<PAGE> 1
[PHOTO OF DEXTER A. DODGE]
Dexter A. Dodge
Chairman
[FREEDOM LOGO] TO OUR SHAREHOLDERS
The most salient fact for any investor in money market funds, or for any manager
of one, is that the Federal Reserve has not changed interest rates since March
of 1997. This single reality has meant that the rates on short-term commercial
paper, certificates of deposit, Treasury Bills, and the like have varied in only
a very narrow range for the last fifteen months. While there have been times
that the market expected the Federal Reserve to raise rates and times that the
market has come close to expecting that rates would be lowered, introducing some
volatility to rates at times, it has been the stability of short-term rates
which has best characterized the last fifteen months.
This stability has been, for the most part, good news for the investors in the
Freedom Group of Money Funds. On the one hand, the Federal Reserve has been able
to keep rates steady because the performance of the economy as a whole has been
nothing short of stellar. We have had excellent growth with very low inflation.
During 1997 the economy grew at a 3.9% pace. In the first quarter of 1998, the
economy grew by 5.4%. Yet, by some measures, inflation is the lowest it has been
in a decade. In recent testimony to Congress, Alan Greenspan pointed out that
over the last twelve months, the consumer price index has increased by only
1.7%. In addition, he pointed out, other measures of inflation, which come from
the calculations used to measure the growth of the economy, like the gross
domestic product (GDP) deflator or the personal consumption deflator, have risen
even less. The GDP deflator is up 1.5% over the last year, and the personal
consumption deflator is up 1.4%. The combination of excellent growth with low
inflation has been good news for many of our investors in their lives outside of
the Freedom Group of Money Market Funds, but the stability of rates while
inflation is falling has also been a good thing for our investors as investors.
While nominal yields have remained relatively stable, real yields (the yield of
the fund minus the inflation rate) have been increasing. In fact, investors in
money market mutual funds are making a higher real yield, and thus taking home
more real dollars, with low inflation and rates close to 5.0%, than investors of
a few years ago were receiving when both nominal rates and inflation were much
higher.
The future, at the moment, looks like more of the past. Growth in the second
quarter of 1998 is expected to slow sharply to 1.5%. However, this appears to be
a temporary phenomenon due to a large reduction in business inventories and to
the strike at General Motors. The fundamental forces of the economy remain
intact. The consumer continues to spend at a fairly robust pace while the crisis
in Asia continues to hurt American exports and American manufacturing. This
appears to lead to an economy which will continue to show decent growth while
inflation remains low. The Federal Reserve has said that their next move is
likely to be to raise interest rates, but the bond market believes that this
stalemate between consumer growth and export difficulties may just as well lead
to a lowering of rates. Long-
<PAGE> 2
term bond rates have fallen from over 6% to 5.75%, reflecting both low
inflation and an economy in apparent equilibrium.
When rates remain stable it is especially important for us to continue to be
alert to the quality of the investments in your portfolios. Complacency is the
enemy of any good money fund manager. We have taken special care to continue to
invest only in the highest quality securities in the Freedom Group of Money
Market Fund portfolios.
We appreciate, as always, the opportunity to be of service to our investors.
Please feel free to contact us should you have any questions or concerns.
Sincerely,
/s/ Dexter A. Dodge
Dexter A. Dodge
Chairman
[PHOTO OF JEANNE CURRIE]
Mary Jeanne Currie
Portfolio Manager
Cash Management Fund
Government Securities Fund
[PHOTO OF PAUL MARANDETT]
Paul Marandett
Portfolio Manager
Tax Exempt Money Fund
FINANCIAL REVIEW
FREEDOM CASH MANAGEMENT FUND AND
FREEDOM GOVERNMENT SECURITIES FUND
The first six months of 1998 proved to be very stable for the short-term fixed
income markets. It would appear that as a result of continued economic growth
without the accompanying signs of inflation, and the uncertainty over the
effect of Asia's economic problems on the U.S. economy, the Federal Reserve
Board will not have to alter its monetary policy. In fact, during the last six
months, the rate on federal funds (the interest rate banks charge to other
banks for overnight loans) remained at 5.5%. Rates on 90-day commercial paper
moved within a 25 basis point range as compared to 1997 when the range varied
by more than double that amount. Similarly, one-year Treasury bills traded
between 5.25% and 5.50%.
While the Federal Reserve was on hold during this period we developed a neutral
stance on the market, keeping the average maturity of both funds close to that
of their respective industries. This strategy will provide us with flexibility
to either lengthen or shorten our investments if events lead us to believe that
the status quo no longer exists. We will continue to analyze economic releases
to assure that this is the most appropriate strategy going forward.
As always, the primary objective of the Funds is the preservation of capital.
All of the investments in the Freedom Cash Management
<PAGE> 3
Fund carry the highest rating assigned to short-term investments and we
constantly monitor and evaluate the creditworthiness of the holdings to be
certain that our conservative investment policy is maintained. Because of the
high quality and other internal controls, the Freedom Cash Management Fund is
rated AAA by Standard & Poor's.
In the Freedom Government Securities Fund all investments are limited to
securities issued or guaranteed by the U.S. Treasury or one of its agencies.
FREEDOM TAX EXEMPT MONEY FUND
As was the case in mid-1997, a sharp slowdown in economic activity during the
second quarter caused long-term interest rates to remain at historically low
levels. This year the short term or money market sector has followed suit.
Yields offered by tax exempt money funds fluctuated very little during the
first half of the year. The seven day average yield on the Freedom Tax Exempt
Money Fund stood at 3.00% in mid-December of last year and ended the second
quarter virtually unchanged at 2.98%, both right in line with the industry
averages. Certainly there was some yield volatility caused by the "January
effect," which saw cash inflows into the Fund, and cash outflows occurred
during "tax time" in late April. Overall, however, the fundamentals of supply
and demand remained fairly equal for the first half of 1998.
June, historically the heaviest in terms of tax exempt note issuance, failed to
see any significant disturbance in that fundamental balance. Once again,
similar to 1997, note issuance was much lighter than in past years. Favorable
economic conditions continue to allow governmental units to operate more on a
pay-as-you-go basis thus lessening their need to issue notes except to
ameliorate cash flow imbalances. While investors continue to focus on the
equity markets there has been some reallocation of funds into the safety and
liquidity of money market funds. Money fund assets, therefore, have continued
to grow but that growth was moderate enough to maintain the supply/demand
balance.
The average maturity for tax exempt money funds has been around 41 days so far
this year (the maximum allowed is 90 days). This historically short average
maturity is a direct result of the short term markets' flat yield curve, a
condition that has persisted for quite some time. Interest rates on 1-, 7- and
30-day variable rate securities have, on average, matched those offered by 3-,
6- and 12-month securities for the last several quarters. The Freedom Tax
Exempt Money Fund is, by virtue of our Standard & Poor's AAA rating, limited to
a 60-day average maturity but we have chosen to keep our average maturity as
close to the industry as possible. We anticipate very little change in this
strategy for the near term. Should the short term yield curve begin to steepen,
the Fund's present liquidity affords us the flexibility to lengthen the average
maturity thus locking in higher yields. Our greatest concern, however,
continues to be that of maintaining the superior credit quality of the
individual securities which comprise the Freedom Tax Exempt Money Fund.
Sincerely,
/s/ Mary Jeanne Currie
- ----------------------
Mary Jeanne Currie
Portfolio Manager
/s/ Paul Marandett
- ----------------------
Paul Marandett
Portfolio Manager
<PAGE> 4
FREEDOM CASH MANAGEMENT FUND
INVESTMENTS AS OF JUNE 30, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL MATURITY
AMOUNT RATE DATE VALUE
--------- ---- ---- -----
<S> <C> <C> <C>
COMMERCIAL PAPER -- 96.5%
ABBEY NATIONAL BANK
$25,000,000 5.480% 07/02/98 $ 24,996,194
30,000,000 5.490% 09/02/98 29,711,775
ABN AMRO N.A.
15,000,000 5.480% 10/05/98 14,780,800
AMERICAN EXPRESS CREDIT CORP.
15,000,000 5.510% 07/23/98 14,949,492
25,000,000 5.490% 07/29/98 24,893,250
15,000,000 5.520% 08/20/98 14,885,000
8,000,000 5.500% 10/15/98 7,870,444
AMERICAN GENERAL FINANCE CORP.
15,000,000 5.500% 08/20/98 14,885,417
15,000,000 5.510% 09/03/98 14,853,067
15,000,000 5.500% 09/10/98 14,837,292
20,000,000 5.510% 09/10/98 19,782,661
AMERICAN HOME PRODUCTS
12,000,000 5.450% 07/06/98 11,990,917
25,000,000 5.470% 07/17/98 24,939,222
20,000,000 5.490% 08/18/98 19,853,600
14,000,000 5.520% 08/21/98 13,890,520
25,000,000 5.490% 09/16/98 24,706,437
ASSET SECURITIZATION COOPERATIVE CORP.
20,000,000 5.470% 07/13/98 19,963,533
18,000,000 5.500% 08/06/98 17,901,000
12,000,000 5.500% 08/07/98 11,932,167
8,000,000 5.500% 08/21/98 7,937,667
20,000,000 5.530% 09/01/98 19,809,522
10,000,000 5.510% 09/04/98 9,900,514
ASSOCIATES CORPORATION OF NORTH AMERICA
15,000,000 5.510% 07/20/98 14,956,379
15,000,000 5.490% 07/31/98 14,931,375
12,000,000 5.500% 08/03/98 11,939,500
15,000,000 5.500% 08/21/98 14,883,125
20,000,000 5.480% 09/09/98 19,786,889
10,000,000 5.790% 01/04/99 9,997,474
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MATURITY
AMOUNT RATE DATE VALUE
--------- ---- ---- -----
<S> <C> <C> <C>
BANK OF NOVA SCOTIA
$25,000,000 5.500% 08/10/98 $ 24,847,222
25,000,000 5.490% 08/12/98 24,839,875
10,000,000 5.490% 09/02/98 9,903,925
CAISSE D'AMORTISSEMENT DE LA DETTE SOCIALE
25,000,000 5.480% 08/03/98 24,874,417
25,000,000 5.480% 08/27/98 24,783,083
25,000,000 5.500% 08/27/98 24,782,292
CAPITAL ONE CORP.
42,274,000 5.630% 07/02/98 42,274,000
CARCO AUTO LOAN MASTER TRUST
50,000,000 5.560% 07/15/98 50,000,000
CHEVRON TRANSPORT CORP.
15,000,000 5.490% 07/08/98 14,983,987
20,000,000 5.490% 07/17/98 19,951,200
10,000,000 5.500% 07/22/98 9,967,917
20,000,000 5.460% 08/04/98 19,896,867
10,000,000 5.470% 08/07/98 9,943,780
COMMONWEALTH BANK OF AUSTRALIA
18,000,000 5.490% 09/03/98 17,824,320
COOPERATIVE ASSOCIATION OF TRACTOR DEALERS
INC.
12,300,000 5.500% 07/02/98 12,298,121
10,000,000 5.420% 07/08/98 9,989,461
7,000,000 5.530% 07/10/98 6,990,322
10,000,000 5.570% 07/13/98 9,981,433
6,600,000 5.600% 07/13/98 6,587,680
25,000,000 5.570% 07/15/98 24,945,847
4,500,000 5.380% 07/17/98 4,489,240
5,616,000 5.600% 07/17/98 5,602,022
2,000,000 5.670% 07/29/98 1,991,180
6,300,000 5.480% 10/13/98 6,200,264
5,000,000 5.520% 10/16/98 4,917,967
FORD MOTOR CREDIT CORP.
26,000,000 5.500% 07/14/98 25,948,361
10,000,000 5.470% 07/17/98 9,975,689
25,000,000 5.490% 07/24/98 24,912,312
</TABLE>
See Notes to Financial Statements.
4
<PAGE> 5
FREEDOM CASH MANAGEMENT FUND
INVESTMENTS AS OF JUNE 30, 1998 -- (CONTINUED)
(UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL MATURITY
AMOUNT RATE DATE VALUE
--------- ---- ---- -----
<S> <C> <C> <C>
COMMERCIAL PAPER -- (CONTINUED)
FORD MOTOR CREDIT CORP. -- (CONTINUED)
$25,000,000 5.500% 08/05/98 $ 24,866,319
5,000,000 5.470% 08/27/98 4,956,696
GENERAL ELECTRIC CAPITAL CORP.
20,000,000 5.700% 07/02/98 19,996,833
22,000,000 5.510% 07/24/98 21,922,554
13,000,000 5.440% 09/03/98 12,874,276
10,000,000 5.500% 09/08/98 9,894,583
3,000,000 5.490% 09/18/98 2,963,858
9,000,000 5.500% 10/01/98 8,873,500
GLAXO WELLCOME PLC
13,000,000 5.460% 07/07/98 12,988,170
5,000,000 5.540% 07/20/98 4,985,381
15,000,000 5.530% 07/23/98 14,949,308
GOLDEN PEANUT CO.
2,900,000 5.460% 07/10/98 2,896,041
10,000,000 5.460% 07/14/98 9,980,283
GOLDMAN SACHS & CO.
14,000,000 5.510% 08/19/98 13,895,004
5,000,000 5.530% 08/28/98 4,955,453
17,000,000 5.500% 09/04/98 16,831,181
10,000,000 5.470% 09/11/98 9,890,600
25,000,000 5.470% 10/06/98 24,631,535
25,000,000 5.490% 10/06/98 24,630,188
HALIFAX PLC
6,000,000 6.000% 07/01/98 6,000,000
J.P. MORGAN & CO., INC.
12,000,000 5.390% 07/10/98 11,983,830
20,903,000 5.480% 07/10/98 20,874,363
15,000,000 5.510% 07/27/98 14,940,308
20,000,000 5.500% 10/09/98 19,694,444
5,000,000 5.500% 11/10/98 4,899,167
23,000,000 5.360% 12/11/98 22,441,816
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MATURITY
AMOUNT RATE DATE VALUE
--------- ---- ---- -----
<S> <C> <C> <C>
MERRILL LYNCH & CO.
$20,000,000 5.530% 07/06/98 $ 19,984,639
10,000,000 5.490% 07/16/98 9,977,125
18,000,000 5.520% 09/08/98 17,809,560
14,500,000 5.510% 09/14/98 14,333,552
4,000,000 5.520% 10/02/98 3,942,960
8,000,000 5.500% 11/16/98 7,831,333
17,000,000 5.500% 12/04/98 16,594,833
METLIFE FUNDING INC.
20,000,000 5.510% 07/09/98 19,975,511
20,000,000 5.500% 07/10/98 19,972,500
10,000,000 5.490% 07/14/98 9,980,175
5,023,000 5.530% 07/27/98 5,002,939
MONSANTO CO.
20,000,000 5.490% 07/17/98 19,951,200
9,000,000 5.480% 08/20/98 8,931,500
PROCTER & GAMBLE CO.
10,000,000 5.470% 07/06/98 9,992,403
15,000,000 5.460% 09/11/98 14,836,200
25,000,000 5.470% 09/18/98 24,699,910
SCOTIA BANC INC.
12,000,000 5.530% 08/24/98 11,900,460
SHEFFIELD RECEIVABLES CORP.
8,800,000 5.520% 07/07/98 8,791,904
15,000,000 5.530% 07/13/98 14,972,350
10,000,000 5.530% 07/14/98 9,980,031
16,000,000 5.560% 07/20/98 15,953,049
20,000,000 5.560% 07/22/98 19,935,133
10,000,000 5.650% 08/03/98 9,948,208
15,000,000 5.520% 08/27/98 14,868,900
</TABLE>
See Notes to Financial Statements.
5
<PAGE> 6
FREEDOM CASH MANAGEMENT FUND
INVESTMENTS AS OF JUNE 30, 1998 -- (CONTINUED)
(UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL MATURITY
AMOUNT RATE DATE VALUE
--------- ---- ---- -----
<S> <C> <C> <C>
COMMERCIAL PAPER -- (CONTINUED)
SHELL FINANCE
$28,610,000 5.500% 07/09/98 $ 28,575,032
25,000,000 5.480% 07/15/98 24,946,722
25,500,000 5.500% 07/15/98 25,445,458
12,300,000 5.490% 07/20/98 12,264,361
TECO FINANCE INC.
12,500,000 5.510% 07/28/98 12,448,344
UBS FINANCE (DE) INC.
20,000,000 5.500% 08/05/98 19,893,056
25,000,000 5.520% 08/07/98 24,858,167
UNILEVER CORP.
50,000,000 6.100% 07/01/98 50,000,000
USAA CAPITAL CORP.
20,000,000 5.500% 07/09/98 19,975,556
20,000,000 5.500% 07/10/98 19,972,500
4,450,000 5.510% 07/23/98 4,435,016
4,885,000 5.530% 08/04/98 4,859,487
10,000,000 5.480% 09/15/98 9,884,311
--------------
TOTAL COMMERCIAL PAPER........ 1,875,008,093
--------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MATURITY
AMOUNT RATE DATE VALUE
--------- ---- ---- -----
<S> <C> <C> <C>
MUNICIPAL SECURITIES -- 0.5%
MISSISSIPPI BUSINESS FINANCE CORP. TAXABLE
INDUSTRIAL DEVELOPMENT REVENUE BONDS
$10,000,000 5.700% 07/01/98 $ 10,000,000
--------------
TOTAL MUNICIPAL SECURITIES.... 10,000,000
--------------
CERTIFICATES OF DEPOSIT -- 1.6%
BAYERISCHE VEREINSBANK AG
30,000,000 5.650% 07/07/98 30,000,340
--------------
TOTAL CERTIFICATES OF
DEPOSIT..................... 30,000,340
--------------
TOTAL INVESTMENTS -- 98.6%.... 1,915,008,433(a)
Other Assets & Liabilities,
Net -- 1.4%................. 27,319,018
--------------
TOTAL NET ASSETS -- 100.0%.... $1,942,327,451
==============
</TABLE>
- ----------------------------------------------
(a) COST FOR TAX PURPOSES IS THE SAME.
See Notes to Financial Statements.
6
<PAGE> 7
FREEDOM GOVERNMENT SECURITIES FUND
INVESTMENTS AS OF JUNE 30, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL MATURITY
AMOUNT RATE DATE VALUE
------ ---- ---- -----
<S> <C> <C> <C>
U.S. GOVERNMENT AGENCY ISSUES -- 97.6%
FEDERAL FARM CREDIT BANK DISCOUNT NOTES --
8.8%
$10,580,000 5.380% 07/13/98 $ 10,561,027
1,600,000 5.370% 07/15/98 1,596,659
16,500,000 5.380% 07/21/98 16,450,683
2,900,000 5.430% 09/21/98 2,864,132
------------
TOTAL FEDERAL FARM CREDIT BANK
DISCOUNT NOTES............... 31,472,501
------------
FEDERAL HOME LOAN BANK DISCOUNT NOTES -- 88.8%
10,000,000 5.390% 07/01/98 10,000,000
1,290,000 5.400% 07/01/98 1,290,000
25,000,000 5.436% 07/02/98 25,000,000
5,100,000 5.350% 07/06/98 5,096,210
18,800,000 5.390% 07/06/98 18,785,926
5,100,000 5.300% 07/07/98 5,095,495
15,000,000 5.340% 07/10/98 14,979,975
3,875,000 5.380% 07/10/98 3,869,788
9,700,000 5.380% 07/15/98 9,679,705
7,000,000 5.365% 07/17/98 6,983,309
5,300,000 5.370% 07/17/98 5,287,351
15,350,000 5.370% 07/22/98 15,301,916
8,700,000 5.360% 07/24/98 8,670,207
21,300,000 5.380% 07/24/98 21,226,787
15,000,000 5.380% 07/31/98 14,932,750
9,700,000 5.390% 07/31/98 9,656,431
10,000,000 5.426% 08/04/98 9,999,243
3,800,000 5.380% 08/05/98 3,780,124
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MATURITY
AMOUNT RATE DATE VALUE
------ ---- ---- -----
<S> <C> <C> <C>
FEDERAL HOME LOAN BANK DISCOUNT
NOTES -- (CONTINUED)
$25,136,000 5.390% 08/05/98 $ 25,004,280
8,200,000 5.260% 08/06/98 8,156,868
630,000 5.510% 08/06/98 626,693
5,500,000 5.370% 08/07/98 5,469,645
6,400,000 5.375% 08/07/98 6,364,644
1,100,000 5.380% 08/07/98 1,093,918
3,250,000 5.375% 08/12/98 3,229,620
3,450,000 5.380% 08/12/98 3,428,346
4,200,000 5.390% 08/12/98 4,173,589
19,000,000 5.315% 08/14/98 18,876,574
8,500,000 5.250% 08/19/98 8,439,260
13,556,000 5.320% 08/19/98 13,457,839
2,300,000 5.380% 08/21/98 2,282,470
1,500,000 5.380% 09/01/98 1,486,102
9,900,000 5.380% 09/02/98 9,806,792
2,000,000 5.390% 09/04/98 1,980,536
3,685,000 5.380% 09/11/98 3,645,349
6,500,000 5.380% 09/16/98 6,425,203
5,000,000 5.592% 11/06/98 4,999,491
------------
TOTAL FEDERAL HOME LOAN BANK
DISCOUNT NOTES............... 318,582,436
------------
TOTAL U.S. GOVERNMENT AGENCY
ISSUES -- 97.6%.............. 350,054,937
Other Assets & Liabilities
Net -- 2.4%.................. 8,539,472
------------
TOTAL NET ASSETS -- 100.0%..... $358,594,409
============
</TABLE>
- ------------
(a) COST FOR TAX PURPOSES IS THE SAME.
See Notes to Financial Statements.
7
<PAGE> 8
FREEDOM TAX EXEMPT MONEY FUND
INVESTMENTS AS OF JUNE 30, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT DESCRIPTION VALUE
------ ----------- -----
<C> <S> <C>
MUNICIPAL SECURITIES -- 101.7%
ALABAMA -- 1.3%
$ 3,600,000 Alabama HFA Series 92A
(AmSouth LOC) 3.55%
7-01-98.................... $ 3,600,000
700,000 Northern Alabama
Environmental Improvement
Authority (Reynolds Metals)
(Bank of Nova Scotia LOC)
4.00% 7-01-98.............. 700,000
------------
4,300,000
------------
ARIZONA -- 5.4%
13,000,000 Apache County IDA (Tucson
Electric & Gas) (Barclays
Bank LOC) 3.55% 7-01-98.... 13,000,000
1,500,000 Maricopa County PCR (Barclays
Bank LOC) 3.55% 7-01-98.... 1,500,000
Mesa Municipal Development
Corp. (West Deutsche
Landesbank LOC)
1,700,000 3.65% 7-07-98................ 1,700,000
1,000,000 3.75% 7-08-98................ 1,000,000
------------
17,200,000
------------
ARKANSAS -- 2.4%
7,600,000 Arkansas Development Finance
Authority (Citibank LOC)
3.40% 7-02-98.............. 7,600,000
------------
CALIFORNIA -- 5.3%
2,000,000 California Higher Education
Loan Authority (National
Westminster LOC) 3.80%
5-01-99.................... 2,000,000
3,000,000 California Higher Education
Loan Authority (SLMA) 3.65%
7-01-99.................... 3,000,000
5,000,000 Los Angeles County TRANS
4.50% 6-30-99.............. 5,039,850
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT DESCRIPTION VALUE
------ ----------- -----
<C> <S> <C>
CALIFORNIA -- (CONTINUED)
Los Angeles Regional Airport
Improvement Corp.
$ 5,800,000 (Societe Generale LOC)
4.00% 7-01-98.............. $ 5,800,000
1,200,000 (Wachovia LOC) 4.00%
7-01-98.................... 1,200,000
------------
17,039,850
------------
COLORADO -- 0.8%
1,000,000 Colorado HFA (MBIA/Credit
Suisse) 3.40% 7-02-98...... 1,000,000
1,575,000 Colorado HFA (MBIA/ Rabobank)
3.40% 7-02-98.............. 1,575,000
------------
2,575,000
------------
DELAWARE -- 0.6%
2,000,000 Delaware EDA (MBIA/Morgan
Stanley) 3.75% 7-01-98..... 2,000,000
------------
DISTRICT OF COLUMBIA -- 3.8%
10,000,000 District of Columbia
(National Westminster LOC)
4.00% 7-01-98.............. 10,000,000
2,000,000 Washington D.C. TRANS (United
Bank of Switzerland/Morgan
Guaranty LOC's) 4.50%
9-30-98.................... 2,003,020
------------
12,003,020
------------
FLORIDA -- 3.2%
1,380,000 Florida Local Government
(First Union LOC) 3.50%
8-03-98.................... 1,380,000
1,000,000 Orange County School Board
(MBIA) 4.50% 8-01-98....... 1,000,839
5,065,000 Putnam County PCR (Seminole
Electric) (NRUCFC) 3.65%
12-15-98................... 5,065,000
</TABLE>
See Notes to Financial Statements.
8
<PAGE> 9
FREEDOM TAX EXEMPT MONEY FUND
INVESTMENTS AS OF JUNE 30, 1998 -- (CONTINUED)
(UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT DESCRIPTION VALUE
------ ----------- -----
<C> <S> <C>
MUNICIPAL SECURITIES -- (CONTINUED)
FLORIDA -- (CONTINUED)
$ 2,900,000 West Orange Memorial Hospital
Tax District (Rabobank LOC)
3.60% 7-27-98.............. $ 2,900,000
------------
10,345,839
------------
GEORGIA -- 4.8%
1,500,000 Downtown Savannah Authority
(Wachovia LOC) 3.50%
7-01-98.................... 1,500,000
5,000,000 Georgia Municipal Electric
Authority (ABN Amro LOC)
3.50% 7-01-98.............. 5,000,000
1,000,000 Georgia Municipal Electric
Authority (Credit Suisse/
Morgan Guaranty LOC's)
3.35% 7-01-98.............. 1,000,000
2,000,000 Georgia Municipal Electric
Authority (Morgan
Guaranty/Bayerische
Landesbank/West Deutsche
Landesbank/Wachovia LOC's)
3.40% 7-23-98.............. 2,000,000
6,000,000 Georgia Municipal Gas
Authority (Wachovia/ Morgan
Guaranty/Bank of
America/Landesbank-
Hessen/Bayerische
Landesbank LOC's) 3.40%
7-01-98.................... 6,000,000
------------
15,500,000
------------
IDAHO -- 0.6%
2,000,000 IDAHO TANS Series 98 4.50%
6-30-99.................... 2,017,320
------------
ILLINOIS -- 9.3%
1,300,000 Chicago (Morgan Guaranty LOC)
3.55% 10-29-98............. 1,300,000
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT DESCRIPTION VALUE
------ ----------- -----
<C> <S> <C>
ILLINOIS -- (CONTINUED)
$ 4,000,000 Chicago (Morgan Guaranty LOC)
3.55% 2-04-99.............. $ 4,000,000
Illinois Development Finance
Authority
4,300,000 (Aurora Central Catholic
H.S.) (Northern Trust LOC)
3.55% 7-01-98.............. 4,300,000
1,000,000 (Illinois Power Co.)
(Canadian Imperial Bank of
Canada LOC) 3.55% 7-01-98.. 1,000,000
1,000,000 (Lake Forest Academy)
(Northern Trust LOC) 3.55%
7-01-98.................... 1,000,000
3,000,000 (Presbyterian Homes)
(LaSalle National Bank LOC)
3.55% 7-01-98.............. 3,000,000
5,950,000 Illinois Health Facilities
Authority (Alexis Brothers)
(MBIA/Morgan Guaranty)
3.70% 7-29-98.............. 5,950,000
4,300,000 Illinois Toll Highway
Authority (MBIA/Societe
Generale) 3.40% 7-01-98.... 4,300,000
5,000,000 Lisle Health Facilities
Authority (FNMA) 3.60%
7-01-98.................... 5,000,000
------------
29,850,000
------------
INDIANA -- 1.2%
2,800,000 Indiana HEFA (Deaconess
Hospital) (FNB-Chicago LOC)
3.50% 7-01-98.............. 2,800,000
1,000,000 Whiting Economic Development
Revenue (Amoco) 3.60%
8-15-98.................... 1,000,000
------------
3,800,000
------------
IOWA -- 0.6%
2,000,000 Iowa School Corp. (FSA) 4.50%
6-25-99.................... 2,016,130
------------
</TABLE>
See Notes to Financial Statements.
9
<PAGE> 10
FREEDOM TAX EXEMPT MONEY FUND
INVESTMENTS AS OF JUNE 30, 1998 -- (CONTINUED)
(UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT DESCRIPTION VALUE
------ ----------- -----
<C> <S> <C>
MUNICIPAL SECURITIES -- (CONTINUED)
KANSAS -- 0.9%
$ 3,000,000 Burlington PCR (Kansas Power
& Light) (Toronto Dominion
LOC) 3.75% 7-20-98......... $ 3,000,000
------------
LOUISIANA -- 5.4%
4,200,000 Ascension Parish IDA (Borden
Project) (Credit Suisse
LOC) 3.50% 7-01-98......... 4,200,000
400,000 East Baton Rouge IDA (Georgia
Pacific) (Toronto Dominion
LOC) 3.40% 7-02-98......... 400,000
1,100,000 Lake Charles Harbor &
Terminal District (Canadian
Imperial Bank of Commerce
LOC) 3.50% 7-01-98......... 1,100,000
2,100,000 Louisiana PCFA (Swiss Bank
LOC) 3.55% 7-01-98......... 2,100,000
Plaquemines Port Harbor &
Terminal Authority
3,700,000 (Tampa Electric Co. Finance
Corp.) 3.50% 7-13-98....... 3,700,000
4,450,000 (Tampa Electric Co. Finance
Corp.) 3.75% 8-06-98....... 4,450,000
1,200,000 Plaquemines Port Harbor &
Terminal Authority Series B
(Morgan Guaranty LOC) 3.60%
3-15-99.................... 1,200,000
------------
17,150,000
------------
MAINE -- 1.3%
4,035,000 Maine HEFA (Bowdoin College)
(State Street Bank LOC)
3.50% 7-01-98.............. 4,035,000
------------
MARYLAND -- 0.7%
1,100,000 Maryland HEFA (Pooled Loan
Program) (FNB Chicago LOC)
3.50% 7-01-98.............. 1,100,000
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT DESCRIPTION VALUE
------ ----------- -----
<C> <S> <C>
MARYLAND -- (CONTINUED)
$ 1,000,000 Prince Georges County
(Escrowed in U.S.
Government Securities)
7.20% 2-01-99.............. $ 1,030,610
------------
2,130,610
------------
MASSACHUSETTS -- 1.8%
5,800,000 Massachusetts Bay Transit
Authority (State Street
Bank LOC) 3.40% 9-01-98.... 5,800,000
------------
MICHIGAN -- 2.2%
1,000,000 Ingham Economic Development
Corp. (National Australia
Bank LOC) 3.55% 7-01-98.... 1,000,000
3,000,000 Michigan 4.50% 9-30-98....... 3,005,290
3,000,000 Michigan Strategic Fund
Series 1985 (Dow Chemical)
3.60% 8-12-98.............. 3,000,000
------------
7,005,290
------------
MINNESOTA -- 0.3%
1,000,000 Duluth PCR (Lake Superior
Paper Industries) (Wachovia
LOC) 3.40% 7-02-98......... 1,000,000
------------
MISSOURI -- 3.1%
2,550,000 Columbia (Insurance Reserve
Bonds) (Toronto Dominion
LOC) 3.50% 7-01-98......... 2,550,000
Missouri Environmental
Improvement Bonds (United
Bank of Switzerland LOC)
3,045,000 3.65% 7-22-98.............. 3,045,000
3,000,000 3.70% 8-10-98.............. 3,000,000
1,200,000 3.60% 8-25-98.............. 1,200,000
------------
9,795,000
------------
</TABLE>
See Notes to Financial Statements.
10
<PAGE> 11
FREEDOM TAX EXEMPT MONEY FUND
INVESTMENTS AS OF JUNE 30, 1998 -- (CONTINUED)
(UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT DESCRIPTION VALUE
------ ----------- -----
<C> <S> <C>
MUNICIPAL SECURITIES -- (CONTINUED)
NEVADA -- 1.1%
$ 2,300,000 Las Vegas Valley Water
District (United Bank of
Switzerland/West Deutsche
Landesbank LOC's) 3.65%
7-09-98.................... $ 2,300,000
1,200,000 Reno Hospital Improvement
(MBIA/Rabobank) 4.00%
7-01-98.................... 1,200,000
------------
3,500,000
------------
NEW HAMPSHIRE -- 1.1%
2,100,000 New Hampshire Business
Finance Authority (CT Light
& Power) Series 92A
(Canadian Imperial Bank of
Commerce LOC) 3.55%
7-01-98.................... 2,100,000
1,300,000 New Hampshire HEFA (Mary
Hitchcock Hospital) (FGIC/
Chemical Bank) 3.55%
7-01-98.................... 1,300,000
------------
3,400,000
------------
NEW MEXICO -- 2.0%
2,200,000 Farmington PCR (Arizona
Public Service) (Barclays
Bank LOC) 3.80% 7-01-98.... 2,200,000
4,000,000 Farmington PCR (El Paso
Electric) (Barclays Bank
LOC) 3.55% 7-01-98......... 4,000,000
------------
6,200,000
------------
NEW YORK -- 3.2%
2,000,000 Long Island Power Authority
(United Bank of
Switzerland/West Deutsche
Landesbank LOC's) 3.75%
8-20-98.................... 2,000,000
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT DESCRIPTION VALUE
------ ----------- -----
<C> <S> <C>
NEW YORK -- (CONTINUED)
$ 2,100,000 Long Island Power Authority
(West Deutsche
Landesbank/Bayerische
Landesbank LOC's) 3.25%
7-01-98.................... $ 2,100,000
4,000,000 New York Energy Research &
Development Authority
(Morgan Guaranty LOC) 3.58%
3-15-99.................... 4,000,000
2,000,000 New York Energy Research &
Development Authority
(United Bank of Switzerland
LOC) 3.80% 12-01-98........ 2,000,000
------------
10,100,000
------------
NORTH CAROLINA -- 6.5%
North Carolina Eastern
Municipal Power
1,500,000 (Canadian Imperial Bank of
Commerce LOC) 3.70%
7-07-98.................... 1,500,000
1,000,000 (Morgan Guaranty/United
Bank of Switzerland LOC's)
3.70% 7-20-98.............. 1,000,000
5,000,000 North Carolina Educational
Facilities (Bowman Gray
Medical School) (Wachovia
Bank LOC) 3.50% 7-02-98.... 5,000,000
2,200,000 North Carolina Educational
Facilities (Elon College)
(Nationsbank LOC) 3.45%
7-01-98.................... 2,200,000
5,350,000 North Carolina Educational
Facilities (Moses Cone
Hospital) (Wachovia Bank
LOC) 3.40% 7-02-98......... 5,350,000
5,850,000 Raleigh-Durham Airport
Authority (Royal Bank of
Canada LOC) 3.85% 7-01-98.. 5,850,000
------------
20,900,000
------------
</TABLE>
See Notes to Financial Statements.
11
<PAGE> 12
FREEDOM TAX EXEMPT MONEY FUND
INVESTMENTS AS OF JUNE 30, 1998 -- (CONTINUED)
(UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT DESCRIPTION VALUE
------ ----------- -----
<C> <S> <C>
MUNICIPAL SECURITIES -- (CONTINUED)
OHIO -- 5.1%
$ 5,000,000 Cincinnati Student Loan
Funding Corp. (Bank of
America LOC) 3.50%
7-01-98.................... $ 5,000,000
3,000,000 Clinton County Hospital
Finance Program (Fifth
Third Bank LOC) 3.65%
7-01-98.................... 3,000,000
3,165,000 Franklin County Hospital
Revenue (U.S. Health Corp.)
(Morgan Guaranty LOC) 3.55%
7-02-98.................... 3,165,000
3,000,000 Ohio Air Quality Development
Authority (Ohio Edison)
(Toronto Dominion LOC)
3.65% 2-01-99.............. 3,000,000
2,000,000 Toledo Special Assessment
Revenue (Canadian Imperial
Bank of Commerce LOC) 3.55%
7-02-98.................... 2,000,000
------------
16,165,000
------------
OREGON -- 0.7%
2,300,000 Port of Portland PCR (Bank of
Nova Scotia LOC) 4.00%
7-01-98.................... 2,300,000
------------
PENNSYLVANIA -- 3.6%
1,000,000 Bethlehem Area School
District (Escrowed in U.S.
Government Securities)
4.20% 9-01-98.............. 1,000,735
7,535,000 Delaware Valley Finance
Authority (Credit Suisse
LOC) 3.45% 7-01-98......... 7,535,000
3,100,000 Pennsylvania HEFA (Allegheny
Delaware Valley) (PNC Bank
LOC) 3.55% 7-01-98......... 3,100,000
------------
11,635,735
------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT DESCRIPTION VALUE
------ ----------- -----
<C> <S> <C>
SOUTH CAROLINA -- 2.4%
$ 2,945,000 York County (North Carolina
Electric) (NRUCFC) 3.50%
9-15-98.................... $ 2,945,000
4,695,000 York County (Saluda River
Project) (NRUCFC) Series E1
3.45% 8-15-98................ 4,695,000
------------
7,640,000
------------
TENNESSEE -- 0.8%
2,600,000 Metropolitan Nashville
Airport Authority
(Bayerische Landesbank LOC)
4.00% 7-01-98.............. 2,600,000
------------
TEXAS -- 9.4%
3,650,000 Austin County IDA (Justin
Industries Inc.) (Citibank
LOC) 3.50% 7-01-98......... 3,650,000
2,000,000 Austin ISD (Texas Permanent
School Fund Guaranty) 6.10%
8-01-98.................... 2,004,351
3,950,000 Brazos River Navigational
District (Dow Chemical)
3.60% 8-17-98.............. 3,950,000
1,000,000 Dallas 4.45% 2-15-99......... 1,005,138
1,100,000 Denton ISD (Texas Permanent
School Fund Guaranty) 3.90%
8-15-98.................... 1,100,000
3,700,000 Lonestar Airport Improvement
Authority (Royal Bank of
Canada LOC) 4.00% 7-01-98.. 3,700,000
2,200,000 Lower Neches Valley Authority
PCR (Chevron) 3.45%
8-17-98.................... 2,200,000
3,500,000 Lower Neches Valley Authority
PCR (Mobil Oil) 3.50%
7-01-98.................... 3,500,000
</TABLE>
See Notes to Financial Statements.
12
<PAGE> 13
FREEDOM TAX EXEMPT MONEY FUND
INVESTMENTS AS OF JUNE 30, 1998 -- (CONTINUED)
(UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT DESCRIPTION VALUE
------ ----------- -----
<C> <S> <C>
MUNICIPAL SECURITIES -- (CONTINUED)
TEXAS -- (CONTINUED)
$ 1,000,000 Richardson ISD (Texas
Permanent School Fund
Guaranty) (United Bank of
Switzerland) 3.55%
7-02-98.................... $ 1,000,000
1,000,000 San Antonio (Escrowed in U.S.
Government Securities)
8.00% 8-01-98.............. 1,003,765
7,000,000 Texas TRANS 4.75% 8-31-98.... 7,010,728
------------
30,123,982
------------
UTAH -- 6.8%
Intermountain Power Agency
5,500,000 (AMBAC/United Bank of
Switzerland) 3.45%
9-15-98.................... 5,500,000
2,000,000 (Bank of America LOC) 3.70%
7-21-98.................... 2,000,000
9,200,000 State Board of Regents
Student Loan Revenue Series
88B (AMBAC/Dresdner) 3.40%
7-01-98.................... 9,200,000
2,000,000 State of Utah Series 97B
3.60% 9-30-98.............. 2,000,000
3,100,000 Utah Transit Authority
(Bayerische Landesbank LOC)
3.40% 7-02-98.............. 3,100,000
------------
21,800,000
------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT DESCRIPTION VALUE
------ ----------- -----
<C> <S> <C>
VIRGINIA -- 0.6%
$ 2,000,000 Harrisonburg Virginia
Redevelopment and Housing
Revenue Bonds (Misty Ridge
Project) (Bank One LOC)
3.55% 7-02-98.............. $ 2,000,000
------------
WASHINGTON -- 1.1%
3,100,000 Seattle Water System Revenue
Bonds (Bayerische
Landesbank LOC) 3.50%
7-01-98.................... 3,100,000
300,000 Washington HCFA (MBIA/ Credit
Suisse) 4.00% 7-01-98...... 300,000
------------
3,400,000
------------
WISCONSIN -- 2.3%
4,000,000 La Crosse PCR (AMBAC/
Rabobank) 4.05% 7-01-98.... 4,000,000
3,500,000 Wisconsin Health and
Education Facilities
(Toronto Dominion LOC)
3.50% 7-01-98.............. 3,500,000
------------
7,500,000
------------
TOTAL INVESTMENTS -- 101.7%................ 325,427,776(a)
Other Assets & Liabilities,
Net -- (1.7%)............................ (5,355,480)
------------
TOTAL NET ASSETS -- 100.0%................. $320,072,296
============
</TABLE>
See Notes to Financial Statements.
13
<PAGE> 14
FREEDOM TAX EXEMPT MONEY FUND
INVESTMENTS AS OF JUNE 30, 1998 -- (CONTINUED)
(UNAUDITED)
Legend:
EDA -- Economic Development Authority
HCFA -- Health Care Finance Authority
HEFA -- Health Education Finance Authority
HFA -- Housing Finance Authority
IDA -- Industrial Development Authority
ISD -- Independent School District
LOC -- Letter of Credit
NRUCFC -- National Rural Utilities Cooperative Finance Corp.
PCFA -- Pollution Control Finance Authority
PCR -- Pollution Control Revenue
TANS -- Tax Anticipation Notes
TRANS -- Tax & Revenue Anticipation Notes
Insurance Abbreviations:
AMBAC -- American Municipal Bond Assurance Corporation
FGIC -- Financial Guaranty Insurance Corporation
FNMA -- Federal National Mortgage Association
FSA -- Financial Security Assurance Inc.
MBIA -- Municipal Bond Investors Assurance
SLMA -- Student Loan Marketing Association
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.
14
<PAGE> 15
FREEDOM MUTUAL FUND
FREEDOM GROUP OF TAX EXEMPT FUNDS
STATEMENTS OF ASSETS AND LIABILITIES
JUNE 30, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
FREEDOM FREEDOM FREEDOM
CASH GOVERNMENT TAX EXEMPT
MANAGEMENT SECURITIES MONEY
FUND FUND FUND
-------------- ------------ ------------
<S> <C> <C> <C>
ASSETS
Investments, at amortized cost........................... $1,915,008,433 $350,054,937 $325,427,776
Cash..................................................... -- 3,124,266 1,440,331
Receivable for Fund shares sold.......................... 32,814,886 6,388,127 2,376,702
Interest receivable...................................... 1,372,096 193,196 1,904,179
Prepaid expenses......................................... 13,419 2,551 2,218
Other assets............................................. 65,871 18,473 21,496
-------------- ------------ ------------
TOTAL ASSETS............................................. 1,949,274,705 359,781,550 331,172,702
-------------- ------------ ------------
LIABILITIES
Payable for investments purchased........................ -- -- 10,057,170
Payable for Fund shares redeemed......................... 1,744,837 259,351 447,436
Payable to custodian bank................................ 63,453 -- --
Dividends payable........................................ 3,928,432 722,076 415,307
Accrued expenses:
Investment adviser's fee............................. 727,542 152,494 130,673
Transfer agent and shareholder servicing fee......... 399,569 35,388 31,796
Trustees' fee........................................ 1,382 1,321 859
Other................................................ 82,039 16,511 17,165
-------------- ------------ ------------
TOTAL LIABILITIES........................................ 6,947,254 1,187,141 11,100,406
-------------- ------------ ------------
NET ASSETS.................................................. $1,942,327,451 $358,594,409 $320,072,296
============== ============ ============
NET ASSETS CONSIST OF:
Capital paid in.......................................... $1,942,482,379 $358,593,590 $320,054,927
Accumulated net realized gain (loss)..................... (154,928) 819 17,369
-------------- ------------ ------------
$1,942,327,451 $358,594,409 $320,072,296
============== ============ ============
SHARES ISSUED AND OUTSTANDING (UNLIMITED SHARES
AUTHORIZED)................................................ 1,942,482,379 358,593,590 320,054,927
-------------- ------------ ------------
NET ASSET VALUE PER SHARE................................... $ 1.00 $ 1.00 $ 1.00
============== ============ ============
</TABLE>
See Notes to Financial Statements.
15
<PAGE> 16
FREEDOM MUTUAL FUND
FREEDOM GROUP OF TAX EXEMPT FUNDS
STATEMENTS OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
FREEDOM FREEDOM FREEDOM
CASH GOVERNMENT TAX EXEMPT
MANAGEMENT SECURITIES MONEY
FUND FUND FUND
----------- ----------- ----------
<S> <C> <C> <C>
INTEREST INCOME............................................. $51,275,320 $10,225,830 $5,548,027
----------- ----------- ----------
EXPENSES
Investment adviser's fee................................. 4,220,357 927,110 780,809
Transfer agent & shareholder services.................... 1,388,390 114,030 82,160
Custodian................................................ 158,103 35,803 36,720
Compensation of Trustees................................. 30,720 8,060 8,555
Audit.................................................... 19,910 4,440 15,810
Legal.................................................... 22,450 5,430 13,450
Printing, postage and stationery......................... 71,400 15,870 19,245
Membership dues.......................................... 24,149 4,594 3,980
Registration expense..................................... 47,650 18,015 19,585
Insurance expense........................................ 29,498 5,595 4,954
Other.................................................... 3,620 904 427
----------- ----------- ----------
TOTAL EXPENSES........................................... 6,016,247 1,139,851 985,695
----------- ----------- ----------
LESS EXPENSE REDUCTIONS.................................. -- -- (6,005)
----------- ----------- ----------
NET EXPENSES............................................. 6,016,247 1,139,851 979,690
----------- ----------- ----------
NET INVESTMENT INCOME....................................... 45,259,073 9,085,979 4,568,337
----------- ----------- ----------
NET REALIZED GAIN (LOSS) ON INVESTMENTS..................... 954 (90) --
----------- ----------- ----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........ $45,260,027 $ 9,085,889 $4,568,337
=========== =========== ==========
</TABLE>
See Notes to Financial Statements.
16
<PAGE> 17
FREEDOM MUTUAL FUND
FREEDOM GROUP OF TAX EXEMPT FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FREEDOM FREEDOM
CASH MANAGEMENT FUND GOVERNMENT SECURITIES FUND
----------------------------------- ----------------------------------
SIX MONTHS SIX MONTHS
ENDED YEAR ENDED ENDED YEAR ENDED
JUNE 30, 1998* DECEMBER 31, 1997 JUNE 30, 1998* DECEMBER 31, 1997
--------------- ----------------- -------------- -----------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS:
Net investment income.............. $ 45,259,073 $ 82,035,689 $ 9,085,979 $ 15,576,097
Net realized gain (loss) from
investments....................... 954 (4,832) (90) (5,428)
--------------- --------------- ------------- ---------------
Net increase in net assets
resulting from operations......... 45,260,027 82,030,857 9,085,889 15,570,669
DIVIDENDS TO SHAREHOLDERS............. (45,259,073) (82,035,689) (9,085,979) (15,576,097)
--------------- --------------- ------------- ---------------
954 (4,832) (90) (5,428)
--------------- --------------- ------------- ---------------
CAPITAL SHARE TRANSACTIONS:
(At Net Asset Value of $1 per share)
Proceeds from sale of shares....... 3,506,273,825 6,067,062,337 556,976,853 1,063,295,849
Net asset value of shares issued to
shareholders in reinvestment of
dividends......................... 40,589,913 79,934,035 8,261,788 15,263,922
Cost of shares redeemed............ (3,351,373,945) (6,037,440,505) (577,002,346) (1,018,134,261)
--------------- --------------- ------------- ---------------
Net increase (decrease) from
capital share transactions...... 195,489,793 109,555,867 (11,763,705) 60,425,510
--------------- --------------- ------------- ---------------
Net increase (decrease) in
net assets........................ 195,490,747 109,551,035 (11,763,795) 60,420,082
NET ASSETS:
Beginning of period................ 1,746,836,704 1,637,285,669 370,358,204 309,938,122
--------------- --------------- ------------- ---------------
End of period...................... $ 1,942,327,451 $ 1,746,836,704 $ 358,594,409 $ 370,358,204
=============== =============== ============= ===============
DIVIDENDS TO SHAREHOLDERS
PER SHARE........................... $ 0.0247 $ 0.0492 $ 0.0243 $ 0.0485
=============== =============== ============= ===============
<CAPTION>
FREEDOM
TAX EXEMPT MONEY FUND
----------------------------------
SIX MONTHS
ENDED YEAR ENDED
JUNE 30, 1998* DECEMBER 31, 1997
-------------- -----------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM
Net investment income.............. $ 4,568,337 $ 8,500,693
Net realized gain (loss) from
investments....................... -- 9,609
------------- ---------------
Net increase in net assets
resulting from operations......... 4,568,337 8,510,302
DIVIDENDS TO SHAREHOLDERS............. (4,568,337) (8,500,693)
------------- ---------------
-- 9,609
------------- ---------------
CAPITAL SHARE TRANSACTIONS:
(At Net Asset Value of $1 per share)
Proceeds from sale of shares....... 672,738,794 1,124,077,515
Net asset value of shares issued to
shareholders in reinvestment of
dividends......................... 4,069,378 8,269,139
Cost of shares redeemed............ (646,640,358) (1,105,540,880)
------------- ---------------
Net increase (decrease) from
capital share transactions...... 30,167,814 26,805,774
------------- ---------------
Net increase (decrease) in
net assets........................ 30,167,814 26,815,383
NET ASSETS:
Beginning of period................ 289,904,482 263,089,099
------------- ---------------
End of period...................... $ 320,072,296 $ 289,904,482
============= ===============
DIVIDENDS TO SHAREHOLDERS
PER SHARE........................... $ 0.0145 $ 0.0300
============= ===============
</TABLE>
- ------------
*Unaudited
See Notes to Financial Statements.
17
<PAGE> 18
FREEDOM MUTUAL FUND
FREEDOM GROUP OF TAX EXEMPT FUNDS
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1. ACCOUNTING POLICIES. Freedom Mutual Fund and Freedom Group of Tax
Exempt Funds (the "Trusts") are Massachusetts business trusts registered under
the Investment Company Act of 1940, as amended, as open-end management
companies. The Agreements and Declarations of Trust permit the issuance of an
unlimited number of shares of beneficial interest in separate series, with
shares of each series representing interests in a separate portfolio of assets
and operating as a separate distinct fund (a "Fund"). The Freedom Mutual Fund
consists of the Freedom Cash Management Fund and the Freedom Government
Securities Fund. The Freedom Group of Tax Exempt Funds consists of the Freedom
Tax Exempt Money Fund and the Freedom California Tax Exempt Money Fund. The
financial statements of the Freedom California Tax Exempt Money Fund are
included in a separate semi-annual report for that Fund.
The following is a summary of significant accounting policies followed by
the Trusts in the preparation of their financial statements. The policies are in
conformity with generally accepted accounting principles. The preparation of
financial statements in accordance with generally accepted accounting principles
requires management to make estimates and assumptions that affect the reported
amounts and disclosures in the financial statements. Actual results could differ
from those estimates.
Security Valuation and Transactions. Each Trust values its portfolio
securities utilizing the amortized cost valuation method. This method involves
valuing a portfolio security at its cost and thereafter assuming a constant
amortization to maturity of any discount or premium. Cost is determined and
gains and losses are based upon the specific identification method for both
financial statement and federal income tax purposes. Investment securities
transactions are accounted for on the date the securities are purchased or sold.
Expenses. The majority of the expenses of each Trust are directly
identifiable to an individual Fund. Expenses which are not readily identifiable
as belonging to a specific Fund are allocated in such a manner as deemed
equitable by the Trustees, taking into consideration, among other things, the
nature and type of expense and the relative sizes of the Funds.
Trustees' fees of $6,000 per Trust, per year, plus $250 per meeting of the
Board of Trustees and $350 per meeting of any committee thereof, are paid to
each Trustee who is not an interested person of the Trusts. No remuneration is
paid by either Trust to any Trustee or officer of that Trust who is affiliated
with Freedom Capital Management Corporation, the Trusts' advisor.
The Trusts have entered into an insurance agreement with ICI Mutual
Insurance Company under which each Trust pays both an annual insurance premium
and a one-time reserve premium, and is committed to provide additional funds of
up to 300% of its initial annual premium if and when called upon.
18
<PAGE> 19
FREEDOM MUTUAL FUND
FREEDOM GROUP OF TAX EXEMPT FUNDS
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
The Freedom Tax Exempt Money Fund has an agreement with the custodian bank
under which $6,005 of custodian fees have been reduced by balance credits
applied during the period ended June 30, 1998. If the Fund had not entered into
this agreement, the assets not invested, on which these balance credits were
earned, could have produced taxable income.
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. 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"), Tucker
Anthony Incorporated ("Tucker Anthony") and Freedom Services Corp. All are
wholly owned subsidiaries of Freedom Securities Corporation ("Freedom
Securities").
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 hundredths of one percent (.45%) for
average daily net assets in excess of that amount. The Funds themselves pay no
salaries or compensation to any of their officers.
Tucker Anthony, Sutro and Freedom Distributors Corporation act as
distributors of the Trusts' shares and receive no compensation for such
services. As sub-transfer agent, Freedom Services Corp.
19
<PAGE> 20
FREEDOM MUTUAL FUND
FREEDOM GROUP OF TAX EXEMPT FUNDS
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
received reimbursements from the Funds for maintaining and servicing certain
shareholder accounts for the period ended June 30, 1998 as follows:
<TABLE>
<CAPTION>
CASH GOVERNMENT TAX
MANAGEMENT SECURITIES EXEMPT MONEY
FUND FUND FUND
- ---------- ---------- ------------
<S> <C> <C>
$693,570 $56,734 $36,206
======== ======= =======
</TABLE>
Effective as of June 16, 1998, Freedom Services Corporation succeeded John
Hancock Signature Services, Inc. as transfer and shareholder services agent for
the Funds.
NOTE 3. Purchases and sales (including maturities) of investments
(excluding repurchase agreements) for the period ended June 30, 1998 were as
follows:
<TABLE>
<CAPTION>
CASH GOVERNMENT TAX
MANAGEMENT SECURITIES EXEMPT MONEY
FUND FUND FUND
-------------- -------------- ------------
<S> <C> <C> <C>
Purchases
U.S. Government........................... -- $1,186,105,537 --
Other..................................... $5,601,571,074 -- $507,028,215
Sales
U.S. Government........................... -- $1,204,878,931 --
Other..................................... $5,443,037,761 -- $467,895,865
</TABLE>
NOTE 4. CHANGE OF CONTROL TRANSACTION. On April 2, 1998, 7,400,000 shares
of common stock of Freedom Securities were sold to the public in an initial
public offering. As a consequence of this offering of stock, as well as an
acquisition by Freedom Securities and the implementation of certain incentive
and stock option plans, the previous controlling shareholder of Freedom
Securities, Thomas H. Lee Equity Fund II, L.P. (and certain related entity
shareholders), owns less than 25% of Freedom Securities stock. As a result of
the occurrence of these transactions, Thomas H. Lee Equity Fund II, L.P. may no
longer be deemed to control Freedom Securities and indirectly the Adviser.
Accordingly, on May 20, 1998, a Special Meeting of Shareholders of the Funds was
held to approve a new Advisory Agreement on behalf of each Fund and the Adviser.
20
<PAGE> 21
FREEDOM GROUP OF MONEY FUNDS
SELECTED PER SHARE DATA AND RATIOS
Selected data for each share of beneficial interest outstanding throughout
each period is as follows:
<TABLE>
<CAPTION>
RATIO OF NET
NET ASSET DIVIDENDS RATIO OF INVESTMENT
VALUE FROM NET ASSET NET ASSETS EXPENSES INCOME
BEGINNING NET NET VALUE END TO AVERAGE TO AVERAGE
OF INVESTMENT INVESTMENT END OF TOTAL OF PERIOD DAILY DAILY
PERIOD ENDED PERIOD INCOME INCOME PERIOD RETURN (THOUSANDS) NET ASSETS NET ASSETS
------------ --------- ---------- ---------- --------- ------ ----------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
CASH MANAGEMENT FUND
June 30, 1998++........... $1.00 $0.0247 $(0.0247) $1.00 2.50% $1,942,327 0.66%+ 4.97%+
December 31, 1997......... 1.00 0.0492 (0.0492) 1.00 5.03% 1,746,837 0.69% 4.92%
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%
GOVERNMENT SECURITIES FUND
June 30, 1998++........... $1.00 0.0243 $(0.0243) $1.00 2.47% $ 358,594 0.61%+ 4.90%+
December 31, 1997......... 1.00 0.0486 (0.0486) 1.00 4.96% 370,358 0.65% 4.86%
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%
TAX EXEMPT MONEY FUND
June 30, 1998++........... $1.00 $0.0145 $(0.0145) $1.00 1.47% $ 320,072 0.63%+(a) 2.93%+(b)
December 31, 1997......... 1.00 0.0300 (0.0300) 1.00 3.04% 289,904 0.64% 3.00%
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(c) (0.0459)(c) 1.00 4.69% 205,166 0.57% 4.57%
</TABLE>
- ------------
+ Annualized.
++ Unaudited.
(a) Ratio of expenses to average daily net assets prior to expense credits was
0.63% and 0.66% for the periods ended June 30, 1998 and December 31, 1997,
respectively.
(b) Ratio of net investment income to average daily net assets prior to expense
credits was 2.92% and 2.98% for the periods ended June 30, 1998 and December
31, 1997, respectively.
(c) Net of fees waived by the Adviser which amounted to $0.0008 per share in
1988.
* Total return would have been lower without credits allowed by the custodian.
21
<PAGE> 22
NO SALES OR REDEMPTION CHARGES
DISTRIBUTORS
Tucker Anthony Incorporated
One Beacon Street
Boston, Massachusetts 02108
Telephone Toll Free
800-453-8206
Sutro & Co. Incorporated
201 California Street
San Francisco, California 94111
INVESTMENT ADVISER
Freedom Capital Management Corporation
One Beacon Street
Boston, Massachusetts 02108-3105
TRANSFER AND SHAREHOLDER
SERVICES AGENT
Freedom Services Corporation
One World Financial Center
200 Liberty Street
New York, New York 10281
Telephone Toll Free
800-453-8206
[FREEDOM GROUP OF MONEY FUNDS LOGO]
This report has been prepared for shareholders and may
be distributed to others only if preceded or accompanied
by a current prospectus for the Freedom Group of Money Funds.
Freedom Group of Money Funds
Freedom
Cash Management
Fund
-
Freedom
Government
Securities Fund
-
Freedom
Tax Exempt
Money Fund
Semi-Annual Report
June 30, 1998
