INDEPENDENCE
ONE
MICHIGAN
MUNICIPAL
CASH FUND
SEMI-ANNUAL REPORT
TO SHAREHOLDERS
OCTOBER 31, 1994
(LOGO)
MICHIGAN
NATIONAL
BANK
INVESTMENT ADVISER
(LOGO) FEDERATED SECURITIES CORP. (LOGO)
DISTRIBUTOR INDEPENDENCE ONE
MUTUAL FUNDS
A SUBSIDIARY OF FEDERATED INVESTORS
FEDERATED INVESTORS TOWER
PITTSBURGH, PA 15222-3779
453777401
1110803 (12/94)
PRESIDENT'S MESSAGE
- --------------------------------------------------------------------------------
Dear Investor:
I am pleased to present the Semi-Annual Report for Independence One Michigan
Municipal Cash Fund (the "Fund") for the six-month period ended October 31,
1994. It contains complete financial information for the Fund--including the
Investment Review and Portfolio of Investments.
The Fund continued to help your cash pursue dividends free from federal and
state income taxes through a diversified portfolio of municipal money market
securities. At the end of the reporting period, total net assets in the Fund
stood at $56.3 million. Double-tax-free dividends paid to shareholders during
the period totaled $0.01 per share.
Thank you for using Independence One Michigan Municipal Cash Fund to keep more
of what you earn while enjoying easy access to your money and a high level of
stability. As always, we welcome your questions, comments, or suggestions.
Sincerely,
Edward C. Gonzales
President
December 15, 1994
INVESTMENT REVIEW
- --------------------------------------------------------------------------------
The shares of Independence One Michigan Municipal Cash Fund (the "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 provide stability
of income and current income exempt from federal regular income tax* and
Michigan state income tax consistent with the stability of principal. The Fund
pursues this investment objective by investing at least 80% of its assets in a
portfolio of Michigan municipal securities maturing in 397 days or less.
Short-term interest rates have risen significantly during most of 1994. This
trend in interest rates is reflected in the 7-day net yield for the Fund, which
has ranged from 1.88% on January 31, 1994 to its current yield of 2.77% on
October 31, 1994.** Total net assets in the Fund are approximately $56 million.
The average maturity for the Fund as of October 31, 1994 was 46 days.
The primary reason short-term interest rates have increased in 1994 is that the
Federal Reserve Board raised the federal funds and discount rates on six
separate occasions. The cumulative impact of the tightening process which began
in February now stands at 250 basis points. The continued strength of the
economy and early signs of accelerating inflation prompted this tightening
directive.
Looking ahead, it is our opinion that the market has overstated the inflation
potential of the current economic expansion and that the pace of Federal Reserve
Board tightening will be much slower in 1995 than what is implied by the current
term structure of interest rates.
The Fund's investment adviser will continue to monitor economic and market
developments to best serve our shareholders who seek a well-managed fund that
seeks a high degree of safety, liquidity and competitive yields.
* Some portion of the Fund's income may be subject to the federal alternative
minimum tax.
** Past performance is not indicative of future results. Yield will vary.
Although money market funds seek to maintain a stable net asset value of
$1.00 per share, there is no assurance that they will be able to do so. An
investment in the Fund is neither insured nor guaranteed by the U.S.
government.
INDEPENDENCE ONE MICHIGAN MUNICIPAL CASH FUND
PORTFOLIO OF INVESTMENTS
OCTOBER 31, 1994
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING:
PRINCIPAL MOODY'S
AMOUNT OR S&P* VALUE
<C> <S> <C> <C>
- ------------ ------------------------------------------------------------------- ---------------- -------------
SHORT-TERM MUNICIPAL SECURITIES--92.7%
- ---------------------------------------------------------------------------------
$ 1,100,000 Delta County, MI, EDC, 2.85%, (Mead Paper)/(Swiss Bank Corp. LOC),
11/1/94 P-1/NR $ 1,100,000
-------------------------------------------------------------------
2,040,000 Delta County, MI, EDC, 2.85%, (Mead Paper)/(Union Bank of
Switzerland LOC), 11/2/94 P-1/NR 2,040,000
-------------------------------------------------------------------
500,000 Delta County, MI, EDC, 2.95%, (Mead Paper)/(Union Bank of
Switzerland LOC), 11/30/94 P-1/NR 500,000
-------------------------------------------------------------------
1,400,000 Delta County, MI, EDC, 3.25%, (Mead Paper)/(Swiss Bank Corp. LOC),
1/5/95 P-1/NR 1,400,000
-------------------------------------------------------------------
1,020,000 Farmington Hills, MI, EDC, 4.00%, (Marketing Display)/ (Comerica
Bank LOC)/(Subject to AMT), 3/1/95 NR/NR 1,020,000
-------------------------------------------------------------------
725,000 Grand Rapids, MI, EDC, Weekly VRDNs (140 Monroe Ltd.
Partnership)/(Old Kent Bank LOC) NR/NR 725,000
-------------------------------------------------------------------
2,500,000 Grand Rapids, MI, EDC, Weekly VRDNs (Series A 1991)/(Amway Hotel
Corp.)/(Sakura Bank, Ltd. LOC) VMIG1/A-1+ 2,500,000
-------------------------------------------------------------------
1,000,000 Grand Rapids, MI, IDR, Weekly VRDNs (Classic Die, Inc.)/(NBD Bank
Detroit LOC)/(Subject to AMT) NR/NR 1,000,000
-------------------------------------------------------------------
2,375,000 Grand Traverse County, MI, ISD, 3.65% TANs (Special
Education)/(Traverse Bay Area), 4/5/95 NR/NR 2,377,144
-------------------------------------------------------------------
1,000,000 Kalamazoo, MI, Hospital Finance Authority, 3.30%,
(Bronson Methodist Hospital)/(NBD LOC), 12/7/94 VMIG1/NR 1,000,000
-------------------------------------------------------------------
400,000 Kalamazoo, MI, Hospital Finance Authority, 3.40%,
(Bronson Methodist Hospital)/(NBD LOC), 12/1/94 VMIG1/NR 400,000
-------------------------------------------------------------------
700,000 Lapeer County, MI, EDC, Weekly VRDNs (Rochester Gear)/(Comerica
Bank LOC)/(Subject to AMT) NR/NR 700,000
-------------------------------------------------------------------
1,000,000 Lapeer County, MI, ISD, 3.55% TANs (Vocational
Education), 4/5/95 NR/NR 1,001,019
-------------------------------------------------------------------
</TABLE>
INDEPENDENCE ONE MICHIGAN MUNICIPAL CASH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING:
PRINCIPAL MOODY'S
AMOUNT OR S&P* VALUE
<C> <S> <C> <C>
- ------------ ------------------------------------------------------------------- ---------------- -------------
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- ---------------------------------------------------------------------------------
$ 450,000 Lapeer County, MI, ISD, 3.65% TANs (Special
Education), 4/5/95 NR/NR $ 450,645
-------------------------------------------------------------------
2,000,000 Livingston Educational Service Agency, 4.05% TANs,
4/4/95 NR/NR 2,003,200
-------------------------------------------------------------------
2,500,000 Michigan Higher Education Student Loan, Weekly VRDNs (Series
Xll-B)/(AMBAC Insured)/(Subject to AMT) AAA/A-1+ 2,500,000
-------------------------------------------------------------------
340,000 Michigan Municipal Bond Authority, 4.25%, (Series 94A), 5/5/95 NR/SP-1 341,250
-------------------------------------------------------------------
1,000,000 Michigan Municipal Bond Authority, 4.75%, (Equipment & Realty
Property Financing Program)/(FSA Insured),
7/20/95 NR/SP-1 1,004,961
-------------------------------------------------------------------
1,900,000 Michigan State Hospital Finance Authority, Weekly VRDNs (Series
A)/(Hospital Equipment Loan Program)/ (First of America LOC) VMIG1/NR 1,900,000
-------------------------------------------------------------------
1,000,000 Michigan State Housing Development Authority, 3.30%, (Series
1988)/(Sanwa Bank LOC)/(Subject to AMT),
11/22/94 VMIG1/A-1+ 1,000,000
-------------------------------------------------------------------
1,500,000 Michigan State Housing Development Authority, 3.30%, (Series
1988)/(Sanwa Bank LOC)/(Subject to AMT),
11/23/94 VMIG1/A-l+ 1,500,000
-------------------------------------------------------------------
285,000 Michigan State Housing Development Authority, 3.70%, SFM Revenue
Bonds, 12/1/94 NR/AA 285,000
-------------------------------------------------------------------
200,000 Michigan Strategic Fund, Weekly VRDNs (Allen Group
Project)/(Dresdner LOC) VMIG1/NR 200,000
-------------------------------------------------------------------
4,620,000 Michigan Strategic Fund, Weekly VRDNs (General Motors Corp.) VMIG1/NR 4,620,000
-------------------------------------------------------------------
2,000,000 Michigan Strategic Fund, Weekly VRDNs (Louisiana-Pacific
Corp.)/(Wachovia LOC) AA2/NR 2,000,000
-------------------------------------------------------------------
</TABLE>
INDEPENDENCE ONE MICHIGAN MUNICIPAL CASH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING:
PRINCIPAL MOODY'S
AMOUNT OR S&P* VALUE
<C> <S> <C> <C>
- ------------ ------------------------------------------------------------------- ---------------- -------------
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- ---------------------------------------------------------------------------------
$ 400,000 Michigan Strategic Fund, Weekly VRDNs (Series A-5)/ (Sarbeth
Investments)/(Comerica Bank LOC)/(Subject to AMT) VMIG1/NR $ 400,000
-------------------------------------------------------------------
320,000 Michigan Strategic Fund, Weekly VRDNs (Starboard)/ (Comerica Bank
LOC)/(Subject to AMT) NR/NR 320,000
-------------------------------------------------------------------
650,000 Michigan Strategic Fund, Weekly VRDNs (Vail Rubber 1989)/(Comerica
Bank LOC) VMIG1/NR 650,000
-------------------------------------------------------------------
500,000 Michigan Strategic Fund, Weekly VRDNs (Waltec America
Forgings)/(Subject to AMT) NR/NR 500,000
-------------------------------------------------------------------
525,000 Michigan Strategic Fund, Weekly VRDNs (Whitehall Ind.)/(Comerica
Bank LOC)/(Subject to AMT) VMIG1/NR 525,000
-------------------------------------------------------------------
1,000,000 Michigan Strategic Fund, 2.90%, (Dow Chemical Co.),
11/16/94 P-1/NR 1,000,000
-------------------------------------------------------------------
500,000 Michigan Strategic Fund, 2.95%, (Dow Chemical Co.),
11/10/94 P-1/NR 500,000
-------------------------------------------------------------------
1,500,000 Michigan Strategic Fund, 3.05%, (Dow Chemical Co.),
11/28/94 P-1/NR 1,500,000
-------------------------------------------------------------------
500,000 Michigan Strategic Fund, 3.15%, (Dow Chemical Co.),
11/29/94 P-1/NR 500,000
-------------------------------------------------------------------
1,000,000 Michigan Strategic Fund, 3.15%, (Dow Chemical Co.),
12/9/94 P-1/NR 1,000,000
-------------------------------------------------------------------
500,000 Michigan Strategic Fund, 3.55%, (Dow Chemical Co.),
1/11/95 P-1/NR 500,000
-------------------------------------------------------------------
220,000 Michigan Strategic Fund, 3.70%, (Joseph Gesmundo Trust)/(First of
America LOC)/(Subject to AMT),
11/15/94 NR/NR 220,000
-------------------------------------------------------------------
500,000 Michigan Strategic Fund, 2.90%, (Scott Paper)/(Series C)/(Sumitomo
Bank, Ltd. LOC)/(Subject to AMT),
11/14/94 VMIG1/NR 500,000
-------------------------------------------------------------------
</TABLE>
INDEPENDENCE ONE MICHIGAN MUNICIPAL CASH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING:
PRINCIPAL MOODY'S
AMOUNT OR S&P* VALUE
<C> <S> <C> <C>
- ------------ ------------------------------------------------------------------- ---------------- -------------
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- ---------------------------------------------------------------------------------
$ 1,000,000 Michigan Strategic Fund, 3.65%, (Scott Paper)/(Series B)/ (Sumitomo
Bank, Ltd. LOC)/(Subject to AMT), 11/15/94 VMIG1/NR $ 1,000,000
-------------------------------------------------------------------
225,000 Michigan Strategic Fund Limited Obligation Revenue Bonds, Weekly
VRDNs (Series B)/(Kay Screen Printing, Inc.)/(Comerica Bank
LOC)/(Subject to AMT) NR/NR 225,000
-------------------------------------------------------------------
700,000 Michigan Strategic Fund Limited Obligation Revenue Bonds, Weekly
VRDNs (Series 1992)/(Pilot Industries, Inc. Project)/(NBD
LOC)/(Subject to AMT) NR/NR 700,000
-------------------------------------------------------------------
140,000 Michigan Strategic Fund Limited Obligation Revenue Bonds, Weekly
VRDNs (Series A)/(Riverfront Development Co.)/(Old Kent Bank &
Trust Co. LOC) NR/NR 140,000
-------------------------------------------------------------------
1,225,000 Michigan Strategic Fund Limited Obligation Revenue Bonds, Weekly
VRDNs (Series B)/(Riverfront Development Co.)/(Old Kent Bank &
Trust Co. LOC) NR/NR 1,225,000
-------------------------------------------------------------------
45,000 Michigan Strategic Fund Limited Obligation Revenue Bonds, Weekly
VRDNs (Series C)/(Riverfront Development Co.)/(Old Kent Bank &
Trust Co. LOC) NR/NR 45,000
-------------------------------------------------------------------
420,000 Michigan Strategic Fund Limited Obligation Revenue Bonds, Weekly
VRDNs (Series D)/(Riverfront Development Co.)/(Old Kent Bank &
Trust Co. LOC) NR/NR 420,000
-------------------------------------------------------------------
110,000 Michigan Strategic Fund Limited Obligation Revenue Bonds, Weekly
VRDNs (Series E)/(Riverfront Development Co.)/(Old Kent Bank &
Trust Co. LOC) NR/NR 110,000
-------------------------------------------------------------------
25,000 Michigan Strategic Fund Limited Obligation Revenue Bonds, Weekly
VRDNs (Series F)/(Riverfront Development Co.)/(Old Kent Bank &
Trust Co. LOC) NR/NR 25,000
-------------------------------------------------------------------
1,700,000 Michigan Strategic Fund Solid Waste Disposal, Weekly VRDNs
(Barclays Bank PLC LOC)/(Subject to AMT) VMIG1/NR 1,700,000
-------------------------------------------------------------------
150,000 Oakland County, MI, EDC, 3.70%, (Orchard Maple
Project)/(First of America LOC), 11/15/94 NR/NR 150,000
-------------------------------------------------------------------
</TABLE>
INDEPENDENCE ONE MICHIGAN MUNICIPAL CASH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
PRINCIPAL RATING:
AMOUNT MOODY'S
OR SHARES OR S&P* VALUE
<C> <S> <C> <C>
- ------------ ------------------------------------------------------------------- ---------------- -------------
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- ---------------------------------------------------------------------------------
$ 190,000 Oakland County, MI, EDC, 3.90%, (Corners Shopping Center)/(First of
America LOC), 2/1/95 NR/A-1+ $ 190,000
-------------------------------------------------------------------
995,000 St. Clair County, MI, ISD, 3.75% TANs (Special
Education), 4/4/95 NR/NR 996,014
-------------------------------------------------------------------
925,000 St. Clair County, MI, ISD, 3.80% TANs (Vocational
Education), 4/4/95 NR/NR 926,131
-------------------------------------------------------------------
655,000 Wayne Charter County, MI, 3.50% Airport Revenue Bonds (Series
A)/(Detroit Metropolitan)/(MBIA Insured), 12/1/94 Aaa/AAA 655,383
-------------------------------------------------------------------
2,000,000 Wayne Westland Community Schools, 4.25% State Aid Notes, 4/24/95 NR/NR 2,005,536
------------------------------------------------------------------- -------------
TOTAL SHORT-TERM MUNICIPAL SECURITIES 52,196,283
------------------------------------------------------------------- -------------
MUTUAL FUND SHARES--6.7%
- ---------------------------------------------------------------------------------
1,000 Dreyfus Michigan Municipal Money Market Fund NR/NR 1,000
-------------------------------------------------------------------
3,793,000 Nuveen Tax-Exempt Money Market Fund NR/NR 3,793,000
------------------------------------------------------------------- -------------
TOTAL MUTUAL FUND SHARES (AT NET ASSET VALUE) 3,794,000
------------------------------------------------------------------- -------------
TOTAL LNVESTMENTS, AT AMORTIZED COST $ 55,990,283+
------------------------------------------------------------------- -------------
</TABLE>
* Please refer to the Appendix of the "Statement of Additional Information" for
an explanation of the credit ratings.
+ Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($56,298,269) at October 31, 1994.
The following abbreviations are used in this portfolio:
AMBAC-- American Municipal Bond
Assurance Corporation
AMT--Alternative Minimum Tax
EDC--Economic Development Corporation
FSA--Financial Security Assurance
IDR--Industrial Development Revenue
ISD--Independent School District
LOC--Letter of Credit
MBIA-- Municipal Bond Investors Assurance
SFM--Single Family Mortgage
TANs--Tax Anticipation Notes
VRDNs--Variable Rate Demand Notes
(See Notes which are an integral part of the Financial Statements)
INDEPENDENCE ONE MICHIGAN MUNICIPAL CASH FUND
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1994
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- ---------------------------------------------------------------------------------------------------
Investments, at amortized cost and value $ 55,990,283
- ---------------------------------------------------------------------------------------------------
Cash 592,509
- ---------------------------------------------------------------------------------------------------
Receivable for Fund shares sold 771,963
- ---------------------------------------------------------------------------------------------------
Interest receivable 325,802
- --------------------------------------------------------------------------------------------------- -------------
Total assets 57,680,557
- ---------------------------------------------------------------------------------------------------
LIABILITIES:
- -------------------------------------------------------------------------------------
Payable for Fund shares redeemed $ 1,347,982
- -------------------------------------------------------------------------------------
Dividends payable 25,834
- -------------------------------------------------------------------------------------
Accrued expenses 8,472
- ------------------------------------------------------------------------------------- ------------
Total liabilities 1,382,288
- --------------------------------------------------------------------------------------------------- -------------
NET ASSETS for 56,298,269 shares of beneficial interest outstanding $ 56,298,269
- --------------------------------------------------------------------------------------------------- -------------
NET ASSET VALUE, ]Offering Price, and Redemption Proceeds Per Share:
($56,298,269 3 56,298,269 shares of beneficial interest outstanding) $1.00
- --------------------------------------------------------------------------------------------------- -------------
(See Notes which are an integral part of the Financial Statements)
</TABLE>
INDEPENDENCE ONE MICHIGAN MUNICIPAL CASH FUND
STATEMENT OF OPERATIONS
SIX MONTHS ENDED OCTOBER 31, 1994
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
- ------------------------------------------------------------------------------------------------------
Interest income $ 897,763
- ------------------------------------------------------------------------------------------------------
EXPENSES:
- ------------------------------------------------------------------------------------------
Investment advisory fee $ 119,941
- ------------------------------------------------------------------------------------------
Trustees' fees 1,907
- ------------------------------------------------------------------------------------------
Administrative personnel and services fees 38,767
- ------------------------------------------------------------------------------------------
Custodian fees 13,938
- ------------------------------------------------------------------------------------------
Portfolio accounting fees 17,252
- ------------------------------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses 14,672
- ------------------------------------------------------------------------------------------
Fund share registration fees 7,420
- ------------------------------------------------------------------------------------------
Auditing fees 5,751
- ------------------------------------------------------------------------------------------
Legal fees 3,813
- ------------------------------------------------------------------------------------------
Printing and postage 7,697
- ------------------------------------------------------------------------------------------
Insurance premiums 2,195
- ------------------------------------------------------------------------------------------
Miscellaneous 800
- ------------------------------------------------------------------------------------------ ----------
Total expenses 234,153
- ------------------------------------------------------------------------------------------
Deduct--Waiver of investment advisory fee 63,964
- ------------------------------------------------------------------------------------------ ----------
Net expenses 170,189
- ------------------------------------------------------------------------------------------------------ ----------
Net investment income $ 727,574
- ------------------------------------------------------------------------------------------------------ ----------
(See Notes which are an integral part of the Financial Statements)
</TABLE>
INDEPENDENCE ONE MICHIGAN MUNICIPAL CASH FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED APRIL 30,
1995* 1994
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- -------------------------------------------------------------------------------
OPERATIONS--
- -------------------------------------------------------------------------------
Net investment income $ 727,574 $ 1,470,198
- ------------------------------------------------------------------------------- --------------- ---------------
DISTRIBUTIONS TO SHAREHOLDERS--
- -------------------------------------------------------------------------------
Dividends to shareholders from net investment income (727,574) (1,470,198)
- ------------------------------------------------------------------------------- --------------- ---------------
FUND SHARE (PRINCIPAL) TRANSACTIONS--
- -------------------------------------------------------------------------------
Proceeds from sale of shares 175,064,281 335,855,356
- -------------------------------------------------------------------------------
Net asset value of shares issued to shareholders
in payment of dividends declared 516,719 940,867
- -------------------------------------------------------------------------------
Cost of shares redeemed (174,296,177) (366,545,290)
- ------------------------------------------------------------------------------- --------------- ---------------
Change in net assets from Fund share transactions 1,284,823 (29,749,067)
- ------------------------------------------------------------------------------- --------------- ---------------
Change in net assets 1,284,823 (29,749,067)
- -------------------------------------------------------------------------------
NET ASSETS:
- -------------------------------------------------------------------------------
Beginning of period 55,013,446 84,762,513
- ------------------------------------------------------------------------------- --------------- ---------------
End of period $ 56,298,269 $ 55,013,446
- ------------------------------------------------------------------------------- --------------- ---------------
</TABLE>
* Six months ended October 31, 1994 (unaudited).
(See Notes which are an integral part of the Financial Statements)
INDEPENDENCE ONE MICHIGAN MUNICIPAL CASH FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
YEAR ENDED APRIL 30,
1995* 1994 1993 1992 1991 1990**
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING
OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- -----------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- -----------------------------------------------
Net investment income 0.01 0.02 0.02 0.04 0.05 0.05
- -----------------------------------------------
LESS DISTRIBUTIONS
- -----------------------------------------------
Dividends to shareholders
from net investment income (0.01) (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*** 1.23% 1.98% 2.27% 3.68% 5.18% 5.14%
- -----------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- -----------------------------------------------
Expenses 0.57%(a) 0.50% 0.53% 0.50% 0.67% 0.44%(a)
- -----------------------------------------------
Net investment income 2.42%(a) 1.96% 2.23% 3.51% 5.02% 5.70%(a)
- -----------------------------------------------
Expense waiver/
reimbursement (b) 0.21%(a) 0.22% 0.20% 0.39% 0.19% 0.39%(a)
- -----------------------------------------------
SUPPLEMENTAL DATA
- -----------------------------------------------
Net assets, end of period
(000 omitted) $56,298 $55,013 $84,763 $71,745 $31,705 $28,921
- -----------------------------------------------
</TABLE>
* Six months ended October 31, 1994 (unaudited).
** Reflects operations for the period from June 14, 1989 (date of initial
public investment) to April 30, 1990.
*** Based on net asset value, which does not reflect the sales load or
contingent deferred sales charge, if applicable.
(a) Computed on an annualized basis.
(b) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
INDEPENDENCE ONE MICHIGAN MUNICIPAL CASH FUND
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1994
(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 three diversified and one
non-diversified portfolios: Independence One Prime Money Market Fund,
Independence One U.S. Treasury Money Market Fund, Independence One U.S.
Government Securities Fund and Independence One Michigan Municipal Cash Fund,
respectively. The financial statements included herein present only those of
Independence One Michigan Municipal Cash Fund (the "Fund"). The financial
statements of the other portfolios are presented separately. The assets of each
portfolio are segregated and a shareholder's interest is limited to the
portfolio in which shares are held.
(2) SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles.
A. INVESTMENT VALUATIONS--The Fund's use of the amortized cost method to value
its portfolio securities is in accordance with Rule 2a-7 under the Act.
Investments in other regulated investment companies are valued at net asset
value.
Since the Fund invests a substantial portion of its assets in issuers
located in one state, it will be more susceptible to factors adversely
affecting issuers in that state than would be a comparable general
tax-exempt mutual fund. In order to reduce the credit risk associated with
such factors, at October 31, 1994, 56.6% of the securities in the portfolio
of investments are backed by letters of credit or bond insurance of various
financial institutions and financial guaranty assurance agencies. The
aggregate percentages by financial institutions and agencies ranged from
0.4% to 6.9% of total investments.
B. INVESTMENT INCOME, EXPENSES AND DISTRIBUTION--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").
Distributions to shareholders are recorded on the ex-dividend date.
C. FEDERAL TAXES--It is the Fund's policy to comply with the provisions of the
Code applicable to regulated investment companies and to distribute to
shareholders each year substantially all of its income. Accordingly, no
provisions for federal tax are necessary.
INDEPENDENCE ONE MICHIGAN MUNICIPAL CASH FUND
- --------------------------------------------------------------------------------
At April 30, 1994, the Fund, for federal tax purposes, had a capital loss
carryforward of $8,153, which will reduce the Fund's taxable income arising
from future net realized gain on investments, if any, to the extent
permitted by the Code, and thus will reduce the amount of the distributions
to shareholders which would otherwise be necessary to relieve the Fund of
liability for federal tax. Pursuant to the Code, such capital loss
carryforward will expire as follows: 1998 ($717), 1999 ($4,003), 2000
($1,790) and 2002 ($1,643).
D. WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Fund may engage in
when-issued or delayed delivery transactions. The Fund records when-issued
securities on the trade date and maintains security positions such that
sufficient liquid assets will be available to make payment for the
securities purchased. Securities purchased on a when-issued or delayed
delivery basis are marked to market daily and begin earning interest on the
settlement date.
E. DEFERRED EXPENSES--The costs incurred by the Fund with respect to
registration of its shares in its first fiscal year, excluding the initial
expense of registering its shares, have been deferred and amortized using
the straight-line method not exceeding a period of five years from the
Fund's commencement date.
F. OTHER--Investment transactions are accounted for on the trade date.
(3) SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value). At
October 31, 1994, capital paid-in aggregated $56,298,269. Transactions in Fund
shares were as follows:
<TABLE>
<CAPTION>
YEAR ENDED APRIL 30,
1995* 1994
<S> <C> <C>
Shares sold 175,064,281 335,855,356
- ----------------------------------------------------------------------------------
Shares issued to shareholders in payment of dividends declared 516,719 940,867
- ----------------------------------------------------------------------------------
Shares redeemed (174,296,177) (366,545,290)
- ---------------------------------------------------------------------------------- -------------- --------------
Net change resulting from Fund share transactions 1,284,823 (29,749,067)
- ---------------------------------------------------------------------------------- -------------- --------------
</TABLE>
*Six months ended October 31,1994.
INDEPENDENCE ONE MICHIGAN MUNICIPAL CASH FUND
- --------------------------------------------------------------------------------
(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 0.40 of 1% of the Fund's average daily net assets. The adviser may
voluntarily choose to waive all or a portion of its fee. The adviser can modify
or terminate this voluntarily waiver at any time at its sole discretion.
ADMINISTRATIVE FEE--Federated Administrative Services ("FAS") provides the Fund
with certain administrative personnel and services. The FAS fee is based on the
level of average aggregate net assets of the Trust for the period. FAS may
voluntarily choose to waive a portion of its fee.
TRANSFER AND DIVIDEND DISBURSING AGENT AND PORTFOLIO ACCOUNTING FEES--Federated
Services Company ("FServ") serves as transfer and dividend disbursing agent for
the Fund. The FServ fee is based on the size, type, and number of accounts and
transactions made by shareholders.
FServ also maintains the Fund's accounting records. The fee is based on the
level of the Fund's average net assets for the period, plus out-of-pocket
expenses. Prior to August l, 1994, State Street Bank and Trust Company
maintained the Fund's accounting records.
Certain of the Officers and Trustees of the Trust are Officers and Trustees of
the above companies.
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
David L. VanAndel 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. Although money market funds seek to
maintain a stable net asset value of $1.00 per share, there is no assurance
that they will be able to do so.
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.
INDEPENDENCE
ONE
PRIME
MONEY MARKET
FUND
SEMI-ANNUAL REPORT
TO SHAREHOLDERS
OCTOBER 31, 1994
(LOGO)
MICHIGAN
NATIONAL
BANK
INVESTMENT ADVISER
(LOGO) FEDERATED SECURITIES CORP. (LOGO)
DISTRIBUTOR INDEPENDENCE ONE
MUTUAL FUNDS
A SUBSIDIARY OF FEDERATED INVESTORS
FEDERATED INVESTORS TOWER
PITTSBURGH, PA 15222-3779
453777203
0112904 (12/94)
PRESIDENT'S MESSAGE
- --------------------------------------------------------------------------------
Dear Investor:
I am pleased to present the Semi-Annual Report for Independence One Prime Money
Market Fund (the "Fund") for the six-month period ended October 31, 1994. It
contains complete financial information for the Fund--including the Investment
Review and Portfolio of Investments.
The Fund continued to put your cash to work pursuing competitive yields from a
high-quality, diversified portfolio of money market securities. Total net assets
in the Fund at the end of the report period stood at $288 million. Dividends
paid to shareholders during the period totaled $0.02 per share.
Thank you for your continued confidence in Independence One Prime Money Market
Fund. Your questions, comments, or suggestions are always welcome.
Sincerely,
Edward C. Gonzales
President
December 15, 1994
INVESTMENT REVIEW
- --------------------------------------------------------------------------------
The shares of Independence One Prime Money Market Fund (the "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 provide current income consistent with
stability of principal. The Fund pursues this investment objective by investing
exclusively in a portfolio of high-quality money market instruments maturing in
397 days or less.
Short-term interest rates have risen significantly during most of 1994. This
trend in interest rates is reflected in the 7-day net yield for the Fund, which
has ranged from 2.66% on January 31, 1994 to its current yield of 4.40% on
October 31, 1994.* Total net assets in the Fund are approximately $288 million.
The average maturity for the Fund as of October 31, 1994 was 29 days.
The primary reason short-term interest rates have increased in 1994 is that the
Federal Reserve Board raised the federal funds and discount rates on six
separate occasions. The cumulative impact of the tightening process which began
in February now stands at 250 basis points. The continued strength of the
economy and early signs of accelerating inflation prompted this tightening
directive.
Looking ahead, it is our opinion that the market has overstated the inflation
potential of the current economic expansion and that the pace of Federal Reserve
Board tightening will be much slower in 1995 than what is implied by the current
term structure of interest rates.
The Fund's investment adviser will continue to monitor economic and market
developments to best serve our shareholders who seek a well-managed fund that
seeks a high degree of safety, liquidity and competitive yields.
* Past performance is not indicative of future results. Yield will vary.
Although money market funds seek to maintain a stable net asset value of $1.00
per share, there is no assurance that they will be able to do so. An
investment in the Fund is neither insured nor guaranteed by the U.S.
government.
INDEPENDENCE ONE PRIME MONEY MARKET FUND
PORTFOLIO OF INVESTMENTS
OCTOBER 31, 1994
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- ------------- --------------------------------------------------------------------------------- --------------
BANKERS ACCEPTANCE--2.5%
- ------------------------------------------------------------------------------------------------
$ 7,300,000 Bank of Tokyo
---------------------------------------------------------------------------------
5.09%, 12/7/94 $ 7,262,843
--------------------------------------------------------------------------------- --------------
CERTIFICATES OF DEPOSIT--34.7%
- ------------------------------------------------------------------------------------------------
10,000,000 Banque Nationale De Paris
---------------------------------------------------------------------------------
5.25%, 1/23/95 10,000,227
---------------------------------------------------------------------------------
10,000,000 Commerzbank
---------------------------------------------------------------------------------
5.46%, 1/13/95 10,000,702
---------------------------------------------------------------------------------
10,000,000 Credit Suisse
---------------------------------------------------------------------------------
5.16%, 1/6/95 10,000,361
---------------------------------------------------------------------------------
10,000,000 Fuji Bank, New York
---------------------------------------------------------------------------------
5.50%, 1/20/95 10,000,000
---------------------------------------------------------------------------------
10,000,000 Mitsubishi Bank, NY
---------------------------------------------------------------------------------
5.00%, 12/30/94 10,000,161
---------------------------------------------------------------------------------
10,000,000 NBD Bank
---------------------------------------------------------------------------------
5.02%, 12/9/94 10,000,105
---------------------------------------------------------------------------------
10,000,000 Rabobank
---------------------------------------------------------------------------------
4.81%, 11/25/94 10,000,066
---------------------------------------------------------------------------------
5,000,000 Sanwa Bank, Ltd.
---------------------------------------------------------------------------------
5.53%, 1/17/95 5,000,211
---------------------------------------------------------------------------------
5,000,000 Sanwa Bank, Ltd.
---------------------------------------------------------------------------------
5.37%, 3/20/95 4,996,963
---------------------------------------------------------------------------------
10,000,000 Societe Generale Bank
---------------------------------------------------------------------------------
5.10%, 1/26/95 10,000,234
---------------------------------------------------------------------------------
</TABLE>
INDEPENDENCE ONE PRIME MONEY MARKET FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- ------------- ------------------------------------------------------------------------------- --------------
CERTIFICATES OF DEPOSIT--CONTINUED
- ------------------------------------------------------------------------------------------------
$ 10,000,000 Sumitomo Bank, Ltd.
---------------------------------------------------------------------------------
4.90%, 11/14/94 $ 10,000,107
--------------------------------------------------------------------------------- --------------
TOTAL CERTIFICATES OF DEPOSIT 99,999,137
--------------------------------------------------------------------------------- --------------
*CERTIFICATES OF DEPOSIT--VARIABLE RATE--3.5%
- ------------------------------------------------------------------------------------------------
10,000,000 Abbey National Treasury Services, PLC
---------------------------------------------------------------------------------
5.195%, 4/27/95 10,000,000
--------------------------------------------------------------------------------- --------------
**COMMERCIAL PAPER--20.8%
- ------------------------------------------------------------------------------------------------
BANKING--6.9%
---------------------------------------------------------------------------------
5,000,000 ***Asset Securitization Cooperative Corp.
---------------------------------------------------------------------------------
5.00%, 11/7/94 4,995,833
---------------------------------------------------------------------------------
5,000,000 ***Asset Securitization Cooperative Corp.
---------------------------------------------------------------------------------
4.85%, 11/9/94 4,994,611
---------------------------------------------------------------------------------
10,000,000 State Bank of New South Wales
---------------------------------------------------------------------------------
5.08%, 12/13/94 9,940,733
--------------------------------------------------------------------------------- --------------
Total 19,931,177
--------------------------------------------------------------------------------- --------------
ELECTRONICS--3.5%
---------------------------------------------------------------------------------
10,000,000 SCI Systems, Inc.
---------------------------------------------------------------------------------
5.12%, 11/14/94 9,981,511
--------------------------------------------------------------------------------- --------------
FINANCE--COMMERICAL--3.5%
---------------------------------------------------------------------------------
10,000,000 Canadian Wheat Board
---------------------------------------------------------------------------------
4.80%, 11/21/94 9,973,333
--------------------------------------------------------------------------------- --------------
FUNDING CORPORATION--3.4%
---------------------------------------------------------------------------------
10,000,000 ***Bishopsgate
---------------------------------------------------------------------------------
4.90%, 11/21/94 9,972,778
--------------------------------------------------------------------------------- --------------
TELECOMMUNICATIONS--3.5%
---------------------------------------------------------------------------------
10,000,000 American Telephone & Telegraph Co.
---------------------------------------------------------------------------------
4.84%, 11/17/94 9,978,489
--------------------------------------------------------------------------------- --------------
TOTAL COMMERICAL PAPER 59,837,288
--------------------------------------------------------------------------------- --------------
</TABLE>
INDEPENDENCE ONE PRIME MONEY MARKET FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- ------------- ------------------------------------------------------------------------------- --------------
FLOATING RATE NOTE--3.5%
- ------------------------------------------------------------------------------------------------
$ 10,000,000 Bankers Trust New York Corp., Medium Term Note
---------------------------------------------------------------------------------
4.94%, 6/20/95 $ 10,000,000
--------------------------------------------------------------------------------- --------------
GOVERNMENT AGENCIES--3.5%
- ------------------------------------------------------------------------------------------------
10,000,000 Federal Farm Credit Bank
---------------------------------------------------------------------------------
4.83%, 12/1/94 10,000,000
--------------------------------------------------------------------------------- --------------
*VARIABLE RATE OBLIGATIONS--0.7%
- ------------------------------------------------------------------------------------------------
2,000,000 Richmond County, GA
---------------------------------------------------------------------------------
5.15%, 11/1/94 2,000,000
--------------------------------------------------------------------------------- --------------
+REPURCHASE AGREEMENTS--31.4%
- ------------------------------------------------------------------------------------------------
45,000,000 Donaldson, Lufkin & Jenrette Securities Corp., 4.78%,
dated 10/31/94, due 11/1/94 45,000,000
---------------------------------------------------------------------------------
45,556,000 Kidder, Peabody & Co., 4.78%, dated 10/31/94, due 11/1/94 45,556,000
--------------------------------------------------------------------------------- --------------
TOTAL REPURCHASE AGREEMENTS 90,556,000
--------------------------------------------------------------------------------- --------------
TOTAL INVESTMENTS, AT AMORTIZED COST $ 289,655,268++
--------------------------------------------------------------------------------- --------------
</TABLE>
* Current rate and next demand date shown.
** Each issue shows the rate of discount at the time of purchase.
*** Commercial paper sold within terms of a private placement memorandum, exempt
from registration under Section 4(2) of the Securities Act of 1933, as
amended, and may be sold only to dealers in that program or other
"accredited investors." These securities have been determined to be liquid
under guidelines established by the Board of Trustees.
+ The repurchase agreements are fully collateralized by U.S. government and/or
agency obligations based on market prices at the date of the portfolio.
++ Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($288,033,788) at October 31, 1994.
(See Notes which are an integral part of the Financial Statements)
INDEPENDENCE ONE PRIME MONEY MARKET FUND
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1994
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- -------------------------------------------------------------------------------------------------
Investments in repurchase agreements $ 90,556,000
- ---------------------------------------------------------------------------------
Investments in other securities 199,099,268
- --------------------------------------------------------------------------------- --------------
Total investments, at amortized cost and value $ 289,655,268
- -------------------------------------------------------------------------------------------------
Cash 344
- -------------------------------------------------------------------------------------------------
Receivable for Fund shares sold 8,448,024
- -------------------------------------------------------------------------------------------------
Interest receivable 766,139
- ------------------------------------------------------------------------------------------------- --------------
Total assets 298,869,775
- -------------------------------------------------------------------------------------------------
LIABILITIES:
- -------------------------------------------------------------------------------------------------
Payable for Fund shares redeemed 10,239,803
- ---------------------------------------------------------------------------------
Dividends payable 554,196
- ---------------------------------------------------------------------------------
Accrued expenses 41,988
- --------------------------------------------------------------------------------- --------------
Total liabilities 10,835,987
- ------------------------------------------------------------------------------------------------- --------------
NET ASSETS for 288,033,788 shares of beneficial interest outstanding $ 288,033,788
- ------------------------------------------------------------------------------------------------- --------------
NET ASSET VALUE, Offering Price, and Redemption Proceeds Per Share:
($288,033,788 / 288,033,788 shares of beneficial interest outstanding) $1.00
- ------------------------------------------------------------------------------------------------- --------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
INDEPENDENCE ONE PRIME MONEY MARKET FUND
STATEMENT OF OPERATIONS
SIX MONTHS ENDED OCTOBER 31, 1994
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
- ------------------------------------------------------------------------------------------------------------------
Interest income $ 6,151,873
- ----------------------------------------------------------------------------------------------------
EXPENSES:
- ----------------------------------------------------------------------------------------------------
Investment advisory fee $ 551,455
- ----------------------------------------------------------------------------------------
Trustees' fees 9,776
- ----------------------------------------------------------------------------------------
Administrative personnel and services fees 178,103
- ----------------------------------------------------------------------------------------
Custodian fees 22,605
- ----------------------------------------------------------------------------------------
Portfolio accounting fees 23,909
- ----------------------------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses 24,893
- ----------------------------------------------------------------------------------------
Fund share registration fees 4,752
- ----------------------------------------------------------------------------------------
Auditing fees 7,039
- ----------------------------------------------------------------------------------------
Legal fees 2,247
- ----------------------------------------------------------------------------------------
Printing and postage 5,560
- ----------------------------------------------------------------------------------------
Insurance premiums 5,433
- ----------------------------------------------------------------------------------------
Miscellaneous 5,667
- ---------------------------------------------------------------------------------------- ----------
Total expenses 841,439
- ---------------------------------------------------------------------------------------------------- ------------
Net investment income $ 5,310,434
- ---------------------------------------------------------------------------------------------------- ------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
INDEPENDENCE ONE PRIME MONEY MARKET FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED APRIL 30,
1995* 1994
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- ----------------------------------------------------------------------------
OPERATIONS--
- ----------------------------------------------------------------------------
Net investment income $ 5,310,434 $ 10,107,774
- ---------------------------------------------------------------------------- ----------------- -----------------
DISTRIBUTIONS TO SHAREHOLDERS--
- ----------------------------------------------------------------------------
Dividends to shareholders from net investment income (5,310,434) (10,107,774)
- ---------------------------------------------------------------------------- ----------------- -----------------
FUND SHARE (PRINCIPAL) TRANSACTIONS--
- ----------------------------------------------------------------------------
Proceeds from sale of shares 1,033,718,600 2,413,011,015
- ----------------------------------------------------------------------------
Net asset value of shares issued to shareholders in payment of dividends
declared 2,450,566 2,867,186
- ----------------------------------------------------------------------------
Cost of shares redeemed (1,058,723,830) (2,528,644,351)
- ---------------------------------------------------------------------------- ----------------- -----------------
Change in net assets from Fund share transactions (22,554,664) (112,766,150)
- ---------------------------------------------------------------------------- ----------------- -----------------
Change in net assets (22,554,664) (112,766,150)
- ----------------------------------------------------------------------------
NET ASSETS:
- ----------------------------------------------------------------------------
Beginning of period 310,588,452 423,354,602
- ---------------------------------------------------------------------------- ----------------- -----------------
End of period $ 288,033,788 $ 310,588,452
- ---------------------------------------------------------------------------- ----------------- -----------------
</TABLE>
* Six months ended October 31, 1994 (unaudited).
(See Notes which are an integral part of the Financial Statements)
INDEPENDENCE ONE PRIME MONEY MARKET FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
YEAR ENDED APRIL 30,
1995* 1994 1993 1992 1991] 1990**
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING
OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- -----------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- -----------------------------------------
Net investment income 0.02 0.03 0.03 0.05 0.07 0.08
- -----------------------------------------
LESS DISTRIBUTIONS
- -----------------------------------------
Dividends to shareholders
from net investment income (0.02) (0.03) (0.03) (0.05) (0.07) (0.08)
- ----------------------------------------- --------- --------- --------- --------- --------- -----------
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ----------------------------------------- --------- --------- --------- --------- --------- -----------
TOTAL RETURN*** 1.97% 2.73% 2.99% 4.89% 7.55% 7.99%
- -----------------------------------------
RATIOS TO AVERAGE NET ASSETS
- -----------------------------------------
Expenses 0.61%(a) 0.59% 0.58% 0.54% 0.53% 0.40%(a)
- -----------------------------------------
Net investment income 3.85%(a) 2.70% 2.91% 4.73% 7.26% 8.24%(a)
- -----------------------------------------
Expense waiver/
reimbursement (b) 0.00%(a) 0.02% 0.04% 0.08% 0.08% 0.23%(a)
- -----------------------------------------
SUPPLEMENTAL DATA
- -----------------------------------------
Net assets, end of period
(000 omitted) $288,034 $310,588 $423,355 $309,009 $371,994 $328,434
- -----------------------------------------
</TABLE>
* Six months ended October 31, 1994 (unaudited).
** Reflects operations for the period from June 1, 1989 (date of initial public
investment) to April 30, 1990.
*** Based on net asset value, which does not reflect the sales load or
contingent deferred sales charge, if applicable.
(a) Computed on an annualized basis.
(b) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
INDEPENDENCE ONE PRIME MONEY MARKET FUND
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1994
(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 three diversified and one
non-diversified portfolios: Independence One Prime Money Market Fund,
Independence One U.S. Treasury Money Market Fund, Independence One U.S.
Government Securities Fund, and Independence One Michigan Municipal Cash Fund,
respectively. The financial statements included herein present only those of
Independence One Prime Money Market Fund (the "Fund"). The financial statements
of the other portfolios are presented separately. The assets of each portfolio
are segregated and a shareholder's interest is limited to the portfolio in which
shares are held.
(2) SIGNIFICANT ACCOUNTING POLICIES
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.
A. INVESTMENT VALUATIONS--The Fund's use of the amortized cost method to value
its portfolio securities is in accordance with Rule 2a-7 under the Act.
B. REPURCHASE AGREEMENTS--It is the policy of the Fund to require the
custodian bank to take possession, to have legally segregated in the
Federal Reserve Book Entry System, or to have segregated within the
custodian bank's vault, all securities held as collateral in support of
repurchase agreement investments. Additionally, procedures have been
established by the Fund to monitor, on a daily basis, the market value of
each repurchase agreement's underlying collateral to ensure that the value
of collateral at least equals the principal amount of the repurchase
agreement, including accrued interest.
The Fund will only enter into repurchase agreements with banks and other
recognized financial institutions, such as broker/dealers, which are deemed
by the Fund's adviser to be creditworthy pursuant to guidelines established
by the 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.
C. INVESTMENT INCOME, EXPENSES AND DISTRIBUTION--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").
Distributions to shareholders are recorded on the ex-dividend date.
INDEPENDENCE ONE PRIME MONEY MARKET FUND
- --------------------------------------------------------------------------------
D. FEDERAL TAXES--It is the Fund's policy to comply with the provisions of the
Code applicable to regulated investment companies and to distribute to
shareholders each year substantially all of its income. Accordingly, no
provision for federal tax is necessary.
E. WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Fund may engage in
when-issued or delayed delivery transactions. The Fund records when-issued
securities on the trade date and maintains security positions such that
sufficient liquid assets will be available to make payment for the
securities purchased. Securities purchased on a when-issued or delayed
delivery basis are marked to market daily and begin earning interest on the
settlement date.
F. DEFERRED EXPENSES--The costs incurred by the Fund with respect to
registration of its shares in its first fiscal year, excluding the initial
expense of registering its shares, have been deferred and amortized using
the straight-line method not exceeding a period of five years from the
Fund's commencement date.
G. OTHER--Investment transactions are accounted for on the trade date.
(3) SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value). At
October 31, 1994, capital paid-in aggregated $288,033,788. Transactions in Fund
shares were as follows:
<TABLE>
<CAPTION>
YEAR ENDED APRIL 30,
<S> <C> <C>
1995* 1994
Shares sold 1,033,718,600 2,413,011,015
- ------------------------------------------------------------------------------
Shares issued to shareholders in payment of dividends declared 2,450,566 2,867,186
- ------------------------------------------------------------------------------
Shares redeemed (1,058,723,830) (2,528,644,351)
- ------------------------------------------------------------------------------ ---------------- ----------------
Net change resulting from Fund share transactions (22,554,664) (112,766,150)
- ------------------------------------------------------------------------------ ---------------- ----------------
</TABLE>
*Six months ended October 31, 1994.
(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 0.40 of 1% of the Fund's average daily net assets.
ADMINISTRATIVE FEE--Federated Administrative Services ("FAS") provides the Fund
with certain administrative personnel and services. The FAS fee is based on the
level of average aggregate net assets of the Trust for the period. FAS may
voluntarily choose to waiver a portion of its fee.
INDEPENDENCE ONE PRIME MONEY MARKET FUND
- --------------------------------------------------------------------------------
TRANSFER AND DIVIDEND DISBURSING AGENT AND PORTFOLIO ACCOUNTING FEES--Federated
Services Company ("FServ") serves as transfer agent and dividend disbursing
agent for the Fund. The FServ fee is based on the size, type, and number of
accounts and transactions made by shareholders.
FServ also maintains the Fund's accounting records. The fee is based on the
level of the Fund's average net assets for the period, plus out-of-pocket
expenses. Prior to August 1, 1994, State Street Bank and Trust Company
maintained the Fund's accounting records.
Certain of the Officers and Trustees are Officers and Trustees of the above
companies.
TRUSTEES OFFICERS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
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
David L. VanAndel Secretary
Gail Cagney
Assistant Secretary
</TABLE>
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
DepositInsurance Corporation, the Federal Reserve Board, or any other government
agency.Investment in mutual funds involves investment risk, including possible
loss of principal.Although money market funds seek to maintain a stable net
asset value of $1.00 per share,there is no assurance that they will be
able to do so.
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.
INDEPENDENCE
ONE
U.S. GOVERNMENT
SECURITIES
FUND
SEMI-ANNUAL REPORT
TO SHAREHOLDERS
OCTOBER 31, 1994
(LOGO)
MICHIGAN
NATIONAL
BANK
INVESTMENT ADVISER
(LOGO) FEDERATED SECURITIES CORP. (LOGO)
DISTRIBUTOR INDEPENDENCE ONE
MUTUAL FUNDS
A SUBSIDIARY OF FEDERATED INVESTORS
FEDERATED INVESTORS TOWER
PITTSBURGH, PA 15222-3779
453777807
3110412 (12/94)
PRESIDENT'S MESSAGE
- --------------------------------------------------------------------------------
Dear Investor:
I am pleased to present the Semi-Annual Report for Independence One U.S.
Government Securities Fund (the "Fund") for the six-month period ended October
31, 1994. It contains complete financial information for the Fund--including the
Investment Review and Portfolio of Investments.
The Fund continued to put your money to work pursuing high-current income from a
portfolio of U.S. government securities. At the end of the period, 98.2% of Fund
net assets were invested in U.S. Treasury notes, while the rest of Fund net
assets were invested in a repurchase agreement fully backed by U.S. government
securities. Total net assets in the Fund at the end of the reporting period
stood at $63.9 million. Dividends paid to shareholders during the period totaled
$0.30 per share. Because of the series of interest rate increases during the
reporting period that caused all bond prices to drop, the Fund's net asset value
was $9.55 on the last day of the period, a decline of $0.29 from the net asset
value on the first day of the period.
Thank you for choosing Independence One U.S. Government Securities Fund. As
always, we welcome your questions, comments, or suggestions.
Sincerely,
Edward C. Gonzales
President
December 15, 1994
INVESTMENT REVIEW
- --------------------------------------------------------------------------------
The shares of Independence One U.S. Government Securities Fund (the "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 high current
income. The Fund pursues this investment objective by investing in U.S.
government securities which are either issued or guaranteed by the U.S.
government, its agencies or instrumentalities.
Long-term interest rates have risen significantly during most of 1994. This
trend in interest rates is reflected in the yield of the 30-year U.S. Treasury
Bond, which has ranged from 6.21% on January 31, 1994 to its current yield of
7.96% on October 31, 1994. Total net assets in the Fund are approximately $64
million. The average maturity for the Fund as of October 31, 1994 was 5.4 years.
The continued strength of the economy and early signs of accelerating inflation
are responsible for the rise in interest rates. In addition, the Federal Reserve
Board raised the federal funds and discount rates on six separate occasions. The
cumulative impact of the tightening process which began in February now stands
at 250 basis points.
Looking ahead, it is our opinion that the market has overstated the inflation
potential of the current economic expansion and that the pace of Federal Reserve
Board tightening will be much slower in 1995 than what is implied by the current
term structure of interest rates.
The Fund's investment adviser will continue to monitor economic and market
developments to best serve our shareholders who seek a well-managed fund that
seeks a high current income.
INDEPENDENCE ONE U.S. GOVERNMENT SECURITIES FUND
PORTFOLIO OF INVESTMENTS
OCTOBER 31, 1994
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- ------------- ----------------------------------------------------------------------------------- -------------
U.S. TREASURY OBLIGATIONS--98.2%
- --------------------------------------------------------------------------------------------------
U.S. TREASURY NOTES
-----------------------------------------------------------------------------------
$ 5,460,000 6.25%, 1/31/97 $ 5,390,876
-----------------------------------------------------------------------------------
9,380,000 5.50%, 7/31/97 9,029,282
-----------------------------------------------------------------------------------
440,000 5.50%, 9/30/97 422,255
-----------------------------------------------------------------------------------
450,000 5.125%, 2/28/98 422,708
-----------------------------------------------------------------------------------
100,000 5.125%, 3/31/98 93,746
-----------------------------------------------------------------------------------
3,870,000 6.375%, 1/15/99 3,732,615
-----------------------------------------------------------------------------------
7,600,000 5.875%, 3/31/99 7,170,752
-----------------------------------------------------------------------------------
7,035,000 7.00%, 4/15/99 6,928,771
-----------------------------------------------------------------------------------
1,850,000 6.50%, 4/30/99 1,785,934
-----------------------------------------------------------------------------------
4,690,000 6.375%, 7/15/99 4,492,879
-----------------------------------------------------------------------------------
240,000 6.00%, 10/15/99 225,562
-----------------------------------------------------------------------------------
3,310,000 7.75%, 2/15/2001 3,338,731
-----------------------------------------------------------------------------------
11,975,000 6.375%, 8/15/2002 11,054,482
-----------------------------------------------------------------------------------
550,000 6.25%, 2/15/2003 500,654
-----------------------------------------------------------------------------------
1,700,000 5.75%, 8/15/2003 1,484,219
-----------------------------------------------------------------------------------
7,750,000 5.875%, 2/15/2004 6,782,955
----------------------------------------------------------------------------------- -------------
TOTAL U.S. TREASURY OBLIGATIONS (IDENTIFIED COST $65,733,430) 62,856,421
----------------------------------------------------------------------------------- -------------
</TABLE>
INDEPENDENCE ONE U.S. GOVERNMENT SECURITES FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- ------------- ----------------------------------------------------------------------------------- -------------
*REPURCHASE AGREEMENT--1.4%
- --------------------------------------------------------------------------------------------------
$ 866,000 Donaldson, Lufkin & Jenrette Securities Corp., 4.78%, dated 10/31/94, due 11/1/94 $ 866,000
----------------------------------------------------------------------------------- -------------
TOTAL INVESTMENTS (IDENTIFIED COST $66,599,430) $ 63,722,421+
----------------------------------------------------------------------------------- -------------
</TABLE>
*The repurchase agreement is fully collateralized by U.S. government and/or
agency obligations based on market prices at the date of the portfolio.
+The cost of investments for federal tax purposes amounts to $66,599,430. The
unrealized depreciation on a federal tax basis amounts to $2,877,009.
Note: The categories of investments are shown as a percentage of net assets
($63,996,252) at October 31, 1994.
(See Notes which are an integral part of the Financial Statements)
INDEPENDENCE ONE U.S. GOVERNMENT SECURITIES FUND
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1994
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- ---------------------------------------------------------------------------------------------------
Investments in securities, at value (identified and tax cost $66,599,430) $ 63,722,421
- ---------------------------------------------------------------------------------------------------
Interest receivable 788,854
- ---------------------------------------------------------------------------------------------------
Deferred expenses 22,431
- --------------------------------------------------------------------------------------------------- -------------
Total assets 64,533,706
- ---------------------------------------------------------------------------------------------------
LIABILITIES:
- ---------------------------------------------------------------------------------------------------
Dividends payable $ 341,128
- ---------------------------------------------------------------------------------------
Payable for Fund shares redeemed 186,875
- ---------------------------------------------------------------------------------------
Accrued expenses 9,451
- --------------------------------------------------------------------------------------- ----------
Total liabilities 537,454
- --------------------------------------------------------------------------------------------------- -------------
NET ASSETS for 6,703,948 shares of beneficial interest outstanding $ 63,996,252
- --------------------------------------------------------------------------------------------------- -------------
NET ASSETS CONSIST OF:
- ---------------------------------------------------------------------------------------------------
Paid-in capital $ 67,164,248
- ---------------------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) of investments (2,877,009)
- ---------------------------------------------------------------------------------------------------
Accumulated net realized gain (loss) on investments (290,987)
- --------------------------------------------------------------------------------------------------- -------------
Total Net Assets $ 63,996,252
- --------------------------------------------------------------------------------------------------- -------------
NET ASSET VALUE, ]Offering Price, and Redemption Proceeds Per Share:
($63,996,252 / 6,703,948 shares of beneficial interest outstanding) $9.55
- --------------------------------------------------------------------------------------------------- -------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
INDEPENDENCE ONE U.S. GOVERNMENT SECURITIES FUND
STATEMENT OF OPERATIONS
SIX MONTHS ENDED OCTOBER 31, 1994
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
- ---------------------------------------------------------------------------------------------------
Interest income $ 2,232,972
- ---------------------------------------------------------------------------------------------------
EXPENSES:
- ---------------------------------------------------------------------------------------------------
Investment advisory fee $ 242,204
- --------------------------------------------------------------------------------------
Trustees' fees 2,153
- --------------------------------------------------------------------------------------
Administrative personnel and services fees 44,716
- --------------------------------------------------------------------------------------
Custodian fees 9,312
- --------------------------------------------------------------------------------------
Portfolio accounting fees 19,818
- --------------------------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses 12,769
- --------------------------------------------------------------------------------------
Fund share registration fees 8,969
- --------------------------------------------------------------------------------------
Auditing fees 5,279
- --------------------------------------------------------------------------------------
Legal fees 4,655
- --------------------------------------------------------------------------------------
Printing and postage 7,480
- --------------------------------------------------------------------------------------
Insurance premiums 2,478
- --------------------------------------------------------------------------------------
Miscellaneous 2,500
- -------------------------------------------------------------------------------------- -----------
Total expenses 362,333
- --------------------------------------------------------------------------------------
Deduct--Waiver of investment advisory fee (242,204)
- -------------------------------------------------------------------------------------- -----------
Net expenses 120,129
- --------------------------------------------------------------------------------------------------- -------------
Net investment income 2,112,843
- --------------------------------------------------------------------------------------------------- -------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
- ---------------------------------------------------------------------------------------------------
Net realized gain (loss) on investments (identified cost basis) (161,248)
- ---------------------------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) on investments (1,865,716)
- --------------------------------------------------------------------------------------------------- -------------
Net realized and unrealized gain (loss) on investments (2,026,964)
- --------------------------------------------------------------------------------------------------- -------------
Change in net assets resulting from operations $ 85,879
- --------------------------------------------------------------------------------------------------- -------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
INDEPENDENCE ONE U.S. GOVERNMENT SECURITIES FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED APRIL 30,
--------------------------------
1995* 1994
<S> <C> <C>
-------------- ----------------
INCREASE (DECREASE) IN NET ASSETS:
- -------------------------------------------------------------------------------
OPERATIONS--
- -------------------------------------------------------------------------------
Net investment income $ 2,112,843 $ 4,522,178
- -------------------------------------------------------------------------------
Net realized gain (loss) on investments ($161,248 and $11,816 net losses,
respectively, as computed for federal tax purposes) (161,248) (129,739)
- -------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) on investments (1,865,716) (3,542,888)
- ------------------------------------------------------------------------------- -------------- ----------------
Change in net assets resulting from operations 85,879 849,551
- ------------------------------------------------------------------------------- -------------- ----------------
DISTRIBUTIONS TO SHAREHOLDERS--
- -------------------------------------------------------------------------------
Dividends to shareholders from net investment income (2,112,843) (4,522,178)
- ------------------------------------------------------------------------------- -------------- ----------------
FUND SHARE (PRINCIPAL) TRANSACTIONS--
- -------------------------------------------------------------------------------
Proceeds from sale of shares 2,655,662 13,357,170
- -------------------------------------------------------------------------------
Net asset value of shares issued to shareholders in payment of dividends
declared 5 17
- -------------------------------------------------------------------------------
Cost of shares redeemed (9,498,619) (24,522,870)
- ------------------------------------------------------------------------------- -------------- ----------------
Change in net assets from Fund share transactions (6,842,952) (11,165,683)
- ------------------------------------------------------------------------------- -------------- ----------------
Change in net assets (8,869,916) (14,838,310)
- -------------------------------------------------------------------------------
NET ASSETS:
- -------------------------------------------------------------------------------
Beginning of period 72,866,168 87,704,478
- ------------------------------------------------------------------------------- -------------- ----------------
End of period $ 63,996,252 $ 72,866,168
- ------------------------------------------------------------------------------- -------------- ----------------
</TABLE>
*Six months ended October 31, 1994 (unaudited).
(See Notes which are an integral part of the Financial Statements)
INDEPENDENCE ONE U.S. GOVERNMENT SECURITIES FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
YEAR ENDED APRIL 30,
<S> <C> <C> <C>
1995* 1994 1993**
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.84 $ 10.31 $ 10.00
- ---------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ---------------------------------------------------------------------------------
Net investment income 0.30 0.55 0.33
- ---------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments (0.29) (0.47) 0.31
- --------------------------------------------------------------------------------- --------- --------- -----------
Total from investment operations 0.01 0.08 0.64
- ---------------------------------------------------------------------------------
LESS DISTRIBUTIONS
- ---------------------------------------------------------------------------------
Dividends to shareholders from net investment income (0.30) (0.55) (0.33)
- --------------------------------------------------------------------------------- --------- --------- -----------
NET ASSET VALUE, END OF PERIOD $ 9.55 $ 9.84 $ 10.31
- --------------------------------------------------------------------------------- --------- --------- -----------
TOTAL RETURN*** 0.09% 0.66% 4.61%
- ---------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ---------------------------------------------------------------------------------
Expenses 0.35%(a) 0.31% 0.17%(a)
- ---------------------------------------------------------------------------------
Net investment income 6.11%(a) 5.32% 5.59%(a)
- ---------------------------------------------------------------------------------
Expense waiver/reimbursement (b) 0.70%(a) 0.70% 0.83%(a)
- ---------------------------------------------------------------------------------
SUPPLEMENTAL DATA
- ---------------------------------------------------------------------------------
Net assets, end of period (000 omitted) $63,996 $72,866 $87,704
- ---------------------------------------------------------------------------------
Portfolio turnover rate 6% 20% 0%
- ---------------------------------------------------------------------------------
</TABLE>
* Six months ended October 31, 1994 (unaudited).
** Reflects operations for the period from January 11, 1993 (date of initial
public investment) to April 30, 1993.
*** Based on net asset value, which does not reflect the sales load or
contingent deferred sales charge, if applicable.
(a) Computed on an annualized basis.
(b) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
INDEPENDENCE ONE U.S. GOVERNMENT SECURITIES FUND
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1994
(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 three diversified and one
non-diversified portfolios: Independence One Prime Money Market Fund,
Independence One U.S. Treasury Money Market Fund, Independence One U.S.
Government Securities Fund, and Independence One Michigan Municipal Cash Fund,
respectively. The financial statements included herein present only those of
Independence One U.S. Government Securities Fund (the "Fund"). The financial
statements of the other portfolios are presented separately. The assets of each
portfolio are segregated and a shareholder's interest is limited to the
portfolio in which shares are held.
(2) SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. The
policies are in conformity with generally accepted accounting principles.
A. INVESTMENT VALUATIONS--U.S. government securities are generally valued at
the mean between the over-the-counter bid and asked prices as furnished by
an independent pricing service. Short-term securities with remaining
maturities of sixty days or less may be valued at amortized cost, which
approximates value.
B. REPURCHASE AGREEMENTS--It is the policy of the Fund to require the
custodian bank to take possession, to have legally segregated in the
Federal Reserve Book Entry System, or to have segregated within the
custodian bank's vault, all securities held as collateral in support of
repurchase agreement investments. Additionally, procedures have been
established by the Fund to monitor, on a daily basis, the market value of
each repurchase agreement's underlying collateral to ensure that the value
of collateral at least equals the principal amount of the repurchase
agreement, including accrued interest.
The Fund will only enter into repurchase agreements with banks and other
recognized financial institutions, such as brokers/dealers, which are
deemed by the Fund's adviser to be credit-
worthy pursuant to guidelines 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.
C. INVESTMENT INCOME, EXPENSES AND DISTRIBUTION--Interest income and expenses
are accrued daily. Bond premium and discount, if applicable, are amortized
as required by the Internal
INDEPENDENCE ONE U.S. GOVERNMENT SECURITIES FUND
- --------------------------------------------------------------------------------
Revenue Code, as amended (the "Code"). Distributions to shareholders are
recorded on the ex-dividend date.
D. FEDERAL TAXES--It is the Fund's policy to comply with the provisions of the
Code applicable to regulated investment companies and to distribute to
shareholders each year all of its income. Accordingly, no provisions for
federal tax are necessary.
At April 30, 1994, the Fund for federal tax purposes, had a capital loss
carryforward of $11,816, which will reduce the Fund's taxable income
arising from future net realized gain on investments, if any, to the extent
permitted by the Code, and thus will reduce the amount of the distributions
to shareholders which would otherwise be necessary to relieve the Fund of
any liability for federal tax. Pursuant to the Code, such capital loss
carryforward will expire in 2002.
Additionally, net capital losses of $117,922 attributable to security
transactions incurred after October 31, 1993, are treated as arising on May
1, 1994, the first day of the Fund's taxable year.
E. WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Fund may engage in
when-issued or delayed delivery transactions. The Fund records when-issued
securities on the trade date and maintains security positions such that
sufficient liquid assets will be available to make payment for the
securities purchased. Securities purchased on a when-issued or delayed
delivery basis are marked to market daily and begin earning interest on the
settlement date.
F. DEFERRED EXPENSES--The costs incurred by the Fund with respect to
registration of its shares in its first fiscal year, excluding the initial
expense of registering its shares, have been deferred and are being
amortized using the straight-line method not to exceed a period of five
years from the Fund's commencement date.
G. OTHER--Investment transactions are accounted for on the trade date.
(3) SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value).
Transactions in Fund shares were as follows:
<TABLE>
<CAPTION>
YEAR ENDED APRIL 30,
<S> <C> <C>
1995* 1994
- -------------------------------------------------------------------------------------- --------- -----------
Shares sold 272,834 1,296,059
- --------------------------------------------------------------------------------------
Shares issued to shareholders in payment of dividends declared 1 2
- --------------------------------------------------------------------------------------
Shares redeemed (975,340) (2,395,771)
- -------------------------------------------------------------------------------------- --------- -----------
Net change resulting from Fund share transactions (702,505) (1,099,710)
- -------------------------------------------------------------------------------------- --------- -----------
</TABLE>
* Six months ended October 31, 1994
INDEPENDENCE ONE U.S. GOVERNMENT SECURITIES FUND
- --------------------------------------------------------------------------------
(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 0.70 of 1% of the Fund's average daily net assets. The adviser may
voluntarily choose to waive all or a 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. The FAS fee is based on the
level of average aggregate net assets of the Trust for the period. FAS may
voluntarily choose to waive a portion of its fee.
TRANSFER AND DIVIDEND DISBURSING AGENT, AND PORTFOLIO ACCOUNTING FEES--Federated
Services Company ("FServ") serves as transfer agent and dividend disbursing
agent for the Fund. The fee is based on the size, type, and number of accounts
and transactions made by shareholders.
FServ also maintains the Fund's accounting records. The fee is based on the
level of the Fund's average net assets for the period, plus out-of-pocket
expenses. Prior to August 1, 1994, State Street Bank and Trust Company
maintained the Fund's accounting records.
ORGANIZATIONAL EXPENSES--Organizational expenses of $49,664 were borne initially
by FAS. The Fund has agreed to reimburse FAS for organizational expenses during
the five year period following January 11, 1993 (date the Fund's first became
effective). For the six months ended October 31, 1994, the Fund paid $3,258,
pursuant to this agreement.
Certain of the Officers and Trustees 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 six
months ended October 31, 1994 were as follows:
<TABLE>
<S> <C>
- ----------------------------------------------------------------------------------------------------
PURCHASES-- $ 3,809,688
- ---------------------------------------------------------------------------------------------------- ------------
SALES-- $ 6,664,480
- ---------------------------------------------------------------------------------------------------- ------------
</TABLE>
TRUSTEES OFFICERS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
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
David L. VanAndel Secretary
Gail Cagney
Assistant Secretary
</TABLE>
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.
INDEPENDENCE
ONE
U.S. TREASURY
MONEY MARKET
FUND
SEMI-ANNUAL REPORT
TO SHAREHOLDERS
OCTOBER 31, 1994
(LOGO)
MICHIGAN
NATIONAL
BANK
INVESTMENT ADVISER
(LOGO) FEDERATED SECURITIES CORP. (LOGO)
DISTRIBUTOR INDEPENDENCE ONE
MUTUAL FUNDS
A SUBSIDIARY OF FEDERATED INVESTORS
FEDERATED INVESTORS TOWER
PITTSBURGH, PA 15222-3779
453777708
0112906 (12/94)
PRESIDENT'S MESSAGE
- --------------------------------------------------------------------------------
Dear Investor:
I am pleased to present the Semi-Annual Report for Independence One U.S.
Treasury Money Market Fund (the "Fund") for the six-month period ended October
31, 1994. It contains complete financial information for the Fund--including the
Investment Review and Portfolio of Investments.
The Fund continued to put your cash to work pursuing competitive yields from a
portfolio of short-term U.S. Treasury securities. Total net assets in the Fund
at the end of the reporting period stood at $252.3 million. Dividends paid to
shareholders during the period totaled $0.02 per share.
Thank you choosing Independence One U.S. Treasury Money Market Fund. As always,
we welcome your questions, comments, or suggestions.
Sincerely,
Edward C. Gonzales
President
December 15, 1994
INVESTMENT REVIEW
- --------------------------------------------------------------------------------
The shares of Independence One U.S. Treasury Money Market Fund (the "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 provide current
income consistent with stability of principal. The Fund pursues this investment
objective by investing exclusively in a portfolio of short-term U.S. Treasury
obligations.
Short-term interest rates have risen significantly during most of 1994. This
trend in interest rates is reflected in the 7-day net yield for the Fund, which
has ranged from 2.56% on January 31, 1994 to its current yield of 4.16% on
October 31, 1994.* Total net assets in the Fund are approximately $252 million.
The average maturity for the Fund as of October 31, 1994 was 28 days.
The primary reason short-term interest rates have increased in 1994 is that the
Federal Reserve Board raised the federal funds and discount rates on six
separate occasions. The cumulative impact of the tightening process which began
in February now stands at 250 basis points. The continued strength of the
economy and early signs of accelerating inflation prompted this tightening
directive.
Looking ahead, it is our opinion that the market has overstated the inflation
potential of the current economic expansion and that the pace of Federal Reserve
Board tightening will be much slower in 1995 than what is implied by the current
term structure of interest rates.
The Fund's investment adviser will continue to monitor economic and market
developments to best serve our shareholders who seek a well-managed fund that
seeks a high degree of safety, liquidity and competitive yields.
* Past performance is not indicative of future results. Yield will vary.
Although money market funds seek to maintain a stable net asset value of $1.00
per share, there is no assurance that they will be able to do so. An
investment in the Fund is neither insured nor guaranteed by the U.S.
government.
INDEPENDENCE ONE U.S. TREASURY MONEY MARKET FUND
PORTFOLIO OF INVESTMENTS
OCTOBER 31, 1994
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- ------------- ---------------------------------------------------------------------------------- --------------
U.S. TREASURY OBLIGATIONS--47.2%
- -------------------------------------------------------------------------------------------------
U.S. TREASURY BILLS
----------------------------------------------------------------------------------
$ 15,000,000 11/10/94 $ 14,983,406
----------------------------------------------------------------------------------
15,000,000 11/25/94 14,954,800
----------------------------------------------------------------------------------
10,000,000 12/1/94 9,962,125
----------------------------------------------------------------------------------
20,000,000 12/8/94 19,905,650
----------------------------------------------------------------------------------
10,000,000 12/22/94 9,933,275
----------------------------------------------------------------------------------
10,000,000 1/12/95 9,906,600
----------------------------------------------------------------------------------
10,000,000 1/19/95 9,890,058
----------------------------------------------------------------------------------
10,000,000 1/26/95 9,879,720
----------------------------------------------------------------------------------
10,000,000 3/9/95 9,815,111
----------------------------------------------------------------------------------
10,000,000 4/6/95 9,767,300
---------------------------------------------------------------------------------- --------------
TOTAL U.S. TREASURY OBLIGATIONS 118,998,045
---------------------------------------------------------------------------------- --------------
*REPURCHASE AGREEMENTS--56.9%
- -------------------------------------------------------------------------------------------------
10,000,000 Daiwa Securities America, Inc., 4.75%, dated 10/31/94, due 11/1/94 10,000,000
----------------------------------------------------------------------------------
62,000,000 Donaldson, Lufkin & Jenrette Securities Corp., 4.78%, dated
10/31/94, due 11/1/94 62,000,000
----------------------------------------------------------------------------------
52,000,000 Kidder, Peabody & Co., Inc., 4.78%, dated 10/31/94, due 11/1/94 52,000,000
----------------------------------------------------------------------------------
10,000,000 Lehman Brothers, Inc., 4.78%, dated 10/31/94, due 11/1/94 10,000,000
----------------------------------------------------------------------------------
</TABLE>
INDEPENDENCE ONE U.S. TREASURY MONEY MARKET FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- ------------- ---------------------------------------------------------------------------------- --------------
REPURCHASE AGREEMENTS--CONTINUED
- -------------------------------------------------------------------------------------------------
$ 9,585,000 Union Bank, Switzerland Securities, 4.70%, dated 10/31/94,
due 11/1/94 $ 9,585,000
---------------------------------------------------------------------------------- --------------
TOTAL REPURCHASE AGREEMENTS 143,585,000
---------------------------------------------------------------------------------- --------------
TOTAL INVESTMENTS, AT AMORTIZED COST $ 262,583,045+
---------------------------------------------------------------------------------- --------------
</TABLE>
* The repurchase agreements are fully collateralized by U.S. Treasury
obligations based on market prices at the date of the portfolio.
+ Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($252,301,902) at October 31, 1994.
(See Notes which are an integral part of the Financial Statements)
INDEPENDENCE ONE U.S. TREASURY MONEY MARKET FUND
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1994
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- -------------------------------------------------------------------------------------------------
Investments in repurchase agreements $ 143,585,000
- ---------------------------------------------------------------------------------
Investments in other securities 118,998,045
- --------------------------------------------------------------------------------- --------------
Total investments, at amortized cost and value $ 262,583,045
- -------------------------------------------------------------------------------------------------
Cash 184
- -------------------------------------------------------------------------------------------------
Due from bank 80,000
- -------------------------------------------------------------------------------------------------
Interest receivable 19,287
- ------------------------------------------------------------------------------------------------- --------------
Total assets 262,682,516
- -------------------------------------------------------------------------------------------------
LIABILITIES:
- -------------------------------------------------------------------------------------------------
Payable for investments purchased 9,879,719
- ---------------------------------------------------------------------------------
Dividends payable 459,749
- ---------------------------------------------------------------------------------
Accrued expenses 41,146
- --------------------------------------------------------------------------------- --------------
Total liabilities 10,380,614
- ------------------------------------------------------------------------------------------------- --------------
NET ASSETS for 252,301,902 shares of beneficial interest outstanding $ 252,301,902
- ------------------------------------------------------------------------------------------------- --------------
NET ASSET VALUE, Offering Price, and Redemption Proceeds Per Share:
($252,301,902 / 252,301,902 shares of beneficial interest outstanding) $1.00
- ------------------------------------------------------------------------------------------------- --------------
(See Notes which are an integral part of the Financial Statements)
</TABLE>
INDEPENDENCE ONE U.S. TREASURY MONEY MARKET FUND
STATEMENT OF OPERATIONS
SIX MONTHS ENDED OCTOBER 31, 1994
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
- ----------------------------------------------------------------------------------------------------
Interest income $ 5,330,580
- ----------------------------------------------------------------------------------------------------
EXPENSES:
- ----------------------------------------------------------------------------------------------------
Investment advisory fee $ 484,860
- ----------------------------------------------------------------------------------------
Trustees' fees 5,916
- ----------------------------------------------------------------------------------------
Administrative personnel and services fees 156,612
- ----------------------------------------------------------------------------------------
Custodian fees 31,737
- ----------------------------------------------------------------------------------------
Portfolio accounting fees 23,907
- ----------------------------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses 15,298
- ----------------------------------------------------------------------------------------
Fund share registration fees 21,479
- ----------------------------------------------------------------------------------------
Auditing fees 5,650
- ----------------------------------------------------------------------------------------
Legal fees 4,567
- ----------------------------------------------------------------------------------------
Printing and postage 7,156
- ----------------------------------------------------------------------------------------
Insurance premiums 3,910
- ----------------------------------------------------------------------------------------
Miscellaneous 2,998
- ---------------------------------------------------------------------------------------- ----------
Total expenses 764,090
- ---------------------------------------------------------------------------------------------------- ------------
Net investment income $ 4,566,490
- ---------------------------------------------------------------------------------------------------- ------------
(See Notes which are an integral part of the Financial Statements)
</TABLE>
INDEPENDENCE ONE U.S. TREASURY MONEY MARKET FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED APRIL 30,
1995* 1994
<S> <C> <C>
--------------- -----------------
INCREASE (DECREASE) IN NET ASSETS:
- -----------------------------------------------------------------------------
OPERATIONS--
- -----------------------------------------------------------------------------
Net investment income $ 4,566,490 $ 5,406,454
- ----------------------------------------------------------------------------- --------------- -----------------
DISTRIBUTIONS TO SHAREHOLDERS--
- -----------------------------------------------------------------------------
Dividends to shareholders from net investment income (4,566,490) (5,406,454)
- ----------------------------------------------------------------------------- --------------- -----------------
FUND SHARE (PRINCIPAL) TRANSACTIONS--
- -----------------------------------------------------------------------------
Proceeds from sale of shares 917,246,831 1,540,448,095
- -----------------------------------------------------------------------------
Net asset value of shares issued to shareholders in payment
of dividends declared 2,107,973 2,337,162
- -----------------------------------------------------------------------------
Cost of shares redeemed (882,885,211) (1,541,022,154)
- ----------------------------------------------------------------------------- --------------- -----------------
Change in net assets from Fund share transactions 36,469,593 1,763,103
- ----------------------------------------------------------------------------- --------------- -----------------
Change in net assets 36,469,593 1,763,103
- -----------------------------------------------------------------------------
NET ASSETS:
- -----------------------------------------------------------------------------
Beginning of period 215,832,309 214,069,206
- ----------------------------------------------------------------------------- --------------- -----------------
End of period $ 252,301,902 $ 215,832,309
- ----------------------------------------------------------------------------- --------------- -----------------
* Six months ended October 31, 1994 (unaudited).
(See Notes which are an integral part of the Financial Statements)
</TABLE>
INDEPENDENCE ONE U.S. TREASURY MONEY MARKET FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
YEAR ENDED APRIL 30,
1995* 1994 1993 1992 1991 1990**
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING
OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ---------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ---------------------------------------------
Net investment income 0.02 0.03 0.03 0.05 0.07 0.08
- ---------------------------------------------
LESS DISTRIBUTIONS
- ---------------------------------------------
Dividends to shareholders
from net investment income (0.02) (0.03) (0.03) (0.05) (0.07) (0.08)
- --------------------------------------------- --------- --------- --------- --------- --------- -----------
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- --------------------------------------------- --------- --------- --------- --------- --------- -----------
TOTAL RETURN*** 1.91% 2.63% 2.92% 4.81% 7.17% 7.83%
- ---------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ---------------------------------------------
Expenses 0.63%(a) 0.61% 0.54% 0.57% 0.60% 0.35%(a)
- ---------------------------------------------
Net investment income 3.77%(a) 2.60% 2.90% 4.55% 6.91% 8.17%(a)
- ---------------------------------------------
Expense waiver/
reimbursement (b) 0.00%(a) 0.00% 0.09% 0.12% 0.07% 0.32%(a)
- ---------------------------------------------
SUPPLEMENTAL DATA
- ---------------------------------------------
Net assets, end of period
(000 omitted) $252,302 $215,832 $214,069 $224,803 $131,263 $82,947
- ---------------------------------------------
</TABLE>
* Six months ended October 31, 1994 (unaudited).
** Reflects operations for the period from June 1, 1989 (date of initial
public investment) to April 30, 1990.
*** Based on net asset value, which does not reflect the sales load or
contingent deferred sales charge, if applicable.
(a) Computed on an annualized basis.
(b) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
INDEPENDENCE ONE U.S. TREASURY MONEY MARKET FUND
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1994
(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 three diversified and one
non-diversified portfolios: Independence One Prime Money Market Fund,
Independence One U.S. Treasury Money Market Fund, Independence One U.S.
Government Securities Fund, and Independence One Michigan Municipal Cash Fund,
respectively. The financial statements included herein present only those of
Independence One U.S. Treasury Money Market Fund (the "Fund"). The financial
statements of the other portfolios are presented separately. The assets of each
portfolio are segregated and a shareholder's interest is limited to the
portfolio in which shares are held.
(2) SIGNIFICANT ACCOUNTING POLICIES
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.
A. INVESTMENT VALUATIONS--The Fund's use of the amortized cost method to value
its portfolio securities is in accordance with Rule 2a-7 under the Act.
B. REPURCHASE AGREEMENTS--It is the policy of the Fund to require the
custodian bank to take possession, to have legally segregated in the
Federal Reserve Book Entry System, or to have segregated within the
custodian bank's vault, all securities held as collateral in support of
repurchase agreement investments. Additionally, procedures have been
established by the Fund to monitor, on a daily basis, the market value of
each repurchase agreement's underlying collateral to ensure that the value
of collateral at least equals the principal amount of the repurchase
agreement, including accrued interest.
The Fund will only enter into repurchase agreements with banks and other
recognized financial institutions, such as broker/dealers, which are deemed
by the Fund's adviser to be creditworthy pursuant to guidelines established
by the 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.
C. INVESTMENT INCOME, EXPENSES AND DISTRIBUTION--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").
Distributions to shareholders are recorded on the ex-dividend date.
INDEPENDENCE ONE U.S. TREASURY MONEY MARKET FUND
- --------------------------------------------------------------------------------
D. FEDERAL TAXES--It is the Fund's policy to comply with the provisions of the
Code applicable to regulated investment companies and to distribute to
shareholders each year substantially all of its income. Accordingly, no
provision for federal tax is necessary.
E. WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Fund may engage in
when-issued or delayed delivery transactions. The Fund records when-issued
securities on the trade date and maintains security positions such that
sufficient liquid assets will be available to make payment for the
securities purchased. Securities purchased on a when-issued or delayed
basis are marked to market daily and begin earning interest on the
settlement date.
F. DEFERRED EXPENSES--The costs incurred by the Fund with respect to
registration of its shares in its first fiscal year, excluding the initial
expense of registering its shares, have been deferred and amortized using
the straight-line method not exceeding a period of five years from the
Fund's commencement date.
G. OTHER--Investment transactions are accounted for on the trade date.
(3) SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value). At
October 31, 1994, capital paid-in aggregated $252,301,902. Transactions in Fund
shares were as follows:
<TABLE>
<CAPTION>
YEAR ENDED APRIL 30,
1995* 1994
<S> <C> <C>
Shares sold 917,246,831 1,540,448,095
- --------------------------------------------------------------------------------
Shares issued to shareholders in payment of dividends declared 2,107,973 2,337,162
- --------------------------------------------------------------------------------
Shares redeemed (882,885,211) (1,541,022,154)
- -------------------------------------------------------------------------------- -------------- ----------------
Net change resulting from Fund share transactions 36,469,593 1,763,103
- -------------------------------------------------------------------------------- -------------- ----------------
</TABLE>
*Six months ended October 31, 1994.
(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.
ADMINISTRATIVE FEE--Federated Administrative Services ("FAS") provides the Fund
with certain administrative personnel and services. The FAS 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 U.S. TREASURY MONEY MARKET FUND
- --------------------------------------------------------------------------------
TRANSFER AND DIVIDEND DISBURSING AGENT AND PORTFOLIO ACCOUNTING FEES--Federated
Services Company ("FServ") serves as transfer agent and dividend disbursing
agent for the Fund. The FServ fee is based on the size, type, and number of
accounts and transactions made by shareholders.
FServ also maintains the Fund's accounting records. The fee is based on the
level of the Fund's average net assets for the period, plus out-of-pocket
expenses. Prior to August 1, 1994, State Street Bank and Trust Company
maintained the Fund's accounting records.
Certain of the Officers and Trustees of the Trust are Officers and Trustees of
the above companies.
TRUSTEES OFFICERS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
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
David L. VanAndel Secretary
Gail Cagney
Assistant Secretary
</TABLE>
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. Although money market funds seek to
maintain a stable net asset value of $1.00 per share, there is no assurance
that they will be able to do so.
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.
