January 1, 1998
Tax-Free USA Fund
Tax-Free USA Intermediate Fund
Tax-Free Insured Fund
A Class/B Class/C Class
Supplement to Prospectus dated October 30, 1997
The following replaces information under Summary of
Expenses for Tax-Free USA Intermediate Fund:
Tax-Free
Annual Operating Expenses USA Intermediate Fund
(as a percentage of Class A Class B Class C
average daily net assets) Shares Shares Shares
Management Fees
(after voluntary
waivers) . . . . . . . . 0.03%* 0.03%* 0.03%*
12b-1 Plan Expenses
(including
service fees). . . . . . 0.15%+ 1.00%+ 1.00%+
Other Operating Expenses . . . 0.52%* 0.52%* 0.52%*
------- ------- ------
Total Operating Expenses
(after voluntary
waivers). . . . . . . . 0.70%* 1.55%* 1.55%*
==== ==== ====
* Beginning January 1, 1998, the Manager has elected
voluntarily to waive that portion, if any, of the annual
management fees payable by the Tax-Free USA Intermediate
Fund and to pay certain of the Fund's expenses to the
extent necessary to ensure that the Total Operating
Expenses of the Fund do not exceed 0.55% (excluding the
12b-1 plan expenses). This waiver and expense limitation
will extend through June 30, 1998. Effective the end of
the Fund's last fiscal year, August 30, 1997 and through
December 31, 1997, commitments of waiver and payment by
the Manager that were different from that currently in
effect for the Fund were in place. The expense
information previously appearing in the Summary of
Expenses table with respect to the Fund has been restated
to reflect the current fees. See the information provided
under Management of the Funds in the Prospectus for a
complete history of the commitments of waiver and payment
by the Manager. If the voluntary expense waivers were not
in effect, the Total Operating Expenses of Tax-Free USA
Intermediate Fund A Class, Tax-Free USA Intermediate Fund
B Class and the Tax-Free USA Intermediate Fund C Class, as
a percentage of average daily net assets, would have been
1.14%, 1.99% and 1.99%, respectively, reflecting
Management Fees of 0.47% for the fiscal year ended August
31, 1997.
+ Class A Shares, Class B Shares and Class C Shares are
subject to separate 12b-1 Plans. Long-term shareholders
of the Classes may pay more than the economic equivalent
of the maximum front-end sales charges permitted by rules
of the National Association of Securities Dealers, Inc.
See Distribution (12b-1) and Service under Management of
the Funds in the Prospectus.
The following example illustrates the expenses that an
investor would pay on a $1,000 investment over various time
periods, assuming (1) a 5% annual rate of return, (2)
redemption and no redemption at the end of each time period and
(3) for Class B Shares and Class C Shares, payment of a CDSC at
the time of redemption, if applicable. The following example
assumes the voluntary waiver of the management fee by the
Manager as discussed above.
Tax-Free USA Intermediate Fund
<TABLE>
<CAPTION>
Assuming Redemption Assuming No Redemption
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 year 3 years 5 years 10 years 1 year 3 years 5 years 10 years
Class A
Shares $34(1) $49 $65 $112 $34 $49 $65 $112
Class B
Shares $36 $59 $84(2) $131(2) $16 $49 $84(2) $131(2)
Class C
Shares $26 $49 $84 $185 $16 $49 $84 $185
</TABLE>
(1) Generally, the Fund does not assess a redemption charge
upon redemption of Class A Shares. Under certain
circumstances, however, a Limited CDSC or other CDSC, which has
not been reflected in this calculation, may be imposed on
certain redemptions within 12 months of purchase. See
Contingent Deferred Sales Charge for Certain Purchases of Class
A Shares Made at Net Asset Value under Redemption and Exchange
in the Prospectus.
(2) At the end of approximately five years after purchase,
Tax-Free USA Intermediate Fund B Class shares will be
automatically converted into Tax-Free USA Intermediate Fund A
Class shares. The example above assumes conversion of Class B
Shares at the end of the fifth year. However, the conversion
may occur as late as three months after the fifth anniversary
of purchase, during which time the higher 12b-1 Plan fees
payable by Class B Shares will continue to be assessed.
Information for the sixth through tenth years reflects expenses
of the Class A Shares. See Automatic Conversion of Class B
Shares under Classes of Shares in the Prospectus for a
description of the automatic conversion feature.
The following supplements the section of the Prospectus
entitled Management of the Funds:
Beginning January 1, 1998, the Manager has elected voluntarily
to waive that portion, if any, of the annual management fees
payable by the Tax-Free USA Intermediate Fund and to pay
certain of the Fund's expenses to the extent necessary to
ensure that the Total Operating Expenses of the Fund do not
exceed 0.55% (excluding the 12b-1 plan expenses). This waiver
and expense limitation will extend through June 30, 1998.
