[PHOTO OF DEXTER A.
DODGE, CHAIRMAN]
[FLAG LOGO]
TO OUR SHAREHOLDERS
The influence of the Federal Reserve Bank in setting short-term interest rates
is considerable. As we write this Semi-Annual Report to you, we are in the midst
of a period in which the Fed has become more active, having raised short-term
interest rates from 4.75% to 5.00% in late June. From the point of view of an
investor in the Freedom Group of Money Funds, the answer to the question of
whether the Fed will continue to act is of relevance to future returns. Should
short-term rates rise, money market fund investors will see higher returns in
the future.
Accordingly, a short discussion of the considerations that the Federal Reserve
has indicated will govern their decisions is in order. To begin, we can turn to
a simple statement of the so-called output gap way of looking at the economy.
Alan Greenspan, in a pair of speeches right before the Federal Reserve raised
rates provided a simple model. The economy can grow, without inflation, only as
fast as the combination of population growth and productivity. That is, if the
population is growing at 1% and productivity is growing at 2%, then the economy
can grow at 3% without the Federal Reserve having to worry about inflation in
the future. Growth above this speed limit has the potential to make inflation
accelerate and would require the Federal Reserve to raise interest rates enough
to slow the economy down to the 3% rate.
Whether they need to raise rates depends importantly on two things. First,
should the economy slow to 3% on its own, the Federal Reserve does not need to
act. Those who believe this will happen cite the following which will cause the
economy to slow on its own.
a. Real personal disposable income, which predicts consumer spending very
well, is going to grow more slowly than it has in the past. This change
is due to sharply rising energy prices, which take more of a bite out of
income, leaving less to spend.
b. Recent increases in interest rates will slow down the housing market
substantially, producing an effect which drags down overall growth.
c. Recent increases in interest rates will tend to reduce the wealth effect
component of consumer spending. That is, consumers will do much less
refinancing of their homes and therefore much less spending with cash
that is gained from the higher value of their homes.
d. The stock market is overvalued, and will correct by 10% which will also
reduce the wealth effect part of spending.
e. Some of the growth in the first quarter was due to warm weather which
simply moved construction from the second and third quarters into the
first.
All of these items will be important to watch to see if the Federal Reserve does
need to act.
The second major thing upon which future Federal Reserve action will depend goes
back to the formula for the speed limit. Suppose, either because of a large
amount of capital spending, or because things have really changed fundamentally
with the advent of the Internet and ever-cheaper computing power, that
productivity grows at 3.5% instead of 2%? According to our formula, that would
mean that the economy can grow at 4.5% (1% population growth
<PAGE>
plus 3.5% productivity growth) which would mean that inflation will not increase
even if we continue growing at 4.5%. This too bears further watching, both from
the point of view of what productivity does (many believe it is currently
growing at close to 3.5%) and also from the point of view of whether the Board
members of the Federal Reserve believe that this rate of growth is short-lived
or sustainable.
Whatever the result of the Federal Reserves deliberation, the disciplines we
employ in the Freedom Group of Money Funds do not change. We continue to invest
to achieve the highest short-term rates available while remaining a portfolio of
very high quality and security.
A review of the Fund by the portfolio manager follows. We thank you again for
the opportunity to be of service.
Sincerely,
/s/ Dexter A. Dodge
- --------------------
Dexter A. Dodge
Chairman
[PHOTO OF MARY JEANNE CURRIE [PHOTO OF PAUL MARANDETT
PORTFOLIO MANAGER PORTFOLIO MANAGER
CASH MANAGEMENT FUND TAX EXEMPT MONEY FUND]
GOVERNMENT SECURITIES FUND]
FINANCIAL REVIEW
FREEDOM CASH MANAGEMENT FUND and
FREEDOM GOVERNMENT SECURITIES FUND
Leaving the turbulence of last year behind, fixed income market participants
began 1999 by focusing on the overall strength of the domestic economy. Low
interest rates, coupled with continued low inflation have propelled economic
expansion into its eighth consecutive year. Despite lower interest rates, money
fund assets have enjoyed comparatively strong growth during the past several
months. The Freedom Cash Management Fund saw its assets reach $2.4 billion at
the end of June, a substantial increase over the prior year. The Freedom
Government Securities Fund saw similar growth during the same period.
The Freedom Cash Management Fund and the Freedom Government Securities Fund have
both been positioned in a short to neutral stance in their respective industry
groups. This strategy will enable us to react on a timely basis to a rise in
interest rates which seems imminent at this point. We will also keep a vigilant
eye on economic developments to determine if current tactics should be altered.
As always, the primary objective of the Funds is the preservation of capital.
All of the investments in the Freedom Cash Management Fund carry the highest
ratings assigned to short-term investments and we constantly monitor and
evaluate the creditworthiness of these holdings to be certain that our
conservative investment policy is maintained.
<PAGE>
Because of the high quality and other internal controls, the Freedom Cash
Management Fund is rated AAA by Standard & Poors. In the Freedom Government
Securities Fund all investments are limited to securities issued by the U.S.
Treasury or one of its agencies.
FREEDOM TAX EXEMPT MONEY FUND
Following the tone set last year, interest rates in the short-term or money
market sector have remained at historically low levels. The annualized monthly
total return on the Freedom Tax Exempt Money Fund was at 2.48% in January and
climbed to only 2.66% for the month of June. That yield averaged 2.50% for the
first six months of the year, just 2 basis points off the industry average.
Certainly there was some yield volatility caused by seasonal cash flows, April
tax payments and heavy note issuance at the beginning of the year but these
occurrences were much more muted than in prior years. Money fund assets overall
have grown steadily during the year and assets of the Freedom Tax Exempt Money
Fund have increased approximately 5% from one year ago to $335 million.
As usual, the fundamentals of supply and demand were the principal factors
effecting the tax exempt money market with demand slightly out-pacing supply.
Normally issuers would take advantage of these low nominal rates and increase
the supply side of the equation but that hasnt happened this year. A combination
of two things has dampened the new issue market; one is the fact that the long
term market also has historically low interest rates which issuers would prefer
to lock into for more permanent financing. The other is the specter of Y2K;
those issuers that can are delaying financing until after year end in hopes that
whatever Y2K problems that may occur will be rectified. With continued economic
strength, along with the bullish behavior of the equity markets, the heightened
level of investor wealth should continue to enhance the supply side of the tax
exempt markets thus maintaining the current interest rate structure.
The average maturity for tax exempt money funds has been close to 41 days for
over a year now (the maximum allowed is 90 days). This historically short
average maturity is a direct result of the short-term markets flat yield curve,
a heretofore unusual condition that has also persisted for more than a year. We
have kept the average maturity of the Freedom Tax Exempt Money Fund at or
shorter than the industry average and expect to continue that strategy until we
see a shift in the structure of the short term yield curve (by virtue of the
Funds AAA Standard & Poors rating its maximum is 60 days). Though the Federal
Reserve Boards June 30th boost of the federal funds rate went largely unnoticed
in the tax exempt money market sector, the Funds present strategy enables it to
easily take advantage of rising interest rates should the Fed continue to raise
short term interest rates.
Sincerely,
/s/ Mary Jeanne Currie
- -----------------------
Mary Jeanne Currie
Portfolio Manager
/s/ Paul Marandett
- -----------------------
Paul Marandett
Portfolio Manager
<PAGE>
FREEDOM CASH MANAGEMENT FUND
INVESTMENTS AS OF JUNE 30, 1999
(UNAUDITED)
PRINCIPAL MATURITY
AMOUNT RATE DATE VALUE
- ------------- ------ ----------- -------------
COMMERCIAL PAPER -- 75.5%
ABBEY NATIONAL BANK
$ 10,000,000 4.790% 07/19/1999 $ 9,976,050
25,000,000 4.790% 08/04/1999 24,886,903
16,000,000 4.890% 09/02/1999 15,863,080
10,000,000 4.830% 09/07/1999 9,908,767
7,400,000 5.040% 09/08/1999 7,328,516
ABN AMRO N.A.
25,000,000 5.250% 09/14/1999 25,010,163
AMERICAN EXPRESS CREDIT CORP.
10,000,000 4.800% 07/06/1999 9,993,333
25,000,000 4.800% 07/07/1999 24,980,000
14,800,000 4.830% 07/07/1999 14,788,086
15,000,000 4.800% 07/09/1999 14,984,000
11,200,000 4.810% 08/03/1999 11,150,617
4,000,000 4.800% 09/10/1999 3,962,133
AMERICAN GENERAL CORP.
$ 14,000,000 4.790% 07/08/1999 13,986,961
4,000,000 4.920% 08/16/1999 3,974,853
10,000,000 4.940% 08/20/1999 9,931,389
AMERICAN GENERAL FINANCE CORP.
16,000,000 4.800% 07/12/1999 15,976,533
7,000,000 4.810% 07/12/1999 6,989,712
20,000,000 4.810% 07/13/1999 19,967,933
2,600,000 4.810% 07/14/1999 2,595,484
9,000,000 4.830% 07/16/1999 8,981,887
7,000,000 4.820% 07/20/1999 6,982,193
10,000,000 4.840% 08/02/1999 9,956,978
20,850,000 5.020% 08/02/1999 20,756,963
AMERICAN HOME PRODUCTS CORP.
19,540,000 4.790% 07/29/1999 19,467,203
7,000,000 4.790% 08/03/1999 6,969,264
25,000,000 4.800% 08/05/1999 24,883,333
25,000,000 4.800% 08/09/1999 24,870,000
PRINCIPAL MATURITY
AMOUNT RATE DATE VALUE
- ------------- ------ ----------- -------------
ASSOCIATES CORPORATION OF NORTH AMERICA
$ 10,300,000 4.850% 07/09/1999 $ 10,288,899
15,200,000 4.930% 08/09/1999 15,118,819
25,000,000 4.920% 08/11/1999 24,859,917
CHEVRON OIL FINANCE CO.
18,000,000 4.840% 08/20/1999 17,879,000
CHEVRON TRANSPORT CORP.
3,400,000 4.860% 07/09/1999 3,396,328
20,000,000 4.820% 07/13/1999 19,967,867
15,000,000 4.820% 07/21/1999 14,959,833
15,000,000 4.880% 08/05/1999 14,928,833
25,000,000 4.810% 09/16/1999 24,742,799
CHEVRON UK INVESTMENT PLC
20,000,000 4.820% 07/14/1999 19,965,189
E.I. DUPONT DE NEMOURS & CO.
25,000,000 4.850% 08/11/1999 24,861,910
15,000,000 4.850% 08/13/1999 14,913,104
DUN & BRADSTREET CORP.
5,000,000 4.820% 07/20/1999 4,987,281
FORD MOTOR CREDIT CORP.
20,000,000 4.840% 07/08/1999 19,981,178
25,000,000 4.800% 07/16/1999 24,950,000
25,000,000 4.790% 07/19/1999 24,940,125
14,000,000 4.950% 07/19/1999 13,965,350
15,250,000 4.940% 08/03/1999 15,180,943
15,000,000 5.020% 08/03/1999 14,930,975
6,000,000 5.040% 09/17/1999 5,934,480
GENERAL ELECTRIC CAPITAL CORP.
26,000,000 4.790% 07/09/1999 25,972,324
6,000,000 4.860% 08/02/1999 5,974,080
10,000,000 4.840% 08/05/1999 9,952,944
13,400,000 4.940% 08/20/1999 13,308,061
12,500,000 4.810% 09/01/1999 12,396,451
7,000,000 4.810% 09/10/1999 6,933,595
15,500,000 4.830% 09/17/1999 15,337,793
See Notes to Financial Statements.
4
<PAGE>
FREEDOM CASH MANAGEMENT FUND
INVESTMENTS AS OF JUNE 30, 1999 -- (CONTINUED)
(UNAUDITED)
PRINCIPAL MATURITY
AMOUNT RATE DATE VALUE
- ------------- ------ ----------- -------------
COMMERCIAL PAPER -- (CONTINUED)
GENERAL ELECTRIC CAPITAL CORP. -- (CONTINUED)
$ 14,000,000 4.910% 01/21/2000 $ 13,610,473
GLAXO WELLCOME PLC
15,000,000 4.800% 07/06/1999 14,990,000
20,000,000 4.780% 07/12/1999 19,970,789
3,500,000 4.780% 07/22/1999 3,490,241
15,000,000 4.800% 08/10/1999 14,920,000
$ 50,000,000 4.940% 09/07/1999 49,533,444
4,200,000 5.050% 09/07/1999 4,159,937
GOLDEN PEANUT CO.
7,000,000 4.820% 07/08/1999 6,993,439
8,000,000 4.820% 08/04/1999 7,963,582
GOLDMAN SACHS & CO.
17,000,000 4.840% 07/01/1999 17,000,000
25,000,000 4.880% 07/16/1999 24,949,167
12,000,000 4.830% 09/15/1999 11,877,640
25,000,000 4.830% 09/16/1999 24,741,729
18,000,000 4.830% 09/17/1999 17,811,630
5,000,000 4.920% 10/01/1999 4,937,133
HALIFAX PLC
25,000,000 4.860% 08/17/1999 24,841,375
10,000,000 4.850% 08/23/1999 9,928,597
25,000,000 4.920% 09/01/1999 24,788,167
6,000,000 4.800% 10/01/1999 5,926,400
H.J. HEINZ CO.
11,500,000 4.830% 07/20/1999 11,470,685
J.P. MORGAN & CO., INC.
9,000,000 4.800% 08/11/1999 8,950,800
8,000,000 4.830% 08/19/1999 7,947,407
25,000,000 4.810% 09/08/1999 24,769,521
10,000,000 4.870% 09/21/1999 9,889,072
15,000,000 4.820% 09/27/1999 14,823,267
5,000,000 4.820% 10/04/1999 4,936,403
10,000,000 4.800% 10/06/1999 9,870,667
PRINCIPAL MATURITY
AMOUNT RATE DATE VALUE
- ------------- ------ ----------- -------------
LUCENT TECHNOLOGIES INC.
$ 50,000,000 5.170% 02/02/2000 $ 48,449,000
MERRILL LYNCH & CO.
12,000,000 4.810% 07/06/1999 11,991,983
10,000,000 4.830% 07/06/1999 9,993,292
8,500,000 4.780% 07/07/1999 8,493,228
12,900,000 4.840% 07/07/1999 12,889,594
23,000,000 4.790% 07/14/1999 22,960,216
15,000,000 5.180% 02/04/2000 14,529,483
MONSANTO CO.
3,900,000 4.800% 07/06/1999 3,897,400
MORGAN GUARANTY TRUST CO. N.Y.
25,000,000 4.938% 11/29/1999 24,996,988
NORTHERN ROCK PLC
5,000,000 4.840% 10/22/1999 4,924,039
15,000,000 4.900% 10/22/1999 14,769,292
PROCTER & GAMBLE CO.
5,600,000 4.760% 07/01/1999 5,600,000
25,000,000 4.800% 07/16/1999 24,950,000
PRUDENTIAL FUNDING CORP.
13,000,000 4.800% 07/15/1999 12,975,733
18,000,000 4.900% 07/23/1999 17,946,100
11,700,000 4.950% 07/27/1999 11,658,173
25,000,000 4.810% 08/09/1999 24,869,729
8,300,000 4.920% 08/23/1999 8,239,880
18,000,000 5.020% 09/09/1999 17,824,300
25,000,000 4.850% 09/16/1999 24,740,660
SIGMA FINANCE INC.
10,000,000 4.820% 07/02/1999 9,998,661
25,000,000 4.840% 07/12/1999 24,963,028
25,000,000 4.820% 07/15/1999 24,953,139
25,000,000 4.810% 08/10/1999 24,866,389
8,000,000 4.870% 08/10/1999 7,956,711
2,200,000 5.120% 09/08/1999 2,178,411
25,000,000 4.820% 10/08/1999 24,668,625
See Notes to Financial Statements.
5
<PAGE>
FREEDOM CASH MANAGEMENT FUND
INVESTMENTS AS OF JUNE 30, 1999 -- (CONTINUED)
(UNAUDITED)
PRINCIPAL MATURITY
AMOUNT RATE DATE VALUE
- ------------- ------ ----------- -------------
COMMERCIAL PAPER -- (CONTINUED)
TORONTO-DOMINION BANK
$ 5,000,000 4.850% 08/30/1999 $ 4,959,583
UBS FINANCE (DE) INC.
25,000,000 4.860% 08/12/1999 24,858,250
25,000,000 4.870% 09/07/1999 24,770,028
25,000,000 4.840% 09/08/1999 24,768,083
25,000,000 4.830% 09/09/1999 24,765,208
15,000,000 4.950% 10/04/1999 14,804,063
USAA CAPITAL CORP.
11,800,000 4.790% 07/08/1999 11,789,010
5,200,000 4.780% 07/13/1999 5,191,715
11,125,000 4.790% 07/13/1999 11,107,237
10,200,000 4.790% 07/16/1999 10,179,643
15,700,000 4.780% 08/04/1999 15,629,123
4,000,000 4.780% 08/09/1999 3,979,287
19,500,000 5.000% 08/09/1999 19,394,375
20,000,000 4.910% 09/08/1999 19,811,782
-------------
TOTAL COMMERCIAL PAPER.................. 1,847,133,418
-------------
COMMERCIAL PAPER - STRUCTURED
FINANCE -- 20.7%
ASSET SECURITIZATION COOPERATIVE CORP.
20,000,000 4.840% 07/01/1999 20,000,000
25,000,000 4.900% 07/20/1999 24,935,347
10,000,000 4.910% 07/21/1999 9,972,222
7,500,000 4.810% 07/22/1999 7,478,956
10,000,000 4.910% 07/23/1999 9,969,994
10,000,000 4.910% 07/26/1999 9,965,903
7,800,000 5.150% 08/06/1999 7,759,830
14,700,000 5.100% 08/09/1999 14,618,782
CAPITAL ONE CORP.
39,204,000 5.180% 07/01/1999 39,204,000
PRINCIPAL MATURITY
AMOUNT RATE DATE VALUE
- ------------- ------ ----------- -------------
COOPERATIVE ASSOCIATION OF TRACTOR DEALERS INC.
$ 7,478,000 4.820% 07/02/1999 $ 7,476,999
15,000,000 4.840% 07/02/1999 14,997,983
3,000,000 5.020% 07/07/1999 2,997,490
2,000,000 4.840% 07/08/1999 1,998,118
2,000,000 4.830% 07/09/1999 1,997,853
3,800,000 4.820% 07/15/1999 3,792,877
4,800,000 4.870% 07/19/1999 4,788,312
17,000,000 5.050% 07/19/1999 16,957,075
1,500,000 5.050% 07/20/1999 1,496,002
7,000,000 4.820% 07/28/1999 6,974,695
2,700,000 5.100% 08/17/1999 2,682,023
2,000,000 5.070% 08/24/1999 1,991,832
3,000,000 5.070% 08/31/1999 2,974,228
2,100,000 4.900% 09/03/1999 2,081,707
3,000,000 5.070% 09/03/1999 2,977,185
2,700,000 5.120% 09/03/1999 2,675,424
8,900,000 5.070% 09/13/1999 8,807,247
18,000,000 5.100% 09/14/1999 17,808,750
1,500,000 5.120% 09/20/1999 1,482,720
1,637,000 4.970% 09/24/1999 1,617,790
9,200,000 5.070% 10/08/1999 9,071,729
1,000,000 5.120% 10/29/1999 982,933
2,000,000 4.850% 11/02/1999 1,966,589
DELAWARE FUNDING CORP.
6,000,000 4.850% 07/08/1999 5,994,342
4,041,000 5.030% 07/08/1999 4,037,048
5,800,000 4.810% 07/12/1999 5,791,476
18,000,000 5.010% 07/15/1999 17,964,930
11,126,000 4.850% 07/20/1999 11,097,521
20,000,000 5.170% 07/20/1999 19,945,428
8,000,000 4.810% 07/21/1999 7,978,622
15,064,000 5.040% 07/22/1999 15,019,712
5,164,000 4.900% 07/28/1999 5,145,022
15,000,000 4.870% 08/16/1999 14,906,658
5,182,000 5.120% 08/17/1999 5,147,361
8,101,000 5.150% 09/14/1999 8,014,083
See Notes to Financial Statements.
6
<PAGE>
FREEDOM CASH MANAGEMENT FUND
INVESTMENTS AS OF JUNE 30, 1999 -- (CONTINUED)
(UNAUDITED)
PRINCIPAL MATURITY
AMOUNT RATE DATE VALUE
- ------------- ------ ----------- -------------
COMMERCIAL PAPER -- (CONTINUED)
SHEFFIELD RECEIVABLES CORP.
$ 25,000,000 4.910% 07/01/1999 $ 25,000,000
11,200,000 4.860% 07/06/1999 11,192,440
8,000,000 4.930% 07/06/1999 7,994,522
16,000,000 4.930% 07/15/1999 15,969,324
20,271,000 5.050% 07/15/1999 20,231,190
10,200,000 4.950% 07/19/1999 10,174,755
7,126,000 5.050% 07/20/1999 7,107,007
11,600,000 5.060% 07/20/1999 11,569,022
8,000,000 5.030% 07/22/1999 7,976,527
4,000,000 5.100% 07/23/1999 3,987,533
-------------
TOTAL COMMERCIAL PAPER STRUCTURED
FINANCE............................... 506,747,118
-------------
PRINCIPAL MATURITY
AMOUNT RATE DATE VALUE
- ------------- ------ ----------- -------------
MUNICIPAL SECURITIES -- 1.7%
MEDICAL BUILDING FUNDING VIII
$ 33,800,000 5.224% 07/26/1999 $ 33,677,381
MISSISSIPPI BUSINESS FINANCE CORP. TAXABLE INDUSTRIAL
DEVELOPMENT REVENUE BONDS
10,000,000 5.000% 07/01/1999 10,000,000
-------------
TOTAL MUNICIPAL SECURITIES.............. 43,677,381
-------------
CERTIFICATES OF DEPOSIT -- 1.0%
BAYERISCHE LANDESBANK
24,000,000 5.650% 07/23/1999 24,007,649
-------------
TOTAL CERTIFICATES OF DEPOSIT........... 24,007,649
-------------
TOTAL INVESTMENTS -- 98.9%.............. 2,421,565,566(A)
Other Assets & Liabilities,
Net -- 1.1%........................... 25,963,086
-------------
TOTAL NET ASSETS -- 100.0%.............. $2,447,528,652
=============
- ------------
(A) COST FOR TAX PURPOSES IS THE SAME.
See Notes to Financial Statements.
7
<PAGE>
FREEDOM GOVERNMENT SECURITIES FUND
INVESTMENTS AS OF JUNE 30, 1999
(UNAUDITED)
PRINCIPAL MATURITY
AMOUNT RATE DATE VALUE
- -------------- ------ --------- -------------
U.S. GOVERNMENT AGENCY ISSUES -- 98.7%
FEDERAL FARM CREDIT BANK DISCOUNT NOTES -- 24.9%
$ 11,000,000 4.720% 07/13/99 $ 10,982,693
2,000,000 4.700% 07/15/99 1,996,344
3,000,000 4.740% 08/03/99 2,986,965
15,400,000 4.760% 08/03/99 15,332,805
16,000,000 4.870% 08/03/99 15,928,573
5,600,000 4.880% 08/06/99 5,572,672
9,200,000 4.700% 08/10/99 9,151,956
5,200,000 4.880% 08/16/99 5,167,575
9,900,000 4.950% 08/20/99 9,831,938
13,400,000 4.850% 09/02/99 13,286,268
2,400,000 4.850% 09/02/99 2,379,630
5,800,000 4.910% 09/21/99 5,735,133
6,745,000 4.700% 10/29/99 6,639,328
2,000,000 4.720% 10/29/99 1,968,533
-------------
TOTAL FEDERAL FARM CREDIT BANK DISCOUNT
NOTES................................ 106,960,413
-------------
FEDERAL HOME LOAN BANK DISCOUNT NOTES -- 68.0%
1,076,000 4.700% 07/01/99 1,076,000
5,520,000 4.700% 07/02/99 5,519,279
17,200,000 4.730% 07/02/99 17,197,740
530,000 4.700% 07/07/99 529,585
7,750,000 4.720% 07/07/99 7,743,903
13,700,000 4.780% 07/09/99 13,685,448
12,500,000 4.680% 07/14/99 12,478,875
8,900,000 4.680% 07/14/99 8,884,959
14,300,000 4.740% 07/16/99 14,271,758
32,000,000 4.700% 07/21/99 31,916,444
8,000,000 4.700% 07/21/99 7,979,111
9,500,000 4.980% 07/23/99 9,471,088
5,400,000 4.800% 07/30/99 5,379,120
2,200,000 4.700% 08/04/99 2,190,234
PRINCIPAL MATURITY
AMOUNT RATE DATE VALUE
- -------------- ------ --------- -------------
FEDERAL HOME LOAN BANK DISCOUNT NOTES -- (CONTINUED)
$ 4,350,000 4.720% 08/04/99 $ 4,330,609
4,800,000 4.720% 08/04/99 4,778,603
11,300,000 4.840% 08/04/99 11,248,346
3,000,000 4.700% 08/13/99 2,983,158
16,574,000 4.720% 08/13/99 16,480,559
2,100,000 4.770% 08/13/99 2,088,035
5,000,000 4.880% 08/13/99 4,970,856
4,000,000 4.850% 09/01/99 3,966,589
2,200,000 4.750% 09/03/99 2,181,422
7,400,000 4.860% 09/03/99 7,336,064
13,200,000 4.860% 09/08/99 13,077,042
17,500,000 4.740% 09/10/99 17,336,404
6,100,000 4.920% 09/10/99 6,040,810
20,700,000 4.700% 09/24/99 20,470,288
12,700,000 4.700% 10/29/99 12,501,033
2,000,000 4.720% 10/29/99 1,968,533
3,250,000 4.730% 11/05/99 3,195,769
3,000,000 4.730% 11/05/99 2,949,943
16,000,000 4.880% 12/01/99 15,668,160
-------------
TOTAL FEDERAL HOME LOAN BANK DISCOUNT
NOTES................................ 291,895,767
-------------
FEDERAL HOME LOAN BANK FLOATING RATE
NOTES -- 5.8%
25,000,000 4.770% 09/08/99 24,997,637
-------------
TOTAL FEDERAL HOME LOAN BANK FLOATING
RATE NOTES........................... 24,997,637
-------------
TOTAL U.S. GOVERNMENT AGENCY
ISSUES -- 98.7%...................... 423,853,817(A)
Other Assets & Liabilities Net -- 1.3%. 5,543,677
-------------
TOTAL NET ASSETS -- 100.0%............. $ 429,397,494
=============
- ------------
(A) COST FOR TAX PURPOSES IS THE SAME.
See Notes to Financial Statements.
8
<PAGE>
FREEDOM TAX EXEMPT MONEY FUND
INVESTMENTS AS OF JUNE 30, 1999
(UNAUDITED)
PRINCIPAL
AMOUNT DESCRIPTION VALUE
- ------------- ---------------------------------------- -------------
MUNICIPAL SECURITIES -- 100.8%
ALABAMA -- 2.5%
$ 2,000,000 Birmingham-Carroway Special Care
Facilities Finance Authority (AmSouth
LOC) 3.30% 7-07-99.................... $ 2,000,000
3,200,000 Daphne-Villa Special Care Facilities
Finance Authority (AmSouth LOC) 3.30%
7-07-99............................... 3,200,000
3,000,000 Mobil County 6.70% 2-01-00 (Escrowed in
U.S. Government Securities)........... 3,120,871
-------------
8,320,871
-------------
ARIZONA -- 5.7%
13,000,000 Apache County IDA (Barclays Bank LOC)
3.55% 7-07-99......................... 13,000,000
5,150,000 Maricopa County PCR (Barclays Bank LOC)
3.40% 7-07-99......................... 5,150,000
1,100,000 Mesa County (FGIC) 5.35% 7-01-00........ 1,119,813
-------------
19,269,813
-------------
ARKANSAS -- 2.3%
7,600,000 Arkansas Development Finance Authority
(Citibank LOC) 3.65% 7-01-99.......... 7,600,000
-------------
CALIFORNIA -- 1.3%
3,000,000 California Higher Education Loan
Authority (SLMA) 3.65% 7-01-99........ 3,000,000
1,300,000 California Student Loan Corporation
(State Street Bank LOC) 3.80%
7-01-99............................... 1,300,000
-------------
4,300,000
-------------
PRINCIPAL
AMOUNT DESCRIPTION VALUE
- ------------- ---------------------------------------- -------------
COLORADO -- 1.1%
$ 1,000,000 Colorado HFA (MBIA/Credit Suisse) 3.65%
7-01-99............................... $ 1,000,000
1,485,000 Colorado HFA (MBIA/ Rabobank) 3.65%
7-01-99............................... 1,485,000
1,080,000 La Plata County PCR 3.00% 9-01-99....... 1,080,000
-------------
3,565,000
-------------
DELAWARE -- 0.5%
1,700,000 Delaware EDA (MBIA/Morgan Stanley) 3.55%
7-07-99............................... 1,700,000
-------------
DISTRICT OF COLUMBIA -- 2.6%
8,800,000 District of Columbia (National
Westminster LOC) 3.50% 7-01-99........ 8,800,000
-------------
FLORIDA -- 3.9%
3,100,000 Dade County Health Facilities Authority
(Barnett Bank LOC) 3.75% 7-01-99...... 3,100,000
4,000,000 Florida Municipal Power Agency (First
Union LOC) 3.15% 7-21-99.............. 4,000,000
3,000,000 Lee County IDA (Kredeitbank LOC) 3.35%
7-07-99............................... 3,000,000
3,150,000 Sarasota Public Hospital District
(SunTrust LOC) 3.00% 7-27-99.......... 3,150,000
-------------
13,250,000
-------------
GEORGIA -- 6.4%
5,000,000 Downtown Savannah Authority (Wachovia
LOC) 3.35% 7-07-99.................... 5,000,000
5,000,000 Georgia Municipal Electric Authority
(ABN Amro LOC) 3.50% 7-07-99.......... 5,000,000
See Notes to Financial Statements.
9
<PAGE>
FREEDOM TAX EXEMPT MONEY FUND
INVESTMENTS AS OF JUNE 30, 1999 -- (CONTINUED)
(UNAUDITED)
PRINCIPAL
AMOUNT DESCRIPTION VALUE
- ------------- ---------------------------------------- -------------
MUNICIPAL SECURITIES -- (CONTINUED)
GEORGIA -- (CONTINUED)
$ 1,200,000 Georgia Municipal Electric Authority
(Landesbank Helaba LOC) 3.35%
7-07-99............................... $ 1,200,000
5,200,000 Hapeville IDA (Deutschebank LOC) 3.70%
7-01-99............................... 5,200,000
5,000,000 Southern Georgia Hospital Authority
(AMBAC/ Wachovia) 3.50% 7-07-99....... 5,000,000
-------------
21,400,000
-------------
ILLINOIS -- 9.1%
1,250,000 Chicago (Canadian Imperial Bank of
Commerce LOC) 3.50% 7-07-99........... 1,250,000
1,300,000 Chicago O'Hare International Airport
Authority (Societe Generale LOC) 3.30%
7-07-99............................... 1,300,000
Illinois Development Finance Authority
1,000,000 (Canadian Imperial Bank of Commerce
LOC) 3.45% 7-07-99.................... 1,000,000
5,300,000 (Northern Trust LOC) 3.55% 7-07-99.... 5,300,000
1,200,000 (Northern Trust/Harris Trust LOC)..... 1,200,000
3,200,000 Illinois Health Facilities Authority
(AMBAC/FNB-Chicago) 3.30% 7-07-99..... 3,200,000
3,685,000 Illinois Health Facilities Authority
(FSA) 5.00% 7-07-99................... 3,718,800
4,600,000 Illinois Toll Highway Authority
(MBIA/Societe Generale) 3.30%
7-07-99............................... 4,600,000
9,000,000 Lisle Health Facilities Authority (FNMA)
3.50% 7-07-99......................... 9,000,000
-------------
30,568,800
-------------
PRINCIPAL
AMOUNT DESCRIPTION VALUE
- ------------- ---------------------------------------- -------------
INDIANA -- 4.2%
$ 2,700,000 Indiana HEFA (FNB-Chicago LOC) 3.35%
7-07-99............................... $ 2,700,000
6,300,000 Indiana Municipal Power Authority
(Toronto Dominion LOC) 3.35%
7-07-99............................... 6,300,000
4,000,000 St. Joseph's County (Bank of America
LOC) 3.60% 7-01-99.................... 4,000,000
1,000,000 Sullivan County (NRUCFC) 3.15%
9-10-99............................... 1,000,000
-------------
14,000,000
-------------
KANSAS -- 0.3%
1,080,000 Kansas Turnpike Authority (AMBAC) 5.00%
9-01-99............................... 1,083,192
-------------
KENTUCKY -- 2.1%
2,000,000 Clark County PCR (NRUCFC) 3.10%
10-15-99.............................. 2,000,000
5,000,000 Kentucky Interlocal School
Transportation Authority 4.00%
6-30-00............................... 5,024,050
-------------
7,024,050
-------------
LOUISIANA -- 5.0%
5,900,000 Ascension Parish IDA (Credit Suisse LOC)
3.30% 7-07-99......................... 5,900,000
3,700,000 Desoto Parish PCR ( West Deutsche
Landesbank LOC) 3.45% 7-07-99......... 3,700,000
2,400,000 East Baton Rouge IDA 3.70% 7-01-99...... 2,400,000
400,000 East Baton Rouge IDA (Wachovia LOC)
3.65% 7-07-99......................... 400,000
1,100,000 Lake Charles Harbor & Terminal District
(Canadian Imperial Bank of Commerce
LOC) 3.30% 7-07-99.................... 1,100,000
See Notes to Financial Statements.
10
<PAGE>
FREEDOM TAX EXEMPT MONEY FUND
INVESTMENTS AS OF JUNE 30, 1999 -- (CONTINUED)
(UNAUDITED)
PRINCIPAL
AMOUNT DESCRIPTION VALUE
- ------------- ---------------------------------------- -------------
MUNICIPAL SECURITIES -- (CONTINUED)
LOUISIANA -- (CONTINUED)
$ 1,250,000 New Orleans (AMBAC) 4.50% 10-01-99...... $ 1,253,622
2,000,000 West Baton Rouge PCR 3.15% 9-08-99...... 2,000,000
-------------
16,753,622
-------------
MAINE -- 1.2%
3,935,000 Maine HEFA (State Street Bank LOC) 3.30%
7-07-99............................... 3,935,000
-------------
MARYLAND -- 1.8%
1,100,000 Maryland HEFA (FNB Chicago LOC) 3.55%
7-07-99............................... 1,100,000
5,000,000 Montgomery County HCA (MBIA/FNB-Chicago)
3.30% 7-07-99......................... 5,000,000
-------------
6,100,000
-------------
MASSACHUSETTS -- 1.8%
1,457,000 Marlborough (FGIC) 4.00% 6-15-00........ 1,477,341
4,460,000 Massachusetts Water Pollution Abatement
Trust 4.25% 8-01-99................... 4,464,635
-------------
5,941,976
-------------
MICHIGAN -- 5.4%
900,000 Delta County (Morgan Guaranty LOC)
7-12-99............................... 900,000
5,100,000 Delta County (United Bank of Switzerland
LOC) 7-12-99.......................... 5,100,000
1,000,000 Ingham Economic Development Corp.
(National Australia Bank LOC) 3.50%
7-07-99............................... 1,000,000
4,350,000 Michigan Housing Development Authority
(Landesbank Helaba LOC) 3.40%
7-07-99............................... 4,350,000
PRINCIPAL
AMOUNT DESCRIPTION VALUE
- ------------- ---------------------------------------- -------------
MICHIGAN -- (CONTINUED)
$ 2,350,000 Michigan State Building Authority
(Canadian Imperial Bank of Commerce
LOC) 3.15% 8-05-99.................... $ 2,350,000
1,500,000 Michigan Strategic Fund 3.10% 8-16-99... 1,500,000
3,000,000 Michigan Strategic Fund 3.25% 7-14-99... 3,000,000
-------------
18,200,000
-------------
MINNESOTA -- 0.3%
1,000,000 Duluth PCR (Wachovia LOC) 3.65%
7-01-99............................... 1,000,000
-------------
MISSOURI -- 2.3%
5,850,000 Columbia (Insurance Reserve Bonds)
(Toronto Dominion LOC) 3.30%
7-07-99............................... 5,850,000
2,000,000 Missouri Environmental Improvement Bonds
(Bank of Nova Scotia/Commerzbank LOC)
3.25% 2-17-00......................... 2,000,000
-------------
7,850,000
-------------
NEVADA -- 0.6%
2,000,000 Las Vegas Valley Water District (West
Deutsche Landesbank LOC) 3.15%
7-08-99............................... 2,000,000
-------------
NEW MEXICO -- 2.2%
400,000 Farmington PCR (Bank of America LOC)
3.40% 7-01-99......................... 400,000
5,300,000 Farmington PCR (Barclays Bank LOC) 3.40%
7-07-99............................... 5,300,000
See Notes to Financial Statements.
11
<PAGE>
FREEDOM TAX EXEMPT MONEY FUND
INVESTMENTS AS OF JUNE 30, 1999 -- (CONTINUED)
(UNAUDITED)
PRINCIPAL
AMOUNT DESCRIPTION VALUE
- ------------- ---------------------------------------- -------------
MUNICIPAL SECURITIES -- (CONTINUED)
NEW MEXICO -- (CONTINUED)
$ 1,700,000 Gadsden ISD #16 (FGIC) 4.25% 8-15-99.... $ 1,701,058
-------------
7,401,058
-------------
NEW YORK -- 1.9%
1,400,000 New York City Municipal Water Finance
Authority (FGIC/ FGIC-SPI) 3.70%
7-01-99............................... 1,400,000
2,000,000 New York Energy Research & Development
Authority (United Bank of Switzerland
LOC) 3.00% 12-01-99................... 2,000,000
3,000,000 New York State Medical Care Facilities
(Escrowed in U.S. Government
Securities) 7.40% 8-15-99............. 3,075,392
-------------
6,475,392
-------------
NORTH CAROLINA -- 3.8%
2,200,000 North Carolina Educational Facilities
(Nationsbank LOC) 3.35% 7-07-99....... 2,200,000
5,000,000 North Carolina Educational Facilities
(Wachovia Bank LOC) 3.70% 7-01-99..... 5,000,000
1,500,000 North Carolina Medical Care (First Union
LOC) 3.75% 7-01-99.................... 1,500,000
2,000,000 Wake County IFA (First Union LOC) 3.30%
7-07-99............................... 2,000,000
2,000,000 Wake County IFA (Wachovia LOC) 3.40%
7-07-99............................... 2,000,000
-------------
12,700,000
-------------
PRINCIPAL
AMOUNT DESCRIPTION VALUE
- ------------- ---------------------------------------- -------------
OHIO -- 3.3%
$ 3,000,000 Clinton County Hospital Finance Program
(Fifth Third Bank LOC) 3.50%
7-07-99............................... $ 3,000,000
3,090,000 Franklin County Hospital Revenue (Morgan
Guaranty LOC) 3.55% 7-01-99........... 3,090,000
3,000,000 Summit County BANS 3.80% 6-01-00........ 3,016,006
2,000,000 Toledo Special Assessment Revenue
(Canadian Imperial Bank of Commerce
LOC) 3.57% 7-01-99.................... 2,000,000
-------------
11,106,006
-------------
OREGON -- 1.5%
2,000,000 Oregon Housing Authority 3.45%
6-29-00............................... 2,000,000
3,000,000 Portland BANS 3.75% 12-15-99............ 3,007,392
-------------
5,007,392
-------------
PENNSYLVANIA -- 5.3%
7,435,000 Delaware Valley Finance Authority
(Credit Suisse LOC) 3.35% 7-07-99..... 7,435,000
5,200,000 Delaware Valley RFA (Credit Suisse LOC)
3.35% 7-07-99......................... 5,200,000
2,500,000 Emmaus GRA (Bayerische-Landesbank LOC)
3.55% 7-07-99......................... 2,500,000
2,500,000 Schuylkill County Water and Sewer
Revenue (Escrowed in U.S. Government
Securities) 6.625% 2-01-00............ 2,573,912
-------------
17,708,912
-------------
See Notes to Financial Statements.
12
<PAGE>
FREEDOM TAX EXEMPT MONEY FUND
INVESTMENTS AS OF JUNE 30, 1999 -- (CONTINUED)
(UNAUDITED)
PRINCIPAL
AMOUNT DESCRIPTION VALUE
- ------------- ---------------------------------------- -------------
MUNICIPAL SECURITIES -- (CONTINUED)
PUERTO RICO -- 1.2%
$ 4,000,000 Puerto Rico Commonwealth TRANS 3.50%
7-30-99............................... $ 4,002,039
-------------
SOUTH CAROLINA -- 0.8%
2,600,000 Florence County Hospital Revenue
(FGIC/First Union) 3.70% 7-01-99...... 2,600,000
55,000 South Carolina Jobs Economic Development
(Chase Manhattan LOC) 3.85% 7-01-99... 55,000
-------------
2,655,000
-------------
TENNESSEE -- 3.3%
3,000,000 Clarksville Public Building Authority
(Nationsbank LOC) 3.80% 7-01-99....... 3,000,000
1,100,000 Hamilton County (Nationsbank LOC) 3.80%
7-01-99............................... 1,100,000
2,000,000 Nashville-Davidson Counties HEFA
(Nationsbank LOC) 3.80% 7-01-99....... 2,000,000
5,000,000 Tennessee State 3.30% 7-07-99........... 5,000,000
-------------
11,100,000
-------------
TEXAS -- 5.1%
3,650,000 Austin County IDA (Citibank LOC) 3.35%
7-07-99............................... 3,650,000
2,850,000 Brazos River Navigational District 3.80%
7-01-99............................... 2,850,000
1,400,000 Brownsville Utilities System (Toronto
Dominion LOC) 3.00% 7-29-99........... 1,400,000
1,000,000 Dallas County 6.00% 8-15-99............. 1,003,159
PRINCIPAL
AMOUNT DESCRIPTION VALUE
- ------------- ---------------------------------------- -------------
TEXAS -- (CONTINUED)
$ 1,000,000 Dallas Area Rapid Transit District (West
Deutsche Landesbank/Bayerische
Landesbank LOC) 3.20% 8-09-99......... $ 1,000,000
1,260,000 Fort Bend Flood Control District (AMBAC)
4.00% 3-01-00......................... 1,264,347
3,500,000 Lower Neches Valley Authority PCR 3.30%
7-07-99............................... 3,500,000
1,500,000 Nueces River Authority PCR (Bank of Nova
Scotia LOC) 3.75% 12-01-99............ 1,500,000
1,000,000 Richardson ISD (United Bank of
Switzerland) 3.70% 7-01-99............ 1,000,000
-------------
17,167,506
-------------
UTAH -- 5.0%
4,000,000 Intermountain Power Agency (Morgan
Guaranty LOC) 3.30% 8-25-99........... 4,000,000
7,400,000 State Board of Regents Student Loan
Revenue (AMBAC/ Dresdner) 3.50%
7-07-99............................... 7,400,000
5,400,000 Utah Transit Authority (Bayerische
Landesbank LOC) 3.65% 7-01-99......... 5,400,000
-------------
16,800,000
-------------
VIRGINIA -- 1.5%
2,000,000 Harrisonburg Virginia Redevelopment and
Housing Revenue Bonds (Banc One LOC)
3.62% 7-01-99......................... 2,000,000
2,870,000 Louisa County IDA (Nationsbank LOC)
3.80% 7-01-99......................... 2,870,000
-------------
4,870,000
-------------
See Notes to Financial Statements.
13
<PAGE>
FREEDOM TAX EXEMPT MONEY FUND
INVESTMENTS AS OF JUNE 30, 1999 -- (CONTINUED)
(UNAUDITED)
PRINCIPAL
AMOUNT DESCRIPTION VALUE
- ------------- ---------------------------------------- -------------
MUNICIPAL SECURITIES -- (CONTINUED)
WASHINGTON -- 2.2%
$ 1,295,000 Benton County Public Utility District
(AMBAC) 6.00% 11-01-99................ $ 1,306,412
3,100,000 Seattle Water System Revenue Bonds
(Bayerische Landesbank LOC) 3.30%
7-07-99............................... 3,100,000
3,040,000 Washington Public Power Supply System
(Escrowed in U.S. Government
Securities) 7.50% 7-01-99............. 3,100,800
-------------
7,507,212
-------------
WEST VIRGINIA -- 0.6%
2,000,000 West Virginia Hospital Finance Authority
(FNB-Chicago LOC) 3.60% 7-01-99....... 2,000,000
-------------
WISCONSIN -- 1.4%
4,710,000 Wisconsin Health and Education
Facilities (Toronto Dominion LOC)
3.30% 7-07-99......................... 4,710,000
-------------
WYOMING -- 1.3%
4,400,000 Lincoln County PCR (United Bank of
Switzerland LOC) 3.10% 8-11-99........ 4,400,000
-------------
TOTAL INVESTMENTS -- 100.8%............................. 338,272,841(A)
Other Assets & Liabilities, Net -- (0.8)%............... (2,782,145)
-------------
TOTAL NET ASSETS -- 100.00%............................. $ 335,490,696
=============
Legend:
BANS -- Bond Anticipation Notes
EDA -- Economic Development Authority
GRA -- General Revenue Authority
HCA -- Health Care Authority
HEFA -- Health Education Finance Authority
HFA -- Housing Finance Authority
IDA -- Industrial Development Authority
IFA -- Industrial Finance Agency
ISD -- Independent School District
LOC -- Letter of Credit
NRUCFC -- National Rural Utilities Cooperative Finance Corp.
PCR -- Pollution Control Revenue
RFA -- Regional Finance Authority
TRANS -- Tax & Revenue Anticipation Notes
Insurance Abbreviations:
AMBAC -- American Municipal Bond Assurance Corporation
FGIC -- Financial Guaranty Insurance Corporation
FGIC-SPI -- Financial Guaranty Insurance Corporation-Securities Purchased Inc.
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>
FREEDOM MUTUAL FUND
FREEDOM GROUP OF TAX EXEMPT FUNDS
STATEMENTS OF ASSETS AND LIABILITIES
JUNE 30, 1999
(UNAUDITED)
FREEDOM FREEDOM FREEDOM
CASH GOVERNMENT TAX EXEMPT
MANAGEMENT SECURITIES MONEY
FUND FUND FUND
-------------- ------------ ------------
ASSETS
Investments, at amortized cost.. $2,421,565,566 $423,853,817 $338,272,841
Cash............................ 816,914 1,093,229 484,260
Receivable for Fund shares sold. 30,400,010 5,534,904 2,432,027
Interest receivable............. 2,601,313 76,187 1,735,242
Prepaid expenses................ 13,832 2,728 2,339
Other assets.................... 65,871 18,473 21,496
-------------- ------------ ------------
TOTAL ASSETS.................... 2,455,463,506 430,579,338 342,948,205
-------------- ------------ ------------
LIABILITIES
Payable for Fund shares
redeemed....................... 2,530,361 214,506 581,642
Payable for investments
purchased...................... -- -- 6,289,377
Dividends payable............... 4,283,774 749,596 392,954
Accrued expenses:
Investment adviser's fee..... 909,469 180,493 142,674
Transfer agent and
shareholder servicing fee... 209,118 15,545 9,420
Trustees' fee................ 2,132 1,129 2,026
Other........................ -- 20,575 39,416
-------------- ------------ ------------
TOTAL LIABILITIES............... 7,934,854 1,181,844 7,457,509
-------------- ------------ ------------
NET ASSETS......................... $2,447,528,652 $429,397,494 $335,490,696
============== ============ ============
NET ASSETS CONSIST OF:
Capital paid in................. $2,447,671,855 $429,427,135 $335,473,327
Accumulated net realized gain
(loss)......................... (143,203) (29,641) 17,369
-------------- ------------ ------------
$2,447,528,652 $429,397,494 $335,490,696
============== ============ ============
SHARES ISSUED AND OUTSTANDING
(UNLIMITED SHARES AUTHORIZED)..... 2,447,671,855 429,391,582 335,473,327
-------------- ------------ ------------
NET ASSET VALUE PER SHARE.......... $ 1.00 $ 1.00 $ 1.00
============== ============ ============
See Notes to Financial Statements.
15
<PAGE>
FREEDOM MUTUAL FUND
FREEDOM GROUP OF TAX EXEMPT FUNDS
STATEMENTS OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1999
(UNAUDITED)
FREEDOM FREEDOM FREEDOM
CASH GOVERNMENT TAX EXEMPT
MANAGEMENT SECURITIES MONEY
FUND FUND FUND
----------- ----------- ----------
INTEREST INCOME.................... $58,624,245 $10,518,723 $5,542,590
----------- ----------- ----------
EXPENSES
Investment adviser's fee........ 5,408,077 1,079,795 891,925
Transfer agent & shareholder
services....................... 1,499,100 119,460 77,830
Custodian....................... 185,598 35,295 45,534
Compensation of Trustees........ 29,865 9,050 8,145
Audit........................... 30,125 5,930 23,195
Legal........................... 39,315 9,835 20,815
Printing, postage and
stationery..................... 96,450 12,550 5,430
Membership dues................. 25,512 5,055 4,315
Registration expense............ 130,415 42,225 33,175
Insurance expense............... 30,951 5,702 5,149
Other........................... 2,715 905 905
----------- ----------- ----------
TOTAL EXPENSES.................. 7,478,123 1,325,802 1,116,418
----------- ----------- ----------
LESS EXPENSE REDUCTIONS......... -- -- (9,334)
----------- ----------- ----------
NET EXPENSES.................... 7,478,123 1,325,802 1,107,084
----------- ----------- ----------
NET INVESTMENT INCOME.............. 51,146,122 9,192,921 4,435,506
----------- ----------- ----------
NET REALIZED GAIN (LOSS) ON
INVESTMENTS....................... (1,072) 714 --
----------- ----------- ----------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS......... $51,145,050 $ 9,193,635 $4,435,506
=========== =========== ==========
See Notes to Financial Statements.
16
<PAGE>
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, 1999* December 31, 1998 June 30, 1999* December 31, 1998
----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN
NET ASSETS FROM OPERATIONS:
Net investment income. $ 51,146,122 $ 98,149,348 $ 9,192,921 $ 18,732,355
Net realized gain (loss)
from investments..... (1,072) 11,489 714 4,289
----------------- ----------------- ----------------- -----------------
Net increase in net
assets resulting from
operations........... 51,145,050 98,160,837 9,193,635 18,736,644
DIVIDENDS TO
SHAREHOLDERS............ (51,146,122) (98,149,348) (9,192,921) (18,732,355)
----------------- ----------------- ----------------- -----------------
(1,072) 11,489 714 4,289
----------------- ----------------- ----------------- -----------------
CAPITAL SHARE TRANSACTIONS:
(At Net Asset Value of $1
per share)
Proceeds from sale of
shares............... 4,779,969,763 7,790,266,223 712,407,184 1,166,074,812
Net asset value of
shares issued to
shareholders in
reinvestment of
dividends............ 45,858,868 95,982,643 8,275,200 18,427,472
Cost of shares
redeemed............. (4,708,593,850) (7,302,802,116) (734,802,569) (1,111,347,812)
----------------- ----------------- ----------------- -----------------
Net increase
(decrease) from
capital share
transactions...... 117,234,781 583,446,750 (14,120,185) 73,154,472
----------------- ----------------- ----------------- -----------------
Net increase (decrease)
in net assets........ 117,233,709 583,458,239 (14,119,471) 73,158,761
NET ASSETS:
Beginning of period... 2,330,294,943 1,746,836,704 443,516,965 370,358,204
----------------- ----------------- ----------------- -----------------
End of period......... $ 2,447,528,652 $ 2,330,294,943 $ 429,397,494 $ 443,516,965
================= ================= ================= =================
</TABLE>
<TABLE>
<CAPTION>
FREEDOM
TAX EXEMPT MONEY FUND
-------------------------------------
Six Months
Ended Year Ended
June 30, 1999* December 31, 1998
----------------- -----------------
<S> <C> <C>
INCREASE (DECREASE) IN
NET ASSETS FROM
OPERATIONS:
Net investment
income............... $ 4,435,506 $ 9,338,378
Net realized gain (loss)
from investments..... -- --
----------------- -----------------
Net increase in net
assets resulting from
operations........... 4,435,506 9,338,378
DIVIDENDS TO
SHAREHOLDERS............ (4,435,506) (9,338,378)
----------------- -----------------
-- --
----------------- -----------------
CAPITAL SHARE TRANSACTIONS:
(At Net Asset Value of $1
per share)
Proceeds from sale of
shares............... 774,811,560 1,381,810,924
Net asset value of
shares issued to
shareholders in
reinvestment of
dividends............ 3,926,205 9,099,347
Cost of shares
redeemed............. (798,640,083) (1,325,421,739)
----------------- -----------------
Net increase
(decrease) from
capital share
transactions...... (19,902,318) 65,488,532
----------------- -----------------
Net increase
(decrease) in net
assets............... (19,902,318) 65,488,532
NET ASSETS:
Beginning of period... 355,393,014 289,904,482
----------------- -----------------
End of period......... $ 335,490,696 $ 355,393,014
================= =================
</TABLE>
- ------------
*Unaudited.
See Notes to Financial Statements.
17
<PAGE>
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>
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 $9,334 of custodian fees have been reduced by balance credits
applied during the period ended June 30, 1999. 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.
As of December 31, 1998, the Freedom Cash Management Fund had $142,131 of
capital loss carry-forwards of which $38,142, $95,472 and $8,517 expire on
December 31, 1999, December 31, 2001 and December 31, 2005, respectively. As of
December 31, 1998, the Freedom Government Securities Fund had $30,355 of capital
loss carry-forwards of which $20,095 and $10,260 expire on December 31, 2002 and
December 31, 2005, respectively.
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.
19
<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. As transfer agent, Freedom Services Corporation received the following
from the Funds for the period ended June 30, 1999:
CASH GOVERNMENT TAX
MANAGEMENT SECURITIES EXEMPT MONEY
FUND FUND FUND
------------ ------------ ------------
$ 1,499,100 $ 119,460 $ 87,164
============ ============ ============
NOTE 3. Purchases and sales (including maturities) of investments
(excluding repurchase agreements) for the period ended June 30, 1999 were as
follows:
CASH GOVERNMENT TAX
MANAGEMENT SECURITIES EXEMPT MONEY
FUND FUND FUND
--------------- --------------- ---------------
Purchases
U.S. Government.......... -- $ 945,974,094 --
Other.................... $ 6,530,602,512 -- $ 461,548,163
Sales
U.S. Government.......... -- $ 970,638,462
Other.................... $ 6,446,333,979 -- $ 470,725,000
20
<PAGE>
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, 1999++........... $ 1.00 $ 0.0216 $ (0.0216) $ 1.00 2.18% $ 2,447,529 0.64%+ 4.36%+
December 31, 1998......... 1.00 0.0491 (0.0491) 1.00 5.03% 2,330,295 0.65% 4.91%
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%
GOVERNMENT SECURITIES FUND
June 30, 1999++........... $ 1.00 $ 0.0211 $ (0.0211) $ 1.00 2.14% $ 429,397 0.61%+ 4.26%+
December 31, 1998......... 1.00 0.0481 (0.0481) 1.00 4.93% 443,517 0.61% 4.81%
December 31, 1997......... 1.00 0.0485 (0.0485) 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%
TAX EXEMPT MONEY FUND
June 30, 1999++........... $ 1.00 $ 0.0123 $ (0.0123) $ 1.00 1.25%* $ 335,491 0.63%+(a) 2.48%+(b)
December 31, 1998......... 1.00 0.0283 (0.0283) 1.00 2.88%* 355,393 0.63%(a) 2.83%(b)
December 31, 1997......... 1.00 0.0300 (0.0300) 1.00 3.04%* 289,904 0.66%(a) 2.98%(b)
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%
</TABLE>
- ------------
+ Annualized.
++ Unaudited.
(a) Ratio of expenses to average daily net assets after expense credits was
0.62%, 0.62% and 0.64% for the period ended June 30, 1999 and for the years
ended December 31, 1998 and December 31, 1997, respectively.
(b) Ratio of net investment income to average daily net assets after expense
credits was 2.49%, 2.83% and 3.00% for the period ended June 30, 1999 and
for the years ended December 31, 1998 and December 31, 1997, respectively.
* Total return would have been lower without credits allowed by the custodian.
21
<PAGE>
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
{FLAG LOGO] FREEDOM
FAMILY OF MUTUAL FUNDS
This report has been prepared for shareholders and may be distributed to others
only if preceded or accompanied by a current prospectus for the Freedom Group of
Money Funds.
F01APD 0699
