INDEPENDENCE ONE EQUITY PLUS FUND
(A PORTFOLIO OF INDEPENDENCE ONE MUTUAL FUNDS)
PROSPECTUS
The shares of Independence One Equity Plus Fund (the "Fund") offered
by this prospectus represent interests in the Fund which is a
diversified portfolio and one of a series of investment portfolios in
Independence One Mutual Funds (the "Trust"), an open-end management
investment company (a mutual fund). Michigan National Bank
professionally manages the Fund's portfolio.
The investment objective of the Fund is total return. The Fund will
pursue this objective by attempting to provide investment results that
correspond to or exceed the aggregate price and dividend performance
of the Standard & Poor's 100 Composite Stock Price Index (the "S&P
100") by investing primarily in the common stocks comprising the S&P
100. The Fund is neither affiliated with nor sponsored by Standard &
Poor's ("S&P").
Shares of the Fund are intended to be sold as an investment vehicle
for institutions, corporations, fiduciaries and individuals.
Shareholders can invest, reinvest, or redeem shares at any time
without charge or penalty imposed by the Fund. Shareholders have
access to other portfolios of the Trust through an exchange program.
THE SHARES OFFERED BY THIS PROSPECTUS ARE NOT DEPOSITS OR OBLIGATIONS
OF MICHIGAN NATIONAL BANK, ARE NOT ENDORSED OR GUARANTEED BY MICHIGAN
NATIONAL BANK, AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER GOVERNMENT AGENCY.
INVESTMENT IN THESE SHARES INVOLVES INVESTMENT RISKS, INCLUDING THE
POSSIBLE LOSS OF PRINCIPAL.
This prospectus contains the information you should read and know
before you invest in shares of the Fund. Keep this prospectus for
future reference.
The Fund has also filed a Statement of Additional Information dated
June 30, 1997, with the Securities and Exchange Commission ("SEC").
The information contained in the Statement is incorporated by
reference into this prospectus. You may request a copy of the
Statement free of charge by calling toll-free 1-800-334-2292. To
obtain other information, or make inquiries about the Trust, contact
the Trust at the address listed in the back of this prospectus.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Prospectus dated June 30, 1997
TABLE OF CONTENTS
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SUMMARY OF FUND EXPENSES 1
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FINANCIAL HIGHLIGHTS 2
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GENERAL INFORMATION 3
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INVESTMENT INFORMATION 3
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Investment Objective 3
Investment Policies 3
Acceptable Investments 4
Equity Investment Considerations 7
Derivative Contracts and Securities 7
Investment Limitation 7
INDEPENDENCE ONE MUTUAL FUND
INFORMATION 7
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Management of the Trust 7
Distribution of Fund Shares 9
Fund Administration 9
Brokerage Transactions 9
NET ASSET VALUE 10
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INVESTING IN THE FUND 10
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Share Purchases 10
Minimum Investment Required 10
What Shares Cost 10
Certificates and Confirmations 11
Dividends and Capital Gains 11
Systematic Investment Program 11
EXCHANGING SECURITIES FOR FUND SHARES 11
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EXCHANGE PRIVILEGE 12
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REDEEMING FUND SHARES 13
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Systematic Withdrawal Program 15
Accounts with Low Balances 15
SHAREHOLDER INFORMATION 16
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Voting Rights 16
EFFECT OF BANKING LAWS 16
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TAX INFORMATION 17
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Federal Income Tax 17
PERFORMANCE INFORMATION 17
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STANDARD & POOR'S 17
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FINANCIAL STATEMENTS 19
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INDEPENDENT AUDITOR'S REPORT 32
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ADDRESSES Back Cover
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SUMMARY OF FUND EXPENSES
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SHAREHOLDER TRANSACTION EXPENSES
<TABLE>
<S> <C>
Maximum Sales Charge Imposed on Purchases (as a percentage of offering price)............................ None
Maximum Sales Charge Imposed on Reinvested Dividends
(as a percentage of offering price).................................................................... None
Contingent Deferred Sales Charge (as a percentage of original purchase
price or redemption proceeds, as applicable)........................................................... None
Redemption Fee (as a percentage of amount redeemed, if applicable)....................................... None
Exchange Fee............................................................................................. None
</TABLE>
ANNUAL FUND OPERATING EXPENSES
(As a percentage of average net assets)
<TABLE>
<S> <C>
Management Fee (after waiver)(1)......................................................................... 0.25%
12b-1 Fees............................................................................................... None
Total Other Expenses (after waiver)(2)................................................................... 0.19%
Total Fund Operating Expenses (after waivers)(3).................................................... 0.44%
</TABLE>
(1) The management fee was reduced to reflect the voluntary waiver by
the investment adviser. The adviser can terminate this voluntary
waiver at any time at its sole discretion. The maximum management
fee is 0.40%.
(2)Total Other Expenses have been reduced to reflect the voluntary
waiver of a portion of the administrative fee. The administrator
can terminate this voluntary waiver at any time at its sole
discretion.
(3) The Total Fund Operating Expenses in the table above are based on
expenses expected to be incurred during the fiscal year ending
April 30, 1998, and are expected to be 0.63%, absent the voluntary
waivers described in Notes 1 and 2 above. During the course of
this period, expenses may be more or less than the amount shown.
The Total Fund Operating Expenses for the fiscal year ended April
30, 1997 were 0.40%, and would have been 0.64% absent the
voluntary waivers of portions of the management fee and
administrative fee.
THE PURPOSE OF THIS TABLE IS TO ASSIST AN INVESTOR IN UNDERSTANDING THE
VARIOUS COSTS AND EXPENSES THAT A SHAREHOLDER OF THE FUND WILL BEAR, EITHER
DIRECTLY OR INDIRECTLY. FOR MORE COMPLETE DESCRIPTIONS OF THE VARIOUS COSTS AND
EXPENSES, SEE "INVESTING IN THE FUND." Wire-transferred redemptions of less than
$5,000 may be subject to additional fees.
<TABLE>
<S> <C> <C> <C> <C>
EXAMPLE 1 YEAR 3 YEARS 5 YEARS 10 YEARS
You would pay the following expenses on a $1,000 investment assuming (1) 5%
annual return and (2) redemption at the end of each time period............ $5 $14 $25 $55
</TABLE>
THE ABOVE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
INDEPENDENCE ONE EQUITY PLUS FUND
FINANCIAL HIGHLIGHTS
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(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD) Reference is made to
the Independent Auditors' Report on page 32.
<TABLE>
<CAPTION>
YEAR ENDED APRIL 30,
<S> <C> <C>
1997 1996(A)
NET ASSET VALUE, BEGINNING OF PERIOD $ 11.39 $ 10.00
- -----------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
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Net investment income 0.21 0.11
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Net realized and unrealized gain (loss) on investments 2.70 1.38
- ----------------------------------------------------------------------------------------- --------- ---------
Total from investment operations 2.91 1.49
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LESS DISTRIBUTIONS
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Distributions from net investment income (0.21) (0.10)
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Distributions from net realized gain on invesments (0.05) --
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Total distributions (0.26) (0.10)
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NET ASSET VALUE, END OF PERIOD $ 14.04 $ 11.39
- ----------------------------------------------------------------------------------------- --------- ---------
TOTAL RETURN (B) 26.00% 14.96%
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RATIOS TO AVERAGE NET ASSETS
- -----------------------------------------------------------------------------------------
Expenses 0.40% 0.39%*
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Net investment income 1.74% 1.92%*
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Expense waiver (c) 0.24% 0.31%*
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SUPPLEMENTAL DATA
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Net assets, end of period (000 omitted) $169,328 $112,609
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Average commission rate paid (d) $0.0350 $0.0345
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Portfolio turnover 8% 6%
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</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.
(c) This voluntary expense decrease is reflected in both the expense
and net investment income ratios shown above.
(d) Represents total commissions paid on portfolio securities divided
by total portfolio shares purchased or sold on which commissions
were charged.
Further information about Equity Plus Fund's performance is contained
in the Annual Report for the fiscal year ended April 30, 1997, which
can be obtained free of charge.
GENERAL INFORMATION
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The Trust was established as a Massachusetts business trust under a
Declaration of Trust dated January 9, 1989. The Declaration of Trust
permits the Trust to offer separate series of shares representing
interests in separate portfolios of securities. The shares in any one
portfolio may be offered in separate classes. This prospectus relates
only to the Trust's portfolio known as Independence One Equity Plus
Fund. As of the date of this prospectus, the Fund does not offer
separate classes of shares.
Shares of the Fund are designed primarily for individuals and
institutions as a convenient means of accumulating an interest in a
professionally-managed, diversified portfolio investing substantially
in the common stocks of companies with very large market
capitalization. A minimum initial investment of $1,000 is required.
Subsequent investments must be in the amount of at least $100.
INVESTMENT INFORMATION
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INVESTMENT OBJECTIVE
The investment objective of the Fund is total return. The investment
objective cannot be changed without the approval of shareholders.
While there is no assurance that the Fund will achieve its investment
objective, it endeavors to do so by following the investment policies
described in this prospectus.
INVESTMENT POLICIES
The Fund will pursue its investment objective by attempting to provide
investment results that correspond to or exceed the aggregate price
and dividend performance of the S&P 100 by investing primarily in the
stocks comprising the S&P 100. Unless indicated otherwise, the
investment policies of the Fund may be changed by the Board of
Trustees ("Trustees") without the approval of shareholders.
Shareholders will be notified before any material change in these
policies becomes effective.
The S&P 100 is a capitalization-weighted index of 100 stocks from a
broad range of industries. It provides a measure of overall large
company performance because it comprises 100 blue chip stocks from
diverse industry groups. Stocks selected for inclusion tend to be the
leading companies in leading industries in the U.S. economy. Selection
criteria include market value, capitalization, trading activity and
liquidity, and soundness of financial and operating conditions. The
component stocks are weighted according to the total market value of
their outstanding shares. The impact of a component's price change is
proportional to the issue's total market value, which is the share
price times the number of shares outstanding. These are summed for all
100 stocks and divided by a predetermined base value. The base value
for the S&P 100 is adjusted to reflect changes in capitalization
resulting from mergers, acquisitions, stock rights and substitutions.
Inclusion of a particular stock in the S&P 100 in no way implies an
opinion by S&P as to its investment attractiveness, nor is S&P a
sponsor or in any way affiliated with the Fund.
Under normal circumstances, at least 80% of the Fund's assets will be
invested to correspond as closely as possible to the relative
weighting of the S&P 100. With respect to this 80% investment level,
the Fund will attempt to achieve a high degree of correlation between
the performance of its portfolio and that of the S&P 100. In managing
this portion of the Fund's assets, Michigan National Bank (the
"Adviser") and Sosnoff Sheridan Group (the "Sub-Adviser")
(collectively, the "Advisers") will utilize a technique called index
fund management which entails the use of a computer program to track
the S&P 100 on a daily basis. The Advisers will purchase and sell
securities from the Fund's portfolio as necessary to continually and
accurately duplicate the composition of the S&P 100, as appropriate,
as it changes over time. The Advisers will continually assess the
validity of the adjustments made to the Fund's portfolio.
With respect to the remaining 20% of the Fund's assets, the Advisers
will normally select common stocks that are included in the S&P 100,
the weightings of which may or may not be identical to that of the S&P
100. These weightings will be determined by the Advisers in an effort
to exceed the total return performance of the S&P 100. Several
criteria are considered in selecting those stocks that, in the
Advisers' opinion, are likely to have above-average performance. These
criteria include: (1) projections by securities analysts of the
stock's earnings and dividend growth; (2) growth potential, as
measured by reinvestment of a high portion of a company's current
earnings; (3) improving earnings outlook, as determined based upon
surveys of Wall Street securities analysts; (4) technical measures,
such as rising trading volume indicating an increasing investor
interest in a stock; and (5) dividend yield, with preference being
given to high-yield stocks and stocks of companies which pay no
dividends and retain their earnings to finance growth.
The Fund's ability to provide investment results that correspond to or
exceed the aggregate price and dividend performance of the S&P 100
will depend partly on the size and timing of cash flows into and out
of the Fund. Investment changes to accommodate these cash flows will
be made to maintain the similarity of the Fund's portfolio to the S&P
100, with respect to the 80% investment level described above, to the
maximum practicable extent. With respect to the reciprocal 20%
investment level described above, changes will be made to accommodate
cash flows, as appropriate. From time to time, adjustments may be made
in the Fund because of changes in the composition of the S&P 100 as
announced by S&P. It is anticipated that these adjustments will occur
infrequently, and therefore, the accompanying costs, including
brokerage fees, custodial expenses, and transfer taxes, are expected
to be relatively low. Portfolio turnover is also expected to be lower
than for most other investment companies. The adverse financial
situation of an issuer may not directly result in the elimination of
its securities from the portfolio, unless the securities are removed
from the S&P 100. The Fund reserves the right to remove an investment
from the Fund if, in the Advisers' opinion, the merit of the
investment has been substantially impaired by extraordinary events or
financial conditions.
ACCEPTABLE INVESTMENTS
In addition to the investment policies described above, the Fund may
utilize stock index futures contracts and options on stocks, stock
indices and stock index futures contracts for the purposes of managing
cash flows into and out of the Fund's portfolio and potentially
reducing transactional costs. The Fund will only enter into stock
index futures contracts for the purpose of offsetting risks from other
positions.
The Fund may hold cash reserves which may be invested in temporary
investments which include, but are not limited to, short-term money
market instruments, U.S. government securities (including variable
rate U.S. government securities), and repurchase agreements. The Fund
may also invest in restricted and illiquid securities, securities of
other investment companies, and lend portfolio securities.
STOCK INDEX FUTURES AND OPTIONS. The Fund may utilize stock index
futures contracts, options, and options on futures contracts, subject
to the limitation that the value of these futures contracts and
options will not exceed 20% of the Fund's total assets. Also the Fund
will not purchase options to the extent that more than 5% of the value
of the Fund's total assets would be invested in premiums on open
option positions.
These contracts and options will serve three purposes. First, the
contracts, some of which require a small margin, will allow the Fund
to maintain sufficient liquidity to meet redemption requests, thereby
handling cash flows into and out of the Fund. In addition, the
contracts will increase the level of Fund assets that may be devoted
to attempting to approximate the investment return of the S&P 100.
Third, participation in futures contracts could potentially reduce
transaction costs, since transaction costs associated with futures and
options contracts can be lower than costs stemming from direct
investments in stocks.
RISKS. There are several risks accompanying the utilization of
futures contracts to effectively anticipate market movements.
First, positions in futures contracts may be closed only on an
exchange or board of trade that furnishes a secondary market for
such contracts. While the Fund plans to utilize futures contracts
only if an active market for such contracts exists, there is no
guarantee that a liquid market will exist for the contracts at a
specified time. The Fund's ability to establish and close out
futures and options positions depends on this secondary market.
Furthermore, because, by definition, futures contracts look to
projected price levels in the future, and not to current levels
of valuation, market circumstances may result in there being a
discrepancy between the price of the stock index future and the
movement in the corresponding stock index. The absence of a
perfect price correlation between the futures contract and its
underlying stock index could stem from investors choosing to
close futures contracts by offsetting transactions, rather than
satisfying additional margin requirements. This could result in a
distortion of the relationship between the index and futures
market. In addition, because the futures market imposes less
burdensome margin requirements than the securities market, an
increased amount of participation by speculators in the futures
market could result in price fluctuations.
The effective use of futures and options as hedging techniques
depends on the correlation between their prices and the behavior
of the Fund's portfolio securities as well as the Adviser's
ability to accurately predict the direction of stock prices,
interest rates and other relevant economic factors. In addition,
daily limits on the fluctuation of futures and options prices
could cause the Fund to be unable to timely liquidate its futures
or options position and cause it to suffer greater losses than
would otherwise be the case. In this regard, the Fund may be
unable to anticipate the extent of its losses from futures
transactions. The Statement of Additional Information includes a
further discussion of futures and options transactions.
In view of these considerations, the Fund will comply with the
following restrictions when purchasing and selling futures
contracts. First, the Fund will not participate in futures
transactions if the sum of its initial margin deposits on open
contracts will exceed 5% of the market value of the Fund's total
assets, after taking into account the unrealized profits and
losses on those contracts it has entered into. Second, the Fund
will not enter into these contracts for speculative purposes.
Third, since the Fund does not constitute a commodity pool, it
will not market itself as such, nor serve as a vehicle for
trading in the commodities futures or commodity options markets.
In this regard, the Fund will disclose to all prospective
investors the limitations on its futures and options
transactions, and make clear that these transactions are entered
into only for bona fide hedging purposes, or other permissible
purposes pursuant to regulations promulgated by the Commodity
Futures Trading Commission ("CFTC"). Finally, the Fund has
claimed an exclusion from registration as a commodity pool
operator under the regulations promulgated by the CFTC.
TEMPORARY INVESTMENTS. For temporary defensive purposes, the Fund may invest up
to 100% of its total assets in cash and cash items including: short-term money
market instruments; securities issued and/or guaranteed as to payment of
principal and interest by the U.S. government, its agencies or
instrumentalities; and repurchase agreements.
The Fund may also hold the instruments described above in such amounts
as necessary: to provide funds for the settlement of portfolio
transactions; pending investment of cash receipts in the ordinary
course of business; and to meet requests for redemption of Fund
shares.
U.S. GOVERNMENT SECURITIES. The Fund is permitted to invest in U.S.
government securities which are either issued or guaranteed by the U.S.
government, its agencies, or instrumentalities. These securities include,
but are not limited to, the following:
direct obligations of the U.S. Treasury, such as U.S. Treasury bills,
notes and bonds; and
notes, bonds, and discount notes of U.S. government agencies or
instrumentalities, such as the: Farm Credit System, including
the National Bank for Cooperatives, Farm Credit Banks, and
Banks for Cooperatives; Farmers Home Administration; Federal
Home Loan Banks; Federal Home Loan Mortgage Corporation;
Federal National Mortgage Association; Government National
Mortgage Association; and Student Loan Marketing Association.
Some of the short-term U.S. government securities the Fund may
purchase carry variable interest rates. These securities have a
rate of interest subject to adjustment at least annually. This
adjusted interest rate is ordinarily tied to some objective
standard, such as a published interest rate or interest rate
index.
REPURCHASE AGREEMENTS. Repurchase agreements are arrangements in
which banks, broker/dealers, and other recognized financial
institutions sell U.S. government securities or other securities
to the Fund and agree at the time of sale to repurchase them at a
mutually agreed upon time and price within one year from the date
of acquisition. To the extent that the original seller does not
repurchase the securities from the Fund, the Fund could receive
less than the repurchase price on any sale of such securities.
EQUITY INVESTMENT CONSIDERATIONS
As described above, the Fund invests primarily in the common stocks
comprising the S&P 100. As with other mutual funds that invest
primarily in common stocks, the Fund is subject to market risks. That
is, the possibility exists that common stocks will decline over short
or even extended periods of time, and the United States equity market
tends to be cyclical, experiencing both periods when stock prices
generally increase and periods when stocks prices generally decrease.
DERIVATIVE CONTRACTS AND SECURITIES
The term "derivative" has traditionally been applied to certain
contracts (including, futures, forward, option and swap contracts)
that "derive" their value from changes in the value of an underlying
security, currency, commodity or index. Certain types of securities
that incorporate the performance characteristics of these contracts
are also referred to as "derivatives." The term has also been applied
to securities "derived" from the cash flows from underlying
securities, mortgages or other obligations.
Derivative contracts and securities can be used to reduce or increase
the volatility of an investment portfolio's total performance. While
the response of certain derivative contracts and securities to market
changes may differ from traditional investments, such as stock and
bonds, derivatives do not necessarily present greater market risks
than traditional investments. The Fund will only use derivative
contracts for the purposes disclosed in the applicable prospectus
sections above. To the extent that the Fund invests in securities that
could be characterized as derivatives, it will only do so in a manner
consistent with its investment objectives, policies and limitations.
INVESTMENT LIMITATION
The Fund will not borrow money directly or through reverse repurchase
agreements (arrangements in which the Fund sells a money market
instrument for at least a percentage of its cash value with an
agreement to buy it back on a set date) except, under certain
circumstances, the Fund may borrow up to one-third of the value of its
total assets and pledge securities to secure such borrowings.
The above investment limitation cannot be changed without shareholder
approval.
INDEPENDENCE ONE MUTUAL FUNDS INFORMATION
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MANAGEMENT OF THE TRUST
BOARD OF TRUSTEES. The Trustees are responsible for managing the
Trust's business affairs and for exercising all of the Trust's powers
except those reserved for the shareholders. An Executive Committee of
the Board of Trustees handles the Board's responsibilities between
meetings of the Board.
INVESTMENT ADVISER. Pursuant to an investment advisory contract with
the Trust, investment decisions for the Fund are made by Michigan
National Bank, as the Fund's investment adviser subject to direction
by the Trustees. The Adviser continually conducts investment research
and supervision for the Fund and is responsible for the purchase or
sale of portfolio instruments, for which it receives an annual fee
from the assets of the Fund.
ADVISORY FEES. The Adviser may receive an annual investment
advisory fee equal to 0.40% of the Fund's average daily net
assets. The Adviser may voluntarily choose to waive a portion of
its fee or reimburse certain expenses of the Fund.
ADVISER'S BACKGROUND. Michigan National Bank, a national banking
association, is a wholly-owned subsidiary of Michigan National
Corporation ("MNC"). MNC is a wholly owned subsidiary of National
Australia Bank Limited, which is a transnational banking
organization, headquartered in Melbourne, Australia. Through its
subsidiaries and affiliates, MNC, Michigan's fifth largest bank
holding company in terms of total assets, as of December 31,
1996, offers a full range of financial services to the public,
including commercial lending, depository services, cash
management, brokerage services, retail banking, mortgage banking,
investment advisory services and trust services. Independence One
Capital Management Corporation ("IOCM"), a nationally recognized
investment advisory subsidiary of MNC, provides investment
advisory services for trust and other managed assets. IOCM and
the Trust Division of Michigan National Bank (the "Trust
Division") have managed custodial assets totaling $10.7 billion.
Of this amount, IOCM and the Trust Division have investment
discretion over $1.9 billion.
Michigan National Bank has managed mutual funds since May 1989.
The Trust Division has managed pools of commingled funds since
1964.
As part of its regular banking operations, Michigan National Bank
may make loans to or provide credit support for obligations
issued by public companies or municipalities. Thus, it may be
possible, from time to time, for the Fund to hold or acquire the
securities of issuers which are also lending clients of Michigan
National Bank. The lending relationship will not be a factor in
the selection of securities.
Sharon Dischinger is Second Vice President and Portfolio Manager for
Michigan National Bank and Independence One Capital Management Corporation
in Farmington Hills, and has been responsible for management of the Fund's
portfolio since its inception. Ms. Dischinger joined Michigan National Bank
in 1990 and is currently the head equity trader. She is also a General
Securities Representative. Prior to Michigan National Bank, Ms. Dischinger
was the head equity trader at Morison Asset Management.
SUB-ADVISER. Pursuant to the terms of an investment sub-advisory
agreement between the Adviser and Sosnoff Sheridan Corporation (doing
business as Sosnoff Sheridan Group), the Sub-Adviser furnishes certain
investment advisory services to the Adviser, including investment
research, statistical and other factual information, and
recommendations, based on its analysis, and assists the Adviser in
identifying securities for potential purchase and/or sale on behalf of
the Fund's portfolio. For the services provided and the expenses
incurred by the Sub-Adviser pursuant to the sub-advisory agreement,
the Sub-Adviser is entitled to receive an annual fee of 0.035% of the
average daily value of the Fund's equity securities payable by the
Adviser. The Sub-Adviser may elect to waive some or all of its fee. In
no event shall the Fund be responsible for any fees due to the
Sub-Adviser for its services to the Adviser. The Sub-Adviser, located
at 440 South LaSalle Street, Suite 2301, Chicago, Illinois, 60605, is
a corporation controlled by Thomas Sosnoff, its Director and
President, and Scott Sheridan, its Director, Executive Vice-President
and Secretary. In the event that the Sub-Adviser, for any reason,
ceases to furnish sub-advisory services to the Fund, the Adviser will
assume direct responsibility for all advisory functions.
DISTRIBUTION OF FUND SHARES
Federated Securities Corp. is the principal distributor for shares of the Fund.
It is a Pennsylvania corporation organized on November 14, 1969, and is the
principal distributor for a number of investment companies. Federated Securities
Corp. is a subsidiary of Federated Investors.
FUND ADMINISTRATION
ADMINISTRATIVE SERVICES. Federated Administrative Services, a
subsidiary of Federated Investors, provides the Fund with certain
administrative personnel and services necessary to operate the Fund,
such as certain legal and accounting services. Federated
Administrative Services provides these at an annual rate as specified
below:
<TABLE>
<CAPTION>
MAXIMUM AVERAGE AGGREGATE DAILY
ADMINISTRATIVE FEE NET ASSETS OF THE TRUST
<C> <S>
.150% on the first $250 million
.125% on the next $250 million
.100% on the next $250 million
.075% on assets in excess of $750 million
</TABLE>
The administrative fee received during any fiscal year shall be at
least $50,000 for each portfolio in Independence One Mutual Funds.
Federated Administrative Services may choose voluntarily to waive a
portion of its fee.
CUSTODIAN. Michigan National Bank, Farmington Hills, Michigan, is custodian for
the securities and cash of the Fund.
BROKERAGE TRANSACTIONS
When selecting brokers and dealers to handle the purchase and sale of
portfolio instruments, the Adviser looks for prompt execution of the
order at a favorable price. In working with dealers, the Adviser will
generally use those who are recognized dealers in specific portfolio
instruments, except when a better price and execution of the order can
be obtained elsewhere. In selecting among firms believed to meet these
criteria, the Adviser may give consideration to those firms which have
sold or are selling shares of the Fund and other funds distributed by
Federated Securities Corp. The Adviser makes decisions on portfolio
transactions and selects brokers and dealers subject to review by the
Board of Trustees.
NET ASSET VALUE
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The Fund's net asset value per share fluctuates. It is determined by
adding the market value of all securities and other assets of the
Fund, subtracting the liabilities of the Fund, and dividing the
remainder by the total number of shares outstanding.
INVESTING IN THE FUND
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SHARE PURCHASES
Shares of the Fund may be purchased through Michigan National Bank,
Independence One Brokerage Services, Inc. ("Independence One"), or
through brokers or dealers which have a sales agreement with the
distributor. Texas residents must purchase shares through Federated
Securities Corp. at 1-800-618-8573. Investors may purchase shares of
the Fund on days on which both the New York Stock Exchange and Federal
Reserve Wire System are open for business. In connection with the sale
of Fund shares, the distributor may from time to time offer certain
items of nominal value to any shareholder or investor. The Fund
reserves the right to reject any purchase request.
TO PLACE AN ORDER. Investors may call toll-free 1-800-334-2292 to
purchase shares of the Fund through Michigan National Bank or
Independence One. In addition, investors may purchase shares of the
Fund by calling their authorized broker directly. Payments may be made
either by check or wire transfer of federal funds.
Payment by wire must be received before 4:00 p.m. (Eastern time). It
is the responsibility of Michigan National Bank, Independence One or
broker/dealers to transmit orders to the Fund by 5:00 p.m. (Eastern
time) in order for shares to be purchased at that day's price. For
settlement of an order, payment must be received by check or wire
transfer within three business days of receipt of the order. To
purchase by check, the check must be included with the order and made
payable to "Independence One Equity Plus Fund." Checks must be
converted into federal funds to be considered received.
Federal funds should be wired as follows: Federated Shareholder
Services Company c/o Michigan National Bank, Farmington Hills,
Michigan; Account Number: 6856238933; For Credit to: Independence One
Equity Plus Fund; Fund Number (this number can be found on the account
statement or by contacting the Fund); Group Number or Order Number;
Nominee or Institution Name; and ABA Number 072000805.
MINIMUM INVESTMENT REQUIRED
The minimum initial investment in the Fund is $1,000. Subsequent
investments must be in amounts of at least $100.
WHAT SHARES COST
Shares of the Fund are sold at their net asset value next determined
after an order is received. There is no sales charge imposed by the
Fund.
The net asset value is determined as of the close of trading (normally
4:00 p.m., Eastern time) on the New York Stock Exchange, Monday
through Friday, except on: (i) days on which there are not sufficient
changes in the value of the Fund's portfolio securities that its net
asset value might be materially affected; (ii) days during which no
shares are tendered for redemption and no orders to purchase shares
are received; and (iii) on the following holidays: New Year's Day,
Martin Luther King Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day, and Christmas Day.
CERTIFICATES AND CONFIRMATIONS
As transfer agent for the Fund, Federated Shareholder Services Company
maintains a share account for each shareholder of record. Share
certificates are not issued unless shareholders so request by
contacting their Michigan National Bank or Independence One
representative or authorized broker in writing.
Detailed confirmations of each purchase and redemption are sent to
each shareholder. Monthly confirmations are sent to report dividends
paid during that month.
DIVIDENDS AND CAPITAL GAINS
Dividends are declared and paid quarterly. Capital gains realized by
the Fund, if any, will be distributed at least once every 12 months.
Dividends and capital gains are automatically reinvested on payment
dates in additional shares without a sales charge unless cash payments
are requested by shareholders in writing to the Fund through their
Michigan National Bank or Independence One representative or
authorized broker. Shares purchased with reinvested dividends are
credited to shareholder accounts on the following day.
SYSTEMATIC INVESTMENT PROGRAM
Once the Fund account has been opened, shareholder may add to their
investment on a regular basis in a minimum amount of $100. Under this
program, funds may be automatically withdrawn periodically from the
shareholder's checking account and invested in Fund shares at the net
asset value next determined after an order is received. A shareholder
may apply for participation in this program through Michigan National
Bank by calling 1-800-334-2292.
EXCHANGING SECURITIES FOR FUND SHARES
- --------------------------------------------------------------------------------
The Fund may accept securities in exchange for Fund shares. The Fund
will allow such exchanges only upon the prior approval of the Fund and
a determination by the Fund and the Adviser that the securities to be
exchanged are acceptable.
Any securities exchanged must meet the investment objective and
policies of the Fund, must have a readily ascertainable market value,
and must be liquid. The market value of any securities exchanged in an
initial investment, plus any cash, must be at least equal to the
minimum investment in the Fund. The Fund acquires the exchanged
securities for investment and not for resale.
Securities accepted by the Fund will be valued in the same manner as
the Fund values its assets. The basis of the exchange will depend on
the net asset value of Fund shares on the day the securities are
valued. One share of the Fund will be issued for the equivalent amount
of securities accepted.
Any interest earned on the securities prior to the exchange will be
considered in valuing the securities. All interest, dividends,
subscription or other rights attached to the securities become the
property of the Fund, along with the securities.
If an exchange is permitted, it will be treated as a sale for federal
income tax purposes. Depending upon the cost basis of the securities
exchanged for Fund shares, a gain or loss may be realized by the
investor.
EXCHANGE PRIVILEGE
- --------------------------------------------------------------------------------
All shareholders of the Fund are shareholders of the Trust, which
consists of the Fund, Independence One Fixed Income Fund, Independence
One Michigan Municipal Bond Fund, Independence One U.S. Government
Securities Fund and the following money market funds: Independence One
Michigan Municipal Cash Fund; Independence One Prime Money Market
Fund; and Independence One U.S. Treasury Money Market Fund.
Shareholders of the Fund have access to these funds ("participating
funds") through an exchange program.
With the exception of Independence One Prime Money Market Fund, the
participating funds currently offer only one class of shares. If such
funds should add a second class of shares, exchanges may be limited to
shares of the same class of each fund. Shareholders of the Fund have
access to both Class A Shares and Class B Shares of Independence One
Prime Money Market Fund through the exchange program.
Shares of the Fund may be exchanged for shares of participating funds
at net asset value.
Shareholders who exercise this exchange privilege must exchange shares
having a net asset value at least equal to the minimum investment of
the participating fund into which they are exchanging. Prior to any
exchange, the shareholder must receive a copy of the current
prospectus of the participating fund into which the exchange is being
made.
The exchange privilege is available to shareholders residing in any
state in which the participating fund shares being acquired may
legally be sold. Upon receipt by the transfer agent of proper
instructions and all necessary supporting documents, shares submitted
for exchange will be redeemed at the next-determined net asset value.
If the exchanging shareholder does not have an account in the
participating fund whose shares are being acquired, a new account will
be established with the same registration, dividend, and capital gain
options as the account from which shares are exchanged, unless
otherwise specified by the shareholder. In the case where the new
account registration is not identical to that of the existing account,
a signature guarantee is required. (See "Redeeming Fund Shares--By
Mail.") Exercise of this privilege is treated as a redemption and new
purchase for federal income tax purposes and, depending on the
circumstances, a short or long-term capital gain or loss may be
realized. The Fund reserves the right to modify or terminate the
exchange privilege at any time. Shareholders would be notified prior
to any modification or termination. Shareholders may obtain further
information on the exchange privilege by calling their Michigan
National Bank or Independence One representative or authorized broker.
EXCHANGE BY TELEPHONE. Shareholders may provide instructions for
exchanges between participating funds by telephone to their Michigan
National Bank or Independence One representative by calling
1-800-334-2292. In addition, investors may exchange shares by calling
their authorized brokers directly. Shares may be exchanged by
telephone only between fund accounts having identical shareholder
registrations.
An authorization form permitting the Fund to accept telephone exchange
requests must first be completed. It is recommended that investors
request this privilege at the time of their initial application. If
not completed at the time of initial application, authorization forms
and information on this service can be obtained through a Michigan
National Bank or Independence One representative or authorized broker.
Telephone exchange instructions may be recorded.
Telephone exchange instructions must be received by Michigan National
Bank, Independence One or an authorized broker and transmitted to the
transfer agent before 4:00 p.m. (Eastern time) for shares to be
exchanged the same day. Shareholders who exchange into a fund will not
receive a dividend from the Fund on the date of the exchange.
Shareholders may have difficulty in making exchanges by telephone
through banks, brokers, and other financial institutions during times
of drastic economic or market changes. If shareholders cannot contact
their Michigan National Bank or Independence One representative or
authorized broker by telephone, it is recommended that an exchange
request be made in writing and sent by mail for next day delivery.
Send mail requests to: Independence One Mutual Funds, 27777 Inkster
Road, Mail Code 10-30, Farmington Hills, Michigan 48333-9065.
Any shares held in certificate form cannot be exchanged by telephone
but must be forwarded to Federated Shareholder Services Company, the
transfer agent, by a Michigan National Bank or Independence One
representative or authorized broker and deposited to the shareholder's
account before being exchanged.
If reasonable procedures are not followed by the Fund, it may be
liable for losses due to unauthorized or fraudulent telephone
instructions.
WRITTEN EXCHANGE. A shareholder wishing to make an exchange by written
request may do so by sending it to: Independence One Mutual Funds,
27777 Inkster Road, Mail Code 10-30, Farmington Hills, Michigan
48333-9065. In addition, an investor may exchange shares by sending a
written request to their authorized broker directly.
REDEEMING FUND SHARES
- --------------------------------------------------------------------------------
Shares are redeemed at their next determined net asset value after
Federated Shareholder Services Company receives the redemption
request. Redemptions will be made on days on which the Fund computes
its net asset value. Redemption requests cannot be executed on days on
which the New York Stock Exchange is closed or on federal holidays
restricting wire transfers. Telephone or written requests for
redemption must be received in proper form and can be made to the Fund
through a Michigan National Bank or Independence One representative or
authorized broker. Although the transfer agent does not charge for
telephone redemptions, it reserves the right to charge a fee for the
cost of wire-transferred redemptions of less than $5,000.
BY TELEPHONE. Shares may be redeemed by telephoning a Michigan
National Bank or an Independence One representative at 1-800-334-2292.
In addition, shareholders may redeem shares by calling their
authorized brokers directly. Redemption requests must be received and
transmitted to the transfer agent before 4:00 p.m. (Eastern time) in
order for shares to be redeemed at that day's net asset value. The
Michigan National Bank or Independence One representative or
authorized broker is responsible for promptly submitting redemption
requests and providing proper written redemption instructions to the
transfer agent. Registered broker/dealers may charge customary fees
and commissions for this service. If at any time, the Fund shall
determine it necessary to terminate or modify this method of
redemption, shareholders would be promptly notified.
For calls received before 4:00 p.m. (Eastern time) proceeds will
normally be wired the next day to the shareholder's account at a
domestic commercial bank that is a member of the Federal Reserve
System or a check will be sent to the address of record. In no event
will proceeds be wired or a check sent more than seven days after a
proper request for redemption has been received.
An authorization form permitting the Fund to accept telephone
redemption requests must first be completed. It is recommended that
investors request this privilege at the time of their initial
application. If not completed at the time of initial application,
authorization forms and information on this service can be obtained
through a Michigan National Bank or Independence One representative or
authorized broker. Telephone redemption instructions may be recorded.
In the event of drastic economic or market changes, a shareholder may
experience difficulty in redeeming by telephone. If such a case should
occur, another method of redemption, such as "By Mail," should be
considered.
If reasonable procedures are not followed by the Fund, it may be
liable for losses due to unauthorized or fraudulent telephone
instructions.
BY MAIL. Shareholders may redeem shares by sending a written request
to the Fund through their Michigan National Bank or Independence One
representative or authorized broker. The written request should
include the shareholder's name, the Fund name, the class designation,
the account number, and the share or dollar amount requested.
Shareholders redeeming through Michigan National Bank or Independence
One should mail written requests to: Independence One Mutual Funds,
27777 Inkster Road, Mail Code 10-30, Farmington Hills, Michigan
48333-9065. Investors redeeming through an authorized broker should
mail written requests directly to their broker.
If share certificates have been issued, they must be properly endorsed
and should be sent by registered or certified mail with the written
request.
Shareholders requesting a redemption of any amount to be sent to an
address other than that on record with the Fund, or a redemption
payable other than to the shareholder of record must have signatures
on written redemption requests guaranteed by:
a trust company or commercial bank whose deposits are insured
by the Bank Insurance Fund, which is administered by the
Federal Deposit Insurance Corporation ("FDIC");
a member of the New York, American, Boston, Midwest, or Pacific Stock
Exchange;
a savings bank or savings association whose deposits are
insured by the Savings Association Insurance Fund, which is
administered by the FDIC; or
any other "eligible guarantor institution", as defined in the
Securities & Exchange Act of 1934.
The Fund does not accept signatures guaranteed by a notary public.
The Fund and its transfer agent have adopted standards for accepting
signature guarantees from the above institutions. The Fund may elect
in the future to limit eligible signature guarantors to institutions
that are members of a signature guarantee program. The Fund and its
transfer agent reserve the right to amend these standards at any time
without notice.
Normally, a check for the proceeds is mailed within one business day,
but in no event more than seven days after receipt of a proper written
redemption request.
SYSTEMATIC WITHDRAWAL PROGRAM
Shareholders who desire to receive payments of a predetermined amount
may take advantage of the Systematic Withdrawal Program. Under this
program, shares of the Fund are redeemed to provide for periodic
withdrawal payments in an amount directed by the shareholder.
Depending upon the amount of the withdrawal payments, the amount of
dividends paid and capital gains distributions with respect to Fund
shares, and the fluctuation of the net asset value of Fund shares
redeemed under this program, redemptions may reduce, and eventually
deplete, the shareholder's investment in the Fund. For this reason,
payments under this program should not be considered as yield or
income on the shareholder's investment in the Fund. To be eligible to
participate in this program, a shareholder must have an account value
of at least $10,000, other than retirement accounts subject to
required minimum distributions. A shareholder may apply for
participation in this program through Michigan National Bank by
calling 1-800-334-2292.
ACCOUNTS WITH LOW BALANCES
Due to the high cost of maintaining accounts with low balances, the
Fund may redeem shares in any account and pay the proceeds to the
shareholder if the account balance falls below the required minimum
value of $1,000 due to shareholder redemptions. This requirement does
not apply, however, if the balance falls below $1,000 because of
changes in the Fund's net asset value. Before shares are redeemed to
close an account, the shareholder is notified in writing and allowed
30 days to purchase additional shares to meet the minimum requirement.
SHAREHOLDER INFORMATION
- --------------------------------------------------------------------------------
VOTING RIGHTS
Each share of the Fund gives the shareholder one vote in Trustee
elections and other matters submitted to shareholders for vote. All
shares of all classes of each portfolio in the Trust have equal voting
rights, except that in matters affecting only a particular portfolio
or class, only shares of that portfolio or class are entitled to vote.
As a Massachusetts business trust, the Trust is not required to hold
annual shareholder meetings. Shareholder approval will be sought only
for certain changes in the Trust's or the Fund's operation and for the
election of Trustees under certain circumstances. As of June 9, 1997,
Pierson & Co., the nominee for Michigan National Bank may for certain
purposes be deemed to control the Equity Plus Fund because it is owner
of record of certain shares of the Fund.
Trustees may be removed by the Trustees or by shareholders at a
special meeting. A special meeting of shareholders shall be called by
the Trustees upon the written request of shareholders owning at least
10% of the Trust's outstanding shares.
EFFECT OF BANKING LAWS
- --------------------------------------------------------------------------------
The Glass-Steagall Act and other banking laws and regulations
presently prohibit a bank holding company registered under the Bank
Holding Company Act of 1956 or any affiliate thereof from sponsoring,
organizing or controlling a registered, open-end investment company
continuously engaged in the issuance of its shares, and from issuing,
underwriting, selling or distributing securities in general. Such
banking laws and regulations do not prohibit such a holding company or
affiliate from acting as an investment adviser, transfer agent or
custodian to such an investment company or from purchasing shares of
such a company as agent for and upon the order of their customers.
Some entities providing services to the Trust are subject to such
banking laws and regulations. They believe, based on the advice of its
counsel, that they may perform those services for the Trust
contemplated by any agreement entered into with the Trust without
violating those laws or regulations. Changes in either federal or
state statutes and regulations relating to the permissible activities
of banks and their subsidiaries or affiliates, as well as further
judicial or administrative decisions or interpretations of present or
future statutes and regulations, could prevent these entities from
continuing to perform all or a part of the above services. If this
happens, the Trustees would consider alternative means of continuing
available investment services. It is not expected that existing
shareholders would suffer any adverse financial consequences as a
result of any of these occurrences.
TAX INFORMATION
- --------------------------------------------------------------------------------
FEDERAL INCOME TAX
The Fund will pay no federal income tax because it expects to meet
requirements of the Internal Revenue Code applicable to regulated
investment companies and to receive the special tax treatment afforded
to such companies.
The Fund will be treated as a single, separate entity for federal
income tax purposes so that income (including capital gains) and
losses realized by the Trust's other portfolios, if any, will not be
combined for tax purposes with those realized by the Fund.
Unless otherwise exempt, shareholders are required to pay federal
income tax on any dividends and other distributions, including capital
gains distributions, received. This applies whether dividends and
distributions are received in cash or as additional shares.
Distributions representing long-term capital gains, if any, will be
taxable to shareholders as long-term capital gains no matter how long
the shareholders have held their shares.
PERFORMANCE INFORMATION
- --------------------------------------------------------------------------------
From time to time the Fund advertises its total return and yield.
Total return represents the change, over a specific period of time, in
the value of an investment in the Fund after reinvesting all income
and capital gain distributions. It is calculated by dividing that
change by the initial investment and is expressed as a percentage.
The yield of the Fund is calculated by dividing the net investment
income per share (as defined by the SEC) earned by the Fund over a
thirty-day period by the offering price per share of the Fund on the
last day of the period. This number is then annualized using
semi-annual compounding. The yield does not necessarily reflect income
actually earned by the Fund and, therefore, may not correlate to the
dividends or other distributions paid to shareholders.
From time to time, advertisements for the Fund may refer to ratings,
rankings, and other information in certain financial publications
and/or compare the Fund's performance to certain indices.
STANDARD & POOR'S
- --------------------------------------------------------------------------------
"Standard & Poor's", "S&P", and "S&P 100" are trademarks of the
McGraw-Hill Companies, Inc. and have been licensed for use by Michigan
National Bank. The Fund is not sponsored, endorsed, sold or promoted
by, or affiliated with, Standard & Poor's ("S&P").
S&P makes no representation or warranty, express or implied, to the
owners of the Fund or any member of the public regarding the
advisability of investing in securities generally or in the Fund
particularly or the ability of the Standard & Poor's 100 Index ("S&P
100 Index") to track general stock market performance. S&P's only
relationship to Michigan National Bank (the "Licensee") is the
licensing of certain trademarks and trade names of S&P and of the S&P
100 Index which is determined, composed and calculated by S&P without
regard to the Licensee or the Fund. S&P has no obligation to take the
needs of the Licensee or the owners of the Fund into consideration in
the determination of the timing of, prices at, or quantities of the
Fund to be issued or in the determination or calculation of the
equation by which the Fund is to be converted into cash. S&P has no
obligation or liability in connection with the administration,
marketing or trading of the Fund.
S&P DOES NOT GUARANTEE THE ACCURACY AND/OR THE COMPLETENESS OF THE S&P
100 INDEX OR ANY DATA INCLUDED THEREIN. S&P MAKES NO WARRANTY, EXPRESS
OR IMPLIED, AS TO RESULTS TO BE OBTAINED BY THE LICENSEE, OWNERS OF
THE FUND, OR ANY OTHER PERSON OR ENTITY FROM THE USE OF THE S&P 100
INDEX OR ANY DATA INCLUDED THEREIN IN CONNECTION WITH THE RIGHTS
LICENSED HEREUNDER OR FOR ANY OTHER USE. S&P MAKES NO EXPRESS OR
IMPLIED WARRANTIES, AND EXPRESSLY DISCLAIMS ALL WARRANTIES OR
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE WITH
RESPECT TO THE S&P 100 INDEX OR ANY DATA INCLUDED THEREIN. WITHOUT
LIMITING ANY OF THE FOREGOING, IN NO EVENT SHALL S&P HAVE ANY
LIABILITY FOR ANY SPECIAL, PUNITIVE, INDIRECT OR CONSEQUENTIAL DAMAGES
(INCLUDING LOST PROFITS), EVEN IF NOTIFIED OF THE POSSIBILITY OF SUCH
DAMAGES.
INDEPENDENCE ONE EQUITY PLUS FUND
PORTFOLIO OF INVESTMENTS
APRIL 30, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ------------ ----------------------------------------------------------------------------------- --------------
<C> <S> <C>
COMMON STOCKS--96.3%
- -------------------------------------------------------------------------------------------------
AEROSPACE & DEFENSE--3.0%
-----------------------------------------------------------------------------------
22,226 Boeing Co. $ 2,192,039
-----------------------------------------------------------------------------------
3,954 General Dynamics Corp. 281,723
-----------------------------------------------------------------------------------
14,795 Raytheon Co. 645,432
-----------------------------------------------------------------------------------
13,725 Rockwell International Corp. 912,713
-----------------------------------------------------------------------------------
14,719 United Technologies Corp. 1,113,124
----------------------------------------------------------------------------------- --------------
Total 5,145,031
----------------------------------------------------------------------------------- --------------
AUTOMOTIVE--3.9%
-----------------------------------------------------------------------------------
44,038 Chrysler Corp. 1,321,140
-----------------------------------------------------------------------------------
75,083 Ford Motor Co. 2,609,134
-----------------------------------------------------------------------------------
47,385 General Motors Corp. 2,742,407
----------------------------------------------------------------------------------- --------------
Total 6,672,681
----------------------------------------------------------------------------------- --------------
BANKING--2.2%
-----------------------------------------------------------------------------------
22,256 BankAmerica Corp. 2,601,170
-----------------------------------------------------------------------------------
19,776 First Chicago NBD Corp. 1,112,400
----------------------------------------------------------------------------------- --------------
Total 3,713,570
----------------------------------------------------------------------------------- --------------
CAPITAL GOODS--1.4%
-----------------------------------------------------------------------------------
9,289 Homestake Mining Co. 123,079
-----------------------------------------------------------------------------------
26,200 Minnesota Mining & Manufacturing Co. 2,279,400
----------------------------------------------------------------------------------- --------------
Total 2,402,479
----------------------------------------------------------------------------------- --------------
CHEMICALS--4.0%
-----------------------------------------------------------------------------------
15,390 Dow Chemical Co. 1,306,226
-----------------------------------------------------------------------------------
35,288 Du Pont (E.I.) de Nemours & Co. 3,744,939
-----------------------------------------------------------------------------------
4,636 Mallinckrodt, Inc. 168,635
-----------------------------------------------------------------------------------
36,471 Monsanto Co. 1,559,135
----------------------------------------------------------------------------------- --------------
Total 6,778,935
----------------------------------------------------------------------------------- --------------
</TABLE>
INDEPENDENCE ONE EQUITY PLUS FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- ------------ ----------------------------------------------------------------------------------- --------------
COMMERCIAL--1.2%
-----------------------------------------------------------------------------------
34,436 Ameritech Corp. $ 2,104,900
----------------------------------------------------------------------------------- --------------
COMPUTERS--7.5%
-----------------------------------------------------------------------------------
4,321 (a)Ceridian Corp. 144,213
-----------------------------------------------------------------------------------
40,768 (a)Cisco Systems, Inc. 2,109,744
-----------------------------------------------------------------------------------
4,794 (a)Computer Sciences Corp. 299,625
-----------------------------------------------------------------------------------
62,899 Hewlett-Packard Co. 3,302,198
-----------------------------------------------------------------------------------
32,101 International Business Machines Corp. 5,160,236
-----------------------------------------------------------------------------------
41,941 (a)Oracle Corp. 1,667,155
-----------------------------------------------------------------------------------
11,073 (a)Unisys Corp. 66,438
----------------------------------------------------------------------------------- --------------
Total 12,749,609
----------------------------------------------------------------------------------- --------------
CONSUMER--1.2%
-----------------------------------------------------------------------------------
29,702 American Express Co. 1,956,619
----------------------------------------------------------------------------------- --------------
COSMETICS & PERSONAL CARE--0.5%
-----------------------------------------------------------------------------------
8,327 Avon Products, Inc. 513,151
-----------------------------------------------------------------------------------
6,842 International Flavors & Fragrances, Inc. 288,219
----------------------------------------------------------------------------------- --------------
Total 801,370
----------------------------------------------------------------------------------- --------------
ELECTRIC--0.7%
-----------------------------------------------------------------------------------
14,625 Entergy Corp. 341,859
-----------------------------------------------------------------------------------
42,667 Southern Co. 869,340
----------------------------------------------------------------------------------- --------------
Total 1,211,199
----------------------------------------------------------------------------------- --------------
ELECTRICAL EQUIPMENT--7.3%
-----------------------------------------------------------------------------------
5,909 Black & Decker Corp. 197,951
-----------------------------------------------------------------------------------
9,959 (a)Digital Equipment Corp. 297,525
-----------------------------------------------------------------------------------
102,119 General Electric Co. 11,322,444
-----------------------------------------------------------------------------------
7,862 Honeywell, Inc. 555,254
----------------------------------------------------------------------------------- --------------
Total 12,373,174
----------------------------------------------------------------------------------- --------------
</TABLE>
INDEPENDENCE ONE EQUITY PLUS FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- ------------ ----------------------------------------------------------------------------------- --------------
ELECTRONICS--5.8%
-----------------------------------------------------------------------------------
13,907 AMP, Inc. $ 498,914
-----------------------------------------------------------------------------------
50,898 Intel Corp. 7,793,756
-----------------------------------------------------------------------------------
8,746 (a)National Semiconductor Corp. 218,650
-----------------------------------------------------------------------------------
2,849 Polaroid Corp. 138,177
-----------------------------------------------------------------------------------
2,069 Tektronix, Inc. 111,985
-----------------------------------------------------------------------------------
11,935 Texas Instruments, Inc. 1,065,199
----------------------------------------------------------------------------------- --------------
Total 9,826,681
----------------------------------------------------------------------------------- --------------
ENTERTAINMENT--2.1%
-----------------------------------------------------------------------------------
42,316 Disney (Walt) Co. 3,469,912
-----------------------------------------------------------------------------------
6,517 (a)Harrah's Entertainment, Inc. 104,272
----------------------------------------------------------------------------------- --------------
Total 3,574,184
----------------------------------------------------------------------------------- --------------
FINANCIAL SERVICES--2.7%
-----------------------------------------------------------------------------------
28,726 Citicorp 3,235,266
-----------------------------------------------------------------------------------
8,632 Great Western Financial Corp. 362,544
-----------------------------------------------------------------------------------
10,215 Merrill Lynch & Co., Inc. 972,979
----------------------------------------------------------------------------------- --------------
Total 4,570,789
----------------------------------------------------------------------------------- --------------
FOOD & BEVERAGE--10.1%
-----------------------------------------------------------------------------------
154,327 Coca-Cola Co. 9,819,055
-----------------------------------------------------------------------------------
23,081 Heinz (H.J.) Co. 957,862
-----------------------------------------------------------------------------------
43,733 McDonald's Corp. 2,345,182
-----------------------------------------------------------------------------------
97,377 PepsiCo, Inc. 3,396,023
-----------------------------------------------------------------------------------
6,664 Ralston Purina Co. 548,947
----------------------------------------------------------------------------------- --------------
Total 17,067,069
----------------------------------------------------------------------------------- --------------
FOREST PRODUCTS & PAPER--1.0%
-----------------------------------------------------------------------------------
3,070 Boise Cascade Corp. 102,077
-----------------------------------------------------------------------------------
6,052 Champion International Corp. 281,418
-----------------------------------------------------------------------------------
19,011 International Paper Co. 803,215
-----------------------------------------------------------------------------------
</TABLE>
INDEPENDENCE ONE EQUITY PLUS FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- ------------ ----------------------------------------------------------------------------------- --------------
FOREST PRODUCTS & PAPER--CONTINUED
-----------------------------------------------------------------------------------
12,430 Weyerhaeuser Co. $ 568,673
----------------------------------------------------------------------------------- --------------
Total 1,755,383
----------------------------------------------------------------------------------- --------------
HOMEBUILDERS--0.2%
-----------------------------------------------------------------------------------
5,260 Fluor Corp. 289,300
----------------------------------------------------------------------------------- --------------
HOUSEHOLD PRODUCTS--0.6%
-----------------------------------------------------------------------------------
9,207 Colgate-Palmolive Co. 1,021,977
----------------------------------------------------------------------------------- --------------
INSURANCE--3.3%
-----------------------------------------------------------------------------------
12,747 American General Corp. 556,088
-----------------------------------------------------------------------------------
29,431 American International Group, Inc. 3,781,883
-----------------------------------------------------------------------------------
4,663 CIGNA Corp. 701,199
-----------------------------------------------------------------------------------
7,362 ITT Hartford Group, Inc. 548,469
----------------------------------------------------------------------------------- --------------
Total 5,587,639
----------------------------------------------------------------------------------- --------------
MANUFACTURING--1.2%
-----------------------------------------------------------------------------------
10,926 Allegheny Teledyne, Inc. 290,905
-----------------------------------------------------------------------------------
20,888 Eastman Kodak Co. 1,744,148
----------------------------------------------------------------------------------- --------------
Total 2,035,053
----------------------------------------------------------------------------------- --------------
MEDICAL SUPPLIES--1.4%
-----------------------------------------------------------------------------------
17,108 Baxter International, Inc. 819,045
-----------------------------------------------------------------------------------
42,079 Columbia/HCA Healthcare Corp. 1,472,765
----------------------------------------------------------------------------------- --------------
Total 2,291,810
----------------------------------------------------------------------------------- --------------
METALS & MINING--0.5%
-----------------------------------------------------------------------------------
10,869 Aluminum Co. of America 759,471
----------------------------------------------------------------------------------- --------------
OFFICE EQUIPMENT--0.9%
-----------------------------------------------------------------------------------
2,445 Harris Corp. 209,048
-----------------------------------------------------------------------------------
20,344 Xerox Corp. 1,251,156
----------------------------------------------------------------------------------- --------------
Total 1,460,204
----------------------------------------------------------------------------------- --------------
OIL--11.7%
-----------------------------------------------------------------------------------
31,168 Amoco Corp. 2,606,424
-----------------------------------------------------------------------------------
</TABLE>
INDEPENDENCE ONE EQUITY PLUS FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- ------------ ----------------------------------------------------------------------------------- --------------
OIL--CONTINUED
-----------------------------------------------------------------------------------
10,097 Atlantic Richfield Co. $ 1,374,454
-----------------------------------------------------------------------------------
9,021 Baker Hughes, Inc. 311,224
-----------------------------------------------------------------------------------
6,597 Coastal Corp. 313,357
-----------------------------------------------------------------------------------
155,672 Exxon Corp. 8,814,927
-----------------------------------------------------------------------------------
7,848 Halliburton Co. 554,265
-----------------------------------------------------------------------------------
24,694 Mobil Corp. 3,210,220
-----------------------------------------------------------------------------------
20,832 Occidental Petroleum Corp. 460,908
-----------------------------------------------------------------------------------
15,276 Schlumberger Ltd. 1,691,817
-----------------------------------------------------------------------------------
9,737 Williams Cos., Inc. (The) 427,211
----------------------------------------------------------------------------------- --------------
Total 19,764,807
----------------------------------------------------------------------------------- --------------
PHARMACEUTICALS--10.0%
-----------------------------------------------------------------------------------
62,780 Bristol-Myers Squibb Co. 4,112,090
-----------------------------------------------------------------------------------
83,473 Johnson & Johnson 5,112,721
-----------------------------------------------------------------------------------
74,768 Merck & Co., Inc. 6,766,504
-----------------------------------------------------------------------------------
31,848 Pharmacia & Upjohn, Inc. 943,497
----------------------------------------------------------------------------------- --------------
Total 16,934,812
----------------------------------------------------------------------------------- --------------
RECREATION--0.1%
-----------------------------------------------------------------------------------
6,169 Brunswick Corp. 174,274
----------------------------------------------------------------------------------- --------------
RETAIL--4.4%
-----------------------------------------------------------------------------------
30,677 (a)KMart Corp. 417,974
-----------------------------------------------------------------------------------
17,168 Limited, Inc. 311,170
-----------------------------------------------------------------------------------
15,351 May Department Stores Co. 709,984
-----------------------------------------------------------------------------------
24,541 Sears, Roebuck & Co. 1,177,968
-----------------------------------------------------------------------------------
3,691 Tandy Corp. 193,316
-----------------------------------------------------------------------------------
18,384 (a)Toys R Us, Inc. 523,944
-----------------------------------------------------------------------------------
145,284 Wal-Mart Stores, Inc. 4,104,273
----------------------------------------------------------------------------------- --------------
Total 7,438,629
----------------------------------------------------------------------------------- --------------
</TABLE>
INDEPENDENCE ONE EQUITY PLUS FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- ------------ ----------------------------------------------------------------------------------- --------------
STEEL--0.0%
-----------------------------------------------------------------------------------
7,071 (a)Bethlehem Steel Corp. $ 58,336
----------------------------------------------------------------------------------- --------------
TELECOMMUNICATIONS--5.6%
-----------------------------------------------------------------------------------
102,622 AT&T Corp. 3,437,837
-----------------------------------------------------------------------------------
27,440 Bell Atlantic Corp. 1,859,060
-----------------------------------------------------------------------------------
42,930 MCI Communications Corp. 1,636,706
-----------------------------------------------------------------------------------
27,579 NYNEX Corp. 1,427,213
-----------------------------------------------------------------------------------
16,196 Northern Telecom Ltd. 1,176,235
----------------------------------------------------------------------------------- --------------
Total 9,537,051
----------------------------------------------------------------------------------- --------------
TRANSPORTATION--1.3%
-----------------------------------------------------------------------------------
9,587 Burlington Northern Santa Fe 754,976
-----------------------------------------------------------------------------------
4,585 Delta Air Lines, Inc. 422,393
-----------------------------------------------------------------------------------
7,150 (a)Federal Express Corp. 385,206
-----------------------------------------------------------------------------------
7,841 Norfolk Southern Corp. 704,710
----------------------------------------------------------------------------------- --------------
Total 2,267,285
----------------------------------------------------------------------------------- --------------
UTILITIES-ELECTRIC--0.5%
-----------------------------------------------------------------------------------
11,749 American Electric Power Co., Inc. 475,835
-----------------------------------------------------------------------------------
13,658 Unicom Corp. 297,062
----------------------------------------------------------------------------------- --------------
Total 772,897
----------------------------------------------------------------------------------- --------------
TOTAL COMMON STOCKS (IDENTIFIED COST $114,119,504) 163,097,218
----------------------------------------------------------------------------------- --------------
</TABLE>
INDEPENDENCE ONE EQUITY PLUS FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- ------------ ----------------------------------------------------------------------------------- --------------
(B) REPURCHASE AGREEMENT--3.2%
- -------------------------------------------------------------------------------------------------
$ 5,407,000 First Chicago Capital Markets, Inc., 5.42%, dated 4/30/1997, due
5/1/1997 (AT AMORTIZED COST) $ 5,407,000
----------------------------------------------------------------------------------- --------------
TOTAL INVESTMENTS (IDENTIFIED COST $119,526,504)(C) $ 168,504,218
----------------------------------------------------------------------------------- --------------
</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
$119,584,156. The net unrealized appreciation of investments on a
federal tax basis amounts to $48,920,062 which is comprised of
$50,425,265 appreciation and $1,505,203 depreciation at April 30,
1997.
Note: The categories of investments are shown as a percentage of net assets
($169,328,223) at
April 30, 1997.
(See Notes which are an integral part of the Financial Statements)
INDEPENDENCE ONE EQUITY PLUS FUND
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1997
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- -------------------------------------------------------------------------------------------------
Total investments in securities, at value
(identified cost $119,526,504, and tax cost $119,584,156) $ 168,504,218
- -------------------------------------------------------------------------------------------------
Income receivable 214,563
- -------------------------------------------------------------------------------------------------
Receivable for shares sold 2,643,174
- -------------------------------------------------------------------------------------------------
Deferred expenses 14,980
- ------------------------------------------------------------------------------------------------- --------------
Total assets 171,376,935
- -------------------------------------------------------------------------------------------------
LIABILITIES:
- -----------------------------------------------------------------------------------
Payable for shares redeemed $ 2,032,158
- -----------------------------------------------------------------------------------
Accrued expenses 16,554
- ----------------------------------------------------------------------------------- ------------
Total liabilities 2,048,712
- ------------------------------------------------------------------------------------------------- --------------
NET ASSETS for 12,060,154 shares outstanding $ 169,328,223
- ------------------------------------------------------------------------------------------------- --------------
NET ASSETS CONSIST OF:
- -------------------------------------------------------------------------------------------------
Paid in capital $ 118,473,226
- -------------------------------------------------------------------------------------------------
Net unrealized appreciation of investments 48,977,714
- -------------------------------------------------------------------------------------------------
Accumulated net realized gain on investments 1,729,963
- -------------------------------------------------------------------------------------------------
Undistributed net investment income 147,320
- ------------------------------------------------------------------------------------------------- --------------
Total Net Assets $ 169,328,223
- ------------------------------------------------------------------------------------------------- --------------
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE:
$169,328,223 / 12,060,154 shares outstanding $ 14.04
- ------------------------------------------------------------------------------------------------- --------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
INDEPENDENCE ONE EQUITY PLUS FUND
STATEMENT OF OPERATIONS
YEAR ENDED APRIL 30, 1997
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
- ---------------------------------------------------------------------------------------------------
Dividends $ 2,919,790
- ---------------------------------------------------------------------------------------------------
Interest 219,655
- --------------------------------------------------------------------------------------------------- -------------
Total income 3,139,445
- ---------------------------------------------------------------------------------------------------
EXPENSES:
- --------------------------------------------------------------------------------------
Investment advisory fee $ 588,469
- --------------------------------------------------------------------------------------
Administrative personnel and services fee 160,370
- --------------------------------------------------------------------------------------
Custodian fees 46,720
- --------------------------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses 32,771
- --------------------------------------------------------------------------------------
Directors'/Trustees' fees 3,000
- --------------------------------------------------------------------------------------
Auditing fees 12,643
- --------------------------------------------------------------------------------------
Legal fees 1,407
- --------------------------------------------------------------------------------------
Portfolio accounting fees 48,989
- --------------------------------------------------------------------------------------
Share registration costs 24,714
- --------------------------------------------------------------------------------------
Printing and postage 8,390
- --------------------------------------------------------------------------------------
Insurance premiums 2,846
- --------------------------------------------------------------------------------------
Miscellaneous 4,179
- -------------------------------------------------------------------------------------- -----------
Total expenses 934,498
- --------------------------------------------------------------------------------------
Waivers--
- -------------------------------------------------------------------------
Waiver of investment advisory fee $(262,493)
- -------------------------------------------------------------------------
Waiver of administrative personnel and services fee (88,264)
- ------------------------------------------------------------------------- -----------
Total waivers (350,757)
- -------------------------------------------------------------------------------------- -----------
Net expenses 583,741
- --------------------------------------------------------------------------------------------------- -------------
Net investment income 2,555,704
- --------------------------------------------------------------------------------------------------- -------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
- ---------------------------------------------------------------------------------------------------
Net realized gain on investments 1,757,572
- ---------------------------------------------------------------------------------------------------
Net change in unrealized appreciation of investments 31,063,371
- --------------------------------------------------------------------------------------------------- -------------
Net realized and unrealized gain on investments 32,820,943
- --------------------------------------------------------------------------------------------------- -------------
Change in net assets resulting from operations $ 35,376,647
- --------------------------------------------------------------------------------------------------- -------------
</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>
YEAR ENDED APRIL 30,
------------------------------
1997 1996*
- --------------------------------------------------------------------------------- -------------- --------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- ---------------------------------------------------------------------------------
OPERATIONS--
- ---------------------------------------------------------------------------------
Net investment income $ 2,555,704 $ 1,003,299
- ---------------------------------------------------------------------------------
Net realized gain on investments ($1,787,648 and $593,968 net gains,
respectively, as computed for federal tax purposes) 1,757,572 566,391
- ---------------------------------------------------------------------------------
Net change in unrealized appreciation 31,063,371 17,914,343
- --------------------------------------------------------------------------------- -------------- --------------
Change in net assets resulting from operations 35,376,647 19,484,033
- --------------------------------------------------------------------------------- -------------- --------------
DISTRIBUTIONS TO SHAREHOLDERS--
- ---------------------------------------------------------------------------------
Distributions from net investment income (2,489,618) (922,065)
- ---------------------------------------------------------------------------------
Distributions from net realized gains (594,000) --
- --------------------------------------------------------------------------------- -------------- --------------
Change in net assets resulting from distributions to shareholders (3,083,618) (922,065)
- --------------------------------------------------------------------------------- -------------- --------------
SHARE TRANSACTIONS--
- ---------------------------------------------------------------------------------
Proceeds from sale of shares 50,948,693 98,945,293
- ---------------------------------------------------------------------------------
Net asset value of shares issued to shareholders in payment of distributions
declared 1,995,104 6,353
- ---------------------------------------------------------------------------------
Cost of shares redeemed (28,517,581) (4,904,636)
- --------------------------------------------------------------------------------- -------------- --------------
Change in net assets resulting from share transactions 24,426,216 94,047,010
- --------------------------------------------------------------------------------- -------------- --------------
Change in net assets 56,719,245 112,608,978
- ---------------------------------------------------------------------------------
NET ASSETS:
- ---------------------------------------------------------------------------------
Beginning of period 112,608,978 --
- --------------------------------------------------------------------------------- -------------- --------------
End of period (including undistributed net investment income of $147,320 and
$81,234, respectively) $ 169,328,223 $ 112,608,978
- --------------------------------------------------------------------------------- -------------- --------------
</TABLE>
* For the period from September 25, 1995 (date of initial public
investment) to April 30, 1996.
(See Notes which are an integral part of the Financial Statements)
INDEPENDENCE ONE EQUITY PLUS FUND
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 1997
- --------------------------------------------------------------------------------
(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"). 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>
YEAR ENDED APRIL 30,
<S> <C> <C>
-------------------------
<CAPTION>
1997 1996(A)
- -------------------------------------------------------------------------------------- ----------- ------------
<S> <C> <C>
Shares sold 4,175,707 10,346,964
- --------------------------------------------------------------------------------------
Shares issued to shareholders in payment of distributions declared 164,811 571
- --------------------------------------------------------------------------------------
Shares redeemed (2,168,967) (458,932)
- -------------------------------------------------------------------------------------- ----------- ------------
Net change resulting from share transactions 2,171,551 9,888,603
- -------------------------------------------------------------------------------------- ----------- ------------
</TABLE>
(a) For the period from September 25, 1995 (date of initial public
investment) to April 30, 1996.
(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE--Michigan National Bank, the Fund's
investment adviser (the "Adviser"), receives for its services an
annual investment advisory fee equal to 0.40% of the
INDEPENDENCE ONE EQUITY PLUS FUND
- --------------------------------------------------------------------------------
Fund's average daily net assets. The Adviser may voluntarily
choose to waive any portion of its fee. The Adviser can modify or
terminate this voluntary waiver at any time at its sole
discretion.
Under the terms of a sub-advisory agreement between the Adviser
and Sosnoff Sheridan Corporation, Sosnoff Sheridan Corporation
receives an annual fee from the Adviser equal to 0.035% of the
average daily value of the Fund's equity securities. Sosnoff
Sheridan Corporation may voluntarily choose to reduce its
compensation. ADMINISTRATIVE FEE--Federated Administrative
Services ("FAS") provides the Fund with certain administrative
personnel and services. The fee paid to FAS is based on the level
of average aggregate net assets of the Trust for the period. The
administrative fee during any fiscal year shall be at least
$50,000 for each portfolio in the Trust. 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 of $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 April 30, 1997, the Fund
paid $2,728 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 April 30, 1997, were as follows:
<TABLE>
<S> <C>
PURCHASES $ 33,660,128
- --------------------------------------------------------------------------------------------------- -------------
SALES $ 11,994,940
- --------------------------------------------------------------------------------------------------- -------------
</TABLE>
REPORT OF KPMG PEAT MARWICK LLP,
INDEPENDENT AUDITORS
- --------------------------------------------------------------------------------
To the Board of Trustees and Shareholders INDEPENDENCE ONE MUTUAL
FUNDS:
We have audited the accompanying statement of assets and liabilities,
including the portfolio of investments, of Independence One Equity
Plus Fund (a portfolio within Independence One Mutual Funds) as of
April 30, 1997, and the related statement of operations for the year
then ended, and the statements of changes in net assets and the
financial highlights, which is presented on page 2 of this prospectus,
for the year or period from September 25, 1995 (commencement of
operations) to April 30, 1997. These financial statements and
financial highlights are the responsibility of the Fund's management.
Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits. We conducted
our audits in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. Our procedures included
confirmation of securities owned at April 30, 1997 by correspondence
with the custodian. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion. In our
opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position
of Independence One Equity Plus Fund as of April 30, 1997, and the
results of its operations, changes in its net assets, and its
financial highlights for each of the periods listed above, in
conformity with generally accepted accounting principles.
KPMG PEAT MARWICK LLP
Pittsburgh, Pennsylvania
June 17, 1997
INDEPENDENCE ONE
MUTUAL FUNDS
INDEPENDENCE ONE
EQUITY PLUS FUND
Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
INVESTMENT ADVISER
Michigan National Bank
27777 Inkster Road
Mail Code 10-52
Farmington Hills, Michigan 48333-9065
SUB-ADVISER
Sosnoff Sheridan Corporation
440 South LaSalle Street
Suite 2301
Chicago, Illinois 60605
DISTRIBUTOR
Federated Securities Corp.
Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
CUSTODIAN
Michigan National Bank
27777 Inkster Road
Mail Code 10-30
Farmington Hills, Michigan 48333-9065
TRANSFER AGENT AND
DIVIDEND DISBURSING AGENT
Federated Shareholder
Services Company
P.O. Box 8600
Boston, Massachusetts 02266-8600
INDEPENDENT AUDITORS
KPMG Peat Marwick LLP
One Mellon Bank Center
Pittsburgh, Pennsylvania 15219
Independence One(R)
Equity Plus Fund
Distributed by Federated Securities Corp.
Prospectus dated
June 30, 1997
- -------------------------------------------------------
- -------------------------------------------------------
- -------------------------------------------------------
- -------------------------------------------------------
- -------------------------------------------------------
- -------------------------------------------------------
- -------------------------------------------------------
- -------------------------------------------------------
[LOGO OF MICHIGAN NATIONAL BANK INVESTMENT ADVISOR]
[LOGO OF RECYCLED PAPER]
Cusip 453777872
G00979-08 (6/97)
INDEPENDENCE ONE EQUITY PLUS FUND
(A PORTFOLIO OF INDEPENDENCE ONE MUTUAL FUNDS)
STATEMENT OF ADDITIONAL INFORMATION
This Statement of Additional Information should be read with
the prospectus of Independence One Equity Plus Fund (the
"Fund"), a portfolio of Independence One Mutual Funds (the
"Trust") dated June 30, 1997. This Statement is not a
prospectus. You may request a copy of a prospectus free of
charge by calling 1-800-334-2292.
FEDERATED INVESTORS TOWER
PITTSBURGH, PENNSYLVANIA 15222-3779
Statement dated June 30, 1997
[GRAPHIC OMITTED]
Cusip 453777872
G01198 -01 (6/97)
<PAGE>
TABLE OF CONTENTS
I
GENERAL INFORMATION ABOUT THE FUND 1
INVESTMENT OBJECTIVE AND POLICIES 1
Types of Investments 1
Portfolio Turnover 3
Investment Limitations 3
INDEPENDENCE ONE MUTUAL FUNDS MANAGEMENT 6
Officers and Trustees 6
Fund Ownership 7
Trustees' Compensation 8
Trustee Liability 8
Massachusetts Partnership Law 8
INVESTMENT ADVISORY SERVICES 8
Adviser to the Fund 8
Advisory Fees 9
Sub-Adviser to the Fund 9
Sub-Advisory Fees 9
BROKERAGE TRANSACTIONS 9
OTHER SERVICES 9
Trust Administration 9
Custodian 9
Transfer Agent and Dividend Disbursing Agent 10
Independent Auditors 10
PURCHASING SHARES 10
Conversion to Federal Funds 10
DETERMINING NET ASSET VALUE 10
DETERMINING MARKET VALUE OF SECURITIES 10
REDEEMING SHARES 10
Redemption in Kind 10
TAX STATUS 11
The Fund's Tax Status 11
Shareholders' Tax Status 11
Capital Gains 11
TOTAL RETURN 11
YIELD 12
PERFORMANCE COMPARISONS 12
Economic and Market Information 13
<PAGE>
GENERAL INFORMATION ABOUT THE FUND
The Fund is a portfolio in Independence One Mutual Funds (the
"Trust"), which was established as a Massachusetts business trust
under a Declaration of Trust dated January 9, 1989.
INVESTMENT OBJECTIVE AND POLICIES
The Fund's investment objective is total return. This investment
objective cannot be changed without the approval of shareholders.
TYPES OF INVESTMENTS
In addition to the common stocks described in the prospectus, the Fund
may also invest in temporary investments which include, but are not
limited to, short-term money market instruments and U.S. government
obligations, and securities in such proportions as, in the judgment of
the Fund's investment adviser, prevailing market conditions warrant.
The following discussion supplements the description of the Fund's
investment policies in the prospectus. Unless otherwise indicated, the
investment policies described below may be changed by the Board of
Trustees (the "Trustees") without shareholder approval. Shareholders
will be notified before any material change in the policies becomes
effective.
U.S. GOVERNMENT OBLIGATIONS
The types of U.S. government obligations in which the Fund may
invest generally include direct obligations of the U.S. Treasury (such
as U.S. Treasury bills, notes, and bonds) and obligations issued or
guaranteed by U.S. government agencies or instrumentalities. These
securities are backed by:
o the full faith and credit of the U.S. Treasury;
o the issuer's right to borrow from the U.S. Treasury;
o the discretionary authority of the U.S. government to purchase
certain obligations of agencies or instrumentalities; or
o the credit of the agency or instrumentality issuing the obligations.
Examples of agencies and instrumentalities which may not
always receive financial support from the U.S. government
are: Farm Credit System, including the National Bank for
Cooperatives, Farm Credit Banks, and Banks for Cooperatives;
Farmers Home Administration; Federal Home Loan Banks; Federal
Home Loan Mortgage Corporation; Federal National Mortgage
Association; Government National Mortgage Association; and
Student Loan Marketing Association.
VARIABLE RATE U.S. GOVERNMENT SECURITIES
In the case of certain U.S. government securities purchased
by the Fund that carry variable interest rates, these rates
will reduce the changes in the market value of such
securities from their original purchase prices.
Accordingly, the potential for capital appreciation or
capital depreciation should not be greater than the potential
for capital appreciation or capital depreciation of fixed
interest rate U.S. government securities having maturities
equal to the interest rate adjustment dates of the variable
rate U.S. government securities.
The Fund may purchase variable rate U.S. government
securities upon the determination by the Trustees that the
interest rate as adjusted will cause the instrument to have a
current market value that approximates its par value on the
adjustment date.
<PAGE>
MONEY MARKET INSTRUMENTS
The Fund may invest in the following money market
instruments:
o instruments of domestic and foreign banks and savings
associations having capital, surplus, and undivided
profits of over $100,000,000, or if the principal amount
of the instrument is insured in full by the Federal
Deposit Insurance Corporation ("FDIC");
o commercial paper issued by domestic or foreign
corporations rated A-1 by Standard & Poor's Ratings Group
("S&P") Prime-1 by Moody's Investors Service, Inc., or F-1
by Fitch Investors Service, Inc. or, if unrated, of
comparable quality as determined by the Fund's investment
adviser;
o time and savings deposits whose accounts are insured by
the Bank Insurance Fund ("BIF") or in institutions whose
accounts are insured by the Savings Association Insurance
Fund, which is also administered by the FDIC, including
certificates of deposit issued by, and other time deposits
in, foreign branches of BIF-insured banks; or
o bankers' acceptances.
REPURCHASE AGREEMENTS
The Fund requires its custodian to take possession of the
securities subject to repurchase agreements and these
securities will be marked to market daily. To the extent that
the original seller does not repurchase the securities from
the Fund, the Fund could receive less than the repurchase
price on any sale of such securities. In the event that a
defaulting seller of the securities filed for bankruptcy or
became insolvent, disposition of such securities by the Fund
might be delayed pending court action. The Fund believes that
under the regular procedures normally in effect for custody
of the Fund's portfolio securities subject to repurchase
agreements, a court of competent jurisdiction would rule in
favor of the Fund and allow retention or disposition of such
securities. The Fund will only enter into repurchase
agreements with banks and other recognized financial
institutions, such as broker/dealers, which are deemed by the
Fund's investment adviser to be creditworthy pursuant to
guidelines established by the Trustees.
STOCK INDEX FUTURES AND OPTIONS
The Fund may utilize stock index futures contracts, options,
and options on futures contracts as discussed in the
prospectus.
A stock index futures contract is a bilateral agreement which
obligates the seller to deliver (and the purchaser to take
delivery of) an amount of cash equal to a specific dollar
amount times the difference between the value of a specific
stock index at the close of trading of the contract and the
price at which the agreement is originally made. There is no
physical delivery of the stocks constituting the index, and
no price is paid upon entering into a futures contract. In
general, contracts are closed out prior to their expiration.
The Fund, when purchasing or selling a futures contract, will
initially be required to deposit in a segregated account in
the broker's name with the Fund's custodian an amount of cash
or U.S. government securities approximately equal to 5-10% of
the contract value. This amount is known as "initial margin,"
and it is subject to change by the exchange or board of trade
on which the contract is traded. Subsequent payments to and
from the broker are made on a daily basis as the price of the
index or the securities underlying the futures contract
fluctuates. These payments are known as "variation margins,"
and the fluctuation in value of the long and short positions
in the futures contract is a process referred to as "marking
to market." The Fund may decide to close its position on a
contract at any time prior to the contract's expiration. This
is accomplished by the Fund taking an opposite position at
the then prevailing price, thereby terminating its existing
position in the contract. Because both the initial and
variation margin resemble a performance bond or good faith
deposit on the contract, they are returned to the Fund upon
the termination of the contract, assuming that all
contractual obligations have been satisfied. Therefore, the
margin utilized in futures contracts is readily
distinguishable from the margin employed in security
transactions, since futures contracts margin does not involve
the borrowing of funds to finance the transaction.
A put option gives the Fund, in return for a premium, the
right to sell the underlying security to the writer (seller)
at a specified price during the term of the option. Put
options on stock indices are similar to put options on stocks
except for the delivery requirements. Instead of giving the
Fund the right to make delivery of stock at a specified
price, a put option on a stock index gives the Fund, as
holder, the right to receive an amount of cash upon exercise
of the option.
<PAGE>
The Fund may also write covered call options. As the writer
of a call option, the Fund has the obligation upon exercise
of the option during the option period to deliver the
underlying security upon payment of the exercise price.
Writing of call options is intended to generate income for
the Fund and thereby protect against price movements in
particular securities in the Fund's portfolio.
The Fund may only: (1) buy listed put options on stock
indices; (2) buy listed put options on securities held in its
portfolio; and (3) sell listed call options either on
securities held in its portfolio or on securities which it
has the right to obtain without payment of further
consideration (or has segregated cash in the amount of any
such additional consideration). The Fund will maintain its
positions in securities, option rights, and segregated cash
subject to puts and calls until the options are exercised,
closed, or expired.
REVERSE REPURCHASE AGREEMENTS
The Fund also may enter into reverse repurchase agreements
under certain circumstances. This transaction is similar to
borrowing cash. In a reverse repurchase agreement, the Fund
transfers possession of a portfolio instrument to another
person, such as a financial institution, broker, or dealer,
in return for a percentage of the instrument's market value
in cash, and agrees that on a stipulated date in the future
the Fund will repurchase the portfolio instrument by
remitting the original consideration plus interest at an
agreed upon rate. The use of reverse repurchase agreements
may enable the Fund to avoid selling portfolio instruments at
a time when a sale may be deemed to be disadvantageous, but
the ability to enter into reverse repurchase agreements does
not ensure that the Fund will be able to avoid selling
portfolio instruments at a disadvantageous time.
When effecting reverse repurchase agreements, liquid assets
of the Fund, in a dollar amount sufficient to make payment
for the obligations to be purchased, are segregated at the
trade date. These securities are marked to market daily and
maintained until the transaction is settled.
LENDING OF PORTFOLIO SECURITIES
In order to generate additional income, the Fund may lend
portfolio securities on a short-term or long-term basis, or
both, to broker/dealers, banks, or other institutional
borrowers of securities. The Fund will only enter into loan
arrangements with broker/dealers, banks, or other
institutions which the Fund's investment adviser has
determined are creditworthy and will receive collateral in
the form of cash or U.S. government securities equal to at
least 102% of the value of the securities loaned.
There is the risk that when lending portfolio securities, the
securities may not be available to the Fund on a timely basis
and the Fund may, therefore, lose the opportunity to sell the
securities at a desirable price. In addition, in the event
that a borrower of securities would file for bankruptcy or
become insolvent, disposition of the securities may be
delayed pending court action.
The collateral received when the Fund lends portfolio
securities must be valued daily and, should the market value
of the loaned securities increase, the borrower must furnish
additional collateral to the Fund. During the time portfolio
securities are on loan, the borrower pays the Fund any
dividends or interest paid on such securities. Loans are
subject to termination at the option of the Fund or the
borrower. The Fund may pay reasonable administrative and
custodial fees in connection with a loan and may pay a
negotiated portion of the interest earned on the cash or
equivalent collateral to the borrower or placing broker. The
Fund does not have the right to vote securities on loan. In
circumstances where the Fund does not, the Fund would
terminate the loan and regain the right to vote if that were
considered important with respect to the investment.
PORTFOLIO TURNOVER
The Fund may trade or dispose of portfolio securities as considered
necessary to meet its investment objective. It is not anticipated that
the portfolio trading engaged in by the Fund will result in its annual
rate of portfolio turnover exceeding 100%. For the fiscal year ended
April 30, 1997 and for the period from September 25, 1995 (date of
initial public investment) to April 30, 1996, the Fund's portfolio
turnover rates were 8% and 6%, respectively.
INVESTMENT LIMITATIONS
SELLING SHORT AND BUYING ON MARGIN
The Fund will not sell any securities short or purchase any
securities on margin, but may obtain such short-term credits
as are necessary for clearance of transactions. The deposit
or payment by the Fund of initial or variation margin in
connection with futures contracts or related options
transactions is not considered the purchase of a security on
margin.
<PAGE>
ISSUING SENIOR SECURITIES AND BORROWING MONEY
The Fund will not issue senior securities except that the
Fund may borrow money and engage in reverse repurchase
agreements in amounts up to one-third of the value of its
total assets, including the amount borrowed. The Fund will
not purchase any securities while borrowings in excess of 5%
of the value of the Fund's total assets are outstanding.
The Fund will not borrow money or engage in reverse
repurchase agreements for investment leverage, but rather as
a temporary, extraordinary, or emergency measure to
facilitate management of the portfolio by enabling the Fund
to meet redemption requests when the liquidation of portfolio
securities is deemed to be inconvenient or disadvantageous.
PLEDGING ASSETS
The Fund will not mortgage, pledge, or hypothecate any assets
except to secure permitted borrowings. For the purpose of
this limitation, the following are not deemed to be pledges:
margin deposits for the purchase and sale of futures
contracts and related options, and segregation or collateral
arrangements made in connection with options activities.
INVESTING IN REAL ESTATE
The Fund will not purchase or sell real estate, including
limited partnership interests, although it may invest in the
securities of issuers whose business involves the purchase or
sale of real estate or in securities which are secured by
real estate or interests in real estate.
INVESTING IN COMMODITIES, COMMODITY CONTRACTS, OR COMMODITY FUTURES CONTRACTS
The Fund will not purchase or sell commodities, commodity
contracts or commodity futures contracts except to the extent
that the Fund may engage in transactions involving futures
contracts and related options.
UNDERWRITING
The Fund will not underwrite any issue of securities, except
as it may be deemed to be an underwriter under the Securities
Act of 1933 in connection with the sale of securities in
accordance with its investment objective, policies, and
limitations.
DIVERSIFICATION OF INVESTMENTS
With respect to securities comprising 75% of the value of its
assets, the Fund will not purchase securities of any one
issuer (other than securities issued or guaranteed by the
government of the United States or its agencies or
instrumentalities) if, as a result, more than 5% of the value
of its total assets would be invested in the securities of
that issuer. Also, the Fund will not acquire more than 10% of
the voting securities of any one issuer.
CONCENTRATION OF INVESTMENTS
The Fund will not invest 25% or more of the value of its
total assets in any one industry, except that the Fund may
invest 25% or more of the value of its total assets in
securities issued or guaranteed by the U.S. government, its
agencies or instrumentalities, and repurchase agreements
secured by such instruments.
LENDING CASH OR SECURITIES
The Fund will not lend any of its assets except portfolio
securities up to one-third of the value of its total assets.
This shall not prevent the Fund from purchasing U.S.
government obligations, money market instruments, bonds,
debentures, notes, certificates of indebtedness, or other
debt securities, entering into repurchase agreements, or
engaging in other transactions where permitted by the Fund's
investment objective, policies and limitations.
The above investment limitations cannot be changed without shareholder
approval. The following investment limitations, however, may be
changed by the Trustees without shareholder approval. Shareholders
will be notified before any material change in these policies becomes
effective.
<PAGE>
INVESTING IN SECURITIES OF OTHER INVESTMENT COMPANIES
The Fund can acquire up to 3% of the total outstanding stock
of other investment companies. The Fund will not be subject
to any other limitations with regard to the acquisition of
securities of other investment companies so long as the
public offering price of the Fund's shares does not include a
sales charge exceeding 1-1/2 percent. However, these
limitations are not applicable if the securities are acquired
in a merger, consolidation, reorganization, or acquisition of
assets. It should be noted that investment companies incur
certain expenses, such as investment advisory, custodian and
transfer agent fees, and therefore, any investment by the
Fund in shares of another investment company would be subject
to such duplicate expenses.
INVESTING IN RESTRICTED SECURITIES
The Fund will not invest more than 5% of its total assets in
securities subject to restrictions on resale under the
federal securities laws, except for certain restricted
securities which meet the criteria for liquidity as
established by the Trustees.
INVESTING IN ILLIQUID SECURITIES
The Fund will not invest more than 15% of the value of its
net assets in illiquid obligations including repurchase
agreements providing for settlement in more than seven days
after notice, over-the-counter options, certain securities
not determined by the Trustees to be liquid, and
non-negotiable fixed income time deposits with maturities
over seven days.
INVESTING IN PUT OPTIONS
The Fund will not purchase put options on securities, other
than put options on stock indices, unless the securities are
held in the Fund's portfolio and not more than 5% of the
value of the Fund's total assets would be invested in
premiums on open put option positions.
WRITING COVERED CALL OPTIONS
The Fund will not write call options on securities unless the
securities are held in the Fund's portfolio or unless the
Fund is entitled to them in deliverable form without further
payment or after segregating cash in the amount of any
further payment.
INVESTING IN WARRANTS
The Fund will not invest more than 5% of its assets in
warrants. No more than 2% of the Fund's net assets , to be
included within the overall 5% limit on investments in
warrants, may be warrants which are not listed on the New
York Stock Exchange or the American Stock Exchange.
PURCHASING SECURITIES TO EXERCISE CONTROL
The Fund will not purchase securities of a company for
purposes of exercising control or management.
Except with respect to borrowing money, if a percentage limitation is
adhered to at the time of investment, a later increase or decrease in
percentage resulting from any change in value or net assets will not
result in a violation of such restriction.
For purposes of its policies and limitations, the Fund considers
certificates of deposit and demand and time deposits issued by a U.S.
branch of a domestic bank or savings association, having capital,
surplus, and undivided profits in excess of $100,000,000 at the time
of investment to be "cash items."
The Fund does not intend to borrow money in excess of 5% of the value
of its total assets during the current year.
<PAGE>
INDEPENDENCE ONE MUTUAL FUNDS MANAGEMENT
OFFICERS AND TRUSTEES
Officers and Trustees are listed with their addresses, birthdates,
principal occupations, and present positions, including any
affiliation with Michigan National Bank, Michigan National
Corporation, Federated Investors, Federated Securities Corp.,
Federated Administrative Services, and Federated Services Company.
Robert E. Baker
4327 Stoneleigh Road
Bloomfield Hills, MI
Birthdate: May 6, 1930
Trustee
Retired; formerly, Vice Chairman, Chrysler Financial Corporation.
Harold Berry
Berry Enterprises
290 Franklin Center
29100 Northwestern Highway
Southfield, MI
Birthdate: September 17, 1925
Trustee
Managing Partner, Berry Enterprises; Chairman, Independent Sprinkler
Companies, Inc.; Chairman, Berry, Ziegelman & Company.
Clarence G. Frame+
W-875 First Bank Building
332 Minnesota Street
St. Paul, MN
Birthdate: July 26, 1918
Trustee
Director, Milwaukee Land Company; formerly, Vice Chairman, First Bank
System, Inc., and President, The First National Bank of St. Paul, a
subsidiary of First Bank System, Inc.
Harry J. Nederlander+
231 S. Old Woodward, Suite 219
Birmingham, MI
Birthdate: September 5, 1917
Trustee
Chairman, Nederlander Enterprises.
<PAGE>
Thomas S. Wilson
Two Championship Drive
Auburn Hills, MI
Birthdate: October 8, 1949
Trustee
President and Executive Administrator of the Detroit Pistons;
President and CEO, Palace Sports and Entertainment.
Edward C. Gonzales
Federated Investors Tower
Pittsburgh, PA
Birthdate: October 22, 1930
President and Treasurer
Vice Chairman, Treasurer, and Trustee, Federated Investors; Vice
President, Federated Advisers, Federated Management, Federated
Research, Federated Research Corp., Federated Global Research Corp.
and Passport Research, Ltd.; Executive Vice President and Director,
Federated Securities Corp.; Trustee, Federated Shareholder Services
Company; Trustee or Director of some of the Funds distributed by
Federated Securities Corp.; President, Executive Vice President and
Treasurer of some of the Funds distributed by Federated Securities
Corp.
Jeffrey W. Sterling
Federated Investors Tower
Pittsburgh, PA
Birthdate: February 5, 1947
Vice President and Assistant Treasurer
Vice President and Assistant Treasurer of various Funds distributed by
Federated Securities Corp.
Jay S. Neuman
Federated Investors Tower
Pittsburgh, PA
Birthdate: April 22, 1950
Secretary
Corporate Counsel, Federated Investors.
+ Members of the Trust's Executive Committee. The Executive Committee
of the Board of Trustees handles the responsibilities of the Board of
Trustees between meetings of the Board.
FUND OWNERSHIP
Officers and Trustees own less than 1% of the outstanding shares of
the Fund. The following list indicates the beneficial ownership of
shareholders who are the beneficial owners of more than 5% of the
outstanding shares of the Equity Plus Fund as of June 9, 1997: Pierson
& Co., the nominee for Michigan National Bank, acting in various
capacities for numerous accounts, owned, of record, approximately
11,597,672 shares (97.18%).
<PAGE>
TRUSTEES' COMPENSATION
AGGREGATE
NAME , COMPENSATION
POSITION WITH FROM
THE TRUST THE TRUST*
Robert E. Baker $10,250
Trustee
Harold Berry $10,250
Trustee
Clarence G. Frame $10,250
Trustee
Harry J. Nederlander $ 9,050
Trustee
Thomas S. Wilson $10,250
Trustee
*Information is furnished for the fiscal year ended April 30, 1997.
The Trust is the only Investment Company in the Fund Complex. The
aggregate compensation is provided for the Trust which is comprised of
seven portfolios.
TRUSTEE LIABILITY
The Trust's Declaration of Trust provides that the Trustees will not
be liable for errors of judgment or mistakes of fact or law. However,
they are not protected against any liability to which they would
otherwise be subject by reason of willful misfeasance, bad faith,
gross negligence, or reckless disregard of the duties involved in the
conduct of their office.
MASSACHUSETTS PARTNERSHIP LAW
Under certain circumstances, shareholders may be held personally
liable as partners under Massachusetts law for acts or obligations of
the Trust. To protect shareholders, the Trust has filed legal
documents with Massachusetts that expressly disclaim the liability of
shareholders for such acts or obligations of the Trust. These
documents require notice of this disclaimer to be given in each
agreement, obligation, or instrument that the Trust or its Trustees
enter into or sign.
In the unlikely event a shareholder is held personally liable for the
Trust's obligations, the Trust is required by the Declaration of Trust
to use the property of the Fund to protect or compensate the
shareholder. On request, the Trust will defend any claim made and pay
any judgment against a shareholder for any act or obligation of the
Trust. Therefore, financial loss resulting from liability as a
shareholder will occur only if the Trust cannot meet its obligations
to indemnify shareholders and pay judgments against them from its
assets.
INVESTMENT ADVISORY SERVICES
ADVISER TO THE FUND
The Fund's investment adviser is Michigan National Bank (the "Adviser").
The Adviser shall not be liable to the Trust, the Fund, or any
shareholder of the Fund for any losses that may be sustained in the
purchase, holding, or sale of any security, or for anything done or
omitted by it, except acts or omissions involving willful misfeasance,
bad faith, gross negligence, or reckless disregard of the duties
imposed upon it by its contract with the Trust.
Because of the internal controls maintained by Michigan National Bank
to restrict the flow of non-public information, Fund investments are
typically made without any knowledge of Michigan National Bank's or
its affiliates' lending relationships with an issuer.
<PAGE>
ADVISORY FEES
For its advisory services, Michigan National Bank receives an annual
investment advisory fee as described in the prospectus. For the fiscal
year ended April 30, 1997 and for the period from September 25, 1995
(date of initial public investment) through April 30, 1996, the
Adviser earned $588,469 and $208,897, of which $262,493 and $104,448,
respectively, were voluntarily waived.
SUB-ADVISER TO THE FUND
The Fund's sub-adviser is Sosnoff Sheridan Corporation (doing business
as Sosnoff Sheridan Group)(the "Sub-Adviser").
SUB-ADVISORY FEES
For its sub-advisory services, the Sub-Adviser receives an annual
sub-advisory fee as described in the prospectus.
For the fiscal year ended April 30, 1997 and for the period from
September 25, 1995 (date of initial public investment) through April
30, 1996, the Sub-Adviser earned $50,260 and $19,633, respectively,
none of which was voluntarily waived.
BROKERAGE TRANSACTIONS
The Adviser may select brokers and dealers who offer brokerage and
research services. These services may be furnished directly to the
Fund or to the Adviser and may include: advice as to the advisability
of investing in securities; security analysis and reports; economic
studies; industry studies; receipt of quotations for portfolio
evaluations; and similar services. Research services provided by
brokers and dealers may be used by the Adviser or its affiliates in
advising the Fund and other accounts. To the extent that receipt of
these services may supplant services for which the Adviser or its
affiliates might otherwise have paid, it would tend to reduce their
expenses. The Adviser and its affiliates exercise reasonable business
judgment in selecting brokers who offer brokerage and research
services to execute securities transactions. They determine in good
faith that commissions charged by such persons are reasonable in
relationship to the value of the brokerage and research services
provided. For the fiscal year ended April 30, 1997 and for the period
from September 25, 1995 (date of initial public investment) to April
30, 1996, the Fund paid $26,727 and $13,382, respectively, in
brokerage commissions on brokerage transactions.
Although investment decisions for the Funds are made independently
from those of the other accounts managed by the Adviser, investments
of the type the Funds may make may also be made by those other
accounts. When the Funds and one or more other accounts managed by the
Adviser are prepared to invest in, or desire to dispose of, the same
security, available investments or opportunities for sales will be
allocated in a manner believed by the Adviser to be equitable to each.
In some cases, this procedure may adversely affect the price paid or
received by the Funds or the size of the position obtained or disposed
of by the Funds. In other cases, however, it is believed that
coordination and the ability to participate in volume transactions
will be to the benefit of the Funds.
OTHER SERVICES
TRUST ADMINISTRATION
Federated Administrative Services, a subsidiary of Federated
Investors, provides administrative personnel and services to the Funds
for the fees set forth in the prospectus. For the fiscal year ended
April 30, 1997 and for the period from September 25 1995 (date of
initial public investment) to April 30, 1996, the administrator earned
$160,370 and $58,574, of which $88,264 and $57,628, respectively, were
voluntarily waived.
CUSTODIAN
Michigan National Bank, Farmington Hills, Michigan, is custodian for
the securities and cash of the Fund. For the services to be provided
to the Trust pursuant to the Custodian Agreement, the Trust pays the
custodian an annual fee based upon the average daily net assets of the
Fund and which is payable monthly. The custodian will also charge
transaction fees and out-of-pocket expenses.
<PAGE>
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT
Federated Services Company, Boston, Massachusetts, through its
subsidiary Federated Shareholder Services Company, is transfer agent
for the shares of the Funds and dividend disbursing agent for the
Funds.
INDEPENDENT AUDITORS
The independent auditors for the Fund is KPMG Peat Marwick LLP,
Pittsburgh, Pennsylvania.
PURCHASING SHARES
Shares are sold at their net asset value without a sales charge on
days when both the New York Stock Exchange and the Federal Reserve
Wire System are open for business. The procedure for purchasing shares
of the Fund is explained in the prospectus under "Investing in the
Fund."
CONVERSION TO FEDERAL FUNDS
It is the Fund's policy to be as fully invested as possible so that
maximum interest may be earned. To this end, all payments from
shareholders must be in federal funds or be converted into federal
funds before shareholders begin to earn dividends. Michigan National
Bank acts as the shareholder's agent in depositing checks and
converting them to federal funds.
DETERMINING NET ASSET VALUE
Net asset value generally changes each day. The days on which net
asset value is calculated by the Fund are described in the prospectus.
DETERMINING MARKET VALUE OF SECURITIES
The market values of the Fund's portfolio securities are determined as
follows:
o for equity securities, according to the last sale price on a
national securities exchange, if applicable;
o in the absence of recorded sales for listed equity
securities, according to the mean between the last closing
bid and asked prices;
o for unlisted equity securities, latest bid prices;
o for bonds and other fixed income securities, as determined by an
independent pricing service;
o for short-term obligations, according to the mean between
bid and asked prices as furnished by an independent
pricing service, or for short-term obligations with
remaining maturities of 60 days or less at the time of
purchase, at amortized cost; or
o for all other securities, at fair value as determined in good faith
by the Trustees.
Prices provided by independent pricing services may be determined
without relying exclusively on quoted prices and may reflect:
institutional trading in similar groups of securities, yield, quality,
coupon rate, maturity, type of issue, trading characteristics, and
other market data.
The Fund will value futures contracts and options at their market
values established by the exchanges at the close of options trading on
such exchanges unless the Trustees determine in good faith that
another method of valuing option positions is necessary.
REDEEMING SHARES
The Fund redeems shares at the next computed net asset value after
Federated Shareholder Services Company receives the redemption
request. Redemption procedures are explained in the prospectus under
"Redeeming Fund Shares."
REDEMPTION IN KIND
Although the Fund intends to redeem shares in cash, it reserves the
right under certain circumstances to pay the redemption price in whole
or in part by a distribution of securities from the Fund's portfolio.
To satisfy registration
<PAGE>
requirements in a particular state, redemption in kind will be made
(for any shareholder requesting redemption) in readily marketable
securities to the extent that such securities are available. If this
state's policy changes, the Fund reserves the right to redeem in kind
by delivering those securities it deems appropriate.
Redemption in kind will be made in conformity with applicable SEC
rules, taking such securities at the same value employed in
determining net asset value and selecting the securities in a manner
the Trustees determine to be fair and equitable.
The Trust has elected to be governed by Rule 18f-1 of the Investment
Company Act of 1940 under which the Fund is obligated to redeem shares
for any one shareholder in cash only up to the lesser of $250,000 or
1% of the Fund's net asset value during any 90-day period.
TAX STATUS
THE FUND'S TAX STATUS
The Fund expects to pay no federal income tax because it intends to
meet the requirements of Subchapter M of the Internal Revenue Code
applicable to regulated investment companies and to receive the
special tax treatment afforded to such companies.
To qualify for this treatment, the Fund must, among other
requirements:
o derive at least 90% of its gross income from dividends, interest,
and gains from the sale of securities;
o derive less than 30% of its gross income from the sale of
securities held less than three months;
o invest in securities within certain statutory limits; and
o distribute to its shareholders at least 90% of its net income
earned during the year.
SHAREHOLDERS' TAX STATUS
Shareholders are subject to federal income tax on dividends received
as cash or additional shares. The dividends received deduction for
corporations will apply to ordinary income distributions to the extent
the distribution represents amounts that would qualify for the
dividends received deduction to the Fund if the Fund were a regular
corporation, and to the extent designated by the Fund as so
qualifying. These dividends, and any short-term capital gains, are
taxable as ordinary income.
CAPITAL GAINS
Long-term capital gains distributed to shareholders will be treated as
long-term capital gains regardless of how long shareholders have held
shares.
TOTAL RETURN
The average annual total returns for the Fund for the 1-year period
ended April 30, 1997 and the period from September 25, 1995 (date of
initial public investment) through April 30, 1997 were 26.00% and
26.09%, respectively.
The average annual total return for the Fund is the average compounded
rate of return for a given period that would equate a $1,000 initial
investment to the ending redeemable value of that investment. The
ending redeemable value is computed by multiplying the number of
shares owned at the end of the period by the net asset value per share
at the end of the period. The number of shares owned at the end of the
period is based on the number of shares purchased at the beginning of
the period with $1,000, less any applicable sales charge, adjusted
over the period by any additional shares, assuming the reinvestment of
all dividends and distributions.
Advertisements and other sales literature for the Fund may quote total
returns which are calculated on nonstandardized base periods. These
total returns also represent the historic change in the value of an
investment in the Fund based on quarterly reinvestment of dividends
over a specified period of time.
<PAGE>
YIELD
The Fund's yield for the thirty-day period ended April 30, 1997 was
1.50%.
The yield for the Fund is determined each day by dividing the net
investment income per share (as defined by the SEC) earned by the Fund
over a thirty-day period by the maximum offering price per share of
the Fund on the last day of the period. This value is then annualized
using semi-annual compounding. This means that the amount of income
generated during the thirty-day period is assumed to be generated each
month over a 12-month period and is reinvested every six months. The
yield does not necessarily reflect income actually earned by the Fund
because of certain adjustments required by the SEC and, therefore, may
not correlate to the dividends or other distributions paid to
shareholders. To the extent that financial institutions and
broker/dealers charge fees in connection with services provided in
conjunction with an investment in the Fund, the performance will be
reduced for those shareholders paying those fees.
PERFORMANCE COMPARISONS
The Fund's performance depends upon such variables as:
o portfolio quality;
o average portfolio maturity;
o type of instruments in which the portfolio is invested;
o changes in interest rates and market value of portfolio securities;
o changes in the Fund's expenses; and
o various other factors.
The Fund's performance fluctuates on a daily basis largely because net
earnings and the maximum offering price per share fluctuate daily.
Both net earnings and offering price per share are factors in the
computation of yield and total return.
Investors may use financial publications and/or indices to obtain a
more complete view of the Fund's performance. When comparing
performance, investors should consider all relevant factors, such as
the composition of any index used, prevailing market conditions,
portfolio compositions of other funds, and methods used to value
portfolio securities and compute offering price. The financial
publications and/or indices which the Fund uses in advertising may
include:
o STANDARD & POOR'S COMPOSITE INDEX OF 500 STOCKS AND
STANDARD & POOR'S 100 INDEX, a composite indices of common
stocks in industry, transportation, and financial and
public utility companies can be used to compare to the
total returns of funds whose portfolios are invested
primarily in common stocks. In addition, the Standard &
Poor's index assumes reinvestments of all dividends paid
by stocks listed on its index. Taxes due on any of these
distributions are not included, nor are brokerage or other
fees calculated in Standard & Poor's figures.
o LIPPER ANALYTICAL SERVICES, INC. ranks funds in various
fund categories by making comparative calculations using
total return. Total return assumes the reinvestment of all
capital gains distributions and income dividends and takes
into account any change in the maximum offering price over
a specific period of time. From time to time, the Fund
will quote its Lipper ranking in the "index funds"
category in advertising and sales literature.
o MORNINGSTAR, INC., an independent rating service, is the publisher
of the bi-weekly Mutual Fund Values. Mutual Fund Values rates more
than 1,000 NASDAQ-listed mutual funds of all types, according to
their risk-adjusted returns. The maximum rating is five stars, and
ratings are effective for two weeks.
Advertising and other promotional literature may include charts,
graphs and other illustrations using the Fund's returns, or returns in
general, that demonstrate basic investment concepts such as
tax-deferred compounding, dollar-cost averaging and systematic
investment. In addition, the Fund can compare its performance, or
performance for the types of securities in which it invests, to a
variety of other investments, such as bank savings accounts,
certificates of deposit, and Treasury bills.
<PAGE>
ECONOMIC AND MARKET INFORMATION
Advertising and sales literature for the Fund may include discussions
of economic, financial and political developments and their effect on
the securities market. Such discussions may take the form of
commentary on these developments by Fund portfolio managers and their
views and analysis on how such developments could affect the Fund. In
addition, advertising and sales literature may quote statistics and
give general information about the mutual fund industry, including the
growth of the industry, from sources such as the Investment Company
Institute ("ICI"). For example, according to the ICI, thirty-seven
percent of American households are pursuing their financial goals
through mutual funds. These investors, as well as businesses and
institutions, have entrusted over $3.5 trillion to the more than 6,000
funds available.
APPENDIX FOR INDEPENDENCE ONE EQUITY PLUS FUND
A. The graphic presentation here displayed consists of a line graph
titled "Growth of $10,000 Invested in Independence One Equity Plus
Fund (the "Fund"). The corresponding components of the line graph are
listed underneath. The Fund is represented by a solid line. The
Standard & Poor's 100 Composite Stock Price Index is represented by a
broken line. The line graph is a visual representation of a comparison
of change in value of a hypothetical $10,000 purchase in the Fund and
the Standard & Poor's 100 Composite Stock Price Index. The "y" axis
reflects the cost of the investment. The "x" axis reflects computation
periods from the Fund's start of performance, 9/25/95 through 4/30/97.
The right margin reflects the ending value of the hypothetical
investment in the Fund as compared to the Standard & Poor's 100
Composite Stock Price Index; the ending values are $14,485 and
$14,598, respectively.
