INDEPENDENCE ONE MUTUAL FUNDS, 485BPOS, 1994-06-29

INDEPENDENCE ONE MUTUAL FUNDS
485BPOS, 1994-06-29

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1933 Act File No. 33-26516
1940 Act File No. 811-5752

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Form N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 X

Pre-Effective Amendment No.

Post-Effective Amendment No. 9 X

and/or

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 X

Amendment No. 9 X

INDEPENDENCE ONE MUTUAL FUNDS

(Exact Name of Registrant as Specified in Charter)

Federated Investors Tower, Pittsburgh, Pennsylvania 15222-3779
(Address of Principal Executive Offices)

(412) 288-1900
(Registrant's Telephone Number)

John W. McGonigle, Esquire,
Federated Investors Tower,
Pittsburgh, Pennsylvania 15222-3779
(Name and Address of Agent for Service)

It is proposed that this filing will become effective:

immediately upon filing pursuant to paragraph (b)
X on June 30, 1994 pursuant to paragraph (b)
60 days after filing pursuant to paragraph (a)
on pursuant to paragraph (a) of Rule 485.

Registrant has filed with the Securities and Exchange
Commission a declaration pursuant to Rule 24f-2 under the
Investment Company Act of 1940, and:

X filed the Notice required by that Rule on June 15, 1994;
or
intends to file the Notice required by that Rule on or
about ____________; or
during the most recent fiscal year did not sell any
securities pursuant to Rule 24f-2 under the Investment
Company Act of 1940, and, pursuant to Rule 24f-2(b)(2), need
not file the Notice.

Copies to:

Thomas J. Donnelly, Esquire Charles H. Morin, Esquire
Houston, Houston & Donnelly Dickstein, Shapiro &
Morin,L.L.P.
2510 Centre City Tower 2101 L Street, N.W.
650 Smithfield Street Washington, D.C. 20037
Pittsburgh, Pennsylvania 15222

CROSS REFERENCE SHEET

This Amendment to the Registration Statement of
INDEPENDENCE ONE MUTUAL FUNDS consists of 4 portfolios: (1)
Independence One Michigan Municipal Cash Fund; (2)
Independence One Prime Money Market Fund; (3) Independence One
U.S. Treasury Money Market Fund; and (4) Independence One U.S.
Government Securities Fund. The portfolios are comprised of
the following:

PART A. INFORMATION REQUIRED IN A PROSPECTUS.

Prospectus Heading
(Rule 404(c) Cross Reference)

Item 1. Cover Page (1-4) Cover Page.
Item 2. Synopsis (1-4) Summary of Fund Expenses.
Item 3. Condensed Financial
Information (1-4) Financial Highlights;
(1-4)Performance Information.

Item 4. General Description of
Registrant (1-4) General Information; (1-
4) Investment Objective; (1-4)
Investment Policies; (1-4)
Investment Limitations; (1,2)
Investment Risks.
Item 5. Management of the Fund (1-4) Independence One Mutual
Funds Information; (1-4)
Management of Independence One
Mutual Funds; (1-4)
Distribution of Fund Shares; (1-
4) Administration of the Fund;
(1-3) Distribution Plan.
Item 6. Capital Stock and Other
Securities (1-4) Dividends; (1-4) Capital
Gains; (1-4) Shareholder
Information; (1-4) Voting
Rights; (1-4) Massachusetts
Partnership Law; (1-4) Effect
of Banking Laws; (1-4) Tax
Information; (1-4) Federal
Income Tax; (1) State and Local
Taxes.
Item 7. Purchase of Securities Being
Offered (1-4) Net Asset Value; (1-4)
Investing in the Fund;
Item 8 Redemption or Repurchase (1-4) Redeeming Shares;
(1-4) Exchange Privilege.
Item 9. Pending Legal Proceedings None.
PART B. INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL
INFORMATION.

Item 10. Cover Page (1-4) Cover Page.
Item 11. Table of Contents (1-4) Table of Contents.
Item 12. General Information and
History (1-4) General Information About
the Fund.
Item 13. Investment Objectives and
Policies (1-4) Investment Objective and
Policies.
Item 14. Management of the Fund (1-4) Independence One Mutual
Funds Management.
Item 15. Control Persons and Principal
Holders of Securities Not applicable.
Item 16. Investment Advisory and Other
Services (1-4) Investment Advisory
Services; (1-4) Administrative
Services.
Item 17. Brokerage Allocation (1-4) Brokerage Transactions.
Item 18. Capital Stock and Other
Securities Not applicable.
Item 19. Purchase, Redemption and
Pricing of Securities Being
Offered (1-4) Purchasing Shares; (1-4)
Determining Net Asset Value; (1-
4) Redeeming Shares; (1-4)
Exchange Privilege.
Item 20. Tax Status (1-4) Tax Status.
Item 21. Underwriters (1-4) Distribution Plan.
Item 22. Calculation of Yield
Quotations of Money Market
Funds (1-4) Performance Comparisons;
Yield; (1) Tax Equivalent
Yield; (1-3) Effective Yield;
(4) Yield.
Item 23. Financial Statements (1-4) filed in Part A.

INDEPENDENCE ONE MICHIGAN MUNICIPAL CASH FUND
(A PORTFOLIO OF INDEPENDENCE ONE MUTUAL FUNDS)
PROSPECTUS

The shares offered by this prospectus represent interests in Independence One
Michigan Municipal Cash Fund (the "Fund"), which is one of a series of
investment portfolios in Independence One Mutual Funds (the "Trust"), an
open-end, management investment company (a mutual fund). Michigan National Bank
professionally manages the Fund's portfolio.

AN INVESTMENT IN THE FUND IS NEITHER INSURED NOR GUARANTEED BY THE U.S.
GOVERNMENT. THE FUND ATTEMPTS TO MAINTAIN A STABLE NET ASSET VALUE OF $1.00 PER
SHARE; THERE CAN BE NO ASSURANCE THAT THE FUND WILL BE ABLE TO DO SO.

THE SHARES OFFERED BY THIS PROSPECTUS ARE NOT DEPOSITS OR OBLIGATIONS OF
MICHIGAN NATIONAL BANK, ARE NOT ENDORSED OR GUARANTEED BY MICHIGAN NATIONAL
BANK, AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE
FEDERAL RESERVE BOARD OR ANY OTHER GOVERNMENT AGENCY.

Shares of the Fund are intended to be sold as an investment vehicle for
institutions, corporations, fiduciaries and individuals. Shareholders can
invest, reinvest, or redeem shares at any time without charge or penalty imposed
by the Fund. Shareholders have access to other portfolios of the Trust through
an exchange program.

This prospectus contains the information you should read and know before you
invest in the Fund. Keep this prospectus for future reference.

The Fund has also filed a Statement of Additional Information dated June 30,
1994, with the Securities and Exchange Commission. The information contained in
the Statement of Additional Information is incorporated by reference into this
prospectus. You may request a copy of the Statement of Additional Information
free of charge, obtain other information, or make inquiries about the Fund by
writing or calling the Fund toll-free 1-800-334-2292.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

Prospectus dated June 30, 1994

TABLE OF CONTENTS
- --------------------------------------------------------------------------------

SUMMARY OF FUND EXPENSES 1
- ------------------------------------------------------

FINANCIAL HIGHLIGHTS 2

- ------------------------------------------------------

GENERAL INFORMATION 3
- ------------------------------------------------------

INVESTMENT INFORMATION 3
- ------------------------------------------------------

Investment Objective 3
Investment Policies 3
Investment Characteristics 4
Ratings 4
Credit Enhancement 4
Participation Interests 5
Variable Rate Demand Notes 5
Demand Features 5
Restricted and Illiquid Securities 5
When-Issued and Delayed
Delivery Transactions 5
Investing in Securities of
Other Investment Companies 6
Temporary Investments 6
Michigan Municipal Securities 6
Standby Commitments 7
Concentration of Investments 7
Investment Risks 7
Non-Diversification 8
Investment Limitations 8
Regulatory Compliance 8

INDEPENDENCE ONE MUTUAL FUNDS
INFORMATION 9
- ------------------------------------------------------

Management of the Trust 9
Board of Trustees 9
Investment Adviser 9
Advisory Fees 9
Adviser's Background 9
Distribution of Fund Shares 10
Distribution Plan 10
Administration of the Fund 11
Administrative Services 11
Custodian 11

Transfer Agent and Dividend
Disbursing Agent 11

Legal Counsel 11
Independent Auditors 11

NET ASSET VALUE 11
- ------------------------------------------------------

INVESTING IN THE FUND 12
- ------------------------------------------------------

Share Purchases 12
To Place an Order 12
Minimum Investment Required 12
Cash Sweep Program 12
Participating Depository
Institutions 12
What Shares Cost 13
Certificates and Confirmations 13
Dividends 13
Capital Gains 13

EXCHANGE PRIVILEGE 13
- ------------------------------------------------------

Exchange by Telephone 14
Written Exchange 15

REDEEMING SHARES 15
- ------------------------------------------------------

Cash Sweep Program 15
Redeeming by Check 15
By Telephone 15
By Mail 16
Accounts with Low Balances 17
Redemption in Kind 17

SHAREHOLDER INFORMATION 17
- ------------------------------------------------------

Voting Rights 17
Massachusetts Partnership Law 18

EFFECT OF BANKING LAWS 18
- ------------------------------------------------------

TAX INFORMATION 19
- ------------------------------------------------------

Federal Income Tax 19
Michigan Tax Considerations 20
Other State and Local Taxes 20

PERFORMANCE INFORMATION 20
- ------------------------------------------------------

FINANCIAL STATEMENTS 21
- ------------------------------------------------------

INDEPENDENT AUDITORS' REPORT 31
- ------------------------------------------------------

ADDRESSES Back Cover
- ------------------------------------------------------

SUMMARY OF FUND EXPENSES
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES
<S> <C>
Maximum Sales Load Imposed on Purchases (as a percentage of offering price)............................. None
Maximum Sales Load Imposed on Reinvested Dividends (as a percentage of offering price).................. None
Contingent Deferred Sales Charge (as a percentage of original purchase price or redemption proceeds, as
applicable)........................................................................................... None
Redemption Fees (as a percentage of amount redeemed, if applicable)..................................... None
Exchange Fee............................................................................................ None
<CAPTION>
ANNUAL FUND OPERATING EXPENSES
(As a percentage of average net assets)
<S> <C>
Management Fee (after waiver)(1)........................................................................ 0.18%
12b-1 Fees(2)........................................................................................... 0.00%
Total Other Expenses.................................................................................... 0.32%
Total Operating Expenses(3)........................................................................ 0.50%
</TABLE>

(1) The estimated management fee has been reduced to reflect the anticipated
voluntary waiver by the investment adviser. The adviser can terminate this
voluntary waiver at any time at its sole discretion. The maximum management
fee is 0.40%.

(2) As of the date of this prospectus, the Fund is not paying or accruing 12b-1
fees. The Fund will not pay or accrue 12b-1 fees until a separate class of
shares has been created for certain institutional investors. The Fund's
distributor can pay up to 0.25% as a 12b-1 fee which is reimbursed to the
distributor by the Fund. See "General Information."

(3) The total Fund operating expenses are estimated to be 0.72% absent the
anticipated voluntary waivers detailed in note (1).

THE PURPOSE OF THIS TABLE IS TO ASSIST AN INVESTOR IN UNDERSTANDING THE
VARIOUS COSTS AND EXPENSES THAT A SHAREHOLDER OF THE FUND WILL BEAR, EITHER
DIRECTLY OR INDIRECTLY. FOR MORE COMPLETE DESCRIPTIONS OF THE VARIOUS COSTS AND
EXPENSES, SEE "INDEPENDENCE ONE MUTUAL FUNDS INFORMATION." Wire-transferred
redemptions of less than $5,000 may be subject to additional fees.

<TABLE>
<S> <C> <C> <C> <C>
EXAMPLE 1 year 3 years 5 years 10 years
You would pay the following expenses on a $1,000 investment assuming
(1) 5% annual return and (2) redemption at the end of each time
period. The Fund charges no redemption fees........................... $5 $16 $28 $63
</TABLE>

THE ABOVE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.

INDEPENDENCE ONE MICHIGAN MUNCIPAL CASH FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)

Reference is made to the Independent Auditors' Report on page 31.

<TABLE>
<CAPTION>
YEAR ENDED APRIL 30,
<S> <C> <C> <C> <C> <C>
1994 1993 1992 1991 1990*
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ---------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ---------------------------------------------------
Net investment income 0.02 0.02 0.04 0.05 0.05
- --------------------------------------------------- --------- --------- --------- --------- ---------
LESS DISTRIBUTIONS
- ---------------------------------------------------
Dividends to shareholders from net investment
income (0.02) (0.02) (0.04) (0.05) (0.05)
- --------------------------------------------------- --------- --------- --------- --------- ---------
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- --------------------------------------------------- --------- --------- --------- --------- ---------
TOTAL RETURN** 1.98% 2.27% 3.68% 5.18% 5.14%
- ---------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ---------------------------------------------------
Expenses 0.50% 0.53% 0.50% 0.67% 0.44%(a)
- ---------------------------------------------------
Net investment income 1.96% 2.23% 3.51% 5.02% 5.70%(a)
- ---------------------------------------------------
Expense waiver/reimbursement (b) 0.22% 0.20% 0.39% 0.19% 0.39%(a)
- ---------------------------------------------------
SUPPLEMENTAL DATA
- ---------------------------------------------------
Net assets, end of period (000 omitted) $55,013 $84,763 $71,745 $31,705 $28,921
- ---------------------------------------------------
</TABLE>

* Reflects operations for the period from June 14, 1989 (date of initial
public investment) to April 30, 1990.

** Based on net asset value, which does not reflect the sales load or
contingent deferred sales charge, if applicable.

(a) Computed on an annualized basis.

(b) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above (Note 4).

(See Notes which are an integral part of the Financial Statements)

GENERAL INFORMATION
- --------------------------------------------------------------------------------

The Trust was established as a Massachusetts business trust under a Declaration
of Trust dated January 9, 1989. The Declaration of Trust permits the Trust to
offer separate series of shares of beneficial interest representing interests in
separate portfolios of securities. In addition, the interests in this portfolio
may be offered in separate classes.

This prospectus relates only to the Trust's non-diversified portfolio known as
Independence One Michigan Municipal Cash Fund. The Fund intends to offer two
classes of shares for sale: Investment and Trust Shares. The classes of shares
represent interests in one common investment portfolio but differ in that
Investment Shares, which will be sold primarily to individual investors, are
subject to distribution expenses paid by the Fund pursuant to a Plan adopted
under Rule 12b-1 of the Investment Company Act of 1940 while Trust shares will
be sold to institutional investors and will not be subject to such a Plan and
will not incur such distribution expenses. Trust Shares are currently not
available for sale. The Fund will not offer Trust Shares and will not accrue or
pay any distribution expenses pursuant to the Plan until the Trust Shares have
been registered with the Securities and Exchange Commission and certain states.
The Investment Shares of the Fund currently being offered are designed for
individuals as a convenient means of accumulating an interest in a
professionally managed portfolio consisting primarily of short-term municipal
securities.

The Fund may not be a suitable investment for retirement plans since it invests
in municipal securities. A minimum initial investment of $1,000 is required.
Subsequent investments must be in amounts of at least $100.

The Fund attempts to stabilize the value of a share at $1.00. Fund shares are
currently sold and redeemed at that price.

INVESTMENT INFORMATION
- --------------------------------------------------------------------------------

INVESTMENT OBJECTIVE

The investment objective of the Fund is to provide stability of income and
current income exempt from federal regular income tax and Michigan state income
tax consistent with stability of principal. In addition, the Fund provides
income exempt from the Michigan intangibles tax and income taxes of Michigan
municipalities. (Federal regular income tax does not include the federal
individual alternative minimum tax or the federal alternative minimum tax for
corporations.) The investment objective cannot be changed without approval of
shareholders. While there is no assurance that the Fund will achieve its
investment objective, it endeavors to do so by following the investment policies
described in this prospectus.

INVESTMENT POLICIES

The Fund pursues its investment objective by investing at least 80% of its
assets in a portfolio of Michigan municipal securities with remaining maturities
of 397 days or less at the time of purchase by the Fund. The average maturity of
the securities in the Fund's portfolio, computed on a dollar-weighted basis,
will be 90 days or less. Michigan municipal securities include obligations
issued by or on behalf of the State of Michigan, its political subdivisions or
agencies, or debt obligations of any territory or possession of the United
States, or any political subdivision of any of the foregoing, or of the District
of Columbia, the interest from which is, in the opinion of bond counsel for the
issuers, or in the opinion of officers of the Fund and/or the adviser to the
Fund, exempt from federal regular income tax and personal income taxes imposed
by the State of Michigan and Michigan municipalities. Michigan municipal
securities also include participation interests in the above obligations.
Interest income of the Fund which is exempt from tax will retain its tax-free
status when distributed to Michigan shareholders. However, income distributed by
the Fund may not necessarily be exempt from state or municipal taxes in states
other than Michigan. Unless indicated otherwise, the investment policies may be
changed by the Board of Trustees ("Trustees") without the approval of
shareholders. Shareholders will be notified before any material changes in these
policies become effective.

INVESTMENT CHARACTERISTICS. The Fund intends to limit its investments by
operating in a manner consistent with Rule 2a-7 (as amended) under the
Investment Company Act of 1940 (the "Rule"). The Rule permits the Fund to
utilize the amortized cost method of valuation in order to offer its shares
at a net asset value of $1.00 per share. (See also the section in the
Statement of Additional Information entitled "Determining Net Asset
Value.") The Rule imposes certain risk limiting conditions on the Fund
which in some instances restrict the Fund's investment policies.

RATINGS. The Municipal Securities in which the Fund invests must either be
rated in one of the two highest short-term rating categories by one or more
nationally recognized statistical rating organizations ("NRSROs") or be of
comparable quality to securities having such ratings. A NRSRO's two highest
rating categories are determined without regard for sub-categories and
gradations. For example, securities rated SP-1+, SP-1 or SP-2 by Standard &
Poor's Corporation ("S&P"), MIG-1 or MIG-2 by Moody's Investors Service,
Inc. ("Moody's"), or FIN-1+, FIN-1 and FIN-2 by Fitch Investors Service,
Inc. ("Fitch"), are all considered rated in one of the two highest
short-term rating categories. The Fund will follow applicable regulations
in determining whether a security rated by more than one NRSRO can be
treated as being in one of the two highest short-term rating categories;
currently, such securities must be rated by two NRSROs in one of their two
highest categories. See "Regulatory Compliance."

CREDIT ENHANCEMENT. Certain of the Fund's acceptable investments may have
been credit enhanced by a guaranty, letter of credit or insurance. The Fund
typically evaluates the credit quality and ratings of credit-enhanced
securities based upon the financial condition and ratings of the party
providing the credit enhancement (the "credit enhancer"), rather than the
issuer. However, credit-enhanced securities will not be treated as having
been issued by the credit enhancer for diversification purposes, unless the
Fund has invested more than 10% of its assets in securities issued,
guaranteed or otherwise credit enhanced by the credit enhancer, in which
case the securities will be treated as having been issued both by the
issuer and the credit enhancer. The bankruptcy, receivership or default of
the credit enhancer will adversely affect the quality and marketability of
the underlying security.

The Fund may have more than 25% of its total assets invested in securities
credit enhanced by banks.

PARTICIPATION INTERESTS. The Fund may purchase participation interests
from financial institutions such as commercial banks, savings and loan
associations, and insurance companies. These participation interests give
the Fund an undivided interest in Michigan municipal securities. The
municipal securities subject to the participation interests are not limited
to maturities of 397 days or less, so long as the participation interests
include the right to demand payment, typically within seven days, from the
issuers of those interests. The Fund will purchase only participation
interests which have such a demand feature or which mature in less than 397
days. The financial institutions from which the Fund purchases
participation interests frequently provide or secure irrevocable letters of
credit or guarantees to assure that the participation interests are of high
quality. The Trustees of the Trust will determine that participation
interests meet the prescribed quality standards for the Fund.

VARIABLE RATE DEMAND NOTES. Variable rate demand notes are long-term
municipal securities that have variable or floating interest rates and
provide the Fund with the right to tender the security for repurchase at
its stated principal amount plus accrued interest. Such securities
typically bear interest at a rate that is intended to cause the securities
to trade at par. The interest rate may float or be adjusted at regular
intervals (ranging from daily to annually), and is normally based on a
published municipal interest rate or interest rate index. Most variable
rate demand notes allow the Fund to demand the repurchase of the security
on not more than seven days' prior notice. Other notes only permit the Fund
to tender the security at the time of each interest rate adjustment or at
other fixed intervals. See "Demand Features." The Fund treats variable rate
demand notes as maturing on the later of the date of the next interest
adjustment or the date on which the Fund may next tender the security for
repurchase.

DEMAND FEATURES. The Fund may acquire securities that are subject to puts and
standby commitments ("demand features") to purchase the securities at their
principal amount (usually with accrued interest) within a fixed period (usually
seven days) following a demand by the Fund. The demand feature may be issued by
the issuer of the underlying securities, a dealer in the securities or by
another third party, and may not be transferred separately from the underlying
security. The Fund uses these arrangements to provide the Fund with liquidity
and not to protect against changes in the market value of the underlying
securities. The bankruptcy, receivership or default by the issuer of the demand
feature, or a default on the underlying security or other event that terminates
the demand feature before its exercise, will adversely affect the liquidity of
the underlying security. Demand features that are exercisable even after a
payment default on the underlying security may be treated as a form of credit
enhancement.

RESTRICTED AND ILLIQUID SECURITIES. The Fund may invest in restricted
securities. Restricted securities are any securities in which the Fund may
invest pursuant to its investment objective and policies but which are subject
to restrictions on resale under federal securities laws. Under criteria
established by the Trustees, certain restricted securities are considered
liquid. To the extent these securities are not deemed to be liquid, the Fund
will limit their purchase together with other securities considered to be
illiquid to 10% of its net assets.

WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS. The Fund may purchase Michigan
municipal securities on a when-issued or delayed delivery basis. These
transactions are arrangements in which the Fund purchases securities with
payment and delivery scheduled for a future time. The Fund engages in
when-issued and delayed delivery transactions only for the purpose of acquiring
portfolio securities consistent with the Fund's investment objective and
policies, not for investment leverage. In when-issued and delayed delivery
transactions, the Fund relies on the seller to complete the transaction. The
seller's failure to complete the transaction may cause the Fund to miss a price
or yield considered to be advantageous. The Fund will limit its purchase of
securities on a when-issued or delayed delivery basis to no more than 20% of the
value of its total assets.

INVESTING IN SECURITIES OF OTHER INVESTMENT COMPANIES. The Fund can acquire up
to 3 per centum of the total outstanding stock of other investment companies.
The Fund will not be subject to any other limitations with regard to the
acquisition of securities of other investment companies so long as the public
offering price of the Fund's shares does not include a sales load exceeding
1-1/2 percent. The Fund will purchase securities of closed-end investment
companies only in open-market transactions involving only customary broker's
commissions. However, these limitations are not applicable if the securities are
acquired in a merger, consolidation, reorganization, or acquisition of assets.

TEMPORARY INVESTMENTS. As a fundamental policy which may only be changed by
shareholders, the Fund invests its assets so that at least 80% of its annual
interest income will be exempt from federal regular income tax and Michigan
state income tax, except in unusual circumstances, such as when management feels
that market conditions dictate a defensive posture in temporary investments.
Interest income from temporary investments may be taxable to shareholders as
ordinary income. These temporary investments include: obligations issued by or
on behalf of municipal or corporate issuers having the same quality
characteristics as municipal securities purchased by the Fund (including
obligations whose interest is subject to the federal alternative minimum income
tax); marketable obligations issued or guaranteed by the U.S. government, its
agencies or instrumentalities; instruments issued by banks or savings and loans
which have capital, surplus, and undivided profits in excess of $100,000,000 at
the time of investment and if their deposits are insured by the Bank Insurance
Fund ("BIF") or the Savings Association Insurance Fund ("SAIF"), which are both
administered by the Federal Deposit Insurance Corporation ("FDIC"); repurchase
agreements (arrangements in which the organization is selling the Fund a
temporary investment and agrees at the time of sale to repurchase it at a
mutually agreed upon time and price); and prime commercial paper rated A-1 by
S&P, Prime-1 by Moody's, or F-1 by Fitch, and variable amount demand master
notes.

MICHIGAN MUNICIPAL SECURITIES

Michigan municipal securities are generally issued to finance public works such
as airports, bridges, highways, housing, hospitals, mass transportation
projects, schools, streets, and water and sewer works. They are also issued to
repay outstanding obligations, to raise funds for general operating expenses,
and to make loans to other public institutions and facilities.

Michigan municipal securities include industrial development bonds issued by or
on behalf of public authorities to provide financing aid to acquire sites or
construct and equip facilities for privately or publicly owned corporations. The
availability of this financing encourages these corporations to locate within
the sponsoring communities and thereby increases local employment.

The two principal classifications of municipal securities are "general
obligation" and "revenue" bonds. General obligation bonds are secured by the
issuer's pledge of its full faith and credit and taxing power for the payment of
principal and interest. Interest on and principal of revenue bonds, however, are
payable only from the revenue generated by the facility financed by the bond or
other specified sources of revenue. Revenue bonds do not represent a pledge of
credit or create any debt of or charge against the general revenues of a
municipality or public authority. Industrial development bonds are typically
classified as revenue bonds.

STANDBY COMMITMENTS

Some securities dealers are willing to sell Michigan municipal securities to the
Fund accompanied by their commitments to repurchase the municipal securities
prior to maturity, at the Fund's option, for the amortized cost of the municipal
securities at the time of repurchase. These arrangements are not used to protect
against changes in the market value of municipal securities. They permit the
Fund, however, to remain fully invested and still provide liquidity to satisfy
redemptions. The cost of Michigan municipal securities accompanied by these
"standby" commitments could be greater than the cost of municipal securities
without such commitments. Standby commitments are not marketable or otherwise
assignable and have value only to the Fund. The default or bankruptcy of a
securities dealer giving such a commitment would not affect the quality of the
Michigan municipal securities purchased but may make such securities more
difficult to sell without such a commitment. The Fund enters into standby
commitments only with those dealers whose credit the adviser believes to be of
high quality.

CONCENTRATION OF INVESTMENTS

The Fund may invest more than 25% of its assets in industrial revenue bonds,
including pollution control bonds. The Fund will not purchase securities if, as
a result of such purchase, 25% or more of the value of its total assets would be
invested in any one industry or in industrial development bonds or other
securities, the interest upon which is paid from revenues of similar type
projects. However, the Fund may invest more than 25% of the value of its assets
in cash or cash items, securities issued or guaranteed by the U.S. government,
its agencies or instrumentalities, or instruments secured by these money market
instruments, such as repurchase agreements.

The Fund will invest more than 25% of its assets in Michigan municipal
securities. The Fund may invest more than 25% of the value of its assets in
tax-exempt project notes guaranteed by the U.S. government, regardless of the
location of the issuing municipality.

If the value of Fund assets invested in the securities of a governmental
subdivision changes because of changing values, the Fund will not be required to
make any reduction in its holdings.

INVESTMENT RISKS

Because the Fund will be able to invest an unlimited percentage of its assets in
Michigan municipal securities, the Fund's performance will be tied to economic
conditions within the State of Michigan and in particular to the financial
condition of the State and its municipalities and authorities. Michigan's
economy is dominated by the automobile and related industries and has tended to
be more vulnerable to economic cycles than those of other states and the nation
as a whole. Michigan's economy has been undergoing basic structural changes.
These changes reflect a diversifying economy which is less reliant on the
automobile industry. As a result, it is expected that in the future Michigan's
economy will be less susceptible to cyclical swings and more resilient when
national downturns occur. An expanded discussion of the risks associated with
the purchase of Michigan issues is contained in the Statement of Additional
Information.

NON-DIVERSIFICATION

The Fund is a non-diversified investment portfolio. As such, there is no limit
on the percentage of assets which can be invested in any single issuer. An
investment in the Fund, therefore, will entail greater risk than would exist in
a diversified investment company because the higher percentage of investments
among fewer issuers may result in greater fluctuation in the total market value
of the Fund's portfolio. Any economic, political, or regulatory developments
affecting the value of the securities in the Fund's portfolio will have a
greater impact on the total value of the portfolio than would be the case if the
portfolio were diversified among more issuers.

However, the Fund intends to comply with Subchapter M of the Internal Revenue
Code. This undertaking requires that, at the end of each quarter of each taxable
year, with regard to at least 50% of the Fund's total assets, no more than 5% of
its total assets are invested in the securities of a single issuer and that with
respect to the remainder of the Fund's total assets, no more than 25% of its
total assets are invested in the securities of a single issuer.

INVESTMENT LIMITATIONS

The Fund will not:

borrow money directly or through reverse repurchase agreements or pledge
securities except, under certain circumstances, the Fund may borrow up to
one-third of the value of its total assets and pledge up to 10% of the
value of those assets to secure such borrowings; or

invest more than 10% of its total assets in the securities of any one
issuer (except cash and cash items, repurchase agreements collateralized
by U.S. government securities and U.S. government obligations) with
respect to securities comprising 75% of its assets. As a matter of
investment practice, the Fund intends to comply with the diversification
restrictions imposed by Subchapter M of the Internal Revenue Code.

The above investment limitations cannot be changed without approval of
shareholders. The following limitation, however, may be changed by the Trustees
without shareholder approval. Shareholders will be notified before any material
change in this limitation becomes effective.

The Fund will not:

invest more than 5% of its assets in industrial revenue bonds where the
payment of principal and interest is the responsibility of companies (or
guarantors, if applicable) with less than three years of continuous
operations, including the operation of any predecessor.

REGULATORY COMPLIANCE

INDEPENDENCE ONE MUTUAL FUNDS INFORMATION
- --------------------------------------------------------------------------------

MANAGEMENT OF THE TRUST

BOARD OF TRUSTEES. The Trustees are responsible for managing the Trust's
business affairs and for exercising all of the Trust's powers except those
reserved for the shareholders. An Executive Committee of the Board of Trustees
handles the Board's responsibilities between meetings of the Board.

INVESTMENT ADVISER. Pursuant to an investment advisory contract with the Trust,
investment decisions for the Fund are made by Michigan National Bank, as the
Fund's investment adviser (the "Adviser"), subject to direction by the Trustees.
The Adviser continually conducts investment research and supervision for the
Fund and is responsible for the purchase or sale of portfolio instruments, for
which it receives an annual fee from the assets of the Fund.

ADVISORY FEES. The Adviser receives an annual investment advisory fee
equal to 0.40 of 1% of the Fund's average daily net assets. The Adviser has
also undertaken to reimburse the Fund, up to the amount of the advisory
fee, for operating expenses in excess of limitations established by certain
states. The Adviser may voluntarily choose to waive a portion of its fee or
reimburse certain expenses of the Fund.

ADVISER'S BACKGROUND. Michigan National Bank, a national banking
association, is a wholly-owned subsidiary of Michigan National Corporation
("MNC"). Through its subsidiaries and affiliates, MNC, Michigan's fourth
largest bank holding company in terms of total assets, as of December 31,
1993, offers a full range of financial services to the public, including
commercial lending, depository services, cash management, brokerage
services, retail banking, mortgage banking, investment advisory services
and trust services. Independence One Capital Management Corporation
("IOCM"), a nationally recognized investment advisory subsidiary of MNC,
provides investment advisory services for trust and other managed assets.
IOCM and the Trust Division have managed custodial assets totaling $6
billion. Of this amount, IOCM and the Trust Division have investment
discretion over $2.5 billion.

As part of its regular banking operations, Michigan National Bank may make
loans to public companies. Thus, it may be possible, from time to time, for
the Fund to hold or acquire the securities of issuers which are also
lending clients of Michigan National Bank. The lending relationship will
not be a factor in the selection of securities.

DISTRIBUTION OF FUND SHARES

Federated Securities Corp. is the principal distributor for shares of the Fund.
It is a Pennsylvania corporation organized on November 14, 1969, and is the
principal distributor for a number of investment companies. Federated Securities
Corp. is a subsidiary of Federated Investors.

DISTRIBUTION PLAN. Pursuant to the provisions of a distribution plan adopted in
accordance with the Investment Company Act Rule 12b-1 (the "Plan"), the Fund
will pay to the distributor an amount computed at an annual rate of 0.25 of 1%
of the average daily net asset value of the shares to finance any activity which
is principally intended to result in the sale of shares of the Fund subject to
the Plan. The Fund will not accrue or pay any distribution expenses pursuant to
the Plan until the Trust Shares have been registered with the Securities and
Exchange Commission and certain states. (See "General Information.")

The distributor may from time to time and for such periods as its deems
appropriate, voluntarily reduce its compensation under the Plan to the extent
the expenses attributable to the shares of the Fund exceed such lower expense
limitation as the distributor may, by notice to the Trust, voluntarily declare
to be effective.

The distributor may select financial institutions such as banks, fiduciaries,
custodians for public funds, investment advisers, and broker/dealers ("brokers")
to provide sales and/or administrative services as agents for their clients or
customers who beneficially own shares of the Fund. Administrative services may
include, but are not limited to, the following functions: providing office
space, equipment, telephone facilities, and various personnel, including
clerical, supervisory, and computer, as necessary or beneficial to establish and
maintain shareholder accounts and records; processing purchase and redemption
transactions and automatic investments of client account cash balances;
answering routine client inquiries regarding the shares of the Fund; assisting
clients in changing dividend options, account designations, and addresses, and
providing such other services as the Fund reasonably requests for its shares.

Financial institutions will receive fees from the distributor based upon shares
owned by their clients or customers. The schedules of such fees and the basis
upon which such fees will be paid will be determined from time to time by the
distributor.

The Fund's Plan is a compensation type plan. As such, the Fund makes no payments
to the distributor except as described above. Therefore, the Fund does not pay
for reimbursed expenses of the distributor, including amounts expended by the
distributor in excess of amounts received by it from the Fund, interest,
carrying or other financing charges in connection with excess amounts expended,
or the distributor's overhead expenses. However, the distributor may be able to
recover such amounts or may earn a profit from future payments made by the Fund
under the Plan.

The Glass-Steagall Act prohibits a depository institution (such as a commercial
bank or a savings and loan association) from being an underwriter or distributor
of most securities. In the event the Glass-Steagall Act is deemed to prohibit
depository institutions from acting in the administrative capacities described
above or should Congress relax current restrictions on depository institutions,
the Trustees will consider appropriate changes in the services.

State securities laws governing the ability of depository institutions to act as
underwriters or distributors of securities may differ from interpretations given
to the Glass-Steagall Act and, therefore, banks and financial institutions may
be required to register as dealers pursuant to state law.

ADMINISTRATION OF THE FUND

ADMINISTRATIVE SERVICES. Federated Administrative Services, a subsidiary of
Federated Investors, provides the Fund with certain administrative personnel and
services necessary to operate the Fund, such as certain legal and accounting
services. Federated Administrative Services provides these at an annual rate as
specified below.

<TABLE>
<CAPTION>
MAXIMUM
ADMINISTRATIVE AVERAGE AGGREGATE DAILY
FEE NET ASSETS OF THE TRUST
<C> <S>
.150 of 1% on the first $250 million
.125 of 1% on the next $250 million
.100 of 1% on the next $250 million
.075 of 1% on assets in excess of $750 million
</TABLE>

The administrative fee received during any fiscal year shall be at least $50,000
per Fund. Federated Administrative Services may choose voluntarily to reimburse
a portion of its fee.

CUSTODIAN. State Street Bank and Trust Company, Boston, Massachusetts, is
custodian for the securities and cash of the Fund.

TRANSFER AGENT AND DIVIDEND DISBURSING AGENT. _Federated Services Company,
Pittsburgh, Pennsylvania, is transfer agent for the shares of the Fund, and
dividend disbursing agent for the Fund.

LEGAL COUNSEL. Legal counsel to the Fund is provided by Houston, Houston &
Donnelly, Pittsburgh, Pennsylvania, and Dickstein, Shapiro and Morin, L.L.P.,
Washington, D.C.

INDEPENDENT AUDITORS. The independent auditors for the Fund are KPMG Peat
Marwick, Pittsburgh, Pennsylvania.

NET ASSET VALUE
- --------------------------------------------------------------------------------

The Fund attempts to stabilize the net asset value of its shares at $1.00 by
valuing the portfolio securities using the amortized cost method. The net asset
value per share is determined by subtracting total liabilities from total assets
and dividing the remainder by the number of shares outstanding. The Fund, of
course, cannot guarantee that its net asset value will always remain at $1.00
per share.

INVESTING IN THE FUND
- --------------------------------------------------------------------------------

SHARE PURCHASES

Shares of the Fund may be purchased through Michigan National Bank, Independence
One Brokerage Services, Inc. ("Independence One"), or through brokers or dealers
which have a sales agreement with the distributor. Texas residents should
purchase shares through Federated Securities Corp. at 1-800-618-8573. Investors
may purchase shares of the Fund on all business days except on days which the
New York Stock Exchange is closed and federal holidays restricting wire
transfers. In connection with the sale of Fund shares, the distributor may from
time to time offer certain items of nominal value to any shareholder or
investor. The Fund reserves the right to reject any purchase request.

TO PLACE AN ORDER. An investor may call toll-free 1-800-334-2292 to purchase
shares of the Fund through Michigan National Bank or Independence One. In
addition, investors may purchase shares of the Fund by calling their authorized
broker directly. Payment may be made either by check or wire transfer of federal
funds.

To purchase by check, the check must be included with the order and made payable
to "Independence One Michigan Municipal Cash Fund." Orders are considered
received after payment by check is converted by the transfer agent's bank, State
Street Bank and Trust Company ("State Street Bank"), into federal funds.

When payment is made through wire transfer of federal funds, the order is
considered received immediately upon receipt by State Street Bank. Payment by
wire must be received before 11:00 a.m. (Eastern time) on the same day in order
to earn dividends for that day. Prior to purchasing by wire, investors should
call their Michigan National Bank or Independence One representative or their
authorized broker. It is the responsibility of Michigan National Bank,
Independence One and authorized brokers to transmit orders promptly. Federal
funds should be wired as follows: Federated Services Company, c/o State Street
Bank and Trust Company, Boston, Massachusetts; Attention: EDGEWIRE; For Credit
to: Independence One Michigan Municipal Cash Fund; Fund Number (this number can
be found on the account statement or by contacting the Fund); Group Number or
Order Number; Nominee or Institution Name; and ABA Number 011000028.

MINIMUM INVESTMENT REQUIRED

The minimum initial investment in the shares of the Fund by an investor is
$1,000. Subsequent investments must be in amounts of at least $100.

CASH SWEEP PROGRAM

Cash accumulations in demand deposit accounts with depository institutions such
as banks and savings and loan associations may be automatically invested in
shares of the Fund on a day selected by the depository institution and its
customer, or when the demand deposit account reaches a predetermined dollar
amount (e.g. $5,000).

PARTICIPATING DEPOSITORY INSTITUTIONS. Participating depository institutions
are responsible for prompt transmission of orders relating to the program. These
depository institutions are the record owners of the shares of the Fund.
Depository institutions participating in this program may charge their customers
for their services relating to the program. This prospectus should, therefore,
be read together with any agreement between the customer and the depository
institution with regard to the services provided, the fees charged for those
services, and any restrictions and limitations imposed.

WHAT SHARES COST

Fund shares are sold at their net asset value next determined after an order is
received. There is no sales charge imposed by the Fund.

The net asset value is determined at 12:00 noon (Eastern time) and 4:00 p.m.
(Eastern time), Monday through Friday, except on: (i) days on which there are
not sufficient changes in the value of the Fund's portfolio securities that its
net asset value might be materially affected; (ii) days during which no shares
are tendered for redemption and no orders to purchase shares are received; and
(iii) on the following holidays; New Year's Day, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day, and Christmas Day.

CERTIFICATES AND CONFIRMATIONS

As transfer agent for the Fund, Federated Services Company maintains a share
account for each shareholder of record. Share certificates are not issued unless
shareholders so request by contacting their Michigan National Bank or
Independence One representative or authorized broker in writing.

Monthly confirmations are sent to report transactions such as purchases and
redemptions as well as dividends paid during the month.

DIVIDENDS

Dividends are declared daily and paid monthly. Dividends are automatically
reinvested on payment dates in additional shares of the Fund unless cash
payments are requested by shareholders in writing to the Fund through their
Michigan National Bank or Independence One representative or authorized broker.
Share purchase orders received by the Fund before 11:00 a.m. (Eastern time) earn
dividends that day.

CAPITAL GAINS

Capital gains, if any, could result in an increase in dividends. Capital losses,
could result in a decrease in dividends. If, for some extraordinary reason, the
Fund realizes net long-term capital gains, it will distribute them at least once
every 12 months.

EXCHANGE PRIVILEGE
- --------------------------------------------------------------------------------

All shareholders of the Fund are shareholders of the Trust which consists of the
Fund, Independence One Prime Money Market Fund, Independence One U.S. Treasury
Money Market Fund, and Independence One U.S. Government Securities Fund.
Shareholders of the Fund have access to Independence One U.S. Treasury Fund,
Independence One Prime Money Market Fund, and Independence One U.S. Government
Securities Fund ("participating funds") through an exchange program.

Shareholders who exercise this exchange privilege must exchange shares having a
net asset value of at least $1,000. Prior to any exchange, the shareholder must
receive a copy of the current prospectus of the participating fund into which an
exchange is to be made.

The exchange privilege is available to shareholders residing in any state in
which the participating fund shares being acquired may legally be sold. Upon
receipt by the transfer agent of proper instructions and all necessary
supporting documents, shares submitted for exchange will be redeemed at the
next-determined net asset value. If the exchanging shareholder does not have an
account in the participating fund whose shares are being acquired, a new account
will be established with the same registration, dividend and capital gain
options as the account from which shares are exchanged, unless otherwise
specified by the shareholder. In the case where the new account registration is
not identical to that of the existing account, a signature guarantee is
required. (See "Redeeming Shares by Mail.") Exercise of this privilege is
treated as a redemption and new purchase for federal income tax purposes and,
depending on the circumstances, a short or long-term capital gain or loss may be
realized. The Fund reserves the right to modify or terminate the exchange
privilege at any time. Shareholders would be notified prior to any modification
or termination. Shareholders may obtain further information on the exchange
privilege by calling their Michigan National Bank or Independence One
representative or authorized broker.

EXCHANGE BY TELEPHONE. Shareholders may provide instructions for exchanges
between participating funds by telephone to their Michigan National Bank or
Independence One representative by calling 1-800-334-2292. In addition,
investors may exchange shares by calling their authorized broker directly.

An authorization form permitting the Fund to accept telephone exchange requests
must first be completed. It is recommended that investors request this privilege
at the time of their initial application. If not completed at the time of
initial application, authorization forms and information on this service can be
obtained through a Michigan National Bank or Independence One representative or
authorized broker. Telephone exchange instructions may be recorded.

Shares may be exchanged by telephone only between fund accounts having identical
shareholder registrations. Exchange instructions given by telephone may be
electronically recorded.

Telephone exchange instructions must be received by Michigan National Bank,
Independence One, or an authorized broker and transmitted to the transfer agent
before 4:00 p.m. (Eastern time) for shares to be exchanged the same day.
Shareholders who exchange into shares of the Fund will not receive a dividend
from the Fund on the date of the exchange.

Shareholders of the Fund may have difficulty in making exchanges by telephone
through banks, brokers and other financial institutions during times of drastic
economic or market changes. If shareholders cannot contact their Michigan
National Bank or Independence One representative or authorized broker by
telephone, it is recommended that an exchange request be made in writing and
sent by mail for next day delivery. Send mail requests to: Independence One
Mutual Funds, 27777 Inkster Road, Mail Code 10-52, Farmington Hills, Michigan
48333-9065.

Any shares held in certificate form cannot be exchanged by telephone but must be
forwarded to Federated Services Company, the transfer agent, by a Michigan
National Bank or Independence One representative or authorized broker and
deposited to the shareholder's account before being exchanged.

If reasonable procedures are not followed by the Fund, it may be liable for
losses due to unauthorized or fraudulent telephone instructions.

WRITTEN EXCHANGE. A shareholder wishing to make an exchange by written request
may do so by sending it to: Independence One Mutual Funds, 27777 Inkster Road,
Mail Code 10-52, Farmington Hills, Michigan 48333-9065. In addition, investors
may exchange shares by sending a written request to their authorized broker
directly.

REDEEMING SHARES
- --------------------------------------------------------------------------------

The Fund redeems shares at their net asset value next determined after Federated
Services Company receives the redemption request. Redemptions will be made on
days on which the Fund computes its net asset value. Redemption requests cannot
be executed on days on which the New York Stock Exchange is closed and federal
holidays restricting wire transfers. Telephone or written requests for
redemptions must be received in proper form and can be made to the Fund through
a Michigan National Bank or Independence One representative or authorized
broker. Although the transfer agent does not charge for telephone redemptions,
it reserves the right to charge a fee for the cost of wire-transferred
redemptions of less than $5,000.

CASH SWEEP PROGRAM. Clients of Michigan National Bank who have executed a Cash
Sweep Agreement should refer to that Agreement for information about redeeming
fund shares purchased through that program.

REDEEMING BY CHECK. At the shareholder's request, Federated Services Company
will establish a checking account for redeeming Fund shares. For further
information, contact a Michigan National Bank or Independence One representative
or authorized broker.

With a Fund checking account, shares may be redeemed simply by writing a check
for $250 or more. The redemption will be made at the net asset value on the date
that the transfer agent presents the check to the Fund. A check may not be
written to close an account. In addition, if a shareholder wishes to redeem
shares and have the proceeds available, a check may be written and negotiated
through the shareholder's local bank. Checks should never be sent to the
transfer agent to redeem shares. Cancelled checks are sent to the shareholder
each month.

BY TELEPHONE. Shareholders may redeem shares of the Fund by telephoning their
Michigan National Bank or Independence One representative at 1-800-334-2292. In
addition, shareholders may redeem shares of the Fund by calling their authorized
broker directly. Redemption requests must be received and transmitted to the
transfer agent before 11:00 a.m. (Eastern time) in order for the proceeds to be
wired that same day. The Michigan National Bank or Independence One
representative or authorized broker is responsible for promptly submitting
redemption requests and providing proper written redemption instructions to the
transfer agent. Registered broker/dealers may charge customary fees and
commissions for this service. If at any time, the Fund shall determine it
necessary to terminate or modify this method of redemption, shareholders would
be promptly notified.

For calls received before 11:00 a.m. (Eastern time) proceeds will normally be
wired the same day to the shareholder's account at a domestic commercial bank
that is a member of the Federal Reserve System or a check will be sent to the
address of record. For calls received after 11:00 a.m. (Eastern time) proceeds
will normally be wired or a check sent the following business day. In no event
will proceeds be wired or a check sent more than seven days after a proper
request for redemption has been received.

A daily dividend will be paid on shares redeemed if the redemption request is
received after 11:00 a.m. (Eastern time). However, the proceeds are normally not
wired until the following business day. Redemption requests received before
11:00 a.m. (Eastern time) will normally be paid the same day but will not be
entitled to that day's dividend.

An authorization form permitting the Fund to accept telephone redemption
requests must first be completed. It is recommended that investors request this
privilege at the time of their initial application. If not completed at the time
of initial application, authorization forms and information on this service can
be obtained through a Michigan National Bank or Independence One representative
or authorized broker. Telephone redemption instructions may be recorded.

In the event of drastic economic or market changes, a shareholder may experience
difficulty in redeeming by telephone. If such a case should occur, another
method of redemption, such as By Mail, should be considered.

If reasonable procedures are not followed by the Fund, it may be liable for
losses due to unauthorized or fraudulent telephone instructions.

BY MAIL. Shareholders may redeem Fund shares by sending a written request to
the Fund through their Michigan National Bank or Independence One representative
or authorized broker. The written request should include the shareholder's name,
the Fund name, the account number, and the share or dollar amount requested.
Shareholders redeeming through Michigan National Bank or Independence One should
mail written requests to: Independence One Mutual Funds, 27777 Inkster Road,
Mail Code 10-52, Farmington Hills, Michigan 48333-9065. Investors redeeming
through an authorized broker should mail written requests directly to their
broker.

If share certificates have been issued, they must be properly endorsed and
should be sent by registered or certified mail with the written request.

Shareholders requesting a redemption or exchange of $50,000 or more, a
redemption of any amount to be sent to an address other than that on record with
the Fund, or a redemption payable other than to the shareholder of record must
have signatures on written redemption requests guaranteed by:

a trust company or a commercial bank whose deposits are insured by BIF,
which is administered by the FDIC;

a member of the New York, American, Boston, Midwest, or Pacific Stock
Exchange;

a savings bank or savings and loan association whose deposits are insured
by SAIF, which is administered by the FDIC; or

any other "eligible guarantor institution," as defined in the Securities
Exchange Act of 1934.

The Fund does not accept signatures guaranteed by a notary public.

The Fund and its transfer agent have adopted standards for accepting signature
guarantees from the above institutions. The Fund may elect in the future to
limit eligible signature guarantors to institutions that are members of a
signature guarantee program. The Fund and its transfer agent reserve the right
to amend these standards at any time without notice.

Normally, a check for the proceeds is mailed to the shareholder within one
business day, but in no event more than seven days after receipt of a proper
written redemption request.

ACCOUNTS WITH LOW BALANCES

Due to the high cost of maintaining accounts with low balances, the Fund may
redeem shares in any account and pay the proceeds to the shareholder if the
account balance falls below a required minimum value of $1,000 due to
shareholder redemptions. Before shares are redeemed to close an account, the
shareholder is notified in writing and allowed 30 days to purchase additional
shares to meet the minimum requirement.

REDEMPTION IN KIND

The Fund is obligated to redeem shares solely in cash up to $250,000 or 1% of
the Fund's net asset value, whichever is less, for any one shareholder within a
90-day period.

Any redemption beyond this amount will also be in cash unless the Trustees
determine that payments should be in kind. In such a case, the Fund will pay all
or a portion of the remainder of the redemption in portfolio instruments, valued
in the same way as the Fund determines net asset value. The portfolio
instruments will be selected in a manner that the Trustees deem fair and
equitable.

Redemption in kind is not as liquid as a cash redemption. If redemption is made
in kind, shareholders receiving their securities and selling them before their
maturity could receive less than the redemption value of their securities and
could incur certain transaction costs.

SHAREHOLDER INFORMATION
- --------------------------------------------------------------------------------

VOTING RIGHTS

Each share of the Fund gives the shareholder one vote in Trustee elections and
other matters submitted to shareholders for vote. All shares of each portfolio
in the Trust have equal voting rights, except that only shares of the Fund are
entitled to vote on matters affecting only the Fund. As a Massachusetts business
trust, the Trust is not required to hold annual shareholder meetings.
Shareholder approval will be sought only for certain changes in the Trust's or
the Fund's operation and for the election of Trustees under certain
circumstances. As of June 4, 1994, Michigan National Bank may for certain
purposes be deemed to control the Fund because it is owner of record of certain
shares of the Fund.

Trustees may be removed by the Trustees or by shareholders at a special meeting.
A special meeting of shareholders shall be called by the Trustees upon the
written request of shareholders owning at least 10% of the Trust's outstanding
shares.

MASSACHUSETTS PARTNERSHIP LAW

Under certain circumstances, shareholders may be held personally liable as
partners under Massachusetts law for acts or obligations of the Trust. To
protect shareholders, the Trust has filed legal documents with Massachusetts
that expressly disclaim the liability of shareholders for such acts or
obligations of the Trust. These documents require notice of this disclaimer to
be given in each agreement, obligation, or instrument which the Trust or its
Trustees enter into or sign.

In the unlikely event a shareholder is held personally liable for the Trust's
obligations, the Trust is required by the Declaration of Trust to use the
property of the Fund to protect or compensate the shareholder. On request, the
Trust will defend any claim made and pay any judgment against a shareholder for
any act or obligation of the Trust. Therefore, financial loss resulting from
liability as a shareholder will occur only if the Trust cannot meet its
obligations to indemnify shareholders and pay judgments against them from its
assets.

EFFECT OF BANKING LAWS
- --------------------------------------------------------------------------------

The Glass-Steagall Act and other banking laws and regulations presently prohibit
a bank holding company registered under the Federal Bank Holding Company Act of
1956 or any bank or non-bank affiliate thereof from sponsoring, organizing,
controlling or distributing the shares of a registered, open-end investment
company continuously engaged in the issuance of its shares, and prohibit banks
generally from issuing, underwriting, selling or distributing securities.
However, such banking laws and regulations do not prohibit such a holding
company affiliate or banks generally from acting as an investment adviser,
transfer agent or custodian to such an investment company or from purchasing
shares of such a company as agent for and upon the order of their customer.
Michigan National Bank is subject to such banking laws and regulations.

Michigan National Bank believes, based on the advice of its counsel, that
Michigan National Bank may perform the services for the Fund contemplated by its
advisory agreement with the Trust without violation of the Glass-Steagall Act or
other applicable banking laws or regulations. Changes in either federal or state
statutes and regulations relating to the permissible activities of banks and
their subsidiaries or affiliates, as well as further judicial or administrative
decisions or interpretations of such or future statutes and regulations, could
prevent Michigan National Bank from continuing to perform all or a part of the
above services for its customers and/or the Fund. If it were prohibited from
engaging in these customer-related activities, the Trustees would consider
alternative advisers and means of continuing available investment services. In
such event, changes in the operation of the Fund may occur, including possible
termination of any automatic or other Fund share investment and redemption
services then being provided by Michigan National Bank. It is not expected that
existing shareholders would suffer any adverse financial consequences (if
another adviser with equivalent abilities to Michigan National Bank is found) as
a result of any of these occurrences.

TAX INFORMATION
- --------------------------------------------------------------------------------

FEDERAL INCOME TAX

The Fund intends to pay no federal income tax because it expects to meet
requirements of the Internal Revenue Code applicable to regulated investment
companies and to receive the special tax treatment afforded to such companies.
The Fund will be treated as a single, separate entity for federal income tax
purposes so that income (including capital gains) and losses realized by the
Trust's other portfolios will not be combined for tax purposes with those
realized by the Fund.

Shareholders are not required to pay federal income tax on any dividends
received from the Fund that represent net interest on tax-exempt municipal
securities. However, under the Tax Reform Act of 1986, dividends representing
net interest income earned on some municipal securities are included in
calculating the federal individual alternative minimum tax or the federal
alternative minimum tax for corporations.

The alternative minimum tax applies when it exceeds the regular tax for the
taxable year. Alternative minimum taxable income is equal to the adjusted gross
income of the taxpayer increased by certain "tax preference" items not included
in regular income and reduced by only a portion of the deductions allowed in the
calculation of the regular tax.

The Tax Reform Act of 1986 treats interest on certain "private activity" bonds
issued after August 7, 1986, as a tax preference item. Unlike traditional
governmental purpose municipal bonds, which finance roads, schools, libraries,
prisons, and other public facilities, private activity bonds provide benefits to
private parties. The Fund may purchase all types of municipal bonds, including
private activity bonds. Thus, while the Fund has no present intention of
purchasing any private activity bonds, should it purchase any such bonds, a
portion of the Fund's dividends may be treated as a tax preference item.

In addition, in the case of a corporate shareholder, dividends of the Fund which
represent interest on municipal bonds may be subject to the corporate
alternative minimum tax because the dividends are included in a corporation's
"adjusted current earnings." The corporate alternative minimum tax treats 75% of
the excess of a taxpayer's pre-tax "adjusted current earnings" over the
taxpayer's alternative minimum taxable income as a tax preference item.
"Adjusted current earnings" is based upon the concept of a corporation's
"earnings and profits." Since "earnings and profits" generally include the full
amount of any Fund dividend, and alternative minimum taxable income does not
include the portion of the Fund's dividend attributable to municipal bonds which
are not private activity bonds, the difference will be included in the
calculation of the corporation's alternative minimum tax.

Dividends of the Fund representing net interest income earned on some temporary
investments and any realized net short-term gains are taxed as ordinary income.

These tax consequences apply whether dividends are received in cash or as
additional shares. Information on the tax status of dividends and distributions
is provided annually.

MICHIGAN TAX CONSIDERATIONS

Under existing Michigan laws, shareholders will not be subject to Michigan
income tax on Fund dividends to the extent that such dividends qualify as
"exempt interest dividends" under the Internal Revenue Code of 1986, as amended,
and represent interest income attributable to Michigan municipal securities.

That portion of a shareholder's shares in the Fund representing Michigan
municipal securities, and dividends paid by the Fund representing interest
payments on such securities, will be exempt from Michigan intangibles tax.

Dividends paid by the Fund are exempt from the Michigan Single Business Tax to
the extent such dividends are derived from Michigan municipal securities.

Certain municipalities in Michigan also impose an income tax on individuals and
corporations. However, to the extent that the dividends from the Funds are
exempt from federal regular income taxes, such dividends also will be exempt
from Michigan municipal income taxes.

OTHER STATE AND LOCAL TAXES

Income from the Fund is not necessarily free from state income taxes in states
other than Michigan or from personal property taxes. State laws differ on this
issue, and shareholders are urged to consult their own tax advisers regarding
the status of their accounts under state and local tax laws.

PERFORMANCE INFORMATION
- --------------------------------------------------------------------------------

From time to time the Fund advertises its yield, effective yield, and
tax-equivalent yield.

The yield of the Fund represents the annualized rate of income earned on an
investment in the Fund over a seven-day period. It is the annualized dividends
earned during the period on the investment, shown as a percentage of the
investment. The effective yield is calculated similarly to the yield, but, when
annualized, the income earned by an investment in the Fund is assumed to be
reinvested daily. The effective yield will be slightly higher than the yield
because of the compounding effect of this assumed reinvestment. The
tax-equivalent yield of the Fund is calculated similarly to the yield, but is
adjusted to reflect the taxable yield that the Fund would have had to earn to
equal its actual yield, assuming a specific tax rate.

Advertisements and other sales literature may also refer to total return. Total
return represents the change, over a specified period of time, in the value of
an investment in the Fund after reinvesting all income distributions. It is
calculated by dividing that change by the initial investment and is expressed as
a percentage.

From time to time, the Fund may advertise its performance using certain
financial publications and/or compare its performance to certain indices.

INDEPENDENCE ONE MICHIGAN MUNICIPAL CASH FUND
PORTFOLIO OF INVESTMENTS
APRIL 30, 1994
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
CREDIT
RATING:
PRINCIPAL MOODY'S
AMOUNT ISSUE OR S&P* VALUE
<C> <S> <C> <C>
- ------------- ------------------------------------------------------------------ --------------- --------------
SHORT-TERM MUNICIPAL SECURITIES--91.1%
- ---------------------------------------------------------------------------------
$ 800,000 Apache County, AZ, IDR, Weekly VRDNs (Series A)/
(Tucson Electric Power)/(Barclays Bank PLC LOC) P-1/A-1+ $ 800,000
------------------------------------------------------------------
2,000,000 Burke County, GA, Pollution Development Authority, 2.25%,
(Oglethorpe Power Corp.)/(Credit Suisse LOC), 5/10/94 P-1/A-1+ 2,000,000
------------------------------------------------------------------
1,000,000 Delta County, MI, EDC 2.45%, (Mead Paper)/(Union Bank of
Switzerland LOC), 5/11/94 P-1/NR 1,000,000
------------------------------------------------------------------
1,100,000 Delta County, MI, EDC 2.45% (Mead Paper)/(Swiss Bank Corp. LOC),
6/3/94 P-1/NR 1,100,000
------------------------------------------------------------------
1,900,000 Delta County, MI, EDC 2.45% (Mead Paper)/(Swiss Bank Corp. LOC),
5/16/94 P-1/NR 1,900,000
------------------------------------------------------------------
2,040,000 Delta County, MI, EDC 2.50% (Mead Paper)/(Union Bank of
Switzerland LOC), 6/9/94 P-1/NR 2,040,000
------------------------------------------------------------------
1,065,000 Farmington Hills, MI, EDC 3.10% (Marketing Display)/ (Comerica
Bank LOC)/(Subject to AMT), 9/1/94 NR/NR 1,065,000
------------------------------------------------------------------
425,000 Grand Rapids, MI, EDC, Weekly VRDNs (140 Monroe Ltd.
Partnership)/(Old Kent Bank LOC) NR/NR 425,000
------------------------------------------------------------------
2,500,000 Grand Rapids, MI, EDC, Weekly VRDNs (Series A 1991)/(Amway Hotel
Corp.)/(Sakura Bank, Ltd. LOC) VMIG1/A-1+ 2,500,000
------------------------------------------------------------------
1,000,000 Kalamazoo, MI, Hospital Finance Authority, 2.65% (Bronson
Methodist Hospital)/(NBD LOC), 6/16/94 VMIG1/Aa3 1,000,000
------------------------------------------------------------------
700,000 Lapeer County, MI, EDC, Weekly VRDNs (Rochester Gear)/(Comerica
Bank LOC)/(Subject to AMT) NR/NR 700,000
------------------------------------------------------------------
2,500,000 Michigan Higher Education Student Loan, Weekly VRDNs (Series
XII-B)/(AMBAC Insured)/(Subject to AMT) VMIG1/A-1+ 2,500,000
------------------------------------------------------------------
340,000 Michigan Municipal Bond Authority, 4.25%, (Series 94A), 5/5/95 NR/NR 342,465
------------------------------------------------------------------
$ 500,000 Michigan Municipal Bond Authority, 2.60% (Equipment & Realty
Property Financing Program)/(FSA Insured), 5/ 1/94 Aaa/AAA $ 500,000
------------------------------------------------------------------
500,000 Michigan State Building Authority, 2.80% Revenue Bonds (Series
A)/(Equipment Program), 10/1/94 NR/SP1+ 500,000
------------------------------------------------------------------
1,900,000 Michigan State Hospital Finance Authority, Weekly VRDNs (Series
A)/(Hospital Equipment Loan Program)/ (First of America LOC) VMIG1/NR 1,900,000
------------------------------------------------------------------
1,500,000 Michigan State Housing Development Authority, 2.55%, (Series
1988)/(Sanwa Bank LOC) (Subject to AMT), 8/ 17/94 VMIG1/A-1+ 1,500,000
------------------------------------------------------------------
1,000,000 Michigan State Housing Development Authority, 2.55% (Series
1988)/(Sanwa Bank LOC)/(Subject to AMT),
8/16/94 VMIG1/A-1+ 1,000,000
------------------------------------------------------------------
450,000 Michigan State Housing Development Authority, 2.85%, SFM Revenue
Bonds, 6/1/94 NR/AA 450,000
------------------------------------------------------------------
40,000 Michigan State Job Development Authority, 3.25% (Brewer Sawmill
Inc.)/(NBD LOC), 10/15/94 NR/NR 40,000
------------------------------------------------------------------
1,400,000 Michigan Strategic Fund Solid Waste Disposal, Weekly VRDNs
(Barclays Bank PLC LOC)/(Subject to AMT) VMIG1/NR 1,400,000
------------------------------------------------------------------
200,000 Michigan Strategic Fund, Weekly VRDNs (Allen Group
Project)/(Dresdner LOC) VMIG1/ AAA 200,000
------------------------------------------------------------------
500,000 Michigan Strategic Fund, 2.65% (Scott Paper)/(Series C)/(Sumitomo
Bank, Ltd. LOC)/(Subject to AMT),
6/1/94 VMIG1/NR 500,000
------------------------------------------------------------------
300,000 Michigan Strategic Fund, 2.35% (Series B)/(Scott Paper)/ (Sumitomo
Bank, Ltd. LOC)/(Subject to AMT),
5/24/94 VMIG1/NR 300,000
------------------------------------------------------------------
400,000 Michigan Strategic Fund, 2.35% (Scott Paper)/
(Series C)/(Sumitomo Bank, Ltd. LOC)/(Subject to AMT), 5/24/94 VMIG1/NR 400,000
------------------------------------------------------------------
$ 1,800,000 Michigan Strategic Fund, 2.35% (Series B)/(Scott
Paper)/(Sumitomo Bank, Ltd. LOC)/(Subject to AMT),
5/18/94 VMIG1/NR $ 1,800,000
------------------------------------------------------------------
2,000,000 Michigan Strategic Fund, 2.65%, (Series B)/(Scott Pa-
per)/(Sumitomo Bank, Ltd. LOC)/(Subject to AMT),
6/7/94 VMIG1/NR 2,000,000
------------------------------------------------------------------
220,000 Michigan Strategic Fund, 3.00% (Joseph Gesmundo Trust)/(First of
America LOC), 5/15/93 NR/NR 220,000
------------------------------------------------------------------
4,200,000 Michigan Strategic Fund, Weekly VRDNs (General
Motors Corp.) VMIG1/NR 4,200,000
------------------------------------------------------------------
500,000 Michigan Strategic Fund, 2.55% (Dow Chemical Co.), 6/ 8/94 P-1/NR 500,000
------------------------------------------------------------------
1,000,000 Michigan Strategic Fund, 2.50% (Dow Chemical Co.), 6/ 2/94 P-1/NR 1,000,000
------------------------------------------------------------------
1,500,000 Michigan Strategic Fund, 2.65% (Dow Chemical Co.), 7/ 6/94 P-1/NR 1,500,000
------------------------------------------------------------------
225,000 Michigan Strategic Fund Limited Obligation Revenue Bonds, Weekly
VRDNs (Series B)/(Kay Screen Printing Inc.)/(Comerica Bank
LOC)/(Subject to AMT) NR/NR 225,000
------------------------------------------------------------------
70,000 Michigan Strategic Fund Limited Obligation Revenue Bonds, Weekly
VRDNs (Village Pines Project)/(NBD LOC) NR/NR 70,000
------------------------------------------------------------------
115,000 Michigan Strategic Fund Limited Obligation Revenue Bonds, Weekly
VRDNs (Riverfront Development
Project)/(Old Kent Bank & Trust Co. LOC) NR/NR 115,000
------------------------------------------------------------------
145,000 Michigan Strategic Fund Limited Obligation Revenue Refunding
Bonds, Weekly VRDNs (Series A)/(Riverfront Development Co.)/(Old
Kent Bank & Trust Co. LOC) NR/NR 145,000
------------------------------------------------------------------
320,000 Michigan Strategic Fund, Weekly VRDNs (Starboard)/ (Comerica Bank
LOC)/(Subject to AMT) NR/NR 320,000
------------------------------------------------------------------
$ 175,000 Michigan Strategic Fund, Weekly VRDNs (Whitehall Ind.)/(Comerica
Bank LOC)/(Subject to AMT) VMIG1/NR $ 175,000
------------------------------------------------------------------
445,000 Michigan Strategic Fund Limited Obligation Revenue Bonds, Weekly
VRDNs (Riverfront Development Co.)/ (Old Kent Bank & Trust Co.
LOC) NR/NR 445,000
------------------------------------------------------------------
25,000 Michigan Strategic Fund Limited Obligation Revenue Bonds, Weekly
VRDNs (Series F)/(Riverfront Development Co. Project)/(Old Kent
Bank & Trust Co. LOC) NR/NR 25,000
------------------------------------------------------------------
1,000,000 Michigan Strategic Fund Limited Obligation Revenue Bonds, Weekly
VRDNs (Series 1992)/(Pilot Industries, Inc. Project)/(NBD
LOC)/(Subject to AMT) NR/NR 1,000,000
------------------------------------------------------------------
1,295,000 Michigan Strategic Fund Limited Obligation Revenue Bonds, Weekly
VRDNs, (Riverfront Development Co.)/ (Old Kent & Trust Co. LOC) NR/NR 1,295,000
------------------------------------------------------------------
50,000 Michigan Strategic Fund Limited Obligation Revenue Bonds, Weekly
VRDNs, (Riverfront Development Co.)/ (Old Kent & Trust Co. LOC) NR/NR 50,000
------------------------------------------------------------------
2,000,000 Michigan Strategic Fund, Weekly VRDN, (Louisiana-
Pacific Corp)/(Wachovia LOC) NR/NR 2,000,000
------------------------------------------------------------------
150,000 Oakland County, MI, EDC 3.00% (Orchard Maple
Project)/(First of America LOC), 5/15/94 NR/NR 150,000
------------------------------------------------------------------
195,000 Oakland County, MI, EDC 2.60% (Corners Shopping Center)/(First of
America LOC), 8/1/94 NR/NR 195,000
------------------------------------------------------------------
2,000,000 Polk County, Iowa, Hospital Equipment & Improvement, Weekly VRDNs
(MBIA Insured) VMIG1/A-1 2,000,000
------------------------------------------------------------------
1,480,000 Putnam County, FL, Development Pollution Control, Weekly VRDNs
(Florida Power & Light Co. Project) VMIG1/A-1 1,480,000
------------------------------------------------------------------
2,500,000 Richmond, VA, Redevelopment & Housing Authority, 3.60% (Series
B-2)/(Tobacco Row)/(Bayerische Landesbank Girozentrale LOC),
5/6/94 VMIG1/A- 2,500,000
------------------------------------------------------------------
$ 655,000 Wayne Charter County, MI, 2.77% Airport Revenue Bonds (Series
A)/(Detroit Metropolitan)/(MBIA
Insured), 12/1/94 AAA/AAA $ 657,733
------------------------------------------------------------------ --------------
TOTAL SHORT-TERM MUNICIPAL SECURITIES 50,130,198
------------------------------------------------------------------ --------------
OTHER--10.5%
- ---------------------------------------------------------------------------------
1,500,000 Dreyfus Michigan Municipal Money Market Fund NR/NR 1,500,000
------------------------------------------------------------------
4,269,000 Nuveen Tax-Exempt Money Market Fund NR/NR 4,269,000
------------------------------------------------------------------ --------------
TOTAL 5,769,000
------------------------------------------------------------------ --------------
TOTAL INVESTMENTS (AT AMORTIZED COST) $ 55,899,198\
------------------------------------------------------------------ --------------
</TABLE>

* Please refer to the Appendix of the "Statement of Additional Information" for
an explanation of the credit ratings. Current credit ratings are unaudited.

\ Also represents cost for federal tax purposes.

Note: The categories of investments are shown as a percentage of net assets
($55,013,446) at April 30, 1994.

The following abbreviations are used in this portfolio:

AMBAC--American Municipal Bond Assurance Corporation
AMT--Alternative Minimum Tax
EDC--Economic Development Corporation
FSA--Financial Security Assurance
IDR--Industrial Development Revenue
LOC--Letter of Credit
MBIA--Municipal Bond Investors
Assurance
PLC--Public Limited Company
SFM--Single Family Mortgage
VRDNs--Variable Rate Demand Notes

(See Notes which are an integral part of the Financial Statements)

INDEPENDENCE ONE MICHIGAN MUNICIPAL CASH FUND
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1994
- --------------------------------------------------------------------------------

<TABLE>
<S> <C> <C>
ASSETS:
- --------------------------------------------------------------------------------------------------
Investments, at amortized cost and value (Note 2A) $ 55,899,198
- --------------------------------------------------------------------------------------------------
Cash 254
- --------------------------------------------------------------------------------------------------
Interest receivable 187,314
- --------------------------------------------------------------------------------------------------
Deferred expenses (Note 2E) 243
- -------------------------------------------------------------------------------------------------- --------------
Total assets 56,087,009
- --------------------------------------------------------------------------------------------------
LIABILITIES:
- --------------------------------------------------------------------------------------------------
Payable for investments purchased $ 1,003,815
- -----------------------------------------------------------------------------------
Dividends payable 21,424
- -----------------------------------------------------------------------------------
Payable for Fund shares redeemed 21,294
- -----------------------------------------------------------------------------------
Payable to transfer and dividend disbursing agent 5,728
- -----------------------------------------------------------------------------------
Accrued expenses 21,302
- ----------------------------------------------------------------------------------- -------------
Total liabilities 1,073,563
- -------------------------------------------------------------------------------------------------- --------------
NET ASSETS for 55,013,446 shares of beneficial interest outstanding $ 55,013,446
- -------------------------------------------------------------------------------------------------- --------------
NET ASSET VALUE, ]Offering Price, and Redemption Price Per Share
($55,013,446 / 55,013,446 shares of beneficial interest outstanding) $1.00
- -------------------------------------------------------------------------------------------------- --------------
</TABLE>

(See Notes which are an integral part of the Financial Statements)

INDEPENDENCE ONE MICHIGAN MUNICIPAL CASH FUND
STATEMENT OF OPERATIONS
YEAR ENDED APRIL 30, 1994
- --------------------------------------------------------------------------------

<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
- ---------------------------------------------------------------------------------------------------
Interest income (Note 2B) $ 1,845,158
- ---------------------------------------------------------------------------------------------------
EXPENSES:
- ---------------------------------------------------------------------------------------------------
Investment advisory fee (Note 4) $ 299,965
- --------------------------------------------------------------------------------------
Administrative personnel and services (Note 4) 94,272
- --------------------------------------------------------------------------------------
Trustees' fees 3,995
- --------------------------------------------------------------------------------------
Custodian and portfolio accounting fees 66,512
- --------------------------------------------------------------------------------------
Transfer agent and dividend disbursing agent fees and expenses (Note 4) 25,538
- --------------------------------------------------------------------------------------
Fund share registration costs 4,801
- --------------------------------------------------------------------------------------
Auditing fees 12,190
- --------------------------------------------------------------------------------------
Legal fees 5,085
- --------------------------------------------------------------------------------------
Printing and postage 12,945
- --------------------------------------------------------------------------------------
Insurance premiums 6,505
- --------------------------------------------------------------------------------------
Miscellaneous 6,753
- -------------------------------------------------------------------------------------- -----------
Total expenses 538,561
- --------------------------------------------------------------------------------------
Deduct--Waiver of investment advisory fee (Note 4) 163,601
- -------------------------------------------------------------------------------------- -----------
Net expenses 374,960
- --------------------------------------------------------------------------------------------------- -------------
Net investment income $ 1,470,198
- --------------------------------------------------------------------------------------------------- -------------
</TABLE>

(See Notes which are an integral part of the Financial Statements)

INDEPENDENCE ONE MICHIGAN MUNICIPAL CASH FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
YEAR ENDED APRIL 30,
1994 1993
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- -----------------------------------------------------------------------------
OPERATIONS--
- -----------------------------------------------------------------------------
Net investment income $ 1,470,198 $ 1,963,249
- ----------------------------------------------------------------------------- ---------------- ----------------
DISTRIBUTIONS TO SHAREHOLDERS (NOTE 2B)--
- -----------------------------------------------------------------------------
Dividends to shareholders from net investment income (1,470,198) (1,963,249)
- ----------------------------------------------------------------------------- ---------------- ----------------
FUND SHARE (PRINCIPAL) TRANSACTIONS (NOTE 3)--
- -----------------------------------------------------------------------------
Proceeds from sale of shares 335,855,356 346,602,170
- -----------------------------------------------------------------------------
Net asset value of shares issued to shareholders in payment of dividends
declared 940,867 1,197,537
- -----------------------------------------------------------------------------
Cost of shares redeemed (366,545,290) (334,782,477)
- ----------------------------------------------------------------------------- ---------------- ----------------
Change in net assets from Fund share transactions (29,749,067) 13,017,230
- ----------------------------------------------------------------------------- ---------------- ----------------
Change in net assets (29,749,067) 13,017,230
- -----------------------------------------------------------------------------
NET ASSETS:
- -----------------------------------------------------------------------------
Beginning of period 84,762,513 71,745,283
- ----------------------------------------------------------------------------- ---------------- ----------------
End of period $ 55,013,446 $ 84,762,513
- ----------------------------------------------------------------------------- ---------------- ----------------
</TABLE>

(See Notes which are an integral part of the Financial Statements)

INDEPENDENCE ONE MICHIGAN MUNICIPAL CASH FUND
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 1994
- --------------------------------------------------------------------------------

(1) ORGANIZATION

Independence One Mutual Funds (the "Trust") is registered under the Investment
Company Act of 1940, as amended, as an open-end, management investment company.
The Trust consists of four portfolios. The financial statements included herein
are only those of Independence One Michigan Municipal Cash Fund (the "Fund").
The financial statements of the other portfolios are presented separately. The
assets of each portfolio are segregated and a shareholder's interest is limited
to the portfolio in which shares are held.

(2) SIGNIFICANT ACCOUNTING POLICIES

The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles (GAAP).

A. INVESTMENT VALUATIONS--The Fund's use of the amortized cost method to value
its portfolio securities is in accordance with Rule 2a-7 under the
Investment Company Act of 1940. Investments in other regulated investment
companies are valued at net asset value.

Since the Fund may invest a substantial portion of its assets in issuers
located in one state, it will be more susceptible to factors adversely
affecting issuers of that state, than would be a comparable general
tax-exempt mutual fund. In order to reduce the risk associated with such
factors, at April 30, 1994, 71.8% of the securities in the portfolio of
investments are backed by letters of credit of various financial
institutions and financial guaranty assurance agencies. The aggregate
percentages by financial institutions and agencies ranged from 0.4% to 8.9%
of total investments.

B. INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS--Interest income and expenses
are accrued daily. Bond premium and discount are amortized as required by
the Internal Revenue Code, as amended ("Code"). Distributions to
shareholders are recorded on the ex-dividend date.

C. FEDERAL TAXES--It is the Fund's policy to comply with the provisions of the
Code applicable to regulated investment companies and to distribute to
shareholders each year substantially all of its taxable income.
Accordingly, no provision for federal tax is necessary. At April 30, 1994,
the Fund, for federal tax purposes, had a capital loss carryforward of
$8,153, which will reduce the Fund's taxable income arising from future net
realized gain on investments, if any, to the extent permitted by the Code,
and thus will reduce the amount of the distributions to shareholders which
would otherwise be necessary to relieve the Fund of liability for federal
tax. Pursuant to the Code, such capital loss carryforward will expire in
1998 ($717), 1999 ($4,003) and 2000 ($1,790) and 2002 ($1,643).

D. WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Fund may engage in
when-issued or delayed delivery transactions. The Fund records when-issued
securities on the trade date and maintains security positions such that
sufficient liquid assets will be available to make payment for the
securities purchased. Securities purchased on a when-issued or delayed
delivery basis are marked to market daily and begin earning interest on the
settlement date.

E. DEFERRED EXPENSES--The costs incurred by the Fund with respect to
registration of its shares in its first fiscal year, excluding the initial
expense of registering the shares, have been deferred and are being
amortized using the straight-line method over a period of five years from
the Fund's commencement date.

F. OTHER--Investment transactions are accounted for on the trade date.

(3) SHARES OF BENEFICIAL INTEREST

The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value).
Transactions in Fund shares were as follows:

<TABLE>
<CAPTION>
YEAR ENDED APRIL 30,
1994 1993
<S> <C> <C>
Shares sold 335,855,356 346,602,170
- --------------------------------------------------------------------------------
Shares issued to shareholders in payment of dividends declared 940,867 1,197,537
- --------------------------------------------------------------------------------
Shares redeemed (366,545,290) (334,782,477)
- -------------------------------------------------------------------------------- --------------- ---------------
Net change resulting from Fund share transactions (29,749,067) 13,017,230
- -------------------------------------------------------------------------------- --------------- ---------------
</TABLE>

(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES

INVESTMENT ADVISORY FEE--Michigan National Bank, the Fund's investment adviser
("Adviser"), receives for its services an annual investment advisory fee equal
to .40 of 1% of the Fund's average daily net assets. Adviser may voluntarily
choose to waive a portion of its fee and reimburse certain operating expenses of
the Fund. Adviser can modify or terminate this voluntary waiver and
reimbursement at any time at its sole discretion.

ADMINISTRATIVE FEE--Federated Administrative Services ("FAS") provides the Fund
with certain administrative personnel and services. The fee is based on the
level of average aggregate net assets of the Trust for the period. FAS may
voluntarily choose to waive a portion of its fee.

TRANSFER AND DIVIDEND DISBURSING AGENT FEES--Federated Services Company
("FServ") serves as transfer agent and dividend disbursing agent for the Fund.
The fee is based on the size, type and number of accounts and transactions made
by shareholders.

Certain Officers of the Trust are Officers and Trustees of the above companies.

INDEPENDENT AUDITORS' REPORT
- --------------------------------------------------------------------------------

The Board of Trustees and Shareholders
INDEPENDENCE ONE MUTUAL FUNDS:

We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of Independence One Michigan Municipal Cash Fund
(a portfolio within Independence One Mutual Funds) as of April 30, 1994, and the
related statement of operations for the year then ended, the statements of
changes in net assets for the years ended April 30, 1994 and 1993, and the
financial highlights, which is presented on page 2 of this prospectus, for each
of the periods indicated therein. These financial statements and the financial
highlights are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and the financial
highlights based on our audits.

We conducted our audits 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 and the financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and the financial highlights. Investment securities held in custody
are confirmed to us by the custodian. As to securities purchased and sold but
not received or delivered, we request confirmations from brokers, and where
replies are not received, we carry out other appropriate auditing procedures. 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 audits provide a reasonable basis
for our opinion.

In our opinion, the financial statements and the financial highlights referred
to above present fairly, in all material respects, the financial position of
Independence One Michigan Municipal Cash Fund at April 30, 1994, and the results
of its operations for the year then ended, the changes in its net assets for the
years ended April 30, 1994 and 1993, and the financial highlights for each of
the periods indicated herein, in conformity with generally accepted accounting
principles.

KPMG Peat Marwick

Pittsburgh, Pennsylvania
June 3, 1994

INDEPENDENCE ONE
MUTUAL FUNDS

INDEPENDENCE ONE MICHIGAN
MUNICIPAL CASH FUND
Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779

INVESTMENT ADVISER
MICHIGAN NATIONAL BANK
27777 Inkster Road
Mail Cod 10-52
Farmington Hills, Michigan 48333-9065

DISTRIBUTOR
Federated Securities Corp.
Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779

CUSTODIAN
State Street Bank and Trust Company
P.O. Box 1119
Boston, Massachusetts 02103

TRANSFER AGENT AND DIVIDEND DISBURSING AGENT
Federated Services Company
Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779

INDEPENDENT AUDITORS
KPMG Peat Marwick
One Mellon Bank Center
Pittsburgh, Pennsylvania 15219

LEGAL COUNSEL
Houston, Houston and Donnelly
2510 Centre City Tower
Pittsburgh, Pennsylvania 15219

DICKSTEIN, SHAPIRO AND MORIN, L.L.P.
2101 L Street, N.W.
Washington, D.C. 20037

9042805A (6/94)

INDEPENDENCE ONE(registered trademark)
MICHIGAN MUNICIPAL
CASH FUND
Distributed by Federated Securities Corp.

PROSPECTUS DATED
JUNE 30, 1994

[LOGO]
MICHIGAN
NATIONAL
BANK
Investment Adviser

INDEPENDENCE ONE
MICHIGAN MUNICIPAL CASH FUND
(A PORTFOLIO OF INDEPENDENCE ONE MUTUAL FUNDS)
STATEMENT OF ADDITIONAL INFORMATION

This Statement of Additional Information should be read with the
prospectus of Independence One Michigan Municipal Cash Fund (the
"Fund") dated June 30, 1994. This Statement is not a prospectus
itself. To receive a copy of the prospectus, write the Fund or call
toll-free 1-800-334-2292.

FEDERATED INVESTORS TOWER
PITTSBURGH, PENNSYLVANIA 15222-3779

Statement dated June 30, 1994

[LOGO] FEDERATED SECURITIES CORP.
---------------------------------------------------------
Distributor
A subsidiary of FEDERATED INVESTORS

TABLE OF CONTENTS

- --------------------------------------------------------------------------------

GENERAL INFORMATION ABOUT THE FUND 1
- ---------------------------------------------------------------

INVESTMENT OBJECTIVE AND POLICIES 1
- ---------------------------------------------------------------

Types of Investments 1

Types of Acceptable Investments 1

Variable Rate Demand Notes 1

When-Issued and Delayed Delivery
Transactions 2

Temporary Investments 2

Reverse Repurchase Agreements 2

Investment Limitations 2

INVESTMENT RISKS 4
- ---------------------------------------------------------------

INDEPENDENCE ONE MUTUAL FUNDS MANAGEMENT 4
- ---------------------------------------------------------------

Officers and Trustees 4

Fund Ownership 5

Trustee Liability 6

INVESTMENT ADVISORY SERVICES 6
- ---------------------------------------------------------------

Adviser to the Fund 6

Advisory Fees 6

ADMINISTRATIVE SERVICES 7
- ---------------------------------------------------------------

BROKERAGE TRANSACTIONS 6

- ---------------------------------------------------------------

PURCHASING SHARES 7
- ---------------------------------------------------------------

Distribution Plan 7

Conversion to Federal Funds 7

DETERMINING NET ASSET VALUE 7
- ---------------------------------------------------------------

Use of the Amortized Cost Method 7

EXCHANGE PRIVILEGE 8
- ---------------------------------------------------------------

REDEEMING SHARES 8

- ---------------------------------------------------------------

Redemption in Kind 9

TAX STATUS 9
- ---------------------------------------------------------------

The Fund's Tax Status 9

YIELD 9
- ---------------------------------------------------------------

TAX-EQUIVALENT YIELD 9
- ---------------------------------------------------------------

Tax Equivalency Table 10

EFFECTIVE YIELD 10
- ---------------------------------------------------------------

PERFORMANCE COMPARISONS 10

- ---------------------------------------------------------------

APPENDIX 12
- ---------------------------------------------------------------

GENERAL INFORMATION ABOUT THE FUND
- --------------------------------------------------------------------------------

The Fund is a portfolio in Independence One Mutual Funds (the "Trust"), which
was established as a Massachusetts business trust under a Declaration of Trust
dated January 9, 1989.

INVESTMENT OBJECTIVE AND POLICIES
- --------------------------------------------------------------------------------

The Fund's investment objective is to provide stability of income and current
income exempt from federal regular income tax and Michigan state income tax
consistent with stability of principal.

This investment objective cannot be changed without approval of shareholders.
The investment policies described below may be changed by the Board of Trustees
("Trustees") without shareholder approval. Shareholders will be notified before
any material changes in these policies become effective.

TYPES OF INVESTMENTS

CHARACTERISTICS

The Michigan municipal securities in which the Fund invests have the
characteristics set forth in the
prospectus.

A Michigan municipal security which is unrated will be determined by the
Trust's Trustees to be an appropriate investment if it is of comparable
quality to municipal securities within the Fund's rating requirements.
The Trustees consider the creditworthiness of the issuer of a Michigan
municipal security, the issuer of a participation interest if the Fund
has the right to demand payment from the issuer of the interest or the
guarantor of payment by either of those issuers.

If a security loses its rating or the security's rating is reduced below
the required minimum after the Fund purchases it, the Fund is not
required to sell the security. The investment adviser considers this
event, however, in its determination of whether the Fund should continue
to hold the security in its portfolio. If ratings made by a nationally
recognized statistical rating organization ("NRSRO") change because of
changes in those organizations or in their rating systems, the Fund will
try to use comparable ratings as standards in accordance with the
investment policies described in the Fund's prospectus.

TYPES OF ACCEPTABLE INVESTMENTS

Examples of Michigan municipal securities are:

tax-exempt project notes issued by the U.S. Department of Housing and Urban
Development to provide financing for housing, redevelopment, and urban renewal;

municipal notes and tax-exempt commercial paper;

serial bonds sold with a series of maturity dates;

tax anticipation notes sold to finance working capital needs of municipalities
in anticipation of receiving taxes at a later date;

bond anticipation notes sold in anticipation of the issuance of longer-term
bonds in the future;

revenue anticipation notes sold in expectation of receipt of federal income
available under the Federal Revenue Sharing Program;

construction loan notes insured by the Federal Housing Administration and
financed by the Federal or Government National Mortgage Association; and

pre-refunded municipal bonds refundable at a later date.

VARIABLE RATE DEMAND NOTES

Variable interest rates generally reduce changes in the market value of
municipal securities from their original purchase prices. Accordingly, as
interest rates decrease or increase, the potential for capital appreciation or
depreciation is less for variable rate municipal securities than for fixed
income obligations.

Many municipal securities with variable interest rates purchased by the Fund are
subject to repayment of principal (usually within seven days) on the Fund's
demand. For purposes of determining the Fund's average maturity, the maturities
of these variable rate demand municipal securities (including participation
interests) are the longer of the periods remaining until the next readjustment
of their interest rates or the periods remaining until their principal amounts
can be recovered by exercising the right to demand payment. The terms of these
variable rate demand instruments require payment of principal and accrued
interest from the issuer of the municipal obligations, the issuer of the
participation interests, or a guarantor of either issuer.

WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS

These transactions are made to secure what is considered to be an advantageous
price and yield for the Fund. Settlement dates may be a month or more after
entering into these transactions, and the market values of the securities
purchased may vary from the purchase prices.

TEMPORARY INVESTMENTS

The Fund may also invest in high quality temporary investments during times of
unusual market conditions for defensive purposes and to maintain liquidity.

REPURCHASE AGREEMENTS

Certain securities in which the Fund invests may be purchased pursuant to
repurchase agreements. Repurchase agreements are arrangements in which
banks, broker/dealers, and other recognized financial institutions sell
U.S. government securities or other securities to the Fund and agree at
the time of sale to repurchase them at a mutually agreed upon time and
price within one year from the date of acquisition. The Fund or its
custodian will take possession of the securities subject to repurchase
agreements and the securities will be marked to market daily. To the
extent that the original seller does not repurchase the securities from
the Fund, the Fund could receive less than the repurchase price on any
sale of such securities. In the event that such a defaulting seller filed
for bankruptcy or became insolvent, disposition of such securities by the
Fund might be delayed pending court action. The Fund believes that under
the regular procedures normally in effect for custody of the Fund's
portfolio securities subject to repurchase agreements, a court of
competent jurisdiction would rule in favor of the Fund and allow
retention or disposition of such securities. The Fund will only enter
into repurchase agreements with banks and other recognized financial
institutions such as broker/dealers which are found by the Fund's adviser
to be creditworthy pursuant to guidelines established by the Trustees.

From time to time, such as when suitable Michigan municipal securities are not
available, the Fund may invest a portion of its assets in cash. Any portion of
the Fund's assets maintained in cash will reduce the amount of assets in
Michigan municipal securities and thereby reduce the Fund's yield.

REVERSE REPURCHASE AGREEMENTS

The Fund may enter into reverse repurchase agreements. This transaction is
similar to borrowing cash. In a reverse repurchase agreement the Fund transfers
possession of a portfolio instrument to another person, such as a financial
institution, broker, or dealer, in return for a percentage of the instrument's
market value in cash, and agrees that on a stipulated date in the future the
Fund will repurchase the portfolio instrument by remitting the original
consideration plus interest at an agreed upon rate.

When effecting reverse repurchase agreements, liquid assets of the Fund, in a
dollar amount sufficient to make payment for the obligations to be purchased,
are segregated at the trade date. These securities are marked to market daily
and maintained until the transaction is settled.

The use of reverse repurchase agreements may enable the Fund to avoid selling
portfolio instruments at a time when a sale may be deemed to be disadvantageous,
but the ability to enter into reverse repurchase agreements does not ensure that
the Fund will be able to avoid selling portfolio instruments at a
disadvantageous time.

INVESTMENT LIMITATIONS

SELLING SHORT AND BUYING ON MARGIN

The Fund will not sell any securities short or purchase any securities on
margin but may obtain such short-term credits as may be necessary for
clearance of transactions.

ISSUING SENIOR SECURITIES AND BORROWING MONEY

The Fund will not issue senior securities except that the Fund may borrow
money directly and engage in reverse repurchase agreements in amounts up
to one-third of the value of its net assets, including the amounts
borrowed.

The Fund will not borrow money or engage in reverse repurchase agreements
for investment leverage, but rather as a temporary, extraordinary, or
emergency measure or to facilitate management of the portfolio by
enabling the Fund to meet redemption requests when the liquidation of
portfolio securities is deemed to be inconvenient or disadvantageous. The
Fund will not purchase any securities while borrowings in excess of 5% of
its total assets are outstanding.

PLEDGING ASSETS

The Fund will not mortgage, pledge, or hypothecate any assets except to
secure permitted borrowings. In these cases, it may pledge assets having
a market value not exceeding the lesser of the dollar amounts borrowed or
10% of the value of total assets at the time of the pledge.

INVESTING IN REAL ESTATE

The Fund will not purchase or sell real estate, although it may invest in
securities of issuers whose business involves the purchase or sale of
real estate or in securities which are secured by real estate or
interests in real estate.

INVESTING IN COMMODITIES, COMMODITY CONTRACTS OR COMMODITY FUTURES
CONTRACTS

The Fund will not purchase or sell commodities, commodity contracts, or
commodity futures contracts.

UNDERWRITING

The Fund will not underwrite any issues of securities, except as it may
be deemed to be an underwriter under the Securities Act of 1933 in
connection with the sale of securities in accordance with its investment
objective, policies, and limitations.

INVESTING IN RESTRICTED SECURITIES

The Fund will not invest more than 10% of the value of its net assets in
securities subject to restrictions on resale under the Securities Act of
1933.

LENDING CASH OR SECURITIES

The Fund will not lend any of its assets, except that it may acquire
publicly or nonpublicly issued municipal securities or temporary
investments or enter into repurchase agreements in accordance with its
investment objective, policies, and limitations.

DIVERSIFICATION OF INVESTMENTS

The Fund will not invest more than 10% of its total assets in the
securities of any one issuer (except cash and cash items, repurchase
agreements collateralized by U.S. government securities and U.S.
government obligations) with respect to securities comprising 75% of its
assets.

Under this limitation each governmental subdivision, including states and
the District of Columbia, territories, possessions of the United States,
or their political subdivisions, agencies, authorities,
instrumentalities, or similar entities, will be considered a separate
issuer if its assets and revenues are separate from those of the
governmental body creating it and the security is backed only by its own
assets and revenues.

Industrial development bonds, backed only by the assets and revenues of a
nongovernmental user, are considered to be issued solely by that user. If
in the case of an industrial development bond or governmental-issued
security, a governmental or other entity guarantees the security, such
guarantee would be considered a separate security issued by the guarantor
as well as the other issuer, subject to limited exclusions allowed by the
Investment Company Act of 1940.

The above investment limitations cannot be changed without approval of
shareholders. The following limitations, however, may be changed by the Trustees
without shareholder approval. Shareholders will be notified before any material
change in these limitations becomes effective.

INVESTING IN SECURITIES OF OTHER INVESTMENT COMPANIES

The Fund can acquire up to 3 per centum of the total outstanding stock of
other investment companies. The Fund will not be subject to any other
limitations with regard to the acquisition of securities of other
investment companies so long as the public offering price of the Fund's
shares does not include a sales load exceeding 1-1/2 percent. The Fund
will purchase securities of closed-end investment companies only in
open-market transactions involving only customary broker's commissions.
However, these limitations are not applicable if the securities are
acquired in a merger, consolidation, reorganization, or acquisition of
assets.

INVESTING IN ILLIQUID SECURITIES

INVESTING IN NEW ISSUERS

The Fund will not invest more than 5% of the value of its total assets in
industrial development bonds where payment of principal and interest is
the responsibility of companies (or in the alternative, guarantors, where
applicable) which have records of less than three years of continuous
operations, including the operation of any predecessor.

INVESTING IN ISSUERS WHOSE SECURITIES ARE OWNED BY OFFICERS AND TRUSTEES OF
THE TRUST

The Fund will not purchase or retain the securities of any issuer if the
officers and Trustees of the Trust or its investment adviser owning
individually more than .5 of 1% of the issuer's securities together own
more than 5% of the issuer's securities.

DEALING IN PUTS AND CALLS

The Fund will not purchase or sell puts, calls, straddles, spreads, or
any combination of them, except that the Fund may purchase municipal
securities accompanied by agreements of sellers to repurchase them at the
Fund's option.

In order to comply with the registration requirements of a particular state, the
Fund will not invest in real estate limited partnerships and oil, gas or other
mineral leases. If this state's policy changes, these restrictions may be
revised without shareholder notification.

Except with respect to borrowing money, if a percentage limitation is adhered to
at the time of investment, a later increase or decrease in percentage resulting
from any change in value or net assets will not result in a violation of such
restriction.

The Fund did not borrow money, pledge securities, invest in illiquid securities,
restricted securities, or engage in when-issued and delayed delivery
transactions or reverse repurchase agreements in excess of 5% of the value of
its net assets during the last fiscal period and has no present intent to do so
during the coming fiscal year.

INVESTMENT RISKS
- --------------------------------------------------------------------------------

Because the Fund invests in obligations of Michigan issuers, the Funds'
performance is tied to conditions within the State of Michigan and in particular
to the financial condition of the State and its authorities and municipalities.
The following information constitutes only a brief summary and does not purport
to be a complete description of such matters. The information is based on
official statements relating to securities offerings of Michigan issuers and
other sources believed to be reliable.

Yields on Michigan municipal securities depend on a variety of factors including
the general conditions of short-term municipal note market, the size of the
particular offering, the maturity of the obligations, and the rating of the
issue. The ability of the Fund to achieve its investment objective also depends
on the continuing ability of the issuers of Michigan municipal securities and
participation interests, or the guarantors of either, to meet their obligations
for the payment of interest and principal when due.

The automotive industry is the backbone of Michigan's economy. The three largest
U.S. automotive manufacturers (General Motors, Ford, and Chrysler) were
Michigan's largest employers in 1993. The type of automotive employment has
shifted over the past several years from manufacturing to administrative and
technical. However, Michigan continues to have the highest concentration of
automotive assembly facilities in the nation.

International trade is becoming increasingly important to Michigan's economy.
Detroit, the largest U.S. city bordering Canada, is located across the Detroit
River from Ontario--Canada's most densely populated province.

Michigan's economy has been undergoing basic structural changes. These changes
reflect a diversifying economy which is less reliant on the automobile industry.
As a result, it is expected that in the future Michigan's economy will be less
susceptible to cyclical swings and more resilient when national downturns occur.

INDEPENDENCE ONE MUTUAL FUNDS MANAGEMENT
- --------------------------------------------------------------------------------

OFFICERS AND TRUSTEES

Officers and Trustees are listed with their addresses, principal occupations,
and present positions, including any affiliation with Michigan National Bank,
Michigan National Corporation, Federated Investors, Federated Securities Corp.,
Federated Administrative Services, and Federated Services Company.

<TABLE>
<CAPTION>
POSITIONS WITH PRINCIPAL OCCUPATIONS
NAME AND ADDRESS THE TRUST DURING PAST FIVE YEARS
<S> <C> <C>
Robert E. Baker Trustee Retired; formerly, Vice Chairman, Chrysler Financial Corporation.
4327 Stoneleigh Road
Bloomfield Hills, MI

Harold Berry Trustee Chairman, Independent Sprinkler Companies, Inc.; formerly, Chairman,
100 Galleria Officentre, Executive Committee, Federal Enterprises, Inc.; Chairman, Berry,
Suite 219 Ziegelman & Company; Chairman, Teleco, Inc.; Vice Chairman, Tel-Am
Southfield, MI Corp.; Chairman, Winjak, Inc.

Clarence G. Frame\ Trustee Director, Tosco Corporation, Chicago Milwaukee Corporation, and Voyageur
W-875 First Bank Building Funds Group; formerly, Vice Chairman, First Bank System, Inc., and
332 Minnesota Street President, The First National Bank of St. Paul, a subsidiary of First
St. Paul, MN Bank System, Inc.

Harry J. Nederlander\* Trustee Chairman, Nederlander Enterprises.
231 S. Woodward,
Suite 219
Birmingham, MI

David L. VanAndel* Trustee Vice President, Manufacturing and Operations, Policy Board Member,
Amway Corporation Executive Committee Member, Amway Corporation; Chief Operating Officer,
7575 Fulton Street, East Sunrise Auto Plaza.
Ada, MI

Thomas S. Wilson Trustee President, Detroit Pistons; Executive Administrator, Detroit Pistons,
Two Championship Drive The Palace of Auburn Hills, and The Pine Knob Music Theatre.
Auburn Hills, MI

Edward C. Gonzales President and Executive Vice President, Treasurer and Director, Federated Securities
Federated Investors Tower Treasurer Corp.; Chairman, Treasurer and Trustee, Federated Administrative
Pittsburgh, PA Services; Vice President, Treasurer and Trustee, Federated Investors.

Jeffrey W. Sterling Vice President Vice President, Federated Administrative Services.
Federated Investors Tower and Assistant
Pittsburgh, PA Treasurer

Jay S. Neuman Secretary Corporate Counsel, Federated Investors; Prior to January 1991, Associate
Federated Investors Tower Counsel, The Boston Company Advisors, Inc.
Pittsburgh, PA
</TABLE>

\Members of the Trust's Executive Committee. The Executive Committee of the
Board of Trustees handles the responsibilities of the Board of Trustees between
meetings of the Board.

*This Trustee is deemed to be an "interested person" of the Fund or Trust as
defined in the Investment Company Act of 1940.

FUND OWNERSHIP

Officers and Trustees own less than 1% of the outstanding shares of the Fund.
The following indicates the beneficial ownership of shareholders who are the
beneficial owners of more than 5% of the outstanding shares of the portfolio as
of June 4, 1994: Michigan National Bank, acting in various capacities for
numerous accounts owned, of record: approximately 17,718,427 shares (29.6%); and
Christman Company, Lansing, MI, owned approximately 3,207,522 shares (5.36%).

TRUSTEE LIABILITY

The Trust's Declaration of Trust provides that the Trustees will not be liable
for errors of judgment or mistakes of fact or law. However, they are not
protected against any liability to which they would otherwise be subject by
reason of willful misfeasance, bad faith, gross negligence, or reckless
disregard of the duties involved in the conduct of their office.

INVESTMENT ADVISORY SERVICES
- --------------------------------------------------------------------------------

ADVISER TO THE FUND

The Fund's investment adviser is Michigan National Bank (the "Adviser").

The Adviser shall not be liable to the Trust, the Fund, or any shareholder of
the Fund for any losses that may be sustained in the purchase, holding, or sale
of any security, or for anything done or omitted by it, except acts or omissions
involving willful misfeasance, bad faith, gross negligence, or reckless
disregard of the duties imposed upon it by its contract with the Trust.

ADVISORY FEES

For its advisory services, Michigan National Bank receives an annual investment
advisory fee as described in the prospectus. For the fiscal years ended April
30, 1994, 1993, and 1992, the Adviser earned $299,965, $351,532, and $184,931,
respectively, of which $163,601, $174,669, and $178,114, respectively, were
waived because of undertakings to limit the Fund's expenses.

STATE EXPENSE LIMITATIONS

The Adviser has undertaken to comply with the expense limitations
established by certain states for investment companies whose shares are
registered for sale in those states. If the Fund's normal operating
expenses (including the investment advisory fee, but not including
brokerage commissions, interest, taxes, and extraordinary expenses)
exceed 2-1/2% per year of the first $30 million of average net assets, 2%
per year of the next $70 million of average net assets, and 1-1/2% per
year of the remaining average net assets, the Adviser will reimburse the
Fund for its expenses over the limitation.

If the Fund's monthly projected operating expenses exceed this
limitation, the investment advisory fee paid will be reduced by the
amount of the excess, subject to an annual adjustment. If the expense
limitation is exceeded, the amount to be reimbursed by the Adviser will
be limited, in any single fiscal year, by the amount of the investment
advisory fee.

This arrangement is not part of the advisory contract and may be amended
or rescinded in the future.

ADMINISTRATIVE SERVICES
- --------------------------------------------------------------------------------

Federated Administrative Services, a subsidiary of Federated Investors, provides
administrative personnel and services to the Fund for the fees set forth in the
prospectus. For the fiscal years ended April 30, 1994, 1993, and 1992, the Fund
incurred administrative services costs of $94,272, $111,949, and $60,000,
respectively, of which
$0, $0, and $5,093, respectively, were voluntarily waived because of
undertakings to limit the Fund's expenses.

BROKERAGE TRANSACTIONS
- --------------------------------------------------------------------------------

When selecting brokers and dealers to handle the purchase and sale of portfolio
instruments, the Adviser looks for prompt execution of the order at a favorable
price. In working with dealers, the Adviser will generally use those who are
recognized dealers in specific portfolio instruments, except when a better price
and execution of the order can be obtained elsewhere. The Adviser makes
decisions on portfolio transactions and selects brokers and dealers subject to
review by the Trustees.

The Adviser may select brokers and dealers who offer brokerage and research
services. These services may be furnished directly to the Fund or to the Adviser
and may include:

advice as to the advisability of investing in securities;

security analysis and reports;

economic studies;

industry studies;

receipt of quotations for portfolio evaluations; and

similar services.

The Adviser and its affiliates exercise reasonable business judgment in
selecting brokers who offer brokerage and research services to execute
securities transactions. They determine in good faith that commissions charged
by such persons are reasonable in relationship to the value of the brokerage and
research services provided.

Research services provided by brokers may be used by the Adviser for other
accounts. To the extent that receipt of these services may supplant services for
which the Adviser or its affiliates might otherwise have paid, it would tend to
reduce their expenses.

PURCHASING SHARES
- --------------------------------------------------------------------------------

Shares are sold at their net asset value without a sales charge on days which
the New York Stock Exchange is open for business, except on federal holidays
restricting wire transfers. The procedure for purchasing shares of the Fund is
explained in the prospectus under "Investing in the Fund."

DISTRIBUTION PLAN

The Trust has adopted a Plan pursuant to Rule 12b-1 which was promulgated by the
Securities and Exchange Commission pursuant to the Investment Company Act of
1940 (the "Plan"). The Plan provides for payment of fees to Federated Securities
Corp. to finance any activity which is principally intended to result in the
sale of the Fund's shares subject to the Plan. Such activities may include the
advertising and marketing of shares; preparing, printing, and distributing
prospectuses and sales literature to prospective shareholders, brokers, or
administrators; and implementing and operating the Plan. Pursuant to the Plan,
Federated Securities Corp. may pay fees to brokers for distribution and
administrative services and to administrators for administrative services as to
shares. The administrative services are provided by a representative who has
knowledge of the shareholder's particular circumstances and goals, and include,
but are not limited to: communicating account openings; communicating account
closings; entering purchase transactions; entering redemption transactions;
providing or arranging to provide accounting support for all transactions,
wiring funds and receiving funds for share purchases and redemptions, confirming
and reconciling all transactions, reviewing the activity in Fund accounts, and
providing training and supervision of broker personnel; posting and reinvesting
dividends to Fund accounts or arranging for this service to be performed by the
Fund's transfer agent; and maintaining and distributing current copies of
prospectuses and shareholder reports to the beneficial owners of shares and
prospective shareholders.

The Board of Trustees expects that the Plan will result in the sale of a
sufficient number of shares so as to allow the Fund to achieve economic
viability. It is also anticipated that an increase in the size of the Fund will
facilitate more efficient portfolio management and assist the Fund in seeking to
achieve its investment objective.

CONVERSION TO FEDERAL FUNDS

It is the Fund's policy to be as fully invested as possible so that maximum
interest may be earned. To this end, all payments from shareholders must be in
federal funds or be converted into federal funds. State Street Bank acts as the
shareholder's agent in depositing checks and converting them to federal funds.

DETERMINING NET ASSET VALUE
- --------------------------------------------------------------------------------

The Fund attempts to stabilize the value of a share at $1.00. The days on which
net asset value is calculated by the Fund are described in the prospectus.

USE OF THE AMORTIZED COST METHOD

The Trustees have decided that the best method for determining the value of
portfolio instruments is amortized cost. Under this method, portfolio
instruments are valued at the acquisition cost as adjusted for amortization of
premium or accumulation of discount rather than at current market value.

The Fund's use of the amortized cost method of valuing portfolio instruments
depends on its compliance with Rule 2a-7, as amended (the "Rule"), under the
Investment Company Act of 1940. Under the Rule, the Trustees must establish
procedures reasonably designed to stabilize the net asset value per share, as
computed for purposes of distribution and redemption, at $1.00 per share, taking
into account current market conditions and the Fund's investment objective.

Under the Rule, the Fund is permitted to purchase instruments which are subject
to demand features or standby commitments. As defined by the Rule, a demand
feature entitles the Fund to receive the principal amount of the instrument from
the issuer or a third party on (1) no more than 30 days' notice or (2) at
specified intervals not exceeding one year on no more than 30 days' notice. A
standby commitment entitles the Fund to achieve same day settlement and to
receive an exercise price equal to the amortized cost of the underlying
instrument plus accrued interest at the time of exercise.

Although demand features and standby commitments are defined as "puts" under the
Rule, the Fund does not consider them to be "puts" as that term is used in the
Fund's investment limitations. Demand features and standby commitments are
features which enhance an instrument's liquidity, and the investment limitation
which proscribes puts is designed to prohibit the purchase and sale of put and
call options and is not designed to prohibit the Fund from using techniques
which enhance the liquidity of portfolio instruments.

MONITORING PROCEDURES

The Trustees' procedures include monitoring the relationship between the
amortized cost value per share and the net asset value per share based
upon available indications of market value. The Trustees will decide
what, if any, steps should be taken if there is a difference of more than
.5 of 1% between the two values. The Trustees will take any steps they
consider appropriate (such as redemption in kind or shortening the
average portfolio maturity) to minimize any material dilution or other
unfair results arising from differences between the two methods of
determining net asset value.

INVESTMENT RESTRICTIONS

The Rule requires that the Fund limit its investments to instruments
that, in the opinion of the Trustees, present minimal credit risks and
have received the requisite rating from one or more nationally recognized
statistical rating organizations. If the instruments are not rated, the
Trustees must determine that they are of comparable quality. The Rule
also requires the Fund to maintain a dollar-weighted average portfolio
maturity (not more than 90 days) appropriate to the objective of
maintaining a stable net asset value of $1.00 per share. In addition, no
instrument with a remaining maturity of more than 397 days can be
purchased by the Fund.

Should the disposition of a portfolio security result in a
dollar-weighted average portfolio maturity of more than 90 days, the Fund
will invest its available cash to reduce the average maturity to 90 days
or less as soon as possible.

The Fund may attempt to increase yield by trading portfolio securities to take
advantage of short-term market variations. This policy may, from time to time,
result in high portfolio turnover. Under the amortized cost method of valuation,
neither the amount of daily income nor the net asset value is affected by any
unrealized appreciation or depreciation of the portfolio.

In periods of declining interest rates, the indicated daily yield on shares of
the Fund, computed by dividing the annualized daily income on the Fund's
portfolio by the net asset value computed as above, may tend to be higher than a
similar computation made by using a method of valuation based upon market prices
and estimates.

In periods of rising interest rates, the indicated daily yield on shares of the
Fund computed the same way may tend to be lower than a similar computation made
by using a method of calculation based upon market prices and estimates.

EXCHANGE PRIVILEGE
- --------------------------------------------------------------------------------

Shareholders using the exchange privilege must exchange shares having a net
asset value of at least $1,000. Before the exchange, the shareholder must
receive a prospectus of the fund for which the exchange is being made.

This privilege is available to shareholders resident in any state in which the
fund shares being acquired may be sold. Upon receipt of proper instructions and
required supporting documents, shares submitted for exchange are redeemed and
the proceeds invested in shares of the other fund.

Instructions for exchanges may be given in writing or by telephone. Exchange
procedures are explained in the prospectus under "Exchange Privilege."

REDEEMING SHARES
- --------------------------------------------------------------------------------

The Fund redeems shares at the next computed net asset value after Federated
Services Company receives the redemption request. Redemption procedures are
explained in the prospectus under "Redeeming Shares."

REDEMPTION IN KIND

Although the Fund intends to redeem shares in cash, it reserves the right under
certain circumstances to pay the redemption price in whole or in part by a
distribution of securities from the Fund's portfolio. To satisfy registration
requirements in a particular state, redemption in kind will be made (for any
shareholder requesting redemption) in readily marketable securities to the
extent that such securities are available. If this state's policy changes, the
Fund reserves the right to redeem in kind by delivering those securities it
deems appropriate.

Redemption in kind will be made in conformity with applicable Securities and
Exchange Commission rules, taking such securities at the same value employed in
determining net asset value and selecting the securities in a manner the
Trustees determine to be fair and equitable.

The Trust has elected to be governed by Rule 18f-1 of the Investment Company Act
of 1940 under which each Fund is obligated to redeem shares for any one
shareholder in cash only up to the lesser of $250,000 or 1% of the Fund's net
asset value during any 90-day period.

TAX STATUS
- --------------------------------------------------------------------------------

THE FUND'S TAX STATUS

The Fund intends to pay no federal income tax because it expects to meet the
requirements of Subchapter M of the Internal Revenue Code applicable to
regulated investment companies and to receive the special tax treatment afforded
to such companies. To qualify for this treatment, the Fund must, among other
requirements:

derive at least 90% of its gross income from dividends, interest, and gains
from the sale of securities;

derive less than 30% of its gross income from the sale of securities held less
than three months;

invest in securities within certain statutory limits; and

distribute to its shareholders at least 90% of its net income earned during the
year.

YIELD
- --------------------------------------------------------------------------------

The Fund's yield for the seven-day period ended April 30, 1994, was 2.22%.

The Fund calculates its yield daily, based upon the seven days ending on the day
of the calculation, called the "base period." This yield is computed by:

determining the net change in the value of a hypothetical account with a
balance of one share at the beginning of the base period, with the net change
excluding capital changes but including the value of any additional shares
purchased with dividends earned from the original one share and all dividends
declared on the original and any purchased shares;

dividing the net change in the account's value by the value of the account at
the beginning of the base period to determine the base period return; and

multiplying the base period return by (365/7).

To the extent that financial institutions and broker/dealers charge fees in
connection with services provided in conjunction with an investment in the Fund,
the performance will be reduced for those shareholders paying those fees.

TAX-EQUIVALENT YIELD
- --------------------------------------------------------------------------------

The Fund's tax-equivalent yield for the seven-day period ended April 30, 1994,
was 3.29%, assuming an effective tax rate of 32.6%.

The tax-equivalent yield of the Fund is calculated similarly to the yield, but
is adjusted to reflect the taxable yield that the Fund would have had to earn to
equal its actual yield, assuming a specified tax rate and assuming that income
is 100% tax-exempt.

TAX-EQUIVALENCY TABLE

The Fund may also use a tax-equivalency table in advertising and sales
literature. The interest earned by the municipal bonds in the Fund's portfolio
generally remains free from federal regular income tax,* and is free from the
state income tax imposed by the State of Michigan. As the table below indicates,
a "tax-exempt" investment is an attractive choice for investors, particularly in
times of narrow spreads between tax-free and taxable yields.

<TABLE>
<S> <C> <C> <C> <C> <C>
COMBINED FEDERAL AND STATE INCOME TAX BRACKET:
19.60% 32.60% 35.60% 40.60% 44.20%
- -----------------------------------------------------------------------------------------------------------
JOINT RETURN: $1-38,000 $38,001-91,850 $91,851-140,000 $140,001-250,000 OVER $250,000
SINGLE RETURN:
$1-22,750 $22,751-55,100 $55,101-115,000 $115,001-250,000 OVER $250,000
- -----------------------------------------------------------------------------------------------------------
<CAPTION>
TAX-EXEMPT
YIELD TAXABLE YIELD EQUIVALENT
<S> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------
1.50% 1.87% 2.23% 2.33% 2.53% 2.69%
2.00 2.49 2.97 3.11 3.37 3.58
2.50 3.11 3.71 3.88 4.21 4.48
3.00 3.73 4.45 4.66 5.05 5.38
3.50 4.35 5.19 5.43 5.89 6.27
4.00 4.98 5.93 6.21 6.73 7.17
4.50 5.60 6.68 6.99 7.58 8.06
5.00 6.22 7.42 7.76 8.42 8.96
5.50 6.84 8.16 8.54 9.26 9.86
6.00 7.46 8.90 9.32 10.10 10.75
</TABLE>

The chart above, which is based on the Michigan tax schedule, is for
illustrative purposes only. It is not an indicator of past or future performance
of the Fund.

Note: The maximum marginal tax rate for each bracket was used in calculating the
taxable yield equivalent. Furthermore, additional state and local taxes
paid on comparable taxable investments were not used to increase federal
deductions.

* Some portion of the Fund's income may be subject to the federal alternative
minimum tax and state and local taxes.

EFFECTIVE YIELD
- --------------------------------------------------------------------------------

The Fund's effective yield for the seven-day period ended April 30, 1994, was
2.24%.

The Fund's effective yield is computed by compounding the unannualized base
period return by:

adding 1 to the base period return;

raising the sum to the 365/7th power; and

subtracting 1 from the result.

PERFORMANCE COMPARISONS
- --------------------------------------------------------------------------------

The Fund's performance depends upon such variables as:

portfolio quality;

average portfolio maturity;

type of instruments in which the portfolio is invested;

changes in interest rates on money market instruments;

changes in Fund expenses; and

the relative amount of Fund cash flow.

Investors may use financial publications and/or indices to obtain a more
complete view of the Fund's performance. When comparing performance, investors
should consider all relevant factors such as the composition of any index used,
prevailing market conditions, portfolio compositions of other funds, and methods
used to value portfolio securities and compute offering price. The financial
publications and/or indices which the Fund uses in advertising may include:

LIPPER ANALYTICAL SERVICES, INC., ranks funds in various fund categories by
making comparative calculations using total return. Total return assumes the
reinvestment of all income dividends and capital gains distributions, if any.
From time to time, the Fund will quote its Lipper ranking in the "tax-free
money funds" category in advertising and sales literature.

MONEY, a monthly magazine, regularly ranks money market funds in various
categories based on the latest available seven-day compound (effective) yield.
From time to time, the Fund will quote its Money ranking in advertising and
sales literature.

Advertisements and other sales literature for the Fund may refer to total
return. Total return is the historic change in the value of an investment in the
Fund based on the monthly reinvestment of dividends over a specified period of
time.

APPENDIX
- --------------------------------------------------------------------------------

STANDARD & POOR'S CORPORATION CORPORATE AND MUNICIPAL BOND RATING DEFINITIONS

AAA--Debt rated AAA has the highest rating assigned by Standard & Poor's.
Capacity to pay interest and repay principal is extremely strong.

AA--Debt rated AA has a very strong capacity to pay interest and repay principal
and differs from the higher rated issues only in small degree.

A--Debt rated A has a strong capacity to pay interest and repay principal
although it is somewhat more susceptible to the adverse effect of changes in
circumstances and economic conditions than debt in higher rated categories.

PLUS (+) OR MINUS (-): The ratings from AA to CCC may be modified by the
addition of a plus or minus sign to show relative standing within the major
rating categories.

MOODY'S INVESTORS SERVICE, INC., CORPORATE AND MUNICIPAL BOND RATING DEFINITIONS

Aaa--Bonds which are rated Aaa are judged to be of the best quality. They carry
the smallest degree of investment risk and are generally referred to as "gilt
edged." Interest payments are protected by a large or by an exceptionally stable
margin and principal is secure. While the various protective elements are likely
to change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.

Aa--Bonds which are rated Aa are judged to be of high quality by all standards.
Together with the AAA group, they comprise what are generally known as
high-grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long term risks appear somewhat larger than in Aaa securities.

A--Bonds which are rated A possess many favorable investment attributes and are
to be considered as upper medium-grade obligations. Factors giving security to
principal and interest are considered adequate but elements may be present which
suggest a susceptibility to impairment some time in the future.

DUFF & PHELPS, INC., CORPORATE BOND RATING DEFINITIONS

AAA--Highest credit quality. The risk factors are negligible being only slightly
more than for risk-free U.S. Treasury debt.

AA+, AA, AA---High credit quality protection factors are strong. Risk is modest
but may vary slightly from time to time because of economic conditions.

A+, A, A---Protection factors are averge but adequate. However, risk factors are
more variable and greater in periods of economic stress.

FITCH INVESTORS SERVICE, INC., CORPORATE BOND RATING DEFINITIONS

AAA--Bonds considered to be investment grade and of the highest quality. The
obligor has an exceptionally strong ability to pay interest and repay principal,
which is unlikely to be affected by reasonably foreseeable events.

AA--Bonds considered to be investment grade and of very high credit quality. The
obligor's ability to pay interest and repay principal is very strong, although
not quite as strong as bonds rated AAA. Because bonds rated in the AAA and AA
categories are not significantly vulnerable to foreseeable future developments,
short-term debt of these issuers is generally rated F-1+.

A--Bonds considered to be investment grade and of high credit quality. The
obligor's ability to pay interest and repay principal is considered to be
strong, but may be more vulnerable to adverse changes in economic conditions and
circumstances than bonds with higher ratings.

IBCA LONG-TERM RATING DEFINITIONS

AAA--Obligations for which there is the lowest expectation of investment risk.
Capacity for timely repayment of principal and interest is substantial, such
that adverse changes in business, economic or financial conditions are unlikely
to increase investment risk significantly.

AA--Obligations for which there is a very low expectation of investment risk.
Capacity for timely repayment of principal and interest is substantial. Adverse
changes in business, economic or financial conditions may increase investment
risk albeit not very significantly.

A--Obligations for which there is a low expectation of investment risk. Capacity
for timely repayment of principal interest is strong, although adverse changes
in business, economic or financial conditions may lead to increased investment
risk.

STANDARD & POOR'S CORPORATION SHORT-TERM MUNICIPAL OBLIGATION RATING DEFINITIONS

SP-1--Very strong or strong capacity to pay principal and interest. Those issues
determined to possess overwhelming safety characteristics will be given a plus
sign (+) designation.

SP-2--Satisfactory capacity to pay principal and interest.

MOODY'S INVESTORS SERVICE, INC., SHORT-TERM MUNICIPAL OBLIGATION RATING
DEFINITIONS

MIG1/VMIG1--This designation denotes best quality. There is a present strong
protection by established cash flows, superior liquidity support or demonstrated
broadbased access to the market for refinancing.

MIG2/VMIG2--This designation denotes high quality. Margins of protection are
ample although not so large as in the preceding group.

IBCA SHORT-TERM RATING DEFINITIONS

A1+--Obligations supported by the highest capacity for timely repayment.

A1--Obligations supported by a very strong capacity for timely repayment.

A2--Obligations supported by a strong capacity for timely repayment, although
such capacity may be susceptible to adverse changes in business, economic or
financial conditions.

STANDARD & POOR'S CORPORATION COMMERCIAL PAPER RATING DEFINITIONS

A-1--This designation indicates that the degree of safety regarding timely
payment is strong. Those issues determined to possess extremely strong safety
characteristics are denoted with a plus (+) sign designation.

A-2--Capacity for timely payment on issues with this designation is
satisfactory. However, the relative degree of safety is not as high as for
issues designated A-1.

MOODY'S INVESTORS SERVICE, INC., COMMERCIAL PAPER RATING DEFINITIONS

PRIME-1--Issuers rated Prime-1 (or related supporting institutions) have a
superior capacity for repayment of short-term promissory obligations. Prime-1
repayment capacity will often be evidenced by many of the following
characteristics:

Leading market positions in well-established industries.

High rates of return on funds employed.

Conservative capitalization structure with moderate reliance on debt and
ample asset protection.

Broad margins in earnings coverage of fixed financial charges and high
internal cash generation.

Well-established access to a range of financial markets and assured
sources of alternate liquidity.

PRIME-2--Issuers rated Prime-2 (or related supporting institutions) have a
strong capacity for repayment of short-term promissory obligations. This will
normally be evidenced by many of the characteristics cited above, but to a
lesser degree. Earnings trends and coverage ratios, while sound, may be more
subject to variation. Capitalization characteristics, while still appropriate,
may be more affected by external conditions. Ample alternate liquidity is
maintained.

NR indicates the bonds are not currently rated by Moody's or Standard & Poor's.
However, management considers them to be of good quality.

DUFF & PHELPS, INC., COMMERCIAL PAPER RATING DEFINITIONS

DUFF 1+--Highest certainty of timely payment. Short-term liquidity, including
internal operating factors and/or access to alternative sources of funds, is
outstanding, and safety is just below risk-free U.S. Treasury short-term
obligations.

DUFF 1--Very high certainty of timely payment. Liquidity factors are excellent
and supported by good fundamental protection factors. Risk factors are minor.

DUFF 1---High certainty of timely payment. Liquidity factors are strong and
supported by good fundamental protection factors. Risk factors are very small.

DUFF 2--Good certainty of timely payment. Liquidity factors and company
fundamentals are sound. Although ongoing funding needs may enlarge total
financing requirements, access to capital markets is good. Risk factors are
small.

9042805B (6/94)

INDEPENDENCE ONE PRIME MONEY MARKET FUND
(A PORTFOLIO OF INDEPENDENCE ONE MUTUAL FUNDS)
PROSPECTUS

The shares of Independence One Prime Money Market Fund (the "Fund") offered by
this prospectus represent interests in the Fund which is one of a series of
investment portfolios in Independence One Mutual Funds (the "Trust"), an
open-end, management investment company (a mutual fund). Michigan National Bank
professionally manages the Fund's portfolio.

The investment objective of the Fund is to provide current income consistent
with stability of principal. The Fund pursues this investment objective by
investing in a variety of high-quality money market instruments maturing in 397
days or less.

This prospectus contains the information you should read and know before you
invest in the Fund. Keep this prospectus for future reference.

Prospectus dated June 30, 1994

TABLE OF CONTENTS
- --------------------------------------------------------------------------------

SUMMARY OF FUND EXPENSES 1
- ------------------------------------------------------

FINANCIAL HIGHLIGHTS 2

- ------------------------------------------------------

GENERAL INFORMATION 3
- ------------------------------------------------------

INVESTMENT INFORMATION 3
- ------------------------------------------------------

Investment Objective 3
Investment Policies 3
Acceptable Investments 3
Variable Rate Demand Notes 4
Bank Instruments 4
Short-Term Credit Facilities 4
Asset-Backed Securities 4

Credit Enhancement 5
Demand Features 5

Ratings 5
Repurchase Agreements 5
Restricted and Illiquid Securities 5
When-Issued and Delayed
Delivery Transactions 6
Investment Risks 6
Investment Limitations 7
Regulatory Compliance 7

INDEPENDENCE ONE MUTUAL FUNDS
INFORMATION 7
- ------------------------------------------------------

Management of the Trust 7
Board of Trustees 7
Investment Adviser 7
Advisory Fees 7
Adviser's Background 8
Distributon of Fund Shares 8
Distribution Plan 8
Administration of the Fund 9
Administrative Services 9
Custodian 9
Transfer Agent and
Dividend Disbursing Agent 9
Legal Counsel 10
Independent Auditors 10

NET ASSET VALUE 10
- ------------------------------------------------------

INVESTING IN THE FUND 10
- ------------------------------------------------------

Share Purchases 10
To Place an Order 10
Minimum Investment Required 11
Cash Sweep Program 11
Participating Depository Institutions 11
What Shares Cost 11
Certificates and Confirmations 11
Dividends 11
Capital Gains 12

EXCHANGE PRIVILEGE 12
- ------------------------------------------------------

Exchange by Telephone 12
Written Exchange 13

REDEEMING SHARES 13
- ------------------------------------------------------

Cash Sweep Customers 13
Redeeming by Check 13
By Telephone 14
By Mail 14
Accounts with Low Balances 15
Redemption in Kind 15

SHAREHOLDER INFORMATION 16
- ------------------------------------------------------

Voting Rights 16
Massachusetts Partnership Law 16

EFFECT OF BANKING LAWS 16
- ------------------------------------------------------

TAX INFORMATION 17
- ------------------------------------------------------

Federal Income Tax 17

PERFORMANCE INFORMATION 17
- ------------------------------------------------------

FINANCIAL STATEMENTS 18
- ------------------------------------------------------

INDEPENDENT AUDITORS' REPORT 27
- ------------------------------------------------------

ADDRESSES Back Cover
- ------------------------------------------------------

SUMMARY OF FUND EXPENSES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES

<S> <C>
Maximum Sales Load Imposed on Purchases (as a percentage of offering price).............................. None
Maximum Sales Load Imposed on Reinvested Dividends (as a percentage of offering price)................... None
Contingent Deferred Sales Charge (as a percentage of original purchase price or
redemption proceeds, as applicable).................................................................... None
Redemption Fees (as a percentage of amount redeemed, if applicable)...................................... None
Exchange Fee............................................................................................. None
<CAPTION>
ANNUAL FUND OPERATING EXPENSES
(As a percentage of average net assets)

<S> <C>
Management Fee (after waiver)(1)........................................................................ 0.38%
12b-1 Fees(2)........................................................................................... 0.00%
Total Other Expenses.................................................................................... 0.21%
Total Operating Expenses(3)........................................................................ 0.59%
</TABLE>

(3) The total Fund Operating Expenses are estimated to be 0.61% absent the
anticipated voluntary waiver detailed in note (1).

THE PURPOSE OF THIS TABLE IS TO ASSIST AN INVESTOR IN UNDERSTANDING THE
VARIOUS COSTS AND EXPENSES THAT A SHAREHOLDER OF THE FUND WILL BEAR, EITHER
DIRECTLY OR INDIRECTLY. FOR MORE COMPLETE DESCRIPTIONS OF THE VARIOUS COSTS AND
EXPENSES, SEE "INDEPENDENCE ONE MUTUAL FUNDS
INFORMATION." Wire-transferred redemptions of less than $5,000 may be subject to
additional fees.

<TABLE>
<S> <C> <C> <C> <C>
EXAMPLE 1 YEAR 3 YEARS 5 YEARS 10 YEARS
You would pay the following expenses on a $1,000 investment assuming (1) 5%
annual return and (2) redemption at the end of each time period. The Fund
charges no redemption fees.................................................. $6 $19 $33 $74
</TABLE>

THE ABOVE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.

INDEPENDENCE ONE PRIME MONEY MARKET FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)

Reference is made to the Independent Auditors' Report on page 27.

<TABLE>
<CAPTION>
YEAR ENDED APRIL 30,
<S> <C> <C> <C> <C> <C>
1994 1993 1992 1991 1990*
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ---------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ---------------------------------------------------
Net investment income 0.03 0.03 0.05 0.07 0.08
- --------------------------------------------------- --------- --------- --------- --------- ---------
LESS DISTRIBUTIONS
- ---------------------------------------------------
Dividends to shareholders from net
investment income (0.03) (0.03) (0.05) (0.07) (0.08)
- --------------------------------------------------- --------- --------- --------- --------- ---------
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- --------------------------------------------------- --------- --------- --------- --------- ---------
TOTAL RETURN (A) 2.73% 2.99% 4.89% 7.55% 7.99%
- ---------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ---------------------------------------------------
Expenses 0.59% 0.58% 0.54% 0.53% 0.40%(b)
- ---------------------------------------------------
Net investment income 2.70% 2.91% 4.73% 7.26% 8.24%(b)
- ---------------------------------------------------
Expense waiver/reimbursement (c) 0.02% 0.04% 0.08% 0.08% 0.23%(b)
- ---------------------------------------------------
SUPPLEMENTAL DATA
- ---------------------------------------------------
Net assets, end of period (000 omitted) $310,588 $423,355 $309,009 $371,994 $328,434
- ---------------------------------------------------
</TABLE>

* Reflects operations for the period from June 1, 1989 (date of initial
public investment) to April 30, 1990.

(a) Based on net asset value, which does not reflect sales load or contingent
deferred sales charge, if applicable.

(b) Computed on an annualized basis.

(c) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above (Note 4).

(See Notes which are an integral part of the Financial Statements)

GENERAL INFORMATION
- --------------------------------------------------------------------------------

This prospectus relates only to the Trust's portfolio known as Independence One
Prime Money Market Fund. The Fund intends to offer two classes of shares for
sale: Investment and Trust Shares. The classes of shares represent interests in
one common investment portfolio but differ in that Investment shares, which will
be sold primarily to individual investors, will be subject to distribution
expenses paid by the Fund pursuant to a Plan adopted under Rule 12b-1 of the
Investment Company Act of 1940 while Trust shares will be sold to institutional
investors and will not be subject to such a Plan and will not incur such
distribution expenses. Trust shares are currently not available for sale. The
Fund will not offer Trust Shares and will not accrue or pay any distribution
expenses pursuant to the Plan until the Trust shares have been registered with
the Securities and Exchange Commission and certain states. The Investment shares
of the Fund currently being offered are designed as a convenient means of
accumulating an interest in a professionally managed, diversified portfolio
limited to money market instruments maturing in 397 days or less.

A minimum initial investment of $1,000 is required. Subsequent investments must
be in amounts of at least $100.

The Fund attempts to stabilize the value of a share at $1.00. Fund shares are
currently sold and redeemed at that price.

INVESTMENT INFORMATION
- --------------------------------------------------------------------------------

INVESTMENT OBJECTIVE

The investment objective of the Fund is to provide current income consistent
with stability of principal. The investment objective cannot be changed without
approval of shareholders. While there is no assurance that the Fund will achieve
its investment objective, it endeavors to do so by following the investment
policies described in this prospectus.

INVESTMENT POLICIES

The Fund pursues its investment objective by investing exclusively in a
portfolio of money market instruments maturing in 397 days or less. The average
maturity of money market instruments in the Fund's portfolio, computed on a
dollar-weighted basis, will be 90 days or less. Unless indicated otherwise, the
investment policies may be changed by the Board of Trustees ("Trustees") without
the approval of shareholders. Shareholders will be notified before any material
changes in these policies become effective.

ACCEPTABLE INVESTMENTS. The Fund invests in high quality money market
instruments that are either rated in the highest short-term rating category by
one or more nationally recognized statistical rating organizations ("NRSROs") or
of comparable quality to securities having such ratings. Examples of these
instruments include, but are not limited to:

domestic issues of corporate debt obligations, including variable rate
demand notes;

commercial paper (including Canadian Commercial Paper and Europaper);

certificates of deposits, demand and time deposits, bankers' acceptances
and other instruments of domestic and foreign banks and other deposit
institutions ("Bank Instruments");

short-term credit facilities, such as demand notes;

asset-backed securities;

obligations issued or guaranteed as to payment of principal and interest
by the U.S. government or one of its agencies or instrumentalities
("Government Securities"); and

other money market instruments.

The Fund invests only in instruments denominated and payable in U.S. dollars.

VARIABLE RATE DEMAND NOTES. Variable rate demand notes are long-term
corporate debt instruments that have variable or floating interest rates
and provide the Fund with the right to tender the security for repurchase
at its stated principal amount plus accrued interest. Such securities
typically bear interest at a rate that is intended to cause the securities
to trade at par. The interest rate may float or be adjusted at regular
intervals (ranging from daily to annually), and is normally based on a
published interest rate or interest rate index. Most variable rate demand
notes allow the Fund to demand the repurchase of the security on not more
than seven days prior notice. Other notes only permit the Fund to tender
the security at the time of each interest rate adjustment or at other fixed
intervals. See "Demand Features." The Fund treats variable rate demand
notes as maturing on the later of the date of the next interest adjustment
or the date on which the Fund may next tender the security for repurchase.

BANK INSTRUMENTS. The Fund only invests in Bank Instruments either issued
by an institution having capital, surplus and undivided profits over $100
million or insured by the Bank Insurance Fund ("BIF") or the Savings
Association Insurance Fund ("SAIF"). Bank Instruments may include
Eurodollar Certificates of Deposit ("ECDs"), Yankee Certificates of Deposit
("Yankee CDs") and Eurodollar Time Deposits ("ETDs"). The Fund will treat
securities credit enhanced with a bank's letter of credit as Bank
Instruments.

SHORT-TERM CREDIT FACILITIES. Demand notes are short-term borrowing
arrangements between a corporation and an institutional lender (such as the
Fund) payable upon demand by either party. The notice period for demand
typically ranges from one to seven days, and the party may demand full or
partial payment. The Fund may also enter into, or acquire participations
in, short-term revolving credit facilities with corporate borrowers. Demand
notes and other short-term credit arrangements usually provide for floating
or variable rates of interest.

ASSET-BACKED SECURITIES. Asset-backed securities are securities issued by
special purpose entities whose primary assets consist of a pool of loans or
accounts receivable. The securities may take the form of beneficial
interest in a special purpose trust, limited partnership interests or
commercial paper or other debt securities issued by a special purpose
corporation. Although the securities
often have some form of credit or liquidity enhancement, payments on the
securities depend predominately upon collections of the loans and
receivables held by the issuer.

CREDIT ENHANCEMENT. _Certain of the Fund's acceptable investments may have
been credit enhanced by a guaranty, letter of credit or insurance. The Fund
typically evaluates the credit quality and ratings of credit-enhanced
securities based upon the financial condition and ratings of the party
providing the credit enhancement (the "credit enhancer"), rather than the
issuer. Generally, the Fund will not treat credit-enhanced securities as
having been issued by the credit enhancer for diversification purposes.
However, under certain circumstances, applicable regulations may require
the Fund to treat the securities as having been issued by both the issuer
and the credit enhancer. The bankruptcy, receivership or default of the
credit enhancer will adversely affect the quality and marketability of the
underlying security.

DEMAND FEATURES. _The Fund may acquire securities that are subject to puts
and standby commitments ("demand features") to purchase the securities at
their principal amount (usually with accrued interest) with a fixed period
(usually seven days) following a demand by the Fund. The demand feature may
be issued by the issuer of the underlying securities, a dealer in the
securities or by another third party, and may not be transferred separately
from the underlying security. The Fund uses these arrangements to provide
the Fund with liquidity and not to protect against changes in the market
value of the underlying securities. The bankruptcy, receivership or default
by the issuer of the demand feature, or a default on the underlying
security or other event that terminates the demand feature before its
exercise, will adversely affect the liquidity of the underlying security.
Demand features that are exercisable even after a payment default on the
underlying security may be treated as a form of credit enhancement.

RATINGS. A NRSRO's highest rating category is determined without regard for
sub-categories and gradations. For example, securities rated A-1 or A-1+ by
Standard & Poor's Corporation ("S&P"), Prime-1 by Moody's Investors Service,
Inc. ("Moody's"), or F-1 (+ or -) by Fitch Investors Service, Inc. ("Fitch"),
are all considered rated in the highest short-term rating category. The Fund
will follow applicable regulations in determining whether a security rated by
more than one NRSRO can be treated as being in the highest short-term rating
category; currently, such securities must be rated by two NRSROs in their
highest rating category. See "Regulatory Compliance."

REPURCHASE AGREEMENTS. Repurchase agreements are arrangements in which banks,
broker/dealers, and other recognized financial institutions sell U.S. government
securities or other securities to the Fund and agree at the time of sale to
repurchase them at a mutually agreed upon time and price within one year from
the date of acquisition. To the extent that the original seller does not
repurchase the securities from the Fund, the Fund could receive less than the
repurchase price on any sale of such securities.

RESTRICTED AND ILLIQUID SECURITIES. The Fund may invest up to 10% of its net
assets in restricted securities. This restriction is not applicable to
commercial paper issued under the Section 4(2) of the Securities Act of 1933.
Restricted securities are any securities in which the Fund may otherwise invest
pursuant to its investment objective and policies, but which are subject to
restriction on resale under federal securities law. The Fund will limit
investments in illiquid securities, including certain restricted securities not
determined by the Trustees to be liquid, non-negotiable time deposits, and
repurchase agreements providing for settlement in more than seven days after
notice, to 10% of its net assets.

The Fund may invest in commercial paper issued in reliance on the exemption from
registration afforded by Section 4(2) of the Securities Act of 1933. Section
4(2) commercial paper is restricted as to disposition under federal securities
law and is generally sold to institutional investors, such as the Fund, who
agree that they are purchasing the paper for investment purposes and not with a
view to public distribution. Any resale by the purchaser must be in an exempt
transaction. Section 4(2) commercial paper is normally resold to other
institutional investors like the Fund through or with the assistance of the
issuer or investment dealers who make a market in Section 4(2) commercial paper,
thus providing liquidity. The Fund believes that Section 4(2) commercial paper
and possibly certain other restricted securities which meet the criteria for
liquidity established by the Trustees are quite liquid. The Fund intends,
therefore, to treat the restricted securities which meet the criteria for
liquidity established by the Trustees, including Section 4(2) commercial paper,
as determined by the Fund's investment adviser, as liquid and not subject to the
investment limitation applicable to illiquid securities. In addition, because
Section 4(2) commercial paper is liquid, the Fund intends to not subject such
paper to the limitation applicable to restricted securities.

When the Fund invests in certain restricted securities determined by the
Trustees to be liquid, such investments could have the effect of increasing the
level of Fund illiquidity to the extent that the buyers in the secondary market
for such securities become, for a time, uninterested in purchasing these
securities.

WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS. The Fund may purchase short-term
U.S. government obligations on a when-issued or delayed delivery basis. These
transactions are arrangements in which the Fund purchases securities with
payment and delivery scheduled for a future time. The Fund engages in
when-issued and delayed delivery transactions only for the purpose of acquiring
portfolio securities consistent with the Fund's investment objective and
policies, not for investment leverage. In when-issued and delayed delivery
transactions, the Fund relies on the seller to complete the transaction. The
seller's failure to complete the transaction may cause the Fund to miss a price
or yield considered to be advantageous. The Fund will limit its purchase of
securities on a when-issued or delayed delivery basis to no more than 20% of the
value of its total assets.

INVESTMENT RISKS

ECDs, ETDs, Yankee CDs, Canadian Commercial Paper, and Europaper are subject to
somewhat different risks than domestic obligations of domestic banks. Examples
of these risks include international, economic, and political developments,
foreign governmental restrictions that may adversely affect the payment of
principal or interest, foreign withholding or other taxes on interest income,
difficulties in obtaining or enforcing a judgment against the issuing bank, and
the possible impact of interruptions in the flow of international currency
transactions. Different risks may also exist for ECDs, ETDs, and Yankee CDs
because the banks issuing these instruments, or their domestic or foreign
branches, are not necessarily subject to the same regulatory requirements that
apply to domestic banks, such as reserve requirements, loan limitations,
examinations, accounting, auditing, and recordkeeping, and the public
availability of information. These factors will be carefully considered by the
Fund's adviser in selecting investments for the Fund.

INVESTMENT LIMITATIONS

The Fund will not:

borrow money directly or through reverse repurchase agreements or pledge
securities except, under certain circumstances, the Fund may borrow up to
one-third of the value of its net assets and pledge up to 10% of the value
of its total assets to secure such borrowings; or

with respect to 75% of the value of its total assets, invest more than 5%
of the value of its total assets in the securities of any one issuer
(other than cash or securities issued or guaranteed by the government of
the United States or its agencies or instrumentalities).

The above investment limitations cannot be changed without shareholder approval.

REGULATORY COMPLIANCE

The Fund may follow non-fundamental operational policies that are more
restrictive than its fundamental investment limitations, as set forth in this
prospectus and its Statement of Additional Information, in order to comply with
applicable laws and regulations, including the provisions of and regulations
under the Investment Company Act of 1940, as amended. In particular, the Fund
will comply with the various requirements of Rule 2a-7, which regulates money
market mutual funds. For example, with limited exceptions, Rule 2a-7 prohibits
the investment of more than 5% of the Fund's total assets in the securities of
any one issuer, although the Fund's investment limitation only requires such 5%
diversification with respect to 75% of its assets. The Fund will invest more
than 5% of its assets in any one issuer only under circumstances permitted by
Rule 2a-7. The Fund will also determine the effective maturity of its
investments, as well as its ability to consider a security as having received
the requisite short-term ratings by NRSROs, according to Rule 2a-7. The Fund may
change these operational policies to reflect changes in the laws and regulations
without the approval of its shareholders.

INDEPENDENCE ONE MUTUAL FUNDS INFORMATION
- --------------------------------------------------------------------------------

MANAGEMENT OF THE TRUST

ADVISORY FEES. The Adviser receives an annual investment advisory fee
equal to 0.40 of 1% of the Fund's average daily net assets. The Adviser has
undertaken to reimburse the Fund, up to the amount of the advisory fee, for
operating expenses in excess of limitations established by certain states.
The Adviser may voluntarily choose to waive a portion of its fee or
reimburse certain expenses of the Fund.

DISTRIBUTION OF FUND SHARES

DISTRIBUTION PLAN. Pursuant to the provisions of a distribution plan adopted in
accordance with the Investment Company Act Rule 12b-1 (the "Plan"), the Fund
will pay to the distributor an amount computed at an annual rate of 0.25 of 1%
of the average daily net asset value of the shares of the Fund to finance any
activity which is principally intended to result in the sale of shares subject
to the Plan. The Fund will not accrue or pay any distribution expenses pursuant
to the Plan until the Trust Shares have been registered with the Securities and
Exchange Commission and certain states. (See "General Information.")

The distributor may select financial institutions such as banks, fiduciaries,
custodians for public funds, investment advisers, and broker/dealers ("brokers")
to provide sales and/or administrative services as agents for their clients or
customers who beneficially own shares of the Fund. Administrative services may
include, but are not limited to, the following functions: providing office
space, equipment, telephone facilities, and various personnel, including
clerical, supervisory, and computer, as necessary or beneficial to establish and
maintain shareholder accounts and records; processing purchase and redemption
transactions and automatic investments of client account cash balances;
answering routine client inquiries regarding the shares of the Fund; assisting
clients in changing dividend options, account designations, and addresses; and
providing such other services as the Fund reasonably requests for its shares.

ADMINISTRATION OF THE FUND

<TABLE>
<CAPTION>
MAXIMUM AVERAGE AGGREGATE
ADMINISTRATIVE DAILY NET ASSETS
FEE OF THE TRUST
<C> <S>
.150 of 1% on the first $250 million
.125 of 1% on the next $250 million
.100 of 1% on the next $250 million
.075 of 1% on assets in excess of $750 million
</TABLE>

The administrative fee received during any fiscal year shall be at least $50,000
per Fund. Federated Administrative Services may choose voluntarily to reimburse
a portion of its fee.

CUSTODIAN. State Street Bank and Trust Company, Boston, Massachusetts, is
custodian for the securities and cash of the Fund.

TRANSFER AGENT AND DIVIDEND DISBURSING AGENT. _Federated Services Company,
Pittsburgh Pennsylvania, is transfer agent for the shares of the Fund, and
dividend disbursing agent for the Fund.

LEGAL COUNSEL. Legal counsel to the Fund is provided by Houston, Houston &
Donnelly, Pittsburgh, Pennsylvania, and Dickstein, Shapiro and Morin, L.L.P.,
Washington, D.C.

INDEPENDENT AUDITORS. The independent auditors for the Fund are KPMG Peat
Marwick, Pittsburgh, Pennsylvania.

NET ASSET VALUE
- --------------------------------------------------------------------------------

INVESTING IN THE FUND
- --------------------------------------------------------------------------------

SHARE PURCHASES

TO PLACE AN ORDER. Investors may call toll-free 1-800-334-2292 to purchase
shares of the Fund through Michigan National Bank or Independence One. In
addition, investors may purchase shares of the Fund by calling their authorized
broker directly. Payment may be made either by check or wire transfer of federal
funds.

To purchase by check, the check must be included with the order and made payable
to "Independence One Prime Money Market Fund." Orders are considered received
after payment by check is converted by the transfer agent's bank, State Street
Bank and Trust Company ("State Street Bank"), into federal funds.

When payment is made through wire transfer of federal funds, the order is
considered received immediately upon receipt by State Street Bank. Payment by
wire must be received before 11:00 a.m. (Eastern time) on the same day as the
order to earn dividends for that day. Prior to purchasing by wire, investors
should call their Michigan National Bank or Independence One representative or
their authorized broker. It is the responsibility of Michigan National Bank,
Independence One, and authorized brokers to transmit orders promptly. Federal
funds should be wired as follows: Federated Services Company c/o State Street
Bank and Trust Company, Boston, Massachusetts; Attention: EDGEWIRE; For Credit
to: Independence One Prime Money Market Fund; Fund Number (this number can be
found on the account statement or by contacting the Fund); Group Number or Order
Number; Nominee or Institution Name; and ABA Number 011000028.

MINIMUM INVESTMENT REQUIRED

The minimum initial investment in the shares of the Fund by an investor is
$1,000. Subsequent investments must be in amounts of at least $100.

CASH SWEEP PROGRAM

WHAT SHARES COST

Fund shares are sold at their net asset value next determined after an order is
received. There is no sales charge imposed by the Fund.

The net asset value is determined at 12:00 noon (Eastern time) and 4:00 p.m.
(Eastern time), Monday through Friday, except on: (i) days on which there are
not sufficient changes in the value of the Fund's portfolio securities that its
net asset value might be materially affected; (ii) days during which no shares
are tendered for redemption and no orders to purchase shares are received; and
(iii) on the following holidays: New Year's Day, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day, and Christmas Day.

CERTIFICATES AND CONFIRMATIONS

Monthly confirmations are sent to report transactions such as purchases and
redemptions as well as dividends paid during the month.

DIVIDENDS

CAPITAL GAINS

EXCHANGE PRIVILEGE
- --------------------------------------------------------------------------------

All shareholders of the Fund are shareholders of the Trust, which consists of
the Fund, Independence One Michigan Municipal Cash Fund, Independence One U.S.
Treasury Money Market Fund, and Independence One U.S. Government Securities
Fund. Shareholders of the Fund have access to Independence One U.S. Treasury
Money Market Fund, Independence One Michigan Municipal Cash Fund, and
Independence One U.S. Government Securities Fund ("participating funds") through
an exchange program.

The exchange privilege is available to shareholders residing in any state in
which the participating fund shares being acquired may legally be sold. Upon
receipt by the transfer agent of proper instructions and all necessary
supporting documents, shares submitted for exchange will be redeemed at the
next-determined net asset value. If the exchanging shareholder does not have an
account in the participating fund whose shares are being acquired, a new account
will be established with the same registration, dividend, and capital gain
options as the account from which shares are exchanged, unless otherwise
specified by the shareholder. In the case where the new account registration is
not identical to that of the existing account, a signature guarantee is
required. (See "Redeeming Shares By Mail.") Exercise of this privilege is
treated as a redemption and new purchase for federal income tax purposes and,
depending on the circumstances, a short or long-term capital gain or loss may be
realized. The Fund reserves the right to modify or terminate the exchange
privilege at any time. Shareholders would be notified prior to any modification
or termination. Shareholders may obtain further information on the exchange
privilege by calling their Michigan National Bank or Independence One
representative or authorized broker.

Shares may be exchanged by telephone only between fund accounts having identical
shareholder registrations. Exchange instructions given by telephone may be
electronically recorded.

Telephone exchange instructions must be received by Michigan National Bank,
Independence One or an authorized broker and transmitted to the transfer agent
before 4:00 p.m. (Eastern time) for shares to be exchanged the same day.
Shareholders who exchange into shares of the Fund will not receive a dividend
from the Fund on the date of the exchange.

Shareholders of the Fund may have difficulty in making exchanges by telephone
through banks, brokers, and other financial institutions during times of drastic
economic or market changes. If shareholders cannot contact their Michigan
National Bank or Independence One representative or authorized broker by
telephone, it is recommended that an exchange request be made in writing and
sent by mail for next day delivery. Send mail requests to: Independence One
Mutual Funds, 27777 Inkster Road, Mail Code 10-52, Farmington Hills, Michigan
48333-9065.

If reasonable procedures are not followed by the Fund, it may be liable for
losses due to unauthorized or fraudulent telephone instructions.

WRITTEN EXCHANGE. A shareholder wishing to make an exchange by written request
may do so by sending it to: Independence One Mutual Funds, 27777 Inkster Road,
Mail Code 10-52, Farmington Hills, Michigan 48333-9065. In addition, an investor
may exchange shares by sending a written request to their authorized broker
directly.

REDEEMING SHARES
- --------------------------------------------------------------------------------

The Fund redeems shares at their net asset value next determined after Federated
Services Company receives the redemption request. Redemptions will be made on
days on which the Fund computes its net asset value. Redemption requests cannot
be executed on days on which the New York Stock Exchange is closed and federal
holidays restricting wire transfers. Telephone or written requests for
redemption must be received in proper form and can be made to the Fund through a
Michigan National Bank or Independence One representative or authorized broker.
Although the transfer agent does not charge for telephone redemptions, it
reserves the right to charge a fee for the cost of wire-transferred redemptions
of less than $5,000.

CASH SWEEP CUSTOMERS. Clients of Michigan National Bank who have executed a
Cash Sweep Agreement should refer to that agreement for information about
redeeming fund shares purchased through that program.

If reasonable procedures are not followed by the Fund, it may be liable for
losses due to unauthorized or fraudulent telephone instructions.

If share certificates have been issued, they must be properly endorsed and
should be sent by registered or certified mail with the written request.

Shareholders requesting a redemption of $50,000 or more, a redemption of any
amount to be sent to an address other than that on record with the Fund, or a
redemption payable other than to the shareholder of record must have signatures
on written redemption requests guaranteed by:

a trust company or a commercial bank whose deposits are insured by BIF,
which is administered by the Federal Deposit Insurance Corporation
("FDIC");

a member of the New York, American, Boston, Midwest, or Pacific Stock
Exchange;

a savings bank or savings and loan association whose deposits are insured
by SAIF, which is administered by the FDIC; or

any other "eligible guarantor institution," as defined in the Securities
Exchange Act of 1934.

The Fund does not accept signatures guaranteed by a notary public.

Normally, a check for the proceeds is mailed to the shareholder within one
business day, but in no event more than seven days after receipt of a proper
written redemption request.

ACCOUNTS WITH LOW BALANCES

Due to the high cost of maintaining accounts with low balances, the Fund may
redeem shares in any account and pay the proceeds to the shareholder if the
account balance falls below the required minimum value of $1,000 due to
shareholder redemptions. Before shares are redeemed to close an account, the
shareholder is notified in writing and allowed 30 days to purchase additional
shares to meet the minimum requirement.

REDEMPTION IN KIND

The Fund is obligated to redeem shares solely in cash up to $250,000 or 1% of
the Fund's net asset value, whichever is less, for any one shareholder within a
90-day period.

SHAREHOLDER INFORMATION
- --------------------------------------------------------------------------------

VOTING RIGHTS

Trustees may be removed by the Trustees or by shareholders at a special meeting.
A special meeting of the shareholders shall be called by the Trustees upon the
written request of shareholders owning at least 10% of the Trust's outstanding
shares.

MASSACHUSETTS PARTNERSHIP LAW

EFFECT OF BANKING LAWS
- --------------------------------------------------------------------------------

TAX INFORMATION
- --------------------------------------------------------------------------------

FEDERAL INCOME TAX

Unless otherwise exempt, shareholders are required to pay federal income tax on
any dividends and other distributions received. This applies whether dividends
and distributions are received in cash or as additional shares. The Fund will
provide detailed tax information for reporting purposes. Shareholders are urged
to consult their own tax advisers regarding the status of their accounts under
state and local tax laws.

PERFORMANCE INFORMATION
- --------------------------------------------------------------------------------

From time to time the Fund advertises its yield and effective yield.

From time to time, the Fund may advertise its performance using certain
financial publications and/or compare its performance to certain indices.

INDEPENDENCE ONE PRIME MONEY MARKET FUND
PORTFOLIO OF INVESTMENTS
APRIL 30, 1994
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- -------------- -------------------------------------------------------------------------------- ---------------
CERTIFICATES OF DEPOSIT--24.1%
- ------------------------------------------------------------------------------------------------
ISSUED BY FOREIGN BANKS-U.S. BRANCHES--20.9%
--------------------------------------------------------------------------------
Rabobank
--------------------------------------------------------------------------------
$ 10,000,000 3.25%, 5/5/94 $ 10,000,011
--------------------------------------------------------------------------------
Sumitomo Corp. of America
--------------------------------------------------------------------------------
5,000,000 3.37%, 5/9/94 4,999,835
--------------------------------------------------------------------------------
National Westminster
--------------------------------------------------------------------------------
5,000,000 3.70%, 5/31/94 5,000,162
--------------------------------------------------------------------------------
Sanwa Bank, Ltd.
--------------------------------------------------------------------------------
10,000,000 3.99%, 6/24/94 10,000,129
--------------------------------------------------------------------------------
Mitsubishi Bank, NY
--------------------------------------------------------------------------------
10,000,000 4.00%, 6/30/94 10,000,331
--------------------------------------------------------------------------------
Banque Nationale De Paris
--------------------------------------------------------------------------------
10,000,000 3.28%, 7/14/94 10,000,202
--------------------------------------------------------------------------------
CIBC New York
--------------------------------------------------------------------------------
15,000,000 3.25%, 7/18/94 14,975,682
-------------------------------------------------------------------------------- ---------------
Total 64,976,352
-------------------------------------------------------------------------------- ---------------
ISSUED BY FOREIGN BANKS-LONDON BRANCHES--3.2%
--------------------------------------------------------------------------------
National Westminster
--------------------------------------------------------------------------------
10,000,000 3.25%, 7/14/94 9,998,867
-------------------------------------------------------------------------------- ---------------
TOTAL CERTIFICATES OF DEPOSIT 74,975,219
-------------------------------------------------------------------------------- ---------------
*CERTIFICATES OF DEPOSIT-VARIABLE RATE--8.1%
- ------------------------------------------------------------------------------------------------
Abbey National Treasury Services, PLC
--------------------------------------------------------------------------------
$ 10,000,000 4.06%, 4/27/95 $ 10,000,000
--------------------------------------------------------------------------------
State Bank of New South Wales
--------------------------------------------------------------------------------
15,000,000 3.73%, 7/1/94 15,000,000
-------------------------------------------------------------------------------- ---------------
TOTAL CERTIFICATES OF DEPOSIT-VARIABLE RATE 25,000,000
-------------------------------------------------------------------------------- ---------------
**COMMERCIAL PAPER--38.5%
- ------------------------------------------------------------------------------------------------
AUTO--4.8%
--------------------------------------------------------------------------------
***Fleet Funding Corp.
--------------------------------------------------------------------------------
5,000,000 3.67%, 5/16/94 4,992,354
--------------------------------------------------------------------------------
***Fleet Funding Corp.
--------------------------------------------------------------------------------
10,000,000 3.77%, 6/14/94 9,953,922
-------------------------------------------------------------------------------- ---------------
Total 14,946,276
-------------------------------------------------------------------------------- ---------------
BANKING--18.6%
--------------------------------------------------------------------------------
***Asset Securitization Cooperative Corp.
--------------------------------------------------------------------------------
8,000,000 3.48%, 5/9/94 7,993,813
--------------------------------------------------------------------------------
***Asset Securitization Cooperative Corp.
--------------------------------------------------------------------------------
5,000,000 3.67%, 5/13/94 4,993,883
--------------------------------------------------------------------------------
Comdisco, Inc.
--------------------------------------------------------------------------------
10,000,000 3.67%, 5/16/94 9,984,708
--------------------------------------------------------------------------------
SBSA (DE), Inc.
--------------------------------------------------------------------------------
15,000,000 3.45%, 5/18/94 14,975,563
--------------------------------------------------------------------------------
Sceptre International Ltd.
--------------------------------------------------------------------------------
15,000,000 3.92%, 6/3/94 14,946,100
--------------------------------------------------------------------------------
Comdisco, Inc.
--------------------------------------------------------------------------------
5,000,000 3.85%, 6/27/94 4,969,521
-------------------------------------------------------------------------------- ---------------
Total 57,863,588
-------------------------------------------------------------------------------- ---------------
ELECTRONICS--1.6%
--------------------------------------------------------------------------------
SCI Systems, Inc.
--------------------------------------------------------------------------------
$ 5,000,000 3.66%, 5/13/94 $ 4,993,900
-------------------------------------------------------------------------------- ---------------
FINANCE-COMMERCIAL--3.2%
--------------------------------------------------------------------------------
Canadian Wheat Board
--------------------------------------------------------------------------------
10,000,000 3.75%, 6/28/94 9,939,583
-------------------------------------------------------------------------------- ---------------
FUNDING CORPORATION--8.0%
--------------------------------------------------------------------------------
Global Funding Corp.
--------------------------------------------------------------------------------
10,000,000 3.15%, 5/2/94 9,999,125
--------------------------------------------------------------------------------
***Bishopsgate
--------------------------------------------------------------------------------
15,000,000 3.85%, 5/19/94 14,971,125
-------------------------------------------------------------------------------- ---------------
Total 24,970,250
-------------------------------------------------------------------------------- ---------------
TELECOMMUNICATIONS--2.3%
--------------------------------------------------------------------------------
American Telephone & Telegraph Co.
--------------------------------------------------------------------------------
7,000,000 3.45%, 5/20/94 6,987,254
-------------------------------------------------------------------------------- ---------------
TOTAL COMMERCIAL PAPER 119,700,851
-------------------------------------------------------------------------------- ---------------
*VARIABLE RATE OBLIGATIONS--0.6%
- ------------------------------------------------------------------------------------------------
Richmond County, GA
--------------------------------------------------------------------------------
2,000,000 3.80%, 5/2/94 2,000,000
-------------------------------------------------------------------------------- ---------------
GOVERNMENT AGENCIES--3.2%
- ------------------------------------------------------------------------------------------------
Federal Home Loan Bank
--------------------------------------------------------------------------------
10,000,000 2.90%, 6/23/94 10,000,000
-------------------------------------------------------------------------------- ---------------
Donaldson, Lufkin & Jenrette Securities Corp., 3.60%,
--------------------------------------------------------------------------------
$ 40,000,000 dated 4/29/94, due 5/2/94 $ 40,000,000
--------------------------------------------------------------------------------
38,604,000 Kidder, Peabody & Co., 3.60%, dated 4/29/94, due 5/2/94 38,604,000
-------------------------------------------------------------------------------- ---------------
TOTAL REPURCHASE AGREEMENTS (NOTE 2B) 78,604,000
-------------------------------------------------------------------------------- ---------------
TOTAL INVESTMENTS (AT AMORTIZED COST) $ 310,280,070\\
-------------------------------------------------------------------------------- ---------------
</TABLE>

* Current rate and next demand date shown.

** Each issue shows the rate of discount at the time of purchase.

*** Commercial paper sold within terms of a private placement memorandum,
exempt from registration under Section 4(2) of the Securities Act of 1933,
as amended, and may be sold only to dealers in that program or other
"accredited investors." These securities have been determined to be liquid
under guidelines established by the Board of Trustees.

\ The repurchase agreements are fully collateralized by U.S. government
and/or agency obligations based on market prices at the date of the
portfolio.

\\ Also represents cost for federal tax purposes.

Note: The categories of investments are shown as a percentage of net assets
($310,588,452) at April 30, 1994.

(See Notes which are an integral part of the Financial Statements)

INDEPENDENCE ONE PRIME MONEY MARKET FUND
STATEMENT OF ASSETS AND LIABILITIES

APRIL 30, 1994

- --------------------------------------------------------------------------------

<TABLE>
<S> <C> <C>
ASSETS:
- ------------------------------------------------------------------------------------------------
Investments in securities $ 231,676,070
- -------------------------------------------------------------------------------
Investments in repurchase agreements (Note 2B) 78,604,000
- ------------------------------------------------------------------------------- ---------------
Total investments, at amortized cost and value (Note 2A) $ 310,280,070
- ------------------------------------------------------------------------------------------------
Cash 24,470
- ------------------------------------------------------------------------------------------------
Interest receivable 856,862
- ------------------------------------------------------------------------------------------------
Receivable for Fund shares sold 38,213
- ------------------------------------------------------------------------------------------------
Deferred expenses (Note 2F) 1,763
- ------------------------------------------------------------------------------------------------ ---------------
Total assets 311,201,378
- ------------------------------------------------------------------------------------------------
LIABILITIES:
- ------------------------------------------------------------------------------------------------
Dividends payable 481,044
- -------------------------------------------------------------------------------
Payable for Fund shares redeemed 51,963
- -------------------------------------------------------------------------------
Payable to transfer and dividend disbursing agent 11,057
- -------------------------------------------------------------------------------
Accrued expenses 68,862
- ------------------------------------------------------------------------------- ---------------
Total liabilities 612,926
- ------------------------------------------------------------------------------------------------ ---------------
NET ASSETS for 310,588,452 shares of beneficial interest outstanding $ 310,588,452
- ------------------------------------------------------------------------------------------------ ---------------
NET ASSET VALUE, Offering Price, and Redemption Price Per Share
($310,588,452 / 310,588,452 shares of beneficial interest outstanding) $1.00
- ------------------------------------------------------------------------------------------------ ---------------
</TABLE>

(See Notes which are an integral part of the Financial Statements)

INDEPENDENCE ONE PRIME MONEY MARKET FUND
STATEMENT OF OPERATIONS

YEAR ENDED APRIL 30, 1994

- --------------------------------------------------------------------------------

<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
- --------------------------------------------------------------------------------------------------
Interest income (Note 2C) $ 12,328,862
- --------------------------------------------------------------------------------------------------
EXPENSES:
- --------------------------------------------------------------------------------------------------
Investment advisory fee (Note 4) $ 1,497,520
- -----------------------------------------------------------------------------------
Administrative personnel and services (Note 4) 470,126
- -----------------------------------------------------------------------------------
Trustees' fees 21,280
- -----------------------------------------------------------------------------------
Custodian and portfolio accounting fees 135,006
- -----------------------------------------------------------------------------------
Transfer agent and dividend disbursing agent fees and
expenses (Note 4) 45,091
- -----------------------------------------------------------------------------------
Fund share registration costs 53,145
- -----------------------------------------------------------------------------------
Auditing fees 14,690
- -----------------------------------------------------------------------------------
Legal fees 8,809
- -----------------------------------------------------------------------------------
Printing and postage 21,132
- -----------------------------------------------------------------------------------
Insurance premiums 11,579
- -----------------------------------------------------------------------------------
Miscellaneous 7,475
- ----------------------------------------------------------------------------------- -------------
Total expenses 2,285,853
- -----------------------------------------------------------------------------------
Deduct--Waiver of investment advisory fee (Note 4) 64,765
- ----------------------------------------------------------------------------------- -------------
Net expenses 2,221,088
- -------------------------------------------------------------------------------------------------- --------------
Net investment income $ 10,107,774
- -------------------------------------------------------------------------------------------------- --------------
</TABLE>

(See Notes which are an integral part of the Financial Statements)

INDEPENDENCE ONE PRIME MONEY MARKET FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
YEAR ENDED APRIL 30,
1994 1993
<S> <C> <C>
------------------ ------------------
INCREASE (DECREASE) IN NET ASSETS:
- -------------------------------------------------------------------------
OPERATIONS--
- -------------------------------------------------------------------------
Net investment income $ 10,107,774 $ 10,452,560
- ------------------------------------------------------------------------- ------------------ ------------------
DISTRIBUTIONS TO SHAREHOLDERS (NOTE 2C)--
- -------------------------------------------------------------------------
Dividends to shareholders from net investment income (10,107,774) (10,452,560)
- ------------------------------------------------------------------------- ------------------ ------------------
FUND SHARE (PRINCIPAL) TRANSACTIONS (NOTE 3)--
- -------------------------------------------------------------------------
Proceeds from sale of shares 2,413,011,015 2,358,845,331
- -------------------------------------------------------------------------
Net asset value of shares issued to shareholders
in payment of dividends declared 2,867,186 3,451,415
- -------------------------------------------------------------------------
Cost of shares redeemed (2,528,644,351) (2,247,951,529)
- ------------------------------------------------------------------------- ------------------ ------------------
Change in net assets from Fund share transactions (112,766,150) 114,345,217
- ------------------------------------------------------------------------- ------------------ ------------------
Change in net assets (112,766,150) 114,345,217
- -------------------------------------------------------------------------
NET ASSETS:
- -------------------------------------------------------------------------
Beginning of period 423,354,602 309,009,385
- ------------------------------------------------------------------------- ------------------ ------------------
End of period $ 310,588,452 $ 423,354,602
- ------------------------------------------------------------------------- ------------------ ------------------
</TABLE>

(See Notes which are an integral part of the Financial Statements)

INDEPENDENCE ONE PRIME MONEY MARKET FUND
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 1994
- --------------------------------------------------------------------------------

(1) ORGANIZATION

Independence One Mutual Funds (the "Trust") is registered under the Investment
Company Act of 1940, as amended, as an open-end, management investment company.
The Trust consists of four portfolios. The financial statements included herein
are only those of Independence One Prime Money Market Fund (the "Fund"). The
financial statements of the other portfolios are presented separately. The
assets of each portfolio are segregated and a shareholder's interest is limited
to the portfolio in which shares are held.

(2) SIGNIFICANT ACCOUNTING POLICIES

A. INVESTMENT VALUATIONS--The Fund's use of the amortized cost method to value
its portfolio securities is in accordance with Rule 2a-7 under the
Investment Company Act of 1940.

B. REPURCHASE AGREEMENTS--It is the policy of the Fund to require the
custodian bank to take possession, to have legally segregated in the
Federal Reserve Book Entry System or to have segregated within the
custodian bank's vault, all securities held as collateral in support of
repurchase agreement investments. Additionally, procedures have been
established by the Fund to monitor, on a daily basis, the market value of
each repurchase agreement's underlying collateral to ensure the value at
least equals the principal amount of the repurchase agreement, including
accrued interest.

The Fund will only enter into repurchase agreements with banks and other
recognized financial institutions such as broker/dealers which are deemed
by the Fund's adviser to be creditworthy pursuant to guidelines established
by the Trustees.

C. INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS--Interest income and expenses
are accrued daily. Bond premium and discount are amortized as required by
the Internal Revenue Code, as amended ("Code"). Distributions to
shareholders are recorded on the ex-dividend date.

D. FEDERAL TAXES--It is the Fund's policy to comply with the provisions of the
Code applicable to regulated investment companies and to distribute to
shareholders each year substantially all of its taxable income.
Accordingly, no provisions for federal tax are necessary.

E. WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Fund may engage in
when-issued or delayed delivery transactions. The Fund records when-issued
securities on the trade date and maintains security positions such that
sufficient liquid assets will be available to make payment for
the securities purchased. Securities purchased on a when-issued or delayed
delivery basis are marked to market daily and begin earning interest on the
settlement date.

F. DEFERRED EXPENSES--The costs incurred by the Fund with respect to
registration of its shares in its first fiscal year, excluding the initial
expense of registering the shares, have been deferred and are being
amortized using the straight-line method over a period of five years from
the Fund's commencement date.

G. OTHER--Investment transactions are accounted for on the trade date.

(3) SHARES OF BENEFICIAL INTEREST

The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value). At April
30, 1994, capital paid in aggregated $310,588,452. Transactions in Fund shares
were as follows:

(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES

INVESTMENT ADVISORY FEE--Michigan National Bank, the Fund's investment adviser
("Adviser"), receives for its services an annual investment advisory fee equal
to 0.40 of 1% of the Fund's average daiy net assets. Adviser may voluntarily
choose to waive a portion of its fee and reimburse certain operating expenses of
the Fund. Adviser can modify or terminate this voluntary waiver and
reimbursement at any time at its sole discretion.

Certain Officers of the Trust are Officers and Trustees of the above companies.

INDEPENDENT AUDITORS' REPORT
- --------------------------------------------------------------------------------

The Board of Trustees and Shareholders
INDEPENDENCE ONE MUTUAL FUNDS:

We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of Independence One Prime Money Market Fund (a
portfolio within Independence One Mutual Funds) as of April 30, 1994, and the
related statement of operations for the year then ended, the statements of
changes in net assets for the years ended April 30, 1994 and 1993, and the
financial highlights, which is presented on page 2 of this prospectus, for each
of the periods indicated therein. These financial statements and the financial
highlights are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and the financial
highlights based on our audits.

In our opinion, the financial statements and the financial highlights referred
to above present fairly, in all material respects, the financial position of
Independence One Prime Money Market Fund at April 30, 1994, and the results of
its operations for the year then ended, the changes in its net assets for the
years ended April 30, 1994 and 1993, and the financial highlights for each of
the periods indicated herein, in conformity with generally accepted accounting
principles.

KPMG Peat Marwick
Pittsburgh, Pennsylvania
June 3, 1994

INDEPENDENCE ONE
MUTUAL FUNDS

INDEPENDENCE ONE PRIME
MONEY MARKET FUND
Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779

INVESTMENT ADVISER
Michigan National Bank
27777 Inkster Road
Mail Code 10-52
Farmington Hills, Michigan 48333-9065

DISTRIBUTOR
Federated Securities Corp.
Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779

CUSTODIAN
State Street Bank and Trust Company
P.O. Box 1119
Boston, Massachusetts 02103

TRANSFER AGENT AND DIVIDEND DISBURSING AGENT
Federated Services Company
Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779

INDEPENDENT AUDITORS
KPMG Peat Marwick
One Mellon Bank Center
Pittsburgh, Pennsylvania 15219

LEGAL COUNSEL
Houston, Houston and Donnelly
2510 Centre City Tower
Pittsburgh, Pennsylvania 15222

DICKSTEIN, SHAPIRO AND MORIN, L.L.P.
2101 L Street, N.W.
Washington, D.C. 20037

9042806A (6/94)

INDEPENDENCE ONE(registered trademark)
PRIME MONEY MARKET
FUND
Distributed by Federated Securities Corp.

PROSPECTUS DATED
JUNE 30, 1993

[LOGO]
MICHIGAN
NATIONAL
BANK
Investment Adviser

INDEPENDENCE ONE
PRIME MONEY MARKET FUND
(A PORTFOLIO OF INDEPENDENCE ONE MUTUAL FUNDS)
STATEMENT OF ADDITIONAL INFORMATION

This Statement of Additional Information should be read with the
prospectus of Independence One Prime Money Market Fund (the "Fund")
dated June 30, 1994. This Statement is not a prospectus itself. To
receive a copy of the prospectus, write the Fund or call toll-free
1-800-334-2292.

FEDERATED INVESTORS TOWER
PITTSBURGH, PENNSYLVANIA 15222-3779

Statement dated June 30, 1994

[LOGO} FEDERATED SECURITIES CORP.
---------------------------------------------------------
Distributor
A subsidiary of FEDERATED INVESTORS

TABLE OF CONTENTS

- --------------------------------------------------------------------------------

GENERAL INFORMATION ABOUT THE FUND 1
- ---------------------------------------------------------------

INVESTMENT OBJECTIVE AND POLICIES 1
- ---------------------------------------------------------------

Types of Investments 1
Repurchase Agreements 1
Restricted and Illiquid Securities 2
When-Issued and Delayed Delivery
Transactions 2
Reverse Repurchase Agreements 2
Investment Limitations 2

INDEPENDENCE ONE MUTUAL FUNDS MANAGEMENT 4
- ---------------------------------------------------------------

Officers and Trustees 4
Fund Ownership 5
Trustee Liability 5

INVESTMENT ADVISORY SERVICES 5
- ---------------------------------------------------------------

Adviser to the Fund 5
Advisory Fees 5

ADMINISTRATIVE SERVICES 6
- ---------------------------------------------------------------

BROKERAGE TRANSACTIONS 6
- ---------------------------------------------------------------

PURCHASING SHARES 6
- ---------------------------------------------------------------

Distribution Plan 6
Conversion to Federal Funds 6

DETERMINING NET ASSET VALUE 7
- ---------------------------------------------------------------

Use of the Amortized Cost Method 7

EXCHANGE PRIVILEGE 8
- ---------------------------------------------------------------

REDEEMING SHARES 8
- ---------------------------------------------------------------

Redemption in Kind 8

TAX STATUS 8
- ---------------------------------------------------------------

The Fund's Tax Status 8
Shareholders' Tax Status 8

YIELD 8
- ---------------------------------------------------------------

EFFECTIVE YIELD 9
- ---------------------------------------------------------------

PERFORMANCE COMPARISONS 9
- ---------------------------------------------------------------

GENERAL INFORMATION ABOUT THE FUND
- --------------------------------------------------------------------------------

The Fund is a portfolio in Independence One Mutual Funds (the "Trust") which was
established as a Massachusetts business trust under a Declaration of Trust dated
January 9, 1989.

INVESTMENT OBJECTIVE AND POLICIES
- --------------------------------------------------------------------------------

The Fund's investment objective is to provide current income consistent with
stability of principal. The investment objective cannot be changed without
approval of shareholders. The policies described below may be changed by the
Board of Trustees ("Trustees") without shareholder approval. Shareholders will
be notified before any material change in these policies becomes effective.

TYPES OF INVESTMENTS

The Fund invests in money market instruments which mature in 397 days or less
and which include, but are not limited to, commercial paper and variable amount
demand master notes, bank instruments and U.S. government obligations.

The instruments of banks and savings and loans that are insured by the Bank
Insurance Fund ("BIF") or the Savings Association Insurance Fund ("SAIF") such
as certificates of deposit, demand and time deposits, savings shares, and
bankers' acceptances, are not necessarily guaranteed by those organizations.

BANK INSTRUMENTS

In addition to domestic bank obligations such as certificates of deposit,
demand and time deposits, savings shares, and bankers' acceptances, the
Fund may invest in:

Eurodollar Certificates of Deposit issued by foreign branches of U.S. or
foreign banks;

Eurodollar Time Deposits, which are U.S. dollar-denominated deposits in
foreign branches of U.S. or foreign banks;

Canadian Time Deposits, which are U.S. dollar-denominated deposits
issued by branches of major Canadian banks located in the United States;
and

Yankee Certificates of Deposit, which are U.S. dollar-denominated
certificates of deposit issued by U.S. branches of foreign banks and
held in the United States.

U.S. GOVERNMENT OBLIGATIONS

The types of U.S. government obligations in which the Fund may invest
generally include direct obligations of the U.S. Treasury (such as U.S.
Treasury bills, notes, and bonds) and obligations issued or guaranteed by
U.S. government agencies or instrumentalities. These securities are
backed by:

the full faith and credit of the U.S. Treasury;

the issuer's right to borrow from the U.S. Treasury;

the discretionary authority of the U.S. government to purchase certain
obligations of agencies or
instrumentalities; or

the credit of the agency or instrumentality issuing the obligations.

Examples of agencies and instrumentalities which may not always receive
financial support from the U.S. government are:

Federal Farm Credit Banks;

Federal Home Loan Banks;

Federal National Mortgage Association;

Student Loan Marketing Association; and

Federal Home Loan Mortgage Corporation.

REPURCHASE AGREEMENTS

The Fund or its custodian will take possession of the securities subject to
repurchase agreements, and these securities will be marked to market daily. In
the event that such a defaulting seller filed for bankruptcy or became
insolvent, disposition of such securities by the Fund might be delayed pending
court action. The Fund believes that under the regular procedures normally in
effect for custody of the Fund's portfolio securities subject to repurchase
agreements, a court of competent jurisdiction would rule in favor of the Fund
and allow retention or disposition of such securities. The Fund will only enter
into repurchase agreements with banks and other recognized financial
institutions such as broker/dealers which are deemed by the Fund's adviser to be
creditworthy pursuant to guidelines established by the Trustees.

RESTRICTED AND ILLIQUID SECURITIES

The ability of the Trustees to determine the liquidity of certain restricted
securities is permitted under the Securities and Exchange Commission ("SEC")
Staff position set forth in the adopting release for Rule 144A under the
Securities Act of 1933 (the "Rule"). The Rule is a non-exclusive safe harbor for
certain secondary market transactions involving securities subject to
restrictions on resale under federal securities laws. The Rule provides an
exemption from registration for resales of otherwise restricted securities to
qualified institutional buyers. The Rule was expected to further enhance the
liquidity of the secondary market for securities eligible for resale under Rule
144A. The Fund believes that the Staff of the SEC has left the question of
determining the liquidity of all restricted securities (eligible for resale
under Rule 144A) to the Trustees. The Trustees consider the following criteria
in determining the liquidity of certain restricted securities:

the frequency of trades and quotes for the securities;

the number of dealers willing to purchase or sell the security and the number
of other potential buyers;

dealer undertakings to make a market in the security; and

the nature of the security and the nature of the marketplace trades.

WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS

These transactions are made to secure what is considered to be an advantageous
price and yield for the Fund. The Fund engages in when-issued and delayed
delivery transactions only for the purpose of acquiring portfolio securities
consistent with the Fund's investment objective and policies, not for investment
leverage.

REVERSE REPURCHASE AGREEMENTS

INVESTMENT LIMITATIONS

SELLING SHORT AND BUYING ON MARGIN

The Fund will not sell any securities short or purchase any securities on
margin but may obtain such short-term credits as may be necessary for
clearance of transactions.

ISSUING SENIOR SECURITIES AND BORROWING MONEY

The Fund will not issue senior securities except that the Fund may borrow
money and engage in reverse repurchase agreements in amounts up to
one-third of the value of its net assets, including the amounts borrowed.

PLEDGING ASSETS

CONCENTRATION OF INVESTMENTS

The Fund will not invest 25% or more of the value of its total assets in
any one industry.

However, investing in bank instruments (such as time and demand deposits
and certificates of deposit), U.S. government obligations or instruments
secured by these money market instruments, such as repurchase agreements,
shall not be considered investments in any one industry.

INVESTING IN COMMODITIES, COMMODITY CONTRACTS, OR COMMODITY FUTURES
CONTRACTS

The Fund will not purchase or sell commodities, commodity contracts, or
commodity futures contracts.

INVESTING IN REAL ESTATE

The Fund will not purchase or sell real estate, although it may invest in
the securities of issuers whose business involves the purchase or sale of
real estate or in securities which are secured by real estate or
interests in real estate.

UNDERWRITING

The Fund will not underwrite any issue of securities, except as it may be
deemed to be an underwriter under the Securities Act of 1933 in
connection with the sale of securities in accordance with its investment
objective, policies, and limitations.

INVESTING IN RESTRICTED SECURITIES

The Fund will not invest more than 10% of its net assets in securities
subject to restrictions on resale under the federal securities laws,
except for Section 4(2) commercial paper.

LENDING CASH OR SECURITIES

The Fund will not lend any of its assets, except that it may purchase or
hold money market instruments, including repurchase agreements and
variable amount demand master notes, in accordance with its investment
objective, policies and limitations.

DIVERSIFICATION OF INVESTMENTS

With respect to 75% of the value of its assets, the Fund will not
purchase securities of any one issuer (other than securities issued or
guaranteed by the government of the United States or its agencies or
instrumentalities) if as a result more than 5% of the value of its total
assets would be invested in the securities of that issuer.

INVESTING IN NEW ISSUERS

The Fund will not invest more than 5% of the value of its total assets in
securities of issuers which have records of less than three years of
continuous operations, including the operation of any predecessor.

INVESTING IN ISSUERS WHOSE SECURITIES ARE OWNED BY OFFICERS AND TRUSTEES OF
THE TRUST

INVESTING IN SECURITIES OF OTHER INVESTMENT COMPANIES

The Fund will not purchase securities of other investment companies
except as part of a merger, consolidation, reorganization, or other
acquisition.

INVESTING IN MINERALS

The Fund will not purchase interests in oil, gas, or other mineral
exploration or development programs, except it may purchase the
securities of issuers which invest in or sponsor such programs.

INVESTING IN ILLIQUID SECURITIES

The Fund will not invest more than 10% of the value of its net assets in
illiquid securities, including repurchase agreements providing for
settlement in more than seven days after notice, certain restricted
securities not determined by the Trustees to be liquid, and
non-negotiable fixed time deposits with maturities over seven days.

The Fund did not borrow money, pledge securities, invest in illiquid securities,
restricted securities, or engage in when-issued and delayed delivery
transactions, or reverse repurchase agreements in excess of 5% of the value of
its net assets during the last fiscal period and has no present intent to do so
during the coming fiscal year.

INDEPENDENCE ONE MUTUAL FUNDS MANAGEMENT
- --------------------------------------------------------------------------------

OFFICERS AND TRUSTEES

Harry J. Nederlander\* Trustee Chairman, Nederlander Enterprises.
231 S. Woodward,
Suite 219
Birmingham, MI

Thomas S. Wilson Trustee President, Detroit Pistons; Executive Administrator, Detroit Pistons,
Two Champioship Drive The Palace of Auburn Hills, and The Pine Knob Music Theatre.
Auburn Hills, MI

Edward C. Gonzales President and Executive Vice President, Treasurer and Director, Federated Securities
Federated Investors Tower Treasurer Corp; Chairman, Treasurer and Trustee, Federated Administrative
Pittsburgh, PA Services; Vice President, Treasurer and Trustee, Federated Investors.

Jeffrey W. Sterling Vice President Vice President, Federated Administrative Services.
Federated Investors Tower and Assistant
Pittsburgh, PA Treasurer

Jay S. Neuman Secretary Corporate Counsel, Federated Investors; Prior to January 1991, Associate
Federated Investors Tower Counsel, The Boston Company Advisors, Inc.
Pittsburgh, PA
</TABLE>

\Members of the Trust's Executive Committee. The Executive Committee of the
Board of Trustees handles the responsibilities of the Board of Trustees between
meetings of the Board.

*This Trustee is deemed to be an "interested person" of the Fund or Trust as
defined in the Investment Company Act of 1940.

FUND OWNERSHIP

Officers and Trustees own less than 1% of the outstanding shares of the Fund.
The following indicates the beneficial ownership of the shareholder who is the
beneficial owner of more than 5% of the outstanding shares of the portfolio as
of June 4, 1994: Michigan National Bank, acting in various capacities for
numerous accounts owned, of record: approximately 151,866,110 shares (55.9%).

As of June , 1994, the following shareholder of record owned 5% or more of the
outstanding shares of the Fund:

TRUSTEE LIABILITY

INVESTMENT ADVISORY SERVICES
- --------------------------------------------------------------------------------

ADVISER TO THE FUND

The Fund's investment adviser is Michigan National Bank (the "Adviser").

Because of the internal controls maintained by Michigan National Bank to
restrict the flow of non-public information, Fund investments are typically made
without any knowledge of Michigan National Bank's or its affiliates' lending
relationships with an issuer.

ADVISORY FEES

For its advisory services, Michigan National Bank receives an annual investment
advisory fee as described in the prospectus. For the fiscal years ended April
30, 1994, 1993, and 1992, the Adviser earned $1,497,520, $1,437,564, and
$1,692,928, respectively, of which $64,765, $158,210, and $326,759,
respectively, were waived because of undertakings to limit the Fund's expenses.

STATE EXPENSE LIMITATIONS

The Adviser has undertaken to comply with the expense limitation
established by certain states for investment companies whose shares are
registered for sale in those states. If the Fund's normal operating
expenses (including the investment advisory fee, but not including
brokerage commissions, interest, taxes, and extraordinary expenses)
exceed 2-1/2% per year of the first $30 million of average net assets, 2%
per year of the next $70 million of average net assets, and 1-1/2% per
year of the remaining average net assets, the Adviser will reimburse the
Fund for its expenses over the limitation.

This arrangement is not part of the advisory contract and may be amended
or rescinded in the future.

ADMINISTRATIVE SERVICES
- --------------------------------------------------------------------------------

Federated Administrative Services, a subsidiary of Federated Investors, provides
administrative personnel and services to the Fund for the fees set forth in the
prospectus. For the fiscal years ended April 30, 1994, 1993 and 1992, the Fund
incurred administrative services costs of $470,126, $457,734, and $551,632,
respectively.

BROKERAGE TRANSACTIONS
- --------------------------------------------------------------------------------

The Adviser may select brokers and dealers who offer brokerage and research
services. These services may be furnished directly to the Fund or to the Adviser
and may include:

advice as to the advisability of investing in securities;

security analysis and reports;

economic studies;

industry studies;

receipt of quotations for portfolio evaluations; and

similar services.

PURCHASING SHARES
- --------------------------------------------------------------------------------

DISTRIBUTION PLAN

CONVERSION TO FEDERAL FUNDS

DETERMINING NET ASSET VALUE
- --------------------------------------------------------------------------------

The Fund attempts to stabilize the value of a share at $1.00. The days on which
net asset value is calculated by the Fund are described in the prospectus.

USE OF THE AMORTIZED COST METHOD

MONITORING PROCEDURES

INVESTMENT RESTRICTIONS

The Rule requires that the Fund limit its investments to instruments
that, in the opinion of the Trustees, present minimal credit risks, and
have received the requisite rating from one or more nationally recognized
statistical rating organizations. If the instruments are not rated, the
Trustees must determine that they are of comparable quality. The Rule
also requires the Fund to maintain a dollar-weighted average portfolio
maturity (not more than 90 days) appropriate to the objective of
maintaining a stable net asset value of $1.00 per share. In addition, no
instrument with a remaining maturity of more than 397 days can be
purchased by the Fund.

EXCHANGE PRIVILEGE
- --------------------------------------------------------------------------------

Instructions for exchanges may be given in writing or by telephone. Exchange
procedures are explained in the prospectus under "Exchange Privilege."

REDEEMING SHARES
- --------------------------------------------------------------------------------

REDEMPTION IN KIND

The Trust has elected to be governed by Rule 18f-1 of the Investment Company Act
of 1940 under which the Fund is obligated to redeem shares for any one
shareholder in cash only up to the lesser of $250,000 or 1% of the Fund's net
asset value during any 90-day period.

TAX STATUS
- --------------------------------------------------------------------------------

THE FUND'S TAX STATUS

derive at least 90% of its gross income from dividends, interest, and gains
from the sale of securities;

derive less than 30% of its gross income from the sale of securities held less
than three months;

invest in securities within certain statutory limits; and

distribute to its shareholders at least 90% of its net income earned during the
year.

SHAREHOLDERS' TAX STATUS

Shareholders are subject to federal income tax on dividends received as cash or
additional shares. No portion of any income dividend paid by the Fund is
eligible for the dividends received deduction available to corporations. These
dividends and any short-term capital gains are taxable as ordinary income.

CAPITAL GAINS

Capital gains experienced by the Fund could result in an increase in
dividends. Capital losses could result in a decrease in dividends. If,
for some extraordinary reason, the Fund realizes net long-term capital
gains, it will distribute them at least once every 12 months.

YIELD
- --------------------------------------------------------------------------------

The Fund's yield for the seven-day period ended April 30, 1994, was 3.09%.

The Fund calculates its yield daily, based upon the seven days ending on the day
of the calculation, called the "base period." This yield is computed by:

dividing the net change in the account's value by the value of the account at
the beginning of the base period to determine the base period return; and

multiplying the base period return by (365/7).

EFFECTIVE YIELD
- --------------------------------------------------------------------------------

The Fund's effective yield for the seven-day period ended April 30, 1994, was
3.13%.

The Fund's effective yield is computed by compounding the unannualized base
period return by:

adding 1 to the base period return;

raising the sum to the 365/7th power; and

subtracting 1 from the result.

PERFORMANCE COMPARISONS
- --------------------------------------------------------------------------------

The Fund's performance depends upon such variables as:

portfolio quality;

average portfolio maturity;

type of instruments in which the portfolio is invested;

changes in interest rates on money market instruments;

changes in Fund expenses; and

the relative amount of Fund cash flow.

LIPPER ANALYTICAL SERVICES, INC., ranks funds in various fund categories by
making comparative calculations using total return. Total return assumes the
reinvestment of all income dividends and capital gains distributions, if any.
From time to time, the Trust will quote its Lipper ranking in the "money market
instrument funds" category in advertising and sales literature.

9042806B (6/94)

INDEPENDENCE ONE U.S. TREASURY MONEY MARKET FUND
(A PORTFOLIO OF INDEPENDENCE ONE MUTUAL FUNDS)
PROSPECTUS

The shares of Independence One U.S. Treasury Money Market Fund (the "Fund")
offered by this prospectus represent interests in the Fund which is one of a
series of investment portfolios in Independence One Mutual Funds (the "Trust"),
an open-end, management investment company (a mutual fund). Michigan National
Bank professionally manages the Fund's portfolio.

The investment objective of the Fund is to provide current income consistent
with stability of principal. The Fund pursues this investment objective by
investing in a portfolio of short-term U.S. Treasury obligations.

This prospectus contains the information you should read and know before you
invest in the Fund. Keep this prospectus for future reference.

Prospectus dated June 30, 1994

TABLE OF CONTENTS
- --------------------------------------------------------------------------------

SUMMARY OF FUND EXPENSES 1
- ------------------------------------------------------

FINANCIAL HIGHLIGHTS 2

- ------------------------------------------------------

GENERAL INFORMATION 3
- ------------------------------------------------------

INVESTMENT INFORMATION 3
- ------------------------------------------------------

Investment Objective 3
Investment Policies 3
Acceptable Investments 3
Repurchase Agreements 4
When-Issued and Delayed
Delivery Transactions 4
Investment Limitations 4
Regulatory Compliance 4

INDEPENDENCE ONE MUTUAL FUNDS
INFORMATION 5
- ------------------------------------------------------

Management of the Trust 5
Board of Trustees 5
Investment Adviser 5
Advisory Fees 5
Adviser's Background 5
Distribution of Fund Shares 5
Distribution Plan 6
Administration of the Fund 7
Administrative Services 7
Custodian 7

Transfer Agent and
Dividend Disbursing Agent 7

Legal Counsel 7
Independent Auditors 7
NET ASSET VALUE 7
- ------------------------------------------------------

INVESTING IN THE FUND 7
- ------------------------------------------------------

Share Purchases 7
To Place an Order 8
Minimum Investment Required 8
Cash Sweep Program 8
Participating Depository Institutions 8
What Shares Cost 8
Certificates and Confirmations 9
Dividends 9
Capital Gains 9

EXCHANGE PRIVILEGE 9
- ------------------------------------------------------

Exchange by Telephone 10
Written Exchange 10

REDEEMING SHARES 11
- ------------------------------------------------------

Cash Sweep Program 11
Redeeming by Check 11
By Telephone 11
By Mail 12
Accounts with Low Balances 12
Redemption in Kind 13

SHAREHOLDER INFORMATION 13
- ------------------------------------------------------

Voting Rights 13
Massachusetts Partnership Law 13

EFFECT OF BANKING LAWS 14
- ------------------------------------------------------

TAX INFORMATION 14
- ------------------------------------------------------

Federal Income Tax 14

PERFORMANCE INFORMATION 15
- ------------------------------------------------------

FINANCIAL STATEMENTS 16
- ------------------------------------------------------

INDEPENDENT AUDITORS' REPORT 22
- ------------------------------------------------------

ADDRESSES Back Cover
- ------------------------------------------------------

SUMMARY OF FUND EXPENSES
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES
<S> <C>
Maximum Sales Load Imposed on Purchases (as a percentage of offering price).............................. None
Maximum Sales Load Imposed on Reinvested Dividends (as a percentage of offering price)................... None
Contingent Deferred Sales Charge (as a percentage of original purchase price or redemption proceeds,
as applicable)......................................................................................... None
Redemption Fees (as a percentage of amount redeemed, if applicable)...................................... None
Exchange Fee............................................................................................. None
<CAPTION>
ANNUAL FUND OPERATING EXPENSES
(As a percentage of average net assets)
Management Fee........................................................................................... 0.40%
12b-1 Fees (1)........................................................................................... 0.00%
Total Other Expenses................................................................................... 0.21%
Total Operating Expenses............................................................................ 0.61%
</TABLE>

(1) As of the date of this prospectus, the Fund is not paying or accruing 12b-1
fees. The Fund will not pay or accrue 12b-1 fees until a separate class of
shares has been created for certain institutional investors. The Fund's
distributor can pay up to 0.25% as a 12b-1 fee which is reimbursed to the
distributor by the Fund. See "General Information."

THE ABOVE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.

INDEPENDENCE ONE U.S. TREASURY MONEY MARKET FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)

Reference is made to the Independent Auditors' Report on page 22.

<TABLE>
<CAPTION>
YEAR ENDED APRIL 30,
<S> <C> <C> <C> <C> <C>
1994 1993 1992 1991 1990*
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ---------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ---------------------------------------------------
Net investment income 0.03 0.03 0.05 0.07 0.08
- --------------------------------------------------- --------- --------- --------- --------- ---------
LESS DISTRIBUTIONS
- ---------------------------------------------------
Dividends to shareholders from net
investment income (0.03) (0.03) (0.05) (0.07) (0.08)
- --------------------------------------------------- --------- --------- --------- --------- ---------
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- --------------------------------------------------- --------- --------- --------- --------- ---------
TOTAL RETURN (A) 2.63% 2.92% 4.81% 7.17% 7.83%
- ---------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ---------------------------------------------------
Expenses 0.61% 0.54% 0.57% 0.60% 0.35%(b)
- ---------------------------------------------------
Net investment income 2.60% 2.90% 4.55% 6.91% 8.17%(b)
- ---------------------------------------------------
Expense waiver/reimbursement (c) 0.00% 0.09% 0.12% 0.07% 0.32%(b)
- ---------------------------------------------------
SUPPLEMENTAL DATA
- ---------------------------------------------------
Net assets, end of period (000 omitted) $215,832 $214,069 $224,803 $131,263 $82,947
- ---------------------------------------------------
</TABLE>

* Reflects operations for the period from June 1, 1989 (date of initial public
investment) to April 30, 1990.

(a) Based on net asset value, which does not reflect sales load or contingent
deferred sales charge, if applicable.

(b) Computed on an annualized basis.

(c) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above (Note 4).

(See Notes which are an integral part of the Financial Statements)

GENERAL INFORMATION
- --------------------------------------------------------------------------------

This prospectus relates only to the Trust's portfolio known as Independence One
U.S. Treasury Money Market Fund. The Fund intends to offer two classes of shares
for sale: Trust and Investment Shares. The classes of shares represent interests
in one common investment portfolio but differ in that Investment Shares, which
will be sold primarily to individual investors, will be subject to distribution
expenses paid by the Fund pursuant to a Plan adopted under Rule 12b-1 of the
Investment Company Act of 1940 while Trust Shares will be sold to institutional
investors and will not be subject to such a Plan and will not incur such
distribution expenses. Trust Shares are currently not available for sale. The
Fund will not offer Trust Shares and will not accrue or pay any distribution
expenses pursuant to the Plan until the Trust Shares have been registered with
the Securities and Exchange Commission and certain states. The Investment Shares
of the Fund currently being offered are designed as a convenient means of
accumulating an interest in a professionally managed, diversified portfolio
limited to money market instruments maturing in 397 days or less.

A minimum initial investment of $1,000 is required. Subsequent investments must
be in amounts of at least $100.

The Fund attempts to stabilize the value of a share at $1.00. Fund shares are
currently sold and redeemed at that price.

INVESTMENT INFORMATION
- --------------------------------------------------------------------------------

INVESTMENT OBJECTIVE

INVESTMENT POLICIES

The Fund pursues its investment objective by investing exclusively in a
portfolio of short-term U.S. Treasury obligations. The average maturity of the
U.S. Treasury obligations in the Fund's portfolio, computed on a dollar-weighted
basis, will be 90 days or less. Unless indicated otherwise, the investment
policies may be changed by the Board of Trustees ("Trustees") without the
approval of shareholders. Shareholders will be notified before any material
changes in these policies become effective.

ACCEPTABLE INVESTMENTS. The Fund invests only in short-term U.S. Treasury
obligations, which are normally held to maturity. These instruments are issued
by the U.S. government, its agencies or instrumentalities, and are fully
guaranteed as to principal and interest by the United States. They
mature in 397 days or less from the date of acquisition unless they are
purchased under a repurchase agreement that provides for repurchase by the
seller within one year from the date of acquisition.

REPURCHASE AGREEMENTS. Certain securities in which the Fund invests may be
purchased pursuant to repurchase agreements. Repurchase agreements are
arrangements in which banks, broker/dealers, and other recognized financial
institutions sell U.S. government securities or other securities to the
Fund and agree at the time of sale to repurchase them at a mutually agreed
upon time and price within one year from the date of acquisition. To the
extent that the original seller does not repurchase the securities from the
Fund, the Fund could receive less than the repurchase price on any sale of
such securities.

WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS. The Fund may purchase short-term
U.S. Treasury obligations on a when-issued or delayed delivery basis. These
transactions are arrangements in which the Fund purchases securities with
payment and delivery scheduled for a future time. The Fund engages in
when-issued and delayed delivery transactions only for the purpose of acquiring
portfolio securities consistent with the Fund's investment objective and
policies, not for investment leverage. In when-issued and delayed delivery
transactions, the Fund relies on the seller to complete the transaction. The
seller's failure to complete the transaction may cause the Fund to miss a price
or yield considered to be advantageous. The Fund will limit its purchase of
securities on a when-issued or delayed delivery basis to no more than 20% of the
value of its total assets.

INVESTMENT LIMITATIONS

The Fund will not:

borrow money directly or through reverse repurchase agreements or pledge
securities except, under certain circumstances, the Fund may borrow up to
one-third of the value of its net assets and pledge up to 10% of the value
of its total assets to secure such borrowings.

The above investment limitation cannot be changed without shareholder approval.
The following limitation, however, may be changed by the Trustees without
shareholder approval. Shareholders will be notified before any material change
in this limitation becomes effective.

The Fund will not:

invest more than 10% of its net assets in illiquid securities, including
repurchase agreements providing for settlement in more than seven days
after notice.

REGULATORY COMPLIANCE

The Fund may follow non-fundamental operational policies that are more
restrictive than its fundamental investment limitations, as set forth in this
prospectus and its Statement of Additional Information, in order to comply with
applicable laws and regulations, including the provisions of and regulations
under the Investment Company Act of 1940, as amended. In particular, the Fund
will comply with the various requirements of Rule 2a-7, which regulates money
market mutual funds. The Fund will also determine the effective maturity of its
investments, as well as its ability to consider a security as having received
the requisite short-term ratings by nationally recognized statistical rating
organizations, according to Rule 2a-7. The Fund may change these operational
policies to reflect changes in the laws and regulations without the approval of
its shareholders.

INDEPENDENCE ONE MUTUAL FUNDS INFORMATION
- --------------------------------------------------------------------------------

MANAGEMENT OF THE TRUST

DISTRIBUTION OF FUND SHARES

DISTRIBUTION PLAN. Pursuant to the provisions of a distribution plan adopted in
accordance with the Investment Company Act Rule 12b-1 (the "Plan"), the Fund
will pay to the distributor an amount computed at an annual rate of 0.25 of 1%
of the average daily net asset value of the shares to finance any activity which
is principally intended to result in the sale of shares of the Fund subject to
the Plan. The Fund will not accrue or pay any distribution expenses pursuant to
the Plan until the Trust shares have been registered with the Securities and
Exchange Commission and certain states. (See "General Information.")

The distributor may select financial institutions such as banks, fiduciaries,
custodians for public funds, investment advisers, and broker/dealers ("brokers")
to provide sales and/or administrative services as agents for their clients or
customers who beneficially own shares of the Fund. Administrative services may
include, but are not limited to the following functions; providing office space,
equipment, telephone facilities, and various personnel, including clerical,
supervisory, and computer, as necessary or beneficial to establish and maintain
shareholder accounts and records; processing purchase and redemption
transactions and automatic investments of client account cash balances;
answering routine client inquiries regarding the shares of the Fund; assisting
clients in changing dividend options, account designations, and addresses; and
providing such other services as the Fund reasonably requests for its shares.

The Fund's Plan is a compensation type plan. As such, the Fund makes no payments
to the distributor except as described above. Therefore, the Fund does not pay
for unreimbursed expenses of the distributor, including amounts expended by the
distributor in excess of amounts received by it from the Fund, interest,
carrying or other financing charges in connection with excess amounts expended,
or the distributor's overhead expenses. However, the distributor may be able to
recover such amounts or may earn a profit from future payments made by the Fund
under the Plan.

ADMINISTRATION OF THE FUND

The administrative fee received during any fiscal year shall be at least $50,000
per Fund. Federated Administrative Services may choose voluntarily to reimburse
a portion of its fee.

CUSTODIAN. State Street Bank and Trust Company, Boston, Massachusetts, is
custodian for the securities and cash of the Fund.

TRANSFER AGENT AND DIVIDEND DISBURSING AGENT. _Federated Services Company,
Pittsburgh, Pennsylvania, is transfer agent for the shares of the Fund, and
dividend disbursing agent for the Fund.

LEGAL COUNSEL. Legal counsel to the Fund is provided by Houston, Houston &
Donnelly, Pittsburgh, Pennsylvania, and Dickstein, Shapiro and Morin, L.L.P.,
Washington, D.C.

INDEPENDENT AUDITORS. The independent auditors for the Fund are KPMG Peat
Marwick, Pittsburgh, Pennsylvania.

NET ASSET VALUE
- --------------------------------------------------------------------------------

INVESTING IN THE FUND
- --------------------------------------------------------------------------------

SHARE PURCHASES

Shares of the Fund may be purchased through Michigan National Bank, Independence
One Brokerage Services, Inc. ("Independence One"), or through brokers or dealers
which have a sales agreement with the distributor. Texas residents should
purchase shares through Federated Securities Corp. at
1-800-618-8573. Investors may purchase shares of the Fund on all business days
except on days which the New York Stock Exchange is closed and federal holidays
restricting wire transfers. In connection
with the sale of Fund shares, the distributor may from time to time offer
certain items of nominal value to any shareholder or investor. The Fund reserves
the right to reject any purchase request.

To purchase by check, the check must be included with the order and made payable
to "Independence One U.S. Treasury Money Market Fund." Orders are considered
received after payment by check is converted by the transfer agent's bank, State
Street Bank and Trust Company ("State Street Bank"), into federal funds.

When payment is made through wire transfer of federal funds, the order is
considered received immediately upon receipt by State Street Bank. Payment by
wire must be received before 11:00 a.m. (Eastern time) on the same day as the
order to earn dividends for that day. Prior to purchasing by wire, investors
should call their Michigan National Bank or Independence One representative or
their authorized broker. It is the responsibility of Michigan National Bank,
Independence One, and authorized brokers to transmit orders promptly. Federal
funds should be wired as follows: Federated Services Company, c/o State Street
Bank and Trust Company, Boston, Massachusetts; Attention: EDGEWIRE; For Credit
to: Independence One U.S. Treasury Money Market Fund; Fund Number (this number
can be found on the account statement or by contacting the Fund); Group Number
or Order Number; Nominee or Institution Name; and ABA Number 011000028.

MINIMUM INVESTMENT REQUIRED

The minimum initial investment in the shares of the Fund by an investor is
$1,000. Subsequent investments must be in amounts of at least $100.

CASH SWEEP PROGRAM

WHAT SHARES COST

Fund shares are sold at their net asset value next determined after an order is
received. There is no sales charge imposed by the Fund.

The net asset value is determined at 12:00 noon (Eastern time), and 4:00 p.m.
(Eastern time), Monday through Friday, except on: (i) days on which there are
not sufficient changes in the value of the Fund's portfolio securities that its
net asset value might be materially affected; (ii) days during which no shares
are tendered for redemption and no orders to purchase shares are received; and
(iii) on the following holidays; New Year's Day, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day, and Christmas Day.

CERTIFICATES AND CONFIRMATIONS

Monthly confirmations are sent to report transactions such as purchases and
redemptions as well as dividends paid during the month.

DIVIDENDS

CAPITAL GAINS

Capital gains, if any, could result in an increase in dividends. Capital losses
could result in a decrease in dividends. If, for some extraordinary reason, the
Fund realizes net long-term capital gains, it will distribute them at least once
every 12 months.

EXCHANGE PRIVILEGE
- --------------------------------------------------------------------------------

All shareholders of the Fund are shareholders of the Trust, which consists of
the Fund, Independence One Prime Money Market Fund, Independence One Michigan
Municipal Cash Fund, and Independence One U.S. Government Securities Fund.
Shareholders of the Fund have access to Independence One Prime Money Market
Fund, Independence One Michigan Municipal Cash Fund, and Independence One U.S.
Government Securities Fund ("participating funds") through an exchange program.

The exchange privilege is available to shareholders residing in any state in
which the participating fund shares being acquired may legally be sold. Upon
receipt by the transfer agent of proper instructions and all necessary
supporting documents, shares submitted for exchange will be redeemed at the
next-determined net asset value. If the exchanging shareholder does not have an
account in the participating fund whose shares are being acquired, a new account
will be established with the same registration, dividend, and capital gain
options as the account from which shares are exchanged, unless otherwise
specified by the shareholder. In the case where the new account registration is
not identical to that of the existing account, a signature guarantee is
required. (See "Redeeming Shares By Mail.") Exercise of this privilege is
treated as a redemption and new purchase for federal income tax purposes and,
depending on the circumstances, a short or long-term capital gain or loss may be
realized. The Fund reserves the right to modify or terminate the exchange
privilege at any time. Shareholders would be notified prior to any modification
or termination. Shareholders may obtain further information on the exchange
privilege by calling their Michigan National Bank or Independence One
representative or authorized broker.

Shares may be exchanged by telephone only between fund accounts having identical
shareholder registrations. Exchange instructions given by telephone may be
electronically recorded.

If reasonable procedures are not followed by the Fund, it may be liable for
losses due to unauthorized or fraudulent telephone instructions.

WRITTEN EXCHANGE. A shareholder wishing to make an exchange by written request
may do so by sending it to: Independence One Mutual Funds, 27777 Inkster Road,
Mail Code 10-52, Farmington Hills, Michigan 48333-9065. In addition, an investor
may exchange shares by sending a written request to their authorized broker
directly.

REDEEMING SHARES
- --------------------------------------------------------------------------------

The Fund redeems shares at their net asset value next determined after Federated
Services Company receives the redemption request. Redemptions will be made on
days on which the Fund computes its net asset value. Redemption requests cannot
be executed on days on which the New York Stock Exchange is closed and federal
holidays restricting wire transfers. Telephone or written requests for
redemption must be received in proper form and can be made to the Fund through a
Michigan National Bank or Independence One representative or authorized broker.
Although the transfer agent does not charge for telephone redemptions, it
reserves the right to charge a fee for the cost of wire-transferred redemptions
of less than $5,000.

If reasonable procedures are not followed by the Fund, it may be liable for
losses due to unauthorized or fraudulent telephone instructions.

BY MAIL. Shareholders may redeem Fund shares by sending a written request to
the Fund through their Michigan National Bank or Independence One representative
or authorized broker. The written request should include the shareholder's name,
the Fund name, the account number, and the share or dollar amount requested.
Shareholders redeeming through Michigan National Bank or Independence One should
mail requests to: Independence One Mutual Funds, 27777 Inkster Road, Mail Code
10-52, Farmington Hills, Michigan 48333-9065. Investors redeeming through an
authorized broker should mail written requests directly to their broker.

If share certificates have been issued, they must be properly endorsed and
should be sent by registered or certified mail with the written request.

a trust company or a commercial bank whose deposits are insured by the
Bank Insurance Fund ("BIF"), which is administered by FDIC;

a member of the New York, American, Boston, Midwest, or Pacific Stock
Exchange;

a savings bank or savings and loan association whose deposits are insured
by SAIF, which is administered by the FDIC; or

any other "eligible guarantor institution," as defined in the Securities
Exhange Act of 1934.

The Fund does not accept signatures guaranteed by a notary public.

Normally, a check for the proceeds is mailed to the shareholder within one
business day, but in no event more than seven days after receipt of a proper
written redemption request.

ACCOUNTS WITH LOW BALANCES

Due to the high cost of maintaining accounts with low balances, the Fund may
redeem shares in any account and pay the proceeds to the shareholder if the
account balance falls below a required minimum
value of $1,000 due to shareholder redemptions. Before shares are redeemed to
close an account, the shareholder is notified in writing and allowed 30 days to
purchase additional shares to meet the minimum requirement.

REDEMPTION IN KIND

The Fund is obligated to redeem shares solely in cash up to $250,000 or 1% of
the Fund's net asset value, whichever is less, for any one shareholder within a
90-day period.

SHAREHOLDER INFORMATION
- --------------------------------------------------------------------------------

VOTING RIGHTS

MASSACHUSETTS PARTNERSHIP LAW

EFFECT OF BANKING LAWS
- --------------------------------------------------------------------------------

TAX INFORMATION
- --------------------------------------------------------------------------------

FEDERAL INCOME TAX

PERFORMANCE INFORMATION
- --------------------------------------------------------------------------------

From time to time the Fund advertises its yield and effective yield.

From time to time, the Fund may advertise its performance using certain
financial publications and/or compare its performance to certain indices.

INDEPENDENCE ONE U.S. TREASURY MONEY MARKET FUND
PORTFOLIO OF INVESTMENTS
APRIL 30, 1994
- --------------------------------------------------------------------------------

* Repurchase agreements are fully collateralized by U.S. Treasury obligations
based on market prices at the date of the portfolio.

\ Also represents cost for federal tax purposes.

Note: The categories of investments are shown as a percentage of net assets
($215,832,309) at April 30, 1994.

(See Notes which are an integral part of the Financial Statements)

INDEPENDENCE ONE U.S. TREASURY MONEY MARKET FUND
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1994
- --------------------------------------------------------------------------------

<TABLE>
<S> <C> <C>
ASSETS:
- ------------------------------------------------------------------------------------------------
Investments in repurchase agreements (Note 2B) $ 146,605,000
- -------------------------------------------------------------------------------
Investments in U.S. Treasury obligations 69,576,197
- ------------------------------------------------------------------------------- ---------------
Total investments, at amortized cost and value (Note 2A) $ 216,181,197
- ------------------------------------------------------------------------------------------------
Cash 670
- ------------------------------------------------------------------------------------------------
Interest receivable 29,077
- ------------------------------------------------------------------------------------------------
Deferred expenses (Note 2F) 519
- ------------------------------------------------------------------------------------------------ ---------------
Total assets 216,211,463
- ------------------------------------------------------------------------------------------------
LIABILITIES:
- ------------------------------------------------------------------------------------------------
Dividends payable 285,947
- -------------------------------------------------------------------------------
Payable for Fund shares redeemed 52,328
- -------------------------------------------------------------------------------
Payable to transfer and dividend disbursing agent 5,053
- -------------------------------------------------------------------------------
Accrued expenses 35,826
- ------------------------------------------------------------------------------- ---------------
Total liabilities 379,154
- ------------------------------------------------------------------------------------------------ ---------------
NET ASSETS for 215,832,309 shares of beneficial interest outstanding $ 215,832,309
- ------------------------------------------------------------------------------------------------ ---------------
NET ASSET VALUE, Offering Price, and Redemption Price Per Share
($215,832,309 / 215,832,309 SHARES OF BENEFICIAL INTEREST OUTSTANDING) $1.00
- ------------------------------------------------------------------------------------------------ ---------------
</TABLE>

(See Notes which are an integral part of the Financial Statements)

INDEPENDENCE ONE U.S. TREASURY MONEY MARKET FUND
STATEMENT OF OPERATIONS
YEAR ENDED APRIL 30, 1994
- --------------------------------------------------------------------------------

<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
- ---------------------------------------------------------------------------------------------------
Interest income (Note 2C) $ 6,672,688
- ---------------------------------------------------------------------------------------------------
EXPENSES:
- ---------------------------------------------------------------------------------------------------
Investment advisory fee (Note 4) $ 832,041
- ------------------------------------------------------------------------------------
Administrative personnel and services (Note 4) 262,246
- ------------------------------------------------------------------------------------
Trustees' fees 11,868
- ------------------------------------------------------------------------------------
Custodian and portfolio accounting fees 84,476
- ------------------------------------------------------------------------------------
Transfer agent and dividend disbursing fees and expenses (Note 4) 16,884
- ------------------------------------------------------------------------------------
Fund share registration costs 17,906
- ------------------------------------------------------------------------------------
Auditing fees 11,690
- ------------------------------------------------------------------------------------
Legal fees 6,430
- ------------------------------------------------------------------------------------
Printing and postage 5,156
- ------------------------------------------------------------------------------------
Insurance premiums 8,606
- ------------------------------------------------------------------------------------
Miscellaneous 9,517
- ------------------------------------------------------------------------------------ -------------
Total expenses 1,266,820
- ------------------------------------------------------------------------------------
Deduct--Waiver of investment advisory fee (Note 4) 586
- ------------------------------------------------------------------------------------ -------------
Net expenses 1,266,234
- --------------------------------------------------------------------------------------------------- -------------
Net investment income $ 5,406,454
- --------------------------------------------------------------------------------------------------- -------------
</TABLE>

(See Notes which are an integral part of the Financial Statements)

INDEPENDENCE ONE U.S. TREASURY MONEY MARKET FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
YEAR ENDED APRIL 30,
<S> <C> <C>
1994 1993
- ------------------------------------------------------------------------- ------------------ ------------------
INCREASE (DECREASE) IN NET ASSETS:
- -------------------------------------------------------------------------
OPERATIONS--
- -------------------------------------------------------------------------
Net investment income $ 5,406,454 $ 6,772,915
- ------------------------------------------------------------------------- ------------------ ------------------
DISTRIBUTIONS TO SHAREHOLDERS (NOTE 2C)--
- -------------------------------------------------------------------------
Dividends to shareholders from net investment income (5,406,454) (6,772,915)
- ------------------------------------------------------------------------- ------------------ ------------------
FUND SHARE (PRINCIPAL) TRANSACTIONS (NOTE 3)--
- -------------------------------------------------------------------------
Proceeds from sale of shares 1,540,448,095 1,660,748,209
- -------------------------------------------------------------------------
Net asset value of shares issued to shareholders in payment of dividends
declared 2,337,162 2,450,153
- -------------------------------------------------------------------------
Cost of shares redeemed (1,541,022,154) (1,673,931,783)
- ------------------------------------------------------------------------- ------------------ ------------------
Change in net assets from Fund share transactions 1,763,103 (10,733,421)
- ------------------------------------------------------------------------- ------------------ ------------------
Change in net assets 1,763,103 (10,733,421)
- -------------------------------------------------------------------------
NET ASSETS:
- -------------------------------------------------------------------------
Beginning of period 214,069,206 224,802,627
- ------------------------------------------------------------------------- ------------------ ------------------
End of period $ 215,832,309 $ 214,069,206
- ------------------------------------------------------------------------- ------------------ ------------------
</TABLE>

(See Notes which are an integral part of the Financial Statements)

INDEPENDENCE ONE U.S. TREASURY MONEY MARKET FUND
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 1994
- --------------------------------------------------------------------------------

(1) ORGANIZATION

Independence One Mutual Funds (the "Trust") is registered under the Investment
Company Act of 1940, as amended, as an open-end, management investment company.
The Trust consists of four portfolios. The financial statements included herein
are only those of Independence One U.S. Treasury Money Market Fund (the "Fund").
The financial statements of the other portfolios are presented separately. The
assets of each portfolio are segregated and a shareholder's interest is limited
to the portfolio in which shares are held.

(2) SIGNIFICANT ACCOUNTING POLICIES

A. INVESTMENT VALUATIONS--The Fund's use of the amortized cost method to value
its portfolio securities is in accordance with Rule 2a-7 under the
Investment Company Act of 1940.

B. REPURCHASE AGREEMENTS--It is the policy of the Fund to require the
custodian bank to take possession, to have legally segregated in the
Federal Reserve Book Entry System or to have segregated within the
custodian bank's vault, all securities held as collateral in support of
repurchase agreement investments. Additionally, procedures have been
established by the Fund to monitor on a daily basis, the market value of
each repurchase agreement's underlying collateral to ensure the value at
least equals the principal amount of the repurchasing agreement, including
accrued interest.

C. INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS--Interest income and expenses
are accrued daily. Premium and discount are amortized as required by the
Internal Revenue Code, as amended ("Code"). Distributions to shareholders
are recorded on the ex-dividend date.

D. FEDERAL TAXES--It is the Fund's policy to comply with the provisions of the
Code applicable to regulated investment companies and to distribute to
shareholders each year all of its taxable income. Accordingly, no
provisions for federal tax are necessary.

E. WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Fund may engage in
when-issued or delayed delivery transactions. The Fund records when-issued
securities on the trade date and maintains security positions such that
sufficient liquid assets will be available to make payment for the
securities purchased. Securities purchased on a when-issued or delayed
basis are marked to market daily and begin earning interest on the
settlement date.

G. OTHER--Investment transactions are accounted for on the trade date.

(3) SHARES OF BENEFICIAL INTEREST

The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value). At April
30, 1994, capital paid in aggregated $215,832,309. Transactions in Fund shares
were as follows:

<TABLE>
<CAPTION>
Year Ended April 30,
1994 1993
<S> <C> <C>
Shares sold 1,540,448,095 1,660,748,209
- ----------------------------------------------------------------------------
Shares issued to shareholders in payment of dividends declared 2,337,162 2,450,153
- ----------------------------------------------------------------------------
Shares redeemed (1,541,022,154) (1,673,931,783)
- ---------------------------------------------------------------------------- ----------------- -----------------
Net change resulting from fund share transactions 1,763,103 (10,733,421)
- ---------------------------------------------------------------------------- ----------------- -----------------
</TABLE>

(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES

INVESTMENT ADVISORY FEE--Michigan National Bank, the Fund's investment adviser
("Adviser"), receives for its services an annual investment advisory fee equal
to 0.40 of 1% of the Fund's average daily net assets. Adviser may voluntarily
choose to waive a portion of its fee and reimburse certain operating expenses of
the Fund. Adviser can modify or terminate this voluntary waiver and
reimbursement at any time at its sole discretion.

Certain Officers of the Trust are Officers and Trustees of the above companies.

INDEPENDENT AUDITORS' REPORT
- --------------------------------------------------------------------------------

The Board of Trustees and Shareholders
INDEPENDENCE ONE MUTUAL FUNDS:

We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of Independence One U.S. Treasury Money Market
Fund (a portfolio within Independence One Mutual Funds) as of April 30, 1994,
and the related statement of operations for the year then ended, the statements
of changes in net assets for the years ended April 30, 1994 and 1993, and the
financial highlights which is presented on page 2 of this prospectus, for each
of the periods indicated therein. These financial statements and the financial
highlights are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and the financial
highlights based on our audits.

In our opinion, the financial statements and the financial highlights referred
to above present fairly, in all material respects, the financial position of
Independence One U.S. Treasury Money Market Fund at April 30, 1994, and the
results of its operations for the year then ended, the changes in its net assets
for the years ended April 30, 1994 and 1993, and the financial highlights for
each of the periods indicated herein in conformity with generally accepted
accounting principles.

KPMG
Peat Marwick
Pittsburgh, Pennsylvania
June 3, 1994

INDEPENDENCE ONE
MUTUAL FUNDS

INDEPENDENCE ONE U.S. TREASURY
MONEY MARKET FUND
Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779

INVESTMENT ADVISER
Michigan National Bank
27777 Inkster Road
Mail Code 10-52
Farmington Hills, Michigan 48333-9065

DISTRIBUTOR
Federated Securities Corp.
Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779

CUSTODIAN
State Street Bank and Trust Company
P.O. Box 1119
Boston, Massachusetts 02103

TRANSFER AGENT AND DIVIDEND DISBURSING AGENT
Federated Services Company
Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779

INDEPENDENT AUDITORS
KPMG Peat Marwick
One Mellon Bank Center
Pittsburgh, Pennsylvania 15219

LEGAL COUNSEL
Houston, Houston and Donnelly
2510 Centre City Tower
Pittsburgh, Pennsylvania 15222

DICKSTEIN, SHAPIRO AND MORIN, L.L.P.
2101 L Street, N.W.
Washington, D.C. 20037

9042802A (6/94)

INDEPENDENCE ONE(registered trademark)
U.S. TREASURY
MONEY MARKET
FUND
Distributed by Federated Securities Corp.

PROSPECTUS DATED
JUNE 30, 1993

[LOGO]
MICHIGAN
NATIONAL
BANK
Investment Adviser

INDEPENDENCE ONE
U.S. TREASURY MONEY MARKET FUND
(A PORTFOLIO OF INDEPENDENCE ONE MUTUAL FUNDS)
STATEMENT OF ADDITIONAL INFORMATION

This Statement of Additional Information should be read with the
prospectus of Independence One U.S. Treasury Money Market Fund (the
"Fund") dated June 30, 1994. This Statement is not a prospectus
itself. To receive a copy of the prospectus, write the Fund or call
toll-free 1-800-334-2292.

FEDERATED INVESTORS TOWER
PITTSBURGH, PENNSYLVANIA 15222-3779

Statement dated June 30, 1994

[LOGO] FEDERATED SECURITIES CORP.
---------------------------------------------------------
Distributor
A subsidiary of FEDERATED INVESTORS

TABLE OF CONTENTS
- --------------------------------------------------------------------------------

GENERAL INFORMATION ABOUT THE FUND 1
- ---------------------------------------------------------------

INVESTMENT OBJECTIVE AND POLICIES 1
- ---------------------------------------------------------------

Types of Investments 1
Repurchase Agreements 1
When-Issued and Delayed Delivery
Transactions 1
Reverse Repurchase Agreements 1
Investment Limitations 1

INDEPENDENCE ONE MUTUAL FUNDS MANAGEMENT 2
- ---------------------------------------------------------------

Officers and Trustees 2
Fund Ownership 3
Trustee Liability 3

INVESTMENT ADVISORY SERVICES 4
- ---------------------------------------------------------------

Adviser to the Fund 4
Advisory Fees 4

ADMINISTRATIVE SERVICES 4
- ---------------------------------------------------------------

BROKERAGE TRANSACTIONS 4
- ---------------------------------------------------------------

PURCHASING SHARES 5
- ---------------------------------------------------------------

Distribution Plan 5
Conversion to Federal Funds 5

DETERMINING NET ASSET VALUE 5
- ---------------------------------------------------------------

Use of Amortized Cost Method 5

EXCHANGE PRIVILEGE 6
- ---------------------------------------------------------------

REDEEMING SHARES 6
- ---------------------------------------------------------------

Redemption in Kind 6

TAX STATUS 7
- ---------------------------------------------------------------

The Fund's Tax Status 7
Shareholders' Tax Status 7

YIELD 7
- ---------------------------------------------------------------

EFFECTIVE YIELD 7
- ---------------------------------------------------------------

PERFORMANCE COMPARISONS 7
- ---------------------------------------------------------------

GENERAL INFORMATION ABOUT THE FUND
- --------------------------------------------------------------------------------

The Fund is a portfolio in Independence One Mutual Funds (the "Trust"), which
was established as a Massachusetts business trust under a Declaration of Trust
dated January 9, 1989.

INVESTMENT OBJECTIVE AND POLICIES
- --------------------------------------------------------------------------------

TYPES OF INVESTMENTS

The Fund invests only in short-term U.S. Treasury obligations. "Short-term U.S.
Treasury obligations" as used herein refers to evidences of indebtedness issued
by the United States, or issued by an agency or instrumentality thereof, and
fully guaranteed as to principal and interest by the United States, maturing in
397 days or less from the date of acquisition or purchased pursuant to
repurchase agreements that provide for repurchase by the seller within one year
from the date of acquisition. The Fund may also retain Fund assets in cash.

REPURCHASE AGREEMENTS

The Fund or its custodian will take possession of the securities subject to
repurchase agreements, and these securities will be marked to market daily. To
the extent that the original seller does not repurchase the securities from the
Fund, the Fund could receive less than the repurchase price on any sale of such
securities. In the event that such a defaulting seller filed for bankruptcy or
became insolvent, disposition of such securities by the Fund might be delayed
pending court action. The Fund believes that under the regular procedures
normally in effect for custody of the Fund's portfolio securities subject to
repurchase agreements, a court of competent jurisdiction would rule in favor of
the Fund and allow retention or disposition of such securities. The Fund will
only enter into repurchase agreements with banks and other recognized financial
institutions such as broker/dealers which are deemed by the Fund's adviser to be
creditworthy pursuant to guidelines established by the Trustees.

WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS

REVERSE REPURCHASE AGREEMENTS

The Fund may enter into reverse repurchase agreements. This transaction is
similar to borrowing cash. In a reverse repurchase agreement the Fund transfers
possession of a portfolio instrument to another person, such as a financial
institution, broker, or dealer, in return for a percentage of the instrument's
market value in cash,
and agrees that on a stipulated date in the future the Fund will repurchase the
portfolio instrument by remitting the original consideration plus interest at an
agreed upon rate.

INVESTMENT LIMITATIONS

SELLING SHORT AND BUYING ON MARGIN

The Fund will not sell any securities short or purchase any securities on
margin but may obtain such short-term credits as may be necessary for the
clearance of transactions.

ISSUING SENIOR SECURITIES AND BORROWING MONEY

The Fund will not issue senior securities except that the Fund may borrow
money directly or through reverse repurchase agreements in amounts up to
one-third of the value of its net assets, including the amounts borrowed.

PLEDGING ASSETS

LENDING CASH OR SECURITIES

The Fund will not lend any of its assets, except that it may purchase or
hold U.S. Treasury obligations, including repurchase agreements, in
accordance with its investment objective, policies, and limitations.

The above investment limitations cannot be changed without shareholder approval.
The following limitations, however, may be changed by the Trustees without
shareholder approval. Shareholders will be notified before any material change
in these limitations becomes effective.

INVESTING IN SECURITIES OF OTHER INVESTMENT COMPANIES

The Fund will not purchase securities of other investment companies
except as part of a merger, consolidation, reorganization, or other
acquisition.

INVESTING IN ILLIQUID SECURITIES

The Fund will not invest more than 10% of the value of its net assets in
illiquid securities, including repurchase agreements providing for
settlement in more than seven days after notice.

The Fund did not borrow money, pledge securities, invest in illiquid securities,
or engage in when-issued and delayed delivery transactions in excess of 5% of
the value of its net assets during the last fiscal period and has no present
intent to do so during the coming fiscal year.

INDEPENDENCE ONE MUTUAL FUNDS MANAGEMENT
- --------------------------------------------------------------------------------

OFFICERS AND TRUSTEES

Harry J. Nederlander\* Trustee Chairman, Nederlander Enterprises.
231 S. Woodward,
Suite 219
Birmingham, MI

Thomas S. Wilson Trustee President, Detroit Pistons; Executive Administrator, Detroit Pistons,
Two Championship Drive The Palace of Auburn Hills, and The Pine Knob Music Theatre.
Auburn Hills, MI

Edward C. Gonzales President Executive Vice President, Treasurer and Director, Federated Securities
Federated Investors Tower and Treasurer Corp.; Chairman, Treasurer and Trustee, Federated Administrative
Pittsburgh, PA Services; Vice President, Treasurer and Trustee, Federated Investors.

Jeffrey W. Sterling Vice President Vice President, Federated Administrative Services.
Federated Investors Tower and Assistant
Pittsburgh, PA Treasurer

Jay S. Neuman Secretary Corporate Counsel, Federated Investors; Prior to January 1991, Associate
Federated Investors Tower Counsel, The Boston Company Advisors, Inc.
Pittsburgh, PA
</TABLE>

\Members of the Trust's Executive Committee. The Executive Committee of the
Board of Trustees handles the responsibilities of the Board of Trustees between
meetings of the Board.

*This Trustee is deemed to be an "interested person" of the Fund or Trust as
defined in the Investment Company Act of 1940.

FUND OWNERSHIP

TRUSTEE LIABILITY

The Trust's Declaration of Trust provides that the Trustees are not liable for
errors of judgment or mistakes of fact or law. However, they are not protected
against any liability to which they would otherwise be subject by reason of
willful misfeasance, bad faith, gross negligence, or reckless disregard of the
duties involved in the conduct of their office.

INVESTMENT ADVISORY SERVICES
- --------------------------------------------------------------------------------

ADVISER TO THE FUND

The Fund's investment adviser is Michigan National Bank (the "Adviser").

ADVISORY FEES

For its advisory services, Michigan National Bank receives an annual investment
advisory fee as described in the prospectus. For the fiscal years ended April
30, 1994, 1993, and 1992, the Adviser earned $832,041, $935,189, and $603,260,
respectively, of which $586, $196,055, and $176,767, respectively, were waived
because of undertakings to limit the Fund's expenses.

STATE EXPENSE LIMITATIONS

This arrangement is not part of the advisory contract and may be amended
or rescinded in the future.

ADMINISTRATIVE SERVICES
- --------------------------------------------------------------------------------

BROKERAGE TRANSACTIONS
- --------------------------------------------------------------------------------

The Adviser may select brokers and dealers who offer brokerage and research
services. These services may be furnished directly to the Fund or to the Adviser
and may include:

advice as to the advisability of investing in securities;

security analysis and reports;

economic studies;

industry studies;

receipt of quotations for portfolio evaluations; and

similar services.

PURCHASING SHARES
- --------------------------------------------------------------------------------

Shares are sold at their net asset value without a sales charge on days which
the New York Stock Exchange is open for business except on federal holidays
restricting wire transfers. The procedure for purchasing shares of the Fund is
explained in the prospectus under "Investing in the Fund."

DISTRIBUTION PLAN

CONVERSION TO FEDERAL FUNDS

DETERMINING NET ASSET VALUE
- --------------------------------------------------------------------------------

The Fund attempts to stabilize the value of a share at $1.00. The days on which
net asset value is calculated by the Fund are described in the prospectus.

USE OF THE AMORTIZED COST METHOD

MONITORING PROCEDURES

INVESTMENT RESTRICTIONS

EXCHANGE PRIVILEGE
- --------------------------------------------------------------------------------

This privilege is available to shareholders resident in any state in which the
fund shares being acquired may
be sold. Upon receipt of proper instructions and required supporting documents,
shares submitted for exchange are redeemed and the proceeds invested in shares
of the other fund.

Instructions for exchanges may be given in writing or by telephone. Exchange
procedures are explained in the prospectus under "Exchange Privilege."

REDEEMING SHARES
- --------------------------------------------------------------------------------

REDEMPTION IN KIND

TAX STATUS

- --------------------------------------------------------------------------------

THE FUND'S TAX STATUS

derive at least 90% of its gross income from dividends, interest, and gains
from the sale of securities;

derive less than 30% of its gross income from the sale of securities held less
than three months;

invest in securities within certain statutory limits; and

distribute to its shareholders at least 90% of its net income earned during the
year.

SHAREHOLDERS' TAX STATUS

Shareholders are subject to federal income tax on dividends received as cash or
additional shares. No portion
of any income dividend paid by the Fund is eligible for the dividends received
deduction available to corporations. These dividends and any short-term capital
gains are taxable as ordinary income.

CAPITAL GAINS

YIELD
- --------------------------------------------------------------------------------

The Fund's yield for the seven-day period ended April 30, 1994, was 3.07%.

The Fund calculates its yield daily, based upon the seven days ending on the day
of the calculation, called the "base period." This yield is computed by:

dividing the net change in the account's value by the value of the account at
the beginning of the base period to determine the base period return; and

multiplying the base period return by (365/7).

EFFECTIVE YIELD
- --------------------------------------------------------------------------------

The Fund's effective yield for the seven-day period ended April 30, 1994, was
3.12%.

The Fund's effective yield is computed by compounding the unannualized base
period return by:

adding 1 to the base period return;

raising the sum to the 365/7th power; and

subtracting 1 from the result.

PERFORMANCE COMPARISONS
- --------------------------------------------------------------------------------

The Fund's performance depends upon such variables as:

portfolio quality;

average portfolio maturity;

type of instruments in which the portfolio is invested;

changes in interest rates on money market instruments;

changes in Fund expenses; and

the relative amount of Fund cash flow.

Investors may use financial publications and/or indices to obtain a more
complete view of the Fund's performance. When comparing performance, investors
should consider all relevant factors such as the composition of any index used,
prevailing market conditions, portfolio compositions of other funds, and methods
used to value
portfolio securities and compute offering price. The financial publications
and/or indices which the Fund uses in advertising may include:

LIPPER ANALYTICAL SERVICES, INC., ranks funds in various fund categories by
making comparative calculations using total return. Total return assumes the
reinvestment of all income dividends and capital gains distributions, if any.
From time to time, the Trust will quote its Lipper ranking in the "money market
U.S. government funds" category in advertising and sales literature.

SALOMON 30-DAY TREASURY BILL INDEX is a weekly quote of the most representative
yields for selected securities, issued by the U.S. Treasury, maturing in 30
days.

9042802B (6/94)

INDEPENDENCE ONE U.S. GOVERNMENT SECURITIES FUND
(A PORTFOLIO OF INDEPENDENCE ONE MUTUAL FUNDS)
PROSPECTUS

The shares of Independence One U.S. Government Securities Fund (the "Fund")
offered by this prospectus represent interests in the Fund which is a
diversified portfolio and one of a series of investment portfolios in
Independence One Mutual Funds (the "Trust"), an open-end management investment
company (a mutual fund). Michigan National Bank, along with Independence One
Capital Management Corporation as sub-adviser, professionally manage the Fund's
portfolio.

The investment objective of the Fund is to seek high current income. In pursuing
this objective, the Fund's portfolio will also be managed in an effort to seek
total return. The Fund invests only in U.S. government securities.

Shares of the Fund are intended to be sold as an investment vehicle for
institutions, corporations and fiduciaries. Shareholders can invest, reinvest,
or redeem shares at any time without charge or penalty imposed by the Fund.
Shareholders have access to other portfolios of the Trust through an exchange
program.

This prospectus contains the information you should read and know before you
invest in shares of the Fund. Keep this prospectus for future reference.

The Fund has also filed a Statement of Additional Information dated June 30,
1994, with the Securities and Exchange Commission. The information contained in
the Statement of Additional Information is incorporated by reference into this
prospectus. You may request a copy of the Statement of Additional Information
free of charge, obtain other information or make inquiries about the Fund by
writing to the Fund or calling toll-free 1-800-334-2292.

Prospectus dated June 30, 1994

TABLE OF CONTENTS
- --------------------------------------------------------------------------------

SUMMARY OF FUND EXPENSES 1
- ------------------------------------------------------

FINANCIAL HIGHLIGHTS 2

- ------------------------------------------------------

GENERAL INFORMATION 3
- ------------------------------------------------------

INVESTMENT INFORMATION 3
- ------------------------------------------------------

Investment Objective 3
Investment Policies 3
Acceptable Investments 3
Risks 4
Repurchase Agreements 4
When-Issued and Delayed Delivery
Transactions 5
Portfolio Turnover 5
Investment Limitations 5

INDEPENDENCE ONE MUTUAL FUNDS
INFORMATION 6
- ------------------------------------------------------

Management of the Trust 6
Board of Trustees 6
Investment Adviser 6
Advisory Fees 6
Adviser's Background 6
Sub-Adviser 6

Distribution of Fund Shares 7

Administration of the Fund 7
Administrative Services 7

Custodian 7
Transfer Agent and Dividend
Disbursing Agent 7

Legal Counsel 7
Independent Auditors 7

NET ASSET VALUE 8
- ------------------------------------------------------

INVESTING IN THE FUND 8

- ------------------------------------------------------

Share Purchases 8
To Place an Order 8
Minimum Investment Required 8
What Shares Cost 8
Certificates and Confirmations 9
Dividends and Capital Gains 9

EXCHANGE PRIVILEGE 9
- ------------------------------------------------------

Exchange by Telephone 10
Written Exchange 10

REDEEMING SHARES 10

- ------------------------------------------------------

By Telephone 11
By Mail 11
Accounts with Low Balances 12
Redemption in Kind 12

SHAREHOLDER INFORMATION 12
- ------------------------------------------------------

Voting Rights 12
Massachusetts Partnership Law 13

EFFECT OF BANKING LAWS 13
- ------------------------------------------------------

TAX INFORMATION 14
- ------------------------------------------------------

Federal Income Tax 14

PERFORMANCE INFORMATION 14
- ------------------------------------------------------

FINANCIAL STATEMENTS 15
- ------------------------------------------------------

INDEPENDENT AUDITOR'S REPORT 22
- ------------------------------------------------------

ADDRESSES Back Cover
- ------------------------------------------------------

SUMMARY OF FUND EXPENSES
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES

<S> <C>
Maximum Sales Load Imposed on Purchases (as a percentage of offering price)................................ None
Maximum Sales Load Imposed on Reinvested Dividends (as a percentage of offering price)..................... None
Contingent Deferred Sales Charge (as a percentage of original purchase price or redemption proceeds, as
applicable).............................................................................................. None
Redemption Fees (as a percentage of amount redeemed, if applicable)........................................ None
Exchange Fee............................................................................................... None
<CAPTION>

ANNUAL FUND OPERATING EXPENSES
(As a percentage of average net assets)
<S> <C>
Management Fee (after waiver) (1)........................................................................ 0.00%
12b-1 Fees............................................................................................... None
Total Other Expenses..................................................................................... 0.31%
Total Operating Expenses (2)........................................................................ 0.31%
</TABLE>

(1) The estimated management fee has been reduced to reflect the anticipated
voluntary waiver by the investment
adviser. The adviser can terminate this voluntary waiver at any time at
its sole discretion. The maximum
management fee is 0.70%.

(2) The total Fund operating expenses are estimated to be 1.01% absent the
anticipated voluntary waiver.

<TABLE>
<S> <C> <C> <C> <C>
EXAMPLE 1 year 3 years 5 years 10 years
You would pay the following expenses on a $1,000 investment assuming
(1) 5% annual return and (2) redemption at the end of each time
period................................................................ $3 $10 $17 $39
</TABLE>

THE ABOVE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.

INDEPENDENCE ONE U.S. GOVERNMENT SECURITIES FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------

(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)

Reference is made to the Independent Auditors' Report on page 22.

<TABLE>
<CAPTION>
YEAR ENDED APRIL 30,
<S> <C> <C>
1994 1993*
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.31 $ 10.00
- ------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ------------------------------------------------------------------------------
Net investment income 0.55 0.33
- ------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments (0.47) 0.31
- ------------------------------------------------------------------------------ --------- ---------
Total from investment operations 0.08 0.64
- ------------------------------------------------------------------------------
LESS DISTRIBUTIONS
- ------------------------------------------------------------------------------
Dividends to shareholders from net investment income (0.55) (0.33)
- ------------------------------------------------------------------------------ --------- ---------
NET ASSET VALUE, END OF PERIOD $ 9.84 $ 10.31
- ------------------------------------------------------------------------------ --------- ---------
TOTAL RETURN** 0.66% 4.61%
- ------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ------------------------------------------------------------------------------
Expenses 0.31% 0.17%(a)
- ------------------------------------------------------------------------------
Net investment income 5.32% 5.59%(a)
- ------------------------------------------------------------------------------
Expense waiver/reimbursement (b) 0.70% 0.83%(a)
- ------------------------------------------------------------------------------
SUPPLEMENTAL DATA
- ------------------------------------------------------------------------------
Net assets, end of period (000 omitted) $72,866 $87,704
- ------------------------------------------------------------------------------
Portfolio turnover rate 20% 0%
- ------------------------------------------------------------------------------
</TABLE>

* Reflects operations for the period from January 11, 1993 (date of initial
public investment) to April 30, 1993.

** Based on net asset value, which does not reflect the sales load or
contingent deferred sales charge, if applicable.

(a) Computed on an annualized basis.

(b) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above (Note 4).

Further information about the Fund's performance is contained in the Fund's
annual report for the fiscal year ended April 30, 1994, which can be obtained
free of charge.

(See Notes which are an integral part of the Financial Statements)

GENERAL INFORMATION
- --------------------------------------------------------------------------------

This prospectus relates only to the Trust's portfolio known as Independence One
U.S. Government Securities Fund. The Fund intends to offer two classes of shares
for sale: Trust and Investment Shares. The classes of shares represent interests
in one common investment portfolio but differ in that Investment Shares, which
will be sold primarily to individual investors, will be subject to distribution
expenses paid by the Fund pursuant to a Plan adopted under Rule 12b-1 of the
Investment Company Act of 1940 while Trust Shares will be sold to institutional
investors and will not be subject to such a Plan and will not incur such
distribution expenses. Investment Shares are currently not available for sale.
The Fund will not offer Investment Shares and will not accrue or pay any
distribution expenses pursuant to the Plan until the Investment Shares have been
registered with the Securities and Exchange Commission and certain states. The
Trust Shares of the Fund currently being offered are designed as a convenient
means of accumulating an interest in a professionally managed, diversified
portfolio consisting primarily of government securities.

A minimum initial investment of $1,000 is required. Subsequent investments must
be in amounts of at least $100.

INVESTMENT INFORMATION
- --------------------------------------------------------------------------------

INVESTMENT OBJECTIVE

The investment objective of the Fund is to seek high current income. The
investment objective cannot be changed without approval of shareholders. While
there is no assurance that the Fund will achieve its investment objective, it
endeavors to do so by following the investment policies described in this
prospectus. As a matter of investment policy, the Fund's portfolio will also be
managed in an effort to seek total return.

INVESTMENT POLICIES

Unless indicated otherwise, the Fund's investment policies may be changed by the
Trustees without approval of shareholders. Shareholders will be notified before
any material change in these policies becomes effective.

ACCEPTABLE INVESTMENTS. The Fund invests in U.S. government securities which
are either issued or guaranteed by the U.S. government, its agencies or
instrumentalities. These securities include, but are not limited to:

direct obligations of the U.S. Treasury such as U.S. Treasury bills,
notes, and bonds; and

obligations of U.S. government agencies or instrumentalities such as
Federal Farm Credit Banks, Federal Home Loan Banks, Student Loan Marketing
Association, Federal Home Loan Mortgage Corporation, and Federal National
Mortgage Association.

Some obligations issued or guaranteed by agencies or instrumentalities of the
U.S. government, such as Government National Mortgage Association participation
certificates, are backed by the full faith and credit of the U.S. Treasury. No
assurances can be given that the U.S. government will provide financial support
to other agencies or instrumentalities, since it is not obligated to do so.
These agencies and instrumentalities are supported by:

the issuer's right to borrow an amount limited to a specific line of
credit from the U.S. Treasury;

the discretionary authority of the U.S. government to purchase certain
obligations of an agency or instrumentality; or

the credit of the agency or instrumentality.

As discussed above, U.S. government securities are subject to varying levels of
backing as to payment of principal and interest by the United States. Of course,
this does not mean that the Fund itself, or the value of its shares, is
guaranteed. In the U.S. government securities market, prices move inversely to
interest rates. A decline in market interest rates results in a rise in the
market prices of outstanding U.S. government securities. Conversely, an increase
in market interest rates results in a decline in market prices. In either case,
the amount of change in market prices of U.S. government securities in response
to changes in market interest rates generally depends on the duration of the
securities; the securities with the highest duration will experience the
greatest market price changes.

RISKS. The market value of U.S. government securities, and, therefore, the
Fund's net asset value, will fluctuate due to changes in economic
conditions and other market factors such as interest rates which are beyond
the control of the adviser. The adviser could be incorrect in its
expectations about the direction or extent of these market factors.
Although U.S. government securities with longer maturities offer
potentially greater returns, they have greater exposure to market price
fluctuation. Consequently, to the extent the Fund is significantly invested
in U.S. government securities with longer maturities, there is a greater
possibility of fluctuation in the Fund's net asset value. As noted above,
the Fund will be managed with a view toward minimizing decreases in the
value of the Fund's shares.

REPURCHASE AGREEMENTS. U.S. government securities may be purchased pursuant to
repurchase agreements. Repurchase agreements are arrangements in which banks,
broker/dealers, and other recognized financial institutions sell U.S. government
securities to the Fund and agree at the time of sale to repurchase them at a
mutually agreed upon time and price. To the extent that the original seller does
not repurchase the securities from the Fund, the Fund could receive less than
the repurchase price on any sale of such securities. In the event that such a
defaulting seller filed for bankruptcy or became insolvent, disposition of such
securities by the Fund might be delayed pending court action. The Fund believes
that under regular procedures normally in effect for custody of the Fund's
portfolio securities subject to repurchase agreements, a court of competent
jurisdiction would rule in favor of the Fund and allow retention or disposition
of such securities. The Fund will only enter into repurchase agreements with
banks and other recognized financial institutions such as broker/dealers which
are deemed by the Fund's adviser to be creditworthy pursuant to guidelines
established by the Trustees.

WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS. The Fund may purchase securities
on a when-issued or delayed delivery basis. These transactions are arrangements
in which the Fund purchases or sells securities with payment and delivery
scheduled for a future time. The Fund engages in when-issued and delayed
delivery transactions only for the purpose of acquiring portfolio securities
consistent with the Fund's investment objective and policies, not for investment
leverage. In when-issued and delayed delivery transactions, the Fund relies on
the seller to complete the transaction. The seller's failure to complete the
transaction may cause the Fund to miss a price or yield considered to be
advantageous. The Fund will limit its purchase of securities on a when-issued or
delayed delivery basis to no more than 20% of its total assets.

PORTFOLIO TURNOVER. The Fund conducts portfolio transactions to accomplish its
investment objective and policies as interest rates change, to invest new money
obtained from selling its shares, and to meet redemption requests. The Fund may
dispose of portfolio securities at any time if it appears that selling the
securities will help the Fund achieve its investment objective and policies. It
is not anticipated that the portfolio trading engaged in by the Fund will result
in its annual rate of portfolio turnover exceeding 400%. A portfolio turnover
rate of 100% would occur, for example, if all the securities in the Fund's
portfolio were replaced once in a period of one year. The Fund's rate of
portfolio turnover may exceed that of certain other mutual funds with the same
investment objective. A higher rate of portfolio turnover involves
correspondingly greater transaction costs and other expenses which must be borne
directly by the Fund and, thus, indirectly by its shareholders. In addition, a
high rate of portfolio turnover may result in the realization of larger amounts
of short-term capital gains which, when distributed to the Fund's shareholders,
are taxable to them as ordinary income. Nevertheless, transactions for the
Fund's portfolio will be based only upon investment considerations and will not
be limited by any other considerations when the Fund's investment adviser deems
it appropriate to make changes in the Fund's portfolio. The adviser to the Fund
does not anticipate that portfolio turnover will result in adverse tax
consequences.

INVESTMENT LIMITATIONS

The Fund will not:

borrow money or pledge securities except, under certain circumstances, the
Fund may borrow up to one-third of the value of its total assets and
pledge up to 10% of the value of its total assets to secure such
borrowings.

The above investment limitation cannot be changed without approval of
shareholders. The following limitation, however, may be changed by the Trustees
without shareholder approval. Shareholders will be notified before any material
change in this limitation becomes effective.

The Fund will not:

invest more than 15% of its net assets in securities which are not readily
marketable or which are otherwise considered illiquid, including
repurchase agreements providing for settlement in more than seven days
after notice.

INDEPENDENCE ONE MUTUAL FUNDS INFORMATION
- --------------------------------------------------------------------------------

MANAGEMENT OF THE TRUST

INVESTMENT ADVISER. Pursuant to an investment advisory contract with the Trust,
investment decisions for the Fund are made by Michigan National Bank, the Fund's
investment adviser (the "Adviser"), subject to direction by the Trustees. The
Adviser continually conducts investment research and supervision for the Fund
and is responsible for the purchase or sale of portfolio instruments, for which
it receives an annual fee from the assets of the Fund.

ADVISORY FEES. The Adviser receives an annual investment advisory fee
equal to 0.70 of 1% of the Fund's average daily net assets. The Adviser may
voluntarily choose to waive a portion of its fee or reimburse certain
expenses of the Fund. The Adviser has also undertaken to reimburse the
Fund, up to the amount of the advisory fee, for operating expenses in
excess of limitations established by certain states.

SUB-ADVISER. Under the terms of the sub-advisory contract between the
Adviser, Michigan National Bank, and Independence One Capital Management
Corporation ("IOCM") (the "Sub-Adviser"), IOCM will assist the Adviser in
the purchase or sale of the Fund's portfolio instruments. The Sub-Adviser
will perform its duties at no cost to the Adviser or the Fund.

IOCM, a nationally recognized investment advisory subsidiary of MNC,
provides investment advisory services for trust and other managed assets.
IOCM and the Trust Division have managed and custodial assets totaling $6.0
billion. Of this amount, IOCM and the Trust Division have investment
discretion over $2.5 billion.

John P. Keegan, Jr. is Vice President and Portfolio Manager for
Independence One Capital Management Corporation in Farmington Hills, and
has been responsible for management of the Fund's portfolio since its
inception. He joined Michigan National Bank in 1989. He earned his BBA
degree in finance from the University of Notre Dame and a MBA from the
University of Detroit. Currently Mr. Keegan is working towards his C.F.A.
certification.

DISTRIBUTION OF FUND SHARES

ADMINISTRATION OF THE FUND

The administrative fee received during any fiscal year shall be at least $50,000
per Fund. Federated Administrative Services may choose voluntarily to reimburse
a portion of its fee.

CUSTODIAN. State Street Bank and Trust Company, Boston, Massachusetts, is
custodian for the securities and cash of the Fund.

TRANSFER AGENT AND DIVIDEND DISBURSING AGENT. _Federated Services Company,
Pittsburgh, Pennsylvania, is transfer agent for the shares of the Fund, and
dividend disbursing agent for the Fund.

LEGAL COUNSEL. Legal counsel to the Fund is provided by Houston, Houston &
Donnelly, Pittsburgh, Pennsylvania, and Dickstein, Shapiro and Morin, L.L.P.,
Washington, D.C.

INDEPENDENT AUDITORS. The independent auditors for the Fund are KPMG Peat
Marwick, Pittsburgh, Pennsylvania.

NET ASSET VALUE
- --------------------------------------------------------------------------------

The Fund's net asset value per share fluctuates. It is determined by adding the
market value of all securities and other assets of the Fund, subtracting the
liabilities of the Fund, and dividing the remainder by the total number of
shares outstanding.

INVESTING IN THE FUND

- --------------------------------------------------------------------------------

SHARE PURCHASES

Shares of the Fund may be purchased through Michigan National Bank. Texas
residents must purchase shares of the Fund through Federated Securities Corp. at
1-800-618-8573. Investors may purchase shares of the Fund on all business days
except on days which the New York Stock Exchange and the Federal Reserve Wire
System are closed. In connection with the sale of Fund shares, the distributor
may from time to time offer certain items of nominal value to any shareholder or
investor. The Fund reserves the right to reject any purchase request.

TO PLACE AN ORDER. Investors may call their Michigan National Bank or IOCM
relationship manager to purchase shares. Orders are considered received when the
Fund is notified of the purchase order.

Purchase orders through Michigan National Bank or IOCM must be received before
4:00 p.m. (Eastern time). It is the responsibility of Michigan National Bank or
IOCM to transmit orders to the Fund by 5:00 p.m. (Eastern time) in order for
shares to be purchased at that day's price. For settlement of an order, payment
must be made within five business days of receipt of the order by check or wire
transfer. Checks must be converted into federal funds to be considered received.

Federal funds should be wired as follows: Federated Services Company, c/o State
Street Bank and Trust Company, Boston, Massachusetts; Attention: EDGEWIRE; For
Credit to: Independence One U.S. Government Securities Fund--Trust Shares; Fund
Number (this number can be found on the account statement or by contacting the
Fund); Group Number or Order Number; Nominee or Institution Name; and ABA Number
011000028.

MINIMUM INVESTMENT REQUIRED

The minimum initial investment by an investor in the Fund is $1,000. Subsequent
investments must be in amounts of at least $100.

WHAT SHARES COST

Shares are sold at their net asset value next determined after an order is
received. There is no sales charge imposed by the Fund.

The net asset value of shares is determined at 4:00 p.m. (Eastern time),
Monday through Friday, except on: (i) days on which there are not sufficient
changes in the value of the Fund's portfolio securities that its net asset value
might be materially affected; (ii) days during which no shares are tendered for
redemption and no orders to purchase shares are received; and (iii) on the
following holidays; New Year's Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day, and Christmas Day.

CERTIFICATES AND CONFIRMATIONS

Detailed confirmations of each purchase or redemption are sent to each
shareholder. Monthly confirmations are sent to report dividends paid during that
month.

DIVIDENDS AND CAPITAL GAINS

Dividends are declared daily and paid monthly. Capital gains realized by the
Fund, if any, will be distributed at least once every 12 months. Dividends and
capital gains are automatically reinvested in additional shares on payment dates
without a sales charge unless cash payments are requested by shareholders in
writing to the Fund through their Michigan National Bank or Independence One
relationship manager. Shares purchased with reinvested dividends are credited to
shareholder accounts on the following day.

EXCHANGE PRIVILEGE
- --------------------------------------------------------------------------------

All shareholders of the Fund are shareholders of the Trust, which consists of
the Fund and the following money market funds: Independence One Prime Money
Market Fund, Independence One Michigan Municipal Cash Fund, and Independence One
U.S. Treasury Money Market Fund. Shareholders of the Fund have access to these
funds ("participating funds") through an exchange program.

The money market funds currently offer only one class of shares. If such funds
should add a second class of shares, exchanges may be limited to shares of the
same class of each fund.

Shares of the Fund may be exchanged for shares of participating funds at net
asset value.

The exchange privilege is available to shareholders residing in any state in
which the participating fund shares being acquired may legally be sold. Upon
receipt by the transfer agent of proper instructions and all necessary
supporting documents, shares submitted for exchange will be redeemed at the
next-determined net asset value. If the exchanging shareholder does not have an
account in the participating fund whose shares are being acquired, a new account
will be established with the same registration, dividend and capital gain
options as the account from which shares are exchanged, unless otherwise
specified by the shareholder. In the case where the new account registration is
not identical to that of the existing account, a signature guarantee is
required. (See "Redeeming Shares--By Mail.") Exercise of this privilege is
treated as a redemption and new purchase for federal income tax purposes and,
depending on the circumstances, a short or long-term capital gain or loss may be
realized. The Fund reserves the right to modify or terminate the exchange
privilege at any time. Shareholders would be
notified prior to any modification or termination. Shareholders may obtain
further information on the exchange privilege by calling their Michigan National
Bank or Independence One relationship manager.

EXCHANGE BY TELEPHONE. Shareholders may provide instructions for exchanges
between participating funds by telephone by calling their Michigan National Bank
or Independence One relationship manager.

An authorization form permitting the Fund to accept telephone exchange requests
must first be completed. It is recommended that investors request this privilege
at the time of their initial application. If not completed at the time of
initial application, authorization forms and information on this service can be
obtained through a Michigan National Bank or Independence One relationship
manager. Telephone exchange instructions may be recorded.

Shares may be exchanged by telephone only between fund accounts having identical
shareholder registrations. Exchange instructions given by telephone may be
electronically recorded.

Telephone exchange instructions must be received by Michigan National Bank or
Independence One and transmitted to the transfer agent before 4:00 p.m. (Eastern
time) for shares to be exchanged the same day. Shareholders who exchange into
shares of the Fund will not receive a dividend from the Fund on the date of the
exchange.

Shareholders of the Fund may have difficulty in making exchanges by telephone
through Michigan National Bank or Independence One during times of drastic
economic or market changes. If shareholders cannot contact their Michigan
National Bank or Independence One relationship manager by telephone, it is
recommended that an exchange request be made in writing and sent by mail for
next day delivery. Send mail requests to: Independence One Mutual Funds, 27777
Inkster Road, Mail Code 10-52, Farmington Hills, Michigan 48333-9065.

Any shares held in certificate form cannot be exchanged by telephone but must be
forwarded to Federated Services Company, the transfer agent, by Michigan
National Bank or Independence One and deposited to the shareholder's account
before being exchanged.

If reasonable procedures are not followed by the Fund, it may be liable for
losses due to unauthorized or fraudulent telephone instructions.

REDEEMING SHARES
- --------------------------------------------------------------------------------

The Fund redeems shares at their net asset value next determined after Federated
Services Company receives the redemption request. Redemptions will be made on
days on which the Fund computes its net asset value. Redemption requests cannot
be executed on days on which the New York Stock Exchange is closed and federal
holidays restricting wire transfers. Telephone or written requests for
redemptions must be received in proper form and can be made to the Fund through
a Michigan National Bank or Independence One relationship manager. Although the
transfer agent does not charge for telephone redemptions, it reserves the right
to charge a fee for the cost of wire-transferred redemptions of less than
$5,000.

BY TELEPHONE. Shareholders may redeem shares by calling their Michigan National
Bank or Independence One relationship manager. Redemption requests must be
received and transmitted to the transfer agent before 4:00 p.m. (Eastern time)
in order for shares to be redeemed at that day's net asset value. The Michigan
National Bank or Independence One relationship manager is responsible for
promptly submitting redemption requests and providing proper written redemption
instructions to the transfer agent. If at any time, the Fund shall determine it
necessary to terminate or modify this method of redemption, shareholders would
be promptly notified.

For calls received before 4:00 p.m. (Eastern time) proceeds will normally be
wired the next business day to the shareholder's account at a domestic
commercial bank that is a member of the Federal Reserve System or a check will
be sent to the address of record. In no event will proceeds will be wired or a
check sent within seven days after a proper request for redemption has been
received.

An authorization form permitting the Fund to accept telephone redemption
requests must first be completed. It is recommended that investors request this
privilege at the time of their initial application. If not completed at the time
of initial application, authorization forms and information on this service can
be obtained through a Michigan National Bank or Independence One relationship
manager. Telephone redemption instructions may be recorded.

If reasonable procedures are not followed by the Fund, it may be liable for
losses due to unauthorized or fraudulent telephone instructions.

BY MAIL. Shareholders may redeem shares by sending a written request to the
Fund through their Michigan National Bank or Independence One relationship
manager. The written request should include the shareholder's name, the Fund and
class names, the account number, and the share or dollar amount requested.
Shareholders redeeming through Michigan National Bank or Independence One should
mail written requests to: Independence One Mutual Funds, 27777 Inkster Road,
Mail Code 10-52, Farmington Hills, Michigan 48333-9065.

If share certificates have been issued, they must be properly endorsed and
should be sent by registered or certified mail with the written request.

Shareholders requesting a redemption or exchange of $50,000 or more, a
redemption of any amount to be sent to an address other than that on record with
the Fund, a redemption payable other than to the shareholder of record or who
complete authorization forms for telephone exchange or redemption after their
initial application must have signatures on written redemption requests or
applications guaranteed by:

a trust company or a commercial bank whose deposits are insured by the
Bank Insurance Fund ("BIF"), which is administered by the Federal Deposit
Insurance Corporation ("FDIC");

a member of the New York, American, Boston, Midwest, or Pacific Stock
Exchange;

a savings bank or savings and loan association whose deposits are insured
by the Savings Association Insurance Fund ("SAIF"), which is administered
by the FDIC; or

any other "eligible guarantor institution," as defined in the Securities
Exchange Act of 1934.

The Fund does not accept signatures guaranteed by a notary public.

Normally, a check for the proceeds is mailed to the shareholder within one
business day, and except under extraordinary circumstances, in no more than
seven days after receipt of a proper written redemption request.

ACCOUNTS WITH LOW BALANCES

Due to the high cost of maintaining accounts with low balances, the Fund may
redeem shares in any account and pay the proceeds to the shareholder if the
account balance falls below a required minimum value of $1,000 due to
shareholder redemptions. This requirement does not apply, however, if the
balance falls below $1,000 because of changes in the Fund's net asset value.

Before shares are redeemed to close an account, the shareholder is notified in
writing and allowed 30 days to purchase additional shares to meet the minimum
requirement.

REDEMPTION IN KIND

The Trust is obligated to redeem shares solely in cash up to $250,000, or 1% of
the Fund's net asset value, whichever is less, for any one shareholder within a
90-day period.

SHAREHOLDER INFORMATION
- --------------------------------------------------------------------------------

VOTING RIGHTS

Each share of the Fund gives the shareholder one vote in Trustee elections and
other matters submitted to shareholders for vote. All shares of all classes of
each portfolio in the Trust have equal voting rights, except that in matters
effecting only a particular Fund or class, only shares of that Fund or class are
entitled to vote. As a Massachusetts business trust, the Trust is not required
to hold annual shareholder
meetings. Shareholder approval will be sought only for certain changes in the
Trust's or the Fund's operation and for the election of Trustees under certain
circumstances. As of June 4, 1994, Michigan National Bank may for certain
purposes be deemed to control the Fund because it is owner of record of certain
shares of the Fund.

MASSACHUSETTS PARTNERSHIP LAW

EFFECT OF BANKING LAWS
- --------------------------------------------------------------------------------

The Glass-Steagall Act and other banking laws and regulations presently prohibit
a bank holding company registered under the Federal Bank Holding Company Act of
1956 or any affiliate thereof from sponsoring, organizing, controlling or
distributing the shares of a registered, open-end investment company
continuously engaged in the issuance of its shares, and prohibit banks generally
from issuing, underwriting, selling or distributing securities. However, such
banking laws and regulations do not prohibit such a holding company affiliate or
banks generally from acting as an investment adviser, transfer agent or
custodian to such an investment company or from purchasing shares of such a
company as agent for and upon the order of such a customer. Michigan National
Bank is subject to such banking laws and regulations.

Michigan National Bank believes, based on the advice of its counsel, that
Michigan National Bank may perform the services for the Fund contemplated by its
advisory agreement with the Trust without violation of the Glass-Steagall Act or
other applicable banking laws or regulations. Changes in either federal or state
statutes and regulations relating to the permissible activities of banks and
their subsidiaries or affiliates, as well as further judicial or administrative
decisions or interpretations of such or future statutes and regulations, could
prevent Michigan National Bank from continuing to perform all
or a part of the above services for its customers and/or the Fund. If it were
prohibited from engaging in these customer-related activities, the Trustees
would consider alternative advisers and means of continuing available investment
services. In such event, changes in the operation of the Fund may occur,
including possible termination of any automatic or other Fund share investment
and redemption services then being provided by Michigan National Bank. It is not
expected that existing shareholders would suffer any adverse financial
consequences (if another adviser with equivalent abilities to Michigan National
Bank is found) as a result of any of these occurrences.

TAX INFORMATION
- --------------------------------------------------------------------------------

FEDERAL INCOME TAX

Unless otherwise exempt, shareholders are required to pay federal income tax on
any dividends and other distributions received. This applies whether dividends
and distributions are received in cash or as additional shares. Shareholders are
urged to consult their own tax advisers regarding the status of their accounts
under state and local laws.

PERFORMANCE INFORMATION
- --------------------------------------------------------------------------------

From time to time the Fund advertises its total return and yield.

Total return represents the change, over a specified period of time, in the
value of an investment in shares of the Fund after reinvesting all income and
capital gain distributions. It is calculated by dividing that change by the
initial investment and is expressed as a percentage.

The yield of the Fund is calculated by dividing the net investment income per
share (as defined by the Securities and Exchange Commission) earned by the Fund
over a thirty-day period by the maximum offering price per share of the Fund on
the last day of the period. This number is then annualized using semi-annual
compounding. The yield does not necessarily reflect income actually earned by
the Fund and, therefore, may not correlate to the dividends or other
distributions paid to shareholders.

From time to time, the Fund may advertise its performance using certain
financial publications and/or compare its performance to certain indices.

INDEPENDENCE ONE U.S. GOVERNMENT SECURITIES FUND
PORTFOLIO OF INVESTMENTS
APRIL 30, 1994
- --------------------------------------------------------------------------------

* The repurchase agreement is fully collateralized by U.S. government and/or
agency obligations based on market prices at the date of the portfolio.

\ The cost of investments for federal tax purposes amounts to $68,892,187. The
unrealized depreciation on a federal tax basis amounts to $1,011,293.

Note: The categories of investments are shown as a percentage of net assets
($72,866,168) at April 30, 1994.

(See Notes which are an integral part of the Financial Statements)

INDEPENDENCE ONE U.S. GOVERNMENT SECURITIES FUND
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1994
- --------------------------------------------------------------------------------

<TABLE>
<S> <C> <C>
ASSETS:
- --------------------------------------------------------------------------------------------------
Investments in securities at value (Notes 2A and 2B)
(identified and tax cost: $68,892,187) $ 67,880,894
- --------------------------------------------------------------------------------------------------
Cash 330
- --------------------------------------------------------------------------------------------------
Receivable for investments sold 5,199,203
- --------------------------------------------------------------------------------------------------
Interest receivable 855,964
- --------------------------------------------------------------------------------------------------
Receivable for Fund shares sold 94,575
- --------------------------------------------------------------------------------------------------
Deferred expenses (Note 2F) 24,009
- -------------------------------------------------------------------------------------------------- --------------
Total assets 74,054,975
- --------------------------------------------------------------------------------------------------
LIABILITIES:
- --------------------------------------------------------------------------------------------------
Payable for Fund shares redeemed $ 797,688
- -------------------------------------------------------------------------------------
Dividends payable 364,022
- -------------------------------------------------------------------------------------
Payable to transfer and dividend disbursing agent 4,300
- -------------------------------------------------------------------------------------
Accrued expenses 22,797
- ------------------------------------------------------------------------------------- -----------
Total liabilities 1,188,807
- -------------------------------------------------------------------------------------------------- --------------
NET ASSETS for 7,406,453 shares of beneficial interest outstanding $ 72,866,168
- -------------------------------------------------------------------------------------------------- --------------
NET ASSETS CONSIST OF:
- --------------------------------------------------------------------------------------------------
Paid-in capital $ 74,007,200
- --------------------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) of investments (1,011,293)
- --------------------------------------------------------------------------------------------------
Accumulated net realized gain (loss) on investments (129,739)
- -------------------------------------------------------------------------------------------------- --------------
Total net assets $ 72,866,168
- -------------------------------------------------------------------------------------------------- --------------
NET ASSET VALUE, ]Offering Price, and Redemption Price Per Share:
($72,866,168 / 7,406,453 shares of beneficial interest outstanding) $9.84
- -------------------------------------------------------------------------------------------------- --------------
</TABLE>

(See Notes which are an integral part of the Financial Statements)

INDEPENDENCE ONE U.S. GOVERNMENT SECURITIES FUND
STATEMENT OF OPERATIONS
YEAR ENDED APRIL 30, 1994
- --------------------------------------------------------------------------------

<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
- --------------------------------------------------------------------------------------------------
Interest income (Note 2C) $ 4,781,624
- --------------------------------------------------------------------------------------------------
EXPENSES:
- -------------------------------------------------------------------------------------
Investment advisory fee (Note 4) $ 595,181
- -------------------------------------------------------------------------------------
Administrative personnel and services fees (Note 4) 106,948
- -------------------------------------------------------------------------------------
Trustees' fees 3,198
- -------------------------------------------------------------------------------------
Custodian and portfolio accounting fees 66,736
- -------------------------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses (Note 4) 14,189
- -------------------------------------------------------------------------------------
Legal fees 3,031
- -------------------------------------------------------------------------------------
Printing and postage 14,386
- -------------------------------------------------------------------------------------
Auditing fees 11,190
- -------------------------------------------------------------------------------------
Registration fees 28,313
- -------------------------------------------------------------------------------------
Insurance 6,415
- -------------------------------------------------------------------------------------
Miscellaneous 5,040
- ------------------------------------------------------------------------------------- -----------
Total expenses 854,627
- -------------------------------------------------------------------------------------
Deduct--Waiver of investment advisory fee (Note 4) 595,181
- ------------------------------------------------------------------------------------- -----------
Net expenses 259,446
- -------------------------------------------------------------------------------------------------- -------------
Net investment income 4,522,178
- -------------------------------------------------------------------------------------------------- -------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
- --------------------------------------------------------------------------------------------------
Net realized gain (loss) on investments (identified cost basis) (129,739)
- --------------------------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) of investments (3,542,888)
- -------------------------------------------------------------------------------------------------- -------------
Net realized and unrealized loss on investments (3,672,627)
- -------------------------------------------------------------------------------------------------- -------------
Change in net assets resulting from operations $ 849,551
- -------------------------------------------------------------------------------------------------- -------------
</TABLE>

(See Notes which are an integral part of the Financial Statements)

INDEPENDENCE ONE U.S. GOVERNMENT SECURITIES FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
YEAR ENDED APRIL 30,
1994 1993*
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- ---------------------------------------------------------------------------------
OPERATIONS--
- ---------------------------------------------------------------------------------
Net investment income $ 4,522,178 $ 1,408,239
- ---------------------------------------------------------------------------------
Net realized gain (loss) on investments ($11,816 net loss and $0
respectively, as computed for federal tax purposes) (Note 2D) (129,739) --
- ---------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) of investments (3,542,888) 2,531,595
- --------------------------------------------------------------------------------- --------------- --------------
Change in net assets resulting from operations 849,551 3,939,834
- --------------------------------------------------------------------------------- --------------- --------------
DISTRIBUTIONS TO SHAREHOLDERS (NOTE 2C)--
- ---------------------------------------------------------------------------------
Dividends to shareholders from net investment income (4,522,178) (1,408,239)
- --------------------------------------------------------------------------------- --------------- --------------
FUND SHARE (PRINCIPAL) TRANSACTIONS (NOTE 3)--
- ---------------------------------------------------------------------------------
Proceeds from sale of shares 13,357,170 88,282,498
- ---------------------------------------------------------------------------------
Net asset value of shares issued to shareholders in payment of
dividends declared 17 5
- ---------------------------------------------------------------------------------
Cost of shares redeemed (24,522,870) (3,109,620)
- --------------------------------------------------------------------------------- --------------- --------------
Change in net assets from Fund share transactions (11,165,683) 85,172,883
- --------------------------------------------------------------------------------- --------------- --------------
Change in net assets (14,838,310) 87,704,478
- ---------------------------------------------------------------------------------
NET ASSETS:
- ---------------------------------------------------------------------------------
Beginning of period 87,704,478 --
- --------------------------------------------------------------------------------- --------------- --------------
End of period $ 72,866,168 $ 87,704,478
- --------------------------------------------------------------------------------- --------------- --------------
</TABLE>

*The period from January 11, 1993 (date of initial public investment) to
April 30, 1993.

(See Notes which are an integral part of the Financial Statements)

INDEPENDENCE ONE U.S. GOVERNMENT SECURITIES FUND
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 1994
- --------------------------------------------------------------------------------

(1) ORGANIZATION

Independence One Mutual Funds (the "Trust") is registered under the Investment
Company Act of 1940, as amended, as an open-end, management investment company.
The Trust consists of four portfolios. The financial statements included herein
are only those of Independence One U.S. Government Securities Fund (the "Fund").
The financial statements of the other portfolios are presented separately. The
assets of each portfolio are segregated and a shareholder's interest is limited
to the portfolio in which shares are held.

(2) SIGNIFICANT ACCOUNTING POLICIES

A. INVESTMENT VALUATIONS--U.S. government obligations are generally valued at
the mean between the over-the-counter bid and asked prices as furnished by
an independent pricing service. Short-term securities with remaining
maturities of sixty days or less may be stated at amortized cost, which
approximates value.

C. INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS--Interest income and expenses
are accrued daily. Premium and discount are amortized as required by the
Internal Revenue Code as amended ("Code"). Distributions to shareholders
are recorded on the ex-dividend date.

At April 30, 1994, the Fund for federal tax purposes, had a capital loss
carryforward of ($11,816) which will reduce the Fund's taxable income
arising from future net realized gain on investments, if any, to the extent
permitted by the Code, and thus will reduce the amount of the distributions
to
shareholders which would otherwise be necessary to relieve the Fund of any
liability for federal tax. Pursuant to the Code, such capital loss
carryforward will expire in 2002 ($11,816).

Additionally, net capital losses of ($117,922) attributable to security
transactions incurred after October 31, 1993 are treated as arising on May
1, 1994, the first day of the Fund's next taxable year.

E. WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Fund may engage in
when-issued or delayed delivery transactions. The Fund records when-issued
securities on the trade date and maintains security positions such that
sufficient liquid assets will be available to make payment for the
securities purchased. Securities purchased on a when-issued or delayed
delivery basis are marked to market daily and begin earning interest on the
settlement date.

G. OTHER--Investment transactions are accounted for on the trade date.

(3) SHARES OF BENEFICIAL INTEREST

The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value).
Transactions in Fund shares were as follows:

<TABLE>
<CAPTION>
YEAR ENDED APRIL 30,
<S> <C> <C>
1994 1993*
Shares sold 1,296,059 8,809,730
- --------------------------------------------------------------------------------------
Shares issued to shareholders in payment of
dividends declared 2 2
- --------------------------------------------------------------------------------------
Shares redeemed (2,395,771) (303,569)
- -------------------------------------------------------------------------------------- ------------ -----------
Net change resulting from Fund share transactions (1,099,710) 8,506,163
- -------------------------------------------------------------------------------------- ------------ -----------
</TABLE>

*The period from January 11, 1993 (date of initial public investment) to April
30, 1993.

(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES

INVESTMENT ADVISORY FEE--Michigan National Bank, the Fund's investment adviser
("Adviser"), receives for its services an annual investment advisory fee equal
to 0.70 of 1% of the Fund's average daily net assets. Adviser may voluntarily
choose to waive a portion of its fee and reimburse certain operating expenses of
the Fund. Adviser can modify or terminate this voluntary waiver and
reimbursement at any time at its sole discretion.

TRANSFER AND DIVIDEND DISBURSING AGENT FEES--Federated Services Company,
("FServ") serves as transfer agent and dividend disbursing agent for the Fund.
The fee is based on the size, type and number of accounts and transactions made
by shareholders.

Certain Officers of the Trust are Officers and Trustees of the above companies.

(5) INVESTMENT TRANSACTIONS

Purchases and sales of investments excluding short-term securities for the
fiscal year ended April 30, 1994 were as follows:

<TABLE>
<S> <C>
- --------------------------------------------------------------------------------------------------
PURCHASES-- $ 16,329,746
- -------------------------------------------------------------------------------------------------- --------------
SALES-- $ 29,281,340
- -------------------------------------------------------------------------------------------------- --------------
</TABLE>

INDEPENDENT AUDITORS' REPORT
- --------------------------------------------------------------------------------

The Board of Trustees and Shareholders
INDEPENDENCE ONE MUTUAL FUNDS:

We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of Independence One U.S. Government Securities
Fund (a portfolio within Independence One Mutual Funds) as of April 30, 1994,
and the related statement of operations for the year then ended, the statements
of changes in net assets for the year ended April 30, 1994 and the period from
January 11, 1993 (date of initial public investment) to April 30, 1993 and the
financial highlights, which is presented on page 2 of this prospectus, for each
of the periods indicated therein. These financial statements and the financial
highlights are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and the financial
highlights based on our audits.

In our opinion, the financial statements and the financial highlights referred
to above present fairly, in all material respects, the financial position of
Independence One U.S. Government Securities Fund at April 30, 1994, and the
results of its operations for the year then ended, the changes in its net assets
for the year ended April 30, 1994 and the period from January 11, 1993 (date of
initial public investment) to April 30, 1993 and the financial highlights for
each of the periods indicated herein, in conformity with generally accepted
accounting principles.

KPMG Peat Marwick
Pittsburgh, Pennsylvania
June 3, 1994

INDEPENDENCE ONE
MUTUAL FUNDS

INDEPENDENCE ONE U.S.
GOVERNMENT SECURITIES FUND
TRUST SHARES
Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779

INVESTMENT ADVISER
Michigan National Bank
27777 Inkster Road
Mail Code 10-52
Farmington Hills, Michigan 48333-9065

INVESTMENT SUB-ADVISER
Independence One Capital
Management Corporation
27777 Inkster Road
Mail Code 10-52
Farmington Hills, Michigan 48333-9065

DISTRIBUTOR
Federated Securities Corp.
Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779

CUSTODIAN
State Street Bank and Trust Company
P.O. Box 1119
Boston, Massachusetts 02103

TRANSFER AGENT AND DIVIDEND DISBURSING AGENT
Federated Services Company
Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779

INDEPENDENT AUDITORS
KPMG Peat Marwick
One Mellon Bank Center
Pittsburgh, Pennsylvania 15219

LEGAL COUNSEL
Houston, Houston and Donnelly
2510 Centre City Tower
Pittsburgh, Pennsylvania 15222

DICKSTEIN, SHAPIRO AND MORIN, L.L.P.
2101 L Street, N.W.
Washington, D.C. 20037

2091701A-I (6/94)

INDEPENDENCE ONE(registered trademark)
U.S. GOVERNMENT
SECURITIES FUND
Distributed by Federated Securities Corp.

PROSPECTUS DATED
JUNE 30, 1993

[LOGO]
MICHIGAN
NATIONAL
BANK
Investment Adviser

INDEPENDENCE ONE
U.S. GOVERNMENT SECURITIES FUND
(A PORTFOLIO OF INDEPENDENCE ONE MUTUAL FUNDS)
STATEMENT OF ADDITIONAL INFORMATION

This Statement of Additional Information should be read with the
prospectus of Independence One U.S. Government Securities Fund (the
"Fund") dated June 30, 1994. This Statement is not a prospectus
itself. To receive a copy of either prospectus, write the Fund or call
toll-free 1-800-334-2292.

FEDERATED INVESTORS TOWER
PITTSBURGH, PENNSYLVANIA 15222-3779

Statement dated June 30, 1994

[LOGO] FEDERATED SECURITIES CORP.
---------------------------------------------------------
Distributor
A subsidiary of FEDERATED INVESTORS

TABLE OF CONTENTS
- --------------------------------------------------------------------------------

GENERAL INFORMATION ABOUT THE FUND 1
- ---------------------------------------------------------------

INVESTMENT OBJECTIVE AND POLICIES 1
- ---------------------------------------------------------------

Acceptable Investments 1
Repurchase Agreements 1
When-Issued and Delayed Delivery
Transactions 1
Portfolio Turnover 1
Investment Limitations 1

INDEPENDENCE ONE MUTUAL FUNDS MANAGEMENT 2
- ---------------------------------------------------------------

Officers and Trustees 2
Fund Ownership 3
Trustee Liability 3

INVESTMENT ADVISORY SERVICES 3
- ---------------------------------------------------------------

Adviser to the Fund 3
Advisory Fees 4

ADMINISTRATIVE SERVICES 4
- ---------------------------------------------------------------

BROKERAGE TRANSACTIONS 4
- ---------------------------------------------------------------

PURCHASING SHARES 5
- ---------------------------------------------------------------

Distribution Plan 5

Conversion to Federal Funds 5

DETERMINING NET ASSET VALUE 5
- ---------------------------------------------------------------

DETERMINING MARKET VALUE OF SECURITIES 5
- ---------------------------------------------------------------

EXCHANGE PRIVILEGE 6
- ---------------------------------------------------------------

REDEEMING SHARES 6
- ---------------------------------------------------------------

Redemption in Kind 6

TAX STATUS 6
- ---------------------------------------------------------------

The Fund's Tax Status 6
Shareholders' Tax Status 6

TOTAL RETURN 6
- ---------------------------------------------------------------

YIELD 7
- ---------------------------------------------------------------

PERFORMANCE COMPARISONS 7
- ---------------------------------------------------------------

Duration 7

GENERAL INFORMATION ABOUT THE FUND
- --------------------------------------------------------------------------------

The Fund is a portfolio in Independence One Mutual Funds (the "Trust"), which
was established as a Massachusetts business trust under a Declaration of Trust
dated January 9, 1989.

INVESTMENT OBJECTIVE AND POLICIES

- --------------------------------------------------------------------------------

The Fund's investment objective is to seek high current income. This investment
objective cannot be changed without approval of shareholders. The investment
policies described below may be changed by the Board of Trustees ("Trustees")
without shareholder approval. Shareholders will be notified before any material
changes in these policies become effective.

ACCEPTABLE INVESTMENTS

The Fund invests only in U.S. government securities.

REPURCHASE AGREEMENTS

The Fund or its custodian will take possession of the securities subject to
repurchase agreements and these securities will be marked to market daily. To
the extent that the original seller does not repurchase the securities from the
Fund, the Fund could receive less than the repurchase price on any sale of such
securities. In the event that such a defaulting seller filed for bankruptcy or
became insolvent, disposition of such securities by the Fund might be delayed
pending court action. The Fund believes that under the regular procedures
normally in effect for custody of the Fund's portfolio securities subject to
repurchase agreements, a court of competent jurisdiction would rule in favor of
the Fund and allow retention or disposition of such securities. The Fund will
only enter into repurchase agreements with banks and other recognized financial
institutions such as brokers/ dealers which are deemed by the Fund's adviser to
be creditworthy pursuant to guidelines established by the Trustees.

WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS

No fees or other expenses, other than normal transaction costs, are incurred.
However, liquid assets of the Fund sufficient to make payment for the securities
to be purchased are segregated at the trade date. These securities are marked to
market daily and maintained until the transaction is settled. The Fund may
engage in these transactions to an extent that would cause segregation of an
amount up to 20% of the value of its assets.

PORTFOLIO TURNOVER

The Fund will not attempt to set or meet a portfolio turnover rate since any
turnover would be incidental to transactions undertaken in an attempt to achieve
the Fund's investment objectives. The portfolio turnover rates for the fiscal
year ended April 30, 1994 and for the period ended April 30, 1993, were 20% and
0%, respectively.

INVESTMENT LIMITATIONS

BUYING ON MARGIN

The Fund will not purchase any securities on margin, but may obtain such
short-term credits as are necessary for clearance of transactions.

ISSUING SENIOR SECURITIES AND BORROWING MONEY

The Fund will not issue senior securities except that the Fund may borrow
money in amounts up to one-third of the value of its total assets,
including the amounts borrowed.

The Fund will not borrow money for investment leverage, but rather as a
temporary, extraordinary, or emergency measure or to facilitate
management of the portfolio by enabling the Fund to meet redemption
requests when the liquidation of portfolio securities is deemed to be
inconvenient or disadvantageous. The Fund will not purchase any
securities while borrowings in excess of 5% of total assets are
outstanding.

CONCENTRATION OF INVESTMENTS

The Fund will not concentrate in any one industry.

UNDERWRITING

LENDING OF ASSETS

The Fund will not lend any of its assets. (This shall not prevent the
purchase or holding of U.S. Treasury securities, repurchase agreements,
or other transactions which are permitted by the Fund's investment
objective and policies.)

SELLING SHORT

The Fund will not sell securities short.

INVESTING IN ILLIQUID SECURITIES

The Fund will not invest more than 15% of the value of its net assets in
securities which are not readily marketable or which are otherwise
considered illiquid, including repurchase agreements providing for
settlement more than seven days after notice.

PLEDGING ASSETS

Except with respect to borrowing money, if a percentage limitation is adhered to
at the time of the investment, a later increase or decrease in percentage
resulting from any change in value or net assets will not result in a violation
of such restriction.

INDEPENDENCE ONE MUTUAL FUNDS MANAGEMENT
- --------------------------------------------------------------------------------

OFFICERS AND TRUSTEES

Harry J. Nederlander\* Trustee Chairman, Nederlander Enterprises.
231 S. Woodward,
Suite 219
Birmingham, MI

Thomas S. Wilson Trustee President, Detroit Pistons; Executive Administrator, Detroit Pistons,
Two Championship Drive The Palace of Auburn Hills, and The Pine Knob Music Theatre.
Auburn Hills, MI

Jeffrey W. Sterling Vice President Vice President, Federated Administrative Services.
Federated Investors Tower and Assistant
Pittsburgh, PA Treasurer

Jay S. Neuman Secretary Corporate Counsel, Federated Investors; prior to January 1991, Associate
Federated Investors Tower Counsel, The Boston Company Advisors, Inc.
Pittsburgh, PA
</TABLE>

\ Members of the Trust's Executive Committee. The Executive Committee of the
Board of Trustees handles the responsibilities of the Board of Trustees
between meetings of the Board.

* This Trustee is deemed to be an "interested person" of the Fund or Trust as
defined in the Investment Company Act of 1940.

FUND OWNERSHIP

TRUSTEE LIABILITY

INVESTMENT ADVISORY SERVICES
- --------------------------------------------------------------------------------

ADVISER TO THE FUND

The Fund's investment adviser is Michigan National Bank (the "Adviser"). The
Fund's investment sub-adviser is Independence One Capital Management Corporation
(the "Sub-Adviser").

The Adviser and Sub-Adviser shall not be liable to the Trust, the Fund, or any
shareholder of the Fund for any losses that may be sustained in the purchase,
holding, or sale of any security, or for anything done or omitted by it, except
acts or omissions involving willful misfeasance, bad faith, gross negligence, or
reckless disregard of the duties imposed upon it by its contract with the Trust.

ADVISORY FEES

For its advisory services, Michigan National Bank receives an annual investment
advisory fee as described in the prospectus. For the fiscal year ended April 30,
1994 and during the period from January 11, 1993 (date of initial public
investment) to April 30, 1993, the Fund's Adviser earned $595,181 and $176,329,
respectively, all of which was voluntarily waived because of undertakings to
limit the Fund's expenses.

STATE EXPENSE LIMITATIONS

This arrangement is not part of the advisory contract and may be amended
or rescinded in the future.

ADMINISTRATIVE SERVICES
- --------------------------------------------------------------------------------

Federated Administrative Services, Inc., a subsidiary of Federated Investors,
provides administrative personnel and services to the Fund for the fees set
forth in the prospectus. For the fiscal year ended April 30, 1994 and during the
period from January 11, 1993 (date of initial public investment) to April 30,
1993, the Fund incurred administrative services costs of $106,948 and $32,114,
respectively, of which $0 and $32,114 were voluntarily waived because of
undertakings to limit the Fund's expenses.

BROKERAGE TRANSACTIONS
- --------------------------------------------------------------------------------

When selecting brokers and dealers to handle the purchase and sale of portfolio
instruments, the Adviser looks for prompt execution of the order at a favorable
price. In working with dealers, the Adviser will generally use those who are
recognized dealers in specific portfolio instruments except when a better price
and execution of the order can be obtained elsewhere. The Adviser makes
decisions on portfolio transactions and selects brokers and dealers subject to
review by the Trustees.

The Adviser may select brokers and dealers who offer brokerage and research
services. These services may be furnished directly to the Fund or to the Adviser
and may include:

advice as to the advisability of investing in securities;

security analysis and reports;

economic studies;

industry studies;

receipt of quotations for portfolio evaluations; and

similar services.

PURCHASING SHARES
- --------------------------------------------------------------------------------

Shares are sold at their net asset value on days which the New York Stock
Exchange is open for business, except on federal holidays restricting wire
transfers. The procedure for purchasing shares of the Fund is explained in the
prospectus under "Investing in the Fund."

DISTRIBUTION PLAN

The Trust has adopted a Plan pursuant to Rule 12b-1 which was promulgated by the
Securities and Exchange Commission pursuant to the Investment Company Act of
1940 (the "Plan"). The Plan provides for payment of fees to Federated Securities
Corp. to finance any activity which is principally intended to result in the
sale of the Fund's shares subject to the Plan. Such activities may include the
advertising and marketing of shares; preparing, printing, and distributing
prospectuses and sales literature to prospective shareholders, brokers or
administrators; and implementing and operating the Plan. Pursuant to the Plan,
the distributor may pay fees to brokers for distribution and administrative
services and to administrators for administrative services as to shares. The
administrative services are provided by a representative who has knowledge of
the shareholder's particular circumstances and goals, and include, but are not
limited to: communicating account openings; communicating account closings;
entering purchase transactions; entering redemption transactions; providing or
arranging to provide accounting support for all transactions; wiring funds and
receiving funds for share purchases and redemptions, confirming and reconciling
all transactions; reviewing the activity in Fund accounts, and providing
training and supervision of broker personnel; posting and reinvesting dividends
to Fund accounts or arranging for this service to be performed by the Fund's
transfer agent; and maintaining and distributing current copies of prospectuses
and shareholder reports to the beneficial owners of shares and prospective
shareholders.

The Board of Trustees expects that the adoption of the Plan will result in the
sale of a sufficient number of shares so as to allow the Fund to achieve
economic viability. It is also anticipated that an increase in the size of the
Fund will facilitate more efficient portfolio management and assist the Fund in
seeking to achieve its investment objective.

For the fiscal year ended April 30, 1994 and during the period from January 11,
1993 (date of initial public investment) to April 30, 1993, brokers and
administrators (financial institutions) did not receive any fees pursuant to the
distribution plan.

CONVERSION TO FEDERAL FUNDS

It is the Fund's policy to be as fully invested as possible so that maximum
interest may be earned. To this end, all payments from shareholders must be in
federal funds or be converted into federal funds before shareholders begin to
earn dividends. State Street Bank acts as the shareholder's agent in depositing
checks and converting them to federal funds.

DETERMINING NET ASSET VALUE
- --------------------------------------------------------------------------------

Net asset value generally changes each day. The days on which net asset value is
calculated by the Fund are described in the prospectus.

DETERMINING MARKET VALUE OF SECURITIES
- --------------------------------------------------------------------------------

Market values of the Fund's portfolio securities are determined as follows:

as provided by an independent pricing service;

for short-term obligations with remaining maturities of 60 days or less at the
time of purchase, at amortized cost unless the Board determines this is not
fair value; or

at fair value as determined in good faith by the Trustees. Prices provided by
independent pricing services may be determined without relying exclusively on
quoted prices. Pricing services may consider:

yield;

quality;

coupon rate;

maturity;

type of issue;

trading characteristics; and

other market data.

EXCHANGE PRIVILEGE
- --------------------------------------------------------------------------------

Instructions for exchanges may be given in writing or by telephone. Exchange
procedures are explained in the prospectus under "Exchange Privilege."

REDEEMING SHARES
- --------------------------------------------------------------------------------

REDEMPTION IN KIND

TAX STATUS
- --------------------------------------------------------------------------------

THE FUND'S TAX STATUS

derive at least 90% of its gross income from dividends, interest, and gains
from the sale of securities;

derive less than 30% of its gross income from the sale of securities held less
than three months;

invest in securities within certain statutory limits; and

distribute to its shareholders at least 90% of its net income earned during the
year.

SHAREHOLDERS' TAX STATUS

Shareholders are subject to federal income tax on dividends and capital gains
received as cash or additional shares. These dividends, and any short-term
capital gains, are taxable as ordinary income.

CAPITAL GAINS

Shareholders will pay federal tax at capital gains rates on long-term
capital gains distributed to them regardless of how long they have held
the Fund shares.

TOTAL RETURN
- --------------------------------------------------------------------------------

The Fund's average annual total return for the fiscal year ended April 30, 1994
and for the period from
January 11, 1993 (date of initial public investment) to April 30, 1994, were
0.66% and 4.22%, respectively.

The average annual total return for shares of the Fund is the average compounded
rate of return for a given period that would equate a $1,000 initial investment
to the ending redeemable value of that investment. The ending redeemable value
is computed by multiplying the number of shares owned at the end of the period
by the maximum offering price per share at the end of the period. The number of
shares owned at the end of the period is based on the number of shares purchased
at the beginning of the period with $1,000, less any applicable sales load,
adjusted over the period by any additional shares, assuming the monthly
reinvestment of all dividends and distributions.

YIELD
- --------------------------------------------------------------------------------

The Fund's yield for the thirty-day period ended April 30, 1994, was 5.90%.

The yield for shares of the Fund is determined by dividing the net investment
income per share (as defined by the Securities and Exchange Commission) earned
by shares of the Fund over a thirty-day period by the maximum offering price per
share of the Fund on the last day of the period. This value is annualized using
semi-annual compounding. This means that the amount of income generated during
the thirty-day period is assumed to be generated each month over a twelve-month
period and is reinvested every six months. The yield does not necessarily
reflect income actually earned by shares of the Fund because of certain
adjustments required by the Securities and Exchange Commission and, therefore,
may not correlate to the dividends or other distributions paid to shareholders.

PERFORMANCE COMPARISONS
- --------------------------------------------------------------------------------

The Fund's performance depends upon such variables as:

portfolio quality;

average portfolio maturity;

type of instruments in which the portfolio is invested;

changes in interest rates and market value of portfolio securities;

changes in the Fund's expenses; and

various other factors.

LIPPER ANALYTICAL SERVICES, INC., ranks funds in various fund categories by
making comparative calculations using total return. Total return assumes the
reinvestment of all capital gains distributions and income dividends and takes
into account any change in net asset value over a specific period of time. From
time to time, the Fund will quote its Lipper ranking in the "U.S. government
funds" category in advertising and sales literature.

MERRILL LYNCH 1-10 YEAR GOVERNMENT INDEX is an unmanaged index tracking
intermediate term U.S. government securities with maturities between 1 and 9.99
years. The index is produced by Merrill Lynch, Pierce, Fenner & Smith, Inc.

MERRILL LYNCH 1-10 YEAR TREASURY INDEX is an unmanaged index tracking
intermediate term U.S. Treasury securities with maturities between 1 and 9.99
years. The index is produced by Merrill Lynch, Pierce, Fenner & Smith, Inc.

MORNINGSTAR, INC., an independent rating service, is the publisher of the
bi-weekly Mutual Fund Values. Mutual Fund Values rates more than 1,000
NASDAQ-listed mutual funds of all types, according to their risk-adjusted
returns. The maximum rating is five stars, and ratings are effective for two
weeks.

LEHMAN BROTHERS TREASURY BOND INDEX is comprised entirely of U.S. Treasury
obligations. Flower bonds and foreign issues are excluded.

Advertisements and other sales literature for the Fund may refer to total
return. Total return also represents the historic change in the value of an
investment in the Fund based on the monthly reinvestment of dividends over a
specified period of time.

DURATION

Duration is a commonly used measure of the potential volatility in the price of
a bond, or other fixed income security, or in a portfolio of fixed income
securities, prior to maturity. Volatility is the magnitude of the change in the
price of a bond relative to a given change in the market rate of interest. A
bond's price volatility depends on three primary variables: the bond's coupon
rate; maturity date; and the level of market yields of similar fixed income
securities. Generally, bonds with lower coupons or longer maturities will be
more volatile than bonds with higher coupons or shorter maturities. Duration
combines these variables into a single measure.

Duration is calculated by dividing the sum of the time-weighted values of the
cash flows of a bond or bonds, including interest and principal payments, by the
sum of the present values of the cash flows. When the Fund invests in mortgage
pass-through securities, its duration will be calculated in a manner which
requires assumptions to be made regarding future principal prepayments. A more
complete description of this calculation is available upon request from the
Fund.

2091701B (6/94)

PART C. OTHER INFORMATION.

Item 24. Financial Statements and Exhibits:

(a) Financial Statements (filed in Part A)
(b) Exhibits:
(1) Copy of Declaration of Trust of the
Registrant (1.);
(i) Amendment No. 1 to the
Declaration of Trust dated January 9,
1989 (2.);
(ii) Amendment No. 2 to the
Declaration of Trust dated January 9,
1989 (2.);
(iii) Amendment No. 3 to the
Declaration of Trust dated January 9,
1989 (4.);
(iv) Amendment No. 4 to the
Declaration of Trust. dated April 8,
1991 (6.);
(v) Amendment No. 5 to the
Declaration of Trust. dated September
26, 1991 (6.);
(2) Copy of By-Laws of the Registrant (1.);
(3) Not applicable;
(4) Copy of Specimen Certificate for Shares of
Beneficial Interest of the Registrant (7.);
(5) Conformed copy of Investment Advisory
Contract of the Registrant as amended (8);
(i) Conformed copy of Investment
Sub-Advisory Contract (8);
(6) Copy of Distributor's Contract of the
Registrant (1.);
(7) Not applicable;
(8) (i)Copy of Custodian Agreement of the
Registrant (1.);
(ii) Copy of the new Agency
Agreement of the Registrant (3.);
(iii) Copy of the new
Administrative Services Agreement of
the Registrant (3.);
(iv) Copy of Amendment No. 1 to
Exhibit A of Custodian Agreement of the
Registrant (7.);
(v) Copy of Amendment No. 1 to
Exhibit A of Agency Agreement of the
Registrant (7.);

+ All exhibits have been filed electronically.

1. Response is incorporated by reference to Registrant's
Initial Registration Statement on Form N-1A filed on January
13, 1989. (File Nos. 33-26516 and 811-5752)
2. Response is incorporated by reference to Registrant's Pre-
Effective Amendment No. 1 on Form N-1A filed on May 5, 1989.
(File Nos. 33-26516 and 811-5752)
3. Response is incorporated by reference to Registrant's Post-
Effective Amendment No. 1 on Form N-1A filed on December 12,
1989. (File Nos. 33-26516 and 811-5752)
4. Response is incorporated by reference to Registrant's Post-
Effective Amendment No. 2 on Form N-1A filed on June 27,
1990. (File Nos. 33-26516 and 811-5752)
6. Response is incorporated by reference to Registrant's Post-
Effective Amendment No. 5 on Form N-1A filed June 24, 1992.
(File Nos. 33-26516 and 811-5752)
7. Response is incorporated by reference to Registrant's Post-
Effective Amendment No. 6 on Form N-1A filed September 2,
1992. (File Nos. 33-26516 and 811-5752)
8. Response is incorporated by reference to Registrant's Post-
Effective Amendment No. 7 on Form N-1A filed June 24, 1993.
(File Nos. 33-26516 and 811-5752)
(9) Form of Agreement for Fund Accounting,
Shareholder Recordingkeeping, and Custody
Services Procurement;+
(10) Copy of Opinion and Consent of Counsel
as to legality of shares being
registered (2.);
(11) (i)Conformed copy of Consent of
Independent Accountants;+
(ii) not applicable;
(12) Not applicable;
(13) Copy of Initial Capital Understanding
(2.);
(14) Not applicable;
(15) (i) Copy of Distribution Plan (5.);
(ii) Sales Agreement with
Federated Securities Corp. and
Administrative Agreement - Appendix B
(2.);
(iii) Conformed copy of Exhibit B
of Distribution Plan (8);
(iv) Copy of Schedule A of Sales
Agreement with Federated Securities
Corp. (7.);
(v) Copy of Fee Schedule for Rule
12b-1 Agreement with Federated
Securities Corp. (7.);
(16) Copy of Schedule for Computation of
Performance Data for Independence One
U.S. Government Securities Fund - Trust
Shares (8);
(17) (i) Copy of Power of Attorney dated June
1992 with respect to Harold Berry (6.);
(ii) Conformed copy of Power of Attorney
filed on behalf of Gonzales, Baker,
Frame, Nederlander, VanAndel, and
Wilson;+
(18) Conformed copy of Opinion and Consent of
Counsel as to Availability of Rule
485(b).+

Item 25. Persons Controlled by or Under Common Control with
Registrant:

None

+ All exhibits have been filed electronically.

2. Response is incorporated by reference to Registrant's Pre-
Effective Amendment No. 1 on Form N-1A filed on May 5, 1989.
(File Nos. 33-26516 and 811-5752)
3. Response is incorporated by reference to Registrant's Post-
Effective Amendment No. 1 on Form N-1A filed on December 12,
1989. (File Nos. 33-26516 and 811-5752)
4. Response is incorporated by reference to Registrant's Post-
Effective Amendment No. 2 on Form N-1A filed on June 27,
1990. (File Nos. 33-26516 and 811-5752)
5. Response is incorporated by reference to Registrant's Post-
Effective Amendment No. 3 on Form N-1A filed May 3, 1991.
(File Nos. 33-26516 and 811-5752)
6. Response is incorporated by reference to Registrant's Post-
Effective Amendment No. 5. on Form N-1A filed June 24, 1992.
(File Nos. 33-26516 and 811-5752)
8. Response is incorporated by reference to Registrant's Post-
Effective Amendment No. 7 on Form N-1A filed on June 24,
1993. (File Nos. 33-26516 and 811-5752)
Item 26. Number of Holders of Securities:

Number of Record Holders
Title of Class Portfolio name as of June 4, 1994

Shares of Independence One Prime 1,651
beneficial Money Market Fund
interest
Independence One U.S. 514
Treasury Money Market Fund

Independence One Michigan 723
Municipal Cash Fund

Independence One U.S. 5
Government Securities Fund

Item 27. Indemnification: (4.)

Item 28. Business and Other Connections of Investment Adviser:

Michigan National Bank, a national banking association
(the "Adviser"), is a wholly owned subsidiary of
Michigan National Corporation ("MNC"). Through its
subsidiaries and affiliates, MNC, Michigan's fourth
largest bank holding company in terms of total assets,
as of December 31, 1993, offers a full range of
financial services to the public including commercial
lending, depository services, cash management,
brokerage services, retail banking, credit card
services, mortgage banking, investment advisory
services and trust services. Independence One Capital
Management Corporation ("IOCM"), a nationally
recognized investment advisory subsidiary of MNC,
provides investment advisory services for trust and
other managed assets. IOCM and the Trust Division have
investment discretion over $2.5 billion.

Michigan National Bank has managed mutual funds since
May 1989. The Trust Division has managed pools of
commingled funds since 1964. In addition, Michigan
National Bank presently manages its own investment
portfolio of approximately $600 million in taxable,
short-term instruments. For more information on the
business of the Adviser, see the Prospectus under the
heading "Management of the Trust--Investment Adviser."

The officers and directors of the Adviser and any other
business, profession, vocation or employment of a
substantial nature in which each such officer and
director is or has been engaged during the past two
years is set forth below. Unless otherwise noted, the
position listed under Other Business, Profession,
Vocation or Employment is with Michigan National Bank.
The business address of each such director and officer
is 27777 Inkster Road, Farmington Hills, Michigan,
48333-9065.

____________________
4. Response is incorporated by reference to
Registrant's Post-Effective amendment No. 2 on Form N-
1A filed on June 27, 1990. (File Nos. 33-26516 and 811-
5752)
Other Substantial
Position with Business,
Profession,
Name the Adviser Vocation or
Employment

Daniel T. Carroll Director Director, Michigan
National
Corporation;
Chairman and
President, The
Carroll Group.

John S. Carton Director Director, Michigan
National
Corporation;
Chairman,
President, and CEO
Pineview, Inc.

Sidney E. Forbes Director Director, Michigan
National
Corporation;
Partner,
Forbes/Cohen
Properties.

Sue Ling Gin Director Director, Michigan
National
Corporation;
Chairman and Chief
Executive Officer,
Flying Food Fare,
Inc.

Morton E. Harris Director Director, Michigan
National
Corporation;
Managing Partner,
Spectrum
Associates.

Gerald B. Mitchell Director Director, Michigan
National
Corporation;
Retired Chairman
and Chief
Executive Officer,
Dana Corporation.

Robert J. Mylod Director, Chairman, Director, Chairman,
and Chief Executive and Chief Exective
Officer Officer, Michigan
National
Corporation.

William F. Pickard Director Director, Michigan
National
Corporation,
Chairman and Chief
Executive Officer,
Regal Plastics
Company.

Douglas E. Ebert President and Chief President and Chief
Operating Officer Operating Officer,
Michigan National
Corporation

Stanton Kinnie Smith, Jr. Director Director, Michigan
National
Corporation;
President and CEO,
American Club
Stores,
Inc.

Walter H. Teninga Director Director, Michigan
National
Corporation;
President and CEO,
American Club
Stores, Inc.

Stephen A. VanAndel Director Director, Michigan
National
Corporation; Vice
President and
Chairman, Amway
Corporation.

Richard T. Walsh Director Director, Michigan
National
Corporation;
Consultant.

James A. Williams Director Director, Michigan
National
Corporation;
Chairman and
President
Williams,
Schaefer, Ruby &
Williams.

Eric D. Booth Executive Vice Executive Vice
President President, Michigan
National
Corporation.

Lawrence L. Gladchun Senior Vice Senior Vice
President,
President, General General Counsel and
Counsel and Secretary Secretary,
Michigan National
Corporation.

Richard C. Webb Senior Vice Senior Vice
President,
President Michigan National
Commercial Banking Corporation.

Joseph J. Whiteside Executive Vice President
and Chief Financial
Officer

B. Matt Morris III Senior Vice Senior Vice
President,
President, Audit/ Michigan National
Corporate Services Corporation.

William D. Ritsema Senior Vice Senior Vice
President,
President, Credit Michigan National
Administration Corporation.

Robert V. Panizzi First Vice First Vice
President,
President and Michigan National
Controller Corporation.

David A. Lind Senior Vice President, Senior Vice
Reatil Banking, President,
Michigan Bankard Mich National
Services Corporation.

Marc L. Belsky First Vice President First Vice
President
Planning and Analysis Michigan
National
Corporation.

Edward H. Sondker First Vice President First Vice
President,
Michigan national
Corp.

Item 29. Principal Underwriters:

(a) Federated Securities Corp., the Distributor
for shares of the Registrant, also acts as
principal underwriter for the following open-end
investment companies: American Leaders Fund, Inc.;
Annuity Management Series; Automated Cash
Management Trust; Automated Government Money Trust;
California Municipal Cash Trust; Cash Trust Series
II; Cash Trust Series, Inc.; DG Investor Series;
Edward D. Jones & Co. Daily Passport Cash Trust;
Federated ARMs Fund; Federated Exchange Fund, Ltd.;
Federated GNMA Trust; Federated Government Trust;
Federated Growth Trust; Federated High Yield Trust;
Federated Income Securities Trust; Federated Income
Trust; Federated Index Trust; Federated
Intermediate Government Trust; Federated Master
Trust; Federated Municipal Trust; Federated Short-
Intermediate Government Trust; Federated Short-
Term U.S. Government Trust; Federated Stock Trust;
Federated Tax-Free Trust; Federated U.S. Government
Bond Fund; First Priority Funds; Fixed Income
Securities, Inc.; Fortress Adjustable Rate U.S.
Government Fund, Inc.; Fortress Municipal Income
Fund, Inc.; Fortress Utility Fund, Inc.; Fund for
U.S. Government Securities, Inc.; Government Income
Securities, Inc.; High Yield Cash Trust; Insight
Institutional Series, Inc.; Insurance Management
Series; Intermediate Municipal Trust; International
Series, Inc.; Investment Series Funds, Inc.;
Investment Series Trust; Liberty Equity Income
Fund, Inc.; Liberty High Income Bond Fund, Inc.;
Liberty Municipal Securities Fund, Inc.; Liberty
U.S. Government Money Market Trust; Liberty Utility
Fund, Inc.; Liquid Cash Trust; Managed Series
Trust; Mark Twain Funds; Money Market Management,
Inc.; Money Market Obligations Trust; Money Market
Trust; Municipal Securities Income Trust; New York
Municipal Cash Trust; 111 Corcoran Funds; Peachtree
Funds; The Planters Funds; Portage Funds; RIMCO
Monument Funds;
The Shawmut Funds; Short-Term Municipal Trust;
Signet Select Funds; Star Funds; The Starburst
Funds; The Starburst Funds II; Stock and Bond Fund,
Inc.; Sunburst Funds; Targeted Duration Trust; Tax-
Free Instruments Trust; Trademark Funds; Trust for
Financial Institutions; Trust For Government Cash
Reserves; Trust for Short-Term U.S. Government
Securities; Trust for U.S. Treasury Obligations;
World Investment Series, Inc.

Federated Securities Corp. also acts as principal
underwriter for the following closed-end investment
company: Liberty Term Trust, Inc. - 1999.

(b)

Richard B. Fisher Director, Chairman, Chief --
Federated Investors Tower Executive Officer, Chief
Pittsburgh, PA 15222-3779 Operating Officer, and
Asst. Treasurer, Federated
Securities Corp.

Edward C. Gonzales Director, Executive Vice President
and
Federated Investors Tower President, and Treasurer, Treasurer
Pittsburgh, PA 15222-3779 Federated Securities
Corp.

John W. McGonigle Director, Executive Vice --
Federated Investors Tower President, and Assistant
Pittsburgh, PA 15222-3779 Secretary, Federated
Securities Corp.

John A. Staley, IV Executive Vice President --
Federated Investors Tower and Assistant Secretary,
Pittsburgh, PA 15222-3779 Federated Securities Corp.

John B. Fisher President-Institutional Sales, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

James F. Getz President-Broker/Dealer, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Mark R. Gensheimer Executive Vice President of --
Federated Investors Tower Bank/Trust
Pittsburgh, PA 15222-3779 Federated Securities Corp.

Mark W. Bloss Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Theodore Fadool, Jr. Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Bryant R. Fisher Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Christopher T. Fives Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

James S. Hamilton Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

James M. Heaton Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

H. Joseph Kennedy Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Keith Nixon Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Timothy C. Pillion Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

James R. Ball Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Richard W. Boyd Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Jane E. Broeren-Lambesis Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Mary J. Combs Vice President, --
Federated Investors Tower Federated
Securities Corp.
Pittsburgh, PA 15222-3779

R. Edmond Connell, Jr. Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Laura M. Deger Vice President, --
Federated Investors Tower Federated
Securities Corp.
Pittsburgh, PA 15222-3779

Jill Ehrenfeld Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Mark D. Fisher Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Joseph D. Gibbons Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

David C. Glabicki Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Richard C. Gonzales Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Scott A. Hutton Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

William J. Kerns Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

William E. Kugler Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Dennis M. Laffey Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Francis J. Matten, Jr. Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Mark J. Miehl Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

J. Michael Miller Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

R. Jeffrey Niss Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Michael P. O'Brien Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Solon A. Person, IV Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Robert F. Phillips Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Eugene B. Reed Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Paul V. Riordan Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Charles A. Robison Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

David W. Spears Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Jeffrey A. Stewart Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Thomas E. Territ Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

William C. Tustin Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Richard B. Watts Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Philip C. Hetzel Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Ernest L. Linane Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

S. Elliott Cohan Secretary, Federated Assistant
Federated Investors Tower Securities Corp. Secretary
Pittsburgh, PA 15222-3779

Item 30. Location of Accounts and Records:

All accounts and records required to be maintained by Section
31(a) of the Investment Company Act of 1940 and Rules 31a-1
through 31a-3 promulgated thereunder are maintained at one of the
following locations:

Independence One Mutual Funds Federated Investors Tower
(Registrant) Pittsburgh, PA 15222-3779

Federated Services Company Federated Investors Tower
("Transfer Agent, Dividend Pittsburgh, PA 15222-
3779
Disbursing Agent and Portfolio
Recordkeeper")

Federated Administrative Services Federated Investors
Tower
(Administrator) Pittsburgh, PA 15222-3779

Michigan National Bank 27777 Inkster Road
(Adviser) Mail Code 10-52
Farmington Hills, MI
48333

State Street Bank and Trust P.O. Box 1119
Company Boston, MA 02103
(Custodian)

Item 31. Management Services: Not applicable.

Item 32. Undertakings:

Registrant hereby undertakes to comply with the
provisions of Section 16(c) of the 1940 Act with
respect to the removal of Trustees and the calling of
special shareholder meetings by shareholders.

Registrant hereby undertakes to furnish each person to
whom a prospectus for Independence One U.S. Government
Securities Fund is delivered with a copy of the
Registrant's latest annual report to shareholders, upon
request and without charge.

SIGNATURES

Pursuant to the requirements of the Securities Act of
1933 and the Investment Company Act of 1940, the Registrant,
INDEPENDENCE ONE MUTUAL FUNDS, certifies that it meets all
of the requirements for effectiveness of this Amendment to
its Registration Statement pursuant to Rule 485(b) under the
Securities Act of 1933 and has duly caused this Amendment to
its Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, all in the City of
Pittsburgh and Commonwealth of Pennsylvania, on the 29th day
of June, 1994.

INDEPENDENCE ONE MUTUAL FUNDS

BY: /s/Jay S. Neuman
Jay S. Neuman, Assistant Secretary
Attorney in Fact for John F. Donahue
June 29, 1994

Pursuant to the requirements of the Securities Act of
1933, this Amendment to its Registration Statement has been
signed below by the following person in the capacity and on
the date indicated:

NAME TITLE DATE

By: /s/Jay S. Neuman
Jay S. Neuman Attorney In Fact June 29, 1994
ASSISTANT SECRETARY For the Persons
Listed Below

NAME TITLE

Edward C. Gonzales* President and Treasurer,
(Principal Executive, Accounting
and Financial Officer)

Robert E. Baker* Trustee

Harold Berry* Trustee

Clarence G. Frame* Trustee

Harry J. Nederlander* Trustee

David L. VanAndel* Trustee

Thomas S. Wilson* Trustee

* By Power of Attorney

Exhibit 11 under N-1A
Exhibit 23 under Item 601/Reg SK

INDEPENDENT AUDITORS' CONSENT

The Board of Trustees and Shareholders
Independence One Mutual Funds:

With respect to the Prospectuses and Statements of Additional
Information included in this Post-Effective Amendment No. 9 to
the Registration Statement on Form N-1A of Independence One
Mutual Funds, we consent to the use of our reports included
herein and to the references to our Firm under the headings
"Financial Highlights" and "Administration of the Fund" in
Part A of the Registration Statement.

. Independence One Prime Money Market Fund;
. Independence One U.S. Treasury Money Market Fund;
. Independence One Michigan Municipal Cash Fund; and
. Independence One U.S. Government Securities Fund.

Pittsburgh, Pennsylvania
June 24, 1994

Exhibit (18) under Form N-1A
Exhibit 99 under Item 601/Reg S-K
HOUSTON, HOUSTON & DONNELLY
ATTORNEYS AT LAW
2510 CENTRE CITY TOWER
WILLIAM McC. HOUSTONPITTSBURGH, PA. 15222
FRED CHALMERS HOUSTON, JR.__________
THOMAS J. DONNELLY
JOHN F. MECK (412) 471-5828 FRED CHALMERS HOUSTON
FAX (412) 471-0736 (1914 - 1971)

MARIO SANTILLI, JR.
THEODORE M. HAMMER

June 24, 1994

Independence One Mutual Funds
Federated Investors Tower
Pittsburgh, PA 15222-3779

Gentlemen:

As counsel to Independence One Mutual Funds ("Trust") we
have reviewed Post-effective Amendment No. 9 to the Trust's
Registration Statement to be filed with the Securities and
Exchange Commission under the Securities Act of 1933 (File No. 33-
26516). The subject Post-effective Amendment will be filed
pursuant to Paragraph (b) of Rule 485 and become effective
pursuant to said Rule on June 30, 1994.

Our review also included an examination of other relevant
portions of the amended 1933 Act Registration Statement of the
Trust and such other documents and records deemed appropriate.
On the basis of this review we are of the opinion that Post-
effective Amendment No. 9 does not contain disclosures which
would render it ineligible to become effective pursuant to
Paragraph (b) of Rule 485.

We hereby consent to the filing of this representation
letter as a part of the Trust's Registration Statement filed with
the Securities and Exchange Commission under the Securities Act
of 1933 and as part of any application or registration statement
filed under the Securities Laws of the States of the United
States.

Very truly yours,

Houston, Houston & Donnelly

By: /s/Thomas J. Donnelly
TJD:heh

Exhibit (17)(ii) of Form N-1A
Exhibit 24 under Item 601/Reg. S-K

POWER OF ATTORNEY

Each person whose signature appears below hereby constitutes
and appoints the Secretary and Assistant Secretary of
Independence One Mutual Funds and the Assistant General Counsel
of Federated Investors, and each of them, their true and lawful
attorneys-in-fact and agents, with full power of substitution
and resubstitution for them and in their names, place and stead,
in any and all capacities, to sign any and all documents to be
filed with the Securities and Exchange Commission pursuant to
the Securities Act of 1933, the Securities Exchange Act of 1934
and the Investment Company Act of 1940, by means of the
Securities and Exchange Commission's electronic disclosure
system known as EDGAR; and to file the same, with all exhibits
thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-
in-fact and agents, and each of them, full power and authority
to sign and perform each and every act and thing requisite and
necessary to be done in connection therewith, as fully to all
intents and purposes as each of them might or could do in
person, hereby ratifying and confirming all that said attorneys-
in-fact and agents, or any of them, or their or his substitute
or substitutes, may lawfully do or cause to be done by virtue
thereof.

SIGNATURES TITLE DATE

/s/ E. C. Gonzales
Edward C. Gonzales President and Treasurer,12/7/93
(Principal Executive, Accounting
and Financial Officer)

/s/ Robert E. Baker
Robert E. Baker Trustee 12/7/93

Harold Berry Trustee

/s/ Clarence G. Frame
Clarence G. Frame Trustee 12/7/93

/s/ Harry J. Nederlander
Harry J. Nederlander Trustee 12/7/93

/s/ David L. VanAndel
David L. VanAn del Trustee 12/7/93

/s/ Thomas S. Wilson
Thomas S. Wilson Trustee 12/7/93

Sworn to and subscribed before me this 7th day of December, 1993.

/s/ Sharon K. Clayton__________________
Notary Public

EXHIBIT 1

Exhibit 9 under Form N-1A
Exhibit 10 under Item 601/Reg. S-K
AGREEMENT
for
FUND ACCOUNTING,
SHAREHOLDER RECORDKEEPING,
and
CUSTODY SERVICES PROCUREMENT

AGREEMENT made as of the 1st day of December, 1993, by and between
those investment companies listed on Exhibit 1 as may be amended from
time to time, having their principal office and place of business at
Federated Investors Tower, Pittsburgh, PA 15222-3779 (the "Trust"), on
behalf of the portfolios (individually referred to herein as a "Fund" and
collectively as "Funds") of the Trust, and FEDERATED SERVICES COMPANY, a
Delaware business trust, having its principal office and place of
business at Federated Investors Tower, Pittsburgh, Pennsylvania 15222-
3779 (the "Company").
WHEREAS, the Trust is registered as an open-end management investment
company under the Investment Company Act of 1940, as amended
(the "1940 Act"), with authorized and issued shares of capital stock or
beneficial interest ("Shares"); and
WHEREAS, the Trust wishes to retain the Company to provide certain
pricing, accounting and recordkeeping services for each of the Funds,
including any classes of shares issued by any Fund ("Classes"), and the
Company is willing to furnish such services; and
WHEREAS, the Trust desires to appoint the Company as its transfer
agent, dividend disbursing agent, and agent in connection with certain
other activities, and the Company desires to accept such appointment; and
WHEREAS, the Trust desires to appoint the Company as its agent to
select, negotiate and subcontract for custodian services from an approved
list of qualified banks and the Company desires to accept such
appointment; and
WHEREAS, from time to time the Trust may desire and may instruct the
Company to subcontract for the performance of certain of its duties and
responsibilities hereunder to State Street Bank and Trust Company or
another agent (the "Agent"); and
WHEREAS, the words Trust and Fund may be used interchangeably for
those investment companies consisting of only one portfolio;
NOW THEREFORE, in consideration of the premises and mutual covenants
herein contained, and intending to be legally bound hereby, the parties
hereto agree as follows:
SECTION ONE: Fund Accounting.
Article 1. Appointment.
The Trust hereby appoints the Company to provide certain pricing and
accounting services to the Funds, and/or the Classes, for the period and
on the terms set forth in this Agreement. The Company accepts such
appointment and agrees to furnish the services herein set forth in return
for the compensation as provided in Article 3 of this Section.
Article 2. The Company and Duties.
Subject to the supervision and control of the Trust's Board of
Trustees or Directors ("Board"), the Company will assist the Trust with
regard to fund accounting for the Trust, and/or the Funds, and/or the
Classes, and in connection therewith undertakes to perform the following
specific services;
A. Value the assets of the Funds and determine the net asset value per
share of each Fund and/or Class, at the time and in the manner from
time to time determined by the Board and as set forth in the
Prospectus and Statement of Additional Information ("Prospectus")
of each Fund;
B. Calculate the net income of each of the Funds, if any;
C. Calculate capital gains or losses of each of the Funds resulting
from sale or disposition of assets, if any;
D. Maintain the general ledger and other accounts, books and financial
records of the Trust, including for each Fund, and/or Class, as
required under Section 31(a) of the 1940 Act and the Rules
thereunder in connection with the services provided by the Company;
E. Preserve for the periods prescribed by Rule 31a-2 under the 1940
Act the records to be maintained by Rule 31a-1 under the 1940 Act
in connection with the services provided by the Company. The
Company further agrees that all such records it maintains for the
Trust are the property of the Trust and further agrees to surrender
promptly to the Trust such records upon the Trust's request;
F. At the request of the Trust, prepare various reports or other
financial documents required by federal, state and other applicable
laws and regulations; and
G. Such other similar services as may be reasonably requested by the
Trust.
Article 3. Compensation and Allocation of Expenses.
A. The Funds will compensate the Company for its services rendered
pursuant to Section One of this Agreement in accordance with the
fees set forth on Fee Schedules A ("A1, A2, A3 etc..."), annexed
hereto and incorporated herein, as may be added or amended from
time to time. Such fees do not include out-of-pocket disbursements
of the Company for which the Funds shall reimburse the Company upon
receipt of a separate invoice. Out-of-pocket disbursements shall
include, but shall not be limited to, the items specified in
Schedules B ("B1, B2, B3, etc..."), annexed hereto and incorporated
herein, as may be added or amended from time to time. Schedules B
may be modified by the Company upon not less than thirty days'
prior written notice to the Trust.
B. The Fund and/or the Class, and not the Company, shall bear the cost
of: custodial expenses; membership dues in the Investment Company
Institute or any similar organization; transfer agency expenses;
investment advisory expenses; costs of printing and mailing stock
certificates, Prospectuses, reports and notices; administrative
expenses; interest on borrowed money; brokerage commissions; taxes
and fees payable to federal, state and other governmental agencies;
fees of Trustees or Directors of the Trust; independent auditors
expenses; Federated Administrative Services and/or Federated
Administrative Services, Inc. legal and audit department expenses
billed to Federated Services Company for work performed related to
the Trust, the Funds, or the Classes; law firm expenses; or other
expenses not specified in this Article 3 which may be properly
payable by the Funds and/or classes.
C. The Company will send an invoice to each of the Funds as soon as
practicable after the end of each month. Each invoice will provide
detailed information about the compensation and out-of-pocket
expenses in accordance with Schedules A and Schedules B. The Funds
and or the Classes will pay to the Company the amount of such
invoice within 30 days of receipt of the invoices.
D. Any compensation agreed to hereunder may be adjusted from time to
time by attaching to Schedules A revised Schedules dated and signed
by a duly authorized officer of the Trust and/or the Funds and a
duly authorized officer of the Company.
E. The fee for the period from the effective date of this Agreement
with respect to a Fund or a Class to the end of the initial month
shall be prorated according to the proportion that such period
bears to the full month period. Upon any termination of this
Agreement before the end of any month, the fee for such period
shall be prorated according to the proportion which such period
bears to the full month period. For purposes of determining fees
payable to the Company, the value of the Fund's net assets shall be
computed at the time and in the manner specified in the Fund's
Prospectus.
F. The Company, in its sole discretion, may from time to time
subcontract to, employ or associate with itself such person or
persons as the Company may believe to be particularly suited to
assist it in performing services under this Section One. Such
person or persons may be third-party service providers, or they may
be officers and employees who are employed by both the Company and
the Funds. The compensation of such person or persons shall be
paid by the Company and no obligation shall be incurred on behalf
of the Trust, the Funds, or the Classes in such respect.
SECTION TWO: Shareholder Recordkeeping.
Article 4. Terms of Appointment.
Subject to the terms and conditions set forth in this Agreement, the
Trust hereby appoints the Company to act as, and the Company agrees to
act as, transfer agent and dividend disbursing agent for each Fund's
Shares, and agent in connection with any accumulation, open-account or
similar plans provided to the shareholders of any Fund
("Shareholder(s)"), including without limitation any periodic investment
plan or periodic withdrawal program.
As used throughout this Agreement, a "Proper Instruction" means a
writing signed or initialed by one or more person or persons as the Board
shall have from time to time authorized. Each such writing shall set
forth the specific transaction or type of transaction involved. Oral
instructions will be deemed to be Proper Instructions if (a) the Company
reasonably believes them to have been given by a person previously
authorized in Proper Instructions to give such instructions with respect
to the transaction involved, and (b) the Trust, or the Fund, and the
Company promptly cause such oral instructions to be confirmed in writing.
Proper Instructions may include communications effected directly between
electro-mechanical or electronic devices provided that the Trust, or the
Fund, and the Company are satisfied that such procedures afford adequate
safeguards for the Fund's assets. Proper Instructions may only be
amended in writing.
Article 5. Duties of the Company.
The Company shall perform the following services in accordance with
Proper Instructions as may be provided from time to time by the Trust as
to any Fund:
A. Purchases
(1) The Company shall receive orders and payment for the purchase
of shares and promptly deliver payment and appropriate
documentation therefore to the custodian of the relevant Fund,
(the "Custodian"). The Company shall notify the Fund and the
Custodian on a daily basis of the total amount of orders and
payments so delivered.
(2) Pursuant to purchase orders and in accordance with the Fund's
current Prospectus, the Company shall compute and issue the
appropriate number of Shares of each Fund and/or Class and
hold such Shares in the appropriate Shareholder accounts.
(3) For certificated Funds and/or Classes, if a Shareholder or its
agent requests a certificate, the Company, as Transfer Agent,
shall countersign and mail by first class mail, a certificate
to the Shareholder at its address as set forth on the transfer
books of the Funds, and/or Classes, subject to any Proper
Instructions regarding the delivery of certificates.
(4) In the event that any check or other order for the purchase of
Shares of the Fund and/or Class is returned unpaid for any
reason, the Company shall debit the Share account of the
Shareholder by the number of Shares that had been credited to
its account upon receipt of the check or other order, promptly
mail a debit advice to the Shareholder, and notify the Fund
and/or Class of its action. In the event that the amount paid
for such Shares exceeds proceeds of the redemption of such
Shares plus the amount of any dividends paid with respect to
such Shares, the Fund and/the Class or its distributor will
reimburse the Company on the amount of such excess.
B. Distribution
(1) Upon notification by the Funds of the declaration of any
distribution to Shareholders, the Company shall act as
Dividend Disbursing Agent for the Funds in accordance with the
provisions of its governing document and the then-current
Prospectus of the Fund. The Company shall prepare and mail or
credit income, capital gain, or any other payments to
Shareholders. As the Dividend Disbursing Agent, the Company
shall, on or before the payment date of any such distribution,
notify the Custodian of the estimated amount required to pay
any portion of said distribution which is payable in cash and
request the Custodian to make available sufficient funds for
the cash amount to be paid out. The Company shall reconcile
the amounts so requested and the amounts actually received
with the Custodian on a daily basis. If a Shareholder is
entitled to receive additional Shares by virtue of any such
distribution or dividend, appropriate credits shall be made to
the Shareholder's account, for certificated Funds and/or
Classes, delivered where requested; and
(2) The Company shall maintain records of account for each Fund
and Class and advise the Trust, each Fund and Class and its
Shareholders as to the foregoing.
C. Redemptions and Transfers
(1) The Company shall receive redemption requests and redemption
directions and, if such redemption requests comply with the
procedures as may be described in the Fund Prospectus or set
forth in Proper Instructions, deliver the appropriate
instructions therefor to the Custodian. The Company shall
notify the Funds on a daily basis of the total amount of
redemption requests processed and monies paid to the Company
by the Custodian for redemptions.
(2) At the appropriate time upon receiving redemption proceeds
from the Custodian with respect to any redemption, the Company
shall pay or cause to be paid the redemption proceeds in the
manner instructed by the redeeming Shareholders, pursuant to
procedures described in the then-current Prospectus of the
Fund.
(3) If any certificate returned for redemption or other request
for redemption does not comply with the procedures for
redemption approved by the Fund, the Company shall promptly
notify the Shareholder of such fact, together with the reason
therefor, and shall effect such redemption at the price
applicable to the date and time of receipt of documents
complying with said procedures.
(4) The Company shall effect transfers of Shares by the registered
owners thereof.
(5) The Company shall identify and process abandoned accounts and
uncashed checks for state escheat requirements on an annual
basis and report such actions to the Fund.
D. Recordkeeping
(1) The Company shall record the issuance of Shares of each Fund,
and/or Class, and maintain pursuant to applicable rules of the
Securities and Exchange Commission ("SEC") a record of the
total number of Shares of the Fund and/or Class which are
authorized, based upon data provided to it by the Fund, and
issued and outstanding. The Company shall also provide the
Fund on a regular basis or upon reasonable request with the
total number of Shares which are authorized and issued and
outstanding, but shall have no obligation when recording the
issuance of Shares, except as otherwise set forth herein, to
monitor the issuance of such Shares or to take cognizance of
any laws relating to the issue or sale of such Shares, which
functions shall be the sole responsibility of the Funds.
(2) The Company shall establish and maintain records pursuant to
applicable rules of the SEC relating to the services to be
performed hereunder in the form and manner as agreed to by the
Trust or the Fund to include a record for each Shareholder's
account of the following:
(a) Name, address and tax identification number (and whether
such number has been certified);
(b) Number of Shares held;
(c) Historical information regarding the account, including
dividends paid and date and price for all transactions;
(d) Any stop or restraining order placed against the account;
(e) Information with respect to withholding in the case of a
foreign account or an account for which withholding is
required by the Internal Revenue Code;
(f) Any dividend reinvestment order, plan application,
dividend address and correspondence relating to the
current maintenance of the account;
(g) Certificate numbers and denominations for any Shareholder
holding certificates;
(h) Any information required in order for the Company to
perform the calculations contemplated or required by this
Agreement.
(3) The Company shall preserve any such records required to be
maintained pursuant to the rules of the SEC for the periods
prescribed in said rules as specifically noted below. Such
record retention shall be at the expense of the Company, and
such records may be inspected by the Fund at reasonable times.
The Company may, at its option at any time, and shall
forthwith upon the Fund's demand, turn over to the Fund and
cease to retain in the Company's files, records and documents
created and maintained by the Company pursuant to this
Agreement, which are no longer needed by the Company in
performance of its services or for its protection. If not so
turned over to the Fund, such records and documents will be
retained by the Company for six years from the year of
creation, during the first two of which such documents will be
in readily accessible form. At the end of the six year
period, such records and documents will either be turned over
to the Fund or destroyed in accordance with Proper
Instructions.
E. Confirmations/Reports
(1) The Company shall furnish to the Fund periodically the
following information:
(a) A copy of the transaction register;
(b) Dividend and reinvestment blotters;
(c) The total number of Shares issued and outstanding in each
state for "blue sky" purposes as determined according to
Proper Instructions delivered from time to time by the
Fund to the Company;
(d) Shareholder lists and statistical information;
(e) Payments to third parties relating to distribution
agreements, allocations of sales loads, redemption fees,
or other transaction- or sales-related payments;
(f) Such other information as may be agreed upon from time to
time.
(2) The Company shall prepare in the appropriate form, file with
the Internal Revenue Service and appropriate state agencies,
and, if required, mail to Shareholders, such notices for
reporting dividends and distributions paid as are required to
be so filed and mailed and shall withhold such sums as are
required to be withheld under applicable federal and state
income tax laws, rules and regulations.
(3) In addition to and not in lieu of the services set forth
above, the Company shall:
(a) Perform all of the customary services of a transfer
agent, dividend disbursing agent and, as relevant, agent
in connection with accumulation, open-account or similar
plans (including without limitation any periodic
investment plan or periodic withdrawal program),
including but not limited to: maintaining all
Shareholder accounts, mailing Shareholder reports and
Prospectuses to current Shareholders, withholding taxes
on accounts subject to back-up or other withholding
(including non-resident alien accounts), preparing and
filing reports on U.S. Treasury Department Form 1099 and
other appropriate forms required with respect to
dividends and distributions by federal authorities for
all Shareholders, preparing and mailing confirmation
forms and statements of account to Shareholders for all
purchases and redemptions of Shares and other confirmable
transactions in Shareholder accounts, preparing and
mailing activity statements for Shareholders, and
providing Shareholder account information; and
(b) provide a system which will enable the Fund to monitor
the total number of Shares of each Fund and/or Class sold
in each state ("blue sky reporting"). The Fund shall by
Proper Instructions (i) identify to the Company those
transactions and assets to be treated as exempt from the
blue sky reporting for each state and (ii) verify the
classification of transactions for each state on the
system prior to activation and thereafter monitor the
daily activity for each state. The responsibility of the
Company for each Fund's and/or Class's state blue sky
registration status is limited solely to the recording of
the initial classification of transactions or accounts
with regard to blue sky compliance and the reporting of
such transactions and accounts to the Fund as provided
above.
F. Other Duties
(1) The Company shall answer correspondence from Shareholders
relating to their Share accounts and such other correspondence
as may from time to time be addressed to the Company;
(2) The Company shall prepare Shareholder meeting lists, mail
proxy cards and other material supplied to it by the Fund in
connection with Shareholder Meetings of each Fund; receive,
examine and tabulate returned proxies, and certify the vote of
the Shareholders;
(3) The Company shall establish and maintain facilities and
procedures for safekeeping of stock certificates, check forms
and facsimile signature imprinting devices, if any; and for
the preparation or use, and for keeping account of, such
certificates, forms and devices.
Article 6. Duties of the Trust.
A. Compliance
The Trust or Fund assume full responsibility for the preparation,
contents and distribution of their own and/or their classes'
Prospectus and for complying with all applicable requirements of
the Securities Act of 1933, as amended (the "1933 Act"), the 1940
Act and any laws, rules and regulations of government authorities
having jurisdiction.
B. Share Certificates
The Trust shall supply the Company with a sufficient supply of
blank Share certificates and from time to time shall renew such
supply upon request of the Company. Such blank Share certificates
shall be properly signed, manually or by facsimile, if authorized
by the Trust and shall bear the seal of the Trust or facsimile
thereof; and notwithstanding the death, resignation or removal of
any officer of the Trust authorized to sign certificates, the
Company may continue to countersign certificates which bear the
manual or facsimile signature of such officer until otherwise
directed by the Trust.
C. Distributions
The Fund shall promptly inform the Company of the declaration of
any dividend or distribution on account of any Fund's shares.
Article 7. Compensation and Expenses.
A. Annual Fee
For performance by the Company pursuant to Section Two of this
Agreement, the Trust and/or the Fund agree to pay the Company an
annual maintenance fee for each Shareholder account as set out in
Schedules C ("C1, C2, C3 etc..."), attached hereto, as may be added
or amended from time to time. Such fees may be changed from time
to time subject to written agreement between the Trust and the
Company. Pursuant to information in the Fund Prospectus or other
information or instructions from the Fund, the Company may sub-
divide any Fund into Classes or other sub-components for
recordkeeping purposes. The Company will charge the Fund the fees
set forth on Schedule C for each such Class or sub-component the
same as if each were a Fund.
B. Reimbursements
In addition to the fee paid under Article 7A above, the Trust
and/or Fund agree to reimburse the Company for out-of-pocket
expenses or advances incurred by the Company for the items set out
in Schedules D ("D1, D2, D3 etc..."), attached hereto, as may be
added or amended from time to time. In addition, any other
expenses incurred by the Company at the request or with the consent
of the Trust and/or the Fund, will be reimbursed by the appropriate
Fund.
C. Payment
The Company shall send an invoice with respect to fees and
reimbursable expenses to the Trust or each of the Funds as soon as
practicable at the end of each month. Each invoice will provide
detailed information about the Compensation and out-of-pocket
expenses in accordance with Schedules C and Schedules D. The Trust
or the Funds will pay to the Company the amount of such invoice
within 30 days following the receipt of the invoices.
Article 8. Assignment of Shareholder Recordkeeping.
Except as provided below, no right or obligation under this Section
Two may be assigned by either party without the written consent of
the other party.
(1) This Agreement shall inure to the benefit of and be binding
upon the parties and their respective permitted successors and
assigns.
(2) The Company may without further consent on the part of the
Trust subcontract for the performance hereof with (A) State
Street Bank and its subsidiary, Boston Financial Data
Services, Inc., a Massachusetts Trust ("BFDS"), which is duly
registered as a transfer agent pursuant to Section 17A(c)(1)
of the Securities Exchange Act of 1934, as amended, or any
succeeding statute ("Section 17A(c)(1)"), or (B) a BFDS
subsidiary duly registered as a transfer agent pursuant to
Section 17A(c)(1), or (C) a BFDS affiliate, or (D) such other
provider of services duly registered as a transfer agent under
Section 17A(c)(1) as Company shall select; provided, however,
that the Company shall be as fully responsible to the Trust
for the acts and omissions of any subcontractor as it is for
its own acts and omissions; or
(3) The Company shall upon instruction from the Trust subcontract
for the performance hereof with an Agent selected by the
Trust, other than BFDS or a provider of services selected by
Company, as described in (2) above; provided, however, that
the Company shall in no way be responsible to the Trust for
the acts and omissions of the Agent.
SECTION THREE: Custody Services Procurement
Article 9. Appointment.
The Trust hereby appoints Company as its agent to evaluate and
obtain custody services from a financial institution that (i) meets
the criteria established in Section 17(f) of the 1940 Act and (ii)
has been approved by the Board as eligible for selection by the
Company as a custodian (the "Eligible Custodian"). The Company
accepts such appointment.
Article 10. The Company and Its Duties.
Subject to the review, supervision and control of the Board, the
Company shall:
(1) evaluate the nature and the quality of the custodial services
provided by the Eligible Custodian;
(2) employ the Eligible Custodian to serve on behalf of the Trust
as Custodian of the Trust's assets substantially on the terms
set forth as the form of agreement in Exhibit 2;
(3) negotiate and enter into agreements with the Custodians for
the benefit of the Trust, with the Trust as a party to each
such agreement. The Company shall not be a party to any
agreement with any such Custodian;
(4) establish procedures to monitor the nature and the quality of
the services provided by the Custodians;
(5) continuously monitor the nature and the quality of services
provided by the Custodians; and
(6) periodically provide to the Trust (i) written reports on the
activities and services of the Custodians; (ii) the nature and
amount of disbursement made on account of the Trust with
respect to each custodial agreement; and (iii) such other
information as the Board shall reasonably request to enable it
to fulfill its duties and obligations under Sections 17(f) and
36(b) of the 1940 Act and other duties and obligations
thereof.
Article 11. Fees and Expenses.
A. Annual Fee
For the performance by the Company pursuant to Section Three of
this Agreement, the Trust and/or the Fund agree to pay the Company
an annual fee as set forth in Schedule E, attached hereto.
B. Payment
The Company shall send an invoice with respect to fees and
reimbursable expenses to each of the Trust/or Fund as soon as
practicable at the end of each month. Each invoice will provide
detailed information about the Compensation and out-of-pocket
expenses in occurrence with Schedule E. The Trust and/or Fund will
pay to the Company the amount of such invoice within 30 days
following the receipt of the invoice.
Article 12. Representations.
The Company represents and warrants that it has obtained all
required approvals from all government or regulatory authorities
necessary to enter into this arrangement and to provide the
services contemplated in Section Three of this Agreement.
SECTION FOUR: General Provisions.
Article 13. Documents.
A. In connection with the appointment of the Company under this
Agreement, the Trust shall file with the Company the following
documents:
(1) A copy of the Charter and By-Laws of the Trust and all
amendments thereto;
(2) A copy of the resolution of the Board of the Trust authorizing
this Agreement;
(3) Specimens of all forms of outstanding Share certificates of
the Trust or the Funds in the forms approved by the Board of
the Trust with a certificate of the Secretary of the Trust as
to such approval;
(4) All account application forms and other documents relating to
Shareholders accounts; and
(5) A copy of the current Prospectus for each Fund.
B. The Fund will also furnish from time to time the following
documents:
(1) Each resolution of the Board of the Trust authorizing the
original issuance of each Fund's, and/or Class's Shares;
(2) Each Registration Statement filed with the SEC and amendments
thereof and orders relating thereto in effect with respect to
the sale of Shares of any Fund, and/or Class;
(3) A certified copy of each amendment to the governing document
and the By-Laws of the Trust;
(4) Certified copies of each vote of the Board authorizing
officers to give Proper Instructions to the Custodian and
agents for fund accountant, custody services procurement, and
shareholder recordkeeping or transfer agency services;
(5) Specimens of all new Share certificates representing Shares of
any Fund, accompanied by Board resolutions approving such
forms;
(6) Such other certificates, documents or opinions which the
Company may, in its discretion, deem necessary or appropriate
in the proper performance of its duties; and
(7) Revisions to the Prospectus of each Fund.
Article 14. Representations and Warranties.
A. Representations and Warranties of the Company
The Company represents and warrants to the Trust that:
(1) It is a business trust duly organized and existing and in good
standing under the laws of the State of Delaware.
(2) It is duly qualified to carry on its business in the State of
Delaware.
(3) It is empowered under applicable laws and by its charter and
by-laws to enter into and perform this Agreement.
(4) All requisite corporate proceedings have been taken to
authorize it to enter into and perform its obligations under
this Agreement.
(5) It has and will continue to have access to the necessary
facilities, equipment and personnel to perform its duties and
obligations under this Agreement.
(6) It is in compliance with federal securities law requirements
and in good standing as a transfer agent.
B. Representations and Warranties of the Trust
The Trust represents and warrants to the Company that:
(1) It is an investment company duly organized and existing and in
good standing under the laws of its state of organization;
(2) It is empowered under applicable laws and by its Charter and
By-Laws to enter into and perform its obligations under this
Agreement;
(3) All corporate proceedings required by said Charter and By-Laws
have been taken to authorize it to enter into and perform its
obligations under this Agreement;
(4) The Trust is an open-end investment company registered under
the 1940 Act; and
(5) A registration statement under the 1933 Act will be effective,
and appropriate state securities law filings have been made
and will continue to be made, with respect to all Shares of
each Fund being offered for sale.
Article 15. Indemnification.
A. Indemnification by Trust
The Company shall not be responsible for and the Trust or Fund
shall indemnify and hold the Company, including its officers,
directors, shareholders and their agents employees and affiliates,
harmless against any and all losses, damages, costs, charges,
counsel fees, payments, expenses and liabilities arising out of or
attributable to:
(1) The acts or omissions of any Custodian,
(2) The Trust's or Fund's refusal or failure to comply with the
terms of this Agreement, or which arise out of the Trust's or
The Fund's lack of good faith, negligence or willful
misconduct or which arise out of the breach of any
representation or warranty of the Trust or Fund hereunder or
otherwise.
(3) The reliance on or use by the Company or its agents or
subcontractors of information, records and documents in proper
form which
(a) are received by the Company or its agents or
subcontractors and furnished to it by or on behalf of the
Fund, its Shareholders or investors regarding the
purchase, redemption or transfer of Shares and
Shareholder account information; or
(b) have been prepared and/or maintained by the Fund or its
affiliates or any other person or firm on behalf of the
Trust.
(4) The reliance on, or the carrying out by the Company or its
agents or subcontractors of Proper Instructions of the Trust
or the Fund.
(5) The offer or sale of Shares in violation of any requirement
under the federal securities laws or regulations or the
securities laws or regulations of any state that such Shares
be registered in such state or in violation of any stop order
or other determination or ruling by any federal agency or any
state with respect to the offer or sale of such Shares in such
state.
Provided, however, that the Company shall not be protected by
this Article 15.A. from liability for any act or omission
resulting from the Company's willful misfeasance, bad faith,
gross negligence or reckless disregard of its duties.
B. Indemnification by the Company
The Company shall indemnify and hold the Trust or each Fund
harmless from and against any and all losses, damages, costs,
charges, counsel fees, payments, expenses and liabilities arising
out of or attributable to any action or failure or omission to act
by the Company as a result of the Company's willful misfeasance,
bad faith, gross negligence or reckless disregard of its duties.
C. Reliance
At any time the Company may apply to any officer of the Trust or
Fund for instructions, and may consult with legal counsel with
respect to any matter arising in connection with the services to be
performed by the Company under this Agreement, and the Company and
its agents or subcontractors shall not be liable and shall be
indemnified by the Trust or the appropriate Fund for any action
reasonably taken or omitted by it in reliance upon such
instructions or upon the opinion of such counsel provided such
action is not in violation of applicable federal or state laws or
regulations. The Company, its agents and subcontractors shall be
protected and indemnified in recognizing stock certificates which
are reasonably believed to bear the proper manual or facsimile
signatures of the officers of the Trust or the Fund, and the proper
countersignature of any former transfer agent or registrar, or of a
co-transfer agent or co-registrar.
D. Notification
In order that the indemnification provisions contained in this
Article 15 shall apply, upon the assertion of a claim for which
either party may be required to indemnify the other, the party
seeking indemnification shall promptly notify the other party of
such assertion, and shall keep the other party advised with respect
to all developments concerning such claim. The party who may be
required to indemnify shall have the option to participate with the
party seeking indemnification in the defense of such claim. The
party seeking indemnification shall in no case confess any claim or
make any compromise in any case in which the other party may be
required to indemnify it except with the other party's prior
written consent.
Article 16. Termination of Agreement.
This Agreement may be terminated by either party upon one hundred
twenty (120) days written notice to the other. Should the Trust
exercise its rights to terminate, all out-of-pocket expenses
associated with the movement of records and materials will be borne
by the Trust or the appropriate Fund. Additionally, the Company
reserves the right to charge for any other reasonable expenses
associated with such termination. The provisions of Article 15
shall survive the termination of this Agreement.
Article 17. Amendment.
This Agreement may be amended or modified by a written agreement
executed by both parties.
Article 18. Interpretive and Additional Provisions.
In connection with the operation of this Agreement, the Company and
the Trust may from time to time agree on such provisions
interpretive of or in addition to the provisions of this Agreement
as may in their joint opinion be consistent with the general tenor
of this Agreement. Any such interpretive or additional provisions
shall be in a writing signed by both parties and shall be annexed
hereto, provided that no such interpretive or additional provisions
shall contravene any applicable federal or state regulations or any
provision of the Charter. No interpretive or additional provisions
made as provided in the preceding sentence shall be deemed to be an
amendment of this Agreement.
Article 19. Governing Law.
This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the
Commonwealth of Massachusetts
Article 20. Notices.
Except as otherwise specifically provided herein, Notices and other
writings delivered or mailed postage prepaid to the Trust at
Federated Investors Tower, Pittsburgh, Pennsylvania, 15222-3779, or
to the Company at Federated Investors Tower, Pittsburgh,
Pennsylvania, 15222-3779, or to such other address as the Trust or
the Company may hereafter specify, shall be deemed to have been
properly delivered or given hereunder to the respective address.
Article 21. Counterparts.
This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original.
Article 22. Limitations of Liability of Trustees and Shareholders of
the Trust.
The execution and delivery of this Agreement have been authorized
by the Trustees of the Trust and signed by an authorized officer of
the Trust, acting as such, and neither such authorization by such
Trustees nor such execution and delivery by such officer shall be
deemed to have been made by any of them individually or to impose
any liability on any of them personally, and the obligations of
this Agreement are not binding upon any of the Trustees or
Shareholders of the Trust, but bind only the appropriate property
of the Fund, or Class, as provided in the Declaration of Trust.
Article 23. Limitations of Liability of Trustees and Shareholders of
the Company.
The execution and delivery of this Agreement have been authorized
by the Trustees of the Company and signed by an authorized officer
of the Company, acting as such, and neither such authorization by
such Trustees nor such execution and delivery by such officer shall
be deemed to have been made by any of them individually or to
impose any liability on any of them personally, and the obligations
of this Agreement are not binding upon any of the Trustees or
Shareholders of the Company, but bind only the property of the
Company as provided in the Declaration of Trust.
Article 24. Assignment.
This Agreement and the rights and duties hereunder shall not be
assignable with respect to the Trust or the Funds by either of the
parties hereto except by the specific written consent of the other
party.
Article 25. Merger of Agreement.
This Agreement constitutes the entire agreement between the parties
hereto and supersedes any prior agreement with respect to the
subject hereof whether oral or written.
Article 26. Successor Agent.
If a successor agent for the Trust shall be appointed by the Trust,
the Company shall upon termination of this Agreement deliver to
such successor agent at the office of the Company all properties of
the Trust held by it hereunder. If no such successor agent shall
be appointed, the Company shall at its office upon receipt of
Proper Instructions deliver such properties in accordance with such
instructions.
In the event that no written order designating a successor agent or
Proper Instructions shall have been delivered to the Company on or
before the date when such termination shall become effective, then
the Company shall have the right to deliver to a bank or trust
company, which is a "bank" as defined in the 1940 Act, of its own
selection, having an aggregate capital, surplus, and undivided
profits, as shown by its last published report, of not less than
$2,000,000, all properties held by the Company under this
Agreement. Thereafter, such bank or trust company shall be the
successor of the Company under this Agreement.
Article 27. Force Majeure.
The Company shall have no liability for cessation of services
hereunder or any damages resulting therefrom to the Fund as a
result of work stoppage, power or other mechanical failure, natural
disaster, governmental action, communication disruption or other
impossibility of performance.
Article 28. Assignment; Successors.
This Agreement shall not be assigned by either party without the
prior written consent of the other party, except that either party
may assign to a successor all of or a substantial portion of its
business, or to a party controlling, controlled by, or under common
control with such party. Nothing in this Article 28 shall prevent
the Company from delegating its responsibilities to another entity
to the extent provided herein.
Article 29. Severability.
In the event any provision of this Agreement is held illegal, void
or unenforceable, the balance shall remain in effect.
Article 30. Modifications and Amendments to Agreement.
The parties hereby agree to the following modifications or amendments to
this Agreement:
A. The proviso at the end of Article 15.A. shall read in its entirety as
follows:
"Provided, however, that the Company shall not be protected by this
Article 15.A. from liability for any act or omission resulting from the
Company's lack of good faith, negligence, willful misconduct, or failure
to meet the standard of care set forth in Article 15.E. below."
B. Article 15.B. shall be amended to read in its entirety as follows:
"The Company shall indemnify and hold the Trust or each Fund harmless
from and against any and all losses, damages, costs, charges, counsel
fees, payments, expenses and liabilities arising out of or attributable
to any action or failure or omission to act by the Company as a result
of the Company's lack of good faith, negligence, willful misconduct, or
failure to meet the standard of care set forth in Article 15.E. below."
C. Article 15 shall be amended to include the following at the end of such
Article 15:
"E. Standard of Care
The Company shall be held to a standard of reasonable care in
carrying out the provisions of this Agreement; provided, however
that the Company shall be held to any higher standard of care which
would be imposed upon the Company by any applicable law or
regulation even though such stated standard of care was not part of
this Agreement."
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
between them dated June 21, 1994, solely as it appears in Section One: Fund
Accounting, Section Two: Shareholder Recordkeeping and Section Four: General
Provisions, to be executed in their names and on their behalf under their
seals by and through their duly authorized officers.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed in their names and on their behalf under their seals by and
through their duly authorized officers, as of the day and year first
above written.

ATTEST: FEDERATED SERVICES COMPANY

By: By:_ _____
Jeannette Fisher-Garber James J. Dolan
Secretary President

ATTEST: INDEPENDENCE ONE MUTUAL FUNDS

By: By: ____
Name: Jay S. Neuman Name: Edward C. Gonzales
Its: Secretary Its: President