<PAGE> 1
[PHOTOGRAPH OF
DEXTER A. DODGE
Chairman]
[FREEDOM FUNDS LOGO] TO OUR SHAREHOLDERS
Two themes have predominated in the fixed income markets in the first half of
this year. The first of these has been the ongoing tension between an economy
that has continued to grow apace and the increased resolve of the Federal
Reserve Bank's Open Market Committee (Fed) to slow the economy down. The second
has been the repercussions of the continuing budget surpluses being rung up in
the United States and their effect on the difference in yields between U.S.
Treasury securities and every other kind of security. Both of these themes have
been important to understanding the movement of the fixed income markets in the
first half of the year.
Starting in June of last year, the Federal Reserve began to increase short term
interest rates. As of this writing they have increased those rates by 1.75% in a
series of six interest rate moves. The reason for this change by the Fed has
been the continued strength in the economy. Indeed, in the first quarter of this
year, the economy appeared to be shrugging off any interest rate increases and
actually accelerating. Current estimates of gross domestic product (GDP) growth
in the first quarter show a growth of 5.4%. This rate actually understates the
real strength the economy showed. Aggregate demand, a favorite measure of the
Federal Reserve Board, rose even more quickly. Personal consumption expenditures
(PCE) rose by 7.5%, for example and business investment in equipment and
software rose by 26.6%. Faced with an economy that strong, the Fed raised rates
three times in 2000 for a total increase of 1.0%. An economy that seemed
unwilling to slow down despite these rate increases brought tremendous pressure
on those securities that have some credit component to them. The result was a
widening, or "spread", of their yields over those offered by U.S. Treasury
securities. On the one hand, rates went up which hurt the current prices of all
long term securities. On the other hand, the Federal Reserve seemed serious
which meant that the markets began to fear that they might overplay their hand,
sending the economy into recession. Bonds with a credit component, often called
"spread product", began to price in the risk of a recession.
Thankfully, the second quarter has provided some relief as the economy appears
to be slowing somewhat. Most forecasters now predict a second quarter GDP in the
range of 3.5%, with PCE slowing from 7.5% to 3.1% and business investment from
26.6% to 14%. Spread product has performed better through June.
The second theme has been the ongoing story of budget surpluses. In a perverse
sort of way these healthy surpluses also served to make spread product, and even
U.S. Government Agency debentures, suffer. Healthy surpluses mean both less new
issuance of U.S. Treasury debt and buybacks of currently outstanding securities.
As the supply of U.S. Treasury securities has dwindled those securities have
taken on a bit of scarcity value making them more dearly priced when compared to
non-Treasury securities.
<PAGE> 2
With an election year upon us, and little agreement either within Congress or
between the Presidential candidates on what to do with the surpluses, it is
reasonable to expect that the scarcity value of U.S. Treasury securities will
continue. The Federal Reserve, meanwhile, is not likely to alter their bias at
this juncture. Until and unless there are more convincing signs of a slowing of
domestic economic growth, those two themes will remain predominate in the fixed
income markets.
The following comments by your portfolio managers detail the strategies used for
each of the Freedom Money Market Funds. As always, we appreciate the opportunity
to be of service to our investors, and we renew our commitment to provide funds
of high quality with service to match. Thank you.
Sincerely,
/s/ Dexter A. Dodge
------------------------
Dexter A. Dodge
Chairman
[PHOTOGRAPH OF [PHOTOGRAPH OF
MARY JEANNE CURRIE 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
As mentioned in our last annual report, the Federal Reserve began raising
interest rates in June of 1999 in a preemptive move to rein in the growth of the
economy and head off any inflationary pressures that usually accompany this type
of acceleration. It was generally anticipated that the Federal Reserve would
continue with this stance in the first half of this year. With this policy in
mind, we began shortening the average maturity of both the Freedom Cash
Management Fund and the Freedom Government Securities Fund. By structuring the
portfolios in this way we were able to increase our liquidity and reinvest
maturing securities at increasingly higher levels.
In the Freedom Cash Management Fund we also increased our position in higher
yielding floating-rate notes - these are notes whose interest rates are reset at
regular intervals based on a benchmark of money market rates, such as LIBOR
(London Interbank Offer Rate).
The results of this strategy are reflected in the yields offered on the Funds.
The seven day net yield on the Freedom Cash Management as of June 30, 2000 was
5.90% versus 5.18% on January 3, 2000. The net yield on the Freedom Government
<PAGE> 3
Securities Fund over the same period was 5.85% versus 4.85%. Also, our asset
growth continued to reflect investor uncertainty over the future of the economy
and interest rates. For the same period mentioned above, assets in the Freedom
Cash Management increased 5% to $2.8 billion and the Freedom Government
Securities Fund 6% to $509.4 million. Market indicators are now pointing to a
more neutral policy by the Federal Reserve as our economic growth appears to be
slowing down. One market indicator in particular is a much flatter yield curve
along with a futures market that has no rate hikes priced in. Because of the
lesser volatility in short term rates, we have extended the maturities of both
funds to closer match that of their respective indices. This positioning allows
the Funds to offer competitive yields and still be able to take advantage of
any sudden changes in the yield curve.
As always, the primary objective of the Funds is the preservation of capital.
All of the securities in the Freedom Cash Management Fund carry the highest
rating assigned to short term investments. We also constantly monitor and
evaluate the creditworthiness of these holdings to be certain that our
conservative investment policy is maintained. As a result of this policy, the
Freedom Cash Management Fund carries an AAA rating by Standard & Poor's Rating
Agency. 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 Federal Reserve's 100 basis point boost to short term interest
rates, tax exempt money market rates also rose approximately the same amount.
The first week in January saw rates at abnormally low levels as fund managers
unwound strategies implemented to ameliorate the Y2K problems that never
occurred. Short term tax exempt interest rates then settled into a range of
around 3.25% to 3.50% and followed the Federal Reserve's rate hikes by ending
the first half of this last year of the old millennium in a range of 4.00% to
4.50%. The market continues to react to the fundamentals of supply and demand,
which, at this time, appear to be relatively well balanced.
Yields offered by the Freedom Tax Exempt Money Fund have remained consistent
with those of the average of tax exempt money funds as recorded by iMoneyNet,
Inc. (formerly IBC Financial Data). Freedom's seven day net yield was 3.87% at
the June 26th reporting date. This rate compares favorably with a net rate of
3.86% for the "average" fund during the same period. Those levels show an
increase of 125 and 113 basis points, respectively, since the end of January.
The short term yield curve (yields offered on securities maturing between 1 day
and 1 year) continues to remain comparatively flat. As a result we ended the
second quarter with a rather short average maturity
<PAGE> 4
of 22 days for the Freedom Fund, 14 days shorter than that of the "average"
fund. While we expect this average maturity to lengthen somewhat as we replace
maturing notes in the portfolio, we will maintain our emphasis on liquidity
until the shape of the yield curve changes.
Going forward we don't foresee any significant changes in our investment
strategy. Moderate asset growth and a reduced supply of short term securities
coming into the market should dampen interest rate volatility for the
foreseeable future. We will continue to be aggressive in monitoring changes in
the yield curve, spread relationships and security selection in our efforts to
provide shareholders with competitive returns and the high quality as befits the
Fund's AAA Standard & Poor's credit rating.
Sincerely,
/s/ Mary Jeanne Currie
----------------------------
Mary Jeanne Currie
Portfolio Manager
/s/ Paul Marandett
----------------------------
Paul Marandett
Portfolio Manager
<PAGE> 5
FREEDOM CASH MANAGEMENT FUND
INVESTMENTS AS OF JUNE 30, 2000
(UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL MATURITY
AMOUNT RATE DATE VALUE
--------- ---- -------- -----
<S> <C> <C> <C>
COMMERCIAL PAPER -- 68.0%
AMERICAN EXPRESS CREDIT CORP.
$ 8,750,000 6.050% 07/05/2000 $ 8,744,118
25,000,000 6.060% 07/06/2000 24,978,958
1,850,000 6.250% 07/06/2000 1,848,394
20,400,000 6.050% 07/07/2000 20,379,430
5,800,000 6.090% 08/01/2000 5,769,584
AMERICAN GENERAL CORP.
10,000,000 6.120% 07/11/2000 9,983,000
8,000,000 6.500% 07/20/2000 7,972,556
17,000,000 6.390% 07/31/2000 16,909,475
15,000,000 6.560% 08/18/2000 14,868,800
2,000,000 6.680% 09/05/2000 1,975,507
10,000,000 6.570% 09/07/2000 9,875,900
9,900,000 6.580% 09/08/2000 9,775,144
13,400,000 6.560% 09/12/2000 13,221,750
AMERICAN GENERAL FINANCE CORP.
17,900,000 6.020% 07/11/2000 17,870,067
12,600,000 6.090% 07/19/2000 12,561,633
7,250,000 6.100% 08/21/2000 7,187,348
8,000,000 6.630% 08/23/2000 7,921,913
AMERICAN TELEPHONE & TELEGRAPH CO.
10,000,000 6.550% 09/05/2000 9,879,917
25,000,000 6.560% 09/19/2000 24,635,556
ASSOCIATES FIRST CAPITAL CORP.
10,000,000 6.450% 07/07/2000 9,989,250
9,500,000 6.570% 08/08/2000 9,434,117
25,000,000 6.570% 08/23/2000 24,758,187
BAYERISCHE VEREINSBANK AG
25,000,000 5.950% 07/10/2000 24,962,812
25,000,000 6.130% 08/04/2000 24,855,264
25,000,000 6.110% 08/11/2000 24,826,035
BOARD OF TRUSTEES OF THE LELAND STANFORD JR. UNIVERSITY
25,000,000 6.350% 07/11/2000 24,955,903
12,000,000 6.100% 07/17/2000 11,967,467
8,000,000 6.630% 08/22/2000 7,923,387
CAPITAL ONE FUNDING
$59,439,000 6.750% 07/06/2000 $59,439,000
CHEVRON TRANSPORT CORP.
25,000,000 6.120% 07/11/2000 24,957,500
25,000,000 6.640% 08/18/2000 24,778,667
CHEVRON UK INVESTMENT PLC
20,000,000 6.580% 09/08/2000 19,747,767
DEXIA CLF FINANCE CO.
25,000,000 6.200% 07/05/2000 24,982,778
25,000,000 6.300% 07/05/2000 24,982,500
12,000,000 6.620% 08/21/2000 11,887,460
3,780,000 6.220% 09/06/2000 3,736,242
12,000,000 6.190% 09/11/2000 11,851,440
DUN & BRADSTREET CORP.
15,000,000 6.550% 07/07/2000 14,983,625
E.I. DUPONT DE NEMOURS & CO.
10,400,000 6.100% 07/17/2000 10,371,804
18,000,000 6.080% 08/02/2000 17,902,720
25,000,000 6.120% 08/02/2000 24,864,000
10,000,000 6.150% 08/16/2000 9,921,417
FORD MOTOR CREDIT COMPANY
10,500,000 6.070% 07/05/2000 10,492,918
25,000,000 6.070% 07/06/2000 24,978,924
14,750,000 6.070% 07/10/2000 14,727,617
11,400,000 6.550% 07/19/2000 11,362,665
10,000,000 6.090% 07/20/2000 9,967,858
10,000,000 6.470% 07/20/2000 9,965,853
25,000,000 6.080% 07/24/2000 24,902,889
6,400,000 6.550% 07/28/2000 6,368,560
19,000,000 6.560% 09/06/2000 18,768,031
GENERAL ELECTRIC CAPITAL CORP.
12,000,000 6.100% 07/12/2000 11,977,633
13,800,000 6.480% 07/14/2000 13,767,708
14,100,000 6.550% 07/25/2000 14,038,430
18,500,000 6.550% 07/26/2000 18,415,851
4,500,000 6.560% 07/28/2000 4,477,860
</TABLE>
See Notes to Financial Statements.
5
<PAGE> 6
FREEDOM CASH MANAGEMENT FUND
INVESTMENTS AS OF JUNE 30, 2000 -- (CONTINUED)
(UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL MATURITY
AMOUNT RATE DATE VALUE
--------- ---- -------- -----
<S> <C> <C> <C>
COMMERCIAL PAPER -- (CONTINUED)
GENERAL ELECTRIC CAPITAL CORP. -- (CONTINUED)
$ 5,450,000 6.600% 08/10/2000 $ 5,410,033
10,450,000 6.610% 08/14/2000 10,365,576
25,000,000 6.650% 08/30/2000 24,722,917
25,000,000 6.550% 09/13/2000 24,663,403
GENERAL MOTORS ACCEPTANCE CORP.
25,000,000 6.100% 07/06/2000 24,978,819
1,350,000 6.130% 07/11/2000 1,347,701
20,000,000 6.150% 07/11/2000 19,965,833
1,300,000 6.000% 07/12/2000 1,297,617
25,000,000 6.160% 07/14/2000 24,944,389
20,000,000 6.170% 07/18/2000 19,941,728
8,000,000 6.150% 07/24/2000 7,968,567
2,800,000 6.550% 08/09/2000 2,780,132
6,000,000 6.640% 08/21/2000 5,943,560
15,000,000 6.580% 09/07/2000 14,813,567
13,000,000 6.570% 09/11/2000 12,829,180
GOLDMAN SACHS GROUP LP
10,000,000 6.150% 07/10/2000 9,984,625
12,000,000 6.180% 07/12/2000 11,977,340
10,000,000 6.140% 07/17/2000 9,972,711
10,000,000 6.040% 07/24/2000 9,961,411
5,000,000 6.050% 08/01/2000 4,973,951
5,000,000 6.450% 08/01/2000 4,972,229
18,000,000 6.520% 08/07/2000 17,879,380
4,000,000 6.580% 08/08/2000 3,972,218
20,000,000 6.640% 08/10/2000 19,852,444
10,000,000 6.600% 08/14/2000 9,919,333
10,000,000 6.590% 08/15/2000 9,917,625
8,000,000 6.640% 08/16/2000 7,932,124
3,000,000 6.220% 08/21/2000 2,973,565
HALIFAX PLC
15,000,000 5.980% 07/03/2000 14,995,017
10,000,000 6.720% 07/07/2000 9,988,800
25,000,000 6.130% 08/01/2000 24,868,035
25,000,000 6.600% 08/01/2000 24,857,917
25,000,000 6.130% 08/02/2000 24,863,778
25,000,000 6.120% 08/08/2000 24,838,500
9,500,000 6.160% 09/05/2000 9,392,713
J.P. MORGAN & CO., INC.
25,000,000 6.100% 07/05/2000 24,983,056
25,000,000 6.500% 08/03/2000 24,851,042
14,000,000 6.580% 09/05/2000 13,831,113
25,000,000 6.640% 03/16/2001 25,000,000
MEDICAL BUILDING FUNDING VIII
33,700,000 6.755% 07/26/2000 33,541,914
MERRILL LYNCH & CO. INC.
14,000,000 6.230% 07/05/2000 13,990,309
7,000,000 6.450% 07/07/2000 6,992,475
7,000,000 6.120% 07/12/2000 6,986,910
18,000,000 6.480% 07/12/2000 17,964,360
25,000,000 6.140% 07/13/2000 24,948,833
10,000,000 6.170% 07/14/2000 9,977,719
17,600,000 6.170% 07/17/2000 17,551,737
8,300,000 6.140% 07/18/2000 8,275,935
15,000,000 6.150% 08/09/2000 14,900,062
3,700,000 6.630% 08/10/2000 3,672,743
12,000,000 6.570% 09/13/2000 11,837,940
NORTHERN ROCK PLC
25,000,000 6.650% 04/20/2001 25,000,000
PRUDENTIAL FUNDING CORP.
15,000,000 6.090% 07/14/2000 14,967,012
9,500,000 6.650% 08/07/2000 9,436,535
9,500,000 6.600% 08/22/2000 9,409,433
18,600,000 6.590% 09/12/2000 18,351,447
15,000,000 6.580% 09/13/2000 14,797,117
15,000,000 6.560% 09/14/2000 14,795,000
TORONTO DOMINION HOLDINGS USA INC.
25,000,000 6.140% 08/11/2000 24,825,181
UBS FINANCE DELAWARE INC.
25,000,000 6.650% 07/05/2000 24,981,528
4,495,000 7.050% 07/05/2000 4,491,479
</TABLE>
See Notes to Financial Statements.
6
<PAGE> 7
FREEDOM CASH MANAGEMENT FUND
INVESTMENTS AS OF JUNE 30, 2000 -- (CONTINUED)
(UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL MATURITY
AMOUNT RATE DATE VALUE
--------- ---- -------- -----
<S> <C> <C> <C>
COMMERCIAL PAPER -- (CONTINUED)
USAA CAPITAL CORP.
$ 3,800,000 6.120% 07/10/2000 $ 3,794,186
9,500,000 6.560% 07/28/2000 9,453,260
3,500,000 6.580% 08/02/2000 3,479,529
23,000,000 6.530% 08/16/2000 22,808,091
14,300,000 6.560% 09/05/2000 14,128,019
5,500,000 6.540% 09/08/2000 5,431,057
25,000,000 6.550% 09/08/2000 24,686,146
VENTURES BUSINESS TRUST
25,000,000 6.600% 09/19/2000 24,633,333
WAL MART STORES INC.
20,000,000 6.560% 09/06/2000 19,755,822
--------------
1,877,248,250
--------------
MUNICIPAL SECURITIES -- 1.0%
MISSISSIPPI BUSINESS FINANCE CORP. TAXABLE
INDUSTRIAL DEVELOPMENT REVENUE BONDS
10,000,000 6.800% 07/01/2000 10,000,000
WAYNE COUNTY, MICHIGAN G.O.
18,045,000 6.650% 11/09/2000 18,045,000
--------------
TOTAL MUNICIPAL SECURITIES.... 28,045,000
--------------
STRUCTURED FINANCE -- 29.8%
ASSET SECURITIZATION COOPERATIVE CORP.
9,000,000 6.100% 07/10/2000 8,986,275
20,000,000 6.080% 07/13/2000 19,959,467
5,000,000 6.430% 07/13/2000 4,989,283
25,000,000 6.480% 07/19/2000 24,919,000
25,000,000 6.450% 08/03/2000 24,852,187
25,000,000 6.550% 08/08/2000 24,827,153
6,700,000 6.480% 08/09/2000 6,652,966
4,000,000 6.630% 08/10/2000 3,970,533
15,000,000 6.570% 08/25/2000 14,849,437
4,500,000 6.580% 09/07/2000 4,444,070
COOPERATIVE ASSOCIATION OF TRACTOR DEALERS INC.
$ 3,300,000 6.920% 07/05/2000 $ 3,297,463
3,800,000 6.050% 07/07/2000 3,796,168
2,000,000 6.100% 07/13/2000 1,995,933
7,900,000 6.170% 07/13/2000 7,883,752
5,000,000 6.620% 07/18/2000 4,984,369
3,400,000 6.050% 07/21/2000 3,388,572
8,100,000 6.570% 07/31/2000 8,055,652
12,800,000 6.150% 08/03/2000 12,727,840
3,000,000 6.570% 08/08/2000 2,979,195
3,000,000 6.200% 08/11/2000 2,978,817
4,550,000 6.630% 08/14/2000 4,513,130
2,000,000 6.600% 08/15/2000 1,983,500
2,700,000 6.100% 08/18/2000 2,678,040
9,500,000 6.070% 08/28/2000 9,407,095
2,500,000 6.670% 09/01/2000 2,471,282
2,600,000 6.620% 09/08/2000 2,567,010
3,400,000 6.620% 09/11/2000 3,354,984
2,000,000 6.600% 09/13/2000 1,972,867
2,000,000 6.250% 09/15/2000 1,973,611
2,100,000 6.600% 09/15/2000 2,070,740
2,000,000 6.650% 09/20/2000 1,970,075
7,100,000 6.650% 09/21/2000 6,992,455
2,000,000 6.250% 09/26/2000 1,969,792
4,350,000 6.270% 10/16/2000 4,268,934
3,000,000 6.640% 10/20/2000 2,938,580
10,000,000 6.670% 11/13/2000 9,749,875
2,845,000 6.670% 11/15/2000 2,772,785
1,100,000 6.670% 11/16/2000 1,071,875
3,463,000 6.750% 11/17/2000 3,372,746
1,300,000 6.780% 11/22/2000 1,264,744
10,900,000 6.670% 12/11/2000 10,570,817
DELAWARE FUNDING CORP.
12,333,000 6.180% 07/10/2000 12,313,946
25,000,000 6.210% 07/18/2000 24,926,687
5,000,000 6.660% 07/19/2000 4,983,350
12,000,000 6.600% 07/21/2000 11,956,000
20,000,000 6.240% 07/25/2000 19,916,800
</TABLE>
See Notes to Financial Statements.
7
<PAGE> 8
FREEDOM CASH MANAGEMENT FUND
INVESTMENTS AS OF JUNE 30, 2000 -- (CONTINUED)
(UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL MATURITY
AMOUNT RATE DATE VALUE
--------- ---- -------- -----
<S> <C> <C> <C>
STRUCTURED FINANCE -- (CONTINUED)
DELAWARE FUNDING CORP. -- (CONTINUED)
$ 8,000,000 6.600% 07/25/2000 $ 7,964,800
19,396,000 6.160% 08/03/2000 19,286,477
2,000,000 6.570% 08/16/2000 1,983,210
20,000,000 6.580% 09/11/2000 19,736,800
EDISON ASSET SECURITIZATION CORP.
25,000,000 6.610% 07/19/2000 24,917,375
25,000,000 6.670% 08/16/2000 24,786,931
25,000,000 6.640% 08/24/2000 24,751,000
15,000,000 6.600% 09/05/2000 14,818,500
25,000,000 6.600% 09/06/2000 24,692,917
20,000,000 6.570% 09/11/2000 19,737,200
SHEFFIELD RECEIVABLES CORP.
25,000,000 6.560% 07/17/2000 24,927,111
22,500,000 6.580% 07/17/2000 22,434,200
25,000,000 6.580% 07/18/2000 24,922,319
23,750,000 6.550% 07/24/2000 23,650,613
6,800,000 6.580% 08/07/2000 6,754,013
SIGMA FINANCE CORP.
3,500,000 6.080% 07/07/2000 3,496,453
21,000,000 6.140% 07/12/2000 20,960,602
4,000,000 6.040% 07/21/2000 3,986,578
9,720,000 6.160% 07/27/2000 9,676,757
7,300,000 6.560% 08/03/2000 7,256,103
5,000,000 6.060% 08/17/2000 4,960,442
2,425,000 6.190% 08/17/2000 2,405,403
3,000,000 6.640% 08/17/2000 2,973,993
2,500,000 6.590% 09/07/2000 2,468,881
9,900,000 6.630% 09/07/2000 9,776,019
40,000,000 6.260% 10/13/2000 39,276,622
2,300,000 6.690% 11/13/2000 2,242,299
2,000,000 6.760% 11/13/2000 1,949,300
TRIPLE A ONE FUNDING CORP.
13,952,000 6.490% 07/07/2000 13,936,909
25,000,000 6.560% 07/17/2000 24,927,111
5,560,000 6.570% 07/25/2000 5,535,647
10,000,000 6.570% 07/27/2000 9,952,550
8,741,000 6.560% 08/07/2000 8,682,066
14,210,000 6.590% 08/07/2000 14,113,755
5,799,000 6.590% 09/12/2000 5,721,508
--------------
TOTAL STRUCTURED FINANCE...... 824,232,316
--------------
TOTAL INVESTMENTS -- 98.8%.... 2,729,525,566(a)
Other Assets & Liabilities,
Net -- 1.2%................. 32,379,211
--------------
TOTAL NET ASSETS -- 100.0%.... $2,761,904,777
==============
-----------
(a) COST FOR TAX PURPOSES IS THE SAME.
</TABLE>
See Notes to Financial Statements.
8
<PAGE> 9
FREEDOM GOVERNMENT SECURITIES FUND
INVESTMENTS AS OF JUNE 30, 2000
(UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL MATURITY
AMOUNT RATE DATE VALUE
--------- ---- -------- -----
<S> <C> <C> <C>
U.S. GOVERNMENT AGENCY ISSUES -- 98.7%
FEDERAL FARM CREDIT BANK DISCOUNT NOTES -- 14.1%
$ 4,825,000 6.380% 07/03/00 $ 4,823,290
12,100,000 6.380% 07/13/00 12,074,267
4,850,000 6.250% 07/17/00 4,836,528
4,300,000 6.380% 07/20/00 4,285,521
3,000,000 6.320% 07/27/00 2,986,307
15,600,000 6.440% 08/04/00 15,505,117
7,600,000 6.470% 08/11/00 7,543,998
1,000,000 6.370% 08/15/00 992,037
6,900,000 6.100% 09/13/00 6,813,482
12,000,000 6.440% 09/13/00 11,841,147
------------
TOTAL FEDERAL FARM CREDIT BANK
DISCOUNT NOTES............... 71,701,694
------------
FEDERAL HOME LOAN BANK DISCOUNT NOTES -- 84.6%
20,000,000 6.195% 07/05/00 19,986,233
5,925,000 6.500% 07/05/00 5,920,721
19,400,000 6.350% 07/06/00 19,382,890
8,000,000 6.260% 07/07/00 7,991,653
4,100,000 6.390% 07/12/00 4,091,995
5,000,000 6.370% 07/13/00 4,989,383
16,950,000 6.045% 07/14/00 16,913,000
2,000,000 6.400% 07/18/00 1,993,956
10,000,000 6.410% 07/19/00 9,967,950
4,257,000 6.420% 07/19/00 4,243,335
600,000 5.780% 07/21/00 598,073
5,000,000 6.070% 07/21/00 4,983,139
12,300,000 6.090% 07/26/00 12,247,981
2,900,000 6.160% 07/28/00 2,886,602
2,700,000 6.180% 07/28/00 2,687,486
8,870,000 6.290% 08/02/00 8,820,407
13,700,000 6.410% 08/02/00 13,621,940
3,300,000 5.970% 08/09/00 3,278,657
12,000,000 6.060% 08/09/00 11,921,220
6,900,000 6.410% 08/11/00 6,849,628
1,850,000 6.520% 08/14/00 1,835,258
7,140,000 6.070% 08/16/00 7,084,621
1,250,000 6.400% 08/17/00 1,239,556
1,175,000 6.400% 08/18/00 1,164,973
13,000,000 6.470% 08/23/00 12,876,171
12,000,000 6.050% 08/30/00 11,879,000
6,850,000 6.420% 08/30/00 6,776,705
26,700,000 6.070% 08/31/00 26,425,383
23,500,000 6.420% 09/01/00 23,239,617
12,850,000 6.090% 09/06/00 12,704,356
13,500,000 6.420% 09/06/00 13,338,698
20,000,000 6.100% 09/07/00 19,769,556
13,600,000 6.100% 09/08/00 13,440,993
8,096,000 6.430% 09/08/00 7,996,224
9,300,000 6.440% 09/13/00 9,176,889
26,200,000 6.450% 09/15/00 25,843,243
8,000,000 6.480% 09/15/00 7,890,560
15,650,000 6.485% 09/15/00 15,435,743
6,400,000 6.460% 09/20/00 6,306,976
5,600,000 6.470% 09/20/00 5,518,478
8,700,000 6.480% 09/27/00 8,562,192
14,400,000 6.510% 09/27/00 14,170,848
7,225,000 6.110% 09/29/00 7,114,638
8,100,000 6.150% 10/18/00 7,949,171
------------
431,116,098
------------
TOTAL INVESTMENTS -- 98.7%..... 502,817,792(a)
Other Assets & Liabilities
Net -- 1.3%.................. 6,588,217
------------
TOTAL NET ASSETS -- 100.0%..... $509,406,009
============
</TABLE>
------------
(a) COST FOR TAX PURPOSES IS THE SAME.
See Notes to Financial Statements.
9
<PAGE> 10
FREEDOM TAX EXEMPT MONEY FUND
INVESTMENTS AS OF JUNE 30, 2000
(UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT DESCRIPTION VALUE
--------- ----------- -----
<C> <S> <C>
MUNICIPAL SECURITIES -- 99.8%
ALABAMA -- 4.4%
$ 2,500,000 Birmingham (AMBAC/Societe
Generale) 4.65% 7-05-00.... $ 2,500,000
2,000,000 Birmingham-Carroway Special
Care Facilities Finance
Authority (AmSouth LOC)
4.95% 7-05-00.............. 2,000,000
4,000,000 Chatom PCR (NRUCFC) 4.85%
7-5-00..................... 4,000,000
4,600,000 Daphne-Villa Special Care
Facilities Finance
Authority (AmSouth LOC)
4.95% 7-05-00.............. 4,600,000
4,000,000 Mobile IDB 4.75% 7-05-00
(Wachovia LOC)............. 4,000,000
------------
17,100,000
------------
ARIZONA -- 5.4%
13,000,000 Apache County IDA (Toronto
Dominion LOC) 4.85%
7-05-00.................... 13,000,000
5,150,000 Maricopa County PCR (Barclays
Bank LOC) 4.90% 7-05-00.... 5,150,000
1,500,000 Maricopa County PCR (Morgan
Guaranty LOC) 4.60%
7-01-00.................... 1,500,000
1,100,000 Mesa County (FGIC) 5.35%
7-01-00.................... 1,100,000
------------
20,750,000
------------
CALIFORNIA -- 2.6%
5,000,000 California Higher Education
Loan Authority (National
Westminster LOC) 4.75%
7-05-00.................... 5,000,000
5,000,000 California Higher Education
Loan Authority (SLMA) 3.50%
7-01-00.................... 5,000,000
------------
10,000,000
------------
COLORADO -- 4.0%
$ 3,400,000 Adams County IDA (Citibank
LOC) 4.75% 7-06-00......... $ 3,400,000
9,500,000 Colorado HFA (MBIA/Credit
Suisse) 4.60% 7-06-00...... 9,500,000
1,390,000 Colorado HFA (MBIA/Rabobank)
4.60% 7-06-00.............. 1,390,000
1,080,000 La Plata County PCR 4.10%
9-01-00.................... 1,080,000
------------
15,370,000
------------
DISTRICT OF COLUMBIA -- 0.6%
2,200,000 District of Columbia (Societe
Generale LOC) 4.65%
7-01-00.................... 2,200,000
------------
FLORIDA -- 4.2%
4,000,000 Jacksonville Capital Project
(AMBAC/SunTrust;Bank of
America;Bank One) 4.65%
7-05-00.................... 4,000,000
3,000,000 Jacksonville Electric
Authority (Morgan Guaranty
LOC) 4.00% 7-12-00......... 3,000,000
3,000,000 Jacksonville Electric
Authority (Morgan Guaranty
LOC) 4.15% 8-08-00......... 3,000,000
1,000,000 Putnam County (NRUCFC) 4.35%
12-15-00................... 1,000,000
5,000,000 West Orange Health Care
District (SunTrust LOC)
4.60% 7-06-00.............. 5,000,000
------------
16,000,000
------------
GEORGIA -- 5.2%
5,000,000 Clayton County (Commerzbank
LOC) 4.70% 7-05-00......... 5,000,000
5,000,000 Municipal Electric Authority
of Georgia (ABN Amro LOC)
4.75% 7-05-00.............. 5,000,000
</TABLE>
See Notes to Financial Statements.
10
<PAGE> 11
FREEDOM TAX EXEMPT MONEY FUND
INVESTMENTS AS OF JUNE 30, 2000 -- (CONTINUED)
(UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT DESCRIPTION VALUE
------ ----------- -----
<S> <C> <C>
MUNICIPAL SECURITIES -- (CONTINUED)
GEORGIA -- (CONTINUED)
$ 5,000,000 Savannah Authority (Wachovia
LOC) 4.75% 7-05-00......... $ 5,000,000
5,000,000 Southern Georgia Hospital
Authority (AMBAC/Wachovia)
4.85% 7-05-00.............. 5,000,000
------------
20,000,000
------------
HAWAII -- 1.9%
3,625,000 Hawaii State (FGIC) 5.00%
10-01-00................... 3,632,929
3,500,000 Honolulu (Landesbank
Hessen-Thuringen LOC) 5.00%
7-05-00.................... 3,500,000
------------
7,132,929
------------
ILLINOIS -- 15.0%
3,000,000 Alton Health Facilities
Revenue Bonds (Escrowed in
U.S. Government Securities)
7.20% 2-15-01.............. 3,112,056
3,900,000 Chicago (Landesbank Hessen-
Thuringen LOC) 3.90%
12-07-00................... 3,900,000
1,000,000 Chicago (West Deutsche
Landesbank LOC) 4.00%
10-26-00................... 1,000,000
1,200,000 Chicago O'Hare International
Airport Authority (Societe
Generale LOC) 4.95%
7-05-00.................... 1,200,000
5,000,000 Elmhurst Health Commission
(Dexia LOC) 4.80%
7-06-00.................... 5,000,000
Illinois Development Finance
Authority
1,000,000 (ABN Amro LOC) 4.80%
7-05-00.................... 1,000,000
2,000,000 (Bank of America LOC) 4.70%
7-05-00.................... 2,000,000
5,300,000 (Northern Trust LOC) 4.80%
7-05-00.................... 5,300,000
Illinois Health Facilities
Authority
10,200,000 (AMBAC/FNB-Chicago) 5.00%
7-05-00.................... 10,200,000
5,400,000 (AMBAC/Harris Trust) 5.00%
7-05-00.................... 5,400,000
5,000,000 (FSA/ABN Amro) 4.85%
7-05-00.................... 5,000,000
5,600,000 Illinois Toll Highway
Authority (MBIA/Societe
Generale) 4.70% 7-05-00.... 5,600,000
9,000,000 Lisle Health Facilities
Authority (FNMA) 4.90%
7-05-00.................... 9,000,000
------------
57,712,056
------------
INDIANA -- 3.4%
5,700,000 Indiana HFFA (FNB-Chicago
LOC) 4.75% 7-05-00......... 5,700,000
6,300,000 Indiana Municipal Power
Authority (Toronto Dominion
LOC) 4.75% 7-05-00......... 6,300,000
1,000,000 Whiting EDA 4.10% 8-15-00.... 1,000,000
------------
13,000,000
------------
IOWA -- 2.1%
5,000,000 Iowa Finance Authority
(MBIA/Toronto Dominion)
4.95% 7-05-00.............. 5,000,000
3,200,000 Iowa School Cash Anticipation
Program (FSA) 4.75%
2-01-01.................... 3,212,632
------------
8,212,632
------------
</TABLE>
See Notes to Financial Statements.
11
<PAGE> 12
FREEDOM TAX EXEMPT MONEY FUND
INVESTMENTS AS OF JUNE 30, 2000 -- (CONTINUED)
(UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT DESCRIPTION VALUE
--------- ----------- -----
<S> <C> <C>
MUNICIPAL SECURITIES -- (CONTINUED)
KENTUCKY -- 2.6%
$ 2,110,000 Clark County PCR (NRUCFC)
4.15% 10-15-00............. $ 2,110,000
3,000,000 Kentucky Asset Liability
Commission 5.25% 6-27-01... 3,020,040
5,000,000 Kentucky ISTA 5.00% 6-29-01.. 5,028,400
------------
10,158,440
------------
LOUISIANA -- 4.0%
2,100,000 Louisiana PFA 4.60%
7-05-00.................... 2,100,000
11,405,000 Louisiana Offshore Terminal
Authority (Banc One LOC)
4.65% 7-05-00.............. 11,405,000
2,000,000 West Baton Rouge PCR 4.45%
7-14-00.................... 2,000,000
------------
15,505,000
------------
MAINE -- 1.0%
3,835,000 Maine HEFA (State Street Bank
LOC) 4.95% 7-05-00......... 3,835,000
------------
MARYLAND -- 2.1%
3,000,000 Maryland HEFA (FNB-Chicago
LOC) 4.70% 7-05-00......... 3,000,000
5,000,000 Montgomery County HCA
(MBIA/FNB-Chicago) 4.95%
7-05-00.................... 5,000,000
------------
8,000,000
------------
MASSACHUSETTS -- 0.6%
2,300,000 Massachusetts Bay
Transportation Authority
(Escrowed in U.S.
Government Securities)
7.65% 8-01-00.............. 2,352,607
------------
MICHIGAN -- 1.0%
995,000 Ingham Economic Development
Corp. (Banc One LOC) 4.80%
7-05-00.................... 995,000
3,000,000 Michigan Strategic Fund 4.00%
7-26-00.................... 3,000,000
------------
3,995,000
------------
MINNESOTA -- 0.2%
900,000 Duluth PCR (Wachovia LOC)
4.60% 7-06-00.............. 900,000
------------
MISSOURI -- 1.5%
5,850,000 Columbia (Insurance Reserve
Bonds) (Toronto Dominion
LOC) 4.75% 7-05-00......... 5,850,000
------------
NEVADA -- 1.8%
3,000,000 Clark County Airport Revenue
(Bayerische Landesbank LOC)
4.95% 7-05-00.............. 3,000,000
4,000,000 Las Vegas Valley Water
District (West Deutsche
Landesbank LOC) 3.95%
7-10-00.................... 4,000,000
------------
7,000,000
------------
NEW MEXICO -- 1.4%
5,300,000 Farmington PCR (Barclays Bank
LOC) 4.90% 7-05-00......... 5,300,000
------------
NORTH CAROLINA -- 4.2%
4,150,000 North Carolina Educational
Facilities (MBIA/Bank of
America) 4.80% 7-05-00..... 4,150,000
2,200,000 North Carolina Educational
Facilities (Nationsbank
LOC) 4.75% 7-05-00......... 2,200,000
5,000,000 North Carolina Educational
Facilities (Wachovia Bank
LOC) 4.75% 7-06-00......... 5,000,000
5,000,000 Wake County IFA (First Union
LOC) 4.75% 7-05-00......... 5,000,000
------------
16,350,000
------------
</TABLE>
See Notes to Financial Statements.
12
<PAGE> 13
FREEDOM TAX EXEMPT MONEY FUND
INVESTMENTS AS OF JUNE 30, 2000 -- (CONTINUED)
(UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT DESCRIPTION VALUE
--------- ----------- -----
<S> <C> <C>
MUNICIPAL SECURITIES -- (CONTINUED)
OHIO -- 3.1%
$ 3,000,000 Clinton County Hospital
Finance Program (Fifth
Third Bank LOC) 4.85%
7-05-00.................... $ 3,000,000
2,990,000 Franklin County Hospital
Revenue (Morgan Guaranty
LOC) 4.73% 7-06-00......... 2,990,000
4,000,000 Ohio Air Quality Development
Authority (AMBAC/Bank of
New York) 4.70% 7-05-00.... 4,000,000
1,800,000 Toledo Special Assessment
Revenue (Canadian Imperial
Bank of Commerce LOC) 4.70%
7-06-00.................... 1,800,000
------------
11,790,000
------------
OREGON -- 0.5%
2,000,000 Oregon Housing Authority
3.58% 8-17-00.............. 2,000,000
------------
PENNSYLVANIA -- 8.7%
10,710,000 Delaware Valley Finance
Authority (Credit Suisse
LOC) 4.75% 7-05-00......... 10,710,000
5,200,000 Delaware Valley RFA (Credit
Suisse LOC) 4.75%
7-05-00.................... 5,200,000
8,600,000 Emmaus GRA (Bayerische
Landesbank LOC) 4.90%
7-05-00.................... 8,600,000
5,000,000 Emmaus GRA (KBC LOC) 4.90%
7-05-00.................... 5,000,000
4,000,000 Montgomery County IDA (Banc
One LOC) 4.15% 8-28-00..... 4,000,000
------------
33,510,000
------------
RHODE ISLAND -- 0.4%
1,570,000 Rhode Island (MBIA) 5.00%
10-01-00................... 1,573,172
------------
SOUTH CAROLINA -- 0.7%
2,800,000 Florence County Hospital
Revenue (FGIC/First Union)
4.65% 7-06-00.............. 2,800,000
------------
TENNESSEE -- 3.3%
5,990,000 Clarksville PBA (Bank of
America LOC) 4.75%
7-06-00.................... 5,990,000
1,100,000 Hamilton County (Nationsbank
LOC) 4.75% 7-06-00......... 1,100,000
4,000,000 Montgomery PBA (Bank of
America LOC) 4.75%
7-06-00.................... 4,000,000
1,800,000 Nashville-Davidson Counties
HEFA (Nationsbank LOC)
4.75% 7-06-00.............. 1,800,000
------------
12,890,000
------------
TEXAS -- 10.9%
3,650,000 Austin County IDA (Banc One
LOC) 4.75% 7-05-00......... 3,650,000
2,115,000 Austin Utilities System
(Morgan Guaranty/Dexia/
State Street LOC's) 4.15%
8-18-00.................... 2,115,000
1,000,000 Board of Regents of the
University of Texas (PUF)
4.40% 8-03-00.............. 1,000,000
2,000,000 Brazos River Navigational
District 4.75% 7-13-00..... 2,000,000
Brownsville Utility District
(Toronto Dominion LOC)
1,500,000 4.50% 8-10-00................ 1,500,000
1,600,000 4.15% 8-18-00................ 1,600,000
Dallas Area Rapid Transit
District (West Deutsche
Landesbank/Bayerische
Landesbank LOC's)
2,000,000 4.10% 7-07-00................ 2,000,000
2,000,000 4.20% 7-14-00................ 2,000,000
</TABLE>
See Notes to Financial Statements.
13
<PAGE> 14
FREEDOM TAX EXEMPT MONEY FUND
INVESTMENTS AS OF JUNE 30, 2000 -- (CONTINUED)
(UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT DESCRIPTION VALUE
--------- ----------- -----
<S> <C> <C>
MUNICIPAL SECURITIES -- (CONTINUED)
TEXAS -- (CONTINUED)
$ 1,225,000 Garland ISD (Permanent School
Fund Guaranteed LOC) 6.50%
2-15-01.................... $ 1,241,998
3,300,000 Grapevine IDA (Bayerische
Landesbank LOC) 4.55%
7-01-00.................... 3,300,000
Gulf Coast Waste Disposal
Authority PCR
3,600,000 4.60% 7-05-00................ 3,600,000
3,000,000 4.00% 7-15-00................ 3,000,000
2,500,000 Northeast ISD (Permanent
School Fund Guaranteed)
6.50% 2-01-01.............. 2,531,972
1,000,000 Port Neches Grove ISD
(Permanent School Fund
Guaranteed) 7.00% 2-15-01.. 1,016,306
900,000 Richardson ISD (Permanent
School Fund Guaranteed/
United Bank of Switzerland)
4.80% 7-06-00.............. 900,000
3,500,000 Tarrant County (Escrowed in
U.S. Government Securities)
5.75% 3-01-01.............. 3,535,049
5,000,000 Texas PFA 4.20% 8-24-00...... 5,000,000
2,000,000 Texas State TRANS 4.50%
8-31-00.................... 2,002,577
------------
41,992,902
------------
VIRGINIA -- 1.2%
2,000,000 Harrisonburg Virginia
Redevelopment and Housing
Revenue Bonds (Banc One
LOC) 4.80% 7-06-00......... 2,000,000
2,570,000 Louisa County IDA
(Nationsbank LOC) 4.75%
7-06-00.................... 2,570,000
------------
4,570,000
------------
WASHINGTON -- 0.8%
3,100,000 Seattle Water System Revenue
Bonds (Bayerische
Landesbank LOC) 4.95%
7-05-00.................... 3,100,000
------------
WISCONSIN -- 1.0%
2,000,000 Kenosha Unified School
District 4.15% 10-06-00.... 2,002,041
2,000,000 Wisconsin Health and
Education Facilities (Bank
One LOC) 4.75% 7-05-00..... 2,000,000
------------
4,002,041
------------
TOTAL INVESTMENTS -- 99.8%................. 384,951,779(a)
Other Assets & Liabilities, Net -- 0.2%.... 652,085
------------
TOTAL NET ASSETS -- 100.00%................ $385,603,864
============
</TABLE>
See Notes to Financial Statements.
14
<PAGE> 15
FREEDOM TAX EXEMPT MONEY FUND
INVESTMENTS AS OF JUNE 30, 2000 -- (CONTINUED)
(UNAUDITED)
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
ISTA -- Interlocal School Transportation Authority
LOC -- Letter of Credit
NRUCFC -- National Rural Utilities Cooperative Finance Corp.
PCR -- Pollution Control Revenue
PFA -- Public Finance Authority
RFA -- Regional Finance Authority
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
PUF -- Permanent University Fund
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.
15
<PAGE> 16
FREEDOM MUTUAL FUND
FREEDOM GROUP OF TAX EXEMPT FUNDS
STATEMENTS OF ASSETS AND LIABILITIES
JUNE 30, 2000
(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........................... $2,729,525,566 $502,817,792 $384,951,779
Cash..................................................... 7,815,828 702,901 286,641
Receivable for Fund shares sold.......................... 33,794,254 7,639,268 7,465,937
Interest receivable...................................... 633,728 -- 2,183,361
Prepaid expenses......................................... 444,743 2,537 2,001
Other assets............................................. 65,871 18,473 21,495
-------------- ------------ ------------
TOTAL ASSETS............................................. 2,772,279,990 511,180,971 394,911,214
-------------- ------------ ------------
LIABILITIES
Payable for Fund shares redeemed......................... 2,117,050 273,047 392,187
Payable for investments purchased........................ -- -- 8,048,440
Dividends payable........................................ 6,634,539 1,213,188 622,375
Accrued expenses:
Investment adviser's fee............................. 1,046,398 206,948 163,214
Transfer agent and shareholder servicing fee......... 271,359 32,252 15,572
Trustees' fee........................................ 3,427 1,291 1,921
Other................................................ 302,440 48,236 63,641
-------------- ------------ ------------
TOTAL LIABILITIES........................................ 10,375,213 1,774,962 9,307,350
-------------- ------------ ------------
NET ASSETS.................................................. $2,761,904,777 $509,406,009 $385,603,864
============== ============ ============
NET ASSETS CONSIST OF:
Capital paid in.......................................... $2,762,012,136 $509,438,256 $385,603,864
Accumulated net realized gain (loss)..................... (107,359) (32,247) --
-------------- ------------ ------------
$2,761,904,777 $509,406,009 $385,603,864
============== ============ ============
SHARES ISSUED AND OUTSTANDING
(UNLIMITED SHARES AUTHORIZED).......................... 2,762,052,540 509,402,703 385,586,495
-------------- ------------ ------------
NET ASSET VALUE PER SHARE................................ $ 1.00 $ 1.00 $ 1.00
============== ============ ============
</TABLE>
See Notes to Financial Statements.
16
<PAGE> 17
FREEDOM MUTUAL FUND
FREEDOM GROUP OF TAX EXEMPT FUNDS
STATEMENTS OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 2000
(UNAUDITED)
<TABLE>
<CAPTION>
FREEDOM FREEDOM FREEDOM
CASH GOVERNMENT TAX EXEMPT
MANAGEMENT SECURITIES MONEY
FUND FUND FUND
----------- ----------- ----------
<S> <C> <C> <C>
INTEREST INCOME............................................. $85,367,748 $15,763,961 $8,009,350
----------- ----------- ----------
EXPENSES
Investment adviser's fee................................. 6,357,780 1,305,702 1,014,292
Transfer agent & shareholder services.................... 1,825,400 148,520 91,000
Custodian................................................ 199,220 49,820 43,963
Compensation of Trustees................................. 30,030 7,740 6,150
Audit.................................................... 22,700 6,370 19,600
Legal.................................................... 45,900 9,380 18,700
Printing, postage and stationery......................... 106,210 11,390 10,680
Membership dues.......................................... 26,126 4,747 3,751
Registration expense..................................... 171,000 28,330 22,520
Insurance expense........................................ 96,875 4,128 3,190
Other.................................................... 7,436 910 911
----------- ----------- ----------
TOTAL EXPENSES........................................... 8,888,677 1,577,037 1,234,757
----------- ----------- ----------
LESS EXPENSE REDUCTIONS.................................. -- -- (20,603)
----------- ----------- ----------
NET EXPENSES............................................. 8,888,677 1,577,037 1,214,154
----------- ----------- ----------
NET INVESTMENT INCOME....................................... 76,479,071 14,186,924 6,795,196
----------- ----------- ----------
NET REALIZED LOSS ON INVESTMENTS............................ (1,392) (3,128) --
----------- ----------- ----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........ $76,477,679 $14,183,796 $6,795,196
=========== =========== ==========
</TABLE>
See Notes to Financial Statements.
17
<PAGE> 18
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, DECEMBER 31, JUNE 30, DECEMBER 31,
2000* 1999 2000* 1999
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
INCREASE IN NET ASSETS FROM:
OPERATIONS:
Net investment income................... $ 76,479,071 $ 112,883,042 $ 14,186,924 $ 20,185,969
Net realized gain (loss) from
investments............................ (1,392) (1,978) (3,128) 1,236
--------------- --------------- --------------- ---------------
Net increase in net assets resulting
from operations........................ 76,477,679 112,881,064 14,183,796 20,187,205
DIVIDENDS TO SHAREHOLDERS.................. (76,479,071) (112,883,042) (14,186,924) (20,185,969)
--------------- --------------- --------------- ---------------
(1,392) (1,978) (3,128) 1,236
--------------- --------------- --------------- ---------------
CAPITAL SHARE TRANSACTIONS:
(At Net Asset Value of $1 per share)
Proceeds from sale of shares............ 6,152,952,479 9,704,052,388 1,059,378,749 1,479,913,398
Net asset value of shares issued to
shareholders in reinvestment of
dividends.............................. 68,281,117 109,959,106 12,738,583 19,803,403
Cost of shares redeemed................. (6,110,749,480) (9,492,882,406) (1,044,516,035) (1,461,427,162)
--------------- --------------- --------------- ---------------
Net increase from capital share
transactions......................... 110,484,116 321,129,088 27,601,297 38,289,639
--------------- --------------- --------------- ---------------
Net increase in net assets.............. 110,482,724 321,127,110 27,598,169 38,290,875
NET ASSETS:
Beginning of period..................... 2,651,422,053 2,330,294,943 481,807,840 443,516,965
--------------- --------------- --------------- ---------------
End of period........................... $ 2,761,904,777 $ 2,651,422,053 $ 509,406,009 $ 481,807,840
=============== =============== =============== ===============
<CAPTION>
FREEDOM
TAX EXEMPT MONEY FUND
-------------------------------
SIX MONTHS
ENDED YEAR ENDED
JUNE 30, DECEMBER 31,
2000* 1999
------------- ---------------
<S> <C> <C>
INCREASE IN NET ASSETS FROM:
OPERATIONS:
Net investment income................... $ 6,795,196 $ 9,541,574
Net realized gain (loss) from
investments............................ -- --
------------- ---------------
Net increase in net assets resulting
from operations........................ 6,795,196 9,541,574
DIVIDENDS TO SHAREHOLDERS.................. (6,795,196) (9,541,574)
------------- ---------------
-- --
------------- ---------------
CAPITAL SHARE TRANSACTIONS:
(At Net Asset Value of $1 per share)
Proceeds from sale of shares............ 953,941,995 1,551,428,470
Net asset value of shares issued to
shareholders in reinvestment of
dividends.............................. 6,013,779 9,220,569
Cost of shares redeemed................. (941,427,313) (1,548,966,650)
------------- ---------------
Net increase from capital share
transactions......................... 18,528,461 11,682,389
------------- ---------------
Net increase in net assets.............. 18,528,461 11,682,389
NET ASSETS:
Beginning of period..................... 367,075,403 355,393,014
------------- ---------------
End of period........................... $ 385,603,864 $ 367,075,403
============= ===============
</TABLE>
---------------
*Unaudited.
See Notes to Financial Statements.
18
<PAGE> 19
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 accounting principles generally accepted in the United States.
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.
19
<PAGE> 20
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 $20,603 of custodian fees have been reduced by balance credits
applied during the six months ended June 30, 2000. 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, 1999, the Freedom Cash Management Fund had $105,967 of
capital loss carryforwards of which $95,472, $8,517, and $1,978 expire on
December 31, 2002, December 31, 2006 and December 31, 2007, respectively. As of
December 31, 1999, the Freedom Government Securities Fund had $29,119 of capital
loss carryforwards of which $18,859 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 Tucker Anthony Sutro (formerly Freedom Securities
Corporation).
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
20
<PAGE> 21
FREEDOM MUTUAL FUND
FREEDOM GROUP OF TAX EXEMPT FUNDS
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
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 transfer agent, Freedom Services Corp. received reimbursements from
the Funds for maintaining and servicing shareholder accounts for the six months
ended June 30, 2000 as follows:
<TABLE>
<CAPTION>
CASH GOVERNMENT TAX
MANAGEMENT SECURITIES EXEMPT MONEY
FUND FUND FUND
---------- ---------- ------------
<S> <C> <C>
$1,825,400 $148,520 $91,000
========== ======== =======
</TABLE>
NOTE 3. Purchases and sales (including maturities) of investments
(excluding repurchase agreements) for the six months ended June 30, 2000 were as
follows:
<TABLE>
<CAPTION>
CASH GOVERNMENT TAX
MANAGEMENT SECURITIES EXEMPT MONEY
FUND FUND FUND
-------------- -------------- ------------
<S> <C> <C> <C>
Purchases
U.S. Government........................... -- $1,770,010,471 --
Other..................................... $8,204,068,632 -- $465,014,316
Sales
U.S. Government........................... -- $1,719,220,213 --
Other..................................... $7,916,574,595 -- $446,289,175
</TABLE>
21
<PAGE> 22
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 ASSET DIVIDENDS NET ASSET NET ASSETS EXPENSES
VALUE NET FROM NET VALUE END OF TO AVERAGE
PERIOD BEGINNING INVESTMENT INVESTMENT END OF TOTAL PERIOD DAILY
ENDED OF PERIOD INCOME INCOME PERIOD RETURN (THOUSANDS) NET ASSETS
------------------------------ --------- ---------- ---------- --------- -------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
CASH MANAGEMENT FUND
June 30, 2000++............... $1.00 $0.0275 $(0.0275) $1.00 2.78% $2,761,905 0.64%+
December 31, 1999............. 1.00 0.0458 (0.0458) 1.00 4.67 2,651,422 0.64
December 31, 1998............. 1.00 0.0491 (0.0491) 1.00 5.03 2,330,295 0.65
December 31, 1997............. 1.00 0.0492 (0.0492) 1.00 5.03 1,746,837 0.69
December 31, 1996............. 1.00 0.0476 (0.0476) 1.00 4.86 1,637,286 0.71
December 31, 1995............. 1.00 0.0526 (0.0526) 1.00 5.38 1,346,625 0.73
GOVERNMENT SECURITIES FUND
June 30, 2000++............... $1.00 $0.0269 $(0.0269) $1.00 2.71% $509,406 0.60%+
December 31, 1999............. 1.00 0.0446 (0.0446) 1.00 4.54 481,808 0.61
December 31, 1998............. 1.00 0.0481 (0.0481) 1.00 4.93 443,517 0.61
December 31, 1997............. 1.00 0.0485 (0.0485) 1.00 4.96 370,358 0.65
December 31, 1996............. 1.00 0.0460 (0.0460) 1.00 4.69 309,938 0.65
December 31, 1995............. 1.00 0.0500 (0.0500) 1.00 5.10 317,400 0.65
TAX EXEMPT MONEY FUND
June 30, 2000++............... $1.00 $0.0167 $(0.0167) $1.00 1.68%* $385,604 0.61%(a)+
December 31, 1999............. 1.00 0.0265 (0.0265) 1.00 2.68* 367,075 0.63(a)
December 31, 1998............. 1.00 0.0283 (0.0283) 1.00 2.88* 355,393 0.63(a)
December 31, 1997............. 1.00 0.0300 (0.0300) 1.00 3.04* 289,904 0.66(a)
December 31, 1996............. 1.00 0.0283 (0.0283) 1.00 2.86 263,089 0.63
December 31, 1995............. 1.00 0.0319 (0.0319) 1.00 3.23 274,076 0.64
<CAPTION>
RATIO OF NET
INVESTMENT
INCOME TO
PERIOD AVERAGE DAILY
ENDED NET ASSETS
------------------------------ -------------
<S> <C>
CASH MANAGEMENT FUND
June 30, 2000++............... 5.51%+
December 31, 1999............. 4.58
December 31, 1998............. 4.91
December 31, 1997............. 4.92
December 31, 1996............. 4.76
December 31, 1995............. 5.26
GOVERNMENT SECURITIES FUND
June 30, 2000++............... 5.39%+
December 31, 1999............. 4.46
December 31, 1998............. 4.81
December 31, 1997............. 4.86
December 31, 1996............. 4.60
December 31, 1995............. 5.00
TAX EXEMPT MONEY FUND
June 30, 2000++............... 3.33%(b)+
December 31, 1999............. 2.64(b)
December 31, 1998............. 2.83(b)
December 31, 1997............. 2.98(b)
December 31, 1996............. 2.82
December 31, 1995............. 3.19
</TABLE>
---------------
+ Annualized.
++ Unaudited.
(a) Ratio of expenses to average daily net assets after expense credits was
0.60%, 0.62%, 0.62% and 0.64% for the six months ended June 30, 2000 and for
the years ended December 31, 1999, December 31, 1998 and December 31, 1997,
respectively.
(b) Ratio of net investment income to average daily net assets after expense
credits was 3.34%, 2.65%, 2.83% and 3.00% for the six months ended June 30,
2000 and for the years ended December 31, 1999, December 31, 1998 and
December 31, 1997, respectively.
* Total return would have been lower without credits allowed by the custodian.
22
<PAGE> 23
This page intentionally left blank.
23
<PAGE> 24
NO SALES OR REDEMPTION CHARGES
DISTRIBUTORS
Tucker Anthony Incorporated
One Beacon Street
Boston, Massachusetts 02108
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.
F01SA 0600
FREEDOM GROUP
OF MONEY FUNDS
[FREE LOGO]
Freedom
Cash Management
Fund
*
Freedom
Government
Securities Fund
*
Freedom
Tax Exempt
Money Fund
------------------
SEMI-ANNUAL REPORT
JUNE 30, 2000
------------------
