INDEPENDENCE
ONE/R/
MONEY
MARKET
FUNDS
ANNUAL REPORT
TO SHAREHOLDERS
APRIL 30, 1996
[LOGO] MICHIGAN NATIONAL BANK
[LOGO] FEDERATED INVESTORS
Federated Investors Tower
Pittsburgh, PA 15222-3779
Federated Securities Corp. is the
distributor of the funds and is a [LOGO] INDEPENDENCE ONE
subsidiary of Federated Investors. Mutual Funds
Cusip 453777708
Cusip 453777203
Cusip 453777302
Cusip 453777401
G01200-01 (6/96)
[LOGO] RECYCLED PAPER
PRESIDENT'S MESSAGE
- --------------------------------------------------------------------------------
Dear Investor:
I am pleased to present the Annual Report for Independence One Money Market
Funds which covers the 12-month period from May 1, 1995 through April 30, 1996.
The report begins with a discussion with each Fund's portfolio manager, which is
followed by a complete listing of Fund holdings and complete financial
information.
During the period, each Fund continued to give shareholders a convenient, stable
way to put their ready cash to work earning daily income. Please note the
following highlights:
INDEPENDENCE ONE PRIME MONEY MARKET FUND, paid competitive dividends of $0.05
per share for Class A Shares and Class B Shares through its high-quality,
diversified portfolio of money market securities. Total net assets grew
substantially, from $233.6 million on the first day of the reporting period to
$396.8 million on the last day of the reporting period.
INDEPENDENCE ONE U.S. TREASURY MONEY MARKET FUND, which invests exclusively in a
high-quality portfolio of U.S. Treasury money market securities, paid dividends
totaling $0.05 per share. Total net assets stood at $297.2 million on the last
day of the reporting period.
INDEPENDENCE ONE MICHIGAN MUNICIPAL CASH FUND, helped its tax-sensitive
shareholders earn $0.03 in double-tax-free dividends per share.* Total net
assets in the Fund's high-quality, diversified portfolio of Michigan municipal
money market securities reached $74.7 million at the end of the reporting
period.
Thank you for keeping your cash working--every day--through one of the
Independence One Money Market Funds. As always, we welcome your questions,
comments, or suggestions.
Sincerely,
/s/ Edward C. Gonzales
Edward C. Gonzales
President
June 15, 1996
No money market fund can guarantee that a stable net asset value will be
maintained. An investment in the funds is neither insured nor guaranteed by the
U.S. government.
* Income may be subject to the federal alternative minimum tax.
MANAGEMENT DISCUSSION & ANALYSIS
- --------------------------------------------------------------------------------
Q What was the state of the economy over the past year, and how did the money
markets react?
A The U.S. economy over the twelve-month period ended April 30, 1996, could
be characterized as one of moderate growth coupled with subdued inflation.
Real Gross Domestic Product grew at a rate of 1.3% in 1995, and at a rate
of 2.3% for the first quarter of 1996. The growth was somewhat uneven because of
large fluctuations in the rate of inventory accumulation and extreme weather
conditions experienced in certain regions of the country (a major heat wave last
July and blizzards in January). The national unemployment rate has been very
stable, ranging between 5.4% and 5.8% for the past twenty months. (During the
last twelve months it improved from 5.7% to 5.4%). The inflation rate as
measured by the Consumer Price Index has continued to remain well behaved by
recent historical standards, and rose at a 2.9% year-over-year rate in April
1996.
In terms of monetary policy, the Federal Reserve Board lowered its federal funds
target rate three times during the past twelve months. It lowered the rate by 25
basis points in July and December 1995, as well as in January 1996. This key
short-term interest rate is currently 5.25%. The reaction of the money markets
to these accommodating moves was as expected, short-term yields fell steadily
during most of the last quarter of 1995 and continued during the first months of
1996.
Q In this environment, how did the Independence One Money Market Funds
perform for shareholders in terms of income and 7-day net yield during the
twelve-month reporting period ended April 30, 1996?
A INDEPENDENCE ONE PRIME MONEY MARKET FUND
The Independence One Prime Money Market Fund earned a total return of 5.33%
for Class A Shares and 5.07% for Class B Shares during the twelve-month
period ended April 30, 1996. The
7-day net yield has fallen during the twelve-month period ended April 30, 1996.
The yield ranged from 5.57% on May 1, 1995, to 4.78% on April 30, 1996, for
Class A Shares. The yield for Class B Shares has ranged from 5.78% on June 13,
1995, to 5.03% on April 30, 1996.* The average maturity for this fund as of
April 30, 1996, was 56 days.
INDEPENDENCE ONE U.S. TREASURY MONEY MARKET FUND
The Independence One U.S. Treasury Money Market Fund earned a total return of
5.28% during the twelve-month period ended April 30, 1996. The 7-day net yield
has fallen during the twelve-month period ended April 30, 1996. The yield ranged
from 5.45% on May 1, 1995, to 4.72% on April 30, 1996.* The average maturity for
this fund as of April 30, 1996, was 59 days.
* Performance quoted represents past performance and is not indicative of future
results. Yield will vary.
- --------------------------------------------------------------------------------
INDEPENDENCE ONE MICHIGAN MUNICIPAL CASH FUND
The Independence One Michigan Municipal Cash Fund earned a total return of 3.24%
during the twelve-month period ended April 30, 1996. The 7-day net yield has
fallen during the twelve-month period ended April 30, 1996. The yield ranged
from 3.69% on May 1, 1995, to 3.24% on April 30, 1996.* The average maturity for
this fund as of April 30, 1996, was 17 days.
Q What is your overall outlook for the economy and short-term interest rates
for the balance of 1996?
A It is our opinion that the real Gross Domestic Product will rise at a 3.25%
annual growth rate for the remainder of 1996, and the Consumer Price Index
will average 3.0%. While the capital spending and housing sectors should
show some weakness in reaction to the increase in interest rates observed since
the start of the year, the rebuilding of depleted inventory stocks coupled with
a continued strength in the consumer sector of the economy should continue to
benefit the economy. We feel that short-term interest rates will continue to
rise during the balance of 1996.
* Performance quoted represents past performance and is not indicative of future
results. Yield will vary.
INDEPENDENCE ONE PRIME MONEY MARKET FUND
PORTFOLIO OF INVESTMENTS
APRIL 30, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
DEPOSIT--49.1% ----------------------------------------------------------------------------------
$ 15,000,000 ABN AMRO Bank, 5.18%, 6/4/1996 $ 15,000,419
----------------------------------------------------------------------------------
10,000,000 Bank of Montreal, 5.38%, 6/10/1996 10,000,220
----------------------------------------------------------------------------------
15,000,000 Bank of Nova Scotia, Toronto, 5.35%, 5/1/1996 15,000,000
----------------------------------------------------------------------------------
10,000,000 (a)Bankers Trust Co., New York, 5.56%, 12/11/1996 10,000,000
----------------------------------------------------------------------------------
15,000,000 Banque Nationale de Paris, 5.38%--5.40%, 6/3/1996--7/9/1996 15,000,531
----------------------------------------------------------------------------------
15,000,000 CIBC Wood Gundy Securities Corp., 5.31%, 6/19/1996 15,000,403
----------------------------------------------------------------------------------
10,000,000 Den Danske Bank, 5.38%, 7/5/1996 10,000,999
----------------------------------------------------------------------------------
15,000,000 Deutsche Bank, 5.15%, 7/15/1996 14,995,918
----------------------------------------------------------------------------------
10,000,000 Dresdner Bank AG--London, 5.35%, 7/1/1996 10,000,396
----------------------------------------------------------------------------------
10,000,000 Lloyds Bank, 5.36%, 10/4/1996 10,000,844
----------------------------------------------------------------------------------
15,000,000 National Westminster Bank, 5.28%, 6/14/1996 15,000,272
----------------------------------------------------------------------------------
15,000,000 Rabobank Nederland, 5.15%, 5/7/1996 15,000,025
----------------------------------------------------------------------------------
5,000,000 Societe Generale, 5.28%, 5/1/1996 5,000,000
----------------------------------------------------------------------------------
10,000,000 Societe Generale, New York, 5.36%, 6/4/1996 9,999,846
----------------------------------------------------------------------------------
15,000,000 Toronto-Dominion Bank, 5.16%, 6/5/1996 15,000,225
----------------------------------------------------------------------------------
10,000,000 Westdeutsche Landesbank, 6.22%, 5/16/1996 10,000,039
---------------------------------------------------------------------------------- --------------
TOTAL CERTIFICATES OF DEPOSIT 195,000,137
---------------------------------------------------------------------------------- --------------
(b) COMMERCIAL PAPER--19.4%
- -------------------------------------------------------------------------------------------------
AGRICULTURE--6.3%
----------------------------------------------------------------------------------
10,000,000 Canadian Wheat Board, 5.22%, 6/19/1996 9,928,950
----------------------------------------------------------------------------------
15,000,000 Cargill, Inc., 5.24%, 7/2/1996 14,864,633
---------------------------------------------------------------------------------- --------------
Total 24,793,583
---------------------------------------------------------------------------------- --------------
CHEMICALS--3.7%
----------------------------------------------------------------------------------
15,000,000 Monsanto Co., 5.25%--5.31%, 7/16/1996--7/31/1996 14,811,242
---------------------------------------------------------------------------------- --------------
FINANCE--7.4%
----------------------------------------------------------------------------------
$ 15,000,000 Eiger Capital Corp., 5.28%, 5/17/1996 $ 14,964,800
----------------------------------------------------------------------------------
</TABLE>
INDEPENDENCE ONE PRIME MONEY MARKET FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<S> <S> <C>
(b) COMMERCIAL PAPER--CONTINUED
- -------------------------------------------------------------------------------------------------
FINANCE--CONTINUED
----------------------------------------------------------------------------------
14,374,000 Fleet Funding Corp., 5.30%--5.36%, 5/23/1996--5/29/1996 14,322,684
---------------------------------------------------------------------------------- --------------
Total 29,287,484
---------------------------------------------------------------------------------- --------------
UTILITIES--2.0%
----------------------------------------------------------------------------------
8,000,000 Pacificorp, 5.28%, 5/24/1996 7,973,013
---------------------------------------------------------------------------------- --------------
TOTAL COMMERCIAL PAPER 76,865,322
---------------------------------------------------------------------------------- --------------
CORPORATE BONDS--5.0%
- -------------------------------------------------------------------------------------------------
FINANCE--RETAIL--2.5%
----------------------------------------------------------------------------------
10,000,000 General Electric Capital Corp., Medium Term Note 5.17%, 3/11/1997 9,967,430
---------------------------------------------------------------------------------- --------------
INDUSTRIAL SERVICES--2.5%
----------------------------------------------------------------------------------
10,000,000 WMX Technologies, Inc., 4.88%, 6/15/1996 9,986,134
---------------------------------------------------------------------------------- --------------
TOTAL CORPORATE BONDS 19,953,564
---------------------------------------------------------------------------------- --------------
GOVERNMENT AGENCIES--3.4%
- -------------------------------------------------------------------------------------------------
FEDERAL HOME LOAN BANK--3.4%
----------------------------------------------------------------------------------
8,500,000 5.29%, 3/5/1997 8,500,000
----------------------------------------------------------------------------------
5,000,000 5.69%, 3/27/1997 5,000,000
---------------------------------------------------------------------------------- --------------
TOTAL GOVERNMENT AGENCIES 13,500,000
---------------------------------------------------------------------------------- --------------
(c) REPURCHASE AGREEMENTS--22.7%
- -------------------------------------------------------------------------------------------------
32,892,000 Daiwa Securities America, Inc., 5.30%, dated 4/30/1996, due 5/1/1996 32,892,000
----------------------------------------------------------------------------------
33,000,000 Donaldson, Lufkin and Jenrette Securities Corp., 5.32%,
dated 4/30/1996, due 5/1/1996 33,000,000
----------------------------------------------------------------------------------
24,000,000 First Chicago Capital Markets, Inc., 5.30%, dated 4/30/1996,
due 5/1/1996 24,000,000
---------------------------------------------------------------------------------- --------------
TOTAL REPURCHASE AGREEMENTS 89,892,000
---------------------------------------------------------------------------------- --------------
TOTAL INVESTMENTS, AT AMORTIZED COST (D) $ 395,211,023
---------------------------------------------------------------------------------- --------------
</TABLE>
(a) Denotes variable rate obligation for which the current rate and next demand
date are shown.
(b) Each issue shows the rate of discount at the time of purchase.
INDEPENDENCE ONE PRIME MONEY MARKET FUND
- --------------------------------------------------------------------------------
(c) The repurchase agreements are fully collateralized by U.S. Treasury
obligations based on market prices at the date of the portfolio.
(d) Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($396,770,655) at
April 30, 1996.
(See Notes which are an integral part of the Financial Statements)
INDEPENDENCE ONE PRIME MONEY MARKET FUND
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- ---------------------------------------------------------------------------------
Investments in repurchase agreements $ 89,892,000
- ---------------------------------------------------------------------------------
Investments in securities 305,319,023
- --------------------------------------------------------------------------------- --------------
Total investments in securities, at amortized cost $ 395,211,023
- -------------------------------------------------------------------------------------------------
Cash 901
- -------------------------------------------------------------------------------------------------
Income receivable 2,415,296
- ------------------------------------------------------------------------------------------------- --------------
Total assets 397,627,220
- -------------------------------------------------------------------------------------------------
LIABILITIES:
- -------------------------------------------------------------------------------------------------
Payable for shares redeemed 38,976
- ---------------------------------------------------------------------------------
Income distribution payable 793,370
- ---------------------------------------------------------------------------------
Accrued expenses 24,219
- --------------------------------------------------------------------------------- --------------
Total liabilities 856,565
- ------------------------------------------------------------------------------------------------- --------------
NET ASSETS for 396,770,655 shares outstanding $ 396,770,655
- ------------------------------------------------------------------------------------------------- --------------
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE:
- -------------------------------------------------------------------------------------------------
CLASS A SHARES:
- -------------------------------------------------------------------------------------------------
$310,991,118 / 310,991,118 shares outstanding $1.00
- ------------------------------------------------------------------------------------------------- --------------
CLASS B SHARES:
- -------------------------------------------------------------------------------------------------
$85,779,537 / 85,779,537 shares outstanding $1.00
- ------------------------------------------------------------------------------------------------- --------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
INDEPENDENCE ONE PRIME MONEY MARKET FUND
STATEMENT OF OPERATIONS
YEAR ENDED APRIL 30, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
- ---------------------------------------------------------------------------------------------------
Interest $ 20,597,975
- ---------------------------------------------------------------------------------------------------
EXPENSES:
- -------------------------------------------------------------------------------------
Investment advisory fee $ 1,424,895
- -------------------------------------------------------------------------------------
Administrative personnel and services fee 419,411
- -------------------------------------------------------------------------------------
Custodian fees 71,245
- -------------------------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses 58,421
- -------------------------------------------------------------------------------------
Directors'/Trustees' fees 23,867
- -------------------------------------------------------------------------------------
Auditing fees 15,674
- -------------------------------------------------------------------------------------
Legal fees 6,768
- -------------------------------------------------------------------------------------
Portfolio accounting fees 80,150
- -------------------------------------------------------------------------------------
Shareholder services fee--Class A Shares 720,142
- -------------------------------------------------------------------------------------
Share registration costs 60,202
- -------------------------------------------------------------------------------------
Printing and postage 21,017
- -------------------------------------------------------------------------------------
Insurance premiums 8,549
- ------------------------------------------------------------------------------------- ------------
Total expenses 2,910,341
- -------------------------------------------------------------------------------------
Waiver--
- -------------------------------------------------------------------------------------
Waiver of investment advisory fee (890,559)
- ------------------------------------------------------------------------------------- ------------
Net expenses 2,019,782
- --------------------------------------------------------------------------------------------------- -------------
Net investment income $ 18,578,193
- --------------------------------------------------------------------------------------------------- -------------
</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 YEAR ENDED
APRIL 30, 1996 APRIL 30, 1995
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- ----------------------------------------------------------------------------
OPERATIONS--
- ----------------------------------------------------------------------------
Net investment income $ 18,578,193 $ 12,028,855
- ---------------------------------------------------------------------------- ----------------- -----------------
DISTRIBUTIONS TO SHAREHOLDERS--
- ----------------------------------------------------------------------------
Distributions from net investment income
- ----------------------------------------------------------------------------
Class A Shares (14,939,049) (12,028,855)
- ----------------------------------------------------------------------------
Class B Shares (3,639,144) 0
- ---------------------------------------------------------------------------- ----------------- -----------------
Change in net assets resulting from distributions to shareholders (18,578,193) (12,028,855)
- ---------------------------------------------------------------------------- ----------------- -----------------
SHARE TRANSACTIONS--
- ----------------------------------------------------------------------------
Proceeds from sale of shares 2,512,058,572 1,885,542,162
- ----------------------------------------------------------------------------
Net asset value of shares issued to shareholders in payment of distributions
declared 8,436,607 5,979,695
- ----------------------------------------------------------------------------
Cost of shares redeemed (2,357,331,372) (1,968,503,461)
- ---------------------------------------------------------------------------- ----------------- -----------------
Change in net assets resulting from share transactions 163,163,807 (76,981,604)
- ---------------------------------------------------------------------------- ----------------- -----------------
Change in net assets 163,163,807 (76,981,604)
- ----------------------------------------------------------------------------
NET ASSETS:
- ----------------------------------------------------------------------------
Beginning of period 233,606,848 310,588,452
- ---------------------------------------------------------------------------- ----------------- -----------------
End of period $ 396,770,655 $ 233,606,848
- ---------------------------------------------------------------------------- ----------------- -----------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
INDEPENDENCE ONE PRIME MONEY MARKET FUND
FINANCIAL HIGHLIGHTS--CLASS A SHARES
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
YEAR ENDED APRIL 30,
<S> <C> <C> <C> <C> <C> <C> <C>
1996 1995 1994 1993 1992 1991 1990(a)
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ----------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ----------------------------------------
Net investment income 0.05 0.05 0.03 0.03 0.05 0.07 0.08
- ----------------------------------------
LESS DISTRIBUTIONS
- ----------------------------------------
Distributions from net investment
income (0.05) (0.05) (0.03) (0.03) (0.05) (0.07) (0.08)
- ---------------------------------------- --------- --------- --------- --------- --------- --------- -----------
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ---------------------------------------- --------- --------- --------- --------- --------- --------- -----------
TOTAL RETURN (b) 5.33% 4.66% 2.73% 2.99% 4.89% 7.55% 7.99%
- ----------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ----------------------------------------
Expenses 0.61% 0.61% 0.59% 0.58% 0.54% 0.53% 0.40%*
- ----------------------------------------
Net investment income 5.19% 4.51% 2.70% 2.91% 4.73% 7.26% 8.24%*
- ----------------------------------------
Expense waiver/reimbursement (c) 0.25% -- 0.02% 0.04% 0.08% 0.08% 0.23%*
- ----------------------------------------
SUPPLEMENTAL DATA
- ----------------------------------------
Net assets, end of period
(000 omitted) $310,991 $233,607 $310,588 $423,355 $309,009 $371,994 $328,434
- ----------------------------------------
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from June 1, 1989 (date of initial
public investment) to April 30, 1990.
(b) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
INDEPENDENCE ONE PRIME MONEY MARKET FUND
FINANCIAL HIGHLIGHTS--CLASS B SHARES
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
<TABLE>
<CAPTION>
YEAR ENDED
APRIL 30, 1996(a)
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00
- -------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- -------------------------------------------------------------------------------------------
Net investment income 0.05
- -------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS
- -------------------------------------------------------------------------------------------
Distributions from net investment income (0.05)
- ------------------------------------------------------------------------------------------- -------
NET ASSET VALUE, END OF PERIOD $ 1.00
- ------------------------------------------------------------------------------------------- -------
TOTAL RETURN (b) 5.07%
- -------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- -------------------------------------------------------------------------------------------
Expenses 0.36%*
- -------------------------------------------------------------------------------------------
Net investment income 5.34%*
- -------------------------------------------------------------------------------------------
Expense waiver/reimbursement (c) 0.25%*
- -------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
- -------------------------------------------------------------------------------------------
Net assets, end of period (000 omitted) $85,780
- -------------------------------------------------------------------------------------------
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from June 13, 1995 (date of initial
public investment) to
April 30, 1996.
(b) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
INDEPENDENCE ONE U.S. TREASURY MONEY MARKET FUND
PORTFOLIO OF INVESTMENTS
APRIL 30, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
U.S. TREASURY BILLS--39.5%
- -------------------------------------------------------------------------------------------------
$ 15,000,000 5/2/1996 $ 14,997,731
----------------------------------------------------------------------------------
10,000,000 5/16/1996 9,979,208
----------------------------------------------------------------------------------
10,000,000 5/23/1996 9,969,567
----------------------------------------------------------------------------------
10,000,000 5/30/1996 9,955,211
----------------------------------------------------------------------------------
10,000,000 7/25/1996 9,869,431
----------------------------------------------------------------------------------
20,000,000 9/5/1996 19,649,339
----------------------------------------------------------------------------------
5,000,000 1/9/1997 4,821,143
----------------------------------------------------------------------------------
30,000,000 3/6/1997 28,688,038
----------------------------------------------------------------------------------
10,000,000 4/3/1997 9,515,328
---------------------------------------------------------------------------------- --------------
TOTAL U.S. TREASURY BILLS 117,444,996
---------------------------------------------------------------------------------- --------------
(a) REPURCHASE AGREEMENTS--60.7%
- -------------------------------------------------------------------------------------------------
75,000,000 Daiwa Securities America, Inc., 5.30%, dated 4/30/1996, due 5/1/1996 75,000,000
----------------------------------------------------------------------------------
10,273,000 Donaldson, Lufkin and Jenrette Securities Corp., 5.32%,
dated 4/30/1996, due 5/1/1996 10,273,000
----------------------------------------------------------------------------------
75,000,000 First Chicago Capital Markets, Inc., 5.30%,
dated 4/30/1996, due 5/1/1996 75,000,000
----------------------------------------------------------------------------------
10,000,000 Goldman, Sachs & Co., 5.25%, dated 4/30/1996, due 5/1/1996 10,000,000
----------------------------------------------------------------------------------
10,000,000 Union Bank of Switzerland, 5.30%, dated 4/30/1996, due 5/1/1996 10,000,000
---------------------------------------------------------------------------------- --------------
TOTAL REPURCHASE AGREEMENTS 180,273,000
---------------------------------------------------------------------------------- --------------
TOTAL INVESTMENTS, AT AMORTIZED COST (B) $ 297,717,996
---------------------------------------------------------------------------------- --------------
</TABLE>
(a) The repurchase agreements are fully collateralized by U.S. Treasury
obligations based on market prices at the date of the portfolio.
(b) Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($297,232,828) at
April 30, 1996.
(See Notes which are an integral part of the Financial Statements)
INDEPENDENCE ONE U.S. TREASURY MONEY MARKET FUND
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- ---------------------------------------------------------------------------------
Investments in repurchase agreements $ 180,273,000
- ---------------------------------------------------------------------------------
Investments in securities 117,444,996
- --------------------------------------------------------------------------------- --------------
Total investments in securities, at amortized cost $ 297,717,996
- -------------------------------------------------------------------------------------------------
Cash 993
- -------------------------------------------------------------------------------------------------
Income receivable 26,532
- -------------------------------------------------------------------------------------------------
Receivable for shares sold 1,400
- ------------------------------------------------------------------------------------------------- --------------
Total assets 297,746,921
- -------------------------------------------------------------------------------------------------
LIABILITIES:
- -------------------------------------------------------------------------------------------------
Payable for shares redeemed 255
- ---------------------------------------------------------------------------------
Income distribution payable 458,974
- ---------------------------------------------------------------------------------
Accrued expenses 54,864
- --------------------------------------------------------------------------------- --------------
Total liabilities 514,093
- ------------------------------------------------------------------------------------------------- --------------
NET ASSETS for 297,232,828 shares outstanding $ 297,232,828
- ------------------------------------------------------------------------------------------------- --------------
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE:
- -------------------------------------------------------------------------------------------------
$297,232,828 / 297,232,828 shares outstanding $1.00
- ------------------------------------------------------------------------------------------------- --------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
INDEPENDENCE ONE U.S. TREASURY MONEY MARKET FUND
STATEMENT OF OPERATIONS
YEAR ENDED APRIL 30, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
- ---------------------------------------------------------------------------------------------------
Interest $ 15,696,372
- ---------------------------------------------------------------------------------------------------
EXPENSES:
- -------------------------------------------------------------------------------------
Investment advisory fee $ 1,093,871
- -------------------------------------------------------------------------------------
Administrative personnel and services fee 324,361
- -------------------------------------------------------------------------------------
Custodian fees 62,077
- -------------------------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses 31,996
- -------------------------------------------------------------------------------------
Directors'/Trustees' fees 17,502
- -------------------------------------------------------------------------------------
Auditing fees 12,581
- -------------------------------------------------------------------------------------
Legal fees 2,188
- -------------------------------------------------------------------------------------
Portfolio accounting fees 49,771
- -------------------------------------------------------------------------------------
Share registration costs 16,682
- -------------------------------------------------------------------------------------
Printing and postage 5,743
- -------------------------------------------------------------------------------------
Insurance premiums 7,657
- -------------------------------------------------------------------------------------
Miscellaneous 24,337
- ------------------------------------------------------------------------------------- ------------
Total expenses 1,648,766
- --------------------------------------------------------------------------------------------------- -------------
Net investment income $ 14,047,606
- --------------------------------------------------------------------------------------------------- -------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
INDEPENDENCE ONE U.S. TREASURY MONEY MARKET FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
APRIL 30, 1996 APRIL 30, 1995
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- ----------------------------------------------------------------------------
OPERATIONS--
- ----------------------------------------------------------------------------
Net investment income $ 14,047,606 $ 10,827,606
- ---------------------------------------------------------------------------- ----------------- -----------------
DISTRIBUTIONS TO SHAREHOLDERS--
- ----------------------------------------------------------------------------
Distributions from net investment income (14,047,606) (10,827,606)
- ---------------------------------------------------------------------------- ----------------- -----------------
SHARE TRANSACTIONS--
- ----------------------------------------------------------------------------
Proceeds from sale of shares 2,423,363,168 1,859,720,057
- ----------------------------------------------------------------------------
Net asset value of shares issued to shareholders
in payment of distributions declared 8,401,826 5,250,905
- ----------------------------------------------------------------------------
Cost of shares redeemed (2,379,419,355) (1,835,916,082)
- ---------------------------------------------------------------------------- ----------------- -----------------
Change in net assets resulting from share transactions 52,345,639 29,054,880
- ---------------------------------------------------------------------------- ----------------- -----------------
Change in net assets 52,345,639 29,054,880
- ----------------------------------------------------------------------------
NET ASSETS:
- ----------------------------------------------------------------------------
Beginning of period 244,887,189 215,832,309
- ---------------------------------------------------------------------------- ----------------- -----------------
End of period $ 297,232,828 $ 244,887,189
- ---------------------------------------------------------------------------- ----------------- -----------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
INDEPENDENCE ONE U.S. TREASURY MONEY MARKET FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
YEAR ENDED APRIL 30,
<S> <C> <C> <C> <C> <C> <C> <C>
1996 1995 1994 1993 1992 1991 1990(a)
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ----------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ----------------------------------------
Net investment income 0.05 0.04 0.03 0.03 0.05 0.07 0.08
- ----------------------------------------
LESS DISTRIBUTIONS
- ----------------------------------------
Distributions from net investment
income (0.05) (0.04) (0.03) (0.03) (0.05) (0.07) (0.08)
- ---------------------------------------- --------- --------- --------- --------- --------- --------- -----------
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ---------------------------------------- --------- --------- --------- --------- --------- --------- -----------
TOTAL RETURN (b) 5.28% 4.49% 2.63% 2.92% 4.81% 7.17% 7.83%
- ----------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ----------------------------------------
Expenses 0.60% 0.63% 0.61% 0.54% 0.57% 0.60% 0.35%*
- ----------------------------------------
Net investment income 5.14% 4.41% 2.60% 2.90% 4.55% 6.91% 8.17%*
- ----------------------------------------
Expense waiver/reimbursement (c) -- -- 0.00% 0.09% 0.12% 0.07% 0.32%*
- ----------------------------------------
SUPPLEMENTAL DATA
- ----------------------------------------
Net assets, end of period
(000 omitted) $297,233 $244,887 $215,832 $214,069 $224,803 $131,263 $82,947
- ----------------------------------------
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from June 1, 1989 (date of initial
public investment) to
April 30, 1990.
(b) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
INDEPENDENCE ONE MICHIGAN MUNICIPAL CASH FUND
PORTFOLIO OF INVESTMENTS
APRIL 30, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
<C> <S> <C> <C>
(a) SHORT-TERM MUNICIPALS--93.1% -----------------------------------------------------------
MICHIGAN--90.4%
---------------------------------------------------------------
$ 2,800,000 Ann Arbor, MI Public School District, GO UT Refunding Revenue
Bonds, 4.75% Bonds (Q-SBLF LOC), 5/1/1996 AA/aa $ 2,800,000
---------------------------------------------------------------
1,000,000 Delta County, MI Economic Development Corp., Environmental
Improvement Revenue Refunding Bonds (Series 1985 A), 3.00% CP
(Mead-Escanaba Paper Co. Project)/(Swiss Bank Corp., LOC),
Mandatory Tender 5/6/1996 Aa1,P-1/NR 1,000,000
---------------------------------------------------------------
1,100,000 Delta County, MI Economic Development Corp., Environmental
Improvement Revenue Refunding Bonds (Series 1985 A), 3.10% CP
(Mead-Escanaba Paper Co. Project)/(Swiss Bank Corp., Basle
LOC), Mandatory Tender 5/2/1996 Aa1,P-1/NR 1,100,000
---------------------------------------------------------------
2,560,000 Delta County, MI Economic Development Corp., Environmental
Improvement Revenue Refunding Bonds (Series 1985 B), 3.00% CP
(Mead-Escanaba Paper Co. Project)/(Union Bank of Switzerland,
Zurich LOC), Mandatory Tender 5/6/1996 Aaa,P-1/NR 2,560,000
---------------------------------------------------------------
2,040,000 Delta County, MI Economic Development Corp., Environmental
Improvement Revenue Refunding Bonds (Series 1985 B), 3.00% CP
(Mead-Escanaba Paper Co. Project)/(Union Bank of Switzerland,
Zurich LOC), Mandatory Tender 5/7/1996 Aaa,P-1/NR 2,040,000
---------------------------------------------------------------
1,000,000 Delta County, MI Economic Development Corp., Environmental
Improvement Revenue Refunding Bonds (Series 1985 B), 3.05% CP
(Mead-Escanaba Paper Co. Project)/(Union Bank of Switzerland,
Zurich LOC), Mandatory Tender 6/4/1996 Aaa,P-1/NR 1,000,000
---------------------------------------------------------------
</TABLE>
INDEPENDENCE ONE MICHIGAN MUNICIPAL CASH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
<C> <S> <C> <C>
(a) SHORT-TERM MUNICIPALS--CONTINUED
- -----------------------------------------------------------------------------
MICHIGAN--CONTINUED
---------------------------------------------------------------
$ 500,000 Delta County, MI Economic Development Corp., Environmental
Improvement Revenue Refunding Bonds (Series 1985 B), 3.05% CP
(Mead-Escanaba Paper Co. Project)/(Union Bank of Switzerland,
Zurich LOC), Mandatory Tender 6/5/1996 Aaa,P-1/NR $ 500,000
---------------------------------------------------------------
600,000 Delta County, MI Economic Development Corp., Environmental
Improvement Revenue Refunding Bonds (Series 1985 B), 3.20% CP
(Mead-Escanaba Paper Co. Project)/(Union Bank of Switzerland,
Zurich LOC), Mandatory Tender 6/13/1996 Aaa,P-1/NR 600,000
---------------------------------------------------------------
970,000 Farmington Hills, MI Economic Development Corp., Limited
Obligations Revenue Bonds, 3.40% TOBs (Marketing
Displays)/(Comerica Bank, Detroit, MI LOC) 9/1/1996 NR/NR 970,000
---------------------------------------------------------------
1,000,000 Grand Rapids, MI EDR Weekly VRDNs (Amway Hotel Corp.)/(Old Kent
Bank & Trust Co., Grand Rapids LOC) NR/NR 1,000,000
---------------------------------------------------------------
1,000,000 Grand Rapids, MI EDR Weekly VRDNs (Amway Hotel Corp.)/(Old Kent
Bank & Trust Co., Grand Rapids LOC) NR/NR 1,000,000
---------------------------------------------------------------
725,000 Grand Rapids, MI EDR Weekly VRDNs (140 Monroe Project)/(Old
Kent Bank & Trust Co., Grand Rapids LOC) NR/NR 725,000
---------------------------------------------------------------
1,000,000 Grand Rapids, MI EDR, (Series C) Weekly VRDNs (Calder)/(Old
Kent Bank & Trust Co., Grand Rapids LOC) NR/A,A-1 1,000,000
---------------------------------------------------------------
920,000 Grand Rapids, MI IDR Weekly VRDNs (Classic Die, Inc.)/(NBD
Bank, Michigan LOC) NR/NR 920,000
---------------------------------------------------------------
1,000,000 Kalamazoo, MI Economic Development Corp., 1995 Limited
Obligation Revenue Refunding Bonds Weekly VRDNs (Wyndham
Project, MI)/(First of America Bank--Illinois LOC) NR/A,A-1 1,000,000
---------------------------------------------------------------
</TABLE>
INDEPENDENCE ONE MICHIGAN MUNICIPAL CASH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
<C> <S> <C> <C>
(a) SHORT-TERM MUNICIPALS--CONTINUED
- -----------------------------------------------------------------------------
MICHIGAN--CONTINUED
---------------------------------------------------------------
$ 4,700,000 Michigan Higher Education Student Loan Authority, Refunding
Revenue Bonds (Series X11-B) Weekly VRDNs (AMBAC INS)/(Bank of
Tokyo LOC) VMIG1/A-1+ $ 4,700,000
---------------------------------------------------------------
2,000,000 Michigan Municipal Bond Authority, 4.50% RANs,
7/3/1996 NR/Sp-1+ 2,002,320
---------------------------------------------------------------
1,500,000 Michigan Municipal Bond Authority, Revenue Bonds (Series A),
5.00% Bonds, 5/3/1996 NR/SP-1+ 1,500,059
---------------------------------------------------------------
800,000 Michigan State Hospital Finance Authority, (Series 1994) Weekly
VRDNs (Mt. Clemens General Hospital)/(Comerica Bank, Detroit,
MI LOC) A1,VMIG1/NR 800,000
---------------------------------------------------------------
3,500,000 Michigan State Hospital Finance Authority, Hospital Equipment
Loan Program Bonds (Series A) VRNs (First of American Bank LOC) A1,VMIG1/NR 3,500,000
---------------------------------------------------------------
1,000,000 Michigan State Hospital Finance Authority, Refunding Revenue
Bonds (Series A), 4.00% Bonds (Henry Ford Health System, MI),
11/15/1996 AA/Aa 1,002,088
---------------------------------------------------------------
1,700,000 Michigan State Hospital Finance Authority, Revenue Bonds
(Series A) Weekly VRDNs (Hospital Equipment Loan
Program)/(First of America Bank-- Michigan LOC) A1,VMIG1/NR 1,700,000
---------------------------------------------------------------
900,000 Michigan State Hospital Finance Authority, Revenue Bonds
(Series A) Weekly VRDNs (Hospital Equipment Loan
Program)/(First of America Bank-- Michigan LOC) A1,VMIG1/NR 900,000
---------------------------------------------------------------
85,000 Michigan State Housing Development Authority, Refunding Revenue
Bonds (Series A), 4.10% TOBs (FHA/VA INS), Optional Tender
6/1/1996 NR/Aa 85,000
---------------------------------------------------------------
4,000,000 Michigan State Housing Development Authority, Rental Housing
Revenue Bonds (1994 Series C) Weekly VRDNs (Credit Suisse,
Zurich LOC) NR/AAA,A-1+ 4,000,000
---------------------------------------------------------------
</TABLE>
INDEPENDENCE ONE MICHIGAN MUNICIPAL CASH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
<C> <S> <C> <C>
(a) SHORT-TERM MUNICIPALS--CONTINUED
- -----------------------------------------------------------------------------
MICHIGAN--CONTINUED
---------------------------------------------------------------
$ 1,100,000 Michigan State Housing Development Authority, Revenue Bonds
(Series A), 3.50% CP (Sanwa Bank Ltd, Osaka LOC), Mandatory
Tender 5/6/1996 Aa1,P-1/AA,A- 1+ $ 1,100,000
---------------------------------------------------------------
860,000 Michigan State Strategic Fund, Limited Obligation Refunding
Revenue Bonds VRNs (Peachwood Center Association) NR/AA-,A-1+ 860,000
---------------------------------------------------------------
180,000 Michigan State Strategic Fund, Limited Obligation Revenue
Bonds, 4.00% TOBs (Joseph E. Gesmundo Trust)/(First of America
Bank--Michigan LOC), Optional Tender 5/15/1996 NR/NR 180,000
---------------------------------------------------------------
500,000 Michigan State Strategic Fund, PCR Bonds Weekly VRDNs (General
Motors Corp.) A3,VMIG1/A- 500,000
---------------------------------------------------------------
1,600,000 Michigan State Strategic Fund, PCR Bonds, 3.30% CP (Dow
Chemical Co.), Mandatory Tender 5/15/1996 A1,P-1/A,A-1 1,600,000
---------------------------------------------------------------
135,000 Michigan State Strategic Fund, Refunding Revenue Bonds (Series
A) Weekly VRDNs (Riverfront Development Co.) NR/NR 135,000
---------------------------------------------------------------
1,155,000 Michigan State Strategic Fund, Refunding Revenue Bonds (Series
B) Weekly VRDNs (Riverfront Development Co.) NR/NR 1,155,000
---------------------------------------------------------------
45,000 Michigan State Strategic Fund, Refunding Revenue Bonds (Series
C) Weekly VRDNs (Riverfront Development Co.) NR/NR 45,000
---------------------------------------------------------------
390,000 Michigan State Strategic Fund, Refunding Revenue Bonds (Series
D) Weekly VRDNs (Riverfront Development Co.) NR/NR 390,000
---------------------------------------------------------------
105,000 Michigan State Strategic Fund, Refunding Revenue Bonds (Series
E) Weekly VRDNs (Riverfront Development Co.) NR/NR 105,000
---------------------------------------------------------------
25,000 Michigan State Strategic Fund, Refunding Revenue Bonds (Series
F) Weekly VRDNs (Riverfront Development Co.) NR/NR 25,000
---------------------------------------------------------------
</TABLE>
INDEPENDENCE ONE MICHIGAN MUNICIPAL CASH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
<C> <S> <C> <C>
(a) SHORT-TERM MUNICIPALS--CONTINUED
- -----------------------------------------------------------------------------
MICHIGAN--CONTINUED
---------------------------------------------------------------
$ 2,000,000 Michigan State Strategic Fund, Refunding Revenue Bonds Weekly
VRDNs (Louisiana-Pacific Corp.)/ (Wachovia Bank & Trust Co.
LOC) NR/Aa2 $ 2,000,000
---------------------------------------------------------------
475,000 Michigan State Strategic Fund, Revenue Bonds (Series A) Weekly
VRDNs (Whitehall Industries)/ (Comerica Bank, Detroit, MI LOC) VMIG1/NR 475,000
---------------------------------------------------------------
325,000 Michigan State Strategic Fund, Revenue Bonds (Series A-5)
Weekly VRDNs (Sarbeth Investments)/ (Comerica Bank, Detroit, MI
LOC) VMIG1/NR 325,000
---------------------------------------------------------------
190,000 Michigan State Strategic Fund, Revenue Bonds (Series B) Weekly
VRDNs (Kay Screen Printing, Inc.)/ (Comerica Bank LOC) NR/NR 190,000
---------------------------------------------------------------
500,000 Michigan State Strategic Fund, Revenue Bonds (Series C-4)
Weekly VRDNs (Vail Rubber Project) (Comerica Bank, Detroit, MI
LOC) VMIG1/NR 500,000
---------------------------------------------------------------
1,200,000 Michigan State Strategic Fund, Revenue Bonds Weekly VRDNs
(Allen Group, Inc.)/(Dresdner Bank AG, Frankfurt LOC) AAA/Aaa 1,200,000
---------------------------------------------------------------
205,000 Michigan State Strategic Fund, Revenue Bonds Weekly VRDNs
(Starboard Industries) NR/NR 205,000
---------------------------------------------------------------
2,500,000 Michigan State Strategic Fund, Revenue Bonds Weekly VRDNs
(Waltec American Forgings) NR/NR 2,500,000
---------------------------------------------------------------
3,600,000 Michigan State Strategic Fund, Solid Waste Disposal Revenue
Bonds Weekly VRDNs (Grayling Generating)/(Barclays Bank, New
York LOC) Aa2,VMIG1/NR 3,600,000
---------------------------------------------------------------
2,000,000 Michigan State, GO UT Notes, 4.00% TRANs,
9/30/1996 SP-1+/MIG1 2,008,180
---------------------------------------------------------------
1,500,000 Michigan Strategic Fund, (Series 1995) Weekly VRDNs (Rood
Industries, Inc. Project)/(NBD Bank, Michigan LOC) NR/NR 1,500,000
---------------------------------------------------------------
1,500,000 Michigan Strategic Fund, 3.10% CP (Dow Chemical Co.), Mandatory
Tender 6/3/1996 A1,P-1/NR 1,500,000
---------------------------------------------------------------
</TABLE>
INDEPENDENCE ONE MICHIGAN MUNICIPAL CASH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
<C> <S> <C> <C>
(a) SHORT-TERM MUNICIPALS--CONTINUED
- -----------------------------------------------------------------------------
MICHIGAN--CONTINUED
---------------------------------------------------------------
$ 1,500,000 Michigan Strategic Fund, 3.10% CP (Dow Chemical Co.), Mandatory
Tender 6/5/1996 A1,P-1/NR $ 1,500,000
---------------------------------------------------------------
3,500,000 Michigan Strategic Fund, Limited Obligation Revenue Bonds
(Series 1995) Weekly VRDNs (United Waste Systems, Inc.)/(Bank
of America Illinois LOC) Aa3,VMIG1/ AA,A-1+ 3,500,000
---------------------------------------------------------------
990,000 Michigan Strategic Fund, Obligation Revenue Bonds (Series 1995)
Weekly VRDNs (Rowe Thomas Company Project)/(Comerica Bank,
Detroit, MI LOC) NR/NR 990,000
---------------------------------------------------------------
950,000 Michigan Strategic Fund, Obligation Revenue Bonds (Series 1995)
Weekly VRDNs (Wayne Disposal-Oakland, Inc. Project)/(Comerica
Bank, Detroit, MI LOC) NR/A 950,000
---------------------------------------------------------------
145,000 Oakland County, MI EDC, Limited Obligation Revenue Bonds, 4.00%
TOBs (Orchard-Maple Project)/(First of America Bank--Michigan
LOC), Optional Tender 5/15/1996 NR 145,000
--------------------------------------------------------------- -------------
Total 67,587,647
--------------------------------------------------------------- -------------
KANSAS--2.7%
---------------------------------------------------------------
2,000,000 Burlington, KS, PCR Bonds (Series A), 3.10% CP (Kansas City
Power And Light Co.)/(Toronto-
Dominion Bank LOC), Mandatory Tender 5/9/1996 NR/AA,A-1+ 2,000,000
--------------------------------------------------------------- -------------
TOTAL SHORT-TERM MUNICIPALS 69,587,647
--------------------------------------------------------------- -------------
</TABLE>
INDEPENDENCE ONE MICHIGAN MUNICIPAL CASH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C> <C>
MUTUAL FUNDS--3.5%
- --------------------------------------------------------------------------------------------------
166,000 Dreyfus Tax Exempt $ 166,000
------------------------------------------------------------------------------------
2,479,000 Nuveen Tax Exempt Money Market Fund 2,479,000
------------------------------------------------------------------------------------ -------------
TOTAL MUTUAL FUND SHARES (AT NET ASSET VALUE) 2,645,000
------------------------------------------------------------------------------------ -------------
TOTAL INVESTMENTS AT AMORTIZED COST AND VALUE(B) $ 72,232,647
------------------------------------------------------------------------------------ -------------
</TABLE>
(a) At April 30, 1996, 26.35% of the total investments at market value were
subject to alternative minimum tax.
(b) Also represents cost for federal tax purposes.
* Please refer to the Appendix of the Statement of Additional Information for
an explanation of the credit ratings. Current credit ratings are unaudited.
Note: The categories of investments are shown as a percentage of net assets
($74,712,235) at
April 30, 1996.
The following acronyms are used throughout this portfolio:
AMBAC--American Municipal Bond
Assurance Corporation
CP--Commercial Paper
EDC--Economic Development Commission
EDR--Economic Development Revenue
FHA/VA--Federal Housing Administration/
Veterans Administration
GO--General Obligation
IDA--Industrial Development Authority
IDR--Industrial Development Revenue
INS--Insured
LOC--Letter of Credit
PCR--Pollution Control Revenue
Q-SBLF--Qualified State Bond Loan Fund
RANs--Revenue Anticipation Notes
TOBs--Tender Option Bonds
TRANs--Tax and Revenue Anticipation Notes
UT--Unlimited Tax
VRDNs--Variable Rate Demand Notes
VRNs--Variable Rate Notes
(See Notes which are an integral part of the Financial Statements)
INDEPENDENCE ONE MICHIGAN MUNICIPAL CASH FUND
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- ---------------------------------------------------------------------------------------------------
Investments in securities, at amortized cost and value $ 72,232,647
- ---------------------------------------------------------------------------------------------------
Cash 923
- ---------------------------------------------------------------------------------------------------
Income receivable 541,899
- ---------------------------------------------------------------------------------------------------
Receivable for investments sold 2,000,000
- ---------------------------------------------------------------------------------------------------
Receivable for shares sold 1,225
- --------------------------------------------------------------------------------------------------- -------------
Total assets 74,776,694
- ---------------------------------------------------------------------------------------------------
LIABILITIES:
- ----------------------------------------------------------------------------------------
Payable for shares redeemed $ 10,545
- ----------------------------------------------------------------------------------------
Income distribution payable 22,139
- ----------------------------------------------------------------------------------------
Accrued expenses 31,775
- ---------------------------------------------------------------------------------------- ---------
Total liabilities 64,459
- --------------------------------------------------------------------------------------------------- -------------
NET ASSETS for 74,712,235 shares outstanding $ 74,712,235
- --------------------------------------------------------------------------------------------------- -------------
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE:
- ---------------------------------------------------------------------------------------------------
$74,712,235 / 74,712,235 shares outstanding $1.00
- --------------------------------------------------------------------------------------------------- -------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
INDEPENDENCE ONE MICHIGAN MUNICIPAL CASH FUND
STATEMENT OF OPERATIONS
YEAR ENDED APRIL 30, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
- ----------------------------------------------------------------------------------------------------
Interest $ 2,677,145
- ----------------------------------------------------------------------------------------------------
EXPENSES:
- ---------------------------------------------------------------------------------------
Investment advisory fee $ 288,247
- ---------------------------------------------------------------------------------------
Administrative personnel and services fee 85,696
- ---------------------------------------------------------------------------------------
Custodian fees 29,762
- ---------------------------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses 30,266
- ---------------------------------------------------------------------------------------
Directors'/Trustees' fees 4,612
- ---------------------------------------------------------------------------------------
Auditing fees 14,629
- ---------------------------------------------------------------------------------------
Legal fees 4,035
- ---------------------------------------------------------------------------------------
Portfolio accounting fees 38,769
- ---------------------------------------------------------------------------------------
Share registration costs 14,485
- ---------------------------------------------------------------------------------------
Printing and postage 9,656
- ---------------------------------------------------------------------------------------
Insurance premiums 5,333
- ---------------------------------------------------------------------------------------
Miscellaneous 2,882
- --------------------------------------------------------------------------------------- -----------
Total expenses 528,372
- ---------------------------------------------------------------------------------------
Waiver--
- ---------------------------------------------------------------------------------------
Waiver of investment advisory fee (144,124)
- --------------------------------------------------------------------------------------- -----------
Net expenses 384,248
- ---------------------------------------------------------------------------------------------------- ------------
Net investment income $ 2,292,897
- ---------------------------------------------------------------------------------------------------- ------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
INDEPENDENCE ONE MICHIGAN MUNICIPAL CASH FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
APRIL 30, 1996 APRIL 30, 1995
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- -----------------------------------------------------------------------------
OPERATIONS--
- -----------------------------------------------------------------------------
Net investment income $ 2,292,897 $ 1,741,700
- ----------------------------------------------------------------------------- ---------------- ----------------
DISTRIBUTIONS TO SHAREHOLDERS--
- -----------------------------------------------------------------------------
Distributions from net investment income (2,292,897) (1,741,700)
- ----------------------------------------------------------------------------- ---------------- ----------------
SHARE TRANSACTIONS--
- -----------------------------------------------------------------------------
Proceeds from sale of shares 497,552,563 397,857,305
- -----------------------------------------------------------------------------
Net asset value of shares issued to shareholders in payment of distributions
declared 1,800,093 1,275,765
- -----------------------------------------------------------------------------
Cost of shares redeemed (491,496,824) (387,290,113)
- ----------------------------------------------------------------------------- ---------------- ----------------
Change in net assets resulting from share transactions 7,855,832 11,842,957
- ----------------------------------------------------------------------------- ---------------- ----------------
Change in net assets 7,855,832 11,842,957
- -----------------------------------------------------------------------------
NET ASSETS:
- -----------------------------------------------------------------------------
Beginning of period 66,856,403 55,013,446
- ----------------------------------------------------------------------------- ---------------- ----------------
End of period $ 74,712,235 $ 66,856,403
- ----------------------------------------------------------------------------- ---------------- ----------------
</TABLE>
(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,
<S> <C> <C> <C> <C> <C> <C> <C>
1996 1995 1994 1993 1992 1991 1990(a)
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ----------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ----------------------------------------
Net investment income 0.03 0.03 0.02 0.02 0.04 0.05 0.05
- ----------------------------------------
LESS DISTRIBUTIONS
- ----------------------------------------
Distributions from net investment
income (0.03) (0.03) (0.02) (0.02) (0.04) (0.05) (0.05)
- ---------------------------------------- --------- --------- --------- --------- --------- --------- -----------
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ---------------------------------------- --------- --------- --------- --------- --------- --------- -----------
TOTAL RETURN (b) 3.24% 2.81% 1.98% 2.27% 3.68% 5.18% 5.14%
- ----------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ----------------------------------------
Expenses 0.53% 0.59% 0.50% 0.53% 0.50% 0.67% 0.44%*
- ----------------------------------------
Net investment income 3.18% 2.80% 1.96% 2.23% 3.51% 5.02% 5.70%*
- ----------------------------------------
Expense waiver/reimbursement (c) 0.20% 0.21% 0.22% 0.20% 0.39% 0.19% 0.39%*
- ----------------------------------------
SUPPLEMENTAL DATA
- ----------------------------------------
Net assets, end of period
(000 omitted) $74,712 $66,856 $55,013 $84,763 $71,745 $31,705 $28,921
- ----------------------------------------
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from June 14, 1989 (date of initial
public investment) to April 30, 1990.
(b) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
INDEPENDENCE ONE MONEY MARKET FUNDS
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 1996
- --------------------------------------------------------------------------------
(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 seven portfolios. The financial
statements of the following portfolios (individually referred to as the "Fund",
or collectively as the "Funds") are presented herein:
<TABLE>
<CAPTION>
PORTFOLIO NAME INVESTMENT OBJECTIVE
<S> <C>
Independence One Prime Money Market Fund ("Prime Money To provide current income consistent with
Market Fund") (d) stability of principal.
Independence One U.S. Treasury Money Market Fund ("U.S. To provide current income consistent with
Treasury Money Market Fund") (d) stability of principal.
Independence One Michigan Municipal Cash Fund ("Michigan To provide stability of income and
Municipal Cash Fund") (n) current income exempt from federal
regular income tax and Michigan state
income tax consistent with stability
of principal.
</TABLE>
(d) Diversified portfolio.
(n) Non-diversified portfolio.
The financial statements of the other portfolios are presented separately. The
assets of each portfolio are segregated and a shareholder's interest is limited
to the portfolio in which shares are held.
Effective May 1, 1995, Prime Money Market Fund's existing shares (Investment
Shares) were designated "Class A Shares" and a new class of shares was
designated "Class B Shares."
(2) SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Funds in the preparation of their financial statements. These
policies are in conformity with generally accepted accounting principles.
INVESTMENT VALUATIONS--The Funds' use of the amortized cost method to value
their portfolio securities is in accordance with Rule 2a-7 under the Act.
Investments in other open-end regulated investment companies are valued at
net asset value.
REPURCHASE AGREEMENTS--It is the policy of the Prime Money Market Fund and
the U.S. Treasury Money Market Fund to require the custodian bank to take
possession, to have legally
INDEPENDENCE ONE MONEY MARKET FUNDS
- --------------------------------------------------------------------------------
segregated in the Federal Reserve Book Entry System, or to have segregated
within the custodian bank's vault, all securities held as collateral under
repurchase agreement transactions. Additionally, procedures have been
established by the Funds to monitor, on a daily basis, the market value of
each repurchase agreement's collateral to ensure that the value of
collateral at least equals the repurchase price to be paid under the
repurchase agreement transaction.
The Prime Money Market Fund and the U.S. Treasury Money Market Fund will
only enter into repurchase agreements with banks and other recognized
financial institutions, such as broker/dealers, which are deemed by the
Funds' adviser to be creditworthy pursuant to the guidelines and/or
standards reviewed or established by the Board of Trustees (the
"Trustees"). Risks may arise from the potential inability of counterparties
to honor the terms of the repurchase agreement. Accordingly, the Funds
could receive less than the repurchase price on the sale of collateral
securities.
INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS--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.
FEDERAL TAXES--It is the Funds' policy to comply with the provisions of the
Code applicable to regulated investment companies and to distribute to
shareholders each year substantially all of their income. Accordingly, no
provisions for federal tax are necessary.
At April 30, 1996, the Michigan Municipal Cash Fund, for federal tax
purposes, had a capital loss carryforward of $8,153, which will reduce the
Funds 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 as follows:
<TABLE>
<CAPTION>
EXPIRATION YEAR EXPIRATION AMOUNT
<S> <C>
1998 $ 717
1999 4,003
2000 1,790
2003 1,643
</TABLE>
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Funds may engage in
when-issued or delayed delivery transactions. The Funds record when-issued
securities on the trade date and maintain 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.
USE OF ESTIMATES--The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts of assets, liabilities,
expenses and revenues reported in the financial statements. Actual results
could differ from those estimated.
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) for each
class of shares.
Transactions in shares were as follows:
<TABLE>
<CAPTION>
PRIME MONEY MARKET FUND
YEAR ENDED APRIL 30,
CLASS A SHARES 1996 1995
<S> <C> <C>
Shares sold 2,125,876,995 1,885,542,162
- -----------------------------------------------------------------------------
Shares issued to shareholders in payment of distributions declared 7,678,573 5,979,695
- -----------------------------------------------------------------------------
Shares redeemed (2,056,171,298) (1,968,503,461)
- ----------------------------------------------------------------------------- ---------------- ----------------
Net change resulting from Class A share transactions 77,384,270 (76,981,604)
- ----------------------------------------------------------------------------- ---------------- ----------------
<CAPTION>
PRIME MONEY MARKET FUND
YEAR ENDED APRIL 30,
CLASS B SHARES 1996* 1995
<S> <C> <C>
Shares sold 386,181,577 --
- -----------------------------------------------------------------------------
Shares issued to shareholders in payment of distributions declared 758,034 --
- -----------------------------------------------------------------------------
Shares redeemed (301,160,074) --
- ----------------------------------------------------------------------------- ---------------- ----------------
Net change resulting from Class B share transactions 85,779,537 --
- ----------------------------------------------------------------------------- ---------------- ----------------
Net change resulting from share transactions 163,163,807 (76,981,604)
- ----------------------------------------------------------------------------- ---------------- ----------------
</TABLE>
INDEPENDENCE ONE MONEY MARKET FUNDS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
U.S. TREASURY
MONEY MARKET FUND
YEAR ENDED APRIL 30,
1996 1995
<S> <C> <C>
Shares sold 2,423,363,168 1,859,720,057
- -----------------------------------------------------------------------------
Shares issued to shareholders in payment of distributions declared 8,401,826 5,250,905
- -----------------------------------------------------------------------------
Shares redeemed (2,379,419,355) (1,835,916,082)
- ----------------------------------------------------------------------------- ---------------- ----------------
Net change resulting from share transactions 52,345,639 29,054,880
- ----------------------------------------------------------------------------- ---------------- ----------------
<CAPTION>
MICHIGAN MUNICIPAL
CASH FUND
YEAR ENDED APRIL 30,
1996 1995
<S> <C> <C>
Shares sold 497,552,563 397,857,305
- -----------------------------------------------------------------------------
Shares issued to shareholders in payment of distributions declared 1,800,093 1,275,765
- -----------------------------------------------------------------------------
Shares redeemed (491,496,824) (387,290,113)
- ----------------------------------------------------------------------------- ---------------- ----------------
Net change resulting from share transactions 7,855,832 11,842,957
- ----------------------------------------------------------------------------- ---------------- ----------------
</TABLE>
*For the period from June 13, 1995 (date of initial public investment) to April
30, 1996.
At April 30, 1996, capital paid-in for Prime Money Market Fund, U.S. Treasury
Money Market Fund, and Michigan Municipal Cash Fund aggregated $396,770,655,
$297,232,828, and $74,712,235, respectively.
(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE--Michigan National Bank, the Funds' investment adviser
(the "Adviser") receives for its services an annual investment advisory fee
equal to 0.40% of each Fund's average daily net assets.
The Adviser may voluntarily choose to waive any portion of its fee. The Adviser
can modify or terminate this voluntary waiver at any time at its sole
discretion.
ADMINISTRATIVE FEE--Federated Administrative Services ("FAS") provides the Funds
with certain administrative personnel and services. The fee paid to FAS is based
on the level of average aggregate net assets of the Trust for the period.
INDEPENDENCE ONE MONEY MARKET FUNDS
- --------------------------------------------------------------------------------
SHAREHOLDER SERVICES FEE--Under the terms of a Shareholder Services Agreement
with Michigan National Bank, Prime Money Market Fund will pay Michigan National
Bank up to 0.25% of daily average net assets of the Class A Shares for the
period. The fee paid to Michigan National Bank is used to finance certain
services for shareholders and to maintain shareholder accounts.
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT FEES--Federated Services Company
("FServ"), through its subsidiary, Federated Shareholder Services Company
("FSSC"), serves as transfer and dividend disbursing agent for the Funds. The
fee paid to FSSC is based on the size, type, and number of accounts and
transactions made by shareholders.
PORTFOLIO ACCOUNTING FEES--FServ maintains the Funds' accounting records for
which it receives a fee. The fee is based on the level of each Fund's average
daily net assets for the period, plus out-of-pocket expenses.
CUSTODIAN FEES--Michigan National Bank is the Funds' custodian. The fee is based
on the level of each Fund's average daily net assets for the period, plus
out-of-pocket expenses.
GENERAL--Certain of the Officers of the Trust are Officers and/or Directors or
Trustees of the above companies.
(5) CONCENTRATION OF CREDIT RISK
Since Michigan Municipal Cash Fund invests a substantial portion of its assets
in issuers located in one state, it will be more susceptible to factors
adversely affecting issuers of that state than would be a comparable tax-exempt
mutual fund that invests nationally. In order to reduce the credit risk
associated with such factors, at April 30, 1996, 72.8% 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
value of investments insured by or supported (backed) by a letter of credit from
any one institution or agency did not exceed 9.0% of total investments.
REPORT OF KPMG PEAT MARWICK LLP,
INDEPENDENT AUDITORS
- --------------------------------------------------------------------------------
To the Board of Trustees and Shareholders
INDEPENDENCE ONE MUTUAL FUNDS:
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, for the Independence One Money Market Funds listed
below, as of April 30, 1996 and the related statement of operations, the changes
in net assets, and the financial highlights for each of the periods listed
below:
INDEPENDENCE ONE PRIME MONEY MARKET FUND--statement of operations for the
year ended April 30, 1996, the statement of changes in net assets for each
of the years in the two-year period then ended, and the financial highlights
for each of the years or period from June 1, 1989 (commencement of
operations) to April 30, 1996.
INDEPENDENCE ONE U.S. TREASURY MONEY MARKET FUND--statement of operations
for the year ended April 30, 1996, the statement of changes in net assets
for each of the years in the two-year period then ended, and the financial
highlights for each of the years or period from June 1, 1989 (commencement
of operations) to April 30, 1996.
INDEPENDENCE ONE MICHIGAN MUNICIPAL CASH FUND--statement of operations for
the year ended April 30, 1996, the statement of changes in net assets for
each of the years in the two-year period then ended, and the financial
highlights for each of the years or period from June 14, 1989 (commencement
of operations) to April 30, 1996.
These financial statements and financial highlights are the responsibility of
the Funds' management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned at April
30, 1996 by correspondence with the custodian. An audit also includes assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe that
our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Independence One Prime Money Market Fund, Independence One U.S. Treasury Money
Market Fund and Independence One Michigan Municipal Cash Fund as of April 30,
1996, and the results of their operations, changes in their net assets, and the
financial highlights for each of the periods listed above, in conformity with
generally accepted accounting principles.
KPMG PEAT MARWICK LLP
Pittsburgh, Pennsylvania
June 14, 1996
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
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.
INDEPENDENCE
ONE(Registration Mark)
MICHIGAN
MUNICIPAL
BOND FUND
ANNUAL REPORT
TO SHAREHOLDERS
APRIL 30, 1996
[LOGO OF MICHIGAN NATIONAL BANK]
[LOGO OF FEDERATED INVESTORS]
Federated Investors Tower
Pittsburgh, PA 15222-3779
Federated Securities Corp. is the distributor of the fund
and a subsidiary of Federated Investors.
Cusip 453777856 [LOGO] INDEPENDENCE ONE
G01200-09 (6/96) Mutual Funds
[RECYCLED LOGO]
PRESIDENT'S MESSAGE
- --------------------------------------------------------------------------------
Dear Investor:
I am pleased to present the annual report for Independence One Michigan
Municipal Bond Fund for the period from November 20, 1995 (date of initial
public investment) through April 30, 1996. Inside, you will find a discussion
with the Fund's portfolio manager, a complete list of Fund holdings, and the
financial statements.
As a shareholder, you are pursuing double-tax-free income* through a carefully
researched portfolio that consists primarily of high-quality securities issued
by municipalities across Michigan. These securities are used by the issuers to
finance a wide range of community development projects.
Since the Fund's inception, the performance of the Fund's portfolio was impacted
by rising interest rates in the first quarter of 1996 which caused bond prices
to fall. The Fund produced a total return of 1.21%** and paid $0.17 per share in
income dividends. Total net assets in the Fund at the end of the period stood at
$25.1 million.
Thank you for choosing Independence One Michigan Municipal Bond Fund to help you
to keep more of what you earn. We look forward to keeping you informed about
your investment progress through the highest quality service.
Sincerely,
/s/ Edward C. Gonzales
Edward C. Gonzales
President
June 15, 1996
* Income may be subject to the federal alternative minimum tax.
** Performance quoted reflects past performance. Investment return and principal
value will fluctuate so that an investor's shares, when redeemed, may be
worth more or less than their original cost.
MANAGEMENT DISCUSSION & ANALYSIS
- --------------------------------------------------------------------------------
Q
What was the state of the municipal bonds over the past year?
A
From April 1995 to the end of 1995, municipal bond yields generally fell.
The Lehman Brothers 7-Year General Obligations Bond Index* yield fell from
approximately 5.00% in May 1995, to 4.61% at the end of 1995. The yield on
this Index subsequently rose to 4.98% at the end of the current fiscal year
(April 30, 1996).
Q
In this environment, how did the Fund perform for shareholders during the
period ended April 30, 1996?
A
The inception date for the Fund was November 20, 1995. The Fund's initial
portfolio had an average maturity of approximately five years. Since the
price performance of shorter maturity bonds typically is better than longer
maturity bonds in a rising interest rate environment, the Fund was able to post
a positive total return of 1.21% for the period ended April 30, 1996** while the
Lehman Brothers 7-Year General Obligations Bond Index* had a total return of
0.00%. For the period from January 1, 1996 through April 30, 1996, the Fund's
total return was (.04%).
Q
What were your primary investment strategies for the Fund during the past
year?
A
There are three distinct strategies that the Fund's portfolio manager is
pursuing with regard to the Fund. First, an effort is being made to
purchase longer maturity securities for the Fund and thereby increase the
duration of the Fund. The yield curve for municipal bonds is currently
positively sloped. This means that longer term securities have higher yields,
which may in turn be passed through to Fund shareholders via higher dividends.
In addition, the prices of longer duration securities are more sensitive to
market interest rate changes and should enjoy greater price appreciation if
interest rates fall. A second strategy being undertaken is to increase the
average size of each individual portfolio holding and, consequently, to reduce
the number of issues held. This should reduce the recordkeeping expenses
incurred by the Fund. A third strategy objective is to reduce, and eventually
eliminate, the number of out-of-state security holdings of the Fund.
*The Lehman Brothers 7-year General Obligations Bond Index is an index of
general obligation bonds rated A or better with 6-8 years to maturity. This
index is unmanaged and investments cannot be made in an index.
**Performance quoted represents past performance. Investment return and
principal value will fluctuate so that an investor's shares, when redeemed, may
be worth more or less than their original cost.
- --------------------------------------------------------------------------------
Q
What progress has been made in pursuing these objectives over the reporting
period?
A
On November 20, 1995 (the inception date of the Fund), the Fund held 192
securities. Through maturities, sales and the exercise of various put and
call options, the number of holdings was reduced by 76 issues by the end of
the reporting period. Seventeen purchases were made, with the bulk of these in
the 2005-2009 maturity range. The number of out-of-state holdings was also
reduced and now stands at only 17 small positions.
Q
Have you made significant changes to portfolio composition or to credit
quality over the reporting period?
A
The net result of the trading activities during the reporting period was to
extend the average maturity and yield to maturity of the Fund. The credit
quality of the portfolio, as measured by the major bond rating agencies,
improved as well. While the credit rating of the typical bond purchased during
the reporting period was "AA", more often than not the issuer obtained a
supplemental insurance policy. The insurance company guarantees the repayment of
principal and interest in the unlikely event that the issuer defaults on its
obligation. The rating agencies recognized the improved credit of the insured
bonds purchased by the Fund by assigning them their highest rating, "AAA".
Independence One Michigan Municipal Bond Fund
- --------------------------------------------------------------------------------
GROWTH OF $10,000 INVESTED IN INDEPENDENCE ONE MICHIGAN MUNICIPAL BOND FUND
The graph below illustrates the hypothetical investment of $10,000 in
Independence One Michigan Municipal Bond Fund (the "Fund") from November 20,
1995 (start of performance) to April 30, 1996 compared to the Lehman Brothers
7-Year General Obligations Bond Index.+
GRAPHIC REPRESENTATION OMITTED. SEE APPENDIX A
CUMULATIVE TOTAL RETURN FOR THE PERIOD ENDED APRIL 30, 1996
Start of Performance (11/20/95) 1.21%
Past performance is not predictive of future performance. Your investment return
and principal value will fluctuate so when shares are redeemed, they may be
worth more or less than original cost. Mutual funds are not obligations of or
guaranteed by any bank and are not federally insured.
*The Fund's performance assumes the reinvestment of all dividends and
distributions. The Lehman Brothers 7-Year General Obligations Bond Index has
been adjusted to reflect reinvestment of dividends on securities in the index.
+The Lehman Brothers 7-Year General Obligations Bond Index is not adjusted to
reflect sales charges, expenses, or other fees that the Securities and Exchange
Commission requires to be reflected in the Fund's performance. This index is
unmanaged.
INDEPENDENCE ONE MICHIGAN MUNICIPAL BOND FUND
PORTFOLIO OF INVESTMENTS
APRIL 30, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
<C> <S> <C> <C>
- ------------ --------------------------------------------------------------- ------------------- -------------
LONG-TERM MUNICIPALS--96.8%
- -----------------------------------------------------------------------------
MICHIGAN--89.2%
---------------------------------------------------------------
$ 150,000 Alpena County, MI, Hospital Improvement GO UT Refunding Bonds,
5.05% (AMBAC INS)/(Original Issue Yield: 5.10%), 6/1/1999 AAA/Aaa $ 152,931
---------------------------------------------------------------
150,000 Alpena County, MI, Hospital Improvement GO UT Refunding Bonds,
5.50% (AMBAC INS)/(Original Issue Yield: 5.55%), 6/1/2002 AAA/Aaa 155,919
---------------------------------------------------------------
150,000 Ann Arbor, MI Water Supply System, Refunding Revenue Bonds
(Series S), 4.70%, 2/1/1997 A+/A1 151,103
---------------------------------------------------------------
100,000 Antrim County, MI, GO UT Bonds, 5.60% (AMBAC INS)/(Original
Issue Yield: 5.60%), 5/1/1999 AAA/Aaa 103,298
---------------------------------------------------------------
100,000 Auburn Hills, MI Local Development Financial Authority, Tax
Increment Revenue Bonds (Series A), 7.00% (Dai-Ichi Kangyo Bank
Ltd., Tokyo LOC)/
(Callable @ 102 5/1/1997), 11/1/2000 NR/A1 103,936
---------------------------------------------------------------
150,000 Battle Creek, MI Water Supply System, Refunding Revenue Bonds,
4.50% (AMBAC INS), 9/1/2002 AAA/Aaa 147,919
---------------------------------------------------------------
150,000 Bay City, MI School District, GO UT Bonds, 5.80% (Michigan
State GTD), 5/1/2001 AA/Aa 157,287
---------------------------------------------------------------
400,000 Beaverton, MI Rural Schools, GO UT Bonds, 4.70% (Michigan State
GTD)/(FGIC INS)/(Original Issue Yield: 4.75%)/(Callable @ 101
5/1/2004), 5/1/2008 NR/Aaa 369,404
---------------------------------------------------------------
150,000 Caledonia, MI Community Schools, GO UT Refunding Bonds, 5.75%
(Michigan State GTD),
5/1/2001 AA/Aa 156,983
---------------------------------------------------------------
100,000 Calhoun County, MI, UT GO (Series II), 6.60% (AMBAC INS),
7/1/2002 AAA/Aaa 103,936
---------------------------------------------------------------
150,000 Chippewa Valley, MI Schools, GO UT Refunding Bonds (Series A),
5.80% (Michigan State GTD),
5/1/2000 AA/Aa 156,573
---------------------------------------------------------------
</TABLE>
INDEPENDENCE ONE MICHIGAN MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
<C> <S> <C> <C>
- ------------ --------------------------------------------------------------- ------------------- -------------
LONG-TERM MUNICIPALS--CONTINUED
- -----------------------------------------------------------------------------
MICHIGAN--CONTINUED
---------------------------------------------------------------
$ 100,000 Chippewa Valley, MI Schools, GO UT Refunding Bonds (Series A),
6.10% (Michigan State GTD),
5/1/2002 AAA/Aaa $ 106,630
---------------------------------------------------------------
150,000 Clare County, MI, GO UT Refunding Bonds, 5.00% (Sewage Disposal
System No.3)/(AMBAC INS)/
(Original Issue Yield: 5.10%), 11/1/2003 AAA/Aaa 151,447
---------------------------------------------------------------
150,000 Clintondale, MI Community Schools, GO UT Refunding Bonds, 4.65%
(Michigan State GTD)/ (Original Issue Yield: 4.75%), 5/1/2003 AA/Aa 148,001
---------------------------------------------------------------
150,000 Coloma, MI Community School District, GO UT Bonds, 6.20%
(Michigan State GTD), 5/1/1999 AA/Aa 157,366
---------------------------------------------------------------
250,000 Dearborn, MI School District, GO UT Bonds, 5.00% (Michigan
State GTD)/(MBIA Insurance Corporation INS), 5/1/2004 AAA/Aaa 250,900
---------------------------------------------------------------
100,000 Detroit, MI City School District, GO UT Bonds (Series XXIII),
7.10% (Michigan State GTD), 5/1/1999 AA/Aa 106,836
---------------------------------------------------------------
150,000 Detroit, MI City School District, GO UT Bonds, 4.80% (Michigan
State GTD), 5/1/1997 AA/Aa 151,463
---------------------------------------------------------------
150,000 Detroit, MI City School District, GO UT Refunding Bonds, 4.70%
(Michigan State GTD)/(FSA INS)/
(Original Issue Yield: 4.80%), 5/1/2002 AAA/Aaa 148,609
---------------------------------------------------------------
500,000 East Detroit Michigan School District, GO UT Refunding Bonds,
6.50% (Michigan State GTD)/ (FGIC INS), 5/1/2006 AAA/Aaa 548,765
---------------------------------------------------------------
100,000 Farmington Hills, MI Hospital Finance Authority,
Hospital Refunding Revenue Bonds (Series A),
6.40% (Botsford General Hospital)/(MBIA Insurance
Corporation INS), 2/15/1998 AAA/Aaa 103,833
---------------------------------------------------------------
150,000 Gaylord, MI Community Schools, GO UT Refunding Bonds, 4.60%
(Michigan State GTD), 5/1/1996 AA/Aa 150,003
---------------------------------------------------------------
</TABLE>
INDEPENDENCE ONE MICHIGAN MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
<C> <S> <C> <C>
- ------------ --------------------------------------------------------------- ------------------- -------------
LONG-TERM MUNICIPALS--CONTINUED
- -----------------------------------------------------------------------------
MICHIGAN--CONTINUED
---------------------------------------------------------------
$ 100,000 Grand Haven, MI Area Public Schools, GO UT
Refunding Bonds, 5.35% (MBIA Insurance
Corporation INS), 5/1/2003 AAA/Aaa $ 102,969
---------------------------------------------------------------
175,000 Grand Haven, MI Area Public Schools, GO UT
Refunding Bonds, 5.50% (MBIA Insurance
Corporation INS)/(Original Issue Yield:
5.55%), 5/1/2005 AAA/Aaa 180,705
---------------------------------------------------------------
100,000 Grand Rapid & Kent County, MI Joint Building Authority, Revenue
Bonds, 6.40%/(Callable @ 102
10/1/1996), 10/1/1998 NR/Aa 102,842
---------------------------------------------------------------
150,000 Grand Rapids, MI Building Authority, Refunding & Improvement
Revenue Bonds, 4.70% (Original Issue Yield: 4.80%), 4/1/2000 A+/A1 150,981
---------------------------------------------------------------
150,000 Grand Rapids, MI Community College, GO LT Refunding Bonds,
3.70%, 5/1/1997 AA-/A1 149,898
---------------------------------------------------------------
100,000 Grandville, MI Public Schools District, GO UT Refunding Bonds
(Series II), 5.80% (Original Issue Yield: 6.00%), 5/1/1999 PRF
@ 100 NR/Aa 104,255
---------------------------------------------------------------
150,000 Grandville, MI Public Schools District, GO UT Refunding Bonds,
5.85% (FGIC INS)/(Original Issue Yield: 5.95%), 5/1/2004 AAA/Aaa 159,515
---------------------------------------------------------------
75,000 Grandville, MI Public Schools District, GO UT Refunding Bonds,
6.00% (FGIC INS)/(Original Issue Yield: 6.05%), 5/1/2005 AAA/Aaa 80,412
---------------------------------------------------------------
400,000 Greater Detroit Resource Recovery Authority, MI, Refunding
Revenue Bonds (Series A), 4.30% (AMBAC INS)/(Original Issue
Yield: 4.35%),
12/13/1998 AAA/Aaa 399,296
---------------------------------------------------------------
500,000 Greater Detroit Resource Recovery Authority, MI,
Refunding Revenue Bonds (Series A), 5.00%
(AMBAC INS), 12/13/2000 AAA/Aaa 506,965
---------------------------------------------------------------
</TABLE>
INDEPENDENCE ONE MICHIGAN MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
<C> <S> <C> <C>
- ------------ --------------------------------------------------------------- ------------------- -------------
LONG-TERM MUNICIPALS--CONTINUED
- -----------------------------------------------------------------------------
MICHIGAN--CONTINUED
---------------------------------------------------------------
$ 100,000 Grosse Pointe Farms, MI Water & Sewer, Revenue Bonds, 6.15%,
8/1/2001 NR $ 106,098
---------------------------------------------------------------
150,000 Hamilton, MI Community Schools District, GO UT Refunding Bonds,
5.75% (FGIC INS), 5/1/2003 AAA/Aaa 157,980
---------------------------------------------------------------
100,000 Holland, MI Electric, Revenue Bonds, 6.30%/(Callable @ 100
7/1/1999), 7/1/2000 AA-/Aa 105,203
---------------------------------------------------------------
100,000 Huntington Woods, MI, Refunding Bonds, 6.00% (MBIA Insurance
Corporation INS), 11/1/1998 AAA/Aaa 103,957
---------------------------------------------------------------
150,000 Kalamazoo, MI Building Authority, Refunding
Revenue Bonds, 5.05%, 4/1/2003 AA-/A1 151,257
---------------------------------------------------------------
100,000 Kalamazoo, MI, GO LT Bonds, 6.50%, 10/1/1997 AA-/A1 103,644
---------------------------------------------------------------
100,000 Lake Orion, MI School District, GO UT Refunding Bonds, 6.10%
(Michigan State GTD)/(AMBAC INS)/ (Original Issue Yield:
6.20%), 5/1/2003 AAA/Aaa 107,255
---------------------------------------------------------------
150,000 Lake Orion, MI School District, GO UT Refunding Bonds, 6.20%
(Michigan State GTD)/(AMBAC INS)/ (Original Issue Yield:
6.30%), 5/1/2004 AAA/Aaa 162,214
---------------------------------------------------------------
150,000 Lanse Creuse, MI Public Schools, GO UT Bonds, 7.10% (Michigan
State GTD), 5/1/1997 PRF @ 102 AA/NR 158,003
---------------------------------------------------------------
100,000 Lansing, MI Building Authority, Refunding Revenue Bonds, 6.10%
(Lansing, MI Building Authority LOC)/ (Escrowed to Maturity),
6/1/1998 NR/A1 103,783
---------------------------------------------------------------
100,000 Lansing, MI Community College, GO Bonds, 6.70%, 5/1/1996 AA/A1 100,008
---------------------------------------------------------------
150,000 Lansing, MI Tax Increment, GO LT Refunding Bonds,
5.00%/(Escrowed to Maturity), 10/1/1997 AA+/A1 152,259
---------------------------------------------------------------
150,000 Lansing, MI Tax Increment, GO LT Refunding Bonds,
6.00%/(Escrowed to Maturity), 10/1/2002 AA+/A1 159,624
---------------------------------------------------------------
100,000 Lapeer, MI, GO LT Refunding Bonds, 6.10% (AMBAC INS)/(Original
Issue Yield: 6.25%),
10/1/1999 AAA/Aaa 104,788
---------------------------------------------------------------
</TABLE>
INDEPENDENCE ONE MICHIGAN MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
<C> <S> <C> <C>
- ------------ --------------------------------------------------------------- ------------------- -------------
LONG-TERM MUNICIPALS--CONTINUED
- -----------------------------------------------------------------------------
MICHIGAN--CONTINUED
---------------------------------------------------------------
$ 100,000 Livonia, MI, GO UT Bonds, 6.10%, 3/1/2000 AA-/A1 $ 105,627
---------------------------------------------------------------
100,000 Macomb County, MI, Transportation Fund Revenue Bonds, 6.70%
(Original Issue Yield: 6.70%), 8/1/1998 AA-/A1 105,147
---------------------------------------------------------------
150,000 Michigan Municipal Bond Authority, GO LT
Revenue Bonds, 6.70% (Kent County Project--
Group 12A)/(Callable @ 102 5/1/1998), 11/1/1998 NR/Aa 158,620
---------------------------------------------------------------
1,000,000 Michigan Municipal Bond Authority, Revenue Bonds (Series B),
5.35% (Original Issue Yield: 5.45%)/
(Callable @ 102 4/1/1996), 10/1/2007 AA/Aa 1,000,550
---------------------------------------------------------------
400,000 Michigan Municipal Bond Authority, Revenue Bonds, 4.60% (AMBAC
INS), 11/1/2003 AAA/Aaa 392,712
---------------------------------------------------------------
150,000 Michigan Public Power Agency, Refunding Revenue Bonds (Series
A), 5.60% (Belle River Project, MI)/ (Original Issue Yield:
5.70%), 1/1/2002 AA-/A1 156,072
---------------------------------------------------------------
100,000 Michigan Public Power Agency, Revenue Bonds, 7.00% (Belle River
Project, MI), 1/1/1997 AA-/A1 102,156
---------------------------------------------------------------
100,000 Michigan State Building Authority, Refunding
Revenue Bonds (Series I), 5.80%, 10/1/1998 AA-/A1 103,433
---------------------------------------------------------------
150,000 Michigan State Building Authority, Refunding
Revenue Bonds (Series I), 6.40% (Original Issue
Yield: 6.50%)/(Callable @ 102 10/1/2001), 10/1/2004 AA-/A1 162,143
---------------------------------------------------------------
100,000 Michigan State Building Authority, Revenue Bonds (Series I),
5.50% (Original Issue Yield: 5.60%)/
(Callable @ 102 10/1/2002), 10/1/2004 AA-/A1 103,501
---------------------------------------------------------------
100,000 Michigan State Building Authority, Revenue Bonds (Series II),
6.00% (AMBAC INS)/(Original Issue Yield: 6.15%), 10/1/1998 AAA/Aaa 103,677
---------------------------------------------------------------
150,000 Michigan State Building Authority, Revenue Bonds (Series II),
6.60% (Lapeer Regional Prison)/(Escrowed to Maturity), 9/1/1996 AAA/A 151,471
---------------------------------------------------------------
</TABLE>
INDEPENDENCE ONE MICHIGAN MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
<C> <S> <C> <C>
- ------------ --------------------------------------------------------------- ------------------- -------------
LONG-TERM MUNICIPALS--CONTINUED
- -----------------------------------------------------------------------------
MICHIGAN--CONTINUED
---------------------------------------------------------------
$ 150,000 Michigan State Building Authority, Revenue Bonds, 6.20% (Grand
Rapids Center)/(BIG INS)/(Callable
@ 102 3/1/1997), 3/1/2001 AAA/Aaa $ 159,588
---------------------------------------------------------------
100,000 Michigan State Comprehensive Transportation Board, Refunding
Revenue Bonds (Series 1988-II), 6.40%, 11/1/1996 AA-/A1 101,379
---------------------------------------------------------------
150,000 Michigan State Comprehensive Transportation Board, Refunding
Revenue Bonds (Series B), 5.625% (Original Issue Yield: 5.70%),
5/15/2003 AA-/A1 157,181
---------------------------------------------------------------
150,000 Michigan State Comprehensive Transportation Board, Revenue
Bonds (Series A), 5.50% (Original Issue Yield: 5.60%),
5/15/2002 AA-/A1 156,124
---------------------------------------------------------------
100,000 Michigan State Comprehensive Transportation Board, Revenue
Refunding Bonds (Series B-II), 6.55%, 11/1/1997 AA-/A1 103,869
---------------------------------------------------------------
150,000 Michigan State Hospital Finance Authority,
Refunding Revenue Bonds (Series A), 4.90%
(Oakwood Hospital Obligated Group)/(FGIC INS)/
(Original Issue Yield: 5.05%), 11/1/2002 AAA/Aaa 149,835
---------------------------------------------------------------
100,000 Michigan State Hospital Finance Authority,
Refunding Revenue Bonds (Series G), 6.45%
(Sisters of Mercy Health System)/(FGIC INS),
7/1/1996 PRF @ 102 AAA/Aaa 102,463
---------------------------------------------------------------
460,000 Michigan State Hospital Finance Authority, Refunding Revenue
Bonds, 5.60% (Oakwood Hospital Obligated Group)/(FGIC
INS)/(Original Issue Yield: 5.70%), 5/1/1999 AAA/Aaa 473,542
---------------------------------------------------------------
100,000 Michigan State Hospital Finance Authority, Revenue Bonds, 6.45%
(Oakwood Hospital Obligated Group)/ (FGIC INS)/(Escrowed to
Maturity), 7/1/1997 AAA/Aaa 103,137
---------------------------------------------------------------
</TABLE>
INDEPENDENCE ONE MICHIGAN MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
<C> <S> <C> <C>
- ------------ --------------------------------------------------------------- ------------------- -------------
LONG-TERM MUNICIPALS--CONTINUED
- -----------------------------------------------------------------------------
MICHIGAN--CONTINUED
---------------------------------------------------------------
$ 100,000 Michigan State Hospital Finance Authority, Revenue Bonds, 6.65%
(Oakwood Hospital Obligated Group)/ (FGIC INS)/(Escrowed to
Maturity), 7/1/1999 AAA/Aaa $ 106,633
---------------------------------------------------------------
100,000 Michigan State Housing Development Authority,
Refunding Revenue Bonds (Series A), 6.40%
(FHA/VA INS), 6/1/2000 AA+/NR 103,056
---------------------------------------------------------------
100,000 Michigan State Housing Development Authority, Rental Housing
Revenue Bonds (Series B), 6.60% (HUD Section 8 LOC), 4/1/1997 A+/NR 101,446
---------------------------------------------------------------
135,000 Michigan State Strategic Fund, Limited Obligation Revenue Bonds
(Series A), 5.875% (Environmental Research Institute of
Michigan)/(Comerica Bank, Detroit, MI LOC), (Mandatory Put @
100), 6/1/1996 NR/A1 135,267
---------------------------------------------------------------
150,000 Michigan State Strategic Fund, Small Business Refunding Revenue
Bonds (Series A1-A2), 5.90% (SBA GTD), 10/1/2000 NR/Aaa 158,466
---------------------------------------------------------------
150,000 Michigan State Trunk Line, Revenue Bonds (Series A), 5.10%
(Original Issue Yield: 5.15%), 10/1/1999 AA-/A1 153,222
---------------------------------------------------------------
150,000 Michigan State University, Refunding Revenue Bonds (Series A),
5.40% (Original Issue Yield: 5.45%), 8/15/2001 AA-/Aa 154,432
---------------------------------------------------------------
100,000 Michigan State, GO UT Recreation Bonds, 3.80% (Original Issue
Yield: 3.85%), 11/1/1996 AA/Aa 100,115
---------------------------------------------------------------
400,000 Michigan State, GO UT Recreation Bonds, 5.50% (Original Issue
Yield: 5.55%), 11/1/1999 AA/Aa 415,124
---------------------------------------------------------------
150,000 Michigan State, GO UT Recreation Bonds, 6.00% (Original Issue
Yield: 6.10%)/(Callable @ 102
11/1/2002), 11/1/2004 AA/Aa 161,327
---------------------------------------------------------------
150,000 Midland, MI Water Supply System, Refunding
Revenue Bonds, 6.50%, 4/1/1999 A 158,346
---------------------------------------------------------------
</TABLE>
INDEPENDENCE ONE MICHIGAN MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
<C> <S> <C> <C>
- ------------ --------------------------------------------------------------- ------------------- -------------
LONG-TERM MUNICIPALS--CONTINUED
- -----------------------------------------------------------------------------
MICHIGAN--CONTINUED
---------------------------------------------------------------
$ 125,000 Napolean, MI School District, GO UT Refunding
Bonds, (Michigan State GTD)/(FGIC INS), 6.20%,
5/1/2005 AAA/Aaa $ 135,626
---------------------------------------------------------------
150,000 North Branch, MI Area Schools, GO UT Refunding Bonds, 4.90%
(Michigan State GTD), 5/1/1997 AA/A1 151,662
---------------------------------------------------------------
900,000 Northview Michigan Public School District,
GO UT Bonds, 5.05% (Michigan State GTD)/(MBIA
Insurance Corporation INS), 5/1/2005 AAA/Aaa 900,000
---------------------------------------------------------------
100,000 Novi, MI Community School District, GO UT Bonds, 6.375%,
5/1/2001 A/A1 107,529
---------------------------------------------------------------
90,000 Oakland County, MI Building Authority, GO LT Bonds, 6.70%,
5/1/1997 PRF @ 102 NR 94,426
---------------------------------------------------------------
150,000 Oakland County, MI Building Authority, Revenue Bonds, 5.30%
(West Wing Extensions), 9/1/2000 AA/A1 154,581
---------------------------------------------------------------
150,000 Oakland County, MI Pontiac Clinton River Drain
District No. 3, GO UT Refunding Bonds, 4.50%,
5/1/2002 AA-/Aa 147,868
---------------------------------------------------------------
100,000 Oakland County, MI, GO LT Bonds, 6.80%/(Callable @ 102
5/1/1997), 5/1/1999 AA/A1 104,192
---------------------------------------------------------------
100,000 Oakland County, MI, GO UT Bonds, 6.00%
(Waterford Extensions Phase V)/(Callable @ 103
5/1/1996), 5/1/1997 AA/Aa 102,230
---------------------------------------------------------------
100,000 Ottawa County, MI, GO LT Bonds, 6.90%, 4/1/1998 AA-/A1 104,750
---------------------------------------------------------------
150,000 Ottawa County, MI, GO LT Refunding Bonds, 6.00% (Holland
Township 1985 Extension), 8/1/1997 AA-/A1 153,813
---------------------------------------------------------------
1,000,000 Oxford, MI Area Community Schools, GO UT Bonds, 4.95% (Michigan
State GTD)/(FGIC INS), 5/1/2007 AAA/Aaa 970,690
---------------------------------------------------------------
100,000 Portage, MI, GO LT City Share Bonds, 5.90%/
(Callable @ 101.50 12/1/2002), 12/1/2003 AA-/NR 106,548
---------------------------------------------------------------
350,000 Reeths Puffer Schools, GO UT Refunding Bonds, 4.90% (Michigan
State GTD)/(FGIC INS), 5/1/2003 AAA/Aaa 351,131
---------------------------------------------------------------
</TABLE>
INDEPENDENCE ONE MICHIGAN MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
<C> <S> <C> <C>
- ------------ --------------------------------------------------------------- ------------------- -------------
LONG-TERM MUNICIPALS--CONTINUED
- -----------------------------------------------------------------------------
MICHIGAN--CONTINUED
---------------------------------------------------------------
$ 150,000 Rochester Hills, MI, GO UT Refunding Bonds, 5.20%/(Callable @
101.50 11/1/2001), 11/1/2003 A+/Aa $ 153,316
---------------------------------------------------------------
100,000 Rochester, MI Community School District, GO UT
Refunding Bonds, 5.25% (Michigan State GTD),
5/1/1996 AA/A1 100,004
---------------------------------------------------------------
150,000 Rockford, MI Public Schools, GO UT Bonds, 5.30% (Michigan State
GTD)/(Original Issue Yield: 5.35%), 5/1/2002 AA/Aa 153,401
---------------------------------------------------------------
150,000 Rockford, MI Public Schools, GO UT Refunding Bonds, 4.45%
(Michigan State GTD), 5/1/1996 AA/Aa 150,003
---------------------------------------------------------------
50,000 Shelby Township, MI, Special Assessment Bonds, 6.30%, 10/1/1999 NR/A 52,804
---------------------------------------------------------------
50,000 Shelby Township, MI, Special Assessment Bonds, 6.40%, 10/1/2000 NR/A 53,457
---------------------------------------------------------------
75,000 Shelby Township, MI, Special Assessment Bonds, 6.50%, 10/1/2000 NR/A 81,166
---------------------------------------------------------------
100,000 South Haven, MI Public Schools, GO UT Bonds, 6.30% (MBIA
Insurance Corporation INS), 5/1/2001 AAA/Aaa 106,981
---------------------------------------------------------------
100,000 South Lake, MI Schools, GO UT Bonds, 6.50%
(Michigan State GTD), 5/1/2000 NR/Aa 107,006
---------------------------------------------------------------
400,000 St. Clair County, MI, GO LT Water Supply System
Bonds, 5.00% (Burtchville)/(MBIA Insurance
Corporation INS)/(Original Issue Yield: 5.10%)/
(Callable @ 101 11/1/2004), 11/1/2009 AAA/Aaa 382,768
---------------------------------------------------------------
150,000 St. Clair Shores, MI, Revenue Bonds, 6.00%
(Michigan Transportation Fund)/(Callable @ 102
4/1/1999), 4/1/2000 AA-/NR 157,419
---------------------------------------------------------------
500,000 Three Rivers Michigan Community Schools,
GO UT Bonds, 5.40% (Michigan State GTD)/
(MBIA Insurance Corporation INS)/
(Callable @ 101 5/1/2006), 5/1/2008 AAA/Aaa 501,885
---------------------------------------------------------------
</TABLE>
INDEPENDENCE ONE MICHIGAN MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
<C> <S> <C> <C>
- ------------ --------------------------------------------------------------- ------------------- -------------
LONG-TERM MUNICIPALS--CONTINUED
- -----------------------------------------------------------------------------
MICHIGAN--CONTINUED
---------------------------------------------------------------
$ 150,000 University of Michigan, Refunding Revenue Bonds
(Series A), 4.65% (Original Issue Yield: 4.75%),
6/1/2002 AA/Aa1 $ 149,374
---------------------------------------------------------------
100,000 Warren, MI, GO LT Bonds, 5.70% (Michigan
Transportation Fund), 6/1/2000 AA-/NR 103,636
---------------------------------------------------------------
500,000 Washtenaw Community College, MI, GO UT Refunding Bonds, 4.50%,
4/1/2001 AAA/Aaa 497,695
---------------------------------------------------------------
100,000 Washtenaw County, MI Building Authority, Revenue Bonds (Series
1), 6.60%, 4/1/1998 AA-/NR 104,236
---------------------------------------------------------------
60,000 Washtenaw County, MI, GO LT Bonds (Series 1), 6.80% (Sewer
Disposal System No. 12)/(Callable
@ 101 7/1/1999), 7/1/2000 AA-/NR 64,328
---------------------------------------------------------------
100,000 Washtenaw County, MI, GO LT Bonds (Series 1), 6.85% (Sewer
Disposal System No. 12)/(Callable
@ 101 7/1/1999), 7/1/2001 AA-/NR 107,004
---------------------------------------------------------------
100,000 Wayland, MI University School District, GO UT Bonds, 5.65%
(Michigan State GTD)/(FGIC INS)/ (Original Issue Yield: 5.75%),
5/1/2003 AAA/Aaa 104,732
---------------------------------------------------------------
100,000 Wayne Charter County, MI Airport Authority,
Revenue Bonds (Series A), 6.00% (Detroit
Metropolitan Airport)/(MBIA Insurance
Corporation INS), 12/1/1997 AAA/Aaa 103,110
---------------------------------------------------------------
100,000 Wayne County, MI Community College, GO UT Refunding Bonds,
6.15% (FGIC INS)/(Callable @ 102 10/1/1996), 4/1/1999 AAA/Aaa 102,642
---------------------------------------------------------------
150,000 Wayne County, MI Southgate-Wyandotte Relief Drain District, GO
UT Refunding Bonds, 4.90% (AMBAC INS)/(Original Issue Yield:
5.00%), 5/1/1998 AAA/Aaa 151,867
---------------------------------------------------------------
50,000 West Ottawa, MI Public School District, GO UT Bonds, 6.40%
(MBIA Insurance Corporation INS)/ (Escrowed to Maturity),
5/1/1997 AAA/Aaa 51,365
---------------------------------------------------------------
</TABLE>
INDEPENDENCE ONE MICHIGAN MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
<C> <S> <C> <C>
- ------------ --------------------------------------------------------------- ------------------- -------------
LONG-TERM MUNICIPALS--CONTINUED
- -----------------------------------------------------------------------------
MICHIGAN--CONTINUED
---------------------------------------------------------------
$ 100,000 West Ottawa, MI Public School District, GO UT
Bonds, 6.60% (MBIA Insurance Corporation INS),
5/1/1999 AAA/Aaa $ 106,053
---------------------------------------------------------------
120,000 Western Michigan University, Revenue Bonds, 5.20% (FGIC
INS)/(Original Issue Yield: 5.25%), 11/15/2000 AAA/Aaa 123,240
---------------------------------------------------------------
440,000 Western School District, MI, GO UT Refunding
Bonds, 5.50%, (MBIA Insurance Corporation INS),
5/1/2002 AAA/Aaa 457,644
---------------------------------------------------------------
750,000 Williamston, MI Community School District,
GO UT Bonds, 4.80% (Michigan State GTD)/(MBIA
Insurance Corporation INS), 5/1/2004 AAA/Aaa 742,005
---------------------------------------------------------------
500,000 Wixon, MI, UT GO Bonds, 4.70% (AMBAC INS)/ (Original Issue
Yield: 4.85%), 5/1/2009 AAA/Aaa 452,595
--------------------------------------------------------------- -------------
Total 22,403,496
--------------------------------------------------------------- -------------
WISCONSIN--1.8%
---------------------------------------------------------------
150,000 Milwaukee County, WI, GO UT Refunding Bonds (Series A), 4.60%,
9/1/1996 AA-/A1 150,467
---------------------------------------------------------------
100,000 Milwaukee, WI, GO UT Public Improvement Bonds (Series BU),
6.60%, 6/1/1996 AA+/Aa1 100,244
---------------------------------------------------------------
100,000 Wisconsin Housing & Economic Development Authority, Refunding
Revenue Bonds (Series 1), 6.40%, 4/1/1998 AA/Aa 102,182
---------------------------------------------------------------
100,000 Wisconsin Public Power System, Revenue Bonds (Series A), 6.20%
(AMBAC INS), 7/1/1998 AAA/Aaa 103,867
--------------------------------------------------------------- -------------
Total 456,760
--------------------------------------------------------------- -------------
INDIANA--1.0%
---------------------------------------------------------------
100,000 Indianapolis, IN Gas Utilities District, Revenue Bonds (Series
A), 6.50% (FGIC INS), 6/1/1996 AAA/Aaa 100,246
---------------------------------------------------------------
</TABLE>
INDEPENDENCE ONE MICHIGAN MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
<C> <S> <C> <C>
- ------------ --------------------------------------------------------------- ------------------- -------------
LONG-TERM MUNICIPALS--CONTINUED
- -----------------------------------------------------------------------------
INDIANA--CONTINUED
---------------------------------------------------------------
$ 150,000 Indianapolis, IN Local Public Improvement, Revenue Bonds
(Series B), 4.70%, 1/10/1997 AA/Aa $ 151,058
--------------------------------------------------------------- -------------
Total 251,304
--------------------------------------------------------------- -------------
ILLINOIS--0.8%
---------------------------------------------------------------
100,000 Illinois State University, Certificate Partnership Bonds, 6.00%
(Original Issue Yield: 6.10%), 1/1/1997 NR/A 101,476
---------------------------------------------------------------
100,000 Illinois State University, Certificates Partnership Bonds,
6.50% (Original Issue Yield: 6.60%), 1/1/2000 NR/A 104,725
--------------------------------------------------------------- -------------
Total 206,201
--------------------------------------------------------------- -------------
TENNESSEE--0.6%
---------------------------------------------------------------
150,000 Murfreesboro, TN, Water & Sewer Refunding
Revenue Bonds, 6.00% (MBIA Insurance
Corporation INS), 5/1/1997 AAA/Aaa 153,345
--------------------------------------------------------------- -------------
TEXAS--0.6%
---------------------------------------------------------------
150,000 Harris County, TX, Certificates Obligation GO UT Bonds, 5.00%,
12/15/1998 AA-/Aa 152,891
--------------------------------------------------------------- -------------
ARIZONA--0.4%
---------------------------------------------------------------
100,000 Maricopa County, AZ University School District No. 001, GO UT
Improvement Bonds, 6.70%, 7/1/1996 PRF @ 101 AA/A1 101,503
--------------------------------------------------------------- -------------
GEORGIA--0.4%
---------------------------------------------------------------
100,000 Georgia State, GO UT Refunding Bonds, 6.70%,
9/1/1996 AA+/Aaa 101,035
--------------------------------------------------------------- -------------
IOWA--0.4%
---------------------------------------------------------------
100,000 Iowa Student Loan Liquidity Corp., Student Loan Revenue Bonds
(Series C), 6.50% (AMBAC INS)/ (Original Issue Yield: 6.55%),
12/1/1999 AAA/Aaa 105,366
--------------------------------------------------------------- -------------
</TABLE>
INDEPENDENCE ONE MICHIGAN MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT CREDIT
OR SHARES RATING* VALUE
<C> <S> <C> <C>
- ------------ --------------------------------------------------------------- ------------------- -------------
LONG-TERM MUNICIPALS--CONTINUED
- -----------------------------------------------------------------------------
NEVADA--0.4%
---------------------------------------------------------------
$ 100,000 Las Vegas-Clark County, NV Library District,
GO LT Refunding Bonds (Series B), 6.20% (FGIC
INS)/(Original Issue Yield: 6.25%), 8/1/1999 AAA/Aaa $ 104,867
--------------------------------------------------------------- -------------
NEW MEXICO--0.4%
---------------------------------------------------------------
90,000 New Mexico Mortgage Finance Authority, SFM
Revenue Bonds (Series A-1), 6.75% (FHA/VA INS),
9/1/1996 A+/NR 90,748
--------------------------------------------------------------- -------------
VERMONT--0.4%
---------------------------------------------------------------
100,000 Vermont State Student Assistance Corp., Educational Loan
Refunding Revenue Bonds (Series A), 6.00% (AMBAC INS),
12/15/1996 AAA/Aaa 101,361
--------------------------------------------------------------- -------------
VIRGIN ISLANDS--0.4%
---------------------------------------------------------------
100,000 Virgin Islands Public Finance Authority, Revenue
Bonds (Series B), 6.80%/(Escrowed to Maturity),
10/1/1997 AAA/Aaa 104,144
--------------------------------------------------------------- -------------
TOTAL LONG-TERM MUNICIPALS
(IDENTIFIED COST $24,452,180) 24,333,021
--------------------------------------------------------------- -------------
SHORT-TERM MUNICIPAL--2.0%
- -----------------------------------------------------------------------------
500,000 Michigan State Hospital Finance Authority, Hospital Equipment
Loan Program Bonds (Series A) VRNs (First of American Bank LOC) NR/A1 500,000
--------------------------------------------------------------- -------------
MUTUAL FUND--11.5%
- -----------------------------------------------------------------------------
2,895,000 Goldman Sachs Tax Exempt Fund (at net asset value) 2,895,000
--------------------------------------------------------------- -------------
TOTAL INVESTMENTS (IDENTIFIED COST $27,847,180) (a) $ 27,728,021
--------------------------------------------------------------- -------------
</TABLE>
(a) The cost of investments for federal tax purposes amounts to $27,847,180.
The net unrealized depreciation of investments on a federal tax basis
amounts to $119,159 which is comprised of $53,085 appreciation and $172,244
depreciation at April 30, 1996.
* Please refer to the Appendix of the Statement of Additional Information for
an explanation of the credit ratings. Current credit ratings are unaudited.
Note: The categories of investments are shown as a percentage of net assets
($25,123,262) at April 30, 1996.
INDEPENDENCE ONE MICHIGAN MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
The following acronyms are used throughout this portfolio:
AMBAC--American Municipal Bond
Assurance Corporation
BIG--Bond Investors Guaranty
FGIC--Financial Guaranty Insurance Company
FHA/VA--Federal Housing Administration/
Veterans Administration
FSA--Financial Security Assurance
GO--General Obligation
GTD--Guaranty
HUD--Housing Urban Development
INS--Insured
LOC--Letter of Credit
LT--Limited Tax
MBIA--Municipal Bond Investors Assurance
PRF--Prerefunded
SBA--Small Business Association
SFM--Single Family Mortgage
UT--Unlimited Tax
VRNs--Variable Rate Notes
(See Notes which are an integral part of the Financial Statements)
INDEPENDENCE ONE MICHIGAN MUNICIPAL BOND FUND
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- ---------------------------------------------------------------------------------------------------
Total investments in securities, at value (identified and tax cost $27,847,180) $ 27,728,021
- ---------------------------------------------------------------------------------------------------
Cash 18,021
- ---------------------------------------------------------------------------------------------------
Income receivable 404,586
- ---------------------------------------------------------------------------------------------------
Deferred expenses 6,464
- --------------------------------------------------------------------------------------------------- -------------
Total assets 28,157,092
- ---------------------------------------------------------------------------------------------------
LIABILITIES:
- -------------------------------------------------------------------------------------
Payable for investments purchased $ 2,937,025
- -------------------------------------------------------------------------------------
Income distribution payable 76,401
- -------------------------------------------------------------------------------------
Accrued expenses 20,404
- ------------------------------------------------------------------------------------- ------------
Total liabilities 3,033,830
- --------------------------------------------------------------------------------------------------- -------------
NET ASSETS for 2,525,059 shares outstanding $ 25,123,262
- --------------------------------------------------------------------------------------------------- -------------
NET ASSETS CONSIST OF:
- ---------------------------------------------------------------------------------------------------
Paid in capital $ 25,239,688
- ---------------------------------------------------------------------------------------------------
Net unrealized depreciation of investments (119,159)
- ---------------------------------------------------------------------------------------------------
Accumulated net realized gain on investments 2,733
- --------------------------------------------------------------------------------------------------- -------------
Total Net Assets $ 25,123,262
- --------------------------------------------------------------------------------------------------- -------------
NET ASSET VALUE, Offering Price and Redemption Proceeds Per Share:
- ---------------------------------------------------------------------------------------------------
$25,123,262 / 2,525,059 shares outstanding $9.95
- --------------------------------------------------------------------------------------------------- -------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
INDEPENDENCE ONE MICHIGAN MUNICIPAL BOND FUND
STATEMENT OF OPERATIONS
FOR THE PERIOD FROM NOVEMBER 20, 1995 (DATE OF INITIAL PUBLIC INVESTMENT)
TO APRIL 30, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
- ----------------------------------------------------------------------------------------------------
Interest $ 509,687
- ----------------------------------------------------------------------------------------------------
EXPENSES:
- ----------------------------------------------------------------------------------------
Investment advisory fee $ 86,756
- ----------------------------------------------------------------------------------------
Administrative personnel and services fee 12,868
- ----------------------------------------------------------------------------------------
Custodian fees 7,356
- ----------------------------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses 6,164
- ----------------------------------------------------------------------------------------
Legal fees 285
- ----------------------------------------------------------------------------------------
Portfolio accounting fees 36,643
- ----------------------------------------------------------------------------------------
Printing and postage 110
- ----------------------------------------------------------------------------------------
Insurance premiums 2,605
- ----------------------------------------------------------------------------------------
Miscellaneous 1,209
- ---------------------------------------------------------------------------------------- ----------
Total expenses 153,996
- ----------------------------------------------------------------------------------------
Waivers--
- -----------------------------------------------------------------------------
Waiver of investment advisory fee ($ 57,837)
- -----------------------------------------------------------------------------
Waiver of administrative personnel and services fee (12,468)
- -----------------------------------------------------------------------------
Waiver of portfolio accounting fees (17,588)
- ----------------------------------------------------------------------------- ---------
Total waivers (87,893)
- ---------------------------------------------------------------------------------------- ----------
Net expenses 66,103
- ---------------------------------------------------------------------------------------------------- -----------
Net investment income 443,584
- ---------------------------------------------------------------------------------------------------- -----------
REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS:
- ----------------------------------------------------------------------------------------------------
Net realized gain on investments 2,733
- ----------------------------------------------------------------------------------------------------
Net change in unrealized depreciation of investments (119,159)
- ---------------------------------------------------------------------------------------------------- -----------
Net realized and unrealized loss on investments (116,426)
- ---------------------------------------------------------------------------------------------------- -----------
Change in net assets resulting from operations $ 327,158
- ---------------------------------------------------------------------------------------------------- -----------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
INDEPENDENCE ONE MICHIGAN MUNICIPAL BOND FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERIOD ENDED
APRIL 30, 1996*
<S> <C>
INCREASE (DECREASE) IN NET ASSETS:
- ----------------------------------------------------------------------------------------------
OPERATIONS--
- ----------------------------------------------------------------------------------------------
Net investment income $ 443,584
- ----------------------------------------------------------------------------------------------
Net realized gain on investments ($2,733 net gain,
as computed for federal tax purposes) 2,733
- ----------------------------------------------------------------------------------------------
Net change in unrealized depreciation (119,159)
- ---------------------------------------------------------------------------------------------- ------------------
Change in net assets resulting from operations 327,158
- ---------------------------------------------------------------------------------------------- ------------------
DISTRIBUTIONS TO SHAREHOLDERS--
- ----------------------------------------------------------------------------------------------
Distributions from net investment income (443,584)
- ---------------------------------------------------------------------------------------------- ------------------
SHARE TRANSACTIONS--
- ----------------------------------------------------------------------------------------------
Proceeds from sale of shares 28,064,937
- ----------------------------------------------------------------------------------------------
Cost of shares redeemed (2,825,249)
- ---------------------------------------------------------------------------------------------- ------------------
Change in net assets resulting from share transactions 25,239,688
- ---------------------------------------------------------------------------------------------- ------------------
Change in net assets 25,123,262
- ----------------------------------------------------------------------------------------------
NET ASSETS:
- ----------------------------------------------------------------------------------------------
Beginning of period 0
- ---------------------------------------------------------------------------------------------- ------------------
End of period $ 25,123,262
- ---------------------------------------------------------------------------------------------- ------------------
</TABLE>
*For the period from November 20, 1995 (date of initial public investment) to
April 30, 1996.
(See Notes which are an integral part of the Financial Statements)
INDEPENDENCE ONE MICHIGAN MUNICIPAL BOND FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
<TABLE>
<CAPTION>
YEAR ENDED
APRIL 30, 1996(a)
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $10.00
- ---------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ---------------------------------------------------------------------------------------------
Net investment income 0.17
- ---------------------------------------------------------------------------------------------
Net realized and unrealized loss on investments (0.05)
- --------------------------------------------------------------------------------------------- -------
Total from investment operations 0.12
- --------------------------------------------------------------------------------------------- -------
LESS DISTRIBUTIONS
- ---------------------------------------------------------------------------------------------
Distributions from net investment income (0.17)
- --------------------------------------------------------------------------------------------- -------
NET ASSET VALUE, END OF PERIOD $ 9.95
- --------------------------------------------------------------------------------------------- -------
TOTAL RETURN (B) 1.21 %
- ---------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ---------------------------------------------------------------------------------------------
Expenses 0.57 %*
- ---------------------------------------------------------------------------------------------
Net investment income 3.83 %*
- ---------------------------------------------------------------------------------------------
Expense waiver/reimbursement (c) 0.76 %*
- ---------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
- ---------------------------------------------------------------------------------------------
Net assets, end of period (000 omitted) $25,123
- ---------------------------------------------------------------------------------------------
Portfolio turnover 39 %
- ---------------------------------------------------------------------------------------------
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from November 20, 1995 (date of initial
public investment) to April 30, 1996.
(b) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
INDEPENDENCE ONE MICHIGAN MUNICIPAL BOND FUND
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 1996
- --------------------------------------------------------------------------------
(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 seven portfolios. The financial
statements included herein are only those of Independence One Michigan Municipal
Bond Fund (the "Fund"), a non-diversified portfolio. The investment objective of
the Fund is to provide current income which is exempt from federal regular
income tax and the personal income taxes imposed by the State of Michigan and
Michigan municipalities. 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 Trust in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles.
INVESTMENT VALUATIONS--Municipal bonds are valued by an independent pricing
service, taking into consideration yield, liquidity, risk, credit quality,
coupon, maturity, type of issue, and any other factors or market data the
pricing service deems relevant. Short-term securities are valued at the
prices provided by an independent pricing service. However, short-term
securities with remaining maturities of sixty days or less at the time of
purchase may be valued at amortized cost, which approximates fair market
value. Investments in other open-end regulated investment companies are
valued at net asset value.
INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS--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.
FEDERAL TAXES--It is the Fund's policy to comply with the provisions of the
Code applicable to regulated investment companies and to distribute to
shareholders each year substantially all of its income. Accordingly, no
provisions for federal tax are necessary.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Fund may engage in
when-issued or delayed delivery transactions. The Fund records when-issued
securities on the trade date and maintains security positions such that
sufficient liquid assets will be available to make payment for the
securities purchased. Securities purchased on a when-issued or delayed
delivery basis are marked to market daily and begin earning interest on the
settlement date.
23
INDEPENDENCE ONE MICHIGAN MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
DEFERRED EXPENSES--The costs incurred by the Fund with respect to
registration of its shares in its first fiscal year, excluding the initial
expense of registering its shares, have been deferred and are being
amortized using the straight-line method over a period of five years from
the Fund's commencement date.
USE OF ESTIMATES--The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts of assets, liabilities,
expenses and revenues reported in the financial statements. Actual results
could differ from those estimated.
OTHER--Investment transactions are accounted for on the trade date.
(3) SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value).
Transactions in shares were as follows:
<TABLE>
<CAPTION>
PERIOD ENDED
APRIL 30, 1996*
<S> <C>
Shares sold 2,805,078
- ----------------------------------------------------------------------------------------------
Shares redeemed (280,019)
- ---------------------------------------------------------------------------------------------- ------------------
Net change resulting from share transactions 2,525,059
- ---------------------------------------------------------------------------------------------- ------------------
</TABLE>
*For the period from November 20, 1995 (date of initial public investment) to
April 30, 1996.
(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE--Michigan National Bank, the Fund's investment adviser,
(the "Adviser"), receives for its services an annual investment advisory fee
equal to 0.75% of the Fund's average daily net assets.
The Adviser may voluntarily choose to waive any portion of its fee. The Adviser
can modify or terminate this voluntary waiver at any time at its sole
discretion.
ADMINISTRATIVE FEE--Federated Administrative Services ("FAS") provides the Fund
with certain administrative personnel and services. The fee paid to FAS is based
on the level of average aggregate net assets of the Trust for the period. FAS
may voluntarily choose to waive a portion of its fee.
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT FEES--Federated Services Company
("FServ"), through its subsidiary, Federated Shareholder Services Company
("FSSC"), serves as transfer and
INDEPENDENCE ONE MICHIGAN MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
dividend disbursing agent for the Fund. The fee paid to FSSC is based on the
size, type, and number of accounts and transactions made by shareholders.
PORTFOLIO ACCOUNTING FEES--FServ maintains the Trust's accounting records for
which it receives a fee. The fee is based on the level of the Trust's average
daily net assets for the period, plus out-of-pocket expenses. Federated Services
Company may voluntarily choose to waive a portion of its fee.
CUSTODIAN FEES--Michigan National Bank is the Fund's custodian. The fee is based
on the level of the Fund's average daily net assets for the period, plus
out-of-pocket expenses.
ORGANIZATIONAL EXPENSES--Organizational expenses estimated to be $24,175 will be
borne initially by FAS.
The Fund has agreed to reimburse FAS for the organizational expenses during the
five year period following the effective date.
GENERAL--Certain of the Officers of the Trust are Officers and/or Directors or
Trustees of the above companies.
(5) INVESTMENT TRANSACTIONS
Purchases and sales of investments, excluding short-term securities, for the
period from
November 20, 1995 (date of initial public investment) to April 30, 1996, were as
follows:
<TABLE>
<S> <C>
- ---------------------------------------------------------------------------------------------------
PURCHASES-- $ 34,215,800
- --------------------------------------------------------------------------------------------------- -------------
SALES-- $ 9,679,832
- --------------------------------------------------------------------------------------------------- -------------
</TABLE>
(6) CONCENTRATION OF CREDIT RISK
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 of
that state than would be a comparable tax-exempt mutual fund that invests
nationally. In order to reduce the credit risk associated with such factors, at
April 30, 1996, 54.7% 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 value of investments insured by
or supported (backed) by a letter of credit from any one institution or agency
did not exceed 14.9% of total investments.
25
REPORT OF KPMG PEAT MARWICK LLP,
INDEPENDENT AUDITORS
- --------------------------------------------------------------------------------
To the Board of Trustees and Shareholders
INDEPENDENCE ONE MUTUAL FUNDS:
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments of Independence One Michigan Municipal Bond Fund (a
portfolio within Independence One Mutual Funds) as of April 30, 1996, and the
related statement of operations, statement of changes in net assets, and the
financial highlights for the period from November 20, 1995 (commencement of
operations) to April 30, 1996. These financial statements and financial
highlights are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and financial highlights are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. Our
procedures included confirmation of securities owned at April 30, 1996 by
correspondence with the custodian. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Independence One Michigan Municipal Bond Fund at April 30, 1996, the result of
its operations, changes in its net assets, and the financial highlights for the
period listed above, in conformity with generally accepted accounting
principles.
KPMG PEAT MARWICK LLP
Pittsburgh, Pennsylvania
June 14, 1996
26
TRUSTEES OFFICERS
- --------------------------------------------------------------------------------
Robert E. Baker Edward C. Gonzales
Harold Berry President and Treasurer
Clarence G. Frame Jeffrey W. Sterling
Harry J. Nederlander Vice President and Assistant Treasurer
Thomas S. Wilson Jay S. Neuman
Secretary
Gail Cagney
Assistant Secretary
Mutual funds are not bank deposits or obligations, are not guaranteed by any
bank, and are not insured or guaranteed by the U.S. government, the Federal
Deposit Insurance Corporation, the Federal Reserve Board, or any other
government agency. Investment in mutual funds involves investment risk,
including possible loss of principal.
This report is authorized for distribution to prospective investors only when
preceded or accompanied by the fund's prospectus which contains facts
concerning its objective and policies, management fees, expenses and other
information.
APPENDIX FOR INDEPENDENCE ONE MICHIGAN MUNICIPAL BOND FUND
A. The graphic presentation here displayed consists of a line graph
titled "Growth of $10,000 Invested in Independence One Michigan Municipal
Bond Fund (the "Fund"). The corresponding components of the line graph are
listed underneath. The Fund is represented by a broken line. The Lehman
Brothers 7-Year General Obligation Bond Index is represented by a solid
line. The line graph is a visual representation of a comparison of change
in value of a hypothetical $10,000 purchase in the Fund and the Lehman
Brothers 7-Year General Obligation Bond Index. The "y" axis reflects the
cost of the investment. The "x" axis reflects computation periods from the
Fund's start of performance, 11/20/95 through 4/30/96. The right margin
reflects the ending value of the hypothetical investment in the Fund as
compared to the Lehman Brothers7-Year General Obligation Bond Index; the
