INDEPENDENCE
ONE(R)
EQUITY
PLUS
FUND
SEMI-ANNUAL REPORT
TO SHAREHOLDERS
OCTOBER 31, 1997
[LOGO OF MICHIGAN NATIONAL BANK]
Investment Adviser
[bird logo] FEDERATED INVESTORS
FEDERATED INVESTORS TOWER
PITTSBURGH, PA 15222-3779
FEDERATED SECURITIES CORP. IS THE DISTRIBUTOR OF THE FUNDS
AND IS A SUBSIDIARY OF FEDERATED INVESTORS.
[LOGO OF INDEPENDENCE ONE]
MUTUAL FUNDS
CUSIP 453777872
G01200-06 (12/97)
[RECYCLED PAPER LOGO]
PRESIDENT'S MESSAGE
- --------------------------------------------------------------------------------
Dear Investor:
I am pleased to present the Semi-Annual Report of Independence One Equity Plus
Fund which covers the six-month period from May 1, 1997 through October 31,
1997. Inside, you will find complete financial information for the
fund--beginning with the portfolio manager's discussion, followed by a list of
fund holdings and the financial statements.
Your money is at work where it can grow over time--in a diversified portfolio of
high-quality stocks that include many household names like American Express,
Avon, AT&T, Black & Decker, Boeing, Chrysler, Coca-Cola, Disney, DuPont, Hewlett
Packard, IBM, Johnson & Johnson, McDonald's, Ralston Purina, and Wal-Mart.
In an extremely favorable--and volatile--environment for stocks, the fund
produced a six-month total return of 11.67%.* This return was the result of a
$1.53 increase in net asset value and distributions consisting of $0.11 per
share in dividend income. The fund's total net assets rose from $169 million to
$182 million during the six-month period ended October 31, 1997.
Thank you for selecting Independence One Equity Plus Fund to pursue the
long-term performance potential of stocks. We look forward to keeping you
informed about the progress of your investment.
Sincerely,
/s/Edward C. Gonzales
Edward C. Gonzales
President
December 15, 1997
* Performance quoted reflects past performance and is not indicative of future
results. Investment return and principal value will fluctuate so that an
investor's shares, when redeemed, may be worth more or less than their
original cost.
INVESTMENT REVIEW
- --------------------------------------------------------------------------------
Q
What are your comments on the rewarding, yet highly volatile stock market
environment during the first half of the fund's fiscal year?
A
The market was volatile as investors tried to digest the impact of numerous
economic, political, and world-wide events on U.S. corporate earnings. The
intention of the fund, however, is to provide a proxy through which
investors can receive the returns of the U.S. large cap equity market and,
therefore, even though short-term volatility occurs, our focus is on providing
our investors with consistent long-term returns.
Q
In this environment, what was the total return of Independence One Equity
Plus Fund during the six-month period ended October 31, 1997, compared to
that of its benchmark, the Standard & Poor's 100 Composite Price Index
("S&P 100")*?
A
The total return for Independence One Equity Plus Fund was 11.67%** versus
the total return for the S&P 100 of 12.16% for the six-month period ended
October 31, 1997.
Q
The fund's portfolio invariably contains large and extremely well-known
companies. What were the fund's top 10 holdings as of October 31, 1997?
A
<TABLE>
<CAPTION>
TOP 10 HOLDINGS % OF PORTFOLIO
<S> <C> <C>
1. General Electric Co. 6.5
2. Microsoft Corp. 4.9
3. Exxon Corp. 4.7
4. Coca-Cola Co. 4.3
5. Intel Corp. 3.9
6. Merck & Co., Inc. 3.3
7. International Business Machines 3.0
8. Bristol-Myers Squibb Co. 2.7
9. AT&T Corp. 2.5
10. Wal-Mart Stores, Inc. 2.5
</TABLE>
* Standard & Poor's 100 Composite Stock Index is a composite index of common
stocks in industry, transportation, and financial and public utility
companies and can be used to compare the total returns of funds whose
portfolios are invested primarily in common stocks. This index is unmanaged
and investments cannot be made in an index. Standard & Poor's, "S&P", and
"S&P 100" are trademarks of The McGraw-Hill Companies, Inc. and have been
licensed for use by Independence One Equity Plus Fund. The Fund is not
sponsored, endorsed, sold or promoted by or affiliated with Standard &
Poor's.
** Performance quoted represents past performance and is not indicative of
future results. Investment return and principal value will fluctuate so that
an investor's shares when redeemed, may be worth more or less than their
original cost.
- --------------------------------------------------------------------------------
Q
As 1997 draws to a close, and unprecedented market volatility continues,
what is your outlook?
A
Given the current global situation, there is a possibility of continued
volatility. However, with the current state of the economy which includes
moderate to strong growth, little or no inflation, and low interest rates,
we expect that the market will continue to advance, although not at the record
levels we have experienced for the past several years.
INDEPENDENCE ONE EQUITY PLUS FUND
PORTFOLIO OF INVESTMENTS
OCTOBER 31, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ------------ ----------------------------------------------------------------------------------- --------------
<C> <S> <C>
COMMON STOCKS--96.2%
- -------------------------------------------------------------------------------------------------
AEROSPACE & DEFENSE--2.9%
-----------------------------------------------------------------------------------
56,453 Boeing Co. $ 2,702,687
-----------------------------------------------------------------------------------
3,552 General Dynamics Corp. 288,378
-----------------------------------------------------------------------------------
13,436 Raytheon Co. 728,903
-----------------------------------------------------------------------------------
11,871 Rockwell International Corp. 581,679
-----------------------------------------------------------------------------------
13,226 United Technologies Corp. 925,820
----------------------------------------------------------------------------------- --------------
Total 5,227,467
----------------------------------------------------------------------------------- --------------
AUTOMOTIVE--3.8%
-----------------------------------------------------------------------------------
38,345 Chrysler Corp. 1,351,661
-----------------------------------------------------------------------------------
68,679 Ford Motor Co. 3,000,414
-----------------------------------------------------------------------------------
41,451 General Motors Corp. 2,660,636
----------------------------------------------------------------------------------- --------------
Total 7,012,711
----------------------------------------------------------------------------------- --------------
BANKING--3.5%
-----------------------------------------------------------------------------------
39,235 BankAmerica Corp. 2,805,303
-----------------------------------------------------------------------------------
16,599 First Chicago NBD Corp. 1,207,577
-----------------------------------------------------------------------------------
40,475 NationsBank Corp. 2,423,441
----------------------------------------------------------------------------------- --------------
Total 6,436,321
----------------------------------------------------------------------------------- --------------
CAPITAL GOODS--1.3%
-----------------------------------------------------------------------------------
8,438 Homestake Mining Co. 104,420
-----------------------------------------------------------------------------------
23,620 Minnesota Mining & Manufacturing Co. 2,161,230
----------------------------------------------------------------------------------- --------------
Total 2,265,650
----------------------------------------------------------------------------------- --------------
CHEMICALS--3.5%
-----------------------------------------------------------------------------------
13,120 Dow Chemical Co. 1,190,640
-----------------------------------------------------------------------------------
64,290 Du Pont (E.I.) de Nemours & Co. 3,656,494
-----------------------------------------------------------------------------------
4,171 Mallinckrodt, Inc. 156,413
-----------------------------------------------------------------------------------
</TABLE>
INDEPENDENCE ONE EQUITY PLUS FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ------------ ----------------------------------------------------------------------------------- --------------
<C> <S> <C>
COMMON STOCKS--CONTINUED
- -------------------------------------------------------------------------------------------------
CHEMICALS--CONTINUED
-----------------------------------------------------------------------------------
33,128 Monsanto Co. $ 1,416,222
----------------------------------------------------------------------------------- --------------
Total 6,419,769
----------------------------------------------------------------------------------- --------------
COMMERCIAL--1.1%
-----------------------------------------------------------------------------------
31,263 Ameritech Corp. 2,032,095
----------------------------------------------------------------------------------- --------------
COMPUTERS--12.9%
-----------------------------------------------------------------------------------
4,589 (a)Ceridian Corp. 179,258
-----------------------------------------------------------------------------------
37,600 (a)Cisco Systems, Inc. 3,084,375
-----------------------------------------------------------------------------------
4,386 (a)Computer Sciences Corp. 311,132
-----------------------------------------------------------------------------------
58,469 Hewlett-Packard Co. 3,606,806
-----------------------------------------------------------------------------------
55,165 International Business Machines Corp. 5,409,618
-----------------------------------------------------------------------------------
68,127 (a)Microsoft Corp. 8,856,510
-----------------------------------------------------------------------------------
55,058 (a)Oracle Corp. 1,970,044
-----------------------------------------------------------------------------------
10,055 (a)Unisys Corp. 133,857
----------------------------------------------------------------------------------- --------------
Total 23,551,600
----------------------------------------------------------------------------------- --------------
CONSUMER--1.1%
-----------------------------------------------------------------------------------
26,652 American Express Co. 2,078,856
----------------------------------------------------------------------------------- --------------
COSMETICS & PERSONAL CARE--0.4%
-----------------------------------------------------------------------------------
7,526 Avon Products, Inc. 492,953
-----------------------------------------------------------------------------------
6,140 International Flavors & Fragrances, Inc. 297,023
----------------------------------------------------------------------------------- --------------
Total 789,976
----------------------------------------------------------------------------------- --------------
ELECTRIC--0.7%
-----------------------------------------------------------------------------------
13,868 Entergy Corp. 338,899
-----------------------------------------------------------------------------------
39,378 Southern Co. 903,233
----------------------------------------------------------------------------------- --------------
Total 1,242,132
----------------------------------------------------------------------------------- --------------
ELECTRICAL EQUIPMENT--7.1%
-----------------------------------------------------------------------------------
5,368 Black & Decker Corp. 204,320
-----------------------------------------------------------------------------------
8,790 (a)Digital Equipment Corp. 440,049
-----------------------------------------------------------------------------------
</TABLE>
INDEPENDENCE ONE EQUITY PLUS FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ------------ ----------------------------------------------------------------------------------- --------------
<C> <S> <C>
COMMON STOCKS--CONTINUED
- -------------------------------------------------------------------------------------------------
ELECTRICAL EQUIPMENT--CONTINUED
-----------------------------------------------------------------------------------
183,979 General Electric Co. $ 11,878,144
-----------------------------------------------------------------------------------
7,166 Honeywell, Inc. 487,736
----------------------------------------------------------------------------------- --------------
Total 13,010,249
----------------------------------------------------------------------------------- --------------
ELECTRONICS--5.1%
-----------------------------------------------------------------------------------
12,631 AMP, Inc. 568,395
-----------------------------------------------------------------------------------
91,762 Intel Corp. 7,065,674
-----------------------------------------------------------------------------------
8,254 (a)National Semiconductor Corp. 297,144
-----------------------------------------------------------------------------------
2,590 Polaroid Corp. 116,388
-----------------------------------------------------------------------------------
1,899 Tektronix, Inc. 112,278
-----------------------------------------------------------------------------------
10,898 Texas Instruments, Inc. 1,162,680
----------------------------------------------------------------------------------- --------------
Total 9,322,559
----------------------------------------------------------------------------------- --------------
ENTERTAINMENT--1.8%
-----------------------------------------------------------------------------------
38,382 Disney (Walt) Co. 3,156,920
-----------------------------------------------------------------------------------
5,805 (a)Harrah's Entertainment, Inc. 114,286
----------------------------------------------------------------------------------- --------------
Total 3,271,206
----------------------------------------------------------------------------------- --------------
FINANCIAL SERVICES--2.8%
-----------------------------------------------------------------------------------
25,734 Citicorp 3,218,358
-----------------------------------------------------------------------------------
6,707 Hartford Financial Services Group, Inc. 543,267
-----------------------------------------------------------------------------------
18,623 Merrill Lynch & Co., Inc. 1,259,380
----------------------------------------------------------------------------------- --------------
Total 5,021,005
----------------------------------------------------------------------------------- --------------
FOOD & BEVERAGE--7.9%
-----------------------------------------------------------------------------------
139,379 Coca-Cola Co. 7,874,914
-----------------------------------------------------------------------------------
20,995 Heinz (H.J.) Co. 974,955
-----------------------------------------------------------------------------------
39,115 McDonald's Corp. 1,752,841
-----------------------------------------------------------------------------------
87,013 PepsiCo, Inc. 3,203,166
-----------------------------------------------------------------------------------
6,057 Ralston Purina Co. 543,616
----------------------------------------------------------------------------------- --------------
Total 14,349,492
----------------------------------------------------------------------------------- --------------
</TABLE>
INDEPENDENCE ONE EQUITY PLUS FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ------------ ----------------------------------------------------------------------------------- --------------
<C> <S> <C>
COMMON STOCKS--CONTINUED
- -------------------------------------------------------------------------------------------------
FOREST PRODUCTS & PAPER--1.0%
-----------------------------------------------------------------------------------
3,193 Boise Cascade Corp. $ 110,558
-----------------------------------------------------------------------------------
5,516 Champion International Corp. 304,414
-----------------------------------------------------------------------------------
17,390 International Paper Co. 782,550
-----------------------------------------------------------------------------------
11,336 Weyerhaeuser Co. 541,294
----------------------------------------------------------------------------------- --------------
Total 1,738,816
----------------------------------------------------------------------------------- --------------
HOMEBUILDERS--0.1%
-----------------------------------------------------------------------------------
4,771 Fluor Corp. 196,207
----------------------------------------------------------------------------------- --------------
HOUSEHOLD PRODUCTS--0.6%
-----------------------------------------------------------------------------------
16,825 Colgate-Palmolive Co. 1,089,419
----------------------------------------------------------------------------------- --------------
INSURANCE--3.0%
-----------------------------------------------------------------------------------
14,116 American General Corp. 719,916
-----------------------------------------------------------------------------------
39,867 American International Group, Inc. 4,068,925
-----------------------------------------------------------------------------------
4,159 CIGNA Corp. 645,685
----------------------------------------------------------------------------------- --------------
Total 5,434,526
----------------------------------------------------------------------------------- --------------
MANUFACTURING--0.8%
-----------------------------------------------------------------------------------
10,002 Allegheny Teledyne, Inc. 263,177
-----------------------------------------------------------------------------------
18,523 Eastman Kodak Co. 1,109,065
----------------------------------------------------------------------------------- --------------
Total 1,372,242
----------------------------------------------------------------------------------- --------------
MEDICAL SUPPLIES--1.0%
-----------------------------------------------------------------------------------
15,889 Baxter International, Inc. 734,866
-----------------------------------------------------------------------------------
37,180 Columbia/HCA Healthcare Corp. 1,050,335
----------------------------------------------------------------------------------- --------------
Total 1,785,201
----------------------------------------------------------------------------------- --------------
METALS & MINING--0.4%
-----------------------------------------------------------------------------------
9,888 Aluminum Co. of America 721,824
----------------------------------------------------------------------------------- --------------
OFFICE EQUIPMENT--0.9%
-----------------------------------------------------------------------------------
4,547 Harris Corp. 198,363
-----------------------------------------------------------------------------------
</TABLE>
INDEPENDENCE ONE EQUITY PLUS FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ------------ ----------------------------------------------------------------------------------- --------------
<C> <S> <C>
COMMON STOCKS--CONTINUED
- -------------------------------------------------------------------------------------------------
OFFICE EQUIPMENT--CONTINUED
-----------------------------------------------------------------------------------
18,485 Xerox Corp. $ 1,466,092
----------------------------------------------------------------------------------- --------------
Total 1,664,455
----------------------------------------------------------------------------------- --------------
OIL--11.6%
-----------------------------------------------------------------------------------
27,904 Amoco Corp. 2,558,448
-----------------------------------------------------------------------------------
18,238 Atlantic Richfield Co. 1,501,215
-----------------------------------------------------------------------------------
9,498 Baker Hughes, Inc. 436,314
-----------------------------------------------------------------------------------
6,026 Coastal Corp. 362,313
-----------------------------------------------------------------------------------
140,671 Exxon Corp. 8,642,475
-----------------------------------------------------------------------------------
14,413 Halliburton Co. 859,375
-----------------------------------------------------------------------------------
44,679 Mobil Corp. 3,253,190
-----------------------------------------------------------------------------------
19,049 Occidental Petroleum Corp. 530,991
-----------------------------------------------------------------------------------
27,822 Schlumberger Ltd. 2,434,425
-----------------------------------------------------------------------------------
8,934 Williams Cos., Inc. (The) 455,076
----------------------------------------------------------------------------------- --------------
Total 21,033,822
----------------------------------------------------------------------------------- --------------
PHARMACEUTICALS--8.9%
-----------------------------------------------------------------------------------
56,667 Bristol-Myers Squibb Co. 4,972,529
-----------------------------------------------------------------------------------
75,657 Johnson & Johnson 4,340,820
-----------------------------------------------------------------------------------
67,879 Merck & Co., Inc. 6,058,201
-----------------------------------------------------------------------------------
28,864 Pharmacia & Upjohn, Inc. 916,432
----------------------------------------------------------------------------------- --------------
Total 16,287,982
----------------------------------------------------------------------------------- --------------
RECREATION--0.1%
-----------------------------------------------------------------------------------
5,646 Brunswick Corp. 190,553
----------------------------------------------------------------------------------- --------------
RETAIL--4.2%
-----------------------------------------------------------------------------------
27,996 (a)K Mart Corp. 369,197
-----------------------------------------------------------------------------------
15,615 Limited, Inc. 367,928
-----------------------------------------------------------------------------------
13,222 May Department Stores Co. 712,335
-----------------------------------------------------------------------------------
22,263 Sears, Roebuck & Co. 932,263
-----------------------------------------------------------------------------------
</TABLE>
INDEPENDENCE ONE EQUITY PLUS FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ------------ ----------------------------------------------------------------------------------- --------------
<C> <S> <C>
COMMON STOCKS--CONTINUED
- -------------------------------------------------------------------------------------------------
RETAIL--CONTINUED
-----------------------------------------------------------------------------------
6,203 Tandy Corp. $ 213,228
-----------------------------------------------------------------------------------
16,398 (a)Toys R Us, Inc. 558,557
-----------------------------------------------------------------------------------
130,253 Wal-Mart Stores, Inc. 4,575,137
----------------------------------------------------------------------------------- --------------
Total 7,728,645
----------------------------------------------------------------------------------- --------------
STEEL--0.0%
-----------------------------------------------------------------------------------
6,474 (a)Bethlehem Steel Corp. 64,740
----------------------------------------------------------------------------------- --------------
TELECOMMUNICATIONS--5.9%
-----------------------------------------------------------------------------------
93,413 AT&T Corp. 4,571,398
-----------------------------------------------------------------------------------
44,131 Bell Atlantic Corp. 3,524,963
-----------------------------------------------------------------------------------
39,333 MCI Communications Corp. 1,396,322
-----------------------------------------------------------------------------------
14,905 Northern Telecom Ltd. 1,336,792
----------------------------------------------------------------------------------- --------------
Total 10,829,475
----------------------------------------------------------------------------------- --------------
TRANSPORTATION--1.3%
-----------------------------------------------------------------------------------
8,843 Burlington Northern Santa Fe 840,085
-----------------------------------------------------------------------------------
4,177 Delta Air Lines, Inc. 420,833
-----------------------------------------------------------------------------------
6,538 (a)Federal Express Corp. 436,412
-----------------------------------------------------------------------------------
21,429 Norfolk Southern Corp. 688,407
----------------------------------------------------------------------------------- --------------
Total 2,385,737
----------------------------------------------------------------------------------- --------------
UTILITIES-ELECTRIC--0.5%
-----------------------------------------------------------------------------------
10,756 American Electric Power Co., Inc. 508,221
-----------------------------------------------------------------------------------
12,437 Unicom Corp. 348,236
----------------------------------------------------------------------------------- --------------
Total 856,457
----------------------------------------------------------------------------------- --------------
TOTAL COMMON STOCKS (IDENTIFIED COST $113,626,790) 175,411,189
----------------------------------------------------------------------------------- --------------
</TABLE>
INDEPENDENCE ONE EQUITY PLUS FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------------ ----------------------------------------------------------------------------------- --------------
<C> <S> <C>
(B)REPURCHASE AGREEMENT--3.7%
- -------------------------------------------------------------------------------------------------
$ 6,686,000 Daiwa Securities America, Inc., 5.67%, dated 10/31/1997,
due 11/3/1997 (AT AMORTIZED COST) $ 6,686,000
----------------------------------------------------------------------------------- --------------
TOTAL INVESTMENTS (IDENTIFIED COST $120,312,790)(C) $ 182,097,189
----------------------------------------------------------------------------------- --------------
</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 $120,312,790.
The net unrealized appreciation of investments on a federal tax basis
amounts to $61,784,399 which is comprised of $62,657,907 appreciation and
$873,508 depreciation at October 31, 1997.
Note: The categories of investments are shown as a percentage of net assets
($182,343,256) at October 31, 1997.
(See Notes which are an integral part of the Financial Statements)
INDEPENDENCE ONE EQUITY PLUS FUND
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- --------------------------------------------------------------------------------------------------
Total investments in securities, at value
(identified and tax cost $120,312,790) $ 182,097,189
- --------------------------------------------------------------------------------------------------
Income receivable 232,068
- --------------------------------------------------------------------------------------------------
Deferred organizational costs 17,537
- --------------------------------------------------------------------------------------------------
Deferred expenses 12,676
- -------------------------------------------------------------------------------------------------- --------------
Total assets 182,359,470
- --------------------------------------------------------------------------------------------------
LIABILITIES:
- ---------------------------------------------------------------------------------------
Payable to Bank $ 922
- ---------------------------------------------------------------------------------------
Accrued expenses 15,292
- --------------------------------------------------------------------------------------- ---------
Total liabilities 16,214
- -------------------------------------------------------------------------------------------------- --------------
NET ASSETS for 11,713,788 shares outstanding $ 182,343,256
- -------------------------------------------------------------------------------------------------- --------------
NET ASSETS CONSIST OF:
- --------------------------------------------------------------------------------------------------
Paid in capital $ 113,092,926
- --------------------------------------------------------------------------------------------------
Net unrealized appreciation of investments 61,784,399
- --------------------------------------------------------------------------------------------------
Accumulated net realized gain on investments 7,325,048
- --------------------------------------------------------------------------------------------------
Undistributed net investment income 140,883
- -------------------------------------------------------------------------------------------------- --------------
Total Net Assets $ 182,343,256
- -------------------------------------------------------------------------------------------------- --------------
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE:
- --------------------------------------------------------------------------------------------------
$182,343,256 / 11,713,788 shares outstanding $15.57
- -------------------------------------------------------------------------------------------------- --------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
INDEPENDENCE ONE EQUITY PLUS FUND
STATEMENT OF OPERATIONS
SIX MONTHS ENDED OCTOBER 31, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
- ---------------------------------------------------------------------------------------------------
Dividends $ 1,563,176
- ---------------------------------------------------------------------------------------------------
Interest 126,847
- --------------------------------------------------------------------------------------------------- -------------
Total income 1,690,023
- ---------------------------------------------------------------------------------------------------
EXPENSES:
- --------------------------------------------------------------------------------------
Investment advisory fee $ 374,975
- --------------------------------------------------------------------------------------
Administrative personnel and services fee 101,104
- --------------------------------------------------------------------------------------
Custodian fees 24,841
- --------------------------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses 17,831
- --------------------------------------------------------------------------------------
Directors'/Trustees' fees 2,252
- --------------------------------------------------------------------------------------
Auditing fees 6,998
- --------------------------------------------------------------------------------------
Legal fees 1,436
- --------------------------------------------------------------------------------------
Portfolio accounting fees 26,038
- --------------------------------------------------------------------------------------
Share registration costs 9,567
- --------------------------------------------------------------------------------------
Printing and postage 6,827
- --------------------------------------------------------------------------------------
Insurance premiums 1,875
- --------------------------------------------------------------------------------------
Miscellaneous 3,149
- -------------------------------------------------------------------------------------- -----------
Total expenses 576,893
- --------------------------------------------------------------------------------------
Waivers--
- -------------------------------------------------------------------------
Waiver of investment advisory fee $(140,616)
- -------------------------------------------------------------------------
Waiver of administrative personnel and services fee (42,659)
- ------------------------------------------------------------------------- -----------
Total waivers (183,275)
- -------------------------------------------------------------------------------------- -----------
Net expenses 393,618
- --------------------------------------------------------------------------------------------------- -------------
Net investment income 1,296,405
- --------------------------------------------------------------------------------------------------- -------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
- ---------------------------------------------------------------------------------------------------
Net realized gain on investments 5,595,085
- ---------------------------------------------------------------------------------------------------
Net change in unrealized appreciation of investments 12,806,685
- --------------------------------------------------------------------------------------------------- -------------
Net realized and unrealized gain on investments 18,401,770
- --------------------------------------------------------------------------------------------------- -------------
Change in net assets resulting from operations $ 19,698,175
- --------------------------------------------------------------------------------------------------- -------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
INDEPENDENCE ONE EQUITY PLUS FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
(UNAUDITED) YEAR ENDED
OCTOBER 31, APRIL 30,
1997 1997
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- ---------------------------------------------------------------------------------
OPERATIONS--
- ---------------------------------------------------------------------------------
Net investment income $ 1,296,405 $ 2,555,704
- ---------------------------------------------------------------------------------
Net realized gain (loss) on investments ($5,595,085 and $1,787,648, respectively,
as computed for federal tax purposes) 5,595,085 1,757,572
- ---------------------------------------------------------------------------------
Net change in unrealized appreciation 12,806,685 31,063,371
- --------------------------------------------------------------------------------- -------------- --------------
Change in net assets resulting from operations 19,698,175 35,376,647
- --------------------------------------------------------------------------------- -------------- --------------
DISTRIBUTIONS TO SHAREHOLDERS--
- ---------------------------------------------------------------------------------
Distributions from net investment income (1,302,842) (2,489,618)
- ---------------------------------------------------------------------------------
Distributions from net realized gains -- (594,000)
- --------------------------------------------------------------------------------- -------------- --------------
Change in net assets resulting from
distributions to shareholders (1,302,842) (3,083,618)
- --------------------------------------------------------------------------------- -------------- --------------
SHARE TRANSACTIONS--
- ---------------------------------------------------------------------------------
Proceeds from sale of shares 17,561,001 50,948,693
- ---------------------------------------------------------------------------------
Net asset value of shares issued to shareholders
in payment of distributions declared 776,878 1,995,104
- ---------------------------------------------------------------------------------
Cost of shares redeemed (23,718,179) (28,517,581)
- --------------------------------------------------------------------------------- -------------- --------------
Change in net assets resulting from share transactions (5,380,300) 24,426,216
- --------------------------------------------------------------------------------- -------------- --------------
Change in net assets 13,015,033 56,719,245
- ---------------------------------------------------------------------------------
NET ASSETS:
- ---------------------------------------------------------------------------------
Beginning of period 169,328,223 112,608,978
- --------------------------------------------------------------------------------- -------------- --------------
End of period (including undistributed net investment income of $140,883 and
$147,320, respectively) $ 182,343,256 $ 169,328,223
- --------------------------------------------------------------------------------- -------------- --------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
INDEPENDENCE ONE EQUITY PLUS FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
(UNAUDITED) YEAR ENDED
OCTOBER 31, APRIL 30,
1997 1997 1996(A)
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 14.04 $ 11.39 $ 10.00
- -----------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- -----------------------------------------------------------------------------
Net investment income 0.11 0.21 0.11
- -----------------------------------------------------------------------------
Net realized and unrealized gain (loss)
on investments 1.53 2.70 1.38
- ----------------------------------------------------------------------------- ------- --------- -----------
Total from investment operations 1.64 2.91 1.49
- ----------------------------------------------------------------------------- ------- --------- -----------
LESS DISTRIBUTIONS
- -----------------------------------------------------------------------------
Distributions from net investment income (0.11) (0.21) (0.10)
- -----------------------------------------------------------------------------
Distributions from net realized gain on investments -- (0.05) --
- ----------------------------------------------------------------------------- ------- --------- -----------
Total distributions (0.11) (0.26) (0.10)
- ----------------------------------------------------------------------------- ------- --------- -----------
NET ASSET VALUE, END OF PERIOD $ 15.57 $ 14.04 $ 11.39
- ----------------------------------------------------------------------------- ------- --------- -----------
TOTAL RETURN (B) 11.67% 26.00% 14.96%
- -----------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- -----------------------------------------------------------------------------
Expenses 0.42%* 0.40% 0.39%*
- -----------------------------------------------------------------------------
Net investment income 1.38%* 1.74% 1.92%*
- -----------------------------------------------------------------------------
Expense waiver/reimbursement (c) 0.20%* 0.24% 0.31%*
- -----------------------------------------------------------------------------
SUPPLEMENTAL DATA
- -----------------------------------------------------------------------------
Net assets, end of period (000 omitted) $182,343 $169,328 $112,609
- -----------------------------------------------------------------------------
Average commission rate paid (d) $0.0350 $0.0350 $0.0345
- -----------------------------------------------------------------------------
Portfolio turnover 10% 8% 6%
- -----------------------------------------------------------------------------
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from September 25, 1995 (date of initial
public investment) to April 30, 1996.
(b) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(d) Represents total commissions paid on portfolio securities divided by total
portfolio shares purchased or sold on which commissions were charged.
(See Notes which are an integral part of the Financial Statements)
INDEPENDENCE ONE EQUITY PLUS FUND
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
(1) ORGANIZATION
Independence One Mutual Funds (the "Trust") is registered under the Investment
Company Act of 1940, as amended (the "Act") as an open-end, management
investment company. The Trust consists of seven portfolios. The financial
statements included herein are only those of Independence One Equity Plus Fund
(the "Fund"). The financial statements of the other portfolios are presented
separately. The assets of each portfolio are segregated and a shareholder's
interest is limited to the portfolio in which shares are held. The investment
objective of the Fund is total return.
(2) SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles.
INVESTMENT VALUATIONS--Listed equity securities are valued at the last sale
price reported on a national securities exchange. Short-term securities are
valued at the prices provided by an independent pricing service. However,
short-term securities with remaining maturities of sixty days or less at
the time of purchase may be valued at amortized cost, which approximates
fair market value.
REPURCHASE AGREEMENTS--It is the policy of the Fund to require the
custodian bank to take possession, to have legally segregated in the
Federal Reserve Book Entry System, or to have segregated within the
custodian bank's vault, all securities held as collateral under repurchase
agreement transactions. Additionally, procedures have been established by
the Fund to monitor, on a daily basis, the market value of each repurchase
agreement's collateral to ensure that the value of collateral at least
equals the repurchase price to be paid under the repurchase agreement
transaction.
The Fund will only enter into repurchase agreements with banks and other
recognized financial institutions, such as broker/dealers, which are deemed
by the Fund's adviser to be creditworthy pursuant to the guidelines and/or
standards reviewed or established by the Board of Trustees (the
"Trustees"). Risks may arise from the potential inability of counterparties
to honor the terms of the repurchase agreement. Accordingly, the Fund could
receive less than the repurchase price on the sale of collateral
securities.
INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS--Interest income and expenses
are accrued daily. Bond premium and discount, if applicable, are amortized
as required by the Internal Revenue Code, as amended (the "Code"). Dividend
income and distributions to shareholders are recorded on the ex-dividend
date.
INDEPENDENCE ONE EQUITY PLUS FUND
- --------------------------------------------------------------------------------
FEDERAL TAXES--It is the Fund's policy to comply with the provisions of the
Code applicable to regulated investment companies and to distribute to
shareholders each year substantially all of its income. Accordingly, no
provisions for federal tax are necessary.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Fund may engage in
when-issued or delayed delivery transactions. The Fund records when-issued
securities on the trade date and maintains security positions such that
sufficient liquid assets will be available to make payment for the
securities purchased. Securities purchased on a when-issued or delayed
delivery basis are marked to market daily and begin earning interest on the
settlement date.
DEFERRED EXPENSES--The costs incurred by the Fund with respect to
registration of its shares in its first fiscal year, excluding the initial
expense of registering its shares, have been deferred and are being
amortized over a period not to exceed five years from the Fund's
commencement date.
USE OF ESTIMATES--The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts of assets, liabilities,
expenses and revenues reported in the financial statements. Actual results
could differ from those estimated.
OTHER--Investment transactions are accounted for on the trade date.
(3) SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value).
Transactions in shares were as follows:
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED
OCTOBER 31, APRIL 30,
1997 1997
<S> <C> <C>
Shares sold 1,119,408 4,175,707
- ------------------------------------------------------------------------------------
Shares issued to shareholders in payment
of distributions declared 48,937 164,811
- ------------------------------------------------------------------------------------
Shares redeemed (1,514,711) (2,168,967)
- ------------------------------------------------------------------------------------ -------------- -----------
Net change resulting from share transactions (346,366) 2,171,551
- ------------------------------------------------------------------------------------ -------------- -----------
</TABLE>
INDEPENDENCE ONE EQUITY PLUS FUND
- --------------------------------------------------------------------------------
(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE--Michigan National Bank, the Fund's investment adviser
(the "Adviser"), receives for its services an annual investment advisory fee
equal to 0.40% of the Fund's average daily net assets. The Adviser may
voluntarily choose to waive any portion of its fee. The Adviser can modify or
terminate this voluntary waiver at any time at its sole discretion.
Under the terms of a sub-advisory agreement between the Adviser and Sosnoff
Sheridan Corporation, Sosnoff Sheridan Corporation receives an annual fee from
the Adviser equal to 0.035% of the Fund's average daily value of the Fund's
equity securities. Sosnoff Sheridan Corporation may voluntarily choose to reduce
its compensation.
ADMINISTRATIVE FEE--Federated Administrative Services ("FAS") provides the Fund
with certain administrative personnel and services. The fee paid to FAS is based
on the level of average aggregate net assets of the Trust for the period. 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 reimbursed FAS for these expenses. These expenses have been
deferred and are being amortized over the five year period following the Fund's
effective date. For the six months ended October 31, 1997, the Fund expensed
$1,429 of organizational expenses.
GENERAL--Certain of the Officers of the Trust are Officers and/or Directors or
Trustees of the above companies.
(5) INVESTMENT TRANSACTIONS
Purchases and sales of investments, excluding short-term securities, for the
period ended October 31, 1997, were as follows:
<TABLE>
<S> <C>
PURCHASES $ 17,048,721
- --------------------------------------------------------------------------------------------------- -------------
SALES $ 23,136,520
- --------------------------------------------------------------------------------------------------- -------------
</TABLE>
TRUSTEES OFFICERS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Robert E. Baker Edward C. Gonzales
Harold Berry President and Treasurer
Harry J. Nederlander Jeffrey W. Sterling
Thomas S. Wilson Vice President and Assistant Treasurer
Jay S. Neuman
Secretary
Gail Cagney
Assistant Secretary
</TABLE>
Mutual funds are not bank deposits or obligations, are not guaranteed by any
bank, and are not insured or guaranteed by the U.S. government, the Federal
Deposit Insurance Corporation, the Federal Reserve Board, or any other
government agency. Investment in mutual funds involves investment risk,
including possible loss of principal.
This report is authorized for distribution to prospective investors only when
preceded or accompanied by the fund's prospectus which contains facts concerning
its objective and policies, management fees, expenses and other information.
INDEPENDENCE
ONE(R)
MUTUAL
FUNDS
COMBINED
SEMI-ANNUAL REPORT
TO SHAREHOLDERS
OCTOBER 31, 1997
Independence One U.S. Government
Securities Fund
Independence One Fixed Income Fund
Independence One Michigan
Municipal Bond Fund
[MICHIGAN NATIONAL BANK LOGO]
Michigan
National
Bank
Investment Adviser
[LOGO OF FEDERATED INVESTORS]
Federated Investors Tower
Pittsburgh, PA 15222-3779
Federated Securities Corp. is the distributor of the funds
and is a subsidiary of Federated Investors.
Cusip 453777856
Cusip 453777807
Cusip 453777864
G01889-02 (12/97)
[LOGO OF INDEPENDENCE ONE]
INDEPENDENCE ONE
Mutual Funds
PRESIDENT'S MESSAGE
- --------------------------------------------------------------------------------
Dear Investor:
I am pleased to present the Semi-Annual Report of Independence One U.S.
Government Securities Fund, Independence One Fixed Income Fund, and Independence
One Michigan Municipal Bond Fund, which covers the six-month period from May 1,
1997 through October 31, 1997. Inside, you will find complete financial
information for each fund. The report begins with a discussion by the funds'
portfolio managers, followed by a list of each fund's holdings and financial
statements.
The bond market environment improved considerably during the reporting period,
as the increases in the funds' net asset values indicate. The following is a
fund-by-fund summary of performance over the six-month reporting period:
INDEPENDENCE ONE U.S. GOVERNMENT SECURITIES FUND
This fund's all-government bond portfolio produced an income stream totaling
$0.29 per share as the net asset value increased from $9.98 to $10.36. As a
result, the fund achieved a total return of 6.85%.* At the end of the reporting
period, more than 69% of the holdings consisted of U.S. Treasury bonds and
notes, while government agency securities accounted for 27.8% of the total net
assets. Fund assets totaled $73.5 million at the end of the period.
INDEPENDENCE ONE FIXED INCOME FUND
This fund provides a diversified approach to bond investing through a portfolio
that consists of a mix of U.S. government, agency and corporate bonds. This
portfolio produced an income stream totaling $0.30 per share. The fund's net
asset value increased from $9.80 to $10.04. Through income and the increase in
net asset value, the fund achieved a total return of 5.54% in a difficult bond
market.* At the end of the period, fund assets reached $77.9 million.
INDEPENDENCE ONE MICHIGAN MUNICIPAL BOND FUND
Designed for tax-sensitive Michigan investors, this fund invests in
investment-grade Michigan municipal bonds to pursue double-tax-free income.**
The fund's portfolio produced an income stream totaling $0.21 per share, while
the net asset value increased from $9.99 to $10.31. Through income and the
increase in net asset value, the fund achieved a total return of 5.51%.* At the
end of the period, fund assets reached $25.9 million.
Thank you for selecting one or more Independence One Mutual Funds to pursue the
income potential of bonds. We look forward to keeping you informed about the
progress of your investment.
Sincerely,
/s/Edward C. Gonzales
Edward C. Gonzales
President
December 15, 1997
* Performance quoted reflects past performance and is not indicative of future
results. Investment return and principal value will fluctuate so that an
investor's shares, when redeemed, may be worth more or less than their
original cost.
** Income may be subject to the federal alternative minimum tax.
INVESTMENT REVIEW
- --------------------------------------------------------------------------------
Q
What is your analysis of the bond market which produced positive results
during the first half of the funds' fiscal year?
A
The bond market rallied during the six-month period ended October 31, 1997.
The interest rate decline was sparked by investors' confidence that
inflation would remain near its current level of 2.2% annually, as measured
by the Consumer Price Index. The yield on the 30-year Treasury bond fell 88
basis points, from 7.03% to 6.15%.
In general, the return on mortgage-backed securities lagged the price
appreciation of comparable non-callable bonds. This occurred because investors
are becoming increasingly concerned about prepayment risk, as homeowners
refinance into lower interest rate loans.
Q
How did the funds perform for shareholders during the six-month reporting
period ended October 31, 1997?
A
The total return of Independence One U.S. Government Securities Fund was
6.85%. The total return of Independence One Fixed Income Fund was 5.54%.
The return of Independence One Michigan Municipal Bond Fund was 5.51%.*
Q
What are your comments on the improved environment for high-quality
corporate fixed-income securities during the first half of the funds'
fiscal year?
A
By investing in high quality corporate bonds, Independence One Fixed Income
Fund has been able to pick-up incremental spread over U.S. Treasury
securities with similar maturity ranges to those corporate bonds normally
held by the fund. In fact, the fund has added additional high-quality corporate
exposure in an attempt to earn additional yield.
Q
As 1997 draws to a close, do you see a continued favorable environment for
bonds?
A
Yes. We are encouraged by the continued high level of global competition
which has generated a general disinflationary trend in the prices of goods
and services. The acceleration of the technological revolution and the
advances in communications have improved the efficiencies of businesses and
helped to control their costs. In addition, a buoyant U.S. economy, coupled with
a slowing of the growth rate of government spending, has brought the federal
government within reach of a balanced budget. All these factors give us optimism
that 1998 will be favorable for the fixed income markets.
* Performance quoted represents past performance and is not indicative of future
results. Investment return and principal value will fluctuate so that an
investor's shares, when redeemed, may be worth more or less than their
original cost.
INDEPENDENCE ONE U.S. GOVERNMENT SECURITIES FUND
PORTFOLIO OF INVESTMENTS
OCTOBER 31, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------------- ----------------------------------------------------------------------------------- -------------
<C> <S> <C>
GOVERNMENT AGENCIES--27.8%
- --------------------------------------------------------------------------------------------------
FEDERAL HOME LOAN BANK--5.9%
-----------------------------------------------------------------------------------
$ 4,000,000 7.20%, 6/14/2011 $ 4,352,480
----------------------------------------------------------------------------------- -------------
FEDERAL HOME LOAN MORTGAGE CORP.--5.5%
-----------------------------------------------------------------------------------
1,000,000 6.50%, 1/14/2000 1,002,180
-----------------------------------------------------------------------------------
3,000,000 6.55%, 10/2/2002 3,083,430
----------------------------------------------------------------------------------- -------------
Total 4,085,610
----------------------------------------------------------------------------------- -------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION--16.4%
-----------------------------------------------------------------------------------
3,000,000 6.50%, 2/25/2002 3,010,020
-----------------------------------------------------------------------------------
3,000,000 6.80%, 1/10/2003 3,118,320
-----------------------------------------------------------------------------------
1,500,000 7.12%, 4/19/2002 1,528,650
-----------------------------------------------------------------------------------
4,000,000 7.65%, 3/10/2005 4,371,200
----------------------------------------------------------------------------------- -------------
Total 12,028,190
----------------------------------------------------------------------------------- -------------
TOTAL GOVERNMENT AGENCIES (IDENTIFIED COST $19,788,527) 20,466,280
----------------------------------------------------------------------------------- -------------
U.S. TREASURY OBLIGATIONS--69.8%
- --------------------------------------------------------------------------------------------------
U.S. TREASURY BONDS--23.3%
-----------------------------------------------------------------------------------
7,000,000 6.50%, 11/15/2026 7,297,780
-----------------------------------------------------------------------------------
5,500,000 7.125%, 2/15/2023 6,124,085
-----------------------------------------------------------------------------------
3,000,000 8.125%, 8/15/2019 3,674,460
----------------------------------------------------------------------------------- -------------
Total 17,096,325
----------------------------------------------------------------------------------- -------------
U.S. TREASURY NOTES--46.5%
-----------------------------------------------------------------------------------
11,000,000 6.125%, 5/15/1998 11,041,360
-----------------------------------------------------------------------------------
10,000,000 6.375%, 3/31/2001 10,196,300
-----------------------------------------------------------------------------------
10,000,000 7.00%, 4/15/1999 10,191,400
-----------------------------------------------------------------------------------
2,500,000 7.50%, 2/15/2005 2,741,675
----------------------------------------------------------------------------------- -------------
Total 34,170,735
----------------------------------------------------------------------------------- -------------
TOTAL U.S. TREASURY OBLIGATIONS (IDENTIFIED COST $49,200,253) 51,267,060
----------------------------------------------------------------------------------- -------------
</TABLE>
INDEPENDENCE ONE U.S. GOVERNMENT SECURITIES FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------------- ----------------------------------------------------------------------------------- -------------
<S> <C> <C>
(A)REPURCHASE AGREEMENT--1.4%
- --------------------------------------------------------------------------------------------------
$ 1,009,000 Daiwa Securities America, Inc., 5.670%, dated 10/31/1997,
due 11/3/1997 (AT AMORTIZED COST) $ 1,009,000
----------------------------------------------------------------------------------- -------------
TOTAL INVESTMENTS (IDENTIFIED COST $69,997,780)(B) $ 72,742,340
----------------------------------------------------------------------------------- -------------
</TABLE>
(a) The repurchase agreement is fully collateralized by U.S. government and/or
agency obligations based on market prices at the date of the portfolio.
(b) The cost of investments for federal tax purposes amounts to $69,997,780. The
net unrealized appreciation of investments on a federal tax basis amounts to
$2,744,560 which is comprised of $2,744,560 appreciation and $0 depreciation
at October 31, 1997.
Note: The categories of investments are shown as a percentage of net assets
($73,491,118) at
October 31, 1997.
(See Notes which are an integral part of the Financial Statements)
INDEPENDENCE ONE U.S. GOVERNMENT SECURITIES FUND
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- ---------------------------------------------------------------------------------------------------
Total investments in securities, at value
(identified and tax cost $69,997,780) $ 72,742,340
- ---------------------------------------------------------------------------------------------------
Cash 75
- ---------------------------------------------------------------------------------------------------
Income receivable 1,077,582
- ---------------------------------------------------------------------------------------------------
Prepaid expenses 7,952
- ---------------------------------------------------------------------------------------------------
Deferred organizational costs 4,322
- ---------------------------------------------------------------------------------------------------
Deferred expenses 3,825
- --------------------------------------------------------------------------------------------------- -------------
Total assets 73,836,096
- ---------------------------------------------------------------------------------------------------
LIABILITIES:
- ---------------------------------------------------------------------------------------
Income distribution payable $ 344,978
- --------------------------------------------------------------------------------------- ----------
Total liabilities 344,978
- --------------------------------------------------------------------------------------------------- -------------
NET ASSETS for 7,094,093 shares outstanding $ 73,491,118
- --------------------------------------------------------------------------------------------------- -------------
NET ASSETS CONSIST OF:
- ---------------------------------------------------------------------------------------------------
Paid in capital $ 71,418,135
- ---------------------------------------------------------------------------------------------------
Net unrealized appreciation of investments 2,744,560
- ---------------------------------------------------------------------------------------------------
Accumulated net realized loss on investments (671,577)
- --------------------------------------------------------------------------------------------------- -------------
Total Net Assets $ 73,491,118
- --------------------------------------------------------------------------------------------------- -------------
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE:
- ---------------------------------------------------------------------------------------------------
$73,491,118 / 7,094,093 shares outstanding $10.36
- --------------------------------------------------------------------------------------------------- -------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
INDEPENDENCE ONE U.S. GOVERNMENT SECURITIES FUND
STATEMENT OF OPERATIONS
SIX MONTHS ENDED OCTOBER 31, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
- ----------------------------------------------------------------------------------------------------
Interest $ 2,336,376
- ----------------------------------------------------------------------------------------------------
EXPENSES:
- ---------------------------------------------------------------------------------------
Investment advisory fee $ 257,447
- ---------------------------------------------------------------------------------------
Administrative personnel and services fee 39,671
- ---------------------------------------------------------------------------------------
Custodian fees 11,331
- ---------------------------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses 17,143
- ---------------------------------------------------------------------------------------
Directors'/Trustees' fees 2,590
- ---------------------------------------------------------------------------------------
Auditing fees 6,109
- ---------------------------------------------------------------------------------------
Legal fees 2,557
- ---------------------------------------------------------------------------------------
Portfolio accounting fees 26,327
- ---------------------------------------------------------------------------------------
Share registration costs 9,821
- ---------------------------------------------------------------------------------------
Printing and postage 2,808
- ---------------------------------------------------------------------------------------
Insurance premiums 1,801
- ---------------------------------------------------------------------------------------
Miscellaneous 6,898
- --------------------------------------------------------------------------------------- -----------
Total expenses 384,503
- ---------------------------------------------------------------------------------------
Waivers--
- ---------------------------------------------------------------------------------------
Waiver of investment advisory fee (165,502)
- --------------------------------------------------------------------------------------- -----------
Net expenses 219,001
- ---------------------------------------------------------------------------------------------------- ------------
Net investment income 2,117,375
- ---------------------------------------------------------------------------------------------------- ------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
- ----------------------------------------------------------------------------------------------------
Net realized gain on investments 382,902
- ----------------------------------------------------------------------------------------------------
Net change in unrealized appreciation of investments 2,364,189
- ---------------------------------------------------------------------------------------------------- ------------
Net realized and unrealized gain on investments 2,747,091
- ---------------------------------------------------------------------------------------------------- ------------
Change in net assets resulting from operations $ 4,864,466
- ---------------------------------------------------------------------------------------------------- ------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
INDEPENDENCE ONE U.S. GOVERNMENT SECURITIES FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS ENDED
(UNAUDITED) YEAR ENDED
OCTOBER 31, 1997 APRIL 30, 1997
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- -----------------------------------------------------------------------
OPERATIONS--
- -----------------------------------------------------------------------
Net investment income $ 2,117,375 $ 4,232,243
- -----------------------------------------------------------------------
Net realized gain (loss) on investments ($382,902 net gain and $1,054,816 net
loss, respectively, as computed for federal tax
purposes) 382,902 (1,052,708)
- -----------------------------------------------------------------------
Net change in unrealized appreciation/depreciation 2,364,189 1,178,565
- ----------------------------------------------------------------------- ---------------------- ----------------
Change in net assets resulting from operations 4,864,466 4,358,100
- ----------------------------------------------------------------------- ---------------------- ----------------
DISTRIBUTIONS TO SHAREHOLDERS--
- -----------------------------------------------------------------------
Distributions from net investment income (2,117,375) (4,232,243)
- -----------------------------------------------------------------------
Distributions from net realized gains -- (63,376)
- ----------------------------------------------------------------------- ---------------------- ----------------
Change in net assets resulting from distributions to shareholders (2,117,375) (4,295,619)
- ----------------------------------------------------------------------- ---------------------- ----------------
SHARE TRANSACTIONS--
- -----------------------------------------------------------------------
Proceeds from sale of shares 5,045,104 18,183,268
- -----------------------------------------------------------------------
Net asset value of shares issued to shareholders in payment of
distributions declared 163,394 428,510
- -----------------------------------------------------------------------
Cost of shares redeemed (6,347,741) (19,082,325)
- ----------------------------------------------------------------------- ---------------------- ----------------
Change in net assets resulting from share transactions (1,139,243) (470,547)
- ----------------------------------------------------------------------- ---------------------- ----------------
Change in net assets 1,607,848 (408,066)
- -----------------------------------------------------------------------
NET ASSETS:
- -----------------------------------------------------------------------
Beginning of period 71,883,270 72,291,336
- ----------------------------------------------------------------------- ---------------------- ----------------
End of period $ 73,491,118 $ 71,883,270
- ----------------------------------------------------------------------- ---------------------- ----------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
INDEPENDENCE ONE U.S. GOVERNMENT SECURITIES FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
(UNAUDITED)
OCTOBER 31, YEAR ENDED APRIL 30,
1997] 1997 1996 1995 1994 1993(A)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.98 $ 9.98 $ 9.79 $ 9.84 $ 10.31 $ 10.00
- -------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- -------------------------------------------------
Net investment income 0.29 0.59 0.59 0.60 0.55 0.33
- -------------------------------------------------
Net realized and unrealized gain (loss) on
investments 0.38 0.01 0.19 (0.05) (0.47) 0.31
- ------------------------------------------------- ------------- --------- --------- --------- --------- -----------
Total from investment operations 0.67 0.60 0.78 0.55 0.08 0.64
- ------------------------------------------------- ------------- --------- --------- --------- --------- -----------
LESS DISTRIBUTIONS
- -------------------------------------------------
Distributions from net investment income (0.29) (0.59) (0.59) (0.60) (0.55) (0.33)
- -------------------------------------------------
Distributions from net realized gain on
investments -- (0.01) -- -- -- --
- ------------------------------------------------- ------------- --------- --------- --------- --------- -----------
Total distributions (0.29) (0.60) (0.59) (0.60) (0.55) (0.33)
- ------------------------------------------------- ------------- --------- --------- --------- --------- -----------
NET ASSET VALUE, END OF PERIOD $ 10.36 $ 9.98 $ 9.98 $ 9.79 $ 9.84 $ 10.31
- ------------------------------------------------- ------------- --------- --------- --------- --------- -----------
TOTAL RETURN (B) 6.85% 6.15% 7.97% 5.90% 0.66% 4.61%
- -------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- -------------------------------------------------
Expenses 0.60%* 0.57% 0.40% 0.35% 0.31% 0.17%*
- -------------------------------------------------
Net investment income 5.76%* 5.82% 5.85% 6.23% 5.32% 5.59%*
- -------------------------------------------------
Expense waiver/reimbursement (c) 0.45%* 0.45% 0.66% 0.70% 0.70% 0.83%*
- -------------------------------------------------
SUPPLEMENTAL DATA
- -------------------------------------------------
Net assets, end of period (000 omitted) $73,491 $71,883 $72,291 $62,514 $72,866 $87,704
- -------------------------------------------------
Portfolio turnover 22% 73% 104% 75% 20% 0%
- -------------------------------------------------
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from January 11, 1993 (date of initial
public investment) to April 30, 1993.
(b) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
INDEPENDENCE ONE FIXED INCOME FUND
PORTFOLIO OF INVESTMENTS
OCTOBER 31, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------------- ----------------------------------------------------------------------------------- -------------
<C> <S> <C>
CORPORATE BONDS--26.8%
- --------------------------------------------------------------------------------------------------
AUTOMOTIVE--1.2%
-----------------------------------------------------------------------------------
$ 1,000,000 Ford Motor Credit Corp., Note, 6.125%, 1/9/2006 $ 978,070
----------------------------------------------------------------------------------- -------------
BANKING--5.4%
-----------------------------------------------------------------------------------
1,000,000 Banc One Corp., Sub. Note, 8.74%, 9/15/2003 1,117,390
-----------------------------------------------------------------------------------
1,000,000 Citicorp, Sr. Note, 5.625%, 2/15/2001 986,380
-----------------------------------------------------------------------------------
1,000,000 First Chicago NBD Corp., Sub. Note, 8.10%, 3/1/2002 1,069,880
-----------------------------------------------------------------------------------
1,000,000 NationsBank Corp., Sr. Note, 7.00%, 9/15/2001 1,029,420
----------------------------------------------------------------------------------- -------------
Total 4,203,070
----------------------------------------------------------------------------------- -------------
ENTERTAINMENT--1.3%
-----------------------------------------------------------------------------------
1,000,000 Disney (Walt) Co., Bond, Series B, 6.75%, 3/30/2006 1,021,660
----------------------------------------------------------------------------------- -------------
FINANCE-COMMERCIAL--2.5%
-----------------------------------------------------------------------------------
1,000,000 Associates Corp. of North America, Sr. Note, 6.26%, 2/15/2006 988,520
-----------------------------------------------------------------------------------
1,000,000 General Electric Financial Services, Inc., Deb., 5.50%, 11/1/2001 980,030
----------------------------------------------------------------------------------- -------------
Total 1,968,550
----------------------------------------------------------------------------------- -------------
FINANCIAL SERVICES--2.7%
-----------------------------------------------------------------------------------
1,000,000 Merrill Lynch & Co., Inc., Note, 7.00%, 3/15/2006 1,029,040
-----------------------------------------------------------------------------------
1,000,000 Morgan Stanley, Dean Witter, Discover & Co., Note, 7.75%, 6/1/2001 1,053,780
----------------------------------------------------------------------------------- -------------
Total 2,082,820
----------------------------------------------------------------------------------- -------------
FOOD & BEVERAGE--1.3%
-----------------------------------------------------------------------------------
1,000,000 Sara Lee Corp., Note, 6.30%, 11/7/2005 1,008,720
----------------------------------------------------------------------------------- -------------
INDUSTRIAL SERVICES--1.5%
-----------------------------------------------------------------------------------
1,000,000 General Mills, Inc., Medium Term Note, 8.90%, 6/15/2006 1,168,020
----------------------------------------------------------------------------------- -------------
OFFICE EQUIPMENT--1.4%
-----------------------------------------------------------------------------------
1,000,000 Xerox Corp., Deb., 9.75%, 3/15/2000 1,079,650
----------------------------------------------------------------------------------- -------------
PHARMACEUTICALS--1.5%
-----------------------------------------------------------------------------------
1,000,000 Lilly (Eli) & Co., Unsecured Note, 8.375%, 12/1/2006 1,139,720
----------------------------------------------------------------------------------- -------------
</TABLE>
INDEPENDENCE ONE FIXED INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------------- ----------------------------------------------------------------------------------- -------------
<C> <S> <C>
CORPORATE BONDS--CONTINUED
- --------------------------------------------------------------------------------------------------
RETAIL--4.0%
-----------------------------------------------------------------------------------
$ 1,000,000 May Department Stores Co., Deb., 9.875%, 6/15/2000 $ 1,090,040
-----------------------------------------------------------------------------------
1,000,000 Penney (J.C.) Co., Inc., Medium Term Note, Series A, 6.375%,
9/15/2000 1,005,300
-----------------------------------------------------------------------------------
1,000,000 Wal-Mart Stores, Inc., Unsecured Note, 6.125%, 10/1/1999 1,005,050
----------------------------------------------------------------------------------- -------------
Total 3,100,390
----------------------------------------------------------------------------------- -------------
TELECOMMUNICATIONS--4.0%
-----------------------------------------------------------------------------------
1,000,000 AT&T Corp., Note, 7.50%, 6/1/2006 1,072,560
-----------------------------------------------------------------------------------
1,000,000 MCI Communications Corp., Sr. Note, 7.50%, 8/20/2004 1,053,150
-----------------------------------------------------------------------------------
1,000,000 U.S. West Communications, Inc., Note, 6.625%, 9/15/2005 1,021,260
----------------------------------------------------------------------------------- -------------
Total 3,146,970
----------------------------------------------------------------------------------- -------------
TOTAL CORPORATE BONDS (IDENTIFIED COST $20,571,095) 20,897,640
----------------------------------------------------------------------------------- -------------
GOVERNMENT AGENCIES--11.8%
- --------------------------------------------------------------------------------------------------
FEDERAL FARM CREDIT BANK--0.9%
-----------------------------------------------------------------------------------
300,000 5.96%, Bond, 7/14/2003 300,249
-----------------------------------------------------------------------------------
410,000 6.05%, Bond, 4/21/2003 412,374
----------------------------------------------------------------------------------- -------------
Total 712,623
----------------------------------------------------------------------------------- -------------
FEDERAL HOME LOAN BANK--2.8%
-----------------------------------------------------------------------------------
880,000 7.46%, Bond, 9/9/2004 948,904
-----------------------------------------------------------------------------------
650,000 7.57%, Bond, 8/19/2004 704,639
-----------------------------------------------------------------------------------
500,000 6.34%, Bond, 10/19/2005 508,780
----------------------------------------------------------------------------------- -------------
Total 2,162,323
----------------------------------------------------------------------------------- -------------
FEDERAL HOME LOAN MORTGAGE CORPORATION--0.9%
-----------------------------------------------------------------------------------
700,000 7.90%, Bond, 1/27/2000 730,212
----------------------------------------------------------------------------------- -------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION--7.2%
-----------------------------------------------------------------------------------
1,000,000 7.49%, Bond, 3/2/2005 1,083,210
-----------------------------------------------------------------------------------
1,000,000 5.37%, Medium Term Note, 2/7/2001 986,090
-----------------------------------------------------------------------------------
490,000 6.16%, Bond, 4/3/2001 494,694
-----------------------------------------------------------------------------------
1,000,000 6.50%, Bond, 2/25/2002 1,003,340
-----------------------------------------------------------------------------------
</TABLE>
INDEPENDENCE ONE FIXED INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------------- ----------------------------------------------------------------------------------- -------------
<C> <S> <C>
GOVERNMENT AGENCIES--CONTINUED
- --------------------------------------------------------------------------------------------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION--CONTINUED
-----------------------------------------------------------------------------------
$ 2,000,000 6.69%, Bond, 8/7/2001 $ 2,055,600
----------------------------------------------------------------------------------- -------------
Total 5,622,934
----------------------------------------------------------------------------------- -------------
TOTAL GOVERNMENT AGENCIES (IDENTIFIED COST $9,039,333) 9,228,092
----------------------------------------------------------------------------------- -------------
U.S. TREASURY OBLIGATIONS--59.6%
- --------------------------------------------------------------------------------------------------
U.S. TREASURY BONDS--3.2%
-----------------------------------------------------------------------------------
2,000,000 10.75%, 5/15/2003 2,463,500
----------------------------------------------------------------------------------- -------------
U.S. TREASURY NOTES--56.4%
-----------------------------------------------------------------------------------
5,500,000 5.125%, 12/31/1998 5,473,215
-----------------------------------------------------------------------------------
2,500,000 6.00%, 12/31/1997 2,503,250
-----------------------------------------------------------------------------------
11,250,000 6.125%, 7/31/2000 11,375,212
-----------------------------------------------------------------------------------
3,750,000 6.25%, 2/15/2007 3,845,775
-----------------------------------------------------------------------------------
8,500,000 6.375%, 8/15/2002 8,722,700
-----------------------------------------------------------------------------------
6,800,000 6.75%, 6/30/1999 6,921,380
-----------------------------------------------------------------------------------
5,000,000 7.50%, 10/31/1999 5,174,550
----------------------------------------------------------------------------------- -------------
Total 44,016,082
----------------------------------------------------------------------------------- -------------
TOTAL U.S. TREASURY OBLIGATIONS (IDENTIFIED COST $46,457,211) 46,479,582
----------------------------------------------------------------------------------- -------------
(A)REPURCHASE AGREEMENTS--0.7%
- --------------------------------------------------------------------------------------------------
532,000 Daiwa Securities America, Inc., 5.67%, dated 10/31/1997,
due 11/3/1997 (AT AMORTIZED COST) 532,000
----------------------------------------------------------------------------------- -------------
TOTAL INVESTMENTS (IDENTIFIED COST $76,599,639)(B) $ 77,137,314
----------------------------------------------------------------------------------- -------------
</TABLE>
(a) The repurchase agreement is fully collateralized by U.S. Treasury
obligations based on market prices at the date of the portfolio.
(b) The cost of investments for federal tax purposes amounts to $76,599,639. The
net unrealized appreciation of investments on a federal tax basis amounts to
$537,675 which is comprised of $1,027,234 appreciation and $489,559
depreciation at October 31, 1997.
Note: The categories of investments are shown as a percentage of net assets
($77,945,407) at
October 31, 1997.
(See Notes which are an integral part of the Financial Statements)
INDEPENDENCE ONE FIXED INCOME FUND
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- ---------------------------------------------------------------------------------------------------
Total investments in securities, at value
(identified and tax cost $76,599,639) $ 77,137,314
- ---------------------------------------------------------------------------------------------------
Cash 89
- ---------------------------------------------------------------------------------------------------
Income receivable 1,176,466
- ---------------------------------------------------------------------------------------------------
Deferred organizational costs 16,108
- ---------------------------------------------------------------------------------------------------
Deferred expenses 8,925
- --------------------------------------------------------------------------------------------------- -------------
Total assets 78,338,902
- ---------------------------------------------------------------------------------------------------
LIABILITIES:
- ---------------------------------------------------------------------------------------
Income distribution payable $ 389,099
- ---------------------------------------------------------------------------------------
Accrued expenses 4,396
- --------------------------------------------------------------------------------------- ----------
Total liabilities 393,495
- --------------------------------------------------------------------------------------------------- -------------
NET ASSETS for 7,765,701 shares outstanding $ 77,945,407
- --------------------------------------------------------------------------------------------------- -------------
NET ASSETS CONSIST OF:
- ---------------------------------------------------------------------------------------------------
Paid in capital $ 77,635,391
- ---------------------------------------------------------------------------------------------------
Net unrealized appreciation of investments 537,675
- ---------------------------------------------------------------------------------------------------
Accumulated net realized loss on investments (227,659)
- --------------------------------------------------------------------------------------------------- -------------
Total Net Assets $ 77,945,407
- --------------------------------------------------------------------------------------------------- -------------
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE:
- ---------------------------------------------------------------------------------------------------
$77,945,407 / 7,765,701 shares outstanding $10.04
- --------------------------------------------------------------------------------------------------- -------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
INDEPENDENCE ONE FIXED INCOME FUND
STATEMENT OF OPERATIONS
SIX MONTHS ENDED OCTOBER 31, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
- ----------------------------------------------------------------------------------------------------
Interest $ 2,461,396
- ----------------------------------------------------------------------------------------------------
EXPENSES:
- ---------------------------------------------------------------------------------------
Investment advisory fee $ 284,853
- ---------------------------------------------------------------------------------------
Administrative personnel and services fee 40,955
- ---------------------------------------------------------------------------------------
Custodian fees 8,070
- ---------------------------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses 17,153
- ---------------------------------------------------------------------------------------
Directors'/Trustees' fees 1,256
- ---------------------------------------------------------------------------------------
Auditing fees 6,374
- ---------------------------------------------------------------------------------------
Legal fees 1,742
- ---------------------------------------------------------------------------------------
Portfolio accounting fees 24,730
- ---------------------------------------------------------------------------------------
Share registration costs 8,079
- ---------------------------------------------------------------------------------------
Printing and postage 4,608
- ---------------------------------------------------------------------------------------
Insurance premiums 1,255
- ---------------------------------------------------------------------------------------
Miscellaneous 2,313
- --------------------------------------------------------------------------------------- -----------
Total expenses 401,388
- ---------------------------------------------------------------------------------------
Waiver--
- ---------------------------------------------------------------------------------------
Waiver of investment advisory fee (189,902)
- --------------------------------------------------------------------------------------- -----------
Net expenses 211,486
- ---------------------------------------------------------------------------------------------------- ------------
Net investment income 2,249,910
- ---------------------------------------------------------------------------------------------------- ------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
- ----------------------------------------------------------------------------------------------------
Net realized loss on investments (25,537)
- ----------------------------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) of investments 1,828,643
- ---------------------------------------------------------------------------------------------------- ------------
Net realized and unrealized gain on investments 1,803,106
- ---------------------------------------------------------------------------------------------------- ------------
Change in net assets resulting from operations $ 4,053,016
- ---------------------------------------------------------------------------------------------------- ------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
INDEPENDENCE ONE FIXED INCOME FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS ENDED
(UNAUDITED) YEAR ENDED
OCTOBER 31, 1997 APRIL 30, 1997
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- -----------------------------------------------------------------------
OPERATIONS--
- -----------------------------------------------------------------------
Net investment income $ 2,249,910 $ 3,892,231
- -----------------------------------------------------------------------
Net realized gain (loss) on investments ($25,537 and $72,088, net loss,
respectively, as computed for federal tax purposes) (25,537) (202,277)
- -----------------------------------------------------------------------
Net change in unrealized appreciation/depreciation 1,828,643 64,749
- ----------------------------------------------------------------------- ---------------------- ----------------
Change in net assets resulting from operations 4,053,016 3,754,703
- ----------------------------------------------------------------------- ---------------------- ----------------
DISTRIBUTIONS TO SHAREHOLDERS--
- -----------------------------------------------------------------------
Distributions from net investment income (2,249,910) (3,892,231)
- -----------------------------------------------------------------------
Distributions from net realized gains -- (11,017)
- ----------------------------------------------------------------------- ---------------------- ----------------
Change in net assets resulting from distributions to shareholders (2,249,910) (3,903,248)
- ----------------------------------------------------------------------- ---------------------- ----------------
SHARE TRANSACTIONS--
- -----------------------------------------------------------------------
Proceeds from sale of shares 9,692,349 18,128,850
- -----------------------------------------------------------------------
Net asset value of shares issued to shareholders in payment of
distributions declared 1,588,779 3,100,848
- -----------------------------------------------------------------------
Cost of shares redeemed (6,022,372) (12,454,102)
- ----------------------------------------------------------------------- ---------------------- ----------------
Change in net assets resulting from share transactions 5,258,756 8,775,596
- ----------------------------------------------------------------------- ---------------------- ----------------
Change in net assets 7,061,862 8,627,051
- -----------------------------------------------------------------------
NET ASSETS:
- -----------------------------------------------------------------------
Beginning of period 70,883,545 62,256,494
- ----------------------------------------------------------------------- ---------------------- ----------------
End of period $ 77,945,407 $ 70,883,545
- ----------------------------------------------------------------------- ---------------------- ----------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
INDEPENDENCE ONE FIXED INCOME FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
(UNAUDITED) YEAR ENDED
OCTOBER 31, APRIL 30,
1997 1997 1996(A)
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.80 $ 9.82 $ 10.00
- -----------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- -----------------------------------------------------------------------------
Net investment income 0.30 0.57 0.30
- -----------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments 0.24 (0.02) (0.18)
- ----------------------------------------------------------------------------- ------- --------- -----------
Total from investment operations 0.54 0.55 0.12
- ----------------------------------------------------------------------------- ------- --------- -----------
LESS DISTRIBUTIONS
- -----------------------------------------------------------------------------
Distributions from net investment income (0.30) (0.57) (0.30)
- -----------------------------------------------------------------------------
Distributions from net realized gain on investments -- 0.00(b) --
- ----------------------------------------------------------------------------- ------- --------- -----------
Total distributions (0.30) (0.57) (0.30)
- ----------------------------------------------------------------------------- ------- --------- -----------
NET ASSET VALUE, END OF PERIOD $ 10.04 $ 9.80 $ 9.82
- ----------------------------------------------------------------------------- ------- --------- -----------
TOTAL RETURN (C) 5.54% 5.79% 1.15%
- -----------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- -----------------------------------------------------------------------------
Expenses 0.56%* 0.55% 0.54%*
- -----------------------------------------------------------------------------
Net investment income 5.92%* 5.83% 5.73%*
- -----------------------------------------------------------------------------
Expense waiver/reimbursement (d) 0.50%* 0.50% 0.61%*
- -----------------------------------------------------------------------------
SUPPLEMENTAL DATA
- -----------------------------------------------------------------------------
Net assets, end of period (000 omitted) $ 77,945 $ 70,884 $ 62,256
- -----------------------------------------------------------------------------
Portfolio turnover 6 % 23% 4 %
- -----------------------------------------------------------------------------
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from October 23, 1995 (date of initial
public investment) to April 30, 1996.
(b) Distribution from net realized gain on investments is less than one cent
per share.
(c) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
(d) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
INDEPENDENCE ONE MICHIGAN MUNICIPAL BOND FUND
PORTFOLIO OF INVESTMENTS
OCTOBER 31, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
PRINCIPAL RATING
AMOUNT S&P/MOODY'S* VALUE
<C> <S> <C> <C>
MUNICIPALS--94.7% -------------------------------------------------------------
MICHIGAN--94.7%
-----------------------------------------------------------------
$ 825,000 Allegan, MI Public School District, GO UT Bonds, 5.55% (AMBAC
INS)/(Original Issue Yield: 5.60%),
5/1/2010 AAA/Aaa $ 863,049
-----------------------------------------------------------------
100,000 Auburn Hills, MI Local Development Financial Authority, Tax
Increment Revenue Bonds (Series A), 7.00% (Dai-Ichi Kangyo Bank
Ltd., Tokyo LOC),
11/1/2000 NR/A1 102,584
-----------------------------------------------------------------
500,000 Bay City, MI, Electric Utility Revenue Refunding Bonds, 5.00%
(AMBAC INS), 1/1/2001 AAA/NR 512,760
-----------------------------------------------------------------
400,000 Beaverton, MI Rural Schools, GO UT Bonds, 4.70% (FGIC
INS)/(Original Issue Yield: 4.75%), 5/1/2008 AAA/Aaa 397,772
-----------------------------------------------------------------
485,000 Central Michigan University, Revenue Bonds, 5.30% (FGIC
INS)/(Original Issue Yield: 5.40%), 10/1/2011 AAA/Aaa 492,192
-----------------------------------------------------------------
150,000 Clare County, MI, GO UT Refunding Bonds, 5.00% (Sewage Disposal
System No.3)/(AMBAC INS)/ (Original Issue Yield: 5.10%),
11/1/2003 AAA/Aaa 154,545
-----------------------------------------------------------------
480,000 Detroit, MI City School District, GO UT Bonds (Series A), 6.50%
(AMBAC INS), 5/1/2008 AAA/Aaa 549,250
-----------------------------------------------------------------
500,000 East Detroit Michigan School District, GO UT Refunding Bonds,
6.50% (FGIC INS), 5/1/2006 AAA/Aaa 563,215
-----------------------------------------------------------------
175,000 Grand Haven, MI Area Public Schools, GO UT Refunding Bonds, 5.50%
(MBIA INS)/(Original Issue Yield: 5.55%), 5/1/2005 AAA/Aaa 185,692
-----------------------------------------------------------------
100,000 Grand Rapid & Kent County, MI Joint Building Authority, Revenue
Bonds, 6.40%, 10/1/1998 NR/Aa3 102,325
-----------------------------------------------------------------
680,000 Grand Rapids, MI Community College, GO UT Bonds, 5.30% (MBIA
INS)/(Original Issue Yield: 5.35%),
5/1/2009 AAA/Aaa 703,814
-----------------------------------------------------------------
</TABLE>
INDEPENDENCE ONE MICHIGAN MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
PRINCIPAL RATING
AMOUNT S&P/MOODY'S* VALUE
<S> <S> <C> <C>
LONG-TERM MUNICIPALS--CONTINUED
- -------------------------------------------------------------------------------
MICHIGAN--CONTINUED
-----------------------------------------------------------------
$ 400,000 Greater Detroit Resource Recovery Authority, MI, Refunding
Revenue Bonds (Series A), 4.30% (AMBAC INS)/(Original Issue
Yield: 4.35%), 12/13/1998 AAA/Aaa $ 401,692
-----------------------------------------------------------------
500,000 Greater Detroit Resource Recovery Authority, MI, Refunding
Revenue Bonds (Series A), 5.00% (AMBAC INS), 12/13/2000 AAA/Aaa 512,575
-----------------------------------------------------------------
550,000 Holland, MI Area Community Swimming Pool Authority, GO UT Bonds,
5.125% (FGIC INS)/(Original Issue Yield: 5.40%), 5/1/2010 AAA/Aaa 555,852
-----------------------------------------------------------------
500,000 Kalamazoo, MI Public Library, GO UT, 5.10% (MBIA INS), 5/1/2010 AAA/Aaa 511,615
-----------------------------------------------------------------
1,000,000 Kenowa Hills Michigan Public Schools, GO UT Bonds, 5.60% (MBIA
INS), 5/1/2009 AAA/Aaa 1,053,730
-----------------------------------------------------------------
500,000 Kent County, MI, GO, 4.50% (Original Issue Yield: 5.00%),
11/1/2011 AAA/Aa2 481,870
-----------------------------------------------------------------
600,000 Lakewood, MI Public Schools, GO UT Bonds, 5.30%
(MBIA INS)/(Original Issue Yield: 5.45%), 5/1/2009 AAA/Aaa 617,784
-----------------------------------------------------------------
100,000 Lapeer, MI, GO LT Refunding Bonds, 6.10% (AMBAC INS)/(Original
Issue Yield: 6.25%), 10/1/1999 AAA/Aaa 103,944
-----------------------------------------------------------------
1,055,000 Lincoln Park, MI School District, GO UT Bonds, 5.70%
(FGIC INS), 5/1/2008 AAA/Aaa 1,133,956
-----------------------------------------------------------------
600,000 Marquette, MI Hospital Finance Authority, Refunding Revenue Bonds
(Series D), 4.95% (Marquette General Hospital, MI)/(FSA INS),
4/1/2002 AAA/Aaa 615,030
-----------------------------------------------------------------
1,000,000 Michigan Municipal Bond Authority, Revenue Bonds (Series B),
5.35% (Original Issue Yield: 5.45%),
10/1/2007 AA+/Aa1 1,048,580
-----------------------------------------------------------------
400,000 Michigan Municipal Bond Authority, Revenue Bonds, 4.60% (AMBAC
INS), 11/1/2003 AAA/Aaa 405,020
-----------------------------------------------------------------
</TABLE>
INDEPENDENCE ONE MICHIGAN MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
PRINCIPAL RATING
AMOUNT S&P/MOODY'S* VALUE
<S> <S> <C> <C>
LONG-TERM MUNICIPALS--CONTINUED
- -------------------------------------------------------------------------------
MICHIGAN--CONTINUED
-----------------------------------------------------------------
$ 500,000 Michigan Municipal Bond Authority, Revenue Bonds, 5.25% (Local
Government Loan Program)/(AMBAC INS), 5/1/2006 AAA/Aaa $ 521,580
-----------------------------------------------------------------
100,000 Michigan State Building Authority, Revenue Bonds (Series I),
5.50% (Original Issue Yield: 5.60%),
10/1/2004 AA-/A1 105,944
-----------------------------------------------------------------
150,000 Michigan State Building Authority, Revenue Bonds, 6.20% (Grand
Rapids Center)/(BIG INS), 3/1/2001 AAA/Aaa 159,159
-----------------------------------------------------------------
460,000 Michigan State Hospital Finance Authority, Refunding Revenue
Bonds, 5.60% (Oakwood Hospital Obligated Group)/(FGIC
INS)/(Original Issue Yield: 5.70%),
5/1/1999 AAA/Aaa 470,479
-----------------------------------------------------------------
100,000 Michigan State Housing Development Authority, Refunding Revenue
Bonds (Series A), 6.40% (FHA/VA mtgs GTD), 6/1/2000 AA+/NR 103,272
-----------------------------------------------------------------
500,000 Michigan State Housing Development Authority, Refunding Revenue,
4.85% (AMBAC INS), 10/1/2002 AAA/Aaa 504,395
-----------------------------------------------------------------
510,000 Michigan State, GO UT Recreation Bonds, 5.50% (Original Issue
Yield: 5.55%), 11/1/1999 AA/Aa2 525,555
-----------------------------------------------------------------
150,000 Michigan Strategic Fund, Small Business Refunding Revenue Bonds
(Series A1-A2), 5.90% (SBA GTD),
10/1/2000 NR/Aaa 157,725
-----------------------------------------------------------------
900,000 Northview Michigan Public School District, GO UT Bonds, 5.05%
(MBIA INS), 5/1/2005 AAA/Aaa 931,212
-----------------------------------------------------------------
500,000 Novi, MI, Refunding GO Bonds, 5.25%, 10/1/2009 A+/A1 521,605
-----------------------------------------------------------------
600,000 Ottawa County, MI Building Authority, Revenue Bonds, 4.90%,
11/1/2009 AA/Aa3 602,838
-----------------------------------------------------------------
1,000,000 Oxford, MI Area Community Schools, GO UT Bonds, 4.95% (FGIC INS),
5/1/2007 AAA/Aaa 1,022,980
-----------------------------------------------------------------
100,000 Portage, MI, GO LT City Share Bonds, 5.90%,
12/1/2003 AA-/NR 108,147
-----------------------------------------------------------------
</TABLE>
INDEPENDENCE ONE MICHIGAN MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
PRINCIPAL RATING
AMOUNT S&P/MOODY'S* VALUE
<S> <S> <C> <C>
LONG-TERM MUNICIPALS--CONTINUED
- -------------------------------------------------------------------------------
MICHIGAN--CONTINUED
-----------------------------------------------------------------
$ 700,000 Redford, MI University School District, GO UT Bonds, 6.25% (FGIC
INS), 5/1/2007 AAA/Aaa $ 785,225
-----------------------------------------------------------------
390,000 Rochester, MI, GO UT Refunding Bonds, 4.90%,
10/1/2006 AAA/NR 398,007
-----------------------------------------------------------------
400,000 St. Clair County, MI, GO LT Water Supply System Bonds, 5.00%
(Burtchville)/(MBIA INS)/(Original Issue Yield: 5.10%), 11/1/2009 AAA/Aaa 404,728
-----------------------------------------------------------------
500,000 Three Rivers Michigan Community Schools, GO UT Bonds, 5.40%
(Michigan State GTD)/(MBIA INS),
5/1/2008 AAA/Aaa 526,300
-----------------------------------------------------------------
265,000 Troy, MI City School District, GO UT Bonds, 3.80%
(Q-SBLF), 5/1/1998 AA/Aa2 265,103
-----------------------------------------------------------------
765,000 University of Michigan, Revenue Bonds (Series A), 5.40%,
11/15/2008 AA/Aa1 806,876
-----------------------------------------------------------------
350,000 University of Michigan, Revenue Bonds (Series A), 5.60% (Original
Issue Yield: 5.70%), 11/15/2012 AA/Aa1 365,467
-----------------------------------------------------------------
500,000 Washtenaw Community College, MI, GO UT, 5.00% (Original Issue
Yield: 5.10%), 4/1/2008 AA/Aa3 508,220
-----------------------------------------------------------------
500,000 Washtenaw Community College, MI, GO UT, 5.00% (Original Issue
Yield: 5.35%), 4/1/2011 AA/Aa3 498,530
-----------------------------------------------------------------
100,000 Wayne County, MI Community College, GO UT Refunding Bonds, 6.15%
(FGIC INS), 4/1/1999 AAA/Aaa 101,865
-----------------------------------------------------------------
400,000 Western Michigan University, Revenue Refunding Bonds, 5.00% (FGIC
INS)/(Original Issue Yield: 5.15%), 11/15/2012 AAA/Aaa 392,532
-----------------------------------------------------------------
440,000 Western School District, MI, GO UT Refunding Bonds,
5.50% (FGIC INS), 5/1/2002 AAA/Aaa 462,682
-----------------------------------------------------------------
750,000 Williamston, MI Community School District, GO UT Bonds, 4.80%
(MBIA INS), 5/1/2004 AAA/Aaa 764,250
-----------------------------------------------------------------
</TABLE>
INDEPENDENCE ONE MICHIGAN MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
PRINCIPAL RATING
AMOUNT S&P/MOODY'S* VALUE
<S> <S> <C> <C>
LONG-TERM MUNICIPALS--CONTINUED
- -------------------------------------------------------------------------------
MICHIGAN--CONTINUED
-----------------------------------------------------------------
$ 500,000 Wixon, MI, UT GO Bonds, 4.70% (AMBAC INS)/ (Original Issue Yield:
4.85%), 5/1/2009 AAA/Aaa $ 492,495
----------------------------------------------------------------- -------------
TOTAL LONG-TERM MUNICIPALS
(IDENTIFIED COST $23,786,762) 24,576,017
----------------------------------------------------------------- -------------
MUTUAL FUND--5.0%
- -------------------------------------------------------------------------------
1,289,859 Goldman Sachs Tax Exempt Fund (at net asset value) 1,289,859
----------------------------------------------------------------- -------------
TOTAL INVESTMENTS (IDENTIFIED COST $25,076,621)(A) $ 25,865,876
----------------------------------------------------------------- -------------
</TABLE>
Securities that are subject to Alternative Minimum Tax represent 2% of the
portfolio as calculated based upon total portfolio market value.
(a) The cost of investments for federal tax purposes amounts to $25,076,621. The
net unrealized appreciation of investments on a federal tax basis amounts to
$789,255 which is comprised of $792,536 appreciation and $3,281 depreciation
at October 31, 1997.
* Please refer to the Appendix of the Statement of Additional Information for
an explanation of the credit ratings.
Note: The categories of investments are shown as a percentage of net assets
($25,948,947) at
October 31, 1997.
The following acronyms are used throughout this portfolio:
AMBAC--American Municipal Bond Assurance Corporation BIG--Bond Investors
Guaranty FGIC--Financial Guaranty Insurance Company FHA/VA--Federal Housing
Administration/Veterans Administration FSA--Financial Security Assurance
GO--General Obligation GTD--Guaranty INS--Insured LOC--Letter of Credit
LT--Limited Tax MBIA--Municipal Bond Investors Assurance Q-SBLF--Qualified State
Bond Loan Fund SBA--Small Business Association UT--Unlimited Tax
(See Notes which are an integral part of the Financial Statements)
INDEPENDENCE ONE MICHIGAN MUNICIPAL BOND FUND
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- ---------------------------------------------------------------------------------------------------
Total investments in securities, at value
(identified and tax cost $25,076,621) $ 25,865,876
- ---------------------------------------------------------------------------------------------------
Income receivable 483,576
- ---------------------------------------------------------------------------------------------------
Receivable for investments sold 162,416
- ---------------------------------------------------------------------------------------------------
Deferred organizational costs 18,131
- ---------------------------------------------------------------------------------------------------
Deferred expenses 4,436
- --------------------------------------------------------------------------------------------------- -------------
Total assets 26,534,435
- ---------------------------------------------------------------------------------------------------
LIABILITIES:
- ---------------------------------------------------------------------------------------
Payable for investments purchased $ 477,240
- ---------------------------------------------------------------------------------------
Income distribution payable 83,588
- ---------------------------------------------------------------------------------------
Payable to Bank 178
- ---------------------------------------------------------------------------------------
Accrued expenses 24,482
- --------------------------------------------------------------------------------------- ----------
Total liabilities 585,488
- --------------------------------------------------------------------------------------------------- -------------
NET ASSETS for 2,516,487 shares outstanding $ 25,948,947
- --------------------------------------------------------------------------------------------------- -------------
NET ASSETS CONSIST OF:
- ---------------------------------------------------------------------------------------------------
Paid in capital $ 25,225,643
- ---------------------------------------------------------------------------------------------------
Net unrealized appreciation of investments 789,255
- ---------------------------------------------------------------------------------------------------
Accumulated net realized loss on investments (65,951)
- --------------------------------------------------------------------------------------------------- -------------
Total Net Assets $ 25,948,947
- --------------------------------------------------------------------------------------------------- -------------
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE:
- ---------------------------------------------------------------------------------------------------
$25,948,947 / 2,516,487 shares outstanding $10.31
- --------------------------------------------------------------------------------------------------- -------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
INDEPENDENCE ONE MICHIGAN MUNICIPAL BOND FUND
STATEMENT OF OPERATIONS
SIX MONTHS ENDED OCTOBER 31, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
- ---------------------------------------------------------------------------------------------------
Interest $ 610,233
- ---------------------------------------------------------------------------------------------------
EXPENSES:
- --------------------------------------------------------------------------------------
Investment advisory fee $ 93,646
- --------------------------------------------------------------------------------------
Administrative personnel and services fee 25,000
- --------------------------------------------------------------------------------------
Custodian fees 8,174
- --------------------------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses 16,926
- --------------------------------------------------------------------------------------
Directors'/Trustees' fees 702
- --------------------------------------------------------------------------------------
Auditing fees 7,218
- --------------------------------------------------------------------------------------
Legal fees 2,414
- --------------------------------------------------------------------------------------
Portfolio accounting fees 26,476
- --------------------------------------------------------------------------------------
Share registration costs 6,251
- --------------------------------------------------------------------------------------
Printing and postage 6,725
- --------------------------------------------------------------------------------------
Insurance premiums 1,602
- --------------------------------------------------------------------------------------
Miscellaneous 2,941
- -------------------------------------------------------------------------------------- -----------
Total expenses 198,075
- --------------------------------------------------------------------------------------
Waivers--
- ---------------------------------------------------------------------------
Waiver of investment advisory fee $ (83,091)
- ---------------------------------------------------------------------------
Waiver of administrative personnel and services fee (22,770)
- --------------------------------------------------------------------------- ---------
Total waivers (105,861)
- -------------------------------------------------------------------------------------- -----------
Net expenses 92,214
- --------------------------------------------------------------------------------------------------- ------------
Net investment income 518,019
- --------------------------------------------------------------------------------------------------- ------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
- ---------------------------------------------------------------------------------------------------
Net realized gain on investments 2,690
- ---------------------------------------------------------------------------------------------------
Net change in unrealized appreciation of investments 756,009
- --------------------------------------------------------------------------------------------------- ------------
Net realized and unrealized gain on investments 758,699
- --------------------------------------------------------------------------------------------------- ------------
Change in net assets resulting from operations $ 1,276,718
- --------------------------------------------------------------------------------------------------- ------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
INDEPENDENCE ONE MICHIGAN MUNICIPAL BOND FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS ENDED
(UNAUDITED) YEAR ENDED
OCTOBER 31, 1997 APRIL 30, 1997
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- -----------------------------------------------------------------------
OPERATIONS--
- -----------------------------------------------------------------------
Net investment income $ 518,019 $ 1,000,032
- -----------------------------------------------------------------------
Net realized gain (loss) on investments ($2,690 net gain and $69,400
net loss, respectively, as computed for federal tax purposes) 2,690 (68,257)
- -----------------------------------------------------------------------
Net change in unrealized appreciation/depreciation 756,009 152,405
- ----------------------------------------------------------------------- ---------------------- ----------------
Change in net assets resulting from operations 1,276,718 1,084,180
- ----------------------------------------------------------------------- ---------------------- ----------------
DISTRIBUTIONS TO SHAREHOLDERS--
- -----------------------------------------------------------------------
Distributions from net investment income (518,019) (1,000,032)
- -----------------------------------------------------------------------
Distributions from net realized gains -- (3,117)
- ----------------------------------------------------------------------- ---------------------- ----------------
Change in net assets resulting from distributions to shareholders (518,019) (1,003,149)
- ----------------------------------------------------------------------- ---------------------- ----------------
SHARE TRANSACTIONS--
- -----------------------------------------------------------------------
Proceeds from sale of shares 2,774,441 3,957,232
- -----------------------------------------------------------------------
Net asset value of shares issued to shareholders in payment of
distributions declared 5,395 15,386
- -----------------------------------------------------------------------
Cost of shares redeemed (1,072,533) (5,693,966)
- ----------------------------------------------------------------------- ---------------------- ----------------
Change in net assets resulting from share transactions 1,707,303 (1,721,348)
- ----------------------------------------------------------------------- ---------------------- ----------------
Change in net assets 2,466,002 (1,640,317)
- -----------------------------------------------------------------------
NET ASSETS:
- -----------------------------------------------------------------------
Beginning of period 23,482,945 25,123,262
- ----------------------------------------------------------------------- ---------------------- ----------------
End of period $ 25,948,947 $ 23,482,945
- ----------------------------------------------------------------------- ---------------------- ----------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
INDEPENDENCE ONE MICHIGAN MUNICIPAL BOND FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
(UNAUDITED) YEAR ENDED
OCTOBER 31, APRIL 30,
1997 1997 1996(A)
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.99 $ 9.95 $ 10.00
- -----------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- -----------------------------------------------------------------------------
Net investment income 0.21 0.41 0.17
- -----------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments 0.32 0.04 (0.05)
- ----------------------------------------------------------------------------- ------- --------- -----------
Total from investment operations 0.53 0.45 0.12
- ----------------------------------------------------------------------------- ------- --------- -----------
LESS DISTRIBUTIONS
- -----------------------------------------------------------------------------
Distributions from net investment income (0.21) (0.41) (0.17)
- -----------------------------------------------------------------------------
Distributions from net realized gain on investments -- 0.00(b) --
- ----------------------------------------------------------------------------- ------- --------- -----------
Total distributions (0.21) (0.41) (0.17)
- ----------------------------------------------------------------------------- ------- --------- -----------
NET ASSET VALUE, END OF PERIOD $ 10.31 $ 9.99 $ 9.95
- ----------------------------------------------------------------------------- ------- --------- -----------
TOTAL RETURN (C) 5.51% 4.62% 1.21%
- -----------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- -----------------------------------------------------------------------------
Expenses 0.74%* 0.70% 0.57%*
- -----------------------------------------------------------------------------
Net investment income 4.15%* 4.12% 3.83%*
- -----------------------------------------------------------------------------
Expense waiver/reimbursement (d) 0.85%* 0.99% 0.76%*
- -----------------------------------------------------------------------------
SUPPLEMENTAL DATA
- -----------------------------------------------------------------------------
Net assets, end of period (000 omitted) $25,949 $23,483 $25,123
- -----------------------------------------------------------------------------
Portfolio turnover 6 % 48% 39 %
- -----------------------------------------------------------------------------
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from November 20, 1995 (date of initial
public investment) to
April 30, 1996.
(b) Distribution from net realized gain on investments was less than one cent
per share.
(c) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
(d) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
INDEPENDENCE ONE MUTUAL FUNDS
COMBINED NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
(1) ORGANIZATION
Independence One Mutual Funds (the "Trust") is registered under the Investment
Company Act of 1940, as amended (the "Act") as an open-end management investment
company. The Trust consists of seven portfolios. The financial statements of the
following portfolios (individually referred to as the "Fund", or collectively as
the "Funds") are presented herein:
<TABLE>
<CAPTION>
PORTFOLIO NAME INVESTMENT OBJECTIVE
<S> <C>
Independence One U.S. Government Securities Fund ("U.S. To seek high current income.
Government Securities Fund")(d)
Independence One Fixed Income Fund To seek total return.
("Fixed Income Fund")(d)
Independence One Michigan Municipal Bond Fund ("Michigan To provide current
income which is exempt from Municipal Bond Fund")(n) federal regular income tax
and the personal income
taxes imposed by the state of Michigan and
Michigan municipalities.
</TABLE>
(d) Diversified portfolio
(n) Non-diversified portfolio
The financial statements of the other portfolios are presented separately. The
assets of each portfolio are segregated and a shareholder's interest is limited
to the portfolio in which shares are held.
(2) SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Funds in the preparation of their financial statements. These
policies are in conformity with generally accepted accounting principles.
INVESTMENT VALUATIONS--Municipal bonds are valued by an independent pricing
service, taking into consideration yield, liquidity, risk, credit quality,
coupon, maturity, type of issue, and any other factors or market data the
pricing service deems relevant. U.S. government securities, listed
corporate bonds, other fixed income and asset-backed securities, and
unlisted securities and private placement securities are generally valued
at the mean of the latest bid and asked price as furnished by an
independent pricing service. Short-term securities are
INDEPENDENCE ONE MUTUAL FUNDS
- --------------------------------------------------------------------------------
valued at the prices provided by an independent pricing service. However,
short-term securities with remaining maturities of sixty days or less at
the time of purchase may be valued at amortized cost, which approximates
fair market value.
REPURCHASE AGREEMENTS--It is the policy of the Funds to require the
custodian bank to take possession, to have legally segregated in the
Federal Reserve Book Entry System, or to have segregated within the
custodian bank's vault, all securities held as collateral under repurchase
agreement transactions. Additionally, procedures have been established by
the Funds to monitor, on a daily basis, the market value of each repurchase
agreement's collateral to ensure that the value of collateral at least
equals the repurchase price to be paid under the repurchase agreement
transaction.
The Funds will only enter into repurchase agreements with banks and other
recognized financial institutions, such as broker/dealers, which are deemed
by the Funds' adviser to be creditworthy pursuant to the guidelines and/or
standards reviewed or established by the Board of Trustees (the
"Trustees"). Risks may arise from the potential inability of counterparties
to honor the terms of the repurchase agreement. Accordingly, the Funds
could receive less than the repurchase price on the sale of collateral
securities.
INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS--Interest income and expenses
are accrued daily. Bond premium and discount, if applicable, are amortized
as required by the Internal Revenue Code, as amended (the "Code").
Distributions to shareholders are recorded on the ex-dividend date.
FEDERAL TAXES--It is the Funds' policy to comply with the provisions of the
Code applicable to regulated investment companies and to distribute to
shareholders each year substantially all of their income. Accordingly, no
provisions for federal tax are necessary.
At April 30, 1997, the Fund's, for federal tax purposes, had capital loss
carryforwards, as noted below, which will reduce the Funds' taxable income
arising from future net realized gain on investments, if any, to the extent
permitted by the Code, and thus will reduce the amount of the distributions
to shareholders which would otherwide be necessary to relieve the Fund of
any liability for federal tax.
<TABLE>
<CAPTION>
PORTFOLIO NAME TOTAL TAX LOSS CARRYFORWARD
<S> <C>
U.S. Government Securities Fund $1,054,816
Fixed Income Fund $72,088
Michigan Municipal Bond Fund $69,400
</TABLE>
INDEPENDENCE ONE MUTUAL FUNDS
- --------------------------------------------------------------------------------
Pursuant to the Code, such capital loss carryforwards will expire as
follows:
<TABLE>
<CAPTION>
PORTFOLIO NAME EXPIRATION YEAR EXPIRATION AMOUNT
<S> <C> <C>
U.S. Government Securities Fund 2005 $1,054,816
Fixed Income Fund 2005 $72,088
Michigan Municipal Bond Fund 2005 $69,400
</TABLE>
Additionally, net capital losses, as noted below, attributable to security
transactions incurred after October 31, 1996, are treated as arising on the
first day of the Fund's next taxable year.
<TABLE>
<CAPTION>
PORTFOLIO NAME TOTAL TAX LOSS PUSHFORWARD
<S> <C>
Fixed Income Fund $86,010
</TABLE>
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Funds may engage in
when-issued or delayed delivery transactions. The Funds record when-issued
securities on the trade date and maintain security positions such that
sufficient liquid assets will be available to make payment for the
securities purchased. Securities purchased on a when-issued or delayed
delivery basis are marked to market daily and begin earning interest on the
settlement date.
DEFERRED EXPENSES--The costs incurred by each Fund with respect to
registration of its shares in its first fiscal year, excluding the initial
expense of registering its shares, have been deferred and are being
amortized over a period not to exceed five years from each Fund's
commencement date.
USE OF ESTIMATES--The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts of assets, liabilities,
expenses and revenues reported in the financial statements. Actual results
could differ from those estimated.
OTHER--Investment transactions are accounted for on the trade date.
INDEPENDENCE ONE MUTUAL FUNDS
- --------------------------------------------------------------------------------
(3) SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value) for each
Fund. Transactions in shares were as follows: <TABLE> <CAPTION>
U.S. GOVERNMENT SECURITIES FUND
<S> <C> <C>
SIX MONTHS ENDED YEAR ENDED
OCTOBER 31, 1997 APRIL 30, 1997
Shares sold 497,493 1,820,631
- ----------------------------------------------------------------------
Shares issued to shareholders in payment of distributions declared 16,112 42,792
- ----------------------------------------------------------------------
Shares redeemed (625,758) (1,902,451)
- ---------------------------------------------------------------------- ---------- ----------------
Net change resulting from share transactions (112,153) (39,028)
- ---------------------------------------------------------------------- ---------- ----------------
<CAPTION>
FIXED INCOME FUND
SIX MONTHS ENDED YEAR ENDED
OCTOBER 31, 1997 APRIL 30, 1997
<S> <C> <C>
Shares sold 979,620 1,843,716
- ----------------------------------------------------------------------
Shares issued to shareholders in payment of distributions declared 160,229 314,984
- ----------------------------------------------------------------------
Shares redeemed (609,066) (1,266,239)
- ---------------------------------------------------------------------- ---------- ----------------
Net change resulting from share transactions 530,783 892,461
- ---------------------------------------------------------------------- ---------- ----------------
<CAPTION>
MICHIGAN MUNICIPAL BOND FUND
SIX MONTHS ENDED YEAR ENDED
OCTOBER 31, 1997 APRIL 30, 1997
<S> <C> <C>
Shares sold 270,565 394,505
- ----------------------------------------------------------------------
Shares issued to shareholders in payment of distributions declared 527 1,535
- ----------------------------------------------------------------------
Shares redeemed (104,721) (570,983)
- ---------------------------------------------------------------------- ---------- ----------------
Net change resulting from share transactions 166,371 (174,943)
- ---------------------------------------------------------------------- ---------- ----------------
</TABLE>
INDEPENDENCE ONE MUTUAL FUNDS
- --------------------------------------------------------------------------------
(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE--Michigan National Bank, the Funds' investment adviser
(the "Adviser") receives for its services an annual investment advisory fee
based on a percentage of each Fund's average daily net assets (see below).
<TABLE>
<CAPTION>
PORTFOLIO NAME INVESTMENT ADVISORY FEE
<S> <C>
U.S. Government Securities Fund 0.70%
Fixed Income Fund 0.75%
Michigan Municipal Bond Fund 0.75%
</TABLE>
The Adviser may voluntarily choose to waive any portion of its fee. The Adviser
can modify or terminate this voluntary waiver at any time at its sole
discretion.
ADMINISTRATIVE FEE--Federated Administrative Services ("FAS") provides the Funds
with certain administrative personnel and services. The fee paid to FAS is based
on the level of average aggregate net assets of the Trust for the period. The
administrative fee received during any fiscal year shall be at least $50,000 for
each portfolio in the Trust.
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT FEES--Federated Services Company
("FServ"), through its subsidiary, Federated Shareholder Services Company
("FSSC") serves as transfer and dividend disbursing agent for the Funds. The fee
paid to FSSC is based on the size, type, and number of accounts and transactions
made by shareholders.
PORTFOLIO ACCOUNTING FEES--FServ maintains the Funds' accounting records for
which it receives a fee. The fee is based on the level of each Fund's average
daily net assets for the period, plus out-of-pocket expenses.
CUSTODIAN FEES--Michigan National Bank is the Funds' custodian. The fee is based
on the level of each Fund's average daily net assets for the period, plus
out-of-pocket expenses.
ORGANIZATIONAL EXPENSES--Organizational expenses were borne initially by FAS.
The Funds have reimbursed FAS for these expenses. These expenses have been
deferred and are being amortized over the five year period following the Fund's
effective date. For the six months ended October 31, 1997, the Funds expensed
the following pursuant to this agreement:
INDEPENDENCE ONE MUTUAL FUNDS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
EXPENSES OF AMOUNT EXPENSED TO
ORGANIZING THE FAS FOR THE SIX MONTHS
PORTFOLIO NAME FUND ENDED OCTOBER 31, 1997
<S> <C> <C>
U.S. Government Securities Fund $49,664 $3,241
Fixed Income Fund $21,477 $1,313
Michigan Municipal Bond Fund $24,175 $1,477
</TABLE>
GENERAL--Certain of the Officers of the Trust are Officers and/or Directors or
Trustees of the above companies.
(5) INVESTMENT TRANSACTION
Purchases and sales of investments, excluding short-term securities, for the six
months ended October 31, 1997, were as follows:
<TABLE>
<CAPTION>
PORTFOLIO NAME PURCHASES SALES
<S> <C> <C>
U.S. Government Securities Fund $15,507,309 $16,721,786
Fixed Income Fund $9,988,467 $4,456,549
Michigan Municipal Bond Fund $2,233,554 $1,425,031
</TABLE>
(6) CONCENTRATION OF CREDIT RISK
Since Michigan Municipal Bond Fund invests a substantial portion of its assets
in issuers located in one state, it will be more susceptible to factors
adversely affecting issuers of that state than would be a comparable tax-exempt
mutual fund that invests nationally. In order to reduce the credit risk
associated with such factors, at October 31, 1997, 71% of the securities in the
portfolio of investments are backed by letters of credit or bond insurance of
various financial institutions and financial guaranty assurance agencies. The
value of investments insured by or supported (backed) by a letter of credit from
any one institution or agency did not exceed 25% of total investments.
TRUSTEES OFFICERS
- --------------------------------------------------------------------------------
Robert E. Baker Edward C. Gonzales
Harold Berry President and Treasurer
Harry J. Nederlander Jeffrey W. Sterling
Thomas S. Wilson Vice President and Assistant Treasurer
Jay S. Neuman
Secretary
Gail Cagney
Assistant Secretary
Mutual funds are not bank deposits or obligations, are not guaranteed by any
bank, and are not insured or guaranteed by the U.S. government, the Federal
Deposit Insurance Corporation, the Federal Reserve Board, or any other
government agency. Investment in mutual funds involves investment risk,
including possible loss of principal.
This report is authorized for distribution to prospective investors only when
preceded or accompanied by the funds' prospectus which contains facts concerning
their objectives and policies, management fees, expenses and other information.
INDEPENDENCE
ONE(R)
MUTUAL
FUNDS
COMBINED
SEMI-ANNUAL REPORT
TO SHAREHOLDERS
OCTOBER 31, 1997
Independence One Prime
Money Market Fund
Independence One U.S. Treasury
Money Market Fund
Independence One Michigan
Municipal Cash Fund
[MICHIGAN NATIONAL BANK LOGO]
Michigan
National
Bank
Investment Adviser
[LOGO OF FEDERATED INVESTORS]
Federated Investors Towers
Pittsburgh, PA 15222-3779
Federated Securities Corp. is the distributor of the funds
and is a subsidiary of Federated Investors.
Cusip 453777708
Cusip 453777203
Cusip 453777302
Cusip 453777401
0112904 (12/97)
[LOGO OF INDEPENDENCE ONE]
INDEPENDENCE ONE
Mutual Funds
PRESIDENT'S MESSAGE
- --------------------------------------------------------------------------------
Dear Investor:
I am pleased to present the Semi-Annual Report of the Independence One Money
Market Funds for the six-month period from May 1, 1997 through October 31, 1997.
This report contains complete financial information for each fund--beginning
with a discussion by the funds' portfolio managers, followed by a complete list
of investments and financial statements.
Each Independence One Money Market Fund is a convenient, stable way to put your
ready cash to work pursing competitive money market income--every day.*
Fund-by-fund highlights are below.
INDEPENDENCE ONE PRIME MONEY MARKET FUND, a high-quality portfolio of money
market securities, paid dividends of $0.03 per share for Class A Shares and
Class B Shares over the reporting period. Assets in the fund totaled over $447
million at the end of the reporting period.
INDEPENDENCE ONE U.S. TREASURY MONEY MARKET FUND, a portfolio of U.S. Treasury
money market securities, paid a total of $0.02 per share in dividends over the
reporting period. Assets in the fund totaled over $260 million at the end of the
reporting period.
INDEPENDENCE ONE MICHIGAN MUNICIPAL CASH FUND, a high-quality portfolio of
Michigan municipal money market securities, paid a total of $0.02 per share in
double tax-free dividends over the reporting period.** Assets in the fund
totaled over $88 million on the last day of the reporting period.
Thank you for keeping your ready cash working every day through one or more of
the Independence One Money Market Funds.
Sincerely,
/s/ Edward C. Gonzales
Edward C. Gonzales
President
December 15, 1997
* Although money market funds seek to maintain a stable net asset value of
$1.00 per share, there is no assurance that they will be able to do so. An
investment in this fund is neither insured nor guaranteed by the U.S.
government.
** Income may be subject to the federal alternative minimum tax.
INVESTMENT REVIEW
- --------------------------------------------------------------------------------
Q
Over the first six months of the funds' fiscal year, the Federal Reserve
Board (the "Fed") took no action on interest rates as inflation remained
benign. What are your comments on the economic environment and short-term
rates?
A
During this time, the Fed, led by Alan Greenspan, navigated monetary policy
to provide sufficient liquidity to accommodate a growing economy, while
still remaining diligent towards inflation. The reaction of the money
markets was as expected, short-term yields remained steady during the period.
Q
In this environment, how did the Independence One Money Market Funds
perform for shareholders in terms of income and 7-day net yield during the
six-month reporting period ended October 31, 1997?
A
INDEPENDENCE ONE PRIME MONEY MARKET FUND
Independence One Prime Money Market Fund earned a total return of 2.58% for
Class A Shares and 2.71% for Class B Shares during the six-month period
ended October 31, 1997. The 7-day net yield for Class A Shares began the period
on May 1, 1997 at 4.95% and ended the period on October 31, 1997 at 5.09%. The
7-day net yield for Class B Shares began the period on May 1, 1997 at 5.20% and
ended the period on October 31, 1997 at 5.34%.* The average maturity for this
fund as of October 31, 1997 was 60 days.
INDEPENDENCE ONE U.S. TREASURY MONEY MARKET FUND
Independence One U.S. Treasury Money Market Fund earned a total return of 2.48%
during the six-month period ended October 31, 1997. The 7-day net yield began
the period on May 1, 1997 at 4.81% and ended the period on October 31, 1997 at
4.94%.* The average maturity for this fund as of October 31, 1997 was 67 days.
INDEPENDENCE ONE MICHIGAN MUNICIPAL CASH FUND
Independence One Michigan Municipal Cash Fund earned a total return of 1.64%
during the six-month period ended October 31, 1997. The 7-day net yield began
the period on May 1, 1997 at 3.73% and ended the period on October 31, 1997 at
3.18%.* The average maturity for this fund as of October 31, 1997 was 56 days.
* Performance quoted represents past performance and is not indicative of future
results. Yield will vary.
- --------------------------------------------------------------------------------
Q
As 1997 draws to a close, what is your overall outlook for the economy and
short-term interest rates for the coming year?
A
As long as the economy continues its modest growth without signs of
inflationary pressure, the Fed should continue to hold monetary policy
steady. We expect short-term interest rates to follow the Fed's lead and
remain steady as well. As always, the Independence One Money Market Funds'
portfolio managers will be actively monitoring developments to best serve the
interests of our shareholders.
INDEPENDENCE ONE PRIME MONEY MARKET FUND
PORTFOLIO OF INVESTMENTS
OCTOBER 31, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
ACCEPTANCE--2.2% -------------------------------------------------------------------------------
$ 5,000,000 Dai-Ichi Kangyo Bank Ltd., Tokyo, 5.625%, 11/14/1997 $ 4,989,979
---------------------------------------------------------------------------------
5,000,000 First of America Bank--Illinois, 5.625%, 12/11/1997 4,969,167
--------------------------------------------------------------------------------- --------------
TOTAL BANKERS ACCEPTANCE 9,959,146
--------------------------------------------------------------------------------- --------------
(A)CERTIFICATES OF DEPOSIT--36.7%
- ------------------------------------------------------------------------------------------------
7,000,000 ABN AMRO Bank, Canada, 5.660%, 2/2/1998 7,000,227
---------------------------------------------------------------------------------
10,000,000 ABN-AMRO Bank North America, 5.640%, 2/2/1998 10,000,696
---------------------------------------------------------------------------------
15,000,000 Bank of Nova Scotia, Toronto, 5.560%, 11/18/97 15,000,210
---------------------------------------------------------------------------------
10,000,000 Bankers Trust Co., New York, 5.800%, 12/5/1997 10,000,184
---------------------------------------------------------------------------------
10,000,000 Banque Nationale de Paris, 5.600%, 11/14/1997 10,000,035
---------------------------------------------------------------------------------
15,000,000 Barclays Bank PLC, London, 5.670%, 1/20/1998 15,001,179
---------------------------------------------------------------------------------
10,000,000 Canadian Imperial Bank of Commerce, Toronto, 5.970%, 3/17/1998 9,998,931
---------------------------------------------------------------------------------
10,000,000 Credit Agricole Indosuez, 5.720%, 3/27/1998 9,997,417
---------------------------------------------------------------------------------
10,000,000 Credit Suisse First Boston, 5.650%, 3/16/1998 10,002,188
---------------------------------------------------------------------------------
10,000,000 Dai-Ichi Kangyo Bank Ltd., Tokyo, 5.820%, 1/26/1998 10,000,464
---------------------------------------------------------------------------------
10,000,000 Deutsche Bank, AG, 5.530%, 12/22/1997 10,000,421
---------------------------------------------------------------------------------
15,000,000 Rabobank Nederland, Utrecht, 5.790%, 11/3/1997 15,000,016
---------------------------------------------------------------------------------
15,000,000 Sanwa Bank Ltd, Osaka, 5.650%, 11/7/1997 15,000,049
---------------------------------------------------------------------------------
17,000,000 Societe Generale, 5.680%--5.970%, 3/18/1998--10/21/1998 16,997,495
--------------------------------------------------------------------------------- --------------
TOTAL CERTIFICATES OF DEPOSIT 163,999,512
--------------------------------------------------------------------------------- --------------
(A)COMMERCIAL PAPER--36.8%
- ------------------------------------------------------------------------------------------------
AGRICULTURE--3.3%
---------------------------------------------------------------------------------
15,000,000 Cargill, Inc., 5.582%, 2/5/1998 14,780,800
--------------------------------------------------------------------------------- --------------
BANKS--7.2%
---------------------------------------------------------------------------------
17,700,000 Banca CRT Financial Corp., 5.640%--5.909%, 11/17/1997--3/2/1998 17,486,491
---------------------------------------------------------------------------------
15,000,000 Commerzbank U.S. Finance, Inc., 5.628%, 1/13/1998 14,831,188
--------------------------------------------------------------------------------- --------------
Total 32,317,679
--------------------------------------------------------------------------------- --------------
</TABLE>
INDEPENDENCE ONE PRIME MONEY MARKET FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<S> <S> <C>
(A)COMMERCIAL PAPER--CONTINUED
- ------------------------------------------------------------------------------------------------
CHEMICALS--3.3%
---------------------------------------------------------------------------------
$ 15,000,000 Monsanto Co., 5.587%, 11/19/1997 $ 14,958,675
--------------------------------------------------------------------------------- --------------
CONSUMER LOAN SERVICES--4.5%
---------------------------------------------------------------------------------
15,000,000 Fleet Funding Corp., 5.550%, 11/25/1997 14,944,800
---------------------------------------------------------------------------------
5,000,000 Receivables Capital Corp., 5.584%, 11/5/1997 4,996,917
--------------------------------------------------------------------------------- --------------
Total 19,941,717
--------------------------------------------------------------------------------- --------------
FINANCE--2.2%
---------------------------------------------------------------------------------
10,000,000 Abbey National N.A. Corp., 5.672%, 1/22/1998 9,872,672
--------------------------------------------------------------------------------- --------------
HEALTH TECHNOLOGY--2.5%
---------------------------------------------------------------------------------
11,455,000 Abbott Laboratories, 5.556%, 1/7/1998 11,338,172
--------------------------------------------------------------------------------- --------------
MISCELLANEOUS RECEIVABLES--2.7%
---------------------------------------------------------------------------------
12,000,000 Asset Securitization Cooperative Corp., 5.590%, 12/4/1997 11,939,170
--------------------------------------------------------------------------------- --------------
OFFICE/BUSINESS MACHINES--5.6%
---------------------------------------------------------------------------------
10,000,000 Pitney Bowes Credit Corp., 5.666%, 1/12/1998 9,889,800
---------------------------------------------------------------------------------
15,000,000 Xerox Corp., 5.559%, 12/4/1997 14,924,375
--------------------------------------------------------------------------------- --------------
Total 24,814,175
--------------------------------------------------------------------------------- --------------
SECURITIES SERVICES--3.3%
---------------------------------------------------------------------------------
15,000,000 Merrill Lynch & Co., Inc., 5.608%, 12/10/1997 14,910,137
--------------------------------------------------------------------------------- --------------
UTILITIES--2.2%
---------------------------------------------------------------------------------
10,000,000 Pacificorp, 5.519%, 11/6/1997 9,992,361
--------------------------------------------------------------------------------- --------------
TOTAL COMMERCIAL PAPER 164,865,558
--------------------------------------------------------------------------------- --------------
GOVERNMENT AGENCY--3.3%
- ------------------------------------------------------------------------------------------------
FEDERAL HOME LOAN BANK--3.3%
---------------------------------------------------------------------------------
9,700,000 5.790%, 10/2/1998 9,700,000
---------------------------------------------------------------------------------
5,000,000 5.875%, 8/12/1998 5,000,000
--------------------------------------------------------------------------------- --------------
TOTAL GOVERNMENT AGENCY 14,700,000
--------------------------------------------------------------------------------- --------------
</TABLE>
INDEPENDENCE ONE PRIME MONEY MARKET FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<S> <S> <C>
(B)REPURCHASE AGREEMENTS--20.9%
- ------------------------------------------------------------------------------------------------
$ 46,000,000 Daiwa Securities America, Inc., 5.670%, dated 10/31/1997,
due 11/3/1997 $ 46,000,000
---------------------------------------------------------------------------------
47,453,000 Donaldson, Lufkin and Jenrette Securities Corp., 5.680%,
dated 10/31/1997, due 11/3/1997 47,453,000
--------------------------------------------------------------------------------- --------------
TOTAL REPURCHASE AGREEMENTS 93,453,000
--------------------------------------------------------------------------------- --------------
TOTAL INVESTMENTS (AT AMORTIZED COST)(C) $ 446,977,216
--------------------------------------------------------------------------------- --------------
</TABLE>
(a) Each issue shows the rate of discount at the time of purchase.
(b) The repurchase agreements are fully collateralized by U.S. Treasury
obligations based on market prices at the date of the portfolio.
(c) Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($447,455,298) at October 31, 1997.
The following acronym is used throughout this portfolio:
PLC--Public Limited Company
(See Notes which are an integral part of the Financial Statements)
INDEPENDENCE ONE PRIME MONEY MARKET FUND
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- ---------------------------------------------------------------------------------
Investments in repurchase agreements $ 93,453,000
- ---------------------------------------------------------------------------------
Investments in securities 353,524,216
- --------------------------------------------------------------------------------- --------------
Total investments in securities, at amortized cost and value $ 446,977,216
- -------------------------------------------------------------------------------------------------
Income receivable 2,471,938
- ------------------------------------------------------------------------------------------------- --------------
Total assets 449,449,154
- -------------------------------------------------------------------------------------------------
LIABILITIES:
- ---------------------------------------------------------------------------------
Income distribution payable $ 1,943,675
- ---------------------------------------------------------------------------------
Payable to Bank 3,420
- ---------------------------------------------------------------------------------
Accrued expenses 46,761
- --------------------------------------------------------------------------------- --------------
Total liabilities 1,993,856
- ------------------------------------------------------------------------------------------------- --------------
NET ASSETS for 447,455,298 shares outstanding $ 447,455,298
- ------------------------------------------------------------------------------------------------- --------------
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE:
- -------------------------------------------------------------------------------------------------
CLASS A SHARES:
- -------------------------------------------------------------------------------------------------
$342,977,673 / 342,977,673 shares outstanding $1.00
- ------------------------------------------------------------------------------------------------- --------------
CLASS B SHARES:
- -------------------------------------------------------------------------------------------------
$104,477,625 / 104,477,625 shares outstanding $1.00
- ------------------------------------------------------------------------------------------------- --------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
INDEPENDENCE ONE PRIME MONEY MARKET FUND
STATEMENT OF OPERATIONS
SIX MONTHS ENDED OCTOBER 31, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
- ---------------------------------------------------------------------------------------------------
Interest $ 12,549,519
- ---------------------------------------------------------------------------------------------------
EXPENSES:
- -------------------------------------------------------------------------------------
Investment advisory fee $ 888,555
- -------------------------------------------------------------------------------------
Administrative personnel and services fee 238,789
- -------------------------------------------------------------------------------------
Custodian fees 38,992
- -------------------------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses 47,701
- -------------------------------------------------------------------------------------
Directors'/Trustees' fees 10,512
- -------------------------------------------------------------------------------------
Auditing fees 8,170
- -------------------------------------------------------------------------------------
Legal fees 4,813
- -------------------------------------------------------------------------------------
Portfolio accounting fees 45,929
- -------------------------------------------------------------------------------------
Shareholder services fee--Class A Shares 443,137
- -------------------------------------------------------------------------------------
Share registration costs 16,811
- -------------------------------------------------------------------------------------
Printing and postage 6,382
- -------------------------------------------------------------------------------------
Insurance premiums 3,632
- -------------------------------------------------------------------------------------
Miscellaneous 2,295
- ------------------------------------------------------------------------------------- ------------
Total expenses 1,755,718
- -------------------------------------------------------------------------------------
Waiver--
- -------------------------------------------------------------------------------------
Waiver of investment advisory fee (555,347)
- ------------------------------------------------------------------------------------- ------------
Net expenses 1,200,371
- --------------------------------------------------------------------------------------------------- -------------
Net investment income $ 11,349,148
- --------------------------------------------------------------------------------------------------- -------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
INDEPENDENCE ONE PRIME MONEY MARKET FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS ENDED
(UNAUDITED) YEAR ENDED
OCTOBER 31, 1997 APRIL 30, 1997
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- ----------------------------------------------------------------------
OPERATIONS--
- ----------------------------------------------------------------------
Net investment income $ 11,349,148 $ 20,976,396
- ---------------------------------------------------------------------- ---------------------- -----------------
DISTRIBUTIONS TO SHAREHOLDERS--
- ----------------------------------------------------------------------
Distributions from net investment income
- ----------------------------------------------------------------------
Class A Shares (8,958,816) (16,743,570)
- ----------------------------------------------------------------------
Class B Shares (2,390,332) (4,232,826)
- ---------------------------------------------------------------------- ---------------------- -----------------
Change in net assets resulting from
distributions to shareholders (11,349,148) (20,976,396)
- ---------------------------------------------------------------------- ---------------------- -----------------
SHARE TRANSACTIONS--
- ----------------------------------------------------------------------
Proceeds from sale of shares 1,464,025,127 2,703,226,336
- ----------------------------------------------------------------------
Net asset value of shares issued to shareholders
in payment of distributions declared 5,130,507 10,473,533
- ----------------------------------------------------------------------
Cost of shares redeemed (1,430,704,312) (2,701,466,548)
- ---------------------------------------------------------------------- ---------------------- -----------------
Change in net assets resulting from share transactions 38,451,322 12,233,321
- ---------------------------------------------------------------------- ---------------------- -----------------
Change in net assets 38,451,322 12,233,321
- ----------------------------------------------------------------------
NET ASSETS:
- ----------------------------------------------------------------------
Beginning of period 409,003,976 396,770,655
- ---------------------------------------------------------------------- ---------------------- -----------------
End of period $ 447,455,298 $ 409,003,976
- ---------------------------------------------------------------------- ---------------------- -----------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
INDEPENDENCE ONE PRIME MONEY MARKET FUND
FINANCIAL HIGHLIGHTS--CLASS A SHARES
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
(UNAUDITED)
OCTOBER 31, YEAR ENDED APRIL 30,
1997 1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ---------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ---------------------------------------------------
Net investment income 0.03 0.05 0.05 0.03 0.03 0.05
- ---------------------------------------------------
LESS DISTRIBUTIONS
- ---------------------------------------------------
Distributions from net investment income (0.03) (0.05) (0.05) (0.03) (0.03) (0.05)
- --------------------------------------------------- ------ --------- --------- --------- --------- ---------
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- --------------------------------------------------- ------ --------- --------- --------- --------- ---------
TOTAL RETURN (A) 2.58% 5.33% 4.66% 2.73% 2.99% 4.89%
- ---------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ---------------------------------------------------
Expenses 0.59%* 0.61% 0.61% 0.59% 0.58% 0.54%
- ---------------------------------------------------
Net investment income 5.05%* 5.19% 4.51% 2.70% 2.91% 4.73%
- ---------------------------------------------------
Expense waiver/reimbursement (b) 0.25%* 0.25% -- 0.02% 0.04% 0.08%
- ---------------------------------------------------
SUPPLEMENTAL DATA
- ---------------------------------------------------
Net assets, end of period (000 omitted) $342,978 $310,991 $233,607 $310,588 $423,355 $309,009
- ---------------------------------------------------
</TABLE>
* Computed on an annualized basis.
(a) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
(b) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
INDEPENDENCE ONE PRIME MONEY MARKET FUND
FINANCIAL HIGHLIGHTS--CLASS B SHARES
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
(UNAUDITED) YEAR ENDED
OCTOBER 31, 1997 APRIL 30, 1996(A)
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00
- -----------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- -----------------------------------------------------------------------
Net investment income 0.03 0.05
- -----------------------------------------------------------------------
LESS DISTRIBUTIONS
- -----------------------------------------------------------------------
Distributions from net investment income (0.03) (0.05)
- ----------------------------------------------------------------------- ------- -------
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00
- ----------------------------------------------------------------------- ------- -------
TOTAL RETURN (B) 2.71% 5.07%
- -----------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- -----------------------------------------------------------------------
Expenses 0.34%* 0.36%*
- -----------------------------------------------------------------------
Net investment income 5.33%* 5.34%*
- -----------------------------------------------------------------------
Expense waiver/reimbursement (c) 0.25%* 0.25%*
- -----------------------------------------------------------------------
SUPPLEMENTAL DATA
- -----------------------------------------------------------------------
Net assets, end of period (000 omitted)
$104,478 $85,780
- -----------------------------------------------------------------------
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from June 13, 1995 (date of initial
public investment) to April 30, 1996.
(b) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
INDEPENDENCE ONE U.S. TREASURY MONEY MARKET FUND
PORTFOLIO OF INVESTMENTS
OCTOBER 31, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
U.S. TREASURY OBLIGATIONS--41.2%
- -------------------------------------------------------------------------------------------------
$ 20,000,000 11/13/1997 $ 19,964,983
----------------------------------------------------------------------------------
25,000,000 12/11/1997 24,855,361
----------------------------------------------------------------------------------
15,000,000 3/5/1998 14,728,750
----------------------------------------------------------------------------------
10,000,000 4/30/1998 9,735,000
----------------------------------------------------------------------------------
15,000,000 8/20/1998 14,368,550
----------------------------------------------------------------------------------
10,000,000 9/17/1998 9,539,556
----------------------------------------------------------------------------------
15,000,000 10/15/1998 14,246,000
---------------------------------------------------------------------------------- --------------
TOTAL U.S. TREASURY OBLIGATIONS 107,438,200
---------------------------------------------------------------------------------- --------------
(A)REPURCHASE AGREEMENTS--59.2%
- -------------------------------------------------------------------------------------------------
11,000,000 BA Securities, Inc., 5.660%, dated 10/31/1997, due 11/3/1997 11,000,000
----------------------------------------------------------------------------------
60,000,000 Daiwa Securities America, Inc., 5.670%, dated 10/31/1997,
due 11/3/1997 60,000,000
----------------------------------------------------------------------------------
61,338,000 Donaldson, Lufkin and Jenrette Securities Corp., 5.680%,
dated 10/31/1997, due 11/3/1997 61,338,000
----------------------------------------------------------------------------------
11,000,000 First Chicago Capital Markets, Inc., 5.650%, dated 10/31/1997,
due 11/3/1997 11,000,000
----------------------------------------------------------------------------------
11,000,000 UBS Securities, Inc., 5.670%, dated 10/31/1997, due 11/3/1997 11,000,000
---------------------------------------------------------------------------------- --------------
TOTAL REPURCHASE AGREEMENTS 154,338,000
---------------------------------------------------------------------------------- --------------
TOTAL INVESTMENTS (AT AMORTIZED COST)(B) $ 261,776,200
---------------------------------------------------------------------------------- --------------
</TABLE>
(a) The repurchase agreements are fully collateralized by U.S. Treasury
obligations based on market prices at the date of the portfolio.
(b) Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($260,720,587) at October 31, 1997.
(See Notes which are an integral part of the Financial Statements)
INDEPENDENCE ONE U.S. TREASURY MONEY MARKET FUND
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- ---------------------------------------------------------------------------------
Investments in repurchase agreements $ 154,338,000
- ---------------------------------------------------------------------------------
Investments in securities 107,438,200
- --------------------------------------------------------------------------------- --------------
Total investments, at amortized cost and value $ 261,776,200
- -------------------------------------------------------------------------------------------------
Income receivable 24,316
- ------------------------------------------------------------------------------------------------- --------------
Total assets 261,800,516
- -------------------------------------------------------------------------------------------------
LIABILITIES:
- ---------------------------------------------------------------------------------
Income distribution payable 1,044,639
- ---------------------------------------------------------------------------------
Payable to Bank 2,105
- ---------------------------------------------------------------------------------
Accrued expenses 33,185
- --------------------------------------------------------------------------------- --------------
Total liabilities 1,079,929
- ------------------------------------------------------------------------------------------------- --------------
NET ASSETS for 260,720,587 shares outstanding $ 260,720,587
- ------------------------------------------------------------------------------------------------- --------------
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE:
- -------------------------------------------------------------------------------------------------
$260,720,587 / 260,720,587 shares outstanding $1.00
- ------------------------------------------------------------------------------------------------- --------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
INDEPENDENCE ONE U.S. TREASURY MONEY MARKET FUND
STATEMENT OF OPERATIONS
SIX MONTHS ENDED OCTOBER 31, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
- ----------------------------------------------------------------------------------------------------
Interest $ 6,957,548
- ----------------------------------------------------------------------------------------------------
EXPENSES:
- ----------------------------------------------------------------------------------------
Investment advisory fee $ 508,453
- ----------------------------------------------------------------------------------------
Administrative personnel and services fee 137,065
- ----------------------------------------------------------------------------------------
Custodian fees 30,969
- ----------------------------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses 19,524
- ----------------------------------------------------------------------------------------
Directors'/Trustees' fees 6,855
- ----------------------------------------------------------------------------------------
Auditing fees 6,296
- ----------------------------------------------------------------------------------------
Legal fees 2,476
- ----------------------------------------------------------------------------------------
Portfolio accounting fees 33,054
- ----------------------------------------------------------------------------------------
Share registration costs 7,249
- ----------------------------------------------------------------------------------------
Printing and postage 3,952
- ----------------------------------------------------------------------------------------
Insurance premiums 2,349
- ----------------------------------------------------------------------------------------
Miscellaneous 2,843
- ---------------------------------------------------------------------------------------- ----------
Total expenses 761,085
- ---------------------------------------------------------------------------------------------------- ------------
Net investment income $ 6,196,463
- ---------------------------------------------------------------------------------------------------- ------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
INDEPENDENCE ONE U.S. TREASURY MONEY MARKET FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS ENDED
(UNAUDITED) YEAR ENDED
OCTOBER 31, 1997 APRIL 30, 1997
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- ----------------------------------------------------------------------
OPERATIONS--
- ----------------------------------------------------------------------
Net investment income $ 6,196,463 $ 13,060,744
- ---------------------------------------------------------------------- ---------------------- -----------------
DISTRIBUTIONS TO SHAREHOLDERS--
- ----------------------------------------------------------------------
Distributions from net investment income (6,196,463) (13,060,744)
- ---------------------------------------------------------------------- ---------------------- -----------------
SHARE TRANSACTIONS--
- ----------------------------------------------------------------------
Proceeds from sale of shares 1,306,985,449 2,388,962,959
- ----------------------------------------------------------------------
Net asset value of shares issued to shareholders
in payment of distributions declared 3,168,659 8,194,683
- ----------------------------------------------------------------------
Cost of shares redeemed (1,294,722,887) (2,449,101,104)
- ---------------------------------------------------------------------- ---------------------- -----------------
Change in net assets resulting from share transactions 15,431,221 (51,943,462)
- ---------------------------------------------------------------------- ---------------------- -----------------
Change in net assets 15,431,221 (51,943,462)
- ----------------------------------------------------------------------
NET ASSETS:
- ----------------------------------------------------------------------
Beginning of period 245,289,366 297,232,828
- ---------------------------------------------------------------------- ---------------------- -----------------
End of period $ 260,720,587 $ 245,289,366
- ---------------------------------------------------------------------- ---------------------- -----------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
INDEPENDENCE ONE U.S. TREASURY MONEY MARKET FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
(UNAUDITED)
OCTOBER 31, YEAR ENDED APRIL 30,
1997 1997 1996 1995 1994 1993
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ---------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ---------------------------------------------------
Net investment income 0.02 0.05 0.05 0.04 0.03 0.03
- ---------------------------------------------------
LESS DISTRIBUTIONS
- ---------------------------------------------------
Distributions from net investment income (0.02) (0.05) (0.05) (0.04) (0.03) (0.03)
- --------------------------------------------------- ------ --------- --------- --------- --------- ---------
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- --------------------------------------------------- ------ --------- --------- --------- --------- ---------
TOTAL RETURN (A) 2.48% 4.86% 5.28% 4.49% 2.63% 2.92%
- ---------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ---------------------------------------------------
Expenses 0.60%* 0.59% 0.60% 0.63% 0.61% 0.54%
- ---------------------------------------------------
Net investment income 4.88%* 4.75% 5.14% 4.41% 2.60% 2.90%
- ---------------------------------------------------
Expense waiver/ reimbursement (b) -- -- -- -- -- 0.09%
- ---------------------------------------------------
SUPPLEMENTAL DATA
- ---------------------------------------------------
Net assets, end of period
(000 omitted) $260,721 $245,289 $297,233 $244,887 $215,832 $214,069
- ---------------------------------------------------
</TABLE>
* Computed on an annualized basis.
(a) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
(b) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
INDEPENDENCE ONE MICHIGAN MUNICIPAL CASH FUND
PORTFOLIO OF INVESTMENTS
OCTOBER 31, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
PRINCIPAL RATING
AMOUNT S&P/MOODY'S* VALUE
<C> <S> <C> <C>
- ------------ --------------------------------------------------------------- ------------------- -------------
(A) SHORT-TERM MUNICIPALS--95.2%
- -----------------------------------------------------------------------------
KANSAS--5.0%
---------------------------------------------------------------
$ 450,000 Burlington, KS, PCR Bonds (Series A), 3.60% CP (Kansas City
Power And Light Co.), Mandatory Tender 11/14/1997 A-1+ / NR $ 450,000
---------------------------------------------------------------
2,000,000 Burlington, KS, PCR Bonds (Series A), 3.65% CP (Kansas City
Power And Light Co.), Mandatory Tender 12/4/1997 A-1+ / NR 2,000,000
---------------------------------------------------------------
2,000,000 Burlington, KS, PCR Bonds (Series A), 3.70% CP (Kansas City
Power And Light Co.), Mandatory Tender 1/8/1998 A-1+ / NR 2,000,000
--------------------------------------------------------------- -------------
Total 4,450,000
--------------------------------------------------------------- -------------
MICHIGAN--86.0%
---------------------------------------------------------------
1,600,000 Allegan, MI Intermediate School District, GO UT, 3.86% TANs,
4/6/1998 NR / NR 1,601,055
---------------------------------------------------------------
2,000,000 Beecher, MI School District, State Aid Notes, 4.125% Bonds,
6/30/1998 NR / NR 2,002,212
---------------------------------------------------------------
1,100,000 Delta County, MI Economic Development Corp., Environmental
Improvement Revenue Refunding Bonds (Series 1985 A), 3.60% CP
(Mead-Escanaba Paper Co. Project)/(Swiss Bank Corp., Basle
LOC), Mandatory Tender 11/4/1997 NR / P-1 1,100,000
---------------------------------------------------------------
1,000,000 Delta County, MI Economic Development Corp., Environmental
Improvement Revenue Refunding Bonds (Series 1985 B), 3.45% CP
(Mead-Escanaba Paper Co. Project)/(Union Bank of Switzerland,
Zurich LOC), Mandatory Tender 11/3/1997 NR / P-1 1,000,000
---------------------------------------------------------------
</TABLE>
INDEPENDENCE ONE MICHIGAN MUNICIPAL CASH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
PRINCIPAL RATING
AMOUNT S&P/MOODY'S* VALUE
<C> <S> <C> <C>
- ------------ --------------------------------------------------------------- ------------------- -------------
(A) SHORT-TERM MUNICIPALS--CONTINUED
- -----------------------------------------------------------------------------
MICHIGAN--CONTINUED
---------------------------------------------------------------
$ 2,000,000 Delta County, MI Economic Development Corp., Environmental
Improvement Revenue Refunding Bonds (Series 1985 B), 3.50% CP
(Mead-Escanaba Paper Co. Project)/(Union Bank of Switzerland,
Zurich LOC), Mandatory Tender 11/12/1997 NR / P-1 $ 2,000,000
---------------------------------------------------------------
1,000,000 Delta County, MI Economic Development Corp., Environmental
Improvement Revenue Refunding Bonds (Series 1985 B), 3.55% CP
(Mead-Escanaba Paper Co. Project)/(Union Bank of Switzerland,
Zurich LOC), Mandatory Tender 12/3/1997 NR / P-1 1,000,000
---------------------------------------------------------------
3,100,000 Dexter, MI Community Schools, GO UT State Aid Notes, 3.80%
Bonds, 4/1/1998 NR / NR 3,100,615
---------------------------------------------------------------
1,750,000 Eaton, MI Intermediate School District, 3.80% TANs, 4/1/1998 NR / NR 1,750,389
---------------------------------------------------------------
860,000 Farmington Hills, MI Economic Development Corp., Limited
Obligations Revenue Bonds, 3.80% TOBs (Marketing
Displays)/(Comerica Bank, Detroit, MI LOC) 3/1/1998 NR / NR 860,000
---------------------------------------------------------------
1,000,000 Grand Rapids, MI EDR Weekly VRDNs (Amway Hotel Corp.)/(Old Kent
Bank & Trust Co., Grand Rapids LOC) NR / NR 1,000,000
---------------------------------------------------------------
1,000,000 Grand Rapids, MI EDR, EDRB Weekly VRDNs (Amway Hotel
Corp.)/(Old Kent Bank & Trust Co., Grand Rapids LOC) A-1 / NR 1,000,000
---------------------------------------------------------------
2,300,000 Huron Valley, MI School District, 4.25% TRANs,
5/1/1998 NR / NR 2,301,046
---------------------------------------------------------------
1,500,000 Johannesburg-Lewiston, MI Area Schools, GO UT, 3.90% TRANs,
4/1/1998 NR / NR 1,501,194
---------------------------------------------------------------
1,700,000 Michigan Higher Education Student Loan Authority, Refunding
Revenue Bonds (Series X11-B) Weekly VRDNs (AMBAC INS)/(Bank of
Tokyo LOC) A-1+/VMIG1 1,700,000
---------------------------------------------------------------
</TABLE>
INDEPENDENCE ONE MICHIGAN MUNICIPAL CASH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
PRINCIPAL RATING
AMOUNT S&P/MOODY'S* VALUE
<C> <S> <C> <C>
- ------------ --------------------------------------------------------------- ------------------- -------------
(A) SHORT-TERM MUNICIPALS--CONTINUED
- -----------------------------------------------------------------------------
MICHIGAN--CONTINUED
---------------------------------------------------------------
$ 2,000,000 Michigan Higher Education Student Loan Authority, Series
XXII--F Weekly VRDNs (Kredietbank N.V., Brussels SA (AMBAC INS) AAA/VMIG1 $ 2,000,000
---------------------------------------------------------------
4,000,000 Michigan Municipal Bond Authority, (Series B), 4.50% Bonds,
7/2/1998 SP-1+ / NR 4,017,949
---------------------------------------------------------------
1,000,000 Michigan State Hospital Finance Authority Weekly VRDNs (Chelsea
Community Hospital) NR / VMIG1 1,000,847
---------------------------------------------------------------
2,000,000 Michigan State Hospital Finance Authority Weekly VRDNs
(Hospital Equipment Loan Program)/(First of America
Bank--Kalamazoo, MI LOC) NR / VMIG1 2,000,000
---------------------------------------------------------------
3,100,000 Michigan State Hospital Finance Authority, (Series A) Weekly
VRDNs (St. Mary Hospital of Livonia) A-1 / VMIG1 3,100,000
---------------------------------------------------------------
1,000,000 Michigan State Hospital Finance Authority, Hospital Equipment
Loan Program Bonds (Series A) Weekly VRDNs (First of American
Bank LOC) NR / VMIG1 1,000,000
---------------------------------------------------------------
1,200,000 Michigan State Hospital Finance Authority, Revenue Bonds
(Series A) Weekly VRDNs (First of America Bank--Michigan LOC) NR / VMIG1 1,200,000
---------------------------------------------------------------
1,700,000 Michigan Strategic Fund Weekly VRDNs (Applied Textiles, Inc.) NR /NR 1,700,000
---------------------------------------------------------------
1,200,000 Michigan Strategic Fund, (Series 1995) Weekly VRDNs (Rood
Industries, Inc. Project)/(NBD Bank, Michigan LOC) NR / NR 1,200,000
---------------------------------------------------------------
1,000,000 Michigan Strategic Fund, 3.50% CP (Dow Chemical Co.), Mandatory
Tender 12/1/1997 NR / P-1 1,000,000
---------------------------------------------------------------
1,500,000 Michigan Strategic Fund, 3.60% CP (Dow Chemical Co.), Mandatory
Tender 1/15/1998 NR / P-1 1,500,000
---------------------------------------------------------------
2,000,000 Michigan Strategic Fund, 3.60% CP (Dow Chemical Co.), Mandatory
Tender 11/19/1997 NR / P-1 2,000,000
---------------------------------------------------------------
</TABLE>
INDEPENDENCE ONE MICHIGAN MUNICIPAL CASH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
PRINCIPAL RATING
AMOUNT S&P/MOODY'S* VALUE
<C> <S> <C> <C>
- ------------ --------------------------------------------------------------- ------------------- -------------
(A) SHORT-TERM MUNICIPALS--CONTINUED
- -----------------------------------------------------------------------------
MICHIGAN--CONTINUED
---------------------------------------------------------------
$ 2,000,000 Michigan Strategic Fund, 3.60% CP (Dow Chemical Co.), Mandatory
Tender 11/6/1997 NR / P-1 $ 2,000,000
---------------------------------------------------------------
2,000,000 Michigan Strategic Fund, Limited Obligation Revenue Bonds
(Series 1995) Weekly VRDNs (United Waste Systems, Inc.)/(Bank
of America Illinois LOC) A-1 / VMIG1 2,000,000
---------------------------------------------------------------
4,925,000 Michigan Strategic Fund, PCR Bonds Weekly VRDNs (General Motors
Corp.) A/ VMIG1 4,925,000
---------------------------------------------------------------
970,000 Michigan Strategic Fund, Refunding Revenue Bonds (Series B)
Weekly VRDNs (Riverfront Development Co.) NR / NR 970,000
---------------------------------------------------------------
3,000,000 Michigan Strategic Fund, Refunding Revenue Bonds Weekly VRDNs
(Louisiana-Pacific Corp.)/(Wachovia Bank & Trust Co. LOC) NR / Aa2 3,000,000
---------------------------------------------------------------
1,400,000 Michigan Strategic Fund, Revenue Bonds Weekly VRDNs (Waltec
American Forgings Inc.) NR / NR 1,400,000
---------------------------------------------------------------
1,000,000 Michigan Strategic Fund, Revenue Bonds Weekly VRDNs (YWY
Investments LLC) NR / NR 1,000,000
---------------------------------------------------------------
3,300,000 Michigan Strategic Fund, Solid Waste Disposal Revenue Bonds
Weekly VRDNs (Grayling Generating)/(Barclays Bank, New York
LOC) NR/VMIG1 3,300,000
---------------------------------------------------------------
3,300,000 Mt. Pleasant, MI School District, State Aid Notes, 4.10% Bonds,
4/1/1998 NR / NR 3,304,026
---------------------------------------------------------------
2,000,000 Pinckney, MI Community Schools, 3.95% TRANs,
5/1/1998 NR / NR 2,001,458
---------------------------------------------------------------
2,000,000 Regents of University of Michigan, (Series A), 3.63% CP (Regents
of University of Michigan GTD), Mandatory Tender
11/25/1997 P-1 /NR 2,000,000
---------------------------------------------------------------
</TABLE>
INDEPENDENCE ONE MICHIGAN MUNICIPAL CASH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING
OR SHARES S&P/MOODY'S* VALUE
<C> <S> <C> <C>
- ------------ --------------------------------------------------------------- ------------------- -------------
(A) SHORT-TERM MUNICIPALS--CONTINUED
- -----------------------------------------------------------------------------
MICHIGAN--CONTINUED
---------------------------------------------------------------
$ 2,000,000 Regents of University of Michigan, (Series A), 3.65% CP
(Regents of University of Michigan GTD), Mandatory Tender
12/10/1997 P-1 /NR $ 2,000,000
---------------------------------------------------------------
1,000,000 Regents of University of Michigan, (Series A), 3.65% CP (Regents
of University of Michigan GTD), Mandatory Tender
12/9/1997 P-1 /NR 1,000,000
---------------------------------------------------------------
4,000,000 Wayne County, MI , Airport Revenue Bonds (Series B) Daily VRDNs
(Detroit Metropolitan County) A-1 / VMIG 4,000,000
--------------------------------------------------------------- -------------
Total 76,535,791
--------------------------------------------------------------- -------------
SOUTH CAROLINA--4.2%
---------------------------------------------------------------
3,700,000 Piedmont Municipal Power Agency, SC, Electric Power & Light
Revenue Refunding Bonds Weekly VRDNs (MBIA INS)/(Morgan
Guaranty Trust Co., New York SA) A-1 / VMIG1 3,700,000
--------------------------------------------------------------- -------------
TOTAL SHORT-TERM MUNICIPALS 84,685,791
--------------------------------------------------------------- -------------
MUTUAL FUND SHARES--4.5%
- -----------------------------------------------------------------------------
3,972,000 Nuveen Tax Exempt Money Market Fund
(AT NET ASSET VALUE) NR / NR 3,972,000
--------------------------------------------------------------- -------------
TOTAL INVESTMENTS (AT AMORTIZED COST)(B) $ 88,657,791
--------------------------------------------------------------- -------------
</TABLE>
* Please refer to the Appendix of the Statement of Additional Information for
an explanation of the credit ratings.
(a) At October 31, 1997, 16.9% of the total investments at market value were
subject to alternative minimum tax.
(b) Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($88,932,803) at
October 31, 1997.
INDEPENDENCE ONE MICHIGAN MUNICIPAL CASH FUND
- --------------------------------------------------------------------------------
The following acronyms are used throughout this portfolio:
AMBAC-- American Municipal Bond Assurance Corporation CP-- Commercial Paper
EDR-- Economic Development Revenue EDRB-- Economic Development Revenue Bonds
GO-- General Obligation GTD-- Guaranty INS-- Insured LOC-- Letter of Credit
MBIA-- Municipal Bond Investors Assurance PCR-- Pollution Control Revenue SA--
Support Agreement TANs-- Tax Anticipation Notes TOBs-- Tender Option Bonds
TRANs-- Tax and Revenue Anticipation Notes UT-- Unlimited Tax VRDNs-- Variable
Rate Demand Notes
(See Notes which are an integral part of the Financial Statements)
INDEPENDENCE ONE MICHIGAN MUNICIPAL CASH FUND
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- ---------------------------------------------------------------------------------------------------
Total investments in securities, at amortized cost and value $ 88,657,791
- ---------------------------------------------------------------------------------------------------
Income receivable 539,877
- --------------------------------------------------------------------------------------------------- -------------
Total assets 89,197,668
- ---------------------------------------------------------------------------------------------------
LIABILITIES:
- ---------------------------------------------------------------------------------------
Income distribution payable $ 237,642
- ---------------------------------------------------------------------------------------
Payable to Bank 31
- ---------------------------------------------------------------------------------------
Accrued expenses 27,192
- --------------------------------------------------------------------------------------- ----------
Total liabilities 264,865
- --------------------------------------------------------------------------------------------------- -------------
NET ASSETS for 88,932,803 shares outstanding $ 88,932,803
- --------------------------------------------------------------------------------------------------- -------------
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE:
- ---------------------------------------------------------------------------------------------------
$88,932,803 / 88,932,803 shares outstanding $1.00
- --------------------------------------------------------------------------------------------------- -------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
INDEPENDENCE ONE MICHIGAN MUNICIPAL CASH FUND
STATEMENT OF OPERATIONS
SIX MONTHS ENDED OCTOBER 31, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
- ----------------------------------------------------------------------------------------------------
Interest $ 1,698,250
- ----------------------------------------------------------------------------------------------------
EXPENSES:
- ----------------------------------------------------------------------------------------
Investment advisory fee $ 183,670
- ----------------------------------------------------------------------------------------
Administrative personnel and services fee 49,500
- ----------------------------------------------------------------------------------------
Custodian fees 8,394
- ----------------------------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses 18,749
- ----------------------------------------------------------------------------------------
Directors'/Trustees' fees 2,109
- ----------------------------------------------------------------------------------------
Auditing fees 6,236
- ----------------------------------------------------------------------------------------
Legal fees 2,301
- ----------------------------------------------------------------------------------------
Portfolio accounting fees 19,453
- ----------------------------------------------------------------------------------------
Share registration costs 6,908
- ----------------------------------------------------------------------------------------
Printing and postage 1,130
- ----------------------------------------------------------------------------------------
Insurance premiums 1,738
- ----------------------------------------------------------------------------------------
Miscellaneous 1,475
- ---------------------------------------------------------------------------------------- ----------
Total expenses 301,663
- ----------------------------------------------------------------------------------------
Waiver--
- ----------------------------------------------------------------------------------------
Waiver of investment advisory fee (74,817)
- ---------------------------------------------------------------------------------------- ----------
Net expenses 226,846
- ---------------------------------------------------------------------------------------------------- ------------
Net investment income $ 1,471,404
- ---------------------------------------------------------------------------------------------------- ------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
INDEPENDENCE ONE MICHIGAN MUNICIPAL CASH FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS ENDED
(UNAUDITED) YEAR ENDED
OCTOBER 31, 1997 APRIL 30, 1997
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- -----------------------------------------------------------------------
OPERATIONS--
- -----------------------------------------------------------------------
Net investment income $ 1,471,404 $ 2,524,176
- ----------------------------------------------------------------------- ---------------------- ----------------
DISTRIBUTIONS TO SHAREHOLDERS--
- -----------------------------------------------------------------------
Distributions from net investment income (1,471,404) (2,524,176)
- ----------------------------------------------------------------------- ---------------------- ----------------
SHARE TRANSACTIONS--
- -----------------------------------------------------------------------
Proceeds from sale of shares 365,887,575 594,439,241
- -----------------------------------------------------------------------
Net asset value of shares issued to shareholders
in payment of distributions declared 1,003,524 2,021,101
- -----------------------------------------------------------------------
Cost of shares redeemed (361,977,609) (587,153,264)
- ----------------------------------------------------------------------- ---------------------- ----------------
Change in net assets resulting from share transactions 4,913,490 9,307,078
- ----------------------------------------------------------------------- ---------------------- ----------------
Change in net assets 4,913,490 9,307,078
- -----------------------------------------------------------------------
NET ASSETS:
- -----------------------------------------------------------------------
Beginning of period 84,019,313 74,712,235
- ----------------------------------------------------------------------- ---------------------- ----------------
End of period $ 88,932,803 $ 84,019,313
- ----------------------------------------------------------------------- ---------------------- ----------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
INDEPENDENCE ONE MICHIGAN MUNICIPAL CASH FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
(UNAUDITED)
OCTOBER 31, YEAR ENDED APRIL 30,
1997 1997 1996 1995 1994 1993
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ---------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ---------------------------------------------------
Net investment income 0.02 0.03 0.03 0.03 0.02 0.02
- ---------------------------------------------------
LESS DISTRIBUTIONS
- ---------------------------------------------------
Distributions from net investment income (0.02) (0.03) (0.03) (0.03) (0.02) (0.02)
- --------------------------------------------------- ------ --------- --------- --------- --------- ---------
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- --------------------------------------------------- ------ --------- --------- --------- --------- ---------
TOTAL RETURN (A) 1.64% 3.04% 3.24% 2.81% 1.98% 2.27%
- ---------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ---------------------------------------------------
Expenses 0.49%* 0.48% 0.53% 0.59% 0.50% 0.53%
- ---------------------------------------------------
Net investment income 3.20%* 3.01% 3.18% 2.80% 1.96% 2.23%
- ---------------------------------------------------
Expense waiver/reimbursement (b) 0.16%* 0.20% 0.20% 0.21% 0.22% 0.20%
- ---------------------------------------------------
SUPPLEMENTAL DATA
- ---------------------------------------------------
Net assets, end of period (000 omitted) $88,933 $84,019 $74,712 $66,856 $55,013 $84,763
- ---------------------------------------------------
</TABLE>
* Computed on an annualized basis.
(a) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
(b) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
INDEPENDENCE ONE MONEY MARKET FUNDS
COMBINED NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
(1) ORGANIZATION
Independence One Mutual Funds (the "Trust") is registered under the Investment
Company Act of 1940, as amended (the "Act") as an open-end management investment
company. The Trust consists of seven portfolios. The financial statements of the
following portfolios (individually referred to as the "Fund", or collectively as
the "Funds") are presented herein:
<TABLE>
<CAPTION>
PORTFOLIO NAME INVESTMENT OBJECTIVE
<S> <C>
Independence One Prime Money Market Fund ("Prime Money To provide current income consistent with
Market Fund")(d) stability of principal.
Independence One U.S. Treasury Money Market Fund ("U.S. To provide current income consistent with
Treasury Money Market Fund")(d) stability of principal.
Independence One Michigan Municipal Cash Fund ("Michigan To provide stability of income and
Municipal Cash Fund") current income exempt from federal
regular income tax and Michigan state
income tax consistent with stability
of principal.
</TABLE>
(d) Diversified portfolios.
The financial statements of the other portfolios are presented separately. The
assets of each portfolio are segregated and a shareholder's interest is limited
to the portfolio in which shares are held.
(2) SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Funds in the preparation of their financial statements. These
policies are in conformity with generally accepted accounting principles.
INVESTMENT VALUATIONS--The Funds use the amortized cost method to value
their portfolio securities in accordance with Rule 2a-7 under the Act.
Investments in other open-end regulated investment companies are valued at
net asset value.
REPURCHASE AGREEMENTS--It is the policy of the Funds to require the
custodian bank to take possession, to have legally segregated in the
Federal Reserve Book Entry System, or to have segregated within the
custodian bank's vault, all securities held as collateral under repurchase
agreement transactions. Additionally, procedures have been established by
the Funds to monitor, on a daily basis, the market value of each repurchase
agreement's collateral to ensure that
INDEPENDENCE ONE MONEY MARKET FUNDS
- --------------------------------------------------------------------------------
the value of collateral at least equals the repurchase price to be paid
under the repurchase agreement transaction.
The Funds will only enter into repurchase agreements with banks and other
recognized financial institutions, such as broker/dealers, which are deemed
by the Funds' adviser to be creditworthy pursuant to the guidelines and/or
standards reviewed or established by the Board of Trustees (the
"Trustees"). Risks may arise from the potential inability of counterparties
to honor the terms of the repurchase agreement. Accordingly, the Funds
could receive less than the repurchase price on the sale of collateral
securities.
INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS--Interest income and expenses
are accrued daily. Bond premium and discount, if applicable, are amortized
as required by the Internal Revenue Code, as amended (the "Code").
Distributions to shareholders are recorded on the ex-dividend date.
FEDERAL TAXES--It is the Funds' policy to comply with the provisions of the
Code applicable to regulated investment companies and to distribute to
shareholders each year substantially all of their income. Accordingly, no
provisions for federal tax are necessary.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Funds may engage in
when-issued or delayed delivery transactions. The Funds record when-issued
securities on the trade date and maintain security positions such that
sufficient liquid assets will be available to make payment for the
securities purchased. Securities purchased on a when-issued or delayed
delivery basis are marked to market daily and begin earning interest on the
settlement date.
USE OF ESTIMATES--The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts of assets, liabilities,
expenses and revenues reported in the financial statements. Actual results
could differ from those estimated.
OTHER--Investment transactions are accounted for on the trade date.
(3) SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value) for each
class of shares. At October 31, 1997, capital paid-in for Prime Money Market
Fund, U.S. Treasury Money Market Fund, and Michigan Municipal Cash Fund
aggregated $447,455,298, $260,720,587, and $88,932,803, respectively.
Transactions in shares were as follows:
INDEPENDENCE ONE MONEY MARKET FUNDS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRIME MONEY MARKET FUND
SIX MONTHS ENDED YEAR ENDED
CLASS A SHARES OCTOBER 31, 1997 APRIL 30, 1997
<S> <C> <C>
Shares sold 1,290,303,867 2,125,876,995
- ----------------------------------------------------------------------
Shares issued to shareholders in payment of
distributions declared 4,067,377 7,678,573
- ----------------------------------------------------------------------
Shares redeemed (1,289,229,911) (2,056,171,298)
- ---------------------------------------------------------------------- ---------------------- ----------------
Net change resulting from Class A Share transactions 5,141,333 77,384,270
- ---------------------------------------------------------------------- ---------------------- ----------------
</TABLE>
<TABLE>
<CAPTION>
PRIME MONEY MARKET FUND
SIX MONTHS ENDED YEAR ENDED
CLASS B SHARES OCTOBER 31, 1997 APRIL 30, 1997
<S> <C> <C>
Shares sold 173,721,260 386,181,577
- ----------------------------------------------------------------------
Shares issued to shareholders in payment of
distributions declared 1,063,130 758,034
- ----------------------------------------------------------------------
Shares redeemed (141,474,401) (301,160,074)
- ---------------------------------------------------------------------- ---------------------- ----------------
Net change resulting from Class B Share transactions 33,309,989 85,779,537
- ---------------------------------------------------------------------- ---------------------- ----------------
Net change resulting from share transactions 38,451,322 163,163,807
- ---------------------------------------------------------------------- ---------------------- ----------------
</TABLE>
<TABLE>
<CAPTION>
U.S. TREASURY MONEY MARKET FUND
SIX MONTHS ENDED YEAR ENDED
OCTOBER 31, 1997 APRIL 30, 1997
<S> <C> <C>
Shares sold 1,306,985,449 2,388,962,959
- ----------------------------------------------------------------------
Shares issued to shareholders in payment of
distributions declared 3,168,659 8,194,683
- ----------------------------------------------------------------------
Shares redeemed (1,294,722,887) (2,449,101,104)
- ---------------------------------------------------------------------- ---------------------- ----------------
Net change resulting from share transactions 15,431,221 (51,943,462)
- ---------------------------------------------------------------------- ---------------------- ----------------
</TABLE>
INDEPENDENCE ONE MONEY MARKET FUNDS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MICHIGAN MUNICIPAL CASH FUND
SIX MONTHS ENDED YEAR ENDED
OCTOBER 31, 1997 APRIL 30, 1997
<S> <C> <C>
Shares sold 365,887,575 594,439,241
- ----------------------------------------------------------------------
Shares issued to shareholders in payment of
distributions declared 1,003,524 2,021,101
- ----------------------------------------------------------------------
Shares redeemed (361,977,609) (587,153,264)
- ---------------------------------------------------------------------- ---------------------- ----------------
Net change resulting from share transactions 4,913,490 9,307,078
- ---------------------------------------------------------------------- ---------------------- ----------------
</TABLE>
(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE--Michigan National Bank, the Funds' investment adviser
(the "Adviser") receives for its services an annual investment advisory fee
equal to 0.40% of each Fund's average daily net assets. The Adviser may
voluntarily choose to waive any portion of its fee. The Adviser can modify or
terminate this voluntary waiver at any time at its sole discretion.
ADMINISTRATIVE FEE--Federated Administrative Services ("FAS") provides the Funds
with certain administrative personnel and services. The fee paid to FAS is based
on the level of average aggregate net assets of the Trust for the period. The
administrative fee during any fiscal year shall be at least $50,000 for each
portfolio in the Trust.
SHAREHOLDER SERVICES FEE--Under the terms of a Shareholder Services Agreement
with Michigan National Bank, Prime Money Market Fund will pay Michigan National
Bank up to 0.25% of average daily net assets of the Class A Shares for the
period. The fee paid to Michigan National Bank is used to finance certain
services for shareholders and to maintain shareholder accounts.
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT FEES--Federated Services Company
("FServ"), through its subsidiary, Federated Shareholder Services Company
("FSSC") serves as transfer and dividend disbursing agent for the Funds. The fee
paid to FSSC is based on the size, type, and number of accounts and transactions
made by shareholders.
PORTFOLIO ACCOUNTING FEES--FServ maintains the Funds' accounting records for
which it receives a fee. The fee is based on the level of each Fund's average
daily net assets for the period, plus out-of-pocket expenses.
CUSTODIAN FEES--Michigan National Bank is the Funds' custodian. The fee is based
on the level of each Fund's average daily net assets for the period, plus
out-of-pocket expenses.
GENERAL--Certain of the Officers of the Trust are Officers and/or Directors or
Trustees of the above companies.
INDEPENDENCE ONE MONEY MARKET FUNDS
- --------------------------------------------------------------------------------
(5) CONCENTRATION OF CREDIT RISK
Since Michigan Municipal Cash Fund invests a substantial portion of its assets
in issuers located in one state, it will be more susceptible to factors
adversely affecting issuers of that state than would be a comparable tax-exempt
mutual fund that invests nationally. In order to reduce the credit risk
associated with such factors, at October 31, 1997, 38.3% of the securities in
the portfolio of investments are backed by letters of credit or bond insurance
of various financial institutions and financial guaranty assurance agencies. The
value of investments insured by or supported (backed) by a letter of credit from
any one institution or agency did not exceed 5.6% of total investments.
TRUSTEES OFFICERS
- --------------------------------------------------------------------------------
Robert E. Baker Edward C. Gonzales
Harold Berry President and Treasurer
Harry J. Nederlander Jeffrey W. Sterling
Thomas S. Wilson Vice President and Assistant Treasurer
Jay S. Neuman
Secretary
Gail Cagney
Assistant Secretary
Mutual funds are not bank deposits or obligations, are not guaranteed by any
bank, and are not insured or guaranteed by the U.S. government, the Federal
Deposit Insurance Corporation, the Federal Reserve Board, or any other
government agency. Investment in mutual funds involves investment risk,
including possible loss of principal. Although money market funds seek to
maintain a stable net asset value of $1.00 per share, there is no assurance that
they will be able to do so.
This report is authorized for distribution to prospective investors only when
preceded or accompanied by the funds' prospectus which contains facts concerning
their objectives and policies, management fees, expenses and other information.
