<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended MARCH 31, 1996
-------------------------------------------------
OR
[ ] TRANSACTION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from ___________________ to _____________________
Commission file number 33-95448
--------------------------
.........................MCD FREEDOM TAX CREDIT FUND L.P........................
(Exact name of registrant as specified in its charter)
............DELAWARE................... ..........34-1806075...............
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
MCDONALD INVESTMENT CENTER
..800 SUPERIOR AVENUE, CLEVELAND, OHIO.. ................44114.............
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code ...(216) 443-2300............
Securities registered pursuant to Section 12(b) of the Act:
<TABLE>
<CAPTION>
Name of each exchange on
Title of each class which registered
------------------- ------------------------
<S> <C>
.............NONE...................... ..............NONE.................
....................................... ...................................
</TABLE>
Securities registered pursuant to Section 12(g) of the Act:
(Title of Class)
......................................NONE......................................
(Title of Class)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes ..X... No ......
Exhibit Index on Page 23 of 24
Page 1 of 24
<PAGE> 2
MCD FREEDOM TAX CREDIT FUND L.P.
FORM 10-K - 1996
CONTENTS AND CROSS REFERENCE INDEX
<TABLE>
<CAPTION>
PART ITEM FORM 10-K
NO. NO. DESCRIPTION PAGE NO.
- --- --- ----------- ----------
<S> <C> <C> <C>
I 1 Business 3
2 Properties 3
3 Legal Proceedings 4
4 Submission of Matters to a Vote of 4
Security Holders
II 5 Market for Registrant's 4
Equity and Related Partner Matters
6 Selected Financial Data 4
7 Management's Discussion and Analysis 4
of Financial Condition and Results of Operations
8 Financial Statements and Supplementary Data 5
9 Changes in and Disagreements with Accountants 5
on Accounting and Financial Disclosure
III 10 Directors and Executive Officers of 15
the Registrant
11 Executive Compensation 17
12 Security Ownership of Certain Beneficial 22
Owners and Management
13 Certain Relationships and Related Party 22
Transactions
IV 14 Exhibits, Financial Statement Schedules, 23
and Reports on Form 8-K
Signatures 24
</TABLE>
Page 2 of 24
<PAGE> 3
PART I
------
ITEM 1. BUSINESS
- ----------------
MCD Freedom Tax Credit Fund L.P. is a Delaware limited partnership formed on
July 13, 1995 (the "Partnership"), for the purpose of investing in other
limited partnerships or limited liability companies (each, an "Operating
Partnership"), each of which will generate low-income housing tax credits by
owning and operating an apartment complex or complexes intended for occupancy
by individuals and families of low or moderate income (each, a "Tax Credit
Property").
The Partnership's primary objectives are to generate federal income tax credits
allowed with respect to low-income housing developments pursuant to Section 42
of the Internal Revenue Code of 1986, as amended, preserve and protect the
Partnership's original capital, participate in any capital appreciation in the
value of Tax Credit Properties and allocate passive losses to investors. The
achievement of these factors will depend on many factors, including the ability
of MCD Freedom Advisers, Inc. (the "General Partner") to select suitable
investments on a timely basis, the timely completion and successful management
of such investments and future economic conditions in the United States.
Consequently, there can be no assurance that these objectives will be achieved.
On January 31, 1996, a registration statement on Form S-11 for an offering of a
minimum of 2,000 units of limited partnership interest ("Units") and a maximum
of 20,000 Units at $1,000 per Unit became effective with the United States
Securities and Exchange Commission (File No. 33-95448). McDonald & Company
Securities, Inc., an affiliate of the General Partner, is acting as the selling
agent for the offering (the "Selling Agent"). As of July 5, 1996,
subscriptions for 707 Units have been received by the Selling Agent. All such
subscriptions and the proceeds represented thereby are being held in escrow
with Star Bank, N.A., Cleveland, Ohio (the "Escrow Agent"), pursuant to the
terms of an Escrow Agreement between the Partnership and the Escrow Agent.
Because the minimum number of Units has not yet been sold, no money has been
released from escrow. Consequently, no Units have actually been sold.
The Partnership itself has no executive officers as employees. The General
Partner, which has responsibility for the management of the Partnership, has
assigned certain individuals to devote as much time to the operations of the
Partnership as deemed necessary. All these individuals serve the Partnership
on a part-time basis.
ITEM 2. PROPERTIES
- -------------------
Because the Partnership has not sold any Units the Partnership has neither
acquired any interests in any Operating Partnerships nor entered into any
negotiations with respect to any such acquisitions.
Page 3 of 24
<PAGE> 4
ITEM 3. LEGAL PROCEEDINGS
- -------------------------
The Partnership is not a party to any material pending legal proceedings.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
- ------------------------------------------------------------
None.
PART II
-------
ITEM 5. MARKET FOR REGISTRANT'S EQUITY AND RELATED PARTNER MATTERS
- ------------------------------------------------------------------
The Partnership has only 1 limited partner, the original limited partner. The
original limited partner did not purchase its interest in the Partnership in
the offering. It is not anticipated that the Units, when sold, will be
traded on any public market.
<TABLE>
<CAPTION>
ITEM 6. SELECTED FINANCIAL DATA*
- ---------------------------------
AS OF 3/31/96
-------------
<S> <C>
Total Assets $479,183
Total Liabilities $468,983
Total Equity $ 10,200
<FN>
* As of March 31, 1996, the Partnership had not conducted any operations.
</TABLE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
- ------------------------------------------------------------------------
RESULTS OF OPERATIONS
- ---------------------
Liquidity, Capital Resources and Results of Operations
- ------------------------------------------------------
As of March 31, 1996, the Partnership had not conducted any operations. The
principal source of the Partnership's liquidity will be derived from the net
proceeds of the offering. Once the Partnership has received the net proceeds
of the offering and invested such net proceeds in Operating Partnerships, it is
anticipated that the Partnership's principal source of liquidity will be
distributions its receives, if any, from the Operating Partnerships.
The proceeds of the offering, when received by the Partnership, will represent
virtually all of the Partnership's capital. Once received, the proceeds of the
offering, less expenses and fees, will be invested in Operating Partnerships.
If the minimum number of Units is not sold, the Partnership will not be able to
conduct
Page 4 of 24
<PAGE> 5
the business for which it was formed or meet its stated investment objectives
and all money previously received from investors will be returned to the
investors.
As of March 31, 1996, the Partnership had not conducted any operations nor made
any distributions to its partners.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
- ----------------------------------------------------
See pages F-1 to F-9.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
- ------------------------------------------------------------------------
FINANCIAL DISCLOSURE
- --------------------
None.
Page 5 of 24
<PAGE> 6
MCD FREEDOM TAX CREDIT FUND L.P. (IN ORGANIZATION)
MARCH 31, 1996 FINANCIAL STATEMENTS
F-1
Page 6 of 24
<PAGE> 7
MCD FREEDOM TAX CREDIT FUND L.P. (IN ORGANIZATION)
CONTENTS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
INDEPENDENT AUDITORS' REPORT F-3
FINANCIAL STATEMENTS
Balance sheet F-4
Statement of operations F-5
Statement of cash flows F-6
Notes to financial statements F-7
</TABLE>
F-2
Page 7 of 24
<PAGE> 8
Independent Auditors' Report
----------------------------
To the Partners
MCD Freedom Tax Credit Fund L.P. (in Organization)
Cleveland, Ohio
We have audited the accompanying balance sheet of MCD Freedom Tax Credit
Fund L.P. (in Organization) as of March 31, 1996, and the related statements of
operations and cash flows for the period July 13, 1995, the date of formation,
to March 31, 1996. These financial statements are the responsibility of the
Partnership's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of MCD Freedom Tax Credit Fund
L.P. (in Organization) as of March 31, 1996, and the results of its operations
and its cash flows for the period July 13, 1995 to March 31, 1996 in conformity
with generally accepted accounting principles.
HAUSSER + TAYLOR
Cleveland, Ohio
July 5, 1996
F-3
Page 8 of 24
<PAGE> 9
MCD FREEDOM TAX CREDIT FUND L.P. (IN ORGANIZATION)
BALANCE SHEET
March 31, 1996
--------------
<TABLE>
<S> <C> <C>
ASSETS
------
CURRENT ASSETS
Cash $ 623
Escrowed (restricted) cash - investors' subscription proceeds 150,000
Deferred costs 328,560
--------
Total assets $479,183
========
LIABILITIES AND PARTNERS' EQUITY
--------------------------------
CURRENT LIABILITIES
Accounts payable:
Trade $ 282,721
General partner and affiliates 36,262 $318,983
Investors' subscription proceeds held in escrow ----------- 150,000
--------
Total liabilities 468,983
PARTNERS' EQUITY
Limited partner 200
General partner 10,000
--------
Total partners' equity 10,200
--------
Total liabilities and partners' equity $479,183
========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-4
Page 9 of 24
<PAGE> 10
MCD FREEDOM TAX CREDIT FUND L.P. (IN ORGANIZATION)
STATEMENT OF OPERATIONS
Period July 13, 1995 to March 31, 1996
--------------------------------------
<TABLE>
<S> <C>
REVENUE $ -
EXPENSE -
-------
NET INCOME $ -
=======
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-5
Page 10 of 24
<PAGE> 11
MCD FREEDOM TAX CREDIT FUND L.P. (IN ORGANIZATION)
STATEMENT OF CASH FLOWS
Period July 13, 1995 to March 31, 1996
--------------------------------------
<TABLE>
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ --
FINANCING ACTIVITIES
Capital contributions 10,200
Deferred costs (9,577)
--------
NET INCREASE IN CASH 623
CASH - BEGINNING --
--------
CASH - ENDING $ 623
========
</TABLE>
Supplemental Schedule of noncash investing, financing and other information:
The Partnership incurred accounts payable of $318,983 for deferred costs
relating to the offering of the Partnership's Units. See notes to financial
statements for information relating to the offering.
The accompanying notes are an integral part of these financial statements.
F-6
Page 11 of 24
<PAGE> 12
MCD FREEDOM TAX CREDIT FUND L.P. (IN ORGANIZATION)
NOTES TO FINANCIAL STATEMENTS
Organization and Principal Purpose
----------------------------------
MCD Freedom Tax Credit Fund L.P., a Delaware limited partnership
(the "Partnership") was formed on July 13, 1995 to invest in
other limited partnerships or limited liability companies
(collectively, the "Operating Partnerships"), each of which will
generate low-income housing tax credits by owning and operating
an apartment complex or complexes intended for occupancy by
individuals and families of low or moderate income (a "Tax
Credit Property"). The Partnership's principal business is to
invest in Operating Partnerships, each of which will own and
operate a Tax Credit Property, in order to:
- Provide tax benefits in the form of Federal Housing Tax
Credits which investors may use to reduce their federal
income tax liability.
- Preserve, protect and enhance the Partnership's capital.
- Maximize the value of the Partnership's assets in
contemplation of the eventual sale of such assets.
Concentration of Credit Risk
----------------------------
Financial instruments which potentially subject the Partnership
to concentrations of credit risk consist principally of
temporary cash investments. The Partnership places its temporary
cash and other investments with high credit quality financial
institutions which balances may exceed federally and privately
insured amounts at times.
Deferred Costs
--------------
Deferred costs consist principally of syndication (offering)
costs that will be charged against the gross proceeds of the
offering (capital) at closing.
General Partner
---------------
MCD Freedom Advisers, Inc., a newly formed Ohio Corporation, is
the General Partner of the Partnership and as such will serve as
the intermediary for substantially all Partnership transactions.
The General Partner will manage the business of the Partnership,
including investment and management of the Partnership's assets.
The General Partner, and/or its affiliates, will receive
substantial compensation and fees from the Partnership and/or
the operating partnerships in connection with the offering of
the Partnership's units and the operations of the Partnership.
F-7
Page 12 of 24
<PAGE> 13
MCD FREEDOM TAX CREDIT FUND L.P. (IN ORGANIZATION)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
Offering/The Units
------------------
On January 31, 1996, a registration statement on Form S-11 for
an offering of a minimum of 2,000 units of limited partnership
interest ("Units") and a maximum of 20,000 Units at $1,000 per
Unit became effective with the United States Securities and
Exchange Commission. The offering expires on January 31, 1997.
McDonald & Company Securities, Inc., an affiliate of the General
Partner, is acting as the selling agent for the offering (the
"Selling Agent"). As of March 31, 1996, subscriptions for 150
Units have been received by the Selling Agent. All such
subscriptions and the $150,000 proceeds represented thereby are
being held in escrow with Star Bank, N.A., Cleveland, Ohio (the
"Escrow Agent"), pursuant to the terms of an Escrow Agreement
between the Partnership and the Escrow Agent. Because the
minimum number of Units has not yet been sold, no money has been
released from escrow. Consequently, no Units have actually been
sold. The $150,000 proceeds is included on the balance sheet as
an asset under the caption "Escrowed (restricted) cash -
investors' subscription proceeds" and as a liability under the
caption "Investors' subscription proceeds held in escrow".
Subsequent to March 31, 1996 (and as of July 5, 1996) the
Partnership received subscriptions for an additional 557 Units
representing $557,000 of subscription proceeds.
The net proceeds of the sale of Units will be contributed by the
Partnership to Operating Partnerships which, in turn, will
develop or renovate affordable multi-family housing projects for
persons of low or moderate income. Investors will be entitled to
all the rights and economic benefits of a limited partner of the
Partnership, including the rights to a percentage of the
Partnership's income, gain, credits, losses, deductions and
distributions. No holder of Units ("Unit Holders") will be
personally liable for the debts, liabilities, contracts or other
obligations of the Partnership unless the Unit Holder is deemed
to have taken part in the control or management of the
Partnership. The Units are not transferable without the consent
of the General Partner, which may be granted or withheld in the
sole discretion of the General Partner. In no event will more
than 5% of the Units be permitted to be transferred in any
12-month period.
Investments in the Partnership involves certain risks.
Such risks include the following:
- Risks associated with the development, ownership and
operation of real property.
- The Partnership has not identified any of the Operating
Partnerships in which it will invest. Consequently,
investors will not have an opportunity to evaluate for
themselves the Operating Partnerships in which the
Partnership will invest.
- There are restrictions and limits on the transferability
of Units and it is unlikely that there will be a market
for the Units.
- The operation of the Partnership involves transactions
between the Partnership and the General Partner and its
Affiliates which may involve conflicts of interest.
F-8
Page 13 of 24
<PAGE> 14
MCD FREEDOM TAX CREDIT FUND L.P. (IN ORGANIZATION)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
Sharing Arrangements-Profits, Credits, Losses, Cash Available for
-----------------------------------------------------------------
Distribution and Residuals
--------------------------
The Partnership will allocate or distribute, as applicable, to
Unit Holders:
(a) 99% of its Profits, Credits and Losses from normal
operations; and
(b) 99% of its Cash Available for Distribution (the difference
between the Partnership's revenues and its expenses), if
any, from normal operations.
Of such items, 1% of each shall be allocated or distributed, as
applicable, by the Partnership to the General Partner.
In the event of a capital transaction related to the
Partnership (the sale or refinancing of a Tax Credit Property
or the sale of the Partnership's interest in an Operating
Partnership), the Partnership will distribute 75% of the
proceeds to the investors and 25% of the proceeds to the
General Partner after the investors have received an amount
equal to their original Capital Contributions, reduced by any
proceeds from capital transactions previously distributed to
the investors.
F-9
Page 14 of 24
<PAGE> 15
PART III
--------
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
- ------------------------------------------------------------
(A) AND (B) IDENTIFICATION OF DIRECTORS AND EXECUTIVE OFFICERS
--------------------------------------------------------------
The Partnership, as an entity, does not have any directors or
officers. The General Partner is MCD Freedom Advisers, Inc. (located at c/o
McDonald & Company Securities, Inc., McDonald Investment Center, 800 Superior
Avenue, Cleveland, Ohio 44114), an Ohio corporation formed for the purpose of
becoming the general partner of the Partnership. The General Partner is a
wholly owned subsidiary of McDonald & Company Investments, Inc., an affiliate
of the Selling Agent. The executive officers/directors of the General Partner
as of March 31, 1996, were as follows: Thomas M. O'Donnell
(Chairman/Director), Richard R. Cundiff, III (President), Thomas C. Rini
(Executive Vice President), Jack E. Griffiths (Chief Financial Officer),
William B. Summers (Director), Patricia J. Jamieson (Treasurer/Director), Henry
Kerr (Secretary), Gary Zdolshek (Vice President) and George Luburich, II (Vice
President). Each of the executive officers and directors named above has
served as an officer and/or director, as the case may be, of the General
Partner since its incorporation on September 13, 1995.
(C) IDENTIFICATION OF CERTAIN SIGNIFICANT EMPLOYEES
---------------------------------------------------
Not applicable
(D) FAMILY RELATIONSHIPS
------------------------
Not applicable
(E) BUSINESS EXPERIENCE
-----------------------
Mr. O'Donnell, age 58, has been Chairman of the Board of Directors
of McDonald & Company Securities, Inc. since 1989 and served as its Chief
Executive Officer from 1989 to 1993. Mr. O'Donnell joined McDonald & Company
in 1965 and became a partner in 1968. He worked in the corporate finance and
special products area of the firm until July 1984 at which time he was elected
President and Chief Operating Officer of the firm. In addition, Mr. O'Donnell
has been an active member of the Regional Firms Advisory Committee of the Board
of Directors of the New York Stock Exchange since 1986. He has also served as
Chairman of the Board of Directors of the Securities Industry Association since
1987.
Mr. Cundiff, age 36, joined McDonald & Company in 1982. Since then
he has been actively involved in the firm's Real Estate and Oil and Gas
investment banking practice. Mr. Cundiff has participated in the development,
structuring and financing of all facets of real estate. Since the enactment of
the 1986 Tax Act,
Page 15 of 24
<PAGE> 16
Mr. Cundiff has led the firm's low income housing tax credit practice. Mr.
Cundiff has participated in the structuring, financing and development of over
6,000 affordable housing units for McDonald & Company's corporate and retail
clientele. Mr. Cundiff is President of the General Partner, the Managing
Director of the Structured & Real Estate Finance group of the Selling Agent,
the President of MCD Property Advisors, Inc., a Vice President of MCD Real
Estate, Inc. and MCD Oil & Gas and is a member of the acquisition committee of
the Partnership (the "Acquisition Committee").
Mr. Rini, age 39, joined McDonald & Company in 1991. Mr. Rini is
Executive Vice President of the General Partner, a Senior Vice President of the
Selling Agent and a member of the Acquisition Committee. Mr. Rini has
extensive financial experience and real estate experience, is a certified
public accountant, has supervised construction of single family homes and has
completed over $100,000,000 of institutional investment property sales.
Mr. Griffiths, age 35, joined McDonald & Company in 1994. As Chief
Financial Officer of the General Partner, Mr. Griffiths is responsible for the
accounting, compliance, structuring and underwriting of tax credit properties
for various partnerships. Mr. Griffiths is a Senior Vice President of the
Selling Agent, a member of the Acquisition Committee and is active in
maintaining investor relations for the Partnership. Prior to joining McDonald
& Company, Mr. Griffiths spent eleven years with Hausser + Taylor, Cleveland,
Ohio, a public accounting firm, specializing in the real estate and
construction fields.
Mr. Summers, age 44, has been Chief Executive Officer of McDonald &
Company since January 1994 and served as Chief Operating Officer from 1988 to
1993. Mr. Summers joined McDonald & Company in 1971 and became a partner in
1975. Mr. Summers began in the firm's municipal trading and underwriting areas
and later established the institutional fixed-income sales function as a major
component of McDonald & Company's business base. He has also been active in
the National Association of Securities Dealers since 1980 and, in 1991, chaired
the NASD's Board of Governors.
Ms. Jamieson, age 41, is Managing Director and Chief Financial
Officer of the Selling Agent. Ms. Jamieson also serves on the Board of
Directors of the Selling Agent. Ms. Jamieson joined McDonald & Company in
October 1983. She was named Manager of Financial Administration in June 1991
and Chief Accounting Officer in August 1995. She is Assistant Treasurer of
McDonald & Company Investments, Inc., Treasurer of the Gradison-McDonald family
of mutual and money market funds, and a member of McDonald & Company's Capital
Commitment, Investment, and Retirement Savings Plan Advisory Committees.
Before joining McDonald & Company, Ms. Jamieson worked for six years with the
public accounting firm of Ernst & Whinney (Ernst & Young).
Page 16 of 24
<PAGE> 17
Mr. Kerr, age 57, joined McDonald & Company in 1991 and is General
Counsel to the firm. Mr. Kerr is the Senior Vice President of the Legal and
Compliance Department, which is responsible for overseeing that the firm
complies with all rules and regulations established by the various exchanges
and self-regulatory organizations of which the firm is a member.
Mr. Zdolshek, age 43, joined McDonald & Company in 1984 and is the
Senior Managing Director of the Structured & Real Estate Finance group of the
Selling Agent. The Structured & Real Estate Finance group is responsible for
the origination and distribution of structured real estate debt/equity and
asset-securitized products. Prior to his current position, Mr. Zdolshek
created and supervised McDonald & Company's Mortgage and Asset Securitization
Trading Desk. Mr. Zdolshek is a member of the Acquisition Committee.
Mr. Luburich, age 31, joined McDonald & Company as a Vice President
in May 1995. Mr. Luburich is responsible for overseeing and supervising the
sale of mortgage and real estate debt/equity products through McDonald &
Company's retail sales network. Prior to joining McDonald & Company, Mr.
Luburich was employed by Inland Real Estate Investment Corporation in Oak
Brook, Illinois. Mr. Luburich is a member of the Acquisition Committee.
(F) INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS
--------------------------------------------
No director or officer of the General Partner was involved in any
event during the past five years which would be responsive to this question.
ITEM 11. EXECUTIVE COMPENSATION
- --------------------------------
No direct remuneration was paid or payable by the Partnership for the period
ended March 31, 1996, to directors or officers of the General Partner. During
the period ended March 31, 1996, no remuneration was paid to any affiliate of
the General Partner. The amounts and kinds of all of the compensation and fees
to be paid to the General Partner and its affiliates during the various phases
of the organization, operation and termination of the Partnership are
summarized below. NONE OF THE FEES TO BE PAID TO THE GENERAL PARTNER AND ITS
AFFILIATES HAS BEEN OR WILL BE NEGOTIATED AT ARMS-LENGTH.
<TABLE>
<CAPTION>
TYPE OF COMPENSATION AND RECIPIENT ESTIMATED AMOUNT OF COMPENSATION
- ---------------------------------- --------------------------------
<S> <C>
ORGANIZATIONAL, OFFERING AND ACQUISITION PHASE
----------------------------------------------
Selling Commissions payable to McDonald & Company Six percent (6%) per Unit payable with respect to
Securities, Inc. all Units sold by McDonald & Company Securities,
Inc., or up to $1,200,000 if the maximum of
$20,000,000 of Units is sold and all such Units
are sold
</TABLE>
Page 17 of 24
<PAGE> 18
<TABLE>
<S> <C>
directly by McDonald & Company Securities, Inc.
All or a portion of the Selling Commissions may be
reallowed to Soliciting Dealers.(1)
Dealer-Manager Fee payable to McDonald & Company Two percent (2%) per Unit. The actual amount
Securities, Inc. depends on the number of Units sold, but will not
exceed $400,000 if the maximum of $20,000,000 of
Units is sold. All or a portion of the Dealer-
Manager Fee may be reallowed to Soliciting
Dealers.
Organization and Offering Expense reimbursement to Estimated not to exceed an amount up to three and
the General Partner or its Affiliates for one-half percent (3.5%) per Unit if the minimum
accountable costs and expenses of the General number of Units is sold and up to one and one-half
Partner and its affiliates in connection with the percent (1.5%) per Unit if the maximum number of
organization of the Partnership, the structuring Units is sold as reimbursement for all costs and
of the Partnership and the offering of the Units expenses actually paid by the General Partner and
its Affiliates on behalf of the Partnership in
connection with the structuring and organization
of the Partnership, and the offering of Units,
including, among others, legal, accounting and
investor communications and computer services
related thereto, printing, travel, distribution,
filing and other accountable offering expenses.
The actual amount of Organization and Offering
Expenses depends on a number of factors (including
the number of Units sold), but is not expected to
exceed $300,000 if the maximum of $20,000,000 of
Units is sold.
Acquisition Expense allowance to the General Reimbursement by the Partnership from the proceeds
Partner for the reimbursement of accountable costs of the offering for all costs and expenses
and expenses of the General Partner and its actually paid by the General Partner to third
affiliates in connection with making the parties on behalf of the Partnership in connection
Partnership's investments in Operating with the evaluation, negotiation and closing of
Partnerships the Partnership's investments in Operating
</TABLE>
Page 18 of 24
<PAGE> 19
<TABLE>
<CAPTION>
TYPE OF COMPENSATION AND RECIPIENT ESTIMATED AMOUNT OF COMPENSATION
- ---------------------------------- --------------------------------
<S> <C>
Partnerships. The actual amount depends on a
number of factors (including the number of Units
sold), but is not expected to exceed $400,000 if
the maximum of $20,000,000 of Units is sold.
Acquisition Fee payable to the General Partner or Six percent (6%) per Unit, or up to $1,200,000 if
its affiliates the maximum of $20,000,000 of Units is sold, for
selecting, evaluating, negotiating and closing the
Partnership's investments in Operating
Partnerships.(2)
OPERATING PHASE
---------------
Asset Management Fee payable to the General Annually, one-half of one percent (1/2 of 1%) of
Partner or its affiliates the aggregate cost of all Tax Credit Properties
with respect to which interests in Operating
Partnerships are acquired and held by the
Partnership. The amount of the annual Asset
Management Fee is not determinable at this time.
Assuming the aggregate cost of all Tax Credit
Properties is $40,000,000, this annual fee would
be $200,000. The Asset Management Fee is payable
to the General Partner or its affiliates for
services rendered in connection with the
administration of the affairs of the Partnership
and its assets, including, without limitation,
coordination of communications between the
Partnership and holders of Units and the
Partnership and Operating Partnerships, periodic
inspections of the Tax Credit Properties and
monitoring compliance by the Operating
Partnerships with the federal housing tax credit
program. This is not a management fee for
services in connection with the management of the
underlying Tax Credit Properties, which will be
</TABLE>
Page 19 of 24
<PAGE> 20
<TABLE>
<CAPTION>
TYPE OF COMPENSATION AND RECIPIENT ESTIMATED AMOUNT OF COMPENSATION
- ---------------------------------- --------------------------------
<S> <C>
subject to their own management fees.
Reporting Fee payable by the Operating Annually, one-half of one percent (1/2 of 1%) of
Partnerships to the General Partner or its the gross revenues of each Operating Partnership.
affiliates Each Operating Partnership will be responsible for
paying the Reporting Fees attributable to such
Operating Partnership's gross revenues. The
amount of the Reporting Fee is not determinable at
this time.
</TABLE>
The Asset Management Fee will be reduced by the amount of any Reporting Fees
paid to the General Partner or its affiliates to the extent the combined
amounts of the Asset Management Fee and the Reporting Fees exceed one-half of
one percent (1/2 of 1%) of the aggregate cost of the applicable Tax Credit
Properties on an annual basis.
<TABLE>
<S> <C>
Reimbursement to the General Partner or its Reimbursement by the Partnership for the actual
affiliates for costs and expenses in connection costs of goods and materials used for or by the
with the operation of the Partnership Partnership and obtained from entities
unaffiliated with the General Partner. In
addition, the General Partner and its affiliates
may be reimbursed, by the Partnership or the
Operating Partnerships, as the case may be, for
the administrative services necessary to the
prudent operation of the Partnership or the
Operating Partnerships, respectively, provided
that any such reimbursement shall be at the lower
of the General Partner's actual cost or the amount
the Partnership or an Operating Partnership would
be required to pay to independent parties for
comparable administrative services in the same
geographic location. The General Partner or its
affiliates may not be reimbursed for rent or
depreciation, utilities, capital equipment, other
on-going administrative expenses or salaries or
fringe benefits incurred by or allocated to any of
their controlling
</TABLE>
Page 20 of 24
<PAGE> 21
<TABLE>
<CAPTION>
TYPE OF COMPENSATION AND RECIPIENT ESTIMATED AMOUNT OF COMPENSATION
- ---------------------------------- --------------------------------
<S> <C>
persons (as set forth in Section V.E.1. of the
NASAA Guidelines)(3)
General Partner's Share of Profits, Credits and One percent (1%) of profits, credits and losses
Losses and of Cash Available for Distribution and of cash available for distribution based on
the Partnership's share of such items from the
Operating Partnerships, anticipated to be 99% of
profits, credits and losses and 99% of cash
available for distribution of the Operating
Partnerships.(3)
Real Estate Brokerage Commission payable by the Any affiliate of the General Partner shall be
Operating Partnerships to affiliates of the entitled to a Competitive Real Estate Commission
General Partner for services actually rendered by such affiliate
in connection with the sale of any Tax Credit
Property so long as such fee does not exceed 3% of
the contract price for the sale of the Tax Credit
Property and together with all other brokerage
commissions and similar fees paid to any person
for the sale of the Tax Credit Property does not
exceed 6% of the contract price for the sale of
the Tax Credit Property.
</TABLE>
Page 21 of 24
<PAGE> 22
<TABLE>
<CAPTION>
TYPE OF COMPENSATION AND RECIPIENT ESTIMATED AMOUNT OF COMPENSATION
- ---------------------------------- --------------------------------
<S> <C>
LIQUIDATION PHASE
-----------------
General Partner's Share of Liquidation, Sale or Twenty-five percent (25%) after the limited
Refinancing Proceeds partners have received back, on a cumulative
basis, an amount equal to their original capital
contributions (reduced only by any proceeds from
capital transactions previously distributed to the
limited partners).(3)
- ------------------------------------
<FN>
1 McDonald & Company Securities, Inc., presently expects that up to 10%
of the potential Selling Commissions may be reallowed to non-
affiliated Soliciting Dealers.
2 Reduced to the extent that any Acquisition Fees or consulting fees are
paid to the General Partner or its affiliates by Operating Partnerships
or the general partners of the Operating Partnerships.
3 The General Partner and its affiliates are unable to predict the
amounts which could be realized.
</TABLE>
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
- -----------------------------------------------------------------------
<TABLE>
<CAPTION>
NAME AND ADDRESS AMOUNT AND NATURE % OF
TITLE OF CLASS OF BENEFICIAL OWNER OF BENEFICIAL OWNERSHIP CLASS
- -------------- -------------------- -------------------------------- -----
<S> <C> <C> <C>
Limited Partnership Richard R. Cundiff, III 2% Limited Partnership 100%
Interest McDonald Investment Interest
Center
800 Superior Ave.
Cleveland, Ohio 44114
</TABLE>
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
- --------------------------------------------------------------
None.
Page 22 of 24
<PAGE> 23
PART IV
-------
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
- --------------------------------------------------------------------------
(A) 1. FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES
-------------------------------------------------------------
The following Financial Statements of the Partnership are included in
Part II, Item 8:
<TABLE>
<CAPTION>
Page
----
<S> <C>
Report of Independent Accountants F-3
Balance Sheet as of March 31, 1996 F-4
Statement of Operations for the period
July 13, 1995 to March 31, 1996 F-5
Statement of Cash Flows for the period
July 13, 1995 to March 31, 1996 F-6
Notes to Financial Statements F-7
</TABLE>
All schedules have been omitted because of the absence of conditions
under which they are required or because the required information is included
in the Financial Statements and notes thereto.
(A) 2. EXHIBITS
---------------
Exhibit 27 - Financial Data Schedule
(A) 3. REPORTS ON FORM 8-K
--------------------------
None.
Page 23 of 24
<PAGE> 24
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
(Registrant) MCD Freedom Tax Credit Fund L.P.
------------------------------------------------------------------
By: MCD Freedom Advisers, Inc., its general partner
By (Signature and Title)* /s/ Richard R. Cundiff, III
-----------------------------------------------------
Richard R. Cundiff, III, President
Date July 12, 1996
--------------------------------------------------------------------------
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
By (Signature and Title)* /s/ Richard R. Cundiff, III
-----------------------------------------------------
Richard R. Cundiff, III, Principal Executive Officer
Date July 12, 1996
--------------------------------------------------------------------------
By (Signature and Title)* /s/ Jack E. Griffiths
-----------------------------------------------------
Jack E. Griffiths, Principal Accounting Officer
Date July 12, 1996
--------------------------------------------------------------------------
By (Signature and Title)* /s/ William B. Summers
-----------------------------------------------------
William B. Summers, Director
Date July 12, 1996
--------------------------------------------------------------------------
By (Signature and Title)* /s/ Patricia J. Jamieson
-----------------------------------------------------
Patricia J. Jamieson, Director
Date July 12, 1996
--------------------------------------------------------------------------
___________________
*Print the name and title of each signing officer under his signature.
Page 24 of 24
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
REGISTRANT'S ANNUAL FINANCIAL STATEMENTS FOR THE PERIOD ENDED MARCH 31, 1996 AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 8-MOS
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-START> JUL-13-1995
<PERIOD-END> MAR-31-1996
<CASH> 623
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 479,183
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 479,183
<CURRENT-LIABILITIES> 468,983
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 10,200
<TOTAL-LIABILITY-AND-EQUITY> 479,183
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 0
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
