INDEPENDENCE
ONE(R)
EQUITY
PLUS
FUND
SEMI-ANNUAL REPORT
TO SHAREHOLDERS
OCTOBER 31, 1996
[LOGO]
MICHIGAN
NATIONAL
BANK
Investment Adviser
[LOGO] Federated Investors
Since 1955
Federated Investors Tower
Pittsburgh, PA 15222-3779
Federated Securities Corp. is the distributor of the Funds
and is a subsidiary of Federated Investors.
[LOGO]
Independence One
Mutual Funds
Cusip 453777872
G01200-06 (12/96)
PRESIDENT'S MESSAGE
- --------------------------------------------------------------------------------
Dear Investor:
I am pleased to present the Semi-Annual Report of Independence One Equity Plus
Fund which covers the six-month period from May 1, 1996 through October 31,
1996. Inside, you will find complete financial information for the
fund--beginning with the portfolio manager's discussion, followed by a list of
fund holdings and the financial statements.
Your money is at work where it can grow over time--in a diversified portfolio of
high-quality stocks that include many household names like American Express,
AT&T, Black & Decker, Boeing, Chrysler, Coca-Cola, Disney, DuPont, Hewlett
Packard, Intel, Johnson & Johnson, K-Mart, McDonald's, Ralston Purina, and
Xerox.
In an extremely favorable environment for stocks, the fund produced a six-month
total return of 8.60%.* This return was the result of a 7% increase in net asset
value and distributions consisting of $0.11 per share in dividend income and
$0.05 per share in capital gains. The fund ended the period with total net
assets of $151.1 million.
Thank you for selecting Independence One Equity Plus Fund to help your money
grow in pursuit of your long-term financial goals. We look forward to keeping
you informed about the progress of your investment.
Sincerely,
/s/ Edward C. Gonzales
Edward C. Gonzales
President
December 15, 1996
* Peformance quoted reflects past performance and is not indicative of future
results. Investment return and principal value will fluctuate so that an
investor's shares, when redeemed, may be worth more or less than their
original cost.
INVESTMENT REVIEW
- --------------------------------------------------------------------------------
Q Can you comment on the stock market that, while experiencing a few
stumbles, continued to reach record levels during the period?
A Investors (both domestic and foreign) have continued to pour record amounts
of money into equity mutual funds. This interest has been fueled by
consumer confidence, improving productivity, steady growth, and rising
profits. Interest rates have remained low. The unemployment rate has been low,
while inflation has remained under control.
Q In this environment, what was the total return as of October 31, 1996, of
Independence One Equity Plus Fund during the six-month reporting period
ended October 31, 1996 compared to that of its benchmark, the Standard &
Poor's 100 Composite Price Index ("S&P 100")*?
A For the six-month period ended October 31, 1996, the fund's total return
was 8.60%, while the S&P 100 was 9.15%.** The lag in the fund was caused by
management fees and a small cash position that was needed in the fund to
cover any liquidations.
Q The fund's portfolio is managed generally to replicate the composition of
the S&P 100. What is the difference between the S&P 100 and the well-known
Standard & Poor's 500 Composite Stock Index ("S&P 500")*?
A The S&P 500 is a capitalization-weighted index based on 500 stocks which
replicates the aggregate performance of all major industries in the broad
domestic economy. The S&P 100 is a capitalization-weighted index based on
100 of the highly capitalized stocks included in the S&P 500 which have options
listed on the Chicago Board Options Exchange.
* Standard & Poor's 100 Composite Stock Index and Standard and Poor's 500
Composite Stock Index are composite indexes of common stocks in industry,
transportation, and financial and public utility companies and can be used to
compare the total returns of funds whose portfolios are invested primarily in
common stocks. These indexes are unmanaged and investments cannot be made in
an index. Standard & Poor's, "S&P", "S&P 500" and "S&P 100" are trademarks of
The McGraw-Hill Companies, Inc. and have been licensed for use by
Independence One Equity Plus Fund. The Fund is not sponsored, endorsed, sold
or promoted by or affiliated with Standard & Poor's.
** Performance quoted represents past performance. Investment return and
principal value will fluctuate so that an investor's shares, when redeemed,
may be worth more or less than their original cost.
- --------------------------------------------------------------------------------
Q What were the fund's top five holdings as of October 31, 1996?
A
<TABLE>
<CAPTION>
NAME % OF PORTFOLIO
<S> <C> <C>
1. General Electric Co. 6.85%
2. Coca-Cola Co. 5.40%
3. Exxon Corp. 4.72%
4. Intel Corp. 3.88%
5. Merck & Co., Inc. 3.87%
</TABLE>
Q As 1996 draws to a close with mixed economic signals and a market that
could continue to climb, what do you foresee in 1997?
A We are cautiously optimistic as 1997 approaches. It is reasonable to assume
that there will be a pull-back in the equity market. The decline would be
considered both normal and healthy, especially as the market has so rapidly
and continuously set record highs.
INDEPENDENCE ONE EQUITY PLUS FUND
PORTFOLIO OF INVESTMENTS
OCTOBER 31, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ------------ ----------------------------------------------------------------------------------- --------------
<C> <S> <C>
COMMON STOCKS--97.4%
- -------------------------------------------------------------------------------------------------
AEROSPACE & DEFENSE--3.3%
-----------------------------------------------------------------------------------
22,565 Boeing Co. $ 2,152,137
-----------------------------------------------------------------------------------
4,081 General Dynamics Corp. 280,059
-----------------------------------------------------------------------------------
15,305 Raytheon Co. 753,771
-----------------------------------------------------------------------------------
14,145 Rockwell International Corp. 777,975
-----------------------------------------------------------------------------------
7,886 United Technologies Corp. 1,015,323
----------------------------------------------------------------------------------- --------------
Total 4,979,265
----------------------------------------------------------------------------------- --------------
AUTOMOTIVE--4.3%
-----------------------------------------------------------------------------------
43,107 Chrysler Corp. 1,449,473
-----------------------------------------------------------------------------------
76,581 Ford Motor Co. 2,393,156
-----------------------------------------------------------------------------------
48,951 General Motors Corp. 2,637,235
----------------------------------------------------------------------------------- --------------
Total 6,479,864
----------------------------------------------------------------------------------- --------------
BANKING--2.1%
-----------------------------------------------------------------------------------
23,304 BankAmerica Corp. 2,132,316
-----------------------------------------------------------------------------------
20,497 First Chicago NBD Corp. 1,045,347
----------------------------------------------------------------------------------- --------------
Total 3,177,663
----------------------------------------------------------------------------------- --------------
CAPITAL GOODS--1.6%
-----------------------------------------------------------------------------------
18,497 Homestake Mining Co. 263,582
-----------------------------------------------------------------------------------
27,142 Minnesota Mining & Manufacturing Co. 2,079,756
----------------------------------------------------------------------------------- --------------
Total 2,343,338
----------------------------------------------------------------------------------- --------------
CHEMICALS--4.2%
-----------------------------------------------------------------------------------
15,884 Dow Chemical Co. 1,234,981
-----------------------------------------------------------------------------------
36,330 Du Pont (E.I.) de Nemours & Co. 3,369,608
-----------------------------------------------------------------------------------
4,802 Mallinckrodt, Inc. 208,887
-----------------------------------------------------------------------------------
37,963 Monsanto Co. 1,504,284
----------------------------------------------------------------------------------- --------------
Total 6,317,760
----------------------------------------------------------------------------------- --------------
</TABLE>
INDEPENDENCE ONE EQUITY PLUS FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ------------ ----------------------------------------------------------------------------------- --------------
<C> <S> <C>
COMMON STOCKS--CONTINUED
- -------------------------------------------------------------------------------------------------
COMMERCIAL--1.3%
-----------------------------------------------------------------------------------
35,586 Ameritech Corp. $ 1,948,334
----------------------------------------------------------------------------------- --------------
COMPUTERS--8.2%
-----------------------------------------------------------------------------------
4,429 (a) Ceridian Corp. 219,789
-----------------------------------------------------------------------------------
41,913 (a) Cisco Systems, Inc. 2,593,367
-----------------------------------------------------------------------------------
4,867 (a) Computer Sciences Corp. 361,375
-----------------------------------------------------------------------------------
66,203 Hewlett-Packard Co. 2,921,207
-----------------------------------------------------------------------------------
34,156 International Business Machines Corp. 4,406,124
-----------------------------------------------------------------------------------
42,363 (a) Oracle Corp. 1,792,484
-----------------------------------------------------------------------------------
11,228 (a) Unisys Corp. 70,175
----------------------------------------------------------------------------------- --------------
Total 12,364,521
----------------------------------------------------------------------------------- --------------
CONSUMER--1.0%
-----------------------------------------------------------------------------------
30,715 American Express Co. 1,443,605
----------------------------------------------------------------------------------- --------------
COSMETICS & PERSONAL CARE--0.5%
-----------------------------------------------------------------------------------
8,615 Avon Products, Inc. 467,363
-----------------------------------------------------------------------------------
7,170 International Flavors & Fragrances, Inc. 296,659
----------------------------------------------------------------------------------- --------------
Total 764,022
----------------------------------------------------------------------------------- --------------
ELECTRIC--0.9%
-----------------------------------------------------------------------------------
14,766 Entergy Corp. 413,448
-----------------------------------------------------------------------------------
43,620 Southern Co. 965,093
----------------------------------------------------------------------------------- --------------
Total 1,378,541
----------------------------------------------------------------------------------- --------------
ELECTRICAL EQUIPMENT--7.5%
-----------------------------------------------------------------------------------
5,678 Black & Decker Corp. 212,215
-----------------------------------------------------------------------------------
10,069 (a) Digital Equipment Corp. 297,035
-----------------------------------------------------------------------------------
106,923 General Electric Co. 10,344,800
-----------------------------------------------------------------------------------
8,195 Honeywell, Inc. 509,114
----------------------------------------------------------------------------------- --------------
Total 11,363,164
----------------------------------------------------------------------------------- --------------
</TABLE>
INDEPENDENCE ONE EQUITY PLUS FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ------------ ----------------------------------------------------------------------------------- --------------
<C> <S> <C>
COMMON STOCKS--CONTINUED
- -------------------------------------------------------------------------------------------------
ELECTRONICS--4.8%
-----------------------------------------------------------------------------------
14,214 AMP, Inc. $ 481,499
-----------------------------------------------------------------------------------
53,252 Intel Corp. 5,851,064
-----------------------------------------------------------------------------------
8,950 (a) National Semiconductor Corp. 172,288
-----------------------------------------------------------------------------------
2,950 Polaroid Corp. 119,844
-----------------------------------------------------------------------------------
2,123 Tektronix, Inc. 83,062
-----------------------------------------------------------------------------------
12,276 Texas Instruments, Inc. 590,783
----------------------------------------------------------------------------------- --------------
Total 7,298,540
----------------------------------------------------------------------------------- --------------
ENTERTAINMENT--2.0%
-----------------------------------------------------------------------------------
43,920 Disney (Walt) Co. 2,893,230
-----------------------------------------------------------------------------------
6,663 (a) Harrah's Entertainment, Inc. 111,605
----------------------------------------------------------------------------------- --------------
Total 3,004,835
----------------------------------------------------------------------------------- --------------
FINANCIAL SERVICES--2.7%
-----------------------------------------------------------------------------------
31,124 Citicorp 3,081,276
-----------------------------------------------------------------------------------
8,881 Great Western Financial Corp. 248,668
-----------------------------------------------------------------------------------
10,921 Merrill Lynch & Co., Inc. 767,200
----------------------------------------------------------------------------------- --------------
Total 4,097,144
----------------------------------------------------------------------------------- --------------
FOOD & BEVERAGE--9.6%
-----------------------------------------------------------------------------------
161,428 Coca-Cola Co. 8,152,114
-----------------------------------------------------------------------------------
23,946 Heinz (H.J.) Co. 850,083
-----------------------------------------------------------------------------------
45,278 McDonald's Corp. 2,009,211
-----------------------------------------------------------------------------------
101,431 PepsiCo, Inc. 3,004,893
-----------------------------------------------------------------------------------
6,859 Ralston Purina Co. 453,551
----------------------------------------------------------------------------------- --------------
Total 14,469,852
----------------------------------------------------------------------------------- --------------
FOREST PRODUCTS & PAPER--1.2%
-----------------------------------------------------------------------------------
3,139 Boise Cascade Corp. 97,309
-----------------------------------------------------------------------------------
6,184 Champion International Corp. 269,004
-----------------------------------------------------------------------------------
19,422 International Paper Co. 830,291
-----------------------------------------------------------------------------------
</TABLE>
INDEPENDENCE ONE EQUITY PLUS FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ------------ ----------------------------------------------------------------------------------- --------------
<C> <S> <C>
COMMON STOCKS--CONTINUED
- -------------------------------------------------------------------------------------------------
FOREST PRODUCTS & PAPER--CONTINUED
-----------------------------------------------------------------------------------
12,841 Weyerhaeuser Co. $ 589,081
----------------------------------------------------------------------------------- --------------
Total 1,785,685
----------------------------------------------------------------------------------- --------------
HOMEBUILDERS--0.2%
-----------------------------------------------------------------------------------
5,412 Fluor Corp. 354,486
----------------------------------------------------------------------------------- --------------
HOUSEHOLD PRODUCTS--0.6%
-----------------------------------------------------------------------------------
9,509 Colgate-Palmolive Co. 874,828
----------------------------------------------------------------------------------- --------------
INSURANCE--3.3%
-----------------------------------------------------------------------------------
13,247 American General Corp. 493,451
-----------------------------------------------------------------------------------
30,403 American International Group, Inc. 3,302,526
-----------------------------------------------------------------------------------
4,919 CIGNA Corp. 641,929
-----------------------------------------------------------------------------------
7,595 ITT Hartford Group, Inc. 478,485
----------------------------------------------------------------------------------- --------------
Total 4,916,391
----------------------------------------------------------------------------------- --------------
MANUFACTURING--1.3%
-----------------------------------------------------------------------------------
11,262 Allegheny Teledyne, Inc. 240,721
-----------------------------------------------------------------------------------
21,816 Eastman Kodak Co. 1,739,826
----------------------------------------------------------------------------------- --------------
Total 1,980,547
----------------------------------------------------------------------------------- --------------
MEDICAL SUPPLIES--1.5%
-----------------------------------------------------------------------------------
17,646 Baxter International, Inc. 734,515
-----------------------------------------------------------------------------------
43,430 Columbia/HCA Healthcare Corp. 1,552,622
----------------------------------------------------------------------------------- --------------
Total 2,287,137
----------------------------------------------------------------------------------- --------------
METALS & MINING--0.4%
-----------------------------------------------------------------------------------
11,275 Aluminum Co. of America 660,997
----------------------------------------------------------------------------------- --------------
OFFICE EQUIPMENT--0.8%
-----------------------------------------------------------------------------------
2,515 Harris Corp. 157,502
-----------------------------------------------------------------------------------
21,031 Xerox Corp. 975,313
----------------------------------------------------------------------------------- --------------
Total 1,132,815
----------------------------------------------------------------------------------- --------------
</TABLE>
INDEPENDENCE ONE EQUITY PLUS FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ------------ ----------------------------------------------------------------------------------- --------------
<C> <S> <C>
COMMON STOCKS--CONTINUED
- -------------------------------------------------------------------------------------------------
OIL--11.5%
-----------------------------------------------------------------------------------
32,191 Amoco Corp. $ 2,438,468
-----------------------------------------------------------------------------------
10,414 Atlantic Richfield Co. 1,379,855
-----------------------------------------------------------------------------------
9,360 Baker Hughes, Inc. 333,450
-----------------------------------------------------------------------------------
6,836 Coastal Corp. 293,948
-----------------------------------------------------------------------------------
80,413 Exxon Corp. 7,126,602
-----------------------------------------------------------------------------------
8,090 Halliburton Co. 458,096
-----------------------------------------------------------------------------------
25,504 Mobil Corp. 2,977,592
-----------------------------------------------------------------------------------
20,916 Occidental Petroleum Corp. 512,442
-----------------------------------------------------------------------------------
15,862 Schlumberger Ltd. 1,572,321
-----------------------------------------------------------------------------------
6,794 Williams Cos., Inc. (The) 354,987
----------------------------------------------------------------------------------- --------------
Total 17,447,761
----------------------------------------------------------------------------------- --------------
PHARMACEUTICALS--9.7%
-----------------------------------------------------------------------------------
32,479 Bristol-Myers Squibb Co. 3,434,654
-----------------------------------------------------------------------------------
86,292 Johnson & Johnson 4,249,881
-----------------------------------------------------------------------------------
78,774 Merck & Co., Inc. 5,839,123
-----------------------------------------------------------------------------------
32,917 Pharmacia & Upjohn, Inc. 1,185,012
----------------------------------------------------------------------------------- --------------
Total 14,708,670
----------------------------------------------------------------------------------- --------------
RECREATION--0.1%
-----------------------------------------------------------------------------------
6,366 Brunswick Corp. 149,601
----------------------------------------------------------------------------------- --------------
RETAIL--4.8%
-----------------------------------------------------------------------------------
31,473 K Mart Corp. 306,862
-----------------------------------------------------------------------------------
17,538 Limited, Inc. 322,261
-----------------------------------------------------------------------------------
16,176 May Department Stores Co. 766,338
-----------------------------------------------------------------------------------
25,346 Sears, Roebuck & Co. 1,226,113
-----------------------------------------------------------------------------------
3,851 Tandy Corp. 144,894
-----------------------------------------------------------------------------------
17,721 (a) Toys R Us, Inc. 600,299
-----------------------------------------------------------------------------------
</TABLE>
INDEPENDENCE ONE EQUITY PLUS FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ------------ ----------------------------------------------------------------------------------- --------------
<C> <S> <C>
COMMON STOCKS--CONTINUED
- -------------------------------------------------------------------------------------------------
RETAIL--CONTINUED
-----------------------------------------------------------------------------------
148,512 Wal-Mart Stores, Inc. $ 3,954,132
----------------------------------------------------------------------------------- --------------
Total 7,320,899
----------------------------------------------------------------------------------- --------------
STEEL--0.0%
-----------------------------------------------------------------------------------
7,185 (a) Bethlehem Steel Corp. 58,378
----------------------------------------------------------------------------------- --------------
TELECOMMUNICATIONS--5.8%
-----------------------------------------------------------------------------------
104,406 AT&T Corp. 3,641,159
-----------------------------------------------------------------------------------
28,347 Bell Atlantic Corp. 1,707,907
-----------------------------------------------------------------------------------
44,526 MCI Communications Corp. 1,118,716
-----------------------------------------------------------------------------------
28,390 NYNEX Corp. 1,263,355
-----------------------------------------------------------------------------------
16,731 Northern Telecom Ltd. 1,089,606
----------------------------------------------------------------------------------- --------------
Total 8,820,743
----------------------------------------------------------------------------------- --------------
TRANSPORTATION--1.5%
-----------------------------------------------------------------------------------
9,910 Burlington Northern Santa Fe 816,336
-----------------------------------------------------------------------------------
5,118 Delta Air Lines, Inc. 362,738
-----------------------------------------------------------------------------------
3,687 (a) Federal Express Corp. 296,804
-----------------------------------------------------------------------------------
8,161 Norfolk Southern Corp. 727,349
----------------------------------------------------------------------------------- --------------
Total 2,203,227
----------------------------------------------------------------------------------- --------------
UTILITIES-ELECTRIC--0.6%
-----------------------------------------------------------------------------------
12,137 American Electric Power Co., Inc. 503,685
-----------------------------------------------------------------------------------
13,956 Unicom Corp. 362,856
----------------------------------------------------------------------------------- --------------
Total 866,541
----------------------------------------------------------------------------------- --------------
TOTAL COMMON STOCKS (IDENTIFIED COST $118,898,348) 146,999,154
----------------------------------------------------------------------------------- --------------
</TABLE>
INDEPENDENCE ONE EQUITY PLUS FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------------ ----------------------------------------------------------------------------------- --------------
<C> <S> <C>
(b) REPURCHASE AGREEMENT--2.6%
- -------------------------------------------------------------------------------------------------
$ 3,920,000 First Chicago Capital Markets, Inc., 5.50%, dated 10/31/1996,
due 11/1/1996 (AT AMORTIZED COST) $ 3,920,000
----------------------------------------------------------------------------------- --------------
TOTAL INVESTMENTS (IDENTIFIED COST $122,818,348)(c) $ 150,919,154
----------------------------------------------------------------------------------- --------------
</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 $122,818,348.
The net unrealized appreciation of investments on a federal tax basis
amounts to $28,100,806 which is comprised of $29,611,804 appreciation and
$1,510,998 depreciation at October 31, 1996.
Note: The categories of investments are shown as a percentage of net assets
($151,120,129) at October 31, 1996.
(See Notes which are an integral part of the Financial Statements)
INDEPENDENCE ONE EQUITY PLUS FUND
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
- --------------------------------------------------------------------------------------------------
Total investments in securities, at value
(identified and tax cost $122,818,348) $ 150,919,154
- --------------------------------------------------------------------------------------------------
Cash 235
- --------------------------------------------------------------------------------------------------
Income receivable 224,507
- --------------------------------------------------------------------------------------------------
Deferred expenses 19,206
- -------------------------------------------------------------------------------------------------- --------------
Total assets 151,163,102
- --------------------------------------------------------------------------------------------------
LIABILITIES:
- --------------------------------------------------------------------------------------------------
Accrued expenses 42,973
- -------------------------------------------------------------------------------------------------- --------------
NET ASSETS for 12,382,020 shares outstanding $ 151,120,129
- -------------------------------------------------------------------------------------------------- --------------
NET ASSETS CONSIST OF:
- --------------------------------------------------------------------------------------------------
Paid in capital $ 122,901,806
- --------------------------------------------------------------------------------------------------
Net unrealized appreciation of investments 28,100,806
- --------------------------------------------------------------------------------------------------
Accumulated net realized loss on investments (40,117)
- --------------------------------------------------------------------------------------------------
Undistributed net investment income 157,634
- -------------------------------------------------------------------------------------------------- --------------
Total Net Assets $ 151,120,129
- -------------------------------------------------------------------------------------------------- --------------
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE:
- --------------------------------------------------------------------------------------------------
$151,120,129 / 12,382,020 shares outstanding $12.20
- -------------------------------------------------------------------------------------------------- --------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
INDEPENDENCE ONE EQUITY PLUS FUND
STATEMENT OF OPERATIONS
SIX MONTHS ENDED OCTOBER 31, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
- ---------------------------------------------------------------------------------------------------
Dividends $ 1,378,128
- ---------------------------------------------------------------------------------------------------
Interest 110,466
- --------------------------------------------------------------------------------------------------- -------------
Total income 1,488,594
- ---------------------------------------------------------------------------------------------------
EXPENSES:
- ---------------------------------------------------------------------------------------------------
Investment advisory fee $ 263,707
- --------------------------------------------------------------------------------------
Administrative personnel and services fee 72,695
- --------------------------------------------------------------------------------------
Custodian fees 22,080
- --------------------------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses 14,536
- --------------------------------------------------------------------------------------
Directors'/Trustees' fees 736
- --------------------------------------------------------------------------------------
Auditing fees 4,968
- --------------------------------------------------------------------------------------
Legal fees 1,288
- --------------------------------------------------------------------------------------
Portfolio accounting fees 25,208
- --------------------------------------------------------------------------------------
Share registration costs 13,616
- --------------------------------------------------------------------------------------
Printing and postage 2,576
- --------------------------------------------------------------------------------------
Insurance premiums 1,104
- --------------------------------------------------------------------------------------
Miscellaneous 2,024
- -------------------------------------------------------------------------------------- -----------
Total expenses 424,538
- --------------------------------------------------------------------------------------
Waivers--
- -------------------------------------------------------------------------
Waiver of investment advisory fee $(131,854)
- -------------------------------------------------------------------------
Waiver of administrative personnel and services fee (39,550)
- ------------------------------------------------------------------------- -----------
Total waivers (171,404)
- -------------------------------------------------------------------------------------- -----------
Net expenses 253,134
- --------------------------------------------------------------------------------------------------- -------------
Net investment income 1,235,460
- --------------------------------------------------------------------------------------------------- -------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
- ---------------------------------------------------------------------------------------------------
Net realized loss on investments (12,508)
- ---------------------------------------------------------------------------------------------------
Net change in unrealized appreciation of investments 10,186,463
- --------------------------------------------------------------------------------------------------- -------------
Net realized and unrealized gain on investments 10,173,955
- --------------------------------------------------------------------------------------------------- -------------
Change in net assets resulting from operations $ 11,409,415
- --------------------------------------------------------------------------------------------------- -------------
</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>
SIX MONTHS ENDED
(UNAUDITED) PERIOD ENDED
OCTOBER 31, 1996 APRIL 30, 1996*
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- ----------------------------------------------------------------------
OPERATIONS--
- ----------------------------------------------------------------------
Net investment income $ 1,235,460 $ 1,003,299
- ----------------------------------------------------------------------
Net realized gain (loss) on investments ($12,508 net loss and $593,968
net gain, respectively, as computed for federal tax purposes) (12,508) 566,391
- ----------------------------------------------------------------------
Net change in unrealized appreciation 10,186,463 17,914,343
- ---------------------------------------------------------------------- ---------------------- ------------------
Change in net assets resulting from operations 11,409,415 19,484,033
- ---------------------------------------------------------------------- ---------------------- ------------------
DISTRIBUTIONS TO SHAREHOLDERS--
- ----------------------------------------------------------------------
Distributions from net investment income (1,159,060) (922,065)
- ----------------------------------------------------------------------
Distributions from net realized gains (594,000) --
- ---------------------------------------------------------------------- ---------------------- ------------------
Change in net assets resulting from distributions to shareholders (1,753,060) (922,065)
- ---------------------------------------------------------------------- ---------------------- ------------------
SHARE TRANSACTIONS--
- ----------------------------------------------------------------------
Proceeds from sale of shares 32,628,203 98,945,293
- ----------------------------------------------------------------------
Net asset value of shares issued to shareholders in payment of
distributions declared 1,144,456 6,353
- ----------------------------------------------------------------------
Cost of shares redeemed (4,917,863) (4,904,636)
- ---------------------------------------------------------------------- ---------------------- ------------------
Change in net assets resulting from share transactions 28,854,796 94,047,010
- ---------------------------------------------------------------------- ---------------------- ------------------
Change in net assets 38,511,151 112,608,978
- ----------------------------------------------------------------------
NET ASSETS:
- ----------------------------------------------------------------------
Beginning of period 112,608,978 0
- ---------------------------------------------------------------------- ---------------------- ------------------
End of period (including undistributed net investment income of
$157,634 and $81,234, respectively) $ 151,120,129 $ 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
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
(UNAUDITED) PERIOD ENDED
OCTOBER 31, 1996 APRIL 30, 1996(a)
- -------------------------------------------------------------------- ---------------- -----------------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 11.39 $ 10.00
- --------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- --------------------------------------------------------------------
Net investment income 0.11 0.11
- --------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments 0.86 1.38
- -------------------------------------------------------------------- ------- -------
Total from investment operations 0.97 1.49
- -------------------------------------------------------------------- ------- -------
LESS DISTRIBUTIONS
- --------------------------------------------------------------------
Distributions from net investment income (0.11) (0.10)
- --------------------------------------------------------------------
Distributions from net realized gain on investments (0.05) --
- -------------------------------------------------------------------- ------- -------
Total distributions (0.16) (0.10)
- -------------------------------------------------------------------- ------- -------
NET ASSET VALUE, END OF PERIOD $ 12.20 $ 11.39
- -------------------------------------------------------------------- ------- -------
TOTAL RETURN (b) 8.60% 14.96%
- --------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- --------------------------------------------------------------------
Expenses 0.38%* 0.39%*
- --------------------------------------------------------------------
Net investment income 1.87%* 1.92%*
- --------------------------------------------------------------------
Expense waiver/reimbursement (c) 0.26%* 0.31%*
- --------------------------------------------------------------------
SUPPLEMENTAL DATA
- --------------------------------------------------------------------
Net assets, end of period (000 omitted) $151,120 $112,609
- --------------------------------------------------------------------
Average commission rate paid $.0345 $0.0034
- --------------------------------------------------------------------
Portfolio turnover 2% 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.
(c) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
INDEPENDENCE ONE EQUITY PLUS FUND
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
(1) ORGANIZATION
Independence One Mutual Funds (the "Trust") is registered under the Investment
Company Act of 1940, as amended (the "Act") as an open-end, management
investment company. The Trust consists of seven portfolios. The financial
statements included herein are only those of Independence One Equity Plus Fund
(the "Fund"), a diversified portfolio. The financial statements of the other
portfolios are presented separately. The assets of each portfolio are segregated
and a shareholder's interest is limited to the portfolio in which shares are
held. The investment objective of the Fund is total return.
(2) SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles.
INVESTMENT VALUATIONS--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.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Fund may engage in
when-issued or delayed delivery transactions. The Fund records when-issued
securities on the trade date and maintains security positions such that
sufficient liquid assets will be available to make payment for the
securities purchased. Securities purchased on a when-issued or delayed
delivery basis are marked to market daily and begin earning interest on the
settlement date.
DEFERRED EXPENSES--The costs incurred by the Fund with respect to
registration of its shares in its first fiscal year, excluding the initial
expense of registering its shares, have been deferred and are being
amortized over a period not to exceed 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>
SIX MONTHS ENDED PERIOD ENDED
OCTOBER 31, 1996 APRIL 30, 1996(a)
<S> <C> <C>
Shares sold 2,812,537 10,346,964
- -----------------------------------------------------------------------
Shares issued to shareholders in payment of distributions declared 100,832 571
- -----------------------------------------------------------------------
Shares redeemed (419,952) (458,932)
- ----------------------------------------------------------------------- -------------------- -------------------
Net change resulting from Share transactions 2,493,417 9,888,603
- ----------------------------------------------------------------------- -------------------- -------------------
</TABLE>
(a) For the period from September 25, 1995 (date of initial public investment)
to April 30, 1996.
INDEPENDENCE ONE EQUITY PLUS FUND
- --------------------------------------------------------------------------------
(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE--Michigan National Bank, the Fund's investment adviser
(the "Adviser"), receives for its services an annual investment advisory fee
equal to 0.40% of 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 the of
Sosnoff Sheridan Corporation, Sosnoff Sheridan Corporation receives an annual
fee from the Adviser equal to 0.035% of the Fund's 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 AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES--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 Fund's accounting records for
which it receives a fee. The fee is based on the level of the Fund'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 were
borne initially by FAS. The Fund has agreed to reimburse FAS for the
organizational expenses during the five year period following effective date.
For the period ended October 31, 1996, the Fund paid $1,559 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 ended October 31, 1996, were as follows:
<TABLE>
<S> <C>
PURCHASES $ 30,457,812
- --------------------------------------------------------------------------------------------------- -------------
SALES $ 2,199,949
- --------------------------------------------------------------------------------------------------- -------------
</TABLE>
TRUSTEES OFFICERS
- --------------------------------------------------------------------------------
Robert E. Baker Edward C. Gonzales
Harold Berry President and Treasurer
Clarence G. Frame Jeffrey W. Sterling
Harry J. Nederlander Vice President and Assistant Treasurer
Thomas S. Wilson Jay S. Neuman
Secretary
Gail Cagney
Assistant Secretary
Mutual funds are not bank deposits or obligations, are not guaranteed by any
bank, and are not insured or guaranteed by the U.S. government, the Federal
Deposit Insurance Corporation, the Federal Reserve Board, or any other
government agency. Investment in mutual funds involves investment risk,
including possible loss of principal.
This report is authorized for distribution to prospective investors only when
preceded or accompanied by the fund's prospectus which contains facts concerning
its objective and policies, management fees, expenses and other information.
INDEPENDENCE
ONE(R)
MUTUAL
FUNDS
COMBINED
SEMI-ANNUAL REPORT
TO SHAREHOLDERS
OCTOBER 31, 1996
Independence One U.S. Government
Securities Fund
Independence One Fixed Income Fund
Independence One Michigan
Municipal Bond Fund
[LOGO]
MICHIGAN
NATIONAL
BANK
Investment Adviser
[LOGO] Federated Investors
Since 1955
Federated Investors Tower
Pittsburgh, PA 15222-3779
Federated Securities Corp. is the distributor of the Funds
and is a subsidiary of Federated Investors.
[LOGO]
Independence One
Mutual Funds
Cusip 453777856
Cusip 453777807
Cusip 453777864
G01889-02 (12/96)
PRESIDENT'S MESSAGE
- --------------------------------------------------------------------------------
Dear Investor:
I am pleased to present the Semi-Annual Report of Independence One U.S.
Government Securities Fund, Independence One Fixed Income Fund, and Independence
One Michigan Municipal Bond Fund, which covers the six-month period from May 1,
1996 through October 31, 1996. Inside, you will find complete financial
information for each fund. The report begins with a discussion by the funds'
portfolio managers, followed by a list of each fund's holdings and financial
statements.
The following highlights summarize fund performance over the six-month period:
INDEPENDENCE ONE U.S. GOVERNMENT SECURITIES FUND
This fund's all-government bond portfolio produced an income stream totaling
$0.30 per share in addition to a capital gain of $0.01 per share. Share price
increased by 1.7%. Through income, gains, and share price increases, the fund
achieved a total return of 4.87% in a difficult bond market.* At the end of the
period, fund assets stood at $73.2 million.
INDEPENDENCE ONE FIXED INCOME FUND
This fund provides a diversified approach to bond investing through a portfolio
that consists of a mix of U.S. government and agency and corporate bonds. This
diversified bond portfolio produced an income stream totaling $0.29 per share.
Share price increased by 1.2%. Through income and share price increases, the
fund achieved a total return of 4.23% in a difficult bond market.* At the end of
the period, fund assets reached $69.5 million.
INDEPENDENCE ONE MICHIGAN MUNICIPAL BOND FUND
Designed for tax-sensitive Michigan investors, this fund invests in
investment-grade Michigan municipal bonds to pursue double-tax-free income.+ The
fund's portfolio produced an income stream totaling $0.20 per share, while the
share price increased by 1.1%. Through income and share price increases, the
fund achieved a total return of 3.19% in a difficult bond market.* At the end of
the period, fund assets reached $24.6 million.
Thank you for selecting one or more Independence One Mutual Funds to pursue your
financial goals. We look forward to keeping you informed about the progress of
your investment.
Sincerely,
/s/ Edward C. Gonzales
Edward C. Gonzales
President
December 15, 1996
* Performance quoted reflects past performance and is not indicative of future
results. Investment return and principal value will fluctuate so that an
investor's shares, when redeemed, may be worth more or less than their
original cost.
+ Income may be subject to the federal alternative minimum tax.
INVESTMENT REVIEW
- --------------------------------------------------------------------------------
Q While the Federal Reserve Board (the "Fed") took no action on interest
rates during the period, interest rates nevertheless bounced back and forth
with market sentiment. Can you comment?
A Mixed economic news and uncertainty about Fed action have kept the market
speculating about the future of interest rates. Interest rate expectations
have fluctuated dramatically in 1996. Initial beliefs that the federal
funds target rate was headed toward 6.00% pushed both short-term and long-term
rates upward. These expectations faded quickly however, when the Fed failed to
change monetary policy. The Fed's "wait-and-see" attitude, and the market's
uncertainty about the future direction of interest rates has worked to hold
interest rates in a relatively narrow range.
Q In this environment, what was the total return of the funds during the
six-month reporting period ended October 31, 1996?
A Total return for the funds can be divided into a capital appreciation
component as well as an interest income segment. The total return of
Independence One U.S. Government Securities Fund was 4.87%*, composed of
1.83% capital appreciation and 3.04% interest income. The total return of
Independence One Fixed Income Fund was 4.23%*, composed of 1.24% capital
appreciation and 2.99% interest income. The total return of Independence One
Michigan Municipal Bond Fund was 3.19%*, composed of 1.11% capital appreciation
and 2.08% interest income.
Q Independence One Fixed Income Fund invests in corporate bonds in an attempt
to pick up incremental yield over U.S. Treasury securities. What is the
yield spread of corporate bonds over U.S. Treasury bonds, and has this
spread remained constant over the last six months?
A High grade corporate bonds in the five to ten year maturity range have
generally been trading at a spread over U.S. Treasuries of about 35 to 60
basis points, depending on the specific maturity and industry sector. This
yield spread of corporate bonds over U.S. Treasury bonds has remained relatively
stable over the last six months. On October 31, 1996, Independence One Fixed
Income Fund held 18.7% of its net assets in corporate securities.
* Performance quoted represents past performance. Investment return and
principal value will fluctuate so that an investor's shares, when redeemed,
may be worth more or less than their original cost.
- --------------------------------------------------------------------------------
Q In the annual report, three strategies were discussed for Independence One
Michigan Municipal Bond Fund: reducing the number of securities in the
portfolio, purchasing longer-maturity securities, and reducing the number
of out-of-state municipal securities. Have these strategies remained in place?
A Yes, and significant progress has been made in completing these objectives.
Through maturities, sales and the exercise of various put and call
features, the number of holdings in the portfolio was reduced by 65 issues
during the reporting period. Eleven purchases were made, with the bulk of those
with final maturities in the 2008-2010 range. The net result of these activities
was to reduce the number of securities in the portfolio from 133 issues to 79.
The average maturity of the fund currently stands at approximately 7.5 years.
The number of out-of-state holdings was reduced from 17 issues down to only 4.
(All of the remaining non-Michigan issuer have maturity dates of April 1998 or
earlier.)
Q As 1996 draws to a close, what is your outlook for the fixed income markets
for 1997?
A At the beginning of September 1996, the fixed income market braced itself
for a hike in interest rates by the Fed. Bond traders felt the Fed would
react to rising inflation fears brought on by a strong labor market,
soaring consumer confidence and a spike in oil prices. By the end of October
1996 sentiment had changed significantly as employment growth moderated,
consumer spending slowed, and favorable inflation reports continued at both the
producer and consumer level. Gross Domestic Product slowed from a torrid 4.7% in
the second quarter of 1996 to a more sustainable 2.0% in the third quarter. The
yield on the 30-year Treasury bond fell a dramatic 50 basis points during the
period from early September to the end of October.
Looking ahead, we expect the rally to continue into early 1997 as more signs of
an economic slowdown manifest themselves. If this turns out to be a "soft
landing" in the midst of a continuation of the current 5.5 year-long expansion,
the fall in rates will most likely end as the economy recovers its momentum.
However, if some unforeseen shock causes the economy to slip into a recession,
we would expect the fixed income markets to rally further in anticipation of an
easing move by the Fed. As always, the funds' portfolio managers will be
actively monitoring developments to best serve the interests of shareholders.
INDEPENDENCE ONE U.S. GOVERNMENT SECURITIES FUND
PORTFOLIO OF INVESTMENTS
OCTOBER 31, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------------- ----------------------------------------------------------------------------------- -------------
<C> <S> <C>
GOVERNMENT AGENCIES--21.7%
- --------------------------------------------------------------------------------------------------
FEDERAL HOME LOAN BANK--5.6%
-----------------------------------------------------------------------------------
$ 4,000,000 7.20%, 6/14/2011 $ 4,141,080
----------------------------------------------------------------------------------- -------------
FEDERAL HOME LOAN MORTGAGE CORP.--4.1%
-----------------------------------------------------------------------------------
3,000,000 6.55%, 10/2/2002 3,029,460
----------------------------------------------------------------------------------- -------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION--12.0%
-----------------------------------------------------------------------------------
3,000,000 6.80%, 1/10/2003 3,066,480
-----------------------------------------------------------------------------------
1,509,000 7.56%, 12/20/2001 1,498,724
-----------------------------------------------------------------------------------
4,000,000 7.65%, 3/10/2005 4,271,640
----------------------------------------------------------------------------------- -------------
Total 8,836,844
----------------------------------------------------------------------------------- -------------
TOTAL GOVERNMENT AGENCIES (IDENTIFIED COST, $15,804,235) 16,007,384
----------------------------------------------------------------------------------- -------------
U.S. TREASURY OBLIGATIONS--75.7%
- --------------------------------------------------------------------------------------------------
U.S. TREASURY BILL--3.9%
-----------------------------------------------------------------------------------
3,000,000 7/24/1997 2,888,220
----------------------------------------------------------------------------------- -------------
U.S. TREASURY BONDS--19.2%
-----------------------------------------------------------------------------------
5,500,000 7.125%, 2/15/2023 5,753,275
-----------------------------------------------------------------------------------
4,340,000 8.00%, 11/15/2021 4,987,832
-----------------------------------------------------------------------------------
3,000,000 8.125%, 8/15/2019 3,476,430
----------------------------------------------------------------------------------- -------------
Total 14,217,537
----------------------------------------------------------------------------------- -------------
U.S. TREASURY NOTES--52.6%
-----------------------------------------------------------------------------------
12,000,000 6.125%, 5/15/1998 12,085,440
-----------------------------------------------------------------------------------
10,000,000 6.375%, 3/31/2001 10,122,200
-----------------------------------------------------------------------------------
10,000,000 7.00%, 4/15/1999 10,268,400
-----------------------------------------------------------------------------------
3,000,000 7.50%, 11/15/2001 3,179,100
-----------------------------------------------------------------------------------
3,000,000 7.50%, 2/15/2005 3,227,040
----------------------------------------------------------------------------------- -------------
Total 38,882,180
----------------------------------------------------------------------------------- -------------
TOTAL U.S. TREASURY OBLIGATIONS (IDENTIFIED COST, $54,538,846) 55,987,937
----------------------------------------------------------------------------------- -------------
</TABLE>
INDEPENDENCE ONE U.S. GOVERNMENT SECURITIES FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------------- ----------------------------------------------------------------------------------- -------------
<C> <S> <C>
(a) REPURCHASE AGREEMENT--1.6%
- --------------------------------------------------------------------------------------------------
$ 928,000 First Chicago Capital Markets, Inc., 5.90%, dated 10/31/1996,
due 11/1/1996 (AT AMORTIZED COST) $ 1,199,000
----------------------------------------------------------------------------------- -------------
TOTAL INVESTMENTS (IDENTIFIED COST, $71,542,081) (b) $ 73,194,321
----------------------------------------------------------------------------------- -------------
(a) The repurchase agreement is fully collateralized by U.S. government and/or
agency obligations based on market prices at the date of the portfolio.
(b) The cost of investments for federal tax purposes amounts to $71,542,081. The
unrealized appreciation of investments on a federal tax basis amounts to
$1,652,240 which is comprised of $1,653,113 appreciation and $873
depreciation at October 31, 1996.
Note: The categories of investments are shown as a percentage of net assets
($73,916,050) at October 31, 1996.
(See Notes which are an integral part of the Financial Statements)
INDEPENDENCE ONE U.S. GOVERNMENT SECURITIES FUND
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C> <C>
ASSETS:
- ---------------------------------------------------------------------------------------------------
Total investments in securities, at value (identified and tax cost $71,542,081) $ 73,194,321
- ---------------------------------------------------------------------------------------------------
Cash 23
- ---------------------------------------------------------------------------------------------------
Income receivable 1,108,698
- ---------------------------------------------------------------------------------------------------
Deferred expenses 9,843
- --------------------------------------------------------------------------------------------------- -------------
Total assets 74,312,885
- ---------------------------------------------------------------------------------------------------
LIABILITIES:
- ---------------------------------------------------------------------------------------
Income distribution payable $ 367,811
- ---------------------------------------------------------------------------------------
Accrued expenses 29,024
- --------------------------------------------------------------------------------------- ----------
Total liabilities 396,835
- --------------------------------------------------------------------------------------------------- -------------
NET ASSETS for 7,281,948 shares outstanding $ 73,916,050
- --------------------------------------------------------------------------------------------------- -------------
NET ASSETS CONSIST OF:
- ---------------------------------------------------------------------------------------------------
Paid-in capital $ 73,332,512
- ---------------------------------------------------------------------------------------------------
Net unrealized appreciation of investments 1,652,240
- ---------------------------------------------------------------------------------------------------
Accumulated net realized loss on investments (1,068,702)
- --------------------------------------------------------------------------------------------------- -------------
Total Net Assets $ 73,916,050
- --------------------------------------------------------------------------------------------------- -------------
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE:
- ---------------------------------------------------------------------------------------------------
$73,916,050 / 7,281,948 shares outstanding $10.15
- --------------------------------------------------------------------------------------------------- -------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
INDEPENDENCE ONE U.S. GOVERNMENT SECURITIES FUND
STATEMENT OF OPERATIONS
SIX MONTHS ENDED OCTOBER 31, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
- ---------------------------------------------------------------------------------------------------
Interest $ 2,336,649
- ---------------------------------------------------------------------------------------------------
EXPENSES:
- --------------------------------------------------------------------------------------
Investment advisory fee $ 256,743
- --------------------------------------------------------------------------------------
Administrative personnel and services fee 40,484
- --------------------------------------------------------------------------------------
Custodian fees 9,384
- --------------------------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses 14,904
- --------------------------------------------------------------------------------------
Directors'/Trustees' fees 2,760
- --------------------------------------------------------------------------------------
Auditing fees 6,440
- --------------------------------------------------------------------------------------
Legal fees 1,472
- --------------------------------------------------------------------------------------
Portfolio accounting fees 23,368
- --------------------------------------------------------------------------------------
Share registration costs 7,728
- --------------------------------------------------------------------------------------
Printing and postage 5,704
- --------------------------------------------------------------------------------------
Insurance premiums 2,208
- --------------------------------------------------------------------------------------
Miscellaneous 4,784
- -------------------------------------------------------------------------------------- -----------
Total expenses 375,979
- --------------------------------------------------------------------------------------
Waivers--
- --------------------------------------------------------------------------------------
Waiver of investment advisory fee (165,049)
- -------------------------------------------------------------------------------------- -----------
Net expenses 210,930
- --------------------------------------------------------------------------------------------------- -------------
Net investment income 2,125,719
- --------------------------------------------------------------------------------------------------- -------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
- ---------------------------------------------------------------------------------------------------
Net realized loss on investments (1,069,039)
- ---------------------------------------------------------------------------------------------------
Net change in unrealized appreciation of investments 2,450,434
- --------------------------------------------------------------------------------------------------- -------------
Net realized and unrealized gain on investments 1,381,395
- --------------------------------------------------------------------------------------------------- -------------
Change in net assets resulting from operations $ 3,507,114
- --------------------------------------------------------------------------------------------------- -------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
INDEPENDENCE ONE U.S. GOVERNMENT SECURITIES FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS ENDED
(UNAUDITED) YEAR ENDED
OCTOBER 31, 1996 APRIL 30, 1996
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- -----------------------------------------------------------------------
OPERATIONS--
- -----------------------------------------------------------------------
Net investment income $ 2,125,719 $ 4,026,005
- -----------------------------------------------------------------------
Net realized gain (loss) on investments ($1,069,039 net loss and
$354,700 net gain, respectively, as computed for federal tax purposes) (1,069,039) 1,859,938
- -----------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) 2,450,434 (999,752)
- ----------------------------------------------------------------------- ---------------------- ----------------
Change in net assets resulting from operations 3,507,114 4,886,191
- ----------------------------------------------------------------------- ---------------------- ----------------
DISTRIBUTIONS TO SHAREHOLDERS--
- -----------------------------------------------------------------------
Distributions from net investment income (2,125,719) (4,026,005)
- -----------------------------------------------------------------------
Distributions from net realized gains (63,377) --
- ----------------------------------------------------------------------- ---------------------- ----------------
Change in net assets resulting from
distributions to shareholders (2,189,096) (4,026,005)
- ----------------------------------------------------------------------- ---------------------- ----------------
SHARE TRANSACTIONS--
- -----------------------------------------------------------------------
Proceeds from sale of shares 11,280,480 22,565,389
- -----------------------------------------------------------------------
Net asset value of shares issued to shareholders in payment of
distributions declared 193,916 --
- -----------------------------------------------------------------------
Cost of shares redeemed (11,167,700) (13,648,382)
- ----------------------------------------------------------------------- ---------------------- ----------------
Change in net assets resulting from share transactions 306,696 8,917,007
- ----------------------------------------------------------------------- ---------------------- ----------------
Change in net assets 1,624,714 9,777,193
- -----------------------------------------------------------------------
NET ASSETS:
- -----------------------------------------------------------------------
Beginning of period 72,291,336 62,514,143
- ----------------------------------------------------------------------- ---------------------- ----------------
End of period $ 73,916,050 $ 72,291,336
- ----------------------------------------------------------------------- ---------------------- ----------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
INDEPENDENCE ONE U.S. GOVERNMENT SECURITIES FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
(UNAUDITED)
OCTOBER 31, YEAR ENDED APRIL 30,
1996 1996 1995 1994 1993(a)
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.98 $ 9.79 $ 9.84 $ 10.31 $ 10.00
- -----------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- -----------------------------------------------------------
Net investment income 0.30 0.59 0.60 0.55 0.33
- -----------------------------------------------------------
Net realized and unrealized gain (loss) on investments 0.18 0.19 (0.05) (0.47) 0.31
- ----------------------------------------------------------- ------------- --------- --------- --------- -----------
Total from investment operations 0.48 0.78 0.55 0.08 0.64
- ----------------------------------------------------------- ------------- --------- --------- --------- -----------
LESS DISTRIBUTIONS
- -----------------------------------------------------------
Distributions from net investment income (0.30) (0.59) (0.60) (0.55) (0.33)
- -----------------------------------------------------------
Total distributions from net realized
gain on investments (0.01) -- -- -- --
- ----------------------------------------------------------- ------------- --------- --------- --------- -----------
Total distributions (0.31) (0.59) (0.60) (0.55) (0.33)
- ----------------------------------------------------------- ------------- --------- --------- --------- -----------
NET ASSET VALUE, END OF PERIOD $ 10.15 $ 9.98 $ 9.79 $ 9.84 $ 10.31
- ----------------------------------------------------------- ------------- --------- --------- --------- -----------
TOTAL RETURN (b) 4.87% 7.97% 5.90% .66% 4.61%
- -----------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- -----------------------------------------------------------
Expenses 0.58%* 0.40% 0.35% 0.31% 0.17%*
- -----------------------------------------------------------
Net investment income 5.80%* 5.85% 6.23% 5.32% 5.59%*
- -----------------------------------------------------------
Expense waiver/reimbursement (c) 0.45%* 0.66% 0.70% 0.70% 0.83%*
- -----------------------------------------------------------
SUPPLEMENTAL DATA
- -----------------------------------------------------------
Net assets, end of period (000 omitted) $73,916 $72,291 $62,514 $72,866 $87,704
- -----------------------------------------------------------
Portfolio turnover 65% 104% 75% 20% 0%
- -----------------------------------------------------------
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from January 11, 1993 (date of inital
public investment) to April 30, 1993.
(b) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
INDEPENDENCE ONE FIXED INCOME FUND
PORTFOLIO OF INVESTMENTS
OCTOBER 31, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------------- ----------------------------------------------------------------------------------- -------------
<C> <S> <C>
CORPORATE BONDS--18.7%
- --------------------------------------------------------------------------------------------------
AEROSPACE & DEFENSE--1.4%
-----------------------------------------------------------------------------------
$ 1,000,000 Raytheon Co., Sr. Note, 6.50%, 7/15/2005 $ 981,020
----------------------------------------------------------------------------------- -------------
AUTOMOTIVE--1.4%
-----------------------------------------------------------------------------------
1,000,000 Ford Motor Credit Corp., Note, 6.125%, 1/9/2006 943,220
----------------------------------------------------------------------------------- -------------
BANKING--2.9%
-----------------------------------------------------------------------------------
1,000,000 Citicorp, Sr. Note, 5.625%, 2/15/2001 971,030
-----------------------------------------------------------------------------------
1,000,000 NationsBank Corp., Sr. Note, 7.00%, 9/15/2001 1,020,570
----------------------------------------------------------------------------------- -------------
Total 1,991,600
----------------------------------------------------------------------------------- -------------
FINANCE-COMMERCIAL--1.4%
-----------------------------------------------------------------------------------
1,000,000 General Electric Capital Corporation, Inc., Deb., 5.50%, 11/1/2001 960,670
----------------------------------------------------------------------------------- -------------
FINANCIAL SERVICES--1.4%
-----------------------------------------------------------------------------------
1,000,000 Merrill Lynch & Co., Inc., Note, 7.00%, 3/15/2006 1,003,840
----------------------------------------------------------------------------------- -------------
INDUSTRIAL SERVICES--1.5%
-----------------------------------------------------------------------------------
1,000,000 WMX Technologies, Inc., Unsecured Note, 7.00%, 5/15/2005 1,013,350
----------------------------------------------------------------------------------- -------------
PHARMACEUTICALS--1.6%
-----------------------------------------------------------------------------------
1,000,000 Lilly (Eli) & Co., Unsecured Note, 8.375%, 12/1/2006 1,117,760
----------------------------------------------------------------------------------- -------------
RETAIL--2.8%
-----------------------------------------------------------------------------------
1,000,000 Penney (J.C.) Co., Inc., Medium Term Note, Series A, 6.375%,
9/15/2000 999,350
-----------------------------------------------------------------------------------
1,000,000 Wal-Mart Stores, Inc., Unsecured Note, 6.125%, 10/1/1999 998,620
----------------------------------------------------------------------------------- -------------
Total 1,997,970
----------------------------------------------------------------------------------- -------------
TELECOMMUNICATIONS--4.3%
-----------------------------------------------------------------------------------
1,000,000 BellSouth Telecommunications, Inc., Note, 6.50%, 6/15/2005 991,280
-----------------------------------------------------------------------------------
1,000,000 MCI Communications Corp., Sr. Note, 7.50%, 8/20/2004 1,046,720
-----------------------------------------------------------------------------------
</TABLE>
INDEPENDENCE ONE FIXED INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------------- ----------------------------------------------------------------------------------- -------------
<C> <S> <C>
CORPORATE BONDS--CONTINUED
- --------------------------------------------------------------------------------------------------
TELECOMMUNICATIONS--CONTINUED
-----------------------------------------------------------------------------------
$ 1,000,000 U.S. West Communications, Inc., Note, 6.625%, 9/15/2005 $ 986,370
----------------------------------------------------------------------------------- -------------
Total 3,024,370
----------------------------------------------------------------------------------- -------------
TOTAL CORPORATE BONDS (IDENTIFIED COST $13,134,665) 13,033,800
----------------------------------------------------------------------------------- -------------
GOVERNMENT AGENCIES--9.2%
- --------------------------------------------------------------------------------------------------
FEDERAL FARM CREDIT BANK--1.7%
-----------------------------------------------------------------------------------
500,000 4.61%, 12/10/1996 499,895
-----------------------------------------------------------------------------------
300,000 5.96%, 7/14/2003 293,154
-----------------------------------------------------------------------------------
410,000 6.05%, 4/21/2003 403,108
----------------------------------------------------------------------------------- -------------
Total 1,196,157
----------------------------------------------------------------------------------- -------------
FEDERAL HOME LOAN BANK--1.3%
-----------------------------------------------------------------------------------
880,000 7.46%, 9/9/2004 931,674
----------------------------------------------------------------------------------- -------------
FEDERAL HOME LOAN MORTGAGE CORPORATION--1.1%
-----------------------------------------------------------------------------------
700,000 7.90%, 1/27/2000 738,080
----------------------------------------------------------------------------------- -------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION--4.4%
-----------------------------------------------------------------------------------
1,000,000 5.37%, Medium Term Note, 2/7/2001 971,080
-----------------------------------------------------------------------------------
2,000,000 6.69%, 8/7/2001 2,041,920
----------------------------------------------------------------------------------- -------------
Total 3,013,000
----------------------------------------------------------------------------------- -------------
TENNESSEE VALLEY AUTHORITY--0.7%
-----------------------------------------------------------------------------------
500,000 8.25%, 11/15/1996 500,715
----------------------------------------------------------------------------------- -------------
TOTAL GOVERNMENT AGENCIES (IDENTIFIED COST $6,331,601) 6,379,626
----------------------------------------------------------------------------------- -------------
U.S. TREASURY OBLIGATIONS--69.7%
- --------------------------------------------------------------------------------------------------
U.S. TREASURY BONDS--3.6%
-----------------------------------------------------------------------------------
2,000,000 10.75%, 5/15/2003 2,481,520
----------------------------------------------------------------------------------- -------------
U.S. TREASURY NOTES--66.1%
-----------------------------------------------------------------------------------
5,500,000 5.125%, 12/31/1998 5,430,755
-----------------------------------------------------------------------------------
5,000,000 6.00%, 12/31/1997 5,026,900
-----------------------------------------------------------------------------------
3,950,000 6.00%, 8/31/1997 3,966,471
-----------------------------------------------------------------------------------
</TABLE>
INDEPENDENCE ONE FIXED INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------------- ----------------------------------------------------------------------------------- -------------
<C> <S> <C>
U.S. TREASURY OBLIGATIONS--CONTINUED
- --------------------------------------------------------------------------------------------------
U.S. TREASURY NOTES--CONTINUED
-----------------------------------------------------------------------------------
$ 12,250,000 6.125%, 7/31/2000 $ 12,301,571
-----------------------------------------------------------------------------------
7,000,000 6.375%, 8/15/2002 7,080,921
-----------------------------------------------------------------------------------
6,800,000 6.75%, 6/30/1999 6,947,900
-----------------------------------------------------------------------------------
5,000,000 7.50%, 10/31/1999 5,214,950
----------------------------------------------------------------------------------- -------------
Total 45,969,468
----------------------------------------------------------------------------------- -------------
TOTAL U.S. TREASURY OBLIGATIONS(IDENTIFIED COST $48,771,133) 48,450,988
----------------------------------------------------------------------------------- -------------
(a) REPURCHASE AGREEMENT--1.3%
- --------------------------------------------------------------------------------------------------
904,000 First Chicago Capital Markets, Inc., 5.50%, dated 10/31/1996,
due 11/1/1996 (at amortized cost) 904,000
----------------------------------------------------------------------------------- -------------
TOTAL INVESTMENTS (IDENTIFIED COST $69,141,399)(b) $ 68,768,414
----------------------------------------------------------------------------------- -------------
</TABLE>
(a) The repurchase agreement is fully collateralized by U.S. Treasury
obligations based on market prices at the date of the portfolio.
(b) The cost of investments for federal tax purposes amounts to $69,141,399. The
net unrealized depreciation of investments on a federal tax basis amounts to
$372,985 which is comprised of $313,404 appreciation and $686,389
depreciation at October 31, 1996.
Note: The categories of investments are shown as a percentage of net assets
($69,510,600) at October 31, 1996.
(See Notes which are an integral part of the Financial Statements)
INDEPENDENCE ONE FIXED INCOME FUND
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- ---------------------------------------------------------------------------------------------------
Total investments in securities, at value (identified and tax cost $69,141,399) $ 68,768,414
- ---------------------------------------------------------------------------------------------------
Cash 2,008
- ---------------------------------------------------------------------------------------------------
Income receivable 1,107,390
- ---------------------------------------------------------------------------------------------------
Deferred expenses 12,862
- --------------------------------------------------------------------------------------------------- -------------
Total assets 69,890,674
- ---------------------------------------------------------------------------------------------------
LIABILITIES:
- ---------------------------------------------------------------------------------------
Income distribution payable $ 334,260
- ---------------------------------------------------------------------------------------
Accrued expenses 45,814
- --------------------------------------------------------------------------------------- ----------
Total liabilities 380,074
- --------------------------------------------------------------------------------------------------- -------------
NET ASSETS for 6,992,830 shares outstanding $ 69,510,600
- --------------------------------------------------------------------------------------------------- -------------
NET ASSETS CONSIST OF:
- ---------------------------------------------------------------------------------------------------
Paid-in capital $ 69,999,697
- ---------------------------------------------------------------------------------------------------
Net unrealized depreciation of investments (372,985)
- ---------------------------------------------------------------------------------------------------
Accumulated net realized loss on investments (116,112)
- --------------------------------------------------------------------------------------------------- -------------
Total Net Assets $ 69,510,600
- --------------------------------------------------------------------------------------------------- -------------
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE:
- ---------------------------------------------------------------------------------------------------
$69,510,600 / 6,992,830 shares outstanding $9.94
- --------------------------------------------------------------------------------------------------- -------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
INDEPENDENCE ONE FIXED INCOME FUND
STATEMENT OF OPERATIONS
SIX MONTHS ENDED OCTOBER 31, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
- ----------------------------------------------------------------------------------------------------
Interest $ 2,035,918
- ----------------------------------------------------------------------------------------------------
EXPENSES:
- ---------------------------------------------------------------------------------------
Investment advisory fee $ 240,152
- ---------------------------------------------------------------------------------------
Administrative personnel and services fee 35,324
- ---------------------------------------------------------------------------------------
Custodian fees 5,152
- ---------------------------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses 13,616
- ---------------------------------------------------------------------------------------
Directors'/Trustees' fees 552
- ---------------------------------------------------------------------------------------
Auditing fees 4,968
- ---------------------------------------------------------------------------------------
Legal fees 920
- ---------------------------------------------------------------------------------------
Portfolio accounting fees 23,552
- ---------------------------------------------------------------------------------------
Share registration costs 8,832
- ---------------------------------------------------------------------------------------
Printing and postage 2,760
- ---------------------------------------------------------------------------------------
Insurance premiums 368
- ---------------------------------------------------------------------------------------
Miscellaneous 1,472
- --------------------------------------------------------------------------------------- -----------
Total expenses 337,668
- ---------------------------------------------------------------------------------------
Waiver--
- ---------------------------------------------------------------------------------------
Waiver of investment advisory fee (160,101)
- --------------------------------------------------------------------------------------- -----------
Net expenses 177,567
- ---------------------------------------------------------------------------------------------------- ------------
Net investment income 1,858,351
- ---------------------------------------------------------------------------------------------------- ------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
- ----------------------------------------------------------------------------------------------------
Net realized loss on investments (116,267)
- ----------------------------------------------------------------------------------------------------
Net change in unrealized depreciation of investments 982,732
- ---------------------------------------------------------------------------------------------------- ------------
Net realized and unrealized gain on investments 866,465
- ---------------------------------------------------------------------------------------------------- ------------
Change in net assets resulting from operations $ 2,724,816
- ---------------------------------------------------------------------------------------------------- ------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
INDEPENDENCE ONE FIXED INCOME FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS ENDED
(UNAUDITED) PERIOD ENDED
OCTOBER 31, 1996 APRIL 30, 1996*
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- ----------------------------------------------------------------------
OPERATIONS--
- ----------------------------------------------------------------------
Net investment income $ 1,858,351 $ 1,621,001
- ----------------------------------------------------------------------
Net realized gain (loss) on investments ($116,267 net loss and
$11,172, net gain respectively, as computed for federal tax purposes) (116,267) 11,172
- ----------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) 982,732 (1,355,717)
- ---------------------------------------------------------------------- ---------------------- ------------------
Change in net assets resulting from operations 2,724,816 276,456
- ---------------------------------------------------------------------- ---------------------- ------------------
DISTRIBUTIONS TO SHAREHOLDERS--
- ----------------------------------------------------------------------
Distributions from net investment income (1,858,351) (1,621,001)
- ----------------------------------------------------------------------
Distributions from net realized gains (11,017) --
- ---------------------------------------------------------------------- ---------------------- ------------------
Change in net assets resulting from distributions to shareholders (1,869,368) (1,621,001)
- ---------------------------------------------------------------------- ---------------------- ------------------
SHARE TRANSACTIONS--
- ----------------------------------------------------------------------
Proceeds from sale of shares 11,212,495 64,728,100
- ----------------------------------------------------------------------
Net asset value of shares issued to shareholders in payment of
distributions declared 1,068,040 --
- ----------------------------------------------------------------------
Cost of shares redeemed (5,881,877) (1,127,061)
- ---------------------------------------------------------------------- ---------------------- ------------------
Change in net assets resulting from share transactions 6,398,658 63,601,039
- ---------------------------------------------------------------------- ---------------------- ------------------
Change in net assets 7,254,106 62,256,494
- ----------------------------------------------------------------------
NET ASSETS:
- ----------------------------------------------------------------------
Beginning of period 62,256,494 --
- ---------------------------------------------------------------------- ---------------------- ------------------
End of period $ 69,510,600 $ 62,256,494
- ---------------------------------------------------------------------- ---------------------- ------------------
</TABLE>
*For the period from October 23, 1995 (date of initial public investment) to
April 30, 1996.
(See Notes which are an integral part of the Financial Statements)
INDEPENDENCE ONE FIXED INCOME FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED PERIOD
(UNAUDITED) ENDED
OCTOBER 31, APRIL 30,
1996 1996(a)
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.82 $ 10.00
- ------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ------------------------------------------------------------------------------------
Net investment income 0.29 0.30
- ------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments 0.12 (0.18)
- ------------------------------------------------------------------------------------ ------- ------------
Total from investment operations 0.41 0.12
- ------------------------------------------------------------------------------------ ------- ------------
LESS DISTRIBUTIONS
- ------------------------------------------------------------------------------------
Distributions from net investment income (0.29) (0.30)
- ------------------------------------------------------------------------------------
Distributions from net realized gains (0.00)(b) --
- ------------------------------------------------------------------------------------ ------- ------------
TOTAL DISTRIBUTIONS (0.29) (0.30)
- ------------------------------------------------------------------------------------ ------- ------------
NET ASSET VALUE, END OF PERIOD $ 9.94 $ 9.82
- ------------------------------------------------------------------------------------ ------- ------------
TOTAL RETURN (c) 4.23% 1.15%
- ------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ------------------------------------------------------------------------------------
Expenses 0.55%* 0.54%*
- ------------------------------------------------------------------------------------
Net investment income 5.80%* 5.73%*
- ------------------------------------------------------------------------------------
Expense waiver/reimbursement (d) 0.50%* 0.61%*
- ------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
- ------------------------------------------------------------------------------------
Net assets, end of period (000 omitted) $69,511 $62,256
- ------------------------------------------------------------------------------------
Portfolio turnover 15% 4%
- ------------------------------------------------------------------------------------
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from October 23, 1995 (date of inital
public investment) to April 30, 1996.
(b) Distribution from net realized gain is less than one cent per share.
(c) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
(d) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
INDEPENDENCE ONE MICHIGAN MUNICIPAL BOND FUND
PORTFOLIO OF INVESTMENTS
OCTOBER 31, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING
PRINCIPAL MOODY'S
AMOUNT & S&P* VALUE
<C> <S> <C> <C>
LONG-TERM MUNICIPALS--97.6%
- ----------------------------------------------------------------------------------
ILLINOIS--0.4%
---------------------------------------------------------------------
$ 100,000 Illinois State University, Certificate Partnership Bonds, 6.00%
(Original Issue Yield: 6.10%), 1/1/1997 A/NR $ 100,345
--------------------------------------------------------------------- -------------
INDIANA--0.6%
---------------------------------------------------------------------
150,000 Indianapolis, IN Local Public Improvement Bond Bank, Revenue Bonds
(Series B), 4.70%, 1/10/1997 Aa/AA 150,286
--------------------------------------------------------------------- -------------
MICHIGAN--95.8%
---------------------------------------------------------------------
825,000 Allegan, MI Public School District, GO UT Bonds, 5.55% (AMBAC
INS)/(Michigan State GTD)/(Original Issue Yield: 5.60%), 5/1/2010 AAA 836,072
---------------------------------------------------------------------
150,000 Ann Arbor, MI Water Supply System, Refunding Revenue Bonds (Series
S), 4.70%, 2/1/1997 A1/A+ 150,371
---------------------------------------------------------------------
100,000 Antrim County, MI, GO UT Bonds, 5.60% (AMBAC INS)/ (Original Issue
Yield: 5.60%), 5/1/1999 Aaa/AAA 103,590
---------------------------------------------------------------------
100,000 Auburn Hills, MI Local Development Financial Authority, Tax Increment
Revenue Bonds (Series A), 7.00% (Dai-Ichi Kangyo Bank Ltd., Tokyo
LOC), 11/1/2000 Aa3/NR 103,406
---------------------------------------------------------------------
400,000 Beaverton, MI Rural Schools, GO UT Bonds, 4.70% (FGIC INS)/(Michigan
State GTD)/(Original Issue Yield: 4.75%), 5/1/2008 Aaa 378,312
---------------------------------------------------------------------
100,000 Calhoun County, MI, UT GO (Series II), 6.60% (AMBAC INS), 7/1/2002 Aaa/AAA 103,234
---------------------------------------------------------------------
150,000 Clare County, MI, GO UT Refunding Bonds, 5.00% (Sewage Disposal
System No. 3)/(AMBAC INS)/(Original Issue Yield: 5.10%), 11/1/2003 Aaa/AAA 153,669
---------------------------------------------------------------------
480,000 Detroit, MI City School District, GO UT Bonds (Series A), 6.50%
(AMBAC INS)/(Michigan State GTD), 5/1/2008 Aaa/AAA 535,046
---------------------------------------------------------------------
</TABLE>
INDEPENDENCE ONE MICHIGAN MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING
PRINCIPAL MOODY'S
AMOUNT & S&P* VALUE
<S> <S> <C> <C>
LONG-TERM MUNICIPALS--CONTINUED
- -----------------------------------------------------------------------------------
MICHIGAN--CONTINUED
---------------------------------------------------------------------
$ 100,000 Detroit, MI City School District, GO UT Bonds (Series XXIII), 7.10%
(Michigan State GTD), 5/1/1999 Aa/AA $ 106,127
---------------------------------------------------------------------
150,000 Detroit, MI City School District, GO UT Bonds, 4.80% (Michigan State
GTD), 5/1/1997 Aa/AA 150,759
---------------------------------------------------------------------
500,000 East Detroit Michigan School District, GO UT Refunding Bonds, 6.50%
(FGIC INS)/(Michigan State GTD)/(Original Issue Yield: 5.45%),
5/1/2006 AAA 554,375
---------------------------------------------------------------------
175,000 Grand Haven, MI Area Public Schools, GO UT Refunding Bonds, 5.50%
(MBIA INS)/(Original Issue Yield: 5.55%),
5/1/2005 Aaa/AAA 182,290
---------------------------------------------------------------------
100,000 Grand Rapid & Kent County, MI Joint Building Authority, Revenue
Bonds, 6.40%, 10/1/1998 Aa/AAA 102,961
---------------------------------------------------------------------
680,000 Grand Rapids, MI Community College, GO UT Bonds, 5.30% (MBIA
INS)/(Original Issue Yield: 5.35%), 5/1/2009 Aaa/AAA 679,816
---------------------------------------------------------------------
150,000 Grand Rapids, MI Community College, Limited Tax GO UT Refunding
Bonds, 3.70%, 5/1/1997 A1/AA- 149,994
---------------------------------------------------------------------
400,000 Greater Detroit Resource Recovery Authority, MI, Refunding Revenue
Bonds (Series A), 4.30% (AMBAC INS)/(Original Issue Yield: 4.35%),
12/13/1998 Aaa/AAA 401,428
---------------------------------------------------------------------
500,000 Greater Detroit Resource Recovery Authority, MI, Refunding Revenue
Bonds (Series A), 5.00% (AMBAC INS), 12/13/2000 Aaa/AAA 508,900
---------------------------------------------------------------------
550,000 Holland, MI Area Community Swimming Pool Authority, GO UT Bonds,
5.125% (FGIC INS)/(Original Issue Yield: 5.40%), 5/1/2010 Aaa/AAA 538,466
---------------------------------------------------------------------
100,000 Holland, MI Electric, Revenue Bonds, 6.30%, 7/1/2000 Aa/AA- 104,737
---------------------------------------------------------------------
100,000 Kalamazoo, MI, GO LT Bonds, 6.50%, 10/1/1997 A1/AA- 102,521
---------------------------------------------------------------------
1,000,000 Kenowa Hills Michigan Public Schools, GO UT Bonds, 5.60% (MBIA INS),
5/1/2009 NR/AAA 1,020,150
---------------------------------------------------------------------
</TABLE>
INDEPENDENCE ONE MICHIGAN MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING
PRINCIPAL MOODY'S
AMOUNT & S&P* VALUE
<S> <S> <C> <C>
LONG-TERM MUNICIPALS--CONTINUED
- -----------------------------------------------------------------------------------
MICHIGAN--CONTINUED
---------------------------------------------------------------------
$ 600,000 Lakewood, MI Public Schools, GO UT Bonds, 5.30% (MBIA INS)/(Original
Issue Yield: 5.45%), 5/1/2009 Aaa/AAA $ 599,838
---------------------------------------------------------------------
150,000 Lanse Creuse, MI Public Schools, GO UT Bonds, 7.10% (Michigan State
GTD), 5/1/1998 NR/AA 155,569
---------------------------------------------------------------------
100,000 Lansing, MI Building Authority, Refunding Revenue Bonds, 6.10%
(Lansing, MI Building Authority LOC)/ (Escrowed to Maturity),
6/1/1998 A1/NR 103,115
---------------------------------------------------------------------
150,000 Lansing, MI Tax Increment, GO LT Refunding Bonds, 6.00% (Escrowed to
Maturity), 10/1/2002 A1/AA+ 160,402
---------------------------------------------------------------------
100,000 Lapeer, MI, GO LT Refunding Bonds, 6.10% (AMBAC INS)/(Original Issue
Yield: 6.25%), 10/1/1999 Aaa/AAA 105,399
---------------------------------------------------------------------
1,055,000 Lincoln Park, MI School District, GO UT Bonds, 5.70%,
5/1/2008 Aaa/AAA 1,098,466
---------------------------------------------------------------------
100,000 Macomb County, MI, Transportation Fund Revenue Bonds, 6.70% (Original
Issue Yield: 6.70%), 8/1/1998 A1/AA- 104,555
---------------------------------------------------------------------
600,000 Marquette, MI Hospital Finance Authority, Refunding Revenue Bonds
(Series D), 4.95% (Marquette General Hospital, MI)/(FSA INS),
4/1/2002 Aaa/AAA 607,074
---------------------------------------------------------------------
1,000,000 Michigan Municipal Bond Authority, Revenue Bonds (Series B), 5.35%
(Original Issue Yield: 5.45%), 10/1/2007 Aa/AA 1,006,030
---------------------------------------------------------------------
400,000 Michigan Municipal Bond Authority, Revenue Bonds, 4.60% (AMBAC INS),
11/1/2003 Aaa/AAA 396,628
---------------------------------------------------------------------
500,000 Michigan Municipal Bond Authority, Revenue Bonds, 5.25% (Local
Government Loan Program)/(AMBAC INS), 5/1/2006 Aaa/AAA 507,660
---------------------------------------------------------------------
100,000 Michigan Public Power Agency, Revenue Bonds, 7.00% (Belle River
Project, MI), 1/1/1997 A1/AA- 100,536
---------------------------------------------------------------------
100,000 Michigan State Building Authority, Refunding Revenue Bonds (Series
I), 5.80%, 10/1/1998 A1/AA- 103,314
---------------------------------------------------------------------
</TABLE>
INDEPENDENCE ONE MICHIGAN MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING
PRINCIPAL MOODY'S
AMOUNT & S&P* VALUE
<S> <S> <C> <C>
LONG-TERM MUNICIPALS--CONTINUED
- -----------------------------------------------------------------------------------
MICHIGAN--CONTINUED
---------------------------------------------------------------------
$ 120,000 Michigan State Building Authority, Refunding Revenue Bonds, 7.375%
(University of Michigan Adult General Hospital)/(AMBAC INS)/(Escrowed
to Maturity)/(Original Issue Yield: 7.60%), 12/1/2000 Aaa/AAA $ 122,762
---------------------------------------------------------------------
100,000 Michigan State Building Authority, Revenue Bonds
(Series I), 5.50% (Original Issue Yield: 5.60%), 10/1/2004 A1/AA- 104,327
---------------------------------------------------------------------
150,000 Michigan State Building Authority, Revenue Bonds, 6.20% (Grand Rapids
Center)/(BIG INS)/(Escrowed to Maturity), 3/1/2001 Aaa/AAA 159,823
---------------------------------------------------------------------
100,000 Michigan State Comprehensive Transportation Board, Refunding Revenue
Bonds (Series 1988-II), 6.40%,
11/1/1996 A1/AA- 100,000
---------------------------------------------------------------------
100,000 Michigan State Comprehensive Transportation Board, Revenue Refunding
Bonds (Series B-II), 6.55% (Michigan State), 11/1/1997 A1/AA- 102,727
---------------------------------------------------------------------
460,000 Michigan State Hospital Finance Authority, Refunding Revenue Bonds,
5.60% (Oakwood Hospital Obligated Group)/(FGIC INS)/(Original Issue
Yield: 5.70%), 5/1/1999 Aaa/AAA 473,262
---------------------------------------------------------------------
100,000 Michigan State Hospital Finance Authority, Revenue Bonds, 6.45%
(Oakwood Hospital Obligated Group)/(FGIC INS), 7/1/1997 Aaa/AAA 101,864
---------------------------------------------------------------------
100,000 Michigan State Housing Development Authority, Refunding Revenue Bonds
(Series A), 6.40% (FHA/VA mtgs GTD), 6/1/2000 NR/AA+ 103,759
---------------------------------------------------------------------
100,000 Michigan State Housing Development Authority, Rental Housing Revenue
Bonds (Series B), 6.60% (HUD Section 8 LOC), 4/1/1997 NR/A+ 100,758
---------------------------------------------------------------------
100,000 Michigan State, GO UT Recreation Bonds, 3.80% (Original Issue Yield:
3.85%), 11/1/1996 Aa/AA 100,000
---------------------------------------------------------------------
$ 510,000 Michigan State, GO UT Recreation Bonds, 5.50% (Original Issue Yield:
5.55%), 11/1/1999 Aa/AA $ 528,431
---------------------------------------------------------------------
</TABLE>
INDEPENDENCE ONE MICHIGAN MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING
PRINCIPAL MOODY'S
AMOUNT & S&P* VALUE
<S> <S> <C> <C>
LONG-TERM MUNICIPALS--CONTINUED
- -----------------------------------------------------------------------------------
MICHIGAN--CONTINUED
---------------------------------------------------------------------
150,000 Michigan State, GO UT Recreation Bonds, 6.00% (Original Issue Yield:
6.10%), 11/1/2004 Aa/AA 161,994
---------------------------------------------------------------------
150,000 Michigan Strategic Fund, Small Business Refunding Revenue Bonds
(Series A1-A2), 5.90% (SBA GTD),
10/1/2000 Aaa/NR 158,201
---------------------------------------------------------------------
150,000 Midland, MI Water Supply System, Refunding Revenue Bonds, 6.50%,
4/1/1999 A/A+ 157,650
---------------------------------------------------------------------
900,000 Northview Michigan Public School District, GO UT Bonds, 5.05% (MBIA
INS)/(Michigan State GTD), 5/1/2005 AAA 909,603
---------------------------------------------------------------------
500,000 Novi, MI, Refunding GO Bonds, 5.25%, 10/1/2009 A1/A+ 497,890
---------------------------------------------------------------------
90,000 Oakland County, MI Building Authority, GO LT Bonds, 6.70%, 5/1/1997
(@102) NR/NR 93,133
---------------------------------------------------------------------
100,000 Oakland County, MI, GO LT Bonds, 6.80%, 5/1/1999 A1/AA 103,399
---------------------------------------------------------------------
100,000 Oakland County, MI, GO UT Bonds, 6.00% (Waterford Extensions Phase
V), 5/1/1997 Aa/AA 101,162
---------------------------------------------------------------------
100,000 Ottawa County, MI, GO LT Bonds, 6.90%, 4/1/1998 A1/AA- 104,028
---------------------------------------------------------------------
150,000 Ottawa County, MI, GO LT Refunding Bonds, 6.00% (Holland Township
1985 Extension), 8/1/1997 A1/AA- 152,495
---------------------------------------------------------------------
1,000,000 Oxford, MI Area Community Schools, GO UT Bonds, 4.95% (FGIC
INS)/(Michigan State GTD, 5/1/2007 AAA 987,040
---------------------------------------------------------------------
100,000 Portage, MI, GO LT City Share Bonds, 5.90%, 12/1/2003 NR/AA- 107,186
---------------------------------------------------------------------
700,000 Redford, MI University School District, GO UT Bonds, 6.25% (FGIC
INS), 5/1/2007 AAA/AAA 765,716
---------------------------------------------------------------------
350,000 Reeths Puffer Schools, GO UT Refunding Bonds, 4.90% (FGIC
INS)/(Michigan State GTD), 5/1/2003 NR/AAA 353,980
---------------------------------------------------------------------
50,000 Shelby Township, MI, Special Assessment Bonds, 6.30%, 10/1/1999 A/A 52,628
---------------------------------------------------------------------
$ 50,000 Shelby Township, MI, Special Assessment Bonds, 6.40%, 10/1/2000 A/A $ 53,338
---------------------------------------------------------------------
</TABLE>
INDEPENDENCE ONE MICHIGAN MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING
PRINCIPAL MOODY'S
AMOUNT & S&P* VALUE
<S> <S> <C> <C>
LONG-TERM MUNICIPALS--CONTINUED
- -----------------------------------------------------------------------------------
MICHIGAN--CONTINUED
---------------------------------------------------------------------
75,000 Shelby Township, MI, Special Assessment Bonds, 6.50%, 10/1/2000 A/A 81,203
---------------------------------------------------------------------
400,000 St. Clair County, MI, GO LT Water Supply System Bonds, 5.00%
(Burtchville)/(MBIA INS)/(Original Issue Yield: 5.10%), 11/1/2009 Aaa/AAA 390,848
---------------------------------------------------------------------
500,000 Three Rivers Michigan Community Schools, GO UT Bonds, 5.40% (Michigan
State GTD)/(MBIA INS), 5/1/2008 Aaa/AAA 507,405
---------------------------------------------------------------------
765,000 University of Michigan, Revenue Bonds (Series A), 5.40%, 11/15/2008 Aa1/AA 776,697
---------------------------------------------------------------------
350,000 University of Michigan, Revenue Bonds (Series A), 5.60% (Original
Issue Yield: 5.70%), 11/15/2012 Aa1/AA 354,120
---------------------------------------------------------------------
500,000 Washtenaw Community College, MI, GO UT Refunding Bonds, 4.50%,
4/1/2001 Aaa/AAA 500,480
---------------------------------------------------------------------
100,000 Washtenaw County, MI Building Authority, Revenue Bonds (Series 1),
6.60%, 4/1/1998 NR/AA- 103,619
---------------------------------------------------------------------
60,000 Washtenaw County, MI, GO LT Bonds (Series 1), 6.80% (Sewer Disposal
System No. 12), 7/1/2000 NR/AA- 63,959
---------------------------------------------------------------------
100,000 Washtenaw County, MI, GO LT Bonds (Series 1), 6.85% (Sewer Disposal
System No. 12), 7/1/2001 NR/AA- 106,723
---------------------------------------------------------------------
100,000 Wayne County, MI , Airport Revenue Bonds (Series A), 6.00% (Detroit
Metropolitan Airport)/(MBIA INS),
12/1/1997 Aaa/AAA 102,289
---------------------------------------------------------------------
100,000 Wayne County, MI Community College, GO UT Refunding Bonds, 6.15%
(FGIC INS), 4/1/1999 Aaa/AAA 102,213
---------------------------------------------------------------------
440,000 Western School District, MI, GO UT Refunding Bonds, 5.50% (MBIA
Ins)/(Michigan State GTD), 5/1/2002 Aaa/AAA 459,162
---------------------------------------------------------------------
$ 750,000 Williamston, MI Community School District, GO UT Bonds, 4.80% (MBIA
INS)/(Michigan State GTD), 5/1/2004 Aaa/AAA $ 750,233
---------------------------------------------------------------------
500,000 Wixon, MI, UT GO Bonds, 4.70% (AMBAC INS)/(Original Issue Yield:
4.85%), 5/1/2009 Aaa/AAA 463,885
--------------------------------------------------------------------- -------------
</TABLE>
INDEPENDENCE ONE MICHIGAN MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING
PRINCIPAL MOODY'S
AMOUNT & S&P* VALUE
<S> <S> <C> <C>
LONG-TERM MUNICIPALS--CONTINUED
- -----------------------------------------------------------------------------------
MICHIGAN--CONTINUED
---------------------------------------------------------------------
Total 23,534,802
--------------------------------------------------------------------- -------------
VERMONT--0.4%
---------------------------------------------------------------------
100,000 Vermont State Student Assistance Corp., Educational Loan Refunding
Revenue Bonds (Series A), 6.00% (AMBAC INS), 12/15/1996 AAA 100,256
--------------------------------------------------------------------- -------------
WISCONSIN--0.4%
---------------------------------------------------------------------
100,000 Wisconsin Housing & Economic Development Authority, GO Refunding
Revenue Bonds (Series 1), 6.40%, 4/1/1998 Aa/A+ 102,079
--------------------------------------------------------------------- -------------
TOTAL LONG-TERM MUNICIPALS (IDENTIFIED COST $23,786,404) 23,987,768
--------------------------------------------------------------------- -------------
MUTUAL FUNDS--3.3%
- -----------------------------------------------------------------------------------
815,000 Goldman Sachs Tax Exempt Fund (at net asset value) 815,000
--------------------------------------------------------------------- -------------
TOTAL INVESTMENTS (IDENTIFIED COST $24,601,404)(a) $ 24,802,768
--------------------------------------------------------------------- -------------
</TABLE>
(a) The cost of investments for federal tax purposes amounts to $24,601,404. The
net unrealized appreciation of investments on a federal tax basis amounts to
$201,364 which is comprised of $263,880 appreciation and $62,516
depreciation at October 31, 1996.
* Please refer to the Appendix of the Statement of Additional Information for
an explanation of the credit ratings.
Note: The categories of investments are shown as a percentage of net assets
($24,573,831) at October 31, 1996.
The following acronyms are used throughout this portfolio:
AMBAC--American Municipal Bond Assurance Corporation
BIG--Bond Investors Guaranty
FGIC--Financial Guaranty Insurance Company
FHA/VA--Federal Housing Administration/Veterans Administration
FSA--Financial Security Assurance
GO--General Obligation
GTD--Guaranty
INS--Insured
HUD--Department of Housing and Urban Development
INDEPENDENCE ONE MICHIGAN MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
LOC--Letter of Credit
LT--Limited Tax
MBIA--Municipal Bond Investors Assurance
SBA--Small Business Association
UT--Unlimited Tax
(See Notes which are an integral part of the Financial Statements)
INDEPENDENCE ONE MICHIGAN MUNICIPAL BOND FUND
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- ---------------------------------------------------------------------------------------------------
Total investments in securities, at value (identified and tax cost $24,601,404) $ 24,802,768
- ---------------------------------------------------------------------------------------------------
Cash 1,079
- ---------------------------------------------------------------------------------------------------
Income receivable 469,693
- ---------------------------------------------------------------------------------------------------
Deferred expenses 6,337
- --------------------------------------------------------------------------------------------------- -------------
Total assets 25,279,877
- ---------------------------------------------------------------------------------------------------
LIABILITIES:
- ---------------------------------------------------------------------------------------
Payable for investments purchased $ 593,066
- ---------------------------------------------------------------------------------------
Income distribution payable 86,562
- ---------------------------------------------------------------------------------------
Accrued expenses 26,418
- --------------------------------------------------------------------------------------- ----------
Total liabilities 706,046
- --------------------------------------------------------------------------------------------------- -------------
NET ASSETS for 2,443,881 shares outstanding $ 24,573,831
- --------------------------------------------------------------------------------------------------- -------------
NET ASSETS CONSIST OF:
- ---------------------------------------------------------------------------------------------------
Paid-in capital $ 24,448,833
- ---------------------------------------------------------------------------------------------------
Net unrealized appreciation of investments 201,364
- ---------------------------------------------------------------------------------------------------
Accumulated net realized loss on investments (76,366)
- --------------------------------------------------------------------------------------------------- -------------
Total Net Assets 24,573,831
- --------------------------------------------------------------------------------------------------- -------------
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE:
- ---------------------------------------------------------------------------------------------------
$24,573,831 / 2,443,881 shares outstanding $10.06
- --------------------------------------------------------------------------------------------------- -------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
INDEPENDENCE ONE MICHIGAN MUNICIPAL BOND FUND
STATEMENT OF OPERATIONS
SIX MONTHS ENDED OCTOBER 31, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
- -----------------------------------------------------------------------------------------------------
Interest $ 576,078
- -----------------------------------------------------------------------------------------------------
EXPENSES:
- -----------------------------------------------------------------------------------------
Investment advisory fee $ 91,470
- -----------------------------------------------------------------------------------------
Administrative personnel and services fee 13,460
- -----------------------------------------------------------------------------------------
Custodian fees 8,152
- -----------------------------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses 11,000
- -----------------------------------------------------------------------------------------
Directors'/Trustees' fees 1,670
- -----------------------------------------------------------------------------------------
Auditing fees 3,943
- -----------------------------------------------------------------------------------------
Legal fees 1,651
- -----------------------------------------------------------------------------------------
Portfolio accounting fees 29,148
- -----------------------------------------------------------------------------------------
Share registration costs 5,914
- -----------------------------------------------------------------------------------------
Printing and postage 5,002
- -----------------------------------------------------------------------------------------
Insurance premiums 1,838
- -----------------------------------------------------------------------------------------
Miscellaneous 2,852
- ----------------------------------------------------------------------------------------- ----------
Total expenses 176,100
- -----------------------------------------------------------------------------------------
Waivers--
- -----------------------------------------------------------------------------------------
Waiver of investment advisory fee ($ 84,449)
- ------------------------------------------------------------------------------
Waiver of administrative personnel and services fee (8,049)
- ------------------------------------------------------------------------------ ---------
Total waivers (92,498)
- ----------------------------------------------------------------------------------------- ----------
Net expenses 83,602
- ----------------------------------------------------------------------------------------------------- ----------
Net investment income 492,476
- ----------------------------------------------------------------------------------------------------- ----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
- -----------------------------------------------------------------------------------------------------
Net realized loss on investments (75,982)
- -----------------------------------------------------------------------------------------------------
Net change in unrealized appreciation of investments 320,523
- ----------------------------------------------------------------------------------------------------- ----------
Net realized and unrealized gain on investments 244,541
- ----------------------------------------------------------------------------------------------------- ----------
Change in net assets resulting from operations $ 737,017
- ----------------------------------------------------------------------------------------------------- ----------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
INDEPENDENCE ONE MICHIGAN MUNICIPAL BOND FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS ENDED
(UNAUDITED) PERIOD ENDED
OCTOBER 31, 1996 APRIL 30, 1996*
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- ----------------------------------------------------------------------
OPERATIONS--
- ----------------------------------------------------------------------
Net investment income $ 492,476 $ 443,584
- ----------------------------------------------------------------------
Net realized gain (loss) on investments ($75,982 net loss and $2,733
net gain, respectively, as computed for federal tax purposes) (75,982) 2,733
- ----------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) 320,523 (119,159)
- ---------------------------------------------------------------------- ---------------------- ------------------
Change in net assets resulting from operations 737,017 327,158
- ---------------------------------------------------------------------- ---------------------- ------------------
DISTRIBUTIONS TO SHAREHOLDERS--
- ----------------------------------------------------------------------
Distributions from net investment income (492,476) (443,584)
- ----------------------------------------------------------------------
Distributions from net realized gains (3,117) --
- ---------------------------------------------------------------------- ---------------------- ------------------
Change in net assets resulting from distributions to shareholders (495,593) (443,584)
- ---------------------------------------------------------------------- ---------------------- ------------------
SHARE TRANSACTIONS--
- ----------------------------------------------------------------------
Proceeds from sale of shares 2,380,163 28,064,937
- ----------------------------------------------------------------------
Net asset value of shares issued to shareholders in payment of
distributions declared 7,276 --
- ----------------------------------------------------------------------
Cost of shares redeemed (3,178,294) (2,825,249)
- ---------------------------------------------------------------------- ---------------------- ------------------
Change in net assets resulting from share transactions (790,855) 25,239,688
- ---------------------------------------------------------------------- ---------------------- ------------------
Change in net assets (549,431) 25,123,262
- ----------------------------------------------------------------------
NET ASSETS:
- ----------------------------------------------------------------------
Beginning of period 25,123,262 --
- ---------------------------------------------------------------------- ---------------------- ------------------
End of period $ 24,573,831 $ 25,123,262
- ---------------------------------------------------------------------- ---------------------- ------------------
</TABLE>
*For the period from November 20, 1995 (date of initial public investment) to
April 30, 1996.
(See Notes which are an integral part of the Financial Statements)
INDEPENDENCE ONE MICHIGAN MUNICIPAL BOND FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
(UNAUDITED) PERIOD ENDED
OCTOBER 31, APRIL 30,
1996 1996(a)
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.95 $ 10.00
- -------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- -------------------------------------------------------------------------------
Net investment income 0.20 0.17
- -------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments 0.11 (0.05)
- ------------------------------------------------------------------------------- ------- -------
Total from investment operations 0.31 0.12
- ------------------------------------------------------------------------------- ------- -------
LESS DISTRIBUTIONS
- -------------------------------------------------------------------------------
Distributions from net investment income (0.20) (0.17)
- -------------------------------------------------------------------------------
Distributions from net realized gain on investment transactions (0.00)(b) --
- ------------------------------------------------------------------------------- ------- -------
TOTAL DISTRIBUTIONS (0.20) (0.17)
- ------------------------------------------------------------------------------- ------- -------
NET ASSET VALUE, END OF PERIOD $ 10.06 $ 9.95
- ------------------------------------------------------------------------------- ------- -------
TOTAL RETURN (c) 3.19% 1.21%
- -------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- -------------------------------------------------------------------------------
Expenses 0.69%* 0.57%*
- -------------------------------------------------------------------------------
Net investment income 4.04%* 3.83%*
- -------------------------------------------------------------------------------
Expense waiver/reimbursement (d) 0.76%* 0.76%*
- -------------------------------------------------------------------------------
SUPPLEMENTAL DATA
- -------------------------------------------------------------------------------
Net assets, end of period (000 omitted) $24,574 $25,123
- -------------------------------------------------------------------------------
Portfolio turnover 36% 39%
- -------------------------------------------------------------------------------
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from November 20, 1995 (date of inital
public investment) to April 30, 1996.
(b) Distribution from net realized gain was less than one cent per share.
(c) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
(d) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
INDEPENDENCE ONE MUTUAL FUNDS
COMBINED NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
(1) ORGANIZATION
Independence One Mutual Funds (the "Trust") is registered under the Investment
Company Act of 1940, as amended (the "Act"), as an open-end management
investment company. The Trust consists of seven portfolios. The financial
statements of the following portfolios (individually referred to as the "Fund",
or collectively as the "Funds") are presented herein:
<TABLE>
<CAPTION>
PORTFOLIO NAME INVESTMENT OBJECTIVE
<S> <C>
Independence One U.S. Government Securities Fund ("U.S. The investment objective of the Fund is
Government Securities Fund")(d) to seek high current income.
Independence One Fixed Income Fixed Fund ("Fixed Income The investment objective of the Fund is
Fund")(d) to seek total return.
Independence One Michigan Municipal Bond Fund ("Michigan The investment objective is to provide current
Municipal Bond Fund")(n) income which is exempt from federal regular income
tax and the personal income taxes imposed by the
state of Michigan and Michigan municipalities.
</TABLE>
(d) Diversified portfolio
(n) Non-diversified portfolio
The financial statements of the other portfolios are presented separately. The
assets of each portfolio are segregated and a shareholder's interest is limited
to the portfolio in which shares are held.
(2) SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Funds in the preparation of their financial statements. These
policies are in conformity with generally accepted accounting principles.
INVESTMENT VALUATIONS--Municipal bonds are valued by an independent pricing
service, taking into consideration yield, liquidity, risk, credit quality,
coupon, maturity, type of issue, and any other factors or market data the
pricing service deems relevant. U.S. government securities, listed
corporate bonds, other fixed income and asset-backed securities, and
unlisted securities and private placement securities are generally valued
at the mean of the latest bid and asked price as furnished by an
independent pricing service. Short-term securities are
INDEPENDENCE ONE MUTUAL FUNDS
- --------------------------------------------------------------------------------
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 U.S. Government Securities Fund
and Fixed Income 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 Funds to monitor, on a daily basis,
the market value of each repurchase agreement's collateral to ensure that
the value of collateral at least equals the repurchase price to be paid
under the repurchase agreement transaction.
The Funds will only enter into repurchase agreements with banks and other
recognized financial institutions, such as broker/dealers, which are deemed
by the Funds' adviser to be creditworthy pursuant to the guidelines and/or
standards reviewed or established by the Board of Trustees (the
"Trustees"). Risks may arise from the potential inability of counterparties
to honor the terms of the repurchase agreement. Accordingly, the Funds
could receive less than the repurchase price on the sale of collateral
securities.
INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS--Interest income and expenses
are accrued daily. Bond premium and discount, if applicable, are amortized
as required by the Internal Revenue Code, as amended (the "Code").
Distributions to shareholders are recorded on the ex-dividend date.
FEDERAL TAXES--It is the Funds' policy to comply with the provisions of the
Code applicable to regulated investment companies and to distribute to
shareholders each year substantially all of their income. Accordingly, no
provisions for federal tax are necessary.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Funds may engage in
when-issued or delayed delivery transactions. The Funds record when-issued
securities on the trade date and maintain security positions such that
sufficient liquid assets will be available to make payment for the
securities purchased. Securities purchased on a when-issued or delayed
delivery basis are marked to market daily and begin earning interest on the
settlement date.
DEFERRED EXPENSES--The costs incurred by each 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 over a period not to exceed five years from each 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.
INDEPENDENCE ONE MUTUAL FUNDS
- --------------------------------------------------------------------------------
(3) SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value) for each
Fund.
Transactions in shares were as follows:
<TABLE>
<CAPTION>
U.S. GOVERNMENT SECURITIES FUND
SIX MONTHS ENDED YEAR ENDED
OCTOBER 31, 1996 APRIL 30, 1996
<S> <C> <C>
Shares sold 1,135,561 2,192,059
- ------------------------------------------------------------------
Shares issued to shareholders in payment of distributions declared 19,508 --
- ------------------------------------------------------------------
Shares redeemed (1,118,396) (1,329,593)
- ------------------------------------------------------------------ ------------ --------------------
Net change resulting from Share transactions 36,673 862,466
- ------------------------------------------------------------------ ------------ --------------------
<CAPTION>
FIXED INCOME FUND
SIX MONTHS ENDED PERIOD ENDED
OCTOBER 31, 1996 APRIL 30, 1996(a)
<S> <C> <C>
Shares sold 1,142,100 6,455,118
- ------------------------------------------------------------------
Shares issued to shareholders in payment of distributions declared 109,170 --
- ------------------------------------------------------------------
Shares redeemed (600,897) (112,661)
- ------------------------------------------------------------------ ------------ --------------------
Net change resulting from Share transactions 650,373 6,342,457
- ------------------------------------------------------------------ ------------ --------------------
</TABLE>
(a) For the period from October 23, 1995 (date of initial public investment) to
April 30, 1996.
<TABLE>
<CAPTION>
MICHIGAN MUNICIPAL BOND FUND
SIX MONTHS ENDED PERIOD ENDED
OCTOBER 31, 1996 APRIL 30, 1996(b)
<S> <C> <C>
Shares sold 238,379 2,805,078
- ------------------------------------------------------------------
Shares issued to shareholders in payment of distributions declared 730 --
- ------------------------------------------------------------------
Shares redeemed (320,287) (280,019)
- ------------------------------------------------------------------ ---------- --------------------
Net change resulting from Share transactions (81,178) 2,525,059
- ------------------------------------------------------------------ ---------- --------------------
</TABLE>
(b) For the period from November 20, 1995 (date of initial public investment) to
April 30, 1996.
INDEPENDENCE ONE MUTUAL FUNDS
- --------------------------------------------------------------------------------
(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE--Michigan National Bank, the Funds' investment adviser
(the "Adviser"), receives for its services an annual investment advisory fee
based on a percentage of each Fund's average daily net assets. (see below).
<TABLE>
<CAPTION>
PORTFOLIO NAME INVESTMENT ADVISORY FEE
<S> <C>
U.S. Government Securities Fund 0.70%
Fixed Income Fund 0.75%
Michigan Municipal Bond Fund 0.75%
</TABLE>
The Adviser may voluntarily choose to waive any portion of its fee. The Adviser
can modify or terminate this voluntary waiver at any time at its sole
discretion.
ADMINISTRATIVE FEE--Federated Administrative Services ("FAS") provides the Funds
with certain administrative personnel and services. The fee paid to FAS is based
on the level of average aggregate net assets of the Trust for the period.
TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES--Federated Services
Company ("FServ"), through its subsidiary, Federated Shareholder Services
Company ("FSSC") serves as transfer and dividend disbursing agent for the Funds.
The fee paid to FSSC is based on the size, type, and number of accounts and
transactions made by shareholders.
PORTFOLIO ACCOUNTING FEES--FServ maintains the Funds' accounting records for
which it receives a fee. The fee is based on the level of each Fund's average
daily net assets for the period, plus out-of-pocket expenses.
CUSTODIAN FEES--Michigan National Bank is the Funds' custodian. The fee is based
on the level of each Fund's average daily net assets for the period, plus
out-of-pocket expenses.
INDEPENDENCE ONE MUTUAL FUNDS
- --------------------------------------------------------------------------------
ORGANIZATIONAL EXPENSES--Organizational expenses were borne initially by FAS.
The Funds have agreed to reimburse FAS for the organizational expenses during
the five year period following effective date. For the six months ended October
31, 1996, the Funds paid the following pursuant to this agreement:
<TABLE>
<CAPTION>
EXPENSES OF AMOUNT REIMBURSED TO
ORGANZING THE FAS FOR THE SIX MONTHS
PORTFOLIO NAME FUND ENDED OCTOBER 31, 1996
<S> <C> <C>
U.S. Government Securities Fund $49,664 $9,773
Fixed Income Fund 21,477 1,432
Michigan Municipal Bond Fund 24,175 1,612
</TABLE>
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 six
months ended October 31, 1996, were as follows:
<TABLE>
<CAPTION>
PORTFOLIO NAME PURCHASES SALES
<S> <C> <C>
U.S. Government Securities Fund $45,402,777 $46,051,288
Fixed Income Fund 14,210,114 8,282,905
Michigan Municipal Bond Fund 8,376,538 9,477,728
</TABLE>
(6) CONCENTRATION OF CREDIT RISK
Since Michigan Municipal Bond Fund invests a substantial portion of its assets
in issuers located in one state, it will be more susceptible to factors
adversely affecting issuers of that state than would be a comparable tax-exempt
mutual fund that invests nationally. In order to reduce the credit risk
associated with such factors, at October 31, 1996, 60.9% of the securities in
the portfolio of investments are backed by letters of credit or bond insurance
of various financial institutions and financial guaranty assurance agencies. The
value of investments insured by or supported (backed) by a letter of credit from
any one institution or agency did not exceed 26.9% of total investments.
TRUSTEES OFFICERS
- --------------------------------------------------------------------------------
Robert E. Baker Edward C. Gonzales
Harold Berry President and Treasurer
Clarence G. Frame Jeffrey W. Sterling
Harry J. Nederlander Vice President and Assistant Treasurer
Thomas S. Wilson Jay S. Neuman
Secretary
Gail Cagney
Assistant Secretary
Mutual funds are not bank deposits or obligations, are not guaranteed by any
bank, and are not insured or guaranteed by the U.S. government, the Federal
Deposit Insurance Corporation, the Federal Reserve Board, or any other
government agency. Investment in mutual funds involves investment risk,
including possible loss of principal.
This report is authorized for distribution to prospective investors only when
preceded or accompanied by the Funds' prospectus which contains facts
concerning their objectives and policies, management fees, expenses and other
information.
INDEPENDENCE
ONE(R)
MUTUAL
FUNDS
COMBINED
SEMI-ANNUAL REPORT
TO SHAREHOLDERS
OCTOBER 31, 1996
Independence One Prime
Money Market Fund
Independence One U.S. Treasury
Money Market Fund
Independence One Michigan
Municipal Cash Fund
[LOGO]
MICHIGAN
NATIONAL
BANK
Investment Adviser
[LOGO] Federated Investors
Since 1955
Federated Investors Tower
Pittsburgh, PA 15222-3779
Federated Securities Corp. is the distributor of the Funds
and is a subsidiary of Federated Investors.
[LOGO]
Independence One
Mutual Funds
Cusip 453777708
Cusip 453777203
Cusip 453777302
Cusip 453777401
0112904 (12/96)
PRESIDENT'S MESSAGE
- --------------------------------------------------------------------------------
Dear Investor:
I am pleased to present the Semi-Annual Report of the Independence One Money
Market Funds for the six-month period from May 1, 1996 through October 31, 1996.
This report contains complete financial information for each fund--beginning
with a discussion by the funds' portfolio managers, followed by a complete list
of investments and financial statements.
Individual fund highlights are below. Each Independence One Money Market Fund is
a convenient, stable way to put your cash to work pursuing competitive money
market income--every day.*
INDEPENDENCE ONE PRIME MONEY MARKET FUND, a high-quality portfolio of money
market securities, paid a total of $0.02 per share in dividends for Class A
Shares and $0.03 per share in dividends for Class B Shares over the reporting
period. Total assets in the fund continued to grow, from $396.7 million on the
first day of the period to $473.9 million at the end of the period.
INDEPENDENCE ONE U.S. TREASURY MONEY MARKET FUND, a portfolio of U.S. Treasury
money market securities, paid a total of $0.02 per share in dividends over the
reporting period. Assets in the fund stood at $280 million at the end of the
period.
INDEPENDENCE ONE MICHIGAN MUNICIPAL CASH FUND, a high-quality portfolio of
Michigan municipal money market securities, paid a total of $0.02 per share in
double tax-free dividends over the reporting period.** Assets in the fund
totaled $89.4 million on the last day of the period.
Thank you for keeping your ready cash working--and accessible--through one or
more of the Independence One Money Market Funds.
Sincerely,
/s/ Edward C. Gonzales
Edward C. Gonzales
President
December 15, 1996
* Although money market funds seek to maintain a stable net asset value of
$1.00 per share, there is no assurance that they will be able to do so. An
investment in the funds is neither insured nor guaranteed by the U.S.
government.
** Income may be subject to the federal alternative minimum tax.
INVESTMENT REVIEW
- --------------------------------------------------------------------------------
Q
While the Federal Reserve Board (the "Fed") took no action on interest
rates during the period, money market rates nevertheless bounced back and
forth with market sentiment. Can you comment?
A
Mixed economic news and uncertainty about Fed action have kept the market
speculating about the future of interest rates. Interest rate expectations
have fluctuated dramatically in 1996. Initial beliefs that the federal
funds target rate was headed toward 6.00% pushed short-term rates upward. These
expectations faded quickly however, when the Fed failed to change monetary
policy. The Fed's "wait-and-see" attitude, and the market's uncertainty about
the future direction of interest rates, has worked to hold money market rates in
a narrow range.
Q
In this environment, how did the Independence One Money Market Funds
perform for shareholders in terms of income and 7-day net yield during the
six-month reporting period ended October 31, 1996?
A
INDEPENDENCE ONE PRIME MONEY MARKET FUND
Independence One Prime Money Market Fund earned a total return of 2.44% for
Class A Shares and 2.57% for Class B Shares during the six-month period
ended October 31, 1996.* The
7-day net yield began the period on May 1, 1996 at 4.77% and ended the period on
October 31, 1996 at the same rate of 4.77% for Class A Shares.* The yield for
Class B Shares was 25 basis points higher at 5.02% on both dates.* The average
maturity for the fund as of October 31, 1996 was 43 days.
INDEPENDENCE ONE U.S. TREASURY MONEY MARKET FUND
Independence One U.S. Treasury Money Market Fund earned a total return of 2.41%
during the six-month period ended October 31, 1996.* The 7-day net yield rose
from 4.71% on May 1, 1996 to 4.75% on October 31, 1996.* The average maturity
for this fund as of October 31, 1996 was 45 days.
INDEPENDENCE ONE MICHIGAN MUNICIPAL CASH FUND
Independence One Michigan Municipal Cash Fund earned a total return of 1.52%
during the six-month period ended October 31, 1996.* The 7-day net yield fell
slightly from 3.25% on May 1, 1996 to 3.08% on October 31, 1996.* The average
maturity for the fund as of October 31, 1996 was 26 days.
* Performance quoted represents past performance and is not indicative of future
results. Yields will vary.
- --------------------------------------------------------------------------------
Q
As 1996 draws to a close, what is your outlook for 1997?
A
At the beginning of September 1996, the market braced itself for a hike in
interest rates by the Fed. Traders felt the Fed would react to rising
inflation fears brought on by a strong labor market, soaring consumer
confidence and a spike in oil prices. By the end of October 1996, sentiment had
changed significantly as employment growth moderated, consumer spending slowed
and a continuation of favorable inflation reports was seen at both the producer
and consumer level. Gross Domestic Product slowed from a torrid 4.7% in the
second quarter of 1996 to a more sustainable 2.0% in the third quarter.
Looking ahead, we expect the rally to continue into early 1997 as more signs of
an economic slowdown manifest themselves. If this turns out to be a "soft
landing" in the midst of the continuation of the current 5.5 year-long
expansion, the fall in rates will most likely end as the economy recovers its
momentum. However, if some unforeseen shock causes the economy to slip into a
recession, we would expect the fixed income markets to rally further in
anticipation of an easing move by the Fed. As always, the Independence One Money
Market Funds' portfolio managers will be actively monitoring developments to
best serve the interests of shareholders.
INDEPENDENCE ONE PRIME MONEY MARKET FUND
PORTFOLIO OF INVESTMENTS
OCTOBER 31, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
NOTES--7.4% ------------------------------------------------------------------------------------
$ 15,000,000 Bank of America Illinois, 5.37%-5.39%, 11/18/1996-1/7/1997 $ 14,999,993
---------------------------------------------------------------------------------
10,000,000 Fifth Third Bancorp, 5.27%, 11/15/1996 9,999,958
---------------------------------------------------------------------------------
10,000,000 NBD Bank, Michigan, 5.37%, 11/27/1996 10,000,000
--------------------------------------------------------------------------------- --------------
TOTAL BANK NOTES 34,999,951
--------------------------------------------------------------------------------- --------------
CERTIFICATES OF DEPOSIT--30.6%
- ------------------------------------------------------------------------------------------------
10,000,000 ABN-AMRO Bank NV, New York, 5.37%, 11/7/1996 10,000,048
---------------------------------------------------------------------------------
15,000,000 Bank of Nova Scotia, Toronto, 5.36%-5.50%, 12/16/1996 15,001,118
---------------------------------------------------------------------------------
10,000,000 (a)Bankers Trust New York Corp., 5.493%, 12/11/1996 10,000,000
---------------------------------------------------------------------------------
15,000,000 Banque Nationale de Paris, 5.3%, 12/16/1996 15,000,186
---------------------------------------------------------------------------------
20,000,000 Canadian Imperial Bank of Commerce, Toronto, 5.36%-5.40%,
11/5/1996-1/17/1997 20,000,303
---------------------------------------------------------------------------------
5,000,000 Deutsche Bank, AG, 5.58%, 2/3/1997 4,999,873
---------------------------------------------------------------------------------
10,000,000 Deutsche Bank, New York, 5.27%, 12/16/1996 10,000,124
---------------------------------------------------------------------------------
20,000,000 National Westminster Bank, New Jersey, 5.39%-5.46%,
1/6/1997-1/21/1997 20,001,203
---------------------------------------------------------------------------------
15,000,000 Societe Generale, New York, 5.29%-5.36%, 11/13/1996-12/10/1996 15,000,140
---------------------------------------------------------------------------------
10,000,000 Swiss Bank Corp., Basle, 5.37%, 12/18/1996 10,001,926
---------------------------------------------------------------------------------
15,000,000 Westdeutsche Landesbank Girozentrale, 5.38%, 1/31/1997 15,000,374
--------------------------------------------------------------------------------- --------------
TOTAL CERTIFICATES OF DEPOSIT 145,005,295
--------------------------------------------------------------------------------- --------------
(b) COMMERCIAL PAPER--39.8%
- ------------------------------------------------------------------------------------------------
AGRICULTURE--3.0%
---------------------------------------------------------------------------------
14,500,000 Cargill Financial Services, 5.801%, 2/28/1997 14,233,985
--------------------------------------------------------------------------------- --------------
CHEMICALS--4.2%
---------------------------------------------------------------------------------
10,000,000 Akzo Nobel Inc., 5.38%, 12/30/1996 9,913,794
---------------------------------------------------------------------------------
10,000,000 Monsanto Co., 5.47%, 11/13/1996 9,982,167
--------------------------------------------------------------------------------- --------------
Total 19,895,961
--------------------------------------------------------------------------------- --------------
</TABLE>
INDEPENDENCE ONE PRIME MONEY MARKET FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<S> <S> <C>
(b) COMMERCIAL PAPER--CONTINUED
- ------------------------------------------------------------------------------------------------
ELECTRONIC TECHNOLOGY--3.2%
---------------------------------------------------------------------------------
$ 15,000,000 Raytheon Co., 5.261%, 11/12/1996 $ 14,975,983
--------------------------------------------------------------------------------- --------------
FINANCE--22.0%
---------------------------------------------------------------------------------
15,000,000 American General Corp., 5.35%, 12/5/1996 14,925,767
---------------------------------------------------------------------------------
15,000,000 Asset Securitization Cooperative Corp., 5.35%, 12/12/1996 14,910,313
---------------------------------------------------------------------------------
5,000,000 Bankers Trust New York Corp., 5.66%, 2/14/1997 5,000,000
---------------------------------------------------------------------------------
10,000,000 Commerzbank U.S. Finance, Inc., 5.47%, 11/15/1996 9,981,951
---------------------------------------------------------------------------------
10,000,000 Dean Witter, Discover & Co., 5.56%, 1/2/1997 9,907,344
---------------------------------------------------------------------------------
10,000,000 Fleet Funding Corp., 5.434%, 11/4/1996 9,995,500
---------------------------------------------------------------------------------
15,000,000 Ford Motor Credit Corp., 5.35%, 12/6/1996 14,923,438
---------------------------------------------------------------------------------
10,000,000 Pitney Bowes Credit Corp., 5.49%, 4/28/1997 9,738,933
---------------------------------------------------------------------------------
15,000,000 Transamerica Finance Corp., 5.35%, 12/6/1996-12/13/1996 14,913,394
--------------------------------------------------------------------------------- --------------
Total 104,296,640
--------------------------------------------------------------------------------- --------------
HEALTH TECHNOLOGY--3.2%
---------------------------------------------------------------------------------
15,000,000 Abbott Laboratories, 5.337%, 12/3/1996 14,930,400
--------------------------------------------------------------------------------- --------------
UTILITIES--4.2%
---------------------------------------------------------------------------------
20,250,000 Pacificorp, 5.41%-5.51%, 11/15/1996-1/24/1997 20,140,319
--------------------------------------------------------------------------------- --------------
TOTAL COMMERCIAL PAPER 188,473,288
--------------------------------------------------------------------------------- --------------
CORPORATE BONDS--2.1%
- ------------------------------------------------------------------------------------------------
FINANCE--RETAIL--2.1%
---------------------------------------------------------------------------------
10,000,000 General Electric Capital Corp., 5.55%, 3/11/1997 9,986,516
--------------------------------------------------------------------------------- --------------
GOVERNMENT AGENCIES--2.8%
- ------------------------------------------------------------------------------------------------
FEDERAL HOME LOAN BANK--2.8%
---------------------------------------------------------------------------------
8,500,000 5.29%, 3/5/1997 8,500,000
---------------------------------------------------------------------------------
5,000,000 5.69%, 3/27/1997 5,000,000
--------------------------------------------------------------------------------- --------------
TOTAL GOVERNMENT AGENCIES 13,500,000
--------------------------------------------------------------------------------- --------------
</TABLE>
INDEPENDENCE ONE PRIME MONEY MARKET FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<S> <S> <C>
(c) REPURCHASE AGREEMENTS--17.3%
- ------------------------------------------------------------------------------------------------
$ 25,784,000 Daiwa Securities America, Inc., 5.5%, dated 10/31/1996,
due 11/1/1996 $ 25,784,000
---------------------------------------------------------------------------------
30,000,000 Donaldson, Lufkin and Jenrette Securities Corp., 5.5%,
dated 10/31/1996, due 11/1/1996 30,000,000
---------------------------------------------------------------------------------
26,000,000 First Chicago Capital Markets, Inc., 5.5%, dated 10/31/1996,
due 11/1/1996 26,000,000
--------------------------------------------------------------------------------- --------------
TOTAL REPURCHASE AGREEMENTS 81,784,000
--------------------------------------------------------------------------------- --------------
TOTAL INVESTMENTS (AT AMORTIZED COST) (D) $ 473,749,050
--------------------------------------------------------------------------------- --------------
</TABLE>
(a) Denotes variable rate obligation for which the current rate and next demand
date are shown.
(b) Each issue shows the rate of discount at the time of purchase.
(c) The repurchase agreements are fully collateralized by U.S. Treasury
obligations based on market prices at the date of the portfolio.
(d) Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($473,902,342) at October 31, 1996.
(See Notes which are an integral part of the Financial Statements)
INDEPENDENCE ONE PRIME MONEY MARKET FUND
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- ---------------------------------------------------------------------------------
Investments in repurchase agreements $ 81,784,000
- ---------------------------------------------------------------------------------
Investments in securities 391,965,050
- --------------------------------------------------------------------------------- --------------
Total investments in securities, at amortized cost and value $ 473,749,050
- -------------------------------------------------------------------------------------------------
Cash 595
- -------------------------------------------------------------------------------------------------
Income receivable 2,168,611
- ------------------------------------------------------------------------------------------------- --------------
Total assets 475,918,256
- -------------------------------------------------------------------------------------------------
LIABILITIES:
- ---------------------------------------------------------------------------------
Income distribution payable 1,949,534
- ---------------------------------------------------------------------------------
Accrued expenses 66,380
- --------------------------------------------------------------------------------- --------------
Total liabilities 2,015,914
- ------------------------------------------------------------------------------------------------- --------------
NET ASSETS for 473,902,342 shares outstanding $ 473,902,342
- ------------------------------------------------------------------------------------------------- --------------
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE:
- -------------------------------------------------------------------------------------------------
CLASS A SHARES:
- -------------------------------------------------------------------------------------------------
$383,210,707 / 383,210,707 shares outstanding $1.00
- ------------------------------------------------------------------------------------------------- --------------
CLASS B SHARES:
- -------------------------------------------------------------------------------------------------
$90,691,635 / 90,691,635 shares outstanding $1.00
- ------------------------------------------------------------------------------------------------- --------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
INDEPENDENCE ONE PRIME MONEY MARKET FUND
STATEMENT OF OPERATIONS
SIX MONTHS ENDED OCTOBER 31, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
- ---------------------------------------------------------------------------------------------------
Interest $ 11,504,582
- ---------------------------------------------------------------------------------------------------
EXPENSES:
- -------------------------------------------------------------------------------------
Investment advisory fee $ 850,537
- -------------------------------------------------------------------------------------
Administrative personnel and services fee 234,504
- -------------------------------------------------------------------------------------
Custodian fees 39,744
- -------------------------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses 57,960
- -------------------------------------------------------------------------------------
Directors'/Trustees' fees 7,728
- -------------------------------------------------------------------------------------
Auditing fees 7,544
- -------------------------------------------------------------------------------------
Legal fees 2,576
- -------------------------------------------------------------------------------------
Portfolio accounting fees 50,525
- -------------------------------------------------------------------------------------
Shareholder services fee--Class A Shares 417,930
- -------------------------------------------------------------------------------------
Share registration costs 20,792
- -------------------------------------------------------------------------------------
Printing and postage 22,816
- -------------------------------------------------------------------------------------
Insurance premiums 4,784
- -------------------------------------------------------------------------------------
Miscellaneous 2,024
- ------------------------------------------------------------------------------------- ------------
Total expenses 1,719,464
- -------------------------------------------------------------------------------------
Waiver--
- -------------------------------------------------------------------------------------
Waiver of investment advisory fee (531,586)
- ------------------------------------------------------------------------------------- ------------
Net expenses 1,187,878
- --------------------------------------------------------------------------------------------------- -------------
Net investment income $ 10,316,704
- --------------------------------------------------------------------------------------------------- -------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
INDEPENDENCE ONE PRIME MONEY MARKET FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS ENDED
(UNAUDITED) YEAR ENDED
OCTOBER 31, 1996 APRIL 30, 1996
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- ----------------------------------------------------------------------
OPERATIONS--
- ----------------------------------------------------------------------
Net investment income $ 10,316,704 $ 18,578,193
- ---------------------------------------------------------------------- ---------------------- -----------------
DISTRIBUTIONS TO SHAREHOLDERS--
- ----------------------------------------------------------------------
Distributions from net investment income
- ----------------------------------------------------------------------
Class A Shares (8,031,575) (14,939,049)
- ----------------------------------------------------------------------
Class B Shares (2,285,129) (3,639,144)
- ---------------------------------------------------------------------- ---------------------- -----------------
Change in net assets resulting from distributions to shareholders (10,316,704) (18,578,193)
- ---------------------------------------------------------------------- ---------------------- -----------------
SHARE TRANSACTIONS--
- ----------------------------------------------------------------------
Proceeds from sale of shares 1,350,098,044 2,512,058,572
- ----------------------------------------------------------------------
Net asset value of shares issued to shareholders in payment of
distributions declared 4,004,793 8,436,607
- ----------------------------------------------------------------------
Cost of shares redeemed (1,276,971,150) (2,357,331,372)
- ---------------------------------------------------------------------- ---------------------- -----------------
Change in net assets resulting from share transactions 77,131,687 163,163,807
- ---------------------------------------------------------------------- ---------------------- -----------------
Change in net assets 77,131,687 163,163,807
- ----------------------------------------------------------------------
NET ASSETS:
- ----------------------------------------------------------------------
Beginning of period 396,770,655 233,606,848
- ---------------------------------------------------------------------- ---------------------- -----------------
End of period $ 473,902,342 $ 396,770,655
- ---------------------------------------------------------------------- ---------------------- -----------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
INDEPENDENCE ONE PRIME MONEY MARKET FUND
FINANCIAL HIGHLIGHTS--CLASS A SHARES
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
(UNAUDITED)
OCTOBER 31, YEAR ENDED APRIL 30,
1996 1996 1995 1994 1993 1992 1991 1990(a)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF
PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ------------------------------
INCOME FROM INVESTMENT
OPERATIONS
- ------------------------------
Net investment income 0.02 0.05 0.05 0.03 0.03 0.05 0.07 0.08
- ------------------------------
LESS DISTRIBUTIONS
- ------------------------------
Distributions from net
investment income (0.02) (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 $ 1.00
- ------------------------------ ------ --------- --------- --------- --------- --------- --------- -----------
TOTAL RETURN (b) 2.44% 5.33% 4.66% 2.73% 2.99% 4.89% 7.55% 7.99%
- ------------------------------
RATIOS TO AVERAGE NET ASSETS
- ------------------------------
Expenses 0.61%* 0.61% 0.61% 0.59% 0.58% 0.54% 0.53% 0.40%*
- ------------------------------
Net investment income 4.80%* 5.19% 4.51% 2.70% 2.91% 4.73% 7.26% 8.24%*
- ------------------------------
Expense waiver/
reimbursement (c) 0.25%* 0.25% -- 0.02% 0.04% 0.08% 0.08% 0.23%*
- ------------------------------
SUPPLEMENTAL DATA
- ------------------------------
Net assets, end of period
(000 omitted) $383,211 $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 periods from June 1, 1989 (date of inital
public investment) to April 30, 1990.
(b) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
INDEPENDENCE ONE PRIME MONEY MARKET FUND
FINANCIAL HIGHLIGHTS--CLASS B SHARES
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
(UNAUDITED) PERIOD ENDED
OCTOBER 31, 1996 APRIL 30, 1996(a)
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00
- -----------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- -----------------------------------------------------------------------
Net investment income 0.03 0.05
- -----------------------------------------------------------------------
LESS DISTRIBUTIONS
- -----------------------------------------------------------------------
Distributions from net investment income (0.03) (0.05)
- ----------------------------------------------------------------------- ------- -------
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00
- ----------------------------------------------------------------------- ------- -------
TOTAL RETURN (b) 2.57% 5.07%
- -----------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- -----------------------------------------------------------------------
Expenses 0.36% 0.36%*
- -----------------------------------------------------------------------
Net investment income 5.05% 5.34%*
- -----------------------------------------------------------------------
Expense waiver/reimbursement (c) 0.25% 0.25%*
- -----------------------------------------------------------------------
SUPPLEMENTAL DATA
- -----------------------------------------------------------------------
Net assets, end of period (000 omitted) $90,692 $85,780
- -----------------------------------------------------------------------
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from June 13, 1995 (date of initial
public investment) to April 30, 1996.
(b) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
INDEPENDENCE ONE U.S. TREASURY MONEY MARKET FUND
PORTFOLIO OF INVESTMENTS
OCTOBER 31, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
U.S. TREASURY OBLIGATIONS--44.0%
- -------------------------------------------------------------------------------------------------
$ 25,000,000 11/14/1996 $ 24,952,929
----------------------------------------------------------------------------------
10,000,000 12/5/1996 9,949,472
----------------------------------------------------------------------------------
10,000,000 12/12/1996 9,940,379
----------------------------------------------------------------------------------
5,000,000 1/9/1997 4,951,221
----------------------------------------------------------------------------------
10,000,000 2/6/1997 9,859,215
----------------------------------------------------------------------------------
30,000,000 3/6/1997 29,469,271
----------------------------------------------------------------------------------
10,000,000 4/3/1997 9,779,956
----------------------------------------------------------------------------------
10,000,000 5/1/1997 9,740,567
----------------------------------------------------------------------------------
15,000,000 5/29/1997 14,549,344
---------------------------------------------------------------------------------- --------------
TOTAL U.S. TREASURY OBLIGATIONS 123,192,354
---------------------------------------------------------------------------------- --------------
(a) REPURCHASE AGREEMENTS--56.4%
- -------------------------------------------------------------------------------------------------
12,000,000 Bank of America NT and SA, San Francisco, 5.510%, dated 10/31/1996, due 11/1/1996 12,000,000
----------------------------------------------------------------------------------
60,000,000 Daiwa Securities America, Inc., 5.500%, dated 10/31/1996, due 11/1/1996 60,000,000
----------------------------------------------------------------------------------
13,000,000 Donaldson, Lufkin and Jenrette Securities Corp., 5.500%,
dated 10/31/1996, due 11/1/1996 13,000,000
----------------------------------------------------------------------------------
60,963,000 First Chicago Capital Markets, Inc., 5.500%, dated 10/31/1996,
due 11/1/1996 60,963,000
----------------------------------------------------------------------------------
12,000,000 Goldman Sachs Group, LP, 5.500%, dated 10/31/1996, due 11/1/1996 12,000,000
---------------------------------------------------------------------------------- --------------
TOTAL REPURCHASE AGREEMENTS 157,963,000
---------------------------------------------------------------------------------- --------------
TOTAL INVESTMENTS, AT AMORTIZED COST (b) $ 281,155,354
---------------------------------------------------------------------------------- --------------
</TABLE>
(a) The repurchase agreements are fully collateralized by U.S. Treasury
obligations based on market prices at the date of the portfolio.
(b) Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($280,004,123) at October 31, 1996.
The following acronym is used throughout this portfolio:
LP--Limited Partnership
(See Notes which are an integral part of the Financial Statements)
INDEPENDENCE ONE U.S. TREASURY MONEY MARKET FUND
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- ---------------------------------------------------------------------------------
Investments in repurchase agreements $ 157,963,000
- ---------------------------------------------------------------------------------
Investments in securities 123,192,354
- --------------------------------------------------------------------------------- --------------
Total investments in securities, at amortized cost and value $ 281,155,354
- -------------------------------------------------------------------------------------------------
Income receivable 24,181
- ------------------------------------------------------------------------------------------------- --------------
Total assets 281,179,535
- -------------------------------------------------------------------------------------------------
LIABILITIES:
- ---------------------------------------------------------------------------------
Income distribution payable 1,110,721
- ---------------------------------------------------------------------------------
Accrued expenses 64,691
- --------------------------------------------------------------------------------- --------------
Total liabilities 1,175,412
- ------------------------------------------------------------------------------------------------- --------------
NET ASSETS for 280,004,123 shares outstanding $ 280,004,123
- ------------------------------------------------------------------------------------------------- --------------
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE:
- -------------------------------------------------------------------------------------------------
$280,004,123 / 280,004,123 shares outstanding $1.00
- ------------------------------------------------------------------------------------------------- --------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
INDEPENDENCE ONE U.S. TREASURY MONEY MARKET FUND
STATEMENT OF OPERATIONS
SIX MONTHS ENDED OCTOBER 31, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
- ----------------------------------------------------------------------------------------------------
Interest $ 7,244,793
- ----------------------------------------------------------------------------------------------------
EXPENSES:
- ----------------------------------------------------------------------------------------
Investment advisory fee $ 545,805
- ----------------------------------------------------------------------------------------
Administrative personnel and services fee 150,586
- ----------------------------------------------------------------------------------------
Custodian fees 35,144
- ----------------------------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses 20,056
- ----------------------------------------------------------------------------------------
Directors'/Trustees' fees 7,176
- ----------------------------------------------------------------------------------------
Auditing fees 6,072
- ----------------------------------------------------------------------------------------
Legal fees 1,104
- ----------------------------------------------------------------------------------------
Portfolio accounting fees 30,360
- ----------------------------------------------------------------------------------------
Printing and postage 5,152
- ----------------------------------------------------------------------------------------
Insurance premiums 2,576
- ----------------------------------------------------------------------------------------
Miscellaneous 184
- ---------------------------------------------------------------------------------------- ----------
Total expenses 804,215
- ---------------------------------------------------------------------------------------------------- ------------
Net investment income $ 6,440,578
- ---------------------------------------------------------------------------------------------------- ------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
INDEPENDENCE ONE U.S. TREASURY MONEY MARKET FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS ENDED
(UNAUDITED) YEAR ENDED
OCTOBER 31, 1996 APRIL 30, 1996
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- ----------------------------------------------------------------------
OPERATIONS--
- ----------------------------------------------------------------------
Net investment income $ 6,440,578 $ 14,047,606
- ---------------------------------------------------------------------- ---------------------- -----------------
DISTRIBUTIONS TO SHAREHOLDERS--
- ----------------------------------------------------------------------
Distributions from net investment income (6,440,578) (14,047,606)
- ---------------------------------------------------------------------- ---------------------- -----------------
SHARE TRANSACTIONS--
- ----------------------------------------------------------------------
Proceeds from sale of shares 1,179,702,448 2,423,363,168
- ----------------------------------------------------------------------
Net asset value of shares issued to shareholders
in payment of distributions declared 3,382,259 8,401,826
- ----------------------------------------------------------------------
Cost of shares redeemed (1,200,313,412) (2,379,419,355)
- ---------------------------------------------------------------------- ---------------------- -----------------
Change in net assets resulting from share transactions (17,228,705) 52,345,639
- ---------------------------------------------------------------------- ---------------------- -----------------
Change in net assets (17,228,705) 52,345,639
- ----------------------------------------------------------------------
NET ASSETS:
- ----------------------------------------------------------------------
Beginning of period 297,232,828 244,887,189
- ---------------------------------------------------------------------- ---------------------- -----------------
End of period $ 280,004,123 $ 297,232,828
- ---------------------------------------------------------------------- ---------------------- -----------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
INDEPENDENCE ONE U.S. TREASURY MONEY MARKET FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
(UNAUDITED)
OCTOBER 31, YEAR ENDED APRIL 30,
1996 1996 1995 1994 1993 1992 1991 1990(a)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF
PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ------------------------------
INCOME FROM INVESTMENT
OPERATIONS
- ------------------------------
Net investment income 0.02 0.05 0.04 0.03 0.03 0.05 0.07 0.08
- ------------------------------
LESS DISTRIBUTIONS
- ------------------------------
Distributions from net
investment income (0.02) (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 $ 1.00
- ------------------------------ ------ --------- --------- --------- --------- --------- --------- -----------
TOTAL RETURN (b) 2.41% 5.28% 4.49% 2.63% 2.92% 4.81% 7.17% 7.83%
- ------------------------------
RATIOS TO AVERAGE NET ASSETS
- ------------------------------
Expenses 0.59%* 0.60% 0.63% 0.61% 0.54% 0.57% 0.60% 0.35%*
- ------------------------------
Net investment income 4.72%* 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) $280,004 $297,233 $244,887 $215,832 $214,069 $224,803 $131,263 $89,947
- ------------------------------
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from June 1, 1989 (date of inital public
investment) to April 30, 1990.
(b) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
INDEPENDENCE ONE MICHIGAN MUNICIPAL CASH FUND
PORTFOLIO OF INVESTMENTS
OCTOBER 31, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
<C> <S> <C> <C>
MUNICIPALS--99.7% ---------------------------------------------------------------
KANSAS--2.2%
-------------------------------------------------------------------
$ 2,000,000 Burlington, KS, PCR Bonds (Series A), 3.50% CP (Kansas City Power
And Light Co.)/(Toronto-Dominion Bank LOC), Mandatory Tender
12/2/1996 NR/A-1+ $ 2,000,000
------------------------------------------------------------------- -------------
MASSACHUSETTS--2.8%
-------------------------------------------------------------------
2,500,000 Massachusetts Municipal Wholesale Electric Company, Power Supply
System Revenue Bonds (1994 Series C) Weekly VRDNs (Canadian
Imperial Bank of Commerce, Toronto LOC) VMIG1/A-1+ 2,500,000
------------------------------------------------------------------- -------------
MICHIGAN--94.7%
-------------------------------------------------------------------
1,300,000 Cornell, MI Economic Development Corp., Industrial Development
Revenue Refunding Bonds (Series 1990), 3.50% CP (Mead-Escanaba
Paper Co. Project)/(Credit Suisse, Zurich LOC), Mandatory Tender
11/26/1996 NR/A-1+ 1,300,000
-------------------------------------------------------------------
1,000,000 Cornell, MI Economic Development Corp., Industrial Development
Revenue Refunding Bonds (Series 1990), 3.60% CP (Mead-Escanaba
Paper Co. Project)/(Credit Suisse, Zurich LOC), Mandatory Tender
1/7/1997 NR/A-1+ 1,000,000
-------------------------------------------------------------------
1,100,000 Delta County, MI Economic Development Corp., Environmental
Improvement Revenue Refunding Bonds (Series 1985 A), 3.35% CP
(Mead-Escanaba Paper Co. Project)/(Swiss Bank Corp., Basle LOC),
Mandatory Tender 12/12/1996 P-1/NR 1,100,000
-------------------------------------------------------------------
2,000,000 Delta County, MI Economic Development Corp., Environmental
Improvement Revenue Refunding Bonds (Series 1985 A), 3.40% CP
(Mead-Escanaba Paper Co. Project)/(Swiss Bank Corp., Basle LOC),
Mandatory Tender 12/9/1996 P-1/NR 2,000,000
-------------------------------------------------------------------
</TABLE>
INDEPENDENCE ONE MICHIGAN MUNICIPAL CASH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
<S> <S> <C> <C>
(a) SHORT-TERM MUNICIPALS--CONTINUED
- ---------------------------------------------------------------------------------
MICHIGAN--CONTINUED
-------------------------------------------------------------------
$ 1,200,000 Delta County, MI Economic Development Corp., Environmental
Improvement Revenue Refunding Bonds (Series 1985 A), 3.50% CP
(Mead-Escanaba Paper Co. Project)/(Swiss Bank Corp., Basle LOC),
Mandatory Tender 1/2/1997 P-1/NR $ 1,200,000
-------------------------------------------------------------------
1,000,000 Delta County, MI Economic Development Corp., Environmental
Improvement Revenue Refunding Bonds (Series 1985 A), 3.55% CP
(Mead-Escanaba Paper Co. Project)/(Swiss Bank Corp., Basle LOC),
Mandatory Tender 1/16/1997 P-1/NR 1,000,000
-------------------------------------------------------------------
1,000,000 Delta County, MI Economic Development Corp., Environmental
Improvement Revenue Refunding Bonds (Series 1985 B), 3.35% CP
(Mead-Escanaba Paper Co. Project)/(Union Bank of Switzerland,
Zurich LOC), Mandatory Tender 12/10/1996 P-1/NR 1,000,000
-------------------------------------------------------------------
2,400,000 Delta County, MI Economic Development Corp., Environmental
Improvement Revenue Refunding Bonds (Series 1985 B), 3.35% CP
(Mead-Escanaba Paper Co. Project)/(Union Bank of Switzerland,
Zurich LOC), Mandatory Tender 12/2/1996 P-1/NR 2,400,000
-------------------------------------------------------------------
600,000 Delta County, MI Economic Development Corp., Environmental
Improvement Revenue Refunding Bonds (Series 1985 B), 3.40% CP
(Mead-Escanaba Paper Co. Project)/(Union Bank of Switzerland,
Zurich LOC), Mandatory Tender 12/10/1996 P-1/NR 600,000
-------------------------------------------------------------------
2,040,000 Delta County, MI Economic Development Corp., Environmental
Improvement Revenue Refunding Bonds (Series 1985 B), 3.45% CP
(Mead-Escanaba Paper Co. Project)/(Union Bank of Switzerland,
Zurich LOC), Mandatory Tender 1/9/1997 P-1/NR 2,040,000
-------------------------------------------------------------------
</TABLE>
INDEPENDENCE ONE MICHIGAN MUNICIPAL CASH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
<S> <S> <C> <C>
(a) SHORT-TERM MUNICIPALS--CONTINUED
- ---------------------------------------------------------------------------------
MICHIGAN--CONTINUED
-------------------------------------------------------------------
$ 2,000,000 Delta County, MI Economic Development Corp., Environmental
Improvement Revenue Refunding Bonds (Series 1985 B), 3.55% CP
(Mead-Escanaba Paper Co. Project)/(Union Bank of Switzerland,
Zurich LOC), Mandatory Tender 11/6/1996 P-1/NR $ 2,000,000
-------------------------------------------------------------------
915,000 Farmington Hills, MI Economic Development Corp., Limited
Obligations Revenue Bonds, 3.75% TOBs (Marketing
Displays)/(Comerica Bank, Detroit, MI LOC), Optional Tender
3/1/1997 NR/NR 915,000
-------------------------------------------------------------------
1,000,000 Grand Rapids, MI EDR Weekly VRDNs (Amway Hotel Corp.)/(Old Kent
Bank & Trust Co., Grand Rapids LOC) NR/NR 1,000,000
-------------------------------------------------------------------
1,000,000 Grand Rapids, MI EDR, EDRB Weekly VRDNs (Amway Hotel Corp.)/(Old
Kent Bank & Trust Co., Grand Rapids LOC) NR/NR 1,000,000
-------------------------------------------------------------------
955,000 Grand Rapids, MI EDR, GO LT (Series C) Weekly VRDNs (Calder
Plaza)/(Old Kent Bank & Trust Co., Grand Rapids LOC) NR/A-1+ 955,000
-------------------------------------------------------------------
815,000 Grand Rapids, MI IDR Weekly VRDNs (Classic Die, Inc.)/(NBD Bank,
Michigan LOC) NR/NR 815,000
-------------------------------------------------------------------
1,000,000 Kalamazoo, MI Economic Development Corp., 1995 Limited Obligation
Revenue Refunding Bonds Weekly VRDNs (Wyndham Project, MI)/(First
of America Bank--Illinois LOC) NR/A-1 1,000,000
-------------------------------------------------------------------
4,700,000 Michigan Higher Education Student Loan Authority, Refunding Revenue
Bonds (Series X11-B) Weekly VRDNs (AMBAC INS)/(Bank of Tokyo LOC) AAA 4,700,000
-------------------------------------------------------------------
1,000,000 Michigan Municipal Bond Authority, (Series B), 4.50% Bonds,
7/25/1997 NR/SP-1+ 1,003,855
-------------------------------------------------------------------
2,000,000 Michigan Municipal Bond Authority, Series A, 4.50% Bonds, 7/3/1997 NR/SP-1+ 2,007,714
-------------------------------------------------------------------
3,000,000 Michigan State Hospital Finance Authority Monthly VRDNs VMIG1/NR 3,000,000
-------------------------------------------------------------------
</TABLE>
INDEPENDENCE ONE MICHIGAN MUNICIPAL CASH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
<S> <S> <C> <C>
(a) SHORT-TERM MUNICIPALS--CONTINUED
- ---------------------------------------------------------------------------------
MICHIGAN--CONTINUED
-------------------------------------------------------------------
$ 2,580,000 Michigan State Hospital Finance Authority, (Series 1994) Weekly
VRDNs (Mt. Clemens General Hospital)/ (Comerica Bank, Detroit, MI
LOC) VMIG1/NR $ 2,580,000
-------------------------------------------------------------------
2,500,000 Michigan State Hospital Finance Authority, Hospital Equipment Loan
Program Bonds (Series A) VRNs (First of American Bank LOC) VMIG/NR 2,500,000
-------------------------------------------------------------------
1,000,000 Michigan State Hospital Finance Authority, Refunding Revenue Bonds
(Series A), 4.00% Bonds (Henry Ford Health System, MI), 11/15/1996 NR/NR 1,000,148
-------------------------------------------------------------------
900,000 Michigan State Hospital Finance Authority, Revenue Bonds (Series A)
Weekly VRDNs (First of America Bank--Michigan LOC) VMIG1/NR 900,000
-------------------------------------------------------------------
1,700,000 Michigan State Hospital Finance Authority, Revenue Bonds (Series A)
Weekly VRDNs (First of America Bank--Michigan LOC) VMIG1/NR 1,700,000
-------------------------------------------------------------------
4,000,000 Michigan State Housing Development Authority, Rental Housing
Revenue Bonds (1994 Series C) Weekly VRDNs (Credit Suisse, Zurich
LOC) NR/A-1+ 4,000,000
-------------------------------------------------------------------
3,845,000 Michigan State Housing Development Authority, Revenue Bonds (Series
A), 3.50% CP (Sanwa Bank Ltd, Osaka LOC), Mandatory Tender
12/5/1996 P-1/A-1+ 3,845,000
-------------------------------------------------------------------
1,100,000 Michigan State Housing Development Authority, Revenue Bonds (Series
A), 3.55% CP (Sanwa Bank Ltd, Osaka LOC), Mandatory Tender
1/13/1997 P-1/A-1+ 1,100,000
-------------------------------------------------------------------
1,200,000 Michigan Strategic Fund Daily VRDNs (Blair Equipment Co.) NR/NR 1,200,000
-------------------------------------------------------------------
1,400,000 Michigan Strategic Fund, (Series 1995) Weekly VRDNs (Rood
Industries, Inc. Project)/(NBD Bank, Michigan LOC) NR/NR 1,400,000
-------------------------------------------------------------------
1,500,000 Michigan Strategic Fund, 3.45% CP (Dow Chemical Co.), Mandatory
Tender 11/4/1996 P-1/NR 1,500,000
-------------------------------------------------------------------
</TABLE>
INDEPENDENCE ONE MICHIGAN MUNICIPAL CASH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
<S> <S> <C> <C>
(a) SHORT-TERM MUNICIPALS--CONTINUED
- ---------------------------------------------------------------------------------
MICHIGAN--CONTINUED
-------------------------------------------------------------------
$ 1,750,000 Michigan Strategic Fund, 3.55% CP (Dow Chemical Co.), Mandatory
Tender 11/7/1996 P-1/A-1 $ 1,750,000
-------------------------------------------------------------------
2,000,000 Michigan Strategic Fund, IDRB Weekly VRDNs (Allen Group,
Inc.)/(Dresdner Bank Ag, Frankfurt LOC) VMIG1/NR 2,000,000
-------------------------------------------------------------------
855,000 Michigan Strategic Fund, Limited Obligation Refunding Revenue Bonds
VRNs (Peachwood Center Association) NR/A-1+ 855,000
-------------------------------------------------------------------
990,000 Michigan Strategic Fund, Limited Obligation Revenue Bonds (Series
1995) Weekly VRDNs (Rowe Thomas Company Project)/(Comerica Bank,
Detroit, MI LOC) NR/NR 990,000
-------------------------------------------------------------------
4,500,000 Michigan Strategic Fund, Limited Obligation Revenue Bonds (Series
1995) Weekly VRDNs (United Waste Systems, Inc.)/(Bank of America
Illinois LOC) VMIG1/A-1 4,500,000
-------------------------------------------------------------------
950,000 Michigan Strategic Fund, Limited Obligation Revenue Bonds (Series
1995) Weekly VRDNs (Wayne Disposal-- Oakland, Inc.
Project)/(Comerica Bank, Detroit, MI LOC) NR/A-1 950,000
-------------------------------------------------------------------
4,000,000 Michigan Strategic Fund, PCR Bonds Weekly VRDNs (General Motors
Corp.) VMIG1/NR 4,000,000
-------------------------------------------------------------------
1,500,000 Michigan Strategic Fund, PCR Bonds, 3.45% CP (Dow Chemical
Co.)/(NCNB National Bank, NC LOC), Mandatory Tender 12/3/1996 P-1/NR 1,500,000
-------------------------------------------------------------------
2,000,000 Michigan Strategic Fund, PCR Bonds, 3.45% CP (Dow Chemical
Co.)/(NCNB National Bank, NC LOC), Mandatory Tender 12/6/1996 P-1/NR 2,000,000
-------------------------------------------------------------------
1,000,000 Michigan Strategic Fund, PCR Bonds, 3.55% CP (Dow Chemical
Co.)/(NCNB National Bank, NC LOC), Mandatory Tender 11/6/1996 P-1/NR 1,000,000
-------------------------------------------------------------------
1,050,000 Michigan Strategic Fund, Refunding Revenue Bonds
(Series B) Weekly VRDNs (Riverfront Development Co.) NR/NR 1,050,000
-------------------------------------------------------------------
3,000,000 Michigan Strategic Fund, Refunding Revenue Bonds Weekly VRDNs
(Louisiana-Pacific Corp.)/(Wachovia Bank & Trust Co. LOC) NR/NR 3,000,000
-------------------------------------------------------------------
</TABLE>
INDEPENDENCE ONE MICHIGAN MUNICIPAL CASH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
<S> <S> <C> <C>
(a) SHORT-TERM MUNICIPALS--CONTINUED
- ---------------------------------------------------------------------------------
MICHIGAN--CONTINUED
-------------------------------------------------------------------
$ 1,000,000 Michigan Strategic Fund, Revenue Bonds VRNs (YWY Investments LLC) NR/NR $ 1,000,000
-------------------------------------------------------------------
2,000,000 Michigan Strategic Fund, Revenue Bonds Weekly VRDNs (Waltec
American Forgings Inc.) NR/NR 2,000,000
-------------------------------------------------------------------
3,300,000 Michigan Strategic Fund, Solid Waste Disposal Revenue Bonds Weekly
VRDNs (Grayling Generating)/(Barclays Bank, New York LOC) VMIG1/NR 3,300,000
-------------------------------------------------------------------
1,000,000 Wayne County, MI , Airport Revenue Bonds (Series B) Daily VRDNs
(Detroit Metropolitan County) NR/A-1+ 1,000,000
------------------------------------------------------------------- -------------
TOTAL MICHIGAN 84,656,717
------------------------------------------------------------------- -------------
TOTAL SHORT-TERM MUNICIPALS 89,156,717
------------------------------------------------------------------- -------------
MUTUAL FUND SHARES--0.2%
- ---------------------------------------------------------------------------------
159,000 Nuveen Tax Exempt Money Market Fund
(AT NET ASSET VALUE) NR 159,000
------------------------------------------------------------------- -------------
TOTAL INVESTMENTS, AT AMORTIZED COST (b) $ 89,315,717
------------------------------------------------------------------- -------------
</TABLE>
* Please refer to the Appendix of the Statement of Additional Information for
an explanation of the credit ratings.
(a) Securities that are subject to Altenative Minimum Tax represent 26.3% of
the portfolio as calculated based upon total portfolio market value.
(b) Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($89,408,037) at October 31, 1996.
INDEPENDENCE ONE MICHIGAN MUNICIPAL CASH FUND
- --------------------------------------------------------------------------------
<TABLE>
<S> <S> <C> <C>
The following acronyms are used throughout this portfolio:
AMBAC--American Municipal Bond Assurance Corporation
CP--Commercial Paper
EDR--Economic Development Revenue
EDRB--Economic Development Revenue Bonds
GO--General Obligation
IDR--Industrial Development Revenue
IDRB--Industrial Development Revenue Bond
INS--Insured
LOC--Letter of Credit
LT--Limited Tax
PCR--Pollution Control Revenue
TOBs--Tender Option Bonds
VRDNs--Variable Rate Demand Notes
VRNs--Variable Rate Notes
(See Notes which are an integral part of the Financial Statements)
INDEPENDENCE ONE MICHIGAN MUNICIPAL CASH FUND
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C> <C>
ASSETS:
- ---------------------------------------------------------------------------------------------------
Total investments in securities, at amortized cost and value $ 89,315,717
- ---------------------------------------------------------------------------------------------------
Income receivable 410,228
- --------------------------------------------------------------------------------------------------- -------------
Total assets 89,725,945
- ---------------------------------------------------------------------------------------------------
LIABILITIES:
- ---------------------------------------------------------------------------------------
Income distribution payable $ 221,753
- ---------------------------------------------------------------------------------------
Payable to Bank 41,483
- ---------------------------------------------------------------------------------------
Accrued expenses 54,672
- --------------------------------------------------------------------------------------- ----------
Total liabilities 317,908
- --------------------------------------------------------------------------------------------------- -------------
NET ASSETS for 89,408,037 shares outstanding $ 89,408,037
- --------------------------------------------------------------------------------------------------- -------------
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE:
- ---------------------------------------------------------------------------------------------------
$89,408,037 / 89,408,037 shares outstanding $1.00
- --------------------------------------------------------------------------------------------------- -------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
INDEPENDENCE ONE MICHIGAN MUNICIPAL CASH FUND
STATEMENT OF OPERATIONS
SIX MONTHS ENDED OCTOBER 31, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
- ----------------------------------------------------------------------------------------------------
Interest $ 1,373,351
- ----------------------------------------------------------------------------------------------------
EXPENSES:
- ----------------------------------------------------------------------------------------
Investment advisory fee $ 157,849
- ----------------------------------------------------------------------------------------
Administrative personnel and services fee 43,495
- ----------------------------------------------------------------------------------------
Custodian fees 6,440
- ----------------------------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses 18,216
- ----------------------------------------------------------------------------------------
Directors'/Trustees' fees 1,840
- ----------------------------------------------------------------------------------------
Auditing fees 5,336
- ----------------------------------------------------------------------------------------
Legal fees 1,104
- ----------------------------------------------------------------------------------------
Portfolio accounting fees 20,424
- ----------------------------------------------------------------------------------------
Share registration costs 4,416
- ----------------------------------------------------------------------------------------
Printing and postage 4,416
- ----------------------------------------------------------------------------------------
Insurance premiums 1,840
- ----------------------------------------------------------------------------------------
Miscellaneous 1,104
- ---------------------------------------------------------------------------------------- ----------
Total expenses 266,480
- ----------------------------------------------------------------------------------------
Waivers--
- ----------------------------------------------------------------------------------------
Waiver of investment advisory fee (78,924)
- ---------------------------------------------------------------------------------------- ----------
Net expenses 187,556
- ---------------------------------------------------------------------------------------------------- ------------
Net investment income $ 1,185,795
- ---------------------------------------------------------------------------------------------------- ------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
INDEPENDENCE ONE MICHIGAN MUNICIPAL CASH FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS ENDED
(UNAUDITED) YEAR ENDED
OCTOBER 31, 1996 APRIL 30, 1996
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- -----------------------------------------------------------------------
OPERATIONS--
- -----------------------------------------------------------------------
Net investment income $ 1,185,795 $ 2,292,897
- ----------------------------------------------------------------------- ---------------------- ----------------
DISTRIBUTIONS TO SHAREHOLDERS--
- -----------------------------------------------------------------------
Distributions from net investment income (1,185,795) (2,292,897)
- ----------------------------------------------------------------------- ---------------------- ----------------
SHARE TRANSACTIONS--
- -----------------------------------------------------------------------
Proceeds from sale of shares 242,089,821 497,552,563
- -----------------------------------------------------------------------
Net asset value of shares issued to shareholders
in payment of distributions declared 744,888 1,800,093
- -----------------------------------------------------------------------
Cost of shares redeemed (228,138,907) (491,496,824)
- ----------------------------------------------------------------------- ---------------------- ----------------
Change in net assets resulting from share transactions 14,695,802 7,855,832
- ----------------------------------------------------------------------- ---------------------- ----------------
Change in net assets 14,695,802 7,855,832
- -----------------------------------------------------------------------
NET ASSETS:
- -----------------------------------------------------------------------
Beginning of period 74,712,235 66,856,403
- ----------------------------------------------------------------------- ---------------------- ----------------
End of period $ 89,408,037 $ 74,712,235
- ----------------------------------------------------------------------- ---------------------- ----------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
INDEPENDENCE ONE MICHIGAN MUNICIPAL CASH FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
(UNAUDITED)
OCTOBER 31, YEAR ENDED APRIL 30,
1996 1996 1995 1994 1993 1992 1991 1990(a)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF
PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ------------------------------
INCOME FROM INVESTMENT
OPERATIONS
- ------------------------------
Net investment income 0.02 0.03 0.03 0.02 0.02 0.04 0.05 0.05
- ------------------------------
LESS DISTRIBUTIONS
- ------------------------------
Distributions from net
investment income (0.02) (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 $ 1.00
- ------------------------------ ------ --------- --------- --------- --------- --------- --------- -----------
TOTAL RETURN (b) 1.52% 3.24% 2.81% 1.98% 2.27% 3.68% 5.18% 5.14%
- ------------------------------
RATIOS TO AVERAGE NET ASSETS
- ------------------------------
Expenses 0.48%* 0.53% 0.59% 0.50% 0.53% 0.50% 0.67% 0.44%*
- ------------------------------
Net investment income 3.01%* 3.18% 2.80% 1.96% 2.23% 3.51% 5.02% 5.70%*
- ------------------------------
Expense waiver/
reimbursement (c) 0.20%* 0.20% 0.21% 0.22% 0.20% 0.39% 0.19% 0.39%*
- ------------------------------
SUPPLEMENTAL DATA
- ------------------------------
Net assets, end of period
(000 omitted) $89,408 $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 periods from June 14, 1989 (date of inital
public investment) to April 30, 1990.
(b) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
INDEPENDENCE ONE MONEY MARKET FUNDS
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
(1) ORGANIZATION
Independence One Money Market Funds (the "Trust") is registered under the
Investment Company Act of 1940, as amended (the "Act"), as an open-end
management investment company. The Trust consists of seven portfolios. The
financial statements of the following portfolios (individually referred to as
the "Fund", or collectively as the "Funds") are presented herein:
<TABLE>
<CAPTION>
PORTFOLIO NAME INVESTMENT OBJECTIVE
<S> <C>
Independence One Prime Money Market Fund ("Prime Money To provide current income consistent with
Market Fund")(d) stability of principal.
Independence One U.S. Treasury Money Market Fund ("U.S. To provide current income consistent with
Treasury Money Market Fund")(d) stability of principal.
Independence One Michigan Municipal Cash Fund ("Michigan To provide stability of income and
Municipal Cash Fund") current income exempt from federal
regular income tax and Michigan state
income tax consistent with stability
of principal.
</TABLE>
(d) Diversified portfolio.
The financial statements of the other portfolios are presented separately. The
assets of each portfolio are segregated and a shareholder's interest is limited
to the portfolio in which shares are held.
Effective May 1, 1995, Prime Money Market Fund's existing shares (Investment
Shares) were designated "Class A Shares" and a new class of shares was
designated "Class B Shares."
(2) SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Funds in the preparation of their financial statements. These
policies are in conformity with generally accepted accounting principles.
INVESTMENT VALUATIONS--The Funds' use of the amortized cost method to value
their portfolio securities is in accordance with Rule 2a-7 under the Act.
Investments in other open-ended regulated investment companies are valued
at net asset value.
REPURCHASE AGREEMENTS--It is the policy of Prime Money Market Fund and U.S.
Treasury Money Market 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
INDEPENDENCE ONE MONEY MARKET FUNDS
- --------------------------------------------------------------------------------
bank's vault, all securities held as collateral under repurchase agreement
transactions. Additionally, procedures have been established by the Funds
to monitor, on a daily basis, the market value of each repurchase
agreement's collateral to ensure that the value of collateral at least
equals the repurchase price to be paid under the repurchase agreement
transaction.
Prime Money Market Fund and U.S. Treasury Money Market Fund will only enter
into repurchase agreements with banks and other recognized financial
institutions, such as broker/dealers, which are deemed by the Funds'
adviser to be creditworthy pursuant to the guidelines and/or standards
reviewed or established by the Board of Trustees (the "Trustees"). Risks
may arise from the potential inability of counterparties to honor the terms
of the repurchase agreement. Accordingly, the Funds could receive less than
the repurchase price on the sale of collateral securities.
INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS--Interest income and expenses
are accrued daily. Bond premium and discount, if applicable, are amortized
as required by the Internal Revenue Code, as amended (the "Code").
Distributions to shareholders are recorded on the ex-dividend date.
FEDERAL TAXES--It is the Funds' policy to comply with the provisions of the
Code applicable to regulated investment companies and to distribute to
shareholders each year substantially all of their income. Accordingly, no
provisions for federal tax are necessary.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Funds may engage in
when-issued or delayed delivery transactions. The Funds record when-issued
securities on the trade date and maintain security positions such that
sufficient liquid assets will be available to make payment for the
securities purchased. Securities purchased on a when-issued or delayed
delivery basis are marked to market daily and begin earning interest on the
settlement date.
USE OF ESTIMATES--The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts of assets, liabilities,
expenses and revenues reported in the financial statements. Actual results
could differ from those estimated.
OTHER--Investment transactions are accounted for on the trade date.
(3) SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value) for each
class of shares.
INDEPENDENCE ONE MONEY MARKET FUNDS
- --------------------------------------------------------------------------------
Transactions in shares were as follows:
<TABLE>
<CAPTION>
PRIME MONEY MARKET FUND
<S> <C> <C>
SIX MONTHS ENDED YEAR ENDED
CLASS A SHARES OCTOBER 31, 1996 APRIL 30, 1996
Shares sold 1,157,246,828 2,125,876,995
- --------------------------------------------------------------------
Shares issued to shareholders in payment of distributions declared 3,209,951 7,678,573
- --------------------------------------------------------------------
Shares redeemed (1,088,237,190) (2,056,171,298)
- -------------------------------------------------------------------- ---------------------- -------------------
Net change resulting from Class A Share transactions 72,219,589 77,384,270
- -------------------------------------------------------------------- ---------------------- -------------------
<CAPTION>
PRIME MONEY MARKET FUND
SIX MONTHS ENDED PERIOD ENDED
CLASS B SHARES OCTOBER 31, 1996 APRIL 30, 1996*
<S> <C> <C>
Shares sold 192,851,216 386,181,577
- --------------------------------------------------------------------
Shares issued to shareholders in payment of distributions declared 794,842 758,034
- --------------------------------------------------------------------
Shares redeemed (188,733,960) (301,160,074)
- -------------------------------------------------------------------- ---------------------- -------------------
Net change resulting from Class B Share transactions 4,912,098 85,779,537
- -------------------------------------------------------------------- ---------------------- -------------------
Net change resulting from Share transactions 77,131,687 163,163,807
- -------------------------------------------------------------------- ---------------------- -------------------
</TABLE>
* For the period from June 13, 1995 (date of initial public investment) to April
30, 1996.
<TABLE>
<CAPTION>
U.S. TREASURY
MONEY MARKET FUND
<S> <C> <C>
SIX MONTHS ENDED YEAR ENDED
OCTOBER 31, 1996 APRIL 30, 1996
Shares sold 1,179,702,448 2,423,363,168
- --------------------------------------------------------------------
Shares issued to shareholders in payment of distributions declared 3,382,259 8,401,826
- --------------------------------------------------------------------
Shares redeemed (1,200,313,412) (2,379,419,355)
- -------------------------------------------------------------------- ---------------------- -------------------
Net change resulting from Share transactions (17,228,705) 52,345,639
- -------------------------------------------------------------------- ---------------------- -------------------
</TABLE>
INDEPENDENCE ONE MONEY MARKET FUNDS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MICHIGAN MUNICIPAL
CASH FUND
SIX MONTHS ENDED YEAR ENDED
OCTOBER 31, 1996 APRIL 30, 1996
<S> <C> <C>
Shares sold 242,089,821 497,552,563
- --------------------------------------------------------------------
Shares issued to shareholders in payment of distributions declared 744,888 1,800,093
- --------------------------------------------------------------------
Shares redeemed (228,138,907) (491,496,824)
- -------------------------------------------------------------------- ---------------------- -------------------
Net change resulting from Share transactions 14,695,802 7,855,832
- -------------------------------------------------------------------- ---------------------- -------------------
</TABLE>
At October 31, 1996, capital paid-in for Prime Money Market Fund, U.S. Treasury
Money Market Fund, and Michigan Municipal Cash fund aggregated $473,902,342,
$280,004,123 and $89,408,037, respectively.
(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE--Michigan National Bank, the Funds' investment adviser
(the "Adviser"), receives for its services an annual investment advisory fee
equal to 0.40% of each Fund's average daily net assets. The Adviser may
voluntarily choose to waive any portion of its fee. The Adviser can modify or
terminate this voluntary waiver at any time at its sole discretion.
ADMINISTRATIVE FEE--Federated Administrative Services ("FAS") provides the Funds
with certain administrative personnel and services. The fee paid to FAS is based
on the level of average aggregate net assets of the Trust for the period.
SHAREHOLDER SERVICES FEE--Under the terms of a Shareholder Services Agreement
with Michigan National Bank, Prime Money Market Fund will pay Michigan National
Bank up to 0.25% of average daily net assets of the Class A shares for the
period. The fee paid to Michigan National Bank is used to finance certain
services for shareholders and to maintain shareholder accounts.
TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES--Federated Services
Company ("FServ") through its subsidiary, Federated Shareholder Services Company
("FSSC") serves as transfer and dividend disbursing agent for the Funds. The fee
paid to FSSC is based on the size, type, and number of accounts and transactions
made by shareholders.
PORTFOLIO ACCOUNTING FEES--FServ maintains the Funds' accounting records for
which it receives a fee. The fee is based on the level of each Fund's average
daily net assets for the period, plus out-of-pocket expenses.
CUSTODIAN FEES--Michigan National Bank is the Funds' custodian. The fee is based
on the level of each Fund's average daily net assets for the period, plus
out-of-pocket expenses.
INDEPENDENCE ONE MONEY MARKET FUNDS
- --------------------------------------------------------------------------------
GENERAL--Certain of the Officers of the Trust are Officers and/or Directors or
Trustees of the above companies.
(5) CONCENTRATION OF CREDIT RISK
Since Michigan Municipal Cash Fund invests a substantial portion of its assets
in issuers located in one state, it will be more susceptible to factors
adversely affecting issuers of that state than would be a comparable tax-exempt
mutual fund that invests nationally. In order to reduce the credit risk
associated with such factors, at October 31, 1996, 76.1% of the securities in
the portfolio of investments are backed by letters of credit or bond insurance
of various financial institutions and financial guaranty assurance agencies. The
value of investments insured by or supported (backed) by a letter of credit from
any one institution or agency did not exceed 9.0% of total investments.
TRUSTEES OFFICERS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Robert E. Baker Edward C. Gonzales
Harold Berry President and Treasurer
Clarence G. Frame Jeffrey W. Sterling
Harry J. Nederlander Vice President and Assistant Treasurer
Thomas S. Wilson Jay S. Neuman
Secretary
Gail Cagney
Assistant Secretary
</TABLE>
Mutual funds are not bank deposits or obligations, are not guaranteed by any
bank,
and are not insured or guaranteed by the U.S. government, the Federal Deposit
Insurance Corporation, the Federal Reserve Board, or any other government
agency.
Investment in mutual funds involves investment risk, including possible loss of
principal. Although money market funds seek to maintain a stable net asset value
of $1.00 per share, there is no assurance that they will be able to do so.
This report is authorized for distribution to prospective investors only when
preceded or accompanied by the Funds' prospectus which contains facts
concerning their objectives and policies, management fees, expenses and other
information.
