INDEPENDENCE
ONE
EQUITY
PLUS
FUND
Semi-Annual Report and
Supplement to Prospectus
dated August 23, 1995
[logo of Michigan National Bank]
Michigan National Bank
Investment Adviser
[logo]
FEDERATED SECURITIES CORP.
- --------------------------- [logo]
Distributor Independence One
Mutual Funds
Cusip 453777872
G01200-06 (12/95)
PRESIDENT'S MESSAGE
- --------------------------------------------------------------------------------
Dear Investor:
I am pleased to present a financial report and supplement to your prospectus for
Independence One Equity Plus Fund. This document covers the period between
September 25, 1995, the date of initial public investment, through October 31,
1995. Inside, you will find complete financial information for the
fund--beginning with the portfolio manager's investment review, which is
followed by a list of fund holdings and its financial statements.
Your money is at work where it can grow over time--in a diversified portfolio of
high-quality stocks. As you can see from the fund's holdings, many of these
stocks are industry leaders whose products and services are part of daily
American life.
Thank you for selecting Independence One Equity Plus Fund to help your money
grow in pursuit of your long-term financial goals. We look forward to keeping
you informed about the progress of your investment.
Sincerely,
Edward C. Gonzales
President
December 15, 1995
INVESTMENT REVIEW
- --------------------------------------------------------------------------------
The shares of Independence One Equity Plus Fund represent interests in the fund,
which is one of a series of investment portfolios in the Independence One Mutual
Funds, an open-end, management investment company. The investment objective of
the fund is total return. The fund will pursue this objective by attempting to
provide investment results that correspond to or exceed the aggregate price and
dividend performance of the Standard & Poor's 100 Composite Stock Price Index
(the "S&P 100") by investing primarily in the common stocks comprising the S&P
100. The fund is neither affiliated with nor sponsored by Standard & Poor's.
The "re-engineering" movement embraced by a multitude of corporations has led to
contained wage pressures and increased global competitiveness. The equity
markets have heralded this strategy, as evidenced by the year-to-date rise in
the S&P 500 of 30.3%, and the toppling of both the 4,000 and 5,000 barriers in
the Dow Jones Industrial Average. The strong performance of the equity markets
has led to an influx of assets into the fund. Since inception, total assets of
the fund have grown to approximately $81 million.
The Federal Reserve Open Market Committee (the "Committee") meets eight times a
year to deliberate monetary policy. The Committee has been inactive during most
of 1995. The year began with its federal funds target rate at 5.50% and its
official discount rate at 4.75%. On February 1, 1995, both benchmark rates were
increased by 50 basis points in response to continued signs of economic strength
and fears of building inflation pressures. This increase in managed interest
rates turned out to be the last in the Committee's twelve month tightening
program that raised the federal funds rate a total of 300 basis points. When it
became apparent that the economy had indeed slowed its rate of growth the
Committee reversed its stance. It lowered the federal funds rate by 25 basis
points to 5.75% after its July 6th meeting. Federal Reserve (the "Fed")
policymakers have left this key rate unchanged since that time.
The pace of economic activity picked up during the second half of 1995. Gross
Domestic Product rose 4.2% during the third quarter and is expected to grow at a
2.8% annual rate during the fourth quarter. The unemployment rate has stayed
below 6% all year, and its most recent reading was 5.5% for the month of
October.
All in all, the Fed should be pleased with the overall health of the economy and
the strong performance of both the equity and credit markets. It is our opinion
that the Federal Reserve will need solid evidence to shift from their current
posture of "wait and see."
The fund's investment adviser will continue to monitor economic and market
developments to best serve our shareholders.
INDEPENDENCE ONE EQUITY PLUS FUND
(A PORTFOLIO OF INDEPENDENCE ONE MUTUAL FUNDS)
SEMI-ANNUAL REPORT AND SUPPLEMENT TO PROSPECTUS DATED AUGUST 23, 1995
A. Please delete the "Summary of Fund Expenses" table on page 1 of the
prospectus and replace it with the following table:
SUMMARY OF FUND EXPENSES
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on Purchases (as a percentage of offering price)............................... None
Maximum Sales Load Imposed on Reinvested Dividends
(as a percentage of offering price)..................................................................... None
Contingent Deferred Sales Charge (as a percentage of original purchase
price or redemption proceeds, as applicable)............................................................ None
Redemption Fees (as a percentage of amount redeemed, if applicable)....................................... None
Exchange Fee.............................................................................................. None
ANNUAL FUND OPERATING EXPENSES*
(as a percentage projected of average net assets)
Management Fee (after waiver) (1)......................................................................... 0.20%
12b-1 Fees................................................................................................ None
Total Other Expenses (after waiver) (2)................................................................... 0.23%
Total Fund Operating Expenses (after waivers) (3)................................................ 0.43%
</TABLE>
(1) The estimated management fee has been 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 is
0.40%.
(2) Total Other Expenses are estimated to be 0.36% absent the anticipated
voluntary waiver by the administrator.
(3) The Total Fund Operating Expenses are estimated to be 0.76% absent the
voluntary waiver by the adviser and administrator.
* Annual Fund Operating Expenses are estimated based on expenses expected to be
incurred during the fiscal year ending April 30, 1996. During the course of
this period, expenses may be more or less than the amount shown.
THE PURPOSE OF THIS TABLE IS TO ASSIST AN INVESTOR IN UNDERSTANDING THE
VARIOUS COSTS AND EXPENSES THAT A SHAREHOLDER OF THE FUND WILL BEAR, EITHER
DIRECTLY OR INDIRECTLY. FOR MORE COMPLETE DESCRIPTIONS OF VARIOUS COSTS AND
EXPENSES, SEE "INDEPENDENCE ONE MUTUAL FUNDS INFORMATION" AND "INVESTING IN THE
FUND." WIRE-TRANSFERRED REDEMPTIONS OF LESS THAN $5,000 MAY BE SUBJECT TO
ADDITIONAL FEES.
<TABLE>
<CAPTION>
EXAMPLE 1 year 3 years
<S> <C> <C>
--------- ---------
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. ....................... $4 $14
</TABLE>
THE ABOVE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN. THIS
EXAMPLE IS BASED ON ESTIMATED DATA FOR FISCAL YEAR ENDING APRIL 30, 1996.
B. Please insert the following "Financial Highlights" table as page 2 of the
prospectus:
INDEPENDENCE ONE EQUITY PLUS FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
<TABLE>
<CAPTION>
PERIOD ENDED
(UNAUDITED)
OCTOBER 31, 1995(A)
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.00
- ------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ------------------------------------------------------------------------------------------
Net investment income 0.01
- ------------------------------------------------------------------------------------------
Net realized and unrealized gain on investments 0.05
- ------------------------------------------------------------------------------------------ -------
Total from investment operations 0.06
- ------------------------------------------------------------------------------------------ -------
NET ASSET VALUE, END OF PERIOD $ 10.06
- ------------------------------------------------------------------------------------------ -------
TOTAL RETURN (B) 0.60%
- ------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ------------------------------------------------------------------------------------------
Expenses 0.43%*
- ------------------------------------------------------------------------------------------
Net investment income 1.97%*
- ------------------------------------------------------------------------------------------
Expense waiver/reimbursement (c) 0.32%*
- ------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
- ------------------------------------------------------------------------------------------
Net assets, end of period (000 omitted) $ 80,780
- ------------------------------------------------------------------------------------------
Portfolio turnover 0%
- ------------------------------------------------------------------------------------------
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from September 25, 1995 (date of initial
public investment) to October 31, 1995.
(b) Based on net asset value, which does not reflect the sales load or
contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
C. Please delete the first sentence of the sub-section entitled "To Place an
Order" under the section entitled "Share Purchases" on page 10 and replace
it with the following:
"Investors may call toll-free 1-800-334-2292 to purchase shares of the Fund
through Michigan National Bank or Independence One."
D. Please insert the following sub-heading and paragraph before the heading
"Exchanging Securities for Fund Shares" on page 11:
"SYSTEMATIC INVESTMENT PROGRAM
Once the Fund account has been opened, shareholders may add to their
investment on a regular basis in a minimum amount of $100. Under this
program, funds may be automatically withdrawn periodically from the
shareholder's checking account and invested in Fund shares at the net asset
value next determined after an order is received. A shareholder may apply
for participation in this program through Michigan National Bank."
E. Please insert the following sub-heading and paragraph before the
sub-heading "Accounts with Low Balances" on page 15:
"SYSTEMATIC WITHDRAWAL PROGRAM
Shareholders who desire to receive payments of a predetermined amount may
take advantage of the Systematic Withdrawal Program. Under this program,
shares of the Fund are redeemed to provide for periodic withdrawal payments
in an amount directed by the shareholder. Depending upon the amount of the
withdrawal payments, the amount of dividends paid and capital gains
distributions with respect to Fund shares, and the fluctuation of the net
asset value of Fund shares redeemed under this program, redemptions may
reduce, and eventually deplete, the shareholder's investment in the Fund.
For this reason, payments under this program should not be considered as
yield or income on the shareholder's investment in the Fund. To be eligible
to participate in this program, a shareholder must have an account value of
at least $10,000. A shareholder may apply for participation in this program
through Michigan National Bank."
F. Please add the following information as a final sentence of the first
paragraph under the sub-heading entitled "Voting Rights" under the
heading "Shareholder Information" on page 15:
"As of December 4, 1995, Michigan National Bank may for certain purposes be
deemed to control the Fund because it is owner of record of certain shares
of the Fund."
G. Please insert the following financial statements beginning as page 19 of
the prospectus:
INDEPENDENCE ONE EQUITY PLUS FUND
PORTFOLIO OF INVESTMENTS
OCTOBER 31, 1995 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- ----------- ------------------------------------------------------------------------------------- -------------
COMMON STOCKS--99.6%
- --------------------------------------------------------------------------------------------------
AEROSPACE & DEFENSE--3.1%
-------------------------------------------------------------------------------------
15,145 Boeing Co. $ 993,891
-------------------------------------------------------------------------------------
2,784 General Dynamics Corp. 154,164
-------------------------------------------------------------------------------------
10,788 Raytheon Co. 470,626
-------------------------------------------------------------------------------------
9,602 Rockwell International Group 427,289
-------------------------------------------------------------------------------------
5,450 United Technologies Corp. 483,687
------------------------------------------------------------------------------------- -------------
Total 2,529,657
------------------------------------------------------------------------------------- -------------
AUTOMOTIVE--4.6%
-------------------------------------------------------------------------------------
16,914 Chrysler Corp. 873,185
-------------------------------------------------------------------------------------
47,502 Ford Motor Co. 1,365,682
-------------------------------------------------------------------------------------
33,057 General Motors Corp. 1,446,244
------------------------------------------------------------------------------------- -------------
Total 3,685,111
------------------------------------------------------------------------------------- -------------
BANKING--3.2%
-------------------------------------------------------------------------------------
16,553 BankAmerica Corp. 951,797
-------------------------------------------------------------------------------------
17,578 Citicorp 1,140,373
-------------------------------------------------------------------------------------
3,968 First Chicago Corp. 269,328
-------------------------------------------------------------------------------------
3,544 First Fidelity BanCorp 231,689
------------------------------------------------------------------------------------- -------------
Total 2,593,187
------------------------------------------------------------------------------------- -------------
CAPITAL GOODS--1.4%
-------------------------------------------------------------------------------------
6,101 Homestake Mining Co. 93,803
-------------------------------------------------------------------------------------
18,584 Minnesota Mining & Manufacturing Co. 1,056,965
------------------------------------------------------------------------------------- -------------
Total 1,150,768
------------------------------------------------------------------------------------- -------------
CHEMICALS--3.7%
-------------------------------------------------------------------------------------
11,895 Dow Chemicals Co. 816,294
-------------------------------------------------------------------------------------
24,543 Du Pont (E. I.) DeNemours 1,530,870
-------------------------------------------------------------------------------------
3,389 Mallinckrodt Group Inc. 117,768
-------------------------------------------------------------------------------------
</TABLE>
INDEPENDENCE ONE EQUITY PLUS FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- ----------- ------------------------------------------------------------------------------------- -------------
COMMON STOCKS--CONTINUED
- --------------------------------------------------------------------------------------------------
CHEMICALS--CONTINUED
-------------------------------------------------------------------------------------
5,097 Monsanto Co. $ 533,911
------------------------------------------------------------------------------------- -------------
Total 2,998,843
------------------------------------------------------------------------------------- -------------
COMPUTERS--6.0%
-------------------------------------------------------------------------------------
2,017 (a)Ceridian Corp. 87,739
-------------------------------------------------------------------------------------
2,454 (a)Computer Sciences Corp. 164,111
-------------------------------------------------------------------------------------
22,622 Hewlett Packard Co. 2,095,363
-------------------------------------------------------------------------------------
25,152 International Business Machines Inc. 2,446,032
-------------------------------------------------------------------------------------
7,578 (a)Unisys Corp. 42,626
------------------------------------------------------------------------------------- -------------
Total 4,835,871
------------------------------------------------------------------------------------- -------------
COSMETICS & PERSONAL CARE--0.6%
-------------------------------------------------------------------------------------
3,029 Avon Products Inc. 215,438
-------------------------------------------------------------------------------------
4,922 International Flavours & Fragrances 237,486
------------------------------------------------------------------------------------- -------------
Total 452,924
------------------------------------------------------------------------------------- -------------
DIVERSIFIED--0.8%
-------------------------------------------------------------------------------------
5,121 ITT Corp. 627,322
------------------------------------------------------------------------------------- -------------
ELECTRIC--1.3%
-------------------------------------------------------------------------------------
10,072 Entergy Corp. 287,052
-------------------------------------------------------------------------------------
29,444 Southern Co. 702,975
------------------------------------------------------------------------------------- -------------
Total 990,027
------------------------------------------------------------------------------------- -------------
ELECTRICAL EQUIPMENT--6.7%
-------------------------------------------------------------------------------------
3,790 Black & Decker Corp. 128,386
-------------------------------------------------------------------------------------
6,494 (a)Digital Equipment Corp. 351,488
-------------------------------------------------------------------------------------
74,913 General Electric Co. 4,738,247
-------------------------------------------------------------------------------------
5,625 Honeywell Inc. 236,250
------------------------------------------------------------------------------------- -------------
Total 5,454,371
------------------------------------------------------------------------------------- -------------
ELECTRONICS--4.7%
-------------------------------------------------------------------------------------
9,623 AMP, Inc. 377,703
-------------------------------------------------------------------------------------
</TABLE>
INDEPENDENCE ONE EQUITY PLUS FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- ----------- ------------------------------------------------------------------------------------- -------------
COMMON STOCKS--CONTINUED
- --------------------------------------------------------------------------------------------------
ELECTRONICS--CONTINUED
-------------------------------------------------------------------------------------
36,420 Intel Corp. $ 2,544,847
-------------------------------------------------------------------------------------
5,469 (a)National Semiconductor Corp. 133,307
-------------------------------------------------------------------------------------
1,999 Polaroid Corp. 85,457
-------------------------------------------------------------------------------------
1,477 Tektronix, Inc. 87,512
-------------------------------------------------------------------------------------
8,310 Texas Instruments Inc. 567,157
------------------------------------------------------------------------------------- -------------
Total 3,795,983
------------------------------------------------------------------------------------- -------------
ENTERTAINMENT--1.7%
-------------------------------------------------------------------------------------
23,033 Disney (Walt) Co. 1,327,277
-------------------------------------------------------------------------------------
4,534 (a)Harrah's Entertainment Inc. 112,216
------------------------------------------------------------------------------------- -------------
Total 1,439,493
------------------------------------------------------------------------------------- -------------
FINANCIAL SERVICES--2.3%
-------------------------------------------------------------------------------------
21,570 American Express Co. 876,281
-------------------------------------------------------------------------------------
3,361 First Interstate Bancorp 433,569
-------------------------------------------------------------------------------------
6,011 Great Western Financial Corp. 135,999
-------------------------------------------------------------------------------------
7,784 Merrill Lynch & Co., Inc. 432,012
------------------------------------------------------------------------------------- -------------
Total 1,877,861
------------------------------------------------------------------------------------- -------------
FOOD & BEVERAGE--9.7%
-------------------------------------------------------------------------------------
55,776 Coca Cola Co. 4,008,900
-------------------------------------------------------------------------------------
10,769 Heinz (H. J.) Co. 500,758
-------------------------------------------------------------------------------------
30,727 McDonalds Corp. 1,259,807
-------------------------------------------------------------------------------------
34,828 Pepsico Inc. 1,837,177
-------------------------------------------------------------------------------------
4,607 Ralston Purina Co. 273,541
------------------------------------------------------------------------------------- -------------
Total 7,880,183
------------------------------------------------------------------------------------- -------------
FOREST PRODUCTS & PAPER--1.4%
-------------------------------------------------------------------------------------
2,112 Boise Cascade Corp. 76,560
-------------------------------------------------------------------------------------
4,272 Champion International Corp. 228,552
-------------------------------------------------------------------------------------
11,259 International Paper Co. 416,583
-------------------------------------------------------------------------------------
</TABLE>
INDEPENDENCE ONE EQUITY PLUS FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- ----------- ------------------------------------------------------------------------------------- -------------
COMMON STOCKS--CONTINUED
- --------------------------------------------------------------------------------------------------
FOREST PRODUCTS & PAPER--CONTINUED
-------------------------------------------------------------------------------------
8,990 Weyerhaeuser Co. $ 396,684
------------------------------------------------------------------------------------- -------------
Total 1,118,379
------------------------------------------------------------------------------------- -------------
HOMEBUILDERS--0.3%
-------------------------------------------------------------------------------------
3,660 Fluor Corp. 206,790
------------------------------------------------------------------------------------- -------------
HOUSEHOLD PRODUCTS--0.6%
-------------------------------------------------------------------------------------
6,432 Colgate Palmolive Co. 445,416
------------------------------------------------------------------------------------- -------------
INSURANCE--3.0%
-------------------------------------------------------------------------------------
9,060 American General Corp. 297,847
-------------------------------------------------------------------------------------
20,972 American International Group, Inc. 1,769,512
-------------------------------------------------------------------------------------
3,208 Cigna Corp. 317,993
------------------------------------------------------------------------------------- -------------
Total 2,385,352
------------------------------------------------------------------------------------- -------------
MANUFACTURING--1.2%
-------------------------------------------------------------------------------------
15,117 Eastman Kodak Co. 946,702
-------------------------------------------------------------------------------------
2,463 Teledyne Inc. 61,267
------------------------------------------------------------------------------------- -------------
Total 1,007,969
------------------------------------------------------------------------------------- -------------
MEDICAL SUPPLIES--0.6%
-------------------------------------------------------------------------------------
12,240 Baxter International, Inc. 472,770
------------------------------------------------------------------------------------- -------------
METALS & MINING--0.5%
-------------------------------------------------------------------------------------
7,894 Aluminum Co. of America 402,594
------------------------------------------------------------------------------------- -------------
OFFICE EQUIPMENT--0.9%
-------------------------------------------------------------------------------------
1,720 Harris Corp. 99,975
-------------------------------------------------------------------------------------
4,756 Xerox Corp. 617,091
------------------------------------------------------------------------------------- -------------
Total 717,066
------------------------------------------------------------------------------------- -------------
OIL & GAS--12.1%
-------------------------------------------------------------------------------------
21,956 Amoco Corp. 1,402,440
-------------------------------------------------------------------------------------
7,113 Atlantic Richfield Co. 759,313
-------------------------------------------------------------------------------------
6,245 Baker Hughes Inc. 122,558
-------------------------------------------------------------------------------------
</TABLE>
INDEPENDENCE ONE EQUITY PLUS FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- ----------- ------------------------------------------------------------------------------------- -------------
COMMON STOCKS--CONTINUED
- --------------------------------------------------------------------------------------------------
OIL & GAS--CONTINUED
-------------------------------------------------------------------------------------
4,636 Coastal Corp. $ 150,091
-------------------------------------------------------------------------------------
54,938 Exxon Corp. 4,195,890
-------------------------------------------------------------------------------------
5,050 Halliburton Co. 209,575
-------------------------------------------------------------------------------------
17,495 Mobil Corp. 1,762,621
-------------------------------------------------------------------------------------
14,072 Occidental Petroleum Corp. 302,548
-------------------------------------------------------------------------------------
10,698 Schlumberger, LTD 665,951
-------------------------------------------------------------------------------------
4,513 Williams Cos., Inc. 174,315
------------------------------------------------------------------------------------- -------------
Total 9,745,302
------------------------------------------------------------------------------------- -------------
PHARMACEUTICALS--9.4%
-------------------------------------------------------------------------------------
22,430 Bristol Myers Squibb Co. 1,710,288
-------------------------------------------------------------------------------------
28,541 Johnson & Johnson Co. 2,326,092
-------------------------------------------------------------------------------------
54,693 Merck & Co. Inc. 3,144,848
-------------------------------------------------------------------------------------
7,572 Upjohn Co. 384,279
------------------------------------------------------------------------------------- -------------
Total 7,565,507
------------------------------------------------------------------------------------- -------------
RECREATION--1.1%
-------------------------------------------------------------------------------------
4,237 Brunswick Corp. 82,622
-------------------------------------------------------------------------------------
6,807 Capital Cities ABC, Inc. 807,480
------------------------------------------------------------------------------------- -------------
Total 890,102
------------------------------------------------------------------------------------- -------------
RETAIL--5.0%
-------------------------------------------------------------------------------------
20,294 K Mart Corp. 164,889
-------------------------------------------------------------------------------------
15,802 Limited Inc. 290,362
-------------------------------------------------------------------------------------
10,997 May Department Stores Co. 431,632
-------------------------------------------------------------------------------------
17,225 Sears Roebuck & Co. 585,650
-------------------------------------------------------------------------------------
2,883 Tandy Corp. 142,348
-------------------------------------------------------------------------------------
12,222 (a)Toys R Us, Inc. 267,356
-------------------------------------------------------------------------------------
101,602 Wal-Mart Stores Inc. 2,197,143
------------------------------------------------------------------------------------- -------------
Total 4,079,380
------------------------------------------------------------------------------------- -------------
</TABLE>
INDEPENDENCE ONE EQUITY PLUS FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- ----------- ------------------------------------------------------------------------------------- -------------
COMMON STOCKS--CONTINUED
- --------------------------------------------------------------------------------------------------
STEEL--0.1%
-------------------------------------------------------------------------------------
4,884 (a)Bethleham Steel Corp. $ 64,103
------------------------------------------------------------------------------------- -------------
TELECOMMUNICATIONS--11.2%
-------------------------------------------------------------------------------------
70,158 AT & T Corp. 4,490,112
-------------------------------------------------------------------------------------
24,510 Ameritech Corp. 1,323,540
-------------------------------------------------------------------------------------
19,309 Bell Atlantic Corp. 1,228,535
-------------------------------------------------------------------------------------
29,976 MCI Communications Corp. 747,527
-------------------------------------------------------------------------------------
18,897 NYNEX Corp. 888,159
-------------------------------------------------------------------------------------
11,217 Northern Telecom LTD 403,812
------------------------------------------------------------------------------------- -------------
Total 9,081,685
------------------------------------------------------------------------------------- -------------
TRANSPORTATION--1.6%
-------------------------------------------------------------------------------------
6,280 Burlington Northern, Inc. 526,735
-------------------------------------------------------------------------------------
2,245 Delta Air Lines Inc. DE 147,328
-------------------------------------------------------------------------------------
2,485 (a)Federal Express Corp. 204,081
-------------------------------------------------------------------------------------
5,794 Norfolk Southern Corp. 447,587
------------------------------------------------------------------------------------- -------------
Total 1,325,731
------------------------------------------------------------------------------------- -------------
UTILITIES-ELECTRIC--0.8%
-------------------------------------------------------------------------------------
8,223 American Electric Power Inc. 313,502
-------------------------------------------------------------------------------------
9,490 Unicom Corp. 310,798
------------------------------------------------------------------------------------- -------------
Total 624,300
------------------------------------------------------------------------------------- -------------
TOTAL COMMON STOCKS (IDENTIFIED COST $73,836,478) 80,444,047
------------------------------------------------------------------------------------- -------------
PREFERRED STOCKS--0.0%
--------------------------------------------------------------------------------------------------
MANUFACTURING--0.0%
-------------------------------------------------------------------------------------
65 Teledyne Inc., Series E, $1.20, (IDENTIFIED COST $896) 934
------------------------------------------------------------------------------------- -------------
</TABLE>
INDEPENDENCE ONE EQUITY PLUS FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- ----------- ------------------------------------------------------------------------------------- -------------
(B) REPURCHASE AGREEMENT--0.4%
- --------------------------------------------------------------------------------------------------
$ 283,000 First Chicago Capital Markets, Inc., 5.85%, dated 10/31/1995,
due 11/1/1995 (AT AMORTIZED COST) $ 283,000
------------------------------------------------------------------------------------- -------------
TOTAL INVESTMENTS (IDENTIFIED COST $73,837,374)(C) $ 80,727,981
------------------------------------------------------------------------------------- -------------
</TABLE>
(a) Non-income producing security.
(b) The repurchase agreement is fully collateralized by U.S. government and/or
agency obligations based on market prices at the date of the portfolio.
(c) The cost of investments for federal tax purposes amounts to $73,837,374.
The net unrealized appreciation of investments on a federal tax basis
amounts to $6,890,607 which is comprised of $7,149,904 appreciation and
$259,297 depreciation at October 31, 1995.
Note: The categories of investments are shown as a percentage of net assets
($80,780,405) at October 31, 1995.
(See Notes which are an integral part of the Financial Statements)
INDEPENDENCE ONE EQUITY PLUS FUND
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1995 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
- ---------------------------------------------------------------------------------------------------
Total investments in securities, at value
(identified and tax cost $73,837,374) $ 80,727,981
- ---------------------------------------------------------------------------------------------------
Cash 1,104
- ---------------------------------------------------------------------------------------------------
Income receivable 64,734
- --------------------------------------------------------------------------------------------------- -------------
Total assets 80,793,819
- ---------------------------------------------------------------------------------------------------
LIABILITIES:
- ---------------------------------------------------------------------------------------------------
Accrued expenses 13,414
- --------------------------------------------------------------------------------------------------- -------------
NET ASSETS for 8,028,136 shares outstanding $ 80,780,405
- --------------------------------------------------------------------------------------------------- -------------
NET ASSETS CONSIST OF:
- ---------------------------------------------------------------------------------------------------
Paid in capital $ 73,817,589
- ---------------------------------------------------------------------------------------------------
Net unrealized appreciation of investments 6,890,607
- ---------------------------------------------------------------------------------------------------
Accumulated net realized gain on investments 1,130
- ---------------------------------------------------------------------------------------------------
Undistributed net investment income 71,079
- --------------------------------------------------------------------------------------------------- -------------
Total Net Assets $ 80,780,405
- --------------------------------------------------------------------------------------------------- -------------
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE:
- ---------------------------------------------------------------------------------------------------
$80,780,405 / 8,028,136 shares outstanding $10.06
- --------------------------------------------------------------------------------------------------- -------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
INDEPENDENCE ONE EQUITY PLUS FUND
STATEMENT OF OPERATIONS
FOR THE PERIOD FROM SEPTEMBER 25, 1995 TO OCTOBER 31, 1995 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
- ----------------------------------------------------------------------------------------------------
Dividends $ 82,958
- ----------------------------------------------------------------------------------------------------
Interest 3,773
- ---------------------------------------------------------------------------------------------------- ------------
Total income 86,731
- ----------------------------------------------------------------------------------------------------
EXPENSES:
- ----------------------------------------------------------------------------------------------------
Investment advisory fee $ 14,426
- -----------------------------------------------------------------------------------------
Administrative personnel and services fee 4,366
- -----------------------------------------------------------------------------------------
Custodian fees 2,236
- -----------------------------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses 541
- -----------------------------------------------------------------------------------------
Directors'/Trustees' fees 252
- -----------------------------------------------------------------------------------------
Legal fees 325
- -----------------------------------------------------------------------------------------
Portfolio accounting fees 3,138
- -----------------------------------------------------------------------------------------
Printing and postage 541
- -----------------------------------------------------------------------------------------
Insurance premiums 613
- -----------------------------------------------------------------------------------------
Miscellaneous 793
- ----------------------------------------------------------------------------------------- ---------
Total expenses 27,231
- -----------------------------------------------------------------------------------------
Waivers--
- ------------------------------------------------------------------------------
Waiver of investment advisory fee ($7,213)
- ------------------------------------------------------------------------------
Waiver of administrative personnel and services fee (4,366)
- ------------------------------------------------------------------------------ ---------
Total waivers (11,579)
- ----------------------------------------------------------------------------------------- ---------
Net expenses 15,652
- ---------------------------------------------------------------------------------------------------- ------------
Net investment income 71,079
- ---------------------------------------------------------------------------------------------------- ------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
- ----------------------------------------------------------------------------------------------------
Net realized gain on investments 1,130
- ----------------------------------------------------------------------------------------------------
Net change in unrealized appreciation of investments 6,890,607
- ---------------------------------------------------------------------------------------------------- ------------
Net realized and unrealized gain on investments 6,891,737
- ---------------------------------------------------------------------------------------------------- ------------
Change in net assets resulting from operations $ 6,962,816
- ---------------------------------------------------------------------------------------------------- ------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
INDEPENDENCE ONE EQUITY PLUS FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERIOD ENDED
(UNAUDITED)
OCTOBER 31, 1995*
<S> <C>
INCREASE (DECREASE) IN NET ASSETS:
- -------------------------------------------------------------------------------------------
OPERATIONS--
- -------------------------------------------------------------------------------------------
Net investment income $ 71,079
- -------------------------------------------------------------------------------------------
Net realized gain on investments ($1,130 net gain,
as computed for federal tax purposes) 1,130
- -------------------------------------------------------------------------------------------
Net change in unrealized appreciation 6,890,607
- ------------------------------------------------------------------------------------------- ---------------------
Change in net assets resulting from operations 6,962,816
- ------------------------------------------------------------------------------------------- ---------------------
SHARE TRANSACTIONS--
- -------------------------------------------------------------------------------------------
Proceeds from sale of shares 75,073,368
- -------------------------------------------------------------------------------------------
Cost of shares redeemed (1,255,779)
- ------------------------------------------------------------------------------------------- ---------------------
Change in net assets resulting from share transactions 73,817,589
- ------------------------------------------------------------------------------------------- ---------------------
Change in net assets 80,780,405
- -------------------------------------------------------------------------------------------
NET ASSETS:
- -------------------------------------------------------------------------------------------
Beginning of period 0
- ------------------------------------------------------------------------------------------- ---------------------
End of period (including undistributed net investment income of $71,079) $ 80,780,405
- ------------------------------------------------------------------------------------------- ---------------------
</TABLE>
*For the period from September 25, 1995 (date of initial public investment) to
October 31, 1995.
(See Notes which are an integral part of the Financial Statements)
INDEPENDENCE ONE EQUITY PLUS FUND
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1995 (UNAUDITED)
- --------------------------------------------------------------------------------
(1) ORGANIZATION
Independence One Mutual Funds (the "Trust") is registered under the Investment
Company Act of 1940, as amended (the "Act"), as an open-end, management
investment company. The Trust consists of five diversified portfolios and two
non-diversified portfolios. The financial statements included herein are only
those of Independence One Equity Plus Fund (the "Fund"). The financial
statements of the other portfolios are presented separately. The assets of each
portfolio are segregated and a shareholder's interest is limited to the
portfolio in which shares are held.
(2) SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles.
INVESTMENT VALUATIONS--Short-term securities with remaining maturities of
sixty days or less at the time of purchase may be valued at amortized cost,
which approximates fair market value. All other securities are valued at
prices provided by an independent pricing service.
REPURCHASE AGREEMENTS--It is the policy of the Fund to require the
custodian bank to take possession, to have legally segregated in the
Federal Reserve Book Entry System, or to have segregated within the
custodian bank's vault, all securities held as collateral under repurchase
agreement transactions. Additionally, procedures have been established by
the Fund to monitor, on a daily basis, the market value of each repurchase
agreement's collateral to ensure that the value of collateral at least
equals the repurchase price to be paid under the repurchase agreement
transaction.
The Fund will only enter into repurchase agreements with banks and other
recognized financial institutions, such as broker/dealers, which are deemed
by the Fund's adviser to be creditworthy pursuant to the guidelines and/or
standards reviewed or established by the Board of Trustees (the
"Trustees"). Risks may arise from the potential inability of counterparties
to honor the terms of the repurchase agreement. Accordingly, the Fund could
receive less than the repurchase price on the sale of collateral
securities.
INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS--Dividends and distributions
to shareholders are recorded on the ex-dividend date. Interest income and
expenses are accrued daily. Bond premium and discount, if applicable, are
amortized as required by the Internal Revenue Code, as amended (the
"Code").
INDEPENDENCE ONE EQUITY PLUS FUND
- --------------------------------------------------------------------------------
FEDERAL TAXES--It is the Fund's policy to comply with the provisions of the
Code applicable to regulated investment companies and to distribute to
shareholders each year substantially all of its income. Accordingly, no
provisions for federal tax are necessary.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Fund may engage in
when-issued or delayed delivery transactions. The Fund records when-issued
securities on the trade date and maintains security positions such that
sufficient liquid assets will be available to make payment for the
securities purchased. Securities purchased on a when-issued or delayed
delivery basis are marked to market daily and begin earning interest on the
settlement date.
DEFERRED EXPENSES--The costs incurred by the Fund with respect to
registration of its shares in its first fiscal year, excluding the initial
expense of registering its shares, have been deferred and are being
amortized using the straight-line method over a period of five years from
the Fund's commencement date.
OTHER--Investment transactions are accounted for on the trade date.
(3) SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value).
Transactions in shares were as follows:
<TABLE>
<CAPTION>
PERIOD ENDED
OCTOBER 31, 1995*
<S> <C>
Shares sold 8,152,355
- -------------------------------------------------------------------------------------------
Shares redeemed (124,219)
- ------------------------------------------------------------------------------------------- ---------------------
Net change resulting from share transactions 8,028,136
- ------------------------------------------------------------------------------------------- ---------------------
</TABLE>
*For the period from September 25, 1995 to (date of initial public investment)
to October 31, 1995.
(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE--Michigan National Bank, the Fund's investment adviser,
(the "Adviser"), receives for its services an annual investment advisory fee
equal to .40 of 1% of the Fund's average daily net assets.
The Adviser may voluntarily choose to waive any portion of its fee. The Adviser
can modify or terminate this voluntary waiver at any time at its sole
discretion.
Under the terms of a sub-advisory agreement between the Adviser and Sosnoff
Sheridan Corporation, Sosnoff Sheridan Corporation receives an annual fee from
the Adviser equal to .035 of 1% of
INDEPENDENCE ONE EQUITY PLUS FUND
- --------------------------------------------------------------------------------
the Fund's average daily net assets. Sosnoff Sheridan Group may voluntarily
choose to reduce its compensation.
ADMINISTRATIVE FEE--Federated Administrative Services ("FAS") provides the Fund
with certain administrative personnel and services. This fee is based on the
level of average aggregate net assets of the Trust for the period. FAS may
voluntarily choose to waive a portion of its fee.
TRANSFER AGENT FEES--Federated Services Company serves as transfer and dividend
disbursing agent for the Fund. This fee is based on the size, type, and number
of accounts and transactions made by shareholders.
PORTFOLIO ACCOUNTING FEES--Federated Services Company maintains the Trust's
accounting records for which it receives a fee. The fee is based on the level of
the Trust's average daily net assets for the period, plus out-of-pocket
expenses.
CUSTODIAN FEES--Michigan National Bank is the Fund's custodian. The fee is based
on the level of the Fund's average daily net assets for the period, plus
out-of-pocket expenses.
GENERAL--Certain of the Officers of the Trust are Officers and Trustees of the
above companies.
(5) INVESTMENT TRANSACTIONS
Purchases and sales of investments, excluding short-term securities, for the
period ended October 31, 1995, were as follows:
<TABLE>
<S> <C>
PURCHASES $ 73,641,574
- --------------------------------------------------------------------------------------------------- -------------
SALES $ 88,330
- --------------------------------------------------------------------------------------------------- -------------
</TABLE>
TRUSTEES OFFICERS
- --------------------------------------------------------------------------------
Robert E. Baker Edward C. Gonzales
Harold Berry President and Treasurer
Clarence G. Frame Jeffrey W. Sterling
Harry J. Nederlander Vice President and Assistant Treasurer
Thomas S. Wilson Jay S. Neuman
Secretary
Gail Cagney
Assistant Secretary
Mutual funds are not bank deposits or obligations, are not guaranteed
by any 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 mutual funds involves
investment risk, including possible loss of principal.
This report is authorized for distribution to prospective investors only when
preceded or accompanied by the fund's prospectus which contains facts
concerning its objective and policies, management fees, expenses and other
information.
PRESIDENT'S MESSAGE
- --------------------------------------------------------------------------------
Dear Investor:
I am pleased to present a financial report and supplement to your prospectus for
Independence One Fixed Income Fund. Inside, you will find complete financial
information for the fund--beginning with the portfolio manager's investment
review, which is followed by a list of fund holdings and financial statements.
As a shareholder, you are pursuing income through a diversified bond portfolio
of U.S. government and high-quality corporate securities. At the end of the
period, 71% of fund assets were invested in U.S. Treasury securities, and 18.7%
were invested in corporate bonds, with the remainder invested in government
agency securities.
Thank you for selecting Independence One Fixed Income Fund to put your money to
work pursuing income. We look forward to keeping you informed about the progress
of your investment.
Sincerely,
Edward C. Gonzales
President
December 15, 1995
INVESTMENT REVIEW
- --------------------------------------------------------------------------------
The shares of Independence One Fixed Income Fund represent interests in the
fund, which is one of a series of investment portfolios in the Independence One
Mutual Funds, an open-end, management investment company. The investment
objective of the fund is to seek total return. The Fund seeks to achieve its
investment objective by investing in a diversified portfolio of high-grade fixed
income securities.
Intermediate-term interest rates have fallen since April 30, 1995. For example,
five year Treasury notes fell in yield over 100 basis points in this period,
from 6.90% to 5.80%. Total net assets of the fund are approximately $42.7
million. The average maturity for the fund as of October 31, 1995 was 3.9 years.
The Federal Reserve Open Market Committee (the "Committee") meets eight times a
year to deliberate monetary policy. The Committee has been inactive during most
of 1995. The year began with its federal funds target rate at 5.50% and its
official discount rate at 4.75%. On February 1, 1995, both benchmark rates were
increased by 50 basis points in response to continued signs of economic strength
and fears of building inflation pressures. This increase in managed interest
rates turned out to be the last in the Committee's twelve month tightening
program that raised the federal funds rate a total of 300 basis points. When it
became apparent that the economy had indeed slowed its rate of growth the
Committee reversed its stance. It lowered the federal funds rate by 25 basis
points to 5.75% after its July 6th meeting. Federal Reserve (the "Fed")
policymakers have left this key rate unchanged since that time.
The pace of economic activity picked up during the second half of 1995. Gross
Domestic Product rose 4.2% during the third quarter and is expected to grow at a
2.8% annual rate during the fourth quarter. The unemployment rate has stayed
below 6% all year, and its most recent reading was 5.5% for the month of
October.
All in all, the Fed should be pleased with the overall health of the economy and
the strong performance of both the equity and credit markets. It is our opinion
that the Federal Reserve will need solid evidence to shift from their current
posture of "wait and see."
The fund's investment adviser will continue to monitor economic and market
developments to best serve our shareholders.
INDEPENDENCE ONE FIXED INCOME FUND
(A PORTFOLIO OF INDEPENDENCE ONE MUTUAL FUNDS)
SEMI-ANNUAL REPORT AND SUPPLEMENT TO PROSPECTUS DATED AUGUST 23, 1995
A. Please delete the "Summary of Fund Expenses" table on page 1 of the
prospectus and replace it with the following table:
SUMMARY OF FUND EXPENSES
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on Purchases (as a percentage of offering price)................................. None
Maximum Sales Load Imposed on Reinvested Dividends
(as a percentage of offering price)....................................................................... None
Contingent Deferred Sales Charge (as a percentage of original purchase
price or redemption proceeds, as applicable).............................................................. None
Redemption Fees (as a percentage of amount redeemed, if applicable)......................................... None
Exchange Fee................................................................................................ None
ANNUAL FUND OPERATING EXPENSES*
(as a percentage of projected average net assets)
Management Fee (after waiver) (1)........................................................................... 0.25%
12b-1 Fees.................................................................................................. None
Total Other Expenses (after waiver)(2)...................................................................... 0.29%
Total Fund Operating Expenses (after waivers) (3)................................................... 0.54%
</TABLE>
(1) The estimated management fee has been 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 is
0.75%.
(2) Total Other Expenses are estimated to be 0.42% absent the anticipated
voluntary waiver by the administrator.
(3) The Total Fund Operating Expenses are estimated to be 1.17% absent the
voluntary waiver by the adviser and administrator.
* Annual Fund Operating Expenses are estimated based on expenses expected to be
incurred during the fiscal year ending April 30, 1996. During the course of
this period, expenses may be more or less than the amount shown.
THE PURPOSE OF THIS TABLE IS TO ASSIST AN INVESTOR IN UNDERSTANDING THE
VARIOUS COSTS AND EXPENSES THAT A SHAREHOLDER OF THE FUND WILL BEAR, EITHER
DIRECTLY OR INDIRECTLY. FOR MORE COMPLETE DESCRIPTIONS OF VARIOUS COSTS AND
EXPENSES, SEE "INDEPENDENCE ONE MUTUAL FUNDS INFORMATION" AND "INVESTING IN THE
FUND." WIRE-TRANSFERRED REDEMPTIONS OF LESS THAN $5,000 MAY BE SUBJECT TO
ADDITIONAL FEES.
<TABLE>
<CAPTION>
EXAMPLE 1 year 3 years
<S> <C> <C>
------- -------
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. ........................ $6 $17
</TABLE>
THE ABOVE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN. THIS
EXAMPLE IS BASED ON ESTIMATED DATA FOR THE FISCAL YEAR ENDING APRIL 30, 1996.
B. Please insert the following "Financial Highlights" table as page 2 of the
prospectus:
INDEPENDENCE ONE FIXED INCOME FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
<TABLE>
<CAPTION>
PERIOD ENDED
(UNAUDITED)
OCTOBER 31, 1995(A)
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $10.00
- ----------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ----------------------------------------------------------------------------------------
Net investment income 0.01
- ----------------------------------------------------------------------------------------
Net realized and unrealized gain on investments 0.02
- ---------------------------------------------------------------------------------------- ------
Total from investment operations 0.03
- ---------------------------------------------------------------------------------------- ------
LESS DISTRIBUTIONS
- ----------------------------------------------------------------------------------------
Distributions from net investment income (0.01)
- ---------------------------------------------------------------------------------------- ------
NET ASSET VALUE, END OF PERIOD $10.02
- ---------------------------------------------------------------------------------------- ------
TOTAL RETURN (B) 0.34%
- ----------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ----------------------------------------------------------------------------------------
Expenses 0.54%*
- ----------------------------------------------------------------------------------------
Net investment income 6.34%*
- ----------------------------------------------------------------------------------------
Expense waiver/reimbursement (c) 0.62%*
- ----------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
- ----------------------------------------------------------------------------------------
Net assets, end of period (000 omitted) $42,741
- ----------------------------------------------------------------------------------------
Portfolio turnover 0%
- ----------------------------------------------------------------------------------------
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from October 23, 1995 (date of initial
public investment) to October 31, 1995.
(b) Based on net asset value, which does not reflect the sales load or
contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
C. Please delete the fourth paragraph of the sub-section entitled "Adviser's
Background" on page 11 and replace it with the following:
"John B. Willard is Vice President and Portfolio Manager for Michigan
National Bank and Independence One Capital Management Corporation in
Farmington Hills, and has been responsible for management of the Fund's
portfolio since November, 1995. He joined Michigan National Bank in 1986.
He earned his BBA from the University of Iowa and MBA from the University
of Arizona."
D. Please delete the first sentence of the sub-section entitled "To Place an
Order" under the section "Share Purchases" on page 13 and replace it with
the following:
"Investors may call toll-free 1-800-334-2292 to purchase shares of the Fund
through Michigan National Bank or Independence One."
E. Please insert the following sub-heading and paragraph before the heading
"Exchanging Securities for Fund Shares" on page 15:
"SYSTEMATIC INVESTMENT PROGRAM
Once the Fund account has been opened, shareholders may add to their
investment on a regular basis in a minimum amount of $100. Under this
program, funds may be automatically withdrawn periodically from the
shareholder's checking account and invested in Fund shares at the net asset
value next determined after an order is received. A shareholder may apply
for participation in this program through Michigan National Bank."
F. Please insert the following sub-heading and paragraph before the
sub-heading "Accounts with Low Balances" on page 18:
"SYSTEMATIC WITHDRAWAL PROGRAM
Shareholders who desire to receive payments of a predetermined amount may
take advantage of the Systematic Withdrawal Program. Under this program,
shares of the Fund are redeemed to provide for periodic withdrawal payments
in an amount directed by the shareholder. Depending upon the amount of the
withdrawal payments, the amount of dividends paid and capital gains
distributions with respect to Fund shares, and the fluctuation of the net
asset value of Fund shares redeemed under this program, redemptions may
reduce, and eventually deplete, the shareholder's investment in the Fund.
For this reason, payments under this program should not be considered as
yield or income on the shareholder's investment in the Fund. To be eligible
to participate in this program, a shareholder must have an account value of
at least $10,000. A shareholder may apply for participation in this program
through Michigan National Bank."
G. Please add the following information as a final sentence of the first
paragraph under the sub-heading "Voting Rights" under the heading
"Shareholder Information" on page 18:
"As of December 4, 1995, Michigan National Bank may for certain purposes be
deemed to control the Fund because it is owner of record of certain shares
of the Fund."
H. Please insert the following financial statements beginning as page 21 of
the prospectus:
INDEPENDENCE ONE FIXED INCOME FUND
PORTFOLIO OF INVESTMENTS
OCTOBER 31, 1995 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- ------------ ------------------------------------------------------------------------------------- -------------
CORPORATE BONDS--18.7%
- ---------------------------------------------------------------------------------------------------
BANKING--2.3%
-------------------------------------------------------------------------------------
$ 1,000,000 Nationsbank Corp., 5.125%, 9/15/1998 $ 974,330
------------------------------------------------------------------------------------- -------------
FINANCE-AUTOMOTIVE--2.3%
-------------------------------------------------------------------------------------
1,000,000 Ford Motor Credit Co., 5.625%, 1/15/1999 983,800
------------------------------------------------------------------------------------- -------------
FINANCE-COMMERCIAL--2.2%
-------------------------------------------------------------------------------------
1,000,000 General Electric Capital Corp., 5.5%, 11/1/2001 960,600
------------------------------------------------------------------------------------- -------------
MISCELLANEOUS--2.4%
-------------------------------------------------------------------------------------
1,000,000 WMX Technologies, Inc., 7.0%, 5/15/2005 1,031,840
------------------------------------------------------------------------------------- -------------
RETAIL--4.7%
-------------------------------------------------------------------------------------
1,000,000 J.C. Penney, Inc., Medium Term Note, 6.375%, 9/15/2000 1,005,770
-------------------------------------------------------------------------------------
1,000,000 Wal-Mart Stores, Inc., 6.125%, 10/01/1999 1,001,150
------------------------------------------------------------------------------------- -------------
Total 2,006,920
------------------------------------------------------------------------------------- -------------
UTILITIES-TELEPHONE--4.8%
-------------------------------------------------------------------------------------
1,000,000 Bellsouth Telecommunications, 6.5%, 6/15/2005 1,003,670
-------------------------------------------------------------------------------------
1,000,000 MCI Communications, 7.5%, 8/20/2004 1,062,000
------------------------------------------------------------------------------------- -------------
Total 2,065,670
------------------------------------------------------------------------------------- -------------
TOTAL CORPORATE BONDS (IDENTIFIED COST $8,014,320) 8,023,160
------------------------------------------------------------------------------------- -------------
GOVERNMENT AGENCIES--2.4%
- ---------------------------------------------------------------------------------------------------
FEDERAL FARM CREDIT BANK--1.2%
-------------------------------------------------------------------------------------
500,000 Federal Farm Credit Bank, Medium Term Note, 4.61%, 12/10/1996 494,675
------------------------------------------------------------------------------------- -------------
TENNESSEE VALLEY AUTHORITY--1.2%
-------------------------------------------------------------------------------------
500,000 Tennessee Valley Authority, 8.25%, 11/15/1996 513,035
------------------------------------------------------------------------------------- -------------
TOTAL GOVERNMENT AGENCIES (IDENTIFIED COST $1,006,084) 1,007,710
------------------------------------------------------------------------------------- -------------
MORTGAGE BACKED SECURITY--4.8%
- ---------------------------------------------------------------------------------------------------
2,000,000 Federal National Mortgage Association, 8.15%, 8/12/1996
(IDENTIFIED COST $2,035,000) 2,038,540
------------------------------------------------------------------------------------- -------------
</TABLE>
INDEPENDENCE ONE FIXED INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- ------------ ------------------------------------------------------------------------------------- -------------
TREASURY SECURITIES--71.0%
- ---------------------------------------------------------------------------------------------------
TREASURY BONDS--6.0%
-------------------------------------------------------------------------------------
$ 2,000,000 United States Treasury Bond, 10.75%, 5/15/2003 $ 2,572,600
------------------------------------------------------------------------------------- -------------
TREASURY NOTES--65.0%
-------------------------------------------------------------------------------------
5,500,000 United States Treasury Note, 5.125%, 12/31/1998 5,408,755
-------------------------------------------------------------------------------------
5,700,000 United States Treasury Note, 6.0%, 8/31/1997 5,736,252
-------------------------------------------------------------------------------------
5,000,000 United States Treasury Note, 6.0%, 12/31/1997 5,038,050
-------------------------------------------------------------------------------------
5,000,000 United States Treasury Note, 6.125%, 7/31/2000 5,065,600
-------------------------------------------------------------------------------------
2,000,000 United States Treasury Note, 6.375%, 8/15/2002 2,051,740
-------------------------------------------------------------------------------------
4,300,000 United States Treasury Note, 6.75%, 6/30/1999 4,439,879
------------------------------------------------------------------------------------- -------------
Total 27,740,276
------------------------------------------------------------------------------------- -------------
TOTAL TREASURY SECURITIES (IDENTIFIED COST $30,225,742) 30,312,876
------------------------------------------------------------------------------------- -------------
(A) REPURCHASE AGREEMENT--1.6%
- ---------------------------------------------------------------------------------------------------
665,000 First Chicago Corp., 5.85%, dated 10/31/1995, due 11/1/1995
(AT AMORTIZED COST) 665,000
------------------------------------------------------------------------------------- -------------
TOTAL INVESTMENTS (IDENTIFIED COST $41,946,146)(B) $ 42,047,286
------------------------------------------------------------------------------------- -------------
(a) The repurchase agreement is fully collateralized by U.S. Treasury
obligations based on market prices at the date of the portfolio.
(b) The cost of investments for federal tax purposes amounts to $41,946,146. The
net unrealized appreciation of investments on a federal tax basis amounts to
$101,140 which is comprised of $111,445 appreciation and $10,305
depreciation at October 31, 1995.
Note: The categories of investments are shown as a percentage of net assets
($42,741,176) at October 31, 1995.
(See Notes which are an integral part of the Financial Statements)
INDEPENDENCE ONE FIXED INCOME FUND
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1995 (UNAUDITED)
- --------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C> <C>
ASSETS:
- ---------------------------------------------------------------------------------------------------
Total investments in securities, at value (identified and tax cost $41,946,146) $ 42,047,286
- ---------------------------------------------------------------------------------------------------
Cash 762
- ---------------------------------------------------------------------------------------------------
Income receivable 757,226
- --------------------------------------------------------------------------------------------------- -------------
Total assets 42,805,274
- ---------------------------------------------------------------------------------------------------
LIABILITIES:
- ---------------------------------------------------------------------------------------------------
Income distribution payable $ 59,072
- ----------------------------------------------------------------------------------------
Accrued expenses 5,026
- ---------------------------------------------------------------------------------------- ---------
Total liabilities 64,098
- --------------------------------------------------------------------------------------------------- -------------
NET ASSETS for 4,263,985 shares outstanding $ 42,741,176
- --------------------------------------------------------------------------------------------------- -------------
NET ASSETS CONSIST OF:
- ---------------------------------------------------------------------------------------------------
Paid in capital $ 42,640,036
- ---------------------------------------------------------------------------------------------------
Net unrealized appreciation of investments 101,140
- --------------------------------------------------------------------------------------------------- -------------
Total Net Assets $ 42,741,176
- --------------------------------------------------------------------------------------------------- -------------
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE:
- ---------------------------------------------------------------------------------------------------
$42,741,176 / 4,263,985 shares outstanding $10.02
- --------------------------------------------------------------------------------------------------- -------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
INDEPENDENCE ONE FIXED INCOME FUND
STATEMENT OF OPERATIONS
FOR THE PERIOD FROM OCTOBER 23, 1995 (DATE OF INITIAL PUBLIC INVESTMENT) TO
OCTOBER 31, 1995 (UNAUDITED)
- ---------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
- ------------------------------------------------------------------------------------------------------
Interest $ 64,098
- ------------------------------------------------------------------------------------------------------
EXPENSES:
- -------------------------------------------------------------------------------------------
Investment advisory fee $ 6,993
- -------------------------------------------------------------------------------------------
Administrative personnel and services fee 1,112
- -------------------------------------------------------------------------------------------
Custodian fees 727
- -------------------------------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses 224
- -------------------------------------------------------------------------------------------
Directors'/Trustees' fees 65
- -------------------------------------------------------------------------------------------
Legal fees 93
- -------------------------------------------------------------------------------------------
Portfolio accounting fees 1,016
- -------------------------------------------------------------------------------------------
Printing and postage 160
- -------------------------------------------------------------------------------------------
Insurance premiums 177
- -------------------------------------------------------------------------------------------
Miscellaneous 233
- ------------------------------------------------------------------------------------------- ---------
Total expenses 10,800
- -------------------------------------------------------------------------------------------
Waivers--
- -------------------------------------------------------------------------------------------
Waiver of investment advisory fee ($ 4,662)
- --------------------------------------------------------------------------------
Waiver of administrative personnel and services fee (1,112)
- -------------------------------------------------------------------------------- ---------
Total waivers (5,774)
- ------------------------------------------------------------------------------------------- ---------
Net expenses 5,026
- ------------------------------------------------------------------------------------------------------ ----------
Net investment income 59,072
- ------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
- ------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation of investments 101,140
- ------------------------------------------------------------------------------------------------------ ----------
Change in net assets resulting from operations $ 160,212
- ------------------------------------------------------------------------------------------------------ ----------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
INDEPENDENCE ONE FIXED INCOME FUND
STATEMENT OF CHANGES IN NET ASSETS
- ---------------------------------------------------------------------
<TABLE>
<CAPTION>
PERIOD ENDED
(UNAUDITED)
OCTOBER 31, 1995*
<S> <C>
INCREASE (DECREASE) IN NET ASSETS:
- -------------------------------------------------------------------------------------------
OPERATIONS--
- -------------------------------------------------------------------------------------------
Net investment income $ 59,072
- -------------------------------------------------------------------------------------------
Net change in unrealized appreciation of investments 101,140
- ------------------------------------------------------------------------------------------- ---------------------
Change in net assets resulting from operations 160,212
- ------------------------------------------------------------------------------------------- ---------------------
DISTRIBUTIONS TO SHAREHOLDERS--
- -------------------------------------------------------------------------------------------
Distributions from net investment income (59,072)
- ------------------------------------------------------------------------------------------- ---------------------
SHARE TRANSACTIONS--
- -------------------------------------------------------------------------------------------
Proceeds from sale of shares 42,655,036
- -------------------------------------------------------------------------------------------
Cost of shares redeemed (15,000)
- ------------------------------------------------------------------------------------------- ---------------------
Change in net assets resulting from share transactions 42,640,036
- ------------------------------------------------------------------------------------------- ---------------------
Change in net assets 42,741,176
- -------------------------------------------------------------------------------------------
NET ASSETS:
- -------------------------------------------------------------------------------------------
Beginning of period 0
- ------------------------------------------------------------------------------------------- ---------------------
End of period (including undistributed net investment income of $0) $ 42,741,176
- ------------------------------------------------------------------------------------------- ---------------------
</TABLE>
* For the period from October 23, 1995 (date of initial public investment) to
October 31, 1995.
(See Notes which are an integral part of the Financial Statements)
INDEPENDENCE ONE FIXED INCOME FUND
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1995 (UNAUDITED)
- --------------------------------------------------------------------------------
(1) ORGANIZATION
Independence One Mutual Funds (the "Trust") is registered under the Investment
Company Act of 1940, as amended (the "Act"), as an open-end, management
investment company. The Trust consists of five diversified and two
non-diversified portfolios. The financial statements included herein are only
those of Independence One Fixed Income Fund (the "Fund"). The financial
statements of the other portfolios are presented separately. The assets of each
portfolio are segregated and a shareholder's interest is limited to the
portfolio in which shares are held.
(2) SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles.
INVESTMENT VALUATIONS--Short-term securities with remaining maturities of
sixty days or less at the time of purchase may be valued at amortized cost,
which approximates fair market value. All other securities are valued at
prices provided by an independent pricing service.
REPURCHASE AGREEMENTS--It is the policy of the Fund to require the
custodian bank to take possession, to have legally segregated in the
Federal Reserve Book Entry System, or to have segregated within the
custodian bank's vault, all securities held as collateral under repurchase
agreement transactions. Additionally, procedures have been established by
the Fund to monitor, on a daily basis, the market value of each repurchase
agreement's collateral to ensure that the value of collateral at least
equals the repurchase price to be paid under the repurchase agreement
transaction.
The Fund will only enter into repurchase agreements with banks and other
recognized financial institutions, such as broker/dealers, which are deemed
by the Fund's adviser to be creditworthy pursuant to the guidelines and/or
standards reviewed or established by the Board of Trustees (the
"Trustees"). Risks may arise from the potential inability of counterparties
to honor the terms of the repurchase agreement. Accordingly, the Fund could
receive less than the repurchase price on the sale of collateral
securities.
INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS--Distributions to
shareholders are recorded on the ex-dividend date. Interest income and
expenses are accrued daily. Bond premium and discount, if applicable, are
amortized as required by the Internal Revenue Code, as amended (the
"Code").
INDEPENDENCE ONE FIXED INCOME FUND
- --------------------------------------------------------------------------------
FEDERAL TAXES--It is the Fund's policy to comply with the provisions of the
Code applicable to regulated investment companies and to distribute to
shareholders each year substantially all of its income. Accordingly, no
provisions for federal tax are necessary.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Fund may engage in
when-issued or delayed delivery transactions. The Fund records when-issued
securities on the trade date and maintains security positions such that
sufficient liquid assets will be available to make payment for the
securities purchased. Securities purchased on a when-issued or delayed
delivery basis are marked to market daily and begin earning interest on the
settlement date.
DEFERRED EXPENSES--The costs incurred by the Fund with respect to
registration of its shares in its first fiscal year, excluding the initial
expense of registering its shares, have been deferred and are being
amortized using the straight-line method over a period of five years from
the Fund's commencement date.
OTHER--Investment transactions are accounted for on the trade date.
(3) SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value).
Transactions in shares were as follows:
<TABLE>
<CAPTION>
PERIOD ENDED
OCTOBER 31, 1995*
<S> <C>
Shares sold 4,265,484
- -------------------------------------------------------------------------------------------
Shares redeemed (1,499)
- ------------------------------------------------------------------------------------------- ---------------------
Net change resulting from share transactions 4,263,985
- ------------------------------------------------------------------------------------------- ---------------------
</TABLE>
* For the period from October 23, 1995 (date of initial public investment) to
October 31, 1995.
(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE--Michigan National Bank, the Fund's investment adviser,
(the "Adviser"), receives for its services an annual investment advisory fee
equal to 0.75 of 1% of the Fund's average daily net assets.
The Adviser may voluntarily choose to waive any portion of its fee. The Adviser
can modify or terminate this voluntary waiver at any time at its sole
discretion.
ADMINISTRATIVE FEE--Federated Administrative Services ("FAS") provides the Fund
with certain administrative personnel and services. This fee is based on the
level of average aggregate net assets of the Trust for the period. FAS may
voluntarily choose to waive a portion of its fee.
INDEPENDENCE ONE FIXED INCOME FUND
- --------------------------------------------------------------------------------
TRANSFER AGENT FEES--Federated Services Company serves as transfer and dividend
disbursing agent for the Fund. This fee is based on the size, type, and number
of accounts and transactions made by shareholders.
PORTFOLIO ACCOUNTING FEES--Federated Services Company maintains the Trust's
accounting records for which it receives a fee. The fee is based on the level of
the Trust's average daily net assets for the period, plus out-of-pocket
expenses.
CUSTODIAN FEES--Michigan National Bank is the Fund's custodian. The fee is based
on the level of the Fund's average daily net assets for the period, plus
out-of-pocket expenses.
GENERAL--Certain of the Officers of the Trust are Officers and Trustees of the
above companies.
(5) INVESTMENT TRANSACTIONS
Purchases and sales of investments, excluding short-term securities, for the
period ended
October 31, 1995, were as follows:
<TABLE>
<S> <C>
PURCHASES $ 41,281,146
- --------------------------------------------------------------------------------------------------- -------------
SALES $ 0
- --------------------------------------------------------------------------------------------------- -------------
</TABLE>
TRUSTEES OFFICERS
- --------------------------------------------------------------------------------
Robert E. Baker Edward C. Gonzales
Harold Berry President and Treasurer
Clarence G. Frame Jeffrey W. Sterling
Harry J. Nederlander Vice President and Assistant Treasurer
Thomas S. Wilson Jay S. Neuman
Secretary
Gail Cagney
Assistant Secretary
Mutual funds are not bank deposits or obligations, are not guaranteed
by any 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 mutual funds involves
investment risk, including possible loss of principal.
This report is authorized for distribution to prospective investors only when
preceded or accompanied by the fund's prospectus which contains facts
concerning its objective and policies, management fees, expenses and other
