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. 10 X
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 X
Amendment No. 10 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)
on _________________ pursuant to paragraph (b)
X 60 days after filing pursuant to paragraph (a) (i)
on pursuant to paragraph (a) (i).
75 days after filing pursuant to paragraph (a)(ii)
on _________________ pursuant to paragraph (a)(ii) of Rule 485.
If appropriate, check the following box:
This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
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.
CROSS REFERENCE SHEET
This Amendment to the Registration Statement of INDEPENDENCE ONE
MUTUAL FUNDS which consists of 4 portfolios: (1) Independence One
Michigan Municipal Cash Fund; (2a) Independence One Prime Money Market
Fund - Class A Shares; (2b) Independence One Prime Money Market Fund -
Class B Shares; (3) Independence One U.S. Treasury Money Market Fund;
and (4) Independence One U.S. Government Securities Fund, relates only
to Independence One Prime Money Market Fund - Class A Shares and Class B
Shares, and is comprised of the following (all Funds have been
referenced below to maintain consistency among the Registrant's filings
and to facilitate the cross-referencing process):
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, 2a,3,4) 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;
(1,3,4) Distribution of Fund
Shares; (2a) Distribution of Class
A Shares; (2b) Distribution of
Class B Shares; (1-4)
Administration of the Fund; (1,3)
Distribution Plan; (2a) Shareholder
Services Plan; (2a, 2b) Other Class
of Shares.
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; (1,3,4)
Investing in the Fund; (2a)
Investing in Class A Shares; (2b)
Investing in Class B Shares;
Item 8 Redemption or Repurchase (1,3,4) Redeeming Shares; (2a)
Redemming Class A Shares; (2b)
Redeeming Class B 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 (1,3,4) Distribution Plan; (2a)
Shareholder Services 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; (2a) also
incorporated into the Fund's
Statement of Additional Information
by reference to the Fund's Semi-
Annual Report dated October 31,
1994 as per Rule 3-18 of Regulation
S-X.
.
INDEPENDENCE ONE PRIME MONEY MARKET FUND
(A PORTFOLIO OF INDEPENDENCE ONE MUTUAL FUNDS)
CLASS A SHARES
PROSPECTUS
The Class A Shares offered by this prospectus represent interests in
Independence One Prime Money Market 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.
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.
Shares of the Fund are intended to be sold as an investment vehicle primarily
for individuals, as well as certain 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 Class A Shares. Keep this prospectus for future reference.
The Fund has also filed a Combined Statement of Additional Information for Class
A Shares and Class B Shares dated _______ , 1995 with the Securities and
Exchange Commission. The information contained in the Combined Statement of
Additional Information is incorporated by reference into this prospectus. You
may request a copy of the Combined 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 _______ , 1995
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
SUMMARY OF FUND EXPENSES 1
- ------------------------------------------------------
FINANCIAL HIGHLIGHTS 2
- ------------------------------------------------------
GENERAL INFORMATION 4
- ------------------------------------------------------
INVESTMENT INFORMATION 4
- ------------------------------------------------------
Investment Objective 4
Investment Policies 4
Acceptable Investments 4
Variable Rate Demand Notes 5
Bank Instruments 5
Short-Term Credit Facilities 5
Asset-Backed Securities 5
Credit Enhancement 5
Demand Features 6
Ratings 6
Repurchase Agreements 6
Restricted and Illiquid Securities 6
When-Issued and Delayed
Delivery Transactions 7
Investing in Securities of Other
Investment Companies 7
Investment Risks 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
Distributon of Class A Shares 9
Shareholder Services Plan 10
Administration of the Fund 10
Administrative Services 10
Custodian 10
Transfer Agent and
Dividend Disbursing Agent 10
Independent Auditors 10
NET ASSET VALUE 10
- ------------------------------------------------------
INVESTING IN CLASS A SHARES 11
- ------------------------------------------------------
Share Purchases 11
To Place an Order 11
Minimum Investment Required 11
Cash Sweep Program 11
Participating Depository Institutions 11
What Shares Cost 12
Certificates and Confirmations 12
Dividends 12
Capital Gains 12
EXCHANGE PRIVILEGE 12
- ------------------------------------------------------
Exchange by Telephone 13
Written Exchange 14
REDEEMING CLASS A SHARES 14
- ------------------------------------------------------
Cash Sweep Customers 14
Redeeming by Check 14
By Telephone 14
By Mail 15
Accounts with Low Balances 16
SHAREHOLDER INFORMATION 16
- ------------------------------------------------------
Voting Rights 16
Massachusetts Partnership Law 16
EFFECT OF BANKING LAWS 17
- ------------------------------------------------------
TAX INFORMATION 18
- ------------------------------------------------------
Federal Income Tax 18
PERFORMANCE INFORMATION 18
- ------------------------------------------------------
OTHER CLASSES OF SHARES 19
- ------------------------------------------------------
FINANCIAL STATEMENTS 20
- ------------------------------------------------------
INDEPENDENT AUDITORS' REPORT 30
- ------------------------------------------------------
ADDRESSES 31
- ------------------------------------------------------
SUMMARY OF FUND EXPENSES
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
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 Fee (as a percentage of amount redeemed, if applicable).......................................... None
Exchange Fee................................................................................................ None
ANNUAL CLASS A SHARES OPERATING EXPENSES*
(As a percentage of average net assets)
Management Fee (after waiver)(1)............................................................................ .15%
12b-1 Fees.................................................................................................. None
Total Other Expenses........................................................................................ .46%
Shareholder Services Fee(2).................................................................. .25%
Total Class A Shares Operating Expenses(3)......................................................... .61%
</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) The Fund can pay up to 0.25 of 1% of average daily net assets of Class A
Shares as a Shareholder Services Fee.
(3) The Total Class A Shares Operating Expenses are estimated to be .86% absent
the anticipated voluntary waiver detailed in note (1).
* Annual Class A Shares Operating Expenses are estimated based on expenses
expected to be incurred during the fiscal year ending April 30, 1996. During
the course of this period, expenses may be more or less than the amount
shown.
THE PURPOSE OF THIS TABLE IS TO ASSIST AN INVESTOR IN UNDERSTANDING THE
VARIOUS COSTS AND EXPENSES THAT A SHAREHOLDER OF CLASS A SHARES WILL BEAR,
EITHER DIRECTLY OR INDIRECTLY. FOR MORE COMPLETE DESCRIPTIONS OF THE VARIOUS
COSTS AND EXPENSES, SEE "INDEPENDENCE ONE MUTUAL FUNDS INFORMATION" AND
"INVESTING IN CLASS A SHARES." 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 for
Class A Shares........................................................... $6 $20 $34 $76
</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. THIS
EXAMPLE IS BASED ON ESTIMATED DATA FOR THE FISCAL YEAR ENDING APRIL 30, 1996.
THE INFORMATION SET FORTH IN THE FOREGOING TABLE AND EXAMPLE RELATES ONLY TO
CLASS A SHARES OF THE FUND. THE FUND ALSO OFFERS ANOTHER CLASS OF SHARES CALLED
CLASS B SHARES. CLASS A SHARES AND CLASS B SHARES ARE SUBJECT TO CERTAIN OF THE
SAME EXPENSES; HOWEVER, CLASS B SHARES ARE NOT SUBJECT TO A SHAREHOLDER SERVICES
FEE. SEE "OTHER CLASSES OF SHARES."
INDEPENDENCE ONE PRIME MONEY MARKET FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR A CLASS A SHARE+ OUTSTANDING THROUGHOUT EACH PERIOD)
Reference is made to the Independent Auditors' Report on page 30.
<TABLE>
<CAPTION>
YEAR ENDED APRIL 30,
1994 1993 1992 1991 1990*
<S> <C> <C> <C> <C> <C>
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>
+ As of _______, 1995, the single class of shares previously offered by the
Fund has been redesignated as Class A Shares.
* 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)
INDEPENDENCE ONE PRIME MONEY MARKET FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR A CLASS A SHARE+ OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
YEAR ENDED APRIL 30,
1995* 1994 1993 1992 1991] 1990**
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING
OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- -----------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- -----------------------------------------
Net investment income 0.02 0.03 0.03 0.05 0.07 0.08
- -----------------------------------------
LESS DISTRIBUTIONS
- -----------------------------------------
Dividends to shareholders
from net investment income (0.02) (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 $ 1.00
- ----------------------------------------- --------- --------- --------- --------- --------- -----------
TOTAL RETURN*** 1.97% 2.73% 2.99% 4.89% 7.55% 7.99%
- -----------------------------------------
RATIOS TO AVERAGE NET ASSETS
- -----------------------------------------
Expenses 0.61%(a) 0.59% 0.58% 0.54% 0.53% 0.40%(a)
- -----------------------------------------
Net investment income 3.85%(a) 2.70% 2.91% 4.73% 7.26% 8.24%(a)
- -----------------------------------------
Expense waiver/
reimbursement (b) 0.00%(a) 0.02% 0.04% 0.08% 0.08% 0.23%(a)
- -----------------------------------------
SUPPLEMENTAL DATA
- -----------------------------------------
Net assets, end of period
(000 omitted) $288,034 $310,588 $423,355 $309,009 $371,994 $328,434
- -----------------------------------------
</TABLE>
+ As of _______, 1995, the single class of shares previously offered by the
Fund has been redesignated as Class A Shares.
* Six months ended October 31, 1994 (unaudited). The complete financial
statements for the six months ended October 31, 1994, which, along with this
Financial Highlights table, comprise the Fund's semi-annual report, are
contained in the Fund's statement of additional information.
** Reflects operations for the period from June 1, 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.
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.
The Fund currently offers two classes of shares for sale: Class A Shares and
Class B Shares. The classes of shares represent interests in one common
investment portfolio but differ in that Class A Shares will be subject to a
shareholder servicing fee paid by the Fund pursuant to a Shareholder Services
Plan, while Class B Shares, which will be sold primarily to certain
institutional investors, will not be subject to such a Plan and will not incur
such shareholder servicing fees. This prospectus relates only to Class A Shares
("Shares"). Shares 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. 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 Ratings Group ("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 total
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 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 seller's failure to complete these transactions may cause the
Fund to miss a price or yield considered to be advantageous. 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.
Accordingly, the Fund may pay more/less than the market value of the securities
on the settlement date.
The Fund may dispose of a commitment prior to settlement if the adviser deems it
appropriate to do so. In addition, the Fund may enter in transactions to sell
its purchase commitments to third parties at current market values and
simultaneously acquire other commitments to purchase similar securities at later
dates. The Fund may realize short-term profits or losses upon the sale of such
commitments.
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 invesment 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 investment companies only in
open-market transactions involving only customary broker's commissions (although
the Fund does not expect to incur any broker's commissions in connection with
its purchases). The Fund's adviser will waive its investment advisory fee on
assets invested in securities of other open-end investment companies. However,
these limitations are not applicable if the securities are acquired in a merger,
consolidation, reorganization, or acquisition of 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
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
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 fifth
largest bank holding company in terms of total assets, as of December 31,
1994, 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 $9
billion. Of this amount, IOCM and the Trust Division have investment
discretion over $2.2 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 $300 million in taxable, short-term instruments.
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 CLASS A 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.
SHAREHOLDER SERVICES PLAN. The Fund has adopted a Shareholder Services Plan
(the "Plan") with respect to Class A Shares under which it may make payments of
up to 0.25 of 1% of the average daily net asset value of Class A Shares to
obtain certain personal services for shareholders and the maintenance of
shareholder accounts ("shareholder services"). The Fund has entered into a
Shareholder Services Agreement with Michigan National Bank, under which Michigan
National Bank will either perform shareholder services directly or will select
financial institutions to perform shareholder services. Financial institutions
will receive fees based upon Class A 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 Fund and Michigan National Bank.
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 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
for each portfolio in Independence One Mutual Funds. 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.
INDEPENDENT AUDITORS. The independent auditors for the Fund are KPMG Peat
Marwick LLP, Pittsburgh, Pennsylvania.
NET ASSET VALUE
- --------------------------------------------------------------------------------
The Fund attempts to stabilize the net asset value of Shares at $1.00 by valuing
the portfolio securities using the amortized cost method. The net asset value
per Share is determined by adding the interest of Shares in the value of all
securities and other assets of the Fund, subtracting the interest of Shares in
the liabilities of the Fund and those attributable to Shares, 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 CLASS A SHARES
- --------------------------------------------------------------------------------
SHARE PURCHASES
Shares 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 must 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 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 toll-free 1-800-334-2292 to purchase
Shares through Michigan National Bank or Independence One. In addition,
investors may purchase Shares 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--Class A Shares." 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. 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--Class A 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 in the Shares 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 Shares. 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
Shares are sold at their net asset value next determined after an order is
received. There is no sales charge imposed by the Fund for Shares.
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 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.
Under limited circumstances, arrangements may be made with Michigan National
Bank for same-day receipt of purchase orders, to earn dividends that day,
if such orders are received before 3:00 p.m. (Eastern time). Investors
interested in establishing such arrangements
are requested to call Michigan National Bank at 1-800-334-2292, and are
reminded that the Fund does reserve the right to refuse any purchase request.
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 Michigan Municipal Cash Fund, Independence One U.S.
Treasury Money Market Fund, and Independence One U.S. Government Securities
Fund. Shareholders of Class A Shares 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.
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 Class A 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 of Class A Shares 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 brokers
directly.
An authorization form permitting the Fund to accept telephone exchange requests
on behalf of Class A Shares 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 will not receive a dividend from the Fund
on the date of the exchange.
Shareholders of Class A Shares 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, an investor
may exchange shares by sending a written request to their authorized broker
directly.
REDEEMING CLASS A SHARES
- --------------------------------------------------------------------------------
Shares are redeemed 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 Shares purchased through that program.
REDEEMING BY CHECK. At the shareholder's request, Federated Services Company
will establish a checking account for redeeming 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. Shares may be redeemed by telephoning a Michigan National Bank or
an Independence One representative at 1-800-334-2292. In addition, shareholders
may redeem Shares 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 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 class designation, 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 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.
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 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.
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
affecting only a particular portfolio or class, only shares of that portfolio 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 January 24, 1995,
Michigan National Bank may for certain purposes be deemed to control the Fund
because it is owner of record of certain Class A Shares of the Fund.
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
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.
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.
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.
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 for Class A
Shares.
The yield of Class A Shares represents the annualized rate of income earned on
an investment in Class A Shares 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 Class A Shares 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.
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 Class A Shares after reinvesting all income distributions. It
is calculated by dividing that change by the initial investment and is expressed
as a percentage.
Yield and effective yield will be calculated separately for Class A Shares and
Class B Shares. Because Class A Shares are subject to a Shareholder Services
Plan fee, the yield and effective yield of Class B Shares for the same period
may exceed that of Class A Shares.
From time to time, the Fund may advertise its performance using certain
financial publications and/ or compare its performance to certain indices.
OTHER CLASSES OF SHARES
- --------------------------------------------------------------------------------
Class B Shares are sold as an investment vehicle primarily for institutions,
corporations, and fiduciaries. Class B Shares are subject to a minimum initial
investment of $1,000,000. Class B Shares are sold at net asset value and are not
subject to a Shareholder Services Fee. Class A Shares are subject to a
Shareholder Services Fee of up to 0.25 of 1% of Class A Shares' average daily
net assets.
The amount of dividends payable to Class A Shares will be less than those
payable to Class B Shares by the difference between Class Expenses and
shareholder service expenses borne by shares of each respective class.
The stated advisory fee is the same for both classes of shares.
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
---------------------------------------------------------------------------------- --------------
+REPURCHASE AGREEMENTS--25.3%
- -------------------------------------------------------------------------------------------------
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. Effective the date of this
prospectus, the Trust offers two classes of shares of the Fund: Class A Shares
and Class B Shares.
(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.
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:
<TABLE>
<CAPTION>
YEAR ENDED APRIL 30,
1994 1993
<S> <C> <C>
- ------------------------------------------------------------------------------ ---------------- ----------------
Shares sold 2,413,011,015 2,358,845,331
- ------------------------------------------------------------------------------
Shares issued to shareholders in payment of dividends declared 2,867,186 3,451,415
- ------------------------------------------------------------------------------
Shares redeemed (2,528,644,351) (2,247,951,529)
- ------------------------------------------------------------------------------ ---------------- ----------------
Net change resulting from Fund share transactions (112,766,150) 114,345,217
- ------------------------------------------------------------------------------ ---------------- ----------------
</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 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.
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.
SHAREHOLDER SERVICES PLAN FEE--Effective December 6, 1994, the Trustees adopted
a Shareholder Services Plan on behalf of the Class A Shares of the Fund. Under
the terms of a Shareholder Services Agreement with Michigan National Bank, the
Class A Shares of the Fund may pay up to 0.25 of 1% of average net assets of
Class A Shares for the period. This fee is to obtain certain personal services
for shareholders and to maintain the shareholder accounts.
For the fiscal year ended April 30, 1994, Class A Shares did not incur a
shareholder services fee.
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.
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 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 LLP
Pittsburgh, Pennsylvania
June 3, 1994
INDEPENDENCE ONE
MUTUAL FUNDS
INDEPENDENCE ONE PRIME
MONEY MARKET FUND--CLASS A 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
DISTRIBUTOR
Federated Securities Corp.
Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
CUSTODIAN, TRANSFER AGENT AND
DIVIDEND DISBURSING AGENT
State Street Bank and Trust Company
P.O. Box 1119
Boston, Massachusetts 02103
INDEPENDENT AUDITORS
KPMG Peat Marwick LLP
One Mellon Bank Center
Pittsburgh, Pennsylvania 15219
Prospectus dated
___________________________, 1995
9042806A (2/95)
INDEPENDENCE ONE PRIME MONEY MARKET FUND
(A PORTFOLIO OF INDEPENDENCE ONE MUTUAL FUNDS)
CLASS B SHARES
PROSPECTUS
The Class B Shares offered by this prospectus represent interests in
Independence One Prime Money Market 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.
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.
Shares of the Fund are intended to be sold as an investment vehicle primarily
for institutions, corporations and fiduciaries. Shareholders can invest,
reinvest, or redeem shares at any time without charge or penalty imposed by the
Fund.
This prospectus contains the information you should read and know before you
invest in Class B Shares. Keep this prospectus for future reference.
The Fund has also filed a Combined Statement of Additional Information for Class
A Shares and Class B Shares dated , 1995, with the Securities and
Exchange Commission. The information contained in the Combined Statement of
Additional Information is incorporated by reference into this prospectus. You
may request a copy of the Combined 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 , 1995
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
SUMMARY OF FUND EXPENSES 1
- ------------------------------------------------------
GENERAL INFORMATION 2
- ------------------------------------------------------
INVESTMENT INFORMATION 2
- ------------------------------------------------------
Investment Objective 2
Investment Policies 2
Acceptable Investments 2
Variable Rate Demand Notes 3
Bank Instruments 3
Short-Term Credit Facilities 3
Asset-Backed Securities 3
Credit Enhancement 3
Demand Features 4
Ratings 4
Repurchase Agreements 4
Restricted and Illiquid Securities 4
When-Issued and Delayed
Delivery Transactions 5
Investing in Securities of Other
Investment Companies 5
Investment Risks 6
Investment Limitations 6
Regulatory Compliance 6
INDEPENDENCE ONE MUTUAL FUNDS
INFORMATION 7
- ------------------------------------------------------
Management of the Trust 7
Board of Trustees 7
Investment Adviser 7
Advisory Fees 7
Adviser's Background 7
Distribution of Class B Shares 7
Administration of the Fund 8
Administrative Services 8
Custodian 8
Transfer Agent and
Dividend Disbursing Agent 8
Independent Auditors 8
Expenses of the Fund and
Class B Shares 8
NET ASSET VALUE 9
- ------------------------------------------------------
INVESTING IN CLASS B SHARES 9
- ------------------------------------------------------
Share Purchases 9
To Place an Order 9
Minimum Investment Required 10
Cash Sweep Program 10
Participating Depository Institutions 10
What Shares Cost 10
Certificates and Confirmations 10
Dividends 10
Capital Gains 11
EXCHANGE PRIVILEGE 11
- ------------------------------------------------------
Exchange by Telephone 11
Written Exchange 12
REDEEMING CLASS B SHARES 12
- ------------------------------------------------------
Cash Sweep Customers 12
By Telephone 13
By Mail 13
Accounts with Low Balances 14
SHAREHOLDER INFORMATION 14
- ------------------------------------------------------
Voting Rights 14
Massachusetts Partnership Law 15
EFFECT OF BANKING LAWS 15
- ------------------------------------------------------
TAX INFORMATION 16
- ------------------------------------------------------
Federal Income Tax 16
PERFORMANCE INFORMATION 16
- ------------------------------------------------------
OTHER CLASSES OF SHARES 17
- ------------------------------------------------------
FINANCIAL HIGHLIGHTS--CLASS A SHARES 18
- ------------------------------------------------------
ADDRESSES 20
- ------------------------------------------------------
SUMMARY OF FUND EXPENSES
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
SHAREHOLDER TRANSACTION EXPENSES
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 Fee (as a percentage of amount redeemed, if applicable)....................................... None
Exchange Fee............................................................................................. None
ANNUAL CLASS B SHARES OPERATING EXPENSES*
(As a percentage of projected average net assets)
Management Fee (after waiver)(1)......................................................................... .15%
12b-1 Fees............................................................................................... None
Total Other Expenses..................................................................................... .21%
Total Class B Shares Operating Expenses(2).......................................................... .36%
</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) The Total Class B Shares Operating Expenses are estimated to be .61% absent
the anticipated voluntary waiver detailed in note (1).
* Annual Class B Shares Operating Expenses are estimated based on expenses
expected to be incurred during the fiscal year ending April 30, 1996. During
the course of this period, expenses may be more or less than the amount
shown.
THE PURPOSE OF THIS TABLE IS TO ASSIST AN INVESTOR IN UNDERSTANDING THE
VARIOUS COSTS AND EXPENSES THAT A SHAREHOLDER OF CLASS B SHARES WILL BEAR,
EITHER DIRECTLY OR INDIRECTLY. FOR MORE COMPLETE DESCRIPTIONS OF THE VARIOUS
COSTS AND EXPENSES, SEE "INDEPENDENCE ONE MUTUAL FUNDS
INFORMATION" AND "INVESTING IN CLASS B SHARES." Wire-transferred redemptions of
less than $5,000 may be subject to additional fees.
<TABLE>
<S> <C> <C>
EXAMPLE 1 YEAR 3 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 for Class B Shares.......................................... $4 $12
</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. THIS
EXAMPLE IS BASED ON ESTIMATED DATA FOR THE FISCAL YEAR ENDING APRIL 30, 1996.
The information set forth in the foregoing table and example relates only
to Class B Shares of the Fund. The Fund also offers another class of shares
called Class A Shares. Class B Shares and Class A Shares are subject to certain
of the same expenses; however, Class A Shares are subject to a maximum
Shareholder Services Fee of 0.25 of 1% of the Class A Shares' average daily net
assets. See "Other Classes of Shares."
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.
The Fund currently offers two classes of shares for sale: Class A Shares and
Class B Shares. The classes of shares represent interests in one common
investment portfolio but differ in that Class A Shares will be subject to a
shareholder servicing fee paid by the Fund pursuant to a Shareholder Services
Plan, while Class B shares, which will be sold primarily to certain
institutional investors, will not be subject to such a Plan and will not incur
such shareholder servicing fees. This prospectus relates only to Class B Shares
("Shares"). Shares 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. Information about other
portfolios of the Trust may be obtained by calling the toll-free number
appearing on the cover of this prospectus.
A minimum initial investment of $1,000,000 is required.
The Fund attempts to stabilize the value of a Share at $1.00. 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 Ratings Group ("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 total
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 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 seller's failure to complete these transactions may cause the
Fund to miss a price or yield considered to be advantageous. 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.
Accordingly, the Fund may pay more/less than the market value of the securities
on the settlement date.
The Fund may dispose of a commitment prior to settlement if the adviser deems it
appropriate to do so. In addition, the Fund may enter in transactions to sell
its purchase commitments to third parties at current market values and
simultaneously acquire other commitments to purchase similar securities at later
dates. The Fund may realize short-term profits or losses upon the sale of such
commitments.
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 invesment 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 investment companies only in
open-market transactions involving only customary broker's commissions (although
the Fund does not expect to incur any broker's commissions in connection with
its purchases). The Fund's adviser will waive its investment advisory fee on
assets invested in securities of other open-end investment companies. However,
these limitations are not applicable if the securities are acquired in a merger,
consolidation, reorganization, or acquisition of 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
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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
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 fifth
largest bank holding company in terms of total assets, as of December 31,
1994, 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 $9
billion. Of this amount, IOCM and the Trust Division have investment
discretion over $2.2 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 $300 million in taxable, short-term instruments.
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 CLASS B 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.
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 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
for each portfolio in Independence One Mutual Funds. 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.
INDEPENDENT AUDITORS. The independent auditors for the Fund are KPMG Peat
Marwick LLP, Pittsburgh, Pennsylvania.
EXPENSES OF THE FUND AND CLASS B SHARES
Holders of Shares pay their allocable share of Fund and Trust expenses. The
Trust expenses for which holders of Shares pay their allocable share include,
but are not limited to: the cost of organizing the Trust and continuing its
existence; registering the Trust with federal and state securities authorities;
Trustees' fees; auditors' fees; the cost of meetings of Trustees; legal fees of
the Trust; association membership dues and such non-recurring and extraordinary
items as may arise from time to time.
The Fund expenses for which holders of Shares pay their allocable portion
include, but are not limited to: registering the Fund and shares of the Fund
under state and federal law; investment advisory services, taxes and
commissions; custodian fees; insurance premiums; auditors' fees; and such
non-recurring and extraordinary items as may arise from time to time.
At present, no expenses are allocated to Shares as a class. However, the
Trustees reserve the right to allocate certain other expenses to the holders of
Shares as they deem appropriate ("Class Expenses"). In any case, Class Expenses
would be limited to: transfer agent fees as identified by the transfer agent as
attributable to holders of Shares; printing and postage expenses related to
preparing and distributing materials such as shareholder reports, prospectuses
and proxies to current shareholders; registration fees paid to the Securities
and Exchange Commission and to state securities commissions; expenses related to
administrative personnel and services as required to support holders of Shares;
legal fees relating solely to Shares; and Trustees' fees incurred as a result of
issues relating solely to Shares.
NET ASSET VALUE
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The Fund attempts to stabilize the net asset value of Shares at $1.00 by valuing
the portfolio securities using the amortized cost method. The net asset value
per Share is determined by adding the interest of Shares in the value of all
securities and other assets of the Fund, subtracting the interest of Shares in
the liabilities of the Fund and those attributable to Shares, 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 CLASS B SHARES
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SHARE PURCHASES
Shares 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 must 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 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 toll-free 1-800-334-2292 to purchase
Shares through Michigan National Bank or Independence One. In addition,
investors may purchase Shares 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--Class B Shares." 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. 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--Class B 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 in Shares by an investor is $1,000,000. An
institutional investor's minimum investment will be calculated by combining all
accounts it maintains with the Fund for Class B Shares.
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 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 Shares. 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
Shares are sold at their net asset value next determined after an order is
received. There is no sales charge imposed by the Fund for Shares.
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 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.
Under limited circumstances, arrangements may be made with Michigan National
Bank for same-day receipt of purchase orders, to earn dividends that day,
if such orders are received before 3:00 p.m. (Eastern time). Investors
interested in establishing such arrangements
are requested to call Michigan National Bank at 1-800-334-2292, and are
reminded that the Fund does reserve the right to refuse any purchase request.
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
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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 Class B Shares 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.
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 Class B 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 of Class B Shares 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 brokers
directly.
An authorization form permitting the Fund to accept telephone exchange requests
on behalf of Class B Shares 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 will not receive a dividend from the Fund
on the date of the exchange.
Shareholders of Class B Shares 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, an investor
may exchange shares by sending a written request to their authorized broker
directly.
REDEEMING CLASS B SHARES
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Shares are redeemed 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 Shares purchased through that program.
BY TELEPHONE. Shares may be redeemed by telephoning a Michigan National Bank or
an Independence One representative at 1-800-334-2292. In addition, shareholders
may redeem Shares 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 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 class designation, 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 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.
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 the required minimum value of $1,000,000 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.
SHAREHOLDER INFORMATION
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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
affecting only a particular portfolio or class, only shares of that portfolio 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 January 24, 1995,
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 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
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.
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.
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.
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 for Class B
Shares.
The yield of Class B Shares represents the annualized rate of income earned on
an investment in Class B Shares 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 Class B Shares 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.
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 Class B Shares after reinvesting all income distributions. It
is calculated by dividing that change by the initial investment and is expressed
as a percentage.
Yield and effective yield will be calculated separately for Class A Shares and
Class B Shares. Because Class A Shares are subject to a Shareholder Services
Plan fee, the yield and effective yield of Class B Shares for the same period
may exceed that of Class A Shares.
From time to time, the Fund may advertise its performance using certain
financial publications and/ or compare its performance to certain indices.
OTHER CLASSES OF SHARES
- --------------------------------------------------------------------------------
Class A Shares are sold as an investment vehicle primarily for individuals,
institutions, corporations, and fiduciaries. Class A Shares are subject to a
minimum initial investment of $1,000. Class A Shares are sold at net asset value
and are subject to a Shareholder Services Fee of up to 0.25 of 1% of Class A
Shares' average daily net assets. Class B Shares are not subject to a
Shareholder Services Fee.
The amount of dividends payable to Class A Shares will be less than those
payable to Class B Shares by the difference between Class Expenses and
shareholder service expenses borne by shares of each respective class.
The stated advisory fee is the same for both classes of shares.
INDEPENDENCE ONE PRIME MONEY MARKET FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR A CLASS A SHARE+ OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
YEAR ENDED APRIL 30,
1994 1993 1992 1991 1990*
<S> <C> <C> <C> <C> <C>
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>
+ As of , 1995, the single class of shares previously offered by
the Fund has been redesignated as Class A Shares.
* 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.
INDEPENDENCE ONE PRIME MONEY MARKET FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR A CLASS A SHARE+ OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
YEAR ENDED APRIL 30,
1995* 1994 1993 1992 1991 1990**
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING
OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- -----------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- -----------------------------------------
Net investment income 0.02 0.03 0.03 0.05 0.07 0.08
- -----------------------------------------
LESS DISTRIBUTIONS
- -----------------------------------------
Dividends to shareholders
from net investment income (0.02) (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 $ 1.00
- ----------------------------------------- --------- --------- --------- --------- --------- -----------
TOTAL RETURN*** 1.97% 2.73% 2.99% 4.89% 7.55% 7.99%
- -----------------------------------------
RATIOS TO AVERAGE NET ASSETS
- -----------------------------------------
Expenses 0.61%(a) 0.59% 0.58% 0.54% 0.53% 0.40%(a)
- -----------------------------------------
Net investment income 3.85%(a) 2.70% 2.91% 4.73% 7.26% 8.24%(a)
- -----------------------------------------
Expense waiver/
reimbursement (b) 0.00%(a) 0.02% 0.04% 0.08% 0.08% 0.23%(a)
- -----------------------------------------
SUPPLEMENTAL DATA
- -----------------------------------------
Net assets, end of period
(000 omitted) $288,034 $310,588 $423,355 $309,009 $371,994 $328,434
- -----------------------------------------
</TABLE>
+ As of , 1995, the single class of shares previously offered by
the Fund has been redesignated as Class A Shares.
* Six months ended October 31, 1994 (unaudited). The complete financial
statements for the six months ended October 31, 1994, which, along with this
Financial Highlights table, comprise the Fund's semi-annual report, are
contained in the Fund's statement of additional information.
** Reflects operations for the period from June 1, 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.
INDEPENDENCE ONE
MUTUAL FUNDS
INDEPENDENCE ONE PRIME
MONEY MARKET FUND--CLASS B 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
DISTRIBUTOR
Federated Securities Corp.
Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
CUSTODIAN, TRANSFER AGENT AND
DIVIDEND DISBURSING AGENT
State Street Bank and Trust Company
P.O. Box 1119
Boston, Massachusetts 02103
INDEPENDENT AUDITORS
KPMG Peat Marwick LLP
One Mellon Bank Center
Pittsburgh, Pennsylvania 15219
Prospectus dated
, 1995
9042806A (1/95)
INDEPENDENCE ONE
PRIME MONEY MARKET FUND
(A PORTFOLIO OF INDEPENDENCE ONE MUTUAL FUNDS)
CLASS A SHARES
CLASS B SHARES
COMBINED STATEMENT OF ADDITIONAL INFORMATION
This Combined Statement of Additional Information should be read with
the respective prospectuses for Class A Shares and Class B Shares of
Independence One Prime Money Market Fund (the "Fund") dated _______
, 1995. 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 _______ , 1995
[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
Trustees' Compensation <R/> 5
Trustee Liability 5
INVESTMENT ADVISORY SERVICES 6
- ---------------------------------------------------------------
Adviser to the Fund 6
Advisory Fees 6
ADMINISTRATIVE SERVICES 6
- ---------------------------------------------------------------
BROKERAGE TRANSACTIONS 6
- ---------------------------------------------------------------
PURCHASING SHARES 7
- ---------------------------------------------------------------
Shareholder Services Plan
(Class A Shares only) 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 8
TAX STATUS 9
- ---------------------------------------------------------------
The Fund's Tax Status 9
Shareholders' Tax Status 9
YIELD 9
- ---------------------------------------------------------------
EFFECTIVE YIELD 9
- ---------------------------------------------------------------
PERFORMANCE COMPARISONS 9
- ---------------------------------------------------------------
FINANCIAL STATEMENTS 10
- ---------------------------------------------------------------
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.
Shares of the Fund are currently offered in two classes: Class A Shares and
Class B Shares (individually and collectively referred to as "Shares"); and this
combined Statement of Additional Information relates to both classes of shares.
Prior to _______ , 1995, the Fund offered a single class of shares, which are
currently designated as Class A Shares.
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
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:
.Farm Credit Banks;
.National Bank for Cooperatives;
.Banks for Cooperatives;
.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. 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 on the Fund's
records at the trade date. These assets are marked to market daily and
maintained until the transaction is settled. The Fund does not intend to engage
in when-issued and delayed delivery transactions to an extent that would cause
the segregation of more than 20% of the total value of its assets.
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 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.
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.
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 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
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.
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 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 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.
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.
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
<R/>
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 Class A Shares as of January
24, 1995: Michigan National Bank, acting in various capacities for numerous
accounts owned, of record: approximately 133,949,368.56 Class A Shares (54.13%).
TRUSTEES' COMPENSATION
<TABLE>
<CAPTION>
AGGREGATE
NAME, POSITION COMPENSATION
WITH TRUST FROM TRUST+
<S> <C> <C>
Trustee $
Trustee $
Trustee $
Trustee $
Trustee $
Trustee $
</TABLE>
+The aggregate compensation is provided for the Trust which is comprised of four
portfolios. The Trust is the only investment company in the Fund complex.
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.
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, with respect to Class A Shares, 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 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 with respect to Class A Shares of
$470,126, $457,734, and $551,632, respectively.
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 respective prospectuses under "Investing in Class A Shares" or
"Investing in Class B Shares."
SHAREHOLDER SERVICES PLAN (CLASS A SHARES ONLY)
This arrangement permits the payment of fees to Michigan National Bank and
financial institutions to cause services to be provided which are necessary for
the maintenance of shareholder accounts and to encourage personal services to
shareholders by a representative who has knowledge of the shareholder's
particular circumstances and goals. These activities and services may include,
but are not limited to: providing office space, equipment, telephone facilities,
and various clerical, supervisory, computer and other personnel as necessary or
beneficial to establish and maintain shareholder accounts and records;
processing purchase and redemption transactions and automatic investments of a
client's account cash balance; answering routine client inquiries; and assisting
clients in changing dividend options, account designations, and addresses. By
adopting the Shareholder Services Plan on behalf of Class A Shares, the Board of
Trustees expects that the Class A Shares will benefit by: (1) providing personal
services to shareholders; (2) investing shareholder assets with a minimum of
delay and administrative detail; (3) enhancing shareholder recordkeeping
systems; and (4) responding promptly to shareholders' requests and inquiries
concerning their accounts.
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. Federated Services Company
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 either
class of shares, 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 either class
of shares, 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 respective prospectuses for Class A and Class B
Shares 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 respective prospectuses under "Redeeming Class A Shares" or
"Redeeming Class B 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 SEC 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 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
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.
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% for
Class A Shares.
The Fund calculates its yield for both classes of Shares 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 Shares,
the performance will be reduced for those shareholders paying those fees.
EFFECTIVE YIELD
- --------------------------------------------------------------------------------
The Fund's effective yield for the seven-day period ended April 30, 1994, was
3.13% for Class A Shares.
The Fund's effective yield for both classes of shares 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 performance of both classes of shares 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
instrument 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 either class of shares may refer
to total return. Total return is the historic change in the value of an
investment in either class of shares based on the monthly reinvestment of
dividends over a specified period of time.
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
The financial statements for the six months ended October 31, 1994 are
incorporated herein by reference to the Fund's Semi-Annual Report dated October
31, 1994 (File Nos. 33-26516 and 811-5752). A copy of the Semi-Annual Report may
be obtained without charge by contacting the Fund at the address located on the
back cover of the prospectus.
9042806B (2/95)
PART C. OTHER INFORMATION.
Item 24. Financial Statements and Exhibits:
(a) Financial Statements (All Funds - filed in Part A;
Independence One Prime Money Market Fund -
also incorporated into the Fund's Statement of
Additional Information by reference to the
Fund's Semi-Annual Report dated October 31,
1994 as per Rule 3-18 of Regulation S-X).
(b) Exhibits:
(1) Conformed 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.);
(vi) Amendment No. 6 to the Declaration of Trust.
dated December 9, 1991;+
(vii) Amendment No. 8 to the Declaration of Trust,
dated December 6, 1994; +
(viii) Certification dated December 6, 1994; +
(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);
+ 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)
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)
(6) Copy of Distributor's Contract of the Registrant
(1.);
(i) Conformed Copy of Exhibit D to the
Distributor's Contract; +
(ii) Conformed Copy of Exhibit E to the
Distributor's Contract; +
(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.);
(9) (i) Conformed Copy of Agreement for Fund Accounting,
Shareholder Recordingkeeping, and Custody Services
Procurement;+
(ii) Form of Shareholder Services Plan; +
(iii) Form of Shareholder Services Agreement;+
(10) Copy of Opinion and Consent of Counsel as to
legality of shares being registered (2.);
+ 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)
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)
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)
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)
(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) Financial Data Schedule for Independence One
Prime Money Market Fund; +
(18) (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;(9.)
____________________
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)
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)
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. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 9 on Form N-1A filed June 29, 1994. (File Nos. 33-26516
and 811-5752)
Item 25. Persons Controlled by or Under Common Control with Registrant:
None
Item 26. Number of Holders of Securities:
Number of Record Holders
Title of Class Portfolio name as of February 3, 1995*
Shares of Independence One Prime 1,741
beneficial Money Market Fund (Class A)*
interest
Independence One U.S. 536
Treasury Money Market Fund
Independence One Michigan 732
Municipal Cash Fund
Independence One U.S. 4
Government Securities Fund
*Figure is as of January 24, 1995 for Independence One Prime Money
Market Fund (Class A Shares).
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 fifth largest bank holding company in terms of
total assets, as of December 31, 1994, 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 $2.2 billion.
_____________
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)
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 $300 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.
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, Development
Company.
Sidney E. Forbes Director Director, Michigan
National Corporation;
Partner, Forbes/Cohen
Properties.
Other Substantial
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.
Other Substantial
Position with Business, Profession,
Name the Adviser Vocation or
Employment
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 Director, President President and Chief
and Chief Operating Operating Officer,
Officer Michigan National
Corporation
Stanton Kinnie Smith, Jr. Director Director, Michigan
National Corporation;
Vice Chairman, CMS
Energy Corporation.
Walter H. Teninga Director Director, Michigan
National Corporation;
Retired 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.
Lawrence L. Gladchun Senior Vice Senior Vice
President,
President, General General Counsel and
Counsel and Secretary Secretary, Michigan
National Corporation.
Other Substantial
Position with Business, Profession,
Name the Adviser Vocation or
Employment
Richard C. Webb Senior Vice Senior Vice
President,
President Michigan National
Commercial Banking Corporation.
Joseph J. Whiteside Executive Vice President
and Chief Financial
Officer
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.
Marc L. Belsky First Vice President First Vice President
Planning and Analysis Michigan National
Corporation.
Edward H. Sondker First Vice President President and CEO
Independence One Bank
of California
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: Alexander Hamilton
Funds; American Leaders Fund, Inc.; Annuity Management
Series; Arrow Funds; Automated Cash Management Trust;
Automated Government Money Trust; BayFunds; The Biltmore
Funds; The Biltmore Municipal Funds; California Municipal
Cash Trust; Cash Trust Series, Inc.; Cash Trust Series II;
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 Institutional 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; First Union Funds; Fixed Income Securities, Inc.;
Fortress Adjustable Rate U.S. Government Fund, Inc.;
Fortress Municipal Income Fund, Inc.; Fortress Utility Fund,
Inc.; Fountain Square Funds; Fund for U.S. Government
Securities, Inc.; Government Income Securities, Inc.; High
Yield Cash Trust; Independence One Mutual Funds; 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; Marshall
Funds, Inc.; Money Market Management, Inc.; The Medalist
Funds; Money Market Obligations Trust; Money Market Trust;
The Monitor Funds; Municipal Securities Income Trust;
Newpoint Funds; New York Municipal Cash Trust; 111 Corcoran
Funds; Peachtree Funds; The Planters Funds; RIMCO Monument
Funds; The Shawmut Funds; Short-Term Municipal Trust;
SouthTrust Vulcan Funds; Star Funds; The Starburst Funds;
The Starburst Funds II; Stock and Bond Fund, Inc.; Sunburst
Funds; Targeted Duration Trust; Tax-Free Instruments Trust;
Tower Mutual Funds; 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; Vision Fiduciary Funds, Inc.; Vision
Group of Funds, Inc.; and 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)
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address With Underwriter With Registrant
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 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.
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address With Underwriter With Registrant
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
Solon A. Person, IV 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
Thomas E. Territ Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
John B. Bohnet 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
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address With Underwriter With Registrant
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
Kevin J. Crenny Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
Daniel T. Culbertson 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
Joseph L. Epstein 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
Michael D. Fitzgerald 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
Craig S. Gonzales Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address With Underwriter With Registrant
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
Stephen A. LaVersa 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
Richard C. Mihm 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
Robert D. Oehlschlager Vice President,
Federated Investors Tower Federated Securities Corp. --
Pittsburgh, PA 15222-3779
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address With Underwriter With Registrant
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
John C. Shelar, Jr. 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
Jamie M. Teschner 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
Paul A. Uhlman 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
Michael P. Wolff 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
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address With Underwriter With Registrant
Charlene H. Jennings 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, Assistant
Federated Investors Tower Federated Securities Corp. Secretary
Pittsburgh, PA 15222-3779
(c) Not applicable.
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, has duly caused this Amendment to its Registration Statement to
be signed on its behalf by the undersigned, thereto duly authorized, in
the City of Pittsburgh and Commonwealth of Pennsylvania, on the 8th day
of February, 1995.
INDEPENDENCE ONE MUTUAL FUNDS
BY: /s/ Gail Cagney
Gail Cagney, Assistant Secretary
Attorney in Fact for Edward C. Gonzales
February 8, 1995
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/Gail Cagney
Gail Cagney Attorney In Fact February 8, 1995
ASSISTANT SECRETARY For the Persons
Listed Below
NAME TITLE
Edward C. Gonzales* President and Treasurer
(Principal Financial and
Accounting Officer)
Robert E. Baker.* Trustee
Harrold Berry* Trustee
Clarence G. Frame* Trustee
HArry J. Nederlander* Trustee
Thomas S. Wilson* Trustee
* By Power of Attorney
Exhibit 11(i) under N-1A
Exhibit 23 under Item 601/Reg SK
INDEPENDENT AUDITORS' CONSENT
The Trustees and Shareholders
Independence One Mutual Funds
With respect to the Prospectus and Statement of Additional Information
included in this Post-Effective Amendment No. 10 to the Registration
Statement on Form N-1A of Independence One Mutual Funds, we consent to
the incorporation by reference of our report, dated June 3, 1994, on the
Independence One Prime Money Market Fund and to the references to our
Firm under the headings "Financial Highlights" and "Administration of
the Fund- Independent Auditors" in Part A of this Registration
Statement.
By:KPMG Peat Marwick LLP
KPMG Peat Marwick LLP
Pittsburgh, Pennsylvania
February 7, 1995
Form N-1A Exhibit 1(vi)
Regulation S-K Exhibit No. 3(a)(i)
INDEPENDENCE ONE MUTUAL FUNDS
Amendment No. 6
to
DECLARATION OF TRUST
dated January 9, 1989
This Declaration of Trust is amended as follows:
A. Strike Section 5 of Article III from the Declaration of Trust
and substitute in its place the following:
"Section 5. Establishment and Designation of Series or
Class.
Without limiting the authority of the Trustees set forth
in Article XII, Section 8, inter alia, to establish and
designate any additional series or class or to modify
the rights and preferences of any existing Series or
Class, the series and classes are and shall be:
Independence One Michigan Municipal Cash Fund-
Investment Shares, Independence One Michigan Municipal
Cash Fund-Trust Shares, Independence One Prime Money
Market Fund-Investment Shares, Independence One Prime
Money Market Fund-Trust Shares, Independence One U.S.
Treasury Money Market Fund, Independence One U.S.
Government Securities Fund-Investment Shares and
Independence One U.S. Government Securities Fund-Trust
Shares."
The undersigned Secretary of Independence One Mutual Funds hereby
certifies that the above-stated amendment is a true and correct
Amendment to the Declaration of Trust, as adopted by the Board of
Trustees on
December 9, 1991.
WITNESS the due execution hereof this 9th day of December, 1991.
/s/ Jay S. Neuman
Jay S. Neuman, Secretary
Form N-1A Exhibit 1(vii)
Regulation S-K Exhibit No. 3(a)(ii)
INDEPENDENCE ONE MUTUAL FUNDS
Amendment No. 8
to
DECLARATION OF TRUST
dated January 9, 1989
This Declaration of Trust is amended as follows:
A. Revise Section 5 of Article III of the Declaration of Trust to
read as set forth on January 9, 1989; and then
B. Strike the first paragraph of Section 5 of Article III from
the Declaration of Trust and substitute in its place the
following:
"Section 5. Establishment and Designation of Series or
Class.
Without limiting the authority of the Trustees set forth
in Article XII, Section 8, inter alia, to establish and
designate any additional Series or Class or to modify
the rights and preferences of any existing Series or
Class, the Series and Classes of the Trust shall be and
are established and designated as Independence One
Michigan Municipal Cash Fund-Investment Shares,
Independence One Michigan Municipal Cash Fund-Trust
Shares, Independence One Prime Money Market Fund-Class
A Shares, Independence One Prime Money Market Fund-
Class B Shares, Independence One U.S. Treasury Money
Market Fund, Independence One U.S. Government
Securities Fund-Investment Shares and Independence One
U.S. Government Securities Fund-Trust Shares."
The undersigned Secretary of Independence One Mutual Funds hereby
certifies that the above-stated amendment is a true and correct
Amendment to the Declaration of Trust, as adopted by the Board of
Trustees on
December 6, 1994.
WITNESS the due execution hereof this 6th day of December, 1994.
/s/ Gail Cagney
Gail Cagney,
Assistant Secretary
Form N-1A Exhibit 1(viii)
Regulation S-K Exhibit No. 3(a)(iii)
INDEPENDENCE ONE MUTUAL FUNDS
C E R T I F I C A T I O N
The undersigned, Assistant Secretary of Independence One Mutual
Funds (the "Trust"), hereby certifies that the following resolution was
duly adopted by the Board of Trustees of the Trust on December 6, 1994,
substantially and materially as follows and that said resolution has not
been amended or rescinded:
RESOLVED, that effective as of this date, the Declaration of
Trust shall be amended by: (1) revising Section
5 of Article III to read as set forth on January
9, 1989; and then (2) striking the first
paragraph of Section 5 of Article III in its
entirety and substituting in its place the
following:
Section 5. Establishment and Designation of
Series or Class.
Without limiting the authority of the Trustees
set forth in Article XII, Section 8, inter alia,
to establish and designate any additional Series
or Class or to modify the rights and preferences
of any existing Series or Class, the Series and
Classes of the Trust shall be and are
established and designated as Independence One
Michigan Municipal Cash Fund-Investment Shares,
Independence One Michigan Municipal Cash
Fund-Trust Shares, Independence One Prime Money
Market Fund-Class A Shares, Independence One
Prime Money Market Fund-Class B Shares,
Independence One U.S. Treasury Money Market
Fund, Independence One U.S. Government
Securities Fund-Investment Shares and
Independence One U.S. Government Securities Fund-
Trust Shares.
WITNESS the due execution hereof this 6th day of December, 1994.
/s/ Gail Cagney
Gail Cagney
Assistant Secretary
Exhibit 9 (i) under Form N-1A
Exhibit 10(i) 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 April 8, 1994, solely as it appears in 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.
ATTEST: FEDERATED SERVICES COMPANY
By: /s/ Jeannette Fisher-Garber By:_/s/ James J. Dolan
Jeannette Fisher-Garber James J. Dolan
Secretary President
ATTEST: INDEPENDENCE ONE MUTUAL FUNDS
By: /s/ Jay S. Neuman By: /s/ Edward C. Gonzales___
Name: Jay S. Neuman Name: Edward C. Gonzales
Its: Secretary Its: President
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.
ATTEST: FEDERATED SERVICES COMPANY
By: /s/ Jeannette Fisher-Garber By:_/s/ James J. Dolan
Jeannette Fisher-Garber James J. Dolan
Secretary President
ATTEST: INDEPENDENCE ONE MUTUAL FUNDS
By: /s/ Jay S. Neuman By: /s/ Edward C. Gonzales___
Name: Jay S. Neuman Name: Edward C. Gonzales
Its: Secretary Its: President
Exhibit No. 6(i) on Form N-1A
Regulation S-K Exhibit No. 1(i)
Exhibit D
to the
Distributor's Contract
Independence One Mutual Funds
Independence One Prime Money Market Fund
Class B Shares
In consideration of the mutual covenants set forth in the
Distributor's Contract dated September 26, 1991 between Independence
One Mutual Funds and Federated Securities Corp., Independence One
Mutual Funds executes and delivers this Exhibit on behalf of
Independence One Prime Money Market Fund, and with respect to the
Class B Shares thereof, first set forth in this Exhibit.
Witness the due execution hereof this 6th day of December, 1994.
ATTEST: Independence One Mutual Funds
/s/ Jay S. Neuman By: /s/ E. C. Gonzales
Secretary President
(SEAL)
ATTEST: FEDERATED SECURITIES CORP.
/s/ S. Elliott Cohan By: /s/ John W. McGonigle
Secretary Executive Vice President
(SEAL)
Exhibit No. 6(ii) on Form N-1A
Regulation S-K Exhibit No. 1(ii)
Exhibit E
to the
Distributor's Contract
INDEPENDENCE ONE MUTUAL FUNDS
Independence One Prime Money Market Fund
Class A Shares
The following provisions are hereby incorporated and made part of
the Distributor's Contract dated September 26, 1991, between
Independence One Mutual Funds and Federated Securities Corp. with
respect to the Class of shares set forth above.
1. The Trust hereby appoints FSC to engage in activities
principally intended to result in the sale of shares of the
above-listed Class ("Shares"). Pursuant to this appointment,
FSC is authorized to select a group of financial institutions
("Financial Institutions") to sell Shares at the current
offering price thereof as described and set forth in the
respective prospectuses of the Trust.
2. During the term of this Agreement, the Trust will pay FSC for
services pursuant to this Agreement, a monthly fee computed at
the annual rate of .25% of the average aggregate net asset
value of the Shares held during the month. For the month in
which this Agreement becomes effective or terminates, there
shall be an appropriate proration of any fee payable on the
basis of the number of days that the Agreement is in effect
during the month.
3. FSC may from time-to-time and for such periods as it deems
appropriate reduce its compensation to the extent any Class'
expenses exceed such lower expense limitation as FSC may, by
notice to the Trust, voluntarily declare to be effective.
4. FSC will enter into separate written agreements with various
firms to provide certain of the services set forth in
Paragraph 1 herein. FSC, in its sole discretion, may pay
Financial Institutions a periodic fee in respect of Shares
owned from time to time by their clients or customers. The
schedules of such fees and the basis upon which such fees will
be paid shall be determined from time to time by FSC in its
sole discretion.
5. FSC will prepare reports to the Board of Trustees of the Trust
on a quarterly basis showing amounts expended hereunder
including amounts paid to Financial Institutions and the
purpose for such expenditures.
In consideration of the mutual covenants set forth in the
Distributor's Contract dated September 26, 1991 between Independence
One Mutual Funds and Federated Securities Corp., Independence One
Mutual Fundsexecutes and delivers this Exhibit on behalf of the
Independence One Prime Money Market Fund, and with respect to the
Class A Shares thereof, first set forth in this Exhibit.
Witness the due execution hereof this 6th day of December, 1994.
ATTEST: Independence One Mutual Funds
/s/ Jay S. Neuman By: /s/ E.C. Gonzales
Secretary President
(SEAL)
ATTEST: FEDERATED SECURITIES CORP.
/s/ S. Elliott Cohan By:/s/ John W. McGonigle
Secretary Executive Vice President
(SEAL)
Exhibit 9 (ii) under Form N-1A
Exhibit 10(ii) under Item 601/Reg. S-
K
INDEPENDENCE ONE MUTUAL FUNDS
SHAREHOLDER SERVICES PLAN
This Shareholder Services Plan ("Plan") is adopted as of this 6th
day of December, 1994, by the Board of Trustees (the "Board") of
Independence One Mutual Funds (the "Trust"), a Massachusetts business
trust, with respect to those portfolios of the Trust (the "Funds")
and/or those classes of shares of the Funds ("Classes") set forth on the
Exhibits hereto.
1. This Plan is adopted to allow the Funds and/or Classes to
make payments as contemplated herein to obtain certain personal services
for shareholders and/or the maintenance of shareholder accounts
("Services").
2. This Plan is designed to compensate Michigan National Bank
("MNB") for providing personal services and/or the maintenance of
shareholder accounts to the Funds/Classes and their shareholders. In
compensation for the services provided pursuant to this Plan, MNB may be
paid a monthly fee computed at the annual rate not to exceed .25 of 1%
of the average aggregate net asset value of the shares of each
Fund/Class held during the month.
3. Any payments made by the Funds/Classes to MNB pursuant to
this Plan will be made pursuant to a "Shareholder Services Agreement"
between MNB and the Trust, on behalf of each Fund/Class.
4. Quarterly in each year that this Plan remains in effect, MNB
shall prepare and furnish to the Board, and the Board shall review, a
written report of the amounts expended under the Plan.
5. This Plan shall become effective with regard to each
Fund/Class (i) after approval by majority votes of: (a) the Board; and
(b) the members of the Board who are not interested persons of such
Fund/Class and have no direct or indirect financial interest in the
operation of this Plan or in any related documents to the Plan
("Independent Trustees"), cast in person at a meeting called for the
purpose of voting on the Plan.
6. This Plan shall remain in effect with respect to each
Fund/Class presently set forth on an Exhibit and any subsequent
Fund/Class added pursuant to an Exhibit during the initial year of this
Plan for the period of one year from the date set forth above and may be
continued thereafter if this Plan is approved with respect to each
Fund/Class at least annually by a majority of the Board and a majority
of the Independent Trustees, cast in person at a meeting called for the
purpose of voting on the renewal of such Plan. If this Plan is adopted
with respect to a Fund/Class after the first annual approval by the
Trustees as described above, this Plan will be effective as to that
Fund/Class upon execution of the applicable Exhibit and will continue in
effect until the next annual approval of this Plan by the Board and
thereafter for successive periods of one year subject to approval as
described above.
7. All material amendments to this Plan must be approved by a
vote of the Board and of the Independent Trustees, cast in person at a
meeting called for such purpose.
8. This Plan may be terminated as follows:
(a) at any time, without the payment of any penalty, by
the vote of a majority of the Independent Trustees or by a vote
of a majority of the outstanding voting securities of any
Fund/Class as defined in the Investment Company Act of 1940 on
sixty (60) days' written notice to the parties to this Plan; or
(b) by any party to the Plan without cause by giving the
other party at least sixty (60) days' written notice of its
intention to terminate.
9. While this Plan shall be in effect, the selection and
nomination of Independent Trustees shall be committed to the discretion
of the Independent Trustees then in office.
10. All agreements with any person relating to the
implementation of this Plan shall be in writing and any agreement
related to this Plan shall be subject to termination, without penalty,
pursuant to the provisions of Paragraph 8 herein.
11. This Plan shall be construed in accordance with and governed
by the laws of the Commonwealth of Pennsylvania.
Witness the due execution hereof this as of the date set forth
above.
Independence One Mutual Funds
By:
Title:
Attest:
Michigan National Bank
By:
Title:
Attest:
Exhibit 9 (iii) under Form N-1A
Exhibit 10(iii) under Item 601/Reg. S-K
INDEPENDENCE ONE MUTUAL FUNDS
SHAREHOLDER SERVICES AGREEMENT
AGREEMENT made as of the 6th day of December, 1994, by and between
Independence One Mutual Funds ("Trust"), on behalf of its portfolios
("Funds") and/or classes of shares of the Funds ("Classes") set forth on
the Exhibits hereto, and who have approved a Shareholder Services Plan
(the "Plan") and this form of Agreement and Michigan National Bank
("MNB").
1. The Trust hereby appoints MNB to render or cause to be
rendered personal services to shareholders of the Funds/Classes and/or
the maintenance of accounts of shareholders of the Funds/Classes
("Services"). In addition to providing Services directly to
shareholders of the Funds/Classes, MNB is hereby appointed the
Funds'/Classes' agent to select, negotiate and subcontract for the
performance of Services. MNB hereby accepts such appointments. MNB
agrees to provide or cause to be provided Services which, in its best
judgment (subject to supervision and control of the Trust's Board of
Trustees), are necessary or desirable for shareholders of the
Funds/Classes. MNB further agrees to provide the Trust, upon request, a
written description of the Services which MNB is providing hereunder.
2. During the term of this Agreement, each Fund/Class will pay
MNB and MNB agrees to accept as full compensation for its services
rendered hereunder a fee at an annual rate, calculated daily and payable
monthly, up to 0.25% of 1% of average net assets of each Fund/Class.
For the payment period in which this Agreement becomes effective
or terminates with respect to any Fund/Class, there shall be an
appropriate proration of the monthly fee on the basis of the number of
days that this Agreement is in effect with respect to such Fund/Class
during the month. To enable the Funds/Classes to comply with an
applicable exemptive order, MNB represents that the fees received
pursuant to this Agreement will be disclosed to and authorized by any
person or entity receiving Services, and will not result in an excessive
fee to MNB.
3. This Agreement shall continue in effect for one year from
the date of its execution, and thereafter for successive periods of one
year only if the form of this Agreement is approved at least annually by
the Board of Trustees, including a majority of the members of the Board
who are not interested persons of the Trust and have no direct or
indirect financial interest in the operation of the Plan or in any
related documents to the Plan ("Independent Trustees") cast in person at
a meeting called for that purpose.
4. Notwithstanding paragraph 3, this Agreement may be
terminated as follows:
(a) at any time, without the payment of any penalty, by
the vote of a majority of the Independent Trustees or by a vote
of a majority of the outstanding voting securities of any
Fund/Class as defined in the Investment Company Act of 1940 on
sixty (60) days' written notice to the parties to this
Agreement;
(b) automatically in the event of the Agreement's
assignment as defined in the Investment Company Act of 1940; and
(c) by any party to the Agreement without cause by
giving the other party at least sixty (60) days' written notice
of its intention to terminate.
5. MNB agrees to obtain any taxpayer identification number
certification from each shareholder of the Funds/Classes to which it
provides Services that is required under Section 3406 of the Internal
Revenue Code, and any applicable Treasury regulations, and to provide
each Fund/Class or its designee with timely written notice of any
failure to obtain such taxpayer identification number certification in
order to enable the implementation of any required backup withholding.
6. MNB shall not be liable for any error of judgment or mistake
of law or for any loss suffered by any Fund/Class in connection with the
matters to which this Agreement relates, except a loss resulting from
willful misfeasance, bad faith or gross negligence on its part in the
performance of its duties or from reckless disregard by it of its
obligations and duties under this Agreement. MNB shall be entitled to
rely on and may act upon advice of counsel (who may be counsel for such
Fund/Class) on all matters, and shall be without liability for any
action reasonably taken or omitted pursuant to such advice. Any person,
even though also an officer, director, partner, employee or agent of
MNB, who may be or become a member of the Trust's Board, officer,
employee or agent of any Fund/Class, shall be deemed, when rendering
services to such Fund/Class or acting on any business of such Fund/Class
(other than services or business in connection with the duties of MNB
hereunder) to be rendering such services to or acting solely for such
Fund/Class and not as an officer, director, partner, employee or agent
or one under the control or direction of MNB even though paid by MNB.
This Section 6 shall survive termination of this Agreement.
7. No provision of this Agreement may be changed, waived,
discharged or terminated orally, but only by an instrument in writing
signed by the party against which an enforcement of the change, waiver,
discharge or termination is sought.
8. MNB is expressly put on notice of the limitation of
liability as set forth in the Trust's Declaration of Trust and agrees
that the obligations assumed by each Fund/Class pursuant to this
Agreement shall be limited in any case to such Fund/Class and its assets
and that MNB shall not seek satisfaction of any such obligations from
the shareholders of such Fund, Class, the Trustees, Officers, Employees
or Agents of such Fundor Class, or any of them.
9. The execution and delivery of this Agreement have been
authorized by the MNB and signed by an authorized officer of MNB, acting
as such.
10. Notices of any kind to be given hereunder shall be in
writing (including facsimile communication) and shall be duly given if
delivered to the Trust at the following address: Federated Investors
Tower, Pittsburgh, PA 15222-3779, Attention: President; and if
delivered to MNB at 27777 Inkster Road, Farmington Hills, MI 48334,
Attention: Stacey A. Gray. .
11. 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. If any provision of this
Agreement shall be held or made invalid by a court or regulatory agency
decision, statute, rule or otherwise, the remainder of this Agreement
shall not be affected thereby. Subject to the provisions of Sections 3
and 4 hereof, this Agreement shall be binding upon and shall inure to
the benefit of the parties hereto and their respective successors and
shall be governed by Pennsylvania law; provided, however, that nothing
herein shall be construed in a manner inconsistent with the Investment
Company Act of 1940 or any rule or regulation promulgated by the
Securities and Exchange Commission thereunder.
12. This Agreement may be executed by different parties on
separate counterparts, each of which, when so executed and delivered,
shall be an original, and all such counterparts shall together
constitute one and the same instrument.
13. This Agreement shall not be assigned by any party without
the prior written consent of MNB in the case of assignment by any
Fund/Class, or of the Trust in the case of assignment by MNB, except
that any party may assign to a successor all of or a substantial portion
of its business to a party controlling, controlled by, or under common
control with such party. Nothing in this Section 14 shall prevent MNB
from delegating its responsibilities to another entity to the extent
provided herein.
IN WITNESS WHEREOF, the parties hereto have caused this instrument
to be executed by their officers designated below as of the day and year
first above written.
Independence One Mutual Funds
By:
Title:
Attest:
Michigan National Bank
By:
Title:
Attest:
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