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. 16 X
_
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF
1940 X _
Amendment No. 16 _ X
_
INDEPENDENCE ONE MUTUAL FUNDS
(Exact Name of Registrant as Specified in Charter)
Federated Investors Tower, Pittsburgh, Pennsylvania 15222-
3779
(Address of Principal Executive Offices)
(412) 288-1900
(Registrant's Telephone Number)
John W. McGonigle, Esquire,
Federated Investors Tower,
Pittsburgh, Pennsylvania 15222-3779
(Name and Address of Agent for Service)
It is proposed that this filing will become effective:
immediately upon filing pursuant to paragraph (b)
X on August 31, 1995 pursuant to paragraph (b)(1)(v)
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:
X 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, 1995;
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 7
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; (4) Independence One U.S. Government
Securities Fund, (5) Independence One Equity Plus Fund; (6)
Independence One Fixed Income Fund; and
(7) Independence One Michigan Municipal Bond Fund, relates
only to Independence One Prime Money Market Fund - Class A
Shares and Class B Shares, Independence One U.S. Treasury
Money Market Fund and Independence One Michigan Municipal
Cash Fund, 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 (1-7) Cover
Page.
Item 2. Synopsis (1-7) Summary of
Fund Expenses.
Item 3. Condensed Financial
Information (1, 2a,3,4)
Financial Highlights;
(1-7) Performance
Information.
Item 4. General Description of
Registrant (1-7) General
Information; (1-7) Investment
Objective; (1-7) Investment
Policies; (1-7) Investment
Limitations; (1,2,7)
Investment Risks; (7) Michigan
Municipal Securities; Non-
Diversification; (5) Equity
Investment Considerations,
Standard & Poor's.
Item 5. Management of the Fund (1-7)
Independence One Mutual Funds
Information; (1-7) Management
of Independence One Mutual
Funds; (7) Sub-Adviser; (1,3-
7) Distribution of Fund
Shares; (2a) Distribution of
Class A Shares; (2b)
Distribution of Class B
Shares; (1-7) Administration
of the Fund; (1,3)
Distribution Plan; (2a)
Shareholder Services Plan;
(2a, 2b) Other Classes of
Shares.
Item 6. Capital Stock and Other
Securities (1-7)
Dividends; (1-7) Capital
Gains; (1-7) Shareholder
Information; (1-7) Voting
Rights; (1-7) Massachusetts
Partnership Law; (1-7) Effect
of Banking Laws; (1-7) Tax
Information; (1-7) Federal
Income Tax; (1) State and
Local Taxes; (7) Michigan
Taxes; Other State and Local
Taxes.
Item 7. Purchase of Securities Being
Offered (1-7) Net Asset
Value; (1,3-7) Investing in
the Fund; (2a) Investing in
Class A Shares; (2b) Investing
in Class B Shares;
Item 8 Redemption or Repurchase (1,3-
7) Redeeming Shares; (2a)
Redemming Class A Shares; (2b)
Redeeming Class B Shares;
(1-7) Exchange Privilege.
Item 9. Pending Legal Proceedings
None.
PART B. INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL
INFORMATION.
Item 10. Cover Page (1-7) Cover
Page.
Item 11. Table of Contents (1-7)
Table of Contents.
Item 12. General Information and
History (1-7) General
Information About the Fund.
Item 13. Investment Objectives and
Policies (1-7) Investment
Objective and Policies; (7)
Michigan Investment Risks.
Item 14. Management of the Fund (1-7)
Independence One Mutual Funds
Management.
Item 15. Control Persons and Principal
Holders of Securities Not
applicable.
Item 16. Investment Advisory and Other
Services (1-7) Investment
Advisory Services; (1-7)
Administrative Services.
Item 17. Brokerage Allocation (1-7)
Brokerage Transactions.
Item 18. Capital Stock and Other
Securities Not applicable.
Item 19. Purchase, Redemption and
Pricing of Securities Being
Offered (1-7) Purchasing
Shares; (1-7) Determining Net
Asset Value; (1-7) Redeeming
Shares; (1-7) 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 (1-7) Performance
Comparisons; Yield; (1,7) Tax
Equivalent Yield;
(1-3) Effective Yield; (4-
7) Yield; (5-7) Total Return.
Item 23. Financial Statements
(1, 2a, 2b, 3, 4) financial
statements dated April 30,
1995 are incorporated by
reference to Part A of
Registrant's Post-Effective
Amendment No. 14 as filed on
June 28, 1995 (File Nos. 33-
26516 and 811-5752); (5,6,7)
to be filed by amendment.
INDEPENDENCE ONE PRIME MONEY MARKET FUND
CLASS A SHARES
CLASS B SHARES
INDEPENDENCE ONE U.S. TREASURY MONEY MARKET FUND
INDEPENDENCE ONE MICHIGAN MUNICIPAL CASH FUND
(PORTFOLIOS OF INDEPENDENCE ONE MUTUAL FUNDS)
COMBINED PROSPECTUS
Independence One Mutual Funds (the "Trust") is an open-end
management investment
company (a mutual fund) comprising a series of investment
portfolios. This
combined prospectus offers investors interests in the
following three separate
investment portfolios (collectively referred to as the
"Funds" and individually
as the "Fund"), each having a distinct investment objective
and policies:
Independence One Prime Money Market Fund
Independence One U.S. Treasury Money Market Fund
Independence One Michigan Municipal Cash Fund
MICHIGAN NATIONAL BANK PROFESSIONALLY MANAGES THE FUNDS'
PORTFOLIOS. THE SHARES
OFFERED BY THIS COMBINED PROSPECTUS ARE NOT DEPOSITS OR
OBLIGATIONS OF MICHIGAN
NATIONAL BANK, ARE NOT ENDORSED OR GUARANTEED BY MICHIGAN
NATIONAL BANK AND ARE
NOT INSURED OR GUARANTEED BY THE U.S. GOVERNMENT, THE
FEDERAL DEPOSIT INSURANCE
CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER
GOVERNMENT AGENCY.
INVESTMENT IN THESE SHARES INVOLVES INVESTMENT RISKS,
INCLUDING POSSIBLE LOSS OF
PRINCIPAL. THE FUNDS ATTEMPT TO MAINTAIN A STABLE NET ASSET
VALUE OF $1.00 PER
SHARE; THERE CAN BE NO ASSURANCE THAT THE FUNDS WILL BE ABLE
TO DO SO.
This combined prospectus contains the information you should
read and know
before you invest in the Funds. Keep this combined
prospectus for future
reference.
The Funds have also filed a Combined Statement of Additional
Information dated
August 31, 1995, with the Securities and Exchange
Commission. The information
contained in the Combined Statement of Additional
Information is incorporated by
reference into this combined prospectus. You may request a
copy of the Combined
Statement of Additional Information free of charge by
calling 1-800-334-2292. To
obtain other information, or make inquiries about the Trust,
contact the Trust
at the address listed in the back of this combined
prospectus.
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 August 31, 1995
TABLE OF CONTENTS
- ------------------------------------------------------------
- --------------------
SYNOPSIS
1
- ------------------------------------------------------------
- --------------------
SUMMARY OF FUND EXPENSES
3
- ------------------------------------------------------------
- --------------------
FINANCIAL HIGHLIGHTS
5
- ------------------------------------------------------------
- --------------------
INVESTMENT INFORMATION
8
- ------------------------------------------------------------
- --------------------
Investment Objective of Each Fund
8
Prime Money Market Fund
8
Investment Objective and Policies
8
Acceptable Investments
8
Investment Risks
9
U.S. Treasury Money Market Fund
9
Investment Objective and Policies
9
Acceptable Investments
10
Michigan Municipal Cash Fund
10
Investment Objective and Policies
10
Temporary Investments
11
Standby Commitments
11
Concentration of Investments
12
Investment Risks
12
Non-Diversification
13
PORTFOLIO INVESTMENTS AND STRATEGIES
13
- ------------------------------------------------------------
- --------------------
Credit Enhancement
13
Ratings
13
Repurchase Agreements
14
Variable Rate Demand Notes
14
Demand Features
14
When-Issued and Delayed Delivery
Transactions
14
Investing in Securities of
Other Investment Companies
15
Investment Limitations
15
Borrowing Money
15
Diversification
15
Restricted and Illiquid Securities
15
Regulatory Compliance
16
INDEPENDENCE ONE MUTUAL FUNDS
INFORMATION
17
- ------------------------------------------------------------
- --------------------
Management of the Trust
17
Board of Trustees
17
Investment Adviser
17
Advisory Fees
17
Adviser's Background
17
Distribution of Fund Shares
18
Distribution Plan
18
Shareholder Services Plan
19
Administration of the Fund
19
Administrative Services
19
Custodian
20
Transfer Agent and
Dividend Disbursing Agent
20
Independent Auditors
20
Expenses of the Funds
20
NET ASSET VALUE
21
- ------------------------------------------------------------
- --------------------
INVESTING IN THE FUND
21
- ------------------------------------------------------------
- --------------------
Share Purchases
21
To Place an Order
21
Minimum Investment Required
21
Cash Sweep Program
22
Participating Depository Institutions
22
What Shares Cost
22
Certificates and Confirmations
22
Dividends
22
Capital Gains
23
EXCHANGE PRIVILEGE
23
- ------------------------------------------------------------
- --------------------
Exchange by Telephone
23
Written Exchange
24
REDEEMING SHARES
24
- ------------------------------------------------------------
- --------------------
Cash Sweep Customers
24
Redeeming by Check
25
By Telephone
25
By Mail
26
Accounts with Low Balances
26
Redemption in Kind
26
SHAREHOLDER INFORMATION
27
- ------------------------------------------------------------
- --------------------
Voting Rights
27
Massachusetts Partnership Law
27
EFFECT OF BANKING LAWS
28
- ------------------------------------------------------------
- --------------------
TAX INFORMATION
28
- ------------------------------------------------------------
- --------------------
Federal Income Tax
28
Michigan Municipal Cash Fund Tax
Considerations
29
Federal Income Tax
29
Michigan Taxes
29
Other State and Local Taxes
29
PERFORMANCE INFORMATION
30
- ------------------------------------------------------------
- --------------------
ADDRESSES
Back Cover
- ------------------------------------------------------------
- --------------------
SYNOPSIS
- ------------------------------------------------------------
- --------------------
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. The shares in any one
portfolio may be
offered in separate classes. This combined prospectus
relates only to the three
Funds described herein. The Funds are designed as a
convenient means of
accumulating interests in professionally managed portfolios.
The following three Funds are offered in this prospectus:
Independence One Prime Money Market Fund ("Prime
Money Market Fund")
seeks to provide current income consistent with
stability of principal.
It pursues its investment objective by investing in a
variety of
high-quality money market instruments maturing in 397
days or less. The
Fund currently offers two classes of shares: 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 are subject to a
shareholder servicing fee paid by the Fund pursuant
to a Shareholder
Services Plan, while Class B Shares, which are sold
primarily to certain
institutional investors, will not be subject to such
a Plan and will not
incur such shareholder servicing fees.
Independence One U.S. Treasury Money Market Fund
("U.S. Treasury Money
Market Fund") seeks to provide current income
consistent with stability
of principal. The Fund pursues its objective by
investing in a portfolio
of short-term U.S. Treasury obligations.
Independence One Michigan Municipal Cash Fund
("Michigan Municipal Cash
Fund") seeks to provide stability of income and
current income exempt
from federal regular income tax and Michigan state
income tax consistent
with stability of principal. In addition, the Fund
provides income exempt
from the Michigan intangibles tax and income taxes of
Michigan
municipalities. The Fund pursues its investment
objective by investing
its assets in a non-diversified portfolio so that at
least 80% of its
annual income is exempt from federal regular income
tax and Michigan
state income tax. The Fund may not be a suitable
investment for
retirement plans since it invests in municipal
securities.
For information on how to purchase shares of the Funds,
please refer to
"Investing in the Funds." The minimum initial investment in
shares of the Prime
Money Market Class A Shares, the U.S. Treasury Money Market
Fund, and the
Michigan Municipal Cash Fund is $1,000. The minimum initial
investment in the
Prime Money Market Fund Class B Shares is $1,000,000.
Subsequent investments in
all the Funds must be in amounts of at least $100. See
"Minimum Investment
Required."
The Funds attempt to stabilize the value of a share at
$1.00. Fund shares are
currently sold and redeemed at that price. Information on
redeeming shares can
be found under "Redeeming Shares." Shareholders can invest,
reinvest, or redeem
shares at any time without charge or penalty imposed by the
Funds. Shareholders
have access to other portfolios of the Trust through an
exchange
program. Information regarding the exchange privilege
offered with respect to
the Trust can be found under "Exchange Privilege."
Michigan National Bank is the investment adviser (the
"Adviser") to the Funds
and receives compensation for its services.
One or more of the Funds may make certain investments and
employ certain
investment techniques that involve risks, including entering
into repurchase
agreements, investing in when-issued securities, restricted
and illiquid
securities, and securities of other investment companies.
These risks and those
associated with investing in Michigan municipal securities,
variable rate
securities, bank instruments, short-term credit facilities,
asset-backed
securities, participation interests, and demand features are
described under
"Investment Objective of Each Fund" and "Portfolio
Investments and Strategies."
INDEPENDENCE ONE MONEY MARKET FUNDS
SUMMARY OF FUND EXPENSES
- ------------------------------------------------------------
- --------------------
<TABLE>
<CAPTION>
PRIME MONEY
MARKET FUND U.S. TREASURY MONEY MICHIGAN
MUNICIPAL
CLASS
A CLASS B MARKET FUND CASH FUND
<S> <C>
<C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price).............
None None None None
Maximum Sales Load Imposed on Reinvested
Dividends (as a percentage of offering price)...
None None None None
Contingent Deferred Sales Charge (as a percentage
of original purchase price or redemption
proceeds, as applicable)........................
None None None None
Redemption Fee (as a percentage of amount
redeemed, if applicable)........................
None None None None
Exchange Fee......................................
None None None None
<CAPTION>
ANNUAL FUND OPERATING EXPENSES*
(As a percentage of average net assets)
<S> <C>
<C> <C> <C>
Management Fees (after waiver)(1).................
0.15% 0.15% 0.40%
0.19%
12b-1 Fees(2).....................................
None None 0.00% 0.00%
Total Other Expenses..............................
0.47% 0.22% 0.23%
0.40%
Shareholder Servicing Fees(3)............0.25%
Total Operating Expenses (after
waiver)(4)................................
0.62% 0.37% 0.63%
0.59%
</TABLE>
(1) The estimated management fee for the Prime Money Market
Fund has been
reduced to reflect the anticipated voluntary waiver by
the investment
adviser. The management fee for the Michigan Municipal
Cash Fund was reduced
to reflect the voluntary waiver by the investment
adviser. The adviser can
terminate this voluntary waiver at any time at its sole
discretion. The
maximum management fee for both Funds is 0.40%.
(2) As of the date of this prospectus, the U.S. Treasury
Money Market Fund and
the Michigan Municipal Cash Fund are not paying or
accruing 12b-1 fees. The
Funds will not pay or accrue 12b-1 fees until a separate
class of shares has
been created for certain institutional investors. The
Funds' distributor can
pay up to 0.25% as a 12b-1 fee which is reimbursed to
the distributor by the
Funds. See "Distribution of Fund Shares."
(3) The Prime Money Market Fund Class A Shares pays a
shareholder services fee
of up to 0.25% of Class A Shares average daily net
assets.
(4) The Total Fund Operating Expenses in the table above are
based on expenses
expected during the fiscal year ending April 30, 1996.
Total Fund Operating
Expenses for the fiscal year ending April 30, 1996 for
the Prime Money
Market Fund Class A Shares and Class B Shares are
expected to be 0.87% and
0.62%, respectively, absent the anticipated voluntary
waiver detailed in
Note (1). The Total Fund Operating Expenses for the
fiscal year ended April
30, 1995 were 0.61% for the Prime Money Market Fund,
Class A Shares. The
Total Fund Operating Expenses for the fiscal year ended
April 30, 1995 were
0.80% for the Michigan Municipal Cash Fund absent the
voluntary waiver
detailed in Note (1).
* Annual Fund Operating Expenses in the table above for the
Prime Money Market
Fund Class A and Class B Shares were calculated as a
percentage of projected
average net assets and are based on average 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 average
amounts shown above.
THE PURPOSE OF THIS TABLE IS TO ASSIST AN INVESTOR IN
UNDERSTANDING THE
VARIOUS COSTS AND EXPENSES THAT A SHAREHOLDER OF THE FUNDS
WILL BEAR, EITHER
DIRECTLY OR INDIRECTLY. FOR A MORE COMPLETE DESCRIPTION OF
THE VARIOUS COSTS AND
EXPENSES, SEE "INVESTING IN THE FUNDS."
EXAMPLE
- -------
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.
<TABLE>
<CAPTION>
PRIME
MONEY**
MARKET FUND U.S. TREASURY MONEY MICHIGAN MUNICIPAL
CLASS A
CLASS B MARKET FUND CASH FUND
<S> <C>
<C> <C> <C>
1 Year............................................ $6
$4 $6 $6
3 Years........................................... $20
$12 $20 $19
5 Years........................................... $35
N/A $35 $33
10 Years.......................................... $77
N/A $79 $74
</TABLE>
THE ABOVE EXAMPLE SHOULD NOT BE CONSIDERED A
REPRESENTATION OF FUTURE
EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE
SHOWN.
** The Prime Money Market Fund Class A and Class B Shares
are based on estimated
data for the fiscal year ending April 30, 1996.
INDEPENDENCE ONE PRIME MONEY MARKET FUND
FINANCIAL HIGHLIGHTS
- ------------------------------------------------------------
- --------------------
(FOR A CLASS A SHARE+ OUTSTANDING THROUGHOUT EACH PERIOD)
The following table has been audited by KPMG Peat Marwick
LLP, the Fund's
independent auditors. Their report, dated June 16, 1995, on
the Fund's Financial
Statements for the year ended April 30, 1995, and on the
following table for
each of the periods presented, is included in the Fund's
Annual Report, which is
incorporated herein by reference. This table should be read
in conjunction with
the Fund's Financial Statements and notes thereto, contained
in the Fund's
Annual Report, which may be obtained from the Fund.
<TABLE>
<CAPTION>
YEAR ENDED APRIL 30,
<S> <C> <C>
<C> <C> <C> <C> <C>
1995
1994 1993 1992 1991 1990(A)
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 0.05
0.03 0.03 0.05 0.07 0.08
- ------------------------------------------- --------- ----
- ----- --------- --------- --------- -----------
LESS DISTRIBUTIONS
- -------------------------------------------
Distributions from net investment income (0.05)
(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 (B) 4.66%
2.73% 2.99% 4.89% 7.55% 7.99%
- -------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- -------------------------------------------
Expenses 0.61%
0.59% 0.58% 0.54% 0.53% 0.40%(c)
- -------------------------------------------
Net investment income 4.51%
2.70% 2.91% 4.73% 7.26% 8.24%(c)
- -------------------------------------------
Expense waiver/reimbursement (d) 0.00%
0.02% 0.04% 0.08% 0.08% 0.23%(c)
- -------------------------------------------
SUPPLEMENTAL DATA
- -------------------------------------------
Net assets, end of period
(000 omitted) $233,607
$310,588 $423,355 $309,009 $371,994 $328,434
- -------------------------------------------
</TABLE>
As of May 1, 1995, the single class of shares previously
offered by the Fund
has been redesignated as Class A Shares.
(a) Reflects operations for the period from June 1, 1989
(date of initial
public investment) to April 30, 1990.
(b) Based on net asset value, which does not reflect the
sales load or
contingent deferred sales charge, if applicable.
(c) Computed on an annualized basis.
(d) This voluntary expense decrease is reflected in both the
expense and net
investment income ratios shown above.
Further information about the Fund's performance is
contained in the Fund's
Annual Report dated April 30, 1995, which can be obtained
free of charge.
INDEPENDENCE ONE U.S. TREASURY MONEY MARKET FUND
FINANCIAL HIGHLIGHTS
- ------------------------------------------------------------
- --------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
The following table has been audited by KPMG Peat Marwick
LLP, the Fund's
independent auditors. Their report, dated June 16, 1995, on
the Fund's Financial
Statements for the year ended April 30, 1995, and on the
following table for
each of the periods presented, is included in the Fund's
Annual Report, which is
incorporated herein by reference. This table should be read
in conjunction with
the Fund's Financial Statements and notes thereto, contained
in the Fund's
Annual Report, which may be obtained from the Fund.
<TABLE>
<CAPTION>
YEAR ENDED APRIL 30,
<S> <C> <C>
<C> <C> <C> <C>
1995
1994 1993 1992 1991 1990(A)
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 0.04
0.03 0.03 0.05 0.07 0.08
- --------------------------------------------
LESS DISTRIBUTIONS
- --------------------------------------------
Distributions from net investment
income (0.04)
(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 (B) 4.49%
2.63% 2.92% 4.81% 7.17% 7.83%
- --------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- --------------------------------------------
Expenses 0.63%
0.61% 0.54% 0.57% 0.60% 0.35%(c)
- --------------------------------------------
Net investment income 4.41%
2.60% 2.90% 4.55% 6.91% 8.17%(c)
- --------------------------------------------
Expense waiver/reimbursement (d) 0.00%
0.00% 0.09% 0.12% 0.07% 0.32%(c)
- --------------------------------------------
SUPPLEMENTAL DATA
- --------------------------------------------
Net assets, end of period
(000 omitted) $244,887
$215,832 $214,069 $224,803 $131,263 $82,947
- --------------------------------------------
</TABLE>
(a) Reflects operations for the period from June 1, 1989
(date of initial
public investment) to April 30, 1990.
(b) Based on net asset value, which does not reflect the
sales load or
contingent deferred sales charge, if applicable.
(c) Computed on an annualized basis.
(d) This voluntary expense decrease is reflected in both the
expense and net
investment income ratios shown above.
Further information about the Fund's performance is
contained in the Fund's
Annual Report dated April 30, 1995, which can be obtained
free of charge.
INDEPENDENCE ONE MICHIGAN MUNICIPAL CASH FUND
FINANCIAL HIGHLIGHTS
- ------------------------------------------------------------
- --------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
The following table has been audited by KPMG Peat Marwick
LLP, the Fund's
independent auditors. Their report, dated June 16, 1995, on
the Fund's Financial
Statements for the year ended April 30, 1995, and on the
following table for
each of the periods presented, is included in the Fund's
Annual Report, which is
incorporated herein by reference. This table should be read
in conjunction with
the Fund's Financial Statements and notes thereto, contained
in the Fund's
Annual Report, which may be obtained from the Fund.
<TABLE>
<CAPTION>
YEAR ENDED APRIL 30,
<S> <C>
<C> <C> <C> <C> <C>
1995
1994 1993 1992 1991 1990(A)
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 0.03
0.02 0.02 0.04 0.05 0.05
- --------------------------------------------- --------- --
- ------- --------- --------- --------- -----------
LESS DISTRIBUTIONS
- ---------------------------------------------
Distributions from net investment income (0.03)
(0.02) (0.02) (0.04) (0.05) (0.05)
- --------------------------------------------- --------- --
- ------- --------- --------- --------- -----------
NET ASSET VALUE, END OF PERIOD $ 1.00 $
1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- --------------------------------------------- --------- --
- ------- --------- --------- --------- -----------
TOTAL RETURN (B) 2.81%
1.98% 2.27% 3.68% 5.18% 5.14%
- ---------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ---------------------------------------------
Expenses 0.59%
0.50% 0.53% 0.50% 0.67% 0.44%(c)
- ---------------------------------------------
Net investment income 2.80%
1.96% 2.23% 3.51% 5.02% 5.70%(c)
- ---------------------------------------------
Expense waiver/reimbursement (d) 0.21%
0.22% 0.20% 0.39% 0.19% 0.39%(c)
- ---------------------------------------------
SUPPLEMENTAL DATA
- ---------------------------------------------
Net assets, end of period (000 omitted) $66,856
$55,013 $84,763 $71,745 $31,705 $28,921
- ---------------------------------------------
</TABLE>
(a) Reflects operations for the period from June 14, 1989
(date of initial
public investment) to April 30, 1990.
(b) Based on net asset value, which does not reflect the
sales load or
contingent deferred sales charge, if applicable.
(c) Computed on an annualized basis.
(d) This voluntary expense decrease is reflected in both the
expense and net
investment income ratios shown above.
Further information about the Fund's performance is
contained in the Fund's
Annual Report dated April 30, 1995, which can be obtained
free of charge.
INVESTMENT INFORMATION
- ------------------------------------------------------------
- --------------------
INVESTMENT OBJECTIVE OF EACH FUND
The investment objective and policies of each Fund appear
below. The investment
objective of a Fund cannot be changed without the approval
of holders of a
majority of that Fund's shares. While there is no assurance
that a Fund will
achieve its investment objective, it endeavors to do so by
following the
investment policies described in this prospectus.
Unless indicated otherwise, the investment policies of a
Fund may be changed by
the Board of Trustees ("Trustees") without approval of
shareholders.
Shareholders will be notified before any material change in
these policies
becomes effective.
Each Fund's investment limitations are discussed below under
"Investment
Limitations."
Additional information about investment limitations,
strategies that one or more
Funds may employ, and certain investment policies mentioned
below appear in the
"Portfolio Investments and Strategies" section of this
combined prospectus and
in the Combined Statement of Additional Information.
PRIME MONEY MARKET FUND
INVESTMENT OBJECTIVE AND POLICIES. The investment objective
of the Fund is to
provide current income consistent with stability of
principal. 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.
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. See
"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.
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.
In addition, the Fund may engage in when-issued and delayed
delivery
transactions and invest in restricted and illiquid
securities, securities of
other investment companies, variable rate demand notes, and
repurchase
agreements. See "Portfolio Investment and Strategies."
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.
The Fund's investment limitations are discussed below under
"Investment
Limitations."
U.S. TREASURY MONEY MARKET FUND
INVESTMENT OBJECTIVE AND POLICIES. The investment objective
of the Fund is to
provide current income consistent with stability of
principal. The Fund pursues
its investment objective by investing exclusively in a
portfolio of short-term
U.S. Treasury obligations. The average maturity of the U.S.
Treasury obligations
in the Fund's portfolio, computed on a dollar-weighted
basis, will be 90 days or
less.
ACCEPTABLE INVESTMENTS. The Fund invests only in short-term
U.S. Treasury
obligations, which are normally held to maturity. These
instruments are issued
by the U.S. government, its agencies or instrumentalities,
and are fully
guaranteed as to principal and interest by the United
States. They
mature in 397 days or less from the date of acquisition
unless they are
purchased under a repurchase agreement that provides for
repurchase by the
seller within one year from the date of acquisition.
In addition, the Fund may invest in repurchase agreements
and engage in
when-issued and delayed delivery transactions. See
"Portfolio Investments and
Strategies."
MICHIGAN MUNICIPAL CASH FUND
INVESTMENT OBJECTIVE AND POLICIES. The investment objective
of the Fund is to
provide stability of income and current income exempt from
federal regular
income tax and Michigan state income tax consistent with
stability of principal.
In addition, the Fund provides income exempt from the
Michigan intangibles tax
and income taxes of Michigan municipalities. (Federal
regular income tax does
not include the federal individual alternative minimum tax
or the federal
alternative minimum tax for corporations.) The Fund pursues
its investment
objective by investing at least 80% of its assets in a
portfolio of Michigan
municipal securities with remaining maturities of 397 days
or less at the time
of purchase by the Fund. The average maturity of the
securities in the Fund's
portfolio, computed on a dollar-weighted basis, will be 90
days or less.
Michigan municipal securities include obligations issued by
or on behalf of the
State of Michigan, its political subdivisions or agencies,
or debt obligations
of any territory or possession of the United States, or any
political
subdivision of any of the foregoing, or of the District of
Columbia, the
interest from which is, in the opinion of bond counsel for
the issuers, or in
the opinion of officers of the Fund and/or the Adviser,
exempt from federal
regular income tax and personal income taxes imposed by the
State of Michigan
and Michigan municipalities. Michigan municipal securities
also include
participation interests in the above obligations. Interest
income of the Fund
which is exempt from tax will retain its tax-free status
when distributed to
Michigan shareholders. However, income distributed by the
Fund may not
necessarily be exempt from state or municipal taxes in
states other than
Michigan.
The municipal securities in which the Fund invests must
either be rated in one
of the two highest short-term rating categories by one or
more NRSROs or be of
comparable quality to securities having such ratings. See
"Ratings."
MICHIGAN MUNICIPAL SECURITIES. Michigan municipal
securities are generally
issued to finance public works such as airports,
bridges, highways,
housing, hospitals, mass transportation projects,
schools, streets, and
water and sewer works. They are also issued to repay
outstanding
obligations, to raise funds for general operating
expenses, and to make
loans to other public institutions and facilities.
Michigan municipal securities include industrial
development bonds issued
by or on behalf of public authorities to provide
financing aid to acquire
sites or construct and equip facilities for privately
or publicly owned
corporations. The availability of this financing
encourages these
corporations to locate within the sponsoring
communities and thereby
increases local employment.
The two principal classifications of municipal
securities are "general
obligation" and "revenue" bonds. General obligation
bonds are secured by
the issuer's pledge of its full faith and credit and
taxing power for the
payment of principal and interest. Interest on and
principal of
revenue bonds, however, are payable only from the
revenue generated by the
facility financed by the bond or other specified
sources of revenue.
Revenue bonds do not represent a pledge of credit or
create any debt of or
charge against the general revenues of a municipality
or public authority.
Industrial development bonds are typically classified
as revenue bonds.
PARTICIPATION INTERESTS. The Fund may purchase
participation interests
from financial institutions such as commercial banks,
savings and loan
associations, and insurance companies. These
participation interests give
the Fund an undivided interest in Michigan municipal
securities. The
municipal securities subject to the participation
interests are not limited
to maturities of 397 days or less, so long as the
participation interests
include the right to demand payment, typically within
seven days, from the
issuers of those interests. The Fund will purchase only
participation
interests which have such a demand feature or which
mature in less than 397
days. The financial institutions from which the Fund
purchases
participation interests frequently provide or secure
irrevocable letters of
credit or guarantees to assure that the participation
interests are of high
quality. The Trustees of the Trust will determine that
participation
interests meet the prescribed quality standards for the
Fund.
TEMPORARY INVESTMENTS. As a fundamental policy which may
only be changed by
shareholders, the Fund invests its assets so that at least
80% of its annual
interest income will be exempt from federal regular income
tax and Michigan
state income tax, except in unusual circumstances, such as
when management feels
that market conditions dictate a defensive posture in
temporary investments.
Interest income from temporary investments may be taxable to
shareholders as
ordinary income. These temporary investments include:
obligations issued by or
on behalf of municipal or corporate issuers having the same
quality
characteristics as municipal securities purchased by the
Fund (including
obligations whose interest is subject to the federal
alternative minimum income
tax); marketable obligations issued or guaranteed by the
U.S. government, its
agencies or instrumentalities; instruments issued by banks
or savings and loans
which have capital, surplus, and undivided profits in excess
of $100,000,000 at
the time of investment and if their deposits are insured by
the BIF or the SAIF,
which are both administered by the Federal Deposit Insurance
Corporation
("FDIC"); repurchase agreements and prime commercial paper
rated A-1 by S&P,
Prime-1 by Moody's, or F-1 by Fitch, and variable amount
demand master notes.
STANDBY COMMITMENTS. Some securities dealers are willing to
sell Michigan
municipal securities to the Fund accompanied by their
commitments to repurchase
the municipal securities prior to maturity, at the Fund's
option, for the
amortized cost of the municipal securities at the time of
repurchase. These
arrangements are not used to protect against changes in the
market value of
municipal securities. They permit the Fund, however, to
remain fully invested
and still provide liquidity to satisfy redemptions. The cost
of Michigan
municipal securities accompanied by these "standby"
commitments could be greater
than the cost of municipal securities without such
commitments. Standby
commitments are not marketable or otherwise assignable and
have value only to
the Fund. The default or bankruptcy of a securities dealer
giving such a
commitment would not affect the quality of the Michigan
municipal securities
purchased but may make such securities more difficult to
sell without such a
commitment. The Fund enters into standby commitments only
with those dealers
whose credit the adviser believes to be of high quality.
CONCENTRATION OF INVESTMENTS. The Fund may invest more than
25% of its assets
in industrial revenue bonds, including pollution control
bonds. The Fund will
not purchase securities if, as a result of such purchase,
25% or more of the
value of its total assets would be invested in any one
industry or in industrial
development bonds or other securities, the interest upon
which is paid from
revenues of similar type projects. However, the Fund may
invest more than 25% of
the value of its assets in cash or cash items, securities
issued or guaranteed
by the U.S. government, its agencies or instrumentalities,
or instruments
secured by these money market instruments, such as
repurchase agreements.
The Fund will invest more than 25% of its assets in Michigan
municipal
securities. The Fund may invest more than 25% of the value
of its assets in
tax-exempt project notes guaranteed by the U.S. government,
regardless of the
location of the issuing municipality. The Fund may also have
more than 25% of
its total assets invested in securities credit enhanced by
banks.
In addition, the Fund will not invest more than 5% of its
assets in industrial
revenue bonds where the payment of principal and interest is
the responsibility
of companies (or guarantors, if applicable) with less than
three years of
continuous operations, including the operation of any
predecessor. This
limitation may be changed by the Trustees without
shareholder approval.
Shareholders will be notified before any material change in
this limitation
becomes effective.
If the value of Fund assets invested in the securities of a
governmental
subdivision changes because of changing values, the Fund
will not be required to
make any reduction in its holdings.
INVESTMENT RISKS. Yields on Michigan municipal securities
depend on a variety
of factors, including: the general conditions of the
municipal bond market; the
size of the particular offering; the maturity of the
obligations; and the rating
of the issue. Further, any adverse economic conditions or
developments affecting
the State of Michigan or its municipalities could impact the
Fund's portfolio.
The ability of the Fund to achieve its investment objective
also depends on the
continuing ability of the issuers of Michigan municipal
securities and
participation interests, or the guarantors of either, to
meet their obligations
for the payment of interest and principal when due. In
addition, from time to
time, the supply of Michigan municipal securities acceptable
for purchase by the
Fund could be limited. Investing in Michigan municipal
securities which meet the
Fund's quality standards may not be possible if the State of
Michigan or its
municipalities do not maintain their current credit ratings.
The Fund may invest in Michigan municipal securities which
are repayable out of
revenue streams generated from economically related projects
or facilities
and/or whose issuers are located in the same state. Sizable
investments in these
Michigan municipal securities could involve an increased
risk to the Fund should
any of these related projects or facilities experience
financial difficulties.
Obligations of issuers of Michigan municipal securities are
subject to the
provisions of bankruptcy, insolvency, and other laws
affecting the rights and
remedies of creditors. In addition, the obligations of such
issuers may become
subject to laws enacted in the future by Congress, state
legislators, or
referenda extending the time for payment of principal and/or
interest, or
imposing constraints upon enforcement of such obligations or
upon the ability of
states or municipalities to levy taxes. There is also the
possibility that, as a
result of litigation or other conditions, the power or
ability of
any issuer to pay, when due, the principal of and interest
on its municipal
securities may be materially affected.
A further discussion of the risks of a portfolio which
invests primarily in
Michigan municipal securities is contained in the Statement
of Additional
Information.
NON-DIVERSIFICATION. The Fund is a non-diversified
investment portfolio. As
such, there is no limit on the percentage of assets which
can be invested in any
single issuer. An investment in the Fund, therefore, will
entail greater risk
than would exist in a diversified investment company because
the higher
percentage of investments among fewer issuers may result in
greater fluctuation
in the total market value of the Fund's portfolio. Any
economic, political, or
regulatory developments affecting the value of the
securities in the Fund's
portfolio will have a greater impact on the total value of
the portfolio than
would be the case if the portfolio were diversified among
more issuers.
However, the Fund intends to comply with Subchapter M of the
Internal Revenue
Code. This undertaking requires that, at the end of each
quarter of each taxable
year, with regard to at least 50% of the Fund's total
assets, no more than 5% of
its total assets are invested in the securities of a single
issuer and that with
respect to the remainder of the Fund's total assets, no more
than 25% of its
total assets are invested in the securities of a single
issuer.
In addition, the Fund may engage in when-issued and delayed
delivery
transactions and invest in restricted and illiquid
securities, securities of
other investment companies, and variable rate demand notes.
The Fund may also
acquire securities that are subject to puts and standby
commitments to purchase
securities at their principal amount within a fixed period
following a demand by
the Fund. See "Portfolio Investments and Strategies."
PORTFOLIO INVESTMENTS AND STRATEGIES
- ------------------------------------------------------------
- --------------------
CREDIT ENHANCEMENT. Certain of the Prime Money Market
Fund's and the Michigan
Municipal Cash Fund's acceptable investments may have been
credit enhanced by a
guaranty, letter of credit or insurance. The Funds typically
evaluate 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 Funds
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 Funds 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.
RATINGS. A NRSRO's rating categories are determined without
regard for
sub-categories and gradations. For example, with respect to
the Prime Money
Market Fund, 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, and with respect to the
Michigan Municipal
Cash Fund, securities rated SP-1+, SP-1 or SP-2 by S&P, MIG-
1 or MIG-2 by
Moody's, or FIN-1+, FIN-1 and FIN-2 by Fitch, are all
considered rated in one of
the two highest short-term rating categories. The Funds will
follow applicable regulations in determining whether a
security rated by more
than one NRSRO can be treated as being in the acceptable
rating categories;
currently, such securities must be rated by two NRSROs in
the acceptable
categories. 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 Funds 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 Funds, the Funds could
receive less than the
repurchase price on any sale of such securities.
VARIABLE RATE DEMAND NOTES. The Prime Money Market Fund and
the Michigan
Municipal Cash Fund may invest in variable rate demand notes
which are long-term
corporate debt instruments or municipal securities that have
variable or
floating interest rates and provide the Funds 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 Funds to demand the repurchase of the security on
not more than seven
days prior notice. Other notes only permit the Funds to
tender the security at
the time of each interest rate adjustment or at other fixed
intervals. See
"Demand Features." The Funds treat variable rate demand
notes as maturing on the
later of the date of the next interest adjustment or the
date on which the Funds
may next tender the security for repurchase.
DEMAND FEATURES. The Prime Money Market Fund and the
Michigan Municipal Cash
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 a 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 Funds
use these arrangements to provide the Funds 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.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS. The Funds
may purchase
securities on a when-issued or delayed delivery basis. These
transactions are
arrangements in which the Funds purchase securities with
payment and delivery
scheduled for a future time. The seller's failure to
complete these transactions
may cause the Funds 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 Funds may pay more or less than the
market value of the
securities on the settlement date. The Funds engage in when-
issued and delayed
delivery transactions only for the purpose of acquiring
portfolio securities consistent with each Fund's investment
objective and
policies, not for investment leverage.
The Funds may dispose of a commitment prior to settlement if
the Adviser deems
it appropriate to do so. In addition, the Funds may enter
into transactions to
sell purchase commitments to third parties at current market
values and
simultaneously acquire other commitments to purchase similar
securities at later
dates. The Funds may realize short-term profits or losses
upon the sale of such
commitments.
INVESTING IN SECURITIES OF OTHER INVESTMENT COMPANIES. The
Prime Money Market
Fund and the Michigan Municipal Cash Fund can acquire up to
3% of the total
outstanding stock of other investment companies. The Funds
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
Funds will purchase
securities of investment companies only in open-market
transactions involving
only customary broker's commissions (although the Funds do
not expect to incur
any broker's commissions in connection with purchases).
However, these
limitations are not applicable if the securities are
acquired in a merger,
consolidation, reorganization, or acquisition of assets. The
Funds' Adviser will
waive its investment advisory fee on assets invested in
securities of other
open-end investment companies.
INVESTMENT LIMITATIONS
BORROWING MONEY. The Funds will not borrow money directly
or through reverse
repurchase agreements or pledge securities except, under
certain circumstances,
a Fund may borrow up to one-third of the value of its total
assets and pledge up
to 10% of the value of those assets to secure such
borrowings.
DIVERSIFICATION. The Prime Money Market Fund will not, 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 Michigan Municipal Cash Fund will not invest more than
10% of its total in
the securities of any one issuer (except cash and cash
items, repurchase
agreements collateralized by U.S. government securities and
U.S. government
obligations) with respect to securities comprising 75% of
its assets.
The above policies may not be changed without shareholder
approval. The
following limitations, however, may be changed by the
Trustees without
shareholder approval. Shareholders will be notified before
any material change
in these limitations becomes effective.
RESTRICTED AND ILLIQUID SECURITIES. The Prime Money Market
Fund and the
Michigan Municipal Cash Fund may invest up to 10% of their
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. All of the Funds may
invest in illiquid
securities. The Funds 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 their
respective net assets.
The Prime Money Market 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 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.
REGULATORY COMPLIANCE
Each Fund may follow non-fundamental operational policies
that are more
restrictive than its fundamental investment limitations, as
set forth in this
prospectus and 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, each Fund
will comply with the various requirements of Rule 2a-7,
which regulates money
market mutual funds. The Rule permits the Funds to utilize
the amortized cost
method of valuation in order to offer their shares at a net
asset value of $1.00
per share. (See also the section in the Statement of
Additional Information
entitled "Determining Net Asset Value.") Each 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 Funds may change these
operational policies to
reflect changes in the laws and regulations without the
approval of
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 Funds are made by Michigan
National Bank, as the
Funds' investment adviser, subject to direction by the
Trustees. The Adviser
continually conducts investment research and supervision for
the Funds and is
responsible for the purchase or sale of portfolio
instruments, for which it
receives an annual fee from the assets of the Funds.
ADVISORY FEES. The Adviser receives an annual
investment advisory fee
equal to 0.40 of 1% of each Fund's average daily net
assets. The Adviser
has undertaken to reimburse each 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 Funds.
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 Funds 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.
On February 4, 1995, the Board of Directors of MNC approved
a definitive
agreement for the acquisition of that company by National
Australia Bank Limited
("NAB"), which is a transnational banking organization,
headquartered in
Melbourne, Australia. On June 2, 1995, shareholders of MNC
approved the merger.
As a result, upon completion of the merger, MNC and its
subsidiaries, including
the Adviser, would become direct or indirect subsidiaries of
NAB. It is
anticipated that the
merger will be completed in the third or fourth quarter of
1995. It is also
anticipated that operations will continue to be conducted
under the Michigan
National Corporation and Michigan National Bank names.
Under provisions of the Investment Company Act of 1940,
completion of the merger
would result in an assignment, and termination, of the
Funds' current investment
advisory contract with the Adviser. In view of the pending
merger, the Fund
Board of Trustees has approved a new investment advisory
contract ("New Advisory
Contract") between the Trust and Michigan National Bank, as
a subsidiary of
National Austrial Bank Limited (the "New Adviser"). The
terms of the New
Advisory Contract are identical in all material respects to
the present advisory
contract, i.e., Michigan National Bank will continue to
provide investment
advisory services to the Funds, and there will be no charge
in either the Funds'
investment objective or investment policies, or the fees
payable by the Funds
for advisory services. The New Advisory Contract would
become effective upon
consummation of the merger, which is subject to the
satisfaction of certain
conditions including, among others, the receipt of all
necessary regulatory
approvals.
DISTRIBUTION OF FUND SHARES
Federated Securities Corp. is the principal distributor for
shares of the Funds.
It is a Pennsylvania corporation organized on November 14,
1969, and is the
principal distributor for a number of investment companies.
Federated Securities
Corp. is a subsidiary of Federated Investors.
DISTRIBUTION PLAN. Pursuant to the provisions of a
distribution plan adopted in
accordance with the Investment Company Act Rule 12b-1 (the
"Plan"), the U.S.
Treasury Money Market Fund and the Michigan Municipal Cash
Fund will pay to the
distributor an amount computed at an annual rate of 0.25 of
1% of the average
daily net asset value of the shares to finance any activity
which is principally
intended to result in the sale of shares of the Funds
subject to the Plan.
The U.S. Treasury Money Market Fund and the Michigan
Municipal Cash Fund each
intend to offer two classes of shares for sale: Investment
Shares and Trust
Shares. The classes of shares represent interests in one
common investment
portfolio but differ in that Investment Shares, which will
be sold primarily to
individual investors, are subject to distribution expenses
paid by the Fund
pursuant to the Plan, while Trust Shares will be sold to
institutional investors
and will not be subject to such a Plan and will not incur
such distribution
expenses. Trust Shares are currently not available for sale.
The Funds will not
offer Trust Shares and will not accrue or pay any
distribution expenses pursuant
to the Plan until Trust Shares have been registered with the
Securities and
Exchange Commission and certain states.
The distributor may from time to time and for such periods
as its deems
appropriate, voluntarily reduce its compensation under the
Plan to the extent
the expenses attributable to the shares of the Funds exceed
such lower expense
limitation as the distributor may, by notice of the Trust,
voluntarily declare
to be effective.
The distributor may select financial institutions such as
banks, fiduciaries,
custodians for public funds, investment advisers, and
broker/dealers ("brokers")
to provide sales and/or administrative services as agents
for their clients or
customers who beneficially own shares of the Funds.
Administrative services may
include, but are not limited to, the following functions;
providing office
space, equipment, telephone facilities, and various
personnel, including
clerical, supervisory, and computer, as necessary or
beneficial to establish and
maintain shareholder accounts and records; processing
purchase and redemption
transactions and automatic investments of client account
cash balances;
answering routine client inquiries regarding the shares of
the Funds; assisting
clients in changing dividend options, account designations,
and addresses, and
providing such other services as the Funds reasonably
request for their shares.
Financial institutions will receive fees from the
distributor based upon shares
owned by their clients or customers. The schedules of such
fees and the basis
upon which such fees will be paid will be determined from
time to time by the
distributor.
The Funds' Plan is a compensation type plan. As such, the
Funds make no payments
to the distributor except as described above. Therefore, the
Funds do not pay
for reimbursed expenses of the distributor, including
amounts expended by the
distributor in excess of amounts received by it from the
Funds, interest,
carrying or other financing charges in connection with
excess amounts expended,
or the distributor's overhead expenses. However, the
distributor may be able to
recover such amounts or may earn a profit from future
payments made by the Funds
under the Plan.
The Glass-Steagall Act prohibits a depository institution
(such as a commercial
bank or a savings and loan association) from being an
underwriter or distributor
of most securities. In the event the Glass-Steagall Act is
deemed to prohibit
depository institutions from acting in the administrative
capacities described
above or should Congress relax current restrictions on
depository institutions,
the Trustees will consider appropriate changes in the
services.
State securities laws governing the ability of depository
institutions to act as
underwriters or distributors of securities may differ from
interpretations given
to the Glass-Steagall Act and, therefore, banks and
financial institutions may
be required to register as dealers pursuant to state law.
SHAREHOLDER SERVICES PLAN. The Prime Money Market Fund has
adopted a
Shareholder Services 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 Funds with certain
administrative personnel
and services necessary to operate the Funds, such as certain
legal and
accounting services. Federated Administrative Services
provides these at an
annual rate as specified below:
<TABLE>
<CAPTION>
MAXIMUM
ADMINISTRATIVE AVERAGE AGGREGATE
FEE DAILY NET ASSETS OF THE TRUST
<C> <S>
.150 of 1% on the first $250 million
.125 of 1% on the next $250 million
.100 of 1% on the next $250 million
.075 of 1% on assets in excess of $750 million
</TABLE>
The administrative fee received during any fiscal year shall
be at least $50,000
for each portfolio in Independence One Mutual Funds.
Federated Administrative
Services may choose voluntarily to reimburse a portion of
its fee.
CUSTODIAN. Michigan National Bank, Farmington Hills,
Michigan, is custodian for
the securities and cash of the Funds, and receives a fee for
that service.
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT. Federated
Services Company,
Boston, Massachusetts, is transfer agent for the shares of
the Funds and
dividend disbursing agent for the Funds.
INDEPENDENT AUDITORS. The independent auditors for the
Funds are KPMG Peat
Marwick LLP, Pittsburgh, Pennsylvania.
EXPENSES OF THE FUNDS
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.
With respect to the Prime Money Market Fund, expenses of the
Shareholder
Services Plan described above are allocated only to Class A
Shares. At present,
no other expenses are allocated to Class A and Class B
Shares as a class.
However, the Trustees reserve the right to allocate certain
other expenses to
the holders of Class A and Class B 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 Class A and
Class B 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 Class A
and Class B Shares; legal fees relating solely to Class A
and Class B Shares;
and Trustees' fees incurred as a result of issues relating
solely to Class A and
Class B Shares.
NET ASSET VALUE
- ------------------------------------------------------------
- --------------------
The Funds attempt 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 Funds, subtracting the
interest of shares in
the liabilities of the Funds and those attributable to
shares, and dividing the
remainder by the number of shares outstanding. The Funds, of
course, cannot
guarantee that the net asset value will always remain at
$1.00 per share.
INVESTING IN THE FUND
- ------------------------------------------------------------
- --------------------
SHARE PURCHASES
Shares of the Funds 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 Funds
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 a
Fund's shares, the
distributor may from time to time offer certain items of
nominal value to any
shareholder or investor. The Funds reserve the right to
reject any purchase
request.
TO PLACE AN ORDER. An investor may call toll-free 1-800-334-
2292 to purchase
shares of the Funds through Michigan National Bank or
Independence One. In
addition, investors may purchase shares of the Funds 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 (include name of Fund and, if
applicable, "Class A" or
"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 (include
name of Fund and, if applicable, "Class A" or "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 the shares of the Prime
Money Market Fund
Class A Shares, the U.S. Treasury Money Market Fund, and the
Michigan Municipal
Cash Fund by an investor is $1,000.
The minimum initial investment in Prime Money Market Fund
Class B 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 in all the Funds 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 Funds on a day selected by the depository
institution and its
customer, or when the demand deposit account reaches a
predetermined dollar
amount (e.g. $5,000).
PARTICIPATING DEPOSITORY INSTITUTIONS. Participating
depository institutions
are responsible for prompt transmission of orders relating
to the program. These
depository institutions are the record owners of the shares
of the Funds.
Depository institutions participating in this program may
charge their customers
for their services relating to the program. This prospectus
should, therefore,
be read together with any agreement between the customer and
the depository
institution with regard to the services provided, the fees
charged for those
services, and any restrictions and limitations imposed.
WHAT SHARES COST
Fund shares are sold at their net asset value next
determined after an order is
received. There is no sales charge imposed by the Funds.
The net asset value is determined at 12:00 noon 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; or
(iii) the following
holidays: New Year's Day, President's Day, Good Friday,
Memorial Day,
Independence Day, Labor Day, Thanksgiving Day, and Christmas
Day.
CERTIFICATES AND CONFIRMATIONS
As transfer agent for the Funds, Federated Services Company
maintains a share
account for each shareholder of record. Share certificates
are not issued unless
shareholders so request by contacting their Michigan
National Bank or
Independence One representative or authorized broker in
writing.
Monthly confirmations are sent to report transactions such
as purchases and
redemptions as well as dividends paid during the month.
DIVIDENDS
Dividends are declared daily and paid monthly. Dividends are
automatically
reinvested on payment dates in additional shares of the
Funds unless cash
payments are requested by shareholders in writing to the
Funds through their
Michigan National Bank or Independence One representative or
authorized broker.
Share purchase orders received by a Fund before 11:00 a.m.
(Eastern time) earn
dividends that day.
In the case of the Prime Money Market Fund, 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
should call Michigan National Bank at 1-800-334-2292, and
are reminded that the
Fund reserves 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 Funds are shareholders of the Trust
which consists of
the Funds, Independence One Equity Plus Fund, Independence
One Fixed Income
Fund, Independence One Michigan Municipal Bond Fund, and
Independence One U.S.
Government Securities Fund ("participating funds").
Shareholders of the Funds
have access to the participating funds through an exchange
program.
Shareholders who exercise this exchange privilege must
exchange shares having a
net asset value of at least $1,000. Prior to any exchange,
the shareholder must
receive a copy of the current prospectus of the
participating fund into which an
exchange is to be made.
The exchange privilege is available to shareholders residing
in any state in
which the participating fund shares being acquired may
legally be sold. Upon
receipt by the transfer agent of proper instructions and all
necessary
supporting documents, shares submitted for exchange will be
redeemed at the
next-determined net asset value. If the exchanging
shareholder does not have an
account in the participating fund whose shares are being
acquired, a new account
will be established with the same registration, dividend and
capital gain
options as the account from which shares are exchanged,
unless otherwise
specified by the shareholder. In the case where the new
account registration is
not identical to that of the existing account, a signature
guarantee is
required. (See "Redeeming Shares by Mail.") Exercise of this
privilege is
treated as a redemption and new purchase for federal income
tax purposes and,
depending on the circumstances, a short or long-term capital
gain or loss may be
realized. The Funds reserve the right to modify or terminate
the exchange
privilege at any time. Shareholders would be notified prior
to any modification
or termination. Shareholders may obtain further information
on the exchange
privilege by calling their Michigan National Bank or
Independence One
representative or authorized broker.
EXCHANGE BY TELEPHONE. Shareholders may provide
instructions for exchanges
between participating funds by telephone to their Michigan
National Bank or
Independence One representative by calling 1-800-334-2292.
In addition,
investors may exchange shares by calling their authorized
broker directly.
An authorization form permitting the Funds to accept
telephone exchange requests
must first be completed. It is recommended that investors
request this privilege
at the time of their initial
application. If not completed at the time of initial
application, authorization
forms and information on this service can be obtained
through a Michigan
National Bank or Independence One representative or
authorized broker. Telephone
exchange instructions may be recorded.
Shares may be exchanged by telephone only between fund
accounts having identical
shareholder registrations. Exchange instructions given by
telephone may be
electronically recorded.
Telephone exchange instructions must be received by Michigan
National Bank,
Independence One, or an authorized broker and transmitted to
the transfer agent
before 4:00 p.m. (Eastern time) for shares to be exchanged
the same day.
Shareholders who exchange into shares of a Fund will not
receive a dividend from
that Fund on the date of the exchange.
Shareholders of the Funds 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 Funds, they
may be liable for
losses due to unauthorized or fraudulent telephone
instructions.
WRITTEN EXCHANGE. A shareholder wishing to make an exchange
by written request
may do so by sending it to: Independence One Mutual Funds,
27777 Inkster Road,
Mail Code 10-52, Farmington Hills, Michigan 48333-9065. In
addition, investors
may exchange shares by sending a written request to their
authorized broker
directly.
REDEEMING SHARES
- ------------------------------------------------------------
- --------------------
Fund 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 Funds compute net asset value.
Redemption requests
cannot be executed on days on which the New York Stock
Exchange is closed and
federal holidays restricting wire transfers. Telephone or
written requests for
redemptions must be received in proper form and can be made
to the Funds through
a Michigan National Bank or Independence One representative
or authorized
broker. Although the transfer agent does not charge for
telephone redemptions,
it reserves the right to charge a fee for the cost of wire-
transferred
redemptions of less than $5,000.
CASH SWEEP PROGRAM. Clients of Michigan National Bank who
have executed a Cash
Sweep Agreement should refer to that Agreement for
information about redeeming
fund shares purchased through that program.
REDEEMING BY CHECK. At the shareholder's request, Federated
Services Company
will establish a checking account for redeeming Prime Money
Market Fund Class A
Shares, U.S. Treasury Money Market Fund, and Michigan
Municipal Cash Fund
shares. For further information, contact a Michigan National
Bank or
Independence One representative or authorized broker.
With a Fund checking account, shares may be redeemed simply
by writing a check
for $250 or more. The redemption will be made at the net
asset value on the date
that the transfer agent presents the check to the Fund. A
check may not be
written to close an account. In addition, if a shareholder
wishes to redeem
shares and have the proceeds available, a check may be
written and negotiated
through the shareholder's local bank. Checks should never be
sent to the
transfer agent to redeem shares. Cancelled checks are sent
to the shareholder
each month.
BY TELEPHONE. 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
Funds 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
and will not be
entitled to that day's dividend.
An authorization form permitting the Funds 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 Funds, they
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, if applicable, 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 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 Funds do not accept signatures guaranteed by a notary
public.
The Funds and their transfer agent have adopted standards
for accepting
signature guarantees from the above institutions. The Funds
may elect in the
future to limit eligible signature guarantors to
institutions that are members
of a signature guarantee program. The Funds and their
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 Funds may
redeem shares in any account and pay the proceeds to the
shareholder if the
account balance falls below a required minimum value of
$1,000, (or $1,000,000
in the case of the Prime Money Market Fund Class B Shares),
due to shareholder
redemptions. Before shares are redeemed to close an account,
the shareholder is
notified in writing and allowed 30 days to purchase
additional shares to meet
the minimum requirement.
REDEMPTION IN KIND
The Funds are obligated to redeem shares solely in cash up
to $250,000 or 1% of
the Fund's net asset value, whichever is less, for any one
shareholder within a
90-day period.
Any redemption beyond this amount will also be in cash
unless the Trustees
determine that payments should be in kind. In such a case,
the Fund will pay all
or a portion of the remainder of the redemption in portfolio
instruments, valued
in the same way as the Fund determines net asset
value. The portfolio instruments will be selected in a
manner that the Trustees
deem fair and equitable.
Redemption in kind is not as liquid as a cash redemption. If
redemption is made
in kind, shareholders receiving their securities and selling
them before their
maturity could receive less than the redemption value of
their securities and
could incur certain transaction costs.
SHAREHOLDER INFORMATION
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VOTING RIGHTS
Each share of the Funds 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
August 4, 1995,
Michigan National Bank may for certain purposes be deemed to
control the Prime
Money Market Fund Class A Shares and Class B Shares and the
U.S. Treasury Money
Market Fund because it is owner of record of certain shares
of the Funds.
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
Funds 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
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- --------------------
FEDERAL INCOME TAX
The Funds intend to pay no federal income tax because each
Fund expects to meet
requirements of the Internal Revenue Code applicable to
regulated investment
companies (including its diversification requirements) and
to receive the
special tax treatment afforded to such companies. Each 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
any of the other
Funds.
Unless otherwise exempt, shareholders of Prime Money Market
Fund and U.S.
Treasury Money Market Fund are required to pay federal
income tax on any
dividends and other distributions received. These tax
consequences apply whether
dividends and distributions are received in cash or as
additional Shares. The
Funds 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.
MICHIGAN MUNICIPAL CASH FUND TAX CONSIDERATIONS
FEDERAL INCOME TAX. In general, shareholders are not
required to pay federal
regular income tax on any dividends received from the Fund
that represent net
interest on tax-exempt municipal bonds. However, under the
Tax Reform Act of
1986, dividends representing net interest income earned on
certain "private
activity" bonds issued after August 7, 1986 may be included
in calculating the
federal individual alternative minimum tax or the federal
alternative minimum
tax for corporations. The Fund may purchase all types of
municipal bonds,
including private activity bonds.
The alternative minimum tax applies when it exceeds the
regular tax for the
taxable year. Alternative minimum taxable income is equal to
the regular taxable
income of the taxpayer increased by certain "tax preference"
items not included
in regular taxable income and reduced by only a portion of
the deductions
allowed in the calculation of the regular tax. Thus, should
the Fund purchase
any private activity bonds, a portion of the Fund's
dividends may be treated as
a tax preference item.
Dividends of the Fund representing net interest income
earned on some temporary
investments and any realized net short-term gains are taxed
as ordinary income.
These tax consequences apply whether dividends are received
in cash or as
additional shares.
MICHIGAN TAXES. Under existing Michigan laws, distribution
made by the Fund
will not be subject to Michigan personal income taxes to the
extent that such
distributions qualify as "exempt-interest dividends" under
the Internal Revenue
Code of 1986, as amended, and represent (i) interest from
obligations of
Michigan or any of its political subdivisions or (ii) income
from obligations of
the United States government which are exempted from state
income taxation by a
law of the United States.
That portion of a shareholder's shares in the Fund
representing (i) bonds or
other similar obligations of Michigan or its political
subdivisions or, (ii)
obligations of the United States which are exempt from
taxation by a law of the
United States, and dividends paid by the Fund representing
interest payments on
securities, will be exempt from Michigan intangibles tax.
Distributions by the Fund are not subject to the Michigan
Single Business Tax to
the extent that such distributions are derived from interest
on obligations of
Michigan or its political subdivisions, or obligations of
the United States
government that are exempt from state taxation by a law of
the United States.
Certain municipalities in Michigan also impose an income tax
on individuals and
corporations. However, to the extent that the dividends from
the Fund are exempt
from federal regular income taxes, such dividends also will
be exempt from
Michigan municipal income taxes.
OTHER STATE AND LOCAL TAXES. Income from the Fund is not
necessarily free from
state income taxes in states other than Michigan or from
personal property
taxes. State laws differ on this issue, and shareholders are
urged to consult
their own tax advisers regarding the status of their
accounts under state and
local tax laws.
PERFORMANCE INFORMATION
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- --------------------
From time to time the Funds advertise their yield and
effective yield, and, in
the case of the Michigan Municipal Cash Fund, tax-equivalent
yield.
The yield of a Fund represents the annualized rate of income
earned on an
investment in the Fund over a seven-day period. It is the
annualized dividends
earned during the period on the investment, shown as a
percentage of the
investment. The effective yield is calculated similarly to
the yield, but, when
annualized, the income earned by an investment in the Fund
is assumed to be
reinvested daily. The effective yield will be slightly
higher than the yield
because of the compounding effect of this assumed
reinvestment. The
tax-equivalent yield of the Michigan Municipal Cash Fund is
calculated similarly
to the yield, but is adjusted to reflect the taxable yield
that the Michigan
Municipal Cash Fund would have had to earn to equal its
actual yield, assuming a
specific tax rate.
Yield and effective yield will be calculated separately for
the Prime Money
Market Fund 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.
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 a Fund after reinvesting all income
distributions. It is
calculated by dividing that change by the initial investment
and is expressed as
a percentage.
From time to time, advertisements for the Funds may refer to
ratings, rankings,
and other information in certain financial publications
and/or compare their
performance to certain indices.
INDEPENDENCE ONE
MUTUAL FUNDS
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
Michigan National Bank
27777 Inkster Road
Mail Code 10-30
Farmington Hills, Michigan 48333-9065
TRANSFER AGENT AND
DIVIDEND DISBURSING AGENT
Federated Services Company
P.O. Box 8600
Boston, Massachusetts 02266-8600
INDEPENDENT AUDITORS
KPMG Peat Marwick LLP
One Mellon Bank Center
Pittsburgh, Pennsylvania 15219
[RECYCLED PAPER LOGO]
Cusip 453777203
Cusip 453777302
Cusip 453777708
Cusip 453777401
G01285-01 (8/95)
Independence One(R)
Prime Money Market Fund
Class A Shares
Class B Shares
U.S. Treasury
Money Market Fund
Michigan Municipal
Cash Fund
Distributed by Federated Securities Corp.
Prospectus dated
August 31, 1995
INDEPENDENCE ONE PRIME MONEY MARKET FUND
Class A Shares
Class B Shares
INDEPENDENCE ONE U.S. TREASURY MONEY MARKET
FUND
INDEPENDENCE ONE MICHIGAN MUNICIPAL CASH
FUND
(PORTFOLIOS OF INDEPENDENCE ONE MUTUAL
FUNDS)
COMBINED STATEMENT OF ADDITIONAL
INFORMATION
This Statement of Additional Information should be read
with the
combined prospectus of Independence One Prime Money
Market Fund,
Independence One U.S. Treasury Money Market Fund, and
Independence One
Michigan Municipal Cash Fund (the "Funds"), portfolios
of Independence
One Mutual Funds (the "Trust") dated August 31, 1995.
This Combined
Statement is not a prospectus. To receive a copy of a
prospectus,
write or call the Trust.
Statement dated August 31, 1995
[LOGO] FEDERATED SECURITIES CORP.
-----------------------------------------------------
- ----
Distributor
A subsidiary of FEDERATED INVESTORS
TABLE OF CONTENTS
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GENERAL INFORMATION ABOUT THE FUND
1
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INVESTMENT OBJECTIVE AND POLICIES
1
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Types of Investments
1
Repurchase Agreements
2
When-Issued and Delayed Delivery Transactions
2
Reverse Repurchase Agreements
3
Restricted and Illiquid Securities
3
Variable Rate Demand Notes
3
Investment Limitations
3
MICHIGAN MUNICIPAL CASH FUND INVESTMENT RISKS
6
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INDEPENDENCE ONE MUTUAL FUNDS MANAGEMENT
7
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Officers and Trustees
7
Fund Ownership
8
Trustees' Compensation
8
Trustee Liability
8
INVESTMENT ADVISORY SERVICES
9
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Adviser to the Fund
9
Advisory Fees
9
ADMINISTRATIVE SERVICES
9
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CUSTODIAN
9
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BROKERAGE TRANSACTIONS
9
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PURCHASING SHARES
10
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Distribution Plan (U.S. Treasury Money
Market Fund and Michigan Municipal
Cash Fund only)
10
Shareholder Services Plan (Prime Money
Market Fund Class A Shares only)
10
Conversion to Federal Funds
11
DETERMINING NET ASSET VALUE
11
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Use of the Amortized Cost Method
11
EXCHANGE PRIVILEGE
12
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REDEEMING SHARES
12
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Redemption in Kind
12
TAX STATUS
12
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The Funds' Tax Status
12
Shareholders' Tax Status
12
YIELD
12
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EFFECTIVE YIELD
13
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TAX-EQUIVALENT YIELD
13
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Tax-Equivalency Table
14
PERFORMANCE COMPARISONS
14
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FINANCIAL STATEMENTS
15
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- ---
GENERAL INFORMATION ABOUT THE FUNDS
- ------------------------------------------------------------
- --------------------
The Trust was established as a Massachusetts business trust
under a Declaration
of Trust dated January 9, 1989. This Combined Statement of
Additional
Information relates only to three portfolios of securities
(the "Funds") which
are as follows: Independence One Prime Money Market Fund
("Prime Money Market
Fund"), Independence One U.S. Treasury Fund ("U.S. Treasury
Fund"), and
Independence One Michigan Municipal Cash Fund ("Michigan
Municipal Cash Fund").
Shares of the Prime Money Market Fund are currently offered
in two classes:
Class A Shares and Class B Shares. Prior to May 1, 1995, the
Prime Money Market
Fund offered a single class of shares, which are currently
designated as Class A
Shares.
INVESTMENT OBJECTIVE AND POLICIES OF THE FUNDS
- ------------------------------------------------------------
- --------------------
The prospectus discusses the objective of each Fund and the
policies it employs
to achieve those objectives. The following discussion
supplements the
description of the Funds' investment policies in the
prospectus.
The Funds' respective investment objectives cannot be
changed without the
approval of shareholders. Except as otherwise noted, the
investment policies
described below may be changed by the Board of Trustees (the
"Trustees") without shareholder approval. Shareholders will
be notified before
any material change in these policies becomes effective.
TYPES OF INVESTMENTS
BANK INSTRUMENTS
The Prime Money Market Fund may invest in instruments
of domestic and
foreign banks and other deposit institutions.
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.
In addition to domestic bank obligations such as
certificates of deposit,
demand and time deposits, savings shares, and
bankers' acceptances, the
Prime Money Market 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
Prime Money Market
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.
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- --------------------
U.S. TREASURY OBLIGATIONS
The U.S. Treasury Money Market Fund invests only in
short-term U.S.
Treasury obligations. "Short-term U.S. Treasury
obligations" as used
herein refers to evidences of indebtedness issued by
the United States,
or issued by an agency or instrumentality thereof,
and fully guaranteed
as to principal and interest by the United States,
maturing in 397 days
or less from the date of acquisition or purchased
pursuant to repurchase
agreements that provide for repurchase by the seller
within one year from
the date of acquisition. The Fund may also retain
assets in cash.
MICHIGAN MUNICIPAL SECURITIES
The Michigan municipal securities in which the
Michigan Municipal Cash
Fund invests have the characteristics set forth in
the prospectus.
A Michigan municipal security which is unrated will
be determined by the
Trust's Trustees to be an appropriate investment if
it is of comparable
quality to municipal securities within the Fund's
rating requirements.
The Trustees consider the creditworthiness of the
issuer of a Michigan
municipal security, the issuer of a participation
interest if the Fund
has the right to demand payment from the issuer of
the interest or the
guarantor of payment by either of those issuers.
If a security loses its rating or the security's
rating is reduced below
the required minimum after the Fund purchases it, the
Fund is not
required to sell the security. The investment adviser
considers this
event, however, in its determination of whether the
Fund should continue
to hold the security in its portfolio. If ratings
made by a nationally
recognized statistical rating organization ("NRSRO")
change because of
changes in those organizations or in their rating
systems, the Fund will
try to use comparable ratings as standards in
accordance with the
investment policies described in the Fund's
prospectus.
Examples of Michigan municipal securities are:
tax-exempt project notes issued by the U.S.
Department of Housing and
Urban Development to provide financing for housing,
redevelopment, and
urban renewal;
municipal notes and tax-exempt commercial paper;
serial bonds sold with a series of maturity dates;
tax anticipation notes sold to finance working
capital needs of
municipalities in anticipation of receiving taxes at
a later date;
bond anticipation notes sold in anticipation of the
issuance of
longer-term bonds in the future;
revenue anticipation notes sold in expectation of
receipt of federal
income available under the Federal Revenue Sharing
Program;
construction loan notes insured by the Federal
Housing Administration
and financed by the Federal or
Government National Mortgage Association; and
pre-refunded municipal bonds refundable at a later
date.
From time to time, such as when suitable Michigan
municipal securities
are not available, the Fund may invest a portion of
its assets in cash.
Any portion of the Fund's assets maintained in cash
will reduce the
amount of assets in Michigan municipal securities and
thereby reduce the
Fund's yield.
REPURCHASE AGREEMENTS
- ------------------------------------------------------------
- --------------------
The Funds or their custodian will take possession of the
securities subject to
repurchase agreements and these securities will be marked to
market daily. To
the extent that the original seller does not repurchase the
securities from a
Fund, the Fund could receive less than the repurchase price
on any sale of such
securities. In the event that such a defaulting seller filed
for bankruptcy or
became insolvent, disposition of such securities by the Fund
might be delayed
pending court action. The Funds believe that under the
regular procedures
normally in effect for custody of a 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 Funds will
only enter into repurchase agreements with banks and other
recognized financial
institutions such as brokers/dealers which are deemed by the
Funds' adviser to
be creditworthy pursuant to guidelines established by the
Trustees.
The Michigan Municipal Cash Fund will use repurchase
agreements only as
temporary investments during times of unusual market
conditions for defensive
purposes and to maintain liquidity.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS
These transactions are made to secure what is considered to
be an advantageous
price or yield for a Fund. No fees or other expenses, other
than normal
transaction costs, are incurred. However, liquid assets of a
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 are maintained until the transaction has been settled.
The Funds do 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 Fund assets.
REVERSE REPURCHASE AGREEMENTS
The Funds 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
Funds 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 Funds will be able to avoid selling portfolio
instruments at a
disadvantageous time.
RESTRICTED AND ILLIQUID SECURITIES
The Prime Money Market Fund and the Michigan Municipal Cash
Fund may invest in
restricted securities. All of the Funds may invest in
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.
VARIABLE RATE DEMAND NOTES
The Prime Money Market Fund and the Michigan Municipal Cash
Fund may invest in
variable rate demand notes. Variable interest rates
generally reduce changes in
the market value of municipal securities from their original
purchase prices.
Accordingly, as interest rates decrease or increase, the
potential for capital
appreciation or depreciation is less for variable rate
securities than for fixed
income obligations.
Many securities with variable interest rates purchased by
the Fund are subject
to repayment of principal (usually within seven days) on the
Fund's demand. For
purposes of determining the Fund's average maturity, the
maturities of these
variable rate demand securities (including participation
interests) are the
longer of the periods remaining until the next readjustment
of their interest
rates or the periods remaining until their principal amounts
can be recovered by
exercising the right to demand payment. The terms of these
variable rate demand
instruments require payment of principal and accrued
interest from the issuer of
the municipal obligations, the issuer of the participation
interests, or a
guarantor of either issuer.
INVESTMENT LIMITATIONS
SELLING SHORT AND BUYING ON MARGIN
The Funds 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.
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- --------------------
ISSUING SENIOR SECURITIES AND BORROWING MONEY
The Funds will not issue senior securities except
that the Funds 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 Funds 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 Funds to meet redemption
requests when the
liquidation of portfolio securities is deemed to be
inconvenient or
disadvantageous. The Funds will not purchase any
securities while
borrowings in excess of 5% of its total assets are
outstanding.
PLEDGING ASSETS
The Funds will not mortgage, pledge, or hypothecate
any assets except to
secure permitted borrowings. In these cases, a Fund
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.
UNDERWRITING
The Prime Money Market Fund and the Michigan
Municipal Cash Fund will not
underwrite any issue of securities, except as a Fund
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.
LENDING CASH OR SECURITIES
The Prime Money Market 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.
The U.S. Treasury Money Market Fund will not lend any
of its assets,
except that it may purchase or hold U.S. Treasury
obligations, including
repurchase agreements, in accordance with its
investment objective,
policies, and limitations.
The Michigan Municipal Cash Fund will not lend of its
assets, except that
it may acquire publicly or nonpublicly issued
municipal securities or
temporary investments or enter into repurchase
agreements in accordance
with its investment objective, policies, and
limitations.
INVESTING IN COMMODITIES, COMMODITY CONTRACTS, OR
COMMODITY FUTURES
CONTRACTS
The Prime Money Market Fund and the Michigan
Municipal Cash Fund will not
purchase or sell commodities, commodity contracts, or
commodity futures
contracts.
INVESTING IN REAL ESTATE
The Prime Money Market Fund and the Michigan
Municipal Cash 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.
INVESTING IN RESTRICTED SECURITIES
The Prime Money Market Fund will not invest more than
10% of Fund net
assets in securities subject to restrictions on
resale under the federal
securities laws, except for Section 4(2) commercial
paper.
The Michigan Municipal Cash Fund will not invest more
than 10% of the
value of its net assets in securities subject to
restrictions on resale
under the Securities Act of 1933.
DIVERSIFICATION OF INVESTMENTS
With respect to 75% of the value of its assets, the
Prime Money Market
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 Michigan Municipal Cash Fund will not invest more
than 10% of its
total assets in the securities of any one issuer
(except cash and cash
items, repurchase agreements collateralized by U.S.
government securities
and U.S. government obligations) with respect to
securities comprising
75% of its assets.
- ------------------------------------------------------------
- --------------------
Under this limitation each governmental subdivision,
including states and
the District of Columbia, territories, possessions of
the United States,
or their political subdivisions, agencies,
authorities,
instrumentalities, or similar entities, will be
considered a separate
issuer if its assets and revenues are separate from
those of the
governmental body creating it and the security is
backed only by its own
assets and revenues.
Industrial development bonds, backed only by the
assets and revenues of a
nongovernmental user, are considered to be issued
solely by that user. If
in the case of an industrial development bond or
governmental-issued
security, a governmental or other entity guarantees
the security, such
guarantee would be considered a separate security
issued by the guarantor
as well as the other issuer, subject to limited
exclusions allowed by the
Investment Company Act of 1940.
CONCENTRATION OF INVESTMENTS
The Prime Money Market 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.
The above investment limitations cannot be changed without
approval of
shareholders. The following limitations, however, may be
changed by the Trustees
without shareholder approval. Shareholders will be notified
before any material
change in these limitations becomes effective.
INVESTING IN SECURITIES OF OTHER INVESTMENT COMPANIES
The Prime Money Market Fund and the Michigan
Municipal Cash Fund can
acquire up to 3 per centum of the total outstanding
stock of other
investment companies. The Funds 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 Funds'
shares does not include a sales load exceeding 1-1/2
percent. The Funds
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.
The U.S. Treasury Money Market Fund will not purchase
securities of other
investment companies except as part of a merger,
consolidation,
reorganization, or other acquisition.
INVESTING IN ILLIQUID SECURITIES
The Funds 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.
INVESTING IN ISSUERS WHOSE SECURITIES ARE OWNED BY
OFFICERS AND TRUSTEES OF
THE TRUST
The Prime Money Market Fund and the Michigan
Municipal Cash 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 NEW ISSUERS
The Prime Money Market 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.
The Michigan Municipal Cash Fund will not invest more
than 5% of the
value of its total assets in industrial development
bonds where payment
of principal and interest is the responsibility of
companies (or in the
alternative, guarantors, where applicable) which have
records of less
than three years of continuous operations, including
the operation of any
predecessor.
INVESTING IN MINERALS
The Prime Money Market 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.
- ------------------------------------------------------------
- --------------------
DEALING IN PUTS AND CALLS
The Michigan Municipal Cash Fund will not purchase or
sell puts, calls,
straddles, spreads, or any combination of them,
except that the Fund may
purchase municipal securities accompanied by
agreements of sellers to
repurchase them at the Fund's option.
In order to comply with the registration requirements of a
particular state, the
Prime Money Market Fund and the Michigan Municipal Cash 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 Funds 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
Fund net assets during the last fiscal period and have no
present intent to do
so during the coming fiscal year.
MICHIGAN MUNICIPAL CASH FUND INVESTMENT RISKS
- ------------------------------------------------------------
- --------------------
The Michigan economy has diversified away from durable goods
manufacturing with
service sector employment currently at approximately 25% of
total employment.
However, manufacturing, and the automobile sector in
particular, still have
significant influence over the State's economy. Michigan's
economy tends to
fluctuate with the cyclical trends of the manufacturing
sector, which still
accounts for nearly 23% of total state employment. The
State's unemployment rate
is below the national unemployment rate for the first time
in almost 20 years
reflecting both the diversification of the regional economy
and significant
improvement in the automobile sector and related industries.
Michigan's finances were hard hit during the 1990 and 1991
fiscal periods.
Spending cuts and an improving state economy resulted in
surplus revenues of
$254 million in fiscal 1992. As a result of continuing
surplus funds in fiscal
years 1993 and 1994, Michigan's budget stabilization fund
reached an
historically high level of $779 million at the end of fiscal
1994, with an
additional increase now projected for the year ended
September 30, 1995. The
State of Michigan maintains a conservative debt position
with per capita debt
remaining below the national average.
On August 19, 1993, the Governor of Michigan signed into law
Act 145, Public
Acts of Michigan, 1993 ("Act 145") a measure which would
have significantly
impacted financing of primary and secondary school
operations and which has
resulted in additional property tax and school finance
reform legislation. Act
145 would have exempted all property in the State of
Michigan from millage
levied for local and intermediate school districts operating
purposes, other
than millage levied for community colleges, effective July
1, 1994. In order to
replace local property tax revenues lost as a result of Act
145, the Michigan
Legislature, in December 1993, enacted several statutes
which address property
tax and school finance reform. Education reform legislation
not dealing with
school finance was also enacted.
The property tax and school finance reform measures included
a ballot proposal
("Proposal A") which was subject to voter approval and in
fact approved on March
15, 1994, and a statutory proposal which would have
automatically taken effect
if Proposal A had not been approved. Under Proposal A as
approved, effective May
1, 1994, the state sales and use tax was increased from 4%
to 6%, the state
income tax was decreased from 4.6% to 4.4%, the cigarette
tax was increased from
$.25 to $.75 per pack and an additional tax of 16% of the
wholesale price was
imposed on certain other tobacco products. A 0.75% real
estate transfer tax was
effective January 1, 1995. Beginning in 1994, a state
property tax of 6 mills
was imposed on all real and personal property currently
subject to the general
property tax. The ability of school districts to levy
property taxes for school
operating purposes was restored. A school board may, with
voter approval, be
able to levy up to the lesser of 18 mills or the number of
mills levied in 1993
for school operating purposes, on non-homestead property.
Proposal A contains
additional provisions regarding the ability of local school
districts to levy
taxes as well as a limit on assessment increases for each
parcel of property,
beginning in 1995 to the lesser of 5% or the rate of
inflation. When property is
subsequently sold, its assessed value will revert to the
current assessment
level of 50% of true cash value. Under Proposal A, much of
the additional
revenue generated by the new taxes will be dedicated to the
State School Aid
Fund.
Proposal A contains a system of financing local school
operating costs which
relies upon a foundation allowance amount which may vary by
district based upon
historical spending levels. State funding will provide each
school district an
amount equal to the difference between its foundation
allowance and the revenues
generated by its local property tax levy. Under Proposal A,
a local school
district will also be entitled to levy supplemental property
taxes to generate
additional revenues if its foundation allowance is less than
its historical per
pupil expenditures. Proposal A also contains provisions
which allow for the levy
of a limited number of enhancement mills on regional and
local district bases.
Proposal A shifts significant portions of the cost of local
school operations
from local districts to the state and raises additional
state revenues to fund
these additional State expenses. These additional revenues
will be included
within the State's Constitutional revenue limitations and
may impact the State's
ability to raise additional revenues in the future. The
credit impact on local
school districts is that revenue growth is linked closely to
state economy and
local enrollment.
INDEPENDENCE ONE MUTUAL FUNDS MANAGEMENT
- ------------------------------------------------------------
- --------------------
OFFICERS AND TRUSTEES
Officers and Trustees are listed with their addresses,
birthdates, 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
Birthdate: May 6, 1930
Harold Berry Trustee
Managing Partner, Berry Enterprises; Chairman, Independent
100 Galleria Officentre,
Sprinkler Companies, Inc.; formerly, Chairman, Executive
Suite 219
Committee, Federal Enterprises, Inc.; Chairman, Berry,
Ziegelman &
Southfield, MI
Company.
Birthdate: September 17, 1925
Clarence G. Frame+ Trustee
Director, Tosco Corporation, Chicago Milwaukee Corporation,
and
W-875 First Bank Building
Voyageur Funds Group; formerly, Vice Chairman, First Bank
System,
332 Minnesota Street
Inc., and President, The First National Bank of St. Paul, a
St. Paul, MN
subsidiary of First Bank System, Inc.
Birthdate: July 26, 1918
Harry J. Nederlander+* Trustee
Chairman, Nederlander Enterprises.
231 S. Woodward,
Suite 219
Birmingham, MI
Birthdate: September 5, 1917
Thomas S. Wilson Trustee
President and Executive Administrator of the Detroit
Pistons;
Two Championship Drive
President, Arena Associates, Inc.
Auburn Hills, MI
Birthdate: October 9, 1949
Edward C. Gonzales President and
Executive Vice President, Treasurer and Director, Federated
Federated Investors Tower Treasurer
Securities Corp.; Chairman, Treasurer and Trustee, Federated
Pittsburgh, PA
Administrative Services; Vice President, Treasurer and
Trustee,
Birthdate: October 22, 1930
Federated Investors.
Jeffrey W. Sterling Vice President
Vice President, Federated Administrative Services.
Federated Investors Tower and Assistant
Pittsburgh, PA Treasurer
Birthdate: February 5, 1947
Jay S. Neuman Secretary
Corporate Counsel, Federated Investors; prior to
Federated Investors Tower
January 1991, Associate Counsel, The Boston Company
Advisors, Inc.
Pittsburgh, PA
Birthdate: April 22, 1950
</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 list indicates the beneficial ownership of
shareholders who are
the beneficial owners of more than 5% of the outstanding
shares of the following
Funds as of August 4, 1995: Michigan National Bank, acting
in various capacities
for numerous accounts, owned, of record, approximately
137,367,652 shares
(50.22%) of Prime Money Market Fund Class A Shares;
approximately 18,825,686
shares (87.15%) of Prime Money Market Fund Class B Shares;
approximately
105,026,182 shares (40.80%) of U.S. Treasury Money Market
Fund; and
approximately 13,744,716 shares (19.63%) of Michigan
Municipal Cash Fund. In
addition, Robert Phelps, Bingham Farms, Michigan, owned
approximately 2,776,091
shares (12.85%) of Prime Money Market Fund Class B Shares;
Value Rx, Inc.,
Bloomfield, Michigan, owned approximately 36,566,278 shares
(14.20%) of U.S.
Treasury Money Market Fund; Christman Company, Lansing,
Michigan, owned
approximately 6,317,182 shares (9.02%) of Michigan Municipal
Cash Fund; Oak Mall
Shopping Center, Troy, Michigan, owned approximately
4,236,052 shares (6.05%) of
Michigan Municipal Cash Fund; and Clark Construction
Company, Inc., Lansing,
Michigan, owned approximately 3,733,206 shares (5.33%) of
Michigan Municipal
Cash Fund.
TRUSTEES' COMPENSATION
<TABLE>
<CAPTION>
AGGREGATE
NAME, POSITION COMPENSATION
WITH TRUST FROM TRUST*
<S> <C>
Robert E. Baker $8,500
Trustee
Harold Berry $8,500
Trustee
Clarence G. Frame $8,500
Trustee
Harry J. Nederlander $8,500
Trustee
Thomas S. Wilson $7,650
Trustee
</TABLE>
*The aggregate compensation is provided for the Trust. The
Trust is the only
Investment Company in the Fund Complex. Information is
furnished for the fiscal
year ended April 30, 1995, during which the Trust was
comprised of four
portfolios.
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 Funds, or
any shareholder of
the Funds for any losses that may be sustained in the
purchase, holding, or sale
of any security, or for anything done or omitted by it,
except acts or omissions
involving willful misfeasance, bad faith, gross negligence,
or reckless
disregard of the duties imposed upon it by its contract with
the Trust.
ADVISORY FEES
For its advisory services, Michigan National Bank receives
an annual investment
advisory fee as described in the prospectus.
<TABLE>
<CAPTION>
1995 1994 1993
ADVISORY ADVISORY ADVISORY ADVISORY
ADVISORY ADVISORY
PORTFOLIO FEE
FEE WAIVER FEE FEE WAIVER FEE FEE
WAIVER
<S> <C>
<C> <C> <C> <C> <C>
Prime Money Market Fund........................... $
1,066,096 $ 0 $ 1,497,420 $ 64,765 $
1,437,564 $ 158,210
U.S. Treasury Money Market Fund...................
983,049 0 832,041 586
935,189 196,055
Michigan Municipal Cash Fund......................
248,836 128,411 299,965 163,601
351,532 174,669
</TABLE>
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 Funds for the
fees set forth in the
prospectus.
<TABLE>
<CAPTION>
1995 1994 1993
ADMINISTRATIVE ADMINISTRATIVE ADMINISTRATIVE
PORTFOLIO
FEE FEE FEE
<S>
<C> <C> <C>
Prime Money Market
Fund........................................................
... $ 344,553 $ 470,126 $ 457,734
U.S. Treasury Money Market
Fund...................................................
317,759 262,246 297,053
Michigan Municipal Cash
Fund......................................................
80,489 94,272 111,949
</TABLE>
CUSTODIAN
- ------------------------------------------------------------
- --------------------
For its services as custodian, Michigan National Bank
receives an annual fee,
payable monthly, based on a percentage of each Fund's
average aggregate daily
net assets and the number and type of transactions, plus out
of pocket expenses
BROKERAGE TRANSACTIONS
- ------------------------------------------------------------
- --------------------
When selecting brokers and dealers to handle the purchase
and sale of portfolio
instruments, the Adviser looks for prompt execution of the
order at a favorable
price. In working with dealers, the Adviser will generally
use those who are
recognized dealers in specific portfolio instruments, except
when a better price
and execution of the order can be obtained elsewhere. The
Adviser makes
decisions on portfolio transactions and selects brokers and
dealers subject to
review by the Trustees.
The Adviser may select brokers and dealers who offer
brokerage and research
services. These services may be furnished directly to the
Fund or to the Adviser
and may include:
advice as to the advisability of investing in securities;
security analysis and reports;
economic studies;
industry studies;
receipt of quotations for portfolio evaluations; and
similar services.
The Adviser and its affiliates exercise reasonable business
judgment in
selecting brokers who offer brokerage and research services
to execute
securities transactions. They determine in good faith that
commissions charged
by such persons are reasonable in relationship to the value
of the brokerage and
research services provided.
Research services provided by brokers may be used by the
Adviser for other
accounts. To the extent that receipt of these services may
supplant services for
which the Adviser or its affiliates might otherwise have
paid, it would tend to
reduce their expenses.
PURCHASING SHARES
- ------------------------------------------------------------
- --------------------
Shares are sold at their net asset value without a sales
charge on days which
the New York Stock Exchange is open for business, except on
federal holidays
restricting wire transfers. The procedure for purchasing
shares of the Funds is
explained in the prospectus under "Investing in the Fund."
DISTRIBUTION PLAN (U.S. TREASURY MONEY MARKET FUND AND
MICHIGAN MUNICIPAL CASH
FUND ONLY)
The Trust has adopted a Plan pursuant to Rule 12b-1 which
was promulgated by the
Securities and Exchange Commission pursuant to the
Investment Company Act of
1940 (the "Plan"). The Plan provides for payment of fees to
Federated Securities
Corp. to finance any activity which is principally intended
to result in the
sale of the Funds' shares subject to the Plan. Such
activities may include the
advertising and marketing of shares; preparing, printing,
and distributing
prospectuses and sales literature to prospective
shareholders, brokers, or
administrators; and implementing and operating the Plan.
Pursuant to the Plan,
Federated Securities Corp. may pay fees to brokers for
distribution and
administrative services and to administrators for
administrative services as to
shares. The administrative services are provided by a
representative who has
knowledge of the shareholder's particular circumstances and
goals, and include,
but are not limited to: communicating account openings;
communicating account
closings; entering purchase transactions; entering
redemption transactions;
providing or arranging to provide accounting support for all
transactions,
wiring funds and receiving funds for share purchases and
redemptions, confirming
and reconciling all transactions, reviewing the activity in
Fund accounts, and
providing training and supervision of broker personnel;
posting and reinvesting
dividends to Fund accounts or arranging for this service to
be performed by the
Funds' transfer agent; and maintaining and distributing
current copies of
prospectuses and shareholder reports to the beneficial
owners of shares and
prospective shareholders.
The Board of Trustees expects that the Plan will result in
the sale of a
sufficient number of shares so as to allow the Funds to
achieve economic
viability. It is also anticipated that an increase in the
size of each Fund will
facilitate more efficient portfolio management and assist
each Fund in seeking
to achieve its investment objective.
SHAREHOLDER SERVICES PLAN (PRIME MONEY MARKET FUND 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 Funds' 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 Funds attempt to stabilize the value of a share at
$1.00. The days on which
net asset value is calculated by the Funds 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 Funds' 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, a 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 Prime Money Market Fund and the Michigan Municipal
Cash Fund do not
consider them to be "puts" as that term is used in the
Funds' 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 a 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 each 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
each 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 a 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 Funds may attempt to increase yield by trading portfolio
securities to take
advantage of short-term market variations. This policy may,
from time to time,
result in high portfolio turnover. Under the amortized cost
method of valuation,
neither the amount of daily income nor the net asset value
is affected by any
unrealized appreciation or depreciation of the portfolio.
- ------------------------------------------------------------
- --------------------
In periods of declining interest rates, the indicated daily
yield on shares,
computed by dividing the annualized daily income on the
Fund's portfolio by the
net asset value computed as above, may tend to be higher
than a similar
computation made by using a method of valuation based upon
market prices and
estimates.
In periods of rising interest rates, the indicated daily
yield on shares,
computed the same way may tend to be lower than a similar
computation made by
using a method of calculation based upon market prices and
estimates.
EXCHANGE PRIVILEGE
- ------------------------------------------------------------
- --------------------
Shareholders using the exchange privilege must exchange
shares having a net
asset value of at least $1,000. Before the exchange, the
shareholder must
receive a prospectus of the fund for which the exchange is
being made.
This privilege is available to shareholders resident in any
state in which the
fund shares being acquired may be sold. Upon receipt of
proper instructions and
required supporting documents, shares submitted for exchange
are redeemed and
the proceeds invested in shares of the other fund.
Instructions for exchanges may be given in writing or by
telephone. Exchange
procedures are explained in the prospectus under "Exchange
Privilege."
REDEEMING SHARES
- ------------------------------------------------------------
- --------------------
The Funds redeem shares at the next computed net asset value
after Federated
Services Company receives the redemption request. Redemption
procedures are
explained in the prospectus under "Redeeming Shares."
REDEMPTION IN KIND
Although the Funds intend to redeem shares in cash, they
reserve 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
Funds reserve the right to redeem in kind by delivering
those securities it
deems appropriate.
Redemption in kind will be made in conformity with
applicable Securities and
Exchange Commission rules, taking such securities at the
same value employed in
determining net asset value and selecting the securities in
a manner the
Trustees determine to be fair and equitable.
The Trust has elected to be governed by Rule 18f-1 of the
Investment Company Act
of 1940 under which a 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 FUNDS' TAX STATUS
The Funds intend to pay no federal income tax because they
expect 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, a 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
No portion of any income dividend paid by a Fund is eligible
for the dividends
received deduction available to corporations. Any short-term
capital gains are
taxable as ordinary income.
YIELD
- ------------------------------------------------------------
- --------------------
The Prime Money Market Fund's yield for the seven-day period
ended April 30,
1995, was 5.55% for Class A Shares.
The U.S. Treasury Money Market Fund's yield for the seven-
day period ended April
30, 1995, was 5.42%.
- ------------------------------------------------------------
- --------------------
The Michigan Municipal Cash Fund's yield for the seven-day
period ended April
30, 1995, was 3.66%.
The Funds calculate yield daily, based upon the seven days
ending on the day of
the calculation, called the "base period." This yield is
computed by:
determining the net change in the value of a hypothetical
account with a
balance of one share at the beginning of the base period,
with the net change
excluding capital changes but including the value of any
additional shares
purchased with dividends earned from the original one share
and all dividends
declared on the original and any purchased shares;
dividing the net change in the account's value by the value
of the account at
the beginning of the base period to determine the base
period return; and
multiplying the base period return by (365/7).
To the extent that financial institutions and broker/dealers
charge fees in
connection with services provided in conjunction with an
investment in a Fund,
the performance will be reduced for those shareholders
paying those fees.
EFFECTIVE YIELD
- ------------------------------------------------------------
- --------------------
The Prime Money Market Fund's effective yield for the seven-
day period ended
April 30, 1995, was 5.71% for Class A Shares.
The U.S. Treasury Money Market Fund's effective yield for
the seven-day period
ended April 30, 1995, was 5.57%.
The Michigan Municipal Cash Fund's effective yield for the
seven-day period
ended April 30, 1995, was 3.72%.
The Funds' effective yield is computed by compounding the
unannualized base
period return by:
adding 1 to the base period return;
raising the sum to the 365/7th power; and
subtracting 1 from the result.
TAX-EQUIVALENT YIELD
- ------------------------------------------------------------
- --------------------
The Michigan Municipal Cash Fund's tax-equivalent yield for
the seven-day period
ended April 30, 1995, was 5.42%, assuming an effective tax
rate of 32.47%.
The tax-equivalent yield of the Fund is calculated similarly
to the yield, but
is adjusted to reflect the taxable yield that the Fund would
have had to earn to
equal its actual yield, assuming a specified tax rate and
assuming that income
is 100% tax-exempt.
- ------------------------------------------------------------
- --------------------
TAX-EQUIVALENCY TABLE
The Michigan Municipal Cash Fund may use a tax-equivalency
table in advertising
and sales literature. The interest earned by the municipal
bonds in the Fund's
portfolio generally remains free from federal regular income
tax,* and is free
from the state income tax imposed by the state of Michigan.
As the table
indicates, a "tax-exempt" investment is an attractive choice
for investors,
particularly in times of narrow spreads between tax-free and
taxable yields.
<TABLE>
<CAPTION>
TAXABLE YIELD
EQUIVALENT FOR 1995
STATE OF
MICHIGAN
- ------------------------------------------------------------
- -----------------------------------------------
COMBINED FEDERAL AND
STATE INCOME TAX BRACKET:
19.47% 32.47% 35.47%
40.47% 44.07%
- ------------------------------------------------------------
- -----------------------------------------------
<S> <C> <C> <C> <C>
<C> <C> <C>
JOINT RETURN: $1-39,000 $39,001-94,250 $94,251-
143,600 $143,601-256,500 OVER $256,500
SINGLE RETURN:
$1-23,350 $22,351-56,550 $56,551-
117,950 $117,951-256,500 OVER $256,500
- ------------------------------------------------------------
- -----------------------------------------------
<CAPTION>
TAX-EXEMPT
YIELD TAXABLE
YIELD EQUIVALENT
- ------------------------------------------------------------
- -----------------------------------------------
<S> <C> <C> <C> <C>
<C> <C> <C>
1.50% 1.86% 2.22% 2.32%
2.52% 2.68%
2.00% 2.48% 2.96% 3.10%
3.36% 3.58%
2.50% 3.10% 3.70% 3.87%
4.20% 4.47%
3.00% 3.73% 4.44% 4.65%
5.04% 5.36%
3.50% 4.35% 5.18% 5.42%
5.88% 6.26%
4.00% 4.97% 5.92% 6.20%
6.72% 7.15%
4.50% 5.59% 6.66% 6.97%
7.56% 8.05%
5.00% 6.21% 7.40% 7.75%
8.40% 8.94%
5.50% 6.83% 8.14% 8.52%
9.24% 9.83%
6.00% 7.45% 8.88% 9.30%
10.08% 10.73%
</TABLE>
Note: The maximum marginal tax rate for each bracket was
used in calculating the
taxable yield equivalent. Furthermore, additional
state and local taxes
paid on comparable taxable investments were not used
to increase federal
deductions.
The chart above is for illustrative purposes only. It is not
an indicator of
past or future performance of Fund shares.
* Some portion of the Fund's income may be subject to the
federal alternative
minimum tax and state and local income taxes.
PERFORMANCE COMPARISONS
- ------------------------------------------------------------
- --------------------
The Funds' performance depends upon such variables as:
portfolio quality;
average portfolio maturity;
type of instruments in which the portfolio is invested;
changes in interest rates on money market instruments;
changes in Fund expenses; and
the relative amount of Fund cash flow.
Investors may use financial publications and/or indices to
obtain a more
complete view of the Funds' 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 Funds use 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, a Fund will quote its ranking in its
respective Lipper
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, a 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 fiscal year ended April 30,
1995 are
incorporated herein by reference to the respective Annual
Report of each Fund
dated April 30, 1995 (File Nos. 33-29808 and 811-5843). A
copy of a Fund's
Annual Report may be obtained without charge by contacting
the Trust.
Cusip 4537203
Cusip 4537302
Cusip 4537708
Cusip 4537104 009901 (8/95)
PART C. OTHER INFORMATION.
Item 24. Financial Statements and
Exhibits:
(a) Financial Statements:
Independence One Michigan
Municipal Cash Fund, Independence One
Prime Money Market Fund - Class A
Shares and Class B Shares, Independence
One U.S. Treasury Money Market Fund and
Independence One U.S. Government
Securities Fund, financial statements
dated April 30, 1995 are incorporated
by reference to Part A of Registrant's
Post-Effective Amendment No. 14 as
filed on June 28, 1995 (File Nos. 33-
26516 and 811-5752), Independence One
Equity Plus Fund, Independence One
Fixed Income Fund, and Independence One
Michigan Municipal Bond Fund - to be
filed by amendment.
(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.);
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)
(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; (10)
(vii) Amendment No.
8 to the Declaration of Trust, dated
December 6, 1994; (10)
(viii) Certification
dated December 6, 1994; (10)
(ix) Amendment No. 9 to
the Declaration of Trust dated May 4,
1995; (12)
(2) Copy of By-Laws of the
Registrant (1.);
(3) Not applicable;
(4) (i) Copy of Specimen
Certificate for Shares of Beneficial Interest
of the Registrant (7.);
(ii) Copy of Specimen
Certificate for Shares of Beneficial Interest
of Independence One Equity Plus Fund,
Independence One Fixed Income Fund, and
Independence One Michigan Municipal Bond
Fund;+
(5) Conformed copy of
Investment Advisory Contract of the
Registrant as amended (8.);
(i) Conformed copy
of Investment Sub-Advisory Contract for
Independence One U.S. Government
Securities Fund (8);
(ii) Conformed copy of Exhibit G to the
Present Investment Advisory
Contract of the Registrant to
add Independence One Fixed Income
Fund to the Present Investment
Advisory Contract of the Registrant;+
+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)
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)
10. Response is incorporated by reference to Registrant's Post-
Effective Amendment No. 10 on Form N-1A filed February 8,
1995. (File Nos. 33-26516 and 811-5752)
12. Response is incorporated by reference to Registrant's Post-
Effective Amendment No. 14 on Form N-1A filed on June 28,
1995. (File Nos. 33-26516 and 811-5752)
(iii) Conformed copy of Exhibit H
to the Present Investment Advisory
Contract of the Registrant to
add Independence One Michigan
Municipal Bond Fund to the Present Investment
Advisory Contract of the Registrant;+
(iv) Conformed copy of Exhibit I
to the Present Investment Advisory
Contract of the Registrant to
add Independence One Equity Plus Fund
to the Present Investment Advisory
Contract of the Registrant;+
(v) Conformed copy of Investment Sub-
Advisory Agreement for Independence
One Equity Plus Fund;+
(6) Copy of Distributor's
Contract of Registrant (1.);
(i) Conformed Copy of Exhibit D to the
Distributor's Contract; (10)
(ii) Conformed Copy of Exhibit E to the
Distributor's Contract; (10)
(iii) Conformed copy of Exhibit F to the
Distributor's Contract;(13)
(iv) Conformed copy of Exhibit G to the
Distributor's Contract;(13)
(v) Conformed copy of Exhibit H to the
Distributor's Contract;(13)
(vi) Conformed copy of Exhibit I to the
Distributor's Contract;(13)
(7) Not applicable;
(8) (i) Copy of Custodian
Agreement of the Registrant (1.);
(ii) Copy of the
new Agency Agreement of the Registrant
(3.);
(iii) Copy of the
new Administrative Services Agreement
of the Registrant (3.);
(iv) Copy of
Amendment No. 1 to Exhibit A of
Custodian Agreement of the Registrant
(7.);
(v) Copy of
Amendment No. 1 to Exhibit A of Agency
Agreement of the Registrant (7.);
____________________
+All exhibits have been filed electronically.
1. Response is incorporated by reference to Registrant's
Initial Registration Statement on Form N-1A filed on January
13, 1989. (File Nos. 33-26516 and 811-5752)
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)
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)
10. Response is incorporated by reference to Registrant's Post-
Effective Amendment No. 10 on Form N-1A filed February 8,
1995. (File Nos. 33-26516 and 811-5752)
13. Response is incorporated by reference to Registrant's Post-
Effective Amendment No. 15 on Form N-1A filed on July 25,
1995. (File Nos. 33-26516 and 811-5752)
(9) (i) Conformed Copy of
Agreement for Fund Accounting, Shareholder
Recordingkeeping, and Custody Services
Procurement; (10)
(ii) Conformed copy of
Shareholder Services Plan; (13)
(iii) Copy of Exhibit 1 to the
Shareholder Services Plan of the Registrant;
(12)
(iv) Conformed copy of of
Shareholder Services Agreement; (13)
(v) Copy of Exhibit 1 of
the Shareholder Services Agreement of the
Registrant; (12)
(vi) Conformed copy of
Multiple Class Plan; (13)
(vii) Conformed copy of
Custodian Contract of the Registrant;+
(10) Copy of Opinion and Consent of
Counsel as to legality of shares being
registered (2.);
(11) (i) Conformed copy of Consent
of Independent Auditors;+
(12) Not applicable;
(13) Conformed Copy of Initial Capital
Understanding (2.);
(14) Not applicable;
(15) (i) Copy of Distribution
Plan (5.);
(ii) Copy of 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);
_____________
+All exhibits have been filed electronically.
2. Response is incorporated by reference to Registrant's Pre-
Effective Amendment No. 1 on Form N-1A filed on May 5, 1989.
(File Nos. 33-26516 and 811-5752)
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)
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)
10. Response is incorporated by reference to Registrant's Post-
Effective Amendment No. 10 on Form N-1A filed February 8,
1995. (File Nos. 33-26516 and 811-5752)
12. Response is incorporated by reference to Registrant's Post-
Effective Amendment No. 14 on Form N-1A filed on June 28,
1995. (File Nos. 33-26516 and 811-5752)
13. Response is incorporated by reference to Registrant's Post-
Effective Amendment No. 13 on Form N-1A filed on July 25,
1995. (File Nos. 33-26516 and 811-5752)
(17) Financial Data Schedules for
Independence One Prime Money Market
Fund, Independence One U.S. Treasury
Money Market Fund, and Independence One
Michigan Municipal Cash 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.)
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
August 8, 1995
Shares of
Independence One Prime
beneficial Money Market Fund (Class A)3,029
interest
Independence One Prime
Money Market Fund (Class B) 6
Independence One U.S. 886
Treasury Money Market Fund
Independence One Michigan 1,182
Municipal Cash Fund
Independence One U.S. 7
Government Securities Fund
Item 27. Indemnification: (4.)
_____________
4. Repsonse 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)
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 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.
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
Other Substantial
Position with Business,
Profession,
Name the Adviser Vocation or
Employment
Sue Ling Gin Director
Director, Michigan
National
Corporation;
Chairman and Chief
Executive Officer,
Flying Food Fare,
Inc.
Morton E. Harris Director
Director, Michigan
National
Corporation;
Managing Partner,
Spectrum
Associates.
Gerald B. Mitchell Director
Director, Michigan
National
Corporation;
Retired Chairman
and Chief
Executive Officer,
Dana Corporation.
Robert J. Mylod Director,
Chairman,
Director,
Chairman,
and Chief
Executive and
Chief Exective
OfficerOfficer,
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.
Other Substantial
Position with Business,
Profession,
Name the Adviser Vocation or
Employment
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, General
President,
Counsel and
Secretary General
Counsel and
Secretary,
Michigan National
Corporation.
Richard C. Webb Senior Vice
Senior Vice
President
President,
Commercial Banking
Michigan National
Corporation.
Joseph J. Whiteside Executive Vice
President
and Chief
Financial
Officer
William D. Ritsema Senior Vice
Senior Vice
President, Credit
President,
Administration
Michigan National
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
National Australia Bank Limited ("NAB") is a
transnational banking organization headquartered at 500
Bourke Street, Melbourne, Australia. NAB is a publicly
owned company, whose shares are widely held and traded on
the Australian Stock Exchange Limited. On February 4, 1995,
the Board of Directors of MNC approved a definitive
agreement for the acquisition (the "Merger") of MNC by NAB.
Shareholders of MNC approved the Merger on June 2, 1995. As
a result, MNC and its subsidiaries, including the Adviser,
would become direct or indirect subsidiaries of NAB upon
completion of the Merger. It is anticipated that the Merger
will be completed during the third or fourth quarter of
1995, and that operations will continue to be conducted
under the Michigan National Corporation and Michigan
National Bank names.
On May 4, 1995, the Trust's Board of Trustees approved the
present investment advisory contract (the "Present Advisory
Contract") between the Trust, on behalf of Independence Once
Equity Plus Fund, Independence One Fixed Income Fund and
Independence One Michigan Municipal Bond Fund (collectively, the
"Portfolios"), and Michigan National Bank, as a subsidiary of
MNC. Under the provisions of the Investment Company Act of 1940,
completion of the Merger would result in an assignment, and
termination of the Portfolios' Present Advisory Contract with the
Adviser. Also on May 4, 1995, in view of the pending Merger, the
Portfolios' Board of Trustees approved a new investment advisory
contract (the "New Advisory Contract") between the Trust, on
behalf of the Portfolios, and Michigan National Bank, as a
subsidiary of NAB. The Merger is subject to the satisfaction of
certain conditions including, among others, the receipt of all
necessary regulatory approvals. The New Advisory Contract would
become effective upon consummation of the Merger.
The following information appeared in NAB's Annual
Report for its fiscal year ended September 30, 1994.
NAB, together with its subsidiaries (collectively, the
"Group"), is one of the four major Australian commercial
banks ("trading banks" in Australian terminology) which
together account for approximately 70.2% of commercial
banking assets in Australia as of September 1994, according
to the Reserve Bank of Australia Bulletin. The Group
undertakes a range of banking, financial and related
activities in Australia and elsewhere in the world,
including commercial banking, savings banking, finance and
life insurance and merchant and investment banking. As of
September 30, 1994, Group assets totalled $125.9 billion, of
which approximately 56.5% was domiciled in Australia, and
Group deposits totalled $78.8 billion, of which
approximately 50.8% was domiciled in Australia.
NAB was established as "The National Bank of
Australasia" in 1858 in Victoria, Australia. Through
internal expansion and the acquisition of other banks, NAB
developed into a national commerical bank. In its present
form, NAB is the product of the merger in 1981 of The
National Bank of Australasia Limited and Commerical Banking
Company of Sydney Limited, the latter Bank being established
in 1834 in New South Wales, Australia.
At September 30, 1994 the Group had 49,163 full-time
and part-time employees worldwide (43,871 full-time
equivalents).
Banking, the Group's principal business activity, is
conducted in Australia by NAB and internationally by NAB and
certain subsidiaries. As of September 30, 1994, NAB was the
second largest commercial bank in Australia (according to
the Reserve Bank of Australia Bulletin) based on domestic
assets of $75 billion. The Group is the largest Australian
banking group based on its global assets of $125.9 billion.
Consistent with its philosophy of providing customers
with a comprehensive range of financial products and
services, in 1985 the Group established a life insurance and
funds management entity, National Australia Financial
Management Limited. This entity and its subsidiaries
provide the Australian market with a range of personal
financial planning services, personal life and disability
insurance, personal superannuation and managed investments,
corporate superannuation, group life insurance and various
investment management services. At September 30, 1994,
funds under managment amounted to $4.0 billion. Two of the
Group's banking subsidiaries in the United Kindom, Yorkshire
Bank and Northern Bank, offer certain insurance and
investment products through subsidiaries, mainly in the
areas of funds managment and other investment related
products.
At November 11, 1994, the directors* and principal
executive officer of NAB were as follows:
________________
*The Directors of NAB are classified as either Executive or
Non-Executive, with the former being those Directors engaged
in the full-time employment of NAB. Mr. Donald Argus is the
only Executive Director.
Name and Position Position/Directorship
Principal
with NAB Held Since
Occupation(s)
William Robert Mitchel Irvine 1992/1979
Barrister and
Chairman and
DirectorSolicitor; Director,
National Australia
Bank
Superannuation Fund Pty
Ltd. and Bank
of New
Zealand; Chairman,
National Australia
Financial Managment
Limited and National
Australia Group (UK)
Limited; former Partner,
Hedderwick
Fookes & Alston,
Solicitors.
Brian Thorley Loton 1992/1988 Chairman,
The
Vice-Chariman Broken
Hill
and Director
Proprietary
Company
Limited;
Director,
Amcor
Limited
and Australian
Foundation Investment
Company Limited;
Alternate Director,
National Australia
Group (UK) Limited;
former Managing
Director, The Broken
Hill
Proprietary Company
Limited.
Name and Position Position/Directorship
Principal
with NAB Held Since
Occupation(s)
David Kennedy Macfarlane 1992/1985
Chairman
Vice-Chairman NAB's
and Director Principal
Board
Audit
Committee;
Director,
Bank of New
Zealand; Alternate
Director, National
Australia Group
(UK)) Limited;
33 years'
experience with James
Hardie Industries
Limited, 12 years
of which
as Managing Director.
Donald Robert Argus 1990/1989 Director,
Managing Director and National
Chief Executive Officer
Australia Bank
Superannuation
Fund Pty
Ltd, Bank
of New
Zealand, Clydesdale
Bank PLC National
Australia Financial
Management Limited,
National Australia
Group (UK)
Limited, National
Irish Bank ,
Limited Northern
Bank Limited and
Yorkshire Bank PLC.
Name and Position Position/Directorship
Principal
with NAB Held Since
Occupation(s)
David Charles Keith Allen 1992 Managing
Director Director,
Woodside
Petroleum
Limited.
Peter John Waraker Cottrell 1985 Chairman,
Director Email
Limited;
member
of NAB's
Principal Board
Audit Committee.
Dr. Christopher Michael Deeley 1992 Non-
Executive
Director Director
and
Chairman,
North
Limited;
Director, Goodman
Fielder Limited;
former Managing
Director and Chief
Executive, ICI Australia
Limited.
David Alexander Tange Dickins 1981
Chartered
Director
Accountant;
Alternate
Director,
Bank of New
Zealand; former
Partner, Court &
Co. Chartered
Accountants; former
Director, The
Commercial Banking
Company of Sydney
Limited.
Name and Position Position/Directorship
Principal
with NAB Held Since
Occupation(s)
The Lord Nickson 1991 Chairman,
Director Clydesdale
Bank
PLC;
Director, National
Australia
Group
(UK)
Limited.
Mark Richard Rayner 1985 Director
and
Director Group
Executive,
CRA
Limited;
Deputy
Chairman
and former
Managing Director,
Comalco
Limited,
Chairman, Pasminco
Limited; member of
NAB's Principal
Board Audit
Committee.
Joseph Charles Trethowan 1984 Vice
Chairman
Director of
Directors and
Chairman,
Audit
Committee
of National
Australia Financial
Managment Limited;
member of NAB's
Principal Board
Audit Committee;
former Chairman
and General
Manager, State
Electricity Commission
of Victoria.
Name and Position Position/Directorship
Principal
with NAB Held Since
Occupation(s)
Andrew Trunbull 1992 Non-
Executive
Director Chairman
and former
Managing Director
and Chief
Executive Officer,
Burns Philip and
Company
Limited.
Sir Bruce Dunstan Watson 1992 Former
Director Chairman,
Director,
and Chief
Executive
Officer,
MIM
Holdings
Limited.
The address of the Directors and principal executive officer
of NAB is c/o 500 Bourke Street, Melbourne, Australia.
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;
Blanchard Funds; Blanchard Precious Metals, Inc.;
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 Equity Funds;
Federated Exchange Fund, Ltd.; Federated GNMA
Trust; Federated Government Trust; Federated High
Yield Trust; Federated Income Securities Trust;
Federated Income Trust; Federated Index Trust;
Federated Institutional Trust; Federated Master
Trust; Federated Municipal Trust; Federated Short-
Term Municipal Trust; Federated Short-Term U.S.
Government Trust; Federated Stock Trust; Federated
Tax-Free Trust; Federated Total Return Series,
Inc.; Federated U.S. Government Bond Fund;
Federated U.S. Government Securities Fund: 1-3
Years; Federated U.S. Government Securities Fund: 3-
5 Years;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; 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.; 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; 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; The Virtus
Funds; 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 TowerPresident, and Treasurer, Treasurer
Pittsburgh, PA 15222-3779Federated Securities
Corp.
John W. McGonigle Director,
Executive Vice __
Federated Investors TowerPresident, and Assistant
Pittsburgh, PA 15222-3779Secretary, Federated
Securities
Corp.
John B. Fisher President-
Institutional Sales, --
Federated Investors TowerFederated Securities Corp.
Pittsburgh, PA 15222-3779
(1) (2)
(3)
Name and Principal Positions and Offices Positions
and Offices
Business Address With Underwriter With
Registrant
James F. Getz President-
Broker/Dealer, --
Federated Investors TowerFederated Securities Corp.
Pittsburgh, PA 15222-3779
Mark R. Gensheimer Executive Vice President of --
Federated Investors Tower Bank/Trust
Pittsburgh, PA 15222-3779 Federated Securities Corp.
Mark W. Bloss Senior Vice
President, --
Federated Investors TowerFederated Securities Corp.
Pittsburgh, PA 15222-3779
Theodore Fadool, Jr. Senior Vice
President, --
Federated Investors TowerFederated Securities Corp.
Pittsburgh, PA 15222-3779
Bryant R. Fisher Senior Vice
President, --
Federated Investors TowerFederated Securities Corp.
Pittsburgh, PA 15222-3779
Christopher T. Fives Senior Vice
President, --
Federated Investors TowerFederated Securities Corp.
Pittsburgh, PA 15222-3779
James S. Hamilton Senior Vice
President, --
Federated Investors TowerFederated Securities Corp.
Pittsburgh, PA 15222-3779
James M. Heaton Senior Vice
President, --
Federated Investors TowerFederated Securities Corp.
Pittsburgh, PA 15222-3779
H. Joseph Kennedy Senior Vice
President, --
Federated Investors TowerFederated Securities Corp.
Pittsburgh, PA 15222-3779
Keith Nixon Senior Vice
President, --
Federated Investors TowerFederated Securities Corp.
Pittsburgh, PA 15222-3779
Solon A. Person, IV Senior Vice
President, --
Federated Investors TowerFederated Securities Corp.
Pittsburgh, PA 15222-3779
Timothy C. Pillion Senior Vice
President, --
Federated Investors TowerFederated Securities Corp.
Pittsburgh, PA 15222-3779
Thomas E. Territ Senior Vice
President, --
Federated Investors TowerFederated Securities Corp.
Pittsburgh, PA 15222-3779
(1) (2)
(3)
Name and Principal Positions and Offices Positions
and Offices
Business Address With Underwriter With
Registrant
John B. Bohnet Vice President,
__
Federated Investors TowerFederated Securities Corp.
Pittsburgh, PA 15222-3779
Richard W. Boyd Vice President,
--
Federated Investors TowerFederated Securities Corp.
Pittsburgh, PA 15222-3779
Jane E. Broeren-Lambesis Vice President, --
Federated Investors TowerFederated 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 TowerFederated Securities Corp.
Pittsburgh, PA 15222-3779
Kevin J. Crenny Vice President,
__
Federated Investors TowerFederated Securities Corp.
Pittsburgh, PA 15222-3779
Daniel T. Culbertson Vice President,
__
Federated Investors TowerFederated 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 TowerFederated Securities Corp.
Pittsburgh, PA 15222-3779
Michael D. Fitzgerald Vice President,
__
Federated Investors TowerFederated Securities Corp.
Pittsburgh, PA 15222-3779
Joseph D. Gibbons Vice President,
--
Federated Investors TowerFederated Securities Corp.
Pittsburgh, PA 15222-3779
(1) (2)
(3)
Name and Principal Positions and Offices Positions
and Offices
Business Address With Underwriter With
Registrant
David C. Glabicki Vice President,
--
Federated Investors TowerFederated Securities Corp.
Pittsburgh, PA 15222-3779
Craig S. Gonzales Vice President,
__
Federated Investors TowerFederated Securities Corp.
Pittsburgh, PA 15222-3779
Richard C. Gonzales Vice President,
--
Federated Investors TowerFederated Securities Corp.
Pittsburgh, PA 15222-3779
Scott A. Hutton Vice President,
--
Federated Investors TowerFederated Securities Corp.
Pittsburgh, PA 15222-3779
William J. Kerns Vice President,
--
Federated Investors TowerFederated Securities Corp.
Pittsburgh, PA 15222-3779
William E. Kugler Vice President,
--
Federated Investors TowerFederated Securities Corp.
Pittsburgh, PA 15222-3779
Dennis M. Laffey Vice President,
--
Federated Investors TowerFederated Securities Corp.
Pittsburgh, PA 15222-3779
Stephen A. LaVersa Vice President,
__
Federated Investors TowerFederated Securities Corp.
Pittsburgh, PA 15222-3779
Francis J. Matten, Jr. Vice President,
--
Federated Investors TowerFederated Securities Corp.
Pittsburgh, PA 15222-3779
Mark J. Miehl Vice President,
--
Federated Investors TowerFederated Securities Corp.
Pittsburgh, PA 15222-3779
Richard C. Mihm Vice President,
__
Federated Investors TowerFederated 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 TowerFederated Securities Corp.
Pittsburgh, PA 15222-3779
(1) (2)
(3)
Name and Principal Positions and Offices Positions
and Offices
Business Address With Underwriter With
Registrant
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
Robert F. Phillips Vice President,
--
Federated Investors Tower Federated
Securities Corp.
Pittsburgh, PA 15222-3779
Eugene B. Reed Vice President,
--
Federated Investors TowerFederated Securities Corp.
Pittsburgh, PA 15222-3779
Paul V. Riordan Vice President,
--
Federated Investors TowerFederated Securities Corp.
Pittsburgh, PA 15222-3779
Charles A. Robison Vice President,
--
Federated Investors TowerFederated Securities Corp.
Pittsburgh, PA 15222-3779
John C. Shelar, Jr. Vice President,
__
Federated Investors TowerFederated 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 TowerFederated Securities Corp.
Pittsburgh, PA 15222-3779
Jamie M. Teschner Vice President,
__
Federated Investors TowerFederated Securities Corp.
Pittsburgh, PA 15222-3779
William C. Tustin Vice President,
--
Federated Investors TowerFederated Securities Corp.
Pittsburgh, PA 15222-3779
Paul A. Uhlman Vice President,
__
Federated Investors TowerFederated Securities Corp.
Pittsburgh, PA 15222-3779
Richard B. Watts Vice President,
--
Federated Investors TowerFederated Securities Corp.
Pittsburgh, PA 15222-3779
(1) (2)
(3)
Name and Principal Positions and Offices Positions
and Offices
Business Address With Underwriter With
Registrant
Michael P. Wolff Vice President,
__
Federated Investors TowerFederated Securities Corp.
Pittsburgh, PA 15222-3779
Philip C. Hetzel Assistant Vice
President, --
Federated Investors TowerFederated Securities Corp.
Pittsburgh, PA 15222-3779
Charlene H. Jennings Assistant Vice
President, __
Federated Investors TowerFederated Securities Corp.
Pittsburgh, PA 15222-3779
Ernest L. Linane Assistant Vice
President, --
Federated Investors TowerFederated 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
P.O. Box 8600
("Transfer Agent, Dividend
Boston, Massachusetts 02266-
Disbursing Agent and Portfolio
8600
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
Michigan National Bank
27777 Inkster Road
(Custodian) Mail Code
10-52
Farmington Hills, MI
48333
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 Prime Moey
Market Fund, Independence One U.S. Treasury Money
Market Fund and Independence One Michigan Municipal
Cash Fund is delivered with a copy of the Registrant's
latest annual report to shareholders, upon request and
without charge.
Registrant hereby undertakes to file a post-effective
amendment on behalf of Independence One Equity Plus
Fund, Independence One Fixed Income Fund and
Independence One Michigan Municipal Bond Fund using
financial statements for each respective fund, which
need not be certified, within four to six months from
the date of Post-Effective Amendment No. 12.
SIGNATURES
Pursuant to the requirements of the Securities Act of
1933 and the Investment Company Act of 1940, the Registrant,
INDEPENDENCE ONE MUTUAL FUNDS, certifies that it meets all
of the requirements for effectiveness of this Amendment to
its Registration Statement pursuant to Rule 485(b) under the
Securities Act of 1933 and has duly caused this Amendment to
its Registration Statement to be signed on its behalf by the
undersigned, thereto duly authorized, in the City of
Pittsburgh and Commonwealth of Pennsylvania, on the 29th day
of August, 1995.
INDEPENDENCE ONE MUTUAL FUNDS
BY: /s/ Jay S. Neuman
Jay S. Neuman, Secretary
Attorney in Fact for Edward C. Gonzales
August 29, 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/ Jay S. Neuman
Jay S. Neuman Attorney In Fact August 29, 1995
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) under N-1A
Regulation S-K Exhibit
No.23
KPMG Peat Marwick LLP
One Mellon Bank Center Telephone 412 391 9710 Telefax
412 391 8963
Pittsburgh, PA 15219 Telex 7106642199 PMM & CO PGH
INDEPENDENT AUDITORS' CONSENT
The Board of Trustees
Independence One Mutual Funds:
With respect to this Post-Effective Amendment No. 16 to the
Registration Statement on Form N-1A of the Independence One
Mutual Funds, we consent to the use of our report dated June
16, 1995, on the financial statements of the Independence
One U.S. Treasury Money Market Fund, Independence One
Michigan Municipal Cash Fund, and Independence One Prime
Money Market Fund (portfolios within Independence One Mutual
Funds), included herein and to the references to our Firm
under the headings "Financial Highlights" and
"Administration of the Fund - Independent Auditors" in Part
A of the Registration Statement.
By: KPMG Peat Marwick LLP
Pittsburgh, Pennsylvania
August 28, 1995
Form N-1A Exhibit No. 4(ii)
Regulation S-K Exhibit No. 4(ii)
INDEPENDENCE ONE MUTUAL FUNDS
INDEPENDENCE ONE EQUITY PLUS FUND
PORTFOLIO
Number Shares
_____ _____
Account No. Alpha Code Organized Under the
See Reverse Side For
Laws of the Commonwealth Certain
Definitions
of Massachusetts
THIS IS TO CERTIFY THAT is the owner of
CUSIP 453777872
Fully Paid and Non-Assessable Shares of Beneficial Interest of
INDEPENDENCE ONE EQUITY PLUS FUND Portfolio of INDEPENDENCE ONE
MUTUAL FUNDS hereafter called the "Trust," transferable on the
books of the Trust by the owner in person or by duly authorized
attorney upon surrender of this Certificate properly endorsed.
The shares represented hereby are issued and shall be held
subject to the provisions of the Declaration of Trust and By-
Laws of the Trust and all amendments thereto, all of which the
holder by acceptance hereof assents.
This Certificate is not valid unless countersigned by the
Transfer Agent.
IN WITNESS WHEREOF, the Trust has caused this Certificate
to be signed in its name by its proper officers and to be sealed
with its Seal.
INDEPENDENCE ONE MUTUAL FUNDS
1989
Trust Seal
Massachusetts
Dated:
/s/ Edward C. Gonzales /s/ Jay S. Neuman
President & Treasurer Secretary
Countersigned: Federated Services
Company
(Pittsburgh) Transfer
Agent
By:
Authorized Signature
The following abbreviations, when used in the inscription on the
face of this Certificate, shall be construed as though they were
written out in full according to applicable laws or regulations;
TEN COM - as tenants in common UNIF
GIFT MIN ACT-...Custodian...
TEN ENT - as tenants by the entireties
(Cust) (Minors)
JT TEN - as joint tenants with right
of under Uniform Gifts to Minors
survivorship and not as tenants
Act.............................
in common (State)
Additional abbreviations may also be used though not in the
above list.
For value received__________ hereby sell, assign, and
transfer unto
Please insert social security or other
identifying number of assignee
______________________________________
________________________________________________________________
_____________
(Please print or typewrite name and address, including zip code,
of assignee)
________________________________________________________________
_____________
________________________________________________________________
_____________
________________________________________________________________
______ shares
of beneficial interest represented by the within Certificate,
and do hereby irrevocably constitute and appoint
__________________________________________
____________________________________________________________
_____Attorney
to transfer the said shares on the books of the within named
Trust with full power of substitution in the premises.
Dated______________________
NOTICE:___________________________
The signature to this assignment
must correspond with the name as
written upon the face of the
certificate in every particular,
without alteration or enlargement
or any change whatever.
All persons dealing with INDEPENDENCE ONE MUTUAL FUNDS, a
Massachusetts business trust, must look solely to the Trust
property for the enforcement of any claim against the Trust, as
the Trustees, officers, agents or shareholders of the Trust
assume no personal liability whatsoever for obligations entered
into on behalf of the Trust.
THIS SPACE MUST NOT BE COVERED IN ANY WAY
DOCUMENT DESCRIPTION - SPECIMEN STOCK CERTIFICATE
Page One
A. The Certificate is outlined by an (color) one-half inch
border.
B. The number in the upper left-hand corner and the number
of shares in the upper right-hand corner are outlined by
octagonal boxes.
C. The cusip number in the middle right-hand area of the
page is boxed.
D. The Massachusetts corporate seal appears in the bottom
middle of the page.
Page Two
The social security or other identifying number of the
assignee appears in a box in the top-third upper-left area of
the page.
Form N-1A Exhibit No. 4(ii)
Regulation S-K Exhibit No. 4(ii)
INDEPENDENCE ONE MUTUAL FUNDS
INDEPENDENCE ONE FIXED INCOME FUND
PORTFOLIO
Number Shares
_____ _____
Account No. Alpha Code Organized Under the
See Reverse Side For
Laws of the Commonwealth Certain
Definitions
of Massachusetts
THIS IS TO CERTIFY THAT is the owner of
CUSIP 453777864
Fully Paid and Non-Assessable Shares of Beneficial Interest of
INDEPENDENCE ONE FIXED INCOME FUND Portfolio of INDEPENDENCE ONE
MUTUAL FUNDS hereafter called the "Trust," transferable on the
books of the Trust by the owner in person or by duly authorized
attorney upon surrender of this Certificate properly endorsed.
The shares represented hereby are issued and shall be held
subject to the provisions of the Declaration of Trust and By-
Laws of the Trust and all amendments thereto, all of which the
holder by acceptance hereof assents.
This Certificate is not valid unless countersigned by the
Transfer Agent.
IN WITNESS WHEREOF, the Trust has caused this Certificate
to be signed in its name by its proper officers and to be sealed
with its Seal.
INDEPENDENCE ONE MUTUAL FUNDS
1989
Trust Seal
Massachusetts
Dated:
/s/ Edward C. Gonzales /s/ Jay S. Neuman
President & Treasurer Secretary
Countersigned: Federated Services
Company
(Pittsburgh) Transfer
Agent
By:
Authorized Signature
The following abbreviations, when used in the inscription on the
face of this Certificate, shall be construed as though they were
written out in full according to applicable laws or regulations;
TEN COM - as tenants in common UNIF
GIFT MIN ACT-...Custodian...
TEN ENT - as tenants by the entireties
(Cust) (Minors)
JT TEN - as joint tenants with right
of under Uniform Gifts to Minors
survivorship and not as tenants
Act.............................
in common (State)
Additional abbreviations may also be used though not in the
above list.
For value received__________ hereby sell, assign, and
transfer unto
Please insert social security or other
identifying number of assignee
______________________________________
________________________________________________________________
_____________
(Please print or typewrite name and address, including zip code,
of assignee)
________________________________________________________________
_____________
________________________________________________________________
_____________
________________________________________________________________
______ shares
of beneficial interest represented by the within Certificate,
and do hereby irrevocably constitute and appoint
__________________________________________
____________________________________________________________
_____Attorney
to transfer the said shares on the books of the within named
Trust with full power of substitution in the premises.
Dated______________________
NOTICE:___________________________
___
The signature to this assignment
must correspond with the name as
written upon the face of the
certificate in every particular,
without alteration or enlargement
or any change whatever.
All persons dealing with INDEPENDENCE ONE MUTUAL FUNDS, a
Massachusetts business trust, must look solely to the Trust
property for the enforcement of any claim against the Trust, as
the Trustees, officers, agents or shareholders of the Trust
assume no personal liability whatsoever for obligations entered
into on behalf of the Trust.
THIS SPACE MUST NOT BE COVERED IN ANY WAY
DOCUMENT DESCRIPTION - SPECIMEN STOCK CERTIFICATE
Page One
A. The Certificate is outlined by an (color) one-half inch
border.
B. The number in the upper left-hand corner and the number
of shares in the upper right-hand corner are outlined by
octagonal boxes.
C. The cusip number in the middle right-hand area of the
page is boxed.
D. The Massachusetts corporate seal appears in the bottom
middle of the page.
Page Two
The social security or other identifying number of the
assignee appears in a box in the top-third upper-left area of
the page.
Form N-1A Exhibit No. 4(iii)
Regulation S-K Exhibit No. 4(iii)
INDEPENDENCE ONE MUTUAL FUNDS
INDEPENDENCE ONE MICHIGAN MUNICIPAL BOND FUND
PORTFOLIO
Number Shares
_____ _____
Account No. Alpha Code Organized Under the
See Reverse Side For
Laws of the Commonwealth Certain
Definitions
of Massachusetts
THIS IS TO CERTIFY THAT is the owner of
CUSIP 453777856
Fully Paid and Non-Assessable Shares of Beneficial Interest of
INDEPENDENCE ONE MICHIGAN MUNICIPAL BOND FUND Portfolio of
INDEPENDENCE ONE MUTUAL FUNDS hereafter called the "Trust,"
transferable on the books of the Trust by the owner in person or
by duly authorized attorney upon surrender of this Certificate
properly endorsed.
The shares represented hereby are issued and shall be held
subject to the provisions of the Declaration of Trust and By-
Laws of the Trust and all amendments thereto, all of which the
holder by acceptance hereof assents.
This Certificate is not valid unless countersigned by the
Transfer Agent.
IN WITNESS WHEREOF, the Trust has caused this Certificate
to be signed in its name by its proper officers and to be sealed
with its Seal.
INDEPENDENCE ONE MUTUAL FUNDS
1989
Trust Seal
Massachusetts
Dated:
/s/ Edward C. Gonzales /s/ Jay S. Neuman
President & Treasurer Secretary
Countersigned: Federated Services
Company
(Pittsburgh) Transfer
Agent
By:
Authorized Signature
The following abbreviations, when used in the inscription on the
face of this Certificate, shall be construed as though they were
written out in full according to applicable laws or regulations;
TEN COM - as tenants in common UNIF
GIFT MIN ACT-...Custodian...
TEN ENT - as tenants by the entireties
(Cust) (Minors)
JT TEN - as joint tenants with right
of under Uniform Gifts to Minors
survivorship and not as tenants
Act.............................
in common (State)
Additional abbreviations may also be used though not in the
above list.
For value received__________ hereby sell, assign, and
transfer unto
Please insert social security or other
identifying number of assignee
______________________________________
________________________________________________________________
_____________
(Please print or typewrite name and address, including zip code,
of assignee)
________________________________________________________________
_____________
________________________________________________________________
_____________
________________________________________________________________
______ shares
of beneficial interest represented by the within Certificate,
and do hereby irrevocably constitute and appoint
__________________________________________
____________________________________________________________
_____Attorney
to transfer the said shares on the books of the within named
Trust with full power of substitution in the premises.
Dated______________________
NOTICE:___________________________
___
The signature to this assignment
must correspond with the name as
written upon the face of the
certificate in every particular,
without alteration or enlargement
or any change whatever.
All persons dealing with INDEPENDENCE ONE MUTUAL FUNDS, a
Massachusetts business trust, must look solely to the Trust
property for the enforcement of any claim against the Trust, as
the Trustees, officers, agents or shareholders of the Trust
assume no personal liability whatsoever for obligations entered
into on behalf of the Trust.
THIS SPACE MUST NOT BE COVERED IN ANY WAY
DOCUMENT DESCRIPTION - SPECIMEN STOCK CERTIFICATE
Page One
A. The Certificate is outlined by an (color) one-half inch
border.
B. The number in the upper left-hand corner and the number
of shares in the upper right-hand corner are outlined by
octagonal boxes.
C. The cusip number in the middle right-hand area of the
page is boxed.
D. The Massachusetts corporate seal appears in the bottom
middle of the page.
Page Two
The social security or other identifying number of the
assignee appears in a box in the top-third upper-left area of
the page.
Exhibit 5(ii) under Form N-1A
Exhibit 10 under Reg. S-K
EXHIBIT G
to the
Investment Advisory Contract
Independence One Fixed Income Fund
For all services rendered by Adviser hereunder,
the above-named Fund of the Trust shall pay to Adviser
and Adviser agrees to accept as full compensation for
all services rendered hereunder, an annual investment
advisory fee equal to 0.75% of the average daily net
assets of the Fund.
The portion of the fee based upon the average
daily net assets of the Fund shall be accrued daily at
the rate of 1/365th of 0.75 of 1% applied to the daily
net assets of the Fund.
The advisory fee so accrued shall be paid to
Adviser daily.
Witness the due execution hereof this 4th day of
May, 1995.
Attest: Michigan National
Bank
/s/ Lawrence L. Gladchun By:/s/ W. Brian
Black
Secretary Senior Vice President
Attest: INDEPENDENCE ONE
MUTUAL FUNDS
/s/ S. Elliott Cohan By:/s/ Jeffrey W.
Sterling
Assistant Secretary Vice President
Exhibit 5(iii) under Form N-1A
Exhibit 10 under Reg. S-K
EXHIBIT H
to the
Investment Advisory Contract
Independence One Michigan Municipal Bond Fund
For all services rendered by Adviser hereunder,
the above-named Fund of the Trust shall pay to Adviser
and Adviser agrees to accept as full compensation for
all services rendered hereunder, an annual investment
advisory fee equal to 0.75% of the average daily net
assets of the Fund.
The portion of the fee based upon the average
daily net assets of the Fund shall be accrued daily at
the rate of 1/365th of 0.75 of 1% applied to the daily
net assets of the Fund.
The advisory fee so accrued shall be paid to
Adviser daily.
Witness the due execution hereof this 4th day of
May, 1995.
Attest: Michigan National
Bank
/s/ Lawrence L. Gladchun By:/s/ W. Brian
Black
Secretary Senior Vice President
Attest: INDEPENDENCE ONE
MUTUAL FUNDS
/s/ S. Elliott Cohan By:/s/ Jeffrey W.
Sterling
Assistant Secretary Vice President
Exhibit 5(iv) under Form N-1A
Exhibit 10 under Reg. S-K
EXHIBIT I
to the
Investment Advisory Contract
Independence One Equity Plus Fund
For all services rendered by Adviser hereunder,
the above-named Fund of the Trust shall pay to Adviser
and Adviser agrees to accept as full compensation for
all services rendered hereunder, an annual investment
advisory fee equal to 0.40% of the average daily net
assets of the Fund.
The portion of the fee based upon the average
daily net assets of the Fund shall be accrued daily at
the rate of 1/365th of 0.40 of 1% applied to the daily
net assets of the Fund.
The advisory fee so accrued shall be paid to
Adviser daily.
Witness the due execution hereof this 6th day of
June, 1995.
Attest: Michigan National
Bank
/s/ Lawrence L. Gladchun By:/s/ W. Brian
Black
Secretary Senior Vice President
Attest: INDEPENDENCE ONE
MUTUAL FUNDS
/s/ S. Elliott Cohan By:/s/ Jeffrey W.
Sterling
Assistant Secretary Vice President
Exhibit (5v) under Form N-1A
Exhibit 10 under Reg. S-K
INDEPENDENCE ONE MUTUAL FUNDS
SUB-ADVISORY AGREEMENT
THIS AGREEMENT is made between Michigan National Bank, a
national banking association (hereinafter referred to as
"Adviser") and Sosnoff Sheridan Corporation, an Illinois
corporation located in Chicago, Illinois (hereinafter referred to
as the "Sub-Adviser").
WITNESSETH:
That the parties hereto, intending to be legally bound,
hereby agree as follows:
1. Notice of Advice. Sub-Adviser hereby agrees to furnish
to Adviser in its capacity as investment adviser to the
Independence One Equity Plus Fund (the "Fund"), a portfolio of
the Independence One Mutual Funds ("Trust"), such investment
advice, statistical and other factual information, as may from
time to time be reasonably requested by Adviser for the Fund,
which may be offered in one or more classes of shares
("Classes"). Sub-Adviser shall furnish such advice and
information to Adviser on a non-discretionary basis. Sub-Adviser
shall not have custody of any funds or securities of the Fund at
any time.
2. Representations of Sub-Adviser. Sub-Adviser hereby
represents to Adviser that it is duly registered as an investment
adviser with (a) the United States Securities and Exchange
Commission pursuant to the Investment Advisers Act of 1940, and
(b) any state authorities with which such registration is
necessary in order to lawfully provide services pursuant to this
Agreement. Sub-Adviser hereby agrees to maintain such
registrations in effect for so long as it continues to provide
services pursuant to this Agreement and to notify Adviser
immediately upon termination or revocation of any such
registration during such period.
3. Brokerage. Sub-Adviser may place orders for the
execution of transactions with or through such brokers-dealers
(including floor brokers) or banks as Adviser may select. Sub-
Adviser may suggest broker-dealers or banks to Adviser; however,
Adviser will choose the broker-dealer or banks through which Sub-
Adviser may place orders. Any accounts opened with such broker-
dealers or banks shall be in the name of the Fund.
4. Records and Confirms. Sub-Adviser will send Adviser a
record of the investments and positions of the Fund (or relevant
Classes of the Fund) as soon as reasonably possible after the
end of each quarterly period. Copies of confirmations of
transactions executed for the Fund will be sent by the broker-
dealers executing the transactions promptly to the custodian for
the Fund and the Sub-Adviser, if the custodian is other than the
broker-dealer. Otherwise, copies of confirmations of
transactions executed will be sent by the broker-dealers
executing the transactions to
Sub-Adviser and the Fund. Sub-Adviser does not assume
responsibility for the accuracy of information furnished by
Adviser or any other party.
5. Voting. Unless otherwise specifically agreed, Sub-
Adviser will not be required to take any action, or render any
advice, with respect to the voting of securities held by the
Fund.
6. Confidentiality. All information and advice furnished
by either party hereto to the other shall be treated as
confidential and shall not be disclosed to third parties, unless
generally known or otherwise publicly available, and except as
required by regulatory agencies or otherwise by law.
7. Other Clients. Sub-Adviser acts as adviser to other
clients and may give advice, and take action, with respect to any
of those which may differ from the advice given, or the timing or
nature of action taken, with respect to the Fund. Sub-Adviser
shall have no obligation to purchase or sell for the Fund, or to
recommend for purchase or sale by the Fund, any security which
Sub-Adviser, its principals, affiliates or employees may purchase
or sell for themselves or for any other clients. Except as
otherwise required by law, Sub-Adviser shall not make any
information about the accounts of its clients available to
Adviser or the Fund.
Adviser recognizes that transactions in a specific security
or securities may not be accomplished for all client accounts at
the same time or at the same price.
In the performance of Sub-Adviser's services hereunder, Sub-
Adviser shall not be liable for any failure to recommend or
effect any purchase or sale, or other investment or trading
strategy on the basis of any information known to Sub-Adviser
where the utilization of such information might, in Sub-Adviser's
opinion, constitute a violation of any federal or state law,
rules or regulations, or the breach of any fiduciary duty or
confidential relationship between Sub-Adviser and any other
person or persons.
8. Adviser's Representations. Adviser represents that it
has full authority to grant Sub-Adviser the authority given to
Sub-Adviser under this Agreement.
9. Fees. For its services under this Agreement, Sub-
Adviser shall receive from Adviser an annual fee ("the Sub-
Advisory Fee"), as set forth on Exhibit A attached hereto.
Notwithstanding any other provision of this Agreement, the
Sub-Adviser may from time to time and for such periods as it
deems appropriate, reduce its compensation (and, if appropriate,
assume expenses of the Fund or Class of the Fund) to the extent
that the Fund's expenses exceed such expense limitation as the
sub-Adviser may, by notice to the Trust on behalf of the Fund,
voluntarily declare to be effective.
10. Term. This Agreement shall begin for the Fund on the
date that the parties execute this Agreement relating to such
Fund and shall continue in effect for the Fund for two years from
the date of its execution and from year to year thereafter,
subject to the provisions for termination and all of the other
terms and conditions hereof if: (a) such continuation shall be
specifically approved at least annually by the vote of a majority
of the Trustees of the Trust, including a majority of the
Trustees who are not parties to this Agreement or interested
persons of any such party (other than as Trustees of the Trust)
cast in person at a meeting called for that purpose; and (b)
Adviser shall not have notified the Trust in writing at least
sixty (60) days prior to the anniversary date of this Agreement
in any year thereafter that it does not desire such continuation
with respect to the Fund.
11. Termination. Notwithstanding any provision in this
Agreement, it may be terminated at any time without the payment
of any penalty: (a) by the Trustees of the Trust or by a vote of
a majority of the outstanding voting securities (as defined in
Section 2(a)(42) of the Investment Company Act of 1940 (the
"Act")) of the Fund on sixty (60) days' written notice to
Adviser; and (b) by Sub-Adviser or Adviser upon sixty (60) days'
written notice to the other party to the Agreement.
12. Automatic Termination. This Agreement shall
automatically terminate:
(a) in the event of its assignment (as defined in the
Act); or
(b) in the event of termination of the Investment
Contract between
the Trust and Adviser ("Investment Advisory
Contract") for any reason whatsoever.
13. Limitation Authority. Neither Adviser nor Sub-Adviser
shall act as an investment adviser (as such term is defined in
the Act) to the Fund except as provided herein and in the
Investment Advisory Contract between the Adviser and the Fund or
in such other manner as may be expressly agreed between Adviser
and Sub-Adviser.
Provided, however, that if the Adviser or Sub-Adviser shall
resign prior to the end of any term of this Agreement or for any
reason be unable or unwilling to serve for a successive term
which has been approved by the Trustees of the Trust pursuant to
the provisions of Paragraph 10 of this Agreement or Paragraph 6
of the Investment Advisory Contract, the remaining party, Sub-
Adviser or Adviser as the case may be, shall not be prohibited
from serving as an investment adviser to such Fund by reason of
the provisions of this Paragraph 13.
14. Notices. Notices regarding termination or other
matters of this Agreement or other matters shall be sent by
certified mail or overnight by a nationally recognized courier
and shall be deemed given when received at the addresses
specified below, or at
such other address as a party to receive notice may specify in a
notice given in accordance with this provision. Sub-Adviser and
Adviser may rely on any notice from any person reasonably
believed to be genuine and authorized.
If to Sub-Adviser: If to Adviser:
440 South LaSalle Street Michigan National Bank
Suite 2301 27777 Inkster Road
Chicago, Illinois 60605 Farmington Hills,
Michigan 48334
Attention: Tom Sosnoff Attention: Robert Stapleton
15. Indemnification. (a) (i) In any threatened, pending
or completed action, suit or proceeding to which the Sub-Adviser,
was, is or is threatened to be made a party, in connection with
or relating to the services performed by the Sub-Adviser for the
Adviser or the Fund as contemplated herein, including, without
limitation, any breach of any representations, warranties or
covenants made by the Adviser in this Agreement or any failure by
the Adviser to comply with the federal or any state securities
laws or the rules and regulations promulgated thereunder or any
other federal or state law, or any rule or regulation promulgated
by and governmental agency or self-regulatory organization,
Adviser shall indemnify and hold harmless the Sub-Adviser,
against any loss, liability, damage, cost and expense (including
reasonable attorneys' and accountants' fees and disbursements)
incurred or suffered by the Sub-Adviser in connection with the
investigation, defense or settlement of any such action, suit or
proceeding, only if the acts or omissions of the Sub-Adviser, did
not involve willful misfeasance, gross negligence, bad faith or
reckless disregard of its duties and obligations under this
Agreement; and (ii) In the event that the Sub-Adviser is made a
party to any claim, dispute or litigation or otherwise incurs any
loss or expense as a result of or in connection with the
activities or claimed activities of Adviser or its partners,
officers, directors, employees, agents or affiliates unrelated to
the Sub-Adviser or the Sub-Adviser's business, Adviser shall
indemnify, defend and hold harmless the Sub-Adviser against any
loss, liability, damage, cost and expense (including, without
limitation, reasonable attorneys' and accountants' fees and
disbursements to be paid as incurred) incurred in connection
therewith. As used in subparagraphs (i) through (ii) above, the
term "Sub-Adviser" shall include the Sub-Adviser and the Sub-
Adviser's directors, officers, shareholders, employees, agents
and affiliates.
(b) (i) In any threatened, pending or completed
action, suit or proceeding to which the Adviser, was, is or is
threatened to be made a party, in connection with or relating to
the services performed by the Sub-Adviser for the Adviser or the
Fund as contemplate herein, including, without limitation, any
breach of any representations, warranties or covenants made by
Sub-Adviser in this Agreement or any failure by Sub-Adviser to
comply with the federal or any state securities laws or
the rules and regulations promulgated thereunder or any other
federal or state law, or any rule or regulation promulgated by
any governmental agency or self-regulatory organization, Sub-
Adviser shall indemnify and hold harmless the Adviser, against
any loss, liability, damage, cost and expense (including
reasonable attorneys' and accountants' fees and disbursements)
incurred or suffered by the Adviser in connection with the
investigation, defense or settlement of any such action, suit or
proceeding, only of the acts or omissions of the Adviser, did not
involve willful misfeasance, gross negligence, bad faith or
reckless disregard of its duties and obligations under this
Agreement; and (ii) In the event that the Adviser is made a party
to any claim, dispute or litigation or otherwise incurs any loss
or expense as a result of or in connection with the activities or
claimed activities of Sub-Adviser or its officers, directors,
employees, agents or affiliates unrelated to the Adviser or the
Adviser's business, Sub-Adviser shall indemnify, defend and hold
harmless the Adviser against any loss, liability, damage, cost
and expense (including, without limitation, reasonable attorneys'
and accountants' fees and disbursements to be paid as incurred)
incurred in connection therewith. As used in subparagraphs (i)
through (ii) above, the term "Adviser" shall include the Adviser
and the Adviser's directors, officers, shareholders, employees,
agents and affiliates.
(c) In the event that a person entitled to
indemnification under Sections 15 (a) or (b) is made a party to
an action, suit or proceeding alleging both matters for which
indemnification can be made hereunder and matters for which
indemnification may not be made hereunder, such person shall be
indemnified only for that portion of the loss, liability, damage,
cost or expense incurred in such action, suit or proceeding which
relates to the matters for which indemnification can be made.
(d) None of the indemnifications contained in this
Section 15 shall be applicable with respect to default
judgments, confessions of judgment or settlements entered into
by the part(ies) claiming indemnification without the prior
written consent of the party obligated to indemnify such party.
(e) The provisions of this Section 15 shall survive
the termination or other expiration of this Agreement.
16. Independent Contractors. The Sub-Adviser shall for all
purposes herein be deemed to be an independent contractor of
Adviser. It is expressly agreed to by the parties hereto that
the relationship created by this Agreement does not create a
partnership or joint venture between the Sub-Adviser and the
Adviser. Except as specifically set forth herein with respect to
the Sub-Adviser's authority to place orders approved by the
Adviser to broker-dealers or banks for trading the accounts of
the Fund, neither party shall have any authority to bind the
other nor shall either party represent to third parties that it
has such authority.
17. Liability. Neither the Sub-Adviser nor any of its
agents, employees, principals, directors or officers or any
person who controls the Sub-Adviser shall be liable to Adviser or
its officers, directors, partners, employees, agents or any
person who controls Adviser or any of its successors. or assigns
under this Agreement, except by reason of acts or omissions in
contravention of this Agreement due to willful misfeasance, gross
negligence, bad faith, reckless disregard of its duties and
obligations under this Agreement, or violation of applicable law.
Adviser acknowledges that all transactions made by the Sub-
Adviser on behalf of the Fund, shall be for the account and risk
of the Fund. The Sub-Adviser shall have no responsibility for
the execution or clearance of the Fund's trades once orders have
been transmitted to the executing broker-dealer or bank for those
trades. Notwithstanding the foregoing sentences, the federal
securities laws impose liabilities under certain circumstances on
persons who act in good faith and therefore, nothing herein
shall in any way constitute a waiver or limitation of any rights
which Adviser may have under the federal securities laws or state
securities laws.
18. Disclosure.
[ ] Adviser acknowledges receipt of Sub-Adviser's
Disclosure Statement (Part II of Adviser's Form ADV), as required
by Rule 204-3 under the Investment Advisers Act of 1940, not less
than 48 hours prior to the date of execution of this agreement
shown below.
[ ] Adviser acknowledges receipt of Sub-Adviser's
Disclosure Statement (Part II of Adviser's Form ADV) less than 48
hours prior to, but not later than, the date of execution of this
agreement. Accordingly, Adviser shall have the option to
terminate this agreement without penalty within five business
days after that date of execution; provided, however, that any
investment action taken by Adviser with respect to the Fund
prior to the effective date of such termination shall be at
Fund's risk.
19. Entire Agreement: Governing Law. This agreement
constitutes the entire agreement of the parties with respect to
the rendering of advice by Sub-Adviser for the benefit of Adviser
and the Fund and can be amended only by written document signed
by the parties. This agreement shall be governed by the internal
laws of the State of Illinois.
20. Amendment. This Agreement may be amended from time to
time by agreement of the parties hereto provided that such
amendment shall be approved both by the vote of a majority of
Trustees of the Trust, including a majority of Trustees who are
not parties to this Agreement or interested persons, as defined
in Section 2(a)(19) of the Act, of any such party at a meeting
called for that purpose, and, where required by Section 15(a)(2)
of the Act, by the holders of a majority of the outstanding
voting securities (as defined in Section 2(a)(42) of the Act) of
the Fund.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed on their behalf by their duly authorized
officers, and their corporate seals affixed hereto this __5th_
day of __________June_________, 1995.
ATTEST: MICHIGAN NATIONAL BANK
/s/ Lawrence L. Gladchun By: /s/ W. Brian Black
Secretary Senior Vice President
SOSNOFF SHERIDAN CORPORATION
/s/ Scott D. Sheridan By: /s/ Scott D. Sheridan
Secretary Vice President
Exhibit A
Independence One Mutual Funds
Independence One Equity Plus Fund
Sub-Advisory Agreement
Adviser will pay Sub-Adviser as full compensation for services
rendered hereunder, an annual fee at the rate of 0.035%, based on
the average daily value of the equity securities in the Fund.
The fee shall be calculated as determined by the Fund on the last
day of each month on which the New York Stock Exchange is open
and shall be payable on a monthly basis, in arrears.
This Exhibit duly incorporates by reference the Sub-Advisory
Agreement.
Adviser:
_____WBB____
(initials)
Sub-Adviser:
_____SDS____
(initials)
Exhibit (9)(vii) under Form N-1A
Exhibit 10 under Reg. S-K
CUSTODIAN CONTRACT
This Contract between Independence One Mutual Funds, a
Massachusetts business trust organized and existing under the
laws of the Commonwealth of Massachusetts, having its principal
place of business at Federated Investors Tower, Pittsburgh,
Pennsylvania 15222-3779 (hereinafter called the "Trust"), and
Michigan National Bank, a national banking association, having
its principal place of business at 27777 Inkster Road, Farmington
Hills, Michigan 48334 (hereinafter called the "Custodian").
WITNESSETH: That in consideration of the mutual covenants
and agreements hereinafter contained, the parties hereto agree as
follows:
1. Employment of Custodian and Property to be Held by It
The Trust hereby employs the Custodian as the custodian of
the assets of each of its portfolios (hereinafter collectively
called the "Funds" and individually referred to as a "Fund") of
the Trust listed in Exhibit A hereto. Except as otherwise
expressly provided herein, the securities and other assets of
each of the Funds shall be segregated from the assets of each of
the other Funds and from all other persons and entities. The
Trust will deliver to the Custodian all securities and cash owned
by the Funds and all payments of income, payments of principal or
capital distributions received by them with respect to all
securities owned by the Funds from time to time, and the cash
consideration received by them for shares ("Shares") of
beneficial interest of the Funds as may be issued or sold from
time to time. The Custodian shall not be responsible for any
property of the Funds held or received by the Funds and not
delivered to the Custodian.
Upon receipt of "Proper Instructions" (within the meaning
of Section 2.18), the Custodian shall from time to time employ
one or more sub-custodians upon the terms specified in the Proper
Instructions, provided that the Custodian shall have no more or
less responsibility or liability to the Trust or any of the Funds
on account of any actions or omissions of any sub-custodian so
employed than any such sub-custodian has to the Custodian.
2. Duties of the Custodian With Respect to Property of the
Funds Held by the Custodian
2.1 Holding Securities. The Custodian shall hold
and physically segregate for the account of each Fund
all non-cash property, including all securities owned
by each Fund, other than securities which are
maintained pursuant to Section 2.12 in a clearing
agency which acts as a securities depository or in a
book-entry system authorized by the U.S. Department
of the Treasury (collectively referred to herein as
"Securities System"), or securities which are subject
to a joint repurchase agreement with affiliated funds
pursuant to Section 2.14. The Custodian shall
maintain records of all receipts, deliveries and
locations of such securities, together with a current
inventory thereof, and shall conduct periodic
physical inspections of certificates representing
stocks, bonds and other securities held by it under
this Contract in such manner as the Custodian shall
determine from time to time to be advisable in order
to verify the accuracy of such inventory. With
respect to securities held by any agent appointed
pursuant to Section 2.11 hereof, and with respect to
securities held by any sub-custodian appointed
pursuant to Section 1 hereof, the Custodian may rely
upon certificates from such agent as to the holdings
of such agent and from such sub-custodian as to the
holdings of such sub-custodian, it being understood
that such reliance in no way relieves the Custodian
of its responsibilities under this Contract. The
Custodian will promptly report to the Trust the
results of such inspections, indicating any shortages
or discrepancies uncovered thereby, and take
appropriate action to remedy any such shortages or
discrepancies.
2.2 Delivery of Securities. The Custodian shall
release and deliver securities owned by a Fund held
by the Custodian or in a Securities System account of
the Custodian only upon receipt of Proper
Instructions, which may be continuing instructions
when deemed appropriate by the parties, and only in
the following cases:
(1) Upon sale of such securities for the
account of a Fund and receipt of payment
therefor;
(2) Upon the receipt of payment in
connection with any repurchase agreement
related to such securities entered into by the
Trust;
(3) In the case of a sale effected through
a Securities System, in accordance with the
provisions of Section 2.12 hereof;
(4) To the depository agent in connection
with tender or other similar offers for
portfolio securities of a Fund, in accordance
with the provisions of Section 2.17 hereof;
(5) To the issuer thereof or its agent
when such securities are called, redeemed,
retired or otherwise become payable; provided
that, in any such case, the cash or other
consideration is to be delivered to the
Custodian;
(6) To the issuer thereof, or its agent,
for transfer into the name of a Fund or into
the name of any nominee or nominees of the
Custodian or into the name or nominee name of
any agent appointed pursuant to Section 2.11 or
into the name or nominee name of any sub-
custodian appointed pursuant to Section 1; or
for exchange for a different number of bonds,
certificates or other evidence representing the
same aggregate face amount or number of units;
provided that, in any such case, the new
securities are to be delivered to the
Custodian;
(7) Upon the sale of such securities for
the account of a Fund, to the broker or its
clearing agent, against a receipt, for
examination in accordance with "street delivery
custom"; provided that in any such case, the
Custodian shall have no responsibility or
liability for any loss arising from the
delivery of such securities prior to receiving
payment for such securities except as may arise
from the Custodian's own failure to act in
accordance with the standard of reasonable care
or any higher standard of care imposed upon the
Custodian by any applicable law or regulation
if such above-stated standard of reasonable
care were not part of this Contract;
(8) For exchange or conversion pursuant to
any plan of merger, consolidation,
recapitalization, reorganization or
readjustment of the securities of the issuer of
such securities, or pursuant to provisions for
conversion contained in such securities, or
pursuant to any deposit agreement; provided
that, in any such case, the new securities and
cash, if any, are to be delivered to the
Custodian;
(9) In the case of warrants, rights or
similar securities, the surrender thereof in
the exercise of such warrants, rights or
similar securities or the surrender of interim
receipts or temporary securities for definitive
securities; provided that, in any such case,
the new securities and cash, if any, are to be
delivered to the Custodian;
(10) For delivery in connection with any
loans of portfolio securities of a Fund, buy
only against receipt of adequate collateral in
the form of (a) cash, in an amount specified by
the Trust, (b) certified securities of a
description specified by the Trust, registered
in the name of the Fund or in the name of a
nominee of the Custodian referred to in Section
2.3 hereof or in proper form for transfer, or
(c) securities of a description specified by
the Trust, transferred through a Securities
System in accordance with Section 2.12 hereof;
(11) For delivery as security in connection
with any borrowings requiring a pledge of
assets by a Fund, buy only against receipt of
amounts borrowed, except that in cases where
additional collateral is required to secure a
borrowing already made, further securities may
be released for the purpose;
(12) For delivery in accordance with the
provisions of any agreement among the Trust,
the Custodian and a broker-dealer registered
under the Securities Exchange Act of 1934 (the
"Exchange Act") and a member of The National
Association of Securities Dealers, Inc.
("NASD"), relating to compliance with the rules
of The Options Clearing Corporation and of any
registered national securities exchange, or of
any similar organization or organizations,
regarding escrow or other arrangements in
connection with transactions for a Fund;
(13) For delivery in accordance with the
provisions of any agreement among the Trust,
the Custodian, and a Futures Commission
Merchant registered under the Commodity
Exchange Act, relating to compliance with the
rules of the Commodity Futures Trading
Commission and/or any Contract Market, or any
similar organization or organizations,
regarding account deposits in connection with
transaction for a Fund;
(14) Upon receipt of instructions from the
transfer agent ("Transfer Agent") for a Fund,
for delivery to such Transfer Agent or to the
holders of shares in connection with
distributions in kind, in satisfaction of
requests by holders of Shares for repurchase or
redemption; and
(15) For any other proper corporate
purpose, but only upon receipt of, in addition
to Proper Instructions, a certified copy of a
resolution of the Executive Committee of the
Trust on behalf of a Fund signed by an officer
of the Trust and certified by its Secretary or
an Assistant Secretary, specifying the
securities to be delivered, setting forth the
purpose for which such delivery is to be made,
declaring such purpose to be a proper corporate
purpose, and naming the person or persons to
whom delivery of such securities shall be made.
2.3 Registration of Securities. Securities held by
the Custodian (other than bearer securities) shall be
registered in the name of a particular Fund or in the
name of any nominee of the Fund or of any nominee of
the custodian which nominee shall be assigned
exclusively to the Fund, unless the Trust has
authorized in writing the appointment of a nominee to
be used in common with other registered investment
companies affiliated with the Fund, or in the name or
nominee name of any agent appointed pursuant to
Section 2.11 or in the name or nominee name of any
sub-custodian appointed pursuant to Section 1. All
securities accepted by the Custodian on behalf of a
Fund under the terms of this Contract shall be in
"street name" or other good delivery form.
2.4 Bank Accounts. The Custodian shall open and
maintain a separate bank account or accounts in the
name of each Fund, subject only to draft or order by
the Custodian acting pursuant to the terms of this
Contract, and shall hold in such account or accounts,
subject to the provisions hereof, all cash received
by it from or for the account of each Fund, other
than cash maintained in a joint repurchase account
with other affiliated funds pursuant to Section 2.14
of this Contract or by a particular Fund in a bank
account established and used in accordance with Rule
17f-3 under the Investment Company Act of 1940.
Funds held by the Custodian for a Fund may be
deposited by it to its credit as Custodian in the
Banking Department of the Custodian or in such other
banks or trust companies as it may in its discretion
deem necessary or desirable; provided, however, that
every such bank or trust company shall be qualified
to act as a custodian under the Investment Company
Act of 1940 and that each such bank or trust company
and the funds to be deposited with each such bank or
trust company shall be approved by vote of a majority
of the Board of Trustees of the Trust. Such funds
shall be deposited by the Custodian in its capacity
as Custodian for the Fund and shall be withdrawable
by the Custodian only in that capacity. If requested
by the Trust, the Custodian shall furnish the Trust,
not later than twenty (20) days after the last
business day of each month, an internal
reconciliation of the closing balance as of that day
in all accounts described in this section to the
balance shown on the daily cash report for that day
rendered to the Trust.
2.5 Payments for Shares. The Custodian shall make
such arrangements with the Transfer Agent of each
Fund, as will enable the Custodian to receive the
cash consideration due to each Fund and will deposit
into each Fund's account such payments as are
received from the Transfer Agent. The Custodian will
provide timely notification to the Trust and the
Transfer Agent of any receipt by it of payments for
Shares of the respective Fund.
2.6 Availability of Federal Funds. Upon mutual
agreement between the Trust and the Custodian, the
Custodian shall make federal funds available to the
Funds as of specified times agreed upon from time to
time by the Trust and the Custodian in the amount of
checks, clearing house funds, and other non-federal
funds received in payment for Shares of the Funds
which are deposited into the Funds' accounts.
2.7 Collection of Income.
(1) The Custodian shall collect on a
timely basis all income and other payments with
respect to registered securities held hereunder
to which each Fund shall be entitled either by
law or pursuant to custom in the securities
business, and shall collect on a timely basis
all income and other payments with respect to
bearer securities if, on the date of payment by
the issuer, such securities are held by the
Custodian or its agent thereof and shall credit
such income, as collected, to each Fund's
custodian account. Without limiting the
generality of the foregoing, the Custodian
shall detach and present for payment all
coupons and other income items requiring
presentation as and when they become due and
shall collect interest when due on securities
held hereunder. The collection of income due
the Funds on securities loaned pursuant to the
provisions of Section 2.2 (10) shall be the
responsibility of the Trust. The Custodian
will have no duty or responsibility in
connection therewith, other than to provide the
Trust with such information or data as may be
necessary to assist the Trust in arranging for
the timely delivery to the Custodian of the
income to which each Fund is properly entitled.
(2) The Custodian shall promptly notify
the Trust whenever income due on securities is
not collected in due course and will provide
the Trust with monthly reports of the status of
past due income.
2.8 Payment of Fund Moneys. Upon receipt of Proper
Instructions, which may be continuing instructions
when deemed appropriate by he parties, the Custodian
shall pay out moneys of each Fund in the following
cases only:
(1) Upon the purchase of securities,
futures contracts or options on futures
contracts for the account of a Fund but only
(a) against the delivery of such securities, or
evidence of title to futures contracts, to the
Custodian (or any bank, banking firm or trust
company doing business in the United States or
abroad which is qualified under the Investment
Company Act of 1940, as amended, to act as a
custodian and has been designated by the
Custodian as its agent for this purpose)
registered in the name of the Fund or in the
name of a nominee of the Custodian referred to
in Section 2.3 hereof or in proper form for
transfer, (b) in the case of a purchase
effected through a Securities System, in
accordance with the conditions set forth in
Section 2.12 hereof, or (c) in the case of
repurchase agreements entered into between the
Trust and any other party, (i) against delivery
of the securities either in certificate form or
through an entry crediting the Custodian's
account at the Federal Reserve Bank with such
securities or (ii) against delivery of the
receipt evidencing purchase for the account of
the Fund of securities owned by the Custodian
along with written evidence of the agreement by
the Custodian to repurchase such securities
from the Fund;
(2) In connection with conversion,
exchange or surrender of securities owned by a
Fund as set forth in Section 2.2 hereof;
(3) For the redemption or repurchase of
Shares of a Fund issued by the Trust as set
forth in Section 2.10 hereof;
(4) For the payment of any expense or
liability incurred by a Fund, including but not
limited to the following payments for the
account of the Fund: interest; taxes;
management, accounting, transfer agent and
legal fees; and operating expenses of the Fund,
whether or not such expenses are to be in whole
or part capitalized or treated as deferred
expenses;
(5) For the payment of any dividends on
Shares of a Fund declared pursuant to the
governing documents of the Trust;
(6) For payment of the amount of dividends
received in respect of securities sold short;
(7) For any other proper purpose, but only
upon receipt of, in addition to Proper
Instructions, a certified copy of a resolution
of the Executive Committee of the Trust on
behalf of a Fund signed by an officer of the
Trust and certified by its Secretary or an
Assistant Secretary, specifying the amount of
such payment, setting forth the purpose for
which such payment is to be made, declaring
such purpose to be a proper purpose, and naming
the person or persons to whom such payment is
to be made.
2.9 Liability for Payment in Advance of Receipt of
Securities Purchased. In any and every case where
payment for purchase of securities for the account of
Fund is made by the Custodian in advance of receipt
of the securities purchased, in the absence of
specific written instructions from the Trust to so
pay in advance, the Custodian shall be absolutely
liable to the Fund for such securities to the same
extent as if the securities had been received by the
Custodian.
2.10 Payments for Repurchases or Redemptions of
Shares of a Fund. From such funds as may be
available for the purpose of repurchasing or
redeeming Shares of a Fund, but subject to the
limitations of the Declaration of Trust and any
applicable votes of the Board of Trustees of the
Trust pursuant thereto, the Custodian shall, upon
receipt of instructions from the Transfer Agent, make
funds available for payment to holders of shares of
such Fund who have delivered to the Transfer Agent a
request for redemption or repurchase of their shares
including without limitation through bank drafts,
automated clearinghouse facilities, or by other
means. In connection with the redemption or
repurchase of Shares of the Funds, the Custodian is
authorized upon receipt of instructions from the
Transfer Agent to wire funds to or through a
commercial bank designated by the redeeming
shareholders.
2.11 Appointment of Agents. The Custodian may at
any time or times in its discretion appoint (and may
at any time remove) any other bank or trust company
which is itself qualified under the Investment
Company Act of 1940, as amended, and any applicable
state law or regulation, to act as a custodian, as
its agent to carry out such of the provisions of this
Section 2 as the Custodian may from time to time
direct; provided, however, that the appointment of
any agent shall not relieve the Custodian of its
responsibilities or liabilities hereunder.
2.12 Deposit of Fund Assets in Securities System.
The Custodian may deposit and/or maintain securities
owned by the Funds in a clearing agency registered
with the Securities and Exchange Commission under
Section 17A of the Securities Exchange Act of 1934,
which acts as a securities depository, or in the book-
entry system authorized by the U.S. Department of the
Treasury and certain federal agencies, collectively
referred to herein as "Securities System" in
accordance with applicable Federal Reserve Board and
Securities and Exchange Commission rules and
regulations, if any, and subject to the following
provisions:
(1) The Custodian may keep securities of
each Fund in a Securities System provided that
such securities are represented in an account
("Account") of the Custodian in the Securities
System which shall not include any assets of
the Custodian other than assets held as a
fiduciary, custodian or otherwise for
customers;
(2) The records of the Custodian with
respect to securities of the Funds which are
maintained in a Securities System shall
identify by book-entry those securities
belonging to each Fund;
(3) The Custodian shall pay for securities
purchased for the account of each Fund upon (i)
receipt of advice from the Securities System
that such securities have been transferred to
the Account, and (ii) the making of an entry on
the records of the Custodian to reflect such
payment and transfer for the account of the
Fund. The Custodian shall transfer securities
sold for the account of a Fund upon (i) receipt
of advice from the Securities System that
payment for such securities has been
transferred to the Account, and (ii) the making
of an entry on the records of the Custodian to
reflect such transfer and payment for the
account of the Fund. Copies of all advices
from the Securities System of transfers of
securities for the account of a Fund shall
identify the Fund, be maintained for the Fund
by the Custodian and be provided to the Trust
at its request. Upon request, the Custodian
shall furnish the Trust confirmation of each
transfer to or from the account of a Fund in
the form of a written advice or notice and
shall furnish to the Trust copies of daily
transaction sheets reflecting each day's
transactions in the Securities System for the
account of a Fund.
(4) The Custodian shall provide the Trust
with any report obtained by the Custodian on
the Securities System's accounting system,
internal accounting control and procedures for
safeguarding securities deposited in the
Securities System;
(5) The Custodian shall have received the
initial certificate, required by Section 9
hereof;
(6) Anything to the contrary in this
Contract notwithstanding, the Custodian shall
be liable to the Trust for any loss or damage
to a Fund resulting from use of the Securities
System by reason of any negligence, misfeasance
or misconduct of the Custodian or any of its
agents or of any of its or their employees or
from failure of the Custodian or any such agent
to enforce effectively such rights as it may
have against the Securities System; at the
election of the Trust, it shall be entitled to
be subrogated to the rights of the Custodian
with respect to any claim against the
Securities system or any other person which the
Custodian may have as a consequence of any such
loss or damage if and to the extent that a Fund
has not been made whole for any such loss or
damage.
(7) The authorization contained in this
Section 2.12 shall not relieve the Custodian
from using reasonable care and diligence in
making use of any Securities System.
2.13 Segregated Account. The Custodian shall upon
receipt of Proper Instructions establish and maintain
a segregated account or accounts for and on behalf of
each Fund, into which account or accounts may be
transferred cash and/or securities, including
securities maintained in an account by the Custodian
pursuant to Section 2.12 hereof, (i) in accordance
with the provisions of any agreement among the Trust,
the Custodian and a broker-dealer registered under
the Exchange Act and a member of the NASD (or any
futures commission merchant registered under the
Commodity Exchange Act), relating to compliance with
the rules of The Options Clearing Corporation and of
any registered national securities exchange (or the
Commodity Futures Trading Commission or any
registered contract market), or of any similar
organization or organizations, regarding escrow or
other arrangements in connection with transactions
for a Fund, (ii) for purpose of segregating cash or
government securities in connection with options
purchased, sold or written for a Fund or commodity
futures contracts or options thereon purchased or
sold for a Fund, (iii) for the purpose of compliance
by the Trust or a Fund with the procedures required
by any release or releases of the Securities and
Exchange Commission relating to the maintenance of
segregated accounts by registered investment
companies, and (iv) for other proper corporate
purposes, but only, in the case of clause (iv), upon
receipt of, in addition to Proper Instructions, a
certified copy of a resolution of the Board of
Trustees or of the Executive Committee signed by an
officer of the Trust and certified by the Secretary
or an Assistant Secretary, setting forth the purpose
or purposes of such segregated account and declaring
such purposes to be proper corporate purposes.
2.14 Joint Repurchase Agreements. Upon the receipt
of Proper Instructions, the Custodian shall deposit
and/or maintain any assets of a Fund and any
affiliated funds which are subject to joint
repurchase transactions in an account established
solely for such transactions for the Fund and its
affiliated funds. For purposes of this Section 2.14,
"affiliated funds" shall include all investment
companies and their portfolios for which subsidiaries
or affiliates of Federated Investors, Inc. serve as
investment advisers. The requirements of segregation
set forth in Section 2.1 shall be deemed to be waived
with respect to such assets.
2.15 Ownership Certificates for Tax Purposes. The
Custodian shall execute ownership and other
certificates and affidavits for all federal and state
tax purposes in connection with receipt of income or
other payments with respect to securities of a Fund
held by it and in connection with transfers of
securities.
2.16 Proxies. The Custodian shall, with respect to
the securities held hereunder, cause to be promptly
executed by the registered holder of such securities,
if the securities are registered otherwise than in
the name of a Fund or a nominee of a Fund, all
proxies, without indication of the manner in which
such proxies are to be voted, and shall promptly
deliver to the Trust such proxies, all proxy
soliciting materials and all notices relating to such
securities.
2.17 Communications Relating to Fund Portfolio
Securities. The Custodian shall transmit promptly to
the Trust all written information (including, without
limitation, pendency of calls and maturities of
securities and expirations of rights in connection
therewith and notices of exercise of call and put
options written by the Fund and the maturity of
futures contracts purchased or sold by the Fund)
received by the Custodian from issuers of the
securities being held for the Fund. With respect to
tender or exchange offers, the Custodian shall
transmit promptly to the Trust all written
information received by the Custodian from issuers of
the securities whose tender or exchange is sought and
from the party (or his agents) making the tender or
exchange offer. If the Trust desires to take action
with respect to any tender offer, exchange offer or
any other similar transaction, the Trust shall notify
the Custodian at least three business days prior to
the date on which the Custodian is to take such
action. However, the Custodian shall nevertheless
exercise its best efforts to take such action in the
event that notification is received three business
days or less prior to the date on which action is
required.
2.18 Proper Instructions. Proper Instructions as
used throughout this Section 2 means a writing signed
or initialed by one or more person or persons as the
Board of Trustees 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 considered Proper
Instructions if the Custodian 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. The Trust shall cause all oral
instructions to be confirmed in writing. Upon
receipt of a certificate of the Secretary or an
Assistant Secretary as to the authorization by the
Board of Trustees of the Trust accompanied by a
detailed description of procedures approved by the
Board of Trustees, Proper Instructions may include
communications effected directly between electro-
mechanical or electronic devices provided that the
Board of Trustees and the Custodian are satisfied
that such procedures afford adequate safeguards for a
Fund's assets.
2.19 Actions Permitted Without Express Authority.
The Custodian may in its discretion, without express
authority from the Trust:
(1) Make payments to itself or others for
minor expenses of handling securities or other
similar items relating to its duties under this
Contract, provided that all such payments shall
be accounted for to the Trust in such form that
it may be allocated to the affected Fund;
(2) Surrender securities in temporary form
for securities in definitive form;
(3) Endorse for collection, in the name of
a Fund, checks, drafts and other negotiable
instruments; and
(4) In general, attend to all non-
discretionary details in connection with the
sale, exchange, substitution, purchase,
transfer and other dealings with the securities
and property of each Fund except as otherwise
directed by the Trust.
2.20 Evidence of Authority. The Custodian shall be
protected in acting upon any instructions, notice,
request, consent, certificate or other instrument or
paper reasonably believed by it to be genuine and to
have been properly executed on behalf of a Fund. The
Custodian may receive and accept a certified copy of
a vote of the Board of Trustees of the Trust as
conclusive evidence (a) of the authority of any
person to act in accordance with such vote, or (b) of
any determination of or any action by the Board of
Trustees pursuant to the Declaration of Trust as
described in such vote, and such vote may be
considered as in full force and effect until receipt
by the Custodian of written notice to the contrary.
3. Duties of Custodian With Respect to the Books of Account
and Calculation of Net Asset Value and Net Income
The Custodian shall cooperate with and supply necessary
information to the entity or entities appointed by the Board of
Trustees of the Trust to keep the books of account of each Fund
and/or compute the net asset value per share of the outstanding
Shares of each Fund or, if directed in writing to do so by the
Trust, shall itself keep such books of account and/or compute
such net asset value per share. If so directed, the Custodian
shall also calculate daily the net income of a Fund as described
in the Fund's currently effective prospectus and shall advise the
Trust and the Transfer Agent daily of the total amounts of such
net income and, if instructed in writing by an officer of the
Trust to do so, shall advise the Transfer Agent periodically of
the division of such net income among its various components.
The calculations of the net asset value per share and the daily
income of a Fund shall be made at the time or times described
from time to time in the fund's currently effective prospectus.
4. Records
The Custodian shall create and maintain all records
relating to its activities and obligations under this Contract in
such manner as will meet the obligations of the Trust and the
Funds under the Investment Company Act of 1940, with particular
attention to Section 31 thereof and Rules 31a-1 and 31a-2
thereunder, applicable federal and state tax laws and any other
law or administrative rules or procedures which may be
applicable. All such records shall be the property of the Trust
and shall at all times during the regular business hours of the
Custodian be open for inspection by duly authorized officers,
employees or agents of the Trust and employees and agents of the
Securities and Exchange Commission. In the event of termination
of this Contract, the Custodian will deliver all such records to
the Trust, to a successor Custodian, or to such other person as
the Trust may direct. The Custodian shall, at the Trust's
request, supply the Trust with a tabulation of securities owned
by a Fund and held by the Custodian and shall, when requested to
do so by the Trust and for such compensation as shall be agreed
upon between the Trust and the Custodian, include certificate
numbers in such tabulations.
5. Opinion of Funds' Independent Accountants
The Custodian shall take all reasonable action, as the
Trust may from time to time request, to obtain from year to year
favorable opinions from each Fund's independent accountants with
respect to its activities hereunder in connection with the
preparation of the Fund's registration statement, periodic
reports, or any other reports to the Securities and Exchange
Commission and with respect to any other requirements of such
Commission.
6. Reports to Trust by Independent Public Accountants
The Custodian shall provide the Trust, at such times as the
Trust may reasonably require, with reports by independent public
accountants for each Fund on the accounting system, internal
accounting control and procedures for safeguarding securities,
futures contracts and options on futures contracts, including
securities deposited and/or maintained in a Securities System,
relating to the services provided by the Custodian for the Fund
under this Contract; such reports, shall be of sufficient scope
and in sufficient detail, as may reasonably be required by the
Trust, to provide reasonable assurance that any material
inadequacies would be disclosed by such examination, and, if
there are no such inadequacies, the reports shall so state.
7. Compensation of Custodian
The Custodian shall be entitled to reasonable compensation
for its services and expenses as Custodian, as agreed upon from
time to time between the Trust and the Custodian.
8. Responsibility of Custodian
The Custodian shall be held to a standard of reasonable
care in carrying out the provisions of this Contract; provided,
however, that the Custodian shall be held to any higher standard
of care which would be imposed upon the custodian by any
applicable law or regulation if such above stated standard of
reasonable care was not part of this Contract. The Custodian
shall be entitled to rely on and may act upon advice of counsel
(who may be counsel for the Trust) on all matters, and shall be
without liability for any action reasonably taken or omitted
pursuant to such advice, provided that such action is not in
violation of applicable federal or state laws or regulations, and
is in good faith and without negligence. Subject to the
limitations set forth in Section 15 hereof, the custodian shall
be kept indemnified by the Trust and be without liability for
any action taken or thing done by it in carrying out the terms
and provisions of this Contract in accordance with the above
standards.
In order that the indemnification provisions contained in
this Section 8 shall apply, however, it is understood that if in
any case the Trust may be asked to indemnify or save the
Custodian harmless, the Trust shall be fully and promptly advised
of all pertinent facts concerning the situation in question, and
it is further understood that the Custodian will use all
reasonable care to identify and notify the Trust promptly
concerning any situation which presents or appears likely to
present the probability of such a claim for indemnification. The
Trust shall have the option to defend the Custodian against any
claim which may be the subject of this indemnification, and in
the event that the Trust so elects it will so notify the
Custodian and thereupon the Trust shall take over complete
defense of the claim, and the Custodian shall in such situation
initiate no further legal or other expenses for which it shall
seek indemnification under this Section. The Custodian shall in
no case confess any claim or make any compromise in any case in
which the Trust will be asked to indemnify the Custodian except
with the Trust's prior written consent.
Notwithstanding the foregoing, the responsibility of the
Custodian with respect to redemptions effected by check shall be
in accordance with a separate Agreement entered into between the
Custodian and the Trust.
If the Trust requires the Custodian to take any action with
respect to securities, which action involves the payment of money
or which action may, in the reasonable opinion of the Custodian,
result in the Custodian or its nominee assigned to a Fund being
liable for the payment of money or incurring liability of some
other form, the Custodian may request the Trust, as a
prerequisite to requiring the Custodian to take such action, to
provide indemnity to the Custodian in an amount and form
satisfactory to the Custodian.
Subject to the limitations set forth in Section 15 hereof,
the Trust agrees to indemnify and hold harmless the custodian and
its nominee from and against all taxes, charges, expenses,
assessments, claims and liabilities (including counsel fees)
(referred to herein as authorized charges) incurred or assessed
against it or its nominee in connection with the performance of
this Contract, except such as may arise from it or its nominee's
own failure to act in accordance with the standard of reasonable
care or any higher standard of care which would be imposed upon
the Custodian by any applicable law or regulation if such above-
stated standard of reasonable care were not part of this
Contract. To secure any authorized charges and any advances of
cash or securities made by the Custodian to or for the benefit of
a Fund for any purpose which results in the Fund incurring an
overdraft at the end of any business day or for extraordinary or
emergency purposes during any business day, the Trust hereby
grants to the Custodian a security interest in and pledges to the
Custodian securities held for the Fund by the Custodian, in an
amount not to exceed ten percent of the Fund's gross assets, the
specific securities to be designated in writing from time to time
by the Trust or the Fund's investment adviser. Should the Trust
fail to make such designation, or should it instruct the
Custodian to make advances exceeding the percentage amount set
forth above and should the Custodian do so, the Trust hereby
agrees that the Custodian shall have a security interest in all
securities or other property purchased for a Fund with the
advances by the Custodian, which securities or property shall be
deemed to be pledged to the Custodian, and the written
instructions of the Trust instructing their purchase shall be
considered the requisite description and designation of the
property so pledged for purposes of the requirements of the
Uniform Commercial Code. Should the Trust fail to cause a Fund
to repay promptly any authorized charges or advances of cash or
securities, subject to the provision of the second paragraph of
this Section 8 regarding indemnification, the Custodian shall be
entitled to use available cash and to dispose of pledged
securities and property as is necessary to repay any such
advances.
9. Effective Period, Termination and Amendment
This Contract shall become effective as of its execution,
shall continue in full force and effect until terminated as
hereinafter provided, may be amended at any time by mutual
agreement of the parties hereto and may be terminated by either
party by an instrument in writing delivered or mailed, postage
prepaid to the other party, such termination to take effect not
sooner than sixty (60) days after the date of such delivery or
mailing; provided, however, that the Custodian shall not act
under Section 2.12 hereof in the absence of receipt of an initial
certificate of the Secretary or an Assistant Secretary that the
Board of Trustees of the Trust has approved the initial use of a
particular Securities System as required in each case by Rule 17f-
4 under the Investment Company Act of 1940, as amended; provided
further, however, that the Trust shall not amend or terminate
this Contract in contravention of any applicable federal or state
regulations, or any provision of the Declaration of Trust, and
further provided, that the Trust may at any time by action of its
Board of Trustees (i) substitute another bank or trust company
for the Custodian by giving notice as described above to the
Custodian, or (ii) immediately terminate this Contract in the
event of the appointment of a conservator or receiver for the
Custodian by the Comptroller of the Currency or upon the
happening of a like event at the direction of an appropriate
regulatory agency or court of competent jurisdiction.
Upon termination of the Contract, the Trust shall pay to
the Custodian such compensation as may be due as of the date of
such termination and shall likewise reimburse the Custodian for
its costs, expenses and disbursements.
10. Successor Custodian
If a successor custodian shall be appointed by the Board of
Trustees of the Trust, the Custodian shall, upon termination,
deliver to such successor custodian at the office of the
Custodian, duly endorsed and in the form for transfer, all
securities then held by it hereunder for each Fund and shall
transfer to separate accounts of the successor custodian all of
each Fund's securities held in a Securities System.
If no such successor custodian shall be appointed, the
Custodian shall, in like manner, upon receipt of a certified copy
of a vote of the Board of Trustees of the Trust, deliver at the
office of the Custodian and transfer such securities, funds and
other properties in accordance with such vote.
In the event that no written order designating a successor
custodian or certified copy of a vote of the Board of Trustees
shall have been delivered to the Custodian on or before the date
when such termination shall become effective, then the Custodian
shall have the right to deliver to a bank or trust company, which
is a "bank" as defined in the Investment Company Act of 1940, of
its own selection, having an aggregate capital, surplus, and
undivided profits, as shown by its last published report, of not
less than $100,000,000.00, all securities, funds and other
properties held by the Custodian and all instruments held by the
Custodian relative thereto and all other property held by it
under this Contract for each Fund and to transfer to separate
accounts of such successor custodian all of each Fund's
securities held in any Securities System. Thereafter, such bank
or trust company shall be the successor of the Custodian under
this Contract.
In the event that securities, funds and other properties
remain in the possession of the Custodian after the date of
termination hereof owing to failure of the Trust to procure the
certified copy of the vote referred to or of the Board of
Trustees to appoint a successor custodian, the Custodian shall be
entitled to fair compensation for its services during such period
as the Custodian retains possession of such securities, funds and
other properties and the provisions of this Contract relating to
the duties and obligations of the Custodian shall remain in full
force and effect.
11. Interpretive and Additional Provisions
In connection with the operation of this Contract, the
Custodian and the Trust may from time to time agree on such
provisions interpretive of or in addition to the provisions of
this Contract as may in their joint opinion be consistent with
the general tenor of this Contract. 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
Declaration of Trust. No interpretive or additional provisions
made as provided in the preceding sentence shall be deemed to be
an amendment of this Contract.
12. Michigan Law to Apply
This Contract shall be construed and the provisions thereof
interpreted under and in accordance with laws of the State of
Michigan.
13. 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 Custodian at 27777 Inkster Road, Farmington
Hills, Michigan 48334, or to such other address as the Trust or
the Custodian may hereafter specify, shall be deemed to have been
properly delivered or given hereunder to the respective address.
14. Counterparts
This Contract may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original.
15. Limitations of Liability
The Custodian is expressly put on notice of the limitation
of liability as set forth in Article XI of the Declaration of
Trust and agrees that the obligations and liabilities assumed by
the Trust and any Fund pursuant to this Contract, including,
without limitation, any obligation or liability to indemnify the
Custodian pursuant to Section 8 hereof, shall be limited in any
case to the relevant Fund and its assets and that the Custodian
shall not seek satisfaction of any such obligation from the
shareholders of the relevant Fund, from any other Fund or its
shareholders or from the Trustees, Officers, employees or agents
of the Trust, or any of them. In addition, in connection with
the discharge and satisfaction of any claim made by the Custodian
against the Trust, for whatever reasons, involving more than one
Fund, the Trust shall have the exclusive right to determine the
appropriate allocations of liability for any such claim between
or among the Funds.
IN WITNESS WHEREOF, each of the parties has caused this
instrument to be executed in its name and behalf by its duly
authorized representative and its seal to be hereunder affixed as
of the __5th___ day of ____June___, 1995.
INDEPENDENCE ONE MUTUAL
ATTEST: FUNDS
/s/ Jay S. Neuman_________________ By:/s/ E. C.
Gonzales_______________
Secretary
Its:President__________________________
MICHIGAN NATIONAL BANK
/s/ Maureen Golab_________________ By:/s/ W. Brian Black
Its:Senior Vice
President_______________
G:\SSDATA\SCHUSTD\AGR\23374.1
CUSTODIAN CONTRACT
EXHIBIT A
PORTFOLIOS OF INDEPENDENCE ONE MUTUAL FUNDS
Independence One Mutual Funds (the "Trust") consists of the
following portfolios (the "Funds") effective as of the dates set
forth below:
Name Date
Independence One Prime Money Market Fund June 1, 1989
Independence One Michigan Municipal Cash Fund June 1, 1989
(formerly Independence One Tax-Free Money Market Fund)
Independence One U.S. Treasury Money Market Fund June 1, 1989
Independence One U.S. Government Securities Fund January 8, 1993
INDEPENDENCE ONE MUTUAL FUNDS
By:/s/ E. C. Gonzales
President
Date:7/3/95__________________________
MICHIGAN NATIONAL BANK
By:/s/ W. Brian Black
Senior Vice President
Date:6/5/95__________________________
CUSTODIAN CONTRACT
Between
INDEPENDENCE ONE MUTUAL FUNDS
and
MICHIGAN NATIONAL BANK
TABLE OF CONTENTS
Page
1. Employment of Custodian and Property to be Held by It
1
2. Duties of the Custodian With Respect to Property of the
Funds Held by the Custodian .1
2.1 Holding Securities
1
2.2 Delivery of Securities
2
2.3 Registration of Securities
3
2.4 Bank Accounts
3
2.5 Payments for Shares
4
2.6 Availability of Federal Funds
4
2.7 Collection of Income
4
2.8 Payment of Fund Moneys
5
2.9 Liability for Payment in Advance of Receipt of
Securities Purchased 5
2.10 Payments for Repurchases or Redemptions of Shares of
a Fund 6
2.11 Appointment of Agents
6
2.12 Deposit of Fund Assets in Securities System
6
2.13 Segregated Account
7
2.14 Joint Repurchase Agreements
7
2.15 Ownership Certificates for Tax Purposes
8
2.16 Proxies
8
2.17 Communications Relating to Fund Portfolio Securities
8
2.18 Proper Instructions
8
2.19 Actions Permitted Without Express Authority
8
2.20 Evidence of Authority
9
3. Duties of Custodian With Respect to the Books of Account
and Calculation of Net Asset
Value and Net Income
9
4. Records
9
5. Opinion of Funds' Independent Accountants
9
6. Reports to Trust by Independent Public Accountants
10
7. Compensation of Custodian
10
8. Responsibility of Custodian
10
9. Effective Period, Termination and Amendment
11
10. Successor Custodian
11
11. Interpretive and Additional Provisions
12
12. Michigan Law to Apply
12
13. Notices
12
14. Counterparts
12
15. Limitations of Liability
13
<TABLE> <S> <C>
<S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 1
<NAME> INDEPENDENCE ONE U.S. TREASURY MONEY
MARKET FUND
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> Apr-30-1995
<PERIOD-END> Apr-30-1995
<INVESTMENTS-AT-COST> 245,471,986
<INVESTMENTS-AT-VALUE> 245,471,986
<RECEIVABLES> 77,180
<ASSETS-OTHER> 445
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 245,549,611
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 662,422
<TOTAL-LIABILITIES> 662,422
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 244,887,189
<SHARES-COMMON-STOCK> 244,887,189
<SHARES-COMMON-PRIOR> 215,832,309
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 244,887,189
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 12,377,029
<OTHER-INCOME> 0
<EXPENSES-NET> 1,549,423
<NET-INVESTMENT-INCOME> 10,827,606
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 10,827,606
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 10,827,606
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,859,720,057
<NUMBER-OF-SHARES-REDEEMED> 1,835,916,082
<SHARES-REINVESTED> 5,250,905
<NET-CHANGE-IN-ASSETS> 29,054,880
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 983,049
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,549,423
<AVERAGE-NET-ASSETS> 245,762,331
<PER-SHARE-NAV-BEGIN> 1.000
<PER-SHARE-NII> 0.040
<PER-SHARE-GAIN-APPREC> 0.000
<PER-SHARE-DIVIDEND> 0.040
<PER-SHARE-DISTRIBUTIONS> 0.000
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 1.000
<EXPENSE-RATIO> 63
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.000
</TABLE>
<TABLE> <S> <C>
<S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 2
<NAME> INDEPENDENCE ONE PRIME MONEY MARKET FUND
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> Apr-30-1995
<PERIOD-END> Apr-30-1995
<INVESTMENTS-AT-COST> 232,772,608
<INVESTMENTS-AT-VALUE> 232,772,608
<RECEIVABLES> 1,473,825
<ASSETS-OTHER> 486,296
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 234,732,729
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,125,881
<TOTAL-LIABILITIES> 1,125,881
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 233,606,848
<SHARES-COMMON-STOCK> 233,606,848
<SHARES-COMMON-PRIOR> 310,588,452
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 233,606,848
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 13,656,886
<OTHER-INCOME> 0
<EXPENSES-NET> 1,628,031
<NET-INVESTMENT-INCOME> 12,028,855
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 12,028,855
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 12,028,855
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,885,542,162
<NUMBER-OF-SHARES-REDEEMED> 1,968,503,461
<SHARES-REINVESTED> 5,979,695
<NET-CHANGE-IN-ASSETS> (76,981,604)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,066,096
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,628,031
<AVERAGE-NET-ASSETS> 266,523,893
<PER-SHARE-NAV-BEGIN> 1.000
<PER-SHARE-NII> 0.050
<PER-SHARE-GAIN-APPREC> 0.000
<PER-SHARE-DIVIDEND> 0.050
<PER-SHARE-DISTRIBUTIONS> 0.000
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 1.000
<EXPENSE-RATIO> 61
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.000
</TABLE>
<TABLE> <S> <C>
<S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 4
<NAME> INDEPENDENCE ONE MICHIGAN MUNICIPAL CASH
FUND
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> Apr-30-1995
<PERIOD-END> Apr-30-1995
<INVESTMENTS-AT-COST> 64,834,630
<INVESTMENTS-AT-VALUE> 64,834,630
<RECEIVABLES> 3,602,998
<ASSETS-OTHER> 2,870
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 68,440,498
<PAYABLE-FOR-SECURITIES> 1,510,755
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 73,340
<TOTAL-LIABILITIES> 1,584,095
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 66,856,403
<SHARES-COMMON-STOCK> 66,856,403
<SHARES-COMMON-PRIOR> 55,013,446
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 66,856,403
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 2,110,862
<OTHER-INCOME> 0
<EXPENSES-NET> 369,162
<NET-INVESTMENT-INCOME> 1,741,700
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 1,741,700
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 1,741,700
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 397,857,305
<NUMBER-OF-SHARES-REDEEMED> 387,290,113
<SHARES-REINVESTED> 1,275,765
<NET-CHANGE-IN-ASSETS> 11,842,957
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 248,836
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 497,573
<AVERAGE-NET-ASSETS> 62,208,976
<PER-SHARE-NAV-BEGIN> 1.000
<PER-SHARE-NII> 0.030
<PER-SHARE-GAIN-APPREC> 0.000
<PER-SHARE-DIVIDEND> 0.030
<PER-SHARE-DISTRIBUTIONS> 0.000
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 1.000
<EXPENSE-RATIO> 59
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.000
</TABLE>
