INDEPENDENCE ONE MUTUAL FUNDS, 497, 1996-07-02

INDEPENDENCE ONE MUTUAL FUNDS
497, 1996-07-02

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Independence One Mutual Funds (the "Trust") is an open-end management investment
company (a mutual fund) comprising a series of investment portfolios. This
prospectus offers investors interests in the following three separate investment
portfolios (collectively referred to as the "Funds" and individually as the
"Fund"), each having a distinct investment objective and policies:

Independence One Prime Money Market Fund

Independence One U.S. Treasury Money Market Fund

Independence One Michigan Municipal Cash Fund

MICHIGAN NATIONAL BANK PROFESSIONALLY MANAGES THE FUNDS' PORTFOLIOS. THE SHARES
OFFERED BY THIS PROSPECTUS ARE NOT DEPOSITS OR OBLIGATIONS OF MICHIGAN NATIONAL
BANK, ARE NOT ENDORSED OR GUARANTEED BY MICHIGAN NATIONAL BANK AND ARE NOT
INSURED OR GUARANTEED BY THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE
CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER GOVERNMENT AGENCY.
INVESTMENT IN THESE SHARES INVOLVES INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF
PRINCIPAL. THE FUNDS ATTEMPT TO MAINTAIN A STABLE NET ASSET VALUE OF $1.00 PER
SHARE; THERE CAN BE NO ASSURANCE THAT THE FUNDS WILL BE ABLE TO DO SO. BECAUSE
INDEPENDENCE ONE MICHIGAN MUNICIPAL CASH FUND MAY INVEST A SIGNIFICANT PORTION
OF ITS ASSETS IN SECURITIES OF A SINGLE ISSUER, AN INVESTMENT IN THIS FUND MAY
INVOLVE ADDITIONAL RISKS COMPARED TO A FULLY DIVERSIFIED MONEY MARKET FUND.

This prospectus contains the information you should read and know before you
invest in the Funds. Keep this prospectus for future reference.

The Funds have also filed a Statement of Additional Information dated June 30,
1996, with the Securities and Exchange Commission ("SEC"). The information
contained in the Statement is incorporated by reference into this prospectus.
You may request a copy of the Statement free of charge by calling toll-free
1-800-334-2292. To obtain other information, or make inquiries about the Trust,
contact the Trust at the address listed in the back of this prospectus.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

Prospectus dated June 30, 1996

TABLE OF CONTENTS
- --------------------------------------------------------------------------------

SYNOPSIS 1
- ------------------------------------------------------

SUMMARY OF FUND EXPENSES 3
- ------------------------------------------------------

FINANCIAL HIGHLIGHTS 4
- ------------------------------------------------------

INVESTMENT INFORMATION 8
- ------------------------------------------------------

Investment Objective of Each Fund 8
Prime Money Market Fund 8
U.S. Treasury Money Market Fund 9
Michigan Municipal Cash Fund 10

PORTFOLIO INVESTMENTS AND STRATEGIES 13
- ------------------------------------------------------

Repurchase Agreements 13
Variable Rate Demand Notes 13
Credit Enhancement 13
Demand Features 14
When-Issued and Delayed Delivery
Transactions 14
Investing in Securities of
Other Investment Companies 14
Investment Limitations 14

INDEPENDENCE ONE MUTUAL FUNDS
INFORMATION 16
- ------------------------------------------------------

Management of the Trust 16
Board of Trustees 16
Investment Adviser 16
Distribution of Fund Shares 16
Fund Administration 18

NET ASSET VALUE 19
- ------------------------------------------------------
INVESTING IN THE FUNDS 19
- ------------------------------------------------------

Share Purchases 19
Minimum Investment Required 19
Cash Sweep Program 20
What Shares Cost 20
Certificates and Confirmations 20
Dividends 20
Capital Gains 21
Systematic Investment Program 21

EXCHANGE PRIVILEGE 21
- ------------------------------------------------------

REDEEMING SHARES 23
- ------------------------------------------------------

Systematic Withdrawal Program 25
Accounts with Low Balances 25
Redemption in Kind 25

SHAREHOLDER INFORMATION 25
- ------------------------------------------------------

Voting Rights 25

EFFECT OF BANKING LAWS 26
- ------------------------------------------------------

TAX INFORMATION 27
- ------------------------------------------------------
Federal Income Tax 27
Michigan Municipal Cash Fund Tax
Considerations 27

PERFORMANCE INFORMATION 28
- ------------------------------------------------------

ADDRESSES Back Cover
- ------------------------------------------------------

SYNOPSIS
- --------------------------------------------------------------------------------

The Trust was established as a Massachusetts business trust under a Declaration
of Trust dated January 9, 1989. The Declaration of Trust permits the Trust to
offer separate series of shares of beneficial interest representing interests in
separate portfolios of securities. The shares in any one portfolio may be
offered in separate classes. This prospectus relates only to the three Funds
described herein. The Funds are designed as a convenient means of accumulating
interests in professionally managed portfolios.

The following three Funds are offered in this prospectus:

Independence One Prime Money Market Fund ("Prime Money Market Fund")
seeks to provide current income consistent with stability of principal.
It pursues its investment objective by investing in a variety of
high-quality money market instruments maturing in 397 days or less. The
Fund currently offers two classes of shares: Class A Shares and Class B
Shares. The classes of shares represent interests in one common
investment portfolio but differ in that Class A Shares are subject to a
shareholder servicing fee paid by the Fund, while Class B Shares, which
are sold primarily to certain institutional investors, will not be
subject to such shareholder servicing fees.

Independence One U.S. Treasury Money Market Fund ("U.S. Treasury Money
Market Fund") seeks to provide current income consistent with stability
of principal. The Fund pursues its objective by investing in a portfolio
of short-term U.S. Treasury obligations.

Independence One Michigan Municipal Cash Fund ("Michigan Municipal Cash
Fund") seeks to provide stability of income and current income exempt
from federal regular income tax and Michigan state income tax consistent
with stability of principal. In addition, the Fund provides income exempt
from the Michigan intangibles tax and income taxes of Michigan
municipalities. The Fund pursues its investment objective by investing
its assets in a non-diversified portfolio so that at least 80% of its
annual income is exempt from federal regular income tax and Michigan
state income tax. The Fund may not be a suitable investment for
retirement plans since it invests in municipal securities.

For information on how to purchase shares of the Funds, please refer to
"Investing in the Funds." The minimum initial investment in shares of the Prime
Money Market Class A Shares, the U.S. Treasury Money Market Fund, and the
Michigan Municipal Cash Fund is $1,000. The minimum initial investment in the
Prime Money Market Fund Class B Shares is $1,000,000. Subsequent investments in
all the Funds must be in amounts of at least $100. See "Minimum Investment
Required."

The Funds attempt to stabilize the value of a share at $1.00. Fund shares are
currently sold and redeemed at that price. Information on redeeming shares can
be found under "Redeeming Shares." Shareholders can invest, reinvest, or redeem
shares at any time without charge or penalty imposed by the Funds. Shareholders
have access to other portfolios of the Trust through an exchange program.
Information regarding the exchange privilege offered with respect to the Trust
can be found under "Exchange Privilege."

- --------------------------------------------------------------------------------

Michigan National Bank is the investment adviser (the "Adviser") to the Funds
and receives compensation for its services.

One or more of the Funds may make certain investments and employ certain
investment techniques that involve risks, including entering into repurchase
agreements, investing in when-issued securities, restricted and illiquid
securities, and securities of other investment companies. These risks and those
associated with investing in Michigan municipal securities, variable rate
securities, bank instruments, short-term credit facilities, asset-backed
securities, participation interests, and demand features are described under
"Investment Objective of Each Fund" and "Portfolio Investments and Strategies."

INDEPENDENCE ONE MONEY MARKET FUNDS
SUMMARY OF FUND EXPENSES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRIME MONEY U.S. TREASURY MICHIGAN
MARKET FUND MONEY MUNICIPAL
<S> <C> <C> <C> <C>
CLASS A CLASS B MARKET FUND CASH FUND
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Charge Imposed on Purchases
(as a percentage of offering price)...................... None None None None
Maximum Sales Charge Imposed on Reinvested
Dividends (as a percentage of offering price)............ None None None None
Contingent Deferred Sales Charge (as a percentage of
original purchase price or redemption proceeds, as
applicable).............................................. None None None None
Redemption Fee (as a percentage of amount redeemed, if
applicable).............................................. None None None None
Exchange Fee............................................... None None None None

<CAPTION>
ANNUAL FUND OPERATING EXPENSES
(As a percentage of average net assets)
<S> <C> <C> <C> <C>
Management Fees (after waiver)(1).......................... 0.15% 0.15% 0.40% 0.20%
12b-1 Fees(2).............................................. None None 0.00% 0.00%
Total Other Expenses....................................... 0.46% 0.21% 0.20% 0.33%
Shareholder Servicing Fees(3).......................... 0.25% -- -- --
Total Operating Expenses (after waiver)(4)......... 0.61% 0.36% 0.60% 0.53%
</TABLE>

(1) The management fee for the Prime Money Market Fund and the Michigan
Municipal Cash Fund was reduced to reflect the voluntary waiver by the
investment adviser. The adviser can terminate this voluntary waiver at any
time at its sole discretion. The maximum management fee for both Funds is
0.40%.

(2) As of the date of this prospectus, the U.S. Treasury Money Market Fund and
the Michigan Municipal Cash Fund are not paying or accruing 12b-1 fees. The
Funds will not pay or accrue 12b-1 fees until a separate class of shares has
been created for certain institutional investors. The Funds' distributor can
pay up to 0.25% as a 12b-1 fee which is reimbursed to the distributor by the
Funds. See "Distribution of Fund Shares."

(3) The Prime Money Market Fund Class A Shares pays a shareholder services fee
of up to 0.25% of Class A Shares' average daily net assets.

(4) The Total Fund Operating Expenses for the Prime Money Market Fund Class A
Shares, Prime Money Market Fund Class B Shares, and the Michigan Municipal
Cash Fund for the fiscal year ended April 30, 1996 were 0.86%, 0.61% and
0.73% respectively, absent the voluntary waiver detailed in Note (1).

THE PURPOSE OF THIS TABLE IS TO ASSIST AN INVESTOR IN UNDERSTANDING THE
VARIOUS COSTS AND EXPENSES THAT A SHAREHOLDER OF THE FUNDS WILL BEAR, EITHER
DIRECTLY OR INDIRECTLY. FOR MORE COMPLETE DESCRIPTIONS OF THE VARIOUS COSTS AND
EXPENSES, SEE "INVESTING IN THE FUNDS."
<TABLE>
<S> <C> <C> <C> <C>
EXAMPLE
You would pay the following expenses on a $1,000 investment assuming (1) 5% annual return and (2)
redemption at the end of each time period.

<CAPTION>
PRIME MONEY MARKET
FUND U.S. TREASURY MONEY MICHIGAN MUNICIPAL
CLASS A CLASS B MARKET FUND CASH FUND
<S> <C> <C> <C> <C>
1 Year................................... $6 $4 $6 $5
3 Years.................................. $20 $12 $19 $17
5 Years.................................. $34 $20 $33 $30
10 Years................................. $76 $46 $75 $66
</TABLE>

THE ABOVE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.

INDEPENDENCE ONE PRIME MONEY MARKET FUND
FINANCIAL HIGHLIGHTS--CLASS A SHARES
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
The following table has been audited by KPMG Peat Marwick LLP, the Fund's
independent auditors. Their report, dated June 14, 1996, on the Fund's Financial
Statements for the year ended April 30, 1996, and on the following table for
each of the periods presented, is included in the Fund's Annual Report, which is
incorporated herein by reference. This table should be read in conjunction with
the Fund's Financial Statements and Notes thereto, contained in the Fund's
Annual Report, which may be obtained from the Fund.
<TABLE>
<CAPTION>
YEAR ENDED APRIL 30,
<S> <C> <C> <C> <C> <C> <C> <C>
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.

(See Notes which are an integral part of the Financial Statements)

Further information about the Prime Money Market Fund's performance is contained
in the Annual Report for the fiscal year ended April 30, 1996, which can be
obtained free of charge.

INDEPENDENCE ONE PRIME MONEY MARKET FUND
FINANCIAL HIGHLIGHTS--CLASS B SHARES
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
The following table has been audited by KPMG Peat Marwick LLP, the Fund's
independent auditors. Their report, dated June 14, 1996, on the Fund's Financial
Statements for the year ended April 30, 1996, and on the following table for the
period presented, is included in the Fund's Annual Report, which is incorporated
herein by reference. This table should be read in conjunction with the Fund's
Financial Statements and Notes thereto, contained in the Fund's Annual Report,
which may be obtained from the Fund.
<TABLE>
<CAPTION>
YEAR ENDED
APRIL 30, 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.

(See Notes which are an integral part of the Financial Statements)

Further information about the Prime Money Market Fund's performance is contained
in the Annual Report for the fiscal year ended June 30, 1996, which can be
obtained free of charge.

INDEPENDENCE ONE U.S. TREASURY MONEY MARKET FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
The following table has been audited by KPMG Peat Marwick LLP, the Fund's
independent auditors. Their report, dated June 14, 1996, on the Fund's Financial
Statements for the year ended April 30, 1996, and on the following table for
each of the periods presented, is included in the Fund's Annual Report, which is
incorporated herein by reference. This table should be read in conjunction with
the Fund's Financial Statements and Notes thereto, contained in the Fund's
Annual Report, which may be obtained from the Fund.
<TABLE>
<CAPTION>
YEAR ENDED APRIL 30,
<S> <C> <C> <C> <C> <C> <C> <C>
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.

(See Notes which are an integral part of the Financial Statements)

Further information about U.S. Treasury Money Market Fund's performance is
contained in the Annual Report for the fiscal year ended April 30, 1996, which
can be obtained free of charge.

INDEPENDENCE ONE MICHIGAN MUNICIPAL CASH FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
The following table has been audited by KPMG Peat Marwick LLP, the Fund's
independent auditors. Their report, dated June 14, 1996, on the Fund's Financial
Statements for the year ended April 30, 1996, and on the following table for
each of the periods presented, is included in the Fund's Annual Report, which is
incorporated herein by reference. This table should be read in conjunction with
the Fund's Financial Statements and Notes thereto, contained in the Fund's
Annual Report, which may be obtained from the Fund.
<TABLE>
<CAPTION>
YEAR ENDED APRIL 30,
<S> <C> <C> <C> <C> <C> <C> <C>
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.

(See Notes which are an integral part of the Financial Statements)

Further information about Michigan Municipal Cash Fund's performance is
contained in the Annual Report for the fiscal year ended April 30, 1996, which
can be obtained free of charge.

INVESTMENT INFORMATION
- --------------------------------------------------------------------------------

INVESTMENT OBJECTIVE OF EACH FUND

The investment objective and policies of each Fund appear below. The investment
objective of a Fund cannot be changed without the approval of holders of a
majority of that Fund's shares. While there is no assurance that a Fund will
achieve its investment objective, it endeavors to do so by complying with the
diversification and other requirements of Rule 2a-7 under the Investment Company
Act of 1940 which regulates money market mutual funds and by following the
investment policies described in this prospectus.

Unless indicated otherwise, the investment policies of a Fund may be changed by
the Board of Trustees ("Trustees") without approval of shareholders.
Shareholders will be notified before any material change in these policies
becomes effective.

Each Fund's investment limitations are discussed below under "Investment
Limitations."

Additional information about investment limitations, strategies that one or more
Funds may employ, and certain investment policies mentioned below appear in the
"Portfolio Investments and Strategies" section of this prospectus and in the
Statement of Additional Information.

PRIME MONEY MARKET FUND

INVESTMENT OBJECTIVE AND POLICIES. The investment objective of the Fund is to
provide current income consistent with stability of principal. The Fund pursues
its investment objective by investing exclusively in a portfolio of money market
instruments maturing in 397 days or less. The average maturity of money market
instruments in the Fund's portfolio, computed on a dollar-weighted basis, will
be 90 days or less.

ACCEPTABLE INVESTMENTS. The Fund invests in high quality money market
instruments that are either rated in the highest short-term rating category by
one or more nationally recognized statistical rating organizations ("NRSROs") or
of comparable quality to securities having such ratings. Examples of these
instruments include, but are not limited to:

domestic issues of corporate or municipal debt obligations, including
variable rate demand notes;

commercial paper (including Canadian Commercial Paper and Europaper);

certificates of deposits, demand and time deposits, bankers' acceptances
and other instruments of domestic and foreign banks and other deposit
institutions ("Bank Instruments");

short-term credit facilities, such as demand notes;

asset-backed securities;

obligations issued or guaranteed as to payment of principal and interest
by the U.S. government or one of its agencies or instrumentalities
("Government Securities"); and

other money market instruments.

The Fund invests only in instruments denominated and payable in U.S. dollars.

BANK INSTRUMENTS. The Fund only invests in Bank Instruments either issued
by an institution having capital, surplus and undivided profits over $100
million or insured by the Bank Insurance Fund ("BIF") or the Savings
Association Insurance Fund ("SAIF"). Bank Instruments may include
Eurodollar Certificates of Deposit ("ECDs"), Yankee Certificates of Deposit
("Yankee CDs") and Eurodollar Time Deposits ("ETDs"). The Fund will treat
securities which are credit enhanced with a bank's letter of credit as Bank
Instruments.

SHORT-TERM CREDIT FACILITIES. Demand notes are short-term borrowing
arrangements between a corporation and an institutional lender (such as the
Fund) payable upon demand by either party. The notice period for demand
typically ranges from one to seven days, and the party may demand full or
partial payment. The Fund may also enter into, or acquire participations
in, short-term revolving credit facilities with corporate borrowers. Demand
notes and other short-term credit arrangements usually provide for floating
or variable rates of interest.
ASSET-BACKED SECURITIES. Asset-backed securities are securities issued by
special purpose entities whose primary assets consist of a pool of loans or
accounts receivable. The securities may take the form of beneficial
interest in a special purpose trust, limited partnership interests or
commercial paper or other debt securities issued by a special purpose
corporation. Although the securities often have some form of credit or
liquidity enhancement, payments on the securities depend predominately upon
collections of the loans and receivables held by the issuer.

INVESTMENT RISKS. ECDs, ETDs, Yankee CDs, Canadian Commercial Paper, and
Europaper are subject to somewhat different risks than domestic obligations of
domestic banks. Examples of these risks include international, economic, and
political developments, foreign governmental restrictions that may adversely
affect the payment of principal or interest, foreign withholding or other taxes
on interest income, difficulties in obtaining or enforcing a judgment against
the issuing bank, and the possible impact of interruptions in the flow of
international currency transactions. Different risks may also exist for ECDs,
ETDs, and Yankee CDs because the banks issuing these instruments, or their
domestic or foreign branches, are not necessarily subject to the same regulatory
requirements that apply to domestic banks, such as reserve requirements, loan
limitations, examinations, accounting, auditing, and recordkeeping, and the
public availability of information. These factors will be carefully considered
by the Adviser in selecting investments for the Fund. For an explanation of the
risks associated with an investment in municipal securities, see "Michigan
Municipal Cash Fund-Investment Risks" below.

The Fund's investment limitations are discussed below under "Investment
Limitations."

U.S. TREASURY MONEY MARKET FUND

INVESTMENT OBJECTIVE AND POLICIES. The investment objective of the Fund is to
provide current income consistent with stability of principal. The Fund pursues
its investment objective by investing exclusively in a portfolio of short-term
U.S. Treasury obligations. The average maturity of the U.S.

Treasury obligations in the Fund's portfolio, computed on a dollar-weighted
basis, will be 90 days or less.

ACCEPTABLE INVESTMENTS. The Fund invests only in short-term U.S. Treasury
obligations, which are normally held to maturity. These instruments are issued
by the U.S. government, its agencies or instrumentalities, and are fully
guaranteed as to principal and interest by the United States. They mature in 397
days or less from the date of acquisition unless they are purchased under a
repurchase agreement that provides for repurchase by the seller within one year
from the date of acquisition.

In addition to investing in repurchase agreements, the Fund may engage in
when-issued and delayed delivery transactions. See "Portfolio Investments and
Strategies."

MICHIGAN MUNICIPAL CASH FUND

INVESTMENT OBJECTIVE AND POLICIES. The investment objective of the Fund is to
provide stability of income and current income exempt from federal regular
income tax and Michigan state income tax consistent with stability of principal.
In addition, the Fund provides income exempt from the Michigan intangibles tax
and income taxes of Michigan municipalities. (Federal regular income tax does
not include the federal individual alternative minimum tax or the federal
alternative minimum tax for corporations.) The Fund pursues its investment
objective by investing at least 80% of its assets in a portfolio of Michigan
municipal securities with remaining maturities of 397 days or less at the time
of purchase by the Fund. The average maturity of the securities in the Fund's
portfolio, computed on a dollar-weighted basis, will be 90 days or less.
Michigan municipal securities include obligations issued by or on behalf of the
State of Michigan, its political subdivisions or agencies, or debt obligations
of any territory or possession of the United States, or any political
subdivision of any of the foregoing, or of the District of Columbia, the
interest from which is, in the opinion of bond counsel for the issuers, or in
the opinion of officers of the Fund and/or the Adviser, exempt from federal
regular income tax and personal income taxes imposed by the State of Michigan
and Michigan municipalities. Michigan municipal securities also include
participation interests in the above obligations. Interest income of the Fund
which is exempt from tax will retain its tax-free status when distributed to
Michigan shareholders. However, income distributed by the Fund may not
necessarily be exempt from state or municipal taxes in states other than
Michigan.

The municipal securities in which the Fund invests must either be rated in one
of the two highest short-term rating categories by one or more NRSROs or be of
comparable quality to securities having such ratings.

MICHIGAN MUNICIPAL SECURITIES. Michigan municipal securities are generally
issued to finance public works such as airports, bridges, highways, housing,
hospitals, mass transportation projects, schools, streets, and water and sewer
works. They are also issued to repay outstanding obligations, to raise funds for
general operating expenses, and to make loans to other public institutions and
facilities.

Michigan municipal securities include industrial development bonds issued by or
on behalf of public authorities to provide financing aid to acquire sites or
construct and equip facilities for

privately or publicly owned corporations. The availability of this financing
encourages these corporations to locate within the sponsoring communities and
thereby increases local employment.

The two principal classifications of municipal securities are "general
obligation" and "revenue" bonds. General obligation bonds are secured by the
issuer's pledge of its full faith and credit and taxing power for the payment of
principal and interest. Interest on and principal of revenue bonds, however, are
payable only from the revenue generated by the facility financed by the bond or
other specified sources of revenue. Revenue bonds do not represent a pledge of
credit or create any debt of or charge against the general revenues of a
municipality or public authority. Industrial development bonds are typically
classified as revenue bonds.

PARTICIPATION INTERESTS. The Fund may purchase participation interests from
financial institutions such as commercial banks, savings associations, and
insurance companies. These participation interests give the Fund an undivided
interest in Michigan municipal securities. The municipal securities subject to
the participation interests are not limited to maturities of 397 days or less,
so long as the participation interests include the right to demand payment,
typically within seven days, from the issuers of those interests. The Fund will
purchase only participation interests which have such a demand feature or which
mature in less than 397 days. The financial institutions from which the Fund
purchases participation interests frequently provide or secure irrevocable
letters of credit or guarantees to assure that the participation interests are
of high quality. The Trustees of the Trust will determine that participation
interests meet the prescribed quality standards for the Fund.

In addition, the Fund may engage in when-issued and delayed delivery
transactions and invest in restricted and illiquid securities, securities of
other investment companies, and variable rate demand notes. The Fund may also
acquire securities that are subject to puts and standby commitments to purchase
securities at their principal amount within a fixed period following a demand by
the Fund. See "Portfolio Investments and Strategies."

TEMPORARY INVESTMENTS. As a fundamental policy which may only be changed by
shareholders, the Fund invests its assets so that at least 80% of its annual
interest income will be exempt from federal regular income tax and Michigan
state income tax, except in unusual circumstances, such as when management feels
that market conditions dictate a defensive posture in temporary investments.
Interest income from temporary investments may be taxable to shareholders as
ordinary income. These temporary investments include: obligations issued by or
on behalf of municipal or corporate issuers having the same quality
characteristics as municipal securities purchased by the Fund (including
obligations whose interest is subject to the federal alternative minimum income
tax); marketable obligations issued or guaranteed by the U.S. government, its
agencies or instrumentalities; instruments issued by banks or savings
associations which have capital, surplus, and undivided profits in excess of
$100,000,000 at the time of investment and if their deposits are insured by the
BIF or the SAIF, which are both administered by the Federal Deposit Insurance
Corporation ("FDIC"); repurchase agreements and prime commercial paper rated A-1
by Standard & Poor's Ratings Group ("S&P"), Prime-1 by Moody's Investor Service,
Inc.("Moody's"), or F-1 by Fitch Investor Service, Inc.("Fitch"), and variable
amount demand master notes.

STANDBY COMMITMENTS. Some securities dealers are willing to sell Michigan
municipal securities to the Fund accompanied by their commitments to repurchase
the municipal securities prior to

maturity, at the Fund's option, for the amortized cost of the municipal
securities at the time of repurchase. These arrangements are not used to protect
against changes in the market value of municipal securities. They permit the
Fund, however, to remain fully invested and still provide liquidity to satisfy
redemptions. The cost of Michigan municipal securities accompanied by these
"standby" commitments could be greater than the cost of municipal securities
without such commitments. Standby commitments are not marketable or otherwise
assignable and have value only to the Fund. The default or bankruptcy of a
securities dealer giving such a commitment would not affect the quality of the
Michigan municipal securities purchased but may make such securities more
difficult to sell without such a commitment. The Fund enters into standby
commitments only with those dealers whose credit the Adviser believes to be of
high quality.

CONCENTRATION OF INVESTMENTS. The Fund may invest more than 25% of its assets
in industrial revenue bonds, including pollution control bonds. The Fund will
not purchase securities if, as a result of such purchase, 25% or more of the
value of its total assets would be invested in any one industry or in industrial
development bonds or other securities, the interest upon which is paid from
revenues of similar type projects. However, the Fund may invest more than 25% of
the value of its assets in cash or cash items, securities issued or guaranteed
by the U.S. government, its agencies or instrumentalities, or instruments
secured by these money market instruments, such as repurchase agreements.

The Fund will invest more than 25% of its assets in Michigan municipal
securities. The Fund may invest more than 25% of the value of its assets in
tax-exempt project notes guaranteed by the U.S. government, regardless of the
location of the issuing municipality.

In addition, the Fund will not invest more than 5% of its assets in industrial
revenue bonds where the payment of principal and interest is the responsibility
of companies (or guarantors, if applicable) with less than three years of
continuous operations, including the operation of any predecessor. This
limitation may be changed by the Trustees without shareholder approval.
Shareholders will be notified before any material change in this limitation
becomes effective.

If the value of Fund assets invested in the securities of a governmental
subdivision changes because of changing values, the Fund will not be required to
make any reduction in its holdings.
INVESTMENT RISKS. Yields on Michigan municipal securities depend on a variety
of factors, including: the general conditions of the municipal bond market; the
size of the particular offering; the maturity of the obligations; and the rating
of the issue. Further, any adverse economic conditions or developments affecting
the State of Michigan or its municipalities could impact the Fund's portfolio.
The ability of the Fund to achieve its investment objective also depends on the
continuing ability of the issuers of Michigan municipal securities and
participation interests, or the guarantors of either, to meet their obligations
for the payment of interest and principal when due. In addition, from time to
time, the supply of Michigan municipal securities acceptable for purchase by the
Fund could be limited. Investing in Michigan municipal securities which meet the
Fund's quality standards may not be possible if the State of Michigan or its
municipalities do not maintain their current credit ratings.

The Fund may invest in Michigan municipal securities which are repayable out of
revenue streams generated from economically related projects or facilities
and/or whose issuers are located in the

same state. Sizable investments in these Michigan municipal securities could
involve an increased risk to the Fund should any of these related projects or
facilities experience financial difficulties.

Obligations of issuers of Michigan municipal securities are subject to the
provisions of bankruptcy, insolvency, and other laws affecting the rights and
remedies of creditors. In addition, the obligations of such issuers may become
subject to laws enacted in the future by Congress, state legislators, or
referenda extending the time for payment of principal and/or interest, or
imposing constraints upon enforcement of such obligations or upon the ability of
states or municipalities to levy taxes. There is also the possibility that, as a
result of litigation or other conditions, the power or ability of any issuer to
pay, when due, the principal of and interest on its municipal securities may be
materially affected. Michigan Municipal Cash Fund's concentration in Michigan
municipal securities may entail a greater level or risk than other types of
money market funds.

A further discussion of the risks of a portfolio which invests primarily in
Michigan municipal securities is contained in the Statement of Additional
Information.

PORTFOLIO INVESTMENTS AND STRATEGIES
- --------------------------------------------------------------------------------

REPURCHASE AGREEMENTS. Repurchase agreements are arrangements in which banks,
broker/dealers, and other recognized financial institutions sell U.S. government
securities or other securities to the Funds and agree at the time of sale to
repurchase them at a mutually agreed upon time and price within one year from
the date of acquisition. To the extent that the original seller does not
repurchase the securities from the Funds, the Funds could receive less than the
repurchase price on any sale of such securities.

VARIABLE RATE DEMAND NOTES. Prime Money Market Fund and Michigan Municipal Cash
Fund may invest in variable rate demand notes which are long-term corporate debt
instruments or municipal securities that have variable or floating interest
rates and provide the Funds with the right to tender the security for repurchase
at its stated principal amount plus accrued interest. Such securities typically
bear interest at a rate that is intended to cause the securities to trade at
par. The interest rate may float or be adjusted at regular intervals (ranging
from daily to annually), and is normally based on a published interest rate or
interest rate index. Most variable rate demand notes allow the Funds to demand
the repurchase of the security on not more than seven days prior notice. Other
notes only permit the Funds to tender the security at the time of each interest
rate adjustment or at other fixed intervals. See "Demand Features." The Funds
treat variable rate demand notes as maturing on the later of the date of the
next interest adjustment or the date on which the Funds may next tender the
security for repurchase.
CREDIT ENHANCEMENT. Certain of the Funds' acceptable investments may be credit
-
enhanced by a guaranty, letter of credit, or insurance. Any bankruptcy,
receivership, default, or change in the credit quality of the party providing
the credit enhancement will adversely affect the quality and marketability of
the underlying security and could cause losses to a Fund and affect its shares
price. Prime Money Market Fund and Michigan Municipal Cash Fund may each have
more than 25% of its total assests invested in securities which are
credit-enhanced by banks.

DEMAND FEATURES. Prime Money Market Fund and Michigan Municipal Cash Fund may
acquire securities that are subject to puts and standby commitments ("demand
features") to purchase the securities at their principal amount (usually with
accrued interest) within a fixed period (usually seven days) following a demand
by a Fund. The demand feature may be issued by the issuer of the underlying
securities, a dealer in the securities or by another third party, and may not be
transferred separately from the underlying security. The Funds use these
arrangements to provide the Funds with liquidity and not to protect against
changes in the market value of the underlying securities. The bankruptcy,
receivership or default by the issuer of the demand feature, or a default on the
underlying security or other event that terminates the demand feature before its
exercise, will adversely affect the liquidity of the underlying security. Demand
features that are exercisable even after a payment default on the underlying
security may be treated as a form of credit enhancement.

WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS. The Funds may purchase
securities on a when-issued or delayed delivery basis. These transactions are
arrangements in which the Funds purchase securities with payment and delivery
scheduled for a future time. The seller's failure to complete these transactions
may cause the Funds to miss a price or yield considered to be advantageous.
Settlement dates may be a month or more after entering into these transactions,
and the market values of the securities purchased may vary from the purchase
prices. Accordingly, the Funds may pay more or less than the market value of the
securities on the settlement date. The Funds engage in when-issued and delayed
delivery transactions only for the purpose of acquiring portfolio securities
consistent with each Fund's investment objective and policies, not for
investment leverage.

The Funds may dispose of a commitment prior to settlement if the Adviser deems
it appropriate to do so. In addition, the Funds may enter into transactions to
sell purchase commitments to third parties at current market values and
simultaneously acquire other commitments to purchase similar securities at later
dates. The Funds may realize short-term profits or losses upon the sale of such
commitments.

INVESTING IN SECURITIES OF OTHER INVESTMENT COMPANIES. Prime Money Market Fund
and Michigan Municipal Cash Fund can acquire up to 3% of the total outstanding
stock of other investment companies. The Funds will not be subject to any other
limitations with regard to the acquisition of securities of other investment
companies so long as the public offering price of the Fund's shares does not
include a sales charge exceeding 1-1/2 percent. The Funds will purchase
securities of investment companies only in open-market transactions involving
only customary broker's commissions (although the Funds do not expect to incur
any broker's commissions in connection with purchases). However, these
limitations are not applicable if the securities are acquired in a merger,
consolidation, reorganization, or acquisition of assets. The Adviser will waive
its investment advisory fee on assets invested in securities of other open-end
investment companies.

INVESTMENT LIMITATIONS

BORROWING MONEY. The Funds will not borrow money directly or through reverse
repurchase agreements or pledge securities except, under certain circumstances,
a Fund may borrow up to one-

third of the value of its total assets and pledge up to 10% of the value of
those assets to secure such borrowings.

DIVERSIFICATION. The Prime Money Market Fund will not, with respect to 75% of
the value of its total assets, invest more than 5% of the value of its total
assets in the securities of any one issuer (other than cash or securities issued
or guaranteed by the government of the United States or its agencies or
instrumentalities).

The above policies may not be changed without shareholder approval. The
following limitations, however, may be changed by the Trustees without
shareholder approval. Shareholders will be notified before any material change
in these limitations becomes effective.

RESTRICTED AND ILLIQUID SECURITIES. Prime Money Market Fund and Michigan
Municipal Cash Fund may invest up to 10% of their respective total assets in
restricted securities. This restriction is not applicable to commercial paper
issued under the Section 4(2) of the Securities Act of 1933. Restricted
securities are any securities in which Fund may otherwise invest pursuant to its
investment objective and policies, but which are subject to restriction on
resale under federal securities law. All of the Funds may invest in illiquid
securities. The Funds will limit investments in illiquid securities, including
certain restricted securities not determined by the Trustees to be liquid, non-
negotiable time deposits, and repurchase agreements providing for settlement in
more than seven days after notice, to 10% of their respective net assets.

Prime Money Market Fund may invest in commercial paper issued in reliance on the
exemption from registration afforded by Section 4(2) of the Securities Act of
1933. Section 4(2) commercial paper is restricted as to disposition under
federal securities law and is generally sold to institutional investors, such as
the Fund, who agree that they are purchasing the paper for investment purposes
and not with a view to public distribution. Any resale by the purchaser must be
in an exempt transaction. Section 4(2) commercial paper is normally resold to
other institutional investors like the Fund through or with the assistance of
the issuer or investment dealers who make a market in Section 4(2) commercial
paper, thus providing liquidity. The Fund believes that Section 4(2) commercial
paper and possibly certain other restricted securities which meet the criteria
for liquidity established by the Trustees are quite liquid. The Fund intends,
therefore, to treat the restricted securities which meet the criteria for
liquidity established by the Trustees, including Section 4(2) commercial paper,
as determined by the Adviser, as liquid and not subject to the investment
limitation applicable to illiquid securities. In addition, because Section 4(2)
commercial paper is liquid, the Fund intends to not subject such paper to the
limitation applicable to restricted securities.

When the Fund invests in certain restricted securities determined by the
Trustees to be liquid, such investments could have the effect of increasing the
level of Fund illiquidity to the extent that the buyers in the secondary market
for such securities become, for a time, uninterested in purchasing these
securities.

INDEPENDENCE ONE MUTUAL FUNDS INFORMATION
- --------------------------------------------------------------------------------

MANAGEMENT OF THE TRUST

BOARD OF TRUSTEES. The Trustees are responsible for managing the Trust's
business affairs and for exercising all of the Trust's powers except those
reserved for the shareholders. An Executive Committee of the Board of Trustees
handles the Board's responsibilities between meetings of the Board.

INVESTMENT ADVISER. Pursuant to an investment advisory contract with the Trust,
investment decisions for the Funds are made by Michigan National Bank, as the
Funds' investment adviser, subject to direction by the Trustees. The Adviser
continually conducts investment research and supervision for the Funds and is
responsible for the purchase or sale of portfolio instruments, for which it
receives an annual fee from the assets of the Funds.

ADVISORY FEES. The Adviser may receive an annual investment advisory fee
equal to 0.40% of each Fund's average daily net assets. The Adviser may
voluntarily choose to waive a portion of its fee or reimburse certain
expenses of the Funds. The Adviser has undertaken to reimburse each Fund,
up to the amount of the advisory fee, for operating expenses in excess of
limitations established by certain states.

ADVISER'S BACKGROUND. Michigan National Bank, a national banking
association, is a wholly-owned subsidiary of Michigan National Corporation
("MNC"). MNC is a wholly owned subsidiary of National Australia Bank
Limited which is a transnational banking organization, headquartered in
Melbourne, Australia. Through its subsidiaries and affiliates, MNC,
Michigan's sixth largest bank holding company in terms of total assets, as
of March 31, 1996 offers a full range of financial services to the public,
including commercial lending, depository services, cash management,
brokerage services, retail banking, mortgage banking, investment advisory
services and trust services. Independence One Capital Management
Corporation ("IOCM"), a nationally recognized investment advisory
subsidiary of MNC, provides investment advisory services for trust and
other managed assets. IOCM and the Trust Division have managed custodial
assets totaling $10.9 billion. Of this amount, IOCM and the Trust Division
have investment discretion over $1.8 billion.

Michigan National Bank has managed mutual funds since May 1989. The Trust
Division has managed pools of commingled funds since 1964.

As part of its regular banking operations, Michigan National Bank may make
loans to public companies. Thus, it may be possible, from time to time, for
the Funds to hold or acquire the securities of issuers which are also
lending clients of Michigan National Bank. The lending relationship will
not be a factor in the selection of securities.

DISTRIBUTION OF FUND SHARES

Federated Securities Corp. is the principal distributor for shares of the Funds.
It is a Pennsylvania corporation organized on November 14, 1969, and is the
principal distributor for a number of investment companies. Federated Securities
Corp. is a subsidiary of Federated Investors.

DISTRIBUTION PLAN. Pursuant to the provisions of a distribution plan adopted in
accordance with the Investment Company Act Rule 12b-1 (the "Plan"), U.S.
Treasury Money Market Fund and Michigan Municipal Cash Fund will pay to the
distributor an amount computed at an annual rate of 0.25% of the average daily
net asset value of the shares to finance any activity which is principally
intended to result in the sale of shares of the Funds subject to the Plan.

U.S. Treasury Money Market Fund and Michigan Municipal Cash Fund each intend to
offer two classes of shares for sale: Investment Shares and Trust Shares. The
classes of shares represent interests in one common investment portfolio but
differ in that Investment Shares, which will be sold primarily to individual
investors, are subject to distribution expenses paid by the Fund pursuant to the
Plan, while Trust Shares will be sold to institutional investors and will not be
subject to such a Plan and will not incur such distribution expenses. Trust
Shares are not currently available for sale. The Funds will not offer Trust
Shares and will not accrue or pay any distribution expenses pursuant to the Plan
until Trust Shares have been registered with the Securities and Exchange
Commission and certain states.

The distributor may from time to time and for such periods as its deems
appropriate, voluntarily reduce its compensation under the Plan to the extent
the expenses attributable to the shares of the Funds exceed such lower expense
limitation as the distributor may, by notice of the Trust, voluntarily declare
to be effective.

The distributor may select financial institutions such as banks, fiduciaries,
custodians for public funds, investment advisers, and broker/dealers ("brokers")
to provide sales and/or administrative services as agents for their clients or
customers who beneficially own shares of the Funds. Administrative services may
include, but are not limited to, the following functions; providing office
space, equipment, telephone facilities, and various personnel, including
clerical, supervisory, and computer, as necessary or beneficial to establish and
maintain shareholder accounts and records; processing purchase and redemption
transactions and automatic investments of client account cash balances;
answering routine client inquiries regarding the shares of the Funds; assisting
clients in changing dividend options, account designations, and addresses, and
providing such other services as the Funds reasonably request for their shares.

Financial institutions will receive fees from the distributor based upon shares
owned by their clients or customers. The schedules of such fees and the basis
upon which such fees will be paid will be determined from time to time by the
distributor.

The Funds' Plan is a compensation type plan. As such, the Funds make no payments
to the distributor except as described above. Therefore, the Funds do not pay
for reimbursed expenses of the distributor, including amounts expended by the
distributor in excess of amounts received by it from the Funds, interest,
carrying or other financing charges in connection with excess amounts expended,
or the distributor's overhead expenses. However, the distributor may be able to
recover such amounts or may earn a profit from future payments made by the Funds
under the Plan.

The Glass-Steagall Act prohibits a depository institution (such as a commercial
bank or a savings association) from being an underwriter or distributor of most
securities. In the event the Glass-

Steagall Act is deemed to prohibit depository institutions from acting in the
administrative capacities described above or should Congress relax current
restrictions on depository institutions, the Trustees will consider appropriate
changes in the services.

State securities laws governing the ability of depository institutions to act as
underwriters or distributors of securities may differ from interpretations given
to the Glass-Steagall Act and, therefore, banks and financial institutions may
be required to register as dealers pursuant to state law.

SHAREHOLDER SERVICES AGREEMENT. Prime Money Market Fund has entered into a
Shareholder Services Agreement with respect to Class A Shares under which it may
make payments of up to 0.25% of the average daily net asset value of Class A
Shares to obtain certain personal services for shareholders and the maintenance
of shareholder accounts ("shareholder services"). Under the Agreement, Michigan
National Bank will either perform shareholder services directly or will select
financial institutions to perform shareholder services. Financial institutions
will receive fees based upon Class A Shares owned by their clients or customers.
The schedules of such fees and the basis upon which such fees will be paid will
be determined from time to time by the Fund and Michigan National Bank.

FUND ADMINISTRATION

ADMINISTRATIVE SERVICES. Federated Administrative Services, a subsidiary of
Federated Investors, provides the Funds with certain administrative personnel
and services necessary to operate the Funds, such as certain legal and
accounting services. Federated Administrative Services provides these at an
annual rate as specified below:
<TABLE>
<CAPTION>
MAXIMUM
ADMINISTRATIVE AVERAGE AGGREGATE
FEE DAILY NET ASSETS OF THE TRUST
<C> <S>
.150% on the first $250 million
.125% on the next $250 million
.100% on the next $250 million
.075% on assets in excess of $750 million
</TABLE>

The administrative fee received during any fiscal year shall be at least $50,000
for each portfolio in Independence One Mutual Funds. Federated Administrative
Services may choose voluntarily to reimburse a portion of its fee.

CUSTODIAN. Michigan National Bank, Farmington Hills, Michigan, is custodian for
the securities and cash of the Funds.

NET ASSET VALUE
- --------------------------------------------------------------------------------

The Funds attempt to stabilize the net asset value of shares at $1.00 by valuing
the portfolio securities using the amortized cost method. The net asset value
per share is determined by adding the interest of shares in the value of all
securities and other assets of the Funds, subtracting the interest of shares in
the liabilities of the Funds and those attributable to shares, and dividing the
remainder by the number of shares outstanding. The Funds, of course, cannot
guarantee that the net asset value will always remain at $1.00 per share.

INVESTING IN THE FUNDS
- --------------------------------------------------------------------------------

SHARE PURCHASES

Shares of the Funds may be purchased through Michigan National Bank,
Independence One Brokerage Services, Inc. ("Independence One"), or through
brokers or dealers which have a sales agreement with the distributor. Texas
residents must purchase shares through Federated Securities Corp. at
1-800-618-8573. Investors may purchase shares of the Funds on all business days
except on days which the New York Stock Exchange is closed and federal holidays
restricting wire transfers. In connection with the sale of a Fund's shares, the
distributor may from time to time offer certain items of nominal value to any
shareholder or investor. The Funds reserve the right to reject any purchase
request.

TO PLACE AN ORDER. An investor may call toll-free 1-800-334-2292 to purchase
shares of the Funds through Michigan National Bank or Independence One. In
addition, investors may purchase shares of the Funds by calling their authorized
broker directly. Payment may be made either by check or wire transfer of federal
funds.

To purchase by check, the check must be included with the order and made payable
to "Independence One (include name of Fund and, if applicable, "Class A" or
"Class B" Shares)." Checks must be converted into federal funds to be considered
received.

Prior to purchasing by wire, investors should call their Michigan National Bank
or Independence One representative or their authorized broker. It is the
responsibility of Michigan National Bank, Independence One and authorized
brokers to transmit orders promptly. Federal funds should be wired as follows:
Federated Shareholder Services Company, c/o Michigan National Bank, Farmington
Hills, Michigan; Account Number: 6856238933; For Credit to: Independence One
(include name of Fund and, if applicable, "Class A" or "Class B" Shares); Fund
Number (this number can be found on the account statement or by contacting the
Fund); Group Number or Order Number; Nominee or Institution Name; and ABA Number
072000805.

MINIMUM INVESTMENT REQUIRED

The minimum initial investment in the shares of Prime Money Market Fund Class A
Shares, U.S. Treasury Money Market Fund, and Michigan Municipal Cash Fund by an
investor is $1,000.

The minimum initial investment in Prime Money Market Fund Class B Shares by an
investor is $1,000,000. An institutional investor's minimum investment will be
calculated by combining all accounts it maintains with the Fund for Class B
Shares.

Subsequent investments in all the Funds must be in amounts of at least $100.

CASH SWEEP PROGRAM

Cash accumulations in demand deposit accounts with depository institutions such
as banks and savings associations may be automatically invested in shares of the
Funds on a day selected by the depository institution and its customer, or when
the demand deposit account reaches a predetermined dollar amount (e.g. $5,000).

PARTICIPATING DEPOSITORY INSTITUTIONS. Participating depository institutions
are responsible for prompt transmission of orders relating to the program. These
depository institutions are the record owners of the shares of the Funds.
Depository institutions participating in this program may charge their customers
for their services relating to the program. This prospectus should, therefore,
be read together with any agreement between the customer and the depository
institution with regard to the services provided, the fees charged for those
services, and any restrictions and limitations imposed.

WHAT SHARES COST

Fund shares are sold at their net asset value next determined after an order is
received. There is no sales charge imposed by the Funds.

The net asset value is determined at 12:00 noon and 4:00 p.m.(Eastern time), and
as of the close of trading (normally 4:00 p.m., Eastern time) on the New York
Stock Exchange, Monday through Friday, except on: (i) days on which there are
not sufficient changes in the value of the Fund's portfolio securities that its
net asset value might be materially affected; (ii) days during which no shares
are tendered for redemption and no orders to purchase shares are received; or
(iii) the following holidays: New Year's Day, President's Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day, and Christmas Day.

CERTIFICATES AND CONFIRMATIONS

As transfer agent for the Funds, Federated Shareholder Services Company
maintains a share account for each shareholder of record. Share certificates are
not issued unless shareholders so request by contacting their Michigan National
Bank or Independence One representative or authorized broker in writing.

Monthly confirmations are sent to report transactions such as purchases and
redemptions as well as dividends paid during the month.

DIVIDENDS

Dividends are declared daily and paid monthly. Dividends are automatically
reinvested on payment dates in additional shares of the Funds unless cash
payments are requested by shareholders in writing to the Funds through their
Michigan National Bank or Independence One representative or

authorized broker. Share purchase orders received by a Fund before 11:00 a.m.
(Eastern time) earn dividends that day.

In the case of Prime Money Market Fund, under limited circumstances,
arrangements may be made with Michigan National Bank for same-day receipt of
purchase orders to earn dividends that day, if such orders are received before
3:00 p.m. (Eastern time). Investors interested in establishing such arrangements
should call Michigan National Bank at 1-800-334-2292, and are reminded that the
Fund reserves the right to refuse any purchase request.

CAPITAL GAINS

Capital gains, if any, could result in an increase in dividends. Capital losses
could result in a decrease in dividends. If, for some extraordinary reason, the
Fund realizes net long-term capital gains, it will distribute them at least once
every 12 months.

SYSTEMATIC INVESTMENT PROGRAM

With respect to shareholders of Prime Money Market Fund Class A Shares, U.S.
Treasury Money Market Fund, and Michigan Municipal Cash Fund, once the Fund
account has been opened, shareholders may add to their investment on a regular
basis in a minimum amount of $100. Under this program, funds may be
automatically withdrawn periodically from the shareholder's checking account and
invested in Fund shares at the net asset value next determined after an order is
received. A shareholder may apply for participation in this program through
Michigan National Bank.

EXCHANGE PRIVILEGE
- --------------------------------------------------------------------------------

All shareholders of the Funds are shareholders of the Trust which consists of
the following additional funds: Independence One Equity Plus Fund, Independence
One Fixed Income Fund, Independence One Michigan Municipal Bond Fund, and
Independence One U.S. Government Securities Fund ("participating funds").
Shareholders of the Funds have access to the participating funds through an
exchange program.

Shareholders who exercise this exchange privilege must exchange shares having a
net asset value of at least $1,000. Prior to any exchange, the shareholder must
receive a copy of the current prospectus of the participating fund into which an
exchange is to be made.

The exchange privilege is available to shareholders residing in any state in
which the participating fund shares being acquired may legally be sold. Upon
receipt by the transfer agent of proper instructions and all necessary
supporting documents, shares submitted for exchange will be redeemed at the
next-determined net asset value. If the exchanging shareholder does not have an
account in the participating fund whose shares are being acquired, a new account
will be established with the same registration, dividend and capital gain
options as the account from which shares are exchanged, unless otherwise
specified by the shareholder. In the case where the new account registration is
not identical to that of the existing account, a signature guarantee is
required. (See "Redeeming Shares by Mail.") Exercise of this privilege is
treated as a redemption and new purchase for federal income tax purposes and,
depending on the circumstances, a short or long-

term capital gain or loss may be realized. The Funds reserve the right to modify
or terminate the exchange privilege at any time. Shareholders would be notified
prior to any modification or termination. Shareholders may obtain further
information on the exchange privilege by calling their Michigan National Bank or
Independence One representative or authorized broker.

EXCHANGE BY TELEPHONE. Shareholders may provide instructions for exchanges
between participating funds by telephone to their Michigan National Bank or
Independence One representative by calling 1-800-334-2292. In addition,
investors may exchange shares by calling their authorized broker directly.

An authorization form permitting the Funds to accept telephone exchange requests
must first be completed. It is recommended that investors request this privilege
at the time of their initial application. If not completed at the time of
initial application, authorization forms and information on this service can be
obtained through a Michigan National Bank or Independence One representative or
authorized broker. Telephone exchange instructions may be recorded.

Shares may be exchanged by telephone only between fund accounts having identical
shareholder registrations. Exchange instructions given by telephone may be
electronically recorded.

Telephone exchange instructions must be received by Michigan National Bank,
Independence One, or an authorized broker and transmitted to the transfer agent
before 4:00 p.m. (Eastern time) for shares to be exchanged the same day.
Shareholders who exchange into shares of a Fund will not receive a dividend from
that Fund on the date of the exchange.

Shareholders of the Funds may have difficulty in making exchanges by telephone
through banks, brokers and other financial institutions during times of drastic
economic or market changes. If shareholders cannot contact their Michigan
National Bank or Independence One representative or authorized broker by
telephone, it is recommended that an exchange request be made in writing and
sent by mail for next day delivery. Send mail requests to: Independence One
Mutual Funds, 27777 Inkster Road, Mail Code 10-30, Farmington Hills, Michigan
48333-9065.

Any shares held in certificate form cannot be exchanged by telephone but must be
forwarded to Federated Shareholder Services Company, the transfer agent, by a
Michigan National Bank or Independence One representative or authorized broker
and deposited to the shareholder's account before being exchanged.

If reasonable procedures are not followed by the Funds, they may be liable for
losses due to unauthorized or fraudulent telephone instructions.

WRITTEN EXCHANGE. A shareholder wishing to make an exchange by written request
may do so by sending it to: Independence One Mutual Funds, 27777 Inkster Road,
Mail Code 10-30, Farmington Hills, Michigan 48333-9065. In addition, investors
may exchange shares by sending a written request to their authorized broker
directly.

REDEEMING SHARES
- --------------------------------------------------------------------------------

Fund shares are redeemed at their net asset value next determined after
Federated Shareholder Services Company receives the redemption request.
Redemptions will be made on days on which the Funds compute net asset value.
Redemption requests cannot be executed on days on which the New York Stock
Exchange is closed and federal holidays restricting wire transfers. Telephone or
written requests for redemptions must be received in proper form and can be made
to the Funds through a Michigan National Bank or Independence One representative
or authorized broker. Although the transfer agent does not charge for telephone
redemptions, it reserves the right to charge a fee for the cost of
wire-transferred redemptions of less than $5,000.

CASH SWEEP PROGRAM. Clients of Michigan National Bank who have executed a Cash
Sweep Agreement should refer to that Agreement for information about redeeming
Fund shares purchased through that program.

REDEEMING BY CHECK. At the shareholder's request, Federated Shareholder
Services Company will establish a checking account for redeeming Prime Money
Market Fund Class A Shares, U.S. Treasury Money Market Fund, and Michigan
Municipal Cash Fund shares. For further information, contact a Michigan National
Bank or Independence One representative or authorized broker.

With a Fund checking account, shares may be redeemed simply by writing a check
for $250 or more. The redemption will be made at the net asset value on the date
that the transfer agent presents the check to the Fund. A check may not be
written to close an account. In addition, if a shareholder wishes to redeem
shares and have the proceeds available, a check may be written and negotiated
through the shareholder's local bank. Checks should never be sent to the
transfer agent to redeem shares. Cancelled checks are sent to the shareholder
each month.

BY TELEPHONE. Shares may be redeemed by telephoning a Michigan National Bank or
an Independence One representative at 1-800-334-2292. In addition, shareholders
may redeem Shares by calling their authorized broker directly. Redemption
requests must be received and transmitted to the transfer agent before 11:00
a.m. (Eastern time) in order for the proceeds to be wired that same day. The
Michigan National Bank or Independence One representative or authorized broker
is responsible for promptly submitting redemption requests and providing proper
written redemption instructions to the transfer agent. Registered broker/dealers
may charge customary fees and commissions for this service. If at any time, the
Funds shall determine it necessary to terminate or modify this method of
redemption, shareholders would be promptly notified.

For calls received before 11:00 a.m. (Eastern time) proceeds will normally be
wired the same day to the shareholder's account at a domestic commercial bank
that is a member of the Federal Reserve System or a check will be sent to the
address of record. For calls received after 11:00 a.m. (Eastern time) proceeds
will normally be wired or a check sent the following business day. In no event
will proceeds be wired or a check sent more than seven days after a proper
request for redemption has been received.

A daily dividend will be paid on shares redeemed if the redemption request is
received after 11:00 a.m. (Eastern time). However, the proceeds are normally not
wired until the following business day.

Redemption requests received before 11:00 a.m. (Eastern time) will normally be
paid the same day and will not be entitled to that day's dividend.

An authorization form permitting the Funds to accept telephone redemption
requests must first be completed. It is recommended that investors request this
privilege at the time of their initial application. If not completed at the time
of initial application, authorization forms and information on this service can
be obtained through a Michigan National Bank or Independence One representative
or authorized broker. Telephone redemption instructions may be recorded.

In the event of drastic economic or market changes, a shareholder may experience
difficulty in redeeming by telephone. If such a case should occur, another
method of redemption, such as "By Mail", should be considered.
If reasonable procedures are not followed by the Funds, they may be liable for
losses due to unauthorized or fraudulent telephone instructions.

BY MAIL. Shareholders may redeem Shares by sending a written request to the
Fund through their Michigan National Bank or Independence One representative or
authorized broker. The written request should include the shareholder's name,
the Fund name, the class designation, if applicable, the account number, and the
share or dollar amount requested. Shareholders redeeming through Michigan
National Bank or Independence One should mail written requests to: Independence
One Mutual Funds, 27777 Inkster Road, Mail Code 10-30, Farmington Hills,
Michigan 48333-9065. Investors redeeming through an authorized broker should
mail written requests directly to their broker.

If share certificates have been issued, they must be properly endorsed and
should be sent by registered or certified mail with the written request.

Shareholders requesting a redemption of any amount to be sent to an address
other than that on record with the Fund, or a redemption payable other than to
the shareholder of record must have signatures on written redemption requests
guaranteed by:

a trust company or a commercial bank whose deposits are insured by BIF,
which is administered by the FDIC;

a member of the New York, American, Boston, Midwest, or Pacific Stock
Exchange;

a savings bank or savings association whose deposits are insured by SAIF,
which is administered by the FDIC; or

any other "eligible guarantor institution," as defined in the Securities
Exchange Act of 1934.
The Funds do not accept signatures guaranteed by a notary public.

The Funds and their transfer agent have adopted standards for accepting
signature guarantees from the above institutions. The Funds may elect in the
future to limit eligible signature guarantors to institutions that are members
of a signature guarantee program. The Funds and their transfer agent reserve the
right to amend these standards at any time without notice.

Normally, a check for the proceeds is mailed to the shareholder within one
business day, but in no event more than seven days after receipt of a proper
written redemption request.

SYSTEMATIC WITHDRAWAL PROGRAM

Shareholders of Prime Money Market Fund Class A Shares, U.S. Treasury Money
Market Fund, and Michigan Municipal Cash Fund who desire to receive payments of
a predetermined amount may take advantage of the Systematic Withdrawal Program.
Under this program, shares of the Fund are redeemed to provide for periodic
withdrawal payments in an amount directed by the shareholder. Depending upon the
amount of the withdrawal payments, the amount of dividends paid and capital
gains distributions with respect to Fund shares, and the fluctuation of the net
asset value of Fund shares redeemed under this program, redemptions may reduce,
and eventually deplete, the shareholder's investment in the Fund. For this
reason, payments under this program should not be considered as yield or income
on the shareholder's investment in the Fund. To be eligible to participate in
this program, a shareholder must have an account value of at least $10,000. A
shareholder may apply for participation in this program through Michigan
National Bank.

ACCOUNTS WITH LOW BALANCES

Due to the high cost of maintaining accounts with low balances, the Funds may
redeem shares in any account and pay the proceeds to the shareholder if the
account balance falls below a required minimum value of $1,000, (or $1,000,000
in the case of the Prime Money Market Fund Class B Shares), due to shareholder
redemptions. Before shares are redeemed to close an account, the shareholder is
notified in writing and allowed 30 days to purchase additional shares to meet
the minimum requirement.

REDEMPTION IN KIND

The Funds are obligated to redeem shares solely in cash up to $250,000 or 1% of
the Fund's net asset value, whichever is less, for any one shareholder within a
90-day period.

Any redemption beyond this amount will also be in cash unless the Trustees
determine that payments should be in kind. In such a case, the Fund will pay all
or a portion of the remainder of the redemption in portfolio instruments, valued
in the same way as the Fund determines net asset value. The portfolio
instruments will be selected in a manner that the Trustees deem fair and
equitable.

Redemption in kind is not as liquid as a cash redemption. If redemption is made
in kind, shareholders receiving their securities and selling them before their
maturity could receive less than the redemption value of their securities and
could incur certain transaction costs.

SHAREHOLDER INFORMATION
- --------------------------------------------------------------------------------

VOTING RIGHTS

Each share of the Funds gives the shareholder one vote in Trustee elections and
other matters submitted to shareholders for vote. All shares of all classes of
each portfolio in the Trust have equal voting rights, except that in matters
affecting only a particular portfolio or class, only shares of that portfolio or
class are entitled to vote. As a Massachusetts business trust, the Trust is not
required to hold annual shareholder meetings. Shareholder approval will be
sought only for certain changes in
the Trust's or the Funds' operation and for the election of Trustees under
certain circumstances. As of May 31, 1996, Pierson & Co., the nominee for
Michigan National Bank and Oak Mall Shopping Center may for certain purposes be
deemed to control the Prime Money Market Fund Class B Shares because they are
owners of record of certain shares of the Fund. As of May 31, 1996, Pierson &
Co, the nominee for Michigan National Bank may for certain purposes be deemed to
control the Prime Money Market Fund Class A Shares and U.S. Treasury Money
Market Fund because it is owner of record of certain shares of the Funds.

Trustees may be removed by the Trustees or by shareholders at a special meeting.
A special meeting of the shareholders shall be called by the Trustees upon the
written request of shareholders owning at least 10% of the Trust's outstanding
shares.

EFFECT OF BANKING LAWS
- --------------------------------------------------------------------------------

The Glass-Steagall Act and other banking laws and regulations presently prohibit
a bank holding company registered under the Bank Holding Company Act of 1956 or
any affiliate thereof from sponsoring, organizing or controlling a registered,
open-end investment company continuously engaged in the issuance of its shares,
and from issuing, underwriting, selling or distributing securities in general.
Such banking laws and regulations do not prohibit such a holding company or
affiliate from acting as an investment adviser, transfer agent or custodian to
such an investment company or from purchasing shares of such a company as agent
for and upon the order of their customers.

Some entities providing services to the Trust are subject to such banking laws
and regulations. They believe, based on the advice of its counsel, that they may
perform those services for the Trust contemplated by any agreement entered into
with the Trust without violating those laws or regulations. Changes in either
federal or state statutes and regulations relating to the permissible activities
of banks and their subsidiaries or affiliates, as well as further judicial or
administrative decisions or interpretations of present or future statutes and
regulations, could prevent these entities from continuing to perform all or a
part of the above services. If this happens, the Trustees would consider
alternative means of continuing available investment services. It is not
expected that existing shareholders would suffer any adverse financial
consequences as a result of any of these occurrences.

TAX INFORMATION
- --------------------------------------------------------------------------------

FEDERAL INCOME TAX

The Funds intend to pay no federal income tax because each Fund expects to meet
requirements of the Internal Revenue Code applicable to regulated investment
companies (including its diversification requirements) and to receive the
special tax treatment afforded to such companies. Each Fund will be treated as a
single, separate entity for federal income tax purposes so that income
(including capital gains) and losses realized by the Trust's other portfolios
will not be combined for tax purposes with those realized by any of the other
Funds.

Unless otherwise exempt, shareholders of Prime Money Market Fund and U.S.
Treasury Money Market Fund are required to pay federal income tax on any
dividends and other distributions received. These tax consequences apply whether
dividends and distributions are received in cash or as additional Shares. The
Funds will provide detailed tax information for reporting purposes. Shareholders
are urged to consult their own tax advisers regarding the status of their
accounts under state and local tax laws.

MICHIGAN MUNICIPAL CASH FUND TAX CONSIDERATIONS

FEDERAL INCOME TAX. In general, shareholders are not required to pay federal
regular income tax on any dividends received from the Fund that represent net
interest on tax-exempt municipal bonds. However, under the Tax Reform Act of
1986, dividends representing net interest income earned on certain "private
activity" bonds issued after August 7, 1986 may be included in calculating the
federal individual alternative minimum tax or the federal alternative minimum
tax for corporations. The Fund may purchase all types of municipal bonds,
including private activity bonds.

The alternative minimum tax applies when it exceeds the regular tax for the
taxable year. Alternative minimum taxable income is equal to the regular taxable
income of the taxpayer increased by certain "tax preference" items not included
in regular taxable income and reduced by only a portion of the deductions
allowed in the calculation of the regular tax. Thus, should the Fund purchase
any private activity bonds, a portion of the Fund's dividends may be treated as
a tax preference item.

Dividends of the Fund representing net interest income earned on some temporary
investments and any realized net short-term gains are taxed as ordinary income.

These tax consequences apply whether dividends are received in cash or as
additional shares.

MICHIGAN TAXES. Under existing Michigan laws, distributions made by the Fund
will not be subject to Michigan personal income taxes to the extent that such
distributions qualify as "exempt-interest dividends" under the Internal Revenue
Code of 1986, and represent (i) interest from obligations of Michigan or any of
its political subdivisions or (ii) income from obligations of the United States
government which are exempted from state income taxation by a law of the United
States.

That portion of a shareholder's shares in the Fund representing (i) bonds or
other similar obligations of Michigan or its political subdivisions or, (ii)
obligations of the United States which are
exempt from taxation by a law of the United States, and dividends paid by the
Fund representing interest payments on securities, will be exempt from Michigan
intangibles tax. 1995 Public Act 5 repeals the intangibles tax effective January
1, 1998.

Distributions by the Fund are not subject to the Michigan Single Business Tax to
the extent that such distributions are derived from interest on obligations of
Michigan or its political subdivisions, or obligations of the United States
government that are exempt from state taxation by a law of the United States.

Certain municipalities in Michigan also impose an income tax on individuals and
corporations. However, to the extent that the dividends from the Fund are exempt
from federal regular income taxes, such dividends also will be exempt from
Michigan municipal income taxes.

OTHER STATE AND LOCAL TAXES. Income from the Fund is not necessarily free from
state income taxes in states other than Michigan or from personal property
taxes. Shareholders are urged to consult their own tax advisers regarding the
status of their accounts under state and local tax laws.

PERFORMANCE INFORMATION
- --------------------------------------------------------------------------------

From time to time the Funds advertise their total return, yield and effective
yield, and, in the case of the Michigan Municipal Cash Fund, tax-equivalent
yield.

The yield of a Fund represents the annualized rate of income earned on an
investment in the Fund over a seven-day period. It is the annualized dividends
earned during the period on the investment, shown as a percentage of the
investment. The effective yield is calculated similarly to the yield, but, when
annualized, the income earned by an investment in the Fund is assumed to be
reinvested daily. The effective yield will be slightly higher than the yield
because of the compounding effect of this assumed reinvestment. The
tax-equivalent yield of the Michigan Municipal Cash Fund is calculated similarly
to the yield, but is adjusted to reflect the taxable yield that the Michigan
Municipal Cash Fund would have had to earn to equal its actual yield, assuming a
specific tax rate.

Total return represents the change, over a specified period of time, in the
value of an investment in a Fund after reinvesting all income distributions. It
is calculated by dividing that change by the initial investment and is expressed
as a percentage.

Total return, yield and effective yield will be calculated separately for Prime
Money Market Fund Class A Shares and Class B Shares. Expense differences between
Class A Shares and Class B Shares may affect the performance of each class.

From time to time, advertisements for the Funds may refer to ratings, rankings,
and other information in certain financial publications and/or compare their
performance to certain indices.

INDEPENDENCE ONE
MUTUAL FUNDS

Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
INVESTMENT ADVISER
Michigan National Bank
27777 Inkster Road
Mail Code 10-52
Farmington Hills, Michigan 48333-9065

DISTRIBUTOR
Federated Securities Corp.
Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779

CUSTODIAN
Michigan National Bank
27777 Inkster Road
Mail Code 10-30
Farmington Hills, Michigan 48333-9065

TRANSFER AGENT AND
DIVIDEND DISBURSING AGENT
Federated Shareholder Services Company
P.O. Box 8600
Boston, Massachusetts 02266-8600

INDEPENDENT AUDITORS
KPMG Peat Marwick LLP
One Mellon Bank Center
Pittsburgh, Pennsylvania 15219

Independence Onet

Prime Money Market Fund
Class A Shares
Class B Shares

U.S. Treasury
Money Market Fund

Michigan Municipal
Cash Fund
Distributed by Federated Securities Corp.

Prospectus dated
June 30, 1996

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[LOGO OF MICHIGAN NATIONAL BANK]

Cusip 453777203
Cusip 453777302
Cusip 453777708
Cusip 453777401
G01285-01 (6/96) [RECYCLED PAPER LOGO]

INDEPENDENCE ONE PRIME MONEY MARKET FUND
CLASS A SHARES
CLASS B SHARES
INDEPENDENCE ONE U.S. TREASURY MONEY MARKET FUND
INDEPENDENCE ONE MICHIGAN MUNICIPAL CASH FUND
(PORTFOLIOS OF INDEPENDENCE ONE MUTUAL FUNDS)
STATEMENT OF ADDITIONAL INFORMATION
This Statement of Additional Information should be read with the
prospectus of Independence One Prime Money Market Fund, Independence
One U.S. Treasury Money Market Fund, and Independence One Michigan
Municipal Cash Fund (the "Funds"), portfolios of Independence One
Mutual Funds (the "Trust") dated June 30, 1996. This Statement is not
a prospectus. You may request a copy of a prospectus free of charge by
calling 1-800-334-2292.
FEDERATED INVESTORS TOWER
PITTSBURGH, PENNSYLVANIA 15222-3779
Statement dated June 30, 1996

FEDERATED INVESTORS
Federated Investors Tower
Pittsburgh, PA 15222-3779

Federated Securities Corp. is the
distributor of the Funds and is a
subsidiary of Federated Investors.
Cusip 453777203
Cusip 453777302
Cusip 453777708
Cusip 453777401
G00979-09 (6/96)

GENERAL INFORMATION ABOUT THE FUNDS 4

INVESTMENT OBJECTIVE AND POLICIES OF THE FUNDS 4

Types of Investments 4
Repurchase Agreements 8
When-Issued and Delayed Delivery Transactions 9
Reverse Repurchase Agreements 9
Credit Enhancement 10
Restricted and Illiquid Securities 11
Variable Rate Demand Notes 11
Investment Limitations 12
Regulatory Compliance 18
MICHIGAN MUNICIPAL CASH FUND INVESTMENT RISKS 19

INDEPENDENCE ONE MUTUAL FUNDS MANAGEMENT 21

Officers and Trustees 21
Fund Ownership 24
Trustees' Compensation 25
Trustee Liability 26
Massachusetts Partnership Law 26
INVESTMENT ADVISORY SERVICES 26

Adviser to the Funds 26
Advisory Fees 27
BROKERAGE TRANSACTIONS 28

OTHER SERVICES 29

Trust Administration 29

Custodian 30
Transfer Agent and Dividend Disbursing Agent 30
Independent Auditors 30
PURCHASING SHARES 30

Distribution Plan (U.S. Treasury Fund and Michigan
Municipal Cash Fund Only) 30
Shareholder Services Agreement (Prime Money Market Fund
Class A Shares Only) 31
Conversion to Federal Funds 32
DETERMINING NET ASSET VALUE 32

Use of the Amortized Cost Method 33
EXCHANGE PRIVILEGE 35

REDEEMING SHARES 35

Redemption in Kind 36
TAX STATUS 36

The Funds' Tax Status 36
Shareholders' Tax Status 37
TOTAL RETURN 37

YIELD 38

EFFECTIVE YIELD 39

TAX-EQUIVALENT YIELD 40

Tax-Equivalency Table 40
PERFORMANCE COMPARISONS 42

Economic and Market Information 43
FINANCIAL STATEMENTS 43

APPENDIX 44

GENERAL INFORMATION ABOUT THE FUNDS

The Trust was established as a Massachusetts business trust under a
Declaration of Trust dated January 9, 1989. This Statement of Additional
Information relates only to three portfolios of securities (the "Funds")
which are as follows: Independence One Prime Money Market Fund ("Prime
Money Market Fund"), Independence One U.S. Treasury Fund ("U.S. Treasury
Fund"), and Independence One Michigan Municipal Cash Fund ("Michigan
Municipal Cash Fund").
Shares of the Prime Money Market Fund are currently offered in two classes:
Class A Shares and Class B Shares. Prior to May 1, 1995, the Prime Money
Market Fund offered a single class of shares, which are currently
designated as Class A Shares.
INVESTMENT OBJECTIVE AND POLICIES OF THE FUNDS

The prospectus discusses the objective of each Fund and the policies they
employ to achieve those objectives. The following discussion supplements
the description of the Funds' investment policies in the prospectus.
The Funds' respective investment objectives cannot be changed without the
approval of shareholders. Except as otherwise noted, the investment
policies described below may be changed by the Board of Trustees (the
"Trustees") without shareholder approval. Shareholders will be notified
before any material change in these policies becomes effective.
TYPES OF INVESTMENTS
BANK INSTRUMENTS
The Prime Money Market Fund may invest in instruments of domestic and
foreign banks and other deposit institutions.
The instruments of banks and savings associations that are insured by
the Bank Insurance Fund ("BIF") or the Savings Association Insurance

Fund ("SAIF") such as certificates of deposit, demand and time
deposits, savings shares, and bankers' acceptances, are not
necessarily guaranteed by those organizations.
In addition to domestic bank obligations such as certificates of
deposit, demand and time deposits, savings shares, and bankers'
acceptances, the Prime Money Market Fund may invest in:
oEurodollar Certificates of Deposit issued by foreign branches of
U.S. or foreign banks;
oEurodollar Time Deposits, which are U.S. dollar-denominated deposits
in foreign branches of U.S. or foreign banks;
oCanadian Time Deposits, which are U.S. dollar-denominated deposits
issued by branches of major Canadian banks located in the United
States; and
oYankee Certificates of Deposit, which are U.S. dollar-denominated
certificates of deposit issued by U.S. branches of foreign banks and
held in the United States.
RATINGS
A nationally recognized statistical rating organization's ("NRSRO")
rating categories are determined without regard for sub-categories and
gradations. For example, with respect to the Prime Money Market Fund,
securities rated A-1 or A-1+ by Standard & Poor's Ratings Group
("S&P"), Prime-1 by Moody's Investors Service, Inc. ("Moody's"), or F-
1 (+ or -) by Fitch Investors Service, Inc. ("Fitch"), are all
considered rated in the highest short-term rating category, and with
respect to the Michigan Municipal Cash Fund, securities rated SP-1+,
SP-1 or SP-2 by S&P, MIG-1 or MIG-2 by Moody's, or FIN-1+, FIN-1 and
FIN-2 by Fitch, are all considered rated in one of the two highest
short-term rating categories. The Funds will follow applicable

regulations in determining whether a security rated by more than one
NRSRO can be treated as being in the acceptable rating categories;
currently, such securities must be rated by two NRSROs in the
acceptable categories. See "Regulatory Compliance."
If a security loses its rating or the security's rating is reduced
below the required minimum after a Fund purchases it, a Fund is not
required to sell the security. The investment adviser considers this
event, however, in its determination of whether a Fund should continue
to hold the security in its portfolio. If ratings made by a NRSRO
change because of changes in those organizations or in their rating
systems, the Fund will try to use comparable ratings as standards in
accordance with the investment policies described in the Funds'
prospectuses.
U.S. GOVERNMENT OBLIGATIONS
The types of U.S. government obligations in which the Prime Money
Market Fund may invest generally include direct obligations of the
U.S. Treasury (such as U.S. Treasury bills, notes, and bonds) and
obligations issued or guaranteed by U.S. government agencies or
instrumentalities. These securities are backed by:
othe full faith and credit of the U.S. Treasury;
othe issuer's right to borrow from the U.S. Treasury;
othe discretionary authority of the U.S. government to purchase
certain obligations of agencies or instrumentalities; or
othe credit of the agency or instrumentality issuing the obligations.
Examples of agencies and instrumentalities which may not always
receive financial support from the U.S. government are: Farm Credit
Banks; National Bank for Cooperatives; Banks for Cooperatives; Federal

Home Loan Banks; Federal National Mortgage Association; Student Loan
Marketing Association; and Federal Home Loan Mortgage Corporation.
U.S. TREASURY OBLIGATIONS
The U.S. Treasury Money Market Fund invests only in short-term U.S.
Treasury obligations. "Short-term U.S. Treasury obligations" as used
herein refers to evidences of indebtedness issued by the United
States, or issued by an agency or instrumentality thereof, and fully
guaranteed as to principal and interest by the United States, maturing
in 397 days or less from the date of acquisition or purchased pursuant
to repurchase agreements that provide for repurchase by the seller
within one year from the date of acquisition. The Fund may also retain
assets in cash.
MICHIGAN MUNICIPAL SECURITIES
The Michigan municipal securities in which the Michigan Municipal Cash
Fund invests have the characteristics set forth in the prospectus.
A Michigan municipal security which is unrated will be determined by
the Trust's Trustees to be an appropriate investment if it is of
comparable quality to municipal securities within the Fund's rating
requirements. The Trustees consider the creditworthiness of the issuer
of a Michigan municipal security, the issuer of a participation
interest if the Fund has the right to demand payment from the issuer
of the interest or the guarantor of payment by either of those
issuers.
Examples of Michigan municipal securities are:
otax-exempt project notes issued by the U.S. Department of Housing
and Urban Development to provide financing for housing,
redevelopment, and urban renewal;
omunicipal notes and tax-exempt commercial paper;

oserial bonds sold with a series of maturity dates;
otax anticipation notes sold to finance working capital needs of
municipalities in anticipation of receiving taxes at a later date;
obond anticipation notes sold in anticipation of the issuance of
longer-term bonds in the future;
orevenue anticipation notes sold in expectation of receipt of federal
income available under the Federal Revenue Sharing Program;
oconstruction loan notes insured by the Federal Housing
Administration and financed by the Federal or Government National
Mortgage Association; and
opre-refunded municipal bonds refundable at a later date.
From time to time, such as when suitable Michigan municipal securities
are not available, the Fund may invest a portion of its assets in
cash. Any portion of the Fund's assets maintained in cash will reduce
the amount of assets in Michigan municipal securities and thereby
reduce the Fund's yield.

REPURCHASE AGREEMENTS
The Funds or their custodian will take possession of the securities subject
to repurchase agreements and these securities will be marked to market
daily. To the extent that the original seller does not repurchase the
securities from a Fund, the Fund could receive less than the repurchase
price on any sale of such securities. In the event that such a defaulting
seller filed for bankruptcy or became insolvent, disposition of such
securities by the Fund might be delayed pending court action. The Funds
believe that under the regular procedures normally in effect for custody of
a Fund's portfolio securities subject to repurchase agreements, a court of

competent jurisdiction would rule in favor of the Fund and allow retention
or disposition of such securities. The Funds will only enter into
repurchase agreements with banks and other recognized financial
institutions such as brokers/dealers which are deemed by the Funds' adviser
to be creditworthy pursuant to guidelines established by the Trustees.
The Michigan Municipal Cash Fund will use repurchase agreements only as
temporary investments during times of unusual market conditions for
defensive purposes and to maintain liquidity.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS
These transactions are made to secure what is considered to be an
advantageous price or yield for a Fund. No fees or other expenses, other
than normal transaction costs, are incurred. However, liquid assets of a
Fund sufficient to make payment for the securities to be purchased are
segregated on the Fund's records at the trade date. These assets are marked
to market daily and are maintained until the transaction has been settled.
The Funds do not intend to engage in when-issued and delayed delivery
transactions to an extent that would cause the segregation of more than 20%
of the total value of Fund assets.
REVERSE REPURCHASE AGREEMENTS
The Funds may enter into reverse repurchase agreements. This transaction is
similar to borrowing cash. In a reverse repurchase agreement the Fund
transfers possession of a portfolio instrument to another person, such as a
financial institution, broker, or dealer, in return for a percentage of the
instrument's market value in cash, and agrees that on a stipulated date in
the future the Fund will repurchase the portfolio instrument by remitting
the original consideration plus interest at an agreed upon rate.
When effecting reverse repurchase agreements, liquid assets of the Fund, in
a dollar amount sufficient to make payment for the obligations to be

purchased, are segregated at the trade date. These securities are marked to
market daily and maintained until the transaction is settled.
The use of reverse repurchase agreements may enable the Funds to avoid
selling portfolio instruments at a time when a sale may be deemed to be
disadvantageous, but the ability to enter into reverse repurchase
agreements does not ensure that the Funds will be able to avoid selling
portfolio instruments at a disadvantageous time.
CREDIT ENHANCEMENT
The Prime Money Market Fund and the Michigan Municipal Cash Fund typically
evaluate the credit quality and ratings of credit-enhanced securities based
upon the financial condition and ratings of the party providing the credit
enhancement (the "credit enhancer"), rather than the issuer. Generally, a
Fund will not treat credit-enhanced securities as being issued by the
credit enhancer for diversification purposes. However, under certain
circumstances applicable regulations may require a Fund to treat securities
as having been issued by both the issuer and the credit enhancer. However,
credit-enhanced securities will not be treated as having been issued by the
credit enhancer for diversification purposes, unless the Funds have
invested more than 10% of their respective assets in securities issued,
guaranteed or otherwise credit enhanced by the credit enhancer, in which
case the securities will be treated as having been issued by both the
issuer and the credit enhancer.
The Funds may have more than 25% of their respective total assets invested
in securities credit enhanced by banks.

RESTRICTED AND ILLIQUID SECURITIES
The Prime Money Market Fund and the Michigan Municipal Cash Fund may invest
in restricted securities. All of the Funds may invest in illiquid
securities. The ability of the Trustees to determine the liquidity of
certain restricted securities is permitted under the Securities and
Exchange Commission ("SEC") Staff position set forth in the adopting
release for Rule 144A under the Securities Act of 1933 (the "Rule"). The
Rule is a non-exclusive safe harbor for certain secondary market
transactions involving securities subject to restrictions on resale under
federal securities laws. The Rule provides an exemption from registration
for resales of otherwise restricted securities to qualified institutional
buyers. The Rule was expected to further enhance the liquidity of the
secondary market for securities eligible for resale under Rule 144A. The
Fund believes that the Staff of the SEC has left the question of
determining the liquidity of all restricted securities (eligible for resale
under Rule 144A) to the Trustees. The Trustees consider the following
criteria in determining the liquidity of certain restricted securities:
o the frequency of trades and quotes for the securities;
o the number of dealers willing to purchase or sell the security and the
number of other potential buyers;
o dealer undertakings to make a market in the security; and
o the nature of the security and the nature of the marketplace trades.
VARIABLE RATE DEMAND NOTES
The Prime Money Market Fund and the Michigan Municipal Cash Fund may invest
in variable rate demand notes. Variable interest rates generally reduce
changes in the market value of municipal securities from their original

purchase prices. Accordingly, as interest rates decrease or increase, the
potential for capital appreciation or depreciation is less for variable
rate securities than for fixed income obligations.
Many securities with variable interest rates purchased by the Fund are
subject to repayment of principal (usually within seven days) on the Fund's
demand. For purposes of determining the Fund's average maturity, the
maturities of these variable rate demand securities (including
participation interests) are the longer of the periods remaining until the
next readjustment of their interest rates or the periods remaining until
their principal amounts can be recovered by exercising the right to demand
payment. The terms of these variable rate demand instruments require
payment of principal and accrued interest from the issuer of the municipal
obligations, the issuer of the participation interests, or a guarantor of
either issuer.
INVESTMENT LIMITATIONS
SELLING SHORT AND BUYING ON MARGIN
The Funds will not sell any securities short or purchase any
securities on margin but may obtain such short-term credits as may be
necessary for clearance of transactions.
ISSUING SENIOR SECURITIES AND BORROWING MONEY
The Funds will not issue senior securities except that the Funds may
borrow money and engage in reverse repurchase agreements in amounts up
to one-third of the value of their respective net assets, including
the amounts borrowed.
The Funds will not borrow money or engage in reverse repurchase
agreements for investment leverage, but rather as a temporary,
extraordinary, or emergency measure or to facilitate management of the
portfolio by enabling the Funds to meet redemption requests when the

liquidation of portfolio securities is deemed to be inconvenient or
disadvantageous. The Funds will not purchase any securities while
borrowings in excess of 5% of their respective total assets are
outstanding.
PLEDGING ASSETS
The Funds will not mortgage, pledge, or hypothecate any assets except
to secure permitted borrowings. In these cases, a Fund may pledge
assets having a market value not exceeding the lesser of the dollar
amounts borrowed or 10% of the value of total assets at the time of
the pledge.
UNDERWRITING
The Prime Money Market Fund and the Michigan Municipal Cash Fund will
not underwrite any issue of securities, except as a Fund may be deemed
to be an underwriter under the Securities Act of 1933 in connection
with the sale of securities in accordance with its investment
objective, policies, and limitations.
LENDING CASH OR SECURITIES
The Prime Money Market Fund will not lend any of its assets, except
that it may purchase or hold money market instruments, including
repurchase agreements and variable amount demand master notes, in
accordance with its investment objective, policies, and limitations.
The U.S. Treasury Money Market Fund will not lend any of its assets,
except that it may purchase or hold U.S. Treasury obligations,
including repurchase agreements, in accordance with its investment
objective, policies, and limitations.
The Michigan Municipal Cash Fund will not lend of its assets, except
that it may acquire publicly or nonpublicly issued municipal
securities or temporary investments or enter into repurchase

agreements in accordance with its investment objective, policies, and
limitations.
INVESTING IN COMMODITIES, COMMODITY CONTRACTS, OR COMMODITY FUTURES
CONTRACTS
The Prime Money Market Fund and the Michigan Municipal Cash Fund will
not purchase or sell commodities, commodity contracts, or commodity
futures contracts.
INVESTING IN REAL ESTATE
The Prime Money Market Fund and the Michigan Municipal Cash Fund will
not purchase or sell real estate, although they may invest in the
securities of issuers whose business involves the purchase or sale of
real estate or in securities which are secured by real estate or
interests in real estate.
INVESTING IN RESTRICTED SECURITIES
The Prime Money Market Fund will not invest more than 10% of Fund net
assets in securities subject to restrictions on resale under the
federal securities laws, except for Section 4(2) commercial paper.
The Michigan Municipal Cash Fund will not invest more than 10% of the
value of its net assets in securities subject to restrictions on
resale under the Securities Act of 1933.
DIVERSIFICATION OF INVESTMENTS
With respect to 75% of the value of its assets, the Prime Money Market
Fund will not purchase securities of any one issuer (other than
securities issued or guaranteed by the government of the United States
or its agencies or instrumentalities) if as a result more than 5% of
the value of its total assets would be invested in the securities of
that issuer.

The Michigan Municipal Cash Fund will not invest more than 10% of its
total assets in the securities of any one issuer (except cash and cash
items, repurchase agreements collateralized by U.S. government
securities and U.S. government obligations) with respect to securities
comprising 75% of its assets.
Under this limitation each governmental subdivision, including states
and the District of Columbia, territories, possessions of the United
States, or their political subdivisions, agencies, authorities,
instrumentalities, or similar entities, will be considered a separate
issuer if its assets and revenues are separate from those of the
governmental body creating it and the security is backed only by its
own assets and revenues.
Industrial development bonds, backed only by the assets and revenues
of a nongovernmental user, are considered to be issued solely by that
user. If in the case of an industrial development bond or
governmental-issued security, a governmental or other entity
guarantees the security, such guarantee would be considered a separate
security issued by the guarantor as well as the other issuer, subject
to limited exclusions allowed by the Investment Company Act of 1940.
CONCENTRATION OF INVESTMENTS
The Prime Money Market Fund will not invest 25% or more of the value
of its total assets in any one industry.
However, investing in bank instruments (such as time and demand
deposits and certificates of deposit), U.S. government obligations or
instruments secured by these money market instruments, such as
repurchase agreements, shall not be considered investments in any one
industry.

The above investment limitations cannot be changed without approval of
shareholders. The following limitations, however, may be changed by the
Trustees without shareholder approval. Shareholders will be notified before
any material change in these limitations becomes effective.

INVESTING IN SECURITIES OF OTHER INVESTMENT COMPANIES
The Prime Money Market Fund and the Michigan Municipal Cash Fund can
acquire up to 3 per centum of the total outstanding stock of other
investment companies. The Funds will not be subject to any other
limitations with regard to the acquisition of securities of other
investment companies so long as the public offering price of other
investment company's shares does not include a sales charge exceeding
1-1/2 percent. The Funds will purchase securities of investment
companies only in open-market transactions involving only customary
broker's commissions. However, these limitations are not applicable if
the securities are acquired in a merger, consolidation,
reorganization, or acquisition of assets.
The U.S. Treasury Money Market Fund will not purchase securities of
other investment companies except as part of a merger, consolidation,
reorganization, or other acquisition.
INVESTING IN ILLIQUID SECURITIES
The Funds will not invest more than 10% of the value of their
respective net assets in illiquid securities, including repurchase
agreements providing for settlement in more than seven days after
notice, certain restricted securities not determined by the Trustees
to be liquid, and non-negotiable fixed time deposits with maturities
over seven days.

INVESTING IN ISSUERS WHOSE SECURITIES ARE OWNED BY OFFICERS AND TRUSTEES
OF THE TRUST
The Prime Money Market Fund and the Michigan Municipal Cash Fund will
not purchase or retain the securities of any issuer if the officers
and Trustees of the Trust or its investment adviser owning
individually more than .50% of the issuer's securities together own
more than 5% of the issuer's securities.
INVESTING IN NEW ISSUERS
The Prime Money Market Fund will not invest more than 5% of the value
of its total assets in securities of issuers which have records of
less than three years of continuous operations, including the
operation of any predecessor.
The Michigan Municipal Cash Fund will not invest more than 5% of the
value of its total assets in industrial development bonds where
payment of principal and interest is the responsibility of companies
(or in the alternative, guarantors, where applicable) which have
records of less than three years of continuous operations, including
the operation of any predecessor.
INVESTING IN MINERALS
The Prime Money Market Fund will not purchase interests in oil, gas,
or other mineral exploration or development programs, except it may
purchase the securities of issuers which invest in or sponsor such
programs.
DEALING IN PUTS AND CALLS
The Michigan Municipal Cash Fund will not purchase or sell puts,
calls, straddles, spreads, or any combination of them, except that the
Fund may purchase municipal securities accompanied by agreements of
sellers to repurchase them at the Fund's option.

In order to comply with the registration requirements of a particular
state, the Prime Money Market Fund and the Michigan Municipal Cash Fund
will not invest in real estate limited partnerships and oil, gas or other
mineral leases. If this state's policy changes, these restrictions may be
revised without shareholder notification.
Except with respect to borrowing money, if a percentage limitation is
adhered to at the time of investment, a later increase or decrease in
percentage resulting from any change in value or net assets will not result
in a violation of such restriction.
The Funds did not borrow money, pledge securities, invest in illiquid
securities, restricted securities, or engage in when-issued and delayed
delivery transactions or reverse repurchase agreements in excess of 5% of
the value of Fund net assets during the last fiscal period and have no
present intent to do so during the coming fiscal year.
For purposes of the Funds' policies and limitations, each Fund considers
certificates of deposit and demand and time deposits issued by a U.S.
branch of a domestic bank or savings association having capital, surplus,
and undivided profits in excess of $100,000,000 at the time of investment
to be "cash items."
REGULATORY COMPLIANCE
Each Fund may follow non-fundamental operational policies that are more
restrictive than its fundamental investment limitations, as set forth in
the prospectus and this Statement of Additional Information, in order to
comply with applicable laws and regulations, including the provisions of
and regulations under the Investment Company Act of 1940. In particular,
each Fund will comply with the various requirements of Rule 2a-7, which
regulates money market mutual funds. For example, with limited exceptions,
Rule 2a-7 prohibits the investment of more than 5% of a Fund's total assets

in securities of any one issuer, although a Fund's limitation may only
require such 5% diversification with respect to 75% or less of its assets.
Each Fund will invest more than 5% of its assets in any one issuer only
under the circumstances permitted by Rule 2a-7. Each Fund will also
determine the effective maturity of its investments, as well as its ability
to consider a security as having received the requisite short-term ratings
by NRSROs, according to Rule 2a-7. The Funds may change these
operational policies to reflect changes in the laws and regulations without
the approval of shareholders.
MICHIGAN MUNICIPAL CASH FUND INVESTMENT RISKS

Michigan's economy continues to be among the most cyclical of states,
remaining heavily dependent on domestic auto production and durable goods
consumption. While manufacturing comprised 21% of the total jobs in the
state in 1994, it comprises a lesser share than in the 1970s when it was
35%. The automobile industry has reduced its share of employment to 6.2%
of total employment, compared with 10.8% in 1979. In fact, Michigan's
economy continues to shift away from durable good manufacturing to a more
diversified base reliant on services and trade. In 1994, for the first
time since 1986, per capita income for the State exceeded the national
level ($22,173 vs. $21,699).
As of December, 1995, unemployment stood at 4.7%, below the national level
of 5.2%. The economic recovery from the early 1990s recession has proved
hearty in Michigan as employment levels have reached an all-time high,
attracting more workers into the labor force. Personal income, which grew
9.4% in 1994, is estimated to have increased to 7.1% in 1995, outperforming
both the region and the nation. The State expects personal income and
employment growth to slow in 1996.

On August 19, 1993, the Governor of Michigan signed into law Act 145,
Public Acts of Michigan, 1993 ("Act 145") a measure which significantly
impacted financing of primary and secondary school operations and which has
resulted in additional property tax and school finance reform legislation.
Michigan's school finance reform shifts the responsibility of funding
schools away from the local district and their real property tax bases to
the state and an earmarked portion of sales taxes. Moreover, the state
government is also subject to a revenue raising cap which is tied to the
annual state personal income growth. The margin between existing revenue
and the constitutional cap is greatly narrowed now that the state absorbs
the costs of funding the local schools. Over the long term the cap may
reduce the state's flexibility to deal with adverse financial developments.
Concerning Michigan's fiscal policy, the state has proven that it can
maintain a balanced budget, low debt levels and high reserves. While the
state's Budget Stabilization Fund ("Rainy Day Fund") was drawn down
substantially during the fiscal years 1990-1992 in order to meet budget
needs of the state during fiscal stress, spending restraint and an improved
economy enabled the state to begin to restore balances in fiscal 1993. By
the end of fiscal 1994, the balances in the Rainy Day Fund were $780
million and was $1.03 billion at the end of January 1996. This makes the
Rainy Day Fund one of the highest in the nation.
Because of the increased revenues in fiscal 1995, the governor proposed a
tax cut which would reduce revenues by $186 million. The governor also is
proposing that the State increase the deposit to the Rainy Day Fund by $110
million, ending the year with a nominal $2 million surplus in the General
Fund. The tax cuts would reduce personal income taxes by increasing the
personal exemption from $2100 to $2400 and would reduce the Single Business
Tax by excluding FICA, workers compensation, and unemployment compensation

from the tax liability base. Reductions are also made to the intangibles
tax. The full annual cost of the tax cuts will be $246 million in fiscal
1996.
While Michigan's economy is in good standing now because of conservative
budgeting practices and the improved economy, the enduring effectiveness of
the state's financial management will continue to be tested by economic
cycles.

INDEPENDENCE ONE MUTUAL FUNDS MANAGEMENT

OFFICERS AND TRUSTEES
Officers and Trustees are listed with their addresses, birthdates,
principal occupations, and present positions, including any affiliation
with Michigan National Bank, Michigan National Corporation, Federated
Investors, Federated Securities Corp., Federated Administrative Services,
and Federated Services Company.

Robert E. Baker
4327 Stoneleigh Road
Bloomfield Hills, MI
Birthdate: May 6, 1930
Trustee
Retired; formerly, Vice Chairman, Chrysler Financial Corporation.

Harold Berry
100 Galleria Offcentre,

Suite 219
Southfield, MI
Birthdate: September 17, 1925
Trustee
Managing Partner, Berry Enterprises; Chairman, Independent Sprinkler
Companies, Inc.; Chairman, Berry, Ziegelman & Company; formerly, Chairman,
Executive Committee, Federal Enterprises, Inc.

Clarence G. Frame+
W-875 First Bank Building
332 Minnesota Street
St. Paul, MN
Birthdate: July 26, 1918
Trustee
Director, Tosco Corporation, Milwaukee Land Company, and Voyageur Funds
Group; formerly, Vice Chairman, First Bank System, Inc., and President, The
First National Bank of St. Paul, a subsidiary of First Bank System, Inc.

Harry J. Nederlander+
231 S. Woodward, Suite 219
Birmingham, MI
Birthdate: September 5, 1917
Trustee
Chairman, Nederlander Enterprises.

Thomas S. Wilson

Two Championship Drive
Auburn Hills, MI
Birthdate: October 9, 1949
Trustee
President and Executive Administrator of the Detroit Pistons; President and
CEO, Palace Sports and Entertainment.

Edward C. Gonzales
Federated Investors Tower
Pittsburgh, PA
Birthdate: October 22, 1930
President and Treasurer
Vice Chairman, Treasurer, and Trustee, Federated Investors; Vice President,
Federated Advisers, Federated Management, Federated Research, Federated
Research Corp., Federated Global Research Corp. and Passport Research,
Ltd.; Executive Vice President and Director, Federated Securities Corp.;
Trustee, Federated Shareholder Services Company; Trustee or Director of
some of the Funds distributed by Federated Securities Corp.; President,
Executive Vice President and Treasurer of some of the Funds distributed by
Federated Securities Corp.

Jeffrey W. Sterling
Federated Investors Tower
Pittsburgh, PA
Birthdate: February 5, 1947

Vice President and Assistant Treasurer
Vice President and Assistant Treasurer of various Funds distributed by
Federated Securities Corp.

Jay S. Neuman
Federated Investors Tower
Pittsburgh, PA
Birthdate: April 22, 1950
Secretary
Corporate Counsel, Federated Investors.

+ Members of the Trust's Executive Committee. The Executive Committee of
the Board of Trustees handles the responsibilities of the Board of
Trustees between meetings of the Board.
FUND OWNERSHIP
Officers and Trustees own less than 1% of the outstanding shares of the
Fund. The following list indicates the beneficial ownership of shareholders
who are the beneficial owners of more than 5% of the outstanding shares of
the following Funds as of May 31, 1996: Pierson & Co., the nominee for
Michigan National Bank, acting in various capacities for numerous accounts,
owned, of record, approximately 144,503,093 shares (48.19%) of Prime Money
Market Fund Class A Shares; approximately 63,172,009 shares (61.40%) of
Prime Money Market Fund Class B Shares; approximately 125,891,996 shares
(42.19%) of U.S. Treasury Fund; and approximately 15,217,356 shares
(21.62%) of Michigan Municipal Cash Fund; Oak Mall Shopping Center owned
approximately 30,981,153 shares (30.11%) of Prime Money Market Fund Class B
Shares; and DOC Optics Corp. owned approximately 3,652,828 shares (5.19%)

and Christman Company owned approximately11,145,900 shares (15.84%) of
Michigan Municipal Cash Fund.

TRUSTEES' COMPENSATION

AGGREGATE
NAME , COMPENSATION
POSITION WITH FROM
THE TRUST THE TRUST*

Robert E. Baker $ 9,350
Trustee
Harold Berry $ 9,350
Trustee
Clarence G. Frame$ 9,350
Trustee
Harry J. Nederlander $ 6,800
Trustee
Thomas S. Wilson $ 9,350
Trustee

TRUSTEE LIABILITY
The Trust's Declaration of Trust provides that the Trustees will not be
liable for errors of judgment or mistakes of fact or law. However, they are
not protected against any liability to which they would otherwise be
subject by reason of willful misfeasance, bad faith, gross negligence, or
reckless disregard of the duties involved in the conduct of their office.
MASSACHUSETTS PARTNERSHIP LAW
Under certain circumstances, shareholders may be held personally liable as
partners under Massachusetts law for acts or obligations of the Trust. To
protect shareholders, the Trust has filed legal documents with
Massachusetts that expressly disclaim the liability of shareholders for
such acts or obligations of the Trust. These documents require notice of
this disclaimer to be given in each agreement, obligation, or instrument
which the Trust or its Trustees enter into or sign.
In the unlikely event a shareholder is held personally liable for the
Trust's obligations, the Trust is required by the Declaration of Trust to
use the property of the Fund to protect or compensate the shareholder. On
request, the Trust will defend any claim made and pay any judgment against
a shareholder for any act or obligation of the Trust. Therefore, financial
loss resulting from liability as a shareholder will occur only if the Trust
cannot meet its obligations to indemnify shareholders and pay judgments
against them from its assets.
INVESTMENT ADVISORY SERVICES

ADVISER TO THE FUNDS
The Fund's investment adviser is Michigan National Bank (the "Adviser").
The Adviser shall not be liable to the Trust, the Funds, or any shareholder
of the Funds for any losses that may be sustained in the purchase, holding,

or sale of any security, or for anything done or omitted by it, except acts
or omissions involving willful misfeasance, bad faith, gross negligence, or
reckless disregard of the duties imposed upon it by its contract with the
Trust.
Because of internal controls maintained by Michigan National Bank to
restrict the flow of non-public information, Fund investments are typically
made without any knowledge of Michigan National Bank's or its affiliates'
lending relationships with an issuer.

ADVISORY FEES
For its advisory services, Michigan National Bank receives an annual
investment advisory fee as described in the prospectus.
For the fiscal years ended April 30, 1996, 1995 and 1994, the Adviser
earned fees from: Prime Money Market Fund of $1,424,895, $1,066,096 and
$1,497,420, of which $890,559, $0 and $64,765, respectively, were
voluntarily waived; U.S. Treasury Fund of $1,093,871, $983,049 and
$832,041, of which $0, $0 and $586, respectively, were voluntarily waived;
and Michigan Municipal Cash Fund of $288,247, $248,836 and $299,965, of
which $144,124, $128,411 and $163,601, respectively, were voluntarily
waived.
STATE EXPENSE LIMITATIONS
The Adviser has undertaken to comply with the expense limitations
established by certain states for investment companies whose shares
are registered for sale in those states. If the Fund's normal
operating expenses (including the investment advisory fee, but not
including brokerage commissions, interest, taxes, and extraordinary
expenses) exceed 2-1/2% per year of the first $30 million of average

net assets, 2% per year of the next $70 million of average net assets,
and 1-1/2% per year of the remaining average net assets, the Adviser
will reimburse the Fund for its expenses over the limitation.
If the Fund's monthly projected operating expenses exceed this
limitation, the investment advisory fee paid will be reduced by the
amount of the excess, subject to an annual adjustment. If the expense
limitation is exceeded, the amount to be reimbursed by the Adviser
will be limited, in any single fiscal year, by the amount of the
investment advisory fee.
This arrangement is not part of the advisory contract and may be
amended or rescinded in the future.
BROKERAGE TRANSACTIONS

When selecting brokers and dealers to handle the purchase and sale of
portfolio instruments, the Adviser looks for prompt execution of the order
at a favorable price. In working with dealers, the Adviser will generally
use those who are recognized dealers in specific portfolio instruments,
except when a better price and execution of the order can be obtained
elsewhere. The Adviser makes decisions on portfolio transactions and
selects brokers and dealers subject to guidelines established by the
Trustees. The Adviser may select brokers and dealers who offer brokerage
and research services. These services may be furnished directly to the
Funds or to the Adviser and may include: advice as to the advisability of
investing in securities; security analysis and reports; economic studies;
industry studies; receipt of quotations for portfolio evaluations; and
similar services. Research services provided by brokers and dealers may be
used by the Adviser or its affiliates in advising the Funds and other
accounts. To the extent that receipt of these services may supplant

services for which the Adviser or its affiliates might otherwise have paid,
it would tend to reduce their expenses. The Adviser and its affiliates
exercise reasonable business judgment in selecting brokers who offer
brokerage and research services to execute securities transactions. They
determine in good faith that commissions charged by such persons are
reasonable in relationship to the value of the brokerage and research
services provided.
Although investment decisions for the Funds are made independently from
those of the other accounts managed by the Adviser, investments of the type
the Funds may make may also be made by those other accounts. When the
Funds and one or more other accounts managed by the Adviser are prepared to
invest in, or desire to dispose of, the same security, available
investments or opportunities for sales will be allocated in a manner
believed by the Adviser to be equitable to each. In some cases, this
procedure may adversely affect the price paid or received by the Funds or
the size of the position obtained or disposed of by the Funds. In other
cases, however, it is believed that coordination and the ability to
participate in volume transactions will be to the benefit of the Funds
OTHER SERVICES

TRUST ADMINISTRATION
Federated Administrative Services, a subsidiary of Federated Investors,
provides administrative personnel and services to the Funds for the fees
set forth in the prospectus. For the fiscal years ended April 30, 1996,
1995 and 1994, administrative service fees were incurred on behalf of Prime
Money Market Fund of $419,411, $344,553 and $470,126, respectively; U.S.
Treasury Fund of $324,361, $317,759 and $262,246, respectively; and
Michigan Municipal Cash Fund of $85,696, $80,489 and $94,272, respectively.

CUSTODIAN
Michigan National Bank, Farmington Hills, Michigan, is custodian for the
securities and cash of the Funds. For its services as custodian, Michigan
National Bank receives an annual fee, payable monthly, based on a
percentage of each Fund's average aggregate daily net assets and the number
and type of transactions, plus out of pocket expenses
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT
Federated Services Company, Boston, Massachusetts, through its subsidiary
Federated Shareholder Services Company, is transfer agent for the shares of
the Funds and dividend disbursing agent for the Funds.
INDEPENDENT AUDITORS
The independent auditors for the Funds are KPMG Peat Marwick LLP,
Pittsburgh, Pennsylvania.
PURCHASING SHARES

Shares are sold at their net asset value without a sales charge on days
which the New York Stock Exchange is open for business, except on federal
holidays restricting wire transfers. The procedure for purchasing shares of
the Funds is explained in the prospectus under "Investing in the Funds."
DISTRIBUTION PLAN (U.S. TREASURY FUND AND MICHIGAN MUNICIPAL CASH FUND
ONLY)
The Trust has adopted a Plan pursuant to Rule 12b-1 which was promulgated
by the Securities and Exchange Commission pursuant to the Investment
Company Act of 1940 (the "Plan"). The Plan provides for payment of fees to
Federated Securities Corp. to finance any activity which is principally
intended to result in the sale of the Funds' shares subject to the Plan.
Such activities may include the advertising and marketing of shares;
preparing, printing, and distributing prospectuses and sales literature to

prospective shareholders, brokers, or administrators; and implementing and
operating the Plan. Pursuant to the Plan, Federated Securities Corp. may
pay fees to brokers for distribution and administrative services and to
administrators for administrative services as to shares. The administrative
services are provided by a representative who has knowledge of the
shareholder's particular circumstances and goals, and include, but are not
limited to: communicating account openings; communicating account closings;
entering purchase transactions; entering redemption transactions; providing
or arranging to provide accounting support for all transactions, wiring
funds and receiving funds for share purchases and redemptions, confirming
and reconciling all transactions, reviewing the activity in Fund accounts,
and providing training and supervision of broker personnel; posting and
reinvesting dividends to Fund accounts or arranging for this service to be
performed by the Funds' transfer agent; and maintaining and distributing
current copies of prospectuses and shareholder reports to the beneficial
owners of shares and prospective shareholders.
The Board of Trustees expects that the Plan will result in the sale of a
sufficient number of shares so as to allow the Funds to achieve economic
viability. It is also anticipated that an increase in the size of each Fund
will facilitate more efficient portfolio management and assist each Fund in
seeking to achieve its investment objective.
SHAREHOLDER SERVICES AGREEMENT (PRIME MONEY MARKET FUND CLASS A SHARES
ONLY)
This arrangement permits the payment of fees to Michigan National Bank and
financial institutions to cause services to be provided which are necessary
for the maintenance of shareholder accounts and to encourage personal
services to shareholders by a representative who has knowledge of the
shareholder's particular circumstances and goals. These activities and

services may include, but are not limited to: providing office space,
equipment, telephone facilities, and various clerical, supervisory,
computer and other personnel as necessary or beneficial to establish and
maintain shareholder accounts and records; processing purchase and
redemption transactions and automatic investments of a client's account
cash balance; answering routine client inquiries; and assisting clients in
changing dividend options, account designations, and addresses. By adopting
the Shareholder Services Agreement on behalf of Class A Shares, the Board
of Trustees expects that the Class A Shares will benefit by: (1) providing
personal services to shareholders; (2) investing shareholder assets with a
minimum of delay and administrative detail; (3) enhancing shareholder
recordkeeping systems; and (4) responding promptly to shareholders'
requests and inquiries concerning their accounts.
For the fiscal year ended April 30, 1996, Prime Money Market Fund (Class A
Shares) paid $720,142 in shareholder services fees.
CONVERSION TO FEDERAL FUNDS
It is the Funds' policy to be as fully invested as possible so that maximum
interest may be earned. To this end, all payments from shareholders must be
in federal funds or be converted into federal funds. Federated Shareholder
Services Company acts as the shareholder's agent in depositing checks and
converting them to federal funds.
DETERMINING NET ASSET VALUE

The Funds attempt to stabilize the value of a share at $1.00. The days on
which net asset value is calculated by the Funds are described in the
prospectus.

USE OF THE AMORTIZED COST METHOD
The Trustees have decided that the best method for determining the value of
portfolio instruments is amortized cost. Under this method, portfolio
instruments are valued at the acquisition cost as adjusted for amortization
of premium or accumulation of discount rather than at current market value.
The Funds' use of the amortized cost method of valuing portfolio
instruments depends on its compliance with Rule 2a-7, (the "Rule"), under
the Investment Company Act of 1940. Under the Rule, the Trustees must
establish procedures reasonably designed to stabilize the net asset value
per share, as computed for purposes of distribution and redemption, at
$1.00 per share, taking into account current market conditions and the
Fund's investment objective.
Under the Rule, a Fund is permitted to purchase instruments which are
subject to demand features or standby commitments. As defined by the Rule,
a demand feature entitles the Fund to receive the principal amount of the
instrument from the issuer or a third party on (1) no more than 30 days'
notice or (2) at specified intervals not exceeding one year on no more than
30 days' notice. A standby commitment entitles the Fund to achieve same day
settlement and to receive an exercise price equal to the amortized cost of
the underlying instrument plus accrued interest at the time of exercise.
Although demand features and standby commitments are defined as "puts"
under the Rule, the Prime Money Market Fund and the Michigan Municipal Cash
Fund do not consider them to be "puts" as that term is used in the Funds'
investment limitations. Demand features and standby commitments are
features which enhance an instrument's liquidity, and the investment
limitation which proscribes puts is designed to prohibit the purchase and
sale of put and call options and is not designed to prohibit a Fund from
using techniques which enhance the liquidity of portfolio instruments.

MONITORING PROCEDURES
The Trustees' procedures include monitoring the relationship between
the amortized cost value per share and the net asset value per share
based upon available indications of market value. The Trustees will
decide what, if any, steps should be taken if there is a difference of
more than .50% between the two values. The Trustees will take any
steps they consider appropriate (such as redemption in kind or
shortening the average portfolio maturity) to minimize any material
dilution or other unfair results arising from differences between the
two methods of determining net asset value.
INVESTMENT RESTRICTIONS
The Rule requires that each Fund limit its investments to instruments
that, in the opinion of the Trustees, present minimal credit risks,
and have received the requisite rating from one or more nationally
recognized statistical rating organizations. If the instruments are
not rated, the Trustees must determine that they are of comparable
quality. The Rule also requires each Fund to maintain a dollar-
weighted average portfolio maturity (not more than 90 days)
appropriate to the objective of maintaining a stable net asset value
of $1.00 per share. In addition, no instrument with a remaining
maturity of more than 397 days can be purchased by a Fund.
Should the disposition of a portfolio security result in a dollar-weighted
average portfolio maturity of more than 90 days, the Fund will invest its
available cash to reduce the average maturity to 90 days or less as soon as
possible.
The Funds may attempt to increase yield by trading portfolio securities to
take advantage of short-term market variations. This policy may, from time
to time, result in high portfolio turnover. Under the amortized cost method

of valuation, neither the amount of daily income nor the net asset value is
affected by any unrealized appreciation or depreciation of the portfolio.
In periods of declining interest rates, the indicated daily yield on
shares, computed by dividing the annualized daily income on the Fund's
portfolio by the net asset value computed as above, may tend to be higher
than a similar computation made by using a method of valuation based upon
market prices and estimates.
In periods of rising interest rates, the indicated daily yield on shares,
computed the same way may tend to be lower than a similar computation made
by using a method of calculation based upon market prices and estimates.

EXCHANGE PRIVILEGE

Shareholders using the exchange privilege must exchange shares having a net
asset value of at least $1,000. Before the exchange, the shareholder must
receive a prospectus of the fund for which the exchange is being made.
This privilege is available to shareholders resident in any state in which
the fund shares being acquired may be sold. Upon receipt of proper
instructions and required supporting documents, shares submitted for
exchange are redeemed and the proceeds invested in shares of the other
fund.
Instructions for exchanges may be given in writing or by telephone.
Exchange procedures are explained in the prospectus under "Exchange
Privilege."
REDEEMING SHARES

The Funds redeem shares at the next computed net asset value after
Federated Shareholder Services Company receives the redemption request.

Redemption procedures are explained in the prospectus under "Redeeming
Shares."
REDEMPTION IN KIND
Although the Funds intend to redeem shares in cash, they reserve the right
under certain circumstances to pay the redemption price in whole or in part
by a distribution of securities from the Fund's portfolio. To satisfy
registration requirements in a particular state, redemption in kind will be
made (for any shareholder requesting redemption) in readily marketable
securities to the extent that such securities are available. If this
state's policy changes, the Funds reserve the right to redeem in kind by
delivering those securities it deems appropriate.
Redemption in kind will be made in conformity with applicable Securities
and Exchange Commission rules, taking such securities at the same value
employed in determining net asset value and selecting the securities in a
manner the Trustees determine to be fair and equitable.
The Trust has elected to be governed by Rule 18f-1 of the Investment
Company Act of 1940 under which a Fund is obligated to redeem shares for
any one shareholder in cash only up to the lesser of $250,000 or 1% of the
Fund's net asset value during any 90-day period.
TAX STATUS

THE FUNDS' TAX STATUS
The Funds intend to pay no federal income tax because they expect to meet
the requirements of Subchapter M of the Internal Revenue Code applicable to
regulated investment companies and to receive the special tax treatment
afforded to such companies. To qualify for this treatment, a Fund must,
among other requirements:

o derive at least 90% of its gross income from dividends, interest, and
gains from the sale of securities;
o derive less than 30% of its gross income from the sale of securities
held less than three months;
o invest in securities within certain statutory limits; and
o distribute to its shareholders at least 90% of its net income earned
during the year.
SHAREHOLDERS' TAX STATUS
No portion of any income dividend paid by a Fund is eligible for the
dividends received deduction available to corporations. Any short-term
capital gains are taxable as ordinary income.

TOTAL RETURN

The average annual total returns for the 1-year and 5-year periods and the
period from June 1, 1989 (date of initial public investment) to April 30,
1996 for U.S. Treasury Fund and Prime Money Market Fund-Class A Shares were
5.28%, 4.02%, 5.07% and 5.33%, 4.11%, 5.21%, respectively. The average
annual total returns for the 1-year and 5-year periods and from June 14,
1989 (date of initial public investment) to April 30, 1996 for Michigan
Municipal Cash Fund were 3.24%, 2.79%, and 3.51%, respectively.
The average annual total return for the Fund is the average compounded rate
of return for a given period that would equate a $1,000 initial investment
to the ending redeemable value of that investment. The ending redeemable
value is computed by multiplying the number of shares owned at the end of
the period by the net asset value per share at the end of the period. The
number of shares owned at the end of the period is based on the number of

shares purchased at the beginning of the period with $1,000, less any
applicable sales charge, adjusted over the period by any additional shares,
assuming the reinvestment of all dividends and distributions.
Cumulative total return reflects the Fund's total performance over a
specific period. The cumulative total return for the Prime Money Market
Fund-Class B Shares for the period from June 13, 1995 (date of initial
public investment) through April 30, 1996 was 5.07%. This total return is
representative of only 11 months of activity since the date of initial
public investment.
Advertisements and other sales literature for either class of shares may
refer to total return. Total return is the historic change in the value of
an investment in either class of shares based on the monthly reinvestment
of dividends over a specified period of time.
YIELD

For the period ended April 30, 1996, the seven-day yields for Class A
Shares and Class B Shares of Prime Money Market Fund were 4.78% and 5.03%,
respectively.
For the period ended April 30, 1996, the seven-day yield for U.S. Treasury
Fund was 4.72%.
For the period ended April 30, 1996, the seven-day yield forMichigan
Municipal Cash Fund was 3.24%.
The Funds calculate yield daily, based upon the seven days ending on the
day of the calculation, called the "base period." This yield is computed
by:
o determining the net change in the value of a hypothetical account with
a balance of one share at the beginning of the base period, with the
net change excluding capital changes but including the value of any

additional shares purchased with dividends earned from the original
one share and all dividends declared on the original and any purchased
shares;
o dividing the net change in the account's value by the value of the
account at the beginning of the base period to determine the base
period return; and
o multiplying the base period return by (365/7).
To the extent that financial institutions and broker/dealers charge fees in
connection with services provided in conjunction with an investment in a
Fund, the performance will be reduced for those shareholders paying those
fees.
EFFECTIVE YIELD

For the period ended April 30, 1996, the seven-day effective yields for
Class A Shares and Class B Shares of Prime Money Market Fund were 4.89% and
5.15%, respectively.
For the period ended April 30, 1996, the seven-day effective yield for U.
S. Treasury Fund was 4.83%.
For the period ended April 30, 1996, the seven-day effective yield for
Michigan Municipal Cash Fund was 3.29%.
The Funds' effective yield is computed by compounding the unannualized base
period return by:
o adding 1 to the base period return;
o raising the sum to the 365/7th power; and
o subtracting 1 from the result.

TAX-EQUIVALENT YIELD

The Michigan Municipal Cash Fund's tax-equivalent yield for the seven-day
period ended April 30, 1996, was 4.29%, assuming an effective tax rate of
32.47%.
The tax-equivalent yield of the Fund is calculated similarly to the yield,
but is adjusted to reflect the taxable yield that the Fund would have had
to earn to equal its actual yield, assuming a specified tax rate and
assuming that income is 100% tax-exempt.
TAX-EQUIVALENCY TABLE
The Michigan Municipal Cash Fund may use a tax-equivalency table in
advertising and sales literature. The interest earned by the municipal
bonds in the Fund's portfolio generally remains free from federal regular
income tax,* and is free from the state income tax imposed by the state of
Michigan. As the table indicates, a "tax-exempt" investment is an
attractive choice for investors, particularly in times of narrow spreads
between tax-free and taxable yields.
TAXABLE YIELD EQUIVALENT FOR 1996

STATE OF MICHIGAN

COMBINED FEDERAL AND STATE INCOME TAX BRACKET:
19.40% 32.40% 35.40% 40.40% 44.00%

JOINT $1- $40,101- $96,901- $147,701- OVER

RETURN 40,100 96,900 147,700 263,750 $263,750

SINGLE $1- $24,001- $58,151- $121,301- OVER
RETURN 24,000 58,150 121,300 263,750 $263,750

TAX-EXEMPT
YIELD TAXABLE YIELD EQUIVALENT

1.50% 1.86% 2.22% 2.32% 2.52% 2.68%
2.00% 2.48% 2.96% 3.10% 3.36% 3.57%
2.50% 3.10% 3.70% 3.87% 4.19% 4.46%
3.00% 3.72% 4.44% 4.64% 5.03% 5.36%
3.50% 4.34% 5.18% 5.42% 5.87% 6.25%
4.00% 4.96% 5.92% 6.19% 6.71% 7.14%
4.50% 5.58% 6.66% 6.97% 7.55% 8.04%
5.00% 6.20% 7.40% 7.74% 8.39% 8.93%
5.50% 6.82% 8.14% 8.51% 9.23% 9.82%
6.00% 7.44% 8.88% 9.29% 10.07% 10.71%

Note: The maximum marginal tax rate for each bracket was used in
calculating the taxable yield equivalent. Furthermore, additional
state and local taxes paid on comparable taxable investments were not
used to increase federal deductions.
The chart above is for illustrative purposes only. It is not an indicator
of past or future performance of the Michigan Municipal Cash Fund.
* Some portion of the Michigan Municipal Cash Fund's income may be subject
to the federal alternative minimum tax and state and local taxes.

PERFORMANCE COMPARISONS

The Funds' performance depends upon such variables as:
o portfolio quality;
o average portfolio maturity;
o type of instruments in which the portfolio is invested;
o changes in interest rates on money market instruments;
o changes in Fund expenses; and
o the relative amount of Fund cash flow.
Investors may use financial publications and/or indices to obtain a more
complete view of the Funds' performance. When comparing performance,
investors should consider all relevant factors such as the composition of
any index used, prevailing market conditions, portfolio compositions of
other funds, and methods used to value portfolio securities and compute
offering price. The financial publications and/or indices which the Funds
use in advertising may include:
o LIPPER ANALYTICAL SERVICES, INC., ranks funds in various fund
categories by making comparative calculations using total return.
Total return assumes the reinvestment of all income dividends and
capital gains distributions, if any. From time to time, a Fund will
quote its ranking in its respective Lipper category in advertising and
sales literature.

o MONEY, a monthly magazine, regularly ranks money market funds in
various categories based on the latest available seven-day compound
(effective) yield. From time to time, a Fund will quote its Money
ranking in advertising and sales literature.
Advertising and other promotional literature may include charts, graphs and
other illustrations using the Funds' returns, or returns in general, that
demonstrate basic investment concepts such as tax-deferred compounding,
dollar-cost averaging and systematic investment. In addition, the Funds can
compare their performance, or performance for the types of securities in
which they invest, to a variety of other investments, such as bank savings
accounts, certificates of deposit, and Treasury bills.
ECONOMIC AND MARKET INFORMATION
Advertising and sales literature for the Funds may include discussions of
economic, financial and political developments and their effect on the
securities market. Such discussions may take the form of commentary on
these developments by Fund portfolio managers and their views and analysis
on how such developments could affect the Funds. In addition, advertising
and sales literature may quote statistics and give general information
about the mutual fund industry, including the growth of the industry, from
sources such as the Investment Company Institute ("ICI"). For example,
according to the ICI, twenty-seven percent of American households are
pursuing their financial goals through mutual funds. These investors, as
well as businesses and institutions, have entrusted over $3 trillion to the
more than 5,500 funds available.
FINANCIAL STATEMENTS

The Financial Statements for the fiscal year ended April 30, 1996 are
incorporated herein by reference to the Annual Report of the Funds dated

April 30, 1996 (File Nos. 33-29808 and 811-5843). A copy of the Funds'
Annual Report may be obtained without charge by contacting the Trust.

APPENDIX

STANDARD AND POOR'S RATINGS GROUP MUNICIPAL BOND RATINGS
AAA--Debt rated "AAA" has the highest rating assigned by Standard & Poor's
Ratings Group ("S&P"). Capacity to pay interest and repay principal is
extremely strong.
AA--Debt rated "AA" has a very strong capacity to pay interest and repay
principal and differs from the higher rated issues only in small degree.
A--Debt rated "A" has a strong capacity to pay interest and repay principal
although it is somewhat more susceptible to the adverse effects of changes
in circumstances and economic conditions than debt in higher rated
categories.
NR--Indicates that no public rating has been requested, that there is
insufficient information on which to base a rating, or that S&P does not
rate a particular type of obligation as a matter of policy.
PLUS (+) OR MINUS (-): The ratings from AA to CCC may be modified by the
addition of a plus or minus sign to show relative standing within the major
rating categories.
MOODY'S INVESTORS SERVICE, INC. CORPORATE BOND RATINGS DEFINITIONS
AAA--Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to
as "gilt edged." Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be visualized

are most unlikely to impair the fundamentally strong position of such
issues.
AA--Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally
known as high grade bonds. They are rated lower than the best bonds because
margins of protection may not be as large as in Aaa securities or
fluctuation of protective elements may be of greater amplitude or there may
be other elements present which make the long-term risks appear somewhat
larger than in Aaa securities.
A--Bonds which are rated A possess many favorable investment attributes and
are to be considered as upper medium grade obligations. Factors giving
security to principal and interest are considered adequate but elements may
be present which suggest a susceptibility to impairment sometime in the
future.
NR--Not rated by Moody's.
Moody's applies numerical modifiers, 1, 2 and 3 in each generic rating
classification from Aa through B in its corporate or municipal bond rating
system. The modifier 1 indicates that the security ranks in the higher end
of its generic rating category; the modifier 2 indicates a mid-range
ranking; and the modifier 3 indicates that the issue ranks in the lower end
of its generic rating category.
FITCH INVESTORS SERVICE, INC. LONG-TERM DEBT RATINGS
AAA--Bonds considered to be investment grade and of very high quality. The
obligor has an exceptionally strong ability to pay interest and repay
principal, which is unlikely to be affected by reasonably foreseeable
events.
AA--Bonds considered to be investment grade and of very high quality. The
obligor's ability to pay interest and repay principal is very strong,

although not quite as strong as bonds rated "AAA". Because bonds rated in
the "AAA" and "AA" categories are not significantly vulnerable to
foreseeable future developments, short-term debt of these issuers is
generally rated F-1+.
A--Bonds considered to be investment grade and of high credit quality. The
obligor's ability to pay interest and repay principal is considered to be
strong, but may be more vulnerable to adverse changes in economic
conditions and circumstances than bonds with higher ratings.
NR--NR indicates that Fitch does not rate the specific issue.
PLUS (+) OR MINUS (-): Plus and minus signs are used with a rating symbol
to indicate the relative position of a credit within the rating category.
Plus and minus signs, however, are not used in the AAA category.
STANDARD AND POOR'S RATINGS GROUP MUNICIPAL NOTE RATINGS
SP-1--Very strong or strong capacity to pay principal and interest. Those
issues determined to possess overwhelming safety characteristics will be
given a plus (+) designation.
SP-2--Satisfactory capacity to pay principal and interest.
MOODY'S INVESTORS SERVICE SHORT-TERM LOAN RATINGS
MIG1/VMIG1--This designation denotes best quality. There is a present
strong protection by established cash flows, superior liquidity support or
demonstrated broadbased access to the market for refinancing.
MIG2/VMIG2--This designation denotes high quality. Margins of protection
are ample although not so large as in the preceding group.
FITCH INVESTORS SERVICE, INC. SHORT-TERM DEBT RATINGS
F-1+--EXCEPTIONALLY STRONG CREDIT QUALITY. Issues assigned this rating are
regarded as having the strongest degree of assurance for timely payment.

F-1--VERY STRONG CREDIT QUALITY. Issues assigned this rating reflect an
assurance of timely payment only slightly less in degree than issues rated
F-1+.
F-2--GOOD CREDIT QUALITY. Issues carrying this rating have a satisfactory
degree of assurance for timely payment, but the margin of safety is not as
great as the F-1+ and F-1 categories.
STANDARD AND POOR'S RATINGS GROUP COMMERCIAL PAPER RATINGS DEFINITIONS
A-1--This highest category indicates that the degree of safety regarding
timely payment is strong. Those issues determined to possess extremely
strong safety characteristics are denoted with a plus (+) sign designation.
A-2--Capacity for timely payment on issues with this designation is
satisfactory. However, the relative degree of safety is not as high as for
issues designated A-1.
MOODY'S INVESTORS SERVICE COMMERCIAL PAPER RATINGS
P-1--Issuers rated PRIME-1 (or related supporting institutions) have a
superior capacity for repayment of short-term promissory obligations.
PRIME-1 repayment capacity will normally be evidenced by the following
characteristics: Leading market positions in well established industries;
high rates of return on funds employed; conservative capitalization
structures with moderate reliance on debt and ample asset protection; broad
margins in earning coverage of fixed financial charges and high internal
cash generation; and well established access to a range of financial
markets and assured sources of alternate liquidity.
P-2--Issuers rated PRIME-2 (or related supporting institutions) have a
strong capacity for repayment of short-term promissory obligations. This
will normally be evidenced by many of the characteristics cited above, but
to a lesser degree. Earnings trends and coverage ratios, while sound, will
be more subject to variation. Capitalization characteristics, while still

appropriate, may be more affected by external conditions. Ample alternate
liquidity is maintained.

INDEPENDENCE ONE EQUITY PLUS FUND
(A PORTFOLIO OF INDEPENDENCE ONE MUTUAL FUNDS)

PROSPECTUS

The shares of Independence One Equity Plus Fund (the "Fund") offered by this
prospectus represent interests in the Fund which is a diversified portfolio and
one of a series of investment portfolios in Independence One Mutual Funds (the
"Trust"), an open-end management investment company (a mutual fund). Michigan
National Bank professionally manages the Fund's portfolio.

The investment objective of the Fund is total return. The Fund will pursue this
objective by attempting to provide investment results that correspond to or
exceed the aggregate price and dividend performance of the Standard & Poor's 100
Composite Stock Price Index (the "S&P 100") by investing primarily in the common
stocks comprising the S&P 100. The Fund is neither affiliated with nor sponsored
by Standard & Poor's ("S&P").

Shares of the Fund are intended to be sold as an investment vehicle for

institutions, corporations, fiduciaries and individuals. Shareholders can
invest, reinvest, or redeem shares at any time without charge or penalty imposed
by the Fund. Shareholders have access to other portfolios of the Trust through
an exchange program.

THE SHARES OFFERED BY THIS PROSPECTUS ARE NOT DEPOSITS OR OBLIGATIONS OF
MICHIGAN NATIONAL BANK, ARE NOT ENDORSED OR GUARANTEED BY MICHIGAN NATIONAL
BANK, AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE
FEDERAL RESERVE BOARD OR ANY OTHER GOVERNMENT AGENCY. INVESTMENT IN THESE SHARES
INVOLVES INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.

This prospectus contains the information you should read and know before you
invest in shares of the Fund. Keep this prospectus for future reference.

The Fund has also filed a Statement of Additional Information dated June 30,
1996 with the Securities and Exchange Commission ("SEC"). The information
contained in the Statement is incorporated by reference into this prospectus.
You may request a copy of the Statement free of charge by calling toll-free
1-800-334-2292. To obtain other information, or make inquiries about the Trust,
contact the Trust at the address listed in the back of this prospectus.

Prospectus dated June 30, 1996

TABLE OF CONTENTS
- --------------------------------------------------------------------------------
SUMMARY OF FUND EXPENSES 1
- ------------------------------------------------------

FINANCIAL HIGHLIGHTS 2
- ------------------------------------------------------

GENERAL INFORMATION 3
- ------------------------------------------------------

INVESTMENT INFORMATION 3
- ------------------------------------------------------

Investment Objective 3
Investment Policies 3
Acceptable Investments 4
Equity Investment Considerations 7
Derivative Contracts and Securities 7
Investment Limitation 7

INDEPENDENCE ONE MUTUAL FUND
INFORMATION 7
- ------------------------------------------------------

Management of the Trust 7
Board of Trustees 7
Investment Adviser 7

Sub-Adviser 8
Distribution of Fund Shares 9
Fund Administration 9
Brokerage Transactions 9
Expenses of the Fund 10

NET ASSET VALUE 10
- ------------------------------------------------------

INVESTING IN THE FUND 10
- ------------------------------------------------------

Share Purchases 10
Minimum Investment Required 11
What Shares Cost 11
Certificates and Confirmations 11
Dividends and Capital Gains 11
Systematic Investment Program 11

EXCHANGING SECURITIES FOR FUND SHARES 12
- ------------------------------------------------------

EXCHANGE PRIVILEGE 12
- ------------------------------------------------------

REDEEMING FUND SHARES 14
- ------------------------------------------------------

Systematic Withdrawal Program 15
Accounts with Low Balances 15

SHAREHOLDER INFORMATION 16
- ------------------------------------------------------

EFFECT OF BANKING LAWS 16
- ------------------------------------------------------

TAX INFORMATION 17
- ------------------------------------------------------

Federal Income Tax 17

PERFORMANCE INFORMATION 17
- ------------------------------------------------------

STANDARD & POOR'S 18
- ------------------------------------------------------

FINANCIAL STATEMENTS 19
- ------------------------------------------------------

INDEPENDENT AUDITOR'S REPORT 32
- ------------------------------------------------------

ADDRESSES Back Cover
- ------------------------------------------------------

SUMMARY OF FUND EXPENSES
- --------------------------------------------------------------------------------
SHAREHOLDER TRANSACTION EXPENSES

<TABLE>
<S> <C>
Maximum Sales Charge Imposed on Purchases (as a percentage of offering price)............................ None
Maximum Sales Charge Imposed on Reinvested Dividends
(as a percentage of offering price).................................................................... None
Contingent Deferred Sales Charge (as a percentage of original purchase
price or redemption proceeds, as applicable)........................................................... None
Redemption Fee (as a percentage of amount redeemed, if applicable)....................................... None
Exchange Fee............................................................................................. None
</TABLE>

ANNUAL FUND OPERATING EXPENSES
(As a percentage of average net assets)

<TABLE>
<S> <C>
Management Fee (after waiver)(1)......................................................................... 0.20%
12b-1 Fees............................................................................................... None
Total Other Expenses (after waiver)(2)................................................................... 0.19%
Total Fund Operating Expenses (after waivers)(3).................................................... 0.39%
</TABLE>

(1) The management fee was reduced to reflect the voluntary waiver by the
investment adviser. The adviser can terminate this voluntary waiver at any
time at its sole discretion. The maximum management fee is 0.40%.

(2) Total Other Expenses have been reduced to reflect the voluntary waiver of a
portion of the administration fee. The administrator can terminate this
voluntary waiver at any time at its sole discretion.

(3) The Total Fund Operating Expenses for the fiscal year ended April 30, 1996
was 0.70% absent the voluntary waivers detailed in Note (1) and Note (2).

THE PURPOSE OF THIS TABLE IS TO ASSIST AN INVESTOR IN UNDERSTANDING THE
VARIOUS COSTS AND EXPENSES THAT A SHAREHOLDER OF THE FUND WILL BEAR, EITHER
DIRECTLY OR INDIRECTLY. FOR MORE COMPLETE DESCRIPTIONS OF THE VARIOUS COSTS AND
EXPENSES, SEE "INVESTING IN THE FUND." Wire-transferred redemptions of less than
$5,000 may be subject to additional fees.

<TABLE>
<S> <C> <C> <C> <C>
EXAMPLE 1 YEAR 3 YEARS 5 YEARS 10 YEARS
You would pay the following expenses on a $1,000 investment assuming (1) 5%
annual return and (2) redemption at the end of each time period............. $4 $13 $22 $49
</TABLE>

THE ABOVE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.

INDEPENDENCE ONE EQUITY PLUS FUND
FINANCIAL HIGHLIGHTS

- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)

Reference is made to the Independent Auditors' Report on page 32.

<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 0.11
- ---------------------------------------------------------------------------------------------
Net realized and unrealized gain on investments 1.38
- --------------------------------------------------------------------------------------------- -------
Total from investment operations 1.49
- --------------------------------------------------------------------------------------------- -------
LESS DISTRIBUTIONS
- ---------------------------------------------------------------------------------------------
Total distributions (0.10)
- --------------------------------------------------------------------------------------------- -------
NET ASSET VALUE, END OF PERIOD $ 11.39
- --------------------------------------------------------------------------------------------- -------
TOTAL RETURN (b) 14.96%
- ---------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ---------------------------------------------------------------------------------------------
Expenses 0.39%*
- ---------------------------------------------------------------------------------------------
Net investment income 1.92%*

- ---------------------------------------------------------------------------------------------
Expense waiver/reimbursement (c) 0.31%*
- ---------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
- ---------------------------------------------------------------------------------------------
Net assets, end of period (000 omitted) $112,609
- ---------------------------------------------------------------------------------------------
Average commission rate paid 0.0034%
- ---------------------------------------------------------------------------------------------
Portfolio turnover 6%
- ---------------------------------------------------------------------------------------------
</TABLE>

* Computed on an annualized basis.

(a) Reflects operations for the period from September 25, 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.

(See Notes which are an integral part of the Financial Statements)

Further information about the Fund's performance is contained in the Annual
Report for the fiscal year ended April 30, 1996, which can be obtained free of
charge.

GENERAL INFORMATION
- --------------------------------------------------------------------------------

The Trust was established as a Massachusetts business trust under a Declaration
of Trust dated January 9, 1989. The Declaration of Trust permits the Trust to
offer separate series of shares representing interests in separate portfolios of
securities. The shares in any one portfolio may be offered in separate classes.
This prospectus relates only to the Trust's portfolio known as Independence One
Equity Plus Fund. As of the date of this prospectus, the Fund does not offer

separate classes of shares.

Shares of the Fund are designed primarily for individuals and institutions as a
convenient means of accumulating an interest in a professionally-managed,
diversified portfolio investing substantially in the common stocks of companies
with very large market capitalization. A minimum initial investment of $1,000 is
required. Subsequent investments must be in the amount of at least $100.

INVESTMENT INFORMATION
- --------------------------------------------------------------------------------

INVESTMENT OBJECTIVE

The investment objective of the Fund is total return. The investment objective
cannot be changed without the approval of shareholders. While there is no
assurance that the Fund will achieve its investment objective, it endeavors to
do so by following the investment policies described in this prospectus.

INVESTMENT POLICIES

The Fund will pursue its investment objective by attempting to provide
investment results that correspond to or exceed the aggregate price and dividend
performance of the S&P 100 by investing primarily in the stocks comprising the
S&P 100. Unless indicated otherwise, the investment policies of the Fund may be
changed by the Board of Trustees ("Trustees") without the approval of
shareholders. Shareholders will be notified before any material change in these
policies becomes effective.

The S&P 100 is a capitalization-weighted index of 100 stocks from a broad range
of industries. It provides a measure of overall large company performance
because it comprises 100 blue chip stocks from diverse industry groups. Stocks
selected for inclusion tend to be the leading companies in leading industries in
the U.S. economy. Selection criteria include market value, capitalization,
trading activity and liquidity, and soundness of financial and operating
conditions. The component stocks are weighted according to the total market
value of their outstanding shares. The impact of a component's price change is
proportional to the issue's total market value, which is the share price times
the number of shares outstanding. These are summed for all 100 stocks and
divided by a predetermined base value. The base value for the S&P 100 is
adjusted to reflect changes in capitalization resulting from mergers,
acquisitions, stock rights and substitutions. Inclusion of a particular stock in
the S&P 100 in no way implies an opinion by S&P as to its investment
attractiveness, nor is S&P a sponsor or in any way affiliated with the Fund.

Under normal circumstances, at least 80% of the Fund's assets will be invested
to correspond as closely as possible to the relative weighting of the S&P 100.
With respect to this 80% investment level, the Fund will attempt to achieve a
high degree of correlation between the performance of its portfolio and that of
the S&P 100. In managing this portion of the Fund's assets, Michigan National
Bank (the "Adviser") and Sosnoff Sheridan Group (the "Sub-Adviser")
(collectively, the "Advisers") will utilize a technique called index fund
management which entails the use of a computer program to track the S&P 100 on a
daily basis. The Advisers will purchase and sell securities from the Fund's
portfolio as necessary to continually and accurately duplicate the composition
of the S&P 100, as appropriate, as it changes over time. The Advisers will
continually assess the validity of the adjustments made to the Fund's portfolio.

With respect to the remaining 20% of the Fund's assets, the Advisers will
normally select common stocks that are included in the S&P 100, the weightings
of which may or may not be identical to that of the S&P 100. These weightings
will be determined by the Advisers in an effort to exceed the total return
performance of the S&P 100. Several criteria are considered in selecting those
stocks that, in the Advisers' opinion, are likely to have above-average
performance. These criteria include: (1) projections by securities analysts of
the stock's earnings and dividend growth; (2) growth potential, as measured by
reinvestment of a high portion of a company's current earnings; (3) improving
earnings outlook, as determined based upon surveys of Wall Street securities
analysts; (4) technical measures, such as rising trading volume indicating an
increasing investor interest in a stock; and (5) dividend yield, with preference
being given to high-yield stocks and stocks of companies which pay no dividends
and retain their earnings to finance growth.

The Fund's ability to provide investment results that correspond to or exceed
the aggregate price and dividend performance of the S&P 100 will depend partly
on the size and timing of cash flows into and out of the Fund. Investment
changes to accommodate these cash flows will be made to maintain the similarity
of the Fund's portfolio to the S&P 100, with respect to the 80% investment level
described above, to the maximum practicable extent. With respect to the
reciprocal 20% investment level described above, changes will be made to
accommodate cash flows, as appropriate. From time to time, adjustments may be
made in the Fund because of changes in the composition of the S&P 100 as
announced by S&P. It is anticipated that these adjustments will occur
infrequently, and therefore, the accompanying costs, including brokerage fees,
custodial expenses, and transfer taxes, are expected to be relatively low.

Portfolio turnover is also expected to be lower than for most other investment
companies. The adverse financial situation of an issuer may not directly result
in the elimination of its securities from the portfolio, unless the securities
are removed from the S&P 100. The Fund reserves the right to remove an
investment from the Fund if, in the Advisers' opinion, the merit of the
investment has been substantially impaired by extraordinary events or financial
conditions.

ACCEPTABLE INVESTMENTS

In addition to the investment policies described above, the Fund may utilize
stock index futures contracts and options on stocks, stock indices and stock
index futures contracts for the purposes of managing cash flows into and out of
the Fund's portfolio and potentially reducing transactional costs. The Fund will
only enter into stock index futures contracts for the purpose of offsetting
risks from other positions.

The Fund may hold cash reserves which may be invested in temporary investments
which include, but are not limited to, short-term money market instruments, U.S.
government securities (including variable rate U.S. government securities), and
repurchase agreements. The Fund may also invest in restricted and illiquid
securities, securities of other investment companies, and lend portfolio
securities.

STOCK INDEX FUTURES AND OPTIONS. The Fund may utilize stock index futures
contracts, options, and options on futures contracts, subject to the limitation
that the value of these futures contracts and options will not exceed 20% of the
Fund's total assets. Also the Fund will not purchase options to the extent that

more than 5% of the value of the Fund's total assets would be invested in
premiums on open option positions.

These contracts and options will serve three purposes. First, the contracts,
some of which require a small margin, will allow the Fund to maintain sufficient
liquidity to meet redemption requests, thereby handling cash flows into and out
of the Fund. In addition, the contracts will increase the level of Fund assets
that may be devoted to attempting to approximate the investment return of the
S&P 100. Third, participation in futures contracts could potentially reduce
transaction costs, since transaction costs associated with futures and options
contracts can be lower than costs stemming from direct investments in stocks.

RISKS. There are several risks accompanying the utilization of futures
contracts to effectively anticipate market movements. First, positions in
futures contracts may be closed only on an exchange or board of trade that
furnishes a secondary market for such contracts. While the Fund plans to
utilize futures contracts only if an active market for such contracts
exists, there is no guarantee that a liquid market will exist for the
contracts at a specified time. The Fund's ability to establish and close
out futures and options positions depends on this secondary market.
Furthermore, because, by definition, futures contracts look to projected
price levels in the future, and not to current levels of valuation, market
circumstances may result in there being a discrepancy between the price of
the stock index future and the movement in the corresponding stock index.
The absence of a perfect price correlation between the futures contract and
its underlying stock index could stem from investors choosing to close
futures contracts by offsetting transactions, rather than satisfying
additional margin requirements. This could result in a distortion of the

relationship between the index and futures market. In addition, because the
futures market imposes less burdensome margin requirements than the
securities market, an increased amount of participation by speculators in
the futures market could result in price fluctuations.

The effective use of futures and options as hedging techniques depends on
the correlation between their prices and the behavior of the Fund's
portfolio securities as well as the Adviser's ability to accurately predict
the direction of stock prices, interest rates and other relevant economic
factors. In addition, daily limits on the fluctuation of futures and
options prices could cause the Fund to be unable to timely liquidate its
futures or options position and cause it to suffer greater losses than
would otherwise be the case. In this regard, the Fund may be unable to
anticipate the extent of its losses from futures transactions. The
Statement of Additional Information includes a further discussion of
futures and options transactions.

In view of these considerations, the Fund will comply with the following
restrictions when purchasing and selling futures contracts. First, the Fund
will not participate in futures transactions if the sum of its initial
margin deposits on open contracts will exceed 5% of the market value of the
Fund's total assets, after taking into account the unrealized profits and
losses on those contracts it has entered into. Second, the Fund will not
enter into these contracts for speculative purposes. Third, since the Fund
does not constitute a commodity pool, it will not market itself as such,
nor serve as a vehicle for trading in the commodities futures or commodity
options markets. In this regard, the Fund will disclose to all prospective
investors the limitations on its futures and options transactions, and make

clear that these transactions are entered into only for bona fide hedging
purposes, or other permissible purposes pursuant to regulations promulgated
by the Commodity Futures Trading Commission ("CFTC"). Finally, the Fund has
claimed an exclusion from registration as a commodity pool operator under
the regulations promulgated by the CFTC.

TEMPORARY INVESTMENTS. For temporary defensive purposes, the Fund may invest up
to 100% of its total assets in cash and cash items including: short-term money
market instruments; securities issued and/or guaranteed as to payment of
principal and interest by the U.S. government, its agencies or
instrumentalities; and repurchase agreements.

The Fund may also hold the instruments described above in such amounts as
necessary: to provide funds for the settlement of portfolio transactions;
pending investment of cash receipts in the ordinary course of business; and to
meet requests for redemption of Fund shares.

U.S. GOVERNMENT SECURITIES. The Fund is permitted to invest in U.S.
government securities which are either issued or guaranteed by the U.S.
government, its agencies, or instrumentalities. These securities include,
but are not limited to, the following:

.direct obligations of the U.S. Treasury, such as U.S. Treasury bills,
notes and bonds; and

.notes, bonds, and discount notes of U.S. government agencies or
instrumentalities, such as the: Farm Credit System, including the
National Bank for Cooperatives, Farm Credit Banks, and Banks for

Cooperatives; Farmers Home Administration; Federal Home Loan Banks;
Federal Home Loan Mortgage Corporation; Federal National Mortgage
Association; Government National Mortgage Association; and Student Loan
Marketing Association.

Some of the short-term U.S. government securities the Fund may purchase
carry variable interest rates. These securities have a rate of interest
subject to adjustment at least annually. This adjusted interest rate is
ordinarily tied to some objective standard, such as a published interest
rate or interest rate index.

REPURCHASE AGREEMENTS. Repurchase agreements are arrangements in which
banks, broker/dealers, and other recognized financial institutions sell
U.S. government securities or other securities to the Fund and agree at the
time of sale to repurchase them at a mutually agreed upon time and price
within one year from the date of acquisition. To the extent that the
original seller does not repurchase the securities from the Fund, the Fund
could receive less than the repurchase price on any sale of such
securities.

EQUITY INVESTMENT CONSIDERATIONS

As described above, the Fund invests primarily in the common stocks comprising
the S&P 100. As with other mutual funds that invest primarily in common stocks,
the Fund is subject to market risks. That is, the possibility exists that common
stocks will decline over short or even extended periods of time, and the United
States equity market tends to be cyclical, experiencing both periods when stock
prices generally increase and periods when stocks prices generally decrease.

DERIVATIVE CONTRACTS AND SECURITIES

The term "derivative" has traditionally been applied to certain contracts
(including futures, forward, option and swap contracts) that "derive" their
value from changes in the value of an underlying security, currency, commodity
or index. Certain types of securities that incorporate the performance
characteristics of these contracts are also referred to as "derivatives." The
term has also been applied to securities "derived" from the cash flows from
underlying securities, mortgages or other obligations.

Derivative contracts and securities can be used to reduce or increase the
volatility of an investment portfolio's total performance. While the response of
certain derivative contracts and securities to market changes may differ from
traditional investments, such as stock and bonds, derivatives do not necessarily
present greater market risks than traditional investments. The Fund will only
use derivative contracts for the purposes disclosed in the applicable prospectus
sections above. To the extent that the Fund invests in securities that could be
characterized as derivatives, it will only do so in a manner consistent with its
investment objectives, policies and limitations.

INVESTMENT LIMITATION

The Fund will not borrow money directly or through reverse repurchase agreements
(arrangements in which the Fund sells a money market instrument for at least a
percentage of its cash value with an agreement to buy it back on a set date)
except, under certain circumstances, the Fund may borrow up to one-third of the
value of its total assets and pledge securities to secure such borrowings.

The above investment limitation cannot be changed without shareholder approval.

INDEPENDENCE ONE MUTUAL FUNDS INFORMATION
- --------------------------------------------------------------------------------

MANAGEMENT OF THE TRUST

INVESTMENT ADVISER. Pursuant to an investment advisory contract with the Trust,
investment decisions for the Fund are made by Michigan National Bank, as the
Fund's investment adviser, subject to direction by the Trustees. The Adviser
continually conducts investment research and
supervision for the Fund and is responsible for the purchase or sale of
portfolio instruments, for which it receives an annual fee from the assets of
the Fund.

ADVISORY FEES. The Adviser may receive an annual investment advisory fee
equal to 0.40% of the Fund's average daily net assets. The Adviser may
voluntarily choose to waive a portion of its fee or reimburse certain
expenses of the Fund. The Adviser has undertaken to reimburse the Fund, up
to the amount of the advisory fee, for operating expenses in excess of
limitations established by certain states.

ADVISER'S BACKGROUND. Michigan National Bank, a national banking
association, is a wholly-owned subsidiary of Michigan National Corporation
("MNC"). MNC is a wholly owned subsidiary of National Australia Bank
Limited, which is a transnational banking organization, headquartered in
Melbourne, Australia. Through its subsidiaries and affiliates, MNC,
Michigan's sixth largest bank holding company in terms of total assets, as
of March 31, 1996 offers a full range of financial services to the public,
including commercial lending, depository services, cash management,
brokerage services, retail banking, mortgage banking, investment advisory
services and trust services. Independence One Capital Management
Corporation ("IOCM"), a nationally recognized investment advisory
subsidiary of MNC, provides investment advisory services for trust and
other managed assets. IOCM and the Trust Division of Michigan National Bank
(the "Trust Division") have managed custodial assets totaling $10.9
billion. Of this amount, IOCM and the Trust Division have investment
discretion over $1.8 billion.

Michigan National Bank has managed mutual funds since May 1989. The Trust
Division has managed pools of commingled funds since 1964.

As part of its regular banking operations, Michigan National Bank may make
loans to or provide credit support for obligations issued by public
companies or municipalities. Thus, it may be possible, from time to time,
for the Fund to hold or acquire the securities of issuers which are also
lending clients of Michigan National Bank. The lending relationship will
not be a factor in the selection of securities.

Sharon Dischinger is Second Vice President and Portfolio Manager for
Michigan National Bank and Independence One Capital Management Corporation
in Farmington Hills, and has been responsible for management of the Fund's
portfolio since its inception. Ms. Dischinger joined Michigan National Bank
in 1990 and is currently the head equity trader. She is also a General
Securities Representative. Prior to Michigan National Bank, Ms. Dischinger
was the head equity trader at Morison Asset Management.

SUB-ADVISER. Pursuant to the terms of an investment sub-advisory agreement
between the Adviser and Sosnoff Sheridan Corporation (doing business as Sosnoff
Sheridan Group), the Sub-Adviser furnishes certain investment advisory services
to the Adviser, including investment research, statistical and other factual
information, and recommendations, based on its analysis, and assists the Adviser
in identifying securities for potential purchase and/or sale on behalf of the
Fund's portfolio. For the services provided and the expenses incurred by the
Sub-Adviser pursuant to the sub-advisory agreement, the Sub-Adviser is entitled
to receive an annual fee of 0.035% of the average daily value of the Fund's
equity securities payable by the Adviser. The Sub-Adviser may elect to
waive some or all of its fee. In no event shall the Fund be responsible for any
fees due to the Sub-Adviser for its services to the Adviser. The Sub-Adviser,
located at 440 South LaSalle Street, Suite 2301, Chicago, Illinois, 60605, is a
corporation controlled by Thomas Sosnoff, its Director and President, and Scott
Sheridan, its Director, Executive Vice-President and Secretary. Although Messrs.
Sosnoff and Sheridan have experience in providing index management services,
prior to September, 1995, they had not previously served as a sub-adviser to an
investment company. In the event that the Sub-Adviser, for any reason, ceases to
furnish sub-advisory services to the Fund, the Adviser will assume direct
responsibility for all advisory functions.

DISTRIBUTION OF FUND SHARES

Federated Securities Corp. is the principal distributor for shares of the Fund.
It is a Pennsylvania corporation organized on November 14, 1969, and is the
principal distributor for a number of investment companies. Federated Securities
Corp. is a subsidiary of Federated Investors.

FUND ADMINISTRATION

ADMINISTRATIVE SERVICES. Federated Administrative Services, a subsidiary of
Federated Investors, provides the Fund with certain administrative personnel and
services necessary to operate the Fund, such as certain legal and accounting
services. Federated Administrative Services provides these at an annual rate as
specified below:

<TABLE>
<CAPTION>
MAXIMUM AVERAGE AGGREGATE DAILY
ADMINISTRATIVE FEE NET ASSETS OF THE TRUST
<C> <S>
.150% on the first $250 million
.125% on the next $250 million
.100% on the next $250 million
.075% on assets in excess of $750 million
</TABLE>

CUSTODIAN. Michigan National Bank, Farmington Hills, Michigan, is custodian for
the securities and cash of the Fund.

BROKERAGE TRANSACTIONS

EXPENSES OF THE FUND

documents for shareholders; registering the Trust, the Fund and shares of the
Fund; taxes and commissions; issuing, purchasing, repurchasing and redeeming
shares; fees for custodians, transfer agents, dividend disbursing agents,
shareholder servicing agents, and registrars; printing, mailing, auditing,
accounting, and legal expenses; reports to shareholders and government agencies;
meetings of Trustees and shareholders and proxy solicitations therefor;
insurance premiums; association membership dues; and such nonrecurring and
extraordinary items as may arise. However, the Adviser may voluntarily waive
and/or reimburse some expenses.

NET ASSET VALUE
- --------------------------------------------------------------------------------

The Fund's net asset value per share fluctuates. It is determined by adding the
market value of all securities and other assets of the Fund, subtracting the
liabilities of the Fund, and dividing the remainder by the total number of
shares outstanding.

INVESTING IN THE FUND
- --------------------------------------------------------------------------------

SHARE PURCHASES

and Federal Reserve Wire System are open for business. In connection with the
sale of Fund shares, the distributor may from time to time offer certain items
of nominal value to any shareholder or investor. The Fund reserves the right to
reject any purchase request.

TO PLACE AN ORDER. Investors may call toll-free 1-800-334-2292 to purchase
shares of the Fund through Michigan National Bank or Independence One. In
addition, investors may purchase shares of the Fund by calling their authorized
broker directly. Payments may be made either by check or wire transfer of
federal funds.

Payment by wire must be received before 4:00 p.m. (Eastern time). It is the
responsibility of Michigan National Bank, Independence One or broker/dealers to
transmit orders to the Fund by 5:00 p.m. (Eastern time) in order for shares to
be purchased at that day's price. For settlement of an order, payment must be
received by check or wire transfer within three business days of receipt of the
order. To purchase by check, the check must be included with the order and made
payable to "Independence One Equity Plus Fund." Checks must be converted into
federal funds to be considered received.

Federal funds should be wired as follows: Federated Shareholder Services Company
c/o Michigan National Bank, Farmington Hills, Michigan; Account Number:
6856238933; For Credit to: Independence One Equity Plus Fund; Fund Number (this
number can be found on the account statement or by contacting the Fund); Group
Number or Order Number; Nominee or Institution Name; and ABA Number 072000805.

MINIMUM INVESTMENT REQUIRED

The minimum initial investment in the Fund is $1,000. Subsequent investments
must be in amounts of at least $100.

WHAT SHARES COST

Shares of the Fund are sold at their net asset value next determined after an
order is received. There is no sales charge imposed by the Fund.

The net asset value is determined as of the close of trading (normally 4:00
p.m., Eastern time) on the New York Stock Exchange, Monday through Friday,
except on: (i) days on which there are not sufficient changes in the value of
the Fund's portfolio securities that its net asset value might be materially
affected; (ii) days during which no shares are tendered for redemption and no
orders to purchase shares are received; and (iii) on the following holidays: New
Year's Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor
Day, Thanksgiving Day, and Christmas Day.

CERTIFICATES AND CONFIRMATIONS

As transfer agent for the Fund, Federated Shareholder Services Company maintains
a share account for each shareholder of record. Share certificates are not
issued unless shareholders so request by contacting their Michigan National Bank
or Independence One representative or authorized broker in writing.

Detailed confirmations of each purchase and redemption are sent to each
shareholder. Monthly confirmations are sent to report dividends paid during that
month.

DIVIDENDS AND CAPITAL GAINS

Dividends are declared and paid quarterly. Capital gains realized by the Fund,
if any, will be distributed at least once every 12 months. Dividends and capital
gains are automatically reinvested on payment dates in additional shares without
a sales charge unless cash payments are requested by shareholders in writing to
the Fund through their Michigan National Bank or Independence One representative
or authorized broker. Shares purchased with reinvested dividends are credited to
shareholder accounts on the following day.

SYSTEMATIC INVESTMENT PROGRAM

Once the Fund account has been opened, shareholders may add to their investment
on a regular basis in a minimum amount of $100. Under this program, funds may be
automatically withdrawn periodically from the shareholder's checking account and
invested in Fund shares at the net asset value next determined after an order is
received. A shareholder may apply for participation in this program through
Michigan National Bank.

EXCHANGING SECURITIES FOR FUND SHARES
- --------------------------------------------------------------------------------

The Fund may accept securities in exchange for Fund shares. The Fund will allow
such exchanges only upon the prior approval of the Fund and a determination by
the Fund and the Adviser that the securities to be exchanged are acceptable.

Any securities exchanged must meet the investment objective and policies of the
Fund, must have a readily ascertainable market value, and must be liquid. The

market value of any securities exchanged in an initial investment, plus any
cash, must be at least equal to the minimum investment in the Fund. The Fund
acquires the exchanged securities for investment and not for resale.

Securities accepted by the Fund will be valued in the same manner as the Fund
values its assets. The basis of the exchange will depend on the net asset value
of Fund shares on the day the securities are valued. One share of the Fund will
be issued for the equivalent amount of securities accepted.

Any interest earned on the securities prior to the exchange will be considered
in valuing the securities. All interest, dividends, subscription or other rights
attached to the securities become the property of the Fund, along with the
securities.

If an exchange is permitted, it will be treated as a sale for federal income tax
purposes. Depending upon the cost basis of the securities exchanged for Fund
shares, a gain or loss may be realized by the investor.

EXCHANGE PRIVILEGE
- --------------------------------------------------------------------------------

All shareholders of the Fund are shareholders of the Trust, which consists of
the Fund, Independence One Fixed Income Fund, Independence One Michigan
Municipal Bond Fund, Independence One U.S. Government Securities Fund and the
following money market funds: Independence One Michigan Municipal Cash Fund;
Independence One Prime Money Market Fund; and Independence One U.S. Treasury
Money Market Fund. Shareholders of the Fund have access to these funds
("participating funds") through an exchange program.

With the exception of Independence One Prime Money Market Fund, the
participating funds currently offer only one class of shares. If such funds
should add a second class of shares, exchanges may be limited to shares of the
same class of each fund. Shareholders of the Fund have access to both Class A
Shares and Class B Shares of Independence One Prime Money Market Fund through
the exchange program.

Shares of the Fund may be exchanged for shares of participating funds at net
asset value.

Shareholders who exercise this exchange privilege must exchange shares having a
net asset value at least equal to the minimum investment of the participating
fund into which they are exchanging. Prior to any exchange, the shareholder must
receive a copy of the current prospectus of the participating fund into which
the exchange is being made.

The exchange privilege is available to shareholders residing in any state in
which the participating fund shares being acquired may legally be sold. Upon
receipt by the transfer agent of proper instructions and all necessary
supporting documents, shares submitted for exchange will be redeemed at the
next-determined net asset value. If the exchanging shareholder does not have an
account in the participating fund whose shares are being acquired, a new account
will be established with the same registration, dividend, and capital gain
options as the account from which shares are exchanged, unless otherwise
specified by the shareholder. In the case where the new account registration is
not identical to that of the existing account, a signature guarantee is
required. (See "Redeeming Fund Shares--By Mail.") Exercise of this privilege is

treated as a redemption and new purchase for federal income tax purposes and,
depending on the circumstances, a short or long-term capital gain or loss may be
realized. The Fund reserves the right to modify or terminate the exchange
privilege at any time. Shareholders would be notified prior to any modification
or termination. Shareholders may obtain further information on the exchange
privilege by calling their Michigan National Bank or Independence One
representative or authorized broker.

An authorization form permitting the Fund to accept telephone exchange requests
must first be completed. It is recommended that investors request this privilege
at the time of their initial application. If not completed at the time of
initial application, authorization forms and information on this service can be
obtained through a Michigan National Bank or Independence One representative or
authorized broker. Telephone exchange instructions may be recorded.

Telephone exchange instructions must be received by Michigan National Bank,
Independence One or an authorized broker and transmitted to the transfer agent
before 4:00 p.m. (Eastern time) for shares to be exchanged the same day.
Shareholders who exchange into a fund will not receive a dividend from the Fund
on the date of the exchange.

Shareholders may have difficulty in making exchanges by telephone through banks,
brokers, and other financial institutions during times of drastic economic or
market changes. If shareholders cannot contact their Michigan National Bank or
Independence One representative or authorized broker by telephone, it is
recommended that an exchange request be made in writing and sent by mail for
next day delivery. Send mail requests to: Independence One Mutual Funds, 27777
Inkster Road, Mail Code 10-30, Farmington Hills, Michigan 48333-9065.

If reasonable procedures are not followed by the Fund, it may be liable for
losses due to unauthorized or fraudulent telephone instructions.

WRITTEN EXCHANGE. A shareholder wishing to make an exchange by written request
may do so by sending it to: Independence One Mutual Funds, 27777 Inkster Road,
Mail Code 10-30, Farmington Hills, Michigan 48333-9065. In addition, an investor
may exchange shares by sending a written request to their authorized broker
directly.

REDEEMING FUND SHARES
- --------------------------------------------------------------------------------

Shares are redeemed at their next determined net asset value after Federated
Shareholder Services Company receives the redemption request. Redemptions will
be made on days on which the Fund computes its net asset value. Redemption

requests cannot be executed on days on which the New York Stock Exchange is
closed or on federal holidays restricting wire transfers. Telephone or written
requests for redemption must be received in proper form and can be made to the
Fund through a Michigan National Bank or Independence One representative or
authorized broker. Although the transfer agent does not charge for telephone
redemptions, it reserves the right to charge a fee for the cost of
wire-transferred redemptions of less than $5,000.

BY TELEPHONE. Shares may be redeemed by telephoning a Michigan National Bank or
an Independence One representative at 1-800-334-2292. In addition, shareholders
may redeem shares by calling their authorized brokers directly. Redemption
requests must be received and transmitted to the transfer agent before 4:00 p.m.
(Eastern time) in order for shares to be redeemed at that day's net asset value.
The Michigan National Bank or Independence One representative or authorized
broker is responsible for promptly submitting redemption requests and providing
proper written redemption instructions to the transfer agent. Registered
broker/dealers may charge customary fees and commissions for this service. If at
any time, the Fund shall determine it necessary to terminate or modify this
method of redemption, shareholders would be promptly notified.

For calls received before 4:00 p.m. (Eastern time) proceeds will normally be
wired the next day to the shareholder's account at a domestic commercial bank
that is a member of the Federal Reserve System or a check will be sent to the
address of record. In no event will proceeds be wired or a check sent more than
seven days after a proper request for redemption has been received.

An authorization form permitting the Fund to accept telephone redemption
requests must first be completed. It is recommended that investors request this

privilege at the time of their initial application. If not completed at the time
of initial application, authorization forms and information on this service can
be obtained through a Michigan National Bank or Independence One representative
or authorized broker. Telephone redemption instructions may be recorded.

If reasonable procedures are not followed by the Fund, it may be liable for
losses due to unauthorized or fraudulent telephone instructions.

BY MAIL. Shareholders may redeem shares by sending a written request to the Fund
through their Michigan National Bank or Independence One representative or
authorized broker. The written
request should include the shareholder's name, the Fund name, the class
designation, the account number, and the share or dollar amount requested.
Shareholders redeeming through Michigan National Bank or Independence One should
mail written requests to: Independence One Mutual Funds, 27777 Inkster Road,
Mail Code 10-30, Farmington Hills, Michigan 48333-9065. Investors redeeming
through an authorized broker should mail written requests directly to their
broker.

If share certificates have been issued, they must be properly endorsed and
should be sent by registered or certified mail with the written request.

Shareholders requesting a redemption of any amount to be sent to an address
other than that on record with the Fund, or a redemption payable other than to

the shareholder of record must have signatures on written redemption requests
guaranteed by:

.a trust company or commercial bank whose deposits are insured by the Bank
Insurance Fund, which is administered by the Federal Deposit Insurance
Corporation ("FDIC");

.a member of the New York, American, Boston, Midwest, or Pacific Stock
Exchange;

.a savings bank or savings association whose deposits are insured by the
Savings Association Insurance Fund, which is administered by the FDIC; or

any other "eligible guarantor institution", as defined in the Securities
& Exchange Act of 1934.

The Fund does not accept signatures guaranteed by a notary public.

The Fund and its transfer agent have adopted standards for accepting signature
guarantees from the above institutions. The Fund may elect in the future to
limit eligible signature guarantors to institutions that are members of a
signature guarantee program. The Fund and its transfer agent reserve the right
to amend these standards at any time without notice.

Normally, a check for the proceeds is mailed within one business day, but in no
event more than seven days after receipt of a proper written redemption request.

SYSTEMATIC WITHDRAWAL PROGRAM

Shareholders who desire to receive payments of a predetermined amount may take
advantage of the Systematic Withdrawal Program. Under this program, shares of
the Fund are redeemed to provide for periodic withdrawal payments in an amount
directed by the shareholder. Depending upon the amount of the withdrawal
payments, the amount of dividends paid and capital gains distributions with
respect to Fund shares, and the fluctuation of the net asset value of Fund
shares redeemed under this program, redemptions may reduce, and eventually
deplete, the shareholder's investment in the Fund. For this reason, payments
under this program should not be considered as yield or income on the
shareholder's investment in the Fund. To be eligible to participate in this
program, a shareholder must have an account value of at least $10,000. A
shareholder may apply for participation in this program through Michigan
National Bank.

ACCOUNTS WITH LOW BALANCES

Due to the high cost of maintaining accounts with low balances, the Fund may
redeem shares in any account and pay the proceeds to the shareholder if the
account balance falls below the required

minimum value of $1,000 due to shareholder redemptions. This requirement does
not apply, however, if the balance falls below $1,000 because of changes in the
Fund's net asset value. Before shares are redeemed to close an account, the
shareholder is notified in writing and allowed 30 days to purchase additional
shares to meet the minimum requirement.

SHAREHOLDER INFORMATION

- --------------------------------------------------------------------------------

VOTING RIGHTS

Each share of the Fund gives the shareholder one vote in Trustee elections and
other matters submitted to shareholders for vote. All shares of all classes of
each portfolio in the Trust have equal voting rights, except that in matters
affecting only a particular portfolio or class, only shares of that portfolio or
class are entitled to vote. As a Massachusetts business trust, the Trust is not
required to hold annual shareholder meetings. Shareholder approval will be
sought only for certain changes in the Trust's or the Fund's operation and for
the election of Trustees under certain circumstances. As of May 31, 1996,
Pierson & Co., the nominee for Michigan National Bank may for certain purposes
be deemed to control the Fund because it is owner of record of certain shares of
the Fund.

Trustees may be removed by the Trustees or by shareholders at a special meeting.
A special meeting of shareholders shall be called by the Trustees upon the
written request of shareholders owning at least 10% of the Trust's outstanding
shares.

EFFECT OF BANKING LAWS
- --------------------------------------------------------------------------------

and from issuing, underwriting, selling or distributing securities in general.
Such banking laws and regulations do not prohibit such a holding company or
affiliate from acting as an investment adviser, transfer agent or custodian to
such an investment company or from purchasing shares of such a company as agent
for and upon the order of their customers.

TAX INFORMATION
- --------------------------------------------------------------------------------

FEDERAL INCOME TAX

The Fund will pay no federal income tax because it expects to meet requirements
of the Internal Revenue Code applicable to regulated investment companies and to
receive the special tax treatment afforded to such companies.

The Fund will be treated as a single, separate entity for federal income tax
purposes so that income (including capital gains) and losses realized by the
Trust's other portfolios, if any, will not be combined for tax purposes with
those realized by the Fund.

Unless otherwise exempt, shareholders are required to pay federal income tax on
any dividends and other distributions, including capital gains distributions,
received. This applies whether dividends and distributions are received in cash
or as additional shares. Distributions representing long-term capital gains, if
any, will be taxable to shareholders as long-term capital gains no matter how
long the shareholders have held their shares.

PERFORMANCE INFORMATION
- --------------------------------------------------------------------------------

From time to time the Fund advertises its total return and yield.

Total return represents the change, over a specific period of time, in the value
of an investment in the Fund after reinvesting all income and capital gain
distributions. It is calculated by dividing that change by the initial
investment and is expressed as a percentage.

The yield of the Fund is calculated by dividing the net investment income per

share (as defined by the Securities and Exchange Commission) earned by the Fund
over a thirty-day period by the offering price per share of the Fund on the last
day of the period. This number is then annualized using semi-annual compounding.
The yield does not necessarily reflect income actually earned by the Fund and,
therefore, may not correlate to the dividends or other distributions paid to
shareholders.

From time to time, advertisements for the Fund may refer to ratings, rankings,
and other information in certain financial publications and/or compare the
Fund's performance to certain indices.

STANDARD & POOR'S
- --------------------------------------------------------------------------------

"Standard & Poor's", "S&P", and "S&P 100" are trademarks of the McGraw-Hill
Companies, Inc. and have been licensed for use by Michigan National Bank. The
Fund is not sponsored, endorsed, sold or promoted by, or affiliated with,
Standard & Poor's ("S&P").

S&P makes no representation or warranty, express or implied, to the owners of
the Fund or any member of the public regarding the advisability of investing in
securities generally or in the Fund particularly or the ability of the Standard
& Poor's 100 Index ("S&P 100 Index") to track general stock market performance.
S&P's only relationship to Michigan National Bank (the "Licensee") is the
licensing of certain trademarks and trade names of S&P and of the S&P 100 Index
which is determined, composed and calculated by S&P without regard to the
Licensee or the Fund. S&P has no obligation to take the needs of the Licensee or
the owners of the Fund into consideration in the determination of the timing of,

prices at, or quantities of the Fund to be issued or in the determination or
calculation of the equation by which the Fund is to be converted into cash. S&P
has no obligation or liability in connection with the administration, marketing
or trading of the Fund.

S&P DOES NOT GUARANTEE THE ACCURACY AND/OR THE COMPLETENESS OF THE S&P 100 INDEX
OR ANY DATA INCLUDED THEREIN. S&P MAKES NO WARRANTY, EXPRESS OR IMPLIED, AS TO
RESULTS TO BE OBTAINED BY THE LICENSEE, OWNERS OF THE FUND, OR ANY OTHER PERSON
OR ENTITY FROM THE USE OF THE S&P 100 INDEX OR ANY DATA INCLUDED THEREIN IN
CONNECTION WITH THE RIGHTS LICENSED HEREUNDER OR FOR ANY OTHER USE. S&P MAKES NO
EXPRESS OR IMPLIED WARRANTIES, AND EXPRESSLY DISCLAIMS ALL WARRANTIES OR
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE WITH RESPECT TO THE
S&P 100 INDEX OR ANY DATA INCLUDED THEREIN. WITHOUT LIMITING ANY OF THE
FOREGOING, IN NO EVENT SHALL S&P HAVE ANY LIABILITY FOR ANY SPECIAL, PUNITIVE,
INDIRECT OR CONSEQUENTIAL DAMAGES (INCLUDING LOST PROFITS), EVEN IF NOTIFIED OF
THE POSSIBILITY OF SUCH DAMAGES.

INDEPENDENCE ONE EQUITY PLUS FUND
PORTFOLIO OF INVESTMENTS

APRIL 30, 1996
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
SHARES VALUE
- ------------ ----------------------------------------------------------------------------------- --------------
<C> <S> <C>
COMMON STOCKS--96.4%
- -------------------------------------------------------------------------------------------------
AEROSPACE & DEFENSE--3.2%
-----------------------------------------------------------------------------------
17,531 Boeing Co. $ 1,439,733
-----------------------------------------------------------------------------------
3,218 General Dynamics Corp. 203,136
-----------------------------------------------------------------------------------
12,383 Raytheon Co. 626,889
-----------------------------------------------------------------------------------
11,099 Rockwell International Corp. 649,292
-----------------------------------------------------------------------------------
6,233 United Technologies Corp. 688,747
----------------------------------------------------------------------------------- --------------
Total 3,607,797
----------------------------------------------------------------------------------- --------------
AUTOMOTIVE--4.8%
-----------------------------------------------------------------------------------
19,328 Chrysler Corp. 1,212,832
-----------------------------------------------------------------------------------
59,714 Ford Motor Co. 2,142,239
-----------------------------------------------------------------------------------
38,287 General Motors Corp. 2,077,069

----------------------------------------------------------------------------------- --------------
Total 5,432,140
----------------------------------------------------------------------------------- --------------
BANKING--1.9%
-----------------------------------------------------------------------------------
18,903 BankAmerica Corp. 1,431,902
-----------------------------------------------------------------------------------
16,390 First Chicago NBD Corp. 676,088
----------------------------------------------------------------------------------- --------------
Total 2,107,990
----------------------------------------------------------------------------------- --------------
CAPITAL GOODS--1.4%
-----------------------------------------------------------------------------------
7,484 Homestake Mining Co. 150,616
-----------------------------------------------------------------------------------
21,440 Minnesota Mining & Manufacturing Co. 1,409,680
----------------------------------------------------------------------------------- --------------
Total 1,560,296
----------------------------------------------------------------------------------- --------------
CHEMICALS--4.0%
-----------------------------------------------------------------------------------
13,375 Dow Chemical Co. 1,188,703
-----------------------------------------------------------------------------------
28,371 Du Pont (E.I.) de Nemours & Co. 2,280,319
-----------------------------------------------------------------------------------
3,822 Mallinckrodt Group, Inc. 150,491
-----------------------------------------------------------------------------------
5,941 Monsanto Co. 900,062

----------------------------------------------------------------------------------- --------------
Total 4,519,575
----------------------------------------------------------------------------------- --------------
</TABLE>

INDEPENDENCE ONE EQUITY PLUS FUND
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
SHARES VALUE
- ------------ ----------------------------------------------------------------------------------- --------------
<C> <S> <C>
COMMON STOCKS--CONTINUED
- -------------------------------------------------------------------------------------------------
COMPUTERS--7.9%
-----------------------------------------------------------------------------------
3,378 (a)Ceridian Corp. $ 161,300
-----------------------------------------------------------------------------------
28,227 (a)Cisco Systems, Inc. 1,464,275
-----------------------------------------------------------------------------------
2,856 (a)Computer Sciences Corp. 211,344
-----------------------------------------------------------------------------------
26,054 Hewlett-Packard Co. 2,758,467
-----------------------------------------------------------------------------------
29,056 International Business Machines Corp. 3,123,520
-----------------------------------------------------------------------------------
33,359 (a)Oracle Corp. 1,125,866
-----------------------------------------------------------------------------------
8,758 (a)Unisys Corp. 52,548
----------------------------------------------------------------------------------- --------------
Total 8,897,320
----------------------------------------------------------------------------------- --------------
COSMETICS & PERSONAL CARE--0.5%
-----------------------------------------------------------------------------------
3,467 Avon Products, Inc. 308,130

-----------------------------------------------------------------------------------
5,669 International Flavors & Fragrances, Inc. 278,490
----------------------------------------------------------------------------------- --------------
Total 586,620
----------------------------------------------------------------------------------- --------------
ELECTRIC--0.9%
-----------------------------------------------------------------------------------
11,636 Entergy Corp. 308,354
-----------------------------------------------------------------------------------
34,034 Southern Co. 748,748
----------------------------------------------------------------------------------- --------------
Total 1,057,102
----------------------------------------------------------------------------------- --------------
ELECTRICAL EQUIPMENT--6.7%
-----------------------------------------------------------------------------------
4,394 Black & Decker Corp. 176,859
-----------------------------------------------------------------------------------
7,824 (a)Digital Equipment Corp. 467,484
-----------------------------------------------------------------------------------
85,334 General Electric Co. 6,613,385
-----------------------------------------------------------------------------------
6,487 Honeywell, Inc. 341,378
----------------------------------------------------------------------------------- --------------
Total 7,599,106
----------------------------------------------------------------------------------- --------------
ELECTRONICS--3.7%
-----------------------------------------------------------------------------------
11,117 AMP, Inc. 497,486

-----------------------------------------------------------------------------------
41,955 Intel Corp. 2,842,451
-----------------------------------------------------------------------------------
6,928 (a)National Semiconductor Corp. 109,116
-----------------------------------------------------------------------------------
2,322 Polaroid Corp. 104,490
-----------------------------------------------------------------------------------
</TABLE>

INDEPENDENCE ONE EQUITY PLUS FUND
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
SHARES VALUE
- ------------ ----------------------------------------------------------------------------------- --------------
<C> <S> <C>
COMMON STOCKS--CONTINUED
- -------------------------------------------------------------------------------------------------
ELECTRONICS--CONTINUED
-----------------------------------------------------------------------------------
1,714 Tektronix, Inc. $ 67,917
-----------------------------------------------------------------------------------
9,646 Texas Instruments, Inc. 544,999
----------------------------------------------------------------------------------- --------------
Total 4,166,459
----------------------------------------------------------------------------------- --------------
ENTERTAINMENT--2.1%
-----------------------------------------------------------------------------------
34,607 Disney (Walt) Co. 2,145,634
-----------------------------------------------------------------------------------
5,244 (a)Harrah's Entertainment, Inc. 180,918
----------------------------------------------------------------------------------- --------------
Total 2,326,552
----------------------------------------------------------------------------------- --------------
FINANCIAL SERVICES--3.4%
-----------------------------------------------------------------------------------
24,748 American Express Co. 1,200,278
-----------------------------------------------------------------------------------
24,840 Citicorp 1,956,150

-----------------------------------------------------------------------------------
6,982 Great Western Financial Corp. 160,586
-----------------------------------------------------------------------------------
8,977 Merrill Lynch & Co., Inc. 541,986
----------------------------------------------------------------------------------- --------------
Total 3,859,000
----------------------------------------------------------------------------------- --------------
FOOD & BEVERAGE--9.3%
-----------------------------------------------------------------------------------
64,085 Coca-Cola Co. 5,222,927
-----------------------------------------------------------------------------------
18,886 Heinz (H.J.) Co. 639,763
-----------------------------------------------------------------------------------
35,573 McDonald's Corp. 1,703,057
-----------------------------------------------------------------------------------
40,255 PepsiCo, Inc. 2,556,192
-----------------------------------------------------------------------------------
5,413 Ralston Purina Co. 315,984
----------------------------------------------------------------------------------- --------------
Total 10,437,923
----------------------------------------------------------------------------------- --------------
FOREST PRODUCTS & PAPER--1.3%
-----------------------------------------------------------------------------------
2,459 Boise Cascade Corp. 114,344
-----------------------------------------------------------------------------------
4,931 Champion International Corp. 237,921
-----------------------------------------------------------------------------------
15,110 International Paper Co. 602,511

-----------------------------------------------------------------------------------
10,305 Weyerhaeuser Co. 510,098
----------------------------------------------------------------------------------- --------------
Total 1,464,874
----------------------------------------------------------------------------------- --------------
</TABLE>

INDEPENDENCE ONE EQUITY PLUS FUND
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
SHARES VALUE
- ------------ ----------------------------------------------------------------------------------- --------------
<C> <S> <C>
COMMON STOCKS--CONTINUED
- -------------------------------------------------------------------------------------------------
HOMEBUILDERS--0.3%
-----------------------------------------------------------------------------------
4,263 Fluor Corp. $ 281,891
----------------------------------------------------------------------------------- --------------
HOUSEHOLD PRODUCTS--0.5%
-----------------------------------------------------------------------------------
7,438 Colgate-Palmolive Co. 569,937
----------------------------------------------------------------------------------- --------------
INSURANCE--2.9%
-----------------------------------------------------------------------------------
10,463 American General Corp. 367,513
-----------------------------------------------------------------------------------
24,221 American International Group, Inc. 2,213,193
-----------------------------------------------------------------------------------
3,880 CIGNA Corp. 439,895
-----------------------------------------------------------------------------------
6,080 ITT Hartford Group, Inc. 297,160
----------------------------------------------------------------------------------- --------------
Total 3,317,761
----------------------------------------------------------------------------------- --------------
MANUFACTURING--1.3%

-----------------------------------------------------------------------------------
17,478 Eastman Kodak Co. 1,337,067
-----------------------------------------------------------------------------------
2,851 Teledyne, Inc. 105,843
----------------------------------------------------------------------------------- --------------
Total 1,442,910
----------------------------------------------------------------------------------- --------------
MEDICAL SUPPLIES--1.6%
-----------------------------------------------------------------------------------
13,871 Baxter International, Inc. 613,792
-----------------------------------------------------------------------------------
22,743 Columbia/HCA Healthcare Corp. 1,208,222
----------------------------------------------------------------------------------- --------------
Total 1,822,014
----------------------------------------------------------------------------------- --------------
METALS & MINING--0.5%
-----------------------------------------------------------------------------------
9,054 Aluminum Co. of America 564,743
----------------------------------------------------------------------------------- --------------
OFFICE EQUIPMENT--0.8%
-----------------------------------------------------------------------------------
1,996 Harris Corp. 123,253
-----------------------------------------------------------------------------------
5,510 Xerox Corp. 807,215
----------------------------------------------------------------------------------- --------------
Total 930,468
----------------------------------------------------------------------------------- --------------
OIL & GAS--11.6%

-----------------------------------------------------------------------------------
25,380 Amoco Corp. 1,852,740
-----------------------------------------------------------------------------------
8,217 Atlantic Richfield Co. 967,552
-----------------------------------------------------------------------------------
7,283 Baker Hughes, Inc. 231,235
-----------------------------------------------------------------------------------
</TABLE>

INDEPENDENCE ONE EQUITY PLUS FUND
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
SHARES VALUE
- ------------ ----------------------------------------------------------------------------------- --------------
<C> <S> <C>
COMMON STOCKS--CONTINUED
- -------------------------------------------------------------------------------------------------
OIL & GAS--CONTINUED
-----------------------------------------------------------------------------------
5,365 Coastal Corp. $ 212,588
-----------------------------------------------------------------------------------
63,437 Exxon Corp. 5,392,145
-----------------------------------------------------------------------------------
5,844 Halliburton Co. 335,300
-----------------------------------------------------------------------------------
20,154 Mobil Corp. 2,317,710
-----------------------------------------------------------------------------------
16,270 Occidental Petroleum Corp. 418,953
-----------------------------------------------------------------------------------
12,358 Schlumberger Ltd. 1,090,593
-----------------------------------------------------------------------------------
5,189 Williams Cos., Inc. (The) 265,288
----------------------------------------------------------------------------------- --------------
Total 13,084,104
----------------------------------------------------------------------------------- --------------
PHARMACEUTICALS--8.9%
-----------------------------------------------------------------------------------
25,778 Bristol-Myers Squibb Co. 2,120,240

-----------------------------------------------------------------------------------
34,040 Johnson & Johnson 3,148,700
-----------------------------------------------------------------------------------
62,908 Merck & Co., Inc. 3,805,934
-----------------------------------------------------------------------------------
25,735 Pharmacia & Upjohn, Inc. 984,364
----------------------------------------------------------------------------------- --------------
Total 10,059,238
----------------------------------------------------------------------------------- --------------
RECREATION--0.1%
-----------------------------------------------------------------------------------
4,902 Brunswick Corp. 107,844
----------------------------------------------------------------------------------- --------------
RETAIL--4.9%
-----------------------------------------------------------------------------------
23,469 K Mart Corp. 237,624
-----------------------------------------------------------------------------------
13,954 Limited, Inc. 289,546
-----------------------------------------------------------------------------------
12,720 May Department Stores Co. 648,720
-----------------------------------------------------------------------------------
19,917 Sears, Roebuck & Co. 993,360
-----------------------------------------------------------------------------------
3,245 Tandy Corp. 168,334
-----------------------------------------------------------------------------------
13,952 (a)Toys R Us, Inc. 388,912
-----------------------------------------------------------------------------------
117,228 Wal-Mart Stores, Inc. 2,798,818

----------------------------------------------------------------------------------- --------------
Total 5,525,314
----------------------------------------------------------------------------------- --------------
STEEL--0.1%
-----------------------------------------------------------------------------------
5,752 (a)Bethlehem Steel Corp. 78,371
----------------------------------------------------------------------------------- --------------
</TABLE>

INDEPENDENCE ONE EQUITY PLUS FUND
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
SHARES VALUE
- ------------ ----------------------------------------------------------------------------------- --------------
<C> <S> <C>
COMMON STOCKS--CONTINUED
- -------------------------------------------------------------------------------------------------
TELECOMMUNICATIONS--9.7%
-----------------------------------------------------------------------------------
81,679 AT&T Corp. $ 5,002,838
-----------------------------------------------------------------------------------
28,298 Ameritech Corp. 1,651,896
-----------------------------------------------------------------------------------
22,342 Bell Atlantic Corp. 1,452,230
-----------------------------------------------------------------------------------
34,806 MCI Communications Corp. 1,024,602
-----------------------------------------------------------------------------------
21,968 NYNEX Corp. 1,079,178
-----------------------------------------------------------------------------------
12,973 Northern Telecom Ltd. 668,110
----------------------------------------------------------------------------------- --------------
Total 10,878,854
----------------------------------------------------------------------------------- --------------
TRANSPORTATION--1.5%
-----------------------------------------------------------------------------------
7,248 Burlington Northern Santa Fe 634,200
-----------------------------------------------------------------------------------
2,615 Delta Air Lines, Inc. 210,181

-----------------------------------------------------------------------------------
2,896 (a)Federal Express Corp. 233,852
-----------------------------------------------------------------------------------
6,630 Norfolk Southern Corp. 556,920
----------------------------------------------------------------------------------- --------------
Total 1,635,153
----------------------------------------------------------------------------------- --------------
UTILITIES-ELECTRIC--0.6%
-----------------------------------------------------------------------------------
9,517 American Electric Power Co., Inc. 386,628
-----------------------------------------------------------------------------------
10,975 Unicom Corp. 301,813
----------------------------------------------------------------------------------- --------------
Total 688,441
----------------------------------------------------------------------------------- --------------
TOTAL COMMON STOCKS (IDENTIFIED COST $90,695,858) 108,609,797
----------------------------------------------------------------------------------- --------------
PREFERRED STOCKS--0.0%
- -------------------------------------------------------------------------------------------------
MANUFACTURING--0.0%
-----------------------------------------------------------------------------------
89 Teledyne, Inc., Pfd., Series E, $1.20 (IDENTIFIED COST $887) 1,291
----------------------------------------------------------------------------------- --------------
</TABLE>

INDEPENDENCE ONE EQUITY PLUS FUND
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------------ ----------------------------------------------------------------------------------- --------------
<C> <S> <C>
(b) REPURCHASE AGREEMENT--3.5%
- -------------------------------------------------------------------------------------------------
$ 3,888,000 First Chicago Capital Markets, Inc., 5.30%, dated 4/30/96,
due 5/1/1996 (AT AMORTIZED COST) $ 3,888,000
----------------------------------------------------------------------------------- --------------
TOTAL INVESTMENTS (IDENTIFIED COST $94,584,745)(C) $ 112,499,088
----------------------------------------------------------------------------------- --------------
</TABLE>

(a) Non-income producing security.

(b) The repurchase agreement is fully collateralized by U.S. Treasury
obligations based on market prices at the date of the portfolio.

(c) The cost of investments for federal tax purposes amounts to $94,612,322.
The net unrealized appreciation of investments on a federal tax basis
amounts to $17,886,766 which is comprised of $18,032,094 appreciation and
$145,328 depreciation at April 30, 1996.

Note: The categories of investments are shown as a percentage of net assets
($112,608,978) at April 30, 1996.

(See Notes which are an integral part of the Financial Statements)

INDEPENDENCE ONE EQUITY PLUS FUND
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1996
- --------------------------------------------------------------------------------

<TABLE>
<S> <C> <C>
ASSETS:
- --------------------------------------------------------------------------------------------------
Total investments in securities, at value
(identified cost $94,584,745 and tax cost $94,612,322) $ 112,499,088
- --------------------------------------------------------------------------------------------------
Cash 457
- --------------------------------------------------------------------------------------------------
Income receivable 148,254
- --------------------------------------------------------------------------------------------------
Receivable for shares sold 5,122
- --------------------------------------------------------------------------------------------------
Deferred expenses 19,590
- -------------------------------------------------------------------------------------------------- --------------
Total assets 112,672,511
- --------------------------------------------------------------------------------------------------
LIABILITIES:
- ---------------------------------------------------------------------------------------
Payable for shares redeemed $ 9,450
- ---------------------------------------------------------------------------------------
Accrued expenses 54,083
- --------------------------------------------------------------------------------------- ---------
Total liabilities 63,533
- -------------------------------------------------------------------------------------------------- --------------
NET ASSETS for 9,888,603 shares outstanding $ 112,608,978
- -------------------------------------------------------------------------------------------------- --------------
NET ASSETS CONSIST OF:

- --------------------------------------------------------------------------------------------------
Paid in capital $ 94,047,010
- --------------------------------------------------------------------------------------------------
Net unrealized appreciation of investments 17,914,343
- --------------------------------------------------------------------------------------------------
Accumulated net realized gain on investments 566,391
- --------------------------------------------------------------------------------------------------
Undistributed net investment income 81,234
- -------------------------------------------------------------------------------------------------- --------------
Total Net Assets $ 112,608,978
- -------------------------------------------------------------------------------------------------- --------------
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE:
$112,608,978 / 9,888,603 shares outstanding $ 11.39
- -------------------------------------------------------------------------------------------------- --------------
</TABLE>

(See Notes which are an integral part of the Financial Statements)

INDEPENDENCE ONE EQUITY PLUS FUND
STATEMENT OF OPERATIONS
FOR THE PERIOD FROM SEPTEMBER 25, 1995 (DATE OF INITIAL PUBLIC INVESTMENT)
TO APRIL 30, 1996
- --------------------------------------------------------------------------------

<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
- ---------------------------------------------------------------------------------------------------
Dividends $ 1,134,849
- ---------------------------------------------------------------------------------------------------
Interest 70,364
- --------------------------------------------------------------------------------------------------- -------------
Total income 1,205,213
- ---------------------------------------------------------------------------------------------------
EXPENSES:
- --------------------------------------------------------------------------------------
Investment advisory fee $ 208,897
- --------------------------------------------------------------------------------------
Administrative personnel and services fee 58,574
- --------------------------------------------------------------------------------------
Custodian fees 25,812
- --------------------------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses 7,834
- --------------------------------------------------------------------------------------
Directors'/Trustees' fees 3,656
- --------------------------------------------------------------------------------------
Legal fees 4,700
- --------------------------------------------------------------------------------------
Portfolio accounting fees 32,066
- --------------------------------------------------------------------------------------
Printing and postage 7,834
- --------------------------------------------------------------------------------------

Insurance premiums 3,128
- --------------------------------------------------------------------------------------
Miscellaneous 11,489
- -------------------------------------------------------------------------------------- -----------
Total expenses 363,990
- --------------------------------------------------------------------------------------
Waivers--
- -------------------------------------------------------------------------
Waiver of investment advisory fee ($104,448)
- -------------------------------------------------------------------------
Waiver of administrative personnel and services fee (57,628)
- ------------------------------------------------------------------------- -----------
Total waivers (162,076)
- -------------------------------------------------------------------------------------- -----------
Net expenses 201,914
- --------------------------------------------------------------------------------------------------- -------------
Net investment income 1,003,299
- --------------------------------------------------------------------------------------------------- -------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
- ---------------------------------------------------------------------------------------------------
Net realized gain on investments 566,391
- ---------------------------------------------------------------------------------------------------
Net change in unrealized appreciation of investments 17,914,343
- --------------------------------------------------------------------------------------------------- -------------
Net realized and unrealized gain on investments 18,480,734
- --------------------------------------------------------------------------------------------------- -------------
Change in net assets resulting from operations $ 19,484,033
- --------------------------------------------------------------------------------------------------- -------------

</TABLE>

(See Notes which are an integral part of the Financial Statements)

INDEPENDENCE ONE EQUITY PLUS FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
PERIOD ENDED
APRIL 30, 1996*
<S> <C>
- ---------------------------------------------------------------------------------------------- ------------------
INCREASE (DECREASE) IN NET ASSETS:
- ----------------------------------------------------------------------------------------------
OPERATIONS--
- ----------------------------------------------------------------------------------------------
Net investment income $ 1,003,299
- ----------------------------------------------------------------------------------------------
Net realized gain on investments ($593,968 net gain,
as computed for federal tax purposes) 566,391
- ----------------------------------------------------------------------------------------------
Net change in unrealized appreciation 17,914,343
- ---------------------------------------------------------------------------------------------- ------------------
Change in net assets resulting from operations 19,484,033
- ---------------------------------------------------------------------------------------------- ------------------
DISTRIBUTIONS TO SHAREHOLDERS--
- ----------------------------------------------------------------------------------------------
Distributions from net investment income (922,065)
- ---------------------------------------------------------------------------------------------- ------------------
SHARE TRANSACTIONS--
- ----------------------------------------------------------------------------------------------
Proceeds from sale of shares 98,945,293
- ----------------------------------------------------------------------------------------------
Net asset value of shares issued to shareholders in

payment of distributions declared 6,353
- ----------------------------------------------------------------------------------------------
Cost of shares redeemed (4,904,636)
- ---------------------------------------------------------------------------------------------- ------------------
Change in net assets resulting from share transactions 94,047,010
- ---------------------------------------------------------------------------------------------- ------------------
Change in net assets 112,608,978
- ----------------------------------------------------------------------------------------------
NET ASSETS:
- ----------------------------------------------------------------------------------------------
Beginning of period 0
- ---------------------------------------------------------------------------------------------- ------------------
End of period (including undistributed net investment income of $81,234) $ 112,608,978
- ---------------------------------------------------------------------------------------------- ------------------
</TABLE>

*For the period from September 25, 1995 (date of initial public investment) to
April 30, 1996.

(See Notes which are an integral part of the Financial Statements)

INDEPENDENCE ONE EQUITY PLUS 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 Equity Plus Fund
(the "Fund"), a diversified portfolio. The investment objective of the Fund is
total return. 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--Listed equity securities are valued at the last sale
price reported on a national securities exchange. 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.

REPURCHASE AGREEMENTS--It is the policy of the Fund to require the
custodian bank to take possession, to have legally segregated in the
Federal Reserve Book Entry System, or to have segregated within the
custodian bank's vault, all securities held as collateral under repurchase
agreement transactions. Additionally, procedures have been established by
the Fund to monitor, on a daily basis, the market value of each repurchase
agreement's collateral to ensure that the value of collateral at least
equals the repurchase price to be paid under the repurchase agreement
transaction.

The Fund will only enter into repurchase agreements with banks and other
recognized financial institutions, such as broker/dealers, which are deemed
by the Fund's adviser to be creditworthy pursuant to the guidelines and/or
standards reviewed or established by the Board of Trustees (the
"Trustees"). Risks may arise from the potential inability of counterparties
to honor the terms of the repurchase agreement. Accordingly, the Fund could
receive less than the repurchase price on the sale of collateral
securities.

INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS--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"). Dividend
income and distributions to shareholders are recorded on the ex-dividend
date.

INDEPENDENCE ONE EQUITY PLUS FUND
- --------------------------------------------------------------------------------

FEDERAL TAXES--It is the Fund's policy to comply with the provisions of the
Code applicable to regulated investment companies and to distribute to
shareholders each year substantially all of its income. Accordingly, no
provisions for federal tax are necessary.

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 10,346,964
- ----------------------------------------------------------------------------------------------
Shares issued to shareholders in payment of distributions declared 571
- ----------------------------------------------------------------------------------------------
Shares redeemed (458,932)
- ---------------------------------------------------------------------------------------------- ------------------
Net change resulting from share transactions 9,888,603
- ---------------------------------------------------------------------------------------------- ------------------
</TABLE>

*For the period from September 25, 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 0.40% of the Fund's average daily net assets.

The Adviser may voluntarily choose to waive any portion of its fee. The
Adviser can modify or terminate this voluntary waiver at any time at its
sole discretion.

Under the terms of a sub-advisory agreement between the Adviser and Sosnoff
Sheridan Corporation, Sosnoff Sheridan Corporation receives an annual fee
from the Adviser equal to 0.035% of the average daily value of the Fund's
equity securities. Sosnoff Sheridan Corporation may voluntarily choose to
reduce its compensation.

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 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.

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 $23,382
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. For the period ended
April 30, 1996, the Fund paid $2,305 pursuant to this agreement.

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 September 25, 1995 (date of initial public investment) to April 30,
1996, were as follows:

<TABLE>
<S> <C>
PURCHASES $ 95,101,435
- --------------------------------------------------------------------------------------------------- -------------
SALES $ 4,971,081
- --------------------------------------------------------------------------------------------------- -------------
</TABLE>

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 Equity Plus 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, which is presented on page 2 of this prospectus, for the period from
September 25, 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 Equity Plus Fund at April 30, 1996, and the results of its
operations, the 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

INDEPENDENCE ONE
MUTUAL FUNDS

INDEPENDENCE ONE
EQUITY PLUS FUND
Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779

INVESTMENT ADVISER
Michigan National Bank
27777 Inkster Road
Mail Code 10-52
Farmington Hills, Michigan 48333-9065

SUB-ADVISER
Sosnoff Sheridan Corporation
440 South LaSalle Street
Suite 2301
Chicago, Illinois 60605

DISTRIBUTOR
Federated Securities Corp.
Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779

CUSTODIAN
Michigan National Bank
27777 Inkster Road
Mail Code 10-30
Farmington Hills, Michigan 48333-9065

TRANSFER AGENT AND
DIVIDEND DISBURSING AGENT
Federated Shareholder
Services Company
P.O. Box 8600
Boston, Massachusetts 02266-8600

INDEPENDENT AUDITORS
KPMG Peat Marwick LLP
One Mellon Bank Center
Pittsburgh, Pennsylvania 15219

[LOGO] RECYCLED PAPER
Cusip 453777872
G00979-08 (6/96)
Independence One/R/
Equity Plus Fund
Distributed by Federated Securities Corp.

Prospectus dated
June 30, 1996

[LOGO] MICHIGAN NATIONAL BANK

INDEPENDENCE ONE EQUITY PLUS FUND
(A PORTFOLIO OF INDEPENDENCE ONE MUTUAL FUNDS)
STATEMENT OF ADDITIONAL INFORMATION
This Statement of Additional Information should be read with the
prospectus of Independence One Equity Plus Fund (the "Fund"), a
portfolio of Independence One Mutual Funds (the "Trust") dated June
30, 1996. This Statement is not a prospectus. You may request a copy
of a prospectus free of charge by calling 1-800-334-2292.
FEDERATED INVESTORS TOWER
PITTSBURGH, PENNSYLVANIA 15222-3779
Statement dated June 30, 1996

FEDERATED INVESTORS
Federated Investors Tower
Pittsburgh, PA 15222-3779

Federated Securities Corp. is the
distributor of the Fund and is a
subsidiary of Federated Investors.
Cusip 453777872
G01198-01 (6/96)

GENERAL INFORMATION ABOUT THE FUND 3

INVESTMENT OBJECTIVE AND POLICIES 3

Types of Investments 3
Portfolio Turnover 9
Investment Limitations 10
INDEPENDENCE ONE MUTUAL FUNDS MANAGEMENT 15

Officers and Trustees 15
Fund Ownership 19
Trustees' Compensation 19
Trustee Liability 20
Massachusetts Partnership Law 20
INVESTMENT ADVISORY SERVICES 21

Adviser to the Fund 21
Advisory Fees 21
Sub-Adviser to the Fund 21
Sub-Advisory Fees 22
BROKERAGE TRANSACTIONS 22

OTHER SERVICES 24

Trust Administration 24
Custodian 24
Transfer Agent and Dividend Disbursing
Agent 24
Independent Auditors 24
PURCHASING SHARES 24

Conversion to Federal Funds 25
DETERMINING NET ASSET VALUE 25

DETERMINING MARKET VALUE OF SECURITIES 25

REDEEMING SHARES 26

Redemption in Kind 26
TAX STATUS 27

The Fund's Tax Status 27
Shareholders' Tax Status 27
Capital Gains 28
TOTAL RETURN 28

YIELD 29

PERFORMANCE COMPARISONS 29

Economic and Market Information 31

GENERAL INFORMATION ABOUT THE FUND

The Fund is a portfolio in Independence One Mutual Funds (the "Trust"),
which was established as a Massachusetts business trust under a Declaration
of Trust dated January 9, 1989.
INVESTMENT OBJECTIVE AND POLICIES

The Fund's investment objective is total return. This investment objective
cannot be changed without the approval of shareholders.
TYPES OF INVESTMENTS
In addition to the common stocks described in the prospectus, the Fund may
also invest in temporary investments which include, but are not limited to,
short-term money market instruments and U.S. government obligations, and
securities in such proportions as, in the judgment of the Adviser,
prevailing market conditions warrant. The following discussion supplements
the description of the Fund's investment policies in the prospectus. Unless
otherwise indicated, the investment policies described below may be changed
by the Board of Trustees (the "Trustees") without shareholder approval.
Shareholders will be notified before any material change in the policies
becomes effective.
U.S. GOVERNMENT OBLIGATIONS
The types of U.S. government obligations in which the Fund may invest
generally include direct obligations of the U.S. Treasury (such as
U.S. Treasury bills, notes, and bonds) and obligations issued or
guaranteed by U.S. government agencies or instrumentalities. These
securities are backed by:
othe full faith and credit of the U.S. Treasury;
othe issuer's right to borrow from the U.S. Treasury;

othe discretionary authority of the U.S. government to purchase
certain obligations of agencies or instrumentalities; or
othe credit of the agency or instrumentality issuing the obligations.
Examples of agencies and instrumentalities which may not always
receive financial support from the U.S. government are: Farm Credit
System, including the National Bank for Cooperatives, Farm Credit
Banks, and Banks for Cooperatives; Farmers Home Administration;
Federal Home Loan Banks; Federal Home Loan Mortgage Corporation;
Federal National Mortgage Association; Government National Mortgage
Association; and Student Loan Marketing Association.
VARIABLE RATE U.S. GOVERNMENT SECURITIES
In the case of certain U.S. government securities purchased by the
Fund that carry variable interest rates, these rates will reduce the
changes in the market value of such securities from their original
purchase prices.
Accordingly, the potential for capital appreciation or capital
depreciation should not be greater than the potential for capital
appreciation or capital depreciation of fixed interest rate U.S.
government securities having maturities equal to the interest rate
adjustment dates of the variable rate U.S. government securities.
The Fund may purchase variable rate U.S. government securities upon
the determination by the Trustees that the interest rate as adjusted
will cause the instrument to have a current market value that
approximates its par value on the adjustment date.

MONEY MARKET INSTRUMENTS
The Fund may invest in the following money market instruments:

oinstruments of domestic and foreign banks and savings associations
having capital, surplus, and undivided profits of over $100,000,000,
or if the principal amount of the instrument is insured in full by
the Federal Deposit Insurance Corporation ("FDIC");
ocommercial paper issued by domestic or foreign corporations rated A-
1 by Standard & Poor's Ratings Group ("S&P") Prime-1 by Moody's
Investors Service, Inc., or F-1 by Fitch Investors Service, Inc. or,
if unrated, of comparable quality as determined by the Fund's
investment adviser;
otime and savings deposits whose accounts are insured by the Bank
Insurance Fund ("BIF") or in institutions whose accounts are insured
by the Savings Association Insurance Fund, which is also
administered by the FDIC, including certificates of deposit issued
by, and other time deposits in, foreign branches of BIF-insured
banks; or
obankers' acceptances.
REPURCHASE AGREEMENTS
The Fund requires its custodian to take possession of the securities
subject to repurchase agreements and these securities will be marked
to market daily. To the extent that the original seller does not
repurchase the securities from the Fund, the Fund could receive less
than the repurchase price on any sale of such securities. In the event
that a defaulting seller of the securities filed for bankruptcy or
became insolvent, disposition of such securities by the Fund might be
delayed pending court action. The Fund believes that under the regular
procedures normally in effect for custody of the Fund's portfolio
securities subject to repurchase agreements, a court of competent
jurisdiction would rule in favor of the Fund and allow retention or

disposition of such securities. The Fund will only enter into
repurchase agreements with banks and other recognized financial
institutions, such as broker/dealers, which are deemed by the Fund's
adviser to be creditworthy pursuant to guidelines established by the
Trustees.
STOCK INDEX FUTURES AND OPTIONS
The Fund may utilize stock index futures contracts, options, and
options on futures contracts as discussed in the prospectus.
A stock index futures contract is a bilateral agreement which
obligates the seller to deliver (and the purchaser to take delivery
of) an amount of cash equal to a specific dollar amount times the
difference between the value of a specific stock index at the close of
trading of the contract and the price at which the agreement is
originally made. There is no physical delivery of the stocks
constituting the index, and no price is paid upon entering into a
futures contract. In general, contracts are closed out prior to their
expiration. The Fund, when purchasing or selling a futures contract,
will initially be required to deposit in a segregated account in the
broker's name with the Fund's custodian an amount of cash or U.S.
government securities approximately equal to 5-10% of the contract
value. This amount is known as "initial margin," and it is subject to
change by the exchange or board of trade on which the contract is
traded. Subsequent payments to and from the broker are made on a daily
basis as the price of the index or the securities underlying the
futures contract fluctuates. These payments are known as "variation
margins," and the fluctuation in value of the long and short positions
in the futures contract is a process referred to as "marking to
market." The Fund may decide to close its position on a contract at

any time prior to the contract's expiration. This is accomplished by
the Fund taking an opposite position at the then prevailing price,
thereby terminating its existing position in the contract. Because
both the initial and variation margin resemble a performance bond or
good faith deposit on the contract, they are returned to the Fund upon
the termination of the contract, assuming that all contractual
obligations have been satisfied. Therefore, the margin utilized in
futures contracts is readily distinguishable from the margin employed
in security transactions, since futures contracts margin does not
involve the borrowing of funds to finance the transaction.
A put option gives the Fund, in return for a premium, the right to
sell the underlying security to the writer (seller) at a specified
price during the term of the option. Put options on stock indices are
similar to put options on stocks except for the delivery requirements.
Instead of giving the Fund the right to make delivery of stock at a
specified price, a put option on a stock index gives the Fund, as
holder, the right to receive an amount of cash upon exercise of the
option.

The Fund may also write covered call options. As the writer of a call
option, the Fund has the obligation upon exercise of the option during
the option period to deliver the underlying security upon payment of
the exercise price. Writing of call options is intended to generate
income for the Fund and thereby protect against price movements in
particular securities in the Fund's portfolio.
The Fund may only: (1) buy listed put options on stock indices; (2)
buy listed put options on securities held in its portfolio; and (3)

sell listed call options either on securities held in its portfolio or
on securities which it has the right to obtain without payment of
further consideration (or has segregated cash in the amount of any
such additional consideration). The Fund will maintain its positions
in securities, option rights, and segregated cash subject to puts and
calls until the options are exercised, closed, or expired.
REVERSE REPURCHASE AGREEMENTS
The Fund also may enter into reverse repurchase agreements under
certain circumstances. This transaction is similar to borrowing cash.
In a reverse repurchase agreement, the Fund transfers possession of a
portfolio instrument to another person, such as a financial
institution, broker, or dealer, in return for a percentage of the
instrument's market value in cash, and agrees that on a stipulated
date in the future the Fund will repurchase the portfolio instrument
by remitting the original consideration plus interest at an agreed
upon rate. The use of reverse repurchase agreements may enable the
Fund to avoid selling portfolio instruments at a time when a sale may
be deemed to be disadvantageous, but the ability to enter into reverse
repurchase agreements does not ensure that the Fund will be able to
avoid selling portfolio instruments at a disadvantageous time.
When effecting reverse repurchase agreements, liquid assets of the
Fund, in a dollar amount sufficient to make payment for the
obligations to be purchased, are segregated at the trade date. These
securities are marked to market daily and maintained until the
transaction is settled.
LENDING OF PORTFOLIO SECURITIES
In order to generate additional income, the Fund may lend portfolio
securities on a short-term or long-term basis, or both, to

broker/dealers, banks, or other institutional borrowers of securities.
The Fund will only enter into loan arrangements with broker/dealers,
banks, or other institutions which the Adviser has determined are
creditworthy and will receive collateral in the form of cash or U.S.
government securities equal to at least 102% of the value of the
securities loaned.
There is the risk that when lending portfolio securities, the
securities may not be available to the Fund on a timely basis and the
Fund may, therefore, lose the opportunity to sell the securities at a
desirable price. In addition, in the event that a borrower of
securities would file for bankruptcy or become insolvent, disposition
of the securities may be delayed pending court action.
The collateral received when the Fund lends portfolio securities must
be valued daily and, should the market value of the loaned securities
increase, the borrower must furnish additional collateral to the Fund.
During the time portfolio securities are on loan, the borrower pays
the Fund any dividends or interest paid on such securities. Loans are
subject to termination at the option of the Fund or the borrower. The
Fund may pay reasonable administrative and custodial fees in
connection with a loan and may pay a negotiated portion of the
interest earned on the cash or equivalent collateral to the borrower
or placing broker. The Fund does not have the right to vote securities
on loan. In circumstances where the Fund does not, the Fund would
terminate the loan and regain the right to vote if that were
considered important with respect to the investment.
PORTFOLIO TURNOVER
The Fund may trade or dispose of portfolio securities as considered
necessary to meet its investment objective. It is not anticipated that the

portfolio trading engaged in by the Fund will result in its annual rate of
portfolio turnover exceeding 100%. For the period from September 25, 1995
(date of initial public investment) to April 30, 1996, the Fund's portfolio
turnover rate was 6%.
INVESTMENT LIMITATIONS
SELLING SHORT AND BUYING ON MARGIN
The Fund will not sell any securities short or purchase any securities
on margin, but may obtain such short-term credits as are necessary for
clearance of transactions. The deposit or payment by the Fund of
initial or variation margin in connection with futures contracts or
related options transactions is not considered the purchase of a
security on margin.

ISSUING SENIOR SECURITIES AND BORROWING MONEY
The Fund will not issue senior securities except that the Fund may
borrow money and engage in reverse repurchase agreements in amounts up
to one-third of the value of its total assets, including the amount
borrowed. The Fund will not purchase any securities while borrowings
in excess of 5% of the value of the Fund's total assets are
outstanding.
The Fund will not borrow money or engage in reverse repurchase
agreements for investment leverage, but rather as a temporary,
extraordinary, or emergency measure to facilitate management of the
portfolio by enabling the Fund to meet redemption requests when the
liquidation of portfolio securities is deemed to be inconvenient or
disadvantageous.

PLEDGING ASSETS
The Fund will not mortgage, pledge, or hypothecate any assets except
to secure permitted borrowings. For the purpose of this limitation,
the following are not deemed to be pledges: margin deposits for the
purchase and sale of futures contracts and related options, and
segregation or collateral arrangements made in connection with options
activities.
INVESTING IN REAL ESTATE
The Fund will not purchase or sell real estate, including limited
partnership interests, although it may invest in the securities of
issuers whose business involves the purchase or sale of real estate or
in securities which are secured by real estate or interests in real
estate.
INVESTING IN COMMODITIES, COMMODITY CONTRACTS, OR COMMODITY FUTURES
CONTRACTS
The Fund will not purchase or sell commodities, commodity contracts or
commodity futures contracts except to the extent that the Fund may
engage in transactions involving futures contracts and related
options.
UNDERWRITING
The Fund will not underwrite any issue of securities, except as it may
be deemed to be an underwriter under the Securities Act of 1933 in
connection with the sale of securities in accordance with its
investment objective, policies, and limitations.
DIVERSIFICATION OF INVESTMENTS
With respect to securities comprising 75% of the value of its assets,
the Fund will not purchase securities of any one issuer (other than
securities issued or guaranteed by the government of the United States

or its agencies or instrumentalities) if, as a result, more than 5% of
the value of its total assets would be invested in the securities of
that issuer. Also, the Fund will not acquire more than 10% of the
voting securities of any one issuer.
CONCENTRATION OF INVESTMENTS
The Fund will not invest 25% or more of the value of its total assets
in any one industry, except that the Fund may invest 25% or more of
the value of its total assets in securities issued or guaranteed by
the U.S. government, its agencies or instrumentalities, and repurchase
agreements secured by such instruments.
LENDING CASH OR SECURITIES
The Fund will not lend any of its assets except portfolio securities
up to one-third of the value of its total assets. This shall not
prevent the Fund from purchasing U.S. government obligations, money
market instruments, bonds, debentures, notes, certificates of
indebtedness, or other debt securities, entering into repurchase
agreements, or engaging in other transactions where permitted by the
Fund's investment objective, policies and limitations.
The above investment limitations cannot be changed without shareholder
approval. The following investment limitations, however, may be changed by
the Trustees without shareholder approval. Shareholders will be notified
before any material change in these policies becomes effective.
INVESTING IN SECURITIES OF OTHER INVESTMENT COMPANIES
The Fund can acquire up to 3% of the total outstanding stock of other
investment companies. The Fund will not be subject to any other
limitations with regard to the acquisition of securities of other
investment companies so long as the public offering price of the
Fund's shares does not include a sales charge exceeding 1-1/2 percent.

The Fund will purchase securities of investment companies only in
open-market transactions involving only customary broker's
commissions. However, these limitations are not applicable if the
securities are acquired in a merger, consolidation, reorganization, or
acquisition of assets. While it is the Fund's policy to waive its
investment advisory fees on Fund assets invested in securities of
other open-end investment companies, it should be noted that
investment companies incur certain expenses, such as custodian and
transfer agent fees, and therefore, any investment by the Fund in
shares of another investment company would be subject to such
duplicate expenses.
INVESTING IN RESTRICTED SECURITIES
The Fund will not invest more than 5% of its total assets in
securities subject to restrictions on resale under the federal
securities laws, except for certain restricted securities which meet
the criteria for liquidity as established by the Trustees.
INVESTING IN ILLIQUID SECURITIES
The Fund will not invest more than 15% of the value of its net assets
in illiquid obligations including repurchase agreements providing for
settlement in more than seven days after notice, over-the-counter
options, certain securities not determined by the Trustees to be
liquid, and non-negotiable fixed income time deposits with maturities
over seven days.
INVESTING IN MINERALS
The Fund will not purchase interests in oil, gas, or other mineral
exploration or development programs or leases, except it may purchase
the securities of issuers which invest in or sponsor such programs.

INVESTING IN NEW ISSUERS
The Fund will not invest more than 5% of the value of its total assets
in securities of issuers which have less than three years of
operations including the operation of any predecessor.
INVESTING IN ISSUERS WHOSE SECURITIES ARE OWNED BY OFFICERS AND TRUSTEES
OF THE TRUST
The Fund will not purchase or retain the securities of any issuer if
the officers and Trustees of the Trust or its investment adviser,
owning individually more than .50% of the issuer's securities,
together own more than 5% of the issuer's securities.
INVESTING IN PUT OPTIONS
The Fund will not purchase put options on securities, other than put
options on stock indices, unless the securities are held in the Fund's
portfolio and not more than 5% of the value of the Fund's total assets
would be invested in premiums on open put option positions.
WRITING COVERED CALL OPTIONS
The Fund will not write call options on securities unless the
securities are held in the Fund's portfolio or unless the Fund is
entitled to them in deliverable form without further payment or after
segregating cash in the amount of any further payment.
INVESTING IN WARRANTS
The Fund will not invest more than 5% of its assets in warrants. No
more than 2% of the Fund's net assets , to be included within the
overall 5% limit on investments in warrants, may be warrants which are
not listed on the New York Stock Exchange or the American Stock
Exchange.

PURCHASING SECURITIES TO EXERCISE CONTROL
The Fund will not purchase securities of a company for purposes of
exercising control or management.
Except with respect to borrowing money, if a percentage limitation is
adhered to at the time of investment, a later increase or decrease in
percentage resulting from any change in value or net assets will not result
in a violation of such restriction.
For purposes of its policies and limitations, the Fund considers
certificates of deposit and demand and time deposits issued by a U.S.
branch of a domestic bank or savings association, having capital, surplus,
and undivided profits in excess of $100,000,000 at the time of investment
to be "cash items."
The Fund does not intend to borrow money in excess of 5% of the value of
its total assets during the current year.
To comply with registration requirements in certain states, the Fund (1)
will limit the aggregate value of the assets underlying covered call
options or put options written by the Fund to not more than 25% of its net
assets, (2) will limit the premiums paid for options purchased by the Fund
to 5% of its net assets, and (3) will limit the margin deposits on futures
contracts entered into by the Fund to 5% of its net assets. (If state
requirements change, these restrictions may be revised without shareholder
notification.)
INDEPENDENCE ONE MUTUAL FUNDS MANAGEMENT

Investors, Federated Securities Corp., Federated Administrative Services,
and Federated Services Company.

Robert E. Baker
4327 Stoneleigh Road
Bloomfield Hills, MI
Birthdate: May 6, 1930
Trustee
Retired; formerly, Vice Chairman, Chrysler Financial Corporation.

Harold Berry
100 Galleria Offcentre,
Suite 219
Southfield, MI
Birthdate: September 17, 1925
Trustee
Managing Partner, Berry Enterprises; Chairman, Independent Sprinkler
Companies, Inc.; Chairman, Berry, Ziegelman & Company; formerly, Chairman,
Executive Committee, Federal Enterprises, Inc.

Clarence G. Frame+
W-875 First Bank Building
332 Minnesota Street
St. Paul, MN
Birthdate: July 26, 1918
Trustee

Director, Tosco Corporation, Milwaukee Land Company, and Voyageur Funds
Group; formerly, Vice Chairman, First Bank System, Inc., and President, The
First National Bank of St. Paul, a subsidiary of First Bank System, Inc.

Harry J. Nederlander+
231 S. Woodward, Suite 219
Birmingham, MI
Birthdate: September 5, 1917
Trustee
Chairman, Nederlander Enterprises.

Thomas S. Wilson
Two Championship Drive
Auburn Hills, MI
Birthdate: October 9, 1949
Trustee
President and Executive Administrator of the Detroit Pistons; President and
CEO, Palace Sports and Entertainment.

Edward C. Gonzales
Federated Investors Tower
Pittsburgh, PA
Birthdate: October 22, 1930
President and Treasurer

Vice Chairman, Treasurer, and Trustee, Federated Investors; Vice President,
Federated Advisers, Federated Management, Federated Research, Federated
Research Corp., Federated Global Research Corp. and Passport Research,
Ltd.; Executive Vice President and Director, Federated Securities Corp.;
Trustee, Federated Shareholder Services Company; Trustee or Director of
some of the Funds distributed by Federated Securities Corp.; President,
Executive Vice President and Treasurer of some of the Funds distributed by
Federated Securities Corp.

Jeffrey W. Sterling
Federated Investors Tower
Pittsburgh, PA
Birthdate: February 5, 1947
Vice President and Assistant Treasurer
Vice President and Assistant Treasurer of various Funds distributed by
Federated Securities Corp.

Jay S. Neuman
Federated Investors Tower
Pittsburgh, PA
Birthdate: April 22, 1950
Secretary
Corporate Counsel, Federated Investors.

TRUSTEES' COMPENSATION

AGGREGATE
NAME , COMPENSATION
POSITION WITH FROM
THE TRUST THE TRUST*

Robert E. Baker $ 9,350
Trustee
Harold Berry $ 9,350
Trustee
Clarence G. Frame$ 9,350
Trustee
Harry J. Nederlander $ 6,800
Trustee

Thomas S. Wilson $ 9,350
Trustee

*Information is furnished for the fiscal year ended April 30, 1996. The
Trust is the only Investment Company in the Fund Complex. The aggregate
compensation is provided for the Trust which is comprised of seven
portfolios.
TRUSTEE LIABILITY
The Trust's Declaration of Trust provides that the Trustees will not be
liable for errors of judgment or mistakes of fact or law. However, they are
not protected against any liability to which they would otherwise be
subject by reason of willful misfeasance, bad faith, gross negligence, or
reckless disregard of the duties involved in the conduct of their office.
MASSACHUSETTS PARTNERSHIP LAW
Under certain circumstances, shareholders may be held personally liable as
partners under Massachusetts law for acts or obligations of the Trust. To
protect shareholders, the Trust has filed legal documents with
Massachusetts that expressly disclaim the liability of shareholders for
such acts or obligations of the Trust. These documents require notice of
this disclaimer to be given in each agreement, obligation, or instrument
that the Trust or its Trustees enter into or sign.
In the unlikely event a shareholder is held personally liable for the
Trust's obligations, the Trust is required by the Declaration of Trust to
use the property of the Fund to protect or compensate the shareholder. On
request, the Trust will defend any claim made and pay any judgment against
a shareholder for any act or obligation of the Trust. Therefore, financial
loss resulting from liability as a shareholder will occur only if the Trust

cannot meet its obligations to indemnify shareholders and pay judgments
against them from its assets.
INVESTMENT ADVISORY SERVICES

ADVISER TO THE FUND
The Fund's investment adviser is Michigan National Bank (the "Adviser").
The Adviser shall not be liable to the Trust, the Fund, or any shareholder
of the Fund for any losses that may be sustained in the purchase, holding,
or sale of any security, or for anything done or omitted by it, except acts
or omissions involving willful misfeasance, bad faith, gross negligence, or
reckless disregard of the duties imposed upon it by its contract with the
Trust.
Because of the internal controls maintained by Michigan National Bank to
restrict the flow of non-public information, Fund investments are typically
made without any knowledge of Michigan National Bank's or its affiliates'
lending relationships with an issuer.

ADVISORY FEES
For its advisory services, Michigan National Bank receives an annual
investment advisory fee as described in the prospectus. For the period
from September 25, 1995 (date of initial public investment) through April
30, 1996, the Adviser earned $208,897, of which $104,448 was voluntarily
waived.
SUB-ADVISER TO THE FUND
The Fund's sub-adviser is Sosnoff Sheridan Corporation (doing business as
Sosnoff Sheridan Group)(the "Sub-Adviser").

SUB-ADVISORY FEES
For its sub-advisory services, the Sub-Adviser receives an annual sub-
advisory fee as described in the prospectus.
For the period from September 25, 1995 (date of initial public investment)
through April 30, 1996, the Sub-Adviser earned $19,633, none of which was
voluntarily waived.
STATE EXPENSE LIMITATIONS
The Adviser has undertaken to comply with the expense limitations
established by certain states for investment companies whose shares
are registered for sale in those states. If the Fund's normal
operating expenses (including the investment advisory fee, but not
including brokerage commissions, interest, taxes, and extraordinary
expenses) exceed 2-1/2% per year of the first $30 million of average
net assets, 2% per year of the next $70 million of average net assets,
and 1-1/2% per year of the remaining average net assets, the Adviser
will reimburse the Trust for its expenses over the limitation.
If the Fund's monthly projected operating expenses exceed this
limitation, the investment advisory fee paid will be reduced by the
amount of the excess, subject to an annual adjustment. If the expense
limitation is exceeded, the amount to be reimbursed by the Adviser
will be limited, in any single fiscal year, by the amount of the
investment advisory fee.
This arrangement is not part of the advisory contract and may be
amended or rescinded in the future.
BROKERAGE TRANSACTIONS

The Adviser may select brokers and dealers who offer brokerage and research
services. These services may be furnished directly to the Fund or to the

Adviser and may include: advice as to the advisability of investing in
securities; security analysis and reports; economic studies; industry
studies; receipt of quotations for portfolio evaluations; and similar
services. Research services provided by brokers and dealers may be used by
the Adviser or its affiliates in advising the Fund and other accounts. To
the extent that receipt of these services may supplant services for which
the Adviser or its affiliates might otherwise have paid, it would tend to
reduce their expenses. The Adviser and its affiliates exercise reasonable
business judgment in selecting brokers who offer brokerage and research
services to execute securities transactions. They determine in good faith
that commissions charged by such persons are reasonable in relationship to
the value of the brokerage and research services provided. For the period
from September 25, 1995 (date of initial public investment) to April 30,
1996, the Fund paid $13,382 in brokerage commissions on brokerage
transactions.
Although investment decisions for the Funds are made independently from
those of the other accounts managed by the Adviser, investments of the type
the Funds may make may also be made by those other accounts. When the
Funds and one or more other accounts managed by the Adviser are prepared to
invest in, or desire to dispose of, the same security, available
investments or opportunities for sales will be allocated in a manner
believed by the Adviser to be equitable to each. In some cases, this
procedure may adversely affect the price paid or received by the Funds or
the size of the position obtained or disposed of by the Funds. In other
cases, however, it is believed that coordination and the ability to
participate in volume transactions will be to the benefit of the Funds.

OTHER SERVICES

TRUST ADMINISTRATION
Federated Administrative Services, a subsidiary of Federated Investors,
provides administrative personnel and services to the Funds for the fees
set forth in the prospectus. For the period from September 25 1995 (date of
initial public investment) to April 30, 1996, the administrator earned
$58,574, of which $57,628 was voluntarily waived.

CUSTODIAN
Michigan National Bank, Farmington Hills, Michigan, is custodian for the
securities and cash of the Fund. For the services to be provided to the
Trust pursuant to the Custodian Agreement, the Trust pays the custodian an
annual fee based upon the average daily net assets of the Fund and which is
payable monthly. The custodian will also charge transaction fees and out-
of-pocket expenses.
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT
Federated Services Company, Boston, Massachusetts, through its subsidiary
Federated Shareholder Services Company, is transfer agent for the shares of
the Funds and dividend disbursing agent for the Funds.
INDEPENDENT AUDITORS
The independent auditors for the Fund is KPMG Peat Marwick LLP, Pittsburgh,
Pennsylvania.
PURCHASING SHARES

Shares are sold at their net asset value without a sales charge on days
when both the New York Stock Exchange and the Federal Reserve Wire System

are open for business. The procedure for purchasing shares of the Fund is
explained in the prospectus under "Investing in the Fund."
CONVERSION TO FEDERAL FUNDS
It is the Fund's policy to be as fully invested as possible so that maximum
interest may be earned. To this end, all payments from shareholders must be
in federal funds or be converted into federal funds before shareholders
begin to earn dividends. Michigan National Bank acts as the shareholder's
agent in depositing checks and converting them to federal funds.
DETERMINING NET ASSET VALUE

Net asset value generally changes each day. The days on which net asset
value is calculated by the Fund are described in the prospectus.
DETERMINING MARKET VALUE OF SECURITIES

The market values of the Fund's portfolio securities are determined as
follows:
o for equity securities, according to the last sale price on a national
securities exchange, if applicable;
o in the absence of recorded sales for listed equity securities,
according to the mean between the last closing bid and asked prices;
o for unlisted equity securities, latest bid prices;
o for bonds and other fixed income securities, as determined by an
independent pricing service;
o for short-term obligations, according to the mean between bid and
asked prices as furnished by an independent pricing service, or for
short-term obligations with remaining maturities of 60 days or less at
the time of purchase, at amortized cost; or
o for all other securities, at fair value as determined in good faith by
the Trustees.

Prices provided by independent pricing services may be determined without
relying exclusively on quoted prices and may reflect: institutional trading
in similar groups of securities, yield, quality, coupon rate, maturity,
type of issue, trading characteristics, and other market data.
The Fund will value futures contracts and options at their market values
established by the exchanges at the close of options trading on such
exchanges unless the Trustees determine in good faith that another method
of valuing option positions is necessary.
REDEEMING SHARES

The Fund redeems shares at the next computed net asset value after
Federated Shareholder Services Company receives the redemption request.
Redemption procedures are explained in the prospectus under "Redeeming Fund
Shares."
REDEMPTION IN KIND
Although the Fund intends to redeem shares in cash, it reserves the right
under certain circumstances to pay the redemption price in whole or in part
by a distribution of securities from the Fund's portfolio. To satisfy
registration requirements in a particular state, redemption in kind will be
made (for any shareholder requesting redemption) in readily marketable
securities to the extent that such securities are available. If this
state's policy changes, the Fund reserves the right to redeem in kind by
delivering those securities it deems appropriate.
Redemption in kind will be made in conformity with applicable SEC rules,
taking such securities at the same value employed in determining net asset
value and selecting the securities in a manner the Trustees determine to be
fair and equitable.

The Trust has elected to be governed by Rule 18f-1 of the Investment
Company Act of 1940 under which the Fund is obligated to redeem shares for
any one shareholder in cash only up to the lesser of $250,000 or 1% of the
Fund's net asset value during any 90-day period.
TAX STATUS

THE FUND'S TAX STATUS
The Fund expects to pay no federal income tax because it intends to meet
the requirements of Subchapter M of the Internal Revenue Code applicable to
regulated investment companies and to receive the special tax treatment
afforded to such companies. To qualify for this treatment, the Fund must,
among other requirements:
derive at least 90% of its gross income from dividends, interest, and gains
from the sale of securities;
derive less than 30% of its gross income from the sale of securities held
less than three months;
invest in securities within certain statutory limits; and
distribute to its shareholders at least 90% of its net income earned during
the year.
SHAREHOLDERS' TAX STATUS
Shareholders are subject to federal income tax on dividends received as
cash or additional shares. The dividends received deduction for
corporations will apply to ordinary income distributions to the extent the
distribution represents amounts that would qualify for the dividends
received deduction to the Fund if the Fund were a regular corporation, and
to the extent designated by the Fund as so qualifying. These dividends, and
any short-term capital gains, are taxable as ordinary income.

CAPITAL GAINS
Long-term capital gains distributed to shareholders will be treated as
long-term capital gains regardless of how long shareholders have held
shares.
TOTAL RETURN

Cumulative total return reflects the Fund's total performance over a
specific period. The cumulative total return for the Fund for the period
from September 25, 1995 (date of initial public investment) through April
30, 1996 was 14.96%. This total return is representative of only 7 months
of activity since the date of initial public investment.
The average annual total return for the Fund is the average compounded rate
of return for a given period that would equate a $1,000 initial investment
to the ending redeemable value of that investment. The ending redeemable
value is computed by multiplying the number of shares owned at the end of
the period by the net asset value per share at the end of the period. The
number of shares owned at the end of the period is based on the number of
shares purchased at the beginning of the period with $1,000, less any
applicable sales charge, adjusted over the period by any additional shares,
assuming the reinvestment of all dividends and distributions.
Advertisements and other sales literature for the Fund may quote total
returns which are calculated on nonstandardized base periods. These total
returns also represent the historic change in the value of an investment in
the Fund based on quarterly reinvestment of dividends over a specified
period of time.

YIELD

The Fund's yield for the thirty-day period ended April 30, 1996 was 1.77%.
The yield for the Fund is determined each day by dividing the net
investment income per share (as defined by the SEC) earned by the Fund over
a thirty-day period by the maximum offering price per share of the Fund on
the last day of the period. This value is then annualized using semi-annual
compounding. This means that the amount of income generated during the
thirty-day period is assumed to be generated each month over a 12-month
period and is reinvested every six months. The yield does not necessarily
reflect income actually earned by the Fund because of certain adjustments
required by the SEC and, therefore, may not correlate to the dividends or
other distributions paid to shareholders. To the extent that financial
institutions and broker/dealers charge fees in connection with services
provided in conjunction with an investment in the Fund, the performance
will be reduced for those shareholders paying those fees.
PERFORMANCE COMPARISONS

The Fund's performance depends upon such variables as:
o portfolio quality;
o average portfolio maturity;
o type of instruments in which the portfolio is invested;
o changes in interest rates and market value of portfolio securities;
o changes in the Fund's expenses; and
o various other factors.
The Fund's performance fluctuates on a daily basis largely because net
earnings and the maximum offering price per share fluctuate daily. Both net

earnings and offering price per share are factors in the computation of
yield and total return.
Investors may use financial publications and/or indices to obtain a more
complete view of the Fund's performance. When comparing performance,
investors should consider all relevant factors, such as the composition of
any index used, prevailing market conditions, portfolio compositions of
other funds, and methods used to value portfolio securities and compute
offering price. The financial publications and/or indices which the Fund
uses in advertising may include:
o STANDARD & POOR'S COMPOSITE INDEX OF 500 STOCKS AND STANDARD & POOR'S
100 INDEX, a composite indices of common stocks in industry,
transportation, and financial and public utility companies can be used
to compare to the total returns of funds whose portfolios are invested
primarily in common stocks. In addition, the Standard & Poor's index
assumes reinvestments of all dividends paid by stocks listed on its
index. Taxes due on any of these distributions are not included, nor
are brokerage or other fees calculated in Standard & Poor's figures.
o LIPPER ANALYTICAL SERVICES, INC. ranks funds in various fund
categories by making comparative calculations using total return.
Total return assumes the reinvestment of all capital gains
distributions and income dividends and takes into account any change
in the maximum offering price over a specific period of time. From
time to time, the Fund will quote its Lipper ranking in the "index
funds" category in advertising and sales literature.
o MORNINGSTAR, INC., an independent rating service, is the publisher of
the bi-weekly Mutual Fund Values. Mutual Fund Values rates more than
1,000 NASDAQ-listed mutual funds of all types, according to their

risk-adjusted returns. The maximum rating is five stars, and ratings
are effective for two weeks.
Advertising and other promotional literature may include charts, graphs and
other illustrations using the Fund's returns, or returns in general, that
demonstrate basic investment concepts such as tax-deferred compounding,
dollar-cost averaging and systematic investment. In addition, the Fund can
compare its performance, or performance for the types of securities in
which it invests, to a variety of other investments, such as bank savings
accounts, certificates of deposit, and Treasury bills.
ECONOMIC AND MARKET INFORMATION
Advertising and sales literature for the Fund may include discussions of
economic, financial and political developments and their effect on the
securities market. Such discussions may take the form of commentary on
these developments by Fund portfolio managers and their views and analysis
on how such developments could affect the Fund. In addition, advertising
and sales literature may quote statistics and give general information
about the mutual fund industry, including the growth of the industry, from
sources such as the Investment Company Institute ("ICI"). For example,
according to the ICI, twenty-seven percent of American households are
pursuing their financial goals through mutual funds. These investors, as
well as businesses and institutions, have entrusted over $3 trillion to the
more than 5,500 funds available.

INDEPENDENCE ONE MICHIGAN MUNICIPAL BOND FUND
(A PORTFOLIO OF INDEPENDENCE ONE MUTUAL FUNDS)
SUPPLEMENT TO PROSPECTUS DATED AUGUST 23, 1995

A. Please delete the "Summary of Fund Expenses" table on page 1 and replace
it with the following:

SUMMARY OF FUND EXPENSES
- --------------------------------------------------------------------------------

<TABLE>
<S> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Charge Imposed on Purchases (as a percentage of offering price)............................... None
Maximum Sales Charge Imposed on Reinvested Dividends
(as a percentage of offering price)....................................................................... None
Contingent Deferred Sales Charge (as a percentage of original purchase price or redemption proceeds, as
applicable)............................................................................................... None
Redemption Fees (as a percentage of amount redeemed, if applicable)......................................... None
Exchange Fee................................................................................................ None
ANNUAL FUND OPERATING EXPENSES
(as a percentage of projected average net assets)*
Management Fee (after waiver)(1)............................................................................ 0.00%
12b-1 Fees.................................................................................................. None
Total Other Expenses (after waiver)(2)...................................................................... 0.68%
Total Fund Operating Expenses (after waivers)(3).................................................... 0.68%
</TABLE>

(1) The management fee has been reduced to reflect the voluntary waiver by the
investment adviser. The adviser can terminate this voluntary waiver at any
time at its sole discretion. The maximum management fee is 0.75%.

(3) The Total Fund Operating Expenses were 0.57% for the fiscal year ended April
30, 1996 and were 1.33% absent the voluntary waivers of the management fee,
administration fee and certain other operating expenses. Total Fund
Operating Expenses are expected to be 1.52% absent the voluntary waivers
described in Note 1 and 2.

* Total Operating Expenses are estimated based on average expenses expected to
be incurred during the period ending April 30, 1997. During the course of this
period, expenses may be more or less than the average amount shown.

THE PURPOSE OF THIS TABLE IS TO ASSIST AN INVESTOR IN UNDERSTANDING THE
VARIOUS COSTS AND EXPENSES THAT A SHAREHOLDER OF THE FUND WILL BEAR, EITHER
DIRECTLY OR INDIRECTLY. FOR MORE COMPLETE DESCRIPTIONS OF THE VARIOUS COSTS AND
EXPENSES, SEE "INVESTING IN THE FUND." WIRE-TRANSFERRED REDEMPTIONS OF LESS THAN
$5,000 MAY BE SUBJECT TO ADDITIONAL FEES.

<TABLE>
<CAPTION>
EXAMPLE 1 year 3 years 5 years 10 years
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
You would pay the following expenses on a $1,000 investment assuming
(1) 5% annual return and (2) redemption at the end of each time period. ... $7 $22 $38 $85
</TABLE>

THE ABOVE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.

B. Please insert the following "Financial Highlights" table as page 2 of the
prospectus:

INDEPENDENCE ONE MICHIGAN MUNICIPAL BOND FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)

The following table has been audited by KPMG Peat Marwick LLP, the Fund's
independent auditors. Their report, dated June 14, 1996, on the Fund's Financial
Statements for the year ended April 30, 1996, and on the following table for the
period presented, is included in the Fund's Annual Report, which is incorporated
herein by reference. This table should be read in conjunction with the Fund's
Financial Statements and Notes thereto, contained in the Fund's Annual Report,
which may be obtained from the Fund.

<TABLE>
<CAPTION>
YEAR ENDED
APRIL 30, 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.

(See Notes which are an integral part of the Financial Statements)

Further information about the Fund's performance is contained in the Annual
Report dated April 30, 1996, which can be obtained free of charge.

C. Please delete the fourth paragraph of the sub-section entitled "Adviser's
Background" which begins on page 7 of the prospectus and replace it with
the following:

"Bruce Beaumont is Vice President and Portfolio Manager for Michigan
National Bank and Independence One Capital Management Corporation in
Farmington Hills, and has been responsible for management of the Fund's
portfolio since November, 1995. He joined Michigan National Bank in 1987.
He earned his BA from Alma College and an MBA from Northwestern University.
Bruce is a Chartered Financial Analyst and a Certified Public Accountant."

D. Please note that the toll-free number for purchasing shares of the Fund
shown in the current prospectus should be changed. Please delete the first
sentence of the sub-section entitled "To Place an Order" under the section
entitled "Share Purchases" on page 10 of the prospectus and replace it
with the following:

"Investors may call toll-free 1-800-334-2292 to purchase shares of the Fund
through Michigan National Bank or Independence One."

E. Please insert the following sub-heading and paragraph before the heading
"Exchanging Securities for Fund Shares" on page 11 of the prospectus:

"SYSTEMATIC INVESTMENT PROGRAM

Once the Fund account has been opened, shareholders may add to their
investment on a regular basis in a minimum amount of $100. Under this
program, funds may be automatically withdrawn periodically from the
shareholder's checking account and invested in Fund shares at the net asset
value next determined after an order is received. A shareholder may apply
for participation in this program through Michigan National Bank."

F. Please insert the following sub-heading and paragraph before the
sub-heading "Accounts with Low Balances" on page 15 of the prospectus:

"SYSTEMATIC WITHDRAWAL PROGRAM

Shareholders who desire to receive payments of a predetermined amount may

take advantage of the Systematic Withdrawal Program. Under this program,
shares of the Fund are redeemed to provide for periodic withdrawal payments
in an amount directed by he shareholder. Depending upon the amount of the
withdrawal payments, the amount of dividends paid and capital gains
distributions with respect to Fund shares, and the fluctuation of the net
asset value of Fund shares redeemed under this program, redemptions may
reduce, and eventually deplete, the shareholder's investment in the Fund.
For this reason, payments under this program should not be considered as
yield or income on the shareholder's investment in the Fund. To be eligible
to participate in this program, a shareholder must have an account value of
at least $10,000. A shareholder may apply for participation in this program
through Michigan National Bank."

G. Please insert the following as the last sentence of the first paragraph of
the section entitled "Voting Rights" on page 15 of the prospectus:

"As of June 5, 1996, Pierson & Co., the nominee for Michigan National Bank,
may for certain purposes be deemed to control the Fund because it is owner
of record of certain shares of the Fund."

H. Please insert the following as the last sentence of the second paragraph
of the section entitled "Michigan Taxes" on page 17 of the prospectus:

"1995 Public Act 5 repeals the intangibles tax effective January 1, 1998."

June 28, 1996

[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
G01184-11 (6/96)

INDEPENDENCE ONE MICHIGAN MUNICIPAL BOND FUND
(A PORTFOLIO OF INDEPENDENCE ONE MUTUAL FUNDS)
PROSPECTUS

The shares of Independence One Michigan Municipal Bond Fund (the "Fund") offered
by this prospectus represent interests in a non-diversified portfolio of
securities which is one of a series of investment portfolios in Independence One
Mutual Funds (the "Trust"), an open-end management investment company (a mutual

fund). Michigan National Bank professionally manages the Fund's portfolio.

The investment objective of the Fund is to provide current income exempt from
federal regular income tax and the personal income taxes imposed by the State of
Michigan and Michigan municipalities. The Fund invests primarily in a portfolio
of municipal securities which are exempt from federal regular income tax and the
personal income taxes imposed by the State of Michigan and Michigan
municipalities ("Michigan Municipal Securities"). These securities include those
issued by or on behalf of the State of Michigan and Michigan municipalities, as
well as those issued by other states, territories and possessions of the United
States which are exempt from federal regular income tax and the personal income
taxes of the State of Michigan and Michigan municipalities. In addition the Fund
intends to qualify as an investment substantially exempt from the Michigan
intangibles tax. Shares of the Fund are intended to be sold as an investment
vehicle for institutions, corporations, fiduciaries and individuals.
Shareholders can invest, reinvest, or redeem shares at any time without charge
or penalty imposed by the Fund. Shareholders have access to other portfolios of
the Trust through an exchange program.

THE SHARES OFFERED BY THIS PROSPECTUS ARE NOT DEPOSITS OR OBLIGATIONS OF
MICHIGAN NATIONAL BANK, ARE NOT ENDORSED OR GUARANTEED BY MICHIGAN NATIONAL
BANK, AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE
FEDERAL RESERVE BOARD, OR ANY OTHER GOVERNMENT AGENCY. INVESTMENT IN THESE
SHARES INVOLVES INVESTMENT RISKS INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.

This prospectus contains the information you should read and know before you
invest in the Fund. Keep this prospectus for future reference.

The Fund has also filed a Statement of Additional Information dated August 23,
1995, with the Securities and Exchange Commission. The information contained in
the Statement of Additional Information is incorporated by reference into this
prospectus. You may request a copy of the Statement of Additional Information
free of charge, obtain other information, or make inquiries about the Fund by
writing or calling the Fund toll-free 1-800-334-2292.

Prospectus dated August 23, 1995

TABLE OF CONTENTS
- --------------------------------------------------------------------------------

SUMMARY OF FUND EXPENSES 1
- ---------------------------------------------------
GENERAL INFORMATION 2
- ---------------------------------------------------
INVESTMENT INFORMATION 2
- ---------------------------------------------------
Investment Objective 2
Investment Policies 2
Acceptable Investments 3
Characteristics 3

Participation Interests 3
Variable Rate Municipal Securities 3
Municipal Leases 3
Investing in Securities of Other
Investment Companies 4
Restricted and Illiquid Securities 4
When-Issued and Delayed Delivery
Transactions 4
Temporary Investments 4
Michigan Municipal Securities 5
Investment Risks 5
Non-Diversification 6
Investment Limitation 6
INDEPENDENCE ONE MUTUAL FUNDS
INFORMATION 7
- ---------------------------------------------------
Management of the Trust 7
Board of Trustees 7
Investment Adviser 7
Advisory Fees 7
Adviser's Background 7
Distribution of Fund Shares 8
Administration of the Fund 8
Administrative Services 8
Custodian 9
Transfer Agent and Dividend
Disbursing Agent 9
Independent Auditors 9

Expenses of the Fund 9
NET ASSET VALUE 9
- ---------------------------------------------------
INVESTING IN THE FUND 10
- ---------------------------------------------------
Share Purchases 10
To Place an Order 10
Minimum Investment Required 10
What Shares Cost 10
Certificates and Confirmations 11
Dividends and Capital Gains 11

EXCHANGING SECURITIES FOR FUND SHARES 11
- ---------------------------------------------------
EXCHANGE PRIVILEGE 11
- ---------------------------------------------------
Exchange by Telephone 12
Written Exchange 13

REDEEMING FUND SHARES 13
- ---------------------------------------------------
By Telephone 13
By Mail 14
Accounts with Low Balances 15

SHAREHOLDER INFORMATION 15
- ---------------------------------------------------
Voting Rights 15

Massachusetts Partnership Law 15

EFFECT OF BANKING LAWS 15
- ---------------------------------------------------
TAX INFORMATION 16
- ---------------------------------------------------
Federal Income Tax 16
Michigan Taxes 17
Other State and Local Taxes 17

PERFORMANCE INFORMATION 17
- ---------------------------------------------------
ADDRESSES Back Cover
- ---------------------------------------------------

SUMMARY OF FUND EXPENSES
- --------------------------------------------------------------------------------
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on Purchases (as a percentage of offering
price).............None
Maximum Sales Load Imposed on Reinvested Dividends
(as a percentage of offering price)...................................None
Contingent Deferred Sales Charge (as a percentage of original
purchase price or redemption proceeds, as applicable)..................None
Redemption Fee (as a percentage of amount redeemed, if applicable).......None
Exchange Fee.............................................................None

ANNUAL FUND OPERATING EXPENSES*
(As a percentage of projected average net assets)
Management Fee (after waiver) (1)...................................0.25%
12b-1 Fees..........................................................None
Total Other Expenses (after waiver) (2).............................0.40%
Total Fund Operating Expenses (3)...............................0.65%
(1) The estimated management fee has been reduced to reflect the anticipated
voluntary waiver by the investment adviser. The adviser can terminate this
voluntary waiver at any time at its sole discretion. The maximum management
fee is 0.75%.
(2) The Total Other Expenses are estimated to be 0.45% absent the anticipated
voluntary waiver by the administrator.
(3) The Total Fund Operating Expenses are estimated to be 1.20% absent the
anticipated voluntary waivers detailed in notes (1) and (2).
* Annual Fund Operating Expenses are estimated based on expenses expected to be
incurred during the fiscal year ending April 30, 1996. During the course of
this period, expenses may be more or less than the amount shown.

THE PURPOSE OF THIS TABLE IS TO ASSIST AN INVESTOR IN UNDERSTANDING THE
VARIOUS COSTS AND EXPENSES THAT A SHAREHOLDER OF THE FUND WILL BEAR, EITHER
DIRECTLY OR INDIRECTLY. FOR MORE COMPLETE DESCRIPTIONS OF THE VARIOUS COSTS AND
EXPENSES, SEE "INDEPENDENCE ONE MUTUAL FUNDS INFORMATION" AND "INVESTING IN THE
FUND." WIRE-TRANSFERRED REDEMPTIONS OF LESS THAN $5,000 MAY BE SUBJECT TO
ADDITIONAL FEES.

EXAMPLE 1YEAR 3 YEARS
- ---------------------------------------- --------- ---------
You would pay the following expenses on
a $1,000 investment assuming (1) 5%

annual return and (2) redemption at
the end of each time period. The
Fund charges no redemption fees.............. $7 $21

THE ABOVE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN. THIS
EXAMPLE IS BASED ON ESTIMATED DATA FOR THE FISCAL YEAR ENDING APRIL 30, 1996.

GENERAL INFORMATION
- --------------------------------------------------------------------------------

The Trust was established as a Massachusetts business trust under a Declaration
of Trust dated January 9, 1989. The Declaration of Trust permits the Trust to
offer separate series of shares of beneficial interest representing interests in
separate portfolios of securities. The shares in any one portfolio may be
offered in separate classes. This prospectus relates only to the Trust's
portfolio known as Independence One Michigan Municipal Bond Fund. As of the date
of this prospectus, the Fund does not offer separate classes of shares.

Shares of the Fund are designed as a convenient means of accumulating an
interest in a professionally managed portfolio investing primarily in Michigan
Municipal Securities. The Fund is not likely to be a suitable investment for
non-Michigan taxpayers or retirement plans since Michigan Municipal Securities
are not likely to produce competitive after-tax yields for such persons and

entities when compared to other investments.

A minimum initial investment of $1,000 is required. Subsequent investments must
be in amounts of $100 or more.

INVESTMENT INFORMATION
- --------------------------------------------------------------------------------

INVESTMENT OBJECTIVE

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 investment objective
cannot be changed without approval of shareholders. While there is no assurance
that the Fund will achieve its investment objective, it endeavors to do so by
following the investment policies described in this prospectus.

Interest income of the Fund that is exempt from the income taxes described above
retains its exempt status when distributed to the Fund's shareholders. However,
income distributed by the Fund may not necessarily be exempt from state or
municipal taxes in states other than Michigan. In addition, the Fund intends to
qualify as an investment substantially exempt from the Michigan Intangibles
Personal Property tax ("Intangibles tax").

INVESTMENT POLICIES

As a matter of fundamental investment policy which may not be changed without
shareholder approval, the Fund will invest its assets so that, under normal

circumstances, at least 80% of its total assets are invested in Michigan
Municipal Securities, as previously defined. (Federal regular income tax does
not include the individual alternative minimum tax or the federal alternative
minimum tax for corporations.) Unless indicated otherwise, the investment
policies of the Fund may be changed by the Trustees without approval of
shareholders. Shareholders will be notified before any material changes in these
policies becomes effective.

ACCEPTABLE INVESTMENTS. The Michigan Municipal Securities in which the Fund
invests include:

- obligations issued by or on behalf of the state of Michigan, its political
subdivisions, or agencies;

- debt obligations of any state, territory, or possession of the United
States, or any political subdivision of any of these; and

- participation interests, as described below, in any of the above
obligations,

the interest from which is, in the opinion of bond counsel for the issuers or in
the opinion of officers of the Trust, on behalf of the Fund and/or the
investment adviser to the Fund, exempt from both federal regular income tax and
the personal income taxes imposed by the State of Michigan and Michigan
municipalities.

The prices of fixed income securities fluctuate inversely to the direction of

interest rates.

CHARACTERISTICS. The Michigan Municipal Securities which the Fund buys are high
grade bonds rated, at the time of purchase, Aaa, Aa or A by Moody's Investors
Service, Inc., AAA, AA or A by Standard & Poor's Ratings Group, or AAA, AA or A
by Fitch Investors Service, Inc. In certain cases the Fund's adviser may choose
bonds which are unrated if it judges the bonds to have the same characteristics
as the investment grade bonds described above. If a security loses its rating or
has its rating reduced after the Fund has purchased it, the Fund is not required
to sell or otherwise dispose of the security, but may consider doing so. A
description of the ratings categories is contained in the Appendix to the
Statement of Additional Information.

PARTICIPATION INTERESTS. The Fund may purchase participation interests from
financial institutions such as commercial banks, savings and loan associations,
and insurance companies. These participation interests give the Fund an
undivided interest in Michigan Municipal Securities. The financial institutions
from which the Fund purchases participation interests frequently provide or
secure irrevocable letters of credit or guarantees to assure that the
participation interests are of high quality. The Fund's adviser will determine
whether participation interests meet the prescribed quality standards for the
Fund.

VARIABLE RATE MUNICIPAL SECURITIES. Some of the Michigan Municipal Securities
which the Fund purchases may have variable interest rates. Variable interest
rates are ordinarily based on a published interest rate, interest rate index, or
a similar standard, such as the 91-day U.S. Treasury bill rate. Many variable
rate municipal securities are subject to payment of principal on demand by the

Fund in not more than seven days. All variable rate municipal securities will
meet the quality standards for the Fund. The Fund's investment adviser has been
instructed by the Trustees to monitor the pricing, quality, and liquidity of the
variable rate municipal securities, including participation interests held by
the Fund on the basis of published financial information and reports of the
rating agencies and other analytical services.

MUNICIPAL LEASES. Municipal leases are obligations issued by state and local
governments or authorities to finance the acquisition of equipment and
facilities and may be considered to be illiquid. They may take the form of a
lease, an installment purchase contract, a conditional sales contract or a
participation certificate on any of the above. Lease obligations may be subject
to periodic appropriation. If the entity does not appropriate funds for future
lease payments, the entity cannot be compelled to make such payments. In the
event of failure of appropriation, unless the participation interests are credit
enhanced, it is unlikely that the participants would be able to obtain an
acceptable substitute source of payment.

INVESTING IN SECURITIES OF OTHER INVESTMENT COMPANIES. The Fund can acquire up
to 3 per centum of the total outstanding stock of other investment companies.
The Fund will not be subject to any other limitations with regard to the
acquisition of securities of other investment companies so long as the public
offering price of the Fund's shares does not include a sales load exceeding
1 1/2 percent. The Fund will purchase securities of investment companies only in
open-market transactions involving only customary broker's commissions (although
the Fund does not expect to incur any broker's commissions in connection with
its purchases). However, these limitations are not applicable if the securities
are acquired in a merger, consolidation, reorganization, or acquisition of

assets. While it is the Fund's policy to waive its investment advisory fees on
Fund assets invested in securities of other open-end investment companies, it
should be noted that investment companies incur certain expenses, such as
custodian and transfer agent fees, and therefore, any investment by the Fund in
shares of another investment company would be subject to such duplicate
expenses.

RESTRICTED AND ILLIQUID SECURITIES. The Fund may invest in restricted
securities. Restricted securities are any securities in which the Fund may
otherwise invest pursuant to its investment objective and policies but which are
subject to restriction upon resale under federal securities laws. To the extent
these securities are not determined to be liquid, the Fund will limit its
purchase of these securities, together with other securities considered to be
illiquid, to 15% of its net assets.

WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS. The Fund may purchase securities
on a when-issued or delayed delivery basis. These transactions are arrangements
in which the Fund purchases securities with payment and delivery scheduled for a
future time. The seller's failure to complete these transactions may cause the
Fund to miss a price or yield considered to be advantageous. Settlement dates
may be a month or more after entering into these transactions, and the market
values of the securities purchased may vary from the purchase prices.
Accordingly, the Fund may pay more/less than the market value of the securities
on the settlement date.

The Fund may dispose of a commitment prior to settlement if the adviser deems it
appropriate to do so. In addition, the Fund may enter into transactions to sell
its purchase commitments to third parties at current market values and

simultaneously acquire other commitments to purchase similar securities at later
dates. The Fund may realize short-term profits or losses upon the sale of such
commitments.

TEMPORARY INVESTMENTS. From time to time on a temporary basis, or when the
investment adviser determines that market conditions call for a temporary
defensive posture, the Fund may invest in short-term non-Michigan municipal
tax-exempt obligations or taxable temporary investments. These temporary
investments include: notes issued by or on behalf of municipal or corporate
issuers; obligations issued or guaranteed by the U.S. government, its agencies,
or instrumentalities; other debt securities; commercial paper; certificates of
deposit of banks; and repurchase agreements (arrangements in which the
organization selling the Fund a bond or temporary investment agrees at the time
of sale to repurchase it at a mutually agreed upon time and price).

There are no rating requirements applicable to temporary investments. However,
the investment adviser will limit temporary investments to those rated within
the high grade categories described under "Acceptable
Investments--Characteristics" (if rated) or (if unrated) those which the
investment adviser judges to have the same characteristics as such investment
grade securities.

Although the Fund is permitted to make taxable, temporary investments, there is
no current intention of generating income subject to federal regular income tax
or personal income taxes imposed by the State of Michigan or Michigan
municipalities.

MICHIGAN MUNICIPAL SECURITIES

Michigan Municipal Securities are generally issued to finance public works, such
as airports, bridges, highways, housing, hospitals, mass transportation
projects, schools, streets, and water and sewer works. They are also issued to
repay outstanding obligations, to raise funds for general operating expenses,
and to make loans to other public institutions and facilities.

Michigan Municipal Securities include industrial development bonds issued by or
on behalf of public authorities to provide financing aid to acquire sites or
construct and equip facilities for privately or publicly owned corporations. The
availability of this financing encourages these corporations to locate within
the sponsoring communities and thereby increases local employment.

The two principal classifications of Michigan Municipal Securities are "general
obligation" and "revenue" bonds. General obligation bonds are secured by the
issuer's pledge of its full faith and credit and taxing power for the payment of
principal and interest. However, interest on and principal of revenue bonds are
payable only from the revenue generated by the facility financed by the bond or
other specified sources of revenue. Revenue bonds do not represent a pledge of
credit or create any debt of or charge against the general revenues of a
municipality or public authority. Industrial development bonds are typically
classified as revenue bonds.

INVESTMENT RISKS

Yields on Michigan Municipal Securities depend on a variety of factors,
including: the general conditions of the municipal bond market; the size of the

particular offering; the maturity of the obligations; and the rating of the
issue. Further, any adverse economic conditions or developments affecting the
State of Michigan or its municipalities could impact the Fund's portfolio. The
ability of the Fund to achieve its investment objective also depends on the
continuing ability of the issuers of Michigan Municipal Securities and
participation interests, or the guarantors of either, to meet their obligations
for the payment of interest and principal when due. In addition, from time to
time, the supply of Michigan Municipal Securities acceptable for purchase by the
Fund could be limited. Investing in Michigan Municipal Securities which meet the
Fund's quality standards may not be possible if the State of Michigan or its
municipalities do not maintain their current credit ratings.

The Fund may invest in Michigan Municipal Securities which are repayable out of
revenue streams generated from economically related projects or facilities
and/or whose issuers are located in the same state. Sizable investments in these
Michigan Municipal Securities could involve an increased risk to the Fund should
any of these related projects or facilities experience financial difficulties.

Obligations of issuers of Michigan Municipal Securities are subject to the
provisions of bankruptcy, insolvency, and other laws affecting the rights and
remedies of creditors. In addition, the obligations of such issuers may become
subject to laws enacted in the future by Congress, state legislators, or
referenda extending the time for payment of principal and/or interest, or
imposing other constraints upon enforcement of such obligations or upon the
ability of states or municipalities to levy taxes. There is also the possibility
that, as a result of litigation or other conditions, the power or ability of any
issuer to pay, when due, the principal of and interest on its municipal
securities may be materially affected.

The Michigan economy has diversified away from durable goods manufacturing with
service sector employment currently at approximately 25% of total employment.
However, manufacturing, and the automobile sector in particular, still have
significant influence over the State's economy. Michigan's economy tends to
fluctuate with the cyclical trends of the manufacturing sector, which still
accounts for nearly 23% of total state employment. The State's unemployment rate
is below the national unemployment rate for the first time in almost 20 years
reflecting both the diversification of the regional economy and significant
improvement in the automobile sector and related industries.

Michigan's finances were hard hit during the 1990 and 1991 fiscal periods.
Spending cuts and an improving state economy resulted in surplus revenues of
$254 million in fiscal 1992. As a result of continuing surplus funds in fiscal
years 1993 and 1994, Michigan's budget stabilization fund reached an
historically high level of $779 million at the end of fiscal 1994, with an
additional increase now projected for the year ended September 30, 1995. The
State of Michigan maintains a conservative debt position with per capita debt
remaining below the national average.

A further discussion of the risks of a portfolio which invests primarily in
Michigan Municipal Securities is contained in the Statement of Additional
Information.

NON-DIVERSIFICATION

The Fund is a non-diversified investment portfolio. As such, there is no limit
on the percentage of assets which can be invested in any single issuer. An

investment in the Fund, therefore, will entail greater risk than would exist in
a diversified portfolio of securities because the higher percentage of
investments among fewer issuers may result in greater fluctuation in the total
market value of the Fund's portfolio. Any economic, political, or regulatory
developments affecting the value of the securities in the Fund's portfolio will
have a greater impact on the total value of the portfolio than would be the case
if the portfolio were diversified among more issuers.

The Fund intends to comply with Subchapter M of the Internal Revenue Code of
1986, as amended. This undertaking requires that at the end of each quarter of
the taxable year: (a) with regard to at least 50% of the Fund's total assets, no
more than 5% of its total assets are invested in the securities of a single
issuer, and (b) beyond that, no more than 25% of its total assets are invested
in the securities of a single issuer.

INVESTMENT LIMITATION

The Fund will not borrow money directly or through reverse repurchase agreements
(arrangements in which the Fund sells a portfolio instrument for a percentage of
its cash value with an agreement to
buy it back on a set date) or pledge securities except, under certain
circumstances, the Fund may borrow up to one-third of the value of its total
assets and pledge securities to secure such borrowings.

The above investment limitation cannot be changed without shareholder approval.

INDEPENDENCE ONE MUTUAL FUNDS INFORMATION
- --------------------------------------------------------------------------------

MANAGEMENT OF THE TRUST

INVESTMENT ADVISER. Pursuant to an investment advisory contract with the Trust,
investment decisions for the Fund are made by Michigan National Bank, as the
Fund's investment adviser (the "Adviser"), subject to direction by the Trustees.
The Adviser continually conducts investment research and supervision for the
Fund and is responsible for the purchase or sale of portfolio instruments, for
which it receives an annual fee based on the assets of the Fund.

ADVISORY FEES. The Adviser receives an annual investment advisory fee equal
to 0.75 of 1% of the Fund's average daily net assets. The fee paid by the
Fund, while higher than the advisory fee paid by other mutual funds in
general, is comparable to fees paid by other mutual funds with similar
objectives and policies. The Adviser has undertaken to reimburse the Fund,
up to the amount of the advisory fee, for operating expenses in excess of
limitations established by certain states. The Adviser may voluntarily
choose to waive a portion of its fee or reimburse certain expenses of the
Fund.
ADVISER'S BACKGROUND. Michigan National Bank, a national banking
association, is a wholly-owned subsidiary of Michigan National Corporation
("MNC"). Through its subsidiaries and affiliates, MNC, Michigan's fifth
largest bank holding company in terms of total assets, as of December 31,

1994, offers a full range of financial services to the public, including
commercial lending, depository services, cash management, brokerage
services, retail banking, mortgage banking, investment advisory services and
trust services. Independence One Capital Management Corporation ("IOCM"), a
nationally recognized investment advisory subsidiary of MNC, provides
investment advisory services for trust and other managed assets. IOCM and
the Trust Division of Michigan National Bank (the "Trust Division") have
managed custodial assets totaling $9 billion. Of this amount, IOCM and the
Trust Division have investment discretion over $2.2 billion.

Michigan National Bank has managed mutual funds since May 1989. The Trust
Division has managed pools of commingled funds since 1964. In addition,
Michigan National Bank presently manages its own investment portfolio of
approximately $300 million in taxable, short-term instruments.

As part of its regular banking operations, Michigan National Bank may make
loans to or provide credit support for obligations issued by public
companies or municipalities. Thus, it may be
possible, from time to time, for the Fund to hold or acquire the securities
of issuers which are also lending clients of Michigan National Bank. The
lending relationship will not be a factor in the selection of securities.

Stacey A. Gray is Vice President and Portfolio Manager for Michigan National
Bank in Farmington Hills, and has been responsible for the management of the
Fund's portfolio since its inception. Ms. Gray joined Michigan National Bank
in 1986. She earned her BS from Mercy College and her JD from the University
of Detroit Mercy School of Law.

On February 4, 1995, the Board of Directors of MNC approved a definitive
agreement for the acquisition of that company by National Australia Bank
Limited ("NAB"), which is a transnational banking organization,
headquartered in Melbourne, Australia. On June 2, 1995, shareholders of MNC
approved the merger. As a result, upon completion of the merger, MNC and its
subsidiaries, including the Adviser, would become direct or indirect
subsidiaries of NAB. It is anticipated that the merger will be completed in
the third or fourth quarter of 1995. It is also anticipated that operations
will continue to be conducted under the Michigan National Corporation and
Michigan National Bank names.

Under provisions of the Investment Company Act of 1940, completion of the
merger would result in an assignment, and termination, of the Fund's current
investment advisory contract with the Adviser. In view of the pending
merger, the Fund's Board of Trustees has approved a new investment advisory
contract ("New Advisory Contract") between the Trust and Michigan National
Bank, as a subsidiary of National Australia Bank Limited (the "New
Adviser"). The terms of the New Advisory Contract are identical in all
material respects to the present advisory contract, i.e., Michigan National
Bank will continue to provide investment advisory services to the Fund, and
there will be no change in either the Fund's investment objective or
investment policies, or the fees payable by the Fund for advisory services.
The New Advisory Contract would become effective upon consummation of the
merger, which is subject to the satisfaction of certain conditions
including, among others, the receipt of all necessary regulatory approvals.

DISTRIBUTION OF FUND SHARES

ADMINISTRATION OF THE FUND

ADMINISTRATIVE SERVICES. Federated Administrative Services, a subsidiary of
Federated Investors, provides the Fund with certain administrative personnel and
services necessary to operate the Fund,
such as certain legal and accounting services. Federated Administrative Services
provides these at an annual rate as specified below:

MAXIMUM AVERAGE AGGREGATE
ADMINISTRATIVE DAILY NET ASSETS
FEE OF THE TRUST
-------------------- ------------------------------------
.150 of 1% on the first $250 million
.125 of 1% on the next $250 million
.100 of 1% on the next $250 million
.075 of 1% on assets in excess of $750 million

CUSTODIAN. Michigan National Bank, Farmington Hills, Michigan, is custodian for
the securities and cash of the Fund.

TRANSFER AGENT AND DIVIDEND DISBURSING AGENT. Federated Services Company,
Boston, Massachusetts, is transfer agent for the shares of the Fund and dividend
disbursing agent for the Fund.

INDEPENDENT AUDITORS. The independent auditors for the Fund are KPMG Peat
Marwick LLP, Pittsburgh, Pennsylvania.

EXPENSES OF THE FUND

The Fund pays all of its own expenses and its allocable share of the Trust's
expenses. These expenses include, but are not limited to, the cost of:
organizing the Trust and continuing its existence; Trustees' fees; investment
advisory and administrative services; printing prospectuses and other Fund
documents for shareholders; registering the Trust, the Fund and shares of the
Fund; taxes and commissions; issuing, purchasing, repurchasing and redeeming
shares; fees for custodians, transfer agents, dividend disbursing agents,
shareholder servicing agents, and registrars; printing, mailing, auditing,
accounting, and legal expenses; reports to shareholders and government agencies;
meetings of Trustees and shareholders and proxy solicitations therefor;
insurance premiums; association membership dues; and such nonrecurring and
extraordinary items as may arise. However, the Adviser may voluntarily waive
and/or reimburse some expenses.

NET ASSET VALUE
- --------------------------------------------------------------------------------

The Fund's net asset value per share fluctuates. It is determined by adding the

market value of all securities and other assets of the Fund, subtracting the
liabilities of the Fund, and dividing the remainder by the total number of
shares outstanding.

INVESTING IN THE FUND
- --------------------------------------------------------------------------------

SHARE PURCHASES

Shares of the Fund may be purchased through Michigan National Bank, Independence
One Brokerage Services, Inc. ("Independence One"), or through brokers or dealers
which have a sales agreement with the distributor. Texas residents must purchase
shares through Federated Securities Corp. at 1-800-618-8573. Investors may
purchase shares of the Fund on days on which both the New York Stock Exchange
and the Federal Reserve Wire System are open for business. In connection with
the sale of Fund shares, the distributor may from time to time offer certain
items of nominal value to any shareholder or investor. The Fund reserves the
right to reject any purchase request.

TO PLACE AN ORDER. Investors may call toll-free 1-800-344-2292 to purchase
shares of the Fund through Michigan National Bank or Independence One. In
addition, investors may purchase shares of the Fund by calling their authorized
broker directly. Payments may be made either by check or wire transfer of
federal funds.

be purchased at that day's price. For settlement of an order, payment must be
received within three business days of receipt of the order by check or wire
transfer. To purchase by check, the check must be included with the order and
made payable to "Independence One Michigan Municipal Bond Fund." Checks must be
converted into federal funds to be considered received.

Federal funds should be wired as follows: Federated Services Company c/o
Michigan National Bank, Farmington Hills, Michigan; Account Number 6856238933;
For Credit to: Independence One Michigan Municipal Bond Fund; Fund Number (this
number can be found on the account statement or by contacting the Fund); Group
Number or Order Number; Nominee or Institution Name; and ABA Number 072000805.

MINIMUM INVESTMENT REQUIRED

The minimum initial investment in the Fund is $1,000. Subsequent investments
must be in amounts of at least $100.

WHAT SHARES COST

Shares of the Fund are sold at their net asset value next determined after an
order is received. There is no sales charge imposed by the Fund.

The net asset value is determined at the close of the New York Stock Exchange
(normally 4:00 p.m. Eastern time) Monday through Friday, except on: (i) days on
which there are not sufficient changes in the value of the Fund's portfolio
securities that its net asset value might be materially affected; (ii) days
during which no shares are tendered for redemption and no orders to purchase
shares are received; and (iii) on the following holidays: New Year's Day,

Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day, and Christmas Day.

CERTIFICATES AND CONFIRMATIONS

As transfer agent for the Fund, Federated Services Company maintains a share
account for each shareholder of record. Share certificates are not issued unless
shareholders so request by contacting their Michigan National Bank or
Independence One representative or authorized broker in writing.

Detailed confirmations of each purchase and redemption are sent to each
shareholder. Monthly confirmations are sent to report dividends paid during that
month.

DIVIDENDS AND CAPITAL GAINS

Dividends are declared daily and paid monthly. Capital gains realized by the
Fund, if any, will be distributed at least once every 12 months. Dividends and
capital gains are automatically reinvested on payment dates in additional shares
without a sales charge unless cash payments are requested by shareholders in
writing to the Fund through their Michigan National Bank or Independence One
representative or authorized broker. Shares purchased with reinvested dividends
are credited to shareholder accounts on the following day.

EXCHANGING SECURITIES FOR FUND SHARES
- --------------------------------------------------------------------------------

Any securities exchanged must meet the investment objective and policies of the
Fund, must have a readily ascertainable market value, and must be liquid. The
market value of any securities exchanged in an initial investment, plus any
cash, must be at least equal to the minimum investment in the Fund. The Fund
acquires the exchanged securities for investment and not for resale.

EXCHANGE PRIVILEGE
- --------------------------------------------------------------------------------

All shareholders of the Fund are shareholders of the Trust, which consists of
the Fund, Independence One Equity Plus Fund, Independence One Fixed Income Fund,
Independence One U.S. Government Securities Fund and the following money market
funds: Independence One Michigan Municipal Cash Fund; Independence One Prime
Money Market Fund; and Independence One U.S. Treasury Money

Market Fund. Shareholders of the Fund have access to these funds ("participating
funds") through an exchange program.

With the exception of Independence One Prime Money Market Fund, the
participating funds currently offer only one class of shares. If such funds
should add a second class of shares, exchanges may be limited to shares of the
same class of each fund. Shareholders of the Fund have access to both Class A
and Class B Shares of Independence One Prime Money Market Fund through the
exchange program.

Shares of the Fund may be exchanged for shares of participating funds at net
asset value.

The exchange privilege is available to shareholders residing in any state in

which the participating fund shares being acquired may legally be sold. Upon
receipt by the transfer agent of proper instructions and all necessary
supporting documents, shares submitted for exchange will be redeemed at the
next-determined net asset value. If the exchanging shareholder does not have an
account in the participating fund whose shares are being acquired, a new account
will be established with the same registration, dividend, and capital gain
options as the account from which shares are exchanged, unless otherwise
specified by the shareholder. In the case where the new account registration is
not identical to that of the existing account, a signature guarantee is
required. (See "Redeeming Fund Shares--By Mail.") Exercise of this privilege is
treated as a redemption and new purchase for federal income tax purposes and,
depending on the circumstances, a short or long-term capital gain or loss may be
realized. The Fund reserves the right to modify or terminate the exchange
privilege at any time. Shareholders would be notified prior to any modification
or termination. Shareholders may obtain further information on the exchange
privilege by calling their Michigan National Bank or Independence One
representative or authorized broker.

initial application, authorization forms and information on this service can be
obtained through a Michigan National Bank or Independence One representative or
authorized broker. Telephone exchange instructions may be recorded.

Any shares held in certificate form cannot be exchanged by telephone but must be
forwarded to Federated Services Company, the transfer agent, by a Michigan
National Bank or Independence One representative or authorized broker and
deposited to the shareholder's account before being exchanged.

If reasonable procedures are not followed by the Fund, it may be liable for
losses due to unauthorized or fraudulent telephone instructions.

WRITTEN EXCHANGE. A shareholder wishing to make an exchange by written request
may do so by sending it to: Independence One Mutual Funds, 27777 Inkster Road,
Mail Code 10-52, Farmington Hills, Michigan 48333-9065. In addition, an investor
may exchange shares by sending a written request to their authorized broker
directly.

REDEEMING FUND SHARES
- --------------------------------------------------------------------------------

Shares are redeemed at their net asset value next determined after Federated
Services Company receives the redemption request. Redemptions will be made on
days on which the Fund computes its net asset value. Redemption requests cannot
be executed on days on which the New York Stock Exchange is closed or on federal
holidays restricting wire transfers. Telephone or written requests for
redemption must be received in proper form and can be made to the Fund through a
Michigan National Bank or Independence One representative or authorized broker.
Although the transfer agent does not charge for telephone redemptions, it
reserves the right to charge a fee for the cost of wire-transferred redemptions
of less than $5,000.

broker/dealers may charge customary fees and commissions for this service. If at
any time, the Fund shall determine it necessary to terminate or modify this
method of redemption, shareholders would be promptly notified.

An authorization form permitting the Fund to accept telephone redemption
requests must first be completed. It is recommended that investors request this
privilege at the time of their initial application. If not completed at the time
of initial application, authorization forms and information on this service can
be obtained through a Michigan National Bank or Independence One representative
or authorized broker. Telephone redemption instructions may be recorded.

If reasonable procedures are not followed by the Fund, it may be liable for
losses due to unauthorized or fraudulent telephone instructions.

BY MAIL. Shareholders may redeem shares by sending a written request to the
Fund through their Michigan National Bank or Independence One representative or

authorized broker. The written request should include the shareholder's name,
the Fund name, the class designation, the account number, and the share or
dollar amount requested. Shareholders redeeming through Michigan National Bank
or Independence One should mail written requests to: Independence One Mutual
Funds, 27777 Inkster Road, Mail Code 10-52, Farmington Hills, Michigan
48333-9065. Investors redeeming through an authorized broker should mail written
requests directly to their broker.

If share certificates have been issued, they must be properly endorsed and
should be sent by registered or certified mail with the written request.

Shareholders requesting a redemption of $50,000 or more, a redemption of any
amount to be sent to an address other than that on record with the Fund, or a
redemption payable other than to the shareholder of record must have signatures
on written redemption requests guaranteed by:

- a trust company or commercial bank whose deposits are insured by the Bank
Insurance Fund, which is administered by the Federal Deposit Insurance
Corporation ("FDIC");

- a member of the New York, American, Boston, Midwest, or Pacific Stock
Exchange;

- a savings bank or savings and loan association whose deposits are insured
by the Savings Association Insurance Fund, which is administered by the
FDIC; or

- any other "eligible guarantor institution", as defined in the Securities

Exchange Act of 1934.

The Fund does not accept signatures guaranteed by a notary public.

Normally, a check for the proceeds is mailed within one business day, but in no
event more than seven days after receipt of a proper written redemption request.

ACCOUNTS WITH LOW BALANCES

Due to the high cost of maintaining accounts with low balances, the Fund may
redeem shares in any account and pay the proceeds to the shareholder if the
account balance falls below the required minimum value of $1,000 due to
shareholder redemptions. This requirement does not apply, however, if the
balance falls below $1,000 because of changes in the Fund's net asset value.
Before shares are redeemed to close an account, the shareholder is notified in
writing and allowed 30 days to purchase additional shares to meet the minimum
requirement.

SHAREHOLDER INFORMATION
- --------------------------------------------------------------------------------

VOTING RIGHTS

MASSACHUSETTS PARTNERSHIP LAW

Under certain circumstances, shareholders may be held personally liable as
partners under Massachusetts law for acts or obligations of the Trust. To
protect shareholders, the Trust has filed legal documents with Massachusetts
that expressly disclaim the liability of shareholders for such acts or
obligations of the Trust. These documents require notice of this disclaimer to
be given in each agreement, obligation, or instrument that the Trust or its
Trustees enter into or sign.

In the unlikely event a shareholder is held personally liable for the Trust's

obligations, the Trust is required by the Declaration of Trust to use the
property of the Fund to protect or compensate the shareholder. On request, the
Trust will defend any claim made and pay any judgment against a shareholder for
any act or obligation of the Trust. Therefore, financial loss resulting from
liability as a shareholder will occur only if the Trust cannot meet its
obligations to indemnify shareholders and pay judgments against them from its
assets.

EFFECT OF BANKING LAWS
- --------------------------------------------------------------------------------

The Glass-Steagall Act and other banking laws and regulations presently prohibit
a bank holding company registered under the Federal Bank Holding Company Act of
1956 or any bank or non-bank affiliate thereof from sponsoring, organizing,
controlling or distributing the shares of a registered, open-end investment
company continuously engaged in the issuance of its shares, and prohibit banks
generally from issuing, underwriting, selling or distributing securities.
However, such banking laws

and regulations do not prohibit such a holding company affiliate or banks
generally from acting as an investment adviser, transfer agent or custodian to
such an investment company or from purchasing shares of such a company as agent
for and upon the order of their customer. Michigan National Bank is subject to
such banking laws and regulations.

Michigan National Bank believes, based on the advice of its counsel, that

Michigan National Bank may perform the services for the Fund contemplated by its
advisory agreement with the Trust without violation of the Glass-Steagall Act or
other applicable banking laws or regulations. Changes in either federal or state
statutes and regulations relating to the permissible activities of banks and
their subsidiaries or affiliates, as well as further judicial or administrative
decisions or interpretations of such or future statutes and regulations, could
prevent Michigan National Bank from continuing to perform all or a part of the
above services for its customers and/or the Fund. If it were prohibited from
engaging in these customer-related activities, the Trustees would consider
alternative advisers and means of continuing available investment services. In
such event, changes in the operation of the Fund may occur, including possible
termination of any automatic or other Fund share investment and redemption
services then being provided by Michigan National Bank. It is not expected that
existing shareholders would suffer any adverse financial consequences (if
another adviser with equivalent abilities to Michigan National Bank is found) as
a result of any of these occurrences.

TAX INFORMATION
- --------------------------------------------------------------------------------

FEDERAL INCOME TAX

The Fund will pay no federal income tax because it expects to meet requirements
of the Internal Revenue Code of 1986, as amended, applicable to regulated
investment companies and to receive the special tax treatment afforded to such
companies. The Fund will be treated as a single, separate entity for federal
income tax purposes so that income (including capital gains) and losses realized
by the Trust's other portfolios will not be combined for tax purposes with those

realized by the Fund.

In general, shareholders are not required to pay federal regular income tax on
any dividends received from the Fund that represent net interest on tax-exempt
municipal bonds. However, under the Tax Reform Act of 1986, dividends
representing net interest income earned on certain "private activity" bonds
issued after August 7, 1986 may be included in calculating the federal
individual alternative minimum tax or the federal alternative minimum tax for
corporations. The Fund may purchase all types of municipal bonds, including
private activity bonds.

Dividends of the Fund representing net interest income earned on some temporary
investments and any realized net short-term gains are taxed as ordinary income.

These tax consequences apply whether dividends are received in cash or as
additional shares.

MICHIGAN TAXES

Under existing Michigan laws, distribution made by the Fund will not be subject
to Michigan personal income taxes to the extent that such distributions qualify
as "exempt-interest dividends" under the Internal Revenue Code of 1986, as
amended, and represent (i) interest from obligations of Michigan or any of its
political subdivisions or (ii) income from obligations of the United States
government which are exempted from state income taxation by a law of the United
States.

That portion of a shareholder's shares in the Fund representing (i) bonds or
other similar obligations of Michigan or its political subdivisions or, (ii)
obligations of the United States which are exempt from taxation by a law of the
United States, and dividends paid by the Fund representing interest payments on
securities, will be exempt from Michigan intangibles tax.

Certain municipalities in Michigan also impose an income tax on individuals and
corporations. However, to the extent that the dividends from the Funds are
exempt from federal regular income taxes, such dividends also will be exempt
from Michigan municipal income taxes.

OTHER STATE AND LOCAL TAXES

Income from the Fund is not necessarily free from state income taxes in states

other than Michigan or from personal property taxes. State laws differ on this
issue, and shareholders are urged to consult their own tax advisers regarding
the status of their accounts under state and local tax laws.

PERFORMANCE INFORMATION
- --------------------------------------------------------------------------------

From time to time the Fund advertises its total return, yield, and
tax-equivalent yield.

The yield of the Fund is calculated by dividing the net investment income per
share (as defined by the Securities and Exchange Commission) earned by the Fund
over a thirty-day period by the offering price per share of the Fund on the last
day of the period. This number is then annualized using semi-annual compounding.
The tax-equivalent yield of the Fund is calculated similarly to the yield, but
is adjusted to reflect the taxable yield that the Fund would have had to earn to
equal its actual yield, assuming a specific tax rate. The yield and the
tax-equivalent yield do not necessarily reflect income actually earned by the
Fund and, therefore, may not correlate to the dividends or other distributions
paid to shareholders.

From time to time, advertisements for the Fund may refer to ratings, rankings,
and other information in certain financial publications and/or compare the

Fund's performance to certain indices.

INDEPENDENCE ONE
MUTUAL FUNDS

INDEPENDENCE ONE
MICHIGAN MUNICIPAL BOND FUND
Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779

INVESTMENT ADVISER
Michigan National Bank
27777 Inkster Road
Mail Code 10-52
Farmington Hills, Michigan 48333-9065

DISTRIBUTOR
Federated Securities Corp.
Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779

CUSTODIAN
Michigan National Bank
27777 Inkster Road
Mail Code 10-52
Farmington Hills, Michigan 48333-9065

TRANSFER AGENT AND DIVIDEND DISBURSING AGENT
Federated Services Company
P.O. Box 8600
Boston, Massachusetts 02266-8600

INDEPENDENT AUDITORS
KPMG Peat Marwick LLP
One Mellon Bank Center
Pittsburgh, Pennsylvania 15219

[RECYCLED PAPER LOGO]
Cusip 453777856
G00979-03 (5/95)

INDEPENDENCE ONE-REGISTERED TRADEMARK-
MICHIGAN MUNICIPAL
BOND FUND
Distributed by Federated Securities Corp.

A Non-Diversified Portfolio of
An Open-End, Management
Investment Company

Prospectus dated
August 23, 1995

MICHIGAN NATIONAL BANK

Investment Adviser

INDEPENDENCE ONE MICHIGAN MUNICIPAL BOND FUND
(A Portfolio of Independence One Mutual Funds)

SUPPLEMENT TO STATEMENT OF ADDITIONAL INFORMATION DATED AUGUST 23, 1995

A. Please delete the last sentence of the section entitled "Portfolio
Turnover" on page 3 and replace it with the following:

"For the period from November 20, 1995 (date of initial public investment)
to April 30, 1996, the Fund's portfolio turnover rate was 39%."

B. Please insert the following as the second sentence under the sub-
heading entitled "Fund Ownership" on page 7:

"As of June 5, 1996, the following shareholders of record owned 5% or more
of the outstanding voting stock of the Fund: Pierson & Co., Michigan
National Bank, acting in various capacities for numerous accounts, owned,
of record, approximately 2,433,239 shares (99.88%) of the Fund."

B. Please insert the following as the second sentence under the sub-
heading entitled "Advisory Fees" on page 8:

"For the period from November 20, 1995 (date of initial public investment)
to April 30, 1996, the Adviser earned $86,756, of which $57,837 was
voluntarily waived."

C. Please delete the section entitled"Trustees' Compensation" on page 7
and replace it with the following:

TRUSTEES' COMPENSATION

AGGREGATE
NAME , COMPENSATION
POSITION WITH FROM
THE TRUST THE TRUST*

Robert E. Baker $ 9,350
Trustee
Harold Berry $ 9,350
Trustee
Clarence G. Frame$ 9,350
Trustee
Harry J. Nederlander $ 6,800
Trustee
Thomas S. Wilson $ 9,350
Trustee

*Information is furnished for the fiscal year ended April 30, 1996. The
Trust is the only Investment Company in the Fund Complex. The aggregate

compensation is provided for the Trust which is comprised of seven
portfolios.

D. Please insert the following information as the second sentence under
the heading entitled "Administrative Services" on page 8:

"For the period from November 20, 1995 (date of initial public investment)
to April 30, 1996, the Fund incurred costs for administrative services of
$12,868, of which $12,468 was voluntarily waived."

E. Please insert the following information as the first paragraph under
the heading entitled "Total Return" on page 10:

"The Fund's cumulative total return for the period from November 20, 1995
(date of initial public investment) to April 30, 1996, was 1.21%.
Cumulative total return reflects the Fund's total performance over a
specified period of time. The Fund's total return is reflective of only 7
months of fund activity since the Fund's date of initial public
investment."

F. Please insert the following information as the first paragraph under
the heading entitled "Yield" on page 11:

"The Fund's yield for the thirty-day period ended April 30, 1996, was
3.88%."

G. Please delete the section entitled "Tax-Equivalent Yield" on page 11
and replace it with the following:

"TAX-EQUIVALENT YIELD
The Fund's tax-equivalent yield for the thirty-day period ended April 30,
1996, was 5.14%.
The tax-equivalent yield for the Fund is calculated similarly to the yield,
but is adjusted to reflect the taxable yield that the Fund would have had
to earn to equal its actual yield, assuming a stated tax rate and assuming
that income in 100% tax exempt.
TAX EQUIVALENCY TABLE
The Fund may also use a tax-equivalency table in advertising and sales
literature. The interest earned by the municipal obligations in the Fundis
portfolio generally remains free from federal regular income tax* and the
income taxes imposed by the State of Michigan. As the table below
indicates, a itax-freei investment is an attractive choice for investors,
particularly in times of narrow spreads between itax-freei and taxable
yields.
TAXABLE YIELD EQUIVALENT FOR 1996

STATE OF MICHIGAN

COMBINED FEDERAL AND STATE INCOME TAX BRACKET:
19.40% 32.40% 35.40% 40.40% 44.00%

JOINT $1- $40,101- $96,901- $147,701- OVER
RETURN 40,100 96,900 147,700 263,750 $263,750

SINGLE $1- $24,001- $58,151- $121,301- OVER
RETURN 24,000 58,150 121,300 263,750 $263,750

TAX-EXEMPT
YIELD TAXABLE YIELD EQUIVALENT

Note: The maximum marginal tax rate for each bracket was used in
calculating the taxable yield equivalent. Furthermore, additional
state and local taxes paid on comparable taxable investments were not
used to increase federal deductions.
The chart above is for illustrative purposes only. It is not an indication
of past or future performance of Fund shares.
* Some portion of the Fund's income may be subject to the federal
alternative minimum tax and state and local taxes.

H. Please insert the following information as the final section on page
12:

"FINANCIAL STATEMENTS

The Financial Statements for the fiscal year ended April 30, 1996 are
incorporated herein by reference to the Fund's Annual Report dated April
30, 1996 (File Nos. 33-29808 and 811-5843). A c opy of the Annual Report
may be obtained without charge by contacting the Trust."
June 28, 1996

FEDERATED INVESTORS
Federated Investors Tower
Pittsburgh, PA 15222-3779

Federated Securities Corp. is the distributor of the Fund
and is a subsidiary of Federated Investors.
Cusip 453777856
G01184-12 (6/96)

INDEPENDENCE ONE MICHIGAN MUNICIPAL BOND FUND
(A PORTFOLIO OF INDEPENDENCE ONE MUTUAL FUNDS)

STATEMENT OF ADDITIONAL INFORMATION

This Statement of Additional Information should be read with the prospectus of
Michigan Municipal Bond Fund (the "Fund") dated August 23, 1995. This
Statement is not a prospectus itself. To receive a copy of the prospectus
write the Fund or call 1-800-334-2292.

FEDERATED INVESTORS TOWER
PITTSBURGH, PENNSYLVANIA 15222-3779

Statement dated August 23, 1995

[LOGO]
Distributor
A subsidiary of FEDERATED INVESTORS

TABLE OF CONTENTS

GENERAL INFORMATION ABOUT THE FUND 1
- ----------------------------------------------------------
INVESTMENT OBJECTIVE AND POLICIES 1
- ----------------------------------------------------------
Acceptable Investments 1
When-Issued and Delayed Delivery Transactions 2
Temporary Investments 2
Portfolio Turnover 3
INVESTMENT LIMITATIONS 3
- ----------------------------------------------------------

Michigan Investment Risks 4
INDEPENDENCE ONE MUTUAL FUNDS MANAGEMENT 5
- ----------------------------------------------------------
Officers and Trustees 5
Fund Ownership 7
Trustees' Compensation 7
Trustee Liability 7
INVESTMENT ADVISORY SERVICES 8
- ----------------------------------------------------------
Adviser to the Fund 8
Advisory Fees 8
ADMINISTRATIVE SERVICES 8
- ----------------------------------------------------------
CUSTODIAN 8
- ----------------------------------------------------------
BROKERAGE TRANSACTIONS 8
- ----------------------------------------------------------
PURCHASING SHARES 9
- ----------------------------------------------------------
Conversion to Federal Funds 9
DETERMINING NET ASSET VALUE 9
- ----------------------------------------------------------
DETERMINING MARKET VALUE OF SECURITIES 9
- ----------------------------------------------------------
Valuing Municipal Bonds 9
Use of Amortized Cost 9
REDEEMING SHARES 9
- ----------------------------------------------------------

Redemption in Kind 9
TAX STATUS 10
- ----------------------------------------------------------
The Fund's Tax Status 10
Shareholder's Tax Status 10
TOTAL RETURN 10
- ----------------------------------------------------------
YIELD 11
- ----------------------------------------------------------
TAX-EQUIVALENT YIELD 11
- ----------------------------------------------------------
Tax-Equivalency Table 11
PERFORMANCE COMPARISONS 12
- ----------------------------------------------------------
APPENDIX 13
- ----------------------------------------------------------

GENERAL INFORMATION ABOUT THE FUND
- ---------------------------------------------------------------------------
- -----
The Fund is a portfolio in Independence One Mutual Funds (the "Trust"),
which was established as a Massachusetts business trust under a Declaration
of Trust dated January 9, 1989.

INVESTMENT OBJECTIVE AND POLICIES
- ---------------------------------------------------------------------------
- ----- The Fund's investment objective 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
investment objective cannot be changed without approval of shareholders. In
addition, the Fund intends to qualify as an investment exempt from the
Michigan Intangibles Personal Property tax.

ACCEPTABLE INVESTMENTS

The Fund invests primarily in a portfolio of municipal securities, which
are exempt from federal regular income tax and the personal income taxes
imposed by the State of Michigan and Michigan municipalities ("Michigan
Municipal Securities"). These securities include those issued by or on
behalf of the State of Michigan and Michigan municipalities, as well as
those issued by other states, territories, and possessions of the United
States which are exempt from federal regular income tax and the personal
income taxes imposed by the State of Michigan and Michigan municipalities.

CHARACTERISTICS

The Michigan Municipal Securities in which the Fund invests have the
characteristics set forth in the prospectus.

TYPES OF ACCEPTABLE INVESTMENTS

Examples of Michigan Municipal Securities are:

municipal notes and municipal commercial paper;

serial bonds sold with differing maturity dates;

tax anticipation notes sold to finance working capital needs of
municipalities;

bond anticipation notes sold prior to the issuance of longer-term
bonds;

pre-refunded municipal bonds; and

general obligation bonds secured by a municipality pledge of taxation.

PARTICIPATION INTERESTS

The financial institutions from which the Fund purchases participation
interests frequently provide or secure from another financial institution
irrevocable letters of credit or guarantees and give the Fund the right to
demand payment of the principal amounts of the participation interests plus
accrued interest on short notice (usually within seven days).

VARIABLE RATE MUNICIPAL SECURITIES

Variable interest rates generally reduce changes in the market value of
municipal securities from their original purchase prices. Accordingly, as
interest rates decrease or increase, the potential for capital appreciation
or depreciation is less for variable rate municipal securities than for
fixed income obligations.

The terms of these variable rate demand instruments require payment of
principal and accrued interest from the issuer of the municipal
obligations, the issuer of the participation interests, or a guarantor of
either issuer.

MUNICIPAL LEASES

The Fund may purchase municipal securities in the form of participation
interests which represent undivided proportional interests in lease
payments by a governmental or non- profit entity. The lease payments and
other rights under the lease provide for and secure the payments on the
certificates. Lease obligations may be limited by municipal charter or the
nature of the appropriation for the lease. In particular, lease obligations
may be subject to periodic appropriation. If the entity does not
appropriate funds for future lease payments, the entity cannot be compelled
to make such payments. Furthermore, a lease may provide that the
certificate trustee cannot accelerate lease obligations upon default. The
trustee would only be able to enforce lease payments as they became due. In
the event of default or failure of appropriation, it is unlikely that the
trustee would be able to obtain an acceptable substitute source of payment.

In determining the liquidity of municipal lease securities, the investment
adviser, under the authority delegated by the Trustees, will base its
determination on the following factors:

whether the lease can be terminated by the lessee;

the potential recovery, if any, from a sale of the leased property
upon
termination of the lease;

the lessee's general credit strength (e.g., its debt, administrative,
economic and financial characteristics and prospects);

the likelihood that the lessee will discontinue appropriating funding
for
the leased property because the property is no longer deemed essential
to
its operations (e.g., the potential for an "event of non-
appropriation");
and

any credit enhancement or legal recourse provided upon an event of
non-appropriation or other termination of the lease.

WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS

These transactions are made to secure what is considered to be an
advantageous price or yield for the Fund. Settlement dates may be a month
or more after entering into these transactions, and the market values of
the securities purchased may vary from the purchase prices. No fees or
other expenses, other than normal transaction costs, are incurred. However,
liquid assets of the Fund sufficient to make payment for the securities to
be purchased are segregated on the Fund's records at the trade date. These
assets are marked to market daily and are maintained until the transaction

has been settled. The Fund does not intend to engage in when-issued and
delayed delivery transactions to an extent that would cause the segregation
of more than 20% of the total value of its assets.

TEMPORARY INVESTMENTS

The Fund may also invest in temporary investments during times of unusual
market conditions or for defensive purposes.

REPURCHASE AGREEMENTS

Repurchase agreements are arrangements in which banks, broker/dealers, and
ther recognized financial institutions sell U.S. government securities or
certificates of deposit to the Fund and agree at the time of sale to
repurchase them at a mutually agreed upon time and price within one year
from the date of acquisition. The Fund or its custodian will take
possession of the securities subject to repurchase agreements. To the
extent that the original seller does not repurchase the securities from the
Fund, the Fund could receive less than the repurchase price on any sale of
such securities. In the event that such a defaulting seller filed for
bankruptcy or became insolvent, disposition of such securities by the Fund
might be delayed pending court action. The Fund believes that under the
regular procedures normally in effect for custody of the Fund's portfolio
securities subject to repurchase agreements, a court of competent
jurisdiction would rule in favor of the Fund and allow retention or
disposition of such securities. The Fund may only enter into repurchase
agreements with banks and other recognized financial institutions, such as

broker/dealers, which are found by the Fund's investment adviser to be
creditworthy pursuant to guidelines established by the Trustees.

From time to time, such as when suitable Michigan municipal bonds are not
available, the Fund may invest a portion of its assets in cash. Any portion
of the Fund's assets maintained in cash will reduce the amount of assets in
Michigan municipal bonds and thereby reduce the Fund's yield.

REVERSE REPURCHASE AGREEMENTS

The Fund may also enter into reverse repurchase agreements. This
transaction is similar to borrowing cash. In a reverse repurchase agreement
the Fund transfers possession of a portfolio instrument to another person,
such as a financial institution, broker, or dealer, in return for a
percentage of the instrument's market value in cash, and agrees that on a
stipulated date in the future the Fund will repurchase the portfolio
instrument by remitting the original consideration plus interest at an
agreed upon rate. The use
of reverse repurchase agreements may enable the Fund to avoid selling
portfolio instruments at a time when a sale may be deemed to be
disadvantageous, but the ability to enter into reverse repurchase
agreements does not ensure that the Fund will be able to avoid selling
portfolio instruments at a disadvantageous time.

When effecting reverse repurchase agreements, liquid assets of the Fund, in
a dollar amount sufficient to make payment for the obligations to be
purchased, are segregated at the trade date. These securities are marked to
market daily and maintained until the transaction is settled.

PORTFOLIO TURNOVER

The Fund may trade or dispose of portfolio securities as considered
necessary to meet its investment objective. It is not anticipated that the
portfolio trading engaged in by the Fund will result in its annual rate of
portfolio turnover exceeding 100%.

INVESTMENT LIMITATIONS

SELLING SHORT AND BUYING ON MARGIN

The Fund will not sell any securities short or purchase any securities on
margin but may obtain such short- term credits as may be necessary for
clearance of transactions.

ISSUING SENIOR SECURITIES AND BORROWING MONEY

The Fund will not issue senior securities except that the Fund may borrow
money and engage in reverse repurchase agreements in amounts up to one-
third of the value of its total assets, including the amounts borrowed.

The Fund will not borrow money or engage in reverse repurchase agreements
for investment leverage, but rather as a temporary, extraordinary, or
emergency measure or to facilitate management of the portfolio by enabling
the Fund to meet redemption requests when the liquidation of portfolio
securities is deemed to be inconvenient or disadvantageous. The Fund will

not purchase any securities while borrowings in excess of 5% of its total
assets are outstanding.

PLEDGING ASSETS

The Fund will not mortgage, pledge, or hypothecate any assets except to
secure permitted borrowings.

UNDERWRITING

The Fund will not underwrite any issue of securities except as it may be
deemed to be an underwriter under the Securities Act of 1933 in connection
with the sale of securities in accordance with its investment objective,
policies, and limitations.

INVESTING IN REAL ESTATE

The Fund will not purchase or sell real estate, including limited
partnership interests, although it may invest in municipal bonds secured by
real estate or interests in real estate.

INVESTING IN COMMODITIES, COMMODITY CONTRACTS, OR COMMODITY FUTURES
CONTRACTS

The Fund will not buy or sell commodities, commodity contracts, or
commodities futures contracts.

LENDING CASH OR SECURITIES

The Fund will not lend any of its assets except that it may acquire
publicly or non-publicly issued municipal bonds or temporary investments or
enter into repurchase agreements in accordance with its investment
objective, policies, and limitations.

CONCENTRATION OF INVESTMENTS

The Fund will not purchase securities if, as a result of such purchase, 25%
or more of the value of its total assets would be invested in any one
industry or in industrial development bonds or other securities, the
interest upon which is paid from revenues of similar types of projects.
However, the Fund may invest as temporary investments 25% or more of the
value of its assets in cash or cash items, securities issued or guaranteed
by the U.S. government, its agencies, or instrumentalities, or instruments
secured by these money market instruments, i.e., repurchase agreements.

The above investment limitations cannot be changed without shareholder
approval. The following limitations, however, may be changed by the
Trustees without shareholder approval. Shareholders will be notified before
any material change in these limitations becomes effective.

INVESTING IN SECURITIES OF OTHER INVESTMENT COMPANIES

The Fund can acquire up to 3 per centum of the total outstanding stock of
other investment companies. The Fund will not be subject to any other
limitations with regard to the acquisition of securities of other
investment companies so long as the public offering price of the Fund's

shares does not include a sales load exceeding 1 1/2 percent. The Fund will
purchase securities of investment companies only in open-market
transactions involving only customary broker's commissions. However, these
limitations are not applicable if the securities are acquired in a merger,
consolidation, reorganization, or acquisition of assets.

INVESTING IN ISSUERS WHOSE SECURITIES ARE OWNED BY OFFICERS AND TRUSTEES OF
THE TRUST

The Fund will not purchase or retain the securities of any issuer if the
officers and Trustees of the Fund or its investment adviser owning
individually more than 1/2 of 1% of the issuer's securities together own
more than 5% of the issuer's securities.

INVESTING IN RESTRICTED SECURITIES

The Fund will not invest more than 10% of the value of its total assets in
securities subject to restrictions on resale under the federal securities
laws.

INVESTING IN ILLIQUID SECURITIES

The Fund will not invest more than 15% of the value of its net assets in
illiquid obligations, including repurchase agreements providing for
settlement in more than seven days after notice, and certain restricted
securities.

INVESTING IN NEW ISSUERS

The Fund will not invest more than 5% of the value of its total assets in
securities of issuers where the principal and interest are the
responsibility of companies (or guarantors, where applicable) with less
than three years of continuous operations, including the operation of any
predecessor.

DEALING IN PUTS AND CALLS

The Fund will not buy or sell puts, calls, straddles, spreads, or any
combination of these.

INVESTING IN MINERALS

The Fund will not purchase or sell interests in oil, gas, or other mineral
exploration or development programs, or leases, although it may invest in
the securities of issuers which invest in or sponsor such programs.

Except with respect to borrowing money, if a percentage limitation is
adhered to at the time of investment, a later increase or decrease in
percentage resulting from any change in value or net assets will not result
in a violation of such restriction.

The Fund does not expect to borrow money or pledge securities or invest in
repurchase agreements in excess of 5% of the value of its net assets during
the coming fiscal year.

For purposes of its policies and limitations, the Fund considers
certificates of deposit and demand and time deposits issued by a U.S.
branch of a domestic bank or savings and loan having capital, surplus, and
undivided profits in excess of $100,000,000 at the time of investment to be
"cash items."

MICHIGAN INVESTMENT RISKS

On August 19, 1993, the Governor of Michigan signed into law Act 145,
Public Acts of Michigan, 1993 ("Act 145"), a measure which would have
significantly impacted financing of primary and secondary school operations
and which has resulted in additional property tax and school finance reform
legislation. Act 145 would have exempted all property in the State of
Michigan from millage levied for local and intermediate school districts
operating purposes, other than millage levied for community colleges,
effectively July 1, 1994. In order to replace local property tax revenues
lost as a result of Act 145, the Michigan Legislature, in December 1993,
enacted several statutes which address property tax and school finance
reform. Education reform legislation not dealing with school finance was
also enacted.

The property tax and school finance reform measures included a ballot
proposal ("Proposal A") which was subject to voter approval and in fact
approved on March 15, 1994, and a statutory proposal which would have
automatically taken effect if Proposal A had not been approved. Under
Proposal A as approved, effective May 1, 1994, the state sales and use tax
was increased from 4% to 6%, the state income tax was decreased from 4.6%
to 4.4%, the cigarette tax was increased from $.25 to $.75 per pack and an

additional tax of 16% of the wholesale price was imposed on certain other
tobacco products. A 0.75% real estate transfer tax was effective January 1,
1995. Beginning in 1994, a state property tax of 6 mills will be imposed on
all real and personal property currently subject to the general property
tax. The ability of school districts to levy property taxes for school
operating purposes will be partially restored. A school board will, with
voter approval, be able to levy up to the lesser of 18 mills or the number
of mills levied in 1993 for school operating purposes, on non- homestead
property. Proposal A contains additional provisions regarding the ability
of local school districts to levy taxes as well as a limit on assessment
increases for each parcel of property, beginning in 1995 to the lesser of
5% or the rate of inflation. When property is subsequently sold, its
assessed value will revert to the current assessment level of 50% of true
cash value. Under Proposal A, much of the additional revenue generated by
the new taxes will be dedicated to the State School Aid Fund.

Proposal A contains a system of financing local school operating costs
which relies upon a foundation allowance amount which may vary by district
based upon historical spending levels. State funding will provide each
school district an amount equal to the difference between its foundation
allowance and the revenues generated by its local property tax levy. Under
Proposal A, a local school district will also be entitled to levy
supplemental property taxes to generate additional revenues if its
foundation allowance is less than its historical per pupil expenditures.
Proposal A also contains provisions which allow for the levy of a limited
number of enhancement mills on regional and local district bases.

Proposal A shifts significant portions of the cost of local school
operations from local districts to the state and raises additional state
revenues to fund these additional State expenses. These additional revenues
will be included within the state's constitutional revenue limitations and
may impact the State's ability to raise additional revenues in the future.
The credit impact on local school districts is that revenue growth is
linked closely to state economy and local enrollment.

INDEPENDENCE ONE MUTUAL FUNDS MANAGEMENT ----------------------------------
- -----

OFFICERS AND TRUSTEES Officers and Trustees are listed with their
addresses, birthdates, principal occupations, and present positions,
including any affiliation with Michigan National Bank, Michigan National
Corporation, Federated Investors, Federated Securities Corp., Federated
Administrative Services, and Federated Services Company.
- ---------------------------------------------------------------------------
- -----
Robert E. Baker
4327 Stoneleigh Road
Bloomfield Hills, MI

Birthdate: May 6, 1930

Trustee

Retired; formerly, Vice Chairman, Chrysler Financial Corporation.

- ---------------------------------------------------------------------------
- -----
Harold Berry
100 Galleria Officentre, Suite 219
Southfield, MI

Birthdate: September 17, 1925

Trustee

Managing Partner, Berry Enterprises; Chairman, Independent Sprinkler
Companies, Inc.; formerly, Chairman, Executive Committee, Federal
Enterprises, Inc; Chairman, Berry, Ziegelman & Company.
- ---------------------------------------------------------------------------
- -----
Clarence G. Frame+
W-875 First Bank Building
332 Minnesota Street
St. Paul, MN

Birthdate: July 26, 1918

Trustee

Director, Tosco Corporation, Chicago Milwaukee Corporation, and Voyageur
Funds Group; formerly, Vice Chairman, First Bank System, Inc. and
President, The First National Bank of St. Paul, a subsidiary of First Bank
System, Inc.

- ---------------------------------------------------------------------------
- ----
Harry J. Nederlander+*
231 S. Woodward, Suite 219
Birmingham, MI

Birthdate: September 5, 1917

Trustee

Chairman, Nederlander Enterprises.
- ---------------------------------------------------------------------------
- -----
Thomas S. Wilson
Two Championship Drive
Auburn Hills, MI

Birthdate: October 9, 1949

Trustee

President and Executive Administrator, Detroit Pistons; President, Arena
Associates, Inc.
- ---------------------------------------------------------------------------
- -----
Edward C. Gonzales
Federated Investors Tower
Pittsburgh, PA

Birthdate: October 22, 1930

President and Treasurer

Executive Vice President, Treasurer and Director, Federated Securities
Corp.; Chairman, Treasurer and Trustee, Federated Administrative Services;
Vice President, Treasurer and Trustee, Federated Investors.
- ---------------------------------------------------------------------------
- ----- Jeffrey W. Sterling
Federated Investors Tower
Pittsburgh, PA

Birthdate: February 5, 1947

Vice President and Assistant Treasurer

Vice President, Federated Administrative Services.

Jay S. Neuman
Federated Investors Tower
Pittsburgh, PA

Birthdate: April 22, 1950

Secretary

Corporate Counsel, Federated Investors; Prior to January 1991, Associate
Counsel, The Boston Company Advisors, Inc.

+ Member of the Trust's Executive Committee. The Executive Committee of
the Board of Trustees handles the responsibilities of the Board of Trustees
between meetings of the Board.

* This Trustee is deemed to be an "interested person" of the Fund or Trust
as defined in the Investment Company Act of 1940.

FUND OWNERSHIP

Officers and Trustees own less than 1% of the outstanding shares of the
Fund.

TRUSTEES' COMPENSATION

AGGREGATE
NAME, POSITION COMPENSATION WITH TRUST FROM TRUST*
- -----------------------------------
Robert E. Baker Trustee $ 8,500
Harold Berry Trustee $ 8,500 Clarence G. Frame Trustee $ 8,500
Harry J. Nederlander Trustee $ 8,500
Thomas S. Wilson Trustee $ 7,650

* Information is furnished for the fiscal year ended April 30, 1995. The
aggregate compensation is provided for the Trust which was comprised of
four portfolios at April 30, 1995. The Trust is the only investment
company in the Fund Complex.

TRUSTEE LIABILITY

The Trust's Declaration of Trust provides that the Trustees will not be
liable for errors of judgment or mistakes of fact or law. However, they are
not protected against any liability to which they would otherwise be
subject by reason of willful misfeasance, bad faith, gross negligence, or
reckless disregard of the duties involved in the conduct of their office.

INVESTMENT ADVISORY SERVICES

ADVISER TO THE FUND The Fund's investment adviser is Michigan National Bank
(the "Adviser").

The Adviser shall not be liable to the Trust, the Fund, or any shareholder
of the Fund for any losses that may be sustained in the purchase, holding,
or sale of any security, or for anything done or omitted by it, except acts
or omissions involving willful misfeasance, bad faith, gross negligence, or
reckless disregard of the duties imposed upon it by its contract with the
Trust.

Because of the internal controls maintained by Michigan National Bank to
restrict the flow of non-public information, Fund investments are typically
made without any knowledge of Michigan National Bank's or its affiliates'
lending relationships with an issuer.

ADVISORY FEES

For its advisory services, Michigan National Bank receives an annual
investment advisory fee as described in the prospectus.

STATE EXPENSE LIMITATIONS

The Adviser has undertaken to comply with the expense limitations
established by certain states for investment companies whose shares are
registered for sale in those states. If the Fund's normal operating
expenses (including the investment advisory fee, but not including
brokerage commissions, interest, taxes, and extraordinary expenses) exceed
2 1/2% per year of the first $30 million of average net assets, 2% per year
of the next $70 million of average net assets, and 1 1/2% per year of the
remaining average net assets, the Adviser will reimburse the Trust for its
expenses over the limitation.

If the Fund's monthly projected operating expenses exceed this limitation,
the investment advisory fee paid will be reduced by the amount of the
excess, subject to an annual adjustment. If the expense limitation is
exceeded, the amount to be reimbursed by the Adviser will be limited, in
any single fiscal year, by the amount of the investment advisory fee.

This arrangement is not part of the advisory contract and may be amended or
rescinded in the future.

ADMINISTRATIVE SERVICES
Federated Administrative Services, a subsidiary of Federated Investors,
provides administrative personnel and services to the Fund for the fees set
forth in the prospectus.

BROKERAGE TRANSACTIONS
When selecting brokers and dealers to handle the purchase and sale of
portfolio instruments, the Adviser looks for prompt execution of the order
at a favorable price. In working with dealers, the Adviser will generally
use those who are recognized dealers in specific portfolio instruments,
except when a better price and execution of the order can be obtained
elsewhere. The Adviser makes decisions on portfolio transactions and
selects brokers and dealers subject to review by the Trustees.

The Adviser may select brokers and dealers who offer brokerage and research
services. These services may be furnished directly to the Fund or to the
Adviser and may include:

- - advice as to the advisability of investing in securities;

- - security analysis and reports;

- - economic studies;

- - industry studies;

- - receipt of quotations for portfolio evaluations; and

- - similar services.

The Adviser and its affiliates exercise reasonable business judgment in
selecting brokers who offer brokerage and research services to execute
securities transactions. They determine in good faith that commissions
charged by such persons are reasonable in relationship to the value of the
brokerage and research services provided.

Research services provided by brokers may be used by the Adviser for other
accounts. To the extent that receipt of these services may supplant
services for which the Adviser or its affiliates might otherwise have paid,
it would tend to reduce their expenses.

PURCHASING SHARES
Shares are sold at their net asset value without a sales charge on days
when both the New York Stock Exchange and the Federal Reserve Wire System

are open for business. The procedure for purchasing shares of the Fund is
explained in the prospectus under "Investing in the Fund."

CONVERSION TO FEDERAL FUNDS

It is the Fund's policy to be as fully invested as possible so that
maximum interest may be earned. To this end, all payments from shareholders
must be in federal funds or be converted into federal funds before
shareholders begin to earn dividends. Michigan National Bank acts as the
shareholder's agent in depositing checks and converting them to federal
funds.

DETERMINING NET ASSET VALUE
Net asset value generally changes each day. The days on which net asset
value is calculated by the Fund are described in the prospectus.

DETERMINING MARKET VALUE OF SECURITIES

VALUING MUNICIPAL BONDS The Trustees use an independent pricing service to
value municipal bonds. The independent pricing service takes into
consideration yield, stability, risk, quality, coupon rate, maturity, type
of issue, trading characteristics, special circumstances of a security or
trading market, and any other factors or market data it considers relevant
in determining valuations for normal institutional size trading units of
debt securities, and does not rely exclusively on quoted prices.

USE OF AMORTIZED COST

The Trustees have decided that the fair value of debt securities authorized
to be purchased by the Fund with remaining maturities of 60 days or less,
at the time of purchase, shall be their amortized cost value, unless the
particular circumstances of the security indicate otherwise. Under this
method, portfolio instruments and assets are valued at the acquisition cost
as adjusted for amortization of premium or accumulation of discount rather
than at current market value. The Executive Committee of the Board of
Trustees continually assesses this method of valuation and recommends
changes where necessary to assure that the Fund's portfolio instruments are
valued at their fair value as determined in good faith by the Trustees.

REDEEMING SHARES
The Fund redeems shares at the next computed net asset value after
Federated Services Company receives the redemption request. Redemption
procedures are explained in the prospectus under "Redeeming Fund Shares."

REDEMPTION IN KIND

Although the Fund intends to redeem shares in cash, it reserves the right
under certain circumstances to pay the redemption price in whole or in part
by a distribution of securities from the Fund's portfolio. To satisfy
registration requirements in a particular state, redemption in kind will be
made (for any shareholder requesting redemption) in readily marketable
securities to the extent that such securities are available. If this
state's policy changes, the Fund reserves the right to redeem in kind by
delivering those securities it deems appropriate.

Redemption in kind will be made in conformity with applicable SEC rules,
taking such securities at the same value employed in determining net asset
value and selecting the securities in a manner the Trustees determine to be
fair and equitable.

TAX STATUS

THE FUND'S TAX STATUS The Fund intends to pay no federal income tax because
it expects to meet the requirements of Subchapter M of the Internal Revenue
Code applicable to regulated investment companies and to receive the
special tax treatment afforded to such companies. To qualify for this
treatment, the Fund must, among other requirements:

- - derive at least 90% of its gross income from dividends, interest, and
gains from the sale of securities;

- - derive less than 30% of its gross income from the sale of securities held
less than three months;

- - invest in securities within certain statutory limits; and

- - distribute to its shareholders at least 90% of its net income earned
during the year.

SHAREHOLDER'S TAX STATUS

No portion of any income dividend paid by the Fund is eligible for the
dividends received deductions available to corporations.

CAPITAL GAINS

Capital gains or losses may be realized by the Fund on the sale of
portfolio securities and as a result of discounts from par value on
securities held to maturity. Sales would generally be made because of:

- - the availability of higher relative yields;

- - differentials in market values;

- - new investment opportunities;

- - changes in creditworthiness of an issuer; or

- - an attempt to preserve gains or limit losses.

Distribution of long-term capital gains are taxed as such, whether they are
taken in cash or reinvested, and regardless of the length of time the
shareholder has owned the shares. Any loss by a shareholder on Fund shares
held for less than six months and sold after a capital gains distribution
will be treated as a long-term capital loss to the extent of the capital
gains distribution.

TOTAL RETURN
The average annual total return of the Fund is the average compounded rate
of return for a given period of time that would equate a $1,000 initial
investment to the ending redeemable value of that investment. The ending
redeemable value is computed by multiplying the number of shares owned at
the end of the period by the offering price per share at the end of the
period. The number of shares owned at the end of the period is based on the
number of shares purchased at the beginning of the period with $1,000 less
any applicable sales charge, adjusted over the period by any additional
shares, assuming a monthly reinvestment of all dividends and distributions.
Any applicable contingent deferred sales charge is deducted from the ending
value of the investment based on the lesser of the original purchase price
or the offering price of shares redeemed.

YIELD

The yield for the Fund is determined by dividing the net investment income
per share (as defined by the SEC) earned by the Fund over a thirty-day
period by the maximum offering price per share of the Fund on the last day
of the period. This value is then annualized using semi- annual
compounding. This means that the amount of income generated during the
thirty-day period is assumed to be generated each month over a twelve-month
period and is reinvested every six months. The yield does not necessarily
reflect income actually earned by the Fund because of certain adjustments
required by the SEC and, therefore, may not correlate to the dividends or
other distributions paid to shareholders. To the extent that financial

institutions and broker/dealers charge fees in connection with services
provided in conjunction with an investment in the Fund, performance will be
reduced for those shareholders paying those fees.

TAX-EQUIVALENT YIELD
The tax-equivalent yield for the Fund is calculated similarly to the yield,
but is adjusted to reflect the taxable yield that the Fund would have had
to earn to equal its actual yield, assuming a stated tax rate and assuming
that income is 100% tax-exempt.

TAX-EQUIVALENCY TABLE

The Fund may also use a tax-equivalency table in advertising and sales
literature. The interest earned by the municipal obligations in the Fund's
portfolio generally remains free from federal regular income tax* and the
income taxes imposed by the State of Michigan. As the table below
indicates, a "tax-free" investment is an attractive choice for investors,
particularly in times of narrow spreads between "tax- free" and taxable
yields.

TAXABLE YIELD EQUIVALENT FOR 1995

STATE OF MICHIGAN
COMBINED FEDERAL AND STATE INCOME TAX BRACKET: 19.47% 32.47% 35.47%
40.47% 44.07% ---------------------------------------- --------------------
- -------------------- ------------------- JOINT RETURN $1-39,000
$39,001- 94,250 $94,251-143,600 $143,601- 256,500 OVER $256,500 --------
- -------------------------------- ---------------------------------------- -

- ------------------ SINGLE RETURN $1-23,350 $23,351- 56,550 $56,551-
117,950 $117,951- 256,500 OVER $256,500 ---------------------------------
- ------- ---------------------------------------- ------------------- TAX-
EXEMPT YIELD TAXABLE YIELD EQUIVALENT 1.50% 1.86% 2.22% 2.32% 2.52%
2.68% 2.00% 2.48% 2.96% 3.10% 3.36% 3.58% 2.50% 3.10% 3.70% 3.87%
4.20% 4.47% 3.00% 3.73% 4.44% 4.65% 5.04% 5.36% 3.50% 4.35% 5.18%
5.42% 5.88% 6.26% 4.00% 4.97% 5.92% 6.20% 6.72% 7.15% 4.50% 5.59%
6.66% 6.97% 7.56% 8.05% 5.00% 6.21% 7.40% 7.75% 8.40% 8.94% 5.50%
6.83% 8.14% 8.52% 9.24% 9.83% 6.00% 7.45% 8.88% 9.30% 10.08% 10.73% ---
- ------------------------------------- -------------------------------------
- --- ------------------- Note: The maximum marginal tax rate for each
bracket was used in calculating the taxable yield equivalent.
Furthermore, additional state and local taxes paid on comparable taxable
investments were not used to increase federal deductions.

The chart above is for illustrative purposes only. It is not an indication
of past or future performance of Fund shares.

* Some portions of the Fund's income may be subject to the federal
alternative minimum tax and state and local taxes.

PERFORMANCE COMPARISONS
The Fund's performance depends upon such variables as:

- - portfolio quality;

- - average portfolio maturity;

- - type of instruments in which the portfolio is invested;

- - changes in interest rates and market value of portfolio securities;

- - changes in the Fund's expenses; and

- - various other factors.

The Fund's performance fluctuates on a daily basis largely because net
earnings and offering price per share fluctuate daily. Both net earnings
and offering price per share are factors in the computation of yield and
total return.

Investors may use financial publications and/or indices to obtain a more
complete view of the Fund's performance. When comparing performance,
investors should consider all relevant factors such as the composition of
any index used, prevailing market conditions, portfolio compositions of
other funds, and methods used to value portfolio securities and compute
offering price. The financial publications and/or indices which the Fund
uses in advertising may include:

LEHMAN BROTHERS SEVEN YEAR STATE GENERAL OBLIGATION BOND INDEX is an index
of general obligation bonds rated A or better with 6-8 years to maturity.

LIPPER ANALYTICAL SERVICES, INC. ranks funds in various fund categories by
making comparative calculations using total return. Total return assumes
the reinvestment of all capital gains distributions and income dividends
and takes into account any change in net asset value over a specific period

of time. From time to time, the Fund will quote its Lipper ranking in the
"general municipal bond funds" category in advertising and sales
literature.

MORNINGSTAR, INC., an independent rating service, is the publisher of the
bi-weekly MUTUAL FUND VALUES. MUTUAL FUND VALUES rates more than 1,000
NASDAQ listed mutual funds of all types, according to their risk-adjusted
returns. The maximum rating is five stars, and ratings are effective for
two weeks.

Advertisements and other sales literature for the Fund may refer to total
return. Total return is the historic change in the value of an investment
in the Fund based on monthly reinvestment of dividends over a specific
period of time.

APPENDIX

STANDARD AND POOR'S RATINGS GROUP MUNICIPAL BOND RATINGS

AAA--Debt rated "AAA" has the highest rating assigned by Standard & Poor's
Ratings Group ("S&P"). Capacity to pay interest and repay principal is
extremely strong.

AA--Debt rated "AA" has a very strong capacity to pay interest and repay
principal and differs from the higher rated issues only in small degree.

A--Debt rated "A" has a strong capacity to pay interest and repay principal
although it is somewhat more susceptible to the adverse effects of changes
in circumstances and economic conditions than debt in higher rated
categories.

NR--Indicates that no public rating has been requested, that there is
insufficient information on which to base a rating, or that S&P does not
rate a particular type of obligation as a matter of policy.

Plus (+) or minus (-): The ratings from AA to CCC may be modified by the
addition of a plus or minus sign to show relative standing within the major
rating categories.

MOODY'S INVESTORS SERVICE, INC. CORPORATE BOND RATINGS DEFINITIONS

Aaa--Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to
as "gilt edged." Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be visualized
are most unlikely to impair the fundamentally strong position of such
issues.

Aa--Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally
known as high grade bonds. They are rated lower than the best bonds because
margins of protection may not be as large as in Aaa securities or
fluctuation of protective elements may be of greater amplitude or there may

be other elements present which make the long-term risks appear somewhat
larger than in Aaa securities.

A--Bonds which are rated A possess many favorable investment attributes and
are to be considered as upper medium grade obligations. Factors giving
security to principal and interest are considered adequate but elements may
be present which suggest a susceptibility to impairment sometime in the
future.

NR--Not rated by Moody's.

Moody's applies numerical modifiers, 1, 2 and 3 in each generic rating
classification from Aa through B in its corporate or municipal bond rating
system. The modifier 1 indicates that the security ranks in the higher end
of its generic rating category; the modifier 2 indicates a mid-range
ranking; and the modifier 3 indicates that the issue ranks in the lower end
of its generic rating category.

FITCH INVESTORS SERVICE, INC. LONG-TERM DEBT RATINGS

AAA--Bonds considered to be investment grade and of very high quality. The
obligor has an exceptionally strong ability to pay interest and repay
principal, which is unlikely to be affected by reasonably foreseeable
events.

AA--Bonds considered to be investment grade and of very high quality. The
obligor's ability to pay interest and repay principal is very strong,
although not quite as strong as bonds rated "AAA". Because bonds rated in

the "AAA" and "AA" categories are not significantly vulnerable to
foreseeable future developments, short-term debt of these issuers is
generally rated F-1+.

A--Bonds considered to be investment grade and of high credit quality. The
obligor's ability to pay interest and repay principal is considered to be
strong, but may be more vulnerable to adverse changes in economic
conditions and circumstances than bonds with higher ratings.

NR--NR indicates that Fitch does not rate the specific issue.

Plus (+) or Minus (-): Plus and minus signs are used with a rating symbol
to indicate the relative position of a credit within the rating category.
Plus and minus signs, however, are not used in the AAA category.

STANDARD AND POOR'S RATINGS GROUP MUNICIPAL NOTE RATINGS

SP-1--Very strong or strong capacity to pay principal and interest. Those
issues determined to possess overwhelming safety characteristics will be
given a plus (+) designation.

SP-2--Satisfactory capacity to pay principal and interest.

MOODY'S INVESTORS SERVICE SHORT-TERM LOAN RATINGS

MIG1/VMIG1--This designation denotes best quality. There is a present
strong protection by established cash flows, superior liquidity support or
demonstrated broadbased access to the market for refinancing.

MIG2/VMIG2--This designation denotes high quality. Margins of protection
are ample although not so large as in the preceding group.

FITCH INVESTORS SERVICE, INC. SHORT-TERM DEBT RATINGS

F-1+--Exceptionally Strong Credit Quality. Issues assigned this rating are
regarded as having the strongest degree of assurance for timely payment.

F-1--Very Strong Credit Quality. Issues assigned this rating reflect an
assurance of timely payment only slightly less in degree than issues rated
F-1+.

F-2--Good Credit Quality. Issues carrying this rating have a satisfactory
degree of assurance for timely payment, but the margin of safety is not as
great as the F-1+ and F-1 categories.

STANDARD AND POOR'S RATINGS GROUP COMMERCIAL PAPER RATINGS DEFINITIONS

A-1--This highest category indicates that the degree of safety regarding
timely payment is strong. Those issues determined to possess extremely
strong safety characteristics are denoted with a plus (+) sign designation.

A-2--Capacity for timely payment on issues with this designation is
satisfactory. However, the relative degree of safety is not as high as for
issues designated A-1.

MOODY'S INVESTORS SERVICE COMMERCIAL PAPER RATINGS

P-1--Issuers rated PRIME-1 (or related supporting institutions) have a
superior capacity for repayment of short-term promissory obligations.
PRIME-1 repayment capacity will normally be evidenced by the following
characteristics: Leading market positions in well established industries;
high rates of return on funds employed; conservative capitalization
structures with moderate reliance on debt and ample asset protection; broad
margins in earning coverage of fixed financial charges and high internal
cash generation; and well established access to a range of financial
markets and assured sources of alternate liquidity.

P-2--Issuers rated PRIME-2 (or related supporting institutions) have a
strong capacity for repayment of short-term promissory obligations. This
will normally be evidenced by many of the characteristics cited above, but
to a lesser degree. Earnings trends and coverage ratios, while sound, will
be more subject to variation. Capitalization characteristics, while still
appropriate, may be more affected by external conditions. Ample alternate
liquidity is maintained.

CUSIP 453777856
G00980-02 (5/95)