As Filed with the Securities and Exchange
Commission on February 28, 1997
1933 Act File No. 2-70863
1940 Act File No. 811-3126
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 / /
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Pre-Effective Amendment No. / /
Post-Effective Amendment No. 26 / X /
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and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 / /
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Amendment No. 28 / X /
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(Check appropriate box or boxes.)
FREEDOM MUTUAL FUND
(Exact Name of Registrant)
One Beacon Street, Boston, MA 02108
(Address of Principal Executive Offices)
(617) 523-3170
(Registrant's Telephone Number)
Edward T. O'Dell, P.C.
Goodwin, Procter & Hoar
Exchange Place, Boston, MA 02109
(Name and Address of Agent for Service of Process)
Approximate date of proposed public offering:
It is proposed that this filing will become effective under Rule 485
(check appropriate box):
/ / Immediately upon filing pursuant to paragraph (b)
/ X / On February 28, 1997, pursuant to paragraph (b)
/ / 60 days after filing pursuant to paragraph (a)(1)
/ / On _____ pursuant to paragraph (a)(1)
/ / 75 days after filing pursuant to paragraph (a)(2)
/ / On _____ pursuant to paragraph (a)(2).
If appropriate check the following box:
/ / This post-effective amendment designates a new effective date for
a previously filed post-effective amendment.
The Registrant, pursuant to Rule 24f-2 promulgated under the Investment
Company Act of 1940, has previously registered an indefinite number of shares of
the Freedom Cash Management Fund series and the Freedom Government Securities
Fund series. A Rule 24f-2 Notice for the Registrant's most recent fiscal year
with respect to the Freedom Cash Management Fund series and Freedom Government
Securities Fund series will be filed on or about February 22, 1997.
<PAGE>
CROSS REFERENCE SHEET
PURSUANT TO RULE 481(A)
<TABLE>
<CAPTION>
Form N-1A Item No. Caption or Location
Part A in Prospectuses
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<S> <C>
1. Cover Page Same
2. Synopsis Summary of Our Expenses
3. Condensed Financial Our Financial Highlights
Information
4. General Description of Our Investment
Registrant Objective and Policies; Our
Organization and Special Considerations
and Risk Factors
5. Management of the Fund Our Management; Additional
Information
5A Management's Discussion of Fund Performance [To be included in Annual Report to
Shareholders]
6. Capital Stock and Other Our Organization and
Securities Shares; Additional Information;
Dividends; Taxes
7. Purchase of Securities Being How to Purchase Shares
Offered
8. Redemption or Repurchase How to Redeem Shares
9. Pending Legal Proceedings Not Applicable
</TABLE>
<TABLE>
<CAPTION>
Caption or Location in
Form N-1A Item No.
Statements of
Part B Additional Information
- ------------------ -----------------------
<S> <C>
10. Cover Page Cover Page
11. Table of Contents Table of Contents
12. General Information and History General Information
13. Investment Objectives and Investment Objectives
Policies and Policies; Investment Restrictions
14. Management of the Fund Management of the Trusts/Fund
</TABLE>
(ii)
<PAGE>
<TABLE>
<CAPTION>
Caption or Location in
Form N-1A Item No. Statements of
Part B Additional Information
- ------------------ -----------------------
<S> <C>
15. Control Persons and Principal Management of the Trusts/Fund
Holders of Securities
16. Investment Advisory and Other The Investment Adviser;
Services Distribution of Shares of the
Trusts/Fund; Custodian; Financial
Statements and Independent
Accountants
17. Brokerage Allocation and Portfolio Transactions
Other Practices
18. Capital Stock and Other General Information
Securities
19. Purchase, Redemption and Pricing Additional Information on Redemption;
of Securities Being Offered Net Asset Value
20. Tax Status Additional Information on
Taxes
21. Underwriters Distribution of Shares of the
Trusts/Fund
22. Calculations of Performance Data Current Yield
23. Financial Statements Financial Statements and Independent
Accountants
</TABLE>
(iii)
<PAGE>
FREEDOM MUTUAL FUND [FLAG
LOGO]
FREEDOM GROUP OF TAX EXEMPT FUNDS
ONE BEACON STREET - BOSTON, MASSACHUSETTS 02108
(800) 453-8206 NATIONWIDE
We are two investment companies offering three separate portfolios,
commonly known as mutual funds (the "Funds"), each of which is a no-load money
market fund with its own specific investment objectives.
Freedom Cash Management Fund -- A money market fund investing in a
diversified portfolio of high-grade money market instruments.
Freedom Government Securities Fund -- A money market fund investing
exclusively in obligations issued or guaranteed as to both principal and
interest by the U.S. Government and its agencies or instrumentalities.
Freedom Tax Exempt Money Fund -- A money market fund investing in a
diversified portfolio of high quality short-term municipal securities.
INVESTMENTS IN THE FUNDS ARE NEITHER INSURED NOR GUARANTEED BY THE U.S.
GOVERNMENT. THERE IS NO ASSURANCE THAT THE FUNDS WILL BE ABLE TO MAINTAIN A
STABLE $1.00 PER SHARE NET ASSET VALUE.
This Prospectus sets forth concisely the information about the Funds that you
ought to know before investing. Please read the Prospectus and retain it for
future reference. Additional information, contained in a Statement of Additional
Information also dated February 28, 1997, has been filed with the Securities and
Exchange Commission and is available upon request without charge by writing to
the Funds at the address set forth above. The Statement of Additional
Information having the same date as this Prospectus is incorporated by reference
into this Prospectus.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
PROSPECTUS -- February 28, 1997
ANNUAL REPORT -- December 31, 1996
<PAGE>
TABLE OF CONTENTS
Page Introduction ......................................................... 1
Benefits to Our Investors ................................................. 1
Summary of Our Expenses ................................................... 2
Our Financial Highlights .................................................. 3
Our Investment Objectives ................................................. 4
Freedom Cash Management Fund ......................................... 4
Freedom Government Securities Fund ................................... 5
Freedom Tax Exempt Money Fund ........................................ 5
Certain Investment Strategies ............................................. 6
Special Considerations -- Tax Exempt Money Fund ........................... 6
How to Purchase Shares .................................................... 7
How to Redeem Shares ...................................................... 9
Freedom Asset Account ..................................................... 11
Pricing of Our Shares ..................................................... 12
Dividends ................................................................. 12
Current Yield ............................................................. 12
Taxes ..................................................................... 12
Our Organization and Shares ............................................... 14
Our Management ............................................................ 15
Shareholder Services ...................................................... 15
Additional Information .................................................... 17
Annual Report -- December 31, 1996 ........................................ 18
<PAGE>
INTRODUCTION
We are two open-end diversified management investment companies offering three
separate portfolios, commonly known as mutual funds (the "Funds"). Each Fund is
a no-load money market fund which provides a stable net asset value and high
current income by investing in a portfolio of high-quality money market
obligations. The Funds described in this Prospectus are Freedom Cash Management
Fund ("Cash Management Fund"), Freedom Government Securities Fund ("Government
Securities Fund") and Freedom Tax Exempt Money Fund ("Tax Exempt Money Fund").
BENEFITS TO OUR INVESTORS
Our money market funds offer you important benefits and conveniences:
No Sales Charge, No Redemption Fee.
Minimum Initial Investment: $1,000.
Minimum Subsequent Investment: $100. See "How to Purchase Shares" and "How
to Redeem Shares".
Liquidity and Share Price Stability: Investment liquidity through
convenient purchase and redemption procedures. Stability of principal through
maintenance of a constant net asset value of $1.00 per share.
Checkwriting Privilege: You have the convenience of making redemptions
without charge merely by writing a check. Such checks may be payable to anyone
you wish and there is no limit on the number of checks you may write.
Professional Management: Freedom Capital Management Corporation, founded in
1930, serves as the Funds' investment adviser (the "Adviser"). The Adviser
provides a number of mutual funds and other clients with investment research and
portfolio management services. Assets under the Adviser's supervision currently
exceed $4 billion. The Adviser is an indirect, wholly-owned subsidiary of JHFSC
Acquisition Corp.
Free Exchange Privilege: You may exchange shares of any Fund without charge
for shares of any other Fund described in this Prospectus.
Investments in the Funds are neither insured nor guaranteed by the U.S.
Government. There is no assurance that the Funds will be able to maintain a
stable $1.00 per share net asset value.
1
<PAGE>
SUMMARY OF OUR EXPENSES
<TABLE>
<CAPTION>
Cash Government Tax Exempt
Management Fund Securities Fund Money Fund
--------------- --------------- ----------
<S> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Sales Load Imposed on Purchases None None None
Sales Load Imposed on Reinvested Dividends None None None
Redemption Fees None None None
Exchange Fees None None None
ANNUAL FUND OPERATING EXPENSES (AS A PERCENTAGE OF
AVERAGE NET ASSETS)*
Management Fees .47% .50% .50%
12b-1 Fees None None None
Other Expenses .24% .15% .13%
Total Fund Operating Expenses .71% .65% .63%
</TABLE>
- --------------
* For the fiscal year ended December 31, 1996
The purpose of this table is to assist you in understanding the various
costs and expenses that you will bear directly or indirectly as an investor in
each Fund. For further information on management fees, see "Our Management."
EXAMPLE
The following example illustrates the effect of each Fund's expenses on the
value of a hypothetical $1,000 investment at the end of one, three, five and ten
year periods in that Fund. As noted in the table above, none of the Funds charge
redemption fees of any kind. THE EXAMPLE SHOULD NOT BE CONSIDERED AS A
REPRESENTATION OF PAST OR FUTURE EXPENSES OR INVESTMENT RETURNS. ACTUAL EXPENSES
AND INVESTMENT RETURNS MAY BE GREATER OR LESS THAN SHOWN.
You would pay the following expenses on a
$1,000 investment, assuming (1) 5% annual
return and (2) redemption at the end of each
time period: 1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Cash Management Fund $7 $23 $40 $88
Government Securities Fund $7 $21 $36 $81
Tax Exempt Money Fund $6 $20 $35 $79
2
<PAGE>
OUR FINANCIAL HIGHLIGHTS
The table of Financial Highlights below represents a summary history of our
operations. The table uses the Funds' fiscal year (which ends December 31) and
expresses the information in terms of a single share outstanding throughout each
year. The table has been audited by Price Waterhouse LLP, independent
accountants, whose unqualified report covering the fiscal years appears
elsewhere in this Prospectus. The financial highlights information should be
read in conjunction with the financial statements and related notes also
included in this Prospectus.
<TABLE>
<CAPTION>
NET RATIO OF RATIO OF NET
NET ASSET DIVIDENDS NET ASSET ASSETS EXPENSES INVESTMENT
VALUE NET FROM NET VALUE END OF TO AVERAGE INCOME TO
YEAR BEGINNING INVESTMENT INVESTMENT END OF TOTAL YEAR DAILY AVERAGE DAILY
ENDED OF YEAR INCOME INCOME YEAR RETURN (THOUSANDS) NET ASSETS NET ASSETS
----- ------- ------ ------ ---- ------ ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
CASH MANAGEMENT FUND
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
December 31, 1996 $1.00 $0.0460 $(0.0460) $1.00 4.69% $309,938 0.65% 4.60%
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
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) 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)
</TABLE>
- ------------
(a) Net of fees waived by the Adviser which amounted to $0.0008 and $0.0016
per share in the years 1988 and 1987, respectively.
3
<PAGE>
OUR INVESTMENT OBJECTIVES
In order to provide you with liquidity, the Funds follow practices to
maintain a $1.00 share price: limiting their portfolios' average maturity to 90
days or less; buying securities which mature in 397 days or less; and buying
only high quality securities with minimal credit risks. Of course, the Funds
cannot guarantee a $1.00 share price, but these practices help to minimize any
price fluctuations that might result from rising or declining interest rates.
While each Fund invests in high quality securities, you should be aware that
your investment is not without risk even if all the securities in the portfolio
are paid in full at maturity. Each of the Funds has a fundamental investment
objective with an investment program to aid in achieving its objective. There is
no assurance that the Funds will achieve their investment objectives. All money
market instruments and debt securities, including U.S. Government securities,
can change in value when interest rates change or when an issuer's
creditworthiness changes.
Each of the Funds will limit its portfolio investments to high quality
money market obligations that, at the time of acquisition, (i) are rated in the
two highest categories by at least two nationally recognized statistical rating
organizations ("NRSROs") (or by one NRSRO if only one NRSRO has rated the
security), (ii) if not rated, are obligations of an issuer whose other
outstanding short-term debt obligations are so rated, or (iii) if not rated, are
of comparable quality as determined by the Adviser in accordance with procedures
established by the Trustees (collectively, "Eligible Securities"). Each Fund
will limit its investments to Eligible Securities that present minimal credit
risk, as determined by the Adviser in accordance with procedures established by
the Trustees.
All Eligible Securities may be classified as "first tier" securities and
"second tier" securities. In general, first tier securities consist of Eligible
Securities that have received the highest rating by at least two NRSROs (or by
one NRSRO if only one NRSRO has rated the security) or which are unrated but
determined to be of comparable quality. All other Eligible Securities are
classified as second tier securities. Neither the Cash Management Fund nor the
Government Securities Fund may invest more than 5% of its total assets in second
tier securities or invest more than 1% of its total assets or $1.0 million
(whichever is greater) in the second tier securities of any single issuer. A
description of the ratings of the NRSROs is contained in the Statement of
Additional Information.
FREEDOM CASH MANAGEMENT FUND
Investment Objective. The Cash Management Fund seeks to achieve as high a
rate of current income as is consistent with maintenance of liquidity and
preservation of capital.
Investment Program. To achieve its objectives, the Fund invests in a
diversified portfolio of short-term, U.S. dollar-denominated instruments of U.S.
and foreign issuers. These instruments include securities issued or guaranteed
by the U.S. Government or its agencies or instrumentalities, foreign
governments, certificates of deposit, time deposits, bankers' acceptances and
other short-term obligations issued by domestic banks, foreign branches of
domestic banks, foreign subsidiaries of domestic banks, and domestic and foreign
branches of foreign banks, asset-backed securities, repurchase agreements, and
high-quality domestic and foreign commercial paper and other short-term
corporate obligations, including those with floating or variable rates of
interest.
Foreign obligations, including obligations of foreign banks, U.S. branches
and agencies of foreign banks, and foreign branches of U.S. banks, may involve
different risks than domestic obligations, including unfavorable political and
economic developments, currency controls or other governmental restrictions
which could affect the payment of principal or interest. Additionally, foreign
issuers may be subject to less governmental regulation and supervision than U.S.
issuers.
4
<PAGE>
FREEDOM GOVERNMENT SECURITIES FUND
Investment Objective. The Government Securities Fund seeks to achieve as
high a rate of current income as is consistent with maintenance of liquidity and
preservation of capital.
Investment Program. To achieve its objectives, the Fund invests exclusively
in short-term U.S. Treasury securities, U.S. Government agency securities and
repurchase agreements with respect to such securities. Some U.S. Government
agency securities, such as Government National Mortgage Association pass-through
certificates, are supported by the full faith and credit of the United States
Treasury; others, such as securities of Federal Home Loan Banks, by the right of
the issuer to borrow from the Treasury.
FREEDOM TAX EXEMPT MONEY FUND
Investment Objective.
The Tax Exempt Money Fund seeks to achieve as high a rate of current income
exempt from federal income taxes as is consistent with maintenance of liquidity
and preservation of capital.
Investment Program. To protect its capital, the Fund invests only in highly
rated securities. The Fund may invest in "Municipal Securities", which, as used
in this Prospectus, means obligations issued by or on behalf of states,
territories, and possessions of the United States, including the District of
Columbia, and their political subdivisions, agencies and instrumentalities, the
interest from which is exempt from federal income tax. Municipal Securities
include tax anticipation notes, revenue anticipation notes, general obligation
bonds, industrial revenue bonds, construction loan notes, bond anticipation
notes, tax exempt commercial paper and short-term municipal bonds. The tax
exempt status of a Municipal Security is determined by the issuer's bond counsel
at the time of the issuance of the security. Interest income of the Fund which
is exempt from federal income tax is expected to retain its tax-free status when
distributed to shareholders. Such income may be subject to state and local
taxes.
The Fund may also invest in when-issued securities and certain variable and
floating rate demand notes. Variable and floating rate demand notes generally
have a maturity in excess of one year, but permit their holder to demand
prepayment upon a specified number of days' notice.
Certain of the Municipal Securities may be backed by a letter of credit
issued by a domestic or a foreign bank in order to improve their credit rating.
In that case, the Fund considers the bank to be the ultimate obligor and credit
risk. See "Special Considerations -- Tax Exempt Money Fund."
It is a fundamental policy of the Fund that during normal market conditions
the Fund's assets will be invested so that at least 80% of the Fund's income
during its fiscal year will be exempt from federal personal income taxes. Up to
20% of the Fund's portfolio may be invested in issues which are not exempt from
federal income tax such as commercial paper, corporate notes, certificates of
deposit, obligations of the U.S. Government, its agencies or instrumentalities
(and repurchase agreements secured by these obligations). Under federal tax
legislation, the interest on certain tax exempt securities which the Fund may
purchase will be included in income subject to the federal individual
alternative minimum tax. The Fund's present policy is to invest no more than 20%
of its total assets in taxable securities including those subject to the
alternative minimum tax. During periods of uncertain market conditions, the Fund
may place more than 20% of its total assets for temporary defensive purposes in
taxable investments or cash reserves.
5
<PAGE>
CERTAIN INVESTMENT STRATEGIES
Repurchase Agreements. Each of the Funds may enter into repurchase
agreements with a bank, financial institution or broker-dealer as a means of
earning income for periods as short as overnight. A repurchase agreement
provides for a Fund to purchase securities, subject to the seller's agreement to
repurchase such securities at a specified time (normally the next business day)
and price. Each repurchase agreement entered into by a Fund will provide that
the value of the collateral underlying the repurchase agreement will always be
at least equal to the repurchase price, including any accrued interest. A Fund's
right to liquidate its collateral, in the event of a default by the seller,
could involve certain costs, losses or delays and, to the extent that proceeds
from any sale upon a default of the obligation to repurchase are less than the
repurchase price, a Fund could suffer a loss. No Fund will invest more than 10%
of its net assets in repurchase agreements of more than one week's duration.
Borrowing. Each Fund may borrow up to 10% of the value of its net assets
from banks for temporary purposes (not for leveraging or investment) but will
not make any new investments so long as such borrowings exceed 5% of the value
of its net assets.
Illiquid Securities. Each Fund may invest up to 10% of its net assets in
securities for which no readily available market exists (including repurchase
agreements maturing in more than one week) or for which there are legal or
contractual restrictions on resale. However, if the Trustees or the Adviser
determine, based upon a review of Board approved guidelines, that restricted
securities eligible for resale to "qualified institutional buyers" pursuant to
Rule 144A under the Securities Act of 1933 are liquid or, with respect to the
Cash Management Fund only, that commercial paper issued as part of a non-public
offering pursuant to Section 4(2) of the Securities Act of 1933 is liquid, then
they may be purchased without regard to the 10% limit. The Trustees will
carefully monitor each Fund's investments in Rule 144A securities, and the Cash
Management Fund's investments in Section 4(2) commercial paper, focusing on
factors, among others, such as valuation, liquidity and availability of
information. This investment practice could have the effect of increasing the
level of illiquidity in the Funds to the extent that qualified institutional
buyers become for a time uninterested in purchasing these securities.
When-Issued Securities. The Tax Exempt Money Fund may invest in
"when-issued" securities. When-issued securities involve commitments to buy a
new issue with settlement up to 45 days later. During the time between the
commitment and settlement, the Fund does not accrue interest but the market
value may fluctuate. This can result in the Fund's share value increasing or
decreasing. If the Fund invests in securities of this type, it will maintain a
segregated account to pay for them and mark it to market daily.
SPECIAL CONSIDERATIONS -- TAX EXEMPT MONEY FUND
The ability of the Tax Exempt Money Fund to achieve its investment
objective is dependent on the continuing ability of the issuers of Municipal
Securities in which the Fund invests to meet their obligations for the payment
of principal and interest when due. It should also be pointed out that, unlike
other types of investments, Municipal Securities traditionally have not been
subject to regulation by, or registration with, the Securities and Exchange
Commission, although there have been proposals which would provide for
regulation in the future.
With respect to Municipal Securities that are backed by a letter of credit
issued by a foreign bank, the ultimate source of payment is the foreign bank.
Investment in foreign banks may involve risks not present in domestic
investments. These include the fact that the foreign bank may be subject to
different, and in some cases less comprehensive, regulatory, accounting,
financial reporting and disclosure standards than are domestic banks.
6
<PAGE>
HOW TO PURCHASE SHARES
GENERAL
Shares of the Funds are distributed by Tucker Anthony Incorporated ("Tucker
Anthony"), Sutro & Co., Incorporated ("Sutro") and Freedom Distributors
Corporation ("Freedom", and together with Tucker Anthony, the "Distributors").
State Street Bank and Trust Company ("State Street") acts as the Funds'
custodian. John Hancock Signature Services, Incorporated ("JHSS") acts as the
Funds' transfer and shareholder services agent.
You may open an account in any Fund by placing an order for at least
$1,000. You may then make subsequent investments for $100 or more.
Shares of the Funds are offered on a continuing basis without a sales
charge at a public offering price equal to the net asset value next determined
after a purchase order is received in proper form as described below. Shares may
be purchased either (1) through the Distributors, utilizing an existing or new
securities brokerage account with a Tucker Anthony or Sutro account executive,
or (2) directly through JHSS. Orders to purchase shares do not become effective
until receipt of "Federal Funds" (monies credited to JHSS's account with its
registered Federal Reserve Bank) by JHSS.
There is no minimum amount for initial or subsequent investment (i) by a
tax-deferred retirement plan (Cash Management Fund and Government Securities
Fund only) or (ii) in connection with purchases through the automatic "sweep"
program (described below) sponsored by Tucker Anthony and Sutro (all Funds).
Where a bank, investment adviser or similar institution has a large number of
accounts and is willing to receive a monthly summary of accounts in lieu of the
regular statement for each account under its control, the minimum amount for
initial investments by individual accounts covered by the summary of accounts is
reduced to $100. All payments will be invested in full and fractional shares.
PURCHASES BY CLIENTS OF TUCKER ANTHONY AND SUTRO
If you have a brokerage account with Tucker Anthony or Sutro, and have not
elected the automatic "sweep" program described below, you may purchase any
Fund's shares through your account executive. In order to purchase through your
account, your account must have a free credit balance (i.e. immediately
available funds). If a properly completed order to purchase Fund shares is
received at any Tucker Anthony or Sutro office before 12:00 noon New York time
and paid utilizing a free credit balance available on a brokerage account,
Tucker Anthony or Sutro will transfer Federal Funds to the Fund and your order
will be executed on the same business day. However, if a properly completed
order to purchase Fund shares is received at any Tucker Anthony or Sutro office
after 12:00 noon New York time and paid utilizing a free credit balance
available on a brokerage account, Tucker Anthony or Sutro will transfer Federal
Funds to the Fund and your order will be executed on the next business day and
dividends on such shares will begin on that day. Accordingly, Tucker Anthony or
Sutro may benefit from the use of free credit balances in your account prior to
their transfer to a Fund.
Certificates for shares owned generally are not issued to you if you have
purchased your shares through Tucker Anthony or Sutro. Tucker Anthony and Sutro
will receive statements and dividends directly from the Funds and will in turn
provide you with account statements reflecting a Fund's purchases, redemptions
and dividend payments.
7
<PAGE>
"Sweep" Program. You may also purchase any Fund's shares by participating
in the "sweep" program of Tucker Anthony and Sutro in which any free credit cash
balance (in available funds) of any amount in your Tucker Anthony/Sutro
brokerage account is invested in one of the Funds automatically no less
frequently than weekly. Under the terms of this program, you may have your free
credit balance invested in shares of any Fund although at any one time your free
credit balance may be invested automatically in only one Fund (the "Designated
Fund"). Free credit cash balances (in available funds) of $2,000 or more will be
invested in shares of the Designated Fund automatically on the next business
day. Automatic purchases using free credit balances of less than $2,000 will be
made weekly, generally on Monday (or the next business day if any Monday is a
holiday) of each week based upon the free credit balance in the account at the
close of business on the preceding Friday. Unless you have elected cash
dividends, dividends on your shares in the Designated Fund will be automatically
reinvested in shares monthly. Redemptions will be effected automatically to
satisfy debit balances in your brokerage account created by activity therein.
Each brokerage account will be scanned automatically for debits each business
day as of the close of business on that day and, after application of any free
credit cash balances in the account to such debits, a sufficient number of
shares of the Designated Fund owned by you will be redeemed at 12:00 noon the
following business day to satisfy any remaining debits in the brokerage account.
Tucker Anthony or Sutro may benefit from the use of free credit balances in your
account prior to their transfer to a Fund.
If you wish additional information concerning the "sweep" program, please
call your account executive.
OTHER INVESTORS -- PURCHASE BY CHECK OR WIRE
Purchase by Mail. On an initial purchase, complete the Purchase Application
included in this Prospectus, indicating which of the Funds you wish to invest in
and each of the services to be used, and mail it, together with a check written
against a U.S. bank and payable to Freedom Cash Management Fund, Freedom
Government Securities Fund or Freedom Tax Exempt Money Fund, to:
John Hancock Signature Services, Incorporated
[Name of Fund(s)]
Attn: Dealer Services
P.O. Box 9102
Boston, Massachusetts 02205-9102
Subsequent purchases of $100 or more may also be made through JHSS by
forwarding payment, together with the detachable stub from your account
statement or a letter containing your account number. When you pay by check,
your order for additional shares of a Fund will be executed at the price next
determined after Federal Funds become immediately available to the applicable
Fund. Federal Funds normally do not become available to a Fund when payment is
by check until two business days or more after the check is deposited. Checks
drawn on banks which are not members of the Federal Reserve System may take
longer to be converted into Federal Funds. When you purchase shares by check,
the Funds can hold payment on redemptions until they are reasonably satisfied
that the investment has been collected (which can take up to ten days).
Purchase by Wire Transfer. You may also purchase shares of any Fund through
JHSS by means of a wire order. Please call JHSS toll free at (800) 257-3336 for
instructions. You should then give
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<PAGE>
instructions to your wiring bank to transmit the specified amount in Federal
Funds to: First Signature Bank & Trust, Portsmouth, New Hampshire -- Freedom
Group of Money Funds, Attention: [Name of Fund(s)], ABA #211475000, specifying
on the wire your account number and your name.
If you transfer Federal Funds by wire in this manner, the transfer may be
subject to a service charge by your bank. If notice from your bank of the wire
transfer is received by JHSS before 12:00 noon New York time, your order will be
executed at 12:00 noon New York time on that day. If notice from your bank of
the wire transfer is received by JHSS after 12:00 noon New York time, your order
will be executed at 12:00 noon New York time on the next business day.
HOW TO REDEEM SHARES
GENERAL
Redemption orders are effected at the net asset value next determined after
receipt of the order by JHSS. For your convenience, and so that you can continue
earning daily dividends for as long as possible, the Funds have established
several different redemption procedures described below. SHOULD THE REDEMPTION
INCLUDE SHARES PURCHASED BY CHECK, PAYMENT MAY BE DELAYED FOR UP TO TEN DAYS
AFTER THE PURCHASE IN ORDER TO ALLOW THE PURCHASE CHECK TO CLEAR. A redemption
of shares purchased by wire will not be subject to this period of delay.
The shares of any Fund may be redeemed in several ways: (1) shares
purchased through a Tucker Anthony or Sutro brokerage account can be redeemed by
placing a redemption order with your account executive or by check redemption,
and (2) shares purchased directly may be redeemed by mail, by expedited
redemption (i.e., wire redemption if you have elected this option on your
Purchase Application) or by check redemption.
REDEMPTION THROUGH YOUR TUCKER ANTHONY OR SUTRO BROKERAGE ACCOUNT
In order to redeem shares purchased through a Tucker Anthony or Sutro
brokerage account, you should advise your account executive, by telephone or
mail, to execute the redemption. If a properly completed order to redeem Fund
shares is received by a Tucker Anthony or Sutro office after 12:00 noon New York
time, your order will be forwarded to the appropriate Fund and will be executed
on the following business day. Redemption proceeds will be held in your
brokerage account unless you give instructions to your account executive to
reinvest or remit the proceeds to you. Generally, redemption proceeds will not
be invested for your benefit without specific instruction, and Tucker Anthony or
Sutro may benefit from the use of temporarily uninvested funds.
DIRECT REDEMPTION
Redemptions by mail and expedited redemptions are not available for shares
purchased through a Tucker Anthony or Sutro brokerage account. Any such
redemption requests received by JHSS will be forwarded to the appropriate Tucker
Anthony or Sutro account executive who will process them as described above.
Redemption By Mail. You may redeem shares by mail. Payment of the
redemption proceeds will ordinarily be made within seven days after the request
for redemption is received in "good order" at
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<PAGE>
the net asset value next determined. If you send your redemption order to JHSS
by mail, you must assume responsibility for assuring that the request for
redemption is received in "good order". "Good order" means that the request must
be accompanied by the following:
(a) A letter of instruction specifying the number of shares or amount of
investment to be redeemed (or that all shares credited to a Fund account be
redeemed), signed by all registered owners of the shares in the exact names
in which they are registered;
(b) For a redemption order over $25,000, or for any amount if the
proceeds are to be sent elsewhere than the address of record, a guarantee of
the signature of each registered owner by a commercial bank which is a
member of the Federal Deposit Insurance Corporation, a trust company or a
member of a recognized stock exchange (a signature guarantee by a savings
bank or notarization by a notary public are not acceptable); and
(c) Additional legal documents concerning authority and related matters
in the case of estates, trusts, guardianships, custodianships, partnerships
and corporations.
All proceeds from redemptions are mailed to your address of record. If you
are uncertain as to the requirements for redemption, please call JHSS toll free
at (800) 257-3336. All redemption requests by mail should be mailed to:
John Hancock Signature Services, Incorporated
[Name of Fund(s)]
Attention: Dealer Services
P.O. Box 9102
Boston, Massachusetts 02205-9102
Expedited Redemptions. If you have elected the expedited redemption option
on the Purchase Application on file with JHSS and wish to redeem $5,000 or more
from any Fund, you may request that payment be made in Federal Funds.
Shareholders may place orders for expedited redemption with JHSS without a
signature guarantee and have the proceeds sent by wire to a bank or trust
company account previously designated in writing. Please call JHSS toll free at
(800) 257-3336 for instructions. If the expedited redemption order is received
by JHSS's Boston office prior to 12:00 noon New York time on a day on which the
New York Stock Exchange is open, payment will be wired to your bank on the same
business day, provided that it is a member of the Federal Reserve System and
that the federal wire system is open. However, if your bank is not a member of
the Federal Reserve System, Federal Funds may not reach your bank until the next
business day. If the redemption order is received after 12:00 noon New York
time, the redemption will be executed and payment will be wired in Federal Funds
on the next business day.
CHECK REDEMPTIONS
You can redeem shares by writing checks drawn on State Street payable in
any amount. In order to redeem shares by writing a check, you must complete a
Purchase Application electing the checkwriting feature and return it either to
your investment executive if you have a brokerage account or directly to JHSS if
you do not have a brokerage account. If you have elected the checkwriting
service on the Purchase Application on file with JHSS, you will be provided with
an initial order of checks free of charge. You may write checks payable to the
order of any person (including any corporation, bank,
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<PAGE>
trust, etc.) in any amount. When your check is presented for payment, JHSS as
transfer agent will cause the Fund to redeem a sufficient number of shares to
cover the amount of the check. This procedure entitles you to continue receiving
dividends on those shares equal to the amount of the check until such time as
the check is presented to JHSS for payment. If you do not own sufficient shares
of the Fund to cover a check, the check will be returned to the payee marked
"insufficient funds." Should the redemption include shares purchased by check,
payment may be delayed for up to ten days after the purchase in order to allow
the purchase check to clear. A redemption of shares purchased by wire will not
be subject to this period of delay. As the aggregate amount owned by a
shareholder may change each day, you should not attempt to redeem all shares
held in your account by using the check redemption procedure. Cancelled checks
will be returned to shareholders monthly. For information on account statements,
see "Shareholder Services."
The Funds reserve the right to terminate or alter the check writing service
at any time after giving shareholders 30 days written notice. Your shareholder
account will be charged $20.00 each for stop payment orders or checks returned
for "insufficient funds."
ADDITIONAL INFORMATION ON REDEMPTION
Because the Funds incur certain fixed costs in maintaining shareholder
accounts, the Funds reserve the right to involuntarily redeem shareholder
accounts in any Fund which have less than $500 in them as of the end of any
month. If a Fund elects to redeem such accounts, it will notify the shareholders
of its intention to do so and provide those shareholders with an opportunity to
increase their accounts by investing a sufficient amount to bring their accounts
up to $500 or more within 30 days of the notice. The Funds will not redeem
accounts which fall below $500 as a result of reduction in net asset value per
share.
FREEDOM ASSET ACCOUNT
The Freedom Asset Account provides an alternative method for investing in
shares of the Funds in conjunction with a program of four financial services:
(1) a Sutro or Tucker Anthony securities margin account ("securities account");
(2) one of the Funds; (3) a check writing facility on an account maintained at
Provident National Bank ("Provident"); and (4) a Visa Gold|Pr Card with ATM
access from PNC National Bank ("PNC", an affiliate of Provident).
To participate in the Freedom Asset Account, an investor must place in a
securities account, cash, marketable securities or a combination of the two
having a gross market value of no less than $20,000 and must meet credit
criteria established by PNC. All customary transactional fees incurred in use of
a securities account must be paid by the participant, including brokerage fees
for securities transactions and interest on margin loans, if any.
THIS SECTION IS ONLY A BRIEF DESCRIPTION OF THE FREEDOM ASSET ACCOUNT AND
ITS RELATION TO THE FUNDS AND DOES NOT DESCRIBE ALL OF THE FEATURES OF THE
FREEDOM ASSET ACCOUNT. PLEASE CONTACT YOUR ACCOUNT EXECUTIVE FOR FURTHER
INFORMATION AND REVIEW CAREFULLY THE FREEDOM SERVICES CORPORATION FREEDOM ASSET
ACCOUNT AGREEMENT.
11
<PAGE>
PRICING OF OUR SHARES
The net asset value per share of the Funds for the purpose of pricing
orders for the purchase and redemption of shares is determined daily as of 12:00
noon New York time, Monday through Friday, exclusive of national business
holidays. Purchase or redemption orders accepted by JHSS prior to 12:00 noon New
York time will be priced at 12:00 noon New York time that day. Purchase or
redemption orders accepted by JHSS subsequent to 12:00 noon New York time will
be priced at 12:00 noon New York time the next day that net asset value is
computed. Net asset value per share is computed by taking the value of all
assets of any Fund, less liabilities, and dividing by the number of shares of
the Fund outstanding. To determine the value of the assets of any Fund for the
purpose of obtaining the net asset value, portfolio securities are valued at
amortized cost, as described below, and interest is accrued daily.
Amortized cost valuation involves valuing a security at its cost and adding
or subtracting, ratably to maturity, any discount or premium, regardless of the
impact of fluctuating interest rates on the market value of the security. Under
the amortized cost method of valuation, neither the amount of daily income nor
net asset value is affected by any unrealized appreciation or depreciation of
the portfolio. As a result, in periods of declining interest rates, the
indicated daily yield on a portfolio valued by amortized cost will be higher
than on a portfolio valued by market prices.
DIVIDENDS
Dividends from net investment income are declared daily and paid monthly on
or about the fifteenth day of the following month. Dividend payments include all
dividends declared during the prior month and not previously paid. You will
receive dividends automatically in additional shares at net asset value, or you
may elect to receive cash. Redemption payments for the entire account value will
include all unpaid dividends.
Purchase orders which are received together with Federal Funds prior to
12:00 noon New York time will receive the dividend declared that day, and
redemption orders effected prior to 12:00 noon New York time will not receive
that day's dividend.
CURRENT YIELD
From time to time, each Fund may quote its yield in advertisements or in
reports to shareholders. Performance information ratings as reported in national
financial publications such as Donoghue's Money Fund Report, a widely recognized
independent publication that monitors the performance of money market funds, may
also be used in comparing the performance of the Funds to other money market
funds with similar investment objectives. Each Fund calculates its annualized
simple and compound yields based on a seven-day period. Since net investment
income of the Funds changes in response to fluctuations in interest rates and
Fund expenses, any given yield quotation should not be considered representative
of a Fund's yield for any future period. CURRENT YIELD INFORMATION FOR THE FUNDS
MAY BE OBTAINED BY CALLING TOLL-FREE AT 1-800-453-8206.
TAXES
Cash Management Fund and Government Securities Fund. Each Fund will
distribute all of its net investment income and capital gains net of capital
losses to shareholders. Income dividends and distributions of realized net
short-term capital gains paid by each Fund are taxable to you as ordinary income
whether received in cash or reinvested in additional shares of the Fund.
Properly designated
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<PAGE>
distributions of net capital gains (the excess of net long-term capital gain
over net short-term capital loss), if any, are taxable to you as long-term
capital gains, regardless of the length of time you have held shares of a Fund
and whether received in cash or additional shares of a Fund.
Government Securities Fund. For mutual funds organized as business trusts
(such as the Fund), most states' laws provide for a pass-through of the state
and local income tax exemption afforded to direct owners of U.S. Government
securities. Thus, for residents of most states, the portion of distributions
derived from the Fund's income from investment in U.S. Government securities
should be free from state and local income taxes. You may wish to consult your
own tax adviser regarding the tax laws in your state.
Tax Exempt Money Fund. The Fund intends to meet all the IRS requirements
necessary to ensure that it is qualified to pay "exempt-interest dividends"
which means that the Fund may pass on to you the federal tax exempt status of
this investment income. For federal income tax purposes, your proportionate
share of taxable distributions from the Fund's other net investment income and
net short-term capital gains, if any, will be taxable as ordinary income,
whether received in cash or invested in additional shares. Properly designated
distributions of net capital gains (the excess of net long-term capital gain
over net short-term capital loss), if any, are taxable to you as long-term
capital gains, regardless of the length of time you have held shares of the Fund
and whether received in cash or additional shares of the Fund.
The tax-exempt status of distributions for federal income tax purposes may
not result in similar treatment under the laws of a particular state or local
taxing authority. You should consult your tax adviser about the status of
distributions from the Fund in your state and locality.
The table below shows the approximate taxable securities yields which are
equivalent to yields of Municipal Securities from 2% to 5% under federal income
tax laws that apply to 1997.
<TABLE>
<CAPTION>
Single Return* Joint Return Income TAX EXEMPT YIELD
-------------- ------------ Tax ----------------
(Taxable Income)** Bracket 2% 3% 4% 5%
------------------ ------- -- -- -- --
EQUIVALENT YIELD TABLE
<C> <C> <C> <C> <C> <C> <C>
$0-24,650 $0-41,200 15% 2.35% 3.53% 4.71% 5.88%
$24,650-59,750 $41,200-99,600 28% 2.78% 4.17% 5.56% 6.94%
$59,750-124,650 $99,600-151,750 31%*** 2.90% 4.35% 5.80% 7.25%
$124,650-271,050 $151,750-271,050 36%*** 3.13% 4.69% 6.25% 7.81%
Over $271,050 Over $271,050 39.6%*** 3.31% 4.97% 6.62% 8.28%
</TABLE>
- --------------
* Other than surviving spouses and heads of households.
** Net amount subject to federal income tax after deductions and exemptions.
*** To implement the phase-out of personal exemption deductions for single
taxpayers having 1997 adjusted gross income of more than $121,200 and
married taxpayers (filing jointly) having 1997 adjusted gross income of more
than $181,800, the exemption deduction is reduced by two percent for each
$2,500 by which adjusted gross income exceeds the threshold amounts. For
taxpayers having 1997 adjusted gross income of more than $121,200 ($60,600
for married filing separately), certain allowable itemized deductions are
reduced. These adjustments may result in effective marginal tax rates
greater than those indicated above. Please consult your tax adviser
regarding your situation.
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<PAGE>
General. Each Fund in which you own shares will inform you of the amount
and nature of its distributions annually. The Funds are required by federal law
to withhold 31% of reportable payments (which may include dividends, capital
gains distributions and redemptions) paid to certain accounts whose owners have
not complied with IRS regulations. In connection with this withholding
requirement, you will be asked to certify on your account application that the
social security or taxpayer identification number you provide is correct and
that you are not subject to 31% backup withholding for previous underreporting
to the IRS. Each of the Funds qualified as a regulated investment company under
Subchapter M of the Internal Revenue Code for its most recent fiscal year.
OUR ORGANIZATION AND SHARES
Freedom Mutual Fund and Freedom Group of Tax Exempt Funds (the "Trusts")
are open-end management investment companies organized as Massachusetts business
trusts. Freedom Mutual Fund was organized on December 22, 1980 and Freedom Group
of Tax Exempt Funds was organized on June 1, 1982. Freedom Mutual Fund currently
has two funds, Freedom Cash Management Fund and Freedom Government Securities
Fund. Freedom Group of Tax Exempt Funds currently has two funds, Freedom Tax
Exempt Money Fund and Freedom California Tax Exempt Money Fund (which is
described in a separate prospectus). The Boards of Trustees supervise our
activities and review our contractual arrangements with companies that provide
us with services. We reserve the right to create and issue a number of series of
shares, or funds, which are separately managed and have different investment
objectives. Each Fund has the right to invest all of its assets in the
securities of a single open-end management investment company with substantially
the same fundamental investment objectives, policies and limitations as such
Fund, although the management of each Fund currently has no intention to do so.
Each share of each Fund has equal dividend, redemption and liquidation rights
and when issued is fully paid and nonassessable. On any matter submitted to the
shareholders, the holder of each Fund share is entitled to one vote per share
regardless of the net asset value thereof (with proportionate voting for
fractional shares). Shareholders of a Fund are not entitled to vote on any
matter which does not affect their Fund but which requires a separate vote of
another Fund.
Under each Trust's Master Trust Agreement, no annual or regular meeting of
shareholders is required. Thus, there will ordinarily be no shareholder meetings
unless required by the Investment Company Act of 1940. The shareholders of each
Trust elected a Board of Trustees at a meeting held on December 16, 1996.
Thereafter, the Trustees are a self-perpetuating body until fewer than 50% of
the Trustees serving as such are Trustees who were elected by shareholders. At
that time, another meeting of shareholders will be called to elect Trustees.
Under each Trust's Master Trust Agreement, any Trustee may be removed by vote of
two-thirds of the outstanding Trust shares and holders of ten percent or more of
the outstanding shares of each Trust can require Trustees to call a meeting of
shareholders for purposes of voting on the removal of one or more Trustees.
Under Massachusetts law, shareholders of a business trust may, under certain
circumstances, be held personally liable as "partners" for its obligations.
However, the risk of a shareholder incurring financial loss on account of
shareholder liability is limited to circumstances in which the Trust itself was
unable to meet its obligations, a possibility which the Adviser believes is
remote. Although each Trust is offering for sale only its own shares and is not
participating in the sale of shares of the other Trust, the Trusts have been
informed that it is the position of the staff of the Securities and Exchange
Commission that it is possible that a Trust is liable for any misstatements in
this Prospectus concerning the other Trust.
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<PAGE>
OUR MANAGEMENT
The Boards of Trustees and officers provide broad supervision over the
affairs of the Funds.
ADVISER
The Funds' Adviser, Freedom Capital Management Corporation, One Beacon
Street, Boston, Massachusetts, provides each Fund with overall investment
advisory and administrative services, as well as general office facilities
pursuant to advisory agreements (the "Advisory Agreements"). As compensation for
its services, under the Advisory Agreements the Adviser receives from each Fund
a fee computed and paid monthly based upon the average daily net asset value of
the Fund, at the annual rate of one-half of one percent (0.50%) on the first
$500 million of average net assets and forty-five hundredths of one percent
(0.45%) on average daily net assets in excess of that amount.
Expenses not expressly assumed by the Adviser under the Advisory Agreements
are paid by each Fund. These include, but are not limited to, taxes, legal,
transfer agent, custodian and auditing fees and printing and other expenses
relating to each Fund's operations. Total expenses for each such Fund for the
year ended December 31, 1996, reflected as an annualized percentage of each
Fund's average net assets were as follows: 0.71% for the Cash Management Fund,
0.65% for the Government Securities Fund and 0.63% for the Tax Exempt Money
Fund. From time to time in the past, the Adviser has waived some or all of its
advisory fees due from the Tax Exempt Money Fund.
The Adviser is an indirect, wholly-owned subsidiary of JHFSC Acquisition
Corp., a newly formed Delaware Corporation. JHFSC Acquisition Corp. is located
at One Beacon Street, Boston, Massachusetts 02108. JHFSC Acquisition Corp. is
owned by the following persons: Thomas H. Lee Equity Fund III, L.P., a
post-venture stage strategic capital fund located at 75 State Street, Boston,
Massachusetts 02109; SCP Private Equity Partners, L.P., a post-venture stage
strategic capital fund located at 435 Devon Park Drive, Wayne, Pennsylvania
19087; and certain members of management and employees of Freedom Securities
Corporation, which is the direct parent of the Adviser.
Freedom Distributors Corporation, a registered broker-dealer which acts as
a Distributor with respect to the Funds' shares, is a wholly-owned subsidiary of
the Adviser and an indirect subsidiary of JHFSC Acquisition Corp. Tucker Anthony
Incorporated, a brokerage firm which is a member of the New York Stock Exchange,
also acts as a Distributor with respect to the Funds' shares and is an indirect
subsidiary of JHFSC Acquisition Corp. and continues an investment banking and
brokerage business established in 1892. Sutro, a dealer of the Funds' shares, is
also an indirect, wholly-owned subsidiary of JHFSC Acquisition Corp.
SHAREHOLDER SERVICES
ACCOUNT STATEMENTS
You will receive a statement of account each time shares are purchased or
redeemed and a report not less frequently than quarterly from JHSS or monthly
from Tucker Anthony or Sutro, showing the activity in your account.
Shares are maintained by each Fund on its register maintained by JHSS, and
the holders thereof will have the same rights and ownership with respect to such
shares as if certificates had been issued.
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<PAGE>
EXCHANGE PRIVILEGE
Shares of each Fund may be exchanged for shares of the other Funds
described in this Prospectus. In addition, if you are a resident of the State of
California, shares of the Funds may be exchanged for shares of the Freedom
California Tax Exempt Money Fund, a no-load money market fund investing in high
quality short-term California municipal securities the income of which is exempt
from federal income tax and California personal income tax. You should carefully
review the prospectus describing the Freedom California Tax Exempt Money Fund
prior to making your exchange.
Exchanges are subject to a minimum investment requirement of $1,000, with
subsequent exchanges permitted in amounts of $100 or more. Any such exchange is
made on the basis of the net asset value per share of the Funds on the date the
exchange request is received.
IF YOU HAVE A BROKERAGE ACCOUNT WITH SUTRO OR TUCKER ANTHONY, YOU MUST
PLACE EXCHANGE ORDERS THROUGH YOUR ACCOUNT EXECUTIVE. IF YOU DO NOT HAVE AN
ACCOUNT WITH SUTRO OR TUCKER ANTHONY, YOU MAY MAKE AN EXCHANGE IN WRITING OR BY
TELEPHONE. Exchanges of shares can be made by writing John Hancock Signature
Services, Incorporated, Attention: Freedom Group of Money Funds, Attention:
Dealer Services, P.O. Box 9102, Boston, Massachusetts 02205-9102. If you do not
have a brokerage account with Sutro or Tucker Anthony, you also have the
automatic privilege of exchanging your shares by telephone. To place a telephone
exchange request, call JHSS at (800) 257-3336. JHSS employs the following
procedures to confirm that instructions received by telephone are genuine. Your
name, the account number, taxpayer identification number applicable to the
account and other relevant information may be requested. Telephone instructions
are recorded. If reasonable procedures, such as those described above, are not
followed, the Funds may be liable for any loss due to unauthorized or fraudulent
instructions. In all other cases, neither the Funds nor JHSS will be liable for
any loss or expense for acting upon telephone instructions made in accordance
with the telephone transaction procedures described above. During times of
drastic economic or market conditions, the telephone exchange privilege may be
difficult to implement because of busy telephone lines. In such times, you may
prefer to submit your exchange requests by express mail c/o the Fund(s) to: John
Hancock Signature Services, Incorporated, 101 Huntington Avenue, Attention:
Dealer Services, Boston, MA 02205-9102, Attention: Freedom Group of Money Funds.
Telephone and written exchange requests must be received by 4:00 p.m. New York
time on a Fund business day to be effective that day. An exchange can be made
only between accounts that are registered in the same name. The Funds reserve
the right to reject any exchange request and to modify or terminate the exchange
privilege at any time upon sixty (60) days' notice to shareholders. You should
carefully review the part of this Prospectus describing the Fund into which your
exchange is being made prior to making your exchange.
BANK INVESTING PLAN AND SYSTEMATIC WITHDRAWAL PLAN
Please call (800) 257-3336 for more information concerning these plans.
RETIREMENT PLANS (Cash Management Fund and Government Securities Fund only)
Taxes on current income may be deferred if an investor qualifies for
certain types of retirement programs. For the convenience of the investor,
prototype plans are made available by your investment executive for eligible
persons to establish Keogh plans, IRA plans and Simplified Employee Pension
plans (SEP/IRA). Other investors interested in any of such plans may obtain
additional information from JHSS at (800) 257-3336.
16
<PAGE>
ADDITIONAL INFORMATION
QUESTIONS ABOUT THE FUNDS
For further information about the Funds, please contact your Tucker Anthony
or Sutro account executive or call JHSS toll free at (800) 257-3336.
TRANSFER AGENT, CUSTODIAN AND SHAREHOLDER SERVICES
John Hancock Signature Services, Incorporated. ("JHSS") acts as transfer
and shareholder services agent for the Funds. JHSS is an indirect, wholly-owned
subsidiary of John Hancock Mutual Life Insurance Company. State Street Bank and
Trust Company holds all cash and securities of the Funds.
17
Freedom Services Corporation ("FSC"), under the terms of a Service
Agreement with the Funds, provides many of the shareholder services (such as
providing monthly account statements and processing purchase and sale orders)
for shareholders who hold shares of the Funds through their brokerage accounts.
FSC receives from each of the Funds a fee of $10.50 per account in payment for
the shareholder services it provides. Transfer agent charges from JHSS are
reduced for those shareholder accounts that are held through a brokerage account
with FSC.
INDEPENDENT ACCOUNTANTS AND FINANCIAL STATEMENTS
Price Waterhouse LLP, 160 Federal Street, Boston, Massachusetts 02110 acts
as the independent accountants for the Funds.
The financial statements of Freedom Cash Management Fund, Freedom
Government Securities Fund and Freedom Tax Exempt Money Fund for the year ended
December 31, 1996 appear on pages 19 through 34.
----------------------
This Prospectus does not contain all the information included in the
Registration Statements filed with the Securities and Exchange Commission under
the Securities Act of 1933 with respect to the securities offered hereby,
certain portions of which have been omitted pursuant to the rules and
regulations of the Securities and Exchange Commission. The Registration
Statements including the exhibits filed therewith may be examined at the office
of the Securities and Exchange Commission in Washington, D.C.
Statements contained in this Prospectus as to the contents of any contract
or other document referred to are not necessarily complete, and, in each
instance, reference is made to the copy of such contract or other document filed
as an exhibit to the Registration Statements of which this Prospectus forms a
part, each such statement being qualified in all respects by such reference.
18
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Trustees of
FREEDOM CASH MANAGEMENT FUND
FREEDOM GOVERNMENT SECURITIES FUND
FREEDOM TAX EXEMPT MONEY FUND
In our opinion, the accompanying statements of assets and liabilities,
including the schedules of investments, and the related statements of operations
and of changes in net assets and the financial highlights appearing on page 3 of
the Prospectus present fairly, in all material respects, the financial position
of Freedom Cash Management Fund and Freedom Government Securities Fund, (each a
series of Freedom Mutual Fund) and Freedom Tax Exempt Money Fund (a series of
Freedom Group of Tax Exempt Funds) (the "Funds") at December 31, 1996, the
results of each of their operations, the changes in their net assets and the
financial highlights for the periods indicated, in conformity with generally
accepted accounting principles. These financial statements and financial
highlights (hereafter referred to as "financial statements") are the
responsibility of the Funds' management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with generally accepted
auditing standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at December 31, 1996 by
correspondence with the custodian, provide a reasonable basis for the opinion
expressed above.
PRICE WATERHOUSE LLP
Boston, Massachusetts
January 31, 1997
19
<PAGE>
FREEDOM CASH MANAGEMENT FUND
INVESTMENTS AS OF DECEMBER 31, 1996 -- (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MATURITY
AMOUNT RATE DATE VALUE
------ ---- ---- -----
COMMERCIAL PAPER -- 91.7%
ABBEY NATIONAL BANK
<S> <C> <C> <C>
$15,000,000 5.30% 03/03/97 $14,865,292
10,000,000 5.31% 03/03/97 9,910,025
10,000,000 5.33% 03/11/97 9,897,842
15,000,000 5.35% 03/11/97 14,846,762
3,350,000 5.39% 03/11/97 3,315,392
AMERICAN EXPRESS CREDIT CORP.
15,000,000 5.32% 01/03/97 14,995,567
10,000,000 5.32% 01/08/97 9,989,656
10,000,000 5.30% 01/27/97 9,961,722
15,000,000 5.32% 01/28/97 14,940,150
10,000,000 5.30% 02/05/97 9,948,472
9,000,000 5.27% 06/11/97 8,787,882
13,000,000 5.28% 07/01/97 12,654,893
AMERICAN GENERAL FINANCE CORP.
10,000,000 5.40% 01/14/97 9,980,500
10,000,000 5.50% 01/16/97 9,977,083
20,000,000 5.31% 01/23/97 19,935,100
10,000,000 5.30% 01/27/97 9,961,722
10,000,000 5.31% 01/29/97 9,958,700
ASSET SECURITIZATION COOPERATIVE CORP.
10,000,000 5.32% 01/09/97 9,988,178
10,000,000 5.33% 01/09/97 9,988,156
15,000,000 5.32% 01/23/97 14,951,233
10,000,000 5.31% 01/27/97 9,961,650
6,000,000 5.31% 01/29/97 5,975,220
15,000,000 5.31% 02/14/97 14,902,650
3,000,000 5.31% 02/27/97 2,974,778
10,000,000 5.37% 03/27/97 9,873,208
ASSOCIATES CORPORATION OF NORTH AMERICA
15,000,000 5.32% 01/15/97 14,968,967
10,000,000 5.31% 01/27/97 9,961,650
20,000,000 5.31% 01/31/97 19,911,500
7,000,000 5.35% 02/06/97 6,962,550
15,000,000 5.29% 02/14/97 14,903,017
15,000,000 5.32% 02/21/97 14,886,950
BANK OF NOVA SCOTIA
12,000,000 5.42% 01/03/97 11,996,387
10,000,000 5.53% 01/21/97 9,969,278
15,000,000 5.33% 03/10/97 14,848,983
BEAR STEARNS COMPANIES, INC.
15,000,000 5.34% 01/08/97 14,984,425
15,000,000 5.43% 01/14/97 14,970,588
15,000,000 5.40% 01/24/97 14,948,250
CAISSE D'AMORTISSEMENT DE LA DETTE SOCIALE
10,000,000 5.30% 01/09/97 9,988,222
10,000,000 5.32% 01/09/97 9,988,178
10,000,000 5.31% 01/22/97 9,969,025
10,000,000 5.36% 01/27/97 9,961,289
4,000,000 5.30% 03/10/97 3,959,956
15,000,000 5.28% 06/10/97 14,648,000
20,100,000 5.30% 06/10/97 19,626,533
CANADIAN IMPERIAL HOLDINGS, INC.
15,000,000 5.305% 01/10/97 14,980,106
CARCO AUTO LOAN MASTER TRUST
50,000,000 5.695% 01/15/97 50,000,000
CHEVRON TRANSPORTATION CORP.
10,000,000 5.30% 07/3/97 9,730,583
CHEVRON UK INVESTMENT PLC
5,000,000 5.41% 01/09/97 4,993,989
15,000,000 5.43% 01/15/97 14,968,325
5,000,000 5.31% 01/23/97 4,983,775
12,000,000 5.32% 01/29/97 11,950,347
15,000,000 5.31% 01/30/97 14,933,625
10,000,000 5.43% 02/06/97 9,945,700
COMMONWEALTH BANK OF AUSTRALIA
15,000,000 5.31% 01/24/97 14,949,112
COOPERATIVE ASSOCIATION OF TRACTOR DEALERS, INC.
1,500,000 5.52% 01/06/97 1,498,850
5,500,000 5.52% 01/10/97 5,492,410
25,300,000 5.32% 01/13/97 25,255,135
2,860,000 5.35% 01/13/97 2,854,900
1,100,000 5.37% 01/13/97 1,098,031
2,000,000 5.38% 01/16/97 1,995,517
3,160,000 5.35% 01/17/97 3,152,486
1,100,000 5.35% 01/21/97 1,096,731
8,600,000 5.33% 01/24/97 8,570,715
6,100,000 5.33% 01/27/97 6,076,518
7,100,000 5.32% 02/04/97 7,064,326
5,000,000 5.33% 02/04/97 4,974,831
10,000,000 5.37% 02/04/97 9,949,283
DRESDNER US FINANCE, INC.
20,000,000 5.32% 01/06/97 19,985,222
</TABLE>
See Notes to Financial Statements.
20
<PAGE>
FREEDOM CASH MANAGEMENT FUND
INVESTMENTS AS OF DECEMBER 31, 1996 -- (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MATURITY
AMOUNT RATE DATE VALUE
------ ---- ---- -----
COMMERCIAL PAPER -- (CONTINUED)
FORD CREDIT EUROPE PLC
<S> <C> <C> <C>
10,000,000 5.32% 01/07/97 9,991,133
15,000,000 5.32% 01/17/97 14,964,533
15,000,000 5.32% 01/22/97 14,953,450
15,000,000 5.31% 01/23/97 14,951,325
FORD MOTOR CREDIT CORP.
15,000,000 5.55% 01/10/97 14,979,187
7,000,000 5.33% 01/14/97 6,986,527
GENERAL ELECTRIC CAPITAL CORP.
4,000,000 5.40% 01/23/97 3,986,800
10,000,000 5.30% 01/27/97 9,961,722
10,000,000 5.39% 01/27/97 9,961,072
8,000,000 5.32% 01/30/97 7,965,716
10,000,000 5.41% 01/30/97 9,956,419
10,000,000 5.31% 02/03/97 9,951,325
10,000,000 5.31% 02/06/97 9,946,900
GLAXO WELLCOME PLC
4,000,000 5.33% 01/02/97 3,999,408
4,500,000 5.35% 01/02/97 4,499,331
15,000,000 5.30% 01/06/97 14,988,958
8,000,000 5.33% 01/13/97 7,985,787
6,500,000 5.31% 01/17/97 6,484,660
10,000,000 5.30% 01/21/97 9,970,556
6,000,000 5.29% 02/11/97 5,963,852
1,975,000 5.32% 02/24/97 1,959,239
GOLDEN PEANUT CO.
4,000,000 5.31% 01/14/97 3,992,330
6,000,000 5.32% 01/22/97 5,981,380
7,000,000 5.30% 01/23/97 6,977,328
8,000,000 5.31% 01/27/97 7,969,320
6,000,000 5.40% 01/28/97 5,975,700
2,000,000 5.31% 02/04/97 1,989,970
3,000,000 5.28% 03/24/97 2,963,920
8,000,000 5.30% 04/03/97 7,891,644
GOLDMAN SACHS & CO.
15,000,000 5.37% 01/16/97 14,966,437
15,000,000 5.42% 02/04/97 14,923,217
20,000,000 5.28% 02/05/97 19,897,333
15,000,000 5.30% 03/11/97 14,847,625
13,000,000 5.28% 05/30/97 12,715,907
J.P. MORGAN & CO., INC.
$10,000,000 5.35% 01/02/97 $ 9,998,514
10,000,000 5.29% 01/08/97 9,989,714
15,000,000 5.29% 01/13/97 14,973,550
10,000,000 5.39% 01/13/97 9,982,033
5,000,000 5.36% 01/17/97 4,988,089
20,000,000 5.35% 03/17/97 19,777,083
12,000,000 5.35% 04/18/97 11,809,183
MERRILL LYNCH & CO.
15,000,000 5.50% 01/06/97 14,988,542
10,000,000 5.33% 01/14/97 9,980,753
10,000,000 5.33% 01/16/97 9,977,792
17,000,000 5.33% 01/21/97 16,949,661
10,000,000 5.34% 01/21/97 9,970,333
2,000,000 5.35% 01/30/97 1,991,381
15,000,000 5.35% 01/31/97 14,933,125
METLIFE FUNDING, INC.
3,287,000 5.32% 01/27/97 3,274,371
MINNESOTA MINING & MANUFACTURING, INC.
11,980,000 5.27% 02/26/97 11,881,791
NEW CENTER ASSET TRUST
15,000,000 5.34% 01/10/97 14,979,975
10,000,000 5.54% 01/22/97 9,967,683
10,000,000 5.45% 01/23/97 9,966,694
10,000,000 5.43% 01/24/97 9,965,308
10,000,000 5.34% 02/25/97 9,918,417
PRUDENTIAL FUNDING CORP.
10,000,000 5.31% 01/15/97 9,979,350
10,000,000 5.31% 01/17/97 9,976,400
5,000,000 5.39% 01/17/97 4,988,022
10,000,000 5.45% 01/17/97 9,975,778
15,000,000 5.42% 02/03/97 14,925,475
15,000,000 5.42% 02/05/97 14,920,958
17,000,000 5.25% 05/29/97 16,633,083
SHEFFIELD RECEIVABLES CORP.
10,600,000 5.68% 01/17/97 10,573,241
10,000,000 5.68% 01/21/97 9,968,444
10,000,000 5.68% 01/22/97 9,966,867
</TABLE>
See Notes to Financial Statements.
21
<PAGE>
FREEDOM CASH MANAGEMENT FUND
INVESTMENTS AS OF DECEMBER 31, 1996 -- (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MATURITY
AMOUNT RATE DATE VALUE
------ ---- ---- -----
COMMERCIAL PAPER -- (CONTINUED)
USAA CAPITAL CORP.
<S> <C> <C> <C>
$15,000,000 5.41% 01/07/97 $ 14,986,475
1,983,000 5.31% 01/09/97 1,980,660
7,000,000 6.00% 01/09/97 6,990,667
5,000,000 5.38% 01/10/97 4,993,275
25,000,000 5.29% 01/22/97 24,922,854
25,000,000 5.27% 04/08/97 24,645,007
--------------
TOTAL COMMERCIAL PAPER ........... 1,500,686,657
--------------
MUNICIPAL SECURITIES -- 3.0%
MISSISSIPPI BUSINESS FINANCE CORP. TAXABLE
INDUSTRIAL DEVELOPMENT REVENUE BONDS
10,000,000 5.70% 01/07/97 10,000,000
NEW YORK (CITY OF) GENERAL OBLIGATION BONDS
18,000,000 5.50% 02/03/97 18,000,000
21,700,000 5.57% 02/10/97 21,700,000
--------------
TOTAL MUNICIPAL SECURITIES ....... 49,700,000
--------------
CERTIFICATES OF DEPOSIT -- 0.9%
SOCIETE GENERALE
15,000,000 5.43% 4/21/97 15,001,319
--------------
ASSET-BACKED NOTES -- 0.6%
NATIONSBANK AUTO OWNER TRUST
10,084,095 5.78% 8/15/97 10,084,095
--------------
BANK NOTES -- 0.6%
MORGAN GUARANTY TRUST CO.
10,000,000 5.50% 1/8/97 $ 10,000,000
--------------
DESCRIPTION
-----------
REPURCHASE AGREEMENT -- 1.6%
26,651,000 Bankers Trust Co. 6.00%
dated 12/31/96 due 1/2/97
with a maturity value
of $26,660,000 (Collateralized
by a U.S. Treasury Note
valued at $26,997,000) 26,651,000
--------------
Total Investments -- 98.4%...... 1,612,123,071(a)
Other Assets & Liabilities, Net --
1.6%............................ 25,162,598
--------------
Total Net Assets -- 100.0%...... $1,637,285,669
==============
</TABLE>
- -------------
(a) Cost for tax purposes is the same.
See Notes to Financial Statements.
22
<PAGE>
FREEDOM GOVERNMENT SECURITIES FUND
INVESTMENTS AS OF DECEMBER 31, 1996
<TABLE>
<CAPTION>
PRINCIPAL MATURITY
AMOUNT RATE DATE VALUE
------ ---- ---- -----
<S> <C> <C> <C>
U.S. GOVERNMENT AGENCY
ISSUES -- 96.7%
FEDERAL FARM CREDIT BANK DISCOUNT
NOTES -- 28.2%
$ 4,500,000 5.21% 01/03/97 $ 4,498,697
9,750,000 5.22% 01/03/97 9,747,172
950,000 5.22% 01/06/97 949,311
2,500,000 5.22% 01/13/97 2,495,650
9,800,000 5.20% 01/14/97 9,781,598
6,790,000 5.37% 01/14/97 6,776,833
6,000,000 5.20% 01/15/97 5,987,867
1,800,000 5.37% 01/23/97 1,794,093
2,000,000 5.20% 01/24/97 1,993,356
1,300,000 5.17% 02/03/97 1,293,839
5,000,000 5.17% 02/05/97 4,974,868
1,700,000 5.20% 02/06/97 1,691,160
250,000 5.21% 02/06/97 248,698
3,000,000 5.31% 02/07/97 2,983,627
7,500,000 5.28% 02/10/97 7,456,000
6,700,000 5.21% 02/11/97 6,660,245
15,000,000 5.20% 03/10/97 14,852,667
3,150,000 5.22% 03/24/97 3,112,547
-----------
TOTAL FEDERAL FARM CREDIT BANK DISCOUNT
NOTES ............................ 87,298,228
-----------
FEDERAL HOME LOAN BANK DISCOUNT
NOTES -- 68.5%
5,000,000 5.21% 01/02/97 4,999,276
9,700,000 5.26% 01/02/97 9,698,582
11,800,000 5.20% 01/08/97 11,788,069
14,550,000 5.22% 01/09/97 14,533,122
1,150,000 5.23% 01/09/97 1,148,663
9,200,000 5.31% 01/16/97 9,179,645
6,250,000 5.23% 01/21/97 6,231,840
3,000,000 5.42% 01/23/97 2,990,063
FEDERAL HOME LOAN BANK DISCOUNT
NOTES -- (CONTINUED)
20,000,000 5.50% 01/26/97 19,989,839
4,200,000 5.20% 01/27/97 4,184,227
7,400,000 5.45% 01/27/97 7,370,872
2,900,000 5.46% 01/27/97 2,888,564
200,000 5.42% 01/27/97 199,217
2,100,000 5.22% 01/28/97 2,091,779
600,000 5.26% 01/28/97 597,633
4,970,000 5.43% 01/28/97 4,949,760
3,500,000 5.46% 01/28/97 3,485,668
4,500,000 5.21% 01/30/97 4,481,114
4,100,000 5.22% 01/30/97 4,082,760
865,000 5.24% 01/30/97 861,349
13,300,000 5.55% 01/30/97 13,240,538
10,000,000 5.30% 01/31/97 9,955,833
4,690,000 5.45% 02/06/97 4,664,440
10,000,000 5.20% 02/14/97 9,936,444
1,000,000 5.31% 02/14/97 993,510
7,500,000 5.21% 02/24/97 7,441,388
2,000,000 5.17% 03/31/97 1,974,437
21,000,000 5.14% 04/15/97 20,688,173
15,000,000 5.16% 05/15/97 14,711,900
13,320,000 5.19% 06/11/97 13,010,832
-----------
TOTAL FEDERAL HOME LOAN BANK DISCOUNT
NOTES .......................... 212,369,537
-----------
TOTAL U.S. GOVERNMENT AGENCY
ISSUES -- 96.7% 299,667,765(a)
OTHER ASSETS & LIABILITIES, NET --
3.3% ........................... 10,270,357
-----------
TOTAL NET ASSETS -- 100.0% ....... $309,938,122
============
</TABLE>
- --------------
(a) Cost for tax purposes is the same.
See Notes to Financial Statements.
23
<PAGE>
FREEDOM TAX EXEMPT MONEY FUND
INVESTMENTS AS OF DECEMBER 31, 1996
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT DESCRIPTION VALUE
------ ----------- -----
<S> <C> <C>
MUNICIPAL SECURITIES -- 96.6%
ALABAMA -- 3.1%
$ 3,900,000 Alabama HFA Series
92A (AmSouth LOC)
4.15% 1/2/97 ...... $ 3,900,000
4,200,000 Huntsville HCA Series
4B (MBIA/AmSouth
LOC) 4.00% 1/2/97 . 4,200,000
-----------
8,100,000
-----------
ARIZONA -- 12.6%
13,000,000 Apache County IDA
(Tucson Electric &
Gas) (Barclays Bank
LOC) 4.20% 1/2/97 . 13,000,000
2,100,000 Apache County IDA
(Tucson Electric &
Gas) (Chemical Bank
LOC) 4.20% 1/2/97 . 2,100,000
1,600,000 Chandler IDA
(Citibank LOC)
4.25% 1/2/97 ...... 1,600,000
4,500,000 Maricopa County IDA
(Grand Canyon
University) (Bank
One LOC) 4.20%
1/2/97 ............ 4,500,000
2,000,000 Maricopa County PCR
(Public Service of
New Mexico
(Canadian Imperial
Bank of Commerce
LOC) 4.15% 1/2/97 . 2,000,000
1,500,000 Mesa Municipal
Development Corp.
(West Deutshe
Landesbank LOC)
3.50% 1/13/97 ..... 1,500,000
5,600,000 Pima County IDA
(Tucson Electric
Power Co.) (Societe
Generale LOC) 4.15%
1/2/97 ............ 5,600,000
3,000,000 Pima County IDA
(Tucson Electric
Power Co.)
(Barclays Bank LOC)
4.20% 1/2/97 ...... 3,000,000
-----------
33,300,000
-----------
ARKANSAS -- 2.9%
7,700,000 Arkansas Development
Finance Authority
(Citibank LOC)
4.15% 1/2/97 ...... 7,700,000
-----------
CALIFORNIA -- 3.0%
3,000,000 California RANS 4.50%
6/30/97 ........... 3,007,540
1,000,000 California School
Cash
Reserve Program
4.75% 7/2/97 ...... 1,004,320
1,000,000 Riverside County
TRANS 4.50% 6/30/97 1,002,843
3,000,000 San Bernardino County
TRANS 4.50% 6/30/97 3,008,901
-----------
8,023,604
-----------
CONNECTICUT -- 0.8%
2,000,000 Connecticut
Development
Authority PCR
(Connecticut Power
& Light) (Deutsche
Bank LOC) 4.15%
1/2/97 ............ 2,000,000
-----------
FLORIDA -- 3.3%
2,600,000 Florida HFA (Multi-
Family -- Oak Hill)
(Chemical Bank LOC)
4.15% 1/2/97 ...... 2,600,000
1,000,000 Florida HFA (Multi-
Family -- So.
Pointe) Series 85
(Chemical Bank LOC)
4.15% 1/2/97 ...... 1,000,000
2,000,000 Putnam County PCR
(Seminole Electric)
(NRUCFC) 3.80%
3/15/97 ........... 2,000,000
1,000,000 Putnam County PCR
(Seminole Electric)
(NRUCFC) 3.45%
6/15/97 ........... 1,000,000
2,000,000 West Orange Memorial
Hospital Tax
District (Rabobank
LOC) 3.55% 1/9/97 . 2,000,000
-----------
8,600,000
-----------
GEORGIA -- 5.4%
3,000,000 Burke County
Development
Authority PCR
(Oglethorpe Power
Corp.) (Credit
Suisse LOC) 3.60%
1/14/97 ........... 3,000,000
</TABLE>
See Notes to Financial Statements.
24
<PAGE>
FREEDOM TAX EXEMPT MONEY FUND
INVESTMENTS AS OF DECEMBER 31, 1996 -- (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT DESCRIPTION VALUE
------ ----------- -----
<S> <C> <C>
MUNICIPAL SECURITIES -- (CONTINUED)
GEORGIA -- (CONTINUED)
$4,090,000 Fulton County
Development
Authority (YMCA
Project) (Wachovia
LOC) 4.05% 1/2/97 . $ 4,090,000
3,000,000 Georgia Municipal Gas
Authority Series B
(ABN Amro/Credit
Suisse/Bayerische
Landesbank/ Morgan
Guarantee/Wachovia
Bank LOC) 4.00%
1/2/97 ............ 3,000,000
4,100,000 Savannah Port
Authority IDA (Pier
One Imports)
(National
Westminster LOC)
4.15% 1/2/97 ...... 4,100,000
-----------
14,190,000
-----------
IDAHO -- 1.1%
3,000,000 Idaho TANS Series 96
4.50% 6/30/97 ..... 3,008,539
-----------
ILLINOIS -- 12.6%
6,400,000 Chicago O'Hare
International
Airport (Societe
Generale LOC) 4.15%
1/2/97 ............ 6,400,000
3,600,000 Chicago O'Hare
International
Airport Series 84B
(Societe Generale
LOC) 4.15% 1/2/97 . 3,600,000
4,300,000 Illinois Development
Finance Authority
(Aurora Central
Catholic High
School) (Northern
Trust LOC) 4.20%
1/2/97 ............ 4,300,000
1,000,000 Illinois Development
Finance Authority
(Lake Forest
Academy) (Northern
Trust LOC) 4.20%
1/2/97 ............ 1,000,000
3,000,000 Illinois Development
Finance Authority
(Presbyterian
Homes) (LaSalle
National Bank LOC)
4.20% 1/2/97 ...... 3,000,000
1,000,000 Illinois Development
Finance Authority
(A.E. Staley Co.)
(Union Bank of
Switzerland LOC)
4.00% 1/2/97 ...... 1,000,000
6,060,000 Illinois Health
Facility Authority
(Evangelical
Hospital Corp.)
(FNB Chicago LOC)
4.10% 1/2/97 ...... 6,060,000
2,000,000 Illinois Health
Facility Authority
(University of
Chicago Hospital)
(Escrowed in U.S.
Government
Securities) 8.10%
8/1/97 ............ 2,087,735
1,680,000 Illinois State Sales
Tax Revenue Notes
(Escrowed in U.S.
Government
Securities) 6.88%
6/15/97 ........... 1,738,676
2,800,000 Jackson & Union
Counties Port
District (Wachovia
LOC) 4.15% 1/2/97 . 2,800,000
295,000 Joliet Regional Port
District (Dow
Chemical) 5.10%
1/2/97 ............ 295,000
1,000,000 Lisle HFA (Ashley of
Lisle Project)
(Credit Suisse LOC)
4.00% 1/2/97 ...... 1,000,000
-----------
33,281,411
-----------
INDIANA -- 1.3%
1,000,000 Indiana Bond Bank
Series 96A-2 4.25%
1/9/97 ............ 1,000,159
1,500,000 Indianapolis MFHA
(Canal Square)
(Societe Generale
LOC) 4.15% 1/2/97 . 1,500,000
1,000,000 Whiting Economic
Development Revenue
(Amoco) 3.80%
2/15/97 ........... 1,000,000
-----------
3,500,159
-----------
IOWA -- 0.8%
1,000,000 Iowa School
Corporation (FSA
Insured) Series A
4.75% 6/27/97 ..... 1,005,571
1,100,000 Iowa School
Corporation (FSA
Insured) Series B
4.50% 1/30/97 ..... 1,100,718
-----------
2,106,289
-----------
</TABLE>
See Notes to Financial Statements.
25
<PAGE>
FREEDOM TAX EXEMPT MONEY FUND
INVESTMENTS AS OF DECEMBER 31, 1996 -- (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT DESCRIPTION VALUE
------ ----------- -----
<S> <C> <C>
MUNICIPAL SECURITIES -- (CONTINUED)
LOUISIANA -- 4.3%
$3,500,000 Ascension Parish IDA
(Borden Project)
(Credit Suisse LOC)
4.15% 1/2/97 ...... $ 3,500,000
400,000 East Baton Rouge IDA
(Georgia Pacific)
(Toronto Dominion
Bank LOC) 4.15%
1/2/97 ............ 400,000
1,600,000 Louisiana Public
Facility Authority
(Societe Generale
LOC) 4.30% 1/2/97 . 1,600,000
2,000,000 Plaquemines Port
Harbor & Terminal
District (Morgan
Guarantee LOC)
3.25% 3/17/97 ..... 2,000,000
1,950,000 Plaquemines Port
Harbor & Terminal
PCR (Tampa Electric
Co. Finance Corp.)
3.65% 1/8/97 ...... 1,950,000
1,900,000 St. Charles Parish
PCR (Shell Oil)
4.05% 1/2/97 ...... 1,900,000
-----------
11,350,000
-----------
MAINE -- 2.3%
4,035,000 Maine HEFA (State
Street Bank LOC)
4.15% 1/2/97 ...... 4,035,000
2,000,000 Maine TANS 4.50%
6/27/97 ........... 2,005,831
-----------
6,040,831
-----------
MARYLAND -- 0.4%
1,100,000 Maryland State Health
& Higher Education
Facilities
Authority (FNB
Chicago LOC) 4.20%
1/7/97 ............ 1,100,000
-----------
MASSACHUSETTS -- 0.9%
2,300,000 Massachusetts Bay
Transportation
Authority (State
Street Bank LOC)
3.63% 3/1/97 ...... 2,300,000
-----------
MICHIGAN -- 1.2%
1,000,000 Cornell Township
Economic
Development Corp.
(Credit Suisse LOC)
3.50% 1/22/97 ..... 1,000,000
1,000,000 Ingham Economic
Development Corp.
(National Australia
Bank LOC) 4.20%
1/2/97 ............ 1,000,000
1,000,000 Michigan Municipal
Bond Authority
(Escrowed in U.S.
Government
Securities) 7.75%
5/1/97 ............ 1,033,849
-----------
3,033,849
-----------
MINNESOTA -- 1.2%
1,100,000 Duluth Tax Increment
Revenue (Lake
Superior Paper
Industries)
(Wachovia LOC)
4.15% 1/2/97 ...... 1,100,000
2,150,000 University of
Minnesota 3.75%
2/1/97 ............ 2,150,000
-----------
3,250,000
-----------
MISSOURI -- 2.4%
3,800,000 Columbia Insurance
Reserve Bonds
(Toronto Dominion
Bank LOC) 4.10%
1/2/97 ............ 3,800,000
2,500,000 Missouri Health &
Higher Education
Facilities
Authority (MBIA
Insured/Credit
Suisse LOC) 4.15%
1/2/97 ............ 2,500,000
-----------
6,300,000
-----------
MONTANA -- 0.6%
1,500,000 Forsyth PCR (Portland
Gas & Electric)
(Union Bank of
Switzerland LOC)
4.05% 1/2/97 ...... 1,500,000
-----------
NEBRASKA -- 0.8%
2,000,000 Heartland Consumer
Power District
(Escrowed in U.S.
Government
Securities) 7.63%
1/2/97 ............ 2,040,000
-----------
NEVADA -- 0.6%
1,600,000 Nevada Department of
Commerce IDR (FMC
Corp.) (Barclays
Bank LOC) 4.00%
9/15/97 ........... 1,600,000
-----------
</TABLE>
See Notes to Financial Statements.
26
<PAGE>
FREEDOM TAX EXEMPT MONEY FUND
INVESTMENTS AS OF DECEMBER 31, 1996
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT DESCRIPTION VALUE
------ ----------- -----
<S> <C> <C>
MUNICIPAL SECURITIES -- (CONTINUED)
NEW HAMPSHIRE -- 0.8%
$2,100,000 New Hampshire
Business Finance
Authority
(Connecticut Light
& Power) (Canadian
Imperial Bank of
Commerce LOC) 4.15%
1/2/97 ............ $ 2,100,000
-----------
NEW MEXICO -- 0.9%
2,400,000 Albuquerque GO
(Canadian Imperial
Bank of Commerce
LOC) 4.10% 1/2/97 . 2,400,000
-----------
NEW YORK -- 0.8%
2,000,000 New York Energy
Research &
Development
Authority (J.P.
Morgan LOC) 3.30%
3/15/97 ........... 2,000,000
-----------
NORTH CAROLINA -- 4.2%
2,000,000 North Carolina
Eastern Municipal
Power (Canadian
Imperial Bank of
Commerce LOC) 3.50%
1/13/97 ........... 2,000,000
4,200,000 North Carolina
Educational
Facilities
Authority (Bowman
Gray Medical
School) (Wachovia
Bank LOC) 4.15%
1/2/97 ............ 4,200,000
4,900,000 North Carolina
Educational
Facilities
Authority (Moses
Cone Hospital)
(Wachovia Bank LOC)
4.15% 1/2/97 ...... 4,900,000
-----------
11,100,000
-----------
OHIO -- 1.1%
3,000,000 Dublin City School
District 4.00%
6/10/97 ........... 3,006,462
-----------
OKLAHOMA -- 1.0%
2,500,000 Oklahoma City
Industrial
Facilities
Authority (Credit
Suisse LOC) 3.00%
1/7/97 ............ 2,500,000
-----------
PENNSYLVANIA -- 1.0%
2,500,000 Delaware County PCR
(Philadelphia Gas &
Electric Co.)
(FGIC/FGIC SPI
Insured) 3.40%
1/28/97 ........... 2,500,000
-----------
RHODE ISLAND -- 0.4%
1,000,000 Rhode Island Port
Authority (Newport
Electric Co.)
(Canadian Imperial
Bank of Commerce
LOC) 4.15% 1/2/97 . 1,000,000
-----------
SOUTH CAROLINA -- 4.5%
4,000,000 Piedmont Municipal
Power Agency
(MBIA/Morgan
Guarantee LOC)
4.20% 1/2/97 ...... 4,000,000
2,960,000 York County (North
Carolina Electric)
(NRUCFC) 3.80%
3/15/97 ........... 2,960,000
4,775,000 York County (Saluda
River Project)
(NRUCFC) 3.65%
2/15/97 ........... 4,775,000
-----------
11,735,000
-----------
TENNESSEE -- 1.6%
1,400,000 Knox County IDA
(Credit Suisse LOC)
3.50% 1/15/97 ..... 1,400,000
1,000,000 Metropolitan
Government of
Nashville &
Davidson County
(Vanderbilt
University) 3.50%
1/15/97 ........... 1,000,000
1,800,000 Metropolitan
Nashville- Davidson
County IDA (Credit
Suisse LOC) (FGIC
Insured) 3.70%
1/15/97 ........... 1,800,000
-----------
4,200,000
-----------
TEXAS -- 8.5%
2,650,000 Austin County IDA
(Justin Industries
Inc.) (Citibank
LOC) 4.10% 1/2/97 . 2,650,000
5,430,000 Brazos River
Authority IDA
(Monsanto Co.
Project) 4.15%
1/2/97 ............ 5,430,000
2,000,000 Harris County Health
System Authority
(Sisters of
Charity) (Credit
Suisse LOC) 3.45%
1/28/97 ........... 2,000,000
1,330,000 Hunt County IDA
(Trico Industries)
(ABN Amro LOC)
3.00% 1/7/97 ...... 1,330,000
</TABLE>
See Notes to Financial Statements.
27
<PAGE>
FREEDOM TAX EXEMPT MONEY FUND
INVESTMENTS AS OF DECEMBER 31, 1996 -- (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT DESCRIPTION VALUE
------ ----------- -----
<S> <C> <C>
MUNICIPAL SECURITIES -- (CONTINUED)
TEXAS -- (CONTINUED)
$ 3,000,000 Mansfield IDA (Pier
One Imports) (National
Westminster LOC)
4.15% 1/2/97 ...... $ 3,000,000
8,000,000 Texas TRANS 4.75%
8/29/97. 8,040,457
-----------
22,450,457
-----------
UTAH -- 4.4%
1,000,000 Intermountain Power
Agency (Morgan
Guaranty LOC) 3.93%
6/16/97 ........... 1,000,000
3,000,000 Intermountain Power
Agency (Swiss Bank
LOC) 3.75% 3/17/97 3,000,000
7,700,000 Utah State Board of
Regents (AMBAC
Insured/ Swiss Bank
LOC) 4.15% 1/2/97 . 7,700,000
-----------
11,700,000
-----------
VIRGINIA -- 1.9%
2,900,000 Hampton Roads RJA
(Wachovia Bank LOC)
4.15% 1/2/97 ...... 2,900,000
2,000,000 Harrisonburg
Redevelopment and
Housing Revenue
Bonds (Bank One
LOC) 4.15% 1/2/97 . 2,000,000
-----------
4,900,000
-----------
WASHINGTON -- 1.6%
1,000,000 Seattle Municipal
Light & Power
(Morgan Guaranty
LOC) 3.63% 1/10/97 1,000,000
3,100,000 Seattle Water System
(Bayerische
Landesbank LOC)
4.15% 1/2/97 ...... 3,100,000
-----------
4,100,000
-----------
WISCONSIN -- 2.3%
4,000,000 Alma PCR (Dairyland
Power Cooperative)
(Rabobank LOC)
4.00% 1/2/97 ...... 4,000,000
2,000,000 Milwaukee RANS 3.50%
2/27/97 ........... 2,000,835
-----------
6,000,835
-----------
TOTAL INVESTMENTS -- 96.6% ....... 254,017,436(a)
Other Assets & Liabilities,
Net -- 3.4% ...................... 9,071,663
-----------
TOTAL NET ASSETS -- 100.0 % ....... $263,089,099
============
</TABLE>
Legend:
GO -- General Obligation Bonds
HCA -- Health Care Authority
HEFA -- Health Education Finance Authority
HFA -- Housing Finance Authority
IDA-- Industrial Development Authority
IDR -- Industrial Development Revenue
LOC -- Letter of Credit
MFHA -- Multi-Family Housing Authority
NRUCFC -- National Rural Utilities Cooperative Finance Corporation
PCR -- Pollution Control Revenue
RANS -- Revenue Anticipation Notes
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 Purchase 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
28
<PAGE>
FREEDOM GROUP OF MONEY FUNDS
STATEMENTS OF ASSETS AND LIABILITIES
December 31, 1996
<TABLE>
<CAPTION>
FREEDOM FREEDOM FREEDOM
CASH GOVERNMENT TAX EXEMPT
MANAGEMENT SECURITIES MONEY
FUND FUND FUND
---- ---- ----
<S> <C> <C> <C>
ASSETS
Investments, at amortized cost ................. $1,612,123,071 $299,667,765 $254,017,436
Cash ........................................... 105,882 4,155,039 3,966,775
Receivable for Fund shares sold ................ 27,493,864 6,484,434 3,948,876
Interest receivable ............................ 1,315,500 15,286 1,651,478
Prepaid expenses ............................... 81,738 17,403 16,008
Other assets ................................... 65,871 18,473 21,495
------------- ----------- -----------
TOTAL ASSETS .................................. 1,641,185,926 310,358,400 263,622,068
------------- ----------- -----------
LIABILITIES
Payable for Fund shares redeemed ............... 2,119,040 130,153 288,635
Dividends payable .............................. 222,460 39,959 23,618
Accrued expenses:
Investment adviser's fee .................... 646,186 135,695 117,067
Transfer agent & shareholder servicing fee .. 720,804 63,900 55,073
Accrued custodian fees ...................... 83,921 18,947 2,022
Trustees' fee ............................... 14,943 5,378 5,196
Other ....................................... 92,903 26,246 41,358
------------- ----------- -----------
TOTAL LIABILITIES ............................. 3,900,257 420,278 532,969
------------- ----------- -----------
NET ASSETS ........................................ $1,637,285,669 $309,938,122 $263,089,099
============== ============ ============
NET ASSETS CONSIST OF:
Capital paid in ................................ $1,637,436,719 $309,931,785 $263,081,339
Accumulated net realized gain (loss) ........... (151,050) 6,337 7,760
------------- ----------- -----------
$1,637,285,669 $309,938,122 $263,089,099
============== ============ ============
SHARES ISSUED AND OUTSTANDING (UNLIMITED SHARES
AUTHORIZED) ...................................... 1,637,436,719 309,931,785 263,081,339
------------- ----------- -----------
NET ASSET VALUE PER SHARE ......................... $ 1.00 $ 1.00 $ 1.00
============== ============ ============
</TABLE>
See Notes to Financial Statements.
29
<PAGE>
FREEDOM GROUP OF MONEY FUNDS
STATEMENTS OF OPERATIONS
Year Ended December 31, 1996
<TABLE>
<CAPTION>
FREEDOM FREEDOM FREEDOM
CASH GOVERNMENT TAX EXEMPT
MANAGEMENT SECURITIES MONEY
FUND FUND FUND
---- ---- ----
<S> <C> <C> <C>
INTEREST INCOME ................................... $81,958,389 $16,498,218 $ 9,912,850
------------- ----------- -----------
EXPENSES
Investment adviser's fee ....................... 6,993,034 1,573,331 1,434,813
Transfer agent & shareholder services .......... 2,795,745 244,045 204,165
Custodian ...................................... 292,286 65,095 1,830
Printing, postage and stationery ............... 143,240 32,870 33,840
Registration expense ........................... 142,295 64,610 48,555
Insurance expense .............................. 48,816 10,743 9,778
Legal .......................................... 42,330 4,505 24,880
Audit .......................................... 39,830 10,970 36,110
Compensation of Trustees ....................... 36,760 14,660 13,145
Other .......................................... 60,632 14,089 11,838
------------- ----------- -----------
TOTAL EXPENSES ................................. 10,594,968 2,034,918 1,818,954
------------- ----------- -----------
NET INVESTMENT INCOME ............................. 71,363,421 14,463,300 8,093,896
------------- ----------- -----------
NET REALIZED GAIN (LOSS) ON INVESTMENTS ........... (3,685) 52 --
------------- ----------- -----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $71,359,736 $14,463,352 $8,093,896
=========== =========== ==========
</TABLE>
See Notes to Financial Statements.
30
<PAGE>
FREEDOM GROUP OF MONEY FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FREEDOM FREEDOM
CASH MANAGEMENT FUND GOVERNMENT SECURITIES FUND
------------------------------ ------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1996 1995 1996 1995
------------ ------------ ------------ ------------
INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS:
<S> <C> <C> <C> <C>
Net investment income ......................... $ 71,363,421 $ 64,952,356 $ 14,463,300 $ 13,913,080
Net realized gain (loss) on investments ....... (3,685) -- 52 8,262
------------- ------------- ------------- ------------
Net increase in net assets resulting from
operations .................................. 71,359,736 64,952,356 14,463,352 13,921,342
DIVIDENDS TO SHAREHOLDERS ......................... (71,363,421) (64,952,356) (14,463,300) (13,913,080)
------------- ------------- ------------- ------------
(3,685) -- 52 8,262
------------- ------------- ------------- ------------
CAPITAL SHARE TRANSACTIONS:
(At Net Asset Value of $1 per share)
Proceeds from sale of shares ................... 5,556,198,753 4,507,108,299 1,060,548,970 1,187,233,854
Net asset value of shares issued to share-
holders in reinvestment of dividends ......... 69,100,632 62,392,885 13,800,298 13,179,702
Cost of shares redeemed ........................ (5,334,634,861) (4,306,537,450) (1,081,811,460) (1,151,455,435)
------------- ------------- ------------- ------------
Net increase (decrease) from capital share
transactions ................................. 290,664,524 262,963,734 (7,462,192) 48,958,121
------------- ------------- ------------- ------------
Net increase (decrease) in net assets .......... 290,660,839 262,963,734 (7,462,140) 48,966,383
NET ASSETS:
Beginning of year .............................. 1,346,624,830 1,083,661,096 317,400,262 268,433,879
------------- ------------- ------------- ------------
End of year .................................... $ 1,637,285,669 $ 1,346,624,830 $ 309,938,122 $ 317,400,262
=============== =============== =============== ===============
DIVIDENDS TO SHAREHOLDERS PER
SHARE ............................................ $ 0.0476 $ 0.0526 $ 0.0460 $ 0.0500
=============== =============== =============== ===============
</TABLE>
<TABLE>
<CAPTION>
FREEDOM
TAX EXEMPT MONEY FUND
------------------------------
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
1996 1995
------------ ------------
INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS:
<S> <C> <C>
Net investment income ......................... $ 8,093,896 $ 8,713,802
Net realized gain (loss) on investments ....... -- --
------------ ------------
Net increase in net assets resulting from
operations .................................. 8,093,896 8,713,802
DIVIDENDS TO SHAREHOLDERS ......................... (8,093,896) (8,713,802)
------------ ------------
-- --
------------ ------------
CAPITAL SHARE TRANSACTIONS:
(At Net Asset Value of $1 per share)
Proceeds from sale of shares ................... 1,066,733,465 1,033,773,788
Net asset value of shares issued to share-
holders in reinvestment of dividends ......... 7,489,562 8,090,985
Cost of shares redeemed ........................ (1,085,210,380) (1,015,833,634)
------------ ------------
Net increase (decrease) from capital share
transactions ................................. (10,987,353) 26,031,139
------------ ------------
Net increase (decrease) in net assets .......... (10,987,353) 26,031,139
NET ASSETS:
Beginning of year .............................. 274,076,452 248,045,313
------------ ------------
End of year .................................... $ 263,089,099 $ 274,076,452
=============== ===============
DIVIDENDS TO SHAREHOLDERS PER
SHARE ............................................ $ 0.0283 $ 0.0319
=============== ===============
</TABLE>
See Notes to Financial Statements.
31
<PAGE>
FREEDOM MUTUAL FUND
FREEDOM GROUP OF TAX EXEMPT FUNDS
NOTES TO FINANCIAL STATEMENTS
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 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' 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.
32
<PAGE>
FREEDOM MUTUAL FUND
FREEDOM GROUP OF TAX EXEMPT FUNDS
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
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 will include 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 Adviser, 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
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.
33
<PAGE>
FREEDOM MUTUAL FUND
FREEDOM GROUP OF TAX EXEMPT FUNDS
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
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 year ended
December 31, 1996 as follows:
CASH GOVERNMENT TAX
MANAGEMENT SECURITIES EXEMPT MONEY
FUND FUND FUND
---------- ---------- ------------
$1,343,515 $116,155 $94,335
========== ======== =======
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 year ended December 31, 1996:
CASH GOVERNMENT TAX
MANAGEMENT SECURITIES EXEMPT MONEY
FUND FUND FUND
---------- ---------- ------------
$1,452,230 $127,890 $109,830
========== ======== ========
NOTE 3. Purchases and sales (including maturities) of investments (excluding
repurchase agreements) for the year ended December 31, 1996 were as follows:
CASH GOVERNMENT TAX
MANAGEMENT SECURITIES EXEMPT MONEY
FUND FUND FUND
---------- ---------- ------------
Purchases
U.S. Government .......... $ 178,720,375 $1,586,318,930 --
Other .................... 6,945,093,668 -- $ 771,272,900
Sales
U.S. Government .......... 222,000,000 1,618,561,629 --
Other .................... 6,621,250,638 -- 785,038,000
34
<PAGE>
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 Signature
Services, Incorporated
P.O. Box 9102
Boston, Massachusetts 02205-9102
Telephone Toll Free
800-257-3336
[Flag 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.
F01ARR 0296
FREEDOM GROUP
OF MONEY FUNDS
[Flag Logo}
FREEDOM
CASH MANAGEMENT
FUND
o
FREEDOM
GOVERNMENT
SECURITIES FUND
o
FREEDOM
TAX EXEMPT
MONEY FUND
PROSPECTUS AND ANNUAL REPORT
DECEMBER 31, 1996
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
FREEDOM MUTUAL FUND
Freedom Cash Management Fund
Freedom Government Securities Fund
FREEDOM GROUP OF TAX EXEMPT FUNDS
Freedom Tax Exempt Money Fund
(The "Funds")
This Statement of Additional Information is not a prospectus but should
be read in conjunction with the Funds' Prospectus dated February 28, 1997, which
may be obtained at no charge from Freedom Distributors Corporation, One Beacon
Street, Boston, Massachusetts 02108. Unless otherwise defined herein,
capitalized terms have the meanings given to them in the Prospectus.
The date of this Statement of Additional Information is February 28,
1997.
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TABLE OF CONTENTS
Page
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GENERAL INFORMATION...............................................................................................1
INVESTORS FOR WHOM THE TRUSTS ARE DESIGNED........................................................................2
INVESTMENT OBJECTIVES AND POLICIES................................................................................2
Additional Information on Investments - Mutual Fund Only.....................................................2
Additional Information on Investments - Tax Exempt Money Fund Only...........................................4
Special Types of Municipal Securities - Tax Exempt Money Fund Only...........................................6
Temporary Taxable Investments - Tax Exempt Money Fund Only...................................................7
Risk Considerations - Tax Exempt Money Fund Only.............................................................8
INVESTMENT RESTRICTIONS...........................................................................................8
Cash Management Fund and Government Securities Fund..........................................................8
Tax Exempt Money Fund.......................................................................................10
PORTFOLIO TRANSACTIONS...........................................................................................12
CURRENT YIELD....................................................................................................12
Yield Information...........................................................................................13
ADDITIONAL INFORMATION ON REDEMPTION.............................................................................13
NET ASSET VALUE..................................................................................................13
ADDITIONAL INFORMATION ON TAXES..................................................................................15
Cash Management Fund and Government Securities Fund.........................................................15
Tax Exempt Money Fund.......................................................................................16
MANAGEMENT OF THE TRUSTS.........................................................................................17
THE INVESTMENT ADVISER...........................................................................................19
DISTRIBUTION OF SHARES OF THE TRUSTS.............................................................................20
CUSTODIAN........................................................................................................20
FINANCIAL STATEMENTS AND INDEPENDENT ACCOUNTANTS.................................................................21
INFORMATION ABOUT SECURITIES RATINGS OF NATIONALLY
RECOGNIZED STATISTICAL RATING ORGANIZATIONS ("NRSROs").....................................................22
</TABLE>
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GENERAL INFORMATION
Freedom Mutual Fund and Freedom Group of Tax Exempt Funds are open-end
management investment companies organized as Massachusetts business trusts on
December 22, 1980 and June 1, 1982, respectively. Freedom Mutual Fund (the
"Mutual Fund") has two series, Freedom Cash Management Fund (the "Cash
Management Fund") and Freedom Government Securities Fund (the "Government
Securities Fund"). Freedom Group of Tax Exempt Funds (individually the "Tax
Exempt Trust" and collectively with the Mutual Fund the "Trusts") currently has
two series, Freedom Tax Exempt Money Fund (the "Tax Exempt Money Fund") and
Freedom California Tax Exempt Money Fund, which is described in a separate
prospectus and statement of additional information. Each of the Cash Management
Fund and the Government Securities Fund seeks to obtain as high a rate of
current income from investments in specified short-term money market instruments
as is consistent with maintaining liquidity and preservation of capital. The Tax
Exempt Money Fund seeks to obtain as high a rate of current income exempt from
federal income taxes as is consistent with the maintenance of liquidity and
preservation of capital by investing primarily in specified tax exempt,
short-term money market instruments.
The assets received by the Trusts from the issue and sale of shares of
each Fund, and all income, earnings, profits and proceeds thereof, subject only
to the rights of creditors, are especially allocated to that Fund and constitute
the underlying assets of such Fund. The underlying assets of each Fund are
required to be segregated on the books of account and are to be charged with the
expenses in respect to that Fund and with a share of the general expenses of the
Trust. Any general expenses of the Trust not readily identifiable as belonging
to a particular Fund shall be allocated by or under the direction of the
Trustees in such manner as the Trustees determine to be fair and equitable,
taking into consideration, among other things, the nature and type of expense
and the relative sizes of the Funds.
Each share of a Fund has equal dividend, redemption and liquidation
rights with other shares of that Fund and when issued is fully paid and
nonassessable. Under the Trusts' Master Trust Agreements, no annual or regular
meeting of shareholders is required. Thus, there will ordinarily be no annual
shareholder meetings, unless otherwise required by the Investment Company Act of
1940 (the "1940 Act"). The Trusts called a meeting of shareholders on December
16, 1996 at which time shareholders elected the Board of Trustees. Thereafter,
the Trustees are a self-perpetuating body until fewer than 50% of the Trustees
serving as such are Trustees who were elected by shareholders. At that time
another meeting of shareholders will be called to elect Trustees. On any matter
submitted to the shareholders for a vote, the holder of each share of a Fund is
entitled to one vote per share (with proportionate voting for fractional shares)
regardless of the relative net asset value thereof. Shareholders of a Fund are
not entitled to vote on any matter which does not affect that Fund but which
requires a separate vote of another Fund. Under the Master Trust Agreements, any
Trustee may be removed by vote of two-thirds of the outstanding Trust shares,
and holders of ten percent or more of the outstanding shares of a Trust can
require Trustees to call a meeting of shareholders for purposes of voting on the
removal of one or more Trustees. The Master Trust Agreements also provide that
if ten or more shareholders who have been such for at least six months and who
hold in the aggregate shares with a net asset value of at least $25,000 inform
the Trustees that they wish to communicate with other shareholders, the Trustees
will either give such shareholders access to the shareholder lists or inform
them of the cost involved if the Trusts forward materials to the shareholders on
their behalf. If the Trustees object to mailing such materials, they must inform
the Securities and Exchange Commission and thereafter comply with the
requirements of the 1940 Act.
Shares do not have cumulative voting rights, which means that in
situations in which shareholders elect Trustees, holders of more than 50% of the
shares voting for the election of Trustees can elect 100% of the Trust's
Trustees, and the holders of less than 50% of the shares voting for the election
of Trustees will not be able to elect any person as a Trustee.
Shares have no preemptive or subscription rights and are fully
transferable. There are no conversion rights.
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INVESTORS FOR WHOM THE TRUSTS ARE DESIGNED
The following information supplements the discussion of the Funds'
investment objectives and policies in the Prospectus of the Funds.
The Trusts offer the economic advantages of block purchases of
securities and diversification. Securities and instruments of the types in which
the Funds invest are not generally available in denominations of less than
$100,000, and in many cases the minimum denominations are substantially higher.
Typically, higher yields are not available unless money market instruments are
bought directly from issuers in amounts of $1,000,000 or more. The Trusts also
offer investors the opportunity to participate in a more diversified selection
of short-term securities than the size of each investor's own portfolio might
otherwise permit.
Investment in the Trusts may also relieve the investor of several
administrative burdens usually associated with the direct purchase of money
market instruments, such as coordinating maturities and reinvestments,
safekeeping of securities, surveying the market for the best price at which to
buy and/or sell and maintaining separate principal and income records.
Furthermore, purchasers electing and complying with the procedures for expedited
redemption have the convenience, if a redemption order is received before 12:00
noon, New York time, on a business day on which the New York Stock Exchange is
open, of having the proceeds from the redemption of their shares remitted to
their bank account at a member bank of the Federal Reserve System by Federal
Funds wire for use on the same business day, provided that the federal wire
system is open. In addition, shareholders availing themselves of the Trust's
check redemption program have the convenience of making redemptions merely by
writing a check. See "How to Redeem Shares" in the Prospectus. All such
advantages, however, will be reduced to the extent of the expenses and losses of
the Fund in which you invest (including losses from portfolio transactions or
from defaults, if any, in payments of interest or principal by issuers).
INVESTMENT OBJECTIVES AND POLICIES
The following information supplements the discussion of the Funds'
investment objectives and policies discussed in the Prospectus.
Additional Information on Investments - Mutual Fund Only
The Cash Management Fund may invest in all categories of investments
described below, whereas the Government Securities Fund may invest only in U.S.
Treasury securities, U.S. Government agency securities and repurchase agreements
with respect to which the underlying securities are in those two categories.
U.S. Treasury Securities: Either Fund may invest in the various types
of marketable securities issued by the U.S. Treasury, which consist of bills,
notes and bonds. Such securities are direct obligations of the United States
Government and differ mainly in the length of their maturity. Treasury bills,
the most frequently issued marketable government security, have a maturity of up
to one year and are issued on a discount basis.
U.S. Government Agency Securities: Either Fund may invest in U.S.
Government agency securities, which are obligations guaranteed as to principal
and interest by an agency or instrumentality of the U.S. Government. Some U.S.
Government agency securities, such as Government National Mortgage Association
pass-through certificates, are supported by the full faith and credit of the
United States Treasury; others, such as securities of Federal Home Loan Banks,
by the right of the issuer to borrow from the Treasury; still others, such as
bonds issued by Federal National Mortgage Association, a private corporation,
are supported only by the credit of the instrumentality. The Government
Securities Fund will not invest in the securities issued by the Federal National
Mortgage Association or any other
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instrumentality where the bonds are supported only by the credit of that
instrumentality. Subject to the foregoing, the Funds may invest in all types of
U.S. Government agency securities currently outstanding or issued in the future.
Domestic and Foreign Issuers. The Cash Management Fund may invest in
U.S. dollar-denominated time deposits, certificates of deposit, bankers'
acceptances of U.S. banks and their branches located outside of the U.S., U.S.
branches and agencies of foreign banks, and foreign branches of foreign banks.
The Cash Management Fund may also invest in U.S. dollar-denominated securities
issued or guaranteed by other U.S. or foreign issuers, including U.S. and
foreign corporations or other business organizations, foreign governments,
foreign government agencies or instrumentalities, and U.S. and foreign financial
institutions, including savings and loan institutions, insurance companies,
mortgage bankers, and real estate investment trusts, as well as banks. These
short-term instruments may include obligations bearing fixed, floating or
variable interest rates.
Time deposits are non-negotiable deposits maintained in a banking
institution for a specified period of time at a stated interest rate. Time
deposits which may be held by the Cash Management Fund will not benefit from
insurance from the Bank Insurance Fund or the Savings Association Insurance Fund
administered by the Federal Deposit Insurance Corporation. Bankers' acceptances
are credit instruments evidencing the obligation of a bank to pay a draft drawn
on it by a customer. These instruments reflect the obligation both of the bank
and of the drawer to pay the face amount of the instrument upon maturity.
Certificates of deposit are interest-bearing negotiable certificates issued by
banks or financial institutions against funds deposited in the issuing
institution.
The obligations of foreign branches of U.S. banks may be general
obligations of the parent bank in addition to the issuing branch, or may be
limited by the terms of a specific obligation and by governmental regulation.
Payment of interest and principal on these obligations may also be affected by
governmental action in the country of domicile of the branch (generally referred
to as sovereign risk). In addition, evidences of ownership of portfolio
securities may be held outside of the U.S. and the Cash Management Fund may be
subject to the risks associated with the holding of such property overseas.
Various provisions of federal law governing the establishment and operation of
U.S. branches do not apply to foreign branches of U.S. banks.
Obligations of U.S. branches and agencies of foreign banks may be
general obligations of the parent bank in addition to the issuing branch, or may
be limited by the terms of a specific obligation and by federal and state
regulation as well as by governmental action in the country in which the foreign
bank has its head office.
Obligations of foreign issuers involve certain additional risks. These
risks may include future unfavorable political and economic developments,
withholding taxes, seizures of foreign deposits, currency controls, interest
limitations, or other governmental restrictions that might affect payment of
principal or interest. Additionally, there may be less public information
available about foreign banks and their branches. Foreign issuers may be subject
to less governmental regulation and supervision than U.S. issuers. Foreign
issuers also generally are not bound by uniform accounting, auditing and
financial reporting requirements comparable to those applicable to U.S. issuers.
Variable and Floating Rate Instruments. The Cash Management Fund may
invest in variable or floating rate instruments that ultimately mature in more
than 397 days, if the Fund acquires a right to sell the securities that meets
certain requirements set forth in Rule 2a-7 of the Investment Company Act of
1940. Variable rate instruments (including instruments subject to a demand
feature) that mature in 397 days or less may be deemed to have maturities equal
to the period remaining until the next adjustment of the interest rate. Other
variable rate instruments with demand features may be deemed to have a maturity
equal to the longer of the period remaining until the next readjustment of the
interest rate or the period remaining until the principal amount can be
recovered through demand. A floating rate instrument subject to a demand feature
may be deemed to have a maturity equal to the period remaining until the
principal amount can be recovered through demand.
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Repurchase Agreements. Both Funds may invest in securities subject to
repurchase agreements with any member bank of the Federal Reserve System or
primary dealer in U.S. Government securities. A repurchase agreement is
characterized as an instrument under which the purchaser (i.e., the Fund)
acquires ownership of the obligation (debt security) and the seller agrees, at
the time of the sale, to repurchase the obligation at a mutually agreed upon
time and price, thereby determining the yield during the purchaser's holding
period. This results in a fixed rate of return insulated from market
fluctuations during such period. The underlying securities will only consist of
U.S. Treasury or Government agency securities in the case of the Government
Securities Fund, and those securities plus certificates of deposit, commercial
paper or bankers' acceptances in the case of the Cash Management Fund.
Repurchase agreements will be entered into with primary dealers for periods not
to exceed seven days. Each repurchase agreement will be fully collateralized
with respect to both principal and interest for the entire term of the
agreement. Upon payment, possession of all of the underlying collateral will be
transferred to an agent of a Fund for the term of the agreement. If a particular
bank or securities dealer defaults on its obligation to repurchase the
underlying security as required by the terms of a repurchase agreement, a Fund
will incur a loss to the extent that the proceeds it receives in the sale of
collateral are less than the repurchase price of the security. In addition,
should the defaulting securities dealer or bank file for bankruptcy, a Fund
could incur certain costs in establishing that it is entitled to dispose of the
collateral and its realization on the collateral may be delayed or limited.
Additional Information on Investments - Tax Exempt Money Fund Only
Following purchase by the Tax Exempt Money Fund, a Municipal Security
may cease to be rated or its rating may be reduced below the minimum required
for purchase by the Tax Exempt Money Fund. Neither event requires a sale of such
security by the Fund, although Freedom Capital Management Corporation (the
"Adviser") will consider such event to be relevant in determining whether the
Fund should continue to hold such security in its portfolio. If the rating
accorded by a Nationally Recognized Statistical Rating Organization ("NRSRO")
for Municipal Securities changes due to changes in the rating systems, the Fund
will attempt to use comparable ratings as standards for investments in
accordance with the investment policies contained herein.
The two principal classifications of Municipal Securities are
"municipal notes" and "municipal bonds."
Municipal Notes. Municipal notes generally are used to provide for
short-term capital needs and generally have maturities of one year or less.
Municipal notes include:
1. Tax Anticipation Notes. Tax anticipation notes are issued to finance
working capital needs of municipalities. Generally, they are issued in
anticipation of various seasonal tax revenues, such as income, sales, use and
business taxes, and are payable from these specific future taxes.
2. Revenue Anticipation Notes. Revenue anticipation notes are issued in
expectation of receipt of other types of revenue, such as revenues available
under federal revenue sharing programs.
3. Bond Anticipation Notes. Bond anticipation notes are issued to
provide interim financing until long-term financing can be arranged. In most
cases, the long-term bonds then provide the money for the repayment of the
notes.
4. Construction Loan Notes. Construction loan notes are sold to provide
construction financing. After successful completion and acceptance, many
projects receive permanent financing through the Federal Housing Administration
under "Fannie Mae" (the Federal National Mortgage Association) or "Ginnie Mae"
(the Government National Mortgage Association).
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5. Tax-Exempt Commercial Paper. Tax-exempt commercial paper is a
short-term obligation with a stated maturity of 365 days or less. It is issued
by agencies of state and local governments to finance seasonal working capital
needs or as short-term financing in anticipation of longer term financing.
Municipal Bonds. Municipal bonds, which meet longer term capital needs
and generally have maturities of more than one year when issued, have two
principal classifications: general obligation bonds and revenue bonds.
1. General Obligation Bonds. Issuers of general obligation bonds
include states, counties, cities, towns and regional districts. The proceeds of
these obligations are used to fund a wide range of public projects, including
construction or improvement of schools, highways and roads, and waste and sewer
systems. The basic security behind a general obligation bond is the issuer's
pledge of its full faith and credit and taxing power for the payment of
principal and interest. The taxes that can be levied for the payment of debt
service may be limited or unlimited as to the rate or amount of special
assessments.
2. Revenue Bonds. Revenue bonds fund two sorts of projects,
publicly-operated facilities ("revenue bonds") and privately-operated facilities
("industrial development bonds").
(a) Revenue Bonds. The principal security for a revenue bond
is generally the net revenues derived from a particular facility, group of
facilities, or, in some cases, the proceeds of a special excise or other
specific revenue source. Revenue bonds are issued to finance a wide variety of
capital projects including: electric, gas, waste and sewer systems; highways,
bridges and tunnels; port and airport facilities; colleges and universities; and
hospitals. Although the principal security behind these bonds may vary, many
provide additional security in the form of a debt service reserve fund whose
money may be used to make principal and interest payments on the issuer's
obligations. Housing finance authorities have a wide range of security,
including partially or fully insured mortgages, rent subsidized and/or
collateralized mortgages, and/or the net revenues from housing or other public
projects. Some authorities provide further security in the form of a state's
ability (without obligation) to make up deficiencies in the debt service reserve
fund.
(b) Industrial Development Bonds. Industrial development
bonds, which are considered municipal bonds if the interest paid thereon is
exempt from federal income tax, are issued by or on behalf of public authorities
to raise money to finance various privately-operated facilities for business and
manufacturing, housing, sports, and pollution control. These bonds are also used
to finance privately-operated public facilities such as airports, mass transit
systems, ports, and parking. The payment of the principal and interest on such
bonds is dependent solely on the ability of the facility's user to meet its
financial obligations and the pledge, if any, of real and personal property so
financed as security for such payment.
There are also other types of Municipal Securities that are, or may
become, available which are similar to the foregoing municipal notes and
municipal bonds. Municipal Securities are sometimes supported by an irrevocable,
unconditional external agreement (normally a bank letter of credit) from a bank
whose own securities are of high quality in order to improve the credit rating
of the Municipal Security. Such external agreement may be issued by a foreign
bank.
For the purpose of the Tax Exempt Money Fund's investment restrictions
set forth beginning on page 10, the identification of the "issuer" of Municipal
Securities which are not general obligation bonds is made by the Adviser on the
basis of the characteristics of the obligation as described above, the most
significant of which is the source of funds for the payment of principal and
interest on such securities. In the case of industrial development bonds, the
"issuer" is the user of the facility, which is usually a non-governmental
entity.
Obligations of issuers of Municipal Securities are subject to the
provisions of bankruptcy, insolvency, and other laws affecting the rights and
remedies of creditors, such as the Federal Bankruptcy Code. In addition, the
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obligations of such issuers may become subject to laws enacted in the future by
Congress, state legislatures, or referenda extending the time for payment of
principal and/or interest, or imposing other constraints upon enforcement of
such obligations or upon municipalities to levy taxes. There is also the
possibility that, as a result of litigation or other conditions, the power or
ability of any issuer to pay, when due, the principal of and interest on its
Municipal Securities may be materially affected. The Tax Exempt Money Fund may
invest more than 25% of its total assets in Municipal Securities the interest
upon which is paid from revenues of similar types of projects. There could be
economic, business or political developments which might affect all Municipal
Securities of a similar type. However, the Tax Exempt Money Fund believes that
the most important consideration affecting credit risk is the quality of
particular issues of Municipal Securities, rather than factors affecting all, or
broad classes of, Municipal Securities.
On December 6, 1994, Orange County (California) became the largest
municipality in the United States to file for protection under the federal
bankruptcy laws. On June 12, 1996, it emerged from bankruptcy after the
successful sale of $880 million in municipal bonds allowed the county to pay off
the last of its creditors. On January 7, 1997, Orange County returned to the
municipal bond market with a $136 million bond issue maturing in 13 years at an
insured yield of 7.23%.
Special Types of Municipal Securities - Tax Exempt Money Fund Only
In addition to the general types of Municipal Securities discussed
above, the Tax Exempt Money Fund may invest in the following Municipal
Securities.
When-Issued Securities. Municipal Securities are frequently offered on
a "when-issued" basis. When so offered, the price, which is generally expressed
in yield terms, is fixed at the time the commitment to purchase is made, but
delivery and payment for the when-issued securities take place at a later date.
Normally, the settlement date occurs within one month of the purchase of
municipal notes; during the period between purchase and settlement, no payment
is made by the Tax Exempt Money Fund to the issuer and no interest accrues to
the Fund. To the extent that assets of the Fund are not invested prior to the
settlement of a purchase of securities, the Fund will earn no income. It is the
Fund's intention, however, to be fully invested to the extent practicable,
subject to the policies stated above. While when-issued securities may be sold
prior to the settlement date, the Fund intends to purchase such securities with
the purpose of actually acquiring them unless a sale appears desirable for
investment reasons. At the time the Fund makes the commitment to purchase a
Municipal Security on a when-issued basis, it will record the transaction and
reflect the value of the security in determining its net asset value.
In accordance with Securities and Exchange Commission policy, whenever
the Tax Exempt Money Fund agrees to purchase securities on a when-issued basis,
its custodian will set aside cash or portfolio securities equal to the amount of
the commitment in a separate account. If necessary, additional assets will be
placed in the account daily so that the value of the account will equal the
amount of the Fund's purchase commitment. When the time comes to pay for
when-issued securities, the Fund will meet its obligations from the then-
available cash flow, sale of securities held in the separate account, cash held
in the separate account or otherwise, sale of other securities or, although it
would not normally expect to do so, from the sale of the when- issued securities
themselves (which may have a value greater or less than the Fund's payment
obligations). To the extent that the Fund sets aside portfolio securities to
satisfy its purchase commitment for when-issued securities, there will be a
greater possibility of fluctuation in market value of the Fund's shares (see
"Pricing of Our Shares" in the Prospectus) than if the Fund were to set aside
cash. The Fund does not intend to purchase when-issued securities for
speculative purposes, but only in furtherance of its investment objectives.
Variable Rate and Floating Rate Instruments. The Tax Exempt Money Fund
may invest in variable or floating rate instruments that ultimately mature in
more than 397 days, if the Fund acquires a right to sell the securities that
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meets certain requirements set forth in Rule 2a-7 of the Investment Company Act
of 1940. Variable rate instruments (including instruments subject to a demand
feature) that mature in 397 days or less may be deemed to have maturities equal
to the period remaining until the next adjustment of the interest rate. Other
variable rate instruments with demand features may be deemed to have a maturity
equal to the longer of the period remaining until the next readjustment of the
interest rate or the period remaining until the principal amount can be
recovered through demand. A floating rate instrument subject to a demand feature
may be deemed to have a maturity equal to the period remaining until the
principal amount can be recovered through demand.
Temporary Taxable Investments - Tax Exempt Money Fund Only
Although the Tax Exempt Money Fund will be invested primarily in
Municipal Securities, the Fund is authorized to place up to 20% of its net
assets in taxable investments or in cash reserves during normal market
conditions for liquidity reasons. During periods of uncertain market conditions,
the Fund may place more than 20% of its total assets for temporary defensive
purposes in taxable investments or cash reserves. The taxable investments in
which the Fund may invest are:
(a) obligations of the U.S. Government and its agencies and
instrumentalities (not all of such obligations are backed by the full
faith and credit of the United States; for example, bonds issued by
Federal National Mortgage Association, a private corporation, are
backed only by the credit of the issuing instrumentality);
(b) certificates of deposit, bankers' acceptances and
short-term obligations of domestic branches of U.S. banks with total
assets of $1 billion or more;
(c) commercial paper rated A-1 by Standard & Poor's, Prime-1
by Moody's (or equivalently rated by another NRSRO), or, if not rated,
of equivalent investment quality as determined by the Adviser;
(d) short-term debt securities of issuers having, at the time
of purchase, a quality rating within the two highest grades by Moody's
(Aaa or Aa), Standard & Poor's (AAA or AA) or Fitch (AAA or AA) (or
equivalently rated by another NRSRO); and
(e) repurchase agreements with respect to an underlying
security which would otherwise qualify for investment by the Fund.
Temporary taxable investments of up to 20% of total assets may also be
made in anticipation of redemptions, pending investment of proceeds from
subscription for Fund shares or from the sale of portfolio securities, or
because of market conditions or the scarcity of suitable tax exempt securities.
Interest income from such investments will be taxable to shareholders as
ordinary income under federal tax laws. Consequently, the Fund intends to invest
its assets in Municipal Securities to the maximum extent possible and prudent.
Repurchase Agreements. Repurchase agreements maturing in more than
seven days, together with any other illiquid instruments held by the Tax Exempt
Money Fund (excluding restricted securities eligible for resale pursuant to Rule
144A under the Securities Act of 1933, which the Board of Trustees or the
Adviser has determined under Board-approved guidelines are liquid), will not, at
the time entered into, exceed 10% of the net assets of such Fund. Because of
their short maturity, repurchase agreements provide liquidity to the Fund while
allowing the Fund to remain fully or substantially invested. The Fund will only
enter into repurchase agreements of one business day's maturity and only with
broker/dealers with substantial capital or major U.S. banks. Each repurchase
agreement will be fully collateralized with respect to both principal and
interest by U.S. Treasury instruments for the entire term of the agreement. Upon
payment, possession of all underlying collateral will be transferred to an agent
of the Fund for the term of the agreement. If a particular securities dealer or
bank defaults on its obligation to repurchase the underlying
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security as required by the terms of a repurchase agreement, the Fund will incur
a loss to the extent that the proceeds it realizes on the sale of the collateral
are less than the repurchase price of the security. In addition, should the
defaulting securities dealer or bank file for bankruptcy, the Fund could incur
certain costs in establishing that it is entitled to dispose of the collateral
and its realization on the collateral may be delayed or limited.
Risk Considerations - Tax Exempt Money Fund Only
There can be no assurance that the Tax Exempt Money Fund will achieve
its investment objectives or be able to maintain its net asset value per share
at $1.00. The price stability and liquidity of the Fund may not be equal to that
of a money market fund which exclusively invests in short-term taxable money
market securities. The taxable money market is a broader and more liquid market
with a greater number of investors, issuers and market makers than the
short-term Municipal Securities market.
Yields on Municipal Securities are dependent on a variety of factors,
including the general conditions of the money market and of the municipal bond
and municipal note market, the size of a particular offering, the maturity of
the obligations and the rating of the issue.
The policies described above in this section are not fundamental and
may be changed upon notice to shareholders.
Tax exempt securities purchased on a when-issued basis are subject to
changes in value as a result of changes in interest rates in the same way that
securities held in the Fund's portfolio are. Purchasing tax exempt securities on
a when-issued basis can thus involve a risk that yields available in the market
when delivery takes place may actually be higher than those obtained in the
when-issued transaction.
INVESTMENT RESTRICTIONS
Cash Management Fund and Government Securities Fund
The following investment restrictions apply to both the Cash Management
Fund and Government Securities Fund. They may not be changed without a
shareholder vote, shareholders of each Fund voting separately to change
restrictions applying to their Fund. A change requires the affirmative vote of a
majority of a Fund's outstanding shares, which as used in this Statement means
the lesser of (1) 67% of that Fund's outstanding shares present at a meeting at
which the holders of more than 50% of the outstanding shares are present in
person or by proxy, or (2) more than 50% of that Fund's outstanding shares.
With respect to investment restrictions Number 1 through 10 below,
neither Fund may:
1. Purchase securities on margin; sell short; purchase warrants; or
write, purchase, or sell puts, calls, straddles, spreads or combinations
thereof.
2. Borrow money, except from banks for temporary purposes (not for
leveraging or investment) and then in an aggregate amount not in excess of 10%
of the value of that Fund's assets at the time of such borrowing, provided, that
so long as such borrowings exceed 5% of the value of the net assets, that Fund
will not make any investments; or mortgage, pledge or hypothecate any assets
except in connection with any such borrowing and in an aggregate amount not in
excess of the dollar amount borrowed.
3. Act as an underwriter of securities of other issuers.
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4. Purchase securities (other than under repurchase agreements of not
more than one week's duration, considering only the remaining days to maturity
of each existing repurchase agreement) for which there exists no readily
available market, or for which there are legal or contractual restrictions on
resale (excluding restricted securities eligible for resale pursuant to Rule
144A under the Securities Act of 1933, and, with regard to the Cash Management
Fund, commercial paper exempt from registration pursuant to Section 4(2) of the
Securities Act of 1933, which the Board of Trustees or the Adviser has
determined under Board-approved guidelines are liquid), if as a result of any
such purchase, more than 10% of that Fund's net assets would be invested in such
securities.
5. Purchase any securities if, immediately after such purchase, more
than 25% of the value of that Fund's total assets would be invested in the
securities of one or more issuers conducting their principal business activities
in the same industry, provided that there is no limitation with respect to
investments in U.S. Treasury securities, Government agency securities and bank
obligations. Neither all finance companies as a group nor all utility companies
as a group are considered a single industry for purposes of this restriction.
6. Purchase securities of any one issuer, other than U.S. Treasury
securities or Government agency securities, if immediately after such purchase,
more than 5% of the value of that Fund's total assets would be invested in such
issuer.
7. Acquire more than 10% of any class of securities of an issuer. For
this purpose, all outstanding bonds and other evidences of indebtedness shall be
deemed within a single class regardless of maturities, priorities, coupon rates,
series, designations, conversion rights, security or other differences.
8. Purchase or sell real estate.
9. Purchase or sell commodities or commodity futures contracts, or oil,
gas or mineral exploration or development programs.
10. Make loans, except that a Fund may purchase or hold debt
instruments and may enter into repurchase agreements in accordance with its
investment objective and policies.
11. Issue any class of securities senior to any other class of
securities, except each Fund may purchase when-issued securities as described
under "Investment Objectives and Policies."
12. Each Fund may, notwithstanding any other fundamental investment
policy or limitation, invest all of its assets in the securities of a single
open-end management investment company with substantially the same fundamental
investment objectives, policies and limitations as that Fund.
The following investment restrictions may be changed by the Board of
Trustees without the approval of shareholders. Appropriate notice will be given
of any changes in these restrictions made by the Board of Trustees. With respect
to investment restrictions Number 12 through 15 below, the Funds may not:
13. Purchase securities of other investment companies, except in
connection with a merger, consolidation, acquisition or reorganization, and
except for purchases of the securities of money market mutual funds.
14. Purchase securities of any issuer for the purpose of exercising
control or management, except in connection with a merger, consolidation,
acquisition or reorganization.
15. Invest more than 5% of either Fund's total assets in securities of
any issuer which, together with its predecessors, has been in continuous
operation less than three years.
16. Purchase or retain the securities of an issuer if those officers or
trustees of the Trust or officers or directors of the Adviser who are also
officers or directors of the issuer and who each own beneficially more than 1/2
of 1% of the securities of that issuer together own more than 5% of the
securities of such issuer.
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17. Neither Fund currently intends to invest all of its assets in the
securities of a single open-end management investment company with substantially
the same fundamental investment objectives, policies and limitations as that
Fund.
If a percentage restriction is adhered to at the time of investment, a
later increase or decrease in percentage resulting from a change in values of
portfolio securities or amount of net assets will not be considered a violation
of any of the foregoing restrictions.
Tax Exempt Money Fund
The following investment restrictions apply to the Tax Exempt Money
Fund. They may not be changed without a shareholder vote. A change requires the
affirmative vote of a majority of the Fund's outstanding shares, which as used
in this Statement means the lesser of (1) 67% of the Fund's outstanding shares
present at a meeting at which the holders of more than 50% of the outstanding
shares are present in person or by proxy, or (2) more than 50% of the Fund's
outstanding shares. With respect to investment restrictions Number 1 through 12
below, the Fund may not:
1. Purchase securities on margin; sell short; purchase warrants; or
write, purchase, or sell straddles, spreads, or combinations thereof.
2. Borrow money, except from banks for temporary purposes (not for
leveraging or investment) and then in an aggregate amount not in excess of 10%
of the value of the Fund's assets at the time of such borrowing, provided, that
so long as such borrowings exceed 5% of the value of the net assets, the Fund
will not make any investments; or mortgage, pledge or hypothecate any assets
except in connection with any such borrowing and in an aggregate amount not in
excess of the dollar amount borrowed.
3. Act as an underwriter of securities of other issuers, except to the
extent that the purchase of Municipal Securities in accordance with the Fund's
investment objective, policies and limitations may be deemed to be an
underwriting.
4. Purchase securities (other than under repurchase agreements of not
more than one week's duration, considering only the remaining days to maturity
of each existing repurchase agreement) for which there exists no readily
available market, or for which there are legal or contractual restrictions on
resale (excluding restricted securities eligible for resale pursuant to Rule
144A under the Securities Act of 1933, which the Board of Trustees or the
Adviser has determined under Board-approved guidelines are liquid), if as a
result of any such purchase, more than 10% of the Fund's net assets would be
invested in such securities.
5. Purchase any securities if, immediately after such purchase, more
than 25% of the value of the Fund's total assets would be invested in the
securities of one or more issuers conducting their principal business activities
in the same industry, provided that there is no limitation with respect to
investments in general municipal obligations and obligations issued or
guaranteed by the U.S. Government, its agencies or instrumentalities.
6. Purchase securities of any one issuer, other than the U.S.
Government, its agencies and instrumentalities, if immediately after such
purchase more than 5% of the value of the Fund's total assets would be invested
in such issuer.
7. Acquire more than 10% of any class of securities of an issuer,
except securities issued or guaranteed by the U.S. Government or any of its
agencies or instrumentalities, or securities which are backed by the full faith
and credit of the United States.
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8. Purchase or sell real estate, except this shall not prevent the Fund
from investing in Municipal Securities secured by real estate or interests
therein.
9. Purchase or sell commodities or commodity futures contracts, or oil,
gas or mineral exploration or development programs.
10. Make loans, except that the Fund may hold debt instruments and
enter into repurchase agreements in accordance with its investment objectives
and policies.
11. Issue any class of securities senior to any other class of
securities, except that the Fund may purchase when-issued securities as
described under "Investment Objectives and Policies."
12. Invest more than 25% of its total assets within a single state of
the United States or the District of Columbia.
13. The Fund may, notwithstanding any other fundamental investment
policy or limitation, invest all of its assets in the securities of a single
open-end management investment company with substantially the same fundamental
investment objectives, policies and limitations as the Fund.
The following investment restrictions may be changed by the Board of
Trustees without the approval of shareholders. Appropriate notice will be given
of any changes in these restrictions made by the Board of Trustees. With respect
to investment restrictions Number 14 through 17 below, the Fund may not:
14. Purchase securities of other investment companies, except in
connection with a merger, consolidation, acquisition or reorganization, and
except for purchases of the securities of money market mutual funds.
15. Purchase securities of any issuer for the purpose of exercising
control or management, except in connection with a merger, consolidation,
acquisition or reorganization.
16. Invest more than 5% of the Fund's total assets in securities of any
issuer which, together with its predecessors, has been in continuous operation
less than three years, except obligations issued or guaranteed by the U.S.
Government or its agencies, or Municipal Securities (other than industrial
development bonds) (for this purpose the period of operation of the issuer shall
include the period of operation of any predecessor or unconditional guarantor of
such issuer).
17. Purchase or retain the securities of an issuer if those officers or
trustees of the Trust or officers or directors of the Adviser who are also
officers or directors of the issuer and who each own beneficially more than 1/2
of 1% of the securities of that issuer together own more than 5% of the
securities of such issuer.
18. The Fund does not currently intend to invest all of its assets in
the securities of a single open- end management investment company with
substantially the same fundamental investment objectives, policies and
limitations as the Fund.
For the purposes of the limitations set forth in paragraphs 5, 6, 7, 16
and 17, the Fund will regard the entity which has the ultimate responsibility
for the payment of principal and interest as the issuer.
If a percentage restriction is adhered to at the time of investment, a
later increase or decrease in percentage resulting from a change in values of
portfolio securities or amount of net assets will not be considered a violation
of any of the foregoing restrictions.
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PORTFOLIO TRANSACTIONS
The Advisory Agreements authorize the Adviser (subject to the control
of the Boards of Trustees) to select brokers and dealers to execute purchases
and sales of portfolio securities. They direct the Adviser to use its best
efforts to obtain the best overall terms for the Trusts, taking into account
such factors as price (including dealer spread), the size, type and difficulty
of the transaction involved, and the financial condition and execution
capability of the broker or dealer.
With respect to the Cash Management Fund and the Government Securities
Fund, the Adviser generally will purchase portfolio securities for both Funds
either directly from the issuer or from dealers who specialize in "money market"
instruments. During the last three fiscal years ended December 31, 1994, 1995,
and 1996 the Cash Management Fund and the Government Securities Fund paid no
brokerage commissions.
With respect to the Tax Exempt Money Fund, purchases and sales of the
Fund's portfolio securities are generally placed by the Adviser with the issuer,
the issuer's underwriter or with a primary market maker. Usually no brokerage
commission is paid, although the price usually includes an undisclosed
compensation. (Transactions with primary market makers reflect the spread
between bid and asked prices; purchases of underwritten issues include an
underwriting fee paid by the issuer to the underwriter.) During the last three
fiscal years ended December 31, 1994, 1995 and 1996, the Tax Exempt Money Fund
paid no brokerage commissions.
With respect to all of the Funds, to the extent that the execution and
price offered by more than one dealer are comparable, the Adviser may, in its
discretion, effect transactions in portfolio securities with dealers who provide
the Trusts with research services such as credit analysis. Any such research
services would be available for use on all investment advisory accounts of the
Adviser.
Other investment advisory clients advised by the Adviser may also
invest in the same securities as the Trusts. When these clients buy or sell the
same securities at substantially the same time, the Adviser may average the
transactions as to price and allocate the amount of available investments in a
manner which the Adviser believes to be equitable to each client, including any
Fund. In some instances, this investment procedure may adversely affect the
price paid or received by any Fund or the size of the position obtainable for
it. On the other hand, to the extent permitted by law, the Adviser may aggregate
the securities to be sold or purchased for any Fund with those to be sold or
purchased for other clients managed by it in order to obtain best execution.
In no instance will portfolio securities be purchased from or sold to
Tucker Anthony Incorporated ("Tucker Anthony"), Sutro & Co. Incorporated
("Sutro") or any affiliated person (as defined in the 1940 Act) thereof.
The Board of Trustees of the Mutual Fund has determined that any
portfolio transaction for the Mutual Fund may be executed through Tucker Anthony
or Sutro, if, in the Adviser's judgment, the use of Tucker Anthony or Sutro is
likely to result in price and execution at least as favorable as those of other
qualified brokers, and if, in the transaction, Tucker Anthony or Sutro charges
the Mutual Fund a commission rate consistent with those charged by Tucker
Anthony or Sutro to comparable unaffiliated customers in similar transactions.
Neither Tucker Anthony nor Sutro will participate in commissions in brokerage
given by the Mutual Fund to other brokers or dealers and will not receive any
reciprocal brokerage business resulting therefrom.
CURRENT YIELD
The Securities and Exchange Commission requires by rule that a yield
quotation set forth in an advertisement or prospectus for a "money market" fund
be computed by a standardized method based on a historical seven calendar
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day period referred to as the "base period." The yield quoted may be a simple
annualized yield or a compounded effective yield which gives effect to the
reinvestment of the proceeds of the investment portfolio. If the compounded
effective yield is used in an advertisement, the simple annualized yield must
also be included. Both yields are computed on the basis of the base period
return on a hypothetical pre-existing account in each Fund having a balance of
one share at the beginning of the seven-day base period. The base period return
equals the net change in value of the account over the seven-day period,
including dividends declared both on the original share and on any additional
shares purchased with previous dividends (such dividends are declared daily and
paid from the net investment income of the Fund) and minus all fees, other than
nonrecurring account or sales charges charged to all shareholder accounts, in
proportion to the length of the base period and the Fund's average account size.
The fees deducted will take into account the expense limitation agreement as
described in "Our Management" in the Prospectus. The net change in value does
not include realized gains and losses from the sale of securities or unrealized
appreciation or depreciation of the securities. The base period return is then
multiplied by 365/7 to arrive at the annualized simple yield. The compounded
effective yield is calculated by dividing the base period return (calculated as
above) by 7, adding 1, raising that sum to the 365th power and subtracting 1
from the result. Both calculations of yields are then expressed to at least two
decimal points.
Yield Information
Cash Management Fund. For the seven day period ended December 31, 1996,
the simple annualized yield of the Cash Management Fund was 4.78%, the compound
effective yield was 4.98%, and the Fund had an average weighted maturity of
investments of 38 days.
Government Securities Fund. For the seven day period ended December 31,
1996, the simple annualized yield of the Government Securities Fund was 4.68%,
the compound effective yield was 4.79%, and the Fund had an average weighted
maturity of investments of 44 days.
Tax Exempt Money Fund. For the seven day period ended December 31,
1996, the simple annualized yield of the Tax Exempt Money Fund was 3.26%, the
compound effective yield was 3.31%, and the Fund had an average weighted
maturity of investments of 34 days.
ADDITIONAL INFORMATION ON REDEMPTION
The Trusts may suspend redemption privileges or postpone the date of
payment on shares of any Fund for more than seven days during any period (1)
when the New York Stock Exchange is closed (other than for week-ends or
holidays) or trading on the Exchange is restricted as determined by the
Securities and Exchange Commission ("SEC"), (2) when an emergency exists, as
defined by the SEC, which makes it not reasonably practicable for either Trust
to dispose of securities owned by it or fairly to determine the value of its
assets, or (3) as the SEC may otherwise permit.
It is possible that under unusual circumstances the redemption price
may be more or less than the shareholder's cost, depending on the market value
of a Fund's portfolio at the time.
NET ASSET VALUE
As disclosed in the Prospectus, the net asset value per share of each
Fund is determined at 12:00 noon New York time Monday through Friday, as
described below. The Funds will be closed on the following national business
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holidays: New Year's Day, Washington's Birthday, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day and Christmas Day.
The net asset value per share of the Funds is determined daily under
the general supervision of the Trusts' Board of Trustees by the Trusts'
custodian at 12:00 noon New York time on each day on which the New York Stock
Exchange is open or on which there is a sufficient degree of trading in the
Trusts' portfolio securities that the current net asset value of the Trusts'
redeemable securities might be materially affected by changes in the value of
the portfolio securities. Purchase or redemption orders accepted by John Hancock
Signature Services, Incorporated ("JHSS") prior to 12:00 noon New York time will
be priced at 12:00 noon New York time that day. Purchase or redemption orders
accepted by JHSS subsequent to 12:00 noon New York time will be priced at 12:00
noon New York time the next day that net asset value is computed. Net asset
value per share is computed by taking the value of all assets of any Fund, less
liabilities, and dividing by the number of shares of the Fund outstanding. To
determine the value of the assets of any Fund for the purpose of obtaining the
net asset value, portfolio securities are valued at amortized cost, as described
below, and interest is accrued daily.
Since the Trusts have adopted a policy of normally holding portfolio
securities to maturity, all portfolio securities of the Funds will normally be
valued at amortized cost. Thus, it is not expected that realized or unrealized
gains or losses on portfolio securities will be a substantial factor in the
computation of the net asset value or gross income of any Fund. If in some
extraordinary circumstance any Fund experiences gains or losses (realized or
unrealized), whether recognized or unrecognized, this could result in a change
in net asset value, a change in dividends, or both.
The Trusts comply with the provisions of Rule 2a-7 under the 1940 Act
which permits each Fund to compute the net asset value using the amortized cost
method of valuing portfolio securities. To comply with that rule, the Board of
Trustees of each Trust has agreed to establish procedures to stabilize the net
asset value for each Fund at $1.00 per share. These procedures include a review
by the Board of Trustees of the extent of any deviation of net asset value per
share, based on available market quotations or estimates of market value
determined by the Boards of Trustees in good faith, from the Fund's $1.00
amortized cost value per share. If that deviation exceeds 1/2 of 1%, the
Trustees will consider any action that should be initiated to reasonably
eliminate or reduce material dilution or other unfair results to shareholders.
Such action may include selling portfolio securities prior to maturity,
withholding dividends, or utilizing a net asset value per share as determined by
using available market quotations. In addition, the Trusts must (a) maintain a
dollar weighted average portfolio maturity of 90 days or less for each Fund, (b)
not purchase any instrument with a remaining maturity greater than 397 days, (c)
limit portfolio investments, including repurchase agreements, to securities
that, at the time of acquisition, (i) are rated in the two highest categories by
at least two nationally recognized statistical rating organizations (or by one
organization if only one organization has rated the security), (ii) if not
rated, are obligations of an issuer whose other outstanding short-term debt
obligations are so rated, or (iii) if not rated, are of comparable quality as
determined by the Boards of Trustees in accordance with procedures established
by the Boards of Trustees, and (d) comply with certain reporting and
recordkeeping procedures. The Trusts' officers will periodically review the
method of valuation and recommend changes to the Boards of Trustees which may be
necessary to assure that the portfolio securities of the Funds are valued at
their fair value as determined by the Trustees in good faith. The Funds will
limit their investments to securities that present minimal credit risks, as
determined by the Boards of Trustees in accordance with the procedures
established by the Boards of Trustees.
Amortized cost valuation involves valuing a security at its cost and
adding or subtracting, ratably to maturity, any discount or premium, regardless
of the impact of fluctuating interest rates on the market value of the security.
Under the amortized cost method of valuation, neither the amount of daily income
nor net asset value is affected by any unrealized appreciation or depreciation
of the portfolio. As a result, in periods of declining interest rates, the
indicated daily yield on a portfolio valued by amortized cost will be higher
than on a portfolio valued by market prices.
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Since there is no sales load involved in an investment in either Trust,
100% of the shareholder's purchase price is invested in shares of the Fund
purchased.
ADDITIONAL INFORMATION ON TAXES
Each Fund intends to qualify and elect to be treated as a "regulated
investment company" under Subchapter M of the Internal Revenue Code of 1986, as
amended (the "Code"). If so qualified, a Fund will not be liable for federal
income taxes on its taxable net investment income and capital gain net income
that is distributed to shareholders, provided that the Fund distributes at least
90% of its net investment income (other than capital gains) and its net
short-term capital gain for the year. To qualify for tax treatment as a
"regulated investment company" under the Code, a Fund must, among other things,
(i) derive in each taxable year at least 90% of its gross income from dividends,
interest, payments with respect to securities loans, gains from the sale or
other disposition of stock, securities or foreign currencies or other income
derived with respect to its business of investing in such stock, securities or
currencies and (ii) derive in each taxable year less than 30% of its gross
income from the sale or other disposition of stock, securities or certain other
financial instruments held for less than three months.
If for any taxable year any Fund does not qualify as a regulated
investment company, all of its taxable income will be subject to tax at
corporate rates and, in such event, dividend distributions to its shareholders
would be eligible for the corporate dividends received deduction.
The Code imposes a nondeductible 4% excise tax on a regulated
investment company that fails to distribute during each calendar year an amount
at least equal to the sum of (1) 98% of its taxable ordinary income for the
calendar year, and (2) 98% of its capital gain net income for the twelve month
period ending on October 31 of the calendar year, and (3) certain undistributed
amounts from the preceding calendar year. The Funds intend to make sufficient
distributions to avoid this 4% excise tax.
Taxable distributions generally are included in a shareholder's gross
income for the taxable year in which they are received. However, dividends
declared in October, November and December and made payable to shareholders of
record in such a month are taxable as of December 31, provided that a Fund pays
the dividend during the following January. It is expected that none of the
Funds' distributions will qualify for the 70% corporate dividends-received
deduction.
Cash Management Fund and Government Securities Fund
Since none of the net investment income of the Cash Management Fund or
the Government Securities Fund will arise from dividends on common or preferred
stock, it is expected that none of the Trust's distributions to shareholders
will be eligible for the corporate dividends received deduction.
Since all net investment income will be distributed as dividends, it
will be taxable to shareholders as ordinary income, except for (a) such portion
as may exceed a shareholder's ratable share of a Fund's earnings and profits as
determined for tax purposes and available therefor, which excess will be applied
against and reduce the shareholder's adjusted tax basis for his shares, and (b)
amounts representing distributions of realized net capital gain (i.e., the
excess of net long-term capital gain over net short-term capital loss) and
properly designated as such. If the excess described in (a) above were to exceed
the shareholder's tax basis for his shares, the amount thereof would be treated
as gain from the sale or exchange of such shares. The amount of any net capital
gain realized by a Fund is, to the extent designated by that Fund, taxable to
shareholders as long-term capital gain, regardless of the length of time a
particular shareholder may have held his shares in the Fund. Not later than
sixty days after the end of each taxable year, each Fund will send to its
shareholders a written notice designating the amount of any distributions made
during such year which is a
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<PAGE>
distribution of long-term capital gain or represents a return of capital. In
view of their policy of investing only in instruments maturing within one year,
it is unlikely that either Fund will realize any long-term capital gains.
Tax Exempt Money Fund
Net investment income received by the Fund from investments in debt
securities other than tax exempt securities, and any excess of net short-term
capital gain over net long-term capital loss recognized by the Fund, will be
taxable to shareholders upon distribution as ordinary income, regardless of
whether the distribution is paid in cash or in additional shares. The excess of
net long-term capital gain over net short-term capital loss ("net capital
gain"), to the extent properly designated by the Fund, will be taxable to
shareholders upon distribution as long-term capital gain, regardless of the
length of time the shares have been held or whether the distribution is paid in
cash or in additional shares. Such distributions of net capital gain will not be
eligible for the dividends received deduction for corporations. However, it is
expected that any such amounts will be insubstantial in relation to the tax
exempt interest generated by the Fund.
Interest on certain private activity bonds issued after August 7, 1986
not otherwise subject to federal income tax may be subject to the federal
alternative minimum tax ("AMT") although the interest continues to be excludable
from gross income for other purposes. The AMT is a supplemental tax designed to
ensure that taxpayers pay at least a minimum amount of tax on their income, even
if they make substantial use of certain tax deductions and exclusions (including
the "items of tax preference"). Interest from certain private activity bonds is
one of the items of tax preference that is added into income from other sources
for the purposes of determining whether a taxpayer is subject to the AMT and the
amount of any tax to be paid. Under regulations to be prescribed,
exempt-interest dividends paid by the Fund will be treated as interest on such
private activity bonds to the extent of the proportionate share of the interest
on such bonds received by the Fund. In addition, corporate investors should note
that exempt-interest dividends will be a component of the "current earnings"
adjustment for the corporate AMT. Prospective investors should consult their own
tax advisors with respect to the possible application of the AMT to their tax
situation.
To the extent that the net asset value at the time of purchase of
shares in the Fund reflects capital gains, a subsequent distribution to the
shareholder of such amounts, although constituting a return of his investment,
would be taxable as described above. Any loss on the sale or exchange of shares
of the Fund held for six months or less will be disallowed to the extent that
tax-exempt interest dividends were paid on such shares.
Information concerning the tax status of dividends and distributions is
mailed to shareholders annually. The Fund anticipates that substantially all of
the dividends to be paid by the Fund will be exempt from federal income taxes.
If any portion of the Fund's dividends is not exempt from federal income taxes,
the Fund will advise shareholders in the annual tax information notice of the
percentage of both tax exempt and taxable income. The Fund will also advise
shareholders in the annual tax information notice of the proportion of dividends
and distributions derived from Municipal Securities of each state. In accordance
with the Code, expenses of the Fund will be allocated pro rata between taxable
and nontaxable income.
Shareholders who are recipients of Social Security benefits should be
aware that tax-exempt interest dividends received from the Fund are taken into
account for purposes of determining whether their incomes are large enough to
result in taxation of up to 85% of the amount of such Social Security benefits.
From time to time, proposals have been introduced before Congress for
the purpose of restricting, limiting, or eliminating the federal income tax
exemptions for interest on Municipal Securities. It can be expected that similar
proposals may be introduced in the future. If any such proposal were enacted,
the availability of Municipal Securities for investment by the Fund and the
value of the Fund's portfolio would be affected. In such an event, the Fund
would reevaluate its investment objective and policies.
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MANAGEMENT OF THE TRUSTS
The Trustees and executive officers of the Trusts and their principal
occupations during the past five years are set forth below. Unless otherwise
indicated, the business address of each is One Beacon Street, Boston,
Massachusetts 02108.
*Dexter A. Dodge-Trustee, Chairman of the Board and Chief Executive
Officer, President and Managing Director of the Adviser since July 1992. He is
62. Vice President of Freedom Distributors Corporation since 1989 and Director
since 1994.
Richard A. Farrell-Trustee-160 Federal Street, Boston, Massachusetts
02110. He is 63. President since 1980 of Farrell, Healer & Co., a venture
capital management firm that manages The Venture Capital Fund of New England.
Ernest T. Kendall-Trustee-230 Beacon Street, Boston, Massachusetts
02116. He is 64. President, Commonwealth Research Group, Inc., Boston, MA, a
consulting firm specializing in microeconomics, regulatory economics and labor
economics, since 1978.
Richard B. Osterberg-Trustee-84 State Street, Boston, MA 02109. He is
52. Member of the law firm of Weston, Patrick, Willard & Redding, Boston, MA
since 1978.
*Lawrence G. Kirshbaum-Trustee and Chief Financial Officer-1 World
Financial Center, New York, New York 10281. He is 54. Chief Financial Officer
and Executive Vice President of Freedom Securities Corporation since 1992.
Director of Tucker Anthony Incorporated, Sutro & Co. Incorporated, John Hancock
Clearing Corporation and the Adviser since 1992. Chairman of Prescott, Ball &
Turben, Inc., Cleveland, Ohio, from 1987-1990. Chief Financial Officer of
Prescott, Ball & Turben, Inc. from 1982-1987.
William H. Darling -Trustee - 294 Washington Street, Suite 310, Boston,
Massachusetts 02108. He is 47. President, W.H. Darling & Co., Inc., managing
corporate general partner to a coal land lessor, since 1994. Partner of Sagamore
Partners, which provides trustee services to family and related trusts, since
1993. Certified Public Accountant, William A. Darling, CPA since 1982.
John R. Haack - Trustee - 311 Commonwealth Avenue #81, Boston,
Massachusetts 02115. He is 54. Vice President of Operations, Reliable
Transaction Processing, 1995 to present. Major General, Assistant to the
Commander in Chief, U.S. Space Command, 1993 to 1995. General Manager, Unilect
Industries, which is an electrical component manufacturer, 1993 to 1994.
Brigadier General, Commander of 102nd Fighter Interceptor Wing, U.S. Air Force
and Air National Guard, 1986 to 1993.
Laurence R. Veator, Jr. - Trustee - 8 Cove Way, Rust Island,
Gloucester, Massachusetts 01930. Currently retired. Formerly, President,
Pacific/Interamerican Divisions of Grace Specialty Chemicals Co. from 1975 to
1987.
John J. Danello-President and Secretary-President of the Adviser since
February 1996, Chief Operating Officer of the Adviser since February 1994 and
Managing Director, Clerk and General Counsel since November 1986. He is 41.
President and Director since February 1989 and Clerk since February 1987 of
Freedom Distributors Corporation. Prior to November 1986, Mr. Danello was
associated with the law firm of Goodwin, Procter & Hoar.
Darlene F. Rego-Treasurer-Vice President of the Adviser since February
1995 and Assistant Vice President since December 1992. She is 33. Assistant
Treasurer of the Trusts from July 1987 until December 1992.
Mary Jeanne Currie-Vice President-Vice President of the Adviser since
February 1983. She is 48.
- --------
* Trustee may be deemed to be an "interested person" of the Trust as
defined in the Investment Company Act of 1940.
Michael M. Spencer-Vice President-Senior Vice President and Director of
Fixed-Income Investments of the Adviser since August 1995. He is 46. From 1985
to 1995, Mr. Spencer was a Portfolio Manager at Shawmut Investment Advisers.
17
<PAGE>
Paul F. Marandett-Vice President-Vice President of the Adviser since
1990. He is 54. From 1980 to 1990, Mr. Marandett was a vice president with the
Bank of Boston.
Maureen M. Renzi-Assistant Secretary-Assistant Vice President of the
Adviser since February 1995 and Assistant Clerk and Compliance Officer since
July 1992. She is 32. Vice President of Freedom Distributors Corporation since
February 1995. Paralegal of New England Securities from March 1989 to July 1992.
Messrs. Dodge, Danello, Kirshbaum, Marandett, McCarthy and Spencer and
Mesdames Currie, Rego and Renzi are all officers of the Adviser as well as of
the Trusts.
During the last fiscal year of the Trust, the Trustees were compensated
as follows:
<TABLE>
<CAPTION>
Name of Aggregate Aggregate Aggregate Total
Trustee Compensation Compensation Compensation Compensation
from the Tax Exempt from the Government from the Cash from Fund Complex
Money Fund Securities Fund Management Fund Paid to Trustees (a)
<S> <C> <C> <C> <C>
Dexter A. Dodge $0 $0 $0 $0
Richard A. Farrell 3,901 4,018 10,124 20,800
Ernest T. Kendall 2,901 3,018 9,124 20,400
Richard B. Osterberg 2,901 3,018 9,124 20,400
Lawrence G. Kirshbaum 0 0 0 0
William H. Darling 0 0 0 0
John R. Haack 0 0 0 0
Laurence R. Veator, Jr. 0 0 0 0
Patrick Grant(b) 715 766 2,292 4,200
Ralph Lowell, Jr.(b) 715 766 2,292 4,200
William Barron III(b) 715 766 2,292 4,200
</TABLE>
(a) Includes compensation from the Tax Exempt Money Fund, Government
Securities Fund, Cash Management Fund, Freedom California Tax Exempt
Money Fund and Fund Manager Portfolios. The Trust does not provide any
pension or retirement benefits for the Trustees.
(b) Messrs. Grant, Lowell and Barron resigned as Trustees effective
December 31, 1995 but were compensated in fiscal year 1996 for certain
services performed in 1995.
As of January 31, 1997, Robert Bretholtz, Brookline, Massachusetts was
the beneficial owner of approximately 6.82% of the shares of the Tax Exempt
Money Fund. To the knowledge of the Mutual Fund and the Tax Exempt Trust, no
other person benficially owns 5% or more of the shares of any of the Funds. As
of January 31, 1997, the officers and Trustees of the Mutual Fund as a group
owned less than 1% of each of the Cash Management Fund and the Government
Securities Fund, and the officers and Trustees of the Tax Exempt Trust as a
group owned less than 1% of the Tax Exempt Money Fund.
18
<PAGE>
THE INVESTMENT ADVISER
The investment adviser for each of the Funds is Freedom Capital
Management Corporation (formerly Tucker Anthony Management Corporation), a
Massachusetts corporation (the "Adviser"), with offices at One Beacon Street,
Boston, Massachusetts. The Adviser is a registered investment advisory firm
which maintains a large securities research department, the efforts of which
will be made available to the Funds.
The Adviser is an indirect, wholly-owned subsidiary of JHFSC Acquisition
Corp., a newly - formed Delaware Corporation. JHFSC Acquisition Corp. is located
at One Beacon Street, Boston, Massachusetts 02108. The Adviser was formerly an
indirect subsidiary of John Hancock Subsidiaries, Inc. ("Hancock Subsidiaries")
which transferred approximately 95% of its interest in Freedom Securities
Corporation ("Freedom Securities"), the parent company of the Adviser to JHFSC
Acquisition Corp. JHFSC Acquisition Corp. is owned by an investor group which
includes certain members of management and employees of Freedom Securities and
its subsidiaries, including the Adviser (the "Employee Shareholders"). To
accomplish the sale, Hancock Subsidiaries, JHFSC Acquisition Corp., Thomas H.
Lee Equity Fund III, L.P. ("Lee") and SCP Private Equity Partners, L.P. ("SCP"),
entered into a Contribution Agreement on October 4, 1996, pursuant to which
Hancock Subsidiaries contributed 100% of the issued and outstanding shares of
capital stock of Freedom Securities to JHFSC Acquisition Corp., in exchange for
(i) 4.9% of the issued and outstanding capital stock of JHFSC Acquisition Corp.
and (ii) aggregate consideration of $180,000,000 (subject to reduction to the
extent of certain distributions made prior to closing).
Upon consummation on November 29, 1996 of the transactions contemplated by
the Contribution Agreement, Freedom Securities became a wholly-owned subsidiary
of JHFSC Acquisition Corp., and the Adviser remained a wholly-owned subsidiary
of Freedom Securities. The outstanding capital stock of JHFSC Acquisition Corp.
after the consummation of the Transaction is held by the following companies and
persons in approximately the following percentages: Thomas H. Lee Equity Fund
III, L.P. (49.9%), SCP Private Equity Partners, L.P. (13.0%), John Hancock
Subsidiaries, Inc. (4.9%), Employee Shareholders (32.2%).
Thomas H. Lee Equity Fund III, L.P. is a Massachusetts limited
partnership. The general partner of Thomas H. Lee Equity Fund III, L.P. is THL
Equity Advisors III Limited Partnership, a Massachusetts limited partnership.
The general partner of THL Equity Advisors III Limited Partnership is THL Equity
Trust III, a Massachusetts business trust. The sole beneficial owner of THL
Equity Trust III is Thomas H. Lee. The address of Thomas H. Lee Equity Fund III,
L.P., THL Equity Advisors III Limited Partnership and THL Equity Trust III is 75
State Street, Boston, Massachusetts 02109.
SCP Private Equity Partners, L.P. is a Delaware limited partnership.
The general partner of SCP Private Equity Partners, L.P. is SCP Private Equity
Management, L.P., a Delaware limited partnership. The interests of SCP Private
Equity Management, L.P. are divided equally among its three general partners:
Safeguard Capital Management, Inc. (which is a wholly owned subsidiary of
Safeguard Scientifics, Inc., a publicly held company), Winston J. Churchill and
Samuel A. Plum. The address of SCP Private Equity Partners, L.P., SCP Private
Equity Management, L.P., Safeguard Capital Management, Inc., Winston J.
Churchill and Samuel A. Plum is 435 Devon Park Drive, Wayne, Pennsylvania 19087.
The consummation of the Transaction resulted in a change of control of
the Adviser, causing the Advisory Agreement between the Adviser 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 (the "1940 Act"). This assignment
necessitated approval of a new Advisory Agreement by the shareholders of the
Funds. The shareholders of the Funds approved the new Advisory Agreements at
meetings held on December 16, 1996.
Freedom Distributors Corporation ("Freedom") and Tucker Anthony
Incorporated ("Tucker Anthony" and together with Freedom, the "Distributors"),
affiliates of the Adviser, serve as distributors and principal underwriters for
the Funds pursuant to a distribution agreement with each Trust. Freedom,
established in 1987, is an indirect subsidiary of JHFSC Acquisition Corp. Tucker
Anthony (formerly Tucker, Anthony & R.L. Day, Inc.), a brokerage firm which is a
member of the New York Stock Exchange, is also an indirect subsidiary of JHFSC
Acquisition Corp. and continues an investment banking and brokerage business
established in 1892.
Pursuant to investment advisory agreements dated as of November 29,
1996 (the "Advisory Agreements") between the respective Trusts and the Adviser,
the Adviser agreed to act as investment adviser and manager to the Funds. As
manager and investment adviser, the Adviser will: (a) furnish continuously an
investment program for the Funds and determine, subject to the overall
supervision and review of the Boards of Trustees, which investments should be
purchased, held, sold or exchanged, (b) provide supervision over all aspects of
the Funds' operations except those which are delegated to a custodian, transfer
agent or other agent, and (c) provide the Trusts with such executive,
administrative and clerical personnel, officers and equipment as are deemed
necessary for the conduct of the business of the Trusts.
Each Trust bears all costs of its organization and operation, including
expenses of preparing, printing and mailing all shareholders' reports, notices,
prospectuses (except that the expense of printing and mailing prospectuses used
for promotional purposes will not be borne by the Trusts), proxy statements and
reports to regulatory agencies; expenses relating to the issuance, registration
and qualification of shares of the Trust; government fees; interest charges;
expenses of furnishing to shareholders their account statements; taxes; expenses
of redeeming shares; brokerage and other expenses connected with the execution
of portfolio securities transactions; fees and expenses of the Trust's
custodian, including those for keeping books and accounts and calculating the
net asset value of shares of each Fund; fees and expenses of its independent
accountants, legal counsel, transfer agent and dividend disbursing agent; the
compensation and expenses of its Trustees who are not otherwise affiliated with
the Trust, the Adviser or any of their affiliates; expenses of trustees' and
shareholders' meetings; trade association memberships; insurance premiums; and
any extraordinary expenses.
19
<PAGE>
The Advisory Agreement for the Mutual Fund was approved on October 3,
1996 by all of the Trustees, including all of the Trustees who are not parties
to that Advisory Agreement or "interested persons" (as defined in the Investment
Company Act of 1940) of any such party and was approved at a meeting held on
December 16, 1996 by the outstanding shareholders of each of the Cash Management
Fund and the Government Securities Fund. The continuation of the Advisory
Agreement for the Tax Exempt Trust was approved on October 3, 1996 by all of the
Trustees, including all of the Trustees who are not parties to the Advisory
Agreement or "interested persons" of any such party and was approved at a
meeting held on December 16, 1996 by the outstanding shareholders of the Tax
Exempt Money Fund. The Advisory Agreements will continue in effect with respect
to the Mutual Fund and Tax Exempt Trust from year to year, provided that its
continuance is approved annually both (i) by the holders of a majority of the
outstanding voting securities of each Fund or by the Board of Trustees, and (ii)
by a majority of the Trustees who are not parties to the Advisory Agreements or
"interested persons" of any such party. The Advisory Agreements may be
terminated on 60 days written notice by either party and will terminate
automatically if they are assigned.
Mr. Osterberg, a Trustee of the Trusts, is a member of the law firm of
Weston, Patrick, Willard & Redding, which has retained the Adviser from time to
time to provide investment advisory consulting services for clients of such
firm.
For the fiscal year ended December 31, 1994, the Cash Management Fund,
the Government Securities Fund and the Tax Exempt Money Fund paid the Adviser an
investment advisory fee of $5,260,049, $1,393,542 and $1,399,383, respectively.
For the fiscal year ended December 31, 1995, the Cash Management Fund,
the Government Securities Fund and the Tax Exempt Money Fund paid the Adviser an
investment advisory fee of $5,802,037, $1,391,071, and $1,365,700 respectively.
For the fiscal year ended December 31, 1996, the Cash Management Fund,
Government Securities Fund and the Tax Exempt Money Fund paid the Adviser an
investment advisory fee of $6,993,034, $ 1,573,331 and $ 1,434,813 respectively.
DISTRIBUTION OF SHARES OF THE TRUSTS
The Trusts have each entered into a Distribution Agreement with the
Distributors whereby the Distributors act as exclusive selling agent of the
Funds selling shares of each Fund on a "best efforts" basis. Although the
Distributors distribute shares of each Fund on a continuous basis, shares may
also be purchased directly from the Funds. No underwriting commissions or
discounts are paid to the Distributors in connection with their distribution of
shares of the Funds.
CUSTODIAN
All cash and securities of the Trusts are held by State Street Bank and
Trust Company, 225 Franklin Street, Boston, Massachusetts 02106, as custodian.
20
<PAGE>
FINANCIAL STATEMENTS AND INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP, 160 Federal Street, Boston, Massachusetts 02110
serves as the Trusts' independent accountants, providing audit services,
including review and consultation, in connection with various filings by the
Trusts with the Securities and Exchange Commission and tax authorities.
The financial statements and the report of the independent accountants
with respect to the Cash Management Fund, the Government Securities Fund and the
Tax Exempt Money Fund for the fiscal year ended December 31, 1996 are included
in the Trusts' Prospectus.
21
<PAGE>
INFORMATION ABOUT SECURITIES RATINGS OF NATIONALLY
RECOGNIZED STATISTICAL RATING ORGANIZATIONS ("NRSROs")
Debt Security Ratings, Including Municipal Bonds
MOODY'S INVESTORS SERVICE, INC. Aaa--the "best quality." Aa--"high
quality by all standards", but margins of protection or other elements make
long-term risks appear somewhat larger than Aaa rated municipal bonds.
STANDARD & POOR'S CORPORATION. AAA--"obligations of the highest
quality." AA--issues with investment characteristics "only slightly less marked
than those of the prime quality issues."
Ratings of Municipal Notes
MOODY'S INVESTORS SERVICE, INC. MIG 1: the best quality. MIG 2: high
quality, with margins of protection ample although not so large as in the
preceding group.
Ratings of Commercial Paper
MOODY'S INVESTORS SERVICE, INC. The rating Prime-1 is the highest
commercial paper rating assigned by Moody's. Among the factors considered by
Moody's in assigning ratings are the following: valuation of the management of
the issuer; economic evaluation of the issuer's industry or industries and an
appraisal of speculative-type risks which may be inherent in certain areas;
evaluation of the issuer's products in relation to competition and customer
acceptance; liquidity; amount and quality of long-term debt; trend of earnings
over a period of 10 years; financial strength of the parent company and the
relationships which exist with the issuer; and recognition by the management of
obligations which may be present or may arise as a result of public interest
questions and preparations to meet such obligations. These factors are all
considered in determining whether the commercial paper is rated P1, P2 or P3.
STANDARD & POOR'S CORPORATION. Commercial paper rated A (highest
quality) by S&P has the following characteristics: liquidity ratios are adequate
to meet cash requirements; and long-term senior debt is rated "A" or better,
although in some cases "BBB" credits may be allowed. The issuer has access to at
least two additional channels of borrowing. Basic earnings and cash flow have an
upward trend with allowance made for unusual circumstances. Typically, the
issuer's industry is well established and the issuer has a strong position
within the industry. The reliability and quality of management are unquestioned.
The relative strength or weakness of the above factors determines whether the
issuer's commercial paper is rated A1, A2, or A3.
IBCA LIMITED/IBCA INC. Short-term obligations, including commercial
paper, rated A-1+ by IBCA Limited or its affiliate IBCA Inc. are obligations
supported by the highest capacity for timely repayment. Obligations rated A-1
have a very strong capacity for timely repayment. Obligations rated A-2 have a
strong capacity for timely repayment, although such capacity may be susceptible
to adverse changes in business, economic or financial conditions.
FITCH INVESTORS SERVICES, INC. Fitch Investors Services, Inc. employs
the rating F-1+ to indicate issues regarded as having the strongest degree of
assurance for timely payment. The rating F-1 reflects an assurance of timely
payment only slightly less in degree than issues rated F-1+, while the rating
F-2 indicates a satisfactory degree of assurance for timely payment, although
the margin of safety is not as great as indicated by the F-1+ and F-1
categories.
DUFF & PHELPS INC. Duff & Phelps Inc. employs the designation of Duff 1
with respect to top grade commercial paper and bank money instruments. Duff 1+
indicates the highest certainty of timely payment: Short-term
22
<PAGE>
liquidity is clearly outstanding, and safety is just below risk-free U.S.
Treasury short-term obligations. Duff 1- indicates high certainty of time
payment. Duff 2 indicates good certainty of timely payment: liquidity factors
and company fundamentals are sound.
THOMSON BANKWATCH, INC. ("BANKWATCH"). BankWatch will assign both
short-term debt ratings and issuer ratings to the issuers it rates. BankWatch
will assign a short-term rating ("TBW-1," "TBW- 2," "TBW-3," or "TBW-4") to each
class of debt (e.g., commercial paper or non-convertible debt), having a
maturity of one-year or less, issued by a holding company structure or an entity
within the holding company structure that is rated by BankWatch. Additionally,
BankWatch will assign an issuer rating ("A," A/B," "B," "B/C, "C," "C/D," "D,"
"D/E," and "E") to each issuer that it rates.
Certain NRSROs utilize rankings within rating categories indicated by a
+ or -. The Funds, in accordance with industry practice, recognize such rankings
with categories as graduations, viewing for example S&P's rating of A-1+ and A-1
as being in S&P's highest rating category.
Ratings of Short-Term Corporate Debt Securities
MOODY'S INVESTORS SERVICE, INC. Aaa--Best quality. These securities
carry the smallest degree of investment risk and are generally referred to as
"gilt edge." Interest payments are protected by a large, or by an exceptionally
stable margin and principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are most unlikely to impair
the fundamentally strong position of such issues. Aa--High quality by all
standards. They are rated lower than the best bond because margins of protection
may not be as large as in Aaa securities, fluctuation of protective elements may
be of greater amplitude, or there may be other elements present which made the
long-term risks appear somewhat greater.
STANDARD & POOR'S CORPORATION. AAA--Highest grade. They possess the
ultimate degree of protection as to principal and interest. Marketwise, they
move with interest rates, and hence provide the maximum safety on all counts.
AA--High grade. Generally, these bonds differ from AAA issues only in a small
degree. Here, too, prices move with the long-term money market.
FITCH INVESTORS SERVICE, INC. AAA-High grade, broadly marketable,
suitable for investment by trustees and fiduciary institutions, and liable to
but slight market fluctuation other than through changes in the money rate. The
prime feature of an "AAA" bond is the showing of earnings several times or many
times interest requirements for such stability of applicable interest that
safety is beyond reasonable question whenever changes occur in conditions. Other
features may be considered, such as a wide margin of protection through
collateral, security or direct lien on specific property. Sinking funds or
voluntary reduction of debt by call or purchase are often factors, while
guarantee or assumption by parties other than the original debtor may influence
their rating. AA--Of safety virtually beyond question and readily salable. Their
merits are not greatly unlike those of "AAA" class but a bond so rated may be
junior though it has a strong lien, or the margin of safety may be less
strikingly broad. The issue may be the obligation of a small company, strongly
secured, but influenced as to rating by the lesser financial power of the
enterprise and more local type of market.
23
<PAGE>
PART C
To the Registration Statement of Freedom Mutual
Fund including Freedom Cash Management Fund
(the "Cash Management Fund") and Freedom
Government Securities Fund (the "Government
Securities Fund")
Item 24. Financial Statements and Exhibits.
(a) Financial Statements:
(1) Financial Statements included in PART A
(Prospectuses) of this
Registration Statement:
Financial Highlights for the Cash Management
Fund and the Government Securities Fund for
the fiscal periods ended 1987 through 1996.
Financial Statements for the Cash Management
Fund and the Government Securities Fund for
year ended December 31, 1996.
Report of Independent Accountants
Investments
Statement of Assets and Liabilities
Statement of Operations
Statement of Changes in Net Assets
(2) Financial Statements included in PART B of
this Registration Statement:
None
(b) Exhibits:
Exhibit No. Description
1 (a) Agreement and Declaration of Trust dated
December 22, 1980.
(b) Amendment No. 1 to Agreement and Declaration
of Trust.
(c) Amendment No. 2 to Agreement and Declaration
of Trust.
(d) Amendment No. 3 to Agreement and Declaration
of Trust.
(e) Amendment No. 4 to Agreement and Declaration
of Trust.
(f) Amendment No. 5 to Agreement and Declaration
of Trust.
(g) Amendment No. 6 to Agreement and Declaration
of Trust.
C-1
<PAGE>
Exhibit No. Description
2 By-Laws as amended and restated.
3 Not Applicable.
4 Specimen share certificates for the Cash
Management Fund and Government Securities
Fund.
5 Investment Advisory Contract dated November
29, 1996 between Registrant and Freedom
Capital Management Corporation incorporated
by reference to Post-Effective Amendment No.
25 filed via EDGAR.
6 Distribution Agreement dated November 29,
1996 by and among the Registrant, Tucker
Anthony Incorporated, Freedom Distributors
Corporation and Sutro & Co., Incorporated.
7 None.
8 Custody Agreement dated March 19, 1981
between Registrant and State Street Bank.
9 Transfer Agency and Service Agreement
between Freedom Mutual Fund and John Hancock
Fund Services, Inc.(recently renamed John
Hancock Signature Services, Incorporated)
dated as of June 19, 1993. Transfer Agency
and Service Agreement dated as of May 8,
1995 among Freedom Mutual Fund with respect
to the Cash Management Fund, Fund Manager
Trust and Investors Bank & Trust Company
incorporated by reference to Post-Effecive
Amendment No. 24 filed via EDGAR.
10 Legal opinion and consent of Goodwin,
Procter & Hoar with respect to the Cash
Management Fund and Government Securities
Fund.
C-2
<PAGE>
Exhibit No. Description
11 Consent of Price Waterhouse LLP.
12 None.
13 Investment letters.
14 Prototype IRA (including SEP IRA) and Keogh
Plan offered by Tucker, Anthony & R.L. Day,
Inc.
15 None.
16 Not applicable.
17 Financial Data Schedules for the Cash
Management Fund and the Government
Securities Fund.
18 None.
19 Powers of Attorney.
Item 25. Persons Controlled by or Under Common Control with Registrant.
Registrant is not directly or indirectly controlled by or under common
control with any person other than the Trustees. Registrant does not have any
subsidiaries.
Item 26. Number of Holders of Securities.
As of January 31, 1997, the record holders of each class of
Registrant's securities were as follows:
C-3
<PAGE>
Title of Class Number of Record Holders
Freedom Cash 137,753
Management Fund -------
Freedom Government 11,071
Securities Fund -------
Item 27. Indemnification.
Under Article VII of the Registrant's Agreement and Declaration of
Trust, any present or former Trustee, Officer, agent or employee or person
serving in such capacity with another entity at the request of the Registrant
("Covered Person") shall be indemnified against all liabilities, including, but
not limited to, amounts paid in satisfaction of judgments, in compromises or as
fines or penalties, and expenses, including reasonable legal and accounting
fees, in connection with the defense or disposition of any proceeding by or in
the name of the Registrant or any shareholder in his capacity as such if: (i) a
favorable final decision on the merits is made by a court or administrative
body; or (ii) a reasonable determination is made by a vote of the majority of a
quorum of disinterested Trustees or by independent legal counsel that the
Covered Person was not liable by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in his office
("Disabling Conduct"); or (iii) a determination is made to indemnify the Covered
Person under procedures approved by the Board of Trustees which in the opinion
of independent legal counsel are not inconsistent with the Investment Company
Act of 1940. Said Article VII further provides that the Registrant shall
indemnify any Covered Person against any such liabilities and expenses incurred
in connection with the defense or disposition of any other type of proceeding
except with respect to any matter as to which the Covered Person shall have
engaged in Disabling Conduct or shall have been finally adjudicated not to have
acted in good faith and in the reasonable belief that such Covered Person's
action was in or not opposed to the best interests of the Registrant.
Item 28. Business and Other Connections of Investment Adviser.
Freedom Capital Management Corporation (the "Adviser") is a registered
investment adviser. The Adviser's offices are located at One Beacon Street,
Boston, Massachusetts. The Adviser is a wholly-owned subsidiary of Freedom
Securities Corporation. Freedom Distributors Corporation, a registered
broker-dealer, is a wholly-owned subsidiary of the Adviser and acts as a
distributor of shares of the Registrant. The principal office of Freedom
Distributors Corporation is at One Beacon Street, Boston, Massachusetts 02108.
The principal office of Freedom Securities Corporation is One Beacon Street,
Boston, Massachusetts. The Adviser offers a wide range of investment advisory
services to both individuals and institutions.
C-4
<PAGE>
On June 25, 1982, the Adviser and Tucker Anthony Incorporated, a
brokerage firm which is a member of the New York Stock Exchange and continues an
investment banking and brokerage business established in 1892 were acquired by
John Hancock Mutual Life Insurance Company ("John Hancock") as indirect
subsidiaries.
On November 29, 1996, John Hancock, through its subsidiary, John
Hancock Subsidiaries Inc., transferred 95.1% of the capital stock of Freedom
Securities Corporation to JHFSC Acquisition Corp. JHFSC Acquisition Corp. is a
newly formed Delaware corporation owned by certain employees and members of
management of John Hancock Freedom Securities, Thomas H. Lee Equity Fund III,
L.P. and SCP Private Equity Partners, L.P.
The Adviser also acts as investment adviser for two other registered
investment company, Freedom Group of Tax Exempt Funds and Fund Manager
Portfolios.
The following information is provided with respect to each director and
executive officer of the Adviser:
<TABLE>
<CAPTION>
Business and Other
Position Positions Within
Name With Adviser Last Two Years
<S> <C> <C>
Dexter A. Dodge Chairman, Managing Director
Managing of the Adviser.
Director Director of Freedom
Distributors Corporation.
John J. Danello President, President and Director
Managing Director, of Freedom Distributors
Clerk and Corporation.
General Counsel
Richard V. Howe Managing Managing Director of
Director the Adviser.
</TABLE>
C-5
<PAGE>
<TABLE>
<CAPTION>
Business and Other
Position Positions Within
Name With Adviser Last Two Years
<S> <C> <C>
Michael M. Spencer Senior Vice Portfolio Manager at
President and Shawmut Investment
Director of Fixed- Advisers.
Income Investments
Arthur E. McCarthy Managing Managing Director of
Director Tucker Anthony
Incorporated.
Lawrence G. Kirshbaum Managing Chief Financial Officer of
Director Freedom Securities Corporation
Director of Tucker Anthony Holding
Corp., John Hancock Clearing
Corporation and Sutro Group.
Registered Principal of Tucker
Anthony Incorporated. Former Chief
Executive Officer of Kirshbaum &
Co. and of Prescott, Ball & Turben.
John H. Goldsmith Managing President and Chief
Director Executive Officer of
Freedom Securities Corporation
Chairman and Chief Executive
Officer of Tucker Anthony
Incorporated.
Terrence J. Gerlich Managing Managing Director of the Adviser
Director
Ellen C. Varney Senior Vice Senior Vice President and Chief
President and Financial Officer of Adviser since
Chief Financial February 1996. Financial Manager
Officer of John Hancock from September
1990 to December 1995.
Charles B. Lipson President of the President and founder of the M.D.
M.D. Hirsch Hirsch Division of the Adviser
Division of the since February 1995. President
Adviser and Chief Operating Officer.
Officer of the M.D. Hirsch Division
of Republic Asset Management
Corporation from February 1991 to
December 1994.
Michael D. Hirsch Chairman, Chairman, M.D. Hirsch Division of
M.D. Hirsch the Adviser since February 1995.
Division of the Vice President and Executive Vice
Adviser Chairman and Managing Director,
Portfolio Manager M.D. Hirsch
Division of Republic Asset
Management Corporation from June
1993 to February 1994.
</TABLE>
Item 29. Principal Underwriters.
(a) Freedom Distributors Corporation ("Freedom"), Sutro & Co.,
Incorporated ("Sutro") and Tucker Anthony Incorporated ("Tucker Anthony") act as
co-distributors for the Cash Management Fund and the Government Securities Fund
series of the Trust. Freedom also acts as co-distributor with Tucker Anthony and
Sutro for Freedom Group of Tax Exempt Funds, a registered investment company.
Freedom acts as a distributor for four other registered investment companies:
Freedom Investment Trust, Freedom Investment Trust II, Freedom Investment Trust
III and FundManager Portfolios.
(b)(1) The name of each director and officer of Freedom, together with
the offices held by such person with Freedom and the Registrant, are set forth
below. The principal business address of each person named below is One Beacon
Street, Boston, MA 02108.
C-6
<PAGE>
<TABLE>
<CAPTION>
Name Offices With Freedom and the Registrant
<S> <C>
John J. Danello............................................. President and Director of Freedom and
Secretary of the Registrant
Michael G. Ferry............................................ Treasurer of Freedom
Dexter A. Dodge............................................. Director of Freedom and Chief Executive
Officer of the Registrant.
Maureen M. Renzi............................................ Vice President and Clerk of Freedom
and Assistant Secretary of the Registrant.
</TABLE>
(b)(2) The persons whose names and addresses are set forth below hold
the offices with Tucker Anthony indicated below. None of these persons holds any
position or office with Freedom.
<TABLE>
<CAPTION>
Name and Principal
Business Address Offices With Tucker Anthony
<S> <C>
John H. Goldsmith (1)................................................ Chairman, Chief Executive Officer
and Director
Robert H. Yevich (2)................................................. President and Director
Kevin J. McKay (2)................................................... Executive Vice President
Marc Menchel (2)..................................................... Executive Vice President,
Secretary and Clerk
Thomas E. Gilligan (2)............................................... Treasurer and Chief
Financial Officer
</TABLE>
- --------
(1) Business address is One Beacon Street, Boston, Massachusetts 02108.
(2) Business address is One World Financial Center, 200 Liberty Street, New
York, New York 10281.
(b) (3) The name and principal business address of each director and
officer of Sutro, together with the offices held by such persons with Sutro, are
set forth below. No officer or director of Sutro holds any office with the
Registrant.
<TABLE>
<CAPTION>
Name and Principal
Business Address Offices With Sutro
<S> <C>
John F. Luikart (1).................................................. President and CEO
Mary Jane Delaney (1)................................................ Executive Vice President
and General Counsel
John H. Goldsmith (2)................................................ Director
Raymond J. Minehan (1)............................................... Executive Vice President
John W. Eisle (1) ................................................... Executive Vice President
Thomas R. Weinberger (3).............................................. Executive Vice President
</TABLE>
(1) Business address is 201 California Street, San Francisco, California 94111.
(2) Business address is One Beacon Street, Boston, Massachusetts 02108.
(3) Business address is 11150 Santa Monica Blvd., Los Angeles, California 90025.
(c) Not applicable.
C-7
<PAGE>
Item 32. Undertakings.
(a) Not applicable.
(b) Not applicable.
(c) Registrant hereby undertakes to furnish each person, upon request
and without charge, to whom a Prospectus with respect to a series of the
Registrant is delivered with a copy of the latest annual report to shareholders
with respect to that series.
C-8
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant hereby certifies that it meets
all of the requirements for effectiveness of this Registration Statement
pursuant to Rule 485(b) under the Securities Act of 1933 and has duly caused
this Amendment to its Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in this City of Boston and Commonwealth
of Massachusetts on the 27th day of February, 1997.
FREEDOM MUTUAL FUND
By: /s/ Dexter A. Dodge
-------------------------------------------
Dexter A. Dodge, Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Amendment to the Registration Statement has been signed below by the following
persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <C>
Principal Executive Officer
/s/ Dexter A. Dodge Chairman and Trustee February 27, 1997
- ---------------------------
Dexter A. Dodge
Principal Financial and
Accounting Officer
/s/ Lawrence G. Kirshbaum Trustee February 27, 1997
- ------------------------------
Lawrence G. Kirshbaum
* Trustee February 27, 1997
- --------------------------
Richard A. Farrell
* Trustee February 27, 1997
- ---------------------------
Ernest T. Kendall
* Trustee February 27, 1997
- ------------------------------
Richard B. Osterberg
* Trustee February 27, 1997
- ------------------------------
William H. Darling
* Trustee February 27, 1997
- ------------------------------
John R. Haack
* Trustee February 27, 1997
- ------------------------------
Laurence R. Veator, Jr.
*By:/s/ Lawrence G. Kirshbaum
--------------------------
Lawrence G. Kirshbaum,
Attorney-in-Fact under
Powers of Attorney
included as Exhibit 17 to this
Post-Effective Amendment.
</TABLE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Manually
Numbered
Exhibit No. Description Page
- ----------- ----------- ----
<S> <C> <C>
1 (a) Agreement and Declaration of Trust dated December 22, 1980.
(b) Amendment No. 1 to Agreement and Declaration of Trust.
(c) Amendment No. 2 to Agreement and Declaration of Trust.
(d) Amendment No. 3 to Agreement and Declaration of Trust.
(e) Amendment No. 4 to Agreement and Declaration of Trust.
(f) Amendment No. 5 to Agreement and Declaration of Trust.
(g) Amendment No. 6 to Agreement and Declaration of Trust.
2 By-Laws as amended and restated.
3 Not Applicable.
4 Specimen share certificates for the Cash Management Fund and
Government Securities Fund.
5 Investment Advisory Contract dated November 29, 1996 between
Registrant and Freedom Capital Management Corporation,
incorporated by reference to Post-Effective Amendment No. 2.
6 Distribution Agreement dated November 29, 1996 between the
Registrant and Tucker Anthony Incorporated, Sutro & Co.,
Incorporated and Freedom Distributors Corporation.
7 None.
8 Custody Agreement dated March 19, 1981 between Registrant and
State Street Bank and Trust Company
</TABLE>
<TABLE>
<CAPTION>
Manually
Numbered
Exhibit No. Description Page
- ----------- ----------- ----
<S> <C> <C>
9 Transfer Agency and Service Agreement between Freedom Mutual
Fund and John Hancock Fund Services, Inc., dated as of June
19, 1993. Transfer Agency and Service Agreement dated as of
May 8, 1995 among Freedom Mutual Fund with respect to The Cash
Management Fund, Fund Management Trust and Investors Bank &
Trust Company incorporated by reference to Post effective
Amendment No. 24 filed via EDGAR.
10 Legal opinion and consent of Goodwin, Procter & Hoar with
respect to the Cash Management Fund. Legal opinion and consent
of Goodwin, Procter & Hoar with respect to the Government
Securities Fund.
11 Consent of Price Waterhouse LLP.
12 None.
13 Investment letters.
14 Prototype IRA (including SEP IRA) and Keogh Plan offered by
Tucker, Anthony & R.L. Day, Inc.
15 None.
16 Not applicable.
17 Financial Data Schedules.
19 Powers of Attorney.
</TABLE>
TUCKER ANTHONY MUTUAL FUND
AGREEMENT AND DECLARATION OF TRUST
December 22, 1980
- --------------------------------------------------------------------------------
DEPARTMENT OF TREASURY
INTERNAL REVENUE SERVICE
Date of This Notice
If you inquire about 02-02-81
your account, please
refer to this Employer Identification Number
number or attach a 04-2716951
copy of this notice
ANTHONY TUCKER MUTUAL FUND TRUST
3 CENTER PLAZA
BOSTON, MA 02108
575 B 015555155
15555555
NOTICE OF NEW EMPLOYER IDENTIFICATION NUMBER ASSIGNED
TUCKER ANTHONY MUTUAL FUND
AGREEMENT AND DECLARATION OF TRUST
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE I. NAME AND DEFINITIONS 1
- ---------- --------------------
Section 1.1 Name 1
Section 1.2 Definitions 1
(a) "Trust" 1
(b) "Trustees" 1
(c) "Shares" 1
(d) "Series" 1
(e) "Sub-Series" 2
(f) "Shareholder" 2
(g) "1940 Act" 2
(h) "Commission" 2
(i) "Declaration of Trust" 2
(j) "By-Laws" 2
ARTICLE II. PURPOSE OF TRUST 2
- ----------- ----------------
ARTICLE III. THE TRUSTEES 2
- ------------ ------------
Section 3.1 Number, Designation, Election, Term, etc. 2
(a) Initial Trustees 2
(b) Number 2
(c) Term 3
(d) Resignation and Retirement 3
(e) Removal 3
(f) Vacancies 3
(g) Effect of Death, Resignation, etc. 3
(h) No Accounting 4
Section 3.2 Powers of Trustees 4
(a) Investments 5
(b) Disposition of Assets 5
(c) Ownership Powers 5
(d) Subscription 5
(e) Form of Holding 5
(f) Reorganization 5
(g) Voting Trusts 5
(h) Compromise 6
(i) Partnerships or Joint Ventures 6
(j) Borrowing and Security 6
(k) Guarantees 6
(l) Insurance 6
(m) Pension and Similar Plans 6
(i)
Section 3.3 Certain Contracts 7
(a) Advisory 7
(b) Administration 7
(c) Distribution 7
(d) Custodian and Depository 7
(e) Transfer and Dividend Disbursing Agency 7
(f) Shareholder Servicing 8
(g) Accounting 8
Section 3.4 Transactions With Related Parties 8
Section 3.5 Payment of Trust Expenses and Compensation
of Trustees 9
Section 3.6 Ownership of Assets of the Trust 9
ARTICLE IV. SHARES 9
- ----------- ------
Section 4.1 Description of Shares 9
Section 4.2 Establishment and Designation of Series 11
(a) Assets Belonging to Series 11
(b) Liabilities Belonging to Series 12
(c) Income Belonging to Series 12
(d) Dividends 12
(e) Liquidation 13
(f) Voting 14
(g) Redemption by Shareholder 14
(h) Redemption by Trust 14
(i) Net Asset Value 15
(j) Transfer 15
(k) Equality 16
(1) Fractions 16
(m) Conversion Rights 16
Section 4.3 Ownership of Shares 16
Section 4.4 Investments in the Trust 16
Section 4.5 No Preemptive Rights 17
Section 4.6 Status of Shares and Limitation of
Personal Liability 17
ARTICLE V SHAREHOLDERS' VOTING POWERS AND MEETINGS 17
- --------- ----------------------------------------
.
Section 5.1 Voting Powers 17
Section 5.2 Meetings 18
Section 5.3 Record Dates 18
(ii)
Section 5.4 Quorum and Required Vote 19
Section 5.5 Action by Written Consent 19
Section 5.6 Inspection of Records 19
Section 5.7 Additional Provisions 20
ARTICLE VI. LIMITATION OF LIABILITY; INDEMNIFICATION
- ----------- ----------------------------------------
OF SHAREHOLDERS 20
---------------
Section 6.1 Trustees, Shareholders, etc. Not
Personally Liable 20
Section 6.2 Notice of Limited Liability 20
Section 6.3 Trustee's Good Faith Action; Expert
Advice; No Bond or Surety 20
Section 6.4 Liability of Third Persons Dealing with
Trustees 21
Section 6.5 Indemnification of Shareholders 21
ARTICLE VII. INDEMNIFICATION OF TRUSTEES, OFFICERS,
- ------------ --------------------------------------
EMPLOYEES AND AGENTS 21
--------------------
Section 7.1 Definitions 21
Section 7.2 Actions In Name of Trust or Shareholder 22
Section 7.3 Other Actions 22
Section 7.4 Advances of Expenses 23
Section 7.5 Indemnification Not Exclusive 23
Section 7.6 Insurance 23
ARTICLE VIII. MISCELLANEOUS 23
- ------------- -------------
Section 8.1 Duration and Termination of Trust 23
Section 8.2 Reorganization 24
Section S.3 Amendments 24
Section 8.4 Filing of Copies; References; Headings 25
Section 8.5 Applicable Law 25
</TABLE>
(iii)
TUCKER ANTHONY MUTUAL FUND
AGREEMENT AND DECLARATION OF TRUST
AGREEMENT AND DECLARATION OF TRUST made at Boston, Massachusetts this
22nd day of December, 1980, by the Trustees hereunder, and by the holders of
shares of beneficial interest to be issued hereunder as hereinafter provided.
WITNESSETH
WHEREAS this Trust has been formed to carry on the business of an
investment company; and
WHEREAS the Trustees have agreed to manage all property coming into
their hands as trustees of a Massachusetts business trust in accordance with the
provisions hereinafter set forth.
NOW, THEREFORE, the Trustees hereby declare that they will hold all
cash, securities and other assets which they may from time to time acquire in
any manner as Trustees hereunder IN TRUST to manage and dispose of the same upon
the following terms and conditions for the benefit of the holders from time to
time of shares of beneficial interest in this Trust as hereinafter set forth.
ARTICLE I
NAME AND DEFINITIONS
Section 1.1 Name. This Trust shall be known as "Tucker Anthony Mutual
Fund" and the Trustees shall conduct the business of the Trust under that name
or any other name as they may from time to time determine.
Section 1.2 Definitions. Whenever used herein, unless otherwise
required by the context or specifically provided:
(a) The "Trust" refers to the Massachusetts business trust established
by this Agreement and Declaration of Trust, as amended from time to time;
(b) "Trustees" refers to the Trustees of the Trust named herein or
elected in accordance with Article III;
(c) "Shares" refers to the transferable units of interest into which
the beneficial interest in the Trust or any Series or Sub-Series of the Trust
(as the context may require) shall be divided from time to time;
(d) "Series" refers to Series of Shares established and designated
under or in accordance with the provisions of Article IV;
(e) "Sub-Series" refers to Sub-Series within a Series established and
designated under or in accordance with the provisions of Article IV.
(f) "Shareholder" means a record owner of Shares;
(g) The "1940 Act" refers to the Investment Company Act of 1940 and
the Rules and Regulations thereunder, all as amended from time to time;
(h) The term "Commission" shall have the meaning given it in the 1940
Act;
(i) "Declaration of Trust" shall mean this Agreement and Declaration
of Trust as amended or restated from time to time; and
(j) "By-Laws" shall mean the By-Laws of the Trust as amended from time
to time.
Section 7.1 contains additional definitions applicable specifically to
Article VII.
ARTICLE II
PURPOSE OF TRUST
The purpose of the Trust is to operate as an investment company and to
offer Shareholders one or more investment programs primarily in securities and
debt instruments.
ARTICLE III
THE TRUSTEES
Section 3.1 Number, Designation, Election, Term, etc.
(a) Initial Trustees. Upon his execution of this Declaration of Trust
or a counterpart hereof or some other writing in which he accepts such
Trusteeship and agrees to the provisions hereof, each of Hugh A. Dunlap, Jr.,
Arthur J. Petone, Richard R. Doll, Ephron Catlin, and Patrick Grant shall become
a Trustee hereof.
(b) Number. The Trustees serving as such, whether named above or
hereafter becoming such, may increase or decrease (to not fewer than three) the
number of Trustees to a number other than the number theretofore determined. No
decrease in the number of Trustees shall have the effect of removing any Trustee
from office prior to the expiration of his term, but the number of
2
Trustees may be decreased in conjunction with the removal of a Trustee pursuant
to subsection (e) of this Section 3.1.
(c) Term. Each Trustee, whether named above or hereafter becoming a
Trustee, shall serve as a Trustee until the next annual meeting of Shareholders
or any special meeting in lieu thereof and until the election and qualification
of his successor, or until such Trustee sooner dies, resigns, retires or is
removed.
(d) Resignation and Retirement. Any Trustee may resign his trust or
retire as a Trustee, by written instrument signed by him and delivered to the
other Trustees or to any officer of the Trust, and such resignation or
retirement shall take effect upon such delivery or upon such later date as is
specified in such instrument.
(e) Removal. Any Trustee may be removed with or without cause at any
time either by written instrument, signed by at least two-thirds of the number
of Trustees prior to such removal specifying the date upon which such removal
shall become effective, or by the Shareholders at any meeting called for the
purpose.
(f) Vacancies. Any vacancy or anticipated vacancy resulting from any
reason, including without limitation the death, resignation, retirement, removal
or incapacity of any of the Trustees, or resulting from an increase in the
number of Trustees by the other Trustees may (but so long as there are at least
three remaining Trustees, need not unless required by the 1940 Act) be filled
either by a majority of the remaining Trustees through the appointment in
writing of such other person as such remaining Trustees in their discretion
shall determine (unless a Shareholder election is required under the 1940 Act)
or by the election by the Shareholders, at a meeting called for the purpose, of
a person to fill such vacancy, and such appointment or election shall be
effective upon the written acceptance of the person named therein to serve as a
Trustee and agreement by such person to be bound by the provisions of this
Declaration of Trust, except that any such appointment or election in
anticipation of a vacancy to occur by reason of retirement, resignation, or
increase in number of Trustees to be effective at a later date shall become
effective only at or after the effective date of said retirement, resignation,
or increase in number of Trustees. As soon as any Trustee so appointed or
elected shall have accepted such appointment or election and shall have agreed
in writing to be bound by this Declaration of Trust and the appointment or
election is effective, the Trust estate shall vest in the new Trustee, together
with the continuing Trustees, without any further act or conveyance.
(g) Effect of Death, Resignation, etc. The death, resignation,
retirement, removal, or incapacity of the Trustees, or any one of them, shall
not operate to annul or terminate the Trust
3
or to revoke or terminate any existing agency or contract created or entered
into pursuant to the terms of this Declaration of Trust.
(h) No Accounting. Except to the extent required by the 1940 Act or
under circumstances which would justify his removal for cause, no person ceasing
to be a Trustee as a result of his death, resignation, retirement, removal or
incapacity (nor the estate of any such person) shall be required to make an
accounting to the Shareholders or remaining Trustees upon such cessation.
Section 3.2 Powers of Trustees. Subject to the provisions of this
Declaration of Trust, the business of the Trust shall be managed by the
Trustees, and they shall have all powers necessary or convenient to carry out
that responsibility and the purposes of the Trust. Without limiting the
foregoing, the Trustees may adopt By-Laws not inconsistent with this Declaration
of Trust providing for the conduct of the business and affairs of the Trust and
may amend and repeal them to the extent that such ByLaws do not reserve that
right to the Shareholders; they may as they consider appropriate elect and
remove officers and appoint and terminate agents and consultants and hire and
terminate employees, any one or more of the foregoing of whom may be a Trustee,
and may provide for the compensation of all of the foregoing; they may appoint
from their own number, and terminate, any one or more committees consisting of
two or more Trustees, including without implied limitation an executive
committee, which may, when the Trustees are not in session and subject to the
1940 Act, exercise some or all of the power and authority of the Trustees as the
Trustees may determine; in accordance with Section 3.3 they may employ one or
more Advisers, Administrators, Depositories and Custodians and may authorize any
Depository or Custodian to employ sub-custodians or agents and to deposit all or
any part of such assets in a system or systems for the central handling of
securities and debt instruments, retain transfer, dividend, accounting or
Shareholder servicing agents or any of the foregoing, provide for the
distribution of Shares by the Trust through one or more distributors, principal
underwriters or otherwise, set record dates or times for the determination of
Shareholders or various of them with respect to various matters; they may
compensate or provide for the compensation of the Trustees, officers, advisers,
administrators, custodians, other agents, consultants and employees of the Trust
or the Trustees on such terms as they deem appropriate; and in general they may
delegate to any officer of the Trust, to any committee of the Trustees and to
any employee, adviser, administrator, distributor, depository, custodian,
transfer and dividend disbursing agent, or any other agent or consultant of the
Trust such authority, powers, functions and duties as they consider desirable or
appropriate for the conduct of the business and affairs of the Trust, including
without implied limitation the power and authority to act in the name of the
Trust and of the Trustees, to sign documents and to act as attorney-in-fact for
the Trustees.
4
Without limiting the foregoing and to the extent not inconsistent with
the 1940 Act or other applicable law, the Trustees shall have power and
authority:
(a) Investments. To invest and reinvest cash and other property, and
to hold cash or other property uninvested without in any event being bound or
limited by any present or future law or custom in regard to investments by
trustees;
(b) Disposition of Assets. To sell, exchange, lend, pledge, mortgage,
hypothecate, write options on and lease any or all of the assets of the Trust;
(c) Ownership Powers. To vote or give assent, or exercise any rights
of ownership, with respect to stock or other securities, debt instruments or
property; and to execute and deliver proxies or powers of attorney to such
person or persons as the Trustees shall deem proper, granting to such person or
persons such power and discretion with relation to securities, debt instruments
or property as the Trustees shall deem proper;
(d) Subscription. To exercise powers and rights of subscription or
otherwise which in any manner arise out of ownership of securities or debt
instruments;
(e) Form of Holding. To hold any security, debt instrument or property
in a form not indicating any trust, whether in bearer, unregistered or other
negotiable form, or in the name of the Trustees or of the Trust or in the name
of a custodian, sub-custodian or other depository or a nominee or nominees or
otherwise;
(f) Reorganization. To consent to or participate in any plan for the
reorganization, consolidation or merger of any corporation or issuer, any
security or debt instrument of which is or was held in the Trust; to consent to
any contract, lease, mortgage, purchase or sale of property by such corporation
or issuer, and to pay calls or subscriptions with respect to any security or
debt instrument held in the Trust;
(g) Voting Trusts. To join with other holders of any securities or
debt instruments in acting through a committee, depositary, voting trustee or
otherwise, and in that connection to deposit any security or debt instrument
with, or transfer any security or debt instrument to, any such committee,
depository or trustee, and to delegate to them such power and authority with
relation to any security or debt instrument (whether or not so deposited or
transferred) as the Trustees shall deem proper, and to agree to pay, and to pay,
such portion of the expenses and compensation of such committee, depository or
trustee as the Trustees shall deem proper;
5
(h) Compromise. To compromise, arbitrate or otherwise adjust claims in
favor of or against the Trust or any matter in controversy, including but not
limited to claims for taxes;
(i) Partnership and Joint Ventures. To enter into joint ventures,
general or limited partnerships and any other combinations or associations;
(j) Borrowing and Security. To borrow funds and to mortgage and pledge
the assets of the Trust or any part thereof to secure obligations arising in
connection with such borrowing;
(k) Guarantees. To endorse or guarantee the payment of any notes or
other obligations of any person; to make contracts of guaranty or suretyship, or
otherwise assume liability for payment thereof; and to mortgage and pledge the
Trust property or any part thereof to secure any of or all such obligations;
(l) Insurance. To purchase and pay for entirely out of Trust property
such insurance as they may deem necessary or appropriate for the conduct of the
business, including, without limitation, insurance policies insuring the assets
of the Trust and payment of distributions and principal on its portfolio
investments, and insurance policies insuring the Shareholders, Trustees,
officers, employees, agents, consultants, investment advisers, managers,
administrators, distributors, principal underwriters, or independent
contractors, or any thereof (or any person connected therewith), of the Trust
individually against all claims and liabilities of every nature arising by
reason of holding, being or having held any such office or position, or by
reason of any action alleged to have been taken or omitted by any such person in
any such capacity, including any action taken or omitted that may be determined
to constitute negligence, whether or not the Trust would have the power to
indemnify such person against such liability; and
(m) Pension and Similar Plans. To pay pensions for faithful service,
as deemed appropriate by the Trustees, and to adopt, establish and carry out
pension, profit-sharing, share bonus, share purchase, savings, thrift and other
retirement, incentive and benefit plans, trust and provisions, including the
purchasing of life insurance and annuity contracts as a means of providing such
retirement and other benefits, for any or all of the Trustees, officers,
employees and agents of the Trust.
Except as otherwise provided by the 1940 Act or other applicable law,
this Declaration of Trust or the By-Laws, any action to be taken by the Trustees
may be taken by a majority of the Trustees present at a meeting of Trustees (a
quorum, consisting of at least a majority of the Trustees then in office, being
present), within or without Massachusetts, including any meeting held by means
of a conference telephone or other communications equipment by means of which
all persons participating in the
6
meeting can hear each other at the same time and participation by such means
shall constitute presence in person at a meeting, or by written consents of a
majority of the Trustees then in office.
Section 3.3 Certain Contracts. Subject to compliance with the
provisions of the 1940 Act, but notwithstanding any limitations of present and
future law or custom in regard to delegation of powers by trustees generally,
the Trustees may, at any time and from time to time and without limiting the
generality of their powers and authority otherwise set forth herein, enter into
one or more contracts with any one or more corporations, trusts, associations,
partnerships, limited partnerships, other type of organizations, or individuals,
("Contracting Party") to provide for the performance and assumption of some or
all of the following services, duties and responsibilities to, for or of the
Trust and/or the Trustees, and to provide for the performance and assumption of
such other services, duties and responsibilities in addition to those set forth
below as the Trustees may determine appropriate:
(a) Advisory. Subject to the general supervision of the Trustees and
in conformity with the stated policy of the Trustees with respect to the
investments of the Trust or of the assets belonging to any Series of Shares of
the Trust (as that phrase is defined in subsection (a) of Section 4.2), to
manage such investments and assets, make investment decisions with respect
thereto, and to place purchase and sale orders for portfolio transactions
relating to such investments and assets;
(b) Administration. Subject to the general supervision of the Trustees
and in conformity with any policies of the Trustees with respect to the
operations of the Trust, to supervise all or any part of the operations of the
Trust, and to provide all or any part of the administrative and clerical
personnel, office space and office equipment and services appropriate for the
efficient administration and operations of the Trust;
(c) Distribution. To distribute the Shares of the Trust, to be
principal underwriter of such Shares, and/or to act as agent of the Trust in the
sale of Shares and the acceptance or rejection of orders for the purchase of
Shares;
(d) Custodian and Depository. To act as depository for and to maintain
custody of the property of the Trust and accounting records in connection
therewith;
(e) Transfer and Dividend Disbursing Agency. To maintain records of
the ownership of outstanding Shares, the issuance and redemption and the
transfer thereof, and to disburse any dividends declared by the Trustees and, in
accordance with the policies of the Trustees and/or the instructions of any
particular Shareholder, to reinvest any such dividends;
7
(f) Shareholder Servicing. To provide service with respect to the
relationship of the Trust and its Shareholders, records with respect to
Shareholders and their Shares, and similar matters; and
(g) Accounting. To handle all or any part of the accounting
responsibilities, whether with respect to the Trust's properties, Shareholders
or otherwise.
The same person may be the Contracting Party for some or all of the services,
duties and responsibilities to, for and of the Trust and/or the Trustees, and
the contracts with respect thereto may contain such terms interpretive of or in
addition to the delineation of the services, duties and responsibilities
provided for, including provisions that are not inconsistent with the 1940 Act
relating to the standard of duty of and the rights to indemnification of the
Contracting Party and others, as the Trustees may determine.
Section 3.4 Transactions With Related Parties.
The fact that:
(i) any of the Shareholders, Trustees or officers of the Trust is
a shareholder, director, officer, partner, trustee, employee, manager,
adviser, principal underwriter or distributor or agent of or for any
Contracting Party, or of or for any parent or affiliate of any
Contracting Party or that the Contracting Party or any parent or
affiliate thereof is a Shareholder or has an interest in the Trust, or
that
(ii) any Contracting Party may have a contract providing for the
rendering of any similar services to one or more other corporations,
trusts, associations, partnerships, limited partnerships or other
organizations, or has other business or interests,
shall not affect the validity of any contract for the performance and assumption
of services, duties and responsibilities to, for or of the Trust and/or the
Trustees or disqualify any Shareholder Trustee or officer of the Trust from
voting upon or executing the same or create any liability or accountability to
the Trust or its Shareholders, provided that in the case of any relationship or
interest referred to in the preceding clause (i) on the part of any Trustee or
officer of the Trust either (A) the material facts as to such relationship or
interest have been disclosed to or are known by the Trustees not having any such
relationship or interest and the contract involved is approved in good faith by
a majority of such Trustees not having any such relationship or interest (even
though such unrelated or disinterested Trustees are less than a quorum of all of
the Trustees), (B) the material facts as to such relationship or interest and as
to the contract have been disclosed to or are known by the Shareholders entitled
to vote thereon and the contract involved
8
is specifically approved in good faith by vote of the Shareholders so entitled
to vote, or (C) the specific contract involved is fair to the Trust as of the
time it is authorized, approved or ratified by the Trustees or by the
Shareholders.
Any Trustee, officer or other agent of the Trust, and any organization
in which any such person is interested may acquire, own, hold and dispose of
Shares of any Series of the Trust to the same extent as if such person were not
a Trustee, officer or other agent of the Trust; and the Trust may issue and sell
or cause to be issued and sold and may purchase Shares of any Series from any
such person or any such organization subject only to the general limitations,
restrictions or other provisions applicable to the sale or purchase of Shares of
such Series generally.
Section 3.5 Payment of Trust Expenses and Compensation of Trustees.
The Trustees are authorized to pay or to cause to be paid out of the principal
or income of the Trust, or partly out of principal and partly out of income, and
to charge or allocate the same to, between or among such one or more of the
Series that may be established and designated pursuant to Article IV, as the
Trustees deem fair, all expenses, fees, charges, taxes and liabilities incurred
or arising in connection with the Trust, or in connection with the management
thereof, including, but not limited to, the Trustees' compensation and such
expenses and charges for the services of the Trust's officers, employees,
investment adviser, administrator, distributor, principal underwriter, auditor,
counsel, depository, custodian, transfer agent, dividend disbursing agent,
accounting agent, Shareholder servicing agent, and such other agents,
consultants, and independent contractors and such other expenses and charges as
the Trustees may deem necessary or proper to incur. Without limiting the
generality of any other provision hereof, the Trustees shall be entitled to
reasonable compensation from the Trust for their services as Trustees and may
fix the amount of such compensation.
Section 3.6 Ownership of Assets of the Trust. Title to all of the
assets of the Trust shall at all times be considered as vested in the Trustees.
ARTICLE IV
SHARES
Section 4.1 Description of Shares. The beneficial interest in the Trust
shall be divided into Shares, all without par value and of one class, but the
Trustees shall have the authority from time to time to divide the class of
Shares into two or more Series of Shares (including without limitation those
Series specifically established and designated in Section 4.2), as they deem
necessary or desirable, to establish and designate such Series, and to fix and
determine the relative rights and preferences as between the different Series of
Shares as to right of redemption and the price, terms and manner of redemption,
special and rela-
9
tive rights as to dividends and other distributions and on liquidation, sinking
or purchase fund provisions, conversion rights, and conditions under which the
several Series shall have separate voting rights or no voting rights. Except as
aforesaid, as otherwise provided herein, or as provided in an instrument of the
Trustees properly establishing and designating a Series, all Shares of the
different Series shall be identical.
The Shares of each Series may be issued or reissued from time to time
in one or more Sub-Series ("Sub-Series"), as determined by the Board of
Trustees. Each Sub-Series shall be appropriately designated, prior to the
issuance of any Shares thereof, by some distinguishing letter, number or title.
All Shares within a Sub-Series shall be alike in every particular. All Shares of
each Series shall be of equal rank and have the same powers, preferences and
rights, and shall be subject to the same qualifications, limitations and
restrictions without distinction between the Shares of different Sub-Series
thereof, except with respect to such differences in the rate or rates of
dividends or distributions among such Sub-Series as the Board of Trustees shall
from time to time determine to be necessary in order to comply with the 1940 Act
or other applicable laws, including differences in the rate or rates of
dividends or distributions.
The number of authorized Shares and the number of Shares of each Series
that may be issued is unlimited. The Trustees may increase or decrease the
number of Shares of any Series, but the number of Shares of any Series shall not
be decreased below the number then outstanding. The Trustees may classify or
reclassify any unissued Shares or any Shares previously issued and reacquired of
any Series into one or more Series that may be established and designated from
time to time. The Trustees may classify or reclassify from time to time any
unissued Shares of any Series by fixing or altering the terms thereof and by
assigning such unissued Shares to an existing or newly created Sub-Series. The
Trustees may from time to time increase the number of Shares allocated to any
Sub-Series already created by providing that any unissued Shares of the
applicable Series shall constitute part of such Sub-Series, or may decrease the
number of Shares allocated to any Sub-Series already created by providing that
any unissued Shares previously assigned to such Sub-Series shall no longer
constitute part thereof. The Board of Trustees is empowered (i) to redesignate
any issued Shares of any Series by assigning a distinguishing letter, number or
title to such shares and (ii) to reclassify all or any part of the issued Shares
of any Series to make them part of an existing or newly created Sub-Series. The
Trustees may hold as treasury Shares (of the same or some other Series or
Sub-Series), reissue for such consideration and on such terms as they may
determine, or cancel, at their discretion from time to time, any Shares of any
Series reacquired by the Trust.
10
The Trustees may issue Shares of any Series for such consideration and
on such terms as they may determine (or for no consideration if pursuant to a
Share dividend or split-up), all without action or approval of the Shareholders.
All Shares when so issued on the terms determined by the Trustees shall be fully
paid and non-assessable (but may be subject to mandatory contribution back to
the Trust as provided in subsection (i) of Section 4.2).
The Trustees may from time to time close the transfer books or
establish record dates and times for the purposes of determining the holders of
Shares entitled to be treated as such, to the extent provided or referred to in
Section 5.3.
The establishment and designation of any Series of Shares in addition
to those established and designated in Section 4.2, or any Sub-Series, shall be
effective upon the execution by a majority of the then Trustees of an instrument
setting forth such establishment and designation and the relative rights and
preferences of such Series or Sub-Series, or as otherwise provided in such
instrument. At any time that there are no Shares outstanding of any particular
Series or Sub-Series previously established and designated, the Trustees may by
an instrument executed by a majority of their number abolish that Series or
Sub-Series and the establishment and designation thereof. Each instrument
referred to in this paragraph shall have the status of an amendment to this
Declaration of Trust.
Section 4.2 Establishment and Designation of Series. Without limiting
the authority of the Trustees set forth in Section 4.1 to establish and
designate any further Series, the Trustees hereby establish and designate one
Series of Shares: "Tucker Anthony Cash Management Fund" Shares. The Tucker
Anthony Cash Management Fund Shares and any Shares of any further Series that
may from time to time be established and designated by the Trustees shall
(unless the Trustees otherwise determine with respect to some further Series or
Sub-Series at the time of establishing and designating the same) have the
following relative rights and preferences:
(a) Assets Belonging to Series. All consideration received by the
Trust for the issue or sale of Shares of a particular Series, together with all
assets in which such consideration is invested or reinvested, all income,
earnings, profits, and proceeds thereof, including any proceeds derived from the
sale, exchange or liquidation of such assets, and any funds or payments derived
from any reinvestment of such proceeds in whatever form the same may be, shall
irrevocably belong to that Series for all purposes, subject only to the rights
of creditors, and shall be so recorded upon the books of account of the Trust.
Such consideration, assets, income, earnings, profits, and proceeds thereof,
including any proceeds derived from the sale, exchange or liquidation of such
assets, and any funds or payments derived from any reinvestment of such
proceeds, in whatever form the same may be, together with any General Items
allocated to that Series as
11
provided in the following sentence, are herein referred to as "assets belonging
to" that Series. In the event that there are any assets, income, earnings,
profits, and proceeds thereof, funds, or payments which are not readily
identifiable as belonging to any particular Series (collectively "General
Items"), the Trustees shall allocate such General Items to and among any one or
more of the Series established and designated from time to time in such manner
and on such basis as they, in their sole discretion, deem fair and equitable;
and any General Items so allocated to a particular Series shall belong to that
Series. Each such allocation by the Trustees shall be conclusive and binding
upon the Shareholders of all Series for all purposes.
(b) Liabilities Belonging to Series. The assets belonging to each
particular Series shall be charged with the liablilities of the Trust in respect
of that Series and all expenses, costs, charges and reserves attributable to
that Series, and any general liabilities, expenses, costs, charges or reserves
of the Trust which are not readily identifiable as belonging to any particular
Series shall be allocated and charged by the Trustees to and among any one or
more of the Series established and designated from time to time in such manner
and on such basis as the Trustees in their sole discretion deem fair and
equitable. The liabilities, expenses, costs, charges and reserves allocated and
so charged to a Series are herein referred to as "liabilities belonging to" that
Series. Each allocation of liabilities, expenses, costs, charges and reserves by
the Trustees shall be conclusive and binding upon the holders of all Series for
all purposes.
(c) Income Belonging to Series. The Board of Trustees shall have full
discretion, to the extent not inconsistent with Massachusetts law and the 1940
Act, to determine which items shall be treated as income and which items as
capital; and each such determination and allocation shall be conclusive and
binding.
Income belonging to a Series includes all income, earnings and profits
derived from assets belonging to that Series, less any expenses, costs, charges
or reserves belonging to that Series, for the relevant time period, all
determined in accordance with generally accepted accounting principles.
(d) Dividends. Dividends and distributions on Shares of a particular
Series may be paid with such frequency as the Trustees may determine, which may
be daily or otherwise pursuant to a standing resolution or resolutions adopted
only once or with such frequency as the Trustees may determine, to the holders
of Shares of that Series, from such of the income and capital gains, accrued or
realized, from the assets belonging to that Series, as the Trustees may
determine, after providing for actual and accrued liabilities belonging to that
Series.
12
Except as hereafter provided, all dividends on Shares of a particular
Series shall be paid only out of the income belonging to that Series and capital
gains distributions on Shares of a particular Series shall be paid only out of
the capital gains belonging to that Series. All dividends and distributions on
Shares of a particular Series shall be distributed pro rata to the holders of
that Series in proportion to the number of Shares of that Series held by such
holders at the date and time of record established for the payment of such
dividends or distributions, except that in connection with any dividend or
distribution program or procedure the Trustees may determine that no dividend or
distribution shall be payable on Shares as to which the Shareholder's purchase
order and/or payment have not been received by the time or times established by
the Trustees under such program or procedure, and except that there may be
differences in the rate or rates of dividends or distributions between different
Sub-Series of a Series pursuant to a resolution, which may be a standing
resolution, of the Board of Trustees.
The Trust intends to qualify as a "regulated investment company" under
the Internal Revenue Code of 1954, as amended, or any successor or comparable
statute thereto, and regulations promulgated thereunder. Inasmuch as the
computation of net income and gains for federal income tax purposes may vary
from the computation thereof on the books of the Trust, the Board of Trustees
shall have the power, in its sole discretion, to distribute in any fiscal year
as dividends, including dividends designated in whole or in part as capital
gains distributions, amounts sufficient, in the opinion of the Board of
Trustees, to enable the Trust to qualify as a regulated investment company and
to avoid liability of the Trust for federal income tax in respect of that year.
However, nothing in the foregoing shall limit the authority of the Board of
Trustees to make distributions greater than or less than the amount necessary to
qualify as a regulated investment company and to avoid liability of the Trust
for such tax.
Dividends and distributions may be made in cash or Shares or a
combination thereof as determined by the Trustees or pursuant to any program
that the Trustees may have in effect at the time for the election by each
Shareholder of the mode of the making of such dividend or distribution to that
Shareholder. Any such dividend or distribution paid in Shares will be paid at
the net asset value thereof as determined in accordance with subsection (i) of
Section 4.2.
(e) Liquidation. In the event of the liquidation or dissolution of the
Trust, the Shareholders of each Series that has been established and designated
shall be entitled to receive, as a Series, when and as declared by the Trustees,
the excess of the assets belonging to that Series over the liabilities belonging
to that Series. The assets so distributable to the Shareholders of any
particular Series shall be distributed among such Shareholders in proportion to
the number of Shares of that Series
13
held by them and recorded on the books of the Trust. The liquidation of any
particular Series with Shares then outstanding may be authorized by vote of a
majority of the Trustees then in office subject to the approval of a majority of
the outstanding voting securities of that Series, as defined in the 1940 Act.
(f) Voting. On each matter submitted to a vote of the Shareholders,
each holder of a Share shall be entitled to one vote for each Share standing in
his name on the books of the Trust irrespective of the Series thereof and all
Shares of all Series shall vote as a single class ("Single Class Voting");
provided, however, that (i) as to any matter with respect to which a separate
vote of any Series is required by the 1940 Act or would be required under the
Massachusetts Business Corporation Law if the Trust were a Massachusetts
business corporation, such requirements as to a separate vote by that Series
shall apply in lieu of Single Class Voting as described above; (ii) in the event
that the separate vote requirements referred to in (i) above apply with respect
to one or more Series, then, subject to (iii) below, the Shares of all other
Series shall vote as a single class; and (iii) as to any matter which does not
affect the interest of a particular Series, only the holders of Shares of the
one or more affected Series shall be entitled to vote.
(g) Redemption by Shareholder. Each holder of Shares of a particular
Series shall have the right at such times as may be permitted by the Trust, but
no less frequently than once each week, to require the Trust to redeem all or
any part of his Shares of that Series at a redemption price equal to the net
asset value per Share of that Series next determined in accordance with
subsection (i) of this Section 4.2 after the Shares are properly tendered for
redemption, less such redemption charge, if any, as is determined by the Board
of Trustees, which redemption charge shall not exceed one percent (1%) of said
net asset value per Share. Payment of the redemption price shall be in cash;
provided, however, that if the Trustees determine, which determination shall be
conclusive, that conditions exist which make payment wholly in cash unwise or
undesirable, the Trust may make payment wholly or partly in securities or other
assets belonging to the Series of which the Shares being redeemed are part at
the value of such securities or assets used in such determination of net asset
value.
Notwithstanding the foregoing, the Trust may postpone payment of the
redemption price and may suspend the right of the holders of Shares of any
Series to require the Trust to redeem Shares of that Series during any period or
at any time when and to the extent permissible under the 1940 Act.
(h) Redemption by Trust. Each Share of each Series that has been
established and designated is subject to redemption by the Trust at the
redemption price which would be applicable if
14
such Share was then being redeemed by the Shareholder pursuant to subsection (g)
of this Section 4.2 at any time if the Trustees determine in their sole
discretion that failure to so redeem may have materially adverse consequences to
all or any of the holders of the Shares, or any Series thereof, of the Trust,
and upon such redemption the holders of the Shares so redeemed shall have no
further right with respect thereto other than to receive payment of such
redemption price. In addition, the Board of Trustees, in its sole discretion,
may require a Shareholder to redeem all of his Shares of any Series within
thirty days after the end of any month, if the value of all of his Shares of
that Series at the end of said month is less than the minimum amount established
from time to time by the Board of Trustees.
(i) Net Asset Value. The net asset value per Share of any Series shall
be the quotient obtained by dividing the value of the net assets of that Series
(being the value of the assets belonging to that Series less the liabilities
belonging to that Series) by the total number of Shares of that Series
outstanding, all determined in accordance with the methods and procedures,
including without limitation those with respect to rounding, established by the
Trustees from time to time and in a manner not inconsistent with the 1940 Act.
The Trustees may determine to maintain the net asset value per Share
of any Series at a designated constant dollar amount and in connection therewith
may adopt procedures not inconsistent with the 1940 Act for the continuing
declarations of income attributable to that Series as dividends payable in
additional Shares of that Series at the designated constant dollar amount and
for the handling of any losses attributable to that Series. Such procedures may
provide that in the event of any loss each Shareholder shall be deemed to have
contributed to the capital of the Trust attributable to that Series his pro rata
portion of the total number of Shares required to be cancelled in order to
permit the net asset value per Share of that Series to be maintained, after
reflecting such loss, at the designated constant dollar amount. Each Shareholder
of the Trust shall be deemed to have agreed, by his investment in any Series
with respect to which the Trustees shall have adopted any such procedure, to
make the contribution referred to in the preceding sentence in the event of any
such loss.
The Trustees may determine that the net asset value of different
Sub-Series within a Series may differ to the extent necessary to equitably
reflect the consequences of differing dividend rates as between said Sub-Series.
(j) Transfer. All Shares of each particular Series shall be
transferable, but transfers of Shares of a particular Series will be recorded on
the Share transfer records of the Trust applicable to that Series only at such
times as Shareholders shall have the right to require the Trust to redeem Shares
of that Series and at such other times as may be permitted by the Trustees.
15
(k) Equality. All Shares of each particular Series shall represent an
equal proportionate interest in the assets belonging to that Series (subject to
the liabilities belonging to that Series), and each Share of any particular
Series shall be equal to each other Share of that Series; but the provisions of
this sentence shall not restrict any distinctions permissible under subsection
(c) of this Section 4.2 that may exist with respect to dividends and
distributions on Shares of different Sub-Series of the same Series or as
otherwise provided therein. The Trustees may from time to time divide or combine
the Shares of any particular Series into a greater or lesser number of Shares of
that Series without thereby changing the proportionate beneficial interest in
the assets belonging to that Series or in any way affecting the rights of Shares
of any other Series.
(l) Fractions. Any fractional Share of any Series or Sub-Series, if
any such fractional Share is outstanding, shall carry proportionately all the
rights and obligations of a whole Share of that Series or Sub-Series, including
with respect to voting, receipt of dividends and distributions, redemption of
Shares, and liquidation of the Trust.
(m) Conversion Rights. Subject to compliance with the requirements of
the 1940 Act, the Trustees shall have the authority to provide that holders of
Shares of any Series shall have the right to convert said Shares into Shares of
one or more other Series of Shares in accordance with such requirements,
including the payment of a sales commission where appropriate, and procedures as
may be established by the Trustees.
Section 4.3 Ownership of Shares. The ownership of Shares shall be
recorded on the books of the Trust or of a transfer or similar agent for the
Trust, which books shall be maintained separately for the Shares of each Series
that has been established and designated. No certificates certifying the
ownership of Shares need be issued except as the Trustees may otherwise
determine from time to time. The Trustees may make such rules as they consider
appropriate for the issuance of Shares certificates, the use of facsimile
signatures, the transfer of Shares and similar matters. The record books of the
Trust as kept by the Trust or any transfer or similar agent, as the case may be,
shall be conclusive as to who are the Shareholders and as to the number of
Shares of each Series or Sub-Series held from time to time by each such
Shareholder.
Section 4.4 Investments in the Trust. The Trustees may accept
investments in the Trust from such persons and on such terms and for such
consideration, not inconsistent with the provisions of the 1940 Act, as they
from time to time authorize. The Trustees may authorize any distributor,
principal underwriter, custodian, transfer agent or other person to accept
orders for the purchase of Shares that conform to such authorized terms and
16
to reject any purchase orders for Shares whether or not conforming to such
authorized terms.
Section 4.5 No Preemptive Rights. Shareholders shall have no preemptive
or other right to subscribe to any additional Shares or other securities issued
by the Trust.
Section 4.6 Status of Shares and Limitation of Personal Liability.
Shares shall be deemed to be personal property giving only the rights provided
in this instrument. Every Shareholder by virtue of having become a Shareholder
shall be held to have expressly assented and agreed to the terms hereof and to
have become a party hereto. The death of a Shareholder during the continuance of
the Trust shall not operate to terminate the Trust, or entitle the
representative of any deceased Shareholder to an accounting or to take any
action in court or elsewhere against the Trust or the Trustees, but only to the
rights of said decedent under this Trust. Ownership of Shares shall not entitle
the Shareholder to any title in or to the whole or any part of the Trust
property or right to call for a partition or division of the same or for an
accounting, nor shall the ownership of Shares constitute the Shareholders
partners. Neither the Trust nor the Trustees, nor any officer, employee or agent
of the Trust shall have any power to bind personally any Shareholder, nor except
as specifically provided herein to call upon any Shareholder for the payment of
any sum of money or assessment whatsoever other than such as the Shareholder may
at any time personally agree to pay.
ARTICLE V
SHAREHOLDERS' VOTING POWERS AND MEETINGS
Section 5.1 Voting Powers. The Shareholders shall have power to vote
only (i) for the election or removal of Trustees as provided in Section 3.1,
(ii) with respect to any contract with a Contracting Party as provided in
Sections 3.3 and 3.4 as to which Shareholder approval is required by the 1940
Act, (iii) with respect to any termination or reorganization of the Trust or any
Series to the extent and as provided in Sections 8.1 and 8.2, (iv) with respect
to any amendment of this Declaration of Trust to the extent and as provided in
Section 8.3, (v) to the same extent as the stockholders of a Massachusetts
business corporation as to whether or not a court action, proceeding or claim
should or should not be brought or maintained derivately or as a class action on
behalf of the Trust or the Shareholders, and (vi) with respect to such
additional matters relating to the Trust as may be reguired by the 1940 Act,
this Declaration of Trust, the By-Laws or any registration of the Trust with the
Commission (or any successor agency) or any state, or as the Trustees may
consider necessary or desirable.
17
There shall be no cumulative voting in the election of Trustees. Shares
may be voted in person or by proxy. A proxy with respect to Shares held in the
name of two or more persons shall be valid if executed by any one of them unless
at or prior to exercise of the proxy the Trust receives a specific written
notice to the contrary from any one of them. A proxy purporting to be executed
by or on behalf of a Shareholder shall be deemed valid unless challenged at or
prior to its exercise and the burden of proving invalidity shall rest on the
challenger. Until Shares are issued, the Trustees may exercise all rights of
Shareholders and may take any action required by law, this Declaration of Trust
or the By-Laws to be taken by Shareholders.
Section 5.2 Meetings. There shall be an annual meeting of Shareholders
on the date fixed in the By-Laws at the office of the Trust in Boston,
Massachusetts, or at such other place as may be designated in the call thereof,
which call shall be made by the Trustees. In the event that such meeting is not
held in any year on the date fixed in the By-Laws, whether the omission be by
oversight or otherwise, a subsequent special meeting may be called by the
Trustees and held in lieu of the annual meeting with the same effect as though
held on such date. Special meetings may also be called by the Trustees from time
to time for the purpose of taking action upon any matter requiring the vote or
authority of the Shareholders as herein provided or upon any other matter deemed
by the Trustees to be necessary or desirable. Written notice of any meeting of
Shareholders shall be given or caused to be given by the Trustees by mailing
such notice at least seven days before such meeting, postage prepaid, stating
the time, place and purpose of the meeting, to each Shareholder at the
Shareholder's address as it appears on the records of the Trust. Upon written
demand for a special meeting (including a meeting involving only the holders of
Shares of one or more but fewer than all Series) by Shareholders holding at
least 10% of the Shares then outstanding of all Series entitled to vote upon any
one matter proposed to be submitted to the special meeting, the Trustees shall
call a special meeting of Shareholders to consider such matter or matters. If
the Trustees shall fail to call or give notice of such special meeting of
Shareholders for which a proper demand has been made within thirty days after
such demand, then such Shareholders may call and give notice of such special
meeting, and thereupon the meeting shall be held in the manner provided for
herein in case of call thereof by the Trustees.
Section 5.3 Record Dates. For the purpose of determining the
Shareholders who are entitled to vote or act at any meeting or any adjournment
thereof, or who are entitled to participate in any dividend or distribution, or
for the purpose of any other action, the Trustees may from time to time close
the transfer books for such period, not exceeding 30 days (except at or in
connection with the termination of the Trust), as the Trustees
18
may determine; or without closing the transfer books the Trustees may fix a date
and time not more than 60 days prior to the date of any meeting of Shareholders
or other action as the date and time of record for the determination of
Shareholders entitled to vote at such meeting or any adjournment thereof or to
be treated as Shareholders of record for purposes of such other action, and any
Shareholder who was a Shareholder at the date and time so fixed shall be
entitled to vote at such meeting or any adjournment thereof or (subject to any
provisions permissible under subsection (d) of Section 4.2 with respect to
dividends or distributions on Shares that have not been ordered and/or paid for
by the time or times established by the Trustees under the applicable dividend
or distribution program or procedure then in effect) to be treated as a
Shareholder of record for purposes of such other action, even though he has
since that date and time disposed of his Shares, and no Shareholder becoming
such after that date and time shall be so entitled to vote at such meeting or
any adjournment thereof or to be treated as a Shareholder of record for purposes
of such other action.
Section 5.4 Quorum and Required Vote. A majority of the Shares
entitled to vote shall be a quorum for the transaction of business at a
Shareholders' meeting, but any lesser number shall be sufficient for
adjournments. Any adjourned session or sessions may be held, within a reasonable
time after the date set for the original meeting without the necessity of
further notice. A majority of the Shares voted at a meeting at which a quorum is
present shall decide any questions and a plurality shall elect a Trustee.
However, when a different vote is required by the 1940 Act or an express
provision of this Declaration of Trust or the By-Laws, that provision shall
apply.
Section 5.5 Action by Written Consent. Subject to the provisions of
the 1940 Act and other applicable law, any action taken by Shareholders may be
taken without a meeting if a majority of Shareholders entitled to vote on the
matter (or such other proportion thereof as shall be required by the 1940 Act or
by any express provision of this Declaration of Trust or the By-Laws) consent to
the action in writing and such written consents are filed with the records of
the meetings of Shareholders. Such consent shall be treated for all purposes as
a vote taken at a meeting of Shareholders.
Section 5.6 Inspection of Records. The records of the Trust shall be
open to inspection by Shareholders to the same extent as is permitted
stockholders of a Massachusetts business corporation under the Massachusetts
Business Corporation Law.
19
Section 5.7 Additional Provisions. The By-Laws may include further
provisions for Shareholders' votes and meetings and related matters.
ARTICLE VI
LIMITATION OF LIABILITY; INDEMNIFICATION
OF SHAREHOLDERS
Section 6.1 Trustees, Shareholders, etc. Not Personally Liable. All
persons extending credit to, contracting with or having any claim against the
Trust shall look only to the assets of the Trust for payment under such credit,
contract or claim; and neither the Shareholders nor the Trustees, nor any of the
Trust's officers, employees or agents, whether past, present or future, shall be
personally liable therefor. Every note, bond, contract, instrument, certificate
or undertaking and every other act or thing whatsoever executed or done by or on
behalf of the Trust or the Trustees or any of them in connection with the Trust
shall be conclusively deemed to have been executed or done only by or for the
Trust or the Trustees and not personally. Nothing in this Declaration of Trust
shall protect any Trustee or officer against any liability to the Trust or the
Shareholders to which such Trustee or officer would otherwise be subject by
reason of willful misfeasance, bad faith, gross negligence or reckless disregard
of the duties involved in the conduct of the office of Trustee or of such
officer.
Section 6.2 Notice of Limited Liability . Every note, bond, contract,
instrument, certificate or undertaking made or issued by the Trustees or by any
officers or officer shall give notice that this Declaration of Trust is on file
with the Secretary of the Commonwealth of Massachusetts and shall recite to the
effect that the same was executed or made by or on behalf of the Trust or by
them as Trustees or Trustee or as officers or officer and not individually and
that the obligations of such instrument are not binding upon any of them or the
Shareholders individually but are binding only upon the assets and property of
the Trust, but the omission thereof shall not operate to bind any Trustees or
Trustee or officers or officer or Shareholders or Shareholder individually.
Section 6.3 Trustee's Good Faith Action; Expert Advice; No Bond or
Surety. The exercise by the Trustees of their powers and discretions hereunder
shall be binding upon everyone interested. A Trustee shall be liable for his own
willful misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of the office of Trustee, and for nothing else,
and shall not be liable for errors of judgment or mistakes of fact or law.
Subject to the foregoing, (a) the Trustees shall not be responsible or liable in
any event for any neglect or
20
wrongdoing of any officer, agent, employee, consultant, adviser, administrator,
distributor or principal underwriter, custodian or transfer, dividend
disbursing, Shareholder servicing or accounting agent of the Trust, nor shall
any Trustee be responsible for the act or omission of any other Trustee; (b) the
Trustees may take advice of counsel or other experts with respect to the meaning
and operation of this Declaration of Trust and their duties as Trustees, and
shall be under no liability for any act or omission in accordance with such
advice or for failing to follow such advice; and (c) in discharging their
duties, the Trustees, when acting in good faith, shall be entitled to rely upon
the books of account of the Trust and upon written reports made to the Trustees
by any officer appointed by them, any independent public accountant, and (with
respect to the subject matter of the contract involved) any officer, partner or
responsible employee of a Contracting Party appointed by the Trustees pursuant
to Section 3.3. The Trustees as such shall not be required to give any bond or
surety or any other security for the performance of their duties.
Section 6.4 Liability of Third Persons Dealing with Trustees. No
person dealing with the Trustees shall be bound to make any inquiry concerning
the validity of any transaction made or to be made by the Trustees or to see to
the application of any payments made or property transferred to the Trust or
upon its order.
Section 6.5 Indemnification of Shareholders. In case any Shareholder
or former Shareholder shall be charged or held to be personally liable for any
obligation or liability of the Trust solely by reason of being or having been a
Shareholder and not because of such Shareholder's acts or omissions or for some
other reason, the Trust (upon proper and timely request by the Shareholder)
shall assume the defense against such charge and satisfy any judgment thereon,
and the Shareholder or former Shareholder (or his heirs, executors,
administrators or other legal representatives or in the case of a corporation or
other entity, its corporate or other general successor) shall be entitled out of
the assets of the Trust estate to be held harmless from and indemnified against
all loss and expense arising from such liability.
ARTICLE II
INDEMNIFICATION OF TRUSTEES, OFFICERS,
EMPLOYEES AND AGENTS
Section 7.1 Definitions. For purposes of this Article VII:
(a) "Covered Person" means an individual: (i) who is a present or
former trustee, officer, agent, or employee of the Trust or who serves or served
another corporation, partnership, joint venture, trust, or other enterprise in
one of these capaci-
21
ties at the request of the Trust; and (ii) who by reason of his position was,
is, or is threatened to be made a party to a Proceeding. It shall also include
such person's heirs, executors and administrators.
(b) "Proceeding" includes any threatened, pending, or completed
action, suit, or proceeding, whether civil, criminal, administrative, or
investigative.
(c) "Disabling Conduct" means willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the Covered Person's
office.
(d) "Disinterested Trustee" means a Trustee who is neither an
"interested person" as defined in Section 2(a)(19) of the 1940 Act nor a party
to the Proceeding(s) in question.
Section 7.2 Actions In Name of Trust or Shareholder. The Trust shall
indemnify any Covered Person against all liabilities, including but not limited
to amounts paid in satisfaction of judgments, in compromises or as fines or
penalties, and expenses, including reasonable legal and accounting fees,
incurred in connection with the defense or disposition of any Proceeding by or
in the name of the Trust or any Shareholder in his capacity as such if one of
the following conditions is satisfied:
(a) a favorable final decision on the merits (which includes a
dismissal of the Proceeding for insufficiency of the evidence) is made by a
court or administrative body before whom it was brought against the Covered
Person; or
(b) a reasonable determination is made, based upon a review of the
facts (but without a hearing), that the Covered Person was not liable by reason
of Disabling Conduct, by either (i) the vote of a majority of a quorum of
Disinterested Trustees, or (ii) independent legal counsel in a written opinion,
or
(c) a determination is made to indemnify the Covered Person utilizing
procedures approved by the Board of Trustees by resolution or otherwise if the
Trustees shall have received an opinion of independent legal counsel that
indemnification in accordance with such procedures is not inconsistent with the
1940 Act.
Section 7.3 Other Actions. The Trust shall indemnify any Covered
Person against any liabilities, including but not limited to amounts paid in
satisfaction of judgments, in compromises or as fines or penalties, and
expenses, including reasonable legal and accounting fees, incurred in connection
with the defense or disposition of any Proceeding other than a Proceeding of the
type described in Section 7.2, except with respect to any matter as to which the
Covered Person shall have engaged in Disabling conduct or shall have been
finally adjudicated in the Proceeding not to have acted in good faith and in the
reasonable belief
22
that such Covered Person's action was in or not opposed to the best interests of
the Trust.
Section 7.4 Advances of Expenses. The Trust shall advance attorneys'
fees or other expenses incurred by a Covered Person in defending a Proceeding,
upon the undertaking by or on behalf of the Covered Person to repay the advance
unless it is ultimately determined that such Covered Person is entitled to
indemnification, so long as one of the following conditions is met: (i) the
Covered Person shall provide security for his undertaking, (ii) the Trust shall
be insured against losses arising by reason of any lawful advances, or (iii) a
majority of a quorum of the Disinterested Trustees, or an independent legal
counsel in a written opinion, shall determine, based on a review of readily
available facts (as opposed to a full hearing), that there is reason to believe
that the Covered Person ultimately will be found entitled to indemnification.
Section 7.5 Indemnification Not Exclusive. The right of indemnification
provided by this Article VII shall not be exclusive of or affect any other
rights to which any such Covered Person may be entitled.
Section 7.6 Insurance. The Trust may purchase and maintain insurance on
its behalf and on behalf of any Covered Person against any liability asserted
against him and incurred by him in any such capacity, or arising out of his
status as such, whether or not the Trust would have the power to indemnify him
against such liability under the provisions of this Article VII.
ARTICLE VIII
MISCELLANEOUS
Section 8.1 Duration and Termination of Trust. Unless terminated as
provided herein, the Trust shall continue without limitation of time. The Trust
may be terminated at any time by a majority of the Trustees then in office,
subject to a favorable vote of a majority of the outstanding voting securities,
as defined in the 1940 Act, Shares of each Series voting separately by Series.
Upon termination, after paying or otherwise providing for all charges,
taxes, expenses and liabilities, whether due or accrued or anticipated as may be
determined by the Trustees, the Trust shall in accordance with such procedures
as the Trustees consider appropriate reduce the remaining assets to
distributable form in cash, securities or other property, or any combination
thereof, and distribute the proceeds to the Shareholders, in conformity with the
provisions of subsection (e) of Section 4.2.
23
Section 8.2 Reorganization. The Trustees may sell, convey and transfer
the assets of the Trust, or the assets belonging to any one or more Series, to
another trust, partnership, association or corporation organized under the laws
of any state of the United States, or to the Trust to be held as assets
belonging to another Series of the Trust, in exchange for cash, shares or other
securities (including, in the case of a transfer to another Series of the Trust,
Shares of such other Series) with such transfer being made subject to, or with
the assumption by the transferee of, the liabilities belonging to each Series
the assets of which are so transferred; provided, however, that if Shareholder
approval is required by the 1940 Act, no assets belonging to any particular
Series shall be so transferred unless the terms of such transfer shall have
first been approved at a meeting called for the purpose by the affirmative vote
of the holders of a majority of the outstanding voting securities, as defined in
the 1940 Act, of that Series. Following such transfer, the Trustees shall
distribute such cash, shares or other securities (giving due effect to the
assets and liabilities belonging to and any other differences among the various
Series the assets belonging to which have so been transferred) among the
Shareholders of the Series the assets belonging to which have been so
transferred; and if all of the assets of the Trust have been so transferred, the
Trust shall be terminated.
Section 8.3 Amendments. All rights granted to the Shareholders under
this Declaration of Trust are granted subject to the reservation of the right to
amend this Declaration of Trust as herein provided, except that no amendment
shall repeal the limitations on personal liability of any Shareholder or Trustee
or repeal the prohibition of assessment upon the Shareholders without the
express consent of each Shareholder or Trustee involved. Subject to the
foregoing, the provisions of this Declaration of Trust (whether or not related
to the rights of Shareholders) may be amended at any time by an instrument in
writing signed by a majority of the then Trustees (or by an officer of the Trust
pursuant to the vote of a majority of such Trustees), when authorized so to do
by the vote in accordance with subsection (e) of Section 4.2 of Shareholders
holding a majority of the Shares entitled to vote, except that amendments (a)
establishing and designating any new Series or Sub-Series of Shares not
established and designated in Section 4.2, (b) abolishing a Series or Sub-Series
at a time when there are no Shares thereof outstanding, (c) having the purpose
of changing the name of the Trust or the name of any Series or Sub-Series
theretofore established and designated, or (d) supplying any omission, curing
any ambiguity or curing, correcting or supplementing any provision hereof which
is internally inconsistent with any other provision hereof or which is defective
or inconsistent with the 1940 Act or with the requirements of the Internal
Revenue Code and applicable regulations for the Trust's obtaining the most
favorable treatment thereunder available to regulated investment companies,
24
shall not require authorization by Shareholder vote. Subject to the foregoing,
any such amendment shall be effective as provided in the instrument containing
the terms of such amendment or, if there is no provision therein with respect to
effectiveness, upon the execution of such instrument and of a certificate (which
may be a part of such instrument) executed by a Trustee or officer of the Trust
to the effect that such amendment has been duly adopted.
Section 8.4 Filing of Copies; References; Headings. The original or a
copy of this instrument and of each amendment hereto shall be kept at the office
of the Trust where it may be inspected by any Shareholder. A copy of this
instrument and of each amendment hereto shall be filed by the Trust with the
Secretary of the Commonwealth of Massachusetts and with the Boston City Clerk,
as well as any other governmental office where such filing may from time to time
be required, but the failure to make any such filing shall not impair the
effectiveness of this instrument or any such amendment. Anyone dealing with the
Trust may rely on a certificate by an officer of the Trust as to whether or not
any such amendments have been made, as to the identities of the Trustees and
officers, and as to any matters in connection with the Trust hereunder; and,
with the same effect as if it were the original, may rely on a copy certified by
an officer of the Trust to be a copy of this instrument or of any such
amendments. In this instrument and in any such amendment, references to this
instrument, and all expressions like "herein", "hereof" and "hereunder" shall be
deemed to refer to this instrument as a whole as the same may be amended or
affected by any such amendments. The masculine gender shall include the feminine
and neuter genders. Headings are placed herein for convenience of reference only
and shall not be taken as a part hereof or control or affect the meaning,
construction or effect of this instrument. This instrument may be executed in
any number of counterparts each of which shall be deemed an original.
Section 8.5 Applicable Law. This Declaration of Trust is made in the
Commonwealth of Massachusetts, and it is created under and is to be governed by
and construed and administered according to the laws of said Commonwealth,
including the Massachusetts Business Corporation Law as the same may be amended
from time to time, to which reference is made with the intention that matters
not specifically covered herein or as to which an ambiguity may exist shall be
resolved as if the Trust were a business corporation organized in Massachusetts,
but the reference to said Business Corporation Law is not intended to give the
Trust, the Trustees, the Shareholders or any other person any right, power,
authority or responsibility available only to or in connection with an entity
organized in corporate form. The Trust shall be of the type referred to in
Section 1 of Chapter 182 of the Massachusetts General Laws and of the type
commonly called a Massachusetts business trust, and without limiting the
25
provisions hereof, the Trust may exercise all powers which are ordinarily
exercised by such a trust.
IN WITNESS WHEREOF, the undersigned have hereunto set their hands and
seals in the City of Boston, Massachusetts for themselves and their assigns, as
of the day and year first above written.
/s/ Hugh A. Dunlap, Jr.
-----------------------
Hugh A. Dunlap, Jr.
/s/ Arthur J. Petone
-----------------------
Arthur J. Petone
-----------------------
Richard R. Doll
/s/ Ephron Catlin
-----------------------
Ephron Catlin
/s/ Patrick Grant
-----------------------
Patrick Grant
C194/G
26
THE COMMONWEALTH OF MASSACHUSETTS
Suffolk, ss.
Then personally appeared the above-named Hugh A. Dunlap, Jr. who
acknowledged the foregoing instrument to be his free act and deed, before me,
this 22nd day of December, 1980.
/s/ David H. Murphree
----------------------
Notary Public
DAVID H. MURPHREE, Notary Public
My commission expires: Jan. 24, 1986
THE COMMONWEALTH OF MASSACHUSETTS
Suffolk, ss.
Then personally appeared the above-named Arthur J. Petone who
acknowledged the foregoing instrument to be his free act and deed, before me,
this 22nd day of December, 1980.
/s/ David H. Murphree
----------------------
Notary Public
My commission expires:
THE COMMONWEALTH OF MASSACHUSETTS
Suffolk, ss.
Then personally appeared the above-named Richard R. Doll who
acknowledged the foregoing instrument to be his free act and deed, before me,
this 22nd day of December, 1980.
----------------------
Notary Public
My commission expires:
27
THE COMMONWEALTH OF MASSACHUSETTS
Suffolk, ss.
Then personally appeared the above-named Ephron Catlin who
acknowledged the foregoing instrument to be his free act and deed, before me,
this 22nd day of December, 1980.
/s/ David H. Murphree
----------------------
Notary Public
DAVID H. MURPHREE, Notary Public
My commission expires: Jan. 24, 1986
THE COMMONWEALTH OF MASSACHUSETTS
Suffolk, ss.
Then personally appeared the above-named Patrick Grant who
acknowledged the foregoing instrument to be his free act and deed, before me,
this 22nd day of December, 1980.
/s/ David H. Murphree
----------------------
Notary Public
DAVID H. MURPHREE, Notary Public
My commission expires: Jan. 24, 1986
C194/G
SVS/2574T
TUCKER ANTHONY MUTUAL FUND
AMENDMENT NO. 1 TO
AGREEMENT AND DECLARATION OF TRUST
AMENDMENT NUMBER 1 to the Agreement and Declaration of Trust dated
December 22, 1980, made at Boston, Massachusetts, this 30th day of April, 1981,
by the Trustees hereunder.
W I T N E S S E T H:
WHEREAS, the Trust has undertaken in Pre-Effective Amendment No. 2 to
Registration Statement No. 2-70863 filed with the Securities and Exchange
Commission under the Securities Act of 1933 to amend Section 7.6 of its
Agreement and Declaration of Trust to cure an inconsistency between said
Agreement and Declaration of Trust and the Investment Company Act of 1940 as
interpreted by the staff of the Securities and Exchange Commission; and
WHEREAS, the Trustees have the authority, under Section 8.3(d) of the
Agreement and Declaration of Trust, to make amendments to the Agreement and
Declaration of Trust to cure inconsistencies with said Investment Company Act of
1940 by an instrument in writing signed by a majority of the then Trustees,
without the necessity of a shareholder vote;
NOW, THEREFORE, the Trustees hereby amend the Agreement and Declaration
of Trust as heretofore in effect by converting the period at the end of Section
7.6 to a semicolon and adding to
said Section the following language: "provided, however, that no such insurance
paid for by the Trust may protect Covered Persons against liabilities arising
from their Disabling Conduct."
IN WITNESS WHEREOF, the undersigned have hereunto set their hands and
seals in the City of Boston, Massachusetts, for themselves and their assigns, as
of the day and year first above written.
/s/ Hugh A. Dunlap, Jr.
-----------------------
Hugh A. Dunlap, Jr.
/s/ Arthur J. Petone
--------------------
Arthur J. Petone
/s/ Ephron Catlin
-----------------
Ephron Catlin
/s/ Patrick Grant
-----------------
Patrick Grant
THE COMMONWEALTH OF MASSACHUSETTS
Suffolk, ss.
Then personally appeared the above-named Hugh A. Dunlap, Jr., Arthur J.
Petone, Ephron Catlin, and Patrick Grant, who acknowledged the foregoing to be
their free acts and deeds, before me, this 30th day of April, 1981.
/s/ David H. Murphree
---------------------
Notary Public
My commission expires:
DAVID H. MURPHREE, Notary Public
My Commission Expires Jan. 24, 1986
TUCKER ANTHONY MUTUAL FUND
AMENDMENT NO. 2 TO AGREEMENT AND DECLARATION OF TRUST
Amendment NO. 2 to the Agreement and Declaration of Trust dated
December 22, 1980, made at Boston, Massachusetts, this 21st day of September.
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, Section 8.3 of an Agreement and Declaration of Trust dated
December 22, 1980, as amended (the "Declaration"), of Tucker Anthony Mutual Fund
(the "Trust") provides that the Declaration may be amended to establish and
designate new Series of Shares by an instrument in writing, signed by an officer
of the Trust pursuant to a vote of the majority of the Trustees of the Trust;
and
WHEREAS, a majority of the Trustees of the Trust have on this date
duly adopted the following votes:
VOTED: That the Agreement and Declaration of Trust of
Tucker Anthony Mutual Fund dated December 22, 1980,
as amended (the "Declaration"), be further amended
as contemplated in Section 4.1 thereof by
establishing and designating an additional Series of
Shares (in addition to the Cash Management Fund
heretofore established and designated) to be known
as the "Government Securities Fund", such new Series
to have the relative rights and preferences set
forth in Subsections (a) through (m) of Section 4.2
of the Declaration; and further
VOTED: That the President, Vice Presidents and Secretary of
this Trust, and each of them acting singly, are
authorized to execute an instrument in writing
effecting the aforesaid amendment and
to cause the same to be filed wherever in the
discretion of such officer such filing is
appropriate;
NOW THEREFORE, the undersigned Hugh A. Dunlap, Jr., the duly appointed
and serving President of Tucker Anthony Mutual Fund, pursuant to the foregoing
authorization, hereby amends the Declaration by designating and establishing a
Series of Shares (in addition to the "Cash Management Fund" heretofore
established and designated) to be known as "Government Securities Fund",
effective as of this date, such new Series to have the relative rights and
preferences set forth in Subsections (a) through (m) of Section 4.2 of the
Declaration.
WITNESS my hand and seal this 21st day of September.
/s/ Hugh A. Dunlap, Jr.
-----------------------
COMMONWEALTH OF MASSACHUSETTS )
) SS.
COUNTY OF SUFFOLK )
Then personally appeared the above-named Hugh A. Dunlap, Jr. and
acknowledged this instrument to be his free act and deed this 21st day of
September, 1981.
/s/ David H. Murphree
--------------------------
Notary Public
My commission expires:
DAVID H. MURPHREE, Notary Public
My Commission Expires, Jan. 24, 1986
-2-
TUCKER ANTHONY MUTUAL FUND
AMENDMENT NO. 3 TO AGREEMENT AND DECLARATION OF TRUST
Amendment No. 3 to Agreement and Declaration of Trust dated December 22,
1980, made at Boston, Massachusetts, this 1st day of May 1985.
W I T N E S S E T H
- - - - - - - - - -
WHEREAS, Section 8.3 of an Agreement and Declaration of Trust dated
December 22, 1980, as amended (the "Declaration") of Tucker Anthony Mutual Fund
(the "Trust") provides that the provisions of the Declaration may be amended at
any time by an instrument in writing signed by an officer of the Trust pursuant
to the vote of a majority of the Trustees, when authorized to do so by a vote of
Shareholders holding a majority of the shares entitled to vote; and
WHEREAS, at the Annual Meeting of Shareholders of the Trust held on Friday,
April 26, 1985, the holders of a majority of the outstanding shares of the Trust
authorized the amendment to the Declaration contained herein and the Trustees
have authorized the President of the Trust to execute and file this Amendment to
the Declaration;
NOW, THEREFORE, the undersigned Hugh A. Dunlap, Jr., the duly elected and
serving President of the Trust, pursuant to the foregoing authorization, hereby
amends the Declaration as follows:
(a) Section 3.1(c) shall be deleted and replaced in full with the
following:
(c) Election and Term. The Trustees shall be elected by the Shareholders of
the Trust at the annual meeting of Shareholders held in 1985. Each Trustee,
whether named above or, hereafter becoming a Trustee, shall serve as a Trustee
hereunder during the lifetime of this Trust and until its termination as
hereinafter provided except as such Trustee sooner dies, resigns or is removed.
Subject to Section 16(a) of the 1940 Act, the Trustees may elect their own
successors and may, pursuant to Section 3.1(f) hereof, appoint Trustees to fill
vacancies.
(b) Section 3.i(e) shall be deleted and replaced in full with the
following:
(e) Removal. Any Trustee may be removed with or without cause at any time:
(i) by written instrument, signed by at least two-thirds of the number of
Trustees prior to such removal, specifying the date upon which such removal
shall become effective; or (ii) by vote of Shareholders holding not less than
two-thirds of the Shares then outstanding, cast in person or by proxy at any
meeting called for the purpose; or (ii) by a written declaration signed by
Shareholders holding not less than two-thirds of the Shares then outstanding and
filed with the Trust's Custodian.
(c) Section 3.1(f) shall be deleted and shall be replaced in full with the
following:
(d) Vacancies. Any vacancy or anticipated vacancy resulting from any
reason, including without limitation the death, resignation, retirement, removal
or incapacity of any of the Trustees, or resulting from an increase in the
number of Trustees by the other Trustees may (but so long as there are at least
two remaining Trustees, need not unless required by the 1940 Act) be filled by a
majority of the remaining Trustees, subject to the provisions of Section 16(a)
of the 1940 Act, through the appointment in writing of such other person as such
remaining Trustees in their discretion shall determine and such appointment
shall be effective upon the written acceptance of the person named therein to
serve as a Trustee and agreement by such person to be bound by the provisions of
this Declaration of Trust, except that any such appointment in anticipation of a
vacancy to occur by reason of retirement, resignation, or increase in number of
Trustees to be effective at a later date shall become effective only at or after
the effective date of said retirement, resignation, or increase in number of
Trustees. As soon as any Trustee so appointed shall have accepted such
appointment and shall have agreed in writing to be bound by this Declaration of
Trust and the appointment is effective, the Trust estate shall vest in the new
Trustee, together with the continuing Trustees, without any further act or
conveyance.
(d) Section 5.2 shall be deleted and shall be replaced in full by the
following:
2
Section 5.2 Meetings. No annual or regular meeting of Shareholders is
required. Special meetings of Shareholders may be called by the Trustees from
time to time for the purpose of taking action upon any matter requiring the vote
or authority of the Shareholders as herein provided or upon any other matter
deemed by the Trustees to be necessary or desirable. Written notice of any
meeting of Shareholders shall be given or caused to be given by the Trustees by
mailing such notice at least seven days before such meeting, postage prepaid,
stating the time, place and purpose of the meeting, to each Shareholder at the
Shareholder's address as it appears on the records of the Trust. The Trustees
shall promptly call and give notice of a meeting of Shareholders for the purpose
of voting upon removal of any Trustee of the Trust when requested to do so in
writing by Shareholders holding not less than 10% of the Shares then
outstanding. If the Trustees shall fail to call or give notice of any meeting of
Shareholders for a period of 30 days after written application by Shareholder
holding at least 10% of the Shares then outstanding requesting a meeting be
called for any other purpose requiring action by the Shareholders as provided
herein or in the By-laws, then Shareholders holding at least 10% of the Shares
then outstanding may call and give notice of such meeting, and thereupon the
meeting shall be held in the manner provided for herein in case of call thereof
by the Trustees.
(e) Section 5.8 appearing below shall be added.
Section 5.8 Shareholder Communications. Wherever ten or more Shareholders
of record who have been such for at least six months preceding the date of
applications, and who hold in the aggregate either Shares having a net asset
value of at least $25,000 or at least 1% of the outstanding Shares, whichever is
less, shall apply to the Trustees in writing, stating that they wish to
communicate with other Shareholders with a view to obtaining signatures to a
request for a Shareholder Meeting and accompanied by a form of communication and
request which they wish to transmit, the Trustees shall within five business
days after receipt of such application either (l) afford to such applicants
access to a list of the names and addresses of all Shareholders as recorded on
the books of the Trust or Series, as applicable, or (2) inform such applicants
as to the approximate number of Shareholders of record, and the approximate cost
of mailing to them the proposed communication and form of request.
If the Trustees elect to follow the course specified in paragraph (2) above
the Trustees, upon the written request of such applicants, accompanied by a
tender of the material to be mailed and of the reasonable expenses of mailing,
shall, with reasonable promptness, mail such material to all Shareholders of
record at their addresses as recorded on the books, unless within five business
days after such tender the Trustees shall mail to such applicants and file with
Securities and Exchange Commission,
3
together with a copy of the material to be mailed, a written statement signed by
at least a majority of the Trustees to the effect that in their opinion either
such material contains untrue statements of fact or omits to state facts
necessary to make the statements contained therein not misleading, or would be
in violation of applicable law, and specifying the basis of such opinion. The
Trustees shall thereafter comply with the requirements of the Investment Company
Act of 1940.
WITNESS my hand and seal this 1st day of May, 1985.
/s/ Hugh A. Dunlap, Jr.
------------------------------
Hugh A. Dunlap, Jr., President
of Tucker Anthony Mutual Fund
COMMONWEALTH OF MASSACHUSETTS )
) S.S.
COUNTY OF SUFFOLK )
Then personally appeared the above-named Hugh A. Dunlap, Jr. and
acknowledged this instrument to be his free act and deed this 1st day of May,
1985.
/s/ Judi A. Hartfield
---------------------
Notary Public
My commission expires:
4/22/88
---------------------
C273/M
4/30/85
4
TUCKER ANTHONY MUTUAL FUND
AMENDMENT NO. 4 TO
AGREEMENT AND DECLARATION 0F TRUST
This Amendment No. 4 to the Agreement and Declaration of Trust dated
December 22, 1980, as amended, is made at Boston, Massachusetts as of May 22,
1989 by the Trustees hereunder.
W I T N E S S E T H
- - - - - - - - - -
WHEREAS, the Trustees wish to change the name of the Trust from "Tucker
Anthony Mutual Fund" to "Freedom Mutual Fund"; and
WHEREAS, the Trustees wish to change the name of the Series established and
designated under or in accordance with the provisions of Article IV from "Tucker
Anthony Cash Management Fund" to "Freedom Cash Management Fund" and from "Tucker
Anthony Government Securities Fund" to "Freedom Government Securities Fund"; and
WHEREAS, the Trustees have the authority, under Section 8.3(c) of the
Agreement and Declaration of Trust, to make amendments to the Agreement and
Declaration of Trust to change the name of the Trust and any of the Series by an
instrument in writing signed by a majority of the then Trustees, without the
necessity of a shareholder vote;
NOW, THEREFORE, the Trustees hereby amend the Agreement and Declaration of
Trust as heretofore in effect as follows:
(a) Section 1.1 shall be deleted and replaced in its entirety with the
following:
Section 1.1 Name. This Trust shall be known as "Freedom Mutual Fund" and
the Trustees shall conduct the business of the Trust under that name or any
other name as they may from time to time determine.
(b) Section 4.2, as amended, shall be further amended by changing the name
of the Series designated as "Tucker Anthony Cash Management Fund" to "Freedom
Cash Management Fund" and by changing the name of the Series designated as
"Tucker Anthony Government Securities Fund" to "Freedom Government Securities
Fund."
IN WITNESS WHEREOF, the undersigned have hereunto set their hands and seals
in the City of Boston, Massachusetts for themselves and their assigns, as of the
day first written above.
/s/ Hugh A. Dunlap, Jr.
-----------------------
Hugh A. Dunlap, Jr.
/s/ Arthur J. Petone
-----------------------
Arthur J. Petone
/s/ William A. Barron
-----------------------
William A. Barron
/s/ Ralph Lowell, Jr.
-----------------------
Ralph Lowell, Jr.
/s/ Richard A. Farrell
-----------------------
Richard A. Farrell
/s/ Patrick Grant
-----------------------
Patrick Grant
YP-0429/T
2
THE COMMONWEALTH OF MASSACHUSETTS
Suffolk, SS: Date: May 22, 1989
Personally appeared before me the above-named Hugh A. Dunlap, Jr., Arthur
J. Petone, William A. Barron III, Ralph Lowell, Jr., Richard A. Farrell and
Partick Grant and made oath that the foregoing statement is true.
/s/ John J. Danello
-------------------
Notary Public
(SEAL)
My commission expires:
12-5-91
-----------------
YP-0409/T
FREEDOM MUTUAL FUND
AMENDMENT NO. 5 TO AGREEMENT AND DECLARATION OF TRUST
Amendment No. 5 to the Agreement and Declaration of Trust dated December
22, 1980, as amended, made at Boston, Massachusetts, as of this 3rd day of
December, 1991.
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, Section 4.1 of the Agreement and Declaration of Trust provides
that the Trustees of the Trust may establish and designate additional series by
an instrument in writing, signed by a majority of the Trustees of the Trust.
NOW, THEREFORE, the Trustees hereby state:
1. that Section 4.2 of the Agreement and all other appropriate references
in the Agreement are amended to designate and establish a new series of shares
(in addition to the "Freedom Cash Management Fund" series and the "Freedom
Government Securities Fund" series heretofore established and designated) to be
known as the "Freedom Short-Intermediate Treasury Fund" effective as of this
date, such new series to have the relative rights and preferences set forth in
Subsections (a) through (m) of Section 4.2 of the Agreement.
2. Furthermore, that the initial paragraph of Section 4.2 of the Agreement
as heretofore in effect is amended to read as follows:
"Section 4.2 Establishment and Designation of
Series. Without limiting the authority of the
Trustees set forth in Section 4.1 to establish and
designate any further series, the Trustees hereby
establish and designate three series: Freedom Cash
Management Fund, Freedom Government Securities
Fund and Freedom Short-Intermediate Treasury Fund.
The Shares of such series and any Shares of any
further series that may from time to
time be established and designated by the Trustees
shall (unless the Trustees otherwise determine
with respect to some further series at the time of
establishing and designating the same) have the
following relative rights and preferences:"
The undersigned, being a majority of the Trustees of the Trust, hereby
certify that the amendment set forth above has been duly adopted in accordance
with the provisions of the Agreement and Declaration of Trust of the Trust.
IN WITNESS WHEREOF, the undersigned have hereunto set their hands and seals
for themselves and their assigns, as of this 3rd day of December, 1991.
/s/ Hugh A. Dunlap, Jr. /s/ William A. Barron, III
- ----------------------- --------------------------
Hugh A. Dunlap, Jr. William A. Barron, III
/s/ Patrick Grant /s/ Ralph Lowell, Jr.
- ----------------------- --------------------------
Patrick Grant Ralph Lowell, Jr.
/s/ Richard A. Farrell
- -----------------------
Richard A. Farrell
-2-
COMMONWEALTH OF MASSACHUSETTS )
) SS.
COUNTY OF SUFFOLK )
Then personally appeared the above-named Hugh A. Dunlap, Jr., Patrick
Grant, Richard A. Farrell, William A. Barron, III and Ralph Lowell, Jr. and
acknowledged this instrument to be his free act and deed as of the 3rd day of
December, 1991.
/s/ John Danello
------------------------
Notary Public
My Commission expires: 11/13/98
JOHN J. DANELLO, Notary Public
My Commission Expires
November 13,1998
-3-
FREEDOM MUTUAL FUND
AMENDMENT NO.6 TO AGREEMENT AND DECLARATION OF TRUST
AMENDMENT NO. 6 to the Agreement and Declaration of Trust of FREEDOM MUTUAL
FUND, dated December 22, 1980, as amended, made at Boston, Massachusetts as of
this 16th day of March, 1993.
WITNESSETH:
WHEREAS, Section 8.3 of the Agreement and Declaration of Trust dated
December 22, 1980, as amended (the "Agreement"), of Freedom Mutual Fund (the
"Trust") provides that the Agreement may be amended to abolish a Series of
Shares by an instrument in writing, signed by an officer of the Trust pursuant
to a vote of a majority of the Trustees of the Trust; and
WHEREAS, the Trustees have the authority, under Section 4.1 of the
Agreement, to abolish any Series and the establishment and designation thereof,
which was previously established by the Trustees pursuant to Section 4.1 of the
Agreement, so long as no Shares of such Series are outstanding at that time; and
WHEREAS, the Trust presently consists of three Series of Shares; and
WHEREAS, the Trustees desire to liquidate the Series of Share of the Trust
established and designated as the "Freedom Short-Intermediate Treasury Fund" and
to abolish the establishment and designation thereof and by resolution have
authorized the foregoing and all foregoing and all actions necessary to
effective the same including the filing of this amendment.
NOW, THEREFORE, the Trustees hereby state:
1. That Section 4.2 of the Agreement and Declaration of Trust and all other
appropriate references in the Agreement are amended to abolish the establishment
and designation of the Freedom Short-Intermediate Treasury Fund Series and to
delete any and all references to such Series from the Agreement, effective as
of this date.
2. Furthermore, that the initial paragraph of Section 4.2 of the Agreement
and Declaration of Trust as heretofore in effect is amended to read as follows:
"Section 4.2 Establishment and Designation of Series. Without limiting
the authority of the Trustees set forth in Section 4.1 to establish and
designate any further Series, the Trustees hereby establish and designate
two Series of Shares: Freedom Cash Management Fund and Freedom Government
Securities Fund. The Shares of such Series and any Shares of any further
Series that may from time to time be established and designated by the
Trustees shall (unless the Trustees otherwise determine with respect to
some further Series at the time of establishing and designating the same)
have the following relative rights and preferences:"
The undersigned, being a majority of the Trustees of the Trust, hereby
certify that the amendment set forth above has been duly adopted in accordance
with the provisions of the Agreement and Declaration of Trust.
2
IN WITNESS WHEREOF, the undersigned have hereunto set their hands and seals
for themselves and their assigns, as of this 16th day of March, 1993.
William A. Barron III
------------------------------
William A. Barron III
Thomas J. Brown
------------------------------
Thomas J. Brown
Dexter A. Dodge
------------------------------
Dexter A. Dodge
Hugh A. Dunlap, Jr.
------------------------------
Hugh A. Dunlap, Jr.
Richard A. Farrell
------------------------------
Richard A. Farrell
Patrick Grant
------------------------------
Patrick Grant
Ralph Lowell, Jr.
------------------------------
Ralph Lowell, Jr.
3
COMMONWEALTH OF MASSACHUSETTS )
) SS.
COUNTY OF SUFFOLK )
Then personally appeared each of the above-named William A. Barron III,
Thomas J. Brown, Dexter A. Dodge, Hugh A. Dunlap, Jr., Richard A. Farrell,
Patrick Grant and Ralph Lowell, Jr. and acknowledged this instrument to be his
free act and deed this 16th day of March, 1993.
Regina M. Pisa
---------------------------------
Notary Public
My Commission Expires: 1-24-97
(SEAL) -----------
BY-LAWS
OF
FREEDOM MUTUAL FUND
-------------------
ARTICLE 1
---------
Agreement and Declaration
-------------------------
of Trust and Principal Office
-----------------------------
1.1 Agreement and Declaration of Trust. These By-Laws shall be subject to
the Declaration of Trust, as from time to time in effect (the "Declaration of
Trust"), of the Freedom Mutual Fund, the Massachusetts business trust
established by the Declaration of Trust (the "Trust").
1.2 Principal Office of the Trust. The principal office of the Trust shall
be located in Boston, Massachusetts.
ARTICLE 2
---------
Meetings of Trustees
--------------------
2.1 Regular Meetings. Regular meetings of the Trustees may be held without
call or notice at such places and at such times as the Trustees may from time to
time determine, provided that notice of the first regular meeting following any
such determination shall be given to absent Trustees.
2.2 Special Meetings. Special meetings of the Trustees may be held at any
time and at any place designated in the call of the meeting when called by the
Chairman of the Trustees, the President or the Chief Financial Officer or by two
or more Trustees, sufficient notice thereof being given to each Trustee by the
Secretary or an Assistant Secretary or by the officer of the Trustees calling
the meeting.
2.3 Notice. It shall be sufficient notice to a Trustee of a special meeting
to send notice by mail at least forty-eight hours or by telegram at least
twenty-four hours before the meeting addressed to the Trustee at his or her
usual or last known business or residence address or to give notice to him or
her in person or by telephone at least twenty-four hours before the meeting.
Notice of a meeting need not be given to any Trustee if a written waiver of
notice, executed by him or her before or after the meeting, is filed with the
records of the meeting, or to any Trustee who attends the meeting without
protesting prior thereto or at its commencement the lack of notice to him or
her. Neither notice of a meeting nor a waiver of a notice need specify the
purposes of the meeting.
2.4 Quorum. At any meeting of the Trustees a majority of the Trustees then
in office shall constitute a quorum. Any meeting may be adjourned from time to
time by a majority of the votes cast upon the question, whether or not a quorum
is present and the meeting may be held as adjourned without further notice.
2.5 Participation by Telephone. One or more of the Trustees or of any
committee of the Trustees may participate in a meeting thereof by means of a
conference telephone or similar communications equipment allowing all persons
participating in the meeting to hear each other at the same time. Participation
by such means shall constitute presence in person at a meeting.
ARTICLE 3
---------
Officers
--------
3.1 Enumeration; Qualification. The officers of the Trust shall be a
Chairman of the Trustees, a President, a Chief Financial Officer, a Treasurer, a
Secretary and such other officers, including Vice Presidents, if any, as the
Trustees from time to time may in their discretion elect. The Trust may also
have such agents as the Trustees from time to time may in their discretion
appoint. The Chairman of the Trustees shall be a Trustee and may but need not be
a shareholder; and any other officer may be but none need be a Trustee or
shareholder. Any two or more offices may be held by the same person.
3.2 Election. The Chairman of the Trustees, the President, the Chief
Financial Officer, the Treasurer, and the Secretary shall be elected annually by
the Trustees at a meeting held within the first four months of the Trust's
fiscal year. The meeting at which the officers are elected shall be known as the
annual meeting of Trustees. Other officers, if any, may be elected or appointed
by the Trustees at said meeting or at any other time. Vacancies in any office
may be filled at any time.
3.3 Tenure. The Chairman of the Trustees, the President, the Chief
Financial Officer, the Treasurer, and the Secretary shall hold office until the
next annual meeting of the Trustees and until their respective successors are
chosen and qualified, or in each case until he or she sooner dies, resigns, is
removed or becomes disqualified. Each other officer shall hold office and each
agent shall retain authority at the pleasure of the Trustees.
3.4 Powers. Subject to the other provisions of these By-Laws, each officer
shall have, in addition to the duties and powers herein and in the Declaration
of Trust set forth, such duties and powers as are commonly incident to the
office occupied by him or her as if the trust were organized as a Massachusetts
business corporation and such other duties and powers as the Trustees may from
time to time designate.
3.5 Chairman; President. Unless the Trustees otherwise provide, the
Chairman of the Trustees, or, if there is none, or in the absence of the
Chairman, the President shall preside at all meetings of the shareholders and of
the Trustees. The Chairman shall be the chief executive officer.
3.6 Vice President. The Vice President, or if there be more than one Vice
President, the Vice Presidents in the order determined by the Trustees (or if
there be no such determination, then in the order of their election) shall in
the absence of the President or in the event of his inability or refusal to act,
perform the duties of the President, and when so acting, shall have all the
powers of and be subject to all the restrictions upon the President. The Vice
Presidents shall perform such other duties and have such other powers as the
Board of Trustees may from time to time prescribe.
3.7 Chief Financial Officer. The Chief Financial Officer shall be the chief
financial and accounting officer of the Trust and shall, subject to the
provisions of the Declaration of Trust and to any arrangement made by the
Trustees with a custodian, investment adviser or manager, or transfer,
shareholder servicing or similar agent, be in charge of the valuable papers,
books of account and accounting records of the Trust and shall have such other
duties and powers as may be designated from time to time by the Trustees or by
the President.
3.8 Treasurer. The Treasurer shall, in absence of the Chief Financial
Officer or in the event of his inability or refusal to act, perform the duties
and exercise the powers of the Chief Financial Officer and shall perform such
other duties and have such other powers as the Board of Trustees may from time
to time prescribe.
3.9 Secretary. The Secretary shall record all proceeds of the shareholders
and the Trustees in books to be kept therefor, which books or a copy thereof
shall be kept at the principal office of the Trust. In the absence of the
Secretary from any meeting of the shareholders or Trustees, an assistant
secretary, or if there be none or if he or she is absent, a temporary secretary
chosen at such meeting shall record the proceedings thereof in the aforesaid
books.
3.10 Assistant Secretary. The Assistant Secretary, or if there be more than
one, the Assistant Secretaries in the order determined by the Trustees (or if
there be no determination, then in the order of their election), shall, in the
absence of the Secretary or in the event of his inability or refusal to act,
perform the duties and exercise the powers of the Secretary and shall perform
such other duties and have such other powers as the Board of Trustees may from
time to time prescribe.
3.11 Resignations and Removals. Any Trustee or officer may resign at any
time by written instrument signed by him or her and delivered to the Chairman,
the President or the Secretary or to a meeting of the Trustees. Such resignation
shall be effective upon receipt unless specified to be effective at some other
time. The Trustees may remove any officer elected by them with or without cause.
Except to the extent expressly provided in a written agreement with the Trust no
Trust or Officer resigning and no officer removed shall have any right to any
compensation for any period following his or her resignation or removal or any
right to damages on account of such removal.
ARTICLE 4
---------
Committees
----------
4.1 General. The Trustees, by vote of a majority of the Trustees then in
office, may elect from their number an Executive Committee or other committees
and may delegate thereto some or all of their powers except those which by law,
by the Declaration of Trust, or by these By-Laws may not be delegated. Except as
the Trustees may otherwise determine, any such committee may make rules for the
conduct of its business, but unless otherwise provided by the Trustees or in
such rules, its business shall be conducted so far as possible in the same
manner as is provided by these By-Laws for the Trustees themselves. All members
of such committees shall hold such offices at the pleasure of the Trustees. The
Trustees may abolish any such committee at any time. Any committee to which the
Trustees delegate any of their powers or duties shall keep records of its
meetings and shall report its action to the Trustees. The Trustees shall have
power to rescind any action of any committee, but no such rescission shall have
retroactive effect.
ARTICLE 5
---------
Reports
-------
5.1 General. The Trustees and officers shall render reports at the time and
in the manner required by the Declaration of Trust or any applicable law.
Officers and Committees shall render such additional reports as they may deem
desirable or as may from time to time be required by the Trustees.
ARTICLE 6
---------
Fiscal Year
-----------
6.1 General. The fiscal year of the Trust shall be fixed by resolution of
the Trustees.
ARTICLE 7
---------
Seal
----
7.1 General. The seal of the Trust shall consist of a flat-faced die with
the word "Massachusetts", together with the name of the Trust and the year of
its organization cut or engraved thereon, but, unless otherwise required by the
Trustees, the seal shall not be necessary to be placed on, and its absence shall
not impair the validity of, any document, instrument or other paper executed and
delivered by or on behalf of the Trust.
ARTICLE 8
---------
Execution of Papers
-------------------
8.1 General. Except as the Trustees may generally or in particular cases
authorize the execution thereof in some other manner, all deeds, leases,
contracts, notes and other obligations made by the Trustees shall be signed by
the Chairman, President, Chief Financial Officer, any Vice President, or by the
Treasurer and need not bear the seal of the Trust.
ARTICLE 9
---------
Issuance of Share Certificates
------------------------------
9.1 Share Certificates. In lieu of issuing certificates for shares, the
Trustees or the transfer agent may either issue receipts therefor or may keep
accounts upon the books of the Trust for the record holders of such shares, who
shall in either case be deemed, for all purposes hereunder, to be the holders of
certificates for such shares as if they had accepted such certificates and shall
be held to have expressly assented and agreed to the terms hereof.
The Trustees may at any time authorize the issuance of share certificates
either in limited cases or to all shareholders. In that event, a shareholder may
receive a certificate stating the number of shares owned by him, in such form as
shall be prescribed from time to time by the Trustees. Such certificate shall be
signed by the president or a vice president and by the treasurer or assistant
treasurer. Such signatures may be facsimiles if the certificate is signed by a
transfer agent, or by a registrar, other than a Trustee, officer or employee of
the Trust. In case any officer who has signed or whose facsimile signature has
been placed on such certificate shall cease to be such officer before such
certificate is issued, it may be issued by the Trust with the same effect as if
he were such officer at the time of its issue.
9.2 Loss of Certificates. In case of the alleged loss or destruction or the
mutilation of a share certificate, a duplicate certificate may be issued in
place thereof, upon such terms as the Trustees shall prescribe.
9.3 Issuance of New Certificate to Pledgee. A pledgee of shares transferred
as collateral security shall be entitled to a new certificate if the instrument
of transfer substantially describes the debt or duty that is intended to be
secured thereby. Such new certificate shall express on its face that it is held
as collateral security, and the name of the pledger shall be stated thereon, who
alone shall be liable as a shareholder, and entitled to vote thereon.
9.4 Discontinuance of Issuance of Certificates. The Trustees may at any
time discontinue the issuance of share certificates and may, by written notice
to each shareholder, require the surrender of shares certificates to the Trust
for cancellation. Such surrender and cancellation shall not affect the ownership
of shares in the Trust.
ARTICLE 10
----------
Dealings with Trustees and Officers
----------------------------------
10.1 General. Any Trustee, officer or other agent of the Trust may acquire,
own and dispose of shares of the Trust to the same extent as if he were not a
Trustee, officer or agent; and the Trustees may accept subscriptions to shares
or repurchase shares from any firm or company in which any Trustee, officer or
other agent of the Trust may have an interest.
ARTICLE 11
----------
Amendments to the By-Laws
-------------------------
11.1 General. These By-Laws may be amended or repealed, in whole or in
part, by a majority of the Trustees then in office at any meeting of the
Trustees, or by one or more writings signed by such a majority.
YP-7167/T
3/1/93
CR.002
NUMBER [FLAG LOGO] SHARES
FREEDOM MUTUAL FUND
(A MASSACHUSETTS BUSINESS TRUST)
FREEDOM GOVERNMENT SECURITIES FUND
SHARES OF BENEFICIAL INTEREST
ACCOUNT NO. ALPHA CODE
CUSIP 356 403 204
SEE REVERSE FOR CERTAIN DEFINITIONS
THIS CERTIFIES THAT
IS THE REGISTERED OWNER OF
FULLY PAID AND NON-ASSESSABLE SHARES (WITHOUT PAR VALUE) OF
- -----------------------FREEDOM GOVERNMENT SECURITIES FUND-----------------------
A Series of Shares established and designated under the Master Trust Agreement
of FREEDOM MUTUAL FUND, a Massachusetts business trust (the "Trust") dated
December 22, 1980 as amended from time to time (the "Trust Agreement"). The
Terms of the Trust Agreement, a copy of which is on file with the Secretary of
the Commonwealth of Massachusetts, are hereby incorporated by references as
fully as if set forth herein in their entirety. As provided in the Trust
Agreement, the beneficial interest in the Trust has been divided into Shares of
such Series as may be established and designated from time to time, and the
Shares evidenced hereby represent the benefical interest in an undivided
proportionate part of the assets belonging to the above designated Series
subject to the liabilities belonging to such Series. Such Series and other
Series have the relative rights and preferences set forth in the Trust
Agreement, and the Trust will furnish to the holder of this certificate upon
written request and without charge a statement of such relative rights and
preferences. THE SHARES EVIDENCED HEREBY ARE SUBJECT TO REDEMPTION BY THE TRUST
pursuant to the procedured that may be determined by the Trustees in accordance
with the Trust Agreement. This certificate is issued by the Trustees of FREEDOM
MUTUAL FUND not individually but as Trustees under the Trust Agreement, and
represents Shares of the above designated Series and does not bind in any of the
Trustees, Shareholders, Officers, Employees or Agents of the Trust personally
but only the assets and property of the Trust. Subject to the provisions of the
Trust Agreement, the Shares represented by this certificate are transferable
upon the books of the Trust by the registered holder hereof in person or by his
duly authorized attorney upon surrender of this certificate.
[SEAL]
WITNESS the facsimile signatures of the President and Treasurer of the Trust and
the signature of its duly authorized agent.
Dated
/s/ Thomas J. Brown /s/ Hugh A. Dunlap, Jr.
Treasurer President
Countersigned: STATE STREET BANK & TRUST COMPANY
By Transfer Agent
Authorized Signature
he following abbreviations, when used in the inscription on the face of this
certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM -as tenants in common UNIF GIFT MIN ACT- Custodian
-------- --------
(Cust) (Minor)
TEN ENT -as tenants by the entireties under Uniform Gifts to Minors
JT TEN -as joint tenants with right Act
of survivorship and not as --------------------------
tenants in common (State)
additional abbreviations may also be used though not in the above list.
For value received, hereby sell, assign and transfer unto
-----------------------
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
----------------------------------------
- --------------------------------------------------------------------------------
Please print or typewrite name and address including postal zip coded of
assignee
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------Shares
represented by the within Certificate, and do hereby irrevocably constitute and
appoint
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Attorney to transfer the said shares on the books of the within-named Trust with
full power of substitution in the premises.
Dated,
------------------
---------------------------------
NOTICE: The signature of this assignment must correspond with the name as
written upon the face of the Certificate, in every particular, without
alteration or enlargement or any change whatever.
NUMBER [FLAG LOGO] SHARES
FREEDOM MUTUAL FUND
(A MASSACHUSETTS BUSINESS TRUST)
FREEDOM CASH MANAGEMENT FUND
SHARES OF BENEFICIAL INTEREST
ACCOUNT NO. ALPHA CODE
CUSIP 356 403 204
SEE REVERSE FOR CERTAIN DEFINITIONS
THIS CERTIFIES THAT
IS THE REGISTERED OWNER OF
FULLY PAID AND NON-ASSESSABLE SHARES (WITHOUT PAR VALUE) OF
-----------------------FREEDOM CASH MANAGEMENT FUND-----------------------
the FREEDOM CASH MANAGEMENT FUND, a Series of Shares established and designated
under the Master Trust Agreement of FREEDOM MUTUAL FUND, a Massachusetts
business trust (the "Trust") dated December 22, 1980 as amended from time to
time (the "Trust Agreement"). The terms of the Trust Agreement, a copy of which
is on file with the Secretary of the Commonwealth of Massachusetts, are hereby
incorporated by references as fully as if set forth herein in their entirety. As
provided in the Trust Agreement, the beneficial interest in the Trust has been
divided into Shares of such Series as may be established and designated from
time to time, and the Shares evidenced hereby represent the beneficial interest
in an undivided proportionate part of the assets belonging to the above
designated Series subject to the liabilities belonging to such Series. Such
Series and other Series have the relative rights and preferences set forth in
the Trust Agreement, and the Trust will furnish to the holder of this
certificate upon written request and without charge a statement of such relative
rights and preferences. THE SHARES EVIDENCED HEREBY ARE SUBJECT TO REDEMPTION BY
THE TRUST pursuant to the procedures that may be determined by the Trustees in
accordance with the Trust Agreement. This certificate is issued by the Trustees
of FREEDOM MUTUAL FUND not individually but as Trustees under the Trust
Agreement, and represents Shares of the above designated Series and does not
bind in any of the Trustees, Shareholders, Officers, Employees or Agents of the
Trust personally but only the assets and property of the Trust. Subject to the
provisions of the Trust Agreement, the Shares represented by this certificate
are transferable upon the books of the Trust by the registered holder hereof in
person or by his duly authorized attorney upon surrender of this certificate.
[SEAL]
WITNESS the facsimile signatures of the President and Treasurer of the Trust and
the signature of its duly authorized agent.
Dated
/s/ Thomas J. Brown /s/ Hugh A. Dunlap, Jr.
Treasurer President
Countersigned: STATE STREET BANK & TRUST COMPANY
By Transfer Agent
Authorized Signature
The following abbreviations, when used in the inscription on the face of this
certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM -as tenants in common UNIF GIFT MIN ACT- Custodian
-------- --------
(Cust) (Minor)
TEN ENT -as tenants by the entireties under Uniform Gifts to Minors
JT TEN -as joint tenants with right Act
of survivorship and not as --------------------------
tenants in common (State)
additional abbreviations may also be used though not in the above list.
For value received, hereby sell, assign and transfer unto
-----------------------
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
----------------------------------------
- --------------------------------------------------------------------------------
Please print or typewrite name and address including postal zip coded of
assignee
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------Shares
represented by the within Certificate, and do hereby irrevocably constitute and
appoint
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Attorney to transfer the said shares on the books of the within-named Trust with
full power of substitution in the premises.
Dated,
------------------
---------------------------------
NOTICE: The signature of this assignment must correspond with the name as
written upon the face of the Certificate, in every particular, without
alteration or enlargement or any change whatever.
DISTRIBUTION AGREEMENT
Distribution Agreement dated as of the 29th day of November, 1996 among
TUCKER ANTHONY INCORPORATED, a corporation organized under the laws of the
Commonwealth of Massachusetts, FREEDOM DISTRIBUTORS CORPORATION, a corporation
organized under the laws of the Commonwealth of Massachusetts, and SUTRO & CO.,
INCORPORATED, a corporation organized under the laws of the State of Nevada,
(sometimes herein referred to collectively as "Distributor"), and FREEDOM MUTUAL
FUND, a Massachusetts business trust having a place of business at One Beacon
Street, Boston, Massachusetts (sometimes herein referred to as "the Trust")
which proposes to offer shares of beneficial interest in different series
representing interests in different portfolios of assets (each series being
referred to herein as a " Fund").
WITNESSETH:
In consideration of the agreements herein contained and for other good
and valuable consideration, receipt and sufficiency of which is hereby
acknowledged by the parties, it is agreed:
1. Appointment of Distributor. The Trust hereby appoints the
Distributor as its exclusive agent to sell and distribute shares of each Fund of
the Trust then in existence at the offering price thereof as from time to time
determined in the manner herein provided. The Distributor hereby accepts such
appointment and agrees during the term of this Distribution Agreement to provide
the services and to assume the obligations herein set forth without
compensation.
2. Basis of Sale of Shares. Distributor does not agree to sell any
specific number of shares. Shares will be sold by Distributor as agent for the
Trust only against orders therefor. Distributor will not purchase shares from
anyone other than the Trust except as agent for the Trust, and Distributor will
not take "short" positions in shares of the Trust.
3. Offering Price. The offering price for shares of any Fund of the
Trust shall be the "net asset value per share" for that Fund determined in
accordance with the Agreement and Declaration of Trust of the Trust. The net
asset value per share for each Fund shall be determined at such time and on such
days as are established by the Board of Trustees of the Trust from time to time.
4. Manner of Offering. Distributor will conform to the securities laws
of any jurisdiction in which it sells, directly or indirectly, any shares.
Distributor also agrees to furnish to the Trust sufficient copies of any
agreements, plans or sales literature it intends to use in connection with any
sales of shares in adequate time for the Trust to file and clear them with the
proper authorities before they are put in use, and not to use them until so
filed and cleared.
5. Allocation of Expenses
(a) The Trust, either directly or through its investment adviser, will
be responsible for, and shall pay the expenses of:
(i) providing all necessary services, including fees and
disbursements of counsel, related to the preparation, setting in type, printing
and filing of any registration statement and/or prospectus required under the
Securities Act of 1933, as amended, or under state securities laws, covering its
shares, and all amendments and supplements thereto, the mailing of any such
prospectus to existing shareholders, and preparing, setting in type, printing
and mailing periodic reports to existing shareholders;
(ii) the cost of all registration or qualification fees;
(iii) the cost of preparing temporary and permanent share
certificates for shares of the Trust;
(iv) all the federal and state (if any) issue and/or transfer
taxes payable upon the issue by or (in the case of treasury shares) transfer
from the Trust to the Distributor of any and all shares distributed hereunder.
(b) The Distributor agrees that, after the prospectus and periodic
reports have been set in type, it will bear the expense of printing and
distributing any copies thereof which are to be used in connection with the
offering of shares to investors. The Distributor further agrees that it will
bear the expenses of preparing, printing and distributing any other literature
used by the Distributor or furnished by it for use in connection with the
offering of the shares for sale to the public, and any expenses of advertising
in connection with such offering. The Distributor will also pay fees for
services rendered by the transfer agent on behalf of the Distributor.
(c) The Trust will be responsible for, and shall pay the expenses of,
maintaining shareholder accounts and furnishing or causing to be furnished to
each shareholder a statement of his account. Where shares of the Trust are
carried for the account of a customer by the Distributor in a broker controlled
account together with other assets of the customer, the Trust will be
responsible for arid shall pay the Distributor or its affiliate the amount of
$10.50 per shareholder account for the Distributor's services in maintaining
shareholder accounts and furnishing statements of account with respect to such
broker controlled accounts. The $10.50 payment shall be in lieu of all other
payments to the Distributor, including any and all out of pocket expenses
incurred by the Distributor on behalf of the Trust.
6. Distributor Is Independent Contractor. Distributor shall be an
independent contractor. Distributor is responsible for its own conduct, for the
employment, control and conduct of its agents and employees and for injury to
such agents or employees or to others through its agents or employees.
Distributor assumes full responsibility for its agents and employees under
applicable statutes and agrees to pay all employer taxes thereunder.
7. Term of Contract. This Distribution Agreement shall go into effect
on the date hereof and shall continue in effect thereafter for successive
periods of one year each if such continuance is approved at least annually
thereafter (i) either by an affirmative vote of a majority
2
of the outstanding shares of the Trust or by the Board of Trustees of the Trust,
and (ii) in either case by a majority of the Trustees of the Trust who are not
interested persons of the Distributor or (otherwise than as Trustees) of the
Trust, cast in person at a meeting called for the purpose of voting on such
approval. Written notice of discontinuance of this Distribution Agreement may be
given by one party hereto to the other not less than sixty (60) days before
expiration of its initial term or before the expiration of any succeeding annual
period.
8. Assignment. This Distribution Agreement may not be assigned by the
Distributor and shall automatically terminate in the event of an attempted
assignment by the Distributor; provided, however, that the Distributor may
employ such other person, persons, corporation, or corporations, as it shall
determine order to assist it in carrying out this Distribution Agreement.
9. Indemnification by Distributor. Distributor agrees to indemnify and
hold harmless the Trust or any other person who has been, is, or may hereafter
be an officer, director or employee of the Trust against any loss, damage or
expense reasonably incurred by any of them in connection with any claim or in
connection with any action, suit, or proceeding to which any of them may be a
party, which arises out of or is alleged to arise out of or is based upon any
untrue statement or alleged untrue statement of a material fact, or the omission
or alleged omission to state a material fact necessary to make the statements
made not misleading, on the part of Distributor or any agent or employee of
Distributor or any other person for whose acts Distributor is responsible or is
alleged to be responsible, unless such statement or omission was made in
reliance upon written information furnished by the Trust. The term "expenses"
for purposes of this and the next paragraph includes amounts paid in
satisfaction of judgments or in settlements which are made with Distributor's
consent. The foregoing rights of indemnification shall be in addition to any
other rights to which the Trust or a Trustee may be entitled as a matter of law.
10. Indemnification by Trust. The Trust agrees to indemnify and hold
harmless the Distributor and each person who has been, is, or may hereafter be
an officer, director, employee or agent of the Distributor against any loss,
damage or expense reasonably incurred by any of them in connection with any
claim or in connection with any action, suit or proceeding to which any of them
may be a party, which arises out of or is alleged to arise out of or is based
upon any untrue or alleged untrue statement of material fact, or the omission or
alleged omission to state a material fact necessary to make the statements
therein not misleading, contained in a registration statement or prospectus, or
any amendment or supplement thereto, unless such statement or omission was made
in reliance upon written information furnished by the Distributor. The foregoing
rights of indemnification shall be in addition to any other rights to which the
Distributor may be entitled as a matter of law. Nothing contained herein shall
relieve Distributor of any liability to the Trust or its shareholders to which
Distributor would otherwise be subject by reason of willful misfeasance, bald
faith, or gross negligence in the performance of its duties or reckless
disregard of its obligations and duties hereunder.
11. Non-exclusive Agreement. The services of the Distributor to the
Trust hereunder shall not be deemed to be exclusive, and the Distributor shall
be free to (a) render similar services
3
to, and act as underwriter or distributor in connection with the distribution of
shares of, other investment companies, and (b)engage in any other businesses and
activities from time to time.
12. Amendment. This Distribution Agreement may be amended at any time
by mutual agreement in writing of the parties hereto, provided that any such
amendment is approved by a majority of the Trustees of the Trust who are not
interested persons of the Distributor or by the holders of a majority of the
outstanding shares of the Trust.
13. Governing law. This Agreement shall be construed in accordance with
the laws of the Commonwealth of Massachusetts.
14. Limitation only Liability. The Agreement and Declaration of Trust
establishing the Trust, dated December 22, 1980, as amended (the "Declaration"),
a copy of which is on file in the Office of the Secretary of the Commonwealth of
Massachusetts, provides that the name "Freedom Mutual Fund" refers to the
Trustees under the Declaration collectively as Trustees, but not as individuals
or personally; and no Trustee, shareholder, officer, employee or agent of the
Trust shall be held to any personal liability, nor shall resort be had to their
private property for the satisfaction of any obligation or claim otherwise in
connection with the affairs of said Trust but the Trust Estate only shall be
liable.
15. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but such
counterparts shall, together, constitute only one instrument.
4
IN WITNESS WHEREOF, this Distribution Agreement has been executed for
the Distributors and the Trust by their duly authorized officers, as of the date
first set forth above.
FREEDOM DISTRIBUTORS TUCKER ANTHONY INCORPORATED
CORPORATION
By:/s/ John Danello By: /s/ Arthur E. McCarthy
--------------------------- --------------------------
President Managing Director
ATTEST:/s/ Maureen M. Renzi ATTEST:/s/ Maureen M. Renzi
----------------------- -----------------------
SUTRO & CO., INCORPORATED FREEDOM MUTUAL FUND
By: By:/s/ Darlene F. Rego
--------------------------- ---------------------------
Executive Vice President Treasurer
ATTEST: ATTEST:/s/ Maureen M. Renzi
----------------------- -----------------------
5
IN WITNESS WHEREOF, this Distribution Agreement has been executed for
the Distributors and the Trust by their duly authorized officers, as of the date
first set forth above.
FREEDOM DISTRIBUTORS TUCKER ANTHONY INCORPORATED
CORPORATION
By: By:
--------------------------- --------------------------
President Managing Director
ATTEST: ATTEST:
----------------------- -----------------------
SUTRO & CO., INCORPORATED FREEDOM MUTUAL FUND
By: illegible By:
--------------------------- ---------------------------
Executive Vice President Treasurer
ATTEST: /s/ Mary Jane Deleney ATTEST:
----------------------- -----------------------
6
CUSTODIAN AGREEMENT
Between
TUCKER ANTHONY MUTUAL FUND
and
STATE STREET BANK AND TRUST COMPANY
TABLE OF CONTENTS
1. Employment of Custodian and Property to be
Held By It..................................................1
2. Duties of the Custodian with Respect to Property
of the Fund Held by the Custodian...........................2
2.1 Holding Securities......................................2
2.2 Delivery of Securities..................................3
2.3 Registration of Securities..............................6
2.4 Bank Accounts...........................................7
2.5 Payments for Shares.....................................8
2.6 Investment and Availability of Federal Funds............8
2.7 Collection of Income....................................8
2.8 Payment of Fund Moneys..................................9
2.9 Liability for Payment in Advance of
Receipt of Securities Purchased........................ll
2.10 Payments for Repurchases or Redemptions
of Shares of the Fund..................................12
2.11 Appointment of Agents..................................13
2.12 Deposit of Fund Assets in Securities System............13
2.13 Ownership Certificates for Tax Purposes................17
2.14 Proxies................................................17
2.15 Communications Relating to Fund
Portfolio Securities...................................17
2.16 Proper Instructions....................................18
2.17 Actions Permitted Without Express Authority............l9
2.18 Evidence of Authority..................................l9
3. Duties of Custodian With Respect to the Books
of Account and Calculation of Net Asset Value
and Net Income..............................................20
4. Records.....................................................21
5. Opinion of Fund's Independent Accountant....................21
6. Reports to Fund by Independent Public Accountants...........22
7. Compensation of Custodian...................................22
8. Responsibility of Custodian.................................22
9. Effective Period, Termination and Amendment.................23
10. Successor Custodian.........................................25
11. Interpretive and Additional Provisions......................26
12. Additional Funds............................................26
13. Massachusetts Law to Apply..................................27
14. Prior Contracts.............................................27
15. Limitation of Liability.....................................27
CUSTODIAN CONTRACT
------------------
. .
(TUCKER ANTHONY CASH MANAGEMENT FUND)
CONTRACT made as of this 19th day of March, 1981 by and between Tucker
Anthony Mutual Fund, a Massachusetts business trust having a principal place of
business at Three Center Plaza, Boston, Massachusetts (hereinafter called the
"Trust") and STATE STREET BANK AND TRUST COMPANY, a Massachusetts banking
corporation having its principal place of business at 225 Franklin Street,
Boston, Massachusetts 02110 (hereinafter called "Custodian").
WHEREAS, the Trust is authorized to issue shares of beneficial interest
("Shares") in separate series, with each such series representing interests in a
separate portfolio of securities and other assets; and
WHEREAS, the Trust intends to initially offer shares in one series, the
Tucker Anthony Cash Management Fund (such series, together with all other series
subsequently established by the Trust and made subject to this Contract in
accordance with paragraph 12, being herein referred to as the "Fund(s)");
WITNESSETH:
That in consideration of the mutual covenants and agreements hereinafter
contained, the parties hereto agree as follows:
1. Employment of Custodian and Property to be Held by It
The Trust hereby employs the Custodian as the custodian
-- 1 --
of its assets of Tucker Anthony Cash Management Fund, and any other Fund which
hereafter becomes subject to the terms hereof, pursuant to the provisions of the
Agreement and Declaration of Trust dated December 22, 1980. The Trust agrees to
deliver to the Custodian all securities and cash owned by any Funds subject to
this Contract, and all payments of income, payments of principal or capital
distributions received by it with respect to all securities owned by such Funds
from time to time, and the cash consideration received by it for such new Shares
of any Fund as may be issued or sold from time to time. The Custodian shall not
be responsible for any property of any Fund held or received by the Trust and
not delivered to the Custodian.
The Custodian may from time to time employ one or more sub-custodians, but
only in accordance with an applicable vote by the Trustees of the Trust, and
provided that the Custodian shall have no more or less responsibility or
liability to the Trust on account of any actions or omissions of any
sub-custodian so employed than any such sub-custodian has to the Custodian.
2. Duties of the Custodian with Respect to Property of the Trust Held By
the Custodian
2.1 Holding Securities. The Custodian shall hold and physically segregate
for the account of each Fund of the Trust all non-cash property,
including all securities owned by the Trust, other than securities
which are maintained pursuant to Section 2.12 in a clearing agency
which acts as a securities depository or in a book-entry
-- 2 --
system authorized by the U.S. Department of the Treasury, collectively
referred to herein as "Securities System".
2.2 Delivery of Securities. The Custodian shall release and deliver
securities owned by the Trust held by the Custodian or in a Securities
System account of the Custodian only upon receipt of proper
instructions, which may be continuing instructions when deemed
appropriate by the parties, and only in the following cases:
1) Upon sale of such securities for the account of a Fund and
receipt of payment therefor;
2) Upon the receipt of payment in connection with any repurchase
agreement related to such securities entered into by the
Trust;
3) In the case of a sale effected through a Securities System,
in accordance with the provisions of Section 2.12 hereof;
4) To the depository agent in connection with tender or other
similar offers for portfolio securities of a Fund;
5) To the Issuer thereof or its agent when such securities are
called, redeemed, retired or otherwise become payable;
provided that, in any such case, the cash or other
consideration is to be delivered to the Custodian;
6) To the Issuer thereof, or its agent, for
-- 3 --
transfer into the name of the Trust or into the name of any
nominee or nominees of the Custodian or into the name or
nominee name of any agent appointed pursuant to Section 2.11
or into the name or nominee name of any sub-custodian
appointed pursuant to Article 1; or for exchange for a
different number of bonds, certificates or other evidence
representing the same aggregate face amount or number of
units; provided that, in any such case, the new securities
are to be delivered to the Custodian;
7) To the broker selling the same for examination in accordance
with the "street delivery" custom;
8) For exchange or conversion pursuant to any plan of merger,
consolidation, recapitalization, reorganization or
readjustment of the securities of the issuer of such
securities, or pursuant to provisions for conversion
contained in such securities, or pursuant to any deposit
agreement; provided that, in any such case, the new
securities and cash, if any, are to be delivered to the
Custodian;
9) In the case of warrants, rights or similar
-- 4--
securities, the surrender thereof in the exercise of such
warrants, rights or similar securities or the surrender of
interim receipts or temporary securities for definitive
securities; provided that, in any such case, the new
securities and cash, if any, are to be delivered to the
Custodian;
10) For delivery in connection with any loans of securities made
by the Trust, but only against receipt of adequate collateral
as agreed upon from time to time by the Custodian and the
Trust, which may be in the form of cash or obligations issued
by the United States government, its agencies or
instrumentalities;
11) For delivery as security in connection with any borrowings by
the Trust requiring a pledge of assets of the appropriate
Fund of the Trust, but only against receipt of amounts
borrowed;
12) Upon receipt of instructions from the transfer agent for the
Trust ("Transfer Agent"), for delivery to such Transfer Agent
or to the holders of Shares of a Fund in connection with
distributions in kind, as may be described from time to time
in that Fund's
-- 5 --
currently effective prospectus, in satisfaction of requests
by holders of Shares for repurchase or redemption; and
13) For any other proper corporate purpose, but only upon receipt
of, in addition to proper instructions, a certified copy of a
resolution of the Trustees or of the Executive Committee
signed by an officer of the Trust and certified by the
Secretary or an Assistant Secretary, specifying the
securities to be delivered, setting forth the purpose for
which such delivery is to be made, declaring such purposes to
be proper corporate purposes, and naming the person or
persons to whom delivery of such securities shall be made.
2.3 Registration of Securities. Securities held by the Custodian (other
than bearer securities) shall be registered in the name of the Trust or
in the name of any nominee of the Trust or of any nominee of the
Custodian which nominee shall be assigned exclusively to the Trust,
unless the Trust has authorized in writing the appointment of a nominee
to be used in common with other registered investment companies having
the same investment adviser as the Trust, or in the name or nominee
name of any agent appointee pursuant to Section
-- 6 --
2.11 or in the name or nominee name of any sub-custodian appointed
pursuant to Article 1. All securities accepted by the Custodian on
behalf of the Trust under the terms of this Contract shall be in
"street" or other good delivery form.
2.4 Bank Accounts. The Custodian shall open and maintain a separate bank
account or accounts in the name of each Fund of the Trust, subject only
to draft or order by the Custodian acting pursuant to the terms of this
Contract, and shall hold in such account or accounts, subject to the
provisions hereof, all cash received by it from or for the account of
that Fund, other than cash maintained by the Trust in a bank account
established and used in accordance with Rule 17f-3 under the Investment
Company Act of 1940. Funds held by the Custodian for the Trust may be
deposited by it to its credit as Custodian in the Banking Department of
the Custodian or in such other banks or trust companies as it may in
its discretion deem necessary or desirable; provided, however, that
every such bank or trust company shall be qualified to act as a
custodian under the Investment Company Act of 1940 and that each such
bank or trust company and the funds to be deposited with each such bank
or trust company shall be approved by vote of a majority of the
Trustees of the Trust. Such funds shall be deposited by the Custodian
in its capacity as Custodian and shall be withdrawable by
-- 7 --
the Custodian only in that capacity.
2.5 Payments for Shares. The Custodian shall receive from the distributor
for the Trust's Shares or from the Transfer Agent of the Trust and
deposit into the account of the appropriate Fund such payments as are
received for Shares of that Fund issued or sold from time to time by
the Trust. The Custodian will provide timely notification to the Trust
and the Transfer Agent of any receipt by it of payments for Shares of
the Trust.
2.6 Investment and Availability of Federal Funds. Upon mutual agreement
between the Trust and the Custodian, the Custodian shall, upon the
receipt of proper instructions,
1) invest in such instruments as may be set forth in such
instructions, on the same day as received, all federal funds
received after a time agreed upon between the Custodian and
the Trust; and
2) make federal funds available to each Fund of the Trust, as of
specified times agreed upon from time to time by the Trust
and the Custodian, in an amount equal to the amount of checks
received in payment for Shares of that Fund which are
deposited into that Fund's account.
2.7 Collection of Income. The Custodian shall collect on a timely basis
all income and other payments with respect
-- 8 --
to registered securities held hereunder to which the Trust shall be
entitled either by law or pursuant to custom in the securities
business, and shall collect on a timely basis all income and other
payments with respect to bearer securities if, on the date of payment
by the issuer, such securities are held by the Custodian or agent
thereof for the account of a Fund of the Trust and shall credit such
income, as collected, to that Fund's custodian account. Without
limiting the generality of the foregoing, the Custodian shall detach
and present for payment all coupons and other income items requiring
presentation as and when they become due and shall collect interest
when due on securities held hereunder.
2.8 Payment of Fund Moneys. Upon receipt of proper instructions, which may
be continuing instructions when deemed appropriate by the parties, the
Custodian shall pay out moneys of the Trust in the following cases
only:
l) Upon the purchase of securities for the account of a Fund of
the Trust but only (a) against the delivery of such
securities to the Custodian (or any bank, banking firm or
trust company doing business in the United States or abroad
which is qualified under the Investment Company Act of 1940,
as amended, to act as a custodian and has been designated by
the Custodian as its agent for this
-- 9 --
purpose) registered in the name of the Trust or in the name
of a nominee of the Custodian referred to in Section 2.3
hereof or in proper form for transfer; (b) in the case of a
purchase effected through a Securities System, in accordance
with the conditions set forth in Section 2.12 hereof or (c)
in the case of repurchase agreements entered into between the
Trust and the Custodian, or another bank, (i) against
delivery of the securities either in certificate form or
through an entry crediting the Custodian's account at the
Federal Reserve Bank with such securities or (ii) against
delivery of the receipt evidencing purchase by the Trust of
securities owned by the Custodian along with written evidence
of the agreement by the Custodian to repurchase such
securities from the Trust;
2) In connection with the conversion, exchange or surrender of
securities owned by the Trust as set forth in Section 2.2
hereof;
3) For the redemption or repurchase of Shares issued by any Fund
of the Trust as set forth in Section 2.10 hereof;
4) For the payment of any expense or liability
-- 10 --
incurred by the Trust, including but not limited to the
following payments for the account of any Fund of the Trust:
interest, taxes, management, accounting, transfer agent and
legal fees, and operating expenses of the Trust whether or
not such expenses are to be in whole or part capitalized or
treated as deferred expenses;
5) For the payment of any dividends declared by any Fund
pursuant to the governing documents of the Trust;
6) For any other proper purpose, but only upon receipt of, in
addition to proper instructions, a certified copy of a
resolution of the Trustees or of the Executive Committee of
the Trust signed by an officer of the Trust and certified by
its Secretary or an Assistant Secretary, specifying the
amount of such payment, setting forth the purpose for which
such payment is to be made, declaring such purpose to be a
proper purpose, and naming the person or persons to whom such
payment is to be made.
2.9 Liability for Payment in Advance of Receipt of Securities Purchased. In
any and every case where payment for
- 11 -
purchase of securities for the account of a Fund of the Trust is made
by the Custodian in advance of receipt of the securities purchased in
the absence of specific written instructions from the Trust to so pay
in advance, the Custodian shall be absolutely liable to the Trust for
such securities to the same extent as if the securities had been
received by the Custodian, except that in the case of repurchase
agreements entered into by the Trust with a bank which is a member of
the Federal Reserve System, the Custodian may transfer funds to the
account of such bank prior to the receipt of written evidence that the
securities subject to such repurchase agreement have been transferred
by book-entry into a segregated non-proprietary account of the
Custodian maintained with the Federal Reserve Bank of Boston or of the
safe-keeping receipt, provided that such securities have in fact been
so transferred by book-entry.
2.10 Payments for Repurchases or Redemptions of Shares of the Trust. From
such funds properly allocable to that Fund as may be available for the
purpose, but subject to the limitations of the Trust's Agreement and
Declaration of Trust and any applicable votes of the Trustees of the
Trust pursuant thereto, the Custodian shall, upon receipt of
instructions from the Transfer Agent, make funds available for payment
to holders of Shares of any Fund who have delivered to the Transfer
Agent a request for
-- 12 --
redemption or repurchase of their Shares of that Fund. In connection
with the redemption or repurchase of Shares of the Trust, the Custodian
is authorized upon receipt of instructions from the Transfer Agent to
wire funds to or through a commercial bank designated by the redeeming
shareholders. In connection with the redemption or repurchase of Shares
of a Fund, the Custodian shall honor checks drawn on the Custodian by a
holder of Shares of that Fund, which checks have been furnished by the
Trust to the holder of Shares, when presented to the Custodian in
accordance with such procedures and controls as are mutually agreed
upon from time to time between the Trust and the Custodian.
2.11 Appointment of Agents. The Custodian may at any time or times in its
discretion appoint (and may at any time remove) any other bank or trust
company which is itself qualified under the Investment Company Act of
1940, as amended, to act as a custodian, as its agent to carry out such
of the provisions of this Article 2 as the Custodian may from time to
time direct; provided, however, that the appointment of any agent shall
not relieve the Custodian of its responsibilities or liabilities
hereunder.
2.12 Deposit of Trust Assets in Securities Systems. The Custodian may
deposit and/or maintain securities owned by the Trust in a clearing
agency registered with the Securities and Exchange Commission under
Section 17A of
-- 13 --
the Securities Exchange Act of 1934, which acts as a securities
depository, or in the book-entry system authorized by the U.S.
Department of the Treasury and certain federal agencies, collectively
referred to herein as "Securities System" in accordance with applicable
Federal Reserve Board and Securities and Exchange Commission rules and
regulations, if any, and subject to the following provisions:
1) The Custodian may keep securities of the Trust in a
Securities System provided that such securities are
represented in an account ("Accounts) of the Custodian in the
Securities System which shall not include any assets of the
Custodian other than assets held as a fiduciary, custodian or
otherwise for customers;
2) The records of the Custodian with respect to securities of
the Trust which are maintained in a Securities System shall
identify by book-entry those securities belonging to each
Fund of the Trust;
3) The Custodian shall pay for securities purchased for the
account of the Trust upon (i) receipt of advice from the
Securities System that such securities have been transferred
to the Account, and (ii) the
-- 14 --
making of an entry on the records of the Custodian to reflect
such payment and transfer for the account of the appropriate
Fund Of the Trust. The Custodian shall transfer securities
sold for the account of, the Trust upon (i) receipt of advice
from the Securities System that payment for such securities
has been transferred to the Account, and (ii) the making of
an entry on the records of the Custodian to reflect such
transfer and payment for the account of the appropriate Fund
of the Trust. Copies of all advices from the Securities
System of transfers of securities for the account of any Fund
of the Trust shall identify the Fund, be maintained for the
Trust by the Custodian and be provided to the Trust at its
request. The Custodian shall furnish to the Trust a
confirmation of each transfer to or from the account of each
Fund in the form of a written advice or notice and shall
furnish to the Trust copies of daily transaction sheets
reflecting each day's transactions in the Securities System
for the account of each Fund on the next business day;
4) The Custodian shall provide the Trust with
-- 15 --
any report obtained by the Custodian on the Securities
System's accounting system, internal accounting control and
procedures for safeguarding securities deposited in the
Securities System;
5) The Custodian shall have received the initial or annual
certificate, as the case may be, required by Article 9
hereof;
6) Anything to the contrary in this Contract notwithstanding,
the Custodian shall be liable to the Trust for any loss or
damage to the Trust resulting from use of the Securities
System by reason of any negligence, misfeasance or misconduct
of the Custodian or any of its agents or of any of its or
their employees or from failure of the Custodian or any such
agent to enforce effectively such rights as it may have
against the Securities System; at the election of the Trust,
it shall be entitled to be subrogated to the rights of the
Custodian with respect to any claim against the Securities
System or any other person which the Custodian may have as a
consequence of any such loss or damage if and to the extent;
that the Trust has not been made whole
-- 16 --
for any such loss or damage.
2.13 Ownership Certificates for Tax Purposes. The Custodian shall execute
ownership and other certificates and affidavits for all federal and
state tax purposes in connection with receipt of income or other
payments with respect to securities of the Trust held by it and in
connection with transfers of securities.
2.14 Proxies. The Custodian shall, with respect to the securities held
hereunder, cause to be promptly executed by the registered holder of
such securities, if the securities are registered otherwise than in the
name of the Trust or a nominee of the Trust, all proxies, without
indication of the manner in which such proxies are to be voted, and
shall promptly deliver to the Trust such proxies, all proxy soliciting
materials and all notices relating to such securities.
2.15 Communications Relating to Trust Portfolio Securities. The Custodian
shall transmit promptly to the Trust all written information
(including, without limitation, pendency of calls and maturities of
securities and expirations of rights in connection therewith) received
by the Custodian from issuers of the securities being held for the
Trust. With respect to tender or exchange offers, the Custodian shall
transmit promptly to the Trust all written information received by the
Custodian from issuers of the securities whose tender or exchange
-- 17 --
is sought and from the party (or his agents) making the tender or
exchange offer. If the Trust desires to take action with respect to any
tender offer, exchange offer or any other similar transaction, the
Trust shall notify the Custodian at least three business days prior to
the date on which the Custodian is to take such action.
2.16 Proper Instructions. Proper Instructions as used throughout this
Article 2 means a writing signed or initialled by one or more person or
persons as the Trustees shall have from time to time authorized. Each
such writing shall set forth the specific transaction or type of
transaction involved, including a specific statement of the purpose for
which such action is requested. Oral instructions will be considered
Proper Instructions if the Custodian reasonably believes them to have
been given by a person authorized to give such instructions with
respect to the transaction involved. The Trust shall cause all oral
instructions to be confirmed in writing. Upon receipt of a certificate
of the Secretary or an Assistant Secretary as to the authorization by
the Trustees of the Trust accompanied by a detailed description of
procedures approved by the Trustees, Proper Instructions may include
communications effected directly between electro-mechanical or
electronic devices provided that the Trustees and the Custodian are
satisfied that such procedures afford
-- 18 --
adequate safeguards for the Trust's assets.
2.17 Actions Permitted without Express Authority. The Custodian may in its
discretion, without express authority from the Trust:
1) make payments to itself or others for minor expenses of
handling securities or other similar items relating to its
duties under this contract, provided that all such payments
shall be accounted for to the Trust;
2) surrender securities in temporary form for securities in
definitive form;
3) endorse for collection, in the name of the Trust, checks,
drafts and other negotiable instruments; and
4) in general, attend to all non-discretionary details in
connection with the sale, exchange, substitution, purchase,
transfer and other dealings with the securities and property
of the Trust except as otherwise directed by the Trustees of
the Trust.
2.18 Evidence of Authority. The Custodian shall be protected in acting upon
any instructions, notice, request, consent, certificate or other
instrument or paper believed by it to be genuine and to have been
properly executed by or on behalf of the Trust. The Custodian may
receive and accept a certified copy of a vote of the
-- 19 --
Trustees of the Trust as conclusive evidence (a) of the authority of
any person to act in accordance with such vote or (b) of any
determination or of any action by the Trustees pursuant to the
Agreement and Declaration of Trust as described in such vote, and such
vote may be considered as in full force and effect until receipt by the
Custodian of written notice to the contrary.
3. Duties of Custodian with Respect to the Books of Account and
Calculation of Net Asset Value and Net Income.
The Custodian shall cooperate with and supply necessary information to
the entity or entities appointed by the Trustees of the Trust to keep the
books of account of the Trust and/or compute the net asset value per share
of the outstanding shares of each Fund of the Trust or, if directed in
writing to do so by the Trust, shall itself keep such books of account
and/or compute such net asset value per share. If so directed, the
Custodian shall also calculate daily the net income of each Fund as
described in that Fund's currently effective prospectus and shall advise
the Trust and the Transfer Agent daily of the total amounts of such net
income and, if instructed in writing by an officer of the Trust to do so,
shall advise the Transfer Agent periodically of the division of such net
income among its various components. The calculations of the net asset
value per share and the daily income of each Fund shall be made at the time
or times described from time to time in the Fund's currently effective
prospectus.
-- 20 --
4. Records
The Custodian shall create and maintain all records relating to its
activities and obligations under this Contract in such manner as will meet
the obligations or the Trust under the Investment Company Act of 1940, with
particular attention to Section 31 thereof and Rules 31a-1 and 31a-2
thereunder, applicable federal and state tax laws and any other law or
administrative rules or procedures which may be applicable to the Trust.
All such records shall be the property of the Trust and shall at all times
during the regular business hours of the Custodian be open for inspection
by duly authorized officers, employees or agents of the Trust and employees
and agents of the Securities and Exchange Commission. The Custodian shall,
at the Trust's request, supply the Trust with a tabulation of securities
owned by the Trust and allocable to each Fund and held by the Custodian and
shall, when requested to do so by the Trust and for such compensation as
shall be agreed upon between the Trust and the Custodian, include
certificate numbers in such tabulations.
5. Opinion of Trust's Independent Accountant
The Custodian shall take all reasonable action, as the Trust may from
time to time request, to obtain from year to year favorable opinions from
the Trust's independent accountants with respect to its activities
hereunder in connection with the preparation of the Trust's Form N-1, and
Form N-1R or other annual reports to the Securities and Exchange Commission
and with respect to any other requirements of such Commission.
-- 21 --
6. Reports to Trust by Independent Public Accountants
The Custodian shall provide the Trust, at such times as the Trust may
reasonably require, with reports by independent public accountants on the
accounting system, internal accounting control and procedures for
safeguarding securities, including securities deposited and/or maintained
in a Securities System, relating to the services provided by the Custodian
under this Contract; such reports, which shall be of sufficient scope and
in sufficient detail, as may reasonably be required by the Trust, to
provide reasonable assurance that any material inadequacies would be
disclosed by such examination, and, if there are no such inadequacies,
shall so state.
7 Compensation of Custodian
The Custodian shall be entitled to reasonable compensation for its
services and expenses as Custodian, as agreed upon from time to time
between the Trust and the Custodian.
8. Responsibility of Custodian
So long as and to the extent that it exercises reasonable care, the
Custodian shall not be responsible for the title, validity or genuineness
of any property or evidence of title thereto received by it or delivered by
it pursuant to this Contract and shall be held harmless in acting upon any
notice, request, consent, certificate or other instrument reasonably
believed by it to be genuine and to be signed by the proper party or
parties. The Custodian shall be held to the exercise of
-- 22 --
reasonable care in carrying out the provisions of this Contract, but shall
be kept indemnified by and shall be without liability to the Trust for any
action taken or omitted by it in good faith without negligence. It shall be
entitled to rely on and may act upon advice of counsel (who may be counsel
for the Trust) on all matters, and shall be without liability for any
action reasonably taken or omitted pursuant to such advice. Notwithstanding
the foregoing, the responsibility of the Custodian with respect to
redemptions effected by check shall be in accordance with a separate
Agreement entered into between the Custodian and the Trust.
If the Trust requires the Custodian to take any action with respect to
securities, which action involves the payment of money or which action may,
in the opinion of the Custodian, result in the Custodian or its nominee
assigned to the Trust being liable for the payment of money or incurring
liability of some other form, the Trust, as a prerequisite to requiring the
Custodian to take such action, shall provide indemnity to the Custodian in
an amount and form satisfactory to it.
9. Effective Period, Termination and Amendment
This Contract shall become effective with respect to Tucker Anthony
Cash Management Fund as of its execution and with respect to any additional
Fund as provided in Section 12, shall continue in full force and effect
until terminated as hereinafter provided, may be amended at any time by
mutual agreement of the parties hereto and may be terminated by either
party with respect
-- 23 --
to any Fund by an instrument in writing delivered or mailed, postage
prepaid to the other party, such termination to take effect not sooner than
thirty (30) days after the date of such delivery or mailing; provided,
however that the Custodian shall not act under Section 2.12 hereof in the
absence of receipt of an initial certificate of the Secretary or an
Assistant Secretary that the Trustees of the Trust have approved the
initial use of a particular Securities System and the receipt of an annual
certificate of the Secretary or an Assistant Secretary that the Trustees
have reviewed the use by the Trust of such Securities System, as required
in each case by Rule 17f-4 under the Investment Company Act of 1940, as
amended; provided further, however, that the Trust shall not amend or
terminate this Contract in contravention of any applicable federal or state
regulations, or any provision of the Agreement and Declaration of Trust,
and further provided, that the Trust may at any time by action of its
Trustees (i) substitute another bank or trust company as Custodian for any
Fund by giving notice as described above to the Custodian, or (ii)
immediately terminate this Contract in the event of the appointment of a
conservator or receiver for the Custodian by the Comptroller of the
Currency or upon the happening of a like event at the direction of an
appropriate regulatory agency or court of competent jurisdiction.
Upon termination of the Contract, the Trust shall pay to the Custodian
such compensation as may be due as of the date of such termination and
shall likewise reimburse the Custodian for
- 24 -
its costs, expenses and disbursements.
10. Successor Custodian
If a successor custodian shall be appointed by the Trustees of the
Trust, the Custodian shall, upon termination, deliver to such successor
custodian at the office of the Custodian, duly endorsed and in the form for
transfer, all securities then held by it hereunder.
If no such successor custodian shall be appointed, the Custodian shall,
in like manner, upon receipt of a certified copy of a vote of the Trustees
of the Trust, deliver at the office of the Custodian such securities, funds
and other properties in accordance with such vote.
In the event that no written order designating a successor custodian or
certified copy of a vote of the Trustees shall have been delivered to the
Custodian on or before the date when such termination shall become
effective, then the Custodian shall have the right to deliver to a bank or
trust company, which is a "bank" as defined in the Investment Company Act
of 1940, doing business in Boston, Massachusetts, of its own selection,
having an aggregate capital, surplus, and undivided profits, as shown by
its last published report, of not less than $25,000,000, all securities,
funds and other properties held by the Custodian and all instruments held
by the Custodian relative thereto and all other property held by it under
this Contract. Thereafter, such bank or trust company shall be the
successor of the Custodian under this Contract.
-- 25 --
In the event that securities, funds and other properties remain in the
possession of the Custodian after the date of termination hereof owing to
failure of the Trust to procure the certified copy of vote referred to or
of the Trustees to appoint a successor custodian, the Custodian shall be
entitled to fair compensation for its services during such period as the
Custodian retains possession of such securities, funds and other properties
and the provisions of this Contract relating to the duties and obligations
of the Custodian shall remain in full force and effect.
11. Interpretive and Additional Provisions
In connection with the operation of this Contract, the Custodian and
the Trust may from time to time agree on such provisions interpretive of or
in addition to the provisions of this Contract as may in their joint
opinion be consistent with the general tenor of this Contract. Any such
interpretive or additional provisions shall be in a writing signed by both
parties and shall be annexed hereto, provided that no such interpretive or
additional provisions shall contravene any applicable federal or state
regulations or any provision of the Agreement and Declaration of Trust of
the Trust. No interpretive or additional provisions made as provided in the
preceding sentence shall be deemed to be an amendment of this Contract.
12. Additional Funds
In the event that the Trust establishes one or more series of Shares in
addition to Tucker Anthony Cash Management
-- 26 --
Fund with respect to which it desires to have Custodian render services as
custodian under the terms hereof, it shall so notify Custodian in writing,
and if Custodian agrees in writing to provide such services, such series of
shares shall become a Fund hereunder.
13. Massachusetts Law to Apply
This Contact shall be construed and the provisions thereof interpreted
under and in accordance with with laws of the Commonwealth of
Massachusetts.
14. Prior Contracts
This Contract supersedes and terminates, as of the date hereof, all
prior contracts between the Trust and the Custodian relating to the custody
of the Trust s assets.
15. Limitation of Liability
The Agreement and Declaration of Trust establishing the Trust, dated
December 22, 1981, a copy of which, together with all amendments thereto
(the "Declaration"), is on file in the Office of the Secretary of the
Commonwealth of Massachusetts, provides that the name Tucker Anthony Mutual
Fund" refers to the Trustees under the Declaration collectively as
Trustees, but not as individuals or personally; and no Trustee,
shareholder, officer, employee or agent of the Trust shall be held to any
personal liability, nor shall resort be had to their private property for
the satisfaction of any obligation or claim otherwise in connection with
the affairs of said Trust out the Trust estate only shall be liable.
IN WITNESS WHEREOF, each of the parties has caused this
-- 27 --
instrument to be executed in its name and behalf by its duly authorized
representative and its seal to be hereunder affixed as of the 19th day of
March, 1981.
SEAL TUCKER ANTHONY MUTUAL FUND
ATTEST
/s/ Elain A Borghesani By /s/ Hugh A. Dunlap, Jr.
---------------------------- ----------------------------
Assistant Secretary President
SEAL STATE STREET BANK AND TRUST COMPANY
ATTEST
/s/ Roselyn Smacon By /s/ David J. Sentor
----------------------------- ----------------------------
Assistant Secretary Vice President
-- 28 --
State street
State Street Bank and Trust Company
Custodian Fee Schedule for
The Tucker Anthony Cash Management Fund
I. Administration
A. Custody, Portfolio and Fund Accounting Service
Maintain custody of fund assets. Settle portfolio purchases and sales.
Report buy and sell fails. Determine and collect portfolio income. Make
cash disbursements and report cash transactions. Maintain investment
ledgers, provide selected portfolio transaction, position and income
reports. Maintain general ledger and capital stock accounts. Prepare
daily trial balance. Calculate net asset value daily. Provide selected
general ledger reports. Securities yield or market value quotations will
be provided to State Street by the fund.
The administration fee shown below is an annual charge, billed and payable
monthly, based on average net assets and calculated in the same manner as the
fund management fee.
Annual Fee
----------
A. Custody, Portfolio
Fund Net Assets and Fund Accounting
--------------- -------------------
First $20 million 1/15 of 1%
Next $80 million 1/30 of 1%
Excess 1/100 of 1 %
II. Portfolio Trades - For each line item processed
State Street Bank Repos $ 7.00
All other trades $12.00
III. Interest Accrual and Holding Charge
For each issue held - monthly charge $ 5.00
IV. Special Services
Fees for activities of a non-recurring nature such as fund consolidations
or reorganizations, extraordinary security shipments and the preparation of
special reports will be subject to negotiation.
V. Out-of-Pocket Expenses
A billing for the recovery of applicable out-of-pocket expenses will be
made as of the end of each month. Out-of-pocket expenses include, but are
not limited to the following:
STATE STREET
V. Out-of-Pocket Expenses (continued)
Telephone
Wire charges ($2.50 per wire in or out)
Postage and insurance
Courier Service
Legal fees
Supplies related to fund records
Rush transfer - $8 each
Duplicating
DTC Eligibility Books
Transfer fees
Pricing services
Sub-custodian charges
The Tucker Anthony
Cash Management Fund State Street Bank and Trust Company
By: /s/ Hugh A. Dunlap, Jr. By: /s/ Illegible
- -------------------------- -----------------------------------
Date: 3-19-81 Date: 3/19/81
- -------------------------- -----------------------------------
State Street
State Street Bank and Trust Company
Fee Schedule for Services as
Plan, Transfer and Dividend Disbursing Agent
The Tucker Anthony Cash Management Fund
Annual Maintenance
I. Fund entering new account information, same day redemptions and purchases
when this system is available.
Basic annual per account fee: $ 12.00
o This includes the processing of 8 share transactions/
account on an average or the entire account base over
the year
Any share transactions over 8/year $ .80 each
The annual maintenance charge includes the processing of all transactions and
correspondence. The fee is billable on a monthly basis at the rate of 1/12 of
the annual fee. A charge is made for an account in the month that an account
opens or closes.
Out-of-Pocket Expenses
Out-of-pocket expenses include but are not limited to: postage, forms,
telephone, microfilm, microfiche and expenses incurred at specific direction of
the fund. Postage for mass mailings is due seven days in advance of the mailing
date.
The Tucker Anthony
Cash Management Fund State Street Bank and Trust Company
By: /s/ Hugh A. Dunlap, Jr. By: /s/ Illegible
- -------------------------- -----------------------------------
Date: 3-19-81 Date: 3/19/81
- -------------------------- -----------------------------------
FREEDOM MUTUAL FUND
One Beacon Street
Boston, MA 02108
State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02110
RE: Custody Agreement
----------------
Gentlemen:
Pursuant to Section 12 of the Custody Agreement dated as of March 19,
1981, between Freedom Mutual Fund (the "Trust") and State Street Bank and Trust
Company (the "Custodian"), please be advised that the Trust has established a
new series of its shares, namely, Freedom Short-Intermediate Treasury Fund (the
"Fund"), and please be further advised that the Trust desires to retain the
Custodian to render custodial services under the Custody Agreement to the Fund
in accordance with the fee schedule attached hereto as Exhibit A.
Please state below whether you are willing to render such services in
accordance with the fee schedule attached hereto as Exhibit A.
FREEDOM MUTUAL FUND
ATTEST: /s/ John Danello By /s/ Hugh A. Dunlap, Jr.
--------------------------- --------------------------------
John J. Danello, Secretary Hugh A. Dunlap, Jr., President
Dated: February 13, 1992
We are willing to render custodial services to the Freedom
Short-Intermediate Treasury Fund in accordance with the fee schedule attached
hereto as Exhibit A.
STATE STREET BANK AND TRUST COMPANY
ATTEST: /s/ M E. Bonomo By /s/ T. B. Hagert
------------------ -------------------------
Dated:
YP-2629/T
TRANSFER AGENCY AND SERVICE AGREEMENT
-------------------------------------
AGREEMENT made as of the 19th day of June, 1993 by and between Freedom
Mutual Fund, a Massachusetts business trust having its principal office and
place of business at One Beacon Street, Boston, Massachusetts (the "Trust"),
and John Hancock Fund Services, Inc., a Delaware corporation having its
principal office and place of business at 101 Huntington Avenue, Boston,
Massachusetts 02199 ("JHFSI").
WITNESSETH:
-----------
WHEREAS, the Trust desires to appoint JHFSI as its transfer agent,
dividend disbursing agent and agent in connection with certain other
activities, and JHFSI desires to accept such appointment;
WHEREAS, the Trust is authorized to issue shares in separate series,
with each such series representing interests in a separate portfolio of
securities and other assets; and
WHEREAS, the Trust presently offers shares of beneficial interest in
two (2) series, such series, together with all other series subsequently
established by the Trust and made subject to this Agreement in accordance with
Article 8, being herein referred to as the "Fund(s)";
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, the parties hereto agree as follows:
Article 1 Terms of Appointment: Duties of JHFSI
1.01 Subject to the terms and conditions set forth in this Agreement,
the Trust hereby, employs and appoints JHFSI to act as, and JHFSI agrees to
act as transfer agent for the Trust's authorized and issued shares of
beneficial interest ("Shares"), with any accumulation, open-account or similar
plans provided to the shareholders of the Funds ("Shareholders") and set out
in the currently effective prospectus of the Funds, including without
limitation any periodic investment plan or periodic withdrawal program.
1.02 JHFSI agrees that it will perform the following services:
(a) In accordance with procedures established from time to time by
agreement between the Trust and JHFSI, JHFSI shall:
(i) Receive for acceptance orders for the purchase of
Shares, and promptly deliver payment and appropriate
documentation therefor to the Custodian of the Funds
(the "Custodian");
(ii) Pursuant to purchase orders, issue the appropriate
number of Shares and hold such Shares in the
appropriate Shareholder account;
(iii) Receive for acceptance, redemption requests and
redemption directions and deliver the appropriate
documentation therefor to the Custodian;
(iv) At the appropriate time as and when it receives monies
paid to it by the Custodian with respect to any
redemption, pay over or cause to be paid over in the
appropriate manner such monies as instructed by the
redeeming Shareholders;
(v) Effect transfers of Shares by the registered owners
thereof upon receipt of appropriate instructions;
(vi) Prepare and transmit payments for dividends and
distributions declared by the Fund;
(vii) Maintain records of account for and advise the Funds
and their Shareholders as to the foregoing; and
(viii) Record the issuance of Shares of the Funds and maintain
pursuant to SEC Rule 17Ad-l0(e) a record of the total
number of Shares of the Funds which are authorized,
based upon data provided to it by the Funds, and issued
and outstanding. JHFSI shall also provide the Funds on
a regular basis with the total number of Shares which
are authorized and issued and outstanding and shall
have no obligation, when recording the issuance of
Shares, to monitor the issuance of such Shares or to
take cognizance of any laws relating to the issue or
sale of such Shares, which functions shall be the sole
responsibility of the Funds.
2
(b) In addition to and not in lieu of the services set forth in the above
paragraph (a), JHFSI shall: (i) perforn all of the customary services of a
transfer agent, dividend disbursing agent and, as relevant, agent in connection
with accumulation, open-account or similar plans (including without limitation
any periodic investment plan or periodic withdrawal program); including but not
limited to: maintaining all Shareholder accounts, preparing Shareholder meeting
lists, mailing proxies, receiving and tabulating proxies, mailing Shareholder
reports and prospectuses to current Shareholders, withholding taxes on U.S.
resident and non-resident alien accounts, preparing and filing U.S. Treasury
Department Forms 1099 and other appropriate forms required with respect to
dividends and distributions by federal authorities for all Shareholders,
preparing and mailing confirmations forms and statements of account to
Shareholders for all purchases and redemptions of Shares and other confirmable
transactions in Shareholder accounts, preparing and mailing activity statements
for Shareholders, and providing Shareholder account information and (ii) provide
a system which will enable the Funds to monitor the total number of Shares sold
in each State.
(c) In addition, the Funds shall (i) identify to JHFSI in writing those
transactions and assets to be treated as exempt from the blue sky reporting for
each State and (ii) verify the establishment of transactions for each State on
the system prior to activation and thereafter monitor the daily activity for
each State. The responsibility of JHFSI for the Funds' blue sky State
registration status is solely limited to the initial establishment of
transactions subject to blue sky compliance by the Funds and the reporting of
such transactions to the Funds as provided above.
(d) Additionally, JHFSI shall:
(i) Utilize a system to identify all share transactions which
involve purchase and redemption orders that are processed at a time other
than the time of the computation of net asset value per share next
computed after receipt of such orders, and shall compute the net effect
upon the Funds of such transactions so identified on a daily and
cumulative basis.
(ii) If upon any day the cumulative net effect of such
transactions upon a Fund is negative and exceed a dollar amount
equivalent to l/2 of l cent per share, JHFSI shall promptly make a
payment to the Fund in cash or through the use of a credit, in the manner
described in paragraph (iv) below, in such amount as may be necessary to
reduce the negative cumulative net effect to less than l/2 of l cent per
share.
3
(iii) If on the last business day of any month the cumulative
net effect upon a Fund (adjusted by the amount of all prior payments and
credits by JHFSI and the Fund) is negative, the Fund shall be entitled to
a reduction in the fee next payable under the Agreement by an equivalent
amount, except as provided in paragraph (iv) below. If on the last
business day in any month the cumulative net effect upon a Fund (adjusted
by the amount of all prior payments and credits by JHFSI and the Fund) is
positive, JHFSI shall be entitled to recover certain past payments and
reductions in fees, and to credit against all future payments and fee
reductions that may be required under the Agreement as herein described
in paragraph (iv) below.
(iv) At the end of each month, any positive cumulative net
effect upon a Fund shall be deemed to be a credit to JHFSI which shall
first be applied to permit JHFSI to recover any prior cash payments and
fee reductions made by it to the Fund under paragraphs (ii) and (iii)
above during the calendar year, by increasing the amount of the monthly
fee under the Agreement next payable in an amount equal to prior payments
and fee reductions made by JHFSI during such calendar year, but not
exceeding the sum of that month's credit and credits arising in prior
months during such calendar year to the extent such prior credits have
not previously been utilized as contemplated by this paragraph. Any
portion of a credit to JHFSI not so used by it shall remain as a credit
to be used as payment against the amount of any future negative
cumulative net effects that would otherwise require a cash payment or fee
reduction to be made to the Fund pursuant to paragraphs (ii) or (iii)
above (regardless of whether or not the credit or any portion thereof
arose in the same calendar year as that in which the negative cumulative
net effects or any portion thereof arose).
(v) JHFSI shall supply to the Funds from time to time, as
mutually agreed upon, reports summarizing the transactions identified
pursuant to paragraph (i) above, and the daily and cumulative net effects
of such transactions, and shall advise the Funds at the end of each month
of the net cumulative effect at such time. JHFSI shall promptly advise
the Funds if at any time the cumulative net effect exceeds a dollar
amount equivalent to 1/2 of 1 cent per share.
(vi) In the event that this Agreement is terminated for whatever
cause, the Funds shall promptly pay to JHFSI an amount in cash equal to
the amount by which the cumulative net effect upon the Funds is positive
or, if the cumulative net effect upon the Funds is negative, JHFSI shall
promptly pay to the Funds an amount in cash equal to the amount of such
cumulative net effect.
4
Procedures applicable to certain of these services may be established from
time to time by agreement between the Fund and JHFSI but the failure of the
Funds to establish such procedures with respect to any service shall not in any
way diminish the duty and obligation of JHFSI to perform such services
hereunder.
Article 2 Fees and Expenses
2.01 For performance by JHFSI pursuant to this Agreement, the Funds
agree to pay JHFSI an annual maintenance fee for each Shareholder account as
set forth in the initial fee schedule attached hereto. Such fees and
out-of-pocket expenses and advances identified under Section 2.02 below may be
changed from time to time subject to mutual written agreement between the Trust
and JHFSI.
2.02 In addition to the fee paid under Section 2.01 above the Funds
agree to reimburse JHFSI for out-of-pocket expenses or advances incurred by
JHFSI for the items set out in the fee schedule attached hereto. In addition,
any other expenses incurred by JHFSI at the request or with the consent of the
Funds, will be reimbursed by the Funds.
2.03 The Funds agree to pay all fees and reimbursable expenses promptly
following the mailing of the respective billing notice. Postage for mailing of
dividends, proxies, Fund reports and other mailings to all shareholder accounts
shall be advanced to JHFSI by the Funds at least seven (7) days prior to the
mailing date of such materials.
Article 3 Representations and Warranties of JHFSI
JHFSI represents and warrants to the Trust that:
3.01 It is a Delaware corporation duly organized and existing and in
good standing under the laws of the State of Delaware, and as a Foreign
Corporation under the Laws of the Commonwealth of Massachusetts.
3.02 It is duly qualified to carry on its business in the Commonwealth
of Massachusetts.
3.03 It is empowered under applicable laws and by its charter and
By-Laws to enter into and perform this Agreement.
5
3.04 All requisite corporate proceedings have been taken to authorize it
to enter into and perform this Agreement.
3.05 It has and will continue to have access to the necessary
facilities, equipment and personnel to perform its duties and obligations under
this Agreement.
Article 4 Representations and Warranties of the Trust
The Trust represents and warrants to JHFSI that:
4.01 It is a trust duly organized and existing and in good standing
under the laws of the Commonwealth of Massachusetts.
4.02 It is empowered under applicable laws and by its Declaration of
Trust and ByLaws to enter into and perform this Agreement.
4.03 All corporate proceedings required by said Declaration of Trust and
By-Laws have been taken to authorize it to enter into and perform this
Agreement.
4.04 It is an open-end investment company registered under the
Investment Company Act of 1940.
4.05 A registration statement under the Securities Act of 1933 is
currently effective and will remain effective, and appropriate state securities
law flings have been made and will continue to be made, with respect to all
Shares of the Funds being offered for sale.
Article 5 Indemnification
5.01 JHFSI shall not be responsible for, and the Trust shall indemnify
and hold JHFSI harmless from and against, any and all losses, damages, costs,
charges, counsel fees, payments, expenses and liabilities arising out of or
attributable to:
(a) All actions of JHFSI or its agent or subcontractors required to be
taken pursuant to this Agreement, provided that such actions are taken in good
faith and without negligence or willful misconduct.
6
(b) The Trust's refusal or failure to comply with the terms of this
Agreement, or which arise out of the Trust's lack of good faith, negligence or
willful misconduct or which arise out of the breach of any representation or
warranty of the Trust hereunder.
(c) The offer or sale of Shares in violation of any requirement under
the federal securities laws or regulations or the securities laws or regulations
of any state that such Shares be registered in such state or in violation of any
stop order or other determination or ruling by any federal agency or any state
with respect to the offer or sale of such Shares in such state unless such
violation results from any action or omission by JHFSI or any of its agents or
subcontractors which fails to comply with written instructions of the Trust or
any officer of the Trust that no offers or sales be made in general or to the
residents of a particular state.
5.02 JHFSI shall indemnify and hold the Trust harmless from and against
any and all losses, damages, costs, charges, counsel fees, payments, expenses
and liabilities arising out of or attributed to any action or failure or
omission to act by JHFSI as a result of JHFSI's lack of good faith, negligence
or willful misconduct.
5.03 At any time JHFSI may apply to any officer of the Trust for
instructions, and may consult with legal counsel with respect to any matter
arising in connection with the services to be performed by JHFSI under this
Agreement, and JHFSI and its agents or subcontractors shall not be liable and
shall be indemnified by the Fund for any action taken or omitted by it in
reliance upon such instructions or upon the opinion of such counsel. JHFSI, its
agents and subcontractors shall be protected and indemnified in acting upon any
paper or document furnished by or on behalf of the Trust, reasonably believed to
be genuine and to have been signed by the proper person or persons, or upon any
instruction, information, data, records or documents provided JHFSI or its
agents or subcontractors by machine readable input, telex, CRT data entry or
other similar means authorized by the Trust, and shall not be held to have
notice of any change of authority of any person, until receipt of written notice
thereof from the Trust. JHFSI, its agents and subcontractors shall also be
protected and indemnified in recognizing share certificates which are reasonably
believed to bear the proper manual or facsimile signatures of the officer of the
Trust, and the proper countersignature of any former transfer agent or
registrar, or of a co-transfer agent or co-registrar.
5.04 In the event either party is unable to perform itS obligations
under the terms of this Agreement because of acts of God, strikes, equipment or
transmission failure or damage reasonably beyond its control, or other causes
reasonably beyond its control, such party shall
7
not be liable for damages to the other for any damages resulting from such
failure to perform or otherwise from such causes.
5.05 Neither party to this Agreement shall be liable to the other party
for consequential damages under any provision of this Agreement or for any act
or failure to act hereunder.
5.06 In order that the indemnification provisions contained in this
Article 5 shall apply, upon the assertion of a claim for which either party may
be required to indemnify the other, the party seeking indemnification shall
promptly notify the other party of such assertion, and shall keep the other
party advised with respect to all developments concerning such claim. The party
who may be required to indemnify shall have the option to participate with the
party seeking indemnification in the defense of such claim. The party seeking
indemnification shall in no case confess any claim or make any compromise in any
case in which the other party may be required to indemnify it except with the
other party's prior written consent.
Article 6 Covenants of the Trust and JHFSI
6.01 The Trust shall promptly furnish to JHFSI the following:
(a) A certified copy of the resolution of the Board of Trustees
authorizing both the appointment of JHFSI and the execution and delivery of this
Agreement.
(b) A copy of the Master Trust Agreement and By-Laws of the Trust and
all amendments thereto.
6.02 JHFSI hereby agrees to establish and maintain facilities and
procedures reasonably acceptable to the Fund for safekeeping of share
certificates, check forms and facsimile signature imprinting devices, if any;
and for the preparation or use, and for keeping account of, such certificates,
forms and devices.
6.03 JHFSI shall keep records relating to the services to be performed
hereunder, in the form and manner as it may deem advisable. To the extent
required by Section 31 of the Investment Company Act of 1940, as amended, and
the Rules thereunder, JHFSI agrees that all such records prepared or maintained
by JHFSI relating to the services to be performed by JHFSI hereunder are the
property of the Trust and will be preserved, maintained and made
8
available in accordance with such Section and Rules, and will be surrendered to
the Fund on and in accordance with its request.
6.04 JHFSI and the Trust agree that all books, records, information and
data pertaining to the business of the other party which are exchanged or
received pursuant to the negotiation or the carrying out of this Agreement
shall remain confidential, and shall not be voluntarily disclosed to any other
person, except as may be required by law.
6.05 In case of any requests or demands for the inspection of the
Shareholder records of the Trust, JHFSI will endeavor to notify the Trust and to
secure instructions from an authorized officer of the Trust as to such
instruction. JHFSI reserves the right, however, to exhibit the Shareholder
records to any person whenever it is advised by its counsel that it may be held
liable for the failure to exhibit the Shareholder records to such person.
Article 7 Termination of Agreement
7.01 This Agreement may be terminated by either party upon one hundred
twenty (120) days' written notice to the other.
7.02 Should the Trust exercise its right to terminate, all out-of-pocket
expenses associated with the movement of records and material will be borne by
the Trust. Additionally, JHFSI reserves the right to charge for any other
reasonable expenses associated with such termination.
Article 8 Additional Funds
8.01 In the event that the Trust establishes one or more of series of
Shares in addition to the present series with respect to which it desires to
have JHFSI render services as a transfer agent under the terms hereof, it shall
so notify JHFSI in writing, and if JHFSI agrees in writing to provide such
services, such series of Shares shall become a Fund hereunder.
Article 9 Assignment
9.01 Except as provided in Section 9.03 below, neither this Agreement
nor any rights or obligations hereunder may be assigned by either party without
the written consent of the other party.
9
9.02 This Agreement shall inure to the benefit of and be binding upon
the parties and their respective permitted successors and assigns.
9.03 JHFSI may, without further consent on the part of the Trust,
subcontract for the performance hereof with (i) Boston Financial Data Services,
Inc., a Massachusetts corporation ("BFDS") which is duly registered as a
transfer agent pursuant to Section 17A (c)(1) of the Securities Exchange Act of
1934 ("Section 17A (c)(1)"), (ii) or any other entity JHFSI deems appropriate
in order to comply with the terms and conditions of this Agreement, provided,
however, that JHFSI shall be as fully responsible to the Trust for the acts and
omissions of any subcontractor as it is for its own acts and omissions.
Article 10 Amendment
10.01 This Agreement may be amended or modified by a written agreement
executed by both parties and authorized or approved by a resolution of the Board
of Trustees of the Trust.
Article 11 Massachusetts Law to Apply
11.01 This Agreement shall be construed and the provisions thereof
interpreted under and in accordance with the laws of The Commonwealth of
Massachusetts.
Article 12 Merger of Agreement
12.01 This Agreement constitutes the entire agreement between the parties
hereto and supersedes any prior agreement with respect to the subject hereof
whether oral or written.
Article 13 Limitation on Liability
13.01 The Master Trust Agreement establishing the Trust, dated December 22,
1980, a copy of which, together with all amendments thereto, is on file in the
Office of the Secretary of the Commonwealth of Massachusetts, provides all
persons extending credit to, contracting with or having any claim against the
Trust shall look only to the assets of the Trust, and neither the shareholders
nor the Trustees, nor any of the Trust's officers, employees, or agents shall be
personally liable therefore.
10
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in their names and on their behalf under their seals by and through
their duly authorized officers, as of the day and year first above written.
ATTEST: FREEDOM MUTUAL FUND
/s/ John Danello BY: /s/ Dexter A. Dodge
- -------------------- ---------------------------
Dexter A. Dodge
Chairman
ATTEST: JOHN HANCOCK FUND SERVICES, INC.
BY: /s/ David A. King
- -------------------- ---------------------------
David A. King
President
11
JOHN HANCOCK FUND SERVICES, INC.
FEE INFORMATION FOR SERVICES AS
PLAN, TRANSFER AND DIVIDEND DISBURSING AGENT
FREEDOM MUTUAL FUND
FREEDOM GROUP OF TAX EXEMPT FUNDS
- --------------------------------------------------------------------------------
General - Fees are based on an annual per shareholder account charge for
account maintenance plus out-of-pocket expenses. Annual maintenance charges
for various kinds of mutual funds are given below.
ANNUAL MAINTENANCE CHARGES - Fees are billable on a monthly basis at the rate
of 1/12 of the annual fee. A charge is made for an account in the month that
an account opens or closes.
Non-Direct Accounts $ 9.50
Direct Accounts $13.50
The following features will each be assessed additional charges as an add-on to
the annual per account rate.
Closed accounts per account, per month $ .10
Disaster Recovery/Emergency Backup per
account serviced, per year $ .25 each account
CHECKWRITING
Each check presented for payment $ 1.00
Set up of checkwriting function $ 5.00 per account
FREEDOM MUTUAL FUND JOHN HANCOCK FUND SERVICES, INC.
FREEDOM CROUP OF TAX EXEMPT FUNDS
By: /s/ Dexter A. Dodge By: David A. King
----------------------- -----------------------
Title: Chairman & CEO Title: President & CEO
------------------- -----------------------
Date: 06/11/93 Date: 6/4/94
------------------- -----------------------
22
GOODWIN, PROCTER & HOAR
COUNSELLORS AT LAW
28 STATE STREET
BOSTON, MASSACHUSETTS 02109
TELEPHONE (617) 523-5700
TELECOPIER (617) 523-1231
TELEX 94-0640
CABLE-GOODPROCT, BOSTON
March , 1981
Tucker Anthony Mutual Fund
Three Center Plaza
Boston, Massachusetts 02109
Gentlemen:
As counsel to Tucker Anthony Mutual Fund (The "Trust"), we have been asked
to render our opinion in connection with the proposed issuance by the Trust of
shares of the Tucker Anthony Cash Management Fund ("Fund"), the series of the
Trust which has been established and designated in section 4.2 of the Trust's
Agreement and Declaration of Trust dated December 22, 1980, as more fully
described in the prospectus contained in the Form N-1 Registration Statement
filed by the Trust.
We have examined the Agreement and Declaration of Trust of the Trust, the
Bylaws of the Trust, the minutes of meetings of the Board of Trustees of the
Trust, the Prospectus, and such other documents, records and certificates as we
deemed necessary for purposes of this opinion.
Based upon the foregoing, we are of the opinion that the Trust has been
duly organized and is validly existing pursuant to the laws of the Commonwealth
of Massachusetts, and that the shares of the fund which are the subject of the
foregoing Registration Statement will, when sold in accordance with the terms of
the Prospectus in effect at the time of sale, by legally issued fully paid and
non-assessable by the Trust.
We consent to being named in the Prospectus and to a copy of this opinion
being filed as an exhibit to the foregoing Registration Statement.
Very truly yours,
/s/ GOODWIN, PROCTER & HOAR
GOODWIN, PROCTER & HOAR
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in the Prospectus constituting part of this
Post-Effective Amendment No. 26 to the registration statement of Form N-1A(the
"Registration Statement") of our report dated January 31, 1997, relating to the
financial statements and financial highlights of Freedom Cash Management Fund
and Freedom Government Securities Fund (each a series of Freedom Mutual Fund),
which appear in such Prospectus, and to the incorporation by reference of our
report into the Statement of Additional Information which also constitutes part
of this Registration Statement. We also consent to the references to us under
the headings "Our Financial Highlights" and "Independent Accountants and
Financial Statements" in such Prospectus and to the reference to us under the
headings "Financial Statements and Independent Accountants" in such Statement of
Additional Information.
/s/ Price Waterhouse LLP
- ------------------------
Price Waterhouse LLP
Boston, Massachusetts
February 28, 1997
INVESTMENT LETTERS
------------------
December 1, 1981
BOARD OF TRUSTEES
TUCKER ANTHONY MUTUAL FUND
THREE CENTER PLAZA
BOSTON, MA 02108
Gentlemen: :
The undersigned has purchased 10 shares of the Tucker Anthony Government
Securities Fund, a Series of Tucker Anthony Mutual Fund, in accordance with the
Subscription attached hereto. The undersigned confirms that the shares of the
Fund purchased by it are being acquired for its account and not with a view to
sale or distribution thereof except to the extent permitted by the Securities
Act of 1933 and the rules and regulations of the Securities and Exchange
Commission thereunder, as amended from time to time.
Very truly yours,
Tucker Anthony Management Corporation
By: /s/ R. William Smith
---------------------------------
Chairman & C.E.O.
Board of Trustees
Tucker Anthony Mutual Fund
Three Center Plaza
Boston, Massachusetts 02108
Gentlemen:
The undersigned has purchased l0 shares of the Tucker Anthony Cash
Management Fund (the "Fund") in accordance with the Subscription attached
hereto. The undersigned confirms that the shares of the Fund purchased by him or
her are being acquired for the account of the undersigned and not with a view to
sale or distribution thereof except to the extent permitted by the Securities
Act of 1933 and the rules and regulations of the Securities and Exchange
Commission thereunder, as amended from time to time.
Very truly yours,
Date: 2/5/81 /s/ Arthur J. Petone
------------ --------------------------
Shareholder
###-##-####
--------------------------
Social Security Number
1 BEACON ST
--------------------------
BOSTON, MASS 02108
--------------------------
Address
INVESTMENT LETTER
-----------------
Board of Trustees
Tucker Anthony Mutual Fund
Three Center Plaza
Boston, Massachusetts 02108
Gentlemen:
The undersigned has purchased 10 shares of the Tucker Anthony Cash
Management Fund (the "Fund") in accordance with the Subscription attached
hereto. The undersigned confirms that the shares of the Fund purchased by him or
her are being acquired for the account of the undersigned and not with a view to
sale or distribution thereof except to the extent permitted by the Securities
Act of 1933 and the rules and regulations of the Securities and Exchange
Commission thereunder, as amended from time to time.
Very truly yours,
Date: /s/ Illegible
------------- --------------------------
Shareholder
--------------------------
Social Security Number
--------------------------
--------------------------
Address
INVESTMENT LETTER
-----------------
Board of Trustees
Tucker Anthony Mutual Fund
Three Center Plaza
Boston, Massachusetts 02108
Gentlemen:
The undersigned has purchased 10 shares of the Tucker Anthony Cash
Management Fund (the "Fund") in accordance with the Subscription attached
hereto. The undersigned confirms that the shares of the Fund purchased by him or
her are being acquired for the account of the undersigned and not with a view to
sale or distribution thereof except to the extent permitted by the Securities
Act of 1933 and the rules and regulations of the Securities and Exchange
Commission thereunder, as amended from time to time.
Very truly yours,
Date: 2-5-81 /s/ Hugh A. Dunlap, Jr.
------------- --------------------------
Shareholder
###-##-####
--------------------------
Social Security Number
29 Lowell Rd
--------------------------
Brookline, MA 02146
--------------------------
Address
INVESTMENT LETTER
-----------------
Board of Trustees
Tucker Anthony Mutual Fund
Three Center Plaza
Boston, Massachusetts 02108
Gentlemen:
The undersigned has purchased l0 shares of the Tucker Anthony Cash
Management Fund (the "Fund") in accordance with the Subscription attached
hereto. The undersigned confirms that the shares of the Fund purchased by him or
her are being acquired for the account of the undersigned and not with a view to
sale or distribution thereof except to the extent permitted by the Securities
Act of 1933 and the rules and regulations of the Securities and Exchange
Commission thereunder, as amended from time to time.
Very truly yours,
Date: Feb. 5, 1981 /s/ F. Elaine Evans
------------- --------------------------
Shareholder
###-##-####
--------------------------
Social Security Number
167 Kennedy Dr. #107
--------------------------
Malden, MA 02148
--------------------------
Address
INVESTMENT LETTER
-----------------
Board of Trustees
Tucker Anthony Mutual Fund
Three Center Plaza
Boston, Massachusetts 02108
Gentlemen:
The undersigned has purchased l0 shares of the Tucker Anthony Cash
Management Fund (the "Fund") in accordance with the Subscription attached
hereto. The undersigned confirms that the shares of the Fund purchased by him or
her are being acquired for the account of the undersigned and not with a view to
sale or distribution thereof except to the extent permitted by the Securities
Act of 1933 and the rules and regulations of the Securities and Exchange
Commission thereunder, as amended from time to time.
Very truly yours,
Date: Feb 5, 1981 /s/ Henderson Inches, Jr.
------------- --------------------------
Shareholder
015 2449 42
--------------------------
Social Security Number
8 Windsor Rd.
--------------------------
Wellesley Hills, Mass. 02181
--------------------------
Address
INVESTMENT LETTER
-----------------
Board of Trustees
Tucker Anthony Mutual Fund
Three Center Plaza
Boston, Massachusetts 02108
Gentlemen:
The undersigned has purchased 10 shares of the Tucker Anthony Cash
Management Fund (the "Fund") in accordance with the Subscription attached
hereto. The undersigned confirms that the shares of the Fund purchased by him or
her are being acquired for the account of the undersigned and not with a view to
sale or distribution thereof except to the extent permitted by the Securities
Act of 1933 and the rules and regulations of the Securities and Exchange
Commission thereunder, as amended from time to time.
Very truly yours,
Date: February 5, 1981 /s/ Elaine A. Borghesani
------------- --------------------------
Shareholder
###-##-####
--------------------------
Social Security Number
62 Skyline Drive
--------------------------
Braintree, Ma. 02184
--------------------------
Address
INVESTMENT LETTER
-----------------
Board of Trustees
Tucker Anthony Mutual Fund
Three Center Plaza
Boston, Massachusetts 02108
Gentlemen:
The undersigned has purchased 10 shares of the Tucker Anthony Cash
Management Fund (the "Fund") in accordance with the Subscription attached
hereto. The undersigned confirms that the shares of the Fund purchased by him or
her are being acquired for the account of the undersigned and not with a view to
sale or distribution thereof except to the extent permitted by the Securities
Act of 1933 and the rules and regulations of the Securities and Exchange
Commission thereunder, as amended from time to time.
Very truly yours,
Date: 2-5-81 /s/ Illegible
------------- --------------------------
Shareholder
###-##-####
--------------------------
Social Security Number
THREE CENTER PLAZA
--------------------------
BOSTON, MA 02108
--------------------------
Address
INVESTMENT LETTER
-----------------
Board of Trustees
Tucker Anthony Mutual Fund
Three Center Plaza
Boston, Massachusetts 02108
Gentlemen:
The undersigned has purchased 10 shares of the Tucker Anthony Cash
Management Fund (the "Fund") in accordance with the Subscription attached
hereto. The undersigned confirms that the shares of the Fund purchased by him or
her are being acquired for the account of the undersigned and not with a view to
sale or distribution thereof except to the extent permitted by the Securities
Act of 1933 and the rules and regulations of the Securities and Exchange
Commission thereunder, as amended from time to time.
Very truly yours,
Date: 2/5/81 /s/ Rosalla W. Bradley
------------- --------------------------
Shareholder
###-##-####
--------------------------
Social Security Number
313 Cabot St.
--------------------------
Newton, Ma 02158
--------------------------
Address
INVESTMENT LETTER
-----------------
Board of Trustees
Tucker Anthony Mutual Fund
Three Center Plaza
Boston, Massachusetts 02108
Gentlemen:
The undersigned has purchased 10 shares of the Tucker Anthony Cash
Management Fund (the "Fund") in accordance with the Subscription attached
hereto. The undersigned confirms that the shares of the Fund purchased by him or
her are being acquired for the account of the undersigned and not with a view to
sale or distribution thereof except to the extent permitted by the Securities
Act of 1933 and the rules and regulations of the Securities and Exchange
Commission thereunder, as amended from time to time.
Very truly yours,
Date: 2/4/81 /s/ Patrick Grant
------------- --------------------------
Shareholder
###-##-####
--------------------------
Social Security Number
5 HAVEN ST
--------------------------
DEDHAM, MASS
--------------------------
Address
INVESTMENT LETTER
-----------------
Board of Trustees
Tucker Anthony Mutual Fund
Three Center Plaza
Boston, Massachusetts 02108
Gentlemen:
The undersigned has purchased 10 shares of the Tucker Anthony Cash
Management Fund (the "Fund") in accordance with the Subscription attached
hereto. The undersigned confirms that the shares of the Fund purchased by him or
her are being acquired for the account of the undersigned and not with a view to
sale or distribution thereof except to the extent permitted by the Securities
Act of 1933 and the rules and regulations of the Securities and Exchange
Commission thereunder, as amended from time to time.
Very truly yours,
Date: 2/4/81 /s/ Ephron Cetlin
------------- --------------------------
Shareholder
###-##-####
--------------------------
Social Security Number
27 Brandmen Lane
--------------------------
Hamilton, Mass. 01936
--------------------------
Address
EXHIBIT 13
INVESTMENT LETTER
-----------------
Board of Trustees
Tucker Anthony Mutual Fund
Three Center Plaza
Boston, Massachusetts 02108
Gentlemen:
The undersigned has purchased 100,000 shares of Tucker Anthony Cash
Management Fund (the "Fund") in accordance with the Subscription attached
hereto. The undersigned confirms that the shares of the Fund purchased by it are
being acquired for the account of the undersigned and not with a view to sale or
distribution thereof except to the extent permitted by the Securities Act of
1933 and the rules and regulations of the Securities and Exchange Commission
thereunder, as amended from time to time.
Very truly yours,
TUCKER, ANTHONY &
R. L. DAY, INC.
Date: Mar 16, 1981 BY /s/ Arthur J. Petone
---------------------------
Arthur J. Petone, Vice President
TUCKER, ANTHONY & R.L. DAY, INC.
SELF-EMPLOYED RETIREMENT PLAN
ARTICLE I. lNTRODUCTION
The Employer named in the Adoption Agreement has established this Plan and the
Custodial Agreement forming a part hereof under the Self-Employed Individuals
Tax Retirement Act of 1962, as amended, in order to create a fund out of the
profits of the Employer's business and the savings of the participating
self-employed individuals and employees which will help provide for their future
security.
ARTICLE II. PARTICIPATION IN THE PLAN
2.1 Definitions.
(A) "Employer" is the sole proprietor or partnership conducting the business
referred to in the Adoption Agreement, and all predecessor and successor
proprietorships and partnerships who have conducted or hereafter conduct that
business.
(B) "Owner-Employee" is the sole proprietor, or any partner owning more than a
10% interest in either the capital or profits, of the Employer's business
referred to in the Adoption Agreement.
(C) "Partner-Employee" is a partner owning an interest in the Employer which
does not make that partner an Owner-Employee.
(D) "Employee" is any person employed in the Employer's business other than an
Owner-Employee or Partner-Employee.
(E) "Year of Service" in respect to any person is a 12-month period beginning
with the date he first is employed by the Employer, and any anniversary of that
date, in which he has completed no less than 1,000 Hours of Service. "Masculine
gender is used throughout the Plan for convenience only and is intended to refer
equally to the feminine gender.) In any case in which the Employer maintains the
plan of a predecessor employer, service for such predecessor shall be treated as
service for the Employer.
(F) "Hour of Service" shall mean:
(1) Each hour for which an Employee, Owner-Employee or Partner-Employee is
directly or indirectly paid, or entitled to payment, for the performance of
duties for the Employer. These hours shall be credited to the Employee for the
computation period in which the duties are performed; and
(2) Each hour for which the Employee, Owner-Employee or Partner-Employee is
directly or indirectly paid, or entitled to payment, by the Employer on account
of a period of time during which no duties are performed (irrespective of
whether the employment relationship has terminated) due to vacation, holiday,
illness, incapacity (including disability), layoff, jury duty, military duty or
leave of absence. No more than 501 hours of service shall be credited under this
paragraph for any single continuous period (whether or not such period occurs in
a single computation period). Hours under this paragraph shall be calculated and
credited pursuant to Section 2530.200b-2 of the Department of Labor Regulations
which are incorporated herein by this reference; and
(3) Each hour for which back pay, irrespective of mitigation of damages, is
either awarded or agreed to by the Employer. The same hours of service shal1 not
be credited both under paragraph (1) or Paragraph (3). These hours shall be
credited to the Employee for the computation period or periods to which the
award or agreement pertains rather than the computation period in which the
award, agreement or payment is made.
(G) "Code" is the Internal Revenue Code of 1954, as now in effect and hereafter
amended.
2.2 In General.
Each Employee, Partner-Employee, and Owner-Employee (subject to 2.3) shall
become a Participant as of the first day of his next "Year of Service" beginning
after he has accrued the number of "Years of Service" specified in the Adoption
Agreement, but no earlier than the Plan Effective Date specified in the Adoption
Agreement.
2.3 Restrictions on Participation by Owner-Employees.
(A) An Owner-Employee shall become a Participant if (and only if) he consents
thereto in the manner prescribed by the Plan Administrator.
(B) If an Owner-Employee owns or is a partner in an unincorporated trade or
business not covered by the Plan, his participation in this Plan is restricted
as follows:
(1) Employer contributions on behalf of any Owner-Employee shall not exceed
for any taxable year the lesser of $15,000 or 15% of such individual's Earned
Income for such year. This limitation applies in the aggregate where any
Owner-Employee is covered as an Owner-Employee or Partner-Employee under more
than one BR-10 plan established with respect to other
2
trades or businesses and intended to qualify under Sections 401(a) and (d) of
the Code. In the event the above limitations would otherwise be exceeded, the
amount which may be contributed with respect to each trade or business shall be
limited to that amount which bears the same ratio to the aggregate amount
deductible with respect to all trades or businesses as the Earned Income derived
from each such trade or business bears to the Earned Income derived from all the
trades or businesses with respect to which plans are established.
(2) (a) If this Plan provides contributions or benefits for one or more
Owner-Employees who control both the business with respect to which this Plan is
established, and one or more other trades or businesses, the Plan and the plan
established with respect to such other trades or businesses must, when looked at
as a single plan, satisfy Sections 401(a) and (d) of the Code with respect to
the employees of this and all such other trades or businesses.
(2) (b) If this plan provides contributions or benefits for one or more
other trades or businesses, the employees of each such other trade or business
must be included in a plan which satisfies Sections 401(a) and (d) of the Code
and which provides contributions and benefits not less favorable than provided
for such Owner-Employees under this Plan.
(2) (c) If an invididual is covered as an Owner-Employee under the plans of
two or more trades or businesses which he or she does not control, and such
individual controls a trade or business, then the contributions or benefits of
the employees under the plan of the trade or business which he or she does
control must be as favorable as those provided for him or her under the most
favorable plan of the trade or business which he or she does not control.
For purposes of this Part 2.3(B)(2), an Owner-Employee, or two or more
Owner-Employees, shall be considered to control a trade or business if such
Owner-Employee, or such two or more Owner-Employees together:
(i) own the entire interest in an unincorporated trade or business, or
(ii) in the case of a partnership, own more than 50% of either the capital
interest or the profits interest in such partnership.
3
ARTICLE III. CONTRIBUTIONS
3.1 Definitions.
(A) "Net Profit" of the Employer is net income from the business covered by this
Plan, determined under generally accepted accounting principles, before income
taxes and before any contributions under the Plan.
(B) "Earned Income" is an Owner-employee's or a Partner-Employee's net earnings
from the Employer's business covered by this Plan (excluding dividends,
interest, rentals, royalties, and gains on sales or exchanges of capital assets
except for any such earnings derived in respect to property created by such
person's personal efforts), computed by deducting contributions under the Plan
for Employees other than Owner-Employees or Partner-Employees, provided his
personal services are a material income-producing factor in such business.
(C) "Compensation" is all of an Employee's compensation from the Employer's
business covered by this Plan including basic pay, bonuses, and overtime, but
not including Plan contributions by the Employer.
(D) "Plan Year" is the fiscal period specified in the Adoption Agreement.
(E) "Adoption Agreement" is the Adoption Agreement establishing the Plan and the
Custodial Agreement. The information set forth therein shall be part of this
Plan as if set forth fully herein.
(F) "Plan Administrator" shall mean the person named in the Adoption Agreement.
If a Plan Administrator is not named, the Employer shall be deemed the Plan
Administrator. Any person or persons may serve both as Named Fiduciary and Plan
Administrator.
(G) "Custodial Account" is the account established under the Custodial Agreement
entered into pursuant to Article VI, and the "Custodian" is the custodian of
such Account or any successor thereto. The Custodian (while serving hereunder)
shall be a broker-dealer registered under the Securities Exchange Act of 1934,
as now in effect and hereafter amended. The Custodian shall, directly or through
its agents, perform the duties assigned to it pursuant to the Plan and the
Custodian Agreement.
(H) "Annual Additions" is the sum of the following amounts allocated on behalf
of a Participant for a Limitation Year:
4
(1) all Employer contributions;
(2) all forfeitures; and
(3) the lesser of (1) one-half of all Employee contributions under Section
3.3(B) or (C), and (2) the amount of all Employee contributions under Section
3.3(B) or (C) in excess of 6% of such Participant's Compensation or Earned
Income.
For purposes of this Article III, amounts reapplied to reduce Employer
contributions under 3.2(F) shall also be included as Annual Additions.
(I) "Employer" is the employer that adopts this Plan. In the case of a group of
employers which constitutes a controlled group of corporations (as defined in
Section 414(b) of the Internal Revenue Code as modified by Section 415(h), or
which constitutes trades or businesses (whether or not incorporated), which are
under common control (as defined in Section 414(c) as modified by Section
415(h)), all such employers shall be considered a single employer for purposes
of applying the limitations of this Part 3.2.
(J) "Excess Amount" is the excess of the Participant's Annual Additions for the
Limitation Year over the Maximum Permissible Amount, less loading and other
administrative charges allocable to such excess.
(K) "Limitation Year" is the Plan Year (or any other 12 consecutive month period
adopted for all plans of the Employer pursuant to a writing adopted by the
Employer).
(L) "Master or Prototype Plan" is a plan the form of which is the subject of a
favorable opinion letter from the Internal Revenue Service.
(M) "Maximum Permissible Amount" for a Limitation Year with respect to any
Participant shall be the lesser of (1) $25,000 (or such larger amount as may be
prescribed by the Secretary or Treasury), or (2) 25% of the Participant's Earned
Income or Compensation for the Limitation Year.
3.2 Employer Contributions.
(A) For each Plan Year, the Employer may contribute for (on behalf of) each
Owner-Employee who is a Participant (except in certain instances described in
Article below), and shall contribute for every other Participant, the lesser of
(1) 15% of the amount of his Earned Income or Compensation for that Plan Year,
or (2) $15,000, subject to the limitations in this Part 3.2.
5
(B) If so specified in the Adoption Agreement, a lower percentage shall control.
(C) Contributions shall be made only out of Net Profit for the Plan Year; if so
specified in the Adoption Agreement, the Employer shall not make contributions
except out of such part of Net Profit as exceeds the dollar limit there
specified. If the Net Profit, minus any dollar limit so specified, is less than
the contributions required or permitted by this Part 3.2, then the contribution
for each Participant shall be ratably reduced.
(D) Compensation or Earned Income, for purposes of contributions or benefits on
behalf of Participants, shall be limited to:
(1) the first $200,000 of Compensation or Earned Income of the Participant
for the Plan Year, if, and only if, the Employer's contributions to the Plan for
that Plan Year on behalf of each Participant are at a rate not Less than 7.5% of
each Participant's Compensation or Earned Income; or
(2) the first $100,000 of Compensation or Earned Income of the Participant
for the Plan Year.
For purposes of this limit:
(1) all plans maintained by the same employer shall be treated as a single
plan;
(2) all plans maintained with respect to one or more trades or businesses
which are under common control, within the meanings of Sections 401(d)(9) and
(10), or 414(c) of the Internal Revenue Code, shall be treated as a single plan;
and
(3) all plans in which any Owner-Employee participates shall be treated as
a single plan with respect to such person.
Subparts (E) through (H) apply to Employers who do not maintain any qualified
plan in addition to this Plan.
(E) If the Employer does not maintain any other qualified plan, the amount of
Annual Additions which may be allocated under this Plan on a Participant's
behalf for a Limitation Year shall not exceed the Maximum Permissible Amount.
(F) Prior to the determination of the Participant's actual Compensation or
Earned Income for a Limitation Year, the Maximum Permissible Amount may be
determined on the basis of the Participant's estimated Compensation or Earned
Income for such Limitation Year. Such estimated Compensation or Earned Income
shall be determined on a reasonable basis and shall be uniformly deter-
6
mined for all Participants similarly situated. Any Employer contributions based
on estimated Compensation or Earned Income shall be reduced by any Excess
Amounts carried over from prior years.
(G) As soon as is administratively feasible after the end of the Limitation
Year, the Maximum Permissible Amount for such Limitation Year shall be
determined on the basis of Participants' actual Compensation or Earned Income
for such Limitation Year.
(H) If, pursuant to this Part 3.2, there is an Excess Amount with respect to a
Participant for a Limitation Year, such Excess Amount shall be disposed of as
follows:
(l) First, any voluntary Employee Contributions under Sections 3.3(B) or
(C), to the extent that the return would reduce the Excess Amount, shall be
returned to the Participant. Any nondeductible Employer contribution on behalf
of an Owner-Employee or Partner-Employee, to the extent that the return would
reduce the Excess Amount, shall be returned to the Employer.
(2) In the event that the Participant is employed by the Employer at the
end of the Limitation Year, then remaining Excess Amounts shall be reapplied to
reduce future Employer contributions under this Plan for the next Limitation
Year (and for each succeeding year, as necessary) for such Participant, so that
in each such year the sum of actual Employer contributions, plus the reapplied
amount, shall equal the amount of Employer contributions which would otherwise
be allocated to each Participant's account.
(3) In the event that the Participant is not employed by the Employer at
the end of the Limitation Year, then remaining Excess Amounts shall be reapplied
to reduce future Employer contributions for all remaining Participants.
Subparts (I) through (N) apply to Employers who, in addition to this Plan,
maintain one or more Plans, all of which are qualified Master or Prototype
defined contribution plans.
(I) If, in addition to this Plan, the Employer maintains any other qualified
defined contribution plans (all of which are qualified Master or Prototype
plans), the amount of Annual Additions which may be allocated under this Plan on
a Participant's behalf for a Limitation Year, shall not exceed the Maximum
Permissible Amount, reduced by the sum of any Annual Additions allocated to the
Participant's accounts for the same Limitation Year under this Plan and such
other defined contribution plans.
7
(J) Prior to the determination of the Participant's actual Compensation or
Earned Income for the Limitation Year, the amounts referred to in 3.2(I) above
may be determined on the basis of the Participant's estimated Compensation or
Earned Income for such Limitation Year. Such estimated Compensation shall be
determined on a reasonable basis and shall be uniformly determined for all
Participants similarly situated. Any Employer contribution based on estimated
Compensation or Earned Income shall be reduced by any Excess Amounts carried
over from prior years.
(K) As soon as is administratively feasible after the end of the Limitation
Year, the amounts referred to in 3.2(I) shall be determined on the basis of the
Participant's actual Compensation or Earned Income for such Limitation Year.
(L) If a Participant's Annual Additions under this Plan and all such other plans
result in an Excess Amount, such Excess Amount shall be deemed to consist of the
amounts last allocated.
(M) If an Excess Amount was allocated to a Participant on an allocation date of
this Plan which coincides with an allocation date of another plan, the Excess
Amount attributed to this Plan will be the product of:
(1) the total Excess Amount allocates on such date (including any amount
which would have been allocated but for the limitations of Section 415 of the
Code)
times
(2) the ratio of (a) the amount allocated to the Participant as of such
date under this Plan, divided by (b) the total amount allocated as of such date
under all qualified defined contribution plans (determined without regard to the
limitations of Section 415 of the Code).
(N) Any Excess Amounts attributed to this Plan shall be disposed of as provided
in 3.2(H).
(O) THIS PLAN MAY NOT BE ADOPTED BY AN EMPLOYER WHO, IN ADDITION TO THIS PLAN,
MAINTAINS ANOTHER PLAN WHICH IS A QUALIFIED DEFINED CONTRIBUTION PLAN UNLESS
SUCH OTHER PLAN IS A MASTER OR PROTOTYPE PLAN.
3.3 Periodic Voluntary Employee Contributions.
(A) Deductible Employee Contributions.
If so specified in Paragraph 6 of the Adoption Agreement, any Participant may
voluntarily contribute to the Plan for each
8
calendar year an amount up to the lesser of 100% of his or her Compensation or
Earned Income, or $2,000, and such contributions, with the income or loss
thereon, shall he credited to a separate account which shall be entitled the
"Deductible Account". Such contributions for a calendar year may be made by
payroll deduction or otherwise, as permitted by the Plan Administrator, and must
be made on or before December 31 of such year. Notwithstanding the foregoing, no
contribution may be made by a Particinant pursuant to this Section 3.3(A) in a
calendar year if such Participant has attained age 701/2 before the close of
such calendar year. All contributions made by a Participant to the Plan pursuant
to this Section 3.3(A) shall be deemed to be "Qualified Voluntary Employee
Contributions" within the meaning of Section 219(e)(2) of the Code.
Subject to the limitations set forth above, all contributions made voluntarily
by a Participant to the Plan in a calendar year shall be deemed to be made
pursuant to this Section 3.3(A) unless the Participant designates, by written
notice to the Plan Administrator on or before the date each such contribution is
paid to the Company, all or any portion of such contributions as not being
Qualified Voluntary Employee Contributions. Such notice shall be irrevocable
after the latest date on which such designation may be made. All voluntary
contributions which are designated as not being Qualified Voluntary Employee
Contributions and all voluntary contributions in excess of the limitations set
forth above shall be deemed to be nondeductible Participant Contributions made
pursuant to Section 3.3(B) or 3.3(C), below.
The amount credited to a Participant's Deductible Account shall be distributed,
or commence to be distributed, from the Plan to the Participant or his
Beneficiary at the same time and pursuant to the same payment options as are
applicable to such Participant's other accounts under the Plan; provided,
however, that unless the Participant or his Beneficiary directs the Plan
Administrator otherwise in writing, any distribution from the Plan shall not be
treated as being made from the Deductible Account until all other vested amounts
standing to the credit of the Participant under the Plan have been distributed.
(B) By Owner-Employees.
For each Plan Year, an Owner-Employee may (if contributions are made that Year
under 3.2 for one or more Partner-Employees or Employees) contribute for (on
behalf of) himself an amount (in addition to amounts provided for in Sections
3.2 and 3.3(A)) not exceeding the lesser of $2,500 or 10% of his Earned Income
as determined for that Plan Year under 3.2. If for that Year he contributes less
than such amount, the difference may (at the
9
Plan Administrator's option, upon written notice to the Service Company), be
considered as contributed by him to the extent (if any) that the Employer's
total contributions for him in respect to that Year exceed the limits in 3.2(A).
However, if an Owner-Employee is covered under any other self-employed
retirement plan qualified under Section 401 of the Code to which he or she makes
voluntary contributions, the total amount of voluntary contributions to all such
qualified plans shall be taken into account in determining the maximum voluntary
contributions for such owner-employee under this paragraph.
(C) By Other Participants.
For each Plan Year, every other Participant may contribute for himself any
amount which will not cause the aggregate of such contributions made by him
under the Plan to exceed 10% of his total Earned Income or Compensation for the
current and all prior Plan Years he has been a Participant as determined for
such Years under 2.2. However, amounts withdrawn under 3.3(D) shall not be
deducted from such aggregate amount so as to be eligible for recontribution.
If the Employer maintains two or more retirement plans qualified under Section
401 of the Code, the 10% limitation applies in the aggregate to voluntary
contributions to such plans.
(D) Withdrawal of Voluntary Contributions.
Upon written notice to the Plan Administrator, a Participant may withdraw the
lesser of (1) the sum of amounts contributed by him under 3.3(A), (B) or (C)
(including earnings on such contributions), or (2) the current value of such
amounts, minus any such amounts previously distributed to him in either case.
3.4 Rollover Contributions.
A Participant may make a contribution which he identifies to the Plan
Administrator (and which the Plan Administrator identifies to the Custodian) as
being a rollover contribution to the Plan. Prior to accepting any rollover
contribution, the Plan Administrator shall require such certificates,
affidavits, representations or other proof as the Plan Administrator deems
necessary or appropriate to determine that the proposed contribution satisfies
all the requirements of the Code in order to qualify as a rollover amount. By
identifying such amount as a rollover contribution, the Plan Administrator shall
be deemed to have represented that the proposed rollover contribution satisfies
all such requirements and the Custodian shall be entitled to rely upon such
representation and shall be under no obligation to make further inquiry or
investigation with respect thereto.
10
A rollover contribution shall be made in cash unless otherwise agreed by the
Custodian. Amounts attributable to "accumulated deductible employee
contributions," as defined in Section 72(o)(5) of the Code, shall be credited to
the separate account established under Section 3.3(A).
3.5 General Provisions on Contributions.
Except as permitted in 3.4, no contribution shall be made in property other than
money. Contributions shall be remitted by the Employer and Participants through
the Administrator to the Custodian and not by them directly. The Plan
Administrator may commingle such contributions for remittance; but he shall
instruct the Custodian as to the amount of each Part 3.2, 3.3(A), 3.3(B) or (C),
and 3.4 contribution to be credited to each Participant's account, and he shall
maintain records thereof and of the dates they are remitted. Before remitting a
contribution, the Plan Administrator shall notify each Participant of any
opportunity provided under 3.3 for the participant to contribute at that time.
3.6 Excess Contributions.
(A) For periods prior to January 1, 1976-Transitional Rule.
This subpart (A) applies only if this Plan is adopted as a continuation of a
Plan existing prior to January 1, 1976.
If an amount is contributed for an Owner-Employee which is in excess of the
limits set forth in the plan, such amount and the net income attributable
thereto shall be returned to the Owner Employee before the end of the six-month
period beginning on the day which the District Director sends notice of the
amount of the contribution and the net income attributable thereto are deemed
repaid to the Owner-Employee if such amounts are applied to reduce future
contributions on behalf of such Participant.
If the amount of an excess contribution and the net income attributable thereto
are not repaid to the Owner-Employee before the end of the six-month period as
stated above, the plan shall not be considered qualified with respect to such
Owner-Employee for the taxable year of the plan within which the excess contri-
bution is made and each succeeding taxable year until the beginning of the
taxable year in which repayment is made. Thus, for any such year (1) no
contribution shall be made on behalf of such Owner-Employee under the plan; and
(2) the Owner-Employee's gross income for any of his or her taxable years which
ends with or within the taxable year of the plan shall include the portion of
the net income earned under the plan for such taxable year which is attributable
to the Owner-Employee's interest under the plan.
11
If an excess contribution on behalf of an Owner-Employee is determined to have
been willfully made, then there shall be distributed to the Owner-Employee his
or her entire interest in all plans in which he or she is a Participant as an
Owner-Employee. Furthermore, no plan in which he or she is covered as meeting
the requirements for qualification with respect to such Owner-Employee for any
taxable year of the plan beginning with or within the calendar year in which it
is determined that the excess contribution has been willfully made.
(B) For periods subsequent to December 31, 1975.
The Employer will incur a 6% tax under Section 4972 of the Code on the amount of
any Excess Contribution, as defined in (C) below, remaining at the close of the
taxable year and after allocation, if any, of any amounts under 3.3.
(C) For purposes of 3.6(B), "Excess Contribution" shall mean (except as
otherwise required under Section 4972 of the Code) the amount of any
contribution made:
(1) by the Employer on behalf of any Owner-Employee, for any Plan Year for
which Employer contributions are made on behalf of only Owner-Employees, which
is not deductible under Section 404 of the Code; or
(2) by the Employer on behalf of any Owner-Employee, for any Plan Year for
which Employer contributions are made on behalf of a Participant other than an
Owner-Employee, which exceeds the amount deductible under Section 404 of the
Code, except to the extent that such amount may be treated as a voluntary
contribution by such Owner-Employee pursuant to 3.3(B); or
(3) by any Owner-Employee pursuant to 3.3(B) on his own behalf -
(i) during a Plan Year in which the Employer has not made a contribution on
behalf of at least one Participant who is not an Owner-Employee;
(ii) at a rate in excess of that permitted to be made by Partner-Employees
or Employees during the Plan Year; or
(iii) which exceeds the lesser of $2,500 or 10% of such Owner-Employee's
Earned Income for the Plan Year; or
12
(4) by any Owner-Employee for a Plan Year in which voluntary contributions
are made by him on his own behalf under more than one self-employed retirement
plan, which, together with any voluntary contributions to such other plans made
by such Owner-Employee on his own behalf, exceeds the limits in subpart (3). If
an Excess Contribution is made pursuant to this subpart (4), the amount thereof
considered made on behalf of the Owner-Employee hereunder shall be the amount by
which his contribution under this Plan for the Plan Year exceeds an amount which
bears the same ratio to the applicable limits set forth in subpart (3) above as
his Earned Income bears to his Earned Income derived from all trades or
businesses with respect to which all such plans are established.
3.7 Crediting and Vesting Contributions.
All contributions made for and by a Participant, and all investments thereof and
earnings thereon, shall be credited to one or more separate Accounts maintained
for him under the Custodial Agreement and the Trust referred to in Article VI. A
separate Account shall also be maintained for deductible employee contributions.
His interest in each of his Accounts shall at all times be fully vested and
nonforfeitable.
ARTICLE IV. PAYMENT OF BENEFITS UNDER THE PLAN
4.1 Definitions.
(A) "Normal Retirement Age" is 65 or the age attained on the tenth anniversary
of the day on which the person became a Participant under 2.2, whichever is
later.
(B) "Retirement" is a Participant's cessation of employment with a present
intention not to return in the future.
(C) "Disability" is a condition demonstrable under Code Section 72(m)(7) as
rendering a Participant unable to engage in any substantial gainful activity by
reason of any medically determinable physical or mental impairment which can be
expected to result in death or be of long-continued and indefinite duration.
(D) The "Annuity Starting Date" of a Participant is both (1) the earliest
retirement date permitted by the Plan Administrator under 4.2(C) (but no later
than when the Participant attains age 59l/2), and also (2) the Participant's
Normal Retirement Age under 4.1(A).
(E) "Election Period" is a period consisting of at least 90 days following the
furnishing by the Plan Administrator to a Married Participant of the Election
Information and ending prior to each Annuity Starting Date.
13
(F) "Election Information" is a written, nontechnical notification of the
Participant's right to elect (1) against receipt by the Participant's spouse of
the survivor annuity portion of a Joint and Survivor Annuity in the event of the
Participant's death while still employed by the Employer after the earlier
Annuity Starting Date, and (2) against distribution of the Joint and Survivor
Annuity after he retires after either Annuity Starting Date. The notification
shall state that the Participant may request from the Administrator a written,
nontechnical explanation of the Single-Life Annuity and of the Joint and
Survivor Annuity and their impact on his benefit (in dollars per annuity
payment).
(G) "Joint and Survivor Annuity" is an annuity for the life of the Participant,
with a survivor annuity for the life of the Participant's spouse equal to 50%
(unless 100% is elected by the Participant or is specified by the Administrator)
of the annuity payable during their joint lives; and which is the actuarial
equivalent of the benefit purchasable by the Participant's Account balance.
(H) "Married Participant" is a Participant married on the Participant's Annuity
Starting Date.
(I) "Single-Life Annuity" is an annuity for the life of the Participant, with no
payments to a spouse or Beneficiary on the Participant's death.
4.2 Retirement Benefits.
(A) To an Owner-Employee.
The amount credited to the Accounts of each Participant who is or has been an
Owner-Employee under the Plan must be distributed to him commencing on the later
of his attaining Normal Retirement Age or his retirement, but in no case
commencing before he has attained age 591/2 (except on account of Disability or
Plan termination) or later than the last day of the taxable year in which he
attains 701/2 even though his employment continues thereafter. See Article VIII
below regarding penalties for premature distributions to Owner-Employees.
(B) To Other Participants.
The amount credited to the Accounts of any other Participant shall be
distributed to him commencing on the first day of the month following the later
of his attaining Normal Retirement Age or his retirement, but in no case
commencing later than the last day of the taxable year in which he attains 70
1/2 (unless he has not yet retired and at least 60 days before attaining said
age irrevocably elects deferral until retirement in a signed written notice to
the Plan Administrator).
14
(C) Early Retirement.
If an Owner-Employee who has attained age 591/2, or any other Participant
regardless of age, retires before the earliest date specified in (A) or (B) for
commencement of distribution, distribution may commence prior to that date in
the Plan Administrator's discretion exercised under rules uniformly applied in
nondiscriminatory fashion to Participants experiencing similar circumstances.
(D) Postponement of Benefit after Retirement.
A Participant may elect that the payment to him of retirement benefits due to
commence under 4.2(A), (B), or (C) commence later than the latest date provided
thereunder (but not later than the last day of the taxable year in which he
attains age 701/2) by filing with the Plan Administrator, at least 60 days
before such latest date, a signed written statement describing the benefit and
the date on which such payment shall commence.
4.3 Disability Benefits.
If a Participant (of whatever age) incurs a Disability before distribution to
him of retirement benefits has commenced under 4.2, the distribution of such
benefits may commence, as of the determination of such Disability or thereafter,
in the Plan Administrator's discretion exercised under rules uniformly applied
in nondiscriminatory fashion to Participants experiencing similar circumstances.
4.4 Death Benefits.
(A) If a Participant dies before distribution of his entire amount then credited
to his Account (his "account balance") has commenced or been completed under 4.2
or 4.3, or if distribution has commenced to his surviving spouse who dies before
such distribution is completed, his account balance shall be distributed to the
"Participant's Beneficiary", as defined in (B) below, commencing within 5 years
after the death of the Participant (or his surviving spouse) in accordance with
4.6 below.
(B) "Participant's Beneficiary" means the person or persons designated as such
by the "designated person" (as defined below) on a form acceptable to the
Custodian for use in connection with the Agreement, signed by the designated
person, and filed with the Custodian through the Plan Administrator in
accordance with this subpart (B). The form may name persons or estates to take
upon the contingency of survival and may specify or limit the mode of
distribution thereto. However, the term Participant's Beneficiary means the
designating person's estate to the extent
15
no such designation on such a form effectively disposes of the account balance
as of when such distribution is to commence. The form last accepted by the
Custodian before such distribution is to commence, and filed with the Custodian
during the designating person's lifetime, shall be controlling and, whether or
not fully dispositive of the account balance thereupon, shall revoke all such
forms previously filed by that person. The term "designating person" means the
Participant; after the Participant's death, it also means the Participant's
spouse, if the Participant's spouse begins to receive a portion of the account
balance (pursuant to such a designation by the Participant) in a manner
described in 4.5(B)(2). A designation by the Participant's spouse shall relate
solely to the account balance remaining after the death of the spouse. All such
forms shall be considered part of this Agreement for purposes of 9.7.
4.5 Commencement and Modes of Distribution.
(A) Subject to (D) below and, if applicable, subject also to any designation the
Participant or Participant's Beneficiary may make pursuant to 4.4(B), the Plan
Administrator shall determine the time and manner for distribution of benefits
under this Article IV and shall direct the Custodian and (if applicable) the
Insurance Trustee by written order as to the time and manner thereof. However,
unless the Participant has elected otherwise in writing, payment of benefits
must commence not later than sixty (60) days after the close of the Plan Year in
which either (l) the Participant reaches age 65, or (2) the Participant
terminates his service with the Employer, whichever is later.
(B) Upon receipt of a proper written order as required in (A) above, the
Custodian and the Insurance Trustee shall distribute the Participant's Account
to him in cash or kind in one or more of the following ways as specified in the
order:
(1) In a lump sum.
(2) In installments ratably over a period which may either be (1) not
longer than the life expectancy of the Participant, or (2) not longer than the
joint and survivor life expectancies of the Participant and his spouse. The life
expectancies referred to in this Plan shall be determined (1) by using
applicable Internal Revenue Service tables, and (2) either once when installment
payments commence, or periodically in a consistent manner. If the period is
measured by one or more such expectancies, the amount distributed each year
shall be at least equal to the quotient obtained by dividing the amount of the
Participant's accounts remaining at the beginning of that year by the life
expectancy factor being used to measure the distribution period, reduced by the
number of whole years
16
elapsed since the Participant attained said age; provided, however, that no
distribution need be made in any year, or a lesser amount may be distributed
during such year, if the aggregate amounts distributed through the end of such
year are at least equal to the aggregate of the minimum amounts required by this
subpart (B) to have been so distributed.
(3) In a Single-Life Annuity.
(4) In a Joint and Survivor Annuity.
(C) If distribution is to be made pursuant to 4.5(B)(3) or (4), then it may be
made by purchase from an Insurer and distribution of a nontransferable Policy
providing an annuity for the life of the Participant or the joint and survivor
lives of the Participant and the Participant's spouse.
(D) Unless a Married Participant otherwise elects in a writing to the Plan
Administrator within the Election Period, his benefits under the Plan shall be
distributed in the form of a Joint and Survivor Annuity.
(E) During the Election Period, a Married Participant may revoke such an
election and later make another such election.
(F) The Administrator shall take whatever action is necessary, including giving
instructions to the Custodian and Insurance Trustee (on which they conclusively
may rely), to carry out the requirements of this Part 4.5.
4.6 Distributions upon Death of a Participant or Beneficiary.
(A) If the Custodian received from the Plan Administrator a proper written order
for distribution on account of the death of a Participant or his Beneficiary,
the Custodian shall distribute his account balance held under the Custodial
Agreement to the Participant's Beneficiary entitled thereto, in a manner
described in 4.5(B). However, if an Owner-Employee dies before complete
distribution to him has been made, except in the case of payment to his
surviving spouse for her life expectancy and in that event if she dies before
such complete distribution of the Participant's interest, then the entire amount
of such interest shall be distributed promptly and in any event within five
years after such death, except that a distribution which began over a period
certain ending with the joint life and last survivor expectancy of the
Participant and his spouse may be completed; such distribution may be made by
purchase from an Insurer (as defined in 6.2(B)(2) of the Plan) and distribution
of a nontransferable Policy providing an annuity for the life of said
Participant's Beneficiary or the joint and survivor lives of such Beneficiary
and such Beneficiary's spouse.
17
(B) Upon the death of a Participant, any of his benefits which are funded with
Policies held by the Insurance Trustee under 6.2 of the Plan shall be
distributed in accordance with (A) above, except that if the Participant has
designated a beneficiary under a Policy, that designation shall prevail (solely
as to proceeds of that Policy) over any designation under 4.4(B) of the Plan.
When distribution commences, the Insurance Trustee (acting upon instructions of
the Plan Administrator, who shall in turn follow any directions received in this
respect from the Participant) either (1) shall distribute the Policies to the
person or persons entitled to such benefits, or (2) shall convert the Policies
into cash and transfer that cash to the Custodian for investment and
distribution in accordance with the Custodial Agreement.
ARTICLE V. THE PLAN ADMINISTRATOR
5.1 The Plan Administrator (Administrator) shall carry out the duties assigned
to him under the Plan and the Custodial Agreement. He shall perform the duties
of the "plan administrator" under Title I of the Employee Retirement Income
Security Act of 1974, as now in effect and hereafter amended including successor
sections ("ERISA"), and shall be a "Named Fiduciary" under Part 4 of said Title
I. If more than one person is named as Administrator, all of them shall exercise
their duties in concert and, to the extent required by ERISA, have
responsibility for each other's actions; but they may allocate their duties
among themselves by written agreement communicated to the Employer (if any,
otherwise to a majority of the persons referred to in the third sentence of
5.2), in which case none of them shall be responsible for acts or omissions of
another except as required by Section 405(c)(2) of ERISA. In any event, the
Custodian may (but need not) rely upon instructions appearing to be genuine
instructions from any Administrator as being the will of all of them, as if no
allocation were made, without duty of further inquiry.
5.2 The Custodian shall be notified in writing by the Employer of the name of
the Administrator(s) designated by the Employer. The Custodian may conclusively
assume that the Administrator will continue to act in that capacity until the
Custodian has been notified in writing by the Employer to the contrary. If at
any time no person designated as the Administrator is able and willing to serve
as such, the Employer promptly shall designate a successor, but if the Employer
has died (if a sole proprietor) or dissolved (if a partnership), a successor
promptly shall be designated by a majority of the Participants for whom accounts
not yet fully distributed are then held in the Custodial Account (a majority of
the legally competent Beneficiaries of a deceases Participant then entitled to
receive benefits may exercise his right to participate in that designation and
shall be considered for the purpose to be one Participant in his place).
18
5.3 The Administrator shall interpret and construe the Employer's adoption of
the Plan, shall decide any disputes which may arise relative to the rights of
Participants past and present, and their beneficiaries, under the terms of the
Plan, shall give instructions and directions to the Custodian as necessary and,
in general, shall perform the duties assigned to him by the Plan. The
Administrator shall not, through interpretation of the Plan or action under the
Plan, increase the burdens imposed upon the Custodian without its consent.
5.4 The Administrator shall be responsible for (1) keeping records of employment
and other matters containing all relevant data pertaining to any person affected
hereby and his eligibility to participate, allocations to his accounts, and his
other rights under the Plan, except for records which of necessity are to be
generated by the Custodian regarding assets of the Custodial Account and the
Accounts of Participants; (2) periodic, timely filing of all statements, reports
and returns requires to be filed by the "plan administrator" with the U.S.
Departments of Labor and the Treasury, employees, and others, and for verifying
that all of the same required of the Employer are timely filed; and (3)
retention by himself and the Employer of records for periods required by law.
5.5 The Administrator shall be agent for service of legal process as required by
Section 502(d)(1) of ERISA.
S.6 The Administrator shall establish and carry out a funding policy and method
to the extent necessary from time to time to implement or supplement the
provisions of the Plan and comply with requirements of ERISA.
5.7 Any person affected hereby may consult with the Administrator on any matters
relating to the Plan. A person claiming eligibility to participate, benefits, or
other rights under the Plan shall present his signed written claim to the
Administrator, and within a reasonable time he shall be given a written answer.
If he is denied the same, the Administrator shall notify him of such denial and
the specific reasons therefor, with reference to pertinent plan provisions and a
description of any additional information necessary to perfect his claim
(including reasons why it is necessary), and an explanation of the claims review
procedure, in a manner calculated to be understood by him and afford him a
reasonable opportunity for full and fair review, by the Administrator, of that
decision. The claimant or his representative or both may at any time after such
denial request such a review, examine all pertinent documents, and submit issues
and comments orally or in writing or both. The final decision of the Plan
Administrator shall be rendered to the claimant or his representative not later
than 60
19
days after the Plan Administrator's receipt of the claimant's request for review
(unless circumstances beyond the control of the Plan Administrator require an
extension of time for processing, in which case a decision shall be made as soon
as possible but not later than 120 days after receipt of that request for
review). Such decision shall be written in a manner calculated to be understood
by the claimant and shall give specific reasons for its conclusion with specific
references to pertinent provisions of the Plan on which the decision is based.
5.8 The Administrator may resign by giving written notice to the Employer (if in
existence, otherwise to all persons then referred to in the third sentence of
5.2) not less than 15 days before the effective date of his resignation. The
Administrator may be removed at any time, without cause, by the Employer (if in
existence, otherwise by a majority of such other persons referred to in the
third sentence of 5.2).
5.9 The Administrator shall be responsible for seeing that he and every other
person required to be bonded under ERISA are so bonded. The Administrator shall
not be liable or responsible for the acts or omissions of any other fiduciary
unless (1) the Administrator knowingly participated or knowingly attempted to
conceal the acts or omissions of the other fiduciary and the Administrator knew
the act or omission was a breach of fiduciary responsibility by the other
fiduciary; or (2) the Administrator has knowledge of a breach by the other
fidiciary and does not make reasonable efforts to remedy the breach; or (3) the
Administrator's breach of his own fiduciary responsibility permitted the other
fiduciary to commit a breach.
5.10 No fee or compensation shall be paid to the Administrator for his services
as the Administrator if he already receives full-time pay from the Employer or
any other organization referred to in Code Section 4975 (d)(10). Any expenses
properly incurred by the Administrator shall be reimbursed by the Employer.
5.11 Wherever, under the provisions of this agreement, discretion is granted to
the Administrator, which shall affect anyone's benefits or other rights under
the Plan, such discretion shall be exercised uniformly so that all persons
similarly situated will be similarly treated.
5.12 The Administrator shall have the right to employ agents and others to
render advice regarding his responsibilities under the Plan and may rely upon
the written opinions or certificates of any such person, for example, counsel,
actuary, investment manager, or physician.
20
5.13 The Administrator may delegate in writing all or any part ! of his
responsibilities under this document to others by written agreement communicated
to the delegate and the Employer (if any, otherwise to the persons referred to
in the third sentence of 5.2); and, in the same manner, may revoke any such
delegation of responsibility. Any action of a delegate in the exercise of such
delegated responsibilities shall have the same force and effect for all purposes
as if such action had been taken by the Administrator. The delegate shall have
the right, in his or its sole discretion, by written instrument delivered to the
Administrator, to reject and to refuse to exercise any such delegates authority.
The Custodian need not act on instructions of such a delegate despite any
knowledge of such delegation, but may require the Administrator to give the
Custodian all instructions needed under the Plan. The Administrator shall make a
formal annual review of each such delegate's performance of his respon-
sibilities and take any necessary action pursuant thereto.
5.14 Action required of the Employer under this Article with respect to the
Administrator, or an establishment of the Plan, shall be carried out by the sole
proprietor, if that is the nature of the Employer; or by any general partner if
it is a partnership. The Custodian shall have (and assume) no responsibility for
inquiring into the authority of any person purporting to act on behalf of a
partnership Employer.
5.15 The Employer, the Administrator, and the Custodian, respectively, shall be
responsible solely for performance of those duties expressly assigned to that
person in this Agreement and assumes no responsibility as to duties assigned to
anyone else hereunder or by operation of law.
ARTICLE VI. ACCOUNTS
6.1 Custodial Account.
Except to the extent that a portion of contributions is used to buy Policies
pursuant to 6.2, all contributions under the Plan shall be paid over to a
Custodial Account to be maintained by the Employer with the Custodian. The
Custodial Agreement pursuant to which such account is maintained shall provide
that all assets of the Custodial Account shall be registered in the name of the
Custodian or a suitable nominee. The Participants shall be the beneficial owners
of all of the assets of the Custodial Account.
6.2 Insurance Trust Account.
(A) This Article shall apply if the Adoption Agreement specifies that the
insurance option is available to Participants.
21
(B) Definitions.
(1) "Insurance Anniversary Date" is specified in the Adoption Agreement.
(2) "Insurance Trustee" is the person named as such in the Adoption
Agreement, and the successors thereto. If at any time the Trustee in office is
not a bank, insured credit union, or other person satisfactory to the Secretary
of the Treasury pursuant to Section 401(d)(1) of the Code, and if the Internal
Revenue Service notifies the Employer that the Insurance Trustee is not keeping
the records, making the returns, or rendering the statements required by law,
then the Employer shall substitute as Trustee such a bank, credit union, or
other satisfactory person.
(3) "Insurer" is a life insurance company licensed to issue Policies in the
states where the Employer's business is located and where the Trustee is
located.
(4) "Policy" is an ordinary whole life policy with cash values, including
an endowment policy; a term life policy; a retirement income contract; or
annuity contract, including a variable annuity. A Policy may provide for
disability income and/or disability waiver of premium benefits. A policy must
satisfy these requirements and, if necessary, be endorsed for the purpose:
(i) Be convertible into or exchangeable for a retirement annuity contract
to pay retirement benefits under the Plan.
(ii) Be "nontransferable" when held by anyone except the Trustee, which
means it cannot be sold, assigned, discounted, or pledged as collateral or any
other purpose to anyone other than the insurer.
(iii) Prohibit automatic premium and other loans on a Policy issued for the
account of an Owner-Employee.
(5) "Trust" is the trust fund established under this Part 6.2.
(C) Selection and Management of Insurance Funding.
(1) A Participant may elect through the Administrator that all or a
designated portion of contributions made pursuant to Sections 3.2 or 3.3(B) or
(C) by and on behalf of the Participant paid over to the Insurance Trustee as of
an Insurance Anniversary Date, for the purpose of being applied to the
22
payment of premiums on Policies of a kind specified by the Participant and
purchased and held in trust by the Insurance Trustee in trust hereunder, but
only to the extent permitted by subparts (2) through (5). Nothing but Policies
and cash awaiting investment or distribution shall be held in the Trust. The
Participant shall be the beneficial owner of Trust assets held for the
Participants account; none shall revert to the Employer, and at no time shall
it be possible for any Trust assets to be used for or diverted to purposes other
than for the exclusive benefit of the Participants and their beneficiaries.
(2) If ordinary life insurance contracts are purchased to insure a
Participant's life, then the amount of the Trust Fund that may be used to pay
the aggregate premiums on such contracts is any amount less than 50% of all
Employer contributions allocated to such Participant up to that time.
(3) If term life or other life insurance contracts with premium rates lower
than those of ordinary life insurance contracts are purchased to insure a
Participant's life and/or health and welfare, then the amount of the Trust Fund
that may be used to pay the aggregate premiums on such contracts is any amount
less than 25% of all Employer contributions allocated to such Participant up to
that time.
(4) If both ordinary life and term insurance are Purchased to insure a
Participant's life, the sum of the term insurance premiums plus one-half of the
ordinary life premiums may not exceed 25% of all Employer contributions
allocated to such Participant up to that time.
(5) If retirement income (or endowment) contracts are purchased on behalf
of any Participant, the death benefit under the contract shall not be greater
than 100 times the anticipated monthly annuity provided under such contract.
(6) Policies available for Participants shall be limited to those issued by
Insurers from time to time designated by the Employer and represented by the
Custodian as their agent or broker.
(7) If a Participant electing purchase of a life insurance Policy is
insurable only at substandard rates, the Policy may provide for an appropriately
smaller benefit.
(8) A Participant who unreasonably fails or refuses to submit to whatever
examination and to provide whatever information the Insurer requires to
determine insurability shall be deemed to be uninsurable.
23
(9) If a Policy is to be purchased for a Participant who dies before it
becomes effective, the death benefit regarding that Policy shall equal the
amount of contributions allocated to that purchase.
(10) A dividend which accrues on a Policy in a Plan Year shall in that or
the next Plan Year be applied to purchase additional retirement benefits for the
Participant for whom that Policy is held. Any premium refund under a Policy
shall be applied to reduce the current or next succeeding premium. In the event
of the Plan's termination or a Participant's death or separation from service
with the Employer, any such refund alternatively may be paid as part of any
distribution of benefits being made at that time as a result of that event.
(11) To the extent sufficient contributions are made by and on behalf of a
Participant under the Plan, and subject to the limitations in subparts (2)
through (4) above, the Plan Administrator shall allocate to the Trust a portion
of such contributions which is adequate for the payment of premiums on Policies
held for that Participant. To the extent such contributions are insufficient for
that purpose, the Participant shall direct the Plan Administrator whether (1) to
order the Insurance Trustee to apply for a premium loan under one or more
Policies (unless the Participant is an Owner-Employee, as such a loan would,
under Code Section 72(m)(4), constitute a distribution in violation of Article
VIII) or to place one or more Policies on a paid-up basis; or (2) (subject to
the limitations in subparts (2) through (4) above) to request that the Employer
order the Custodian, under Section 5 of the Custodial Agreement, to sell those
Custodial Account assets held for the Participant which the Participant
specifies for sale and to transfer the proceeds to the Insurance Trustee for
payment of such premiums.
(12) To the extent consistent with other provisions of this Article VI, a
Participant may direct the Insurance Trustee through the Administrator to change
a Policy or convert it into another Policy; to surrender a Policy and transfer
the proceeds to the Custodian for investment for the Participant's account under
the Custodial Agreement; or to request that the Employer order the Custodian,
under Section 5 of the Custodial Agreement, to sell Custodial Account assets
held for the Participant which the Participant specifies for sale, and to
transfer the proceeds to the Insurance Trustee for purchase of a Policy.
(13) Neither the Employer, the Administrator, nor the Insurance Trustee
shall be responsible for a Policy's validity or failure of the Insurer to make a
payment thereunder. Except as otherwise required by law, the Insurance Trustee
shall not be liable for failure to obtain a Policy or to pay when due a
24
premium thereon except for gross negligence or wilful misconduct, and neither
the Employer nor the Administrator shall be liable in any event.
(14) Except as otherwise required by law, an Insurer shall not be
considered a party to the Plan or Trust; may rely upon a certificate of the
Employer, Administrator, or Insurance Trustee as conclusive of the facts stated
therein; and shall be fully discharged in acting upon the Insurance Trustee's
directions and need not see to the application of money paid in accordance
therewith.
(15) In the event of any conflict between the terms of the Plan and the
provisions of any Policy issued hereunder, the terms of the Plan shall control.
(D) Concerning the Insurance Trustee.
(1) The Insurance Trustee shall keep adequate records of transactions with
respect to the Trust. Not later than sixty (60) days after the close of each
Plan Year (or after the Insurance Trustee's resignation or removal), the
Insurance Trustee shall file a written report of such transactions and the
assets of the Trust, and the Employer or Administrator shall furnish or cause to
be furnished to each Participant a copy of such portions of the report or
summary thereof as required by law. Upon the expiration of sixty (60) days after
such a report is rendered, the Insurance Trustee shall be forever released and
discharged from all liability and accountability to anyone with respect to
transactions, shown in or reflected by such report, except with respect to any
such acts or transactions as to which the Employer shall have filed written
objections with the Insurance Trustee within the latter such sixty-day period.
(2) All reasonable expenses and agreed-upon fees of the Insurance Trustee
(other than Policy premiums) shall be paid or reimbursed by the Employer.
(3) The Insurance Trustee may resign, upon thirty (30) days' notice to the
Employer, or be removed by the Employer upon thirty (30) days' notice to the
Insurance Trustee. The Employer shall notify the Custodian of all changes in the
identity and address of the Insurance Trustee. When such a change occurs, the
succeeded Insurance Trustee promptly shall transfer and pay over to the
successor the records and assets of the Trust. No Insurance Trustee shall be
responsible solely for the performance of duties expressly assigned to that
Insurance Trustee hereunder and not for duties assigned to anyone else in
connection with the Plan.
25
ARTICLE VII. AMENDMENT AND TERMINATION UNDER THE PLAN
7.1 The "Sponsor" of the prototype plan under which this Plan is adopted shall
be the Custodian.
7.2 This Prototype Plan may be amended from time to time by the Sponsor (acting
alone) by an instrument in writing, but no amendment shall become effective
until the day following thirty (30) days after a copy of such amendment shall
have been furnished to each Employer (whereupon it may take effect retroactively
if so provided). The Employer may from time to time amend its elections in the
Adoption Agreement, provided it is satisfied that no such amendment will affect
the qualified status of the Plan. In the event of any amendment by the Sponsor,
each Employer shall be deemed to have consented thereto unless its dissent
thereto in writing be delivered to the Sponsor within thirty (30) days after a
copy of such amendment shall have been furnished to each Employer. In the event
that an Employer dissents to any such amendment, such dissent shall constitute a
withdrawal by the Employer of its Plan from under the prototype Plan; the
general procedures of the Internal Revenue Service governing
individually-designed plans will be applicable thereafter. Except in the case of
such dissent, upon the execution by the Sponsor of an instrument setting forth
the amendment, the Plan shall be deemed to have been so amended, effective as of
the date specified in such instrument to which may be retroactive as provided
above), and all Participants and other persons claiming any interest hereunder
shall be bound thereby. Unless required in order to obtain determination of the
Plan's initial or continuing qualified status under the Code, no amendment shall
(1) have the effect of vesting in any Employer any interest in any property held
subject to the terms of this Plan; (2) cause or permit any property held subject
to the terms of the Plan to be diverted to purposes other than the exclusive
benefit of the present or future Participants and Beneficiaries; or (3) cause
any Participant to be deprived of benefits theretofore vested in him.
7.3 Any Employer may withdraw its Plan from under the prototype plan by
dissenting to an amendment hereto as provided in 7.2 above or by giving written
notice of discontinuance of participation to the Custodian. A withdrawal from
the Plan by an Employer shall not of itself constitute a termination of the Plan
with respect to such Employer. Upon such withdrawal, the Employer shall succeed
to the Sponsor's Power (described in 7.2) to amend the Plan. If the Plan of any
participating Employer fails to retain its qualified status, such Plan will be
considered withdrawn from the prototype plan.
26
7.4 No amendment may increase the burdens of the Custodian or the Insurance
Trustee without the written consent of the affected entity.
7.5 The Plan shall terminate upon the death of the proprietor if the Employer is
a sole proprietor or, if the Employer is a partnership, upon termination of the
partnership, unless upon such event a successor to the business of the Employer
elects to continue the same and such continuation is acceptable to the
Custodian.
7.6 Upon the termination of the Plan, any and all assets remaining in the
Custodial Account shall be distributed by the Custodian to the Participants in
accordance with the amounts credited to their accounts as of the date of such
termination. Such distribution shall be in cash or in kind unless the Employer
directs another method permitted by 4.5 above. If the Plan is funded in part
with insurance, then upon termination of the Plan any and all Policies remaining
in the Trust shall be endorsed as nontransferable and be distributed by the
Insurance Trustee in kind to the Participants for whom the assets are held. Upon
the completion of such distribution, the Custodian and the Insurance Trustee
shall be relieved from all further liability with respect to all amounts so
paid.
ARTICLE VIII. PENALTY FOR PREMATURE DISTRIBUTIONS
(limitation on 4.2)
Notwithstanding any provisions to the contrary elsewhere in the Plan;
No distribution shall be made to a Participant who is or has been an
Owner-Employee prior to his attaining age 591/2 for any reason other than
disability or plan termination, to the extent that such distribution is
attributable to contributions paid while he was an Owner-Employee on his behalf
by the Employer, or by himself to the extent he could not withdraw the same at
that time under 3.3(C). If the foregoing sentence is violated, then no
contribution shall be made by or on behalf of such Participant for the five Tax
Years succeeding the Tax Year in which such distribution is made.
ARTICLE IX. - MISCELLANEOUS
9.1 Non-Reversion Provisions.
This Plan is established for the exclusive benefit of the Participants and their
Beneficiaries, and under no circumstances shall any of the assets of the
Custodial Account established hereunder revert to the Employer.
27
9.2 Inalienability of Benefits.
The benefits hereunder shall not be subject to alienation, assignment,
garnishment, attachment, execution, or levy of any kind, and any attempt to
cause such benefits to be so subjected shall not be recognized, except to the
extent required by law.
9.3 Notices.
Except where otherwise specifically required in this Plan, any notice from the
Custodian to any person provided for in this Plan shall be effective if sent by
first class mail to such person at that person's last address on the sender's
records.
9.4 Status of Participants.
Neither the establishment of the Plan and the Custodial Account nor any
modification thereof, nor the creation of any fund or account, nor the payment
of any benefits, shall be construed as giving to any Participant or other person
any legal or equitable right against the Employer or Custodian, except as
provided herein or by law; and in no event shall the terms of employment of any
Employee or Participant be modified or in any way be affected hereby.
9.5 Allocation of Charges.
Any taxes and all fees and other expenses incurred with respect to the assets of
the Custodial Account shall be payable as provided for in the Custodial
Agreement. The expenses of the Plan Administrator are provided for in 5.10
above.
9.6 Mergers and Transfers.
In the event this Plan is merged or consolidated with, or its assets and
liabilities are transferred to, any other plan, the Plan Administrator shall be
responsible for verifying that each Participant in this Plan would be entitled
to receive a benefit immediately after the merger, consolidation or transfer (if
the Plan then terminated) which would be equal to or greater than the benefit he
would have been entitled to receive immediately before the merger, consolidation
or transfer if this Plan had then terminated.
9.7 Governing Law.
This Plan shall be construed and administered in accordance with the laws of the
Commonwealth of Massachusetts to the extent not pre-empted by the laws of the
United States of America (including ERISA); any provision hereof in conflict
with applicable
28
federal law shall survive to the extent permitted by that law. This Plan is
intended to meet the requirements of Section 401 (a) of the Code, and if any
provision hereof is subject to more than one construction, such ambiguity shall
be resolved in favor of that interpretation or construction which is consistent
with that intent. However, the Custodian shall not be responsible for whether or
not such intentions are achieved through use of this Plan; the Employer should
consult the Employer's attorney on such questions.
29
TUCKER, ANTHONY & R.L. DAY, INC.
CUSTODIAL AGREEMENT
SECTION 1. INTRODUCTION
The Employer, as engaged in the business referred to on the Adoption Agreement,
has adopted the foregoing Prototype as its Retirement Plan (the "Plans") for the
benefit of the Participants therein pursuant to the Self-Employed Individuals
Tax Retirement Act of 1962, as amended, and pursuant to the Employee Retirement
Income Security Act of 1974 as now in effect and hereafter amended, including
successor sections ("ERISA"). As part of the Plan, the Employer has requested
the Custodian to establish a Custodial Account for the investment of
contributions under the Plan upon the terms and conditions set forth in this
Agreement. The word "Employer" and other words and phrases defined in the Plan
shall have the same meanings hereunder. The Custodian shall be entitled to all
of the protection conferred on it by the terms of the Plan; and it may assume
that the Employer is serving as the Plan Administrator unless and until it
receives written notice to the contrary.
This Agreement shall take effect upon acceptance in writing by the Custodian of
its appointment in the Adoption Agreement.
SECTION 2. ESTABLISHMENT OF PARTICIPANTS' ACCOUNTS
The Custodian shall, upon acceptance of its duties under the Plan and this
Agreement, open and maintain Participants' Accounts for such individuals as the
Administrator shall from time to time certify to it, by name, address and social
security number, as Participants in the Plan.
SECTION 3. RECEIPT OF CONTRIBUTIONS
All contributions of money by or on behalf of Participants as may be made from
time to time shall he invested in the name of the Custodian as provided herein.
All such contributions of money shall be accompanied or preceded by written
instructions from the Administrator specifying the Participants' Accounts to
which they are to be credited, the amount of each such credit which is an
Employer contribution, the amount, if any, which is the Participant's
contribution, and the amount, if any, which is a deductible employee
contribution, or a rollover contribution, and designating Owner-Employees as
such. If written instructions are not received, or if received, are unclear in
the opinion of the Custodian, the Custodian may hold all or a portion of the
contribution in cash without liability for loss of income or appreciation, and
without liability for interest, pending receipt
30
of written instructions or clarification. Contributions may be made at intervals
determined by the Employer.
In addition, the Custodian may accept assets transferred to it from any other
Plan which is maintained by the Employer for the benefit of any of the
Participants if the Administrator certifies in writing to the Custodian his
reasonable belief that such other Plan satisfies the requirements of Section
401(a) and Section 401(d), if applicable, of the Internal Revenue Code ("Code"),
and if the Custodian has received a description of the assets and such other
information as it may reasonably require. The Custodian at its option may, but
need not, accept assets other than investments of the types specified in Section
4, or cash; any such other assets shall be disposed of as promptly as possible,
the proceeds shall be reinvested as provided in this Section 3, and the
Custodian shall, in accordance with the written instructions of the
Administrator, make appropriate credits to the accounts of the Participants for
whose benefit assets have been transferred. Any amounts so credited as
contributions previously made by the Employer or by such Participants under such
other Plan, as specified by the Administrator, shall be treated as contributions
previously made under the Plan by the Employer or by such Participants, as the
case may be.
SECTION 4. INVESTMENT OF CONTRIBUTIONS
When the Custodian accepts and signs this Agreement, it shall establish a
Custodial Account consisting of all separate Participant accounts under this
Plan. All contributions to the Plan shall be invested and reinvested in such
marketable securities (including options) traded by or obtainable through the
Custodian either "over the counter" or on a recognized exchange (excluding
securities issued by the Custodian), and in such amounts, as are specifically
selected and specified by the Participant in orders to the Custodian in such
form and either directly or through the Administrator as may he acceptable to
the Custodian. The Custodian shall be responsible for the execution of such
orders and for maintaining adequate records thereof. However, if any such orders
are not received as required or, if received, are unclear in the opinion of the
Custodian, all or a portion of the contribution may be held uninvested without
liability for loss of income or appreciation, and without liability for
interest, pending receipt of such orders or clarification; or the contribution
may be returned. Amounts referred to in the next preceding sentence may be
invested, and dividends, interest, proceeds of the sale of securities, and other
cash receipts not intended as payment for securities shall be invested, in a
daily-interest money market mutual fund which is sponsored and/or managed by the
Custodian or any affiliate of the Custodian pending receipt of contrary
31
orders, except that a balance of to $200 of uninvested cash may (but need not)
be maintained for administrative convenience.
All assets of the Custodial Account shall be registered in the name of the
Custodian or of a suitable nominee. The same nominee may be used with respect to
(1) assets of the Accounts of all (or some) of the Participants, and (2) assets
of other investors whether or not held under agreements similar to this one or
in any capacity whatsoever. However, each Participant's Account shall be
separate and distinct; a separate account thereof shall be maintained by the
Custodian; and the assets thereof shall be held by the Custodian in individual
or bulk segregation either in the Custodian's vaults or in depositories approved
by the Securities and Exchange Commission under the Securities Exchange Act of
1934.
The Custodian does not assume any responsibility for rendering advice with
respect to the investment and reinvestment of a Participant's Account and shall
not be liable for any loss which results from the Participant's exercise of
control over his Account. Except only to the extent (and upon the terms) that
the Custodian specifically agrees with the Employer or the Participant in
writing from time to time that the Custodian will render such advice, the
Participant shall have and exercise exclusive responsibility for and control
over the investment of the assets of his Account, and the Custodian shall not
have any duty to question his directions in that regard or to advise him
regarding purchase, retention, or sale of such assets.
SECTION 5. DISTRIBUTIONS
On receipt of a written order from the Administrator certifying that a
Participant's benefits and/or a withdrawal of the Participant's contributions is
payable pursuant to the Plan, the Custodian shall cause all assets credited to
such participant's Account (or such portion thereof as the Administrator may so
order) to be transferred into the name of such Participant or the name of such
other person as is entitled thereto under the Plan and distribute such assets to
the transferee. Before such distribution is made, however, the Custodian shall
be furnished with any and all applications, certificates, tax waivers, signature
guarantees and other documents (including proof of the Administrator's or any
legal representative's authority) deemed necessary or advisable by the
Custodian; but the Custodian shall not be responsible for complying with an
order which appears on its face to be genuine, or for refusing to comply if not
satisfied it is genuine, and assumes no duty of further inquiry. The Custodian
shall not have any responsibility for making any distribution unless and until
such an order has been received which specifies the occasion for the
distribution and the method under the Plan in which distribution is to be made.
32
Anything else to the contrary notwithstanding, upon receiving such an order with
the necessary instructions the Custodian will make any repayment or
redistribution of any Excess Contribution required under the Plan and/or the
Custodian shall make whatever adjustment of accounts provided for in the Plan,
whichever appropriate under the circumstances.
On receipt of a written direction from the Employer, the Custodian shall
transfer assets held in the Custodial Account for the account of a Participant
or Participants to the trustee or custodian serving in respect to another plan
or plans maintained by the Employer or some other employer of such Participant
or Participants for the benefit of such Participant or Participants and others.
Such transfer shall be accompanied by instructions to the effect that such a
Participant who was an Owner-Employee under the Plan be treated as an
Owner-Employee under such other plan. However, the Custodian shall first be
furnished with a written certificate of the Administrator that the Administrator
is satisfied that the requirements of Section 401(a) and Section 401(d), if
applicable, of the Code are satisfied by such other plan or plans. The Custodian
shall have no further liability under the terms of this Agreement with respect
to assets so transferred.
SECTION 6. VOTING AND OTHER ACTION
The Custodian shall deliver, or cause to be delivered, to each Participant all
notices, prospectuses, financial statements, proxies and proxy soliciting
materials relating to assets credited to his Account. The Custodian shall not
vote any shares of stock or take any other action, pursuant to such documents,
with respect to such assets except upon receipt by the Custodian of adequate
written instructions from the Participant.
SECTION 7. RECORDS AND REPORTS OF THE CUSTODIAN AND EMPLOYER
The Custodian shall keep adequate records of the transactions it is required to
perform hereunder. Not later than sixty (60) days after the close of each Plan
Year (or after the Custodian's resignation or removal pursuant to Section 11
hereof), it shall file with the Employer a written report or reports which may
consist of regularly issued Tucker, Anthony & R.L. Day, Inc. account statements
reflecting the transactions effected by it during such period and the fair
market value of the assets of each Participant's account in the Custodial
Account at its close or adequate information to compute that value, and
thereupon the Employer or Administrator shall furnish or cause to be furnished
to each Participant a copy of such portions of the report or summary thereof as
required by law. Upon the expiration of sixty (60) days after such a report is
rendered, the Custodian
33
shall be forever released and discharged from all liability and accountability
to anyone with respect to transactions, shown in or reflected by such report,
except with respect to any such acts or transactions as to which the Employer
shall have filed written objections with the Custodian within the latter such
sixty-day period.
The Employer and the Custodian shall furnish to each other such information
relevant to the Plan and Custodial Account as may be required under the Code and
any Regulations issued or forms adopted by the Treasury Department thereunder.
The Employer agrees by itself or through its appointed Plan Administrator to
fulfill any reporting or disclosure obligations now or hereafter imposed on the
Employer or the Custodian, or both of them, by ERISA, the Code, or any similar
federal, state or municipal requirement. To the extent the Custodian must assume
any such obligations, it may charge a reasonable fee for the service apart from
its normal fees and its expenses, as provided for in Section 8.
SECTION 8. CUSTODIAN'S FEES AND EXPENSES OF THE CUSTODIAL
ACCOUNT
The Custodian, in consideration of its services under the Plan and this
Custodial Agreement, shall receive the fees specified on the applicable fee
schedule. The fee schedule originally applicable shall be the same one
identified on the Adoption Agreement. The Custodian may substitute a different
fee schedule at any time upon thirty (30) days' written notice to the Employer.
The Custodian shall also receive reasonable fees for any services not
contemplated by any applicable fee schedule and either deemed by it to be
necessary or desirable, or requested by the Employer or Plan Administrator.
The Custodian shall also receive reasonable fees for the broker-dealer services
which it renders on behalf of a Participant's Account, which shall be charged to
that Account.
To the extent incurred by the Custodian and not reimbursed by the Employer, any
income, gift, estate and inheritance taxes and other taxes of any kind
whatsoever, including transfer taxes incurred in connection with the investment
or reinvestment of the assets of the Custodial Account, that may be levied or
assessed in respect to such assets shall, if allocable to specific Participants,
be charged to the Accounts of such Participants, and if not so allocable they
shall be charged proportionately to all such Participants' Accounts. Similarly,
to the extent not reimbursed by the Employer, all other administrative expenses
incurred by the Custodian in the performance of its duties (including fees for
legal services rendered to it)
34
shall, if allocable to specific Participants, be charged to the Accounts of such
Participants, and if not so allocable, be charged proportionately to such
Accounts.
All such fees and taxes and other administrative expenses charged to a
Participant's Account will be collected either from the amount of any
contribution or distribution to be credited to such Account, or (at the option
of the Custodian) by the conversion into cash of sufficient assets of the
Account; but the Employer shall be responsible for any deficiency.
SECTION 9. CONCERNING THE CUSTODIAN
The Custodian shall not be responsible in any way for the collection of
contributions provided for under the Plan; the purpose or propriety of any
distribution or withdrawal made pursuant to Section 5 hereof; any other action
or nonaction taken pursuant to the request of the Employer, the Plan
Administrator, or a Participant; the validity or effect of the Plan or Custodial
Agreement; the qualification of the Plan or this Agreement under the Code or
ERISA: or examination of the Plan.
The Employer and the legal representative or successor of the Employer, as
appropriate, and (with respect to directions from the Participant) the
Participant and his legal representative, shall at all times fully indemnify and
save harmless the Custodian, its successors and assigns, from any liability
arising from distributions so made or actions so taken, and from any and all
other liability whatsoever which may arise in connection with this Agreement,
except liability arising from the negligence or willful misconduct of the
indemnified person.
The Custodian shall not he under any duty to take any action other than as
herein specified with respect to the Custodial Account unless the Employer, Plan
Administrator, or Participant (whichever is appropriate) shall furnish the
Custodian with instructions in proper form and such instructions shall have been
specifically agreed to by the Custodian in writing, or to defend or engage in
any suit with respect to the Custodial Account unless the Custodian shall have
first agreed in writing to do so and shall have been fully indemnified to its
satisfaction. The Custodian may conclusively rely upon and shall be protected in
acting upon any written order from the Employer, the Plan Administrator or a
Participant, or any other notice, request, consent, certificate of other
instrument or paper believed by it to be genuine and to have been properly
executed, or upon any opinion of counsel and, so long as it acts in good faith,
in taking or omitting to take any action. The Custodian shall not be liable for
interest on any cash balances maintained in the Custodial Account in accordance
with the provisions of this Custodial Agreement.
35
The Custodian shall not be obligated to receive a contribution, instruction or
request from a Participant unless the same is forwarded by the Employer or Plan
Administrator, but it may do no in its discretion.
The Employer and the executor, administrator or successors of the Employer,
shall have the sole authority to enforce this agreement on behalf of any and all
persons having or claiming any interest in the Custodial Account. In order to
save the Custodial Account from the expenses which might otherwise be incurred,
it is imposed as a condition to the acquisition of any interest in the Custodial
Account, and it is hereby agreed, that no person other than the Employer and
such other persons as appropriate, may institute or maintain any action or
proceeding against the Custodian in the absence of written authority from the
Employer or a determination of a court of competent jurisdiction that, in
refusing such authority, the Employer or such other persons have acted
fraudulently or in bad faith.
SECTION 10. AMENDMENT
Amendment and termination of this Agreement shall be governed by the provisions
of Article VII of the Plan. They shall not be construed to reduce the freedom of
the Custodian to substitute fee schedules within the limits of Section 8, and no
such substitution shall be deemed to be an amendment of the Plan or of this
Agreement.
SECTION 11. RESIGNATION OR REMOVAL OF CUSTODIAN
Upon thirty (30) days' prior written notice to the Custodian, the Employer may
remove the Custodian from its office hereunder. Such notice, to be effective,
shall designate a successor Custodian and shall be accompanied by the
successor's written acceptance. The Custodian also may at any time resign
unilaterally upon thirty (30) days' prior written notice to the Employer,
whereupon the Employer shall appoint a successor Custodian.
The successor Custodian shall be a bank, insured credit union, or other person
satisfactory to the Secretary of the Treasury pursuant to Section 401(d)(1) of
the Code, and (while serving hereunder) a broker-dealer registered under the
Securities Exchange Act of 1934, as now in effect and hereafter amended. Upon
receipt by the Custodian of written acceptance by its successor of such
successor's appointment, the Custodian shall transfer and pay over to such
successor the assets of the Custodial Account and all records (or copies
thereof) of the Custodian pertaining thereto provided that the successor
Custodian agrees not to dispose of any such records without the Custodian's
consent. The Custodian is authorized, however, to
36
reserve such sum of money or property as it may deem advisable for payment of
all its fees, compensation, costs, and expenses, or for payment of any other
liabilities constituting a charge on or against the assets of the Custodial
Account or on or against the Custodian, with any balance of such reserve
remaining after the payment of all such items to be paid over to the successor
Custodian.
The Employer shall substitute another Custodian in place of the Custodian
specified in the Plan upon receipt of notice from the Commissioner of the
Internal Revenue Service or his delegate that such substitution is required
because the specified Custodian has failed to comply with the requirements of
Temporary Income Tax Regulations Section 11.401(d)(1)-1, or is not keeping such
records, making such returns or rendering such statements as are required by
applicable law, regulations or other rulings.
The Custodian shall not be liable for the acts or omissions of its successor.
SECTION 12. TERMINATION OF ACCOUNT
The Custodian shall terminate the Custodial Account if this Agreement is
terminated, or if within thirty (30) days (or such longer time as the Custodian
may agree to) after resignation or removal of the Custodian pursuant to Section
11, the Employer has not appointed a successor Custodian which has accepted such
appointment. Except in a case where the last paragraph of Section 5 applies with
respect to a termination of this Agreement, termination of the Custodial Account
shall be effected by distributing all assets thereof to the Participants in
accordance with the provisions of the Plan and pursuant to the direction of the
Employer (or in the absence of such direction as determined by the Custodian),
as on the termination of the Plan subject to the Custodian's right to reserve
funds as provided in Section 11.
Upon termination of the Custodial Account as provided for in this Section, the
Agreement shall be considered to be rescinded and of no force and effect, and
the Custodian shall be relieved from all further liability with respect to this
Agreement, the Custodial Account and all assets thereof so distributed, and any
determinations by the Custodian of the mode of distributing the assets of the
Custodial Account.
SECTION 13. MISCELLANEOUS
At no time shall it be possible for any part of the assets of the Custodial
Account to be used for or diverted to purposes other than for the exclusive
benefit of Participants or their beneficiaries.
37
Any notice from the Custodian to the Employer provided for in this Agreement
shall be effective if sent by first-class mail to it at its last address on the
sender's records.
In the event of any conflict between the provisions of the Plan and those of
this Agreement, the provisions of this Agreement shall prevail, except over
those Plan provisions necessary to retain qualified status under Code Section
401.
The assets of the Custodial Account shall not be subject to alienation,
assignment, trustee process, garnishment, attachment, execution or levy of any
kind except by the Custodian for its fees and expenses, and no attempt to cause
such assets to be so subjected shall be recognized except to such extent as may
be required by law or provided for herein.
This Agreement shall be construed and administered in accordance with the laws
of the Commonwealth of Massachusetts, to the extent not pre-empted by the laws
of the United States of America (including ERISA); any provision of this
Agreement in conflict with applicable federal law shall survive to the extent
permitted by that law.
The Custodian shall be responsible solely for performance of those duties
expressly assigned to it in the Plan and this Agreement; it assumes no
responsibility as to duties assigned to anyone else thereunder or by operation
of law.
38
SUMMARY OF KEOGH FEATURES AND PROVISIONS
PROTOTYPE SELF-EMPLOYED PROFIT-SHARING RETIREMENT PLAN
This Summary describes the general terms of the Tucker, Anthony Self-Employed
Profit-Sharing Retirement Plan which has been adopted by your employer to help
provide financial security for your retirement and to protect you and your
family if disability keeps you from working, or in the event of your death.
ELIGIBILITY
You may participate in the Plan on the first day of the year following that in
which you complete ( ) years of service with the employer.
A year of service is a 12-month period, measured from your date of hire or
anniversaries of it, during which you complete 1,000 hours of service with the
employer. Once you have joined the Plan, you will continue to be a participant
for as long as you are an employee of your employer.
An owner-employee - someone who owns more than 10% interest in the employer's
business - must agree to participate before he becomes a participant.
EMPLOYER CONTRIBUTIONS
Each year the employer shall make cash contributions under the Plan for each
employee who is then a Participant.
Cash contributions shall be equal to __________% of employees' compensation or
earned income with a maximum of $15,000 per year. The percentage contributed for
non-owner-employees must be at least as high as that contributed for
owner-employees.
Contributions are made out of the employer's net business income (net profit) in
excess of $_______________. For any year in which the employer has no net
profit, no contribution may be made. If net profit is insufficient in any year
to make a full contribution, contributions to all participant accounts will be
reduced on a pro rata basis.
DEDUCTIBLE EMPLOYEE CONTRIBUTIONS
Effective January 1, 1982, you may make contributions to this Plan from your own
earnings, and deduct the contributions on your federal income tax return. The
maximum you may contribute and deduct is 100% of your compensation (not
including employer paid contributions under this Plan), up to a maximum of
$2,000
39
for each calendar year. You may make contributions on account of a calendar year
at any time up to April 15 of the next year.
If you also maintain an individual retirement account for yourself, you may not
contribute and deduct more than the maximum (100% of compensation up to $2,000)
to the IRA and this plan combined.
You may contribute additional amounts to this Plan as voluntary nondeductible
contributions, as described in the next section. You may also wish to contribute
to both an IRA and this Plan, and designate any or all of your contributions
under this Plan as nondeductible. The Custodian will automatically allocate the
first $2,000 of each Participant's employee-paid contributions as deductible
contributions. It you wish any portion of the first $2,000 of your contribution
to be nondeductible, you must notify the Custodian by certified mail, return
receipt requested, on or before April 15 of the following year.
VOLUNTARY NONDEDUCTIBLE CONTRIBUTIONS
For any Plan Year in which there are Employer contributions made on behalf of
participants other than owner-employees, you may make voluntary nondeductible
contributions. The limit on owner-employee voluntary nondeductible contributions
is 10% of Earned Income or $2,500, whichever is less. The limit on voluntary
nondeductible contributions for other participants is applied in the aggregate
to such contributions for all Plan Years you were a participant; the total of
all your voluntary nondeductible contributions may not exceed 10% of your total
Compensation or Earned Income for those years.
These voluntary contributions are not tax deductible, but earnings on them will
not be taxed until your benefits are eventually distributed.
You may withdraw your voluntary nondeductible or deductible contributions upon
written notice to the Plan Administrator up to their current value. If you
withdraw accumulated deductible contributions prior to age 59 1/2, you may be
subject to significant tax penalties.
INVESTMENTS
As a participant, your portion of the annual employer contribution is credited
to an account in your name at the Plan Custodian, Tucker, Anthony & R.L. Day,
Inc.
Under the Plan, you have a wide choice of productive investments, and
flexibility to control and direct how your funds are put to work. To invest your
funds in bond, stocks, mutual funds, or other alternatives available under the
Plan, give your instructions to the Plan Administrator.
40
ADMINISTRATION OF PLAN
The Plan is administered by your employer unless otherwise stated. The Plan
Administrator is responsible for all matters relating to participation in the
Plan, and performs such duties as enrolling participants, keeping records,
sending contributions to the Custodian, and executing the investment
instructions of Participants.
The Administrator shall also provide adequate notice in writing to any employee
whose claim for benefits under the Plan has been denied in any respect, setting
forth the specific reasons for denial, written in a manner calculated to be
understood by such employee, and shall also afford a reasonable opportunity to
any such employee for a full and fair review of such denial.
Questions concerning the Plan should be directed to the Plan Administrator.
DISTRIBUTION OF BENEFITS
When you reach the Normal Retirement age under the Plan (age 65 or the 10th
anniversary of the day you became a participant, whichever is later) you will be
entitled to receive a distribution of your account in one of the following ways;
as designated by the Plan Administrator.
LUMP SUM
All securities (if any) in your accounts are redeemed and a check for the value
will be given to you for the entire balance of your interest in the Plan.
Alternatively, such securities may be transferred to you or your beneficiary as
payment in kind.
INSTALLMENTS
Benefits may be distributed in installments over a fixed period of years not to
exceed your life expectancy or the joint and last survivor expectancy of you and
your spouse. If, for example, a period of 10 years was selected, 1/10 of the
value of the account would be distributed the first year, the next year, 1/9,
etc. until the entire account was depleted.
If your employer approves, you may elect to work beyond your normal retirement
date and receive your retirement benefits after you actually retire. (An
owner-employee, however, may not begin receiving benefit payments except in case
of death or disability before age 59 1/2 and must begin receiving payments by
age 70 1/2.)
41
SINGLE-LIFE ANNUITY
This form of benefit would provide you with an annuity for life with no payments
after your death to a spouse or beneficiary.
JOINT AND SURVIVOR ANNUITY
If you are married, your benefit will automatically be paid in the form of a 50%
joint and survivor annuity, unless you elect in writing not to have your benefit
paid in this form. If you do not want your retirement benefit paid in the joint
and survivor annuity form, you must so elect in writing during the election
period and the Plan Administrator will designate one of the other forms of
payments.
The election period will begin upon the furnishing to you of notice of the
election by the Plan Administrator or following the furnishing of any additional
information concerning the election which you request. The election period will
last at least 90 days and ends on the day before benefits are to commence. The
election may be revoked in writing and another election may be made anytime
prior to the end of the election period.
The 50% joint and survivor annuity form will provide you with monthly benefits
as long as you live. Upon your death, payments to your spouse will continue but
will be reduced by 50% of the amount of your monthly payment. You may, however,
elect to receive (or the Plan Administrator may specify) a smaller joint and
survivor annuity benefit with continuation of payments to your spouse at the
rate of 100% of the rate payable to you during your lifetime.
DEATH BENEFITS
If you should die before your account has been distributed, whatever
undistributed interest remains will be distributed to your beneficiary, or will
be immediately applied to purchase an annuity for such beneficiary.
DISABILITY
If you become "disabled"--that is, you are unable to engage in any gainful
activity by reason of any medically determinable physical or mental impairment
which can be expected to result in death or be of long-continued or indefinite
duration--then the Plan Administrator has the discretion to have your benefit
distribution commence at once. In determining your disability and exercising
this discretion, the Administrator must follow uniform rules among participants.
42
TERMINATION OF EMPLOYMENT
If you terminate your employment prior to reaching Normal Retirement Age, other
than by death or disability, your account(s) will normally remain with the
Custodian until you reach Normal Retirement Age. However, at the discretion of
the Plan Administrator, who must use rules applied uniformly in a
nondiscriminatory manner, distribution may commence earlier; but owner-employees
may not receive any benefits prior to reaching age 59 1/2, unless the Plan
itself is terminated or the owner-employee becomes disabled.
PLAN TERMINATION INSURANCE
Because this Plan is of the "defined contribution" type, it is not insured under
Title IV of the Employee Retirement Income Security Act of 1974 by the Pension
Benefit Guaranty Corporation.
STATEMENT OF ERISA RIGHTS
As a Particicant in the Plan, you are entitled to certain rights and protections
under the Employee Retirement Income Security Act of 1974 (ERISA). ERISA
provides that all Plan Participants shall be entitled to:
Examine, without charge, at the Plan Administrator's office al1 plan documents,
and copies of all documents filed by the Plan Administrator with the United
States Department of Labor, such as annual reports and plan descriptions.
Examination at the Plan Administrator's office shall take place by prearranged
appointment during normal business hours.
Obtain copies of all plan documents and other plan information upon written
request to the Plan Administrator. The Plan Administrator may make a reasonable
charge for the copies. Receive a summary of the Plan's annual financial report.
The Plan Administrator is required by law to furnish each Participant with a
copy of this summarized annual report.
Obtain a statement telling you whether you have a right to receive a benefit at
normal retirement age and, if so, what your Benefits would be at normal
retirement age if you stop working under the plan now. If you do not have a
right to a benefit, the statement will tell you how many more years you have to
work to get a right to a benefit. This statement must be requested in writing
and is not required to be given more than once a year. The Plan must provide the
statement free of charge.
In addition to creating rights for Plan Participants, ERISA imposes duties upon
the people who are responsible for the operation of the Plan. The people who
operate your plan, called
43
"fiduciaries" of the Plan, have a duty to do so prudently and in the interest of
you and other plan Participants and beneficiaries. No one, including the
Company, may fire you or otherwise discriminate against you in any way to
prevent you from obtaining a pension benefit or exercising your rights under
ERISA. If your claim for benefits is denied in whole or in part, you must
receive a written explanation of the reason for the denial. You have the right
to have the Plan Administrator review and reconsider your claim. Under ERISA,
there are steps you can take to enforce the above rights. For instance, if you
request materials from the Plan and do not receive them within thirty (30) days,
you may file suit in a federal court. In such a case, the court may require the
Plan Administrator to provide the materials and pay you up to $100 a day until
you receive the materials, unless the materials were not sent because of reasons
beyond the control of the Plan Administrator. If you have a claim for benefits
which is denied or ignored, in whole or in part, you may file suit in a state or
federal court. If it should happen that plan fiduciaries misuse the plan's
money, or if you are discriminated against for asserting your rights, you may
seek assistance from the U.S. Department of Labor, or you may file suit in a
federal court. The court will decide who should pay court costs and legal fees.
If you are successful, the court may order the person you has sued to pay these
costs and fees. If you lose, the court may order you to pay these costs and
fees, for example, if it finds your claim is frivolous. If you have any
questions about your Plan, you should contact the Plan Administrator. If you
have any questions about this statement or about your rights under ERISA, you
should contact the nearest Area Office of U.S. Labor-Management Services
Administration, Department of Labor.
44
The purpose of this Summary is to describe the key features and provisions
clearly and concisely for the benefit of participants and their beneficiaries.
Should any of the text appear to contradict or conflict with that of the Plan
and Adoption Agreement executed by the employer, the terms of these Plan
documents shall control.
W-0122H/
45
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<TABLE> <S> <C>
<ARTICLE> 6
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<NAME> FREEDOM MUTUAL FUND
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<INVESTMENTS-AT-VALUE> 299,699,944
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</TABLE>
POWER OF ATTORNEY
I, the undersigned Trustee of Freedom Mutual Fund (the "Trust"), do
hereby constitute and appoint Lawrence G. Kirshbaum as my true and lawful
attorney, with full powers to sign for me, in my name in the capacities
indicated below, any and all Registration Statements of the Trust on Form N-1A
or N-14 and any and all amendments thereto filed with the Securities and
Exchange Commission to enable the Trust to comply with the provisions of the
Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as
amended, and the Investment Company Act of 1940, as amended, and all
requirements and regulations of the Securities and Exchange Commission, hereby
ratifying and confirming my signature as it may be signed by my said attorney to
any and all said amendments to the Registration Statement.
IN WITNESS WHEREOF, I have hereunto set my hand on the date indicated
below.
/s/ Dexter A. Dodge
- --------------------------------- -----------------------------------
Dexter A. Dodge Date: February 1, 1995
Trustee
POWER OF ATTORNEY
I, the undersigned Trustee of Freedom Mutual Fund (the "Trust"), do
hereby severally constitute and appoint Dexter A. Dodge and Lawrence G.
Kirshbaum, and each of them acting singly, as my true and lawful attorneys, with
full powers to them and each of them to sign for me, in my name in the
capacities indicated below, any and all Registration Statements of the Trust on
Form N-1A or N-14 and any and all amendments thereto filed with the Securities
and Exchange Commission to enable the Trust to comply with the provisions of the
Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as
amended, and the Investment Company Act of 1940, as amended, and all
requirements and regulations of the Securities and Exchange Commission, hereby
ratifying and confirming my signature as it may be signed by my said attorneys
to any and all said amendments to the Registration Statement.
IN WITNESS WHEREOF, I have hereunto set my hand on the date indicated
below.
/s/ Ernest T. Kendall
- --------------------------------- -----------------------------------
Ernest T. Kendall Date: February 1, 1995
Trustee
POWER OF ATTORNEY
I, the undersigned Trustee of Freedom Mutual Fund (the "Trust"), do
hereby severally constitute and appoint Dexter A. Dodge and Lawrence G.
Kirshbaum, and each of them acting singly, as my true and lawful attorneys, with
full powers to them and each of them to sign for me, in my name in the
capacities indicated below, any and all Registration Statements of the Trust on
Form N-1A or N-14 and any and all amendments thereto filed with the Securities
and Exchange Commission to enable the Trust to comply with the provisions of the
Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as
amended, and the Investment Company Act of 1940, as amended, and all
requirements and regulations of the Securities and Exchange Commission, hereby
ratifying and confirming my signature as it may be signed by my said attorneys
to any and all said amendments to the Registration Statement.
IN WITNESS WHEREOF, I have hereunto set my hand on the date indicated
below.
/s/ Richard B. Osterberg
- --------------------------------- -----------------------------------
Richard B. Osterberg Date: February 1, 1995
Trustee
POWER OF ATTORNEY
I, the undersigned Trustee of Freedom Mutual Fund (the "Trust"), do
hereby constitute and appoint Dexter A. Dodge as my true and lawful attorney,
with full powers to sign for me, in my name in the capacities indicated below,
any and all Registration Statements of the Trust on Form N-1A or N-14 and any
and all amendments thereto filed with the Securities and Exchange Commission to
enable the Trust to comply with the provisions of the Securities Act of 1933, as
amended, the Securities Exchange Act of 1934, as amended, and the Investment
Company Act of 1940, as amended, and all requirements and regulations of the
Securities and Exchange Commission, hereby ratifying and confirming my signature
as it may be signed by my said attorney to any and all said amendments to the
Registration Statement.
IN WITNESS WHEREOF, I have hereunto set my hand on the date indicated
below.
/s/ Lawrence G. Kirshbaum
- --------------------------------- -----------------------------------
Lawrence G. Kirshbaum Date: February 1, 1995
Trustee
POWER OF ATTORNEY
I, the undersigned Trustee of Freedom Mutual Fund (the "Trust"), do
hereby severally constitute and appoint Dexter A. Dodge and Lawrence G.
Kirshbaum, and each of them acting singly, as my true and lawful attorneys, with
full powers to them and each of them to sign for me, in my name in the
capacities indicated below, any and all Registration Statements of the Trust on
Form N-1A or N-14 and any and all amendments thereto filed with the Securities
and Exchange Commission to enable the Trust to comply with the provisions of the
Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as
amended, and the Investment Company Act of 1940, as amended, and all
requirements and regulations of the Securities and Exchange Commission, hereby
ratifying and confirming my signature as it may be signed by my said attorneys
to any and all said amendments to the Registration Statement.
IN WITNESS WHEREOF, I have hereunto set my hand on the date indicated
below.
/s/ Richard A. Farrell
- --------------------------------- -----------------------------------
Richard A. Farrell Date: February 1, 1995
Trustee
POWER OF ATTORNEY
I, the undersigned Trustee of Freedom Mutual Fund (the "Trust"), do
hereby severally constitute and appoint Dexter A. Dodge and Lawrence G.
Kirshbaum, and each of them acting singly, as my true and lawful attorneys, with
full powers to them and each of them to sign for me, in my name in the
capacities indicated below, any and all Registration Statements of the Trust on
Form N1-A or N-14 and any and all amendments thereto filed with the Securities
and Exchange Commission to enable the Trust to comply with the provisions of the
Securities Act of 1933, as amended, the Securities Act of 1934, as amended, and
the Investment Company Act of 1940, as amended, and all requirements and
regulations of the Securities and Exchange Commission, hereby ratifying and
confirming my signature as it may be signed by my said attorneys to any and all
said amendments to the Registration Statement.
IN WITNESS WHEREOF, I have hereunto set my hand on the date indicated
below.
/s/ William H. Darling
- -------------------------------- ------------------------------------
William H. Darling Date: January 28, 1997
POWER OF ATTORNEY
I, the undersigned Trustee of Freedom Mutual Funds (the "Trust"), do
hereby severally constitute and appoint Dexter A. Dodge and Lawrence G.
Kirshbaum, and each of them acting singly, as my true and lawful attorneys, with
full powers to them and each of them to sign for me, in my name in the
capacities indicated below, any and all Registration Statements of the Trust on
Form N1-A or N-14 and any and all amendments thereto filed with the Securities
and Exchange Commission to enable the Trust to comply with the provisions of the
Securities Act of 1933, as amended, the Securities Act of 1934, as amended, and
the Investment Company Act of 1940, as amended, and all requirements and
regulations of the Securities and Exchange Commission, hereby ratifying and
confirming my signature as it may be signed by my said attorneys to any and all
said amendments to the Registration Statement.
IN WITNESS WHEREOF, I have hereunto set my hand on the date indicated
below.
/s/ John R. Haack 23 January 97
- -------------------------------- ------------------------------------
John R. Haack Date: January 23, 1997
Trustee
POWER OF ATTORNEY
I, the undersigned Trustee of Freedom Mutual Funds (the "Trust"), do
hereby severally constitute and appoint Dexter A. Dodge and Lawrence G.
Kirshbaum, and each of them acting singly, as my true and lawful attorneys, with
full powers to them and each of them to sign for me, in my name in the
capacities indicated below, any and all Registration Statements of the Trust on
Form N1-A or N-14 and any and all amendments thereto filed with the Securities
and Exchange Commission to enable the Trust to comply with the provisions of the
Securities Act of 1933, as amended, the Securities Act of 1934, as amended, and
the Investment Company Act of 1940, as amended, and all requirements and
regulations of the Securities and Exchange Commission, hereby ratifying and
confirming my signature as it may be signed by my said attorneys to any and all
said amendments to the Registration Statement.
IN WITNESS WHEREOF, I have hereunto set my hand on the date indicated
below.
/s/ Laurence R. Veator, Jr. January 28, 1997
- -------------------------------- ------------------------------------
Laurence R. Veator, Jr. Date: January 28, 1997
