INDEPENDENCE ONE MUTUAL FUNDS, 497, 1997-07-01

INDEPENDENCE ONE MUTUAL FUNDS
497, 1997-07-01

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INDEPENDENCE ONE PRIME MONEY MARKET FUND

CLASS A SHARES
CLASS B SHARES

INDEPENDENCE ONE U.S. TREASURY MONEY MARKET FUND
INDEPENDENCE ONE MICHIGAN MUNICIPAL CASH FUND
(PORTFOLIOS OF INDEPENDENCE ONE MUTUAL FUNDS)

PROSPECTUS

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

Independence One Prime Money Market Fund

Independence One U.S. Treasury Money Market Fund

Independence One Michigan Municipal Cash Fund

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

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

The Funds have also filed a Statement of Additional Information dated
June 30, 1997, with the Securities and Exchange Commission ("SEC").
The information contained in the Statement is incorporated by
reference into this prospectus. You may request a copy of the
Statement free of charge by calling toll-free 1-800-334-2292. To
obtain other information, or make inquiries about the Trust, contact
the Trust at the address listed in the back of this prospectus.

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

Prospectus dated June 30, 1997

TABLE OF CONTENTS

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SYNOPSIS 1

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SUMMARY OF FUND EXPENSES 3

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FINANCIAL HIGHLIGHTS 4

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INVESTMENT INFORMATION 8

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

PORTFOLIO INVESTMENTS AND STRATEGIES 13

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Investment Limitations 14

INDEPENDENCE ONE MUTUAL FUNDS

INFORMATION 16

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Management of the Trust 16
Distribution of Fund Shares 16
Fund Administration 18

NET ASSET VALUE 18

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INVESTING IN THE FUNDS 19

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

EXCHANGE PRIVILEGE 21

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REDEEMING SHARES 22

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Systematic Withdrawal Program 24
Accounts with Low Balances 25
Redemption in Kind 25

SHAREHOLDER INFORMATION 25

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Voting Rights 25

EFFECT OF BANKING LAWS 26

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TAX INFORMATION 26

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Federal Income Tax 26
Michigan Municipal Cash Fund Tax

Considerations 26

PERFORMANCE INFORMATION 28

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ADDRESSES Back Cover

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SYNOPSIS

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

The following three Funds are offered in this prospectus:

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

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

Independence One Michigan Municipal Cash Fund ("Michigan
Municipal Cash Fund") seeks to provide stability of income and
current income exempt from federal regular income tax and
Michigan state income tax consistent with stability of
principal. In addition, the Fund provides income exempt from
the Michigan intangibles tax and income taxes of Michigan
municipalities. The municipal securities in which the Fund
invests primarily include those issued by or on behalf of the
State of Michigan and Michigan municipalities, as well as those
issued by other states, territories and possessions of the
United States which are exempt from federal regular income tax
and the personal income taxes of the State of Michigan and
Michigan municipalities ("Michigan Municipal Securities"). The
Fund may not be a suitable investment for retirement plans
since it invests in municipal securities.

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

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

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

program. Information regarding the exchange privilege offered with respect to
the Trust can be found under "Exchange Privilege."

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

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

INDEPENDENCE ONE MONEY MARKET FUNDS
SUMMARY OF FUND EXPENSES

- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>

PRIME MONEY U.S. TREASURY MICHIGAN
MARKET FUND MONEY MUNICIPAL

<S> <C> <C> <C> <C>
CLASS A CLASS B MARKET FUND CASH FUND

SHAREHOLDER TRANSACTION EXPENSES

Maximum Sales Charge Imposed on Purchases

(as a percentage of offering price)......................... None None None None
Maximum Sales Charge Imposed on Reinvested

Dividends (as a percentage of offering price)............... None None None None
Contingent Deferred Sales Charge (as a percentage of original
purchase price or redemption proceeds, as applicable)....... None None None None
Redemption Fee (as a percentage of amount redeemed, if appli-
cable)...................................................... None None None None
Exchange Fee.................................................. None None None None

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

<S> <C> <C> <C> <C>
Management Fees (after waiver)(1)............................. 0.15% 0.15% 0.40% 0.25%
12b-1 Fees(2)................................................. None None 0.00% 0.00%
Shareholder Services Fees(3).................................. 0.25% None None None
Total Other Expenses (after waiver)........................... 0.20% 0.20% 0.19% 0.28%
Total Fund Operating Expenses (after waiver)(4)....... 0.60% 0.35% 0.59% 0.53%
</TABLE>

(1) The management fee for Prime Money Market Fund and Michigan Municipal Cash
Fund was reduced to reflect the voluntary waiver by the Adviser. The Adviser
can terminate this voluntary waiver at any time at its sole discretion. The

maximum management fee for both Funds is 0.40%.

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

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

(4) The Total Fund Operating Expenses for Michigan Municipal Cash Fund
in the above table are based on expenses expected to be incurred
during the fiscal year ending April 30, 1998, and are expected to
be 0.68% absent the voluntary waiver described in Note 1 above.
During the course of this period, expenses may be more or less
than the amount shown. The Total Fund Operating Expenses for
Michigan Municipal Cash Fund for the fiscal year ended April 30,
1997, were 0.48% and would have been 0.68% absent the voluntary
waiver of a portion of the management fee. The Total Fund
Operating Expenses for Prime Money Market Fund Class A Shares and
Class B Shares for the fiscal year ended April 30, 1997 were 0.85%
and 0.60%, respectively, absent the voluntary waiver of a portion
of the managerment fee. THE PURPOSE OF THIS TABLE IS TO ASSIST AN
INVESTOR IN UNDERSTANDING THE

VARIOUS COSTS AND EXPENSES THAT A SHAREHOLDER OF THE FUNDS WILL BEAR, EITHER
DIRECTLY OR INDIRECTLY. FOR MORE COMPLETE DESCRIPTIONS OF THE VARIOUS COSTS AND

EXPENSES, SEE "INVESTING IN THE FUNDS."

EXAMPLE

You would pay the following expenses on a $1,000 investment assuming
(1) 5% annual return and (2) redemption at the end of each time
period.

PRIME MONEY MARKET

FUND U.S. TREASURY MONEY MICHIGAN MUNICIPAL
CLASS A CLASS B MARKET FUND CASH FUND

<S> <C> <C> <C> <C>
1 Year................................... $6 $4 $6 $5
3 Years.................................. $20 $12 $19 $17
5 Years.................................. $34 $20 $33 $30
10 Years................................. $76 $46 $75 $66
</TABLE>

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

INDEPENDENCE ONE PRIME MONEY MARKET FUND
FINANCIAL HIGHLIGHTS--CLASS A SHARES

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(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)

The following table has been audited by KPMG Peat Marwick LLP, the
Fund's independent auditors. Their report, dated June 17, 1997, on the
Fund's Financial Statements for the year ended April 30, 1997, and on
the following table for each of the periods presented, is included in
the Funds' Combined Annual Report, which is incorporated herein by
reference. This table should be read in conjunction with the Fund's
Financial Statements and Notes thereto, contained in the Funds'
Combined Annual Report, which may be obtained from the Fund.

YEAR ENDED APRIL 30,

<S> <C> <C> <C> <C> <C> <C> <C> <C>
1997 1996 1995 1994 1993 1992 1991 1990(A)
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- -----------------------------------------
INCOME FROM INVESTMENT OPERATIONS

- -----------------------------------------
Net investment income 0.05 0.05 0.05 0.03 0.03 0.05 0.07 0.08
- -----------------------------------------
LESS DISTRIBUTIONS

- -----------------------------------------
Distributions from net investment

income (0.05) (0.05) (0.05) (0.03) (0.03) (0.05) (0.07) (0.08)
- ----------------------------------------- --------- --------- --------- --------- --------- --------- --------- -----------
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ----------------------------------------- --------- --------- --------- --------- --------- --------- --------- -----------
TOTAL RETURN (B) 4.94% 5.33% 4.66% 2.73% 2.99% 4.89% 7.55% 7.99%
- -----------------------------------------
RATIOS TO AVERAGE NET ASSETS

- -----------------------------------------
Expenses 0.60% 0.61% 0.61% 0.59% 0.58% 0.54% 0.53% 0.40%*
- -----------------------------------------
Net investment income 4.83% 5.19% 4.51% 2.70% 2.91% 4.73% 7.26% 8.24%*
- -----------------------------------------
Expense waiver (c) 0.25% 0.25% -- 0.02% 0.04% 0.08% 0.08% 0.23%*
- -----------------------------------------
SUPPLEMENTAL DATA

- -----------------------------------------
Net assets, end of period

(000 omitted) $337,836 $310,991 $233,607 $310,588 $423,355 $309,009 $371,994 $328,434
- -----------------------------------------
</TABLE>

* Computed on an annualized basis.

(a) Reflects operations for the period from June 1, 1989 (date of
initial public investment) to April 30, 1990.

(b) Based on net asset value.

(c)_ This voluntary expense decrease is reflected in both the expense
and net investment income ratios shown above.

Further information about the Prime Money Market Fund's performance is contained

in the Combined Annual Report for the fiscal year ended April 30,
1997, which can be obtained free of charge.

INDEPENDENCE ONE PRIME MONEY MARKET FUND
FINANCIAL HIGHLIGHTS--CLASS B SHARES

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(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)

The following table has been audited by KPMG Peat Marwick LLP, the
Fund's independent auditors. Their report, dated June 17, 1997, on the
Fund's Financial Statements for the year ended April 30, 1997, and on
the following table for the period presented, is included in the
Funds' Combined Annual Report, which is incorporated herein by
reference. This table should be read in conjunction with the Fund's
Financial Statements and Notes thereto, contained in the Funds'
Combined Annual Report, which may be obtained from the Fund.

YEAR ENDED

APRIL 30,

<S> <C> <C>
1997 1996(A)

NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00
- --------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS

- --------------------------------------------------------------------------------------------
Net investment income 0.05 0.05
- --------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS

- --------------------------------------------------------------------------------------------
Distributions from net investment income (0.05) (0.05)
- -------------------------------------------------------------------------------------------- --------- -----------
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00
- -------------------------------------------------------------------------------------------- --------- -----------
TOTAL RETURN (B) 5.20% 5.07%
- --------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS

- --------------------------------------------------------------------------------------------
Expenses 0.35% 0.36%*
- --------------------------------------------------------------------------------------------
Net investment income 5.06% 5.34%*
- --------------------------------------------------------------------------------------------
Expense waiver (c) 0.25% 0.25%*
- --------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA

- --------------------------------------------------------------------------------------------
Net assets, end of period (000 omitted) $71,168 $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.

Further information about the Prime Money Market Fund's performance is contained

in the Combined Annual Report for the fiscal year ended April 30,
1997, which can be obtained free of charge.

INDEPENDENCE ONE U.S. TREASURY MONEY MARKET FUND
FINANCIAL HIGHLIGHTS

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

YEAR ENDED APRIL 30,

- ----------------------------------------
Net investment income 0.05 0.05 0.04 0.03 0.03 0.05 0.07 0.08
- ----------------------------------------
LESS DISTRIBUTIONS

- ----------------------------------------
Distributions from net investment

income (0.05) (0.05) (0.04) (0.03) (0.03) (0.05) (0.07) (0.08)
- ---------------------------------------- --------- --------- --------- --------- --------- --------- --------- -----------
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ---------------------------------------- --------- --------- --------- --------- --------- --------- --------- -----------
TOTAL RETURN (B) 4.86% 5.28% 4.49% 2.63% 2.92% 4.81% 7.17% 7.83%
- ----------------------------------------
RATIOS TO AVERAGE NET ASSETS

- ----------------------------------------
Expenses 0.59% 0.60% 0.63% 0.61% 0.54% 0.57% 0.60% 0.35%*
- ----------------------------------------
Net investment income 4.75% 5.14% 4.41% 2.60% 2.90% 4.55% 6.91% 8.17%*
- ----------------------------------------
Expense waiver (c) -- -- -- -- 0.09% 0.12% 0.07% 0.32%*
- ----------------------------------------
SUPPLEMENTAL DATA

- ----------------------------------------
Net assets, end of period

(000 omitted) $245,289 $297,233 $244,887 $215,832 $214,069 $224,803 $131,263 $89,947
- ----------------------------------------
</TABLE>

* Computed on an annualized basis.

(a) Reflects operations for the period from June 1, 1989 (date of
initial public investment) to April 30, 1990.

(b) Based on net asset value.

Further information about U.S. Treasury Money Market Fund's performance is

contained in the Combined Annual Report for the fiscal year ended
April 30, 1997, which can be obtained free of charge.

INDEPENDENCE ONE MICHIGAN MUNICIPAL CASH FUND
FINANCIAL HIGHLIGHTS

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

The following table has been audited by KPMG Peat Marwick LLP, the
Fund's independent auditors. Their report, dated June 17, 1997, on the
Fund's Financial Statements for the year ended April 30, 1997, and on
the following table for each of the periods presented, is included in
the Fund's Annual Report, which is incorporated herein by reference.
This table should be read in conjunction with the Fund's Financial
Statements and Notes thereto, contained in the Fund's Annual Report,
which may be obtained from the Fund.

YEAR ENDED APRIL 30,

- -----------------------------------------
Net investment income 0.03 0.03 0.03 0.02 0.02 0.04 0.05 0.05
- -----------------------------------------
LESS DISTRIBUTIONS

- -----------------------------------------
Distributions from net investment

income (0.03) (0.03) (0.03) (0.02) (0.02) (0.04) (0.05) (0.05)
- ----------------------------------------- --------- --------- --------- --------- --------- --------- --------- -----------
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ----------------------------------------- --------- --------- --------- --------- --------- --------- --------- -----------
TOTAL RETURN (B) 3.04% 3.24% 2.81% 1.98% 2.27% 3.68% 5.18% 5.14%
- -----------------------------------------
RATIOS TO AVERAGE NET ASSETS

- -----------------------------------------
Expenses 0.48% 0.53% 0.59% 0.50% 0.53% 0.50% 0.67% 0.44%*
- -----------------------------------------
Net investment income 3.01% 3.18% 2.80% 1.96% 2.23% 3.51% 5.02% 5.70%*
- -----------------------------------------
Expense waiver (c) 0.20% 0.20% 0.21% 0.22% 0.20% 0.39% 0.19% 0.39%*
- -----------------------------------------
SUPPLEMENTAL DATA

- -----------------------------------------
Net assets, end of period

(000 omitted) $84,019 $74,712 $66,856 $55,013 $84,763 $71,745 $31,705 $28,921
- -----------------------------------------
</TABLE>

* Computed on an annualized basis.

(a) Reflects operations for the period from June 14, 1989 (date of
initial public investment) to April 30, 1990.

(b) Based on net asset value.

Further information about Michigan Municipal Cash Fund's performance
is contained in the Annual Report for the fiscal year ended April 30,
1997, which can be obtained free of charge.

INVESTMENT INFORMATION

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

INVESTMENT OBJECTIVE OF EACH FUND

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

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

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

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

PRIME MONEY MARKET FUND

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

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

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

commercial paper (including Canadian Commercial Paper and Europaper);

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

short-term credit facilities, such as demand notes;

asset-backed securities;

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

other money market instruments.

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

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

SHORT-TERM CREDIT FACILITIES. Demand notes are short-term borrowing
arrangements between a corporation and an institutional lender (such
as the Fund) payable upon demand by either party. The notice period
for demand typically ranges from one to seven days, and the party may
demand full or partial payment. The Fund may also enter into, or
acquire participations in, short-term revolving credit facilities with
corporate borrowers. Demand notes and other short-term credit
arrangements usually provide for floating or variable rates of
interest.

ASSET-BACKED SECURITIES. Asset-backed securities are securities issued
by special purpose entities whose primary assets consist of a pool of
loans or accounts receivable. The securities may take the form of
beneficial interest in a special purpose trust, limited partnership
interests or commercial paper or other debt securities issued by a
special purpose corporation. Although the securities often have some
form of credit or liquidity enhancement, payments on the securities
depend predominately upon collections of the loans and receivables
held by the issuer.

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

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

U.S. TREASURY MONEY MARKET FUND

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

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

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

Strategies."

MICHIGAN MUNICIPAL CASH FUND

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

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

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

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

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

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

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

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

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

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

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

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

If the value of Fund assets invested in the securities of a
governmental subdivision changes because of changing values, the Fund
will not be required to make any reduction in its holdings.

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

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

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

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

PORTFOLIO INVESTMENTS AND STRATEGIES

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

VARIABLE RATE DEMAND NOTES. Prime Money Market Fund and Michigan
Municipal Cash Fund may invest in variable rate demand notes which are
long-term corporate debt instruments or municipal securities that have
variable or floating interest rates and provide the Funds with the
right to tender the security for repurchase at its stated principal
amount plus accrued interest. Such securities typically bear interest
at a rate that is intended to cause the securities to trade at par.
The interest rate may float or be adjusted at regular intervals
(ranging from daily to annually), and is normally based on a published
interest rate or interest rate index. Most variable rate demand notes
allow the Funds to demand the repurchase of the security on not more
than seven days prior notice. Other notes only permit the Funds to
tender the security at the time of each interest rate adjustment or at
other fixed intervals. See "Demand Features." The Funds treat variable
rate demand notes as maturing on the later of the date of the next
interest adjustment or the date on which the Funds may next tender the
security for repurchase.

CREDIT ENHANCEMENT. Certain of the Funds' acceptable investments may
be credit enhanced by a guaranty, letter of credit, or insurance. Any
bankruptcy, receivership, default, or change in the credit quality of
the party providing the credit enhancement will adversely affect the
quality and marketability of the underlying security and could cause
losses to a Fund and affect its share price. Prime Money Market Fund
and Michigan Municipal Cash Fund may each have more than 25% of its
total assests invested in securities credit-enhanced by banks.

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

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

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

INVESTING IN SECURITIES OF OTHER INVESTMENT COMPANIES. Prime Money
Market Fund and Michigan Municipal Cash Fund can acquire up to 3% of
the total outstanding stock of other investment companies. The Funds
will not be subject to any other limitations with regard to the
acquisition of securities of other investment companies so long as the
public offering price of the Fund's shares does not include a sales
charge exceeding 1-1/2 percent. However, these limitations are not
applicable if the securities are acquired in a merger, consolidation,
reorganization, or acquisition of assets.

INVESTMENT LIMITATIONS

BORROWING MONEY. The Funds will not borrow money directly or through
reverse repurchase agreements or pledge securities except, under
certain circumstances, a Fund may borrow up to one-third of the value
of its total assets and pledge up to 10% of the value of those assets
to secure such borrowings.

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

Michigan Municipal Cash Fund will not invest more than 10% of its
total assets in the securities of any one issuer (except cash and cash
items, repurchase agreements collateralized by U.S. Treasury
securities and U.S. government obligations) with respect to securities
comprising 75% of its assets.

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

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

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

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

INDEPENDENCE ONE MUTUAL FUNDS INFORMATION

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MANAGEMENT OF THE TRUST

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

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

ADVISORY FEES. The Adviser may receive an annual investment advisory
fee equal to 0.40% of each Fund's average daily net assets. The
Adviser may voluntarily choose to waive a portion of its fee or
reimburse certain expenses of the Funds.

ADVISER'S BACKGROUND. Michigan National Bank, a national banking
association, is a wholly-owned subsidiary of Michigan National
Corporation ("MNC"). MNC is a wholly owned subsidiary of National
Australia Bank Limited which is a transnational banking organization,
headquartered in Melbourne, Australia. Through its subsidiaries and
affiliates, MNC, Michigan's fifth largest bank holding company in
terms of total assets, as of December 31, 1996, offers a full range of
financial services to the public, including commercial lending,
depository services, cash management, brokerage services, retail
banking, mortgage banking, investment advisory services and trust
services. Independence One Capital Management Corporation ("IOCM"), a
nationally recognized investment advisory subsidiary of MNC, provides
investment advisory services for trust and other managed assets. IOCM
and the Trust Division have managed custodial assets totaling $10.7
billion. Of this amount, IOCM and the Trust Division have investment
discretion over $1.9 billion.

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

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

DISTRIBUTION OF FUND SHARES

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

Corp. is a subsidiary of Federated Investors.

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

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

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

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

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

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

The Glass-Steagall Act prohibits a depository institution (such as a
commercial bank or a savings association) from being an underwriter or
distributor of most securities. In the event the Glass-Steagall Act is
deemed to prohibit depository institutions from acting in the
administrative capacities described above or should Congress relax
current restrictions on depository institutions, the Trustees will
consider appropriate changes in the services.

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

FUND ADMINISTRATION

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

MAXIMUM AVERAGE AGGREGATE
ADMINISTRATIVE FEE DAILY NET ASSETS OF THE TRUST

<C> <S>

.150% on the first $250 million
.125% on the next $250 million
.100% on the next $250 million
.075% on assets in excess of $750 million

</TABLE>

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

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

NET ASSET VALUE

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

INVESTING IN THE FUNDS

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SHARE PURCHASES

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

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

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

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

MINIMUM INVESTMENT REQUIRED

The minimum initial investment in the shares of the Prime Money Market Fund
Class A Shares, the U.S. Treasury Money Market Fund, and Michigan Municipal Cash

Fund by an investor is $1,000.

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

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

CASH SWEEP PROGRAM

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

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

WHAT SHARES COST

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

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

CERTIFICATES AND CONFIRMATIONS

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

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

DIVIDENDS

Dividends are declared daily and paid monthly. Dividends are
automatically reinvested on payment dates in additional shares of the
Funds unless cash payments are requested by shareholders in writing to
the Funds through their Michigan National Bank or Independence One
representative or authorized broker. Share purchase orders received by
a Fund before 11:00 a.m. (Eastern time) earn dividends that day.

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

CAPITAL GAINS

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

SYSTEMATIC INVESTMENT PROGRAM

With respect to shareholders of Prime Money Market Fund Class A
Shares, U.S. Treasury Money Market Fund, and Michigan Municipal Cash
Fund, once the Fund account has been opened, shareholders may add to
their investment on a regular basis in a minimum amount of $100. Under
this program, funds may be automatically withdrawn periodically from
the shareholder's checking account and invested in Fund shares at the
net asset value next determined after an order is received. A
shareholder may apply for participation in this program through
Michigan National Bank by calling 1-800-334-2292.

EXCHANGE PRIVILEGE

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

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

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

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

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

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

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

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

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

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

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

REDEEMING SHARES

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

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

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

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

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

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

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

A daily dividend will be paid on shares redeemed if the redemption
request is received after 11:00 a.m. (Eastern time). However, the
proceeds are normally not wired until the following business day.
Redemption requests received before 11:00 a.m. (Eastern time) will
normally be paid the same day and will not be entitled to that day's
dividend.

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

In the event of drastic economic or market changes, a shareholder may
experience difficulty in redeeming by telephone. If such a case should
occur, another method of redemption, such as "By Mail", should be
considered.

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

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

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

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

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

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

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

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

The Funds do not accept signatures guaranteed by a notary public.

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

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

SYSTEMATIC WITHDRAWAL PROGRAM

Shareholders of Prime Money Market Fund Class A Shares, U.S. Treasury
Money Market Fund, and Michigan Municipal Cash Fund who desire to
receive payments of a predetermined amount may take advantage of the
Systematic Withdrawal Program. Under this program, shares of the Fund
are redeemed to provide for periodic withdrawal payments in an amount
directed by the shareholder. Depending upon the amount of the
withdrawal payments, the amount of dividends paid and capital gains
distributions with respect to Fund shares, and the fluctuation of the
net asset value of Fund shares redeemed under this program,
redemptions may reduce, and eventually deplete, the shareholder's
investment in the Fund. For this reason, payments under this program
should not be considered as yield or income on the shareholder's
investment in the Fund. To be eligible to participate in this program,
a shareholder must have an account value of at least $10,000, other
than retirement accounts subject to required minimum distributions. A
shareholder may apply for participation in this program through
Michigan National Bank by calling 1-800-334-2292.

ACCOUNTS WITH LOW BALANCES

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

REDEMPTION IN KIND

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

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

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

SHAREHOLDER INFORMATION

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

VOTING RIGHTS

Each share of the Funds gives the shareholder one vote in Trustee
elections and other matters submitted to shareholders for vote. All
shares of all classes of each portfolio in the Trust have equal voting
rights, except that in matters affecting only a particular portfolio
or class, only shares of that portfolio or class are entitled to vote.
As a Massachusetts business trust, the Trust is not required to hold
annual shareholder meetings. Shareholder approval will be sought only
for certain changes in the Trust's or the Funds' operation and for the
election of Trustees under certain circumstances. As of June 9, 1997,
Pierson & Co., the nominee for Michigan National Bank and Oak Mall
Shopping Center may for certain purposes be deemed to control the
Prime Money Market Fund Class B Shares because they are owners of
record of certain shares of the Fund. As of June 9, 1997, Pierson &
Co., the nominee for Michigan National Bank may for certain purposes
be deemed to control the Prime Money Market Fund Class A Shares and
U.S. Treasury Money Market Fund because it is owner of record of
certain shares of the Funds.

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

EFFECT OF BANKING LAWS

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

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

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

TAX INFORMATION

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

FEDERAL INCOME TAX

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

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

MICHIGAN MUNICIPAL CASH FUND TAX CONSIDERATIONS

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

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

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

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

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

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

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

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

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

PERFORMANCE INFORMATION

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

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

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

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

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

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

Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779

INVESTMENT ADVISER

Michigan National Bank
27777 Inkster Road

Mail Code 10-52

Farmington Hills, Michigan 48333-9065

DISTRIBUTOR
Federated Securities Corp.
Federated Investors Tower

Pittsburgh, Pennsylvania 15222-3779

CUSTODIAN

Michigan National Bank
27777 Inkster Road

Mail Code 10-30

Farmington Hills, Michigan 48333-9065

TRANSFER AGENT AND
DIVIDEND DISBURSING AGENT

Federated Shareholder Services Company
P.O. Box 8600
Boston, Massachusetts 02266-8600

INDEPENDENT AUDITORS

KPMG Peat Marwick LLP
One Mellon Bank Center

Pittsburgh, Pennsylvania 15219
Independence Onet

Prime Money Market Fund
Class A Shares
Class B Shares

U.S. Treasury
Money Market Fund

Michigan Municipal
Cash Fund

(Distributed by Federated Securities Corp.)

Prospectus dated
June 30, 1997

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[LOGO OF MICHIGAN NATIONAL BANK INVESTMENT ADVISER]
[LOGO OF RECYCLED PAPER]

Cusip 453777203
Cusip 453777302
Cusip 453777708
Cusip 453777401

G01285-01 (6/97)

INDEPENDENCE ONE PRIME MONEY MARKET FUND
CLASS A SHARES
CLASS B SHARES

INDEPENDENCE ONE U.S. TREASURY MONEY MARKET FUND
INDEPENDENCE ONE MICHIGAN MUNICIPAL CASH FUND
(PORTFOLIOS OF INDEPENDENCE ONE MUTUAL FUNDS)

STATEMENT OF ADDITIONAL INFORMATION

This Statement of Additional Information should be read with
the prospectus of Independence One Prime Money Market Fund,
Independence One U.S. Treasury Money Market Fund, and
Independence One Michigan Municipal Cash Fund (the "Funds"),
portfolios of Independence One Mutual Funds (the "Trust")
dated June 30, 1997. This Statement is not a prospectus. You
may request a copy of a prospectus free of charge by calling
1-800-334-2292.

FEDERATED INVESTORS TOWER
PITTSBURGH, PENNSYLVANIA 15222-3779

Statement dated June 30, 1997

[GRAPHIC OMITTED]

Cusip 453777203
Cusip 453777302
Cusip 453777708
Cusip 453777401
G00979 -09 (6/97)

<PAGE>

TABLE OF CONTENTS

GENERAL INFORMATION ABOUT THE FUNDS 1

INVESTMENT OBJECTIVE AND POLICIES OF THE FUNDS 1
Types of Investments 1
Repurchase Agreements 3
When-Issued and Delayed Delivery Transactions 3
Reverse Repurchase Agreements 3
Credit Enhancement 3
Restricted and Illiquid Securities 4
Variable Rate Demand Notes 4
Investment Limitations 4
Regulatory Compliance 6

MICHIGAN MUNICIPAL CASH FUND INVESTMENT RISKS 7

INDEPENDENCE ONE MUTUAL FUNDS MANAGEMENT 8
Officers and Trustees 8
Fund Ownership 9
Trustees' Compensation 10
Trustee Liability 10
Massachusetts Partnership Law 10

INVESTMENT ADVISORY SERVICES 10
Adviser to the Funds 10
Advisory Fees 11

BROKERAGE TRANSACTIONS 11

OTHER SERVICES 11
Trust Administration 11
Custodian 11
Transfer Agent and Dividend Disbursing Agent 12
Independent Auditors 12

PURCHASING SHARES 12

Distribution Plan (U.S. Treasury Fund and Michigan
Municipal Cash Fund Only) 12
Shareholder Services Agreement (Prime Money Market
Fund Class A Shares Only) 12

Conversion to Federal Funds 13

DETERMINING NET ASSET VALUE 13
Use of the Amortized Cost Method 13

EXCHANGE PRIVILEGE 14

REDEEMING SHARES 14
Redemption in Kind 14

TAX STATUS 14
The Funds' Tax Status 14
Shareholders' Tax Status 14

TOTAL RETURN 15

YIELD 15

EFFECTIVE YIELD 15

TAX-EQUIVALENT YIELD 16
Tax-Equivalency Table 16

PERFORMANCE COMPARISONS 17
Economic and Market Information 17

FINANCIAL STATEMENTS 17

APPENDIX 18

<PAGE>

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GENERAL INFORMATION ABOUT THE FUNDS

The Trust was established as a Massachusetts business trust under a
Declaration of Trust dated January 9, 1989. This Statement of
Additional Information relates only to three portfolios of securities
which are as follows: Independence One Prime Money Market Fund ("Prime
Money Market Fund"), Independence One U.S. Treasury Fund ("U.S.
Treasury Fund"), and Independence One Michigan Municipal Cash Fund
("Michigan Municipal Cash Fund").

Shares of the Prime Money Market Fund are currently offered in two
classes: Class A Shares and Class B Shares. Prior to May 1, 1995, the
Prime Money Market Fund offered a single class of shares, which are
currently designated as Class A Shares.

INVESTMENT OBJECTIVE AND POLICIES OF THE FUNDS

The prospectus discusses the objective of each Fund and the policies
they employ to achieve those objectives. The following discussion
supplements the description of the Funds' investment policies in the
prospectus.

The Funds' respective investment objectives cannot be changed without
the approval of shareholders. Except as otherwise noted, the
investment policies described below may be changed by the Board of
Trustees (the "Trustees") without shareholder approval. Shareholders
will be notified before any material change in these policies becomes
effective.

TYPES OF INVESTMENTS

BANK INSTRUMENTS

The Prime Money Market Fund may invest in instruments of
domestic and foreign banks and other deposit institutions.

The instruments of banks and savings associations that are
insured by the Bank Insurance Fund ("BIF") or the Savings
Association Insurance Fund ("SAIF") such as certificates of
deposit, demand and time deposits, savings shares, and
bankers' acceptances, are not necessarily guaranteed by those
organizations.

In addition to domestic bank obligations such as certificates
of deposit, demand and time deposits, savings shares, and
bankers' acceptances, the Prime Money Market Fund may invest
in:

o Eurodollar Certificates of Deposit issued by foreign branches of
U.S. or foreign banks;

o Eurodollar Time Deposits, which are U.S. dollar-denominated
deposits in foreign branches of U.S. or foreign banks;

o Canadian Time Deposits, which are U.S. dollar-denominated deposits
issued by branches of major Canadian banks located in the
United States; and

o Yankee Certificates of Deposit, which are U.S. dollar-denominated
certificates of deposit issued by U.S. branches of foreign banks
and held in the United States.

RATINGS

A nationally recognized statistical rating organization's
("NRSRO") rating categories are determined without regard for
sub-categories and gradations. For example, with respect to
the Prime Money Market Fund, securities rated A-1 or A-1+ by
Standard & Poor's Ratings Group ("S&P"), Prime-1 by Moody's
Investors Service, Inc. ("Moody's"), or F-1 (+ or -) by Fitch
Investors Service, Inc. ("Fitch"), are all considered rated
in the highest short-term rating category, and with respect
to the Michigan Municipal Cash Fund, securities rated SP-1+,
SP-1 or SP-2 by S&P, MIG-1 or MIG-2 by Moody's, or F-1+, F-1
and F-2 by Fitch, are all considered rated in one of the two
highest short-term rating categories. The Funds will follow
applicable regulations in determining whether a security
rated by more than one NRSRO can be treated as being in the
acceptable rating categories; currently, such securities must
be rated by two NRSROs in the acceptable categories. See
"Regulatory Compliance."

If a security loses its rating or the security's rating is
reduced below the required minimum after a Fund purchases it,
a Fund is not required to sell the security. The investment
adviser considers this event, however, in its determination
of whether a Fund should continue to hold the security in its
portfolio. If ratings made by a

<PAGE>

NRSRO change because of changes in those organizations or in
their rating systems, the Fund will try to use comparable
ratings as standards in accordance with the investment
policies described in the Funds' prospectuses.

U.S. GOVERNMENT OBLIGATIONS

The types of U.S. government obligations in which Prime Money
Market Fund may invest generally include direct obligations of the
U.S. Treasury (such as U.S. Treasury bills, notes, and bonds) and
obligations issued or guaranteed by U.S. government agencies or
instrumentalities. These securities are backed by:

o the full faith and credit of the U.S. Treasury;

o the issuer's right to borrow from the U.S. Treasury;

o the discretionary authority of the U.S. government to purchase
certain obligations of agencies or instrumentalities; or

o the credit of the agency or instrumentality issuing the obligations.

Examples of agencies and instrumentalities which may not
always receive financial support from the U.S. government
are: Farm Credit Banks; National Bank for Cooperatives; Banks
for Cooperatives; Federal Home Loan Banks; Federal National
Mortgage Association; Student Loan Marketing Association; and
Federal Home Loan Mortgage Corporation.

U.S. TREASURY OBLIGATIONS

U.S. Treasury Money Market Fund invests only in short-term
U.S. Treasury obligations. "Short-term U.S. Treasury
obligations" as used herein refers to evidences of
indebtedness issued by the United States, or issued by an
agency or instrumentality thereof, and fully guaranteed as to
principal and interest by the United States, maturing in 397
days or less from the date of acquisition or purchased
pursuant to repurchase agreements that provide for repurchase
by the seller within one year from the date of acquisition.
The Fund may also retain assets in cash.

MICHIGAN MUNICIPAL SECURITIES

The Michigan municipal securities in which Michigan Municipal
Cash Fund invests have the characteristics set forth in the
prospectus.

A Michigan municipal security which is unrated will be
determined by the Trustees to be an appropriate investment if
it is of comparable quality to municipal securities within
the Fund's rating requirements. The Trustees consider the
creditworthiness of the issuer of a Michigan municipal
security, the issuer of a participation interest if the Fund
has the right to demand payment from the issuer of the
interest or the guarantor of payment by either of those
issuers.

Examples of Michigan municipal securities are:

o tax-exempt project notes issued by the U.S. Department of Housing
and Urban Development to provide financing for
housing, redevelopment, and urban renewal;

o municipal notes and tax-exempt commercial paper;

o serial bonds sold with a series of maturity dates;

o tax anticipation notes sold to finance working capital
needs of municipalities in anticipation of receiving taxes
at a later date;

o bond anticipation notes sold in anticipation of the issuance of
longer-term bonds in the future;

o revenue anticipation notes sold in expectation of receipt
of federal income available under the Federal Revenue
Sharing Program;

o construction loan notes insured by the Federal Housing
Administration and financed by the Federal or Government
National Mortgage Association; and

o pre-refunded municipal bonds refundable at a later date.

<PAGE>

From time to time, such as when suitable Michigan municipal
securities are not available, the Fund may invest a portion
of its assets in cash. Any portion of the Fund's assets
maintained in cash will reduce the amount of assets in
Michigan municipal securities and thereby reduce the Fund's
yield.

REPURCHASE AGREEMENTS

The Funds or their custodian will take possession of the securities
subject to repurchase agreements and these securities will be marked
to market daily. To the extent that the original seller does not
repurchase the securities from a Fund, the Fund could receive less
than the repurchase price on any sale of such securities. In the event
that such a defaulting seller filed for bankruptcy or became
insolvent, disposition of such securities by the Fund might be delayed
pending court action. The Funds believe that under the regular
procedures normally in effect for custody of a Fund's portfolio
securities subject to repurchase agreements, a court of competent
jurisdiction would rule in favor of the Fund and allow retention or
disposition of such securities. The Funds will only enter into
repurchase agreements with banks and other recognized financial
institutions such as brokers/dealers which are deemed by the Funds'
investment adviser to be creditworthy pursuant to guidelines
established by the Trustees.

Michigan Municipal Cash Fund will use repurchase agreements only as
temporary investments during times of unusual market conditions for
defensive purposes and to maintain liquidity.

WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS

These transactions are made to secure what is considered to be an
advantageous price or yield for a Fund. No fees or other expenses,
other than normal transaction costs, are incurred. However, liquid
assets of a Fund sufficient to make payment for the securities to be
purchased are segregated on the Fund's records at the trade date.
These assets are marked to market daily and are maintained until the
transaction has been settled.

The Funds do not intend to engage in when-issued and delayed delivery
transactions to an extent that would cause the segregation of more
than 20% of the total value of Fund assets.

REVERSE REPURCHASE AGREEMENTS

The Funds may enter into reverse repurchase agreements. This
transaction is similar to borrowing cash. In a reverse repurchase
agreement the Fund transfers possession of a portfolio instrument to
another person, such as a financial institution, broker, or dealer, in
return for a percentage of the instrument's market value in cash, and
agrees that on a stipulated date in the future the Fund will
repurchase the portfolio instrument by remitting the original
consideration plus interest at an agreed upon rate.

When effecting reverse repurchase agreements, liquid assets of the
Fund, in a dollar amount sufficient to make payment for the
obligations to be purchased, are segregated at the trade date. These
securities are marked to market daily and maintained until the
transaction is settled.

The use of reverse repurchase agreements may enable the Funds to avoid
selling portfolio instruments at a time when a sale may be deemed to
be disadvantageous, but the ability to enter into reverse repurchase
agreements does not ensure that the Funds will be able to avoid
selling portfolio instruments at a disadvantageous time.

CREDIT ENHANCEMENT

Prime Money Market Fund and Michigan Municipal Cash Fund typically
evaluate the credit quality and ratings of credit-enhanced securities
based upon the financial condition and ratings of the party providing
the credit enhancement (the "credit enhancer"), rather than the
issuer. Generally, a Fund will not treat credit-enhanced securities as
being issued by the credit enhancer for diversification purposes.
However, under certain circumstances applicable regulations may
require a Fund to treat securities as having been issued by both the
issuer and the credit enhancer. However, credit-enhanced securities
will not be treated as having been issued by the credit enhancer for
diversification purposes, unless the Funds have invested more than 10%
of their respective assets in securities issued, guaranteed or
otherwise credit enhanced by the credit enhancer, in which case the
securities will be treated as having been issued by both the issuer
and the credit enhancer.

The Funds may have more than 25% of their respective total assets
invested in securities credit enhanced by banks.

<PAGE>

RESTRICTED AND ILLIQUID SECURITIES

Prime Money Market Fund and Michigan Municipal Cash Fund may invest in
restricted securities. All of the Funds may invest in illiquid
securities. The ability of the Trustees to determine the liquidity of
certain restricted securities is permitted under the Securities and
Exchange Commission ("SEC") Staff position set forth in the adopting
release for Rule 144A under the Securities Act of 1933 (the "Rule").
The Rule is a non-exclusive safe harbor for certain secondary market
transactions involving securities subject to restrictions on resale
under federal securities laws. The Rule provides an exemption from
registration for resales of otherwise restricted securities to
qualified institutional buyers. The Rule was expected to further
enhance the liquidity of the secondary market for securities eligible
for resale under Rule 144A. The Fund believes that the Staff of the
SEC has left the question of determining the liquidity of all
restricted securities (eligible for resale under Rule 144A) to the
Trustees. The Trustees consider the following criteria in determining
the liquidity of certain restricted securities:

o the frequency of trades and quotes for the securities;

o the number of dealers willing to purchase or sell the security and
the number of other potential buyers;

o dealer undertakings to make a market in the security; and

o the nature of the security and the nature of the marketplace trades.

VARIABLE RATE DEMAND NOTES

Prime Money Market Fund and Michigan Municipal Cash Fund may invest in
variable rate demand notes. Variable interest rates generally reduce
changes in the market value of municipal securities from their
original purchase prices. Accordingly, as interest rates decrease or
increase, the potential for capital appreciation or depreciation is
less for variable rate securities than for fixed income obligations.

Many securities with variable interest rates purchased by the Fund are
subject to repayment of principal (usually within seven days) on the
Fund's demand. For purposes of determining the Fund's average
maturity, the maturities of these variable rate demand securities
(including participation interests) are the longer of the periods
remaining until the next readjustment of their interest rates or the
periods remaining until their principal amounts can be recovered by
exercising the right to demand payment. The terms of these variable
rate demand instruments require payment of principal and accrued
interest from the issuer of the municipal obligations, the issuer of
the participation interests, or a guarantor of either issuer.

INVESTMENT LIMITATIONS

SELLING SHORT AND BUYING ON MARGIN

The Funds will not sell any securities short or purchase any
securities on margin but may obtain such short-term credits
as may be necessary for clearance of transactions.

ISSUING SENIOR SECURITIES AND BORROWING MONEY

The Funds will not issue senior securities except that the
Funds may borrow money and engage in reverse repurchase
agreements in amounts up to one-third of the value of their
respective net assets, including the amounts borrowed.

The Funds will not borrow money or engage in reverse
repurchase agreements for investment leverage, but rather as
a temporary, extraordinary, or emergency measure or to
facilitate management of the portfolio by enabling the Funds
to meet redemption requests when the liquidation of portfolio
securities is deemed to be inconvenient or disadvantageous.
The Funds will not purchase any securities while borrowings
in excess of 5% of their respective total assets are
outstanding.

PLEDGING ASSETS

The Funds will not mortgage, pledge, or hypothecate any
assets except to secure permitted borrowings. In these cases,
a Fund may pledge assets having a market value not exceeding
the lesser of the dollar amounts borrowed or 10% of the value
of total assets at the time of the pledge.

<PAGE>

UNDERWRITING

Prime Money Market Fund and Michigan Municipal Cash Fund will
not underwrite any issue of securities, except as a Fund may
be deemed to be an underwriter under the Securities Act of
1933 in connection with the sale of securities in accordance
with its investment objective, policies, and limitations.

LENDING CASH OR SECURITIES

Prime Money Market Fund will not lend any of its assets,
except that it may purchase or hold money market instruments,
including repurchase agreements and variable amount demand
master notes, in accordance with its investment objective,
policies, and limitations.

U.S. Treasury Money Market Fund will not lend any of its
assets, except that it may purchase or hold U.S. Treasury
obligations, including repurchase agreements, in accordance
with its investment objective, policies, and limitations.

Michigan Municipal Cash Fund will not lend of its assets,
except that it may acquire publicly or nonpublicly issued
municipal securities or temporary investments or enter into
repurchase agreements in accordance with its investment
objective, policies, and limitations.

INVESTING IN COMMODITIES, COMMODITY CONTRACTS, OR COMMODITY FUTURES CONTRACTS

Prime Money Market Fund and Michigan Municipal Cash Fund will
not purchase or sell commodities, commodity contracts, or
commodity futures contracts.

INVESTING IN REAL ESTATE

Prime Money Market Fund and Michigan Municipal Cash Fund will
not purchase or sell real estate, although they may invest in
the securities of issuers whose business involves the
purchase or sale of real estate or in securities which are
secured by real estate or interests in real estate.

INVESTING IN RESTRICTED SECURITIES

Prime Money Market Fund will not invest more than 10% of its
net assets in securities subject to restrictions on resale
under the federal securities laws, except for Section 4(2)
commercial paper.

Michigan Municipal Cash Fund will not invest more than 10% of
the value of its net assets in securities subject to
restrictions on resale under the Securities Act of 1933.

DIVERSIFICATION OF INVESTMENTS

With respect to 75% of the value of its assets, Prime Money
Market Fund will not purchase securities of any one issuer
(other than securities issued or guaranteed by the government
of the United States or its agencies or instrumentalities) if
as a result more than 5% of the value of its total assets
would be invested in the securities of that issuer.

Michigan Municipal Cash Fund will not invest more than 10% of
its total assets in the securities of any one issuer (except
cash and cash items, repurchase agreements collateralized by
U.S. government securities and U.S. government obligations)
with respect to securities comprising 75% of its assets.

Under this limitation each governmental subdivision,
including states and the District of Columbia, territories,
possessions of the United States, or their political
subdivisions, agencies, authorities, instrumentalities, or
similar entities, will be considered a separate issuer if its
assets and revenues are separate from those of the
governmental body creating it and the security is backed only
by its own assets and revenues.

Industrial development bonds, backed only by the assets and
revenues of a nongovernmental user, are considered to be
issued solely by that user. If in the case of an industrial
development bond or governmental-issued security, a
governmental or other entity guarantees the security, such
guarantee would be considered a separate security issued by
the guarantor as well as the other issuer, subject to limited
exclusions allowed by the Investment Company Act of 1940.

<PAGE>

CONCENTRATION OF INVESTMENTS

Prime Money Market Fund will not invest 25% or more of the
value of its total assets in any one industry.

However, investing in bank instruments (such as time and
demand deposits and certificates of deposit), U.S. government
obligations or instruments secured by these money market
instruments, such as repurchase agreements, shall not be
considered investments in any one industry.

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

INVESTING IN SECURITIES OF OTHER INVESTMENT COMPANIES

Prime Money Market Fund and Michigan Municipal Cash Fund can
acquire up to 3 per centum of the total outstanding stock of
other investment companies. The Funds will not be subject to
any other limitations with regard to the acquisition of
securities of other investment companies so long as the
public offering price of other investment company's shares
does not include a sales charge exceeding 1-1/2 percent.
However, these limitations are not applicable if the
securities are acquired in a merger, consolidation,
reorganization, or acquisition of assets. It should be noted
that investment companies incur certain expenses, such as
investment advisory, custodian and transfer agent fees, and
therefore, any investment by the Fund in shares of another
investment company would be subject to such duplicate
expenses.

U.S. Treasury Money Market Fund will not purchase securities
of other investment companies except as part of a merger,
consolidation, reorganization, or other acquisition.

INVESTING IN ILLIQUID SECURITIES

The Funds will not invest more than 10% of the value of their
respective net assets in illiquid securities, including
repurchase agreements providing for settlement in more than
seven days after notice, certain restricted securities not
determined by the Trustees to be liquid, and non-negotiable
fixed time deposits with maturities over seven days.

DEALING IN PUTS AND CALLS

Michigan Municipal Cash Fund will not purchase or sell puts,
calls, straddles, spreads, or any combination of them, except
that the Fund may purchase municipal securities accompanied
by agreements of sellers to repurchase them at the Fund's
option.

Except with respect to borrowing money, if a percentage limitation is
adhered to at the time of investment, a later increase or decrease in
percentage resulting from any change in value or net assets will not
result in a violation of such restriction.

The Funds did not borrow money, pledge securities, invest in illiquid
securities, restricted securities, or engage in when-issued and
delayed delivery transactions or reverse repurchase agreements in
excess of 5% of the value of Fund net assets during the last fiscal
period and have no present intent to do so during the coming fiscal
year.

For purposes of the Funds' policies and limitations, each Fund
considers certificates of deposit and demand and time deposits issued
by a U.S. branch of a domestic bank or savings association having
capital, surplus, and undivided profits in excess of $100,000,000 at
the time of investment to be "cash items."

REGULATORY COMPLIANCE

Each Fund may follow non-fundamental operational policies that are
more restrictive than its fundamental investment limitations, as set
forth in the prospectus and this Statement of Additional Information,
in order to comply with applicable laws and regulations, including the
provisions of and regulations under the Investment Company Act of
1940. In particular, each Fund will comply with the various
requirements of Rule 2a-7, which regulates money market mutual funds.
For example, with limited exceptions, Rule 2a-7 prohibits the
investment of more than 5% of a Fund's total assets in securities of
any one issuer, although a Fund's limitation may only require such 5%
diversification with respect to 75% or less of its assets. Each Fund
will invest more than 5% of its assets in any one issuer only under
the circumstances permitted by Rule 2a-7. Each Fund will also
determine the effective maturity of its investments, as well as its
ability to consider a security as having received the requisite
short-term ratings by NRSROs, according to Rule 2a-7. The Funds may
change these operational policies to reflect changes in the laws and
regulations without the approval of shareholders.

<PAGE>

MICHIGAN MUNICIPAL CASH FUND INVESTMENT RISKS

Michigan's economy continues to be among the most cyclical of states,
remaining heavily dependent on domestic auto production and durable
goods consumption. However, the State's efforts over the last several
decades to diversify its economy have seen success as reflected by the
fact that the share of employment in the durable goods sector has
fallen from 33.1% in 1960 to 17.9% in 1990. It improved further to
15.8% in 1996. The motor vehicle industry, which is an important
component in the State's economy, has reduced its share of employment
to 6.1% of total employment in 1996, compared with 10.8% in 1979.
Durable goods manufacturing still represents a sizable portion of the
State's economy, and as a result, any substantial national economic
downturn is likely to have an adverse effect on the State's economy,
and on the State's revenues.

During 1996, unemployment in the State average 4.9%, below the
national level of 5.4%. The economic recovery from the early 1990s
recession has proved hearty in Michigan as employment levels have
reached an all-time high, attracting more workers into the labor
force. The State's forecast is for its unemployment rate to average
4.5% in 1997, continuing the recent trend since 1994 of Michigan's
unemployment rate being below the national average compared to the 27
year history of having higher unemployment. Personal income, grew 4.2%
in 1996, compared to a 5.4% growth for the country as a whole.

On August 19, 1993, the Governor of Michigan signed into law Act 145,
Public Acts of Michigan, 1993 ("Act 145") a measure which
significantly impacted financing of primary and secondary school
operations and which has resulted in additional property tax and
school finance reform legislation. Michigan's school finance reform
shifts the responsibility of funding schools away from the local
district and their real property tax bases to the state and an
earmarked portion of sales taxes. Moreover, the state government is
also subject to a revenue raising cap which is tied to the annual
state personal income growth. The margin between existing revenue and
the constitutional cap is greatly narrowed now that the state absorbs
the costs of funding the local schools. Over the long term the cap may
reduce the state's flexibility to deal with adverse financial
developments.

Concerning Michigan's fiscal policy, the state has proven that it can
maintain a balanced budget, low debt levels and high reserves. While
the state's Budget Stabilization Fund ("Rainy Day Fund") was drawn
down substantially during the fiscal years 1990-1992 in order to meet
budget needs of the state during fiscal stress, spending restraint and
an improved economy enabled the state to begin to restore balances in
fiscal 1993. By the end of fiscal 1994, the balances in the Rainy Day
Fund were $780 million and was $1.15 billion as of September 30, 1996.
This makes Michigan's Rainy Day Fund one of the highest in the nation.

While Michigan's economy is in good standing now because of
conservative budgeting practices and the improved economy, the
enduring effectiveness of the state's financial management will
continue to be tested by economic cycles.

<PAGE>

INDEPENDENCE ONE MUTUAL FUNDS MANAGEMENT

OFFICERS AND TRUSTEES

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

Robert E. Baker
4327 Stoneleigh Road
Bloomfield Hills, MI
Birthdate: May 6, 1930

Trustee

Retired; formerly, Vice Chairman, Chrysler Financial Corporation.

Harold Berry
Berry Enterprises
290 Franklin Center

29100 Northwestern Highway

Southfield, MI

Birthdate: September 17, 1925

Trustee

Managing Partner, Berry Enterprises; Chairman, Independent Sprinkler
Companies, Inc.; Chairman, Berry, Ziegelman & Company.

Clarence G. Frame+
W-875 First Bank Building
332 Minnesota Street

St. Paul, MN

Birthdate: July 26, 1918

Trustee

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

Harry J. Nederlander+
231 S. Old Woodward, Suite 219

Birmingham, MI
Birthdate: September 5, 1917

Trustee

Chairman, Nederlander Enterprises.

<PAGE>

Thomas S. Wilson
Two Championship Drive
Auburn Hills, MI
Birthdate: October 8, 1949

Trustee

President and Executive Administrator of the Detroit Pistons;
President and CEO, Palace Sports and Entertainment.

Edward C. Gonzales
Federated Investors Tower

Pittsburgh, PA
Birthdate: October 22, 1930

President and Treasurer

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

Jeffrey W. Sterling
Federated Investors Tower

Pittsburgh, PA
Birthdate: February 5, 1947

Vice President and Assistant Treasurer

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

Jay S. Neuman
Federated Investors Tower

Pittsburgh, PA
Birthdate: April 22, 1950

Secretary

Corporate Counsel, Federated Investors.

+ Members of the Trust's Executive Committee. The Executive Committee
of the Board of Trustees handles the responsibilities of the Board of
Trustees between meetings of the Board.

FUND OWNERSHIP

Officers and Trustees own less than 1% of the outstanding shares of
the Fund. The following list indicates the beneficial ownership of
shareholders who are the beneficial owners of more than 5% of the
outstanding shares of the following Funds as of June 9, 1997: Pierson
& Co., the nominee for Michigan National Bank, acting in various
capacities for numerous accounts, was the record owner of 148,394,741
Class A Shares (43.11%) of Prime Money Market Fund, 35,294,109 Class B
Shares (43.84%) of Prime Money Market Fund, 95,055,354 shares (37.56%)
of Treasury Money Market Fund and 20,597,130 shares (20.88%) of
Michigan Municipal Cash Fund. As of June 9, 1997, Oak Mall Shopping
Center owned 29,387,484 shares (36.50%) and South Side Landfill, Inc.
owned 4,671,231 shares (5.80%) of Class B Shares of Prime Money Market
Fund. As of June 9, 1997, Christman Company owned 7,759,780 shares
(7.87%) and Art Van Furniture Tech Plaza owned 6,501,340 shares
(6.59%) of Michigan Municipal Cash Fund.

<PAGE>

TRUSTEES' COMPENSATION

AGGREGATE

NAME , COMPENSATION
POSITION WITH FROM
THE TRUST THE TRUST*

Robert E. Baker $10,250
Trustee
Harold Berry $10,250
Trustee
Clarence G. Frame $10,250
Trustee
Harry J. Nederlander $ 9,050
Trustee
Thomas S. Wilson $10,250
Trustee

*Information is furnished for the fiscal year ended April 30, 1997.
The Trust is the only Investment Company in the Fund Complex. The
aggregate compensation is provided for the Trust which is comprised of
seven portfolios.

TRUSTEE LIABILITY

The Trust's Declaration of Trust provides that the Trustees will not
be liable for errors of judgment or mistakes of fact or law. However,
they are not protected against any liability to which they would
otherwise be subject by reason of willful misfeasance, bad faith,
gross negligence, or reckless disregard of the duties involved in the
conduct of their office.

MASSACHUSETTS PARTNERSHIP LAW

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

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

INVESTMENT ADVISORY SERVICES

ADVISER TO THE FUNDS

The Fund's investment adviser is Michigan National Bank (the "Adviser").

The Adviser shall not be liable to the Trust, the Funds, or any
shareholder of the Funds for any losses that may be sustained in the
purchase, holding, or sale of any security, or for anything done or
omitted by it, except acts or omissions involving willful misfeasance,
bad faith, gross negligence, or reckless disregard of the duties
imposed upon it by its contract with the Trust.

Because of internal controls maintained by Michigan National Bank to
restrict the flow of non-public information, Fund investments are
typically made without any knowledge of Michigan National Bank's or
its affiliates' lending relationships with an issuer.

<PAGE>

ADVISORY FEES

For its advisory services, Michigan National Bank receives an annual
investment advisory fee as described in the prospectus.

For the fiscal years ended April 30, 1997, 1996, and 1995, the Adviser
earned fees from: Prime Money Market Fund of $1,720,845, $1,424,895,
and $1,066,096, of which $1,075,528, $890,559, and $0, respectively,
were voluntarily waived; U.S. Treasury Money Market Fund of
$1,099,098, $1,093,871, and $983,049, none of which were voluntarily
waived; and Michigan Municipal Cash Fund of $355,606, $288,247, and
$248,836, of which $167,803, $144,124, and $128,411, respectively,
were voluntarily waived.

BROKERAGE TRANSACTIONS

When selecting brokers and dealers to handle the purchase and sale of
portfolio instruments, the Adviser looks for prompt execution of the
order at a favorable price. In working with dealers, the Adviser will
generally use those who are recognized dealers in specific portfolio
instruments, except when a better price and execution of the order can
be obtained elsewhere. The Adviser makes decisions on portfolio
transactions and selects brokers and dealers subject to guidelines
established by the Trustees. The Adviser may select brokers and
dealers who offer brokerage and research services. These services may
be furnished directly to the Funds or to the Adviser and may include:
advice as to the advisability of investing in securities; security
analysis and reports; economic studies; industry studies; receipt of
quotations for portfolio evaluations; and similar services. Research
services provided by brokers and dealers may be used by the Adviser or
its affiliates in advising the Funds and other accounts. To the extent
that receipt of these services may supplant services for which the
Adviser or its affiliates might otherwise have paid, it would tend to
reduce their expenses. The Adviser and its affiliates exercise
reasonable business judgment in selecting brokers who offer brokerage
and research services to execute securities transactions. They
determine in good faith that commissions charged by such persons are
reasonable in relationship to the value of the brokerage and research
services provided.

Although investment decisions for the Funds are made independently
from those of the other accounts managed by the Adviser, investments
of the type the Funds may make may also be made by those other
accounts. When the Funds and one or more other accounts managed by the
Adviser are prepared to invest in, or desire to dispose of, the same
security, available investments or opportunities for sales will be
allocated in a manner believed by the Adviser to be equitable to each.
In some cases, this procedure may adversely affect the price paid or
received by the Funds or the size of the position obtained or disposed
of by the Funds. In other cases, however, it is believed that
coordination and the ability to participate in volume transactions
will be to the benefit of the Funds

OTHER SERVICES

TRUST ADMINISTRATION

CUSTODIAN

Michigan National Bank, Farmington Hills, Michigan, is custodian for
the securities and cash of the Funds. For its services as custodian,
Michigan National Bank receives an annual fee, payable monthly, based
on a percentage of each Fund's average aggregate daily net assets and
the number and type of transactions, plus out of pocket expenses

<PAGE>

TRANSFER AGENT AND DIVIDEND DISBURSING AGENT

Federated Services Company, Boston, Massachusetts, through its
subsidiary Federated Shareholder Services Company, is transfer agent
for the shares of the Funds and dividend disbursing agent for the
Funds.

INDEPENDENT AUDITORS

The independent auditors for the Funds are KPMG Peat Marwick LLP,
Pittsburgh, Pennsylvania.

PURCHASING SHARES

Shares are sold at their net asset value without a sales charge on
days which the New York Stock Exchange is open for business, except on
federal holidays restricting wire transfers. The procedure for
purchasing shares of the Funds is explained in the prospectus under
"Investing in the Funds."

DISTRIBUTION PLAN (U.S. TREASURY FUND AND MICHIGAN MUNICIPAL CASH FUND ONLY)

The Trust has adopted a Plan pursuant to Rule 12b-1 which was
promulgated by the Securities and Exchange Commission pursuant to the
Investment Company Act of 1940 (the "Plan"). The Plan provides for
payment of fees to Federated Securities Corp. to finance any activity
which is principally intended to result in the sale of the Funds'
shares subject to the Plan. Such activities may include the
advertising and marketing of shares; preparing, printing, and
distributing prospectuses and sales literature to prospective
shareholders, brokers, or administrators; and implementing and
operating the Plan. Pursuant to the Plan, Federated Securities Corp.
may pay fees to brokers for distribution and administrative services
and to administrators for administrative services as to shareholders.
The administrative services are provided by a representative who has
knowledge of the shareholder's particular circumstances and goals, and
include, but are not limited to: communicating account openings;
communicating account closings; entering purchase transactions;
entering redemption transactions; providing or arranging to provide
accounting support for all transactions, wiring funds and receiving
funds for share purchases and redemptions, confirming and reconciling
all transactions, reviewing the activity in Fund accounts, and
providing training and supervision of broker personnel; posting and
reinvesting dividends to Fund accounts or arranging for this service
to be performed by the Funds' transfer agent; and maintaining and
distributing current copies of prospectuses and shareholder reports to
the beneficial owners of shares and prospective shareholders.

The Board of Trustees expects that the Plan will result in the sale of
a sufficient number of shares so as to allow the Funds to achieve
economic viability. It is also anticipated that an increase in the
size of each Fund will facilitate more efficient portfolio management
and assist each Fund in seeking to achieve its investment objective.

The Funds are not currently paying any 12b-1 fees under the Plan.
Should the Funds begin to pay these fees, shareholders would be
notified.

SHAREHOLDER SERVICES AGREEMENT (PRIME MONEY MARKET FUND CLASS A SHARES ONLY)

This arrangement permits the payment of fees to Michigan National Bank
and other financial institutions to cause services to be provided
which are necessary for the maintenance of shareholder accounts and to
encourage personal services to shareholders by a representative who
has knowledge of the shareholder's particular circumstances and goals.
These activities and services may include, but are not limited to:
providing office space, equipment, telephone facilities, and various
clerical, supervisory, computer and other personnel as necessary or
beneficial to establish and maintain shareholder accounts and records;
processing purchase and redemption transactions and automatic
investments of a client's account cash balance; answering routine
client inquiries; and assisting clients in changing dividend options,
account designations, and addresses. By adopting the Shareholder
Services Agreement on behalf of Class A Shares, the Board of Trustees
expects that the Class A Shares will benefit by: (1) providing
personal services to shareholders; (2) investing shareholder assets
with a minimum of delay and administrative detail; (3) enhancing
shareholder recordkeeping systems; and (4) responding promptly to
shareholders' requests and inquiries concerning their accounts.

For the fiscal year ended April 30, 1997, Prime Money Market Fund
(Class A Shares) paid $866,504 in shareholder services fees.

<PAGE>

CONVERSION TO FEDERAL FUNDS

It is the Funds' policy to be as fully invested as possible so that
maximum interest may be earned. To this end, all payments from
shareholders must be in federal funds or be converted into federal
funds. Federated Shareholder Services Company acts as the
shareholder's agent in depositing checks and converting them to
federal funds.

DETERMINING NET ASSET VALUE

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

USE OF THE AMORTIZED COST METHOD

The Trustees have decided that the best method for determining the
value of portfolio instruments is amortized cost. Under this method,
portfolio instruments are valued at the acquisition cost as adjusted
for amortization of premium or accumulation of discount rather than at
current market value.

The Funds' use of the amortized cost method of valuing portfolio
instruments depends on its compliance with Rule 2a-7, (the "Rule"),
under the Investment Company Act of 1940. Under the Rule, the Trustees
must establish procedures reasonably designed to stabilize the net
asset value per share, as computed for purposes of distribution and
redemption, at $1.00 per share, taking into account current market
conditions and the Fund's investment objective.

Under the Rule, a Fund is permitted to purchase instruments which are
subject to demand features or standby commitments. As defined by the
Rule, a demand feature entitles the Fund to receive the principal
amount of the instrument from the issuer or a third party on (1) no
more than 30 days' notice or (2) at specified intervals not exceeding
one year on no more than 30 days' notice. A standby commitment
entitles the Fund to achieve same day settlement and to receive an
exercise price equal to the amortized cost of the underlying
instrument plus accrued interest at the time of exercise.

Although demand features and standby commitments are defined as "puts"
under the Rule, Prime Money Market Fund and Michigan Municipal Cash
Fund do not consider them to be "puts" as that term is used in the
Funds' investment limitations. Demand features and standby commitments
are features which enhance an instrument's liquidity, and the
investment limitation which proscribes puts is designed to prohibit
the purchase and sale of put and call options and is not designed to
prohibit a Fund from using techniques which enhance the liquidity of
portfolio instruments.

MONITORING PROCEDURES

The Trustees' procedures include monitoring the relationship
between the amortized cost value per share and the net asset
value per share based upon available indications of market
value. The Trustees will decide what, if any, steps should be
taken if there is a difference of more than .50% between the
two values. The Trustees will take any steps they consider
appropriate (such as redemption in kind or shortening the
average portfolio maturity) to minimize any material dilution
or other unfair results arising from differences between the
two methods of determining net asset value.

INVESTMENT RESTRICTIONS

The Rule requires that each Fund limit its investments to
instruments that, in the opinion of the Trustees, present
minimal credit risks, and have received the requisite rating
from one or more nationally recognized statistical rating
organizations. If the instruments are not rated, the Trustees
must determine that they are of comparable quality. The Rule
also requires each Fund to maintain a dollar-weighted average
portfolio maturity (not more than 90 days) appropriate to the
objective of maintaining a stable net asset value of $1.00
per share. In addition, no instrument with a remaining
maturity of more than 397 days can be purchased by a Fund.

Should the disposition of a portfolio security result in a
dollar-weighted average portfolio maturity of more than 90 days, the
Fund will invest its available cash to reduce the average maturity to
90 days or less as soon as possible.

The Funds may attempt to increase yield by trading portfolio
securities to take advantage of short-term market variations. This
policy may, from time to time, result in high portfolio turnover.
Under the amortized cost method of valuation, neither the amount of
daily income nor the net asset value is affected by any unrealized
appreciation or depreciation of the portfolio.

<PAGE>

In periods of declining interest rates, the indicated daily yield on
shares, computed by dividing the annualized daily income on the Fund's
portfolio by the net asset value computed as above, may tend to be
higher than a similar computation made by using a method of valuation
based upon market prices and estimates.

In periods of rising interest rates, the indicated daily yield on
shares, computed the same way may tend to be lower than a similar
computation made by using a method of calculation based upon market
prices and estimates.

EXCHANGE PRIVILEGE

Shareholders using the exchange privilege must exchange shares having
a net asset value of at least $1,000. Before the exchange, the
shareholder must receive a prospectus of the fund for which the
exchange is being made.

This privilege is available to shareholders resident in any state in
which the fund shares being acquired may be sold. Upon receipt of
proper instructions and required supporting documents, shares
submitted for exchange are redeemed and the proceeds invested in
shares of the other fund.

Instructions for exchanges may be given in writing or by telephone. Exchange
procedures are explained in the prospectus under "Exchange Privilege."

REDEEMING SHARES

The Funds redeem shares at the next computed net asset value after
Federated Shareholder Services Company receives the redemption
request. Redemption procedures are explained in the prospectus under
"Redeeming Shares."

REDEMPTION IN KIND

Although the Funds intend to redeem shares in cash, they reserve the
right under certain circumstances to pay the redemption price in whole
or in part by a distribution of securities from the Fund's portfolio.
To satisfy registration requirements in a particular state, redemption
in kind will be made (for any shareholder requesting redemption) in
readily marketable securities to the extent that such securities are
available. If this state's policy changes, the Funds reserve the right
to redeem in kind by delivering those securities it deems appropriate.

Redemption in kind will be made in conformity with applicable
Securities and Exchange Commission rules, taking such securities at
the same value employed in determining net asset value and selecting
the securities in a manner the Trustees determine to be fair and
equitable.

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

TAX STATUS

THE FUNDS' TAX STATUS

The Funds intend to pay no federal income tax because they expect to
meet the requirements of Subchapter M of the Internal Revenue Code
applicable to regulated investment companies and to receive the
special tax treatment afforded to such companies.

To qualify for this treatment, a Fund must, among other requirements:

o derive at least 90% of its gross income from dividends, interest,
and gains from the sale of securities;

o derive less than 30% of its gross income from the sale of
securities held less than three months;

o invest in securities within certain statutory limits; and

o distribute to its shareholders at least 90% of its net income
earned during the year.

SHAREHOLDERS' TAX STATUS

No portion of any income dividend paid by a Fund is eligible for the
dividends received deduction available to corporations. Any short-term
capital gains are taxable as ordinary income.

<PAGE>

TOTAL RETURN

The average annual total returns for the 1-year and 5-year periods
ended April 30, 1997 and the period from June 1, 1989 (date of initial
public investment) to April 30, 1997 for Prime Money Market Fund-Class
A Shares and U.S. Treasury Money Market Fund were 4.94%, 4.12%, 5.17%,
and 4.86%, 4.03% 5.04%, respectively. The average annual total returns
for Prime Money Market Fund-Class B Shares for the 1-year period ended
April 30, 1997 and the period from June 13, 1995 (date of initial
public investment) to April 30, 1997 were 5.20% and 5.39%,
respectively. The average annual total returns for the 1-year and
5-year periods ended April 30, 1997 and the period from June 14, 1989
(date of initial public investment) to April 30, 1997 for Michigan
Municipal Cash Fund were 3.04%, 2.67%, ,and 3.45%, respectively.

The average annual total return for the Fund is the average compounded
rate of return for a given period that would equate a $1,000 initial
investment to the ending redeemable value of that investment. The
ending redeemable value is computed by multiplying the number of
shares owned at the end of the period by the net asset value per share
at the end of the period. The number of shares owned at the end of the
period is based on the number of shares purchased at the beginning of
the period with $1,000, less any applicable sales charge, adjusted
over the period by any additional shares, assuming the reinvestment of
all dividends and distributions.

Advertisements and other sales literature for either class of shares
may refer to total return. Total return is the historic change in the
value of an investment in either class of shares based on the monthly
reinvestment of dividends over a specified period of time.

YIELD

For the period ended April 30, 1997, the seven-day yields for Class A
Shares and Class B Shares of Prime Money Market Fund were 4.95% and
5.20%, respectively.

For the period ended April 30, 1997, the seven-day yield for U.S.
Treasury Money Market Fund was 4.82%. For the period ended April 30,
1997, the seven-day yield for Michigan Municipal Cash Fund was 3.71%.

The Funds calculate yield daily, based upon the seven days ending on
the day of the calculation, called the "base period." This yield is
computed by:

o determining the net change in the value of a hypothetical
account with a balance of one share at the beginning of
the base period, with the net change excluding capital
changes but including the value of any additional shares
purchased with dividends earned from the original one
share and all dividends declared on the original and any
purchased shares;

o dividing the net change in the account's value by the
value of the account at the beginning of the base period
to determine the base period return; and

o multiplying the base period return by (365/7).

To the extent that financial institutions and broker/dealers charge
fees in connection with services provided in conjunction with an
investment in a Fund, the performance will be reduced for those
shareholders paying those fees.

EFFECTIVE YIELD

For the period ended April 30, 1997, the seven-day effective yields
for Class A Shares and Class B Shares of Prime Money Market Fund were
5.07% and 5.33%, respectively.

For the period ended April 30, 1997, the seven-day effective yield for
U. S. Treasury Money Market Fund was 4.93%. For the period ended April
30, 1997, the seven-day effective yield for Michigan Municipal Cash
Fund was 3.78%. The Funds' effective yield is computed by compounding
the unannualized base period return by:

o adding 1 to the base period return;

o raising the sum to the 365/7th power; and

o subtracting 1 from the result.

<PAGE>

TAX-EQUIVALENT YIELD

Michigan Municipal Cash Fund's tax-equivalent yield for the seven-day
period ended April 30, 1997, was 5.49%, assuming an effective tax rate
of 32.40%.

The tax-equivalent yield of the Fund is calculated similarly to the
yield, but is adjusted to reflect the taxable yield that the Fund
would have had to earn to equal its actual yield, assuming a specified
tax rate and assuming that income is 100% tax-exempt.

TAX-EQUIVALENCY TABLE

Michigan Municipal Cash Fund may use a tax-equivalency table in
advertising and sales literature. The interest earned by the municipal
bonds in the Fund's portfolio generally remains free from federal
regular income tax,* and is free from the state income tax imposed by
the state of Michigan. As the table indicates, a "tax-exempt"
investment is an attractive choice for investors, particularly in
times of narrow spreads between tax-free and taxable yields.
<TABLE>
<CAPTION>

TAXABLE YIELD EQUIVALENT FOR 1997
STATE OF MICHIGAN

COMBINED FEDERAL AND STATE INCOME TAX BRACKET:
<S> <C> <C> <C> <C> <C> <C>

19.40% 32.40% 35.40% 40.40% 44.00%

JOINT $1- $41,201- $99,601- $151,751- OVER

RETURN 41,200 99,600 151,750 271,050 $271,050

SINGLE $1- $24,651- $59,751- $124,651- OVER

RETURN 24,650 59,750 124,650 271,050 $271,050

TAX-EXEMPT

YIELD TAXABLE YIELD EQUIVALENT

1.50% 1.86% 2.22% 2.32% 2.52% 2.68%

2.00% 2.48% 2.96% 3.10% 3.36% 3.57%

2.50% 3.10% 3.70% 3.87% 4.19% 4.46%

3.00% 3.72% 4.44% 4.64% 5.03% 5.36%

3.50% 4.34% 5.18% 5.42% 5.87% 6.25%

4.00% 4.96% 5.92% 6.19% 6.71% 7.14%

4.50% 5.58% 6.66% 6.97% 7.55% 8.04%

5.00% 6.20% 7.40% 7.74% 8.39% 8.93%

5.50% 6.82% 8.14% 8.51% 9.23% 9.82%

6.00% 7.44% 8.88% 9.29% 10.07% 10.71%

</TABLE>

* Some portion of Michigan Municipal Cash Fund's income may be subject
to the federal alternative minimum tax and state and local taxes.

The chart above is for illustrative purposes only. It is not an
indicator of past or future performance of the Michigan Municipal Cash
Fund.

<PAGE>

PERFORMANCE COMPARISONS

The Funds' performance depends upon such variables as:

o portfolio quality;

o average portfolio maturity;

o type of instruments in which the portfolio is invested;

o changes in interest rates on money market instruments;

o changes in Fund expenses; and

o the relative amount of Fund cash flow.

Investors may use financial publications and/or indices to obtain a
more complete view of the Funds' performance. When comparing
performance, investors should consider all relevant factors such as
the composition of any index used, prevailing market conditions,
portfolio compositions of other funds, and methods used to value
portfolio securities and compute offering price. The financial
publications and/or indices which the Funds use in advertising may
include:

o LIPPER ANALYTICAL SERVICES, INC., ranks funds in various
fund categories by making comparative calculations using
total return. Total return assumes the reinvestment of all
income dividends and capital gains distributions, if any.
From time to time, a Fund will quote its ranking in its
respective Lipper category in advertising and sales
literature.

o MONEY, a monthly magazine, regularly ranks money market
funds in various categories based on the latest available
seven-day compound (effective) yield. From time to time, a
Fund will quote its Money ranking in advertising and sales
literature.

Advertising and other promotional literature may include charts,
graphs and other illustrations using the Funds' returns, or returns in
general, that demonstrate basic investment concepts such as
tax-deferred compounding, dollar-cost averaging and systematic
investment. In addition, the Funds can compare their performance, or
performance for the types of securities in which they invest, to a
variety of other investments, such as bank savings accounts,
certificates of deposit, and Treasury bills.

ECONOMIC AND MARKET INFORMATION

Advertising and sales literature for the Funds may include discussions
of economic, financial and political developments and their effect on
the securities market. Such discussions may take the form of
commentary on these developments by Fund portfolio managers and their
views and analysis on how such developments could affect the Funds. In
addition, advertising and sales literature may quote statistics and
give general information about the mutual fund industry, including the
growth of the industry, from sources such as the Investment Company
Institute ("ICI"). For example, according to the ICI, thirty-seven
percent of American households are pursuing their financial goals
through mutual funds. These investors, as well as businesses and
institutions, have entrusted over $3.5 trillion to the more than 6,000
funds available.

FINANCIAL STATEMENTS

The Financial Statements for the fiscal year ended April 30, 1997 are
incorporated herein by reference to the Annual Report of the Funds
dated April 30, 1997 (File Nos. 33-26516 and 811-5752). A copy of the
Funds' Annual Report may be obtained without charge by contacting the
Trust.

<PAGE>

APPENDIX

STANDARD AND POOR'S RATINGS GROUP MUNICIPAL BOND RATINGS

AAA--Debt rated "AAA" has the highest rating assigned by Standard &
Poor's Ratings Group ("S&P"). Capacity to pay interest and repay
principal is extremely strong.

AA--Debt rated "AA" has a very strong capacity to pay interest and
repay principal and differs from the higher rated issues only in small
degree.

A--Debt rated "A" has a strong capacity to pay interest and repay
principal although it is somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than debt
in higher rated categories.

NR--Indicates that no public rating has been requested, that there is
insufficient information on which to base a rating, or that S&P does
not rate a particular type of obligation as a matter of policy.

PLUS (+) OR MINUS (-): The ratings from AA to CCC may be modified by
the addition of a plus or minus sign to show relative standing within
the major rating categories.

MOODY'S INVESTORS SERVICE, INC. CORPORATE BOND RATINGS DEFINITIONS

AAA--Bonds which are rated Aaa are judged to be of the best quality.
They carry the smallest degree of investment risk and are generally
referred to as "gilt edged." Interest payments are protected by a
large or by an exceptionally stable margin and principal is secure.
While the various protective elements are likely to change, such
changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.

AA--Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are
generally known as high grade bonds. They are rated lower than the
best bonds because margins of protection may not be as large as in Aaa
securities or fluctuation of protective elements may be of greater
amplitude or there may be other elements present which make the
long-term risks appear somewhat larger than in Aaa securities.

A--Bonds which are rated A possess many favorable investment
attributes and are to be considered as upper medium grade obligations.
Factors giving security to principal and interest are considered
adequate but elements may be present which suggest a susceptibility to
impairment sometime in the future.

NR--Not rated by Moody's.

Moody's applies numerical modifiers, 1, 2 and 3 in each generic rating
classification from Aa through B in its corporate or municipal bond
rating system. The modifier 1 indicates that the security ranks in the
higher end of its generic rating category; the modifier 2 indicates a
mid-range ranking; and the modifier 3 indicates that the issue ranks
in the lower end of its generic rating category.

FITCH INVESTORS SERVICE, INC. LONG-TERM DEBT RATINGS

AAA--Bonds considered to be investment grade and of very high quality.
The obligor has an exceptionally strong ability to pay interest and
repay principal, which is unlikely to be affected by reasonably
foreseeable events.

AA--Bonds considered to be investment grade and of very high quality.
The obligor's ability to pay interest and repay principal is very
strong, although not quite as strong as bonds rated "AAA". Because
bonds rated in the "AAA" and "AA" categories are not significantly
vulnerable to foreseeable future developments, short-term debt of
these issuers is generally rated F-1+.

A--Bonds considered to be investment grade and of high credit quality.
The obligor's ability to pay interest and repay principal is
considered to be strong, but may be more vulnerable to adverse changes
in economic conditions and circumstances than bonds with higher
ratings.

NR--NR indicates that Fitch does not rate the specific issue.

PLUS (+) OR MINUS (-): Plus and minus signs are used with a rating
symbol to indicate the relative position of a credit within the rating
category. Plus and minus signs, however, are not used in the AAA
category.

<PAGE>

STANDARD AND POOR'S RATINGS GROUP MUNICIPAL NOTE RATINGS

SP-1--Very strong or strong capacity to pay principal and interest.
Those issues determined to possess overwhelming safety characteristics
will be given a plus (+) designation.

SP-2--Satisfactory capacity to pay principal and interest.

MOODY'S INVESTORS SERVICE SHORT-TERM LOAN RATINGS

MIG1/VMIG1--This designation denotes best quality. There is a present
strong protection by established cash flows, superior liquidity
support or demonstrated broadbased access to the market for
refinancing.

MIG2/VMIG2--This designation denotes high quality. Margins of
protection are ample although not so large as in the preceding group.

FITCH INVESTORS SERVICE, INC. SHORT-TERM DEBT RATINGS

F-1+--EXCEPTIONALLY STRONG CREDIT QUALITY. Issues assigned this rating are
regarded as having the strongest degree of assurance for timely payment.

F-1--VERY STRONG CREDIT QUALITY. Issues assigned this rating reflect
an assurance of timely payment only slightly less in degree than
issues rated F-1+.

F-2--GOOD CREDIT QUALITY. Issues carrying this rating have a
satisfactory degree of assurance for timely payment, but the margin of
safety is not as great as the F-1+ and F-1 categories.

STANDARD AND POOR'S RATINGS GROUP COMMERCIAL PAPER RATINGS DEFINITIONS

A-1--This highest category indicates that the degree of safety
regarding timely payment is strong. Those issues determined to possess
extremely strong safety characteristics are denoted with a plus (+)
sign designation.

A-2--Capacity for timely payment on issues with this designation is
satisfactory. However, the relative degree of safety is not as high as
for issues designated A-1.

MOODY'S INVESTORS SERVICE COMMERCIAL PAPER RATINGS

P-1--Issuers rated PRIME-1 (or related supporting institutions) have a
superior capacity for repayment of short-term promissory obligations.
PRIME-1 repayment capacity will normally be evidenced by the following
characteristics: Leading market positions in well established
industries; high rates of return on funds employed; conservative
capitalization structures with moderate reliance on debt and ample
asset protection; broad margins in earning coverage of fixed financial
charges and high internal cash generation; and well established access
to a range of financial markets and assured sources of alternate
liquidity.

P-2--Issuers rated PRIME-2 (or related supporting institutions) have a
strong capacity for repayment of short-term promissory obligations.
This will normally be evidenced by many of the characteristics cited
above, but to a lesser degree. Earnings trends and coverage ratios,
while sound, will be more subject to variation. Capitalization
characteristics, while still appropriate, may be more affected by
external conditions. Ample alternate liquidity is maintained.

INDEPENDENCE ONE U.S. GOVERNMENT SECURITIES FUND
INDEPENDENCE ONE FIXED INCOME FUND
INDEPENDENCE ONE MICHIGAN MUNICIPAL BOND FUND
(PORTFOLIOS OF INDEPENDENCE ONE MUTUAL FUNDS)

PROSPECTUS

Independence One U.S. Government Securities Fund;

Independence One Fixed Income Fund; and

Independence One Michigan Municipal Bond Fund.

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

The Funds have also filed a Statement of Additional Information, dated
June 30, 1997, with the Securities and Exchange Commission ("SEC").
The information contained in the Statement is incorporated by
reference into this prospectus. You may request a copy of the
Statement by calling toll-free 1-800-334-2292. To obtain other
information, or make inquiries about the Trust, contact the Trust at
the address listed in the back of this prospectus.

Prospectus dated June 30, 1997

TABLE OF CONTENTS

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

SYNOPSIS 1

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

SUMMARY OF FUND EXPENSES 3

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

FINANCIAL HIGHLIGHTS 4

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

INVESTMENT INFORMATION 7

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

Investment Objective of Each Fund 7
Government Securities Fund 7
Fixed Income Fund 8
Michigan Municipal Bond Fund 14

PORTFOLIO INVESTMENTS AND STRATEGIES 18

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

Investment Limitations 19

INDEPENDENCE ONE MUTUAL FUNDS

INFORMATION 19

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

Management of the Trust 19
Distribution of Fund Shares 21
Administration of the Fund 21

NET ASSET VALUE 21

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

INVESTING IN THE FUNDS 22

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

Share Purchases 22
Minimum Investment Required 22

What Shares Cost 22
Certificates and Confirmations 23
Dividends and Capital Gains 23
Systematic Investment Program 23
Exchanging Securities for Fund Shares 23

EXCHANGE PRIVILEGE 24

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

REDEEMING SHARES 25

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

Systematic Withdrawal Program 27
Accounts with Low Balances 27

SHAREHOLDER INFORMATION 27

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

Voting Rights 27

EFFECT OF BANKING LAWS 28

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

TAX INFORMATION 28

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

Federal Income Tax 28
Michigan Municipal Bond Fund Tax

Considerations 28

PERFORMANCE INFORMATION 30

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

ADDRESSES Back Cover

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

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

The following three Funds are offered in this prospectus:

Independence One U.S. Government Securities Fund ("Government
Securities Fund") seeks to provide high current income. In
pursuing this objective, the Government Securities Fund's
portfolio will also be managed in an effort to seek total
return. The Government Securities Fund invests only in U.S.
government securities which are either issued or guaranteed by
the U.S. government, its agencies or instrumentalities.

Independence One Fixed Income Fund ("Fixed Income Fund") seeks
to provide total return by investing primarily in a diversified
portfolio of high-grade fixed income securities.

Independence One Michigan Municipal Bond Fund ("Michigan
Municipal Bond Fund") seeks to provide current income exempt
from federal regular income tax and the personal income taxes
imposed by the State of Michigan and Michigan municipalities.
The municipal securities in which Michigan Municipal Bond Fund
invests primarily include those issued by or on behalf of the
State of Michigan and Michigan municipalities, as well as those
issued by other states, territories and possessions of the
United States which are exempt from federal regular income tax
and the personal income taxes of the State of Michigan and
Michigan municipalities ("Michigan Municipal Securities"). In
addition, Michigan Municipal Bond Fund intends to qualify as an
investment substantially exempt from the Michigan intangibles
tax.

Shares of the Funds are intended to be sold as an investment vehicle for
institutions, corporations, fiduciaries and individuals. For information on how
to purchase shares of the Funds, please refer to "Investing in the Funds." A
minimum initial investment of $1,000 is required for each Fund. Subsequent
investments must be in the amount of at least $100. See "Minimum Investment
Required."

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

Michigan National Bank is the investment adviser (the "Adviser") to
the Funds and receives compensation for its services. Independence One
Capital Management Corporation serves as sub-adviser to Government
Securities Fund.

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

INDEPENDENCE ONE MUTUAL FUNDS
SUMMARY OF FUND EXPENSES

- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>

MICHIGAN

GOVERNMENT FIXED INCOME MUNICIPAL
SECURITIES FUND FUND BOND FUND

<S> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES

Maximum Sales Charge Imposed on Purchases

(as a percentage of offering price)................................ None None None
Maximum Sales Charge Imposed on Reinvested Dividends

(as a percentage of offering price)................................ None None None
Contingent Deferred Sales Charge (as a percentage of original
purchase price or redemption proceeds, as applicable).............. None None None
Redemption Fee (as a percentage of amount redeemed,
if applicable)..................................................... None None None
Exchange Fee......................................................... None None None

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

<S> <C> <C> <C>
Management Fees (after waiver) (1)................................... 0.25% 0.25% 0.00%
12b-1 Fees........................................................... None None None
Total Other Expenses (after waiver) (2).............................. 0.33% 0.31% 0.64%
Total Fund Operating Expenses (after waivers) (3)............ 0.58% 0.56% 0.64%
</TABLE>

(1)The management fees for Government Securities Fund, Fixed Income
Fund and Michigan Municipal Bond Fund have been reduced to reflect
the anticipated voluntary waiver by the Adviser. The Adviser can
terminate this voluntary waiver at any time at its sole
discretion. The maximum management fee for Government Securities
Fund is 0.70%. The maximum management fee for the Fixed Income
Fund and Michigan Municipal Bond Fund is 0.75%.

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

(3) The Total Fund Operating Expenses in the table above for
Government Securities Fund, Fixed Income Fund and Michigan
Municipal Bond Fund are based on expenses expected to be incurred
during the fiscal year ending April 30, 1998, and are expected to
be 1.03%, 1.06% and 1.48%, respectively, absent the voluntary
waivers described in Notes 1 and 2 above. During the course of
this period, expenses may be more or less than the amounts shown.
The Total Fund Operating Expenses for Government Securities Fund,
Fixed Income Fund and Michigan Municipal Bond Fund for the fiscal
year ended April 30, 1997 were 0.57%, 0.55% and 0.70%,
respectively. The Total Fund Operating Expenses for Government
Securities Fund and Fixed Income Fund for the fiscal year ended
April 30, 1997 were 1.02% and 1.05%, respectively, absent the
voluntary waiver of the management fee. The Total Fund Operating
Expenses for Michigan Municipal Bond Fund for the fiscal year
ended April 30, 1997 were 1.64% absent the voluntary waivers of
the management fee and administrative fee. THE PURPOSE OF THIS
TABLE IS TO ASSIST AN INVESTOR IN UNDERSTANDING THE

VARIOUS COSTS AND EXPENSES THAT A SHAREHOLDER OF THE FUNDS WILL BEAR, EITHER
DIRECTLY OR INDIRECTLY. FOR MORE COMPLETE DESCRIPTIONS OF THE VARIOUS COSTS AND

EXPENSES, SEE "INVESTING IN THE FUNDS."
<TABLE>

EXAMPLE

You would pay the following expenses on a $1,000 investment assuming
(1) 5% annual return and (2) redemption at the end of each time
period.

MICHIGAN

GOVERNMENT FIXED INCOME MUNICIPAL
SECURITIES FUND FUND BOND FUND

<S> <C> <C> <C>
1 Year............................................................. $6 $6 $7
3 Years............................................................ $19 $18 $20
5 Years............................................................ $32 $31 $36
10 Years........................................................... $73 $70 $80
</TABLE>

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

INDEPENDENCE ONE U.S. GOVERNMENT SECURITIES FUND
FINANCIAL HIGHLIGHTS

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

YEAR ENDED APRIL 30,

<S> <C> <C> <C> <C> <C>
1997 1996 1995 1994 1993(A)

NET ASSET VALUE, BEGINNING OF PERIOD $ 9.98 $ 9.79 $ 9.84 $ 10.31 $ 10.00
- ------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS

- ------------------------------------------------------------
Net investment income 0.59 0.59 0.60 0.55 0.33
- ------------------------------------------------------------
Net realized and unrealized gain (loss) on investments 0.01 0.19 (0.05) (0.47) 0.31
- ------------------------------------------------------------ --------- --------- --------- --------- -----------
Total from investment operations 0.60 0.78 0.55 0.08 0.64
- ------------------------------------------------------------ --------- --------- --------- --------- -----------
LESS DISTRIBUTIONS

- ------------------------------------------------------------
Distributions from net investment income (0.59) (0.59) (0.60) (0.55) (0.33)
- ------------------------------------------------------------
Distributions from net realized gain on investments (0.01) -- -- -- --
- ------------------------------------------------------------ --------- --------- --------- --------- -----------
Total distributions (0.60) (0.59) (0.60) (0.55) (0.33)
- ------------------------------------------------------------ --------- --------- --------- --------- -----------
NET ASSET VALUE, END OF PERIOD $ 9.98 $ 9.98 $ 9.79 $ 9.84 $ 10.31
- ------------------------------------------------------------ --------- --------- --------- --------- -----------
TOTAL RETURN (B) 6.15% 7.97% 5.90% 0.66% 4.61%
- ------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS

- ------------------------------------------------------------
Expenses 0.57% 0.40% 0.35% 0.31% 0.17%*
- ------------------------------------------------------------
Net investment income 5.82% 5.85% 6.23% 5.32% 5.59%*
- ------------------------------------------------------------
Expense waiver (c) 0.45% 0.66% 0.70% 0.70% 0.83%*
- ------------------------------------------------------------
SUPPLEMENTAL DATA

- ------------------------------------------------------------
Net assets, end of period (000 omitted)

$71,883
$72,291

$62,514
$72,866

$87,704

- ------------------------------------------------------------
Portfolio turnover 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.

Further information about Government Securities Fund's performance is contained

in the Combined Annual Report for the fiscal year ended April 30,
1997, which can be obtained free of charge.

INDEPENDENCE ONE FIXED INCOME FUND
FINANCIAL HIGHLIGHTS

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

YEAR ENDED

APRIL 30,

<S> <C> <C>
1997 1996(A)

NET ASSET VALUE, BEGINNING OF PERIOD $ 9.82 $ 10.00
- --------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS

- --------------------------------------------------------------------------------------------
Net investment income 0.57 0.30
- --------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments (0.02) (0.18)
- -------------------------------------------------------------------------------------------- --------- -----------
Total from investment operations 0.55 0.12
- -------------------------------------------------------------------------------------------- --------- -----------
LESS DISTRIBUTIONS

- --------------------------------------------------------------------------------------------
Distributions from net investment income (0.57) (0.30)
- --------------------------------------------------------------------------------------------
Distributions from net realized gain on investments (0.00 (b) --
- -------------------------------------------------------------------------------------------- --------- -----------
Total distributions (0.57) (0.30)
- -------------------------------------------------------------------------------------------- --------- -----------
NET ASSET VALUE, END OF PERIOD $ 9.80 $ 9.82
- -------------------------------------------------------------------------------------------- --------- -----------
TOTAL RETURN (C) 5.79% 1.15%
- --------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS

- --------------------------------------------------------------------------------------------
Expenses 0.55% 0.54%*
- --------------------------------------------------------------------------------------------
Net investment income 5.83% 5.73%*
- --------------------------------------------------------------------------------------------
Expense waiver (d) 0.50% 0.61%*
- --------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA

- --------------------------------------------------------------------------------------------
Net assets, end of period (000 omitted) $70,884 $62,256
- --------------------------------------------------------------------------------------------
Portfolio turnover 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.

(d) This voluntary expense decrease is reflected in both the expense
and net investment income ratios shown above.

Further information about the Fixed Income Fund's performance is contained in

the Combined Annual Report for the fiscal year ended April 30, 1997,
which can be obtained free of charge.

INDEPENDENCE ONE MICHIGAN MUNICIPAL BOND FUND
FINANCIAL HIGHLIGHTS

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

YEAR ENDED

APRIL 30,

<S> <C> <C>
1997 1996(A)

NET ASSET VALUE, BEGINNING OF PERIOD $ 9.95 $ 10.00
- --------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS

- --------------------------------------------------------------------------------------------
Net investment income 0.41 0.17
- --------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments 0.04 (0.05)
- -------------------------------------------------------------------------------------------- --------- -----------
Total from investment operations 0.45 0.12
- -------------------------------------------------------------------------------------------- --------- -----------
LESS DISTRIBUTIONS

- --------------------------------------------------------------------------------------------
Distributions from net investment income (0.41) (0.17)
- --------------------------------------------------------------------------------------------
Distributions from net realized gain on investments 0.00(b) --
- -------------------------------------------------------------------------------------------- --------- -----------
Total distributions (0.41) (0.17)
- -------------------------------------------------------------------------------------------- --------- -----------
NET ASSET VALUE, END OF PERIOD $ 9.99 $ 9.95
- -------------------------------------------------------------------------------------------- --------- -----------
TOTAL RETURN (C) 4.62% 1.21%
- --------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS

- --------------------------------------------------------------------------------------------
Expenses 0.70% 0.57%*
- --------------------------------------------------------------------------------------------
Net investment income 4.12% 3.83%*
- --------------------------------------------------------------------------------------------
Expense waiver (d) 0.94% 0.76%*
- --------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA

- --------------------------------------------------------------------------------------------
Net assets, end of period (000 omitted) $23,483 $25,123
- --------------------------------------------------------------------------------------------
Portfolio turnover 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 is less than one cent
per share.

(d) This voluntary expense decrease is reflected in both the expense
and net investment income ratios shown above.

Further information about the Michigan Municipal Bond Fund's
performance is contained in the Combined Annual Report for the fiscal
year ended April 30, 1997, which can be obtained free of charge.

INVESTMENT INFORMATION

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

INVESTMENT OBJECTIVE OF EACH FUND

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

GOVERNMENT SECURITIES FUND

INVESTMENT OBJECTIVE AND POLICIES. The investment objective of the
Fund is to seek high current income. As a matter of investment policy,
the Fund's portfolio will also be managed in an effort to seek total
return.

ACCEPTABLE INVESTMENTS. The Fund invests in U.S. government securities which
are either issued or guaranteed by the U.S. government, its agencies or
instrumentalities. These securities include, but are not limited to:

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

notes, bonds and discount notes issued or guaranteed by U.S. government
agencies and instrumentalities supported by the full faith and credit of
the United States;

notes, bonds and discount notes of U.S. government agencies or
instrumentalities which receive or have access to federal funding; and

notes, bonds and discount notes of other U.S. government
instrumentalities supported only by the credit of the instrumentalities.

Some obligations issued or guaranteed by agencies or instrumentalities of the
U.S. government are backed by the full faith and credit of the U.S. Treasury. No
assurances can be given that the U.S. government will provide financial support
to other agencies or instrumentalities, since it is not obligated to do so.

These agencies and instrumentalities are supported by:

the issuer's right to borrow an amount limited to a specific line of
credit from the U.S. Treasury;

the discretionary authority of the U.S. government to purchase certain
obligations of an agency or instrumentality; or

the credit of the agency or instrumentality.

As discussed above, U.S. government securities are subject to varying
levels of backing as to payment of principal and interest by the
United States. Of course, this does not mean that the Fund itself, or
the value of its shares, is guaranteed. As with all debt securities,
prices of U.S. government securities move inversely to interest rates.
A decline in market interest rates results in a rise in the market
prices of outstanding U.S. government or other debt securities.
Conversely, an increase in market interest rates results in a decline
in market prices. In either case, the amount of change in market
prices of U.S. government or other debt securities in response to
changes in market interest rates generally depends on the duration of
the securities; the securities with the highest duration will
experience the greatest market price changes. As noted above, the Fund
will be managed with a view toward minimizing decreases in the value
of the Fund's shares. See the discussion of "Risks" under "Portfolio
Investments and Strategies."

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

FIXED INCOME FUND

INVESTMENT OBJECTIVE AND POLICIES. The investment objective of the
Fund is to seek total return. Total return consists of income and
capital gains. The Fund pursues its investment objective by investing
primarily in a diversified portfolio of high-grade fixed income
securities that, at the time of purchase, are rated A or higher by
Moody's Investors Service, Inc. ("Moody's"), Standard & Poor's Ratings
Group ("S&P"), or Fitch Investors Service, Inc. ("Fitch") or which, if
unrated, are deemed to be of comparable quality to securities with
such ratings, as determined by the Adviser.

In pursuing its investment objective, the Fund will attempt to deliver
share price and/or income performance in excess of the bond market in
general as measured by such broad indices as the Lehman Brothers
Intermediate Government/Corporate Bond Index. The Fund presently
expects to maintain an average dollar-weighted maturity of between 3
and 8 years, although securities of longer or shorter maturities may
be purchased. The Fund will invest, under normal circumstances, at
least 65% of the value of its total assets in fixed income securities.

The Adviser will use a multi-disciplined management approach which
combines judgments about the interest rate environment with other
active management techniques, such as emphasizing or de-emphasizing
particular industry groups, in selecting the Fund's investments. Fixed
income securities will be purchased for the Fund based on the
Adviser's expectations regarding general market interest rate trends
and the impact such trends would have on the total return of the fixed
income securities. As a secondary consideration, the Adviser will
attempt to reduce loss of principal relative to the fixed income
markets. However, the primary consideration will be total return.

The Adviser attempts to manage the Fund's total performance, which
includes both changes in principal value of the Fund's portfolio and
interest income earned, to anticipate the opportunities and risks of
changes in market interest rates. The Adviser does not select
securities purely to maximize the current yield of the Fund. When the
Adviser expects that market interest rates may decline, which would
cause prices of outstanding debt obligations to rise, it generally
extends the average maturity of the Fund's portfolio. When, in the
Adviser's judgment, market interest rates may rise, which would cause
market prices of outstanding debt obligations to decline, it generally
shortens the average maturity of the Fund's portfolio. The amount of
change in market prices of

debt obligations in response to changes in market interest rates
generally depends on the maturity of the debt obligations; as noted
below under "Portfolio Investments and Strategies," "Risks," the debt
obligations with the longest maturities will generally experience the
greatest market price changes. The Adviser also attempts to improve
the Fund's total return by weighing the relative value of fixed income
securities issues having similar maturities in selecting portfolio
securities. By actively managing the Fund's portfolio in this manner,
the Adviser seeks to provide capital appreciation during periods of
falling interest rates and protection against capital depreciation
during periods of rising rates.

ACCEPTABLE INVESTMENTS. The Fund invests primarily in a professionally-managed,
diversified portfolio of fixed income securities which include:

domestic issues of corporate debt obligations, including demand
master notes, rated at the time of purchase Aaa, Aa, or A by
Moody's, AAA, AA, or A by S&P or by Fitch or, if unrated, of
comparable quality as determined by the Adviser;

obligations issued or guaranteed by the U.S. government, its agencies or
instrumentalities, as described above under "Government Securities Fund";

asset-backed securities, including mortgage-backed securities;

repurchase agreements collateralized by high quality, liquid investments;

and

money market instruments.

If a security loses its rating or has its rating reduced after the
Fund has purchased it, the Fund is not required to sell or otherwise
dispose of the security, but may consider doing so. A description of
the ratings categories is contained in the Appendix to the Statement
of Additional Information.

The Fund may also borrow money, lend portfolio securities, and invest
in restricted and illiquid securities, convertible securities and
securities of other investment companies. The Fund may engage in
repurchase agreements, reverse repurchase agreements, when-issued and
delayed delivery transactions, put and call options, futures, and
options on futures. See "Portfolio Investments and Strategies."

CORPORATE DEBT OBLIGATIONS. The Fund invests in corporate debt
obligations, including corporate bonds, notes, and debentures, which
may have floating or fixed rates of interest.

FIXED RATE CORPORATE DEBT OBLIGATIONS. The Fund may invest in
fixed rate securities, including fixed rate securities with
short-term characteristics. Fixed rate securities with short-term
characteristics are long-term debt obligations but are treated in
the market as having short maturities because call features of
the securities may make them callable within a short period of
time. A fixed rate security with short-term characteristics would
include a fixed income security priced close to the call or
redemption price or a fixed income security approaching maturity,
where the expectation of call or redemption is high.

Fixed rate securities tend to exhibit more price volatility
during times of rising or falling interest rates than securities
with floating rates of interest. This is because floating rate
securities, as described below, may behave more like short-term
instruments in that the rate of interest they pay is subject to
periodic adjustments based on a designated interest rate index.
Fixed rate securities pay a fixed rate of interest and are more
sensitive to fluctuating interest

rates. In periods of rising interest rates the value of a fixed
rate security is likely to fall. Fixed rate securities with
short-term characteristics are not subject to the same price
volatility as fixed rate securities without such characteristics.
Therefore, they behave more like floating rate securities with
respect to price volatility.

FLOATING RATE CORPORATE DEBT OBLIGATIONS. The Fund may invest in
floating rate corporate debt obligations. Floating rate
securities are generally offered at an initial interest rate
which is at or above prevailing market rates. The interest rate
paid on these securities is then reset periodically (commonly
every 90 days) to an increment over some predetermined interest
rate index. Commonly utilized indices include the three-month
Treasury bill rate, the six-month Treasury bill rate, the
one-month or three-month London Interbank Offered Rate (LIBOR),
the prime rate of a bank, the commercial paper rates, or the
longer-term rates on U.S. Treasury securities.

DEMAND MASTER NOTES. The Fund may invest in variable amount demand
master notes. Demand notes are short-term borrowing arrangements
between a corporation or government agency and an institutional lender
(such as the Fund) payable upon demand by either party. The notice
period for demand typically ranges from one to seven days, and the
party may demand full or partial payment. Many master notes give the
Fund the option of increasing or decreasing the principal amount of
the master note on a daily or weekly basis within certain limits.
Demand master notes usually provide for floating or variable rates of
interest.

CONVERTIBLE SECURITIES. Convertible securities are fixed income
securities that may be exchanged or converted into a predetermined
number of the issuer's underlying common stock at the option of the
holder during a specified time period. Convertible securities may take
the form of convertible preferred stock, convertible bonds or
debentures, units consisting of "usable" bonds and warrants, or a
combination of the features of several of these securities. The
investment characteristics of each convertible security vary widely,
which allows convertible securities to be employed for different
investment objectives.

Convertible securities generally retain the investment characteristics
of fixed income securities until they have been converted, but also
react to movements in the underlying equity securities. The holder is
entitled to receive the fixed income of a bond or the dividend
preference of a preferred stock until the holder elects to exercise
the conversion privilege. Usable bonds are corporate bonds that can be
used in whole or in part, customarily at full face value, in lieu of
cash to purchase the issuer's common stock. When owned as part of a
unit along with warrants, which are options to buy the common stock,
they function as convertible bonds, except that the warrants generally
will expire before the bond's maturity. Convertible securities are
senior to equity securities and, therefore, have a claim to assets of
the corporation prior to the holders of common stock in the case of
liquidation. However, convertible securities are generally
subordinated to similar nonconvertible securities of the same company.
The interest income and dividends from convertible bonds and preferred
stocks provide a stable stream of income with generally higher yields
than common stocks, but lower than non-convertible securities of
similar quality.

The Fund will exchange or convert the convertible securities held in
its portfolio into shares of the underlying common stock in instances
in which, in the Adviser's opinion, the investment characteristics of
the underlying common shares will assist the Fund in achieving its
investment objective. Otherwise, the Fund will hold or trade the
convertible securities. In selecting convertible securities for the
Fund, the Adviser evaluates the investment characteristics of the
convertible security as a fixed income instrument, and the investment
potential of the underlying equity security for capital appreciation.
In evaluating these matters with respect to a particular convertible
security, the Adviser considers numerous factors, including the
economic and political outlook, the value of the security relative to
other investment alternatives, trends in the determination of the
issuer's profits, and the issuer's management capability and
practices.

ZERO COUPON CONVERTIBLE SECURITIES. Zero coupon convertible securities
are debt securities which are issued at a discount to their face
amount and do not entitle the holder to any periodic payments of
interest prior to maturity. Rather, interest earned on zero coupon
convertible securities accretes at a stated yield until the security
reaches its face amount at maturity. Zero coupon convertible
securities are convertible into a specific number of shares of the
issuer's common stock. In addition, zero coupon convertible securities
usually have features that provide the holder with the opportunity to
put the bonds back to the issuer at a stated price before maturity.
Generally, the prices of zero coupon convertible securities may be
more sensitive to market interest rate fluctuations than conventional
convertible securities. Additionally, federal tax law requires that
interest on zero coupon bonds be reported as income to the Fund even
though the Fund received no cash interest until the maturity or
payment date of such securities.

MORTGAGE-BACKED SECURITIES. Mortgage-backed securities are securities
that directly or indirectly represent a participation in, or are
secured by and payable from, mortgage loans on real property. There
are currently three basic types of mortgage-backed securities: (i)
those issued or guaranteed by the U.S. government or one of its
agencies or instrumentalities, such as the Government National
Mortgage Association ("Ginnie Mae"), the Federal National Mortgage
Association ("Fannie Mae") and the Federal Home Loan Mortgage
Corporation ("Freddie Mac"); (ii) those issued by private issuers that
represent an interest in or are collateralized by mortgage-backed
securities issued or guaranteed by the U.S. government or one of its
agencies or instrumentalities; and (iii) those issued by private
issuers that represent an interest in or are collateralized by whole
loans or mortgage-backed securities without a government guarantee but
usually having some form of private credit enhancement.

ADJUSTABLE RATE MORTGAGE SECURITIES. Adjustable rate mortgage
securities ("ARMS") are pass-through mortgage securities
representing interests in adjustable rather than fixed interest
rate mortgages. The ARMS in which the Fund invests are issued by
Ginnie Mae, Fannie Mae or Freddie Mac, and are actively traded.
The underlying mortgages which collateralize ARMS issued by
Ginnie Mae are fully guaranteed by the Federal Housing
Administration or Veterans Administration, while those
collateralizing ARMS issued by Fannie Mae or Freddie Mac are
typically conventional residential mortgages conforming to strict
underwriting size and maturity constraints.

COLLATERALIZED MORTGAGE OBLIGATIONS. Collateralized mortgage
obligations ("CMOs") are debt obligations collateralized by
mortgage loans or mortgage pass-through securities. Typically,
CMOs are collateralized by Ginnie Mae, Fannie Mae or Freddie Mac
Certificates, but may be collateralized by whole loans or private
pass-through securities.

The Fund will only invest in CMOs which, at the time of purchase,
are rated AAA by a nationally recognized statistical rating
organization ("NRSRO") or are of comparable quality as determined
by the Adviser, and which may be: (a) collateralized by pools of
mortgages in which each mortgage is guaranteed as to payment of
principal and interest by an agency or instrumentality of the
U.S. government; (b) collateralized by pools of mortgages in
which payment of principal and interest is guaranteed by the
issuer and such guarantee is collateralized by U.S. government
securities; or (c) collateralized by pools of mortgages without a
government guarantee as to payment of principal and interest, but
which have some form of credit enhancement.

REAL ESTATE MORTGAGE INVESTMENT CONDUITS. Real estate mortgage
investment conduits ("REMICs") are offerings of multiple class
real estate mortgage-backed securities which qualify and elect
treatment as such under provisions of the Internal Revenue Code.
Issuers of REMICs may take several forms, such as trusts,
partnerships, corporations, associations, or segregated pools of
mortgages. Once REMIC status is elected and obtained, the entity
is not subject to federal income taxation. Instead, income is
passed through the entity and is taxed to the person or persons
who hold interests in the REMIC. A REMIC interest must consist of
one or more classes of "regular interests." To qualify as a
REMIC, substantially all the assets of the entity must be in
assets directly or indirectly secured principally by real
property.

ASSET-BACKED SECURITIES. Asset-backed securities have structural
characteristics similar to mortgage-backed securities but have
underlying assets that are not mortgage loans or interests in mortgage
loans. The Fund may invest in asset-backed securities which, at the
time of purchase, are rated A or higher by an NRSRO including, but not
limited to, interests in pools of receivables, such as motor vehicle
installment purchase obligations and credit card receivables. These
securities may be in the form of pass-through instruments or
asset-backed bonds. The securities are issued by non-governmental
entities and carry no direct or indirect government guarantee.

RISKS OF MORTGAGE-BACKED AND ASSET-BACKED SECURITIES. Mortgage-backed
and asset-backed securities generally pay back principal and interest
over the life of the security. At the time the Fund reinvests the
payments and any unscheduled prepayments of principal received, the
Fund may receive a rate of interest which is actually lower than the
rate of interest paid on these securities ("prepayment risks").
Mortgage-backed and asset-backed securities are subject to higher
prepayment risks than most other types of debt instruments with
prepayment risks because the underlying mortgage loans or the
collateral supporting asset-backed securities may be prepaid without
penalty or premium. Prepayment risks on mortgage-backed securities
tend to increase during periods of declining mortgage interest rates
because many borrowers refinance their mortgages to take advantage of
the more favorable rates. Prepayments on mortgage-backed securities
are also affected by other factors, such as the frequency with which
people sell their homes or elect to make unscheduled payments on their
mortgages. Prepayments may result in a capital loss to the Fund to the
extent that the prepaid securities were purchased at a market premium
over their stated principal amount. Conversely, the prepayment of a
security purchased at a market discount from its stated principal
amount will accelerate the recognition of interest income by the Fund,
which would be taxed as ordinary income when distributed to the
shareholders. Although asset-backed securities generally are less
likely to experience substantial prepayments than are mortgage-backed
securities, certain of the factors that affect the rate of prepayments
on mortgage-backed securities also affect the rate of prepayments on
asset-backed securities.

Asset-backed securities present certain risks that are not presented
by mortgage-backed securities. Primarily, these securities do not have
the benefit of the same security interest in the related collateral.
Credit card receivables are generally unsecured and the debtors are
entitled to the protection of a number of state and federal consumer
credit laws, many of which give such debtors the right to set off
certain amounts owed on the credit cards, thereby reducing the balance
due. Most issuers of asset-backed securities backed by motor vehicle
installment purchase obligations permit the servicer of such
receivables to retain possession of the underlying obligations. If the
servicer sells these obligations to another party, there is a risk
that the purchaser would acquire an interest superior to that of the
holders of the related asset-backed securities. Further, if a vehicle
is registered in one state and is then reregistered because the owner
and obligor moves to another state, such reregistration could defeat
the original security interest in the vehicle in certain cases. In
addition, because of the large number of vehicles involved in a
typical issuance and technical requirements under state laws, the
trustee for the holders of asset-backed securities backed by
automobile receivables may not have a proper security interest in all
of the obligations backing such receivables. Therefore, there is the
possibility that recoveries on repossessed collateral may not, in some
cases, be available to support payments on these securities.

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

LENDING OF PORTFOLIO SECURITIES. In order to generate additional
income, the Fund may lend portfolio securities on a short-term or
long-term basis, or both, to broker/dealers, banks, or other
institutional borrowers of securities. The Fund will only enter into
loan arrangements with broker/dealers, banks, or other institutions
which the Adviser has determined are creditworthy and will receive
collateral in the form of cash or U.S. government securities equal to
at least 102% of the value of the securities loaned.

There is the risk that when lending portfolio securities, the
securities may not be available to the Fund on a timely basis and the
Fund may, therefore, lose the opportunity to sell the securities at a
desirable price. In addition, in the event that a borrower of
securities would file for bankruptcy or become insolvent, disposition
of the securities may be delayed pending court action.

OTHER INVESTMENT TECHNIQUES. The Fund may purchase and sell financial
futures contracts and related options. In addition, the Fund may
purchase put options on its portfolio securities. These options will
be used as a hedge to attempt to protect securities which the Fund
holds against decreases in value. The Fund may also write covered call
options on all or any portion of its portfolio to generate income for
the Fund. The Fund will write call options on securities either held
in its portfolio or which it has the right to obtain without payment
of further consideration or for which it has segregated cash or U.S.
government securities in the amount of any additional consideration.

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

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

MICHIGAN MUNICIPAL BOND FUND

INVESTMENT OBJECTIVE AND POLICIES. The investment objective of the
Fund is to provide current income which is exempt from federal regular
income tax and the personal income taxes imposed by the State of
Michigan and Michigan municipalities. Interest income of the Fund that
is exempt from the income taxes described above retains its exempt
status when distributed to the Fund's shareholders. However, income
distributed by the Fund may not necessarily be exempt from state or
municipal taxes in states other than Michigan. In addition, the Fund
intends to qualify as an investment substantially exempt from the
Michigan Intangibles Personal Property tax ("Intangibles tax").
(Federal regular income tax does not include the individual
alternative minimum tax or the federal alternative minimum tax for
corporations.) The Fund is not likely to be a suitable investment for
non-Michigan taxpayers or retirement plans since Michigan Municipal
Securities are not likely to produce competitive after-tax yields for
such persons and entities when compared to other investments.

As a matter of fundamental investment policy which may not be changed
without shareholder approval, the Fund will invest its assets so that,
under normal circumstances, at least 80% of its total assets are
invested in Michigan Municipal Securities, as previously defined.

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

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

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

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

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

The prices of fixed income securities fluctuate inversely to the direction of
interest rates. See the discussion "Risks" under "Portfolio Investments and
Strategies."

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

VARIABLE RATE MUNICIPAL SECURITIES. Some of the Michigan Municipal
Securities which the Fund purchases may have variable interest rates.
Variable interest rates are ordinarily based on a published interest
rate, interest rate index, or a similar standard, such as the 91-day
U.S. Treasury bill rate. Many variable rate municipal securities are
subject to payment of principal on demand by the Fund in not more than
seven days. All variable rate municipal securities will meet the
quality standards for the Fund. The Adviser has been instructed by the
Trustees to monitor the pricing, quality, and liquidity of the
variable rate municipal securities, including participation interests
held by the Fund on the basis of published financial information and
reports of the rating agencies and other analytical services.

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

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

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

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

In addition, Michigan Municipal Bond Fund may engage in when-issued and delayed
delivery transactions, restricted and illiquid securities, and securities of
other investment companies. See "Portfolio Investment and Strategies."

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

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

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

The Michigan economy continues to be among the most cyclical of
states, remaining heavily dependent on domestic auto production and
durable goods consumption. Michigan's efforts to diversify its economy
have seen success as reflected by the fact that the share of
employment in the durable goods sector was 15.8% in 1996. During 1996,
unemployment averaged 4.9%, below the national level of 5.4%.

Michigan's finances were hard hit during the 1990 and 1991 fiscal
periods. Spending cuts and an improving state economy enabled the
state to begin to restore balances in fiscal 1993. As a result of
continuing surplus funds in fiscal years 1993 and 1994, Michigan's
budget stabilization fund reached an historically high level of $780
million at the end of fiscal 1994 and was $1.15 billion at the end of
September 1996.

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

NON-DIVERSIFICATION. The Fund is a non-diversified investment
portfolio. As such, there is no limit on the percentage of assets
which can be invested in any single issuer. An investment in the Fund,
therefore, will entail greater risk than would exist in a diversified
portfolio of securities because the higher percentage of investments
among fewer issuers may result in greater fluctuation in the total
market value of the Fund's portfolio. Any economic, political, or
regulatory developments affecting the value of the securities in the
Fund's portfolio will have a greater impact on the total value of the
portfolio than would be the case if the portfolio were diversified
among more issuers.

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

PORTFOLIO INVESTMENTS AND STRATEGIES

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REPURCHASE AGREEMENTS. Certain of the securities in which the Funds
invest may be purchased pursuant to repurchase agreements. Repurchase
agreements are arrangements in which banks, broker/dealers, and other
recognized financial institutions sell U.S. government securities or
other high-quality, liquid securities to the Funds and agree at the
time of sale to repurchase them at a mutually agreed upon time and
price. To the extent that the original seller does not repurchase the
securities from the Funds, the Funds could receive less than the
repurchase price on any sale of such securities. In the event that
such a defaulting seller filed for bankruptcy or became insolvent,
disposition of such securities by the Funds might be delayed pending
court action. The Funds believe that under regular procedures normally
in effect for custody of the Funds' portfolio securities subject to
repurchase agreements, a court of competent jurisdiction would rule in
favor of the Funds and allow retention or disposition of such
securities. The Funds will only enter into repurchase agreements with
banks and other recognized financial institutions such as
broker/dealers which are deemed by the Adviser to be creditworthy
pursuant to guidelines established by the Trustees.

RESTRICTED AND ILLIQUID SECURITIES. Each Fund may invest in illiquid
securities. The Fixed Income Fund and Michigan Municipal Bond Fund may
invest in restricted securities. Restricted securities are any
securities in which the Funds may otherwise invest pursuant to their
investment objectives and policies but which are subject to
restrictions on resale under federal securities laws. To the extent
these securities are not determined to be liquid, the Funds will limit
their purchase of these securities, together with other securities
considered to be illiquid, (including repurchase agreements providing
for settlement in more than seven days after notice, and, in the case
of Fixed Income Fund, over-the-counter options), to 15% of their
respective net assets.

INVESTING IN SECURITIES OF OTHER INVESTMENT COMPANIES. Fixed Income
Fund and Michigan Municipal Bond Fund can each acquire up to 3 per
centum of the total outstanding stock of other investment companies.
The Funds will not be subject to any other limitations with regard to
the acquisition of securities of other investment companies so long as
the public offering price of the Funds' shares does not include a
sales charge exceeding 1-1/2 percent. However, these limitations are
not applicable if the securities are acquired in a merger,
consolidation, reorganization, or acquisition of assets. It should be
noted that investment companies incur certain expenses, such as
investment advisory, custodian and transfer agent fees, and therefore,
any investment by the Funds in shares of another investment company
would be subject to such duplicate expenses.

RISKS. As noted above in the discussion of Government Securities Fund,
the market value of debt obligations (including U.S. government
securities) and, therefore, the Funds' net asset values, will
fluctuate due to changes in economic conditions and other market
factors such as interest rates which are beyond the control of the
Adviser. The Adviser could be incorrect in its expectations about the
direction or extent of these market factors. Although debt securities
with longer maturities offer potentially greater returns, they have
greater exposure to market price fluctuation. Consequently, to the
extent a Fund is significantly invested in debt securities with longer
maturities, there is a greater possibility of fluctuation in the
Fund's net asset value.

INVESTMENT LIMITATIONS

BORROWING MONEY. Government Securities Fund will not borrow money or
pledge securities except, under certain circumstances, the Fund may
borrow up to one-third of the value of its total assets and pledge up
to 10% of the value of its total assets to secure such borrowings.

Fixed Income Fund and Michigan Municipal Bond Fund will not borrow
money directly or through reverse repurchase agreements (arrangements
in which the Funds sell portfolio instruments for a percentage of
their cash value with an agreement to buy them back on a set date) or
pledge securities except, under certain circumstances, the Funds may
borrow up to one-third of the value of their respective total assets
and pledge securities to secure such borrowings.

DIVERSIFICATION. Fixed Income Fund will not, with respect to 75% of
the value of its total assets, invest more than 5% of the value of its
total assets in securities of one issuer (other than cash, cash items,
or securities issued or guaranteed by the government of the United
States or its agencies or instrumentalities, and repurchase agreements
collateralized by such securities), or acquire more than 10% of the
outstanding voting securities of any one issuer.

The above investment limitations cannot be changed without shareholder
approval.

INDEPENDENCE ONE MUTUAL FUNDS INFORMATION

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MANAGEMENT OF THE TRUST

ADVISORY FEES. The Adviser receives an annual investment advisory fee
equal to 0.70% with respect to Government Securities Fund, and 0.75%
with respect to Fixed Income Fund and Michigan Municipal Bond Fund, of
each Fund's average daily net assets. The Adviser may voluntarily
choose to waive a portion of its fee or reimburse certain expenses of
the Funds.

Independence One Capital Management Corporation ("IOCM"), a nationally
recognized investment advisory subsidiary of MNC, provides investment
advisory services for trust and other managed assets of the Funds.
IOCM serves as sub-adviser for Government Securities Fund.

Michigan National Bank has managed mutual funds since May 1989. IOCM
and the Trust Division of Michigan National Bank (the "Trust
Division") have managed custodial assets totaling $10.7 billion. Of
this amount, IOCM and the Trust Division have investment discretion
over $1.9 billion. The Trust Division has managed pools of commingled
funds since 1964.

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

SUB-ADVISER. With respect to Government Securities Fund, under the
terms of the sub-advisory contract between and among the Adviser and
IOCM, IOCM will assist the Adviser in the purchase or sale of the
Fund's portfolio instruments. IOCM will perform its duties at no cost
to the Adviser or the Fund.

PORTFOLIO MANAGERS. Bruce Beaumont is Vice President and Portfolio Manager
for Michigan National Bank and IOCM in Farmington Hills, and has been
responsible for management of Michigan Municipal Bond Fund's portfolio since
November 1995. Mr. Beaumont has been primarily responsible for management of
Government Securities Fund's portfolio since January 1995, previously having
assisted with those duties. He joined Michigan National Bank in 1987. He earned
his BA from Alma College and a MBA from Northwestern University. Mr. Beaumont
is a Chartered Financial Analyst and a Certified Public Accountant.

John B. Willard is Vice President and Portfolio Manager for Michigan
National Bank and IOCM in Farmington Hills, and has been responsible
for management of Fixed Income Fund's portfolio since November 1995.
He joined Michigan National Bank in 1986. He earned his BBA from the
University of Iowa and MBA from the University of Arizona.

DISTRIBUTION OF FUND SHARES

Corp. is a subsidiary of Federated Investors.

ADMINISTRATION OF THE FUNDS

MAXIMUM AVERAGE AGGREGATE DAILY
ADMINISTRATIVE FEE NET ASSETS OF THE TRUST

<C> <S>

.150% on the first $250 million
.125% on the next $250 million
.100% on the next $250 million
.075% on assets in excess of $750 million

</TABLE>

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

NET ASSET VALUE

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

INVESTING IN THE FUNDS

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SHARE PURCHASES

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

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

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

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

MINIMUM INVESTMENT REQUIRED

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

WHAT SHARES COST

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

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

CERTIFICATES AND CONFIRMATIONS

Share certificates are not issued unless shareholders so request by
contacting their Michigan National Bank or Independence One
representative or authorized broker in writing.

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

DIVIDENDS AND CAPITAL GAINS

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

SYSTEMATIC INVESTMENT PROGRAM

Once a Fund account has been opened, shareholders may add to their
investment on a regular basis in a minimum amount of $100. Under this
program, funds may be automatically withdrawn periodically from the
shareholder's checking account and invested in Fund shares at the net
asset value next determined after an order is received. A shareholder
may apply for participation in this program through Michigan National
Bank by calling 1-800-334-2292.

EXCHANGING SECURITIES FOR FUND SHARES

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

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

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

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

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

EXCHANGE PRIVILEGE

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

All shareholders of the Funds are shareholders of the Trust, which
consists of the following additional funds: Independence One Equity
Plus Fund; Independence One Michigan Municipal Cash Fund; Independence
One Prime Money Market Fund; and Independence One U.S. Treasury Money
Market Fund. Shareholders of the Funds have access to these funds
("participating funds") through an exchange program.

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

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

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

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

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

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

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

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

REDEEMING SHARES

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

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

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

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

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

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

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

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

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

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

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

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

The Funds do not accept signatures guaranteed by a notary public.

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

SYSTEMATIC WITHDRAWAL PROGRAM

Shareholders who desire to receive payments of a predetermined amount
may take advantage of the Systematic Withdrawal Program. Under this
program, shares of the Funds are redeemed to provide for periodic
withdrawal payments in an amount directed by the shareholder.
Depending upon the amount of the withdrawal payments, the amount of
the dividends paid and capital gains distributions with respect to
Fund shares, and the fluctuation of the net asset value of Fund shares
redeemed under this program, redemptions may reduce and eventually
deplete, the shareholder's investment in the Fund. For this reason,
payments under this program should not be considered as yield or
income on the shareholder's investment in the Fund. To be eligible to
participate in this program, a shareholder must have an account value
of at least $10,000, other than retirement accounts subject to
required minimum distributions. A shareholder may apply for
participation in this program through Michigan National Bank by
calling 1-800-334-2292.

ACCOUNTS WITH LOW BALANCES

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

SHAREHOLDER INFORMATION

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

VOTING RIGHTS

Each share of each Fund gives the shareholder one vote in Trustee
elections and other matters submitted to shareholders for vote. All
shares of all classes of each portfolio in the Trust have equal voting
rights, except that in matters affecting only a particular portfolio
or class, only shares of that portfolio or class are entitled to vote.
As a Massachusetts business trust, the Trust is not required to hold
annual shareholder meetings. Shareholder approval will be sought only
for certain changes in the Trust's or the Funds' operation and for the
election of Trustees under certain circumstances.

Trustees may be removed by the Trustees or by shareholders at a
special meeting. A special meeting of shareholders shall be called by
the Trustees upon the written request of shareholders owning at least
10% of the Trust's outstanding shares. As of June 9, 1997, Pierson &
Co., the nominee for Michigan National Bank, may for certain purposes
be deemed to control the Funds because it is owner of record of
certain shares of the Funds

EFFECT OF BANKING LAWS

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

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

TAX INFORMATION

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FEDERAL INCOME TAX

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

Unless otherwise exempt, shareholders of Government Securities Fund
and Fixed Income Fund are required to pay federal income tax on any
dividends and other distributions, including capital gains
distributions, received. This applies whether dividends and
distributions are received in cash or as additional shares.
Shareholders are urged to consult their own tax advisers regarding the
status of their accounts under state and local laws. Distributions
representing long-term capital gains, if any, will be taxable to
shareholders as long-term capital gains no matter how long the
shareholders have held their shares.

MICHIGAN MUNICIPAL BOND FUND TAX CONSIDERATIONS

Dividends of the Fund representing net interest income earned on some
temporary investments and any realized net short-term gains are taxed
as ordinary income. Distributions representing long-term capital
gains, if any, will be taxable to shareholders as long-term capital
gains no matter how long the shareholders have held their shares.

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

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

PERFORMANCE INFORMATION

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

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

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

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

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

Fixed Income Fund is the successor to the portfolio of a pooled fund
managed by the Adviser. At the Fund's commencement of operations, the
assets from the pooled fund were transferred to the Fund in exchange
for Fund shares. The Adviser has represented that the Fund's
investment objective, policies, and limitations are in all material
respects identical to those of the pooled fund.

The Fund's average annual total return for the fiscal year ended April
30, 1997 was 5.79%. The Fund's cumulative total return for the period
from January 3, 1995 (date of commencement of operations of the pooled
fund) to April 30, 1997 was 18.45%. The average annual total return
for the same period was 7.54%. The quoted performance data includes
the performance of the pooled fund for periods before the Fund's
registration statement became effective, as adjusted to reflect the
Fund's anticipated expenses as set forth in the "Summary of Fund
Expenses" section of its initial prospectus. The pooled fund was not
registered under the Investment Company Act of 1940 ("1940 Act") and
therefore was not subject to certain investment restrictions that are
imposed by the 1940 Act. If the pooled fund had been registered under
the 1940 Act, the performance may have been adversely affected.

INDEPENDENCE ONE
MUTUAL FUNDS

Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779

INVESTMENT ADVISER

Michigan National Bank

INVESTMENT SUB-ADVISER

(Government Securities Fund only)
Independence One Capital Management Corporation
27777 Inkster Road

Mail Code 10-52

Farmington Hills, Michigan 48333-9065

DISTRIBUTOR
Federated Securities Corp.
Federated Investors Tower

Pittsburgh, Pennsylvania 15222-3779

CUSTODIAN

Michigan National Bank
27777 Inkster Road

Mail Code 10-30

Farmington Hills, Michigan 48333-9065

TRANSFER AGENT AND DIVIDEND DISBURSING AGENT

Federated Shareholder Services Company
P.O. Box 8600
Boston, Massachusetts 02266-8600

INDEPENDENT AUDITORS

KPMG Peat Marwick LLP
One Mellon Bank Center

Pittsburgh, Pennsylvania 15219
Independence One

U.S. Government Securities
Fund

Fixed Income Fund
Michigan Municipal Bond

Fund

(Distributed by Federated Securities Corp.)

Prospectus dated
June 30, 1997

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[LOGO OF MICHIAGAN NATIONAL BANK INVESTMENT ADVISER]
[LOGO OF RECYCLED PAPER]

Cusip 453777864
Cusip 453777856
Cusip 453777807

G01285-02 (6/97)

INDEPENDENCE ONE U.S. GOVERNMENT SECURITIES FUND

INDEPENDENCE ONE FIXED INCOME FUND

INDEPENDENCE ONE MICHIGAN MUNICIPAL BOND FUND
(PORTFOLIOS OF INDEPENDENCE ONE MUTUAL FUNDS)

STATEMENT OF ADDITIONAL INFORMATION

This Statement of Additional Information should be read with
the prospectus of Independence One U.S. Government Securities
Fund, Independence One Fixed Income Fund and Independence One
Michigan Municipal Bond Fund (collectively, the "Funds" or
individually, the "Fund"), portfolios of Independence One
Mutual Funds (the "Trust") dated June 30, 1997. This Statement
is not a prospectus. You may request a copy of the prospectus
free of charge by calling 1-800-334-2292.

FEDERATED INVESTORS TOWER
PITTSBURGH, PENNSYLVANIA 15222-3779

Statement dated June 30, 1997

[GRAPHIC OMITTED]

Cusip 453777807
Cusip 453777864
Cusip 453777856
G01285 -03 (6/97)

<PAGE>

TABLE OF CONTENTS

GENERAL INFORMATION ABOUT THE FUNDS 1

INVESTMENT OBJECTIVE AND POLICIES OF THE FUNDS 1
Acceptable Investments 1
Fixed Income Fund 1
Privately Issued Mortgage-Related Securities 1
Resets of Interest Rates 2
Caps and Floors 2
Restricted and Illiquid Securities 2
Variable Rate Demand Notes 3
Lending of Portfolio Securities 3
Futures and Options Transactions 3
Warrants 6
Michigan Municipal Bond Fund 6
Michigan Municipal Securities 6
Participation Interests 6
Variable Rate Municipal Securities 6
Municipal Leases 7

PORTFOLIO INVESTMENTS AND STRATEGIES 7
When-Issued and Delayed Delivery Transactions 7
Repurchase Agreements 7
Reverse Repurchase Agreements 8
Portfolio Turnover 8

INVESTMENT LIMITATIONS 8

MICHIGAN MUNICIPAL BOND FUND INVESTMENT RISK 11

INDEPENDENCE ONE MUTUAL FUNDS MANAGEMENT 12
Officers and Trustees 12
Fund Ownership 14
Trustees' Compensation 14
Trustee Liability 14
Massachusetts Partnership Law 14

INVESTMENT ADVISORY SERVICES 14
Adviser and Sub-Adviser to the Funds 14
Advisory and Sub-Advisory Fees 15

BROKERAGE TRANSACTIONS 15

OTHER SERVICES 15
Trust Administration 15
Custodian 16
Transfer Agent and Dividend Disbursing Agent 16
Independent Auditors 16

PURCHASING SHARES 16
Conversion to Federal Funds 16

DETERMINING NET ASSET VALUE 16

DETERMINING MARKET VALUE OF SECURITIES 16

EXCHANGE PRIVILEGE 17

REDEEMING SHARES 17
Redemption in Kind 17

TAX STATUS 17
The Funds' Tax Status 17
Shareholder's Tax Status 17
Capital Gains 18

TOTAL RETURN 18

YIELD 18

TAX-EQUIVALENT YIELD 19
Tax-Equivalency Table 19

PERFORMANCE COMPARISONS 20
Economic and Market Information 21
Duration 21

FINANCIAL STATEMENTS 21

APPENDIX 22

<PAGE>

GENERAL INFORMATION ABOUT THE FUNDS

The Trust was established as a Massachusetts business trust under a
Declaration of Trust dated January 9, 1989. This Statement of
Additional Information relates only to three portfolios of securities
which are as follows: Independence One U.S. Government Securities Fund
("Government Securities Fund"), Independence One Fixed Income Fund
("Fixed Income Fund") and Independence One Michigan Municipal Bond
Fund ("Michigan Municipal Bond Fund").

INVESTMENT OBJECTIVE AND POLICIES OF THE FUNDS

The Funds' respective investment objectives cannot be changed without
approval of shareholders. Except as otherwise noted, the investment
policies described below may be changed by the Board of Trustees (the
"Trustees") without shareholder approval. Shareholders will be
notified before any material change in these policies becomes
effective.

ACCEPTABLE INVESTMENTS

Government Securities Fund invests only in U.S. government securities which
are either issued or guaranteed by the U.S. government, its agencies or
instrumentalities.

Fixed Income Fund pursues its investment objective by investing
primarily in fixed income securities that, at the time of purchase,
are rated A or higher by Moody's Investors Service ("Moody's"),
Standard & Poor's Ratings Group ("S&P"), or Fitch Investors Service
("Fitch") or, if unrated, are of comparable quality to securities with
such ratings as determined by the Fund's investment adviser.

Michigan Municipal Bond Fund invests primarily in a portfolio of
municipal securities, which are exempt from federal regular income tax
and the personal income taxes imposed by the State of Michigan and
Michigan municipalities ("Michigan Municipal Securities"). These
securities include those issued by or on behalf of the State of
Michigan and Michigan municipalities, as well as those issued by other
states, territories, and possessions of the United States which are
exempt from federal regular income tax and the personal income taxes
imposed by the State of Michigan and Michigan municipalities.

FIXED INCOME FUND

Fixed Income Fund may invest in money market instruments such
as:

o instruments of domestic and foreign banks and savings
associations if they have capital, surplus, and undivided
profits of over $100,000,000, or if the principal amount
of the instrument is federally insured;

o commercial paper rated, at the time of purchase, A-1 or
better by S&P, Prime-1 or better by Moody's, or F-1 or
better by Fitch or, if unrated, are of comparable quality
as determined by the Fund's investment adviser;

o time and savings deposits whose accounts are insured by
the Bank Insurance Fund ("BIF"), which is administered by
the Federal Deposit Insurance Corporation ("FDIC"), or in
institutions whose accounts are insured by the Savings
Association Insurance Fund, which is also administered by
the FDIC, including certificates of deposit issued by, and
other time deposits in, foreign branches of BIF-insured
banks; or

o bankers' acceptances.

PRIVATELY ISSUED MORTGAGE-RELATED SECURITIES

Privately issued mortgage-related securities generally
represent an ownership interest in federal agency mortgage
pass-through securities such as those issued by Government
National Mortgage Association. The terms and characteristics
of the mortgage instruments may vary among pass-through
mortgage loan pools. The market for such mortgage-related
securities has expanded considerably since its inception. The
size of the primary issuance market and the active
participation in the secondary market by securities dealers
and other investors makes government-related pools highly
liquid.

<PAGE>

RESETS OF INTEREST RATES

The interest rates paid on certain mortgage-backed securities
in which Fixed Income Fund invests generally are readjusted
at intervals of one year or less to an increment over some
predetermined interest rate index. There are two main
categories of indices: those based on U.S. Treasury
securities and those derived from a calculated measure, such
as a cost of funds index or a moving average of mortgage
rates. Commonly utilized indices include the one-year and
five-year constant maturity Treasury Note rates, the
three-month Treasury Bill rate, the six-month Treasury Bill
rate, rates on longer-term Treasury securities, the National
Median Cost of Funds, the one-month or three-month LIBOR, the
prime rate of a specific bank, or commercial paper rates.
Some indices, such as the one-year constant maturity Treasury
Note rate, closely mirror changes in market interest rate
levels. Others tend to lag changes in market rate levels and
tend to be somewhat less volatile.

To the extent that the adjusted interest rate on the mortgage
security reflects current market rates, the market value of
an adjustable rate mortgage security will tend to be less
sensitive to interest rate changes than a fixed rate debt
security of the same stated maturity. However, adjustable
rate mortgage securities which use indices that lag changes
in market rates should experience greater price volatility
than adjustable rate mortgage securities that closely mirror
the market. Certain residual interest tranches of CMOs may
have adjustable interest rates that deviate significantly
from prevailing market rates, even after the interest rate is
reset, and are subject to correspondingly increased price
volatility. In the event the Fund purchases such residual
interest mortgage securities, it will factor in the increased
interest and price volatility of such securities when
determining its dollar-weighted average duration.

CAPS AND FLOORS

The underlying mortgages which collateralize the ARMS, CMOs,
and REMICs in which Fixed Income Fund invests will frequently
have caps and floors which limit the maximum amount by which
the loan rate to the residential borrower may change up or
down: (1) per reset or adjustment interval, and (2) over the
life of the loan. Some residential mortgage loans restrict
periodic adjustments by limiting changes in the borrower's
monthly principal and interest payments rather than limiting
interest rate changes. These payment caps may result in
negative amortization.

The value of mortgage securities in which the Fund invests
may be affected if market interest rates rise or fall faster
and farther than the allowable caps or floors on the
underlying residential mortgage loans. Additionally, even
though the interest rates on the underlying residential
mortgages are adjustable, amortization and prepayments may
occur, thereby causing the effective maturities of the
mortgage securities in which the Fund invests to be shorter
than the maturities stated in the underlying mortgages.

RESTRICTED AND ILLIQUID SECURITIES

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

<PAGE>

The ability of the Trustees to determine the liquidity of
certain restricted securities is permitted under a Securities
and Exchange Commission staff position set forth in the
adopting release for Rule 144A (the "Rule") under the
Securities Act of 1933. The Rule is a non-exclusive,
safe-harbor for certain secondary market transactions
involving securities subject to restrictions on resale under
federal securities laws. The Rule provides an exemption from
registration for resales of otherwise restricted securities
to qualified institutional buyers. The Rule was expected to
further enhance the liquidity of the secondary market for
securities eligible for resale under the Rule. The Fund
believes that the staff of the Securities and Exchange
Commission has left the question of determining the liquidity
of all restricted securities (eligible for resale under the
Rule) to the Trustees. The Trustees consider the following
criteria in determining the liquidity of certain restricted
securities:

o the frequency of trades and quotes for the security;

o the number of dealers willing to purchase or sell the security and
the number of other potential buyers;

o dealer undertakings to make a market in the security; and

o the nature of the security and the nature of the marketplace trades.

VARIABLE RATE DEMAND NOTES

Variable rate demand notes are long-term corporate debt
instruments that have variable or floating interest rates and
provide the Fund with the right to tender the security for
repurchase at its stated principal amount plus accrued
interest. Such securities typically bear interest at a rate
that is intended to cause the securities to trade at par. The
interest rate may float or be adjusted at regular intervals
(ranging from daily to annually), and is normally based on an
interest rate index or a published interest rate. Many
variable rate demand notes allow the Fund to demand the
repurchase of the security on not more than seven days' prior
notice. Other notes only permit the Fund to tender the
security at the time of each interest rate adjustment or at
other fixed intervals.

LENDING OF PORTFOLIO SECURITIES

The collateral received when the Fund lends portfolio
securities must be valued daily and, should the market value
of the loaned securities increase, the borrower must furnish
additional collateral to the Fund. During the time portfolio
securities are on loan, the borrower pays the Fund any
dividends or interest paid on such securities. Loans are
subject to termination at the option of the Fund or the
borrower. The Fund may pay reasonable administrative and
custodial fees in connection with a loan and may pay a
negotiated portion of the interest earned on the cash or
equivalent collateral to the borrower or placing broker. The
Fund does not have the right to vote securities on loan. In
circumstances where the Fund does not, the Fund would
terminate the loan and regain the right to vote if that were
considered important with respect to the investment.

FUTURES AND OPTIONS TRANSACTIONS

As a means of reducing fluctuations in the net asset value of
shares of the Fund, the Fund may attempt to hedge its
portfolio by buying and selling financial futures contracts,
buying put options on portfolio securities and put options on
financial futures contracts for portfolio securities, and
writing call options on futures contracts. The Fund also may
write covered call options on portfolio securities to attempt
to increase its current income.

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

The Fund will maintain its position in securities, options
and segregated cash subject to puts and calls until the
options are exercised, closed, or have expired. An option
position may be closed out over-the-counter or on a
nationally-recognized exchange which provides a secondary
market for options of the same series. The Fund currently
does not intend to invest more than 5% of its total assets in
options transactions.

<PAGE>

FUTURES CONTRACTS. The Fund may purchase and sell financial
futures contracts to hedge against the effects of changes in
the value of portfolio securities due to anticipated changes
in interest rates and market conditions without necessarily
buying or selling the securities. The Fund will not engage in
futures transactions for speculative purposes.

A futures contract is a firm commitment by two parties: the
seller, who agrees to make delivery of the specific type of
security called for in the contract ("going short"), and the
buyer, who agrees to take delivery of the security ("going
long") at a certain time in the future.

For example, in the fixed income securities market, prices
generally move inversely to interest rates. A rise in rates
means a drop in price. Conversely, a drop in rates typically
means a rise in price. In order to hedge its holdings of
fixed income securities against a rise in market interest
rates, the Fund could enter into contracts to deliver
securities at a predetermined price (i.e., "go short") to
protect itself against the possibility that the prices of its
fixed income securities may decline during the Fund's
anticipated holding period. The Fund would "go long" (agree
to purchase securities in the future at a predetermined
price) to hedge against a decline in market interest rates.

"MARGIN" IN FUTURES TRANSACTIONS. Unlike the purchase or sale
of a security, the Fund does not pay or receive money upon
the purchase or sale of a futures contract. Rather, the Fund
is required to deposit an amount of "initial margin" in cash
or U.S. Treasury bills with its custodian (or the broker, if
legally permitted). The nature of initial margin in futures
transactions is different from that of margin in securities
transactions in that initial margin in futures transactions
does not involve the borrowing of funds by the Fund to
finance the transactions. Initial margin is in the nature of
a performance bond or good faith deposit on the contract
which is returned to the Fund upon termination of the futures
contract, assuming all contractual obligations have been
satisfied.

A futures contract held by the Fund is valued daily at the
official settlement price of the exchange on which it is
traded. Each day the Fund pays or receives cash, called
"variation margin," equal to the daily change in value of the
futures contract. This process is known as "marking to
market." Variation margin does not represent a borrowing or
loan by the Fund, but is instead settlement between the Fund
and the broker of the amount one would owe the other if the
futures contract expired. In computing its daily net asset
value, the Fund will mark to market its open futures
positions.

The Fund is also required to deposit and maintain margin when
it writes call options on futures contracts.

The Fund will comply with the following restrictions when
purchasing and selling futures contracts. First, the Fund
will not participate in futures transactions if the sum of
its initial margin deposits on open contracts will exceed 5%
of the market value of the Fund's total assets, after taking
into account the unrealized profits and losses on those
contracts it has entered into. Second, the Fund will not
enter into these contracts for speculative purposes. Third,
since the Fund does not constitute a commodity pool, it will
not market itself as such, nor serve as a vehicle for trading
in the commodities futures or commodity options markets.
Connected with this, the Fund will disclose to all
prospective investors the limitations on its futures and
options transactions, and make clear that these transactions
are entered into only for bona fide hedging purposes, or
other permissible purposes pursuant to regulations
promulgated by the Commodity Futures Trading Commission
("CFTC"). Finally, because the Fund will submit to the CFTC
special calls for information, the Fund will not register as
a commodities pool operator.

PUT OPTIONS ON FINANCIAL FUTURES CONTRACTS. The Fund may
purchase listed put options on financial futures contracts.
The Fund would use these options solely to protect portfolio
securities against decreases in value resulting from market
factors such as an anticipated increase in rates.

Unlike entering directly into a futures contract, which
requires the purchaser to buy a financial instrument on a set
date at a specified price, the purchase of a put option on a
futures contract entitles (but does not obligate) its
purchaser to decide on or before a future date whether to
assume a short position at the specified price.

Generally, if the hedged portfolio securities decrease in
value during the term of an option, the related futures
contracts will also decrease in value and the option will
increase in value. In such an event, the Fund will normally
close out its option by selling an identical option. If the
hedge is successful, the proceeds received by the Fund upon
the sale of the second option will be large enough to offset
both the premium paid by the Fund for the original option
plus the decrease in value of the hedged securities.

<PAGE>

Alternatively, the Fund may exercise its put option to close
out the position. To do so, it would simultaneously enter
into a futures contract of the type underlying the option
(for a price less than the strike price of the option) and
exercise the option. The Fund would then deliver the futures
contract in return for payment of the strike price. If the
Fund neither closes out nor exercises an option, the option
will expire on the date provided in the option contract, and
only the premium paid for the contract will be lost.

CALL OPTIONS ON FINANCIAL FUTURES CONTRACTS. In addition to
purchasing put options on futures, the Fund may write listed
call options on financial futures contracts or
over-the-counter call options on future contracts to hedge
its portfolio against an increase in market interest rates.
When the Fund writes a call option on a futures contract, it
is undertaking the obligation of assuming a short futures
position (selling a futures contract) at the fixed strike
price at any time during the life of the option if the option
is exercised. As market interest rates rise, causing the
prices of futures to decrease, the Fund's obligation under a
call option on a future (to sell a futures contract) costs
less to fulfill causing the value of the Fund's call option
position to increase.

In other words, as the underlying futures price goes down
below the strike price, the buyer of the option has no reason
to exercise the call, so that the Fund keeps the premium
received for the option. This premium can substantially
offset the drop in value of the Fund's portfolio securities.

Prior to the expiration of a call written by the Fund, or
exercise of it by the buyer, the Fund may close out the
option by buying an identical option. If the hedge is
successful, the cost of the second option will be less than
the premium received by the Fund for the initial option. The
net premium income of the Fund will then substantially offset
the realized decrease in value of the hedged securities.

The Fund will not maintain open positions in futures
contracts it has sold or call options it has written on
futures contracts if, in the aggregate, the value of the open
positions (marked to market) exceeds the current market value
of its portfolio, plus or minus the unrealized gain or loss
on those open positions, adjusted for the correlation of
volatility between the hedged securities and the futures
contracts. If this limitation is exceeded at any time, the
Fund will take prompt action to close out a sufficient number
of open contracts to bring its open futures and options
positions within this limitation.

PURCHASING PUT OPTIONS ON PORTFOLIO SECURITIES. The Fund may
purchase put options on portfolio securities to protect
against price movements in particular securities in its
portfolio. A put option gives the Fund, in return for a
premium, the right to sell the underlying security to the
writer (seller) at a specified price during the term of the
option. The Fund may purchase these put options as long as
they are listed on a recognized options exchange and the
underlying stocks are held in its portfolio.

WRITING COVERED CALL OPTIONS ON PORTFOLIO SECURITIES. The
Fund may also write call options on securities either held in
its portfolio or which it has the right to obtain without
payment of further consideration or for which it has
segregated cash in the amount of any additional
consideration. As the writer of a call option, the Fund has
the obligation, upon exercise of the option during the option
period, to deliver the underlying security upon payment of
the exercise price. The call options which the Fund writes
must be listed on a recognized options exchange. Writing of
call options by the Fund is intended to generate income for
the Fund and thereby protect against price movements in
particular securities in the Fund's portfolio.

OVER-THE-COUNTER OPTIONS. The Fund may purchase and write
over-the-counter options on portfolio securities in
negotiated transactions with the buyers or writers of the
options for those options on portfolio securities held by the
Fund and not traded on an exchange.

RISKS. When the Fund uses futures and options on futures as
hedging devices, there is a risk that the prices of the
securities subject to the futures contracts may not correlate
perfectly with the prices of the securities in the Fund's
portfolio. This may cause the futures contact and any related
options to react differently than the portfolio securities to
market changes. In addition, the Fund's investment adviser
could be incorrect in its expectations about the direction or
extent of market factors such as stock price movements. In
these events, the Fund may lose money on the futures contract
or option.

It is not certain that a secondary market for positions in
futures contracts or for options will exist at all times.
Although the Fund's investment adviser will consider
liquidity before entering into these transactions, there is
no assurance that a liquid secondary market on an exchange or
otherwise will exist for any particular futures contract or
option at any particular time. The Fund's ability to
establish and close out futures and options positions depends
on this secondary market.

<PAGE>

To minimize risks, the Fund may not purchase or sell futures
contracts or related options if immediately thereafter the
sum of the amount of margin deposits on the Fund's existing
futures positions and premiums paid for related options would
exceed 5% of the market value of the Fund's total assets.
When the Fund purchases futures contracts, an amount of cash
and cash equivalents, equal to the underlying commodity value
of the futures contracts (less any related margin deposits),
will be deposited in a segregated account with the Fund's
custodian (or the broker, if legally permitted) to
collateralize the position and thereby insure that the use of
such futures contract is unleveraged. When the Fund sells
futures contacts, it will either own or have the right to
receive the underlying future or security, or will make
deposits to collateralize the position as discussed above.

WARRANTS

The Fund may invest in warrants. Warrants are basically
options to purchase common stock at a specific price (usually
at a premium above the market value of the optioned common
stock at issuance) valid for a specific period of time.
Warrants may have a life ranging from less than a year to
twenty years or may be perpetual. However, most warrants have
expiration dates after which they are worthless. In addition,
if the market price of the common stock does not exceed the
warrant's exercise price during the life of the warrant, the
warrant will expire as worthless. Warrants have no voting
rights, pay no dividends, and have no rights with respect to
the assets of the corporation issuing them. The percentage
increase or decrease in the market price of the warrant may
tend to be greater than the percentage increase or decrease
in the market price of the optioned common stock.

MICHIGAN MUNICIPAL BOND FUND

MICHIGAN MUNICIPAL SECURITIES

The Michigan Municipal Securities in which Michigan Municipal
Bond Fund invests have the characteristics set forth in the
prospectus.

Examples of Michigan Municipal Securities are:

o municipal notes and municipal commercial paper;

o serial bonds sold with differing maturity dates;

o tax anticipation notes sold to finance working capital needs of
municipalities;

o bond anticipation notes sold prior to the issuance of longer-term
bonds;

o pre-refunded municipal bonds; and

o general obligation bonds secured by a municipality pledge of
taxation.

PARTICIPATION INTERESTS

The financial institutions from which the Fund purchases
participation interests frequently provide or secure from
another financial institution irrevocable letters of credit
or guarantees and give the Fund the right to demand payment
of the principal amounts of the participation interests plus
accrued interest on short notice (usually within seven days).

VARIABLE RATE MUNICIPAL SECURITIES

Variable interest rates generally reduce changes in the
market value of municipal securities from their original
purchase prices. Accordingly, as interest rates decrease or
increase, the potential for capital appreciation or
depreciation is less for variable rate municipal securities
than for fixed income obligations.

The terms of these variable rate demand instruments require
payment of principal and accrued interest from the issuer of
the municipal obligations, the issuer of the participation
interests, or a guarantor of either issuer.

<PAGE>

MUNICIPAL LEASES

The Fund may purchase municipal securities in the form of
participation interests which represent undivided
proportional interests in lease payments by a governmental or
non-profit entity. The lease payments and other rights under
the lease provide for and secure the payments on the
certificates. Lease obligations may be limited by municipal
charter or the nature of the appropriation for the lease. In
particular, lease obligations may be subject to periodic
appropriation. If the entity does not appropriate funds for
future lease payments, the entity cannot be compelled to make
such payments. Furthermore, a lease may provide that the
certificate trustee cannot accelerate lease obligations upon
default. The trustee would only be able to enforce lease
payments as they became due. In the event of default or
failure of appropriation, it is unlikely that the trustee
would be able to obtain an acceptable substitute source of
payment.

In determining the liquidity of municipal lease securities,
the investment adviser, under the authority delegated by the
Trustees, will base its determination on the following
factors:

o whether the lease can be terminated by the lessee;

o the potential recovery, if any, from a sale of the leased property
upon termination of the lease;

o the lessee's general credit strength (e.g., its debt,
administrative, economic and financial characteristics and
prospects);

o the likelihood that the lessee will discontinue
appropriating funding for the leased property because the
property is no longer deemed essential to its operations
(e.g., the potential for an "event of non-appropriation");
and

o any credit enhancement or legal recourse provided upon an
event of non-appropriation or other termination of the
lease.

PORTFOLIO INVESTMENTS AND STRATEGIES

WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS

These transactions are made to secure what is considered to be an
advantageous price or yield for the Funds. Settlement dates may be a
month or more after entering into these transactions, and the market
values of the securities purchased may vary from the purchase prices.
No fees or other expenses, other than normal transaction costs, are
incurred. However, liquid assets of a Fund sufficient to make payment
for the securities to be purchased are segregated on a Fund's records
at the trade date. These assets are marked to market daily and are
maintained until the transaction has been settled. The Funds do not
intend to engage in when-issued and delayed delivery transactions to
an extent that would cause the segregation of more than 20% of the
total value of a Fund's assets.

REPURCHASE AGREEMENTS

The Funds or their custodian will take possession of the securities
subject to repurchase agreements and these securities will be marked
to market daily. To the extent that the original seller does not
repurchase the securities from the Funds, the Funds could receive less
than the repurchase price on any sale of such securities. In the event
that such a defaulting seller filed for bankruptcy or became
insolvent, disposition of such securities by the Funds might be
delayed pending court action. The Funds believe that under the regular
procedures normally in effect for custody of a Fund's portfolio
securities subject to repurchase agreements, a court of competent
jurisdiction would rule in favor of the Fund and allow retention or
disposition of such securities. The Funds will only enter into
repurchase agreements with banks and other recognized financial
institutions such as broker/dealers which are deemed by the Funds'
investment adviser to be creditworthy pursuant to guidelines
established by the Trustees.

From time to time, such as when suitable Michigan municipal bonds are
not available, Michigan Municipal Bond Fund may invest a portion of
its assets in cash. Any portion of the Fund's assets maintained in
cash will reduce the amount of assets in Michigan municipal bonds and
thereby reduce the Fund's yield. Michigan Municipal Bond Fund will use
repurchase agreements only as temporary investments during times of
unusual market conditions for defensive purposes and to maintain
liquidity.

<PAGE>

REVERSE REPURCHASE AGREEMENTS

Fixed Income Fund and Michigan Municipal Bond Fund may also enter into
reverse repurchase agreements. These transactions are similar to
borrowing cash. In a reverse repurchase agreement a Fund transfers
possession of a portfolio instrument to another person, such as a
financial institution, broker, or dealer, in return for a percentage
of the instrument's market value in cash, and agrees that on a
stipulated date in the future the Fund will repurchase the portfolio
instrument by remitting the original consideration plus interest at an
agreed upon rate. The use of reverse repurchase agreements may enable
the Fund to avoid selling portfolio instruments at a time when a sale
may be deemed to be disadvantageous, but the ability to enter into
reverse repurchase agreements does not ensure that the Fund will be
able to avoid selling portfolio instruments at a disadvantageous time.

PORTFOLIO TURNOVER

The Funds may trade or dispose of portfolio securities as considered
necessary to meet their respective investment objectives. For the
fiscal years ended April 30, 1997 and 1996, Government Securities
Fund's portfolio turnover rates were 73% and 104%, respectively. For
the fiscal year ended April 30, 1997 and for the period from October
23, 1995 (date of initial public investment) through April 30, 1996,
Fixed Income Fund's portfolio turnover rates were 23% and 4%,
respectively. For the fiscal year ended April 30, 1997 and for the
period from November 20, 1995 (date of initial public investment)
through April 30, 1996, Michigan Municipal Bond Fund's portfolio
turnover rates were 48% and 39%, respectively.

INVESTMENT LIMITATIONS

SELLING SHORT AND BUYING ON MARGIN

The Funds will not sell any securities short or purchase any
securities on margin but may obtain such short- term credits
as may be necessary for clearance of transactions. With
respect to Fixed Income Fund, the deposit or payment by the
Fund of initial or variation margin in connection with
financial futures contracts or related options transactions
is not considered the purchase of a security on margin.

ISSUING SENIOR SECURITIES AND BORROWING MONEY

Government Securities Fund will not issue senior securities
except that it may borrow money in amounts up to one-third of
the value of its total assets, including the amounts
borrowed.

Government Securities Fund will not borrow money for
investment leverage, but rather as a temporary,
extraordinary, or emergency measure to facilitate management
of the portfolio by enabling the Fund to meet redemption
requests when the liquidation of portfolio securities is
deemed to be inconvenient or disadvantageous. The Fund will
not purchase any securities while borrowings in excess of 5%
of total assets are outstanding.

Fixed Income Fund and Michigan Municipal Bond Fund will not
issue senior securities except that they may borrow money and
engage in reverse repurchase agreements in amounts up to
one-third of the value of their respective total assets,
including the amounts borrowed.

Fixed Income Fund and Michigan Municipal Bond Fund will not
borrow money or engage in reverse repurchase agreements for
investment leverage, but rather as a temporary,
extraordinary, or emergency measure or to facilitate
management of the portfolio by enabling the Funds to meet
redemption requests when the liquidation of portfolio
securities is deemed to be inconvenient or disadvantageous.
Fixed Income Fund and Michigan Municipal Bond Fund will not
purchase any securities while borrowings in excess of 5% of
their respective total assets are outstanding.

CONCENTRATION OF INVESTMENTS

Government Securities Fund will not concentrate in any one
industry.

Fixed Income Fund will not invest 25% or more of the value of
its total assets in any one industry, except that the Fund
may invest 25% or more of the value of its total assets in
securities issued or guaranteed by the U.S. government, its
agencies or instrumentalities, and repurchase agreements
collateralized by such securities.

<PAGE>

Michigan Municipal Bond Fund will not purchase securities if,
as a result of such purchase, 25% or more of the value of its
total assets would be invested in any one industry or in
industrial development bonds or other securities, the
interest upon which is paid from revenues of similar types of
projects. However, the Fund may invest as temporary
investments 25% or more of the value of its assets in cash or
cash items, securities issued or guaranteed by the U.S.
government, its agencies, or instrumentalities, or
instruments secured by these money market instruments, i.e.,
repurchase agreements.

UNDERWRITING

Government Securities Fund and Michigan Municipal Bond Fund
will not underwrite any issue of securities except as either
Fund may be deemed to be an underwriter under the Securities
Act of 1933 in connection with the sale of securities in
accordance with its investment objective, policies, and
limitations.

Fixed Income Fund will not underwrite any issue of securities
except as it may be deemed to be an underwriter under the
Securities Act of 1933 in connection with the sale of
restricted securities in accordance with its investment
objective, policies, and limitations.

LENDING CASH OR SECURITIES

Government Securities Fund will not lend any of its assets.
(This shall not prevent the purchase or holding of U.S.
Treasury securities, repurchase agreements, or other
transactions which are permitted by the Fund's investment
objective and policies.)

Fixed Income Fund will not lend any of its assets except
portfolio securities up to one-third of the value of its
total assets. This shall not prevent the Fund from purchasing
or holding U.S. government obligations, money market
instruments, variable rate demand notes, bonds, debentures,
notes, certificates of indebtedness, or other debt
securities, entering into repurchase agreements, or engaging
in other transactions where permitted by the Fund's
investment objectives, policies, and limitations.

Michigan Municipal Bond Fund will not lend any of its assets
except that it may acquire publicly or non-publicly issued
municipal bonds or temporary investments or enter into
repurchase agreements in accordance with its investment
objective, policies, and limitations.

PLEDGING ASSETS

Fixed Income Fund and Michigan Municipal Bond Fund will not
mortgage, pledge, or hypothecate any assets except to secure
permitted borrowings. With respect to Fixed Income Fund, for
purposes of this limitation, the following are not deemed to
be pledges: margin deposits for the purchase and sale of
futures contract and related options, and segregation or
collateral arrangements made in connection with options
activities or the purchase of securities on a when-issued
basis.

INVESTING IN REAL ESTATE

Fixed Income Fund will not purchase or sell real estate,
including limited partnership interests, although it may
invest in the securities of issuers whose business involves
the purchase or sale of real estate or in securities which
are secured by real estate or interests in real estate.

Michigan Municipal Bond Fund will not purchase or sell real
estate, including limited partnership interests, although it
may invest in municipal bonds secured by real estate or
interests in real estate.

INVESTING IN COMMODITIES, COMMODITY CONTRACTS, OR COMMODITY FUTURES CONTRACTS

Fixed Income Fund will not purchase or sell commodities,
commodity contracts, or commodity futures contracts except to
the extent that the Fund may engage in transactions involving
futures contracts and related options.

Michigan Municipal Bond Fund will not buy or sell
commodities, commodity contracts, or commodities futures contracts.

<PAGE>

DIVERSIFICATION OF INVESTMENTS

With respect to 75% of the value of its assets, Fixed Income
Fund will not purchase securities of any one issuer (other
than securities issued or guaranteed by the government of the
United States or its agencies or instrumentalities) if, as a
result, more than 5% of the value of its total assets would
be invested in the securities of that issuer. Also, the Fund
will not acquire more than 10% of the outstanding voting
securities of any one issuer.

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

PLEDGING ASSETS

Government Securities Fund will not mortgage, pledge, or
hypothecate any assets except to secure permitted borrowings.
In these cases, it may pledge assets having a market value
not exceeding the lesser of the dollar amounts borrowed or
10% of the value of total assets at the time of the
borrowing.

INVESTING IN ILLIQUID SECURITIES

Government Securities Fund will not invest more than 15% of
the value of its net assets in securities which are not
readily marketable or which are otherwise considered
illiquid, including repurchase agreements providing for
settlement more than seven days after notice.

Fixed Income Fund will not invest more than 15% of the value
of its net assets in illiquid obligations, including
repurchase agreements providing for settlement in more than
seven days after notice, over-the-counter options, certain
securities not determined by the Trustees to be liquid, and
non-negotiable fixed time deposits with maturities over seven
days.

Michigan Municipal Bond Fund will not invest more than 15% of
the value of its net assets in illiquid obligations,
including repurchase agreements providing for settlement in
more than seven days after notice, and certain restricted
securities.

INVESTING IN SECURITIES OF OTHER INVESTMENT COMPANIES

Fixed Income Fund and Michigan Municipal Bond Fund can each
acquire up to 3 per centum of the total outstanding stock of
other investment companies. The Funds will not be subject to
any other limitations with regard to the acquisition of
securities of other investment companies so long as the
public offering price of each Fund's shares does not include
a sales charge exceeding 1 1/2 percent. With respect to Fixed
Income Fund, these limitations are not applicable if the
securities are acquired in a merger, consolidation,
reorganization, or acquisition of assets, nor are they
applicable with respect to securities of investment companies
that have been exempted from registration under the
Investment Company Act of 1940. With respect to Michigan
Municipal Bond Fund, these limitations are not applicable if
the securities are acquired in a merger, consolidation,
reorganization, or acquisition of assets.

INVESTING IN RESTRICTED SECURITIES

Fixed Income Fund and Michigan Municipal Bond Fund will not
invest more than 10% of the value of their respective total
assets in securities subject to restrictions on resale under
the federal securities laws except, with respect to Fixed
Income Fund, for certain restricted securities which meet the
criteria for liquidity as established by the Trustees.

INVESTING IN PUT OPTIONS

Fixed Income Fund will not purchase put options on securities
unless the securities are held in the Fund's portfolio and
not more than 5% of the value of the Fund's total assets
would be invested in premiums on open put option positions.

<PAGE>

WRITING COVERED CALL OPTIONS

Fixed Income Fund will not write call options on securities
unless the securities are held in the Fund's portfolio or
unless the Fund is entitled to them in deliverable form
without further payment or after segregating cash in the
amount of any further payment.

INVESTING IN WARRANTS

Fixed Income Fund will not invest more than 5% of its assets
in warrants. No more than 2% of the Fund's net assets, to be
included within the overall 5% limit on investments in
warrants, may be warrants which are not listed on the New
York Stock Exchange or the American Stock Exchange.

PURCHASING SECURITIES TO EXERCISE CONTROL

Fixed Income Fund will not purchase securities of a company
for purpose of exercising control or management.

DEALING IN PUTS AND CALLS

Michigan Municipal Bond Fund will not buy or sell puts,
calls, straddles, spreads, or any combination of these.

The Funds did not borrow money, pledge securities or invest in
repurchase agreements in excess of 5% of the value of Fund net assets
during the last fiscal period and have no present intent to do so
during the coming fiscal year.

MICHIGAN MUNICIPAL BOND FUND INVESTMENT RISKS

<PAGE>

INDEPENDENCE ONE MUTUAL FUNDS MANAGEMENT

OFFICERS AND TRUSTEES

Robert E. Baker
4327 Stoneleigh Road
Bloomfield Hills, MI
Birthdate: May 6, 1930

Trustee

Retired; formerly, Vice Chairman, Chrysler Financial Corporation.

Harold Berry
Berry Enterprises
290 Franklin Center

29100 Northwestern Highway

Southfield, MI

Birthdate: September 17, 1925

Trustee

Managing Partner, Berry Enterprises; Chairman, Independent Sprinkler
Companies, Inc.; Chairman, Berry, Ziegelman & Company.

Clarence G. Frame+
W-875 First Bank Building
332 Minnesota Street

St. Paul, MN

Birthdate: July 26, 1918

Trustee

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

<PAGE>

Harry J. Nederlander+
231 S. Old Woodward, Suite 219

Birmingham, MI
Birthdate: September 5, 1917

Trustee

Chairman, Nederlander Enterprises.

Thomas S. Wilson
Two Championship Drive
Auburn Hills, MI
Birthdate: October 8, 1949

Trustee

President and Executive Administrator of the Detroit Pistons;
President and CEO, Palace Sports and Entertainment.

Edward C. Gonzales
Federated Investors Tower

Pittsburgh, PA
Birthdate: October 22, 1930

President and Treasurer

Jeffrey W. Sterling
Federated Investors Tower

Pittsburgh, PA
Birthdate: February 5, 1947

Vice President and Assistant Treasurer

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

Jay S. Neuman
Federated Investors Tower

Pittsburgh, PA
Birthdate: April 22, 1950

Secretary

Corporate Counsel, Federated Investors.

+ Members of the Trust's Executive Committee. The Executive Committee
of the Board of Trustees handles the responsibilities of the Board of
Trustees between meetings of the Board.

<PAGE>

FUND OWNERSHIP

TRUSTEES' COMPENSATION

AGGREGATE

NAME , COMPENSATION
POSITION WITH FROM
THE TRUST THE TRUST*

Robert E. Baker $10,250
Trustee
Harold Berry $10,250
Trustee
Clarence G. Frame $10,250
Trustee
Harry J. Nederlander $ 9,050
Trustee
Thomas S. Wilson $10,250
Trustee

TRUSTEE LIABILITY

MASSACHUSETTS PARTNERSHIP LAW

INVESTMENT ADVISORY SERVICES

ADVISER AND SUB-ADVISER TO THE FUNDS

The Funds' investment adviser is Michigan National Bank (the
"Adviser"). Government Securities Fund's sub-adviser is Independence
One Capital Management Corporation (the "Sub-Adviser").

The Adviser and Sub-Adviser shall not be liable to the Trust, the
Funds, or any shareholder of the Funds for any losses that may be
sustained in the purchase, holding, or sale of any security, or for
anything done or omitted by it, except

<PAGE>

acts or omissions involving willful misfeasance, bad faith, gross
negligence, or reckless disregard of the duties imposed upon it by its
contract with the Trust.

Because of the internal controls maintained by Michigan National Bank
to restrict the flow of non-public information, Fund investments are
typically made without any knowledge of Michigan National Bank's or
its affiliates' lending relationships with an issuer.

ADVISORY AND SUB-ADVISORY FEES

For its advisory services, Michigan National Bank receives an annual
investment advisory fee as described in the prospectus. For the fiscal
years ended April 30, 1997, 1996, and 1995, the Adviser earned fees
from Government Securities Fund of $509,098, $481,848, and $458,170,
of which $327,278, $394,602, and $458,170, respectively, was
voluntarily waived because of undertakings to limit Government
Securities Fund's expenses. For the fiscal year ended April 30, 1997
and for the period from October 23, 1995 (date of initial public
investment) to April 30, 1996, the Adviser earned fees from Fixed
Income Fund of $500,293 and $212,343, of which $333,528 and $141,562,
respectively, was voluntarily waived because of undertakings to limit
Fixed Income Fund's expenses. For the fiscal year ended April 30, 1997
and for the period from November 20, 1995 (date of initial public
investment) to April 30, 1996, the Adviser earned fees from Michigan
Municipal Bond Fund of $182,176 and $86,756, of which $182,176 and
$57,837, respectively, was voluntarily waived because of undertakings
to limit Michigan Municipal Bond Fund's expenses.

The Sub-Adviser will perform its duties at no cost to the Adviser or
Government Securities Fund.

BROKERAGE TRANSACTIONS

OTHER SERVICES

TRUST ADMINISTRATION

Federated Administrative Services, a subsidiary of Federated
Investors, provides administrative personnel and services to the Funds
for the fees set forth in the prospectus. For the fiscal years ended
April 30, 1997, 1996, and 1995, Government Securities Fund incurred
administrative services costs of $79,408, $81,663, and $84,660,
respectively, of which $0, $57,395, and $0 were voluntarily waived
because of undertakings to limit Fund expenses. For the fiscal year
ended April 30, 1997 and for the period from October 23, 1995 (date of
initial public investment) to April 30, 1996, Fixed Income Fund
incurred administrative services costs of $72,776 and $31,636, of
which $0 and $30,644, respectively, was voluntarily waived because of
undertakings to limit Fund expenses. For the fiscal year ended April
30, 1997 and for the period from November 20, 1995 (date of initial
public investment) to April 30, 1996, Michigan Municipal Bond Fund
incurred administrative costs of $50,000 and $12,868, of which $44,944
and $12,468, respectively, was voluntarily waived because of
undertakings to limit Fund expenses.

<PAGE>

CUSTODIAN

Michigan National Bank, Farmington Hills, Michigan, is custodian for
the securities and cash of the Funds. For the services to be provided
to the Trust pursuant to the Custodian Agreement, the Trust pays the
custodian an annual fee based upon the average daily net assets of
each Fund and which is payable monthly. The custodian will also charge
transaction fees and out-of-pocket expenses.

TRANSFER AGENT AND DIVIDEND DISBURSING AGENT

INDEPENDENT AUDITORS

The independent auditors for the Funds are KPMG Peat Marwick LLP,
Pittsburgh, Pennsylvania.

PURCHASING SHARES

Shares are sold at their net asset value without a sales charge on
days when both the New York Stock Exchange and the Federal Reserve
Wire System are open for business. The procedures for purchasing
shares of the Funds are explained in the prospectus under "Investing
in the Funds."

CONVERSION TO FEDERAL FUNDS

It is each Fund's policy to be as fully invested as possible so that
maximum interest may be earned. To this end, all payments from
shareholders must be in federal funds or be converted into federal
funds before shareholders begin to earn dividends. Michigan National
Bank acts as the shareholder's agent in depositing checks and
converting them to federal funds.

DETERMINING NET ASSET VALUE

Net asset value generally changes each day. The days on which net
asset value is calculated by the Funds are described in the
prospectus.

DETERMINING MARKET VALUE OF SECURITIES

Market values of the Funds' portfolio securities are determined as
follows:

o for bonds and other fixed income securities, as determined by an
independent pricing service;

o for short-term obligations, according to the mean between
bid and asked prices as furnished by an independent
pricing service, or for short-term obligations with
remaining maturities of 60 days or less at the time of
purchase, at amortized cost;

o for equity securities, according to the last sale price on a
national securities exchange, if applicable;

o in the absence of recorded sales for listed equity
securities, according to the mean between the last closing
bid and asked prices;

o for unlisted equity securities, latest bid prices; or

o for all other securities, at fair value as determined in good
faith by the Trustees.

Prices provided by independent pricing services may be determined
without relying exclusively on quoted prices and may reflect:
institutional trading in similar groups of securities, yield, quality,
coupon rate, maturity, type of issue, trading characteristics, and
other market data.

The Funds will value futures contracts and options at their market
values established by the exchanges at the close of options trading on
such exchanges unless the Trustees determine in good faith that
another method of valuing option positions is necessary.

<PAGE>

EXCHANGE PRIVILEGE

Instructions for exchanges may be given in writing or by telephone. Exchange
procedures are explained in the prospectus under "Exchange Privilege."

REDEEMING SHARES

REDEMPTION IN KIND

Although the Funds intend to redeem shares in cash, they reserve the
right under certain circumstances to pay the redemption price in whole
or in part by a distribution of securities from the Funds' portfolios.
To satisfy registration requirements in a particular state, redemption
in kind will be made (for any shareholder requesting redemption) in
readily marketable securities to the extent that such securities are
available. If this state's policy changes, the Funds reserve the right
to redeem in kind by delivering those securities it deems appropriate.

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

TAX STATUS

THE FUNDS' TAX STATUS

To qualify for this treatment, a Fund must, among other requirements:

o derive at least 90% of its gross income from dividends, interest,
and gains from the sale of securities;

o derive less than 30% of its gross income from the sale of
securities held less than three months;

o invest in securities within certain statutory limits; and

o distribute to its shareholders at least 90% of its net income
earned during the year.

Federal income tax law requires the holder of a zero coupon
convertible security to recognize income with respect to the security
prior to the receipt of cash payments. To maintain its qualification
as a regulated investment company and avoid liability of federal
income taxes, Fixed Income Fund will be required to distribute income
accrued with respect to zero coupon convertible securities which it
owns, and may have to sell portfolio securities (perhaps at
disadvantageous times) in order to generate cash to satisfy these
distribution requirements.

SHAREHOLDER'S TAX STATUS

Shareholders are subject to federal income tax on dividends and
capital gains received as cash or additional shares. No portion of any
income dividend paid by the Fund is eligible for the dividends
received deductions available to corporations. These dividends and any
short-term capital gains, are taxable as ordinary income.

<PAGE>

CAPITAL GAINS

Capital gains or losses may be realized by Michigan Municipal Bond
Fund on the sale of portfolio securities and as a result of discounts
from par value on securities held to maturity. Sales would generally
be made because of:

o the availability of higher relative yields;

o differentials in market values;

o new investment opportunities;

o changes in creditworthiness of an issuer; or

o an attempt to preserve gains or limit losses.

Distribution of long-term capital gains are taxed as such, whether
they are taken in cash or reinvested, and regardless of the length of
time the shareholder has owned the shares. Any loss by a shareholder
on Fund shares held for less than six months and sold after a capital
gains distribution will be treated as a long-term capital loss to the
extent of the capital gains distribution.

TOTAL RETURN

Government Securities Fund's average annual total return for the
one-year period ended April 30, 1997 and for the period from January
11, 1993 (date of initial public investment) to April 30, 1997 were
5.86% and 6.15%, respectively.

Fixed Income Fund's average annual total return for the one-year
period ended April 30, 1997 was 5.79%. The Fund's cumulative total
return for the period from January 3, 1995 (date of commencement of
operations of the common trust fund) to April 30, 1997 was 18.45%. The
average annual total return for the same period was 7.54%. The quoted
performance data includes the performance of the common trust fund for
periods before the Fund's registration statement became effective, as
adjusted to reflect the Fund's anticipated expenses as set forth in
the "Summary of Fund Expenses" section of the prospectus. The common
trust fund was not registered under the Investment Company Act of 1940
("1940 Act") and therefore was not subject to certain investment
restrictions that are imposed by the 1940 Act. If the common trust
fund had been registered under the 1940 Act, the performance may have
been adversely affected.

Michigan Municipal Bond Fund's average annual total return for the
one-year period ended April 30, 1997 and for the period from November
20, 1995 (date of initial public investment) to April 30, 1997 were
4.03% and 4.62%, respectively.

The average annual total return for shares of the Funds is the average
compounded rate of return for a given period that would equate a
$1,000 initial investment to the ending redeemable value of that
investment. The ending redeemable value is computed by multiplying the
number of shares owned at the end of the period by the offering price
per share at the end of the period. The number of shares owned at the
end of the period is based on the number of shares purchased at the
beginning of the period with $1,000, less any applicable sales charge,
adjusted over the period by any additional shares, assuming the
reinvestment of all dividends and distributions.

Advertisements and other sales literature for the Funds may quote
total returns which are calculated on non-standardized base periods.
These total returns also represent the historic change in the value of
an investment in the Funds based on monthly reinvestment of dividends
over a specified period of time.

YIELD

The thirty-day yields for the period ended April 30, 1997 for
Government Securities Fund, Fixed Income Fund and Michigan Municipal
Bond Fund were 6.14%, 6.09%, and 4.38%, respectively.

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

<PAGE>

TAX-EQUIVALENT YIELD

The tax-equivalent yield of Michigan Municipal Bond Fund is calculated
similarly to the yield, but is adjusted to reflect the taxable yield
that the Fund would have had to earn to equal its actual yield,
assuming a specified tax rate and assuming that income is 100%
tax-exempt.

Michigan Municipal Bond Fund's tax-equivalent yield for the thirty-day
period ended April 30, 1997, was 6.48%, assuming a combined federal
and state income effective tax rate of 32.40%.

TAX-EQUIVALENCY TABLE

Michigan Municipal Bond Fund may use a tax-equivalency table in
advertising and sales literature. The interest earned by the municipal
bonds in the Fund's portfolio generally remains free from federal
regular income tax,* and is free from the state income tax imposed by
the state of Michigan. As the table indicates, a "tax-exempt"
investment is an attractive choice for investors, particularly in
times of narrow spreads between tax-free and taxable yields.
<TABLE>
<CAPTION>

TAXABLE YIELD EQUIVALENT FOR 1997
STATE OF MICHIGAN

COMBINED FEDERAL AND STATE INCOME TAX BRACKET:
<S> <C> <C> <C> <C> <C> <C>

19.40% 32.40% 35.40% 40.40% 44.00%

JOINT $1- $41,201- $99,601- $151,751- OVER

RETURN 41,200 99,600 151,750 271,050 $271,050

SINGLE $1- $24,651- $59,751- $124,651- OVER

RETURN 24,650 59,750 124,650 271,050 $271,050

TAX-EXEMPT

YIELD TAXABLE YIELD EQUIVALENT

1.50% 1.86% 2.22% 2.32% 2.52% 2.68%

2.00% 2.48% 2.96% 3.10% 3.36% 3.57%

2.50% 3.10% 3.70% 3.87% 4.19% 4.46%

3.00% 3.72% 4.44% 4.64% 5.03% 5.36%

3.50% 4.34% 5.18% 5.42% 5.87% 6.25%

4.00% 4.96% 5.92% 6.19% 6.71% 7.14%

4.50% 5.58% 6.66% 6.97% 7.55% 8.04%

5.00% 6.20% 7.40% 7.74% 8.39% 8.93%

5.50% 6.82% 8.14% 8.51% 9.23% 9.82%

6.00% 7.44% 8.88% 9.29% 10.07% 10.71%
</TABLE>

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

<PAGE>

PERFORMANCE COMPARISONS

The Funds' performance depends upon such variables as:

o portfolio quality;

o average portfolio maturity;

o type of instruments in which the portfolio is invested;

o changes in interest rates and market value of portfolio securities;

o changes in the Funds' expenses; and

o various other factors.

The Funds' performance fluctuates on a daily basis largely because net
earnings and maximum offering price per share fluctuate daily. Both
net earnings and offering price per share are factors in the
computation of yield and total return.

O LIPPER ANALYTICAL SERVICES, INC. (ALL FUNDS) ranks funds
in various fund categories by making comparative
calculations using total return. Total return assumes the
reinvestment of all capital gains distributions and income
dividends and takes into account any change in net asset
value over a specific period of time. From time to time, a
Fund will quote its ranking from its respective Lipper
category in advertising and sales literature.

O MORNINGSTAR, INC. (ALL FUNDS), an independent rating
service, is the publisher of the bi-weekly MUTUAL FUND
VALUES. MUTUAL FUND VALUES rates more than 1,000 NASDAQ
listed mutual funds of all types, according to their
risk-adjusted returns. The maximum rating is five stars,
and ratings are effective for two weeks.

o LEHMAN BROTHERS GOVERNMENT BOND INDEX (GOVERNMENT SECURITIES
FUND) is an unmanaged index comprised of all publicly issued,
non-convertible domestic debt of the U.S. government, or any
agency thereof, or any quasi-federal corporation and of corporate
debt guaranteed by the U.S. government.

LEHMAN BROTHERS GOVERNMENT/CORPORATE (TOTAL) INDEX (GOVERNMENT
SECURITIES FUND) is comprised of approximately 5,000 issues which
include: non-convertible bonds publicly issued by the U.S.
government or its agencies; corporate bonds guaranteed by the
U.S. government and quasi-federal corporations; and publicly
issued, fixed rate, non-convertible domestic bonds of companies
in industry, public utilities, and finance. The average maturity
of these bonds approximates nine years. Tracked by Lehman
Brothers, the index calculates total returns for one-month,
three-month, twelve-month, and ten-year periods and year-to-date.

o LEHMAN BROTHERS INTERMEDIATE GOVERNMENT/CORPORATE BOND
INDEX (FIXED INCOME FUND) is an unmanaged index comprised
of all the bonds issued by the U.S. Government its
agencies and instrumentalities and corporations with
maturities between 1 and 9.99 years. Total return is based
on price appreciation/depreciation and income as a
percentage of the original investment. Indices are
rebalanced monthly by market capitalization.

o LEHMAN BROTHERS SEVEN YEAR STATE GENERAL OBLIGATION BOND
INDEX (MICHIGAN MUNICIPAL BOND INDEX) is an index of
general obligation bonds rated Baa or better with 6-8
years to maturity.

<PAGE>

ECONOMIC AND MARKET INFORMATION

DURATION

Duration is a commonly used measure of the potential volatility in the
price of a bond, or other fixed income security, or in a portfolio of
fixed income securities, prior to maturity. Volatility is the
magnitude of the change in the price of a bond relative to a given
change in the market rate of interest. A bond's price volatility
depends on three primary variables: the bond's coupon rate; maturity
date; and the level of market yields of similar fixed income
securities. Generally, bonds with lower coupons or longer maturities
will be more volatile than bonds with higher coupons or shorter
maturities. Duration combines these variables into a single measure.

Duration is calculated by dividing the sum of the time-weighted values
of the cash flows or a bond or bonds, including interest and principal
payments, by the sum of the present values of the cash flows. When the
Government Securities Fund and Fixed Income Fund invest in mortgage
pass-through securities, the duration will be calculated in a manner
which requires assumptions to be made regarding future principal
prepayments. A more complete description of this calculation is
available upon request from the Funds.

FINANCIAL STATEMENTS

The Financial Statements for the fiscal year ended April 30, 1997 are
incorporated herein by reference to the Annual Reports of the Funds
dated April 30, 1997 (File Nos. 33-26516 and 811-5752). A copy of the
Funds' Annual Reports may be obtained without charge by contacting the
Trust.

<PAGE>

APPENDIX

STANDARD AND POOR'S RATINGS GROUP MUNICIPAL BOND RATINGS

AAA--Debt rated "AAA" has the highest rating assigned by Standard &
Poor's Ratings Group ("S&P"). Capacity to pay interest and repay
principal is extremely strong.

AA--Debt rated "AA" has a very strong capacity to pay interest and
repay principal and differs from the higher rated issues only in small
degree.

PLUS (+) OR MINUS (-): The ratings from AA to CCC may be modified by
the addition of a plus or minus sign to show relative standing within
the major rating categories.

MOODY'S INVESTORS SERVICE, INC. CORPORATE BOND RATINGS DEFINITIONS

NR--Not rated by Moody's.

FITCH INVESTORS SERVICE, INC. LONG-TERM DEBT RATINGS

NR--NR indicates that Fitch does not rate the specific issue.

<PAGE>

STANDARD AND POOR'S RATINGS GROUP MUNICIPAL NOTE RATINGS

SP-1--Very strong or strong capacity to pay principal and interest.
Those issues determined to possess overwhelming safety characteristics
will be given a plus (+) designation.

SP-2--Satisfactory capacity to pay principal and interest.

MOODY'S INVESTORS SERVICE SHORT-TERM LOAN RATINGS

MIG2/VMIG2--This designation denotes high quality. Margins of
protection are ample although not so large as in the preceding group.

FITCH INVESTORS SERVICE, INC. SHORT-TERM DEBT RATINGS

F-1+--EXCEPTIONALLY STRONG CREDIT QUALITY. Issues assigned this rating are
regarded as having the strongest degree of assurance for timely payment.

F-1--VERY STRONG CREDIT QUALITY. Issues assigned this rating reflect
an assurance of timely payment only slightly less in degree than
issues rated F-1+.

F-2--GOOD CREDIT QUALITY. Issues carrying this rating have a
satisfactory degree of assurance for timely payment, but the margin of
safety is not as great as the F-1+ and F-1 categories.

STANDARD AND POOR'S RATINGS GROUP COMMERCIAL PAPER RATINGS DEFINITIONS

A-2--Capacity for timely payment on issues with this designation is
satisfactory. However, the relative degree of safety is not as high as
for issues designated A-1.

MOODY'S INVESTORS SERVICE COMMERCIAL PAPER RATINGS

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

PROSPECTUS

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

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

Shares of the Fund are intended to be sold as an investment vehicle
for institutions, corporations, fiduciaries and individuals.
Shareholders can invest, reinvest, or redeem shares at any time
without charge or penalty imposed by the Fund. Shareholders have
access to other portfolios of the Trust through an exchange program.

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

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

The Fund has also filed a Statement of Additional Information dated
June 30, 1997, with the Securities and Exchange Commission ("SEC").
The information contained in the Statement is incorporated by
reference into this prospectus. You may request a copy of the
Statement free of charge by calling toll-free 1-800-334-2292. To
obtain other information, or make inquiries about the Trust, contact
the Trust at the address listed in the back of this prospectus.

Prospectus dated June 30, 1997

TABLE OF CONTENTS

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

SUMMARY OF FUND EXPENSES 1

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

FINANCIAL HIGHLIGHTS 2

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

GENERAL INFORMATION 3

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

INVESTMENT INFORMATION 3

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

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

INDEPENDENCE ONE MUTUAL FUND

INFORMATION 7

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

Management of the Trust 7
Distribution of Fund Shares 9
Fund Administration 9
Brokerage Transactions 9

NET ASSET VALUE 10

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

INVESTING IN THE FUND 10

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

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

EXCHANGING SECURITIES FOR FUND SHARES 11

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

EXCHANGE PRIVILEGE 12

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

REDEEMING FUND SHARES 13

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

Systematic Withdrawal Program 15
Accounts with Low Balances 15

SHAREHOLDER INFORMATION 16

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

Voting Rights 16
EFFECT OF BANKING LAWS 16

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

TAX INFORMATION 17

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

Federal Income Tax 17

PERFORMANCE INFORMATION 17

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

STANDARD & POOR'S 17

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

FINANCIAL STATEMENTS 19

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

INDEPENDENT AUDITOR'S REPORT 32

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

ADDRESSES Back Cover

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

SUMMARY OF FUND EXPENSES

- --------------------------------------------------------------------------------
SHAREHOLDER TRANSACTION EXPENSES

<TABLE>

<S> <C>
Maximum Sales Charge Imposed on Purchases (as a percentage of offering price)............................ None
Maximum Sales Charge Imposed on Reinvested Dividends

(as a percentage of offering price).................................................................... None
Contingent Deferred Sales Charge (as a percentage of original purchase

price or redemption proceeds, as applicable)........................................................... None
Redemption Fee (as a percentage of amount redeemed, if applicable)....................................... None
Exchange Fee............................................................................................. None

</TABLE>

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

<TABLE>

<S> <C>
Management Fee (after waiver)(1)......................................................................... 0.25%
12b-1 Fees............................................................................................... None
Total Other Expenses (after waiver)(2)................................................................... 0.19%

Total Fund Operating Expenses (after waivers)(3).................................................... 0.44%
</TABLE>

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

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

(3) The Total Fund Operating Expenses in the table above are based on
expenses expected to be incurred during the fiscal year ending
April 30, 1998, and are expected to be 0.63%, absent the voluntary
waivers described in Notes 1 and 2 above. During the course of
this period, expenses may be more or less than the amount shown.
The Total Fund Operating Expenses for the fiscal year ended April
30, 1997 were 0.40%, and would have been 0.64% absent the
voluntary waivers of portions of the management fee and
administrative fee.

THE PURPOSE OF THIS TABLE IS TO ASSIST AN INVESTOR IN UNDERSTANDING THE
VARIOUS COSTS AND EXPENSES THAT A SHAREHOLDER OF THE FUND WILL BEAR, EITHER
DIRECTLY OR INDIRECTLY. FOR MORE COMPLETE DESCRIPTIONS OF THE VARIOUS COSTS AND
EXPENSES, SEE "INVESTING IN THE FUND." Wire-transferred redemptions of less than
$5,000 may be subject to additional fees.
<TABLE>
<S> <C> <C> <C> <C>
EXAMPLE 1 YEAR 3 YEARS 5 YEARS 10 YEARS
You would pay the following expenses on a $1,000 investment assuming (1) 5%
annual return and (2) redemption at the end of each time period............ $5 $14 $25 $55
</TABLE>

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

INDEPENDENCE ONE EQUITY PLUS FUND
FINANCIAL HIGHLIGHTS

- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD) Reference is made to
the Independent Auditors' Report on page 32.

YEAR ENDED APRIL 30,

<S> <C> <C>
1997 1996(A)

NET ASSET VALUE, BEGINNING OF PERIOD $ 11.39 $ 10.00
- -----------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS

- -----------------------------------------------------------------------------------------
Net investment income 0.21 0.11
- -----------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments 2.70 1.38
- ----------------------------------------------------------------------------------------- --------- ---------
Total from investment operations 2.91 1.49
- ----------------------------------------------------------------------------------------- --------- ---------
LESS DISTRIBUTIONS

- -----------------------------------------------------------------------------------------
Distributions from net investment income (0.21) (0.10)
- -----------------------------------------------------------------------------------------
Distributions from net realized gain on invesments (0.05) --
- ----------------------------------------------------------------------------------------- --------- ---------
Total distributions (0.26) (0.10)
- ----------------------------------------------------------------------------------------- --------- ---------
NET ASSET VALUE, END OF PERIOD $ 14.04 $ 11.39
- ----------------------------------------------------------------------------------------- --------- ---------
TOTAL RETURN (B) 26.00% 14.96%
- -----------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS

- -----------------------------------------------------------------------------------------
Expenses 0.40% 0.39%*
- -----------------------------------------------------------------------------------------
Net investment income 1.74% 1.92%*
- -----------------------------------------------------------------------------------------
Expense waiver (c) 0.24% 0.31%*
- -----------------------------------------------------------------------------------------
SUPPLEMENTAL DATA

- -----------------------------------------------------------------------------------------
Net assets, end of period (000 omitted) $169,328 $112,609
- -----------------------------------------------------------------------------------------
Average commission rate paid (d) $0.0350 $0.0345
- -----------------------------------------------------------------------------------------
Portfolio turnover 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.

(d) Represents total commissions paid on portfolio securities divided
by total portfolio shares purchased or sold on which commissions
were charged.

Further information about Equity Plus Fund's performance is contained
in the Annual Report for the fiscal year ended April 30, 1997, which
can be obtained free of charge.

GENERAL INFORMATION

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

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

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

INVESTMENT INFORMATION

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

INVESTMENT OBJECTIVE

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

INVESTMENT POLICIES

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

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

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

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

The Fund's ability to provide investment results that correspond to or
exceed the aggregate price and dividend performance of the S&P 100
will depend partly on the size and timing of cash flows into and out
of the Fund. Investment changes to accommodate these cash flows will
be made to maintain the similarity of the Fund's portfolio to the S&P
100, with respect to the 80% investment level described above, to the
maximum practicable extent. With respect to the reciprocal 20%
investment level described above, changes will be made to accommodate
cash flows, as appropriate. From time to time, adjustments may be made
in the Fund because of changes in the composition of the S&P 100 as
announced by S&P. It is anticipated that these adjustments will occur
infrequently, and therefore, the accompanying costs, including
brokerage fees, custodial expenses, and transfer taxes, are expected
to be relatively low. Portfolio turnover is also expected to be lower
than for most other investment companies. The adverse financial
situation of an issuer may not directly result in the elimination of
its securities from the portfolio, unless the securities are removed
from the S&P 100. The Fund reserves the right to remove an investment
from the Fund if, in the Advisers' opinion, the merit of the
investment has been substantially impaired by extraordinary events or
financial conditions.

ACCEPTABLE INVESTMENTS

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

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

STOCK INDEX FUTURES AND OPTIONS. The Fund may utilize stock index
futures contracts, options, and options on futures contracts, subject
to the limitation that the value of these futures contracts and
options will not exceed 20% of the Fund's total assets. Also the Fund
will not purchase options to the extent that more than 5% of the value
of the Fund's total assets would be invested in premiums on open
option positions.

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

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

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

In view of these considerations, the Fund will comply with the
following restrictions when purchasing and selling futures
contracts. First, the Fund will not participate in futures
transactions if the sum of its initial margin deposits on open
contracts will exceed 5% of the market value of the Fund's total
assets, after taking into account the unrealized profits and
losses on those contracts it has entered into. Second, the Fund
will not enter into these contracts for speculative purposes.
Third, since the Fund does not constitute a commodity pool, it
will not market itself as such, nor serve as a vehicle for
trading in the commodities futures or commodity options markets.
In this regard, the Fund will disclose to all prospective
investors the limitations on its futures and options
transactions, and make clear that these transactions are entered
into only for bona fide hedging purposes, or other permissible
purposes pursuant to regulations promulgated by the Commodity
Futures Trading Commission ("CFTC"). Finally, the Fund has
claimed an exclusion from registration as a commodity pool
operator under the regulations promulgated by the CFTC.

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

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

U.S. GOVERNMENT SECURITIES. The Fund is permitted to invest in U.S.
government securities which are either issued or guaranteed by the U.S.
government, its agencies, or instrumentalities. These securities include,

but are not limited to, the following:

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

notes, bonds, and discount notes of U.S. government agencies or
instrumentalities, such as the: Farm Credit System, including
the National Bank for Cooperatives, Farm Credit Banks, and
Banks for Cooperatives; Farmers Home Administration; Federal
Home Loan Banks; Federal Home Loan Mortgage Corporation;
Federal National Mortgage Association; Government National
Mortgage Association; and Student Loan Marketing Association.

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

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

EQUITY INVESTMENT CONSIDERATIONS

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

DERIVATIVE CONTRACTS AND SECURITIES

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

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

INVESTMENT LIMITATION

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

The above investment limitation cannot be changed without shareholder
approval.

INDEPENDENCE ONE MUTUAL FUNDS INFORMATION

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

MANAGEMENT OF THE TRUST

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

ADVISORY FEES. The Adviser may receive an annual investment
advisory fee equal to 0.40% of the Fund's average daily net
assets. The Adviser may voluntarily choose to waive a portion of
its fee or reimburse certain expenses of the Fund.

ADVISER'S BACKGROUND. Michigan National Bank, a national banking
association, is a wholly-owned subsidiary of Michigan National
Corporation ("MNC"). MNC is a wholly owned subsidiary of National
Australia Bank Limited, which is a transnational banking
organization, headquartered in Melbourne, Australia. Through its
subsidiaries and affiliates, MNC, Michigan's fifth largest bank
holding company in terms of total assets, as of December 31,
1996, offers a full range of financial services to the public,
including commercial lending, depository services, cash
management, brokerage services, retail banking, mortgage banking,
investment advisory services and trust services. Independence One
Capital Management Corporation ("IOCM"), a nationally recognized
investment advisory subsidiary of MNC, provides investment
advisory services for trust and other managed assets. IOCM and
the Trust Division of Michigan National Bank (the "Trust
Division") have managed custodial assets totaling $10.7 billion.
Of this amount, IOCM and the Trust Division have investment
discretion over $1.9 billion.

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

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

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

SUB-ADVISER. Pursuant to the terms of an investment sub-advisory
agreement between the Adviser and Sosnoff Sheridan Corporation (doing
business as Sosnoff Sheridan Group), the Sub-Adviser furnishes certain
investment advisory services to the Adviser, including investment
research, statistical and other factual information, and
recommendations, based on its analysis, and assists the Adviser in
identifying securities for potential purchase and/or sale on behalf of
the Fund's portfolio. For the services provided and the expenses
incurred by the Sub-Adviser pursuant to the sub-advisory agreement,
the Sub-Adviser is entitled to receive an annual fee of 0.035% of the
average daily value of the Fund's equity securities payable by the
Adviser. The Sub-Adviser may elect to waive some or all of its fee. In
no event shall the Fund be responsible for any fees due to the
Sub-Adviser for its services to the Adviser. The Sub-Adviser, located
at 440 South LaSalle Street, Suite 2301, Chicago, Illinois, 60605, is
a corporation controlled by Thomas Sosnoff, its Director and
President, and Scott Sheridan, its Director, Executive Vice-President
and Secretary. In the event that the Sub-Adviser, for any reason,
ceases to furnish sub-advisory services to the Fund, the Adviser will
assume direct responsibility for all advisory functions.

DISTRIBUTION OF FUND SHARES

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

Corp. is a subsidiary of Federated Investors.

FUND ADMINISTRATION

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

MAXIMUM AVERAGE AGGREGATE DAILY
ADMINISTRATIVE FEE NET ASSETS OF THE TRUST

<C> <S>

.150% on the first $250 million
.125% on the next $250 million
.100% on the next $250 million
.075% on assets in excess of $750 million
</TABLE>

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

BROKERAGE TRANSACTIONS

NET ASSET VALUE

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

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

INVESTING IN THE FUND

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

SHARE PURCHASES

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

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

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

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

MINIMUM INVESTMENT REQUIRED

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

WHAT SHARES COST

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

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

CERTIFICATES AND CONFIRMATIONS

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

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

DIVIDENDS AND CAPITAL GAINS

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

SYSTEMATIC INVESTMENT PROGRAM

Once the Fund account has been opened, shareholder may add to their
investment on a regular basis in a minimum amount of $100. Under this
program, funds may be automatically withdrawn periodically from the
shareholder's checking account and invested in Fund shares at the net
asset value next determined after an order is received. A shareholder
may apply for participation in this program through Michigan National
Bank by calling 1-800-334-2292.

EXCHANGING SECURITIES FOR FUND SHARES

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

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

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

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

EXCHANGE PRIVILEGE

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

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

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

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

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

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

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

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

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

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

REDEEMING FUND SHARES

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

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

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

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

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

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

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

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

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

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

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

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

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

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

SYSTEMATIC WITHDRAWAL PROGRAM

Shareholders who desire to receive payments of a predetermined amount
may take advantage of the Systematic Withdrawal Program. Under this
program, shares of the Fund are redeemed to provide for periodic
withdrawal payments in an amount directed by the shareholder.
Depending upon the amount of the withdrawal payments, the amount of
dividends paid and capital gains distributions with respect to Fund
shares, and the fluctuation of the net asset value of Fund shares
redeemed under this program, redemptions may reduce, and eventually
deplete, the shareholder's investment in the Fund. For this reason,
payments under this program should not be considered as yield or
income on the shareholder's investment in the Fund. To be eligible to
participate in this program, a shareholder must have an account value
of at least $10,000, other than retirement accounts subject to
required minimum distributions. A shareholder may apply for
participation in this program through Michigan National Bank by
calling 1-800-334-2292.

ACCOUNTS WITH LOW BALANCES

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

SHAREHOLDER INFORMATION

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

VOTING RIGHTS

Each share of the Fund gives the shareholder one vote in Trustee
elections and other matters submitted to shareholders for vote. All
shares of all classes of each portfolio in the Trust have equal voting
rights, except that in matters affecting only a particular portfolio
or class, only shares of that portfolio or class are entitled to vote.
As a Massachusetts business trust, the Trust is not required to hold
annual shareholder meetings. Shareholder approval will be sought only
for certain changes in the Trust's or the Fund's operation and for the
election of Trustees under certain circumstances. As of June 9, 1997,
Pierson & Co., the nominee for Michigan National Bank may for certain
purposes be deemed to control the Equity Plus Fund because it is owner
of record of certain shares of the Fund.

EFFECT OF BANKING LAWS

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

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

TAX INFORMATION

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

FEDERAL INCOME TAX

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

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

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

PERFORMANCE INFORMATION

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

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

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

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

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

STANDARD & POOR'S

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

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

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

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

INDEPENDENCE ONE EQUITY PLUS FUND
PORTFOLIO OF INVESTMENTS

APRIL 30, 1997

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

SHARES VALUE

- ------------ ----------------------------------------------------------------------------------- --------------
<C> <S> <C>
COMMON STOCKS--96.3%

- -------------------------------------------------------------------------------------------------
AEROSPACE & DEFENSE--3.0%

-----------------------------------------------------------------------------------
22,226 Boeing Co. $ 2,192,039
-----------------------------------------------------------------------------------
3,954 General Dynamics Corp. 281,723
-----------------------------------------------------------------------------------
14,795 Raytheon Co. 645,432
-----------------------------------------------------------------------------------
13,725 Rockwell International Corp. 912,713
-----------------------------------------------------------------------------------
14,719 United Technologies Corp. 1,113,124
----------------------------------------------------------------------------------- --------------
Total 5,145,031

----------------------------------------------------------------------------------- --------------
AUTOMOTIVE--3.9%

-----------------------------------------------------------------------------------
44,038 Chrysler Corp. 1,321,140
-----------------------------------------------------------------------------------
75,083 Ford Motor Co. 2,609,134
-----------------------------------------------------------------------------------
47,385 General Motors Corp. 2,742,407
----------------------------------------------------------------------------------- --------------
Total 6,672,681

----------------------------------------------------------------------------------- --------------
BANKING--2.2%

-----------------------------------------------------------------------------------
22,256 BankAmerica Corp. 2,601,170
-----------------------------------------------------------------------------------
19,776 First Chicago NBD Corp. 1,112,400
----------------------------------------------------------------------------------- --------------
Total 3,713,570

----------------------------------------------------------------------------------- --------------
CAPITAL GOODS--1.4%

-----------------------------------------------------------------------------------
9,289 Homestake Mining Co. 123,079
-----------------------------------------------------------------------------------
26,200 Minnesota Mining & Manufacturing Co. 2,279,400
----------------------------------------------------------------------------------- --------------
Total 2,402,479

----------------------------------------------------------------------------------- --------------
CHEMICALS--4.0%

-----------------------------------------------------------------------------------
15,390 Dow Chemical Co. 1,306,226
-----------------------------------------------------------------------------------
35,288 Du Pont (E.I.) de Nemours & Co. 3,744,939
-----------------------------------------------------------------------------------
4,636 Mallinckrodt, Inc. 168,635
-----------------------------------------------------------------------------------
36,471 Monsanto Co. 1,559,135
----------------------------------------------------------------------------------- --------------
Total 6,778,935

----------------------------------------------------------------------------------- --------------
</TABLE>

INDEPENDENCE ONE EQUITY PLUS FUND

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

SHARES VALUE
<C> <S> <C>

- ------------ ----------------------------------------------------------------------------------- --------------
COMMERCIAL--1.2%

-----------------------------------------------------------------------------------
34,436 Ameritech Corp. $ 2,104,900
----------------------------------------------------------------------------------- --------------
COMPUTERS--7.5%

-----------------------------------------------------------------------------------
4,321 (a)Ceridian Corp. 144,213
-----------------------------------------------------------------------------------
40,768 (a)Cisco Systems, Inc. 2,109,744
-----------------------------------------------------------------------------------
4,794 (a)Computer Sciences Corp. 299,625
-----------------------------------------------------------------------------------
62,899 Hewlett-Packard Co. 3,302,198
-----------------------------------------------------------------------------------
32,101 International Business Machines Corp. 5,160,236
-----------------------------------------------------------------------------------
41,941 (a)Oracle Corp. 1,667,155
-----------------------------------------------------------------------------------
11,073 (a)Unisys Corp. 66,438
----------------------------------------------------------------------------------- --------------
Total 12,749,609

----------------------------------------------------------------------------------- --------------
CONSUMER--1.2%

-----------------------------------------------------------------------------------
29,702 American Express Co. 1,956,619
----------------------------------------------------------------------------------- --------------
COSMETICS & PERSONAL CARE--0.5%

-----------------------------------------------------------------------------------
8,327 Avon Products, Inc. 513,151
-----------------------------------------------------------------------------------
6,842 International Flavors & Fragrances, Inc. 288,219
----------------------------------------------------------------------------------- --------------
Total 801,370

----------------------------------------------------------------------------------- --------------
ELECTRIC--0.7%

-----------------------------------------------------------------------------------
14,625 Entergy Corp. 341,859
-----------------------------------------------------------------------------------
42,667 Southern Co. 869,340
----------------------------------------------------------------------------------- --------------
Total 1,211,199

----------------------------------------------------------------------------------- --------------
ELECTRICAL EQUIPMENT--7.3%

-----------------------------------------------------------------------------------
5,909 Black & Decker Corp. 197,951
-----------------------------------------------------------------------------------
9,959 (a)Digital Equipment Corp. 297,525
-----------------------------------------------------------------------------------
102,119 General Electric Co. 11,322,444
-----------------------------------------------------------------------------------
7,862 Honeywell, Inc. 555,254
----------------------------------------------------------------------------------- --------------
Total 12,373,174

----------------------------------------------------------------------------------- --------------
</TABLE>

INDEPENDENCE ONE EQUITY PLUS FUND

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

SHARES VALUE
<C> <S> <C>

- ------------ ----------------------------------------------------------------------------------- --------------
ELECTRONICS--5.8%

-----------------------------------------------------------------------------------
13,907 AMP, Inc. $ 498,914
-----------------------------------------------------------------------------------
50,898 Intel Corp. 7,793,756
-----------------------------------------------------------------------------------
8,746 (a)National Semiconductor Corp. 218,650
-----------------------------------------------------------------------------------
2,849 Polaroid Corp. 138,177
-----------------------------------------------------------------------------------
2,069 Tektronix, Inc. 111,985
-----------------------------------------------------------------------------------
11,935 Texas Instruments, Inc. 1,065,199
----------------------------------------------------------------------------------- --------------
Total 9,826,681

----------------------------------------------------------------------------------- --------------
ENTERTAINMENT--2.1%

-----------------------------------------------------------------------------------
42,316 Disney (Walt) Co. 3,469,912
-----------------------------------------------------------------------------------
6,517 (a)Harrah's Entertainment, Inc. 104,272
----------------------------------------------------------------------------------- --------------
Total 3,574,184

----------------------------------------------------------------------------------- --------------
FINANCIAL SERVICES--2.7%

-----------------------------------------------------------------------------------
28,726 Citicorp 3,235,266
-----------------------------------------------------------------------------------
8,632 Great Western Financial Corp. 362,544
-----------------------------------------------------------------------------------
10,215 Merrill Lynch & Co., Inc. 972,979
----------------------------------------------------------------------------------- --------------
Total 4,570,789

----------------------------------------------------------------------------------- --------------
FOOD & BEVERAGE--10.1%

-----------------------------------------------------------------------------------
154,327 Coca-Cola Co. 9,819,055
-----------------------------------------------------------------------------------
23,081 Heinz (H.J.) Co. 957,862
-----------------------------------------------------------------------------------
43,733 McDonald's Corp. 2,345,182
-----------------------------------------------------------------------------------
97,377 PepsiCo, Inc. 3,396,023
-----------------------------------------------------------------------------------
6,664 Ralston Purina Co. 548,947
----------------------------------------------------------------------------------- --------------
Total 17,067,069

----------------------------------------------------------------------------------- --------------
FOREST PRODUCTS & PAPER--1.0%

-----------------------------------------------------------------------------------
3,070 Boise Cascade Corp. 102,077
-----------------------------------------------------------------------------------
6,052 Champion International Corp. 281,418
-----------------------------------------------------------------------------------
19,011 International Paper Co. 803,215
-----------------------------------------------------------------------------------
</TABLE>

INDEPENDENCE ONE EQUITY PLUS FUND

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

SHARES VALUE
<C> <S> <C>

- ------------ ----------------------------------------------------------------------------------- --------------
FOREST PRODUCTS & PAPER--CONTINUED

-----------------------------------------------------------------------------------
12,430 Weyerhaeuser Co. $ 568,673
----------------------------------------------------------------------------------- --------------
Total 1,755,383

----------------------------------------------------------------------------------- --------------
HOMEBUILDERS--0.2%

-----------------------------------------------------------------------------------
5,260 Fluor Corp. 289,300
----------------------------------------------------------------------------------- --------------
HOUSEHOLD PRODUCTS--0.6%

-----------------------------------------------------------------------------------
9,207 Colgate-Palmolive Co. 1,021,977
----------------------------------------------------------------------------------- --------------
INSURANCE--3.3%

-----------------------------------------------------------------------------------
12,747 American General Corp. 556,088
-----------------------------------------------------------------------------------
29,431 American International Group, Inc. 3,781,883
-----------------------------------------------------------------------------------
4,663 CIGNA Corp. 701,199
-----------------------------------------------------------------------------------
7,362 ITT Hartford Group, Inc. 548,469
----------------------------------------------------------------------------------- --------------
Total 5,587,639

----------------------------------------------------------------------------------- --------------
MANUFACTURING--1.2%

-----------------------------------------------------------------------------------
10,926 Allegheny Teledyne, Inc. 290,905
-----------------------------------------------------------------------------------
20,888 Eastman Kodak Co. 1,744,148
----------------------------------------------------------------------------------- --------------
Total 2,035,053

----------------------------------------------------------------------------------- --------------
MEDICAL SUPPLIES--1.4%

-----------------------------------------------------------------------------------
17,108 Baxter International, Inc. 819,045
-----------------------------------------------------------------------------------
42,079 Columbia/HCA Healthcare Corp. 1,472,765
----------------------------------------------------------------------------------- --------------
Total 2,291,810

----------------------------------------------------------------------------------- --------------
METALS & MINING--0.5%

-----------------------------------------------------------------------------------
10,869 Aluminum Co. of America 759,471
----------------------------------------------------------------------------------- --------------
OFFICE EQUIPMENT--0.9%

-----------------------------------------------------------------------------------
2,445 Harris Corp. 209,048
-----------------------------------------------------------------------------------
20,344 Xerox Corp. 1,251,156
----------------------------------------------------------------------------------- --------------
Total 1,460,204

----------------------------------------------------------------------------------- --------------
OIL--11.7%

-----------------------------------------------------------------------------------
31,168 Amoco Corp. 2,606,424
-----------------------------------------------------------------------------------
</TABLE>

INDEPENDENCE ONE EQUITY PLUS FUND

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

SHARES VALUE
<C> <S> <C>

- ------------ ----------------------------------------------------------------------------------- --------------
OIL--CONTINUED

-----------------------------------------------------------------------------------
10,097 Atlantic Richfield Co. $ 1,374,454
-----------------------------------------------------------------------------------
9,021 Baker Hughes, Inc. 311,224
-----------------------------------------------------------------------------------
6,597 Coastal Corp. 313,357
-----------------------------------------------------------------------------------
155,672 Exxon Corp. 8,814,927
-----------------------------------------------------------------------------------
7,848 Halliburton Co. 554,265
-----------------------------------------------------------------------------------
24,694 Mobil Corp. 3,210,220
-----------------------------------------------------------------------------------
20,832 Occidental Petroleum Corp. 460,908
-----------------------------------------------------------------------------------
15,276 Schlumberger Ltd. 1,691,817
-----------------------------------------------------------------------------------
9,737 Williams Cos., Inc. (The) 427,211
----------------------------------------------------------------------------------- --------------
Total 19,764,807

----------------------------------------------------------------------------------- --------------
PHARMACEUTICALS--10.0%

-----------------------------------------------------------------------------------
62,780 Bristol-Myers Squibb Co. 4,112,090
-----------------------------------------------------------------------------------
83,473 Johnson & Johnson 5,112,721
-----------------------------------------------------------------------------------
74,768 Merck & Co., Inc. 6,766,504
-----------------------------------------------------------------------------------
31,848 Pharmacia & Upjohn, Inc. 943,497
----------------------------------------------------------------------------------- --------------
Total 16,934,812

----------------------------------------------------------------------------------- --------------
RECREATION--0.1%

-----------------------------------------------------------------------------------
6,169 Brunswick Corp. 174,274
----------------------------------------------------------------------------------- --------------
RETAIL--4.4%

-----------------------------------------------------------------------------------
30,677 (a)KMart Corp. 417,974
-----------------------------------------------------------------------------------
17,168 Limited, Inc. 311,170
-----------------------------------------------------------------------------------
15,351 May Department Stores Co. 709,984
-----------------------------------------------------------------------------------
24,541 Sears, Roebuck & Co. 1,177,968
-----------------------------------------------------------------------------------
3,691 Tandy Corp. 193,316
-----------------------------------------------------------------------------------
18,384 (a)Toys R Us, Inc. 523,944
-----------------------------------------------------------------------------------
145,284 Wal-Mart Stores, Inc. 4,104,273
----------------------------------------------------------------------------------- --------------
Total 7,438,629

----------------------------------------------------------------------------------- --------------
</TABLE>

INDEPENDENCE ONE EQUITY PLUS FUND

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

SHARES VALUE
<C> <S> <C>

- ------------ ----------------------------------------------------------------------------------- --------------
STEEL--0.0%

-----------------------------------------------------------------------------------
7,071 (a)Bethlehem Steel Corp. $ 58,336
----------------------------------------------------------------------------------- --------------
TELECOMMUNICATIONS--5.6%

-----------------------------------------------------------------------------------
102,622 AT&T Corp. 3,437,837
-----------------------------------------------------------------------------------
27,440 Bell Atlantic Corp. 1,859,060
-----------------------------------------------------------------------------------
42,930 MCI Communications Corp. 1,636,706
-----------------------------------------------------------------------------------
27,579 NYNEX Corp. 1,427,213
-----------------------------------------------------------------------------------
16,196 Northern Telecom Ltd. 1,176,235
----------------------------------------------------------------------------------- --------------
Total 9,537,051

----------------------------------------------------------------------------------- --------------
TRANSPORTATION--1.3%

-----------------------------------------------------------------------------------
9,587 Burlington Northern Santa Fe 754,976
-----------------------------------------------------------------------------------
4,585 Delta Air Lines, Inc. 422,393
-----------------------------------------------------------------------------------
7,150 (a)Federal Express Corp. 385,206
-----------------------------------------------------------------------------------
7,841 Norfolk Southern Corp. 704,710
----------------------------------------------------------------------------------- --------------
Total 2,267,285

----------------------------------------------------------------------------------- --------------
UTILITIES-ELECTRIC--0.5%

-----------------------------------------------------------------------------------
11,749 American Electric Power Co., Inc. 475,835
-----------------------------------------------------------------------------------
13,658 Unicom Corp. 297,062
----------------------------------------------------------------------------------- --------------
Total 772,897

----------------------------------------------------------------------------------- --------------
TOTAL COMMON STOCKS (IDENTIFIED COST $114,119,504) 163,097,218
----------------------------------------------------------------------------------- --------------
</TABLE>

INDEPENDENCE ONE EQUITY PLUS FUND

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

PRINCIPAL

AMOUNT VALUE
<C> <S> <C>

- ------------ ----------------------------------------------------------------------------------- --------------
(B) REPURCHASE AGREEMENT--3.2%

- -------------------------------------------------------------------------------------------------
$ 5,407,000 First Chicago Capital Markets, Inc., 5.42%, dated 4/30/1997, due
5/1/1997 (AT AMORTIZED COST) $ 5,407,000
----------------------------------------------------------------------------------- --------------
TOTAL INVESTMENTS (IDENTIFIED COST $119,526,504)(C) $ 168,504,218
----------------------------------------------------------------------------------- --------------
</TABLE>

(a) Non-income producing security.

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

(c) The cost of investments for federal tax purposes amounts to
$119,584,156. The net unrealized appreciation of investments on a
federal tax basis amounts to $48,920,062 which is comprised of
$50,425,265 appreciation and $1,505,203 depreciation at April 30,
1997.

Note: The categories of investments are shown as a percentage of net assets

($169,328,223) at
April 30, 1997.

(See Notes which are an integral part of the Financial Statements)
INDEPENDENCE ONE EQUITY PLUS FUND

STATEMENT OF ASSETS AND LIABILITIES

APRIL 30, 1997

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

<TABLE>

ASSETS:

- -------------------------------------------------------------------------------------------------
Total investments in securities, at value

(identified cost $119,526,504, and tax cost $119,584,156) $ 168,504,218
- -------------------------------------------------------------------------------------------------
Income receivable 214,563

- -------------------------------------------------------------------------------------------------
Receivable for shares sold 2,643,174

- -------------------------------------------------------------------------------------------------
Deferred expenses 14,980

- ------------------------------------------------------------------------------------------------- --------------
Total assets 171,376,935

- -------------------------------------------------------------------------------------------------
LIABILITIES:

- -----------------------------------------------------------------------------------
Payable for shares redeemed $ 2,032,158
- -----------------------------------------------------------------------------------
Accrued expenses 16,554

- ----------------------------------------------------------------------------------- ------------
Total liabilities 2,048,712

- ------------------------------------------------------------------------------------------------- --------------
NET ASSETS for 12,060,154 shares outstanding $ 169,328,223
- ------------------------------------------------------------------------------------------------- --------------
NET ASSETS CONSIST OF:

- -------------------------------------------------------------------------------------------------
Paid in capital $ 118,473,226
- -------------------------------------------------------------------------------------------------
Net unrealized appreciation of investments 48,977,714

- -------------------------------------------------------------------------------------------------
Accumulated net realized gain on investments 1,729,963
- -------------------------------------------------------------------------------------------------
Undistributed net investment income 147,320

- ------------------------------------------------------------------------------------------------- --------------
Total Net Assets $ 169,328,223
- ------------------------------------------------------------------------------------------------- --------------
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE:

$169,328,223 / 12,060,154 shares outstanding $ 14.04
- ------------------------------------------------------------------------------------------------- --------------
</TABLE>

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

INDEPENDENCE ONE EQUITY PLUS FUND
STATEMENT OF OPERATIONS
YEAR ENDED APRIL 30, 1997

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

<TABLE>

<S> <C> <C> <C>
INVESTMENT INCOME:

- ---------------------------------------------------------------------------------------------------
Dividends $ 2,919,790
- ---------------------------------------------------------------------------------------------------
Interest 219,655

- --------------------------------------------------------------------------------------------------- -------------
Total income 3,139,445

- ---------------------------------------------------------------------------------------------------
EXPENSES:

- --------------------------------------------------------------------------------------
Investment advisory fee $ 588,469
- --------------------------------------------------------------------------------------
Administrative personnel and services fee 160,370

- --------------------------------------------------------------------------------------
Custodian fees 46,720

- --------------------------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses 32,771
- --------------------------------------------------------------------------------------
Directors'/Trustees' fees 3,000

- --------------------------------------------------------------------------------------
Auditing fees 12,643

- --------------------------------------------------------------------------------------
Legal fees 1,407

- --------------------------------------------------------------------------------------
Portfolio accounting fees 48,989

- --------------------------------------------------------------------------------------
Share registration costs 24,714

- --------------------------------------------------------------------------------------
Printing and postage 8,390

- --------------------------------------------------------------------------------------
Insurance premiums 2,846

- --------------------------------------------------------------------------------------
Miscellaneous 4,179

- -------------------------------------------------------------------------------------- -----------
Total expenses 934,498

- --------------------------------------------------------------------------------------
Waivers--

- -------------------------------------------------------------------------
Waiver of investment advisory fee $(262,493)

- -------------------------------------------------------------------------
Waiver of administrative personnel and services fee (88,264)
- ------------------------------------------------------------------------- -----------
Total waivers (350,757)

- -------------------------------------------------------------------------------------- -----------
Net expenses 583,741

- --------------------------------------------------------------------------------------------------- -------------
Net investment income 2,555,704

- --------------------------------------------------------------------------------------------------- -------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:

- ---------------------------------------------------------------------------------------------------
Net realized gain on investments 1,757,572

- ---------------------------------------------------------------------------------------------------
Net change in unrealized appreciation of investments 31,063,371
- --------------------------------------------------------------------------------------------------- -------------
Net realized and unrealized gain on investments 32,820,943
- --------------------------------------------------------------------------------------------------- -------------
Change in net assets resulting from operations $ 35,376,647
- --------------------------------------------------------------------------------------------------- -------------
</TABLE>

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

INDEPENDENCE ONE EQUITY PLUS FUND
STATEMENT OF CHANGES IN NET ASSETS

- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>

YEAR ENDED APRIL 30,

------------------------------
1997 1996*
- --------------------------------------------------------------------------------- -------------- --------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:

- ---------------------------------------------------------------------------------
OPERATIONS--

- ---------------------------------------------------------------------------------
Net investment income $ 2,555,704 $ 1,003,299
- ---------------------------------------------------------------------------------
Net realized gain on investments ($1,787,648 and $593,968 net gains,

respectively, as computed for federal tax purposes) 1,757,572 566,391
- ---------------------------------------------------------------------------------
Net change in unrealized appreciation 31,063,371 17,914,343
- --------------------------------------------------------------------------------- -------------- --------------
Change in net assets resulting from operations 35,376,647 19,484,033
- --------------------------------------------------------------------------------- -------------- --------------
DISTRIBUTIONS TO SHAREHOLDERS--

- ---------------------------------------------------------------------------------
Distributions from net investment income (2,489,618) (922,065)
- ---------------------------------------------------------------------------------
Distributions from net realized gains (594,000) --
- --------------------------------------------------------------------------------- -------------- --------------
Change in net assets resulting from distributions to shareholders (3,083,618) (922,065)
- --------------------------------------------------------------------------------- -------------- --------------
SHARE TRANSACTIONS--

- ---------------------------------------------------------------------------------
Proceeds from sale of shares 50,948,693 98,945,293
- ---------------------------------------------------------------------------------
Net asset value of shares issued to shareholders in payment of distributions

declared 1,995,104 6,353
- ---------------------------------------------------------------------------------
Cost of shares redeemed (28,517,581) (4,904,636)
- --------------------------------------------------------------------------------- -------------- --------------
Change in net assets resulting from share transactions 24,426,216 94,047,010
- --------------------------------------------------------------------------------- -------------- --------------
Change in net assets 56,719,245 112,608,978
- ---------------------------------------------------------------------------------
NET ASSETS:

- ---------------------------------------------------------------------------------
Beginning of period 112,608,978 --
- --------------------------------------------------------------------------------- -------------- --------------
End of period (including undistributed net investment income of $147,320 and

$81,234, respectively) $ 169,328,223 $ 112,608,978
- --------------------------------------------------------------------------------- -------------- --------------
</TABLE>

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

(See Notes which are an integral part of the Financial Statements)
INDEPENDENCE ONE EQUITY PLUS FUND

NOTES TO FINANCIAL STATEMENTS

APRIL 30, 1997

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

(1) ORGANIZATION

Independence One Mutual Funds (the "Trust") is registered under the
Investment Company Act of 1940, as amended (the "Act") as an open-end,
management investment company. The Trust consists of seven portfolios.
The financial statements included herein are only those of
Independence One Equity Plus Fund (the "Fund"). The financial
statements of the other portfolios are presented separately. The
assets of each portfolio are segregated and a shareholder's interest
is limited to the portfolio in which shares are held. The investment
objective of the Fund is total return.

(2) SIGNIFICANT ACCOUNTING POLICIES

The following is a summary of significant accounting policies
consistently followed by the Fund in the preparation of its financial
statements. These policies are in conformity with generally accepted
accounting principles.

INVESTMENT VALUATIONS--Listed equity securities are valued at the
last sale price reported on a national securities exchange.
Short-term securities are valued at the prices provided by an
independent pricing service. However, short-term securities with
remaining maturities of sixty days or less at the time of
purchase may be valued at amortized cost, which approximates fair
market value.

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

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

INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS--Interest income
and expenses are accrued daily. Bond premium and discount, if
applicable, are amortized as required by the Internal Revenue
Code, as amended (the "Code"). Dividend income and distributions
to shareholders are recorded on the ex-dividend date.

INDEPENDENCE ONE EQUITY PLUS FUND

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

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

WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Fund may
engage in when-issued or delayed delivery transactions. The Fund
records when-issued securities on the trade date and maintains
security positions such that sufficient liquid assets will be
available to make payment for the securities purchased.
Securities purchased on a when-issued or delayed delivery basis
are marked to market daily and begin earning interest on the
settlement date.

DEFERRED EXPENSES--The costs incurred by the Fund with respect to
registration of its shares in its first fiscal year, excluding
the initial expense of registering its shares, have been deferred
and are being amortized over a period not to exceed five years
from the Fund's commencement date.

USE OF ESTIMATES--The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the
amounts of assets, liabilities, expenses and revenues reported in
the financial statements. Actual results could differ from those
estimated.

OTHER--Investment transactions are accounted for on the trade
date.

(3) SHARES OF BENEFICIAL INTEREST

The Declaration of Trust permits the Trustees to issue an unlimited
number of full and fractional shares of beneficial interest (without
par value).

Transactions in shares were as follows:
<TABLE>

YEAR ENDED APRIL 30,

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

1997 1996(A)

- -------------------------------------------------------------------------------------- ----------- ------------
<S> <C> <C>
Shares sold 4,175,707 10,346,964

- --------------------------------------------------------------------------------------
Shares issued to shareholders in payment of distributions declared 164,811 571
- --------------------------------------------------------------------------------------
Shares redeemed (2,168,967) (458,932)
- -------------------------------------------------------------------------------------- ----------- ------------
Net change resulting from share transactions 2,171,551 9,888,603
- -------------------------------------------------------------------------------------- ----------- ------------
</TABLE>

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

(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES

INVESTMENT ADVISORY FEE--Michigan National Bank, the Fund's
investment adviser (the "Adviser"), receives for its services an
annual investment advisory fee equal to 0.40% of the

INDEPENDENCE ONE EQUITY PLUS FUND

- --------------------------------------------------------------------------------
Fund's average daily net assets. The Adviser may voluntarily
choose to waive any portion of its fee. The Adviser can modify or
terminate this voluntary waiver at any time at its sole
discretion.

Under the terms of a sub-advisory agreement between the Adviser
and Sosnoff Sheridan Corporation, Sosnoff Sheridan Corporation
receives an annual fee from the Adviser equal to 0.035% of the
average daily value of the Fund's equity securities. Sosnoff
Sheridan Corporation may voluntarily choose to reduce its
compensation. ADMINISTRATIVE FEE--Federated Administrative
Services ("FAS") provides the Fund with certain administrative
personnel and services. The fee paid to FAS is based on the level
of average aggregate net assets of the Trust for the period. The
administrative fee during any fiscal year shall be at least
$50,000 for each portfolio in the Trust. FAS may voluntarily
choose to waive a portion of its fee.

TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND
EXPENSES--Federated Services Company ("FServ"), through its
subsidiary, Federated Shareholder Services Company ("FSSC")
serves as transfer and dividend disbursing agent for the Fund.
The fee paid to FSSC is based on the size, type, and number of
accounts and transactions made by shareholders.

PORTFOLIO ACCOUNTING FEES--FServ maintains the Fund's accounting
records for which it receives a fee. The fee is based on the
level of the Fund's average daily net assets for the period, plus
out-of-pocket expenses.

CUSTODIAN FEES--Michigan National Bank is the Fund's custodian.
The fee is based on the level of the Fund's average daily net
assets for the period, plus out-of-pocket expenses.

ORGANIZATIONAL EXPENSES--Organizational expenses of $23,382 were
borne initially by FAS. The Fund has agreed to reimburse FAS for
the organizational expenses during the five year period following
effective date. For the period ended April 30, 1997, the Fund
paid $2,728 pursuant to this agreement.

GENERAL--Certain of the Officers of the Trust are Officers and/or
Directors or Trustees of the above companies.

(5) INVESTMENT TRANSACTIONS

Purchases and sales of investments, excluding short-term securities,
for the period ended April 30, 1997, were as follows:

<TABLE>

<S> <C>
PURCHASES $ 33,660,128

- --------------------------------------------------------------------------------------------------- -------------
SALES $ 11,994,940
- --------------------------------------------------------------------------------------------------- -------------
</TABLE>

REPORT OF KPMG PEAT MARWICK LLP,
INDEPENDENT AUDITORS

- --------------------------------------------------------------------------------
To the Board of Trustees and Shareholders INDEPENDENCE ONE MUTUAL
FUNDS:

We have audited the accompanying statement of assets and liabilities,
including the portfolio of investments, of Independence One Equity
Plus Fund (a portfolio within Independence One Mutual Funds) as of
April 30, 1997, and the related statement of operations for the year
then ended, and the statements of changes in net assets and the
financial highlights, which is presented on page 2 of this prospectus,
for the year or period from September 25, 1995 (commencement of
operations) to April 30, 1997. These financial statements and
financial highlights are the responsibility of the Fund's management.
Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits. We conducted
our audits in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. Our procedures included
confirmation of securities owned at April 30, 1997 by correspondence
with the custodian. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion. In our
opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position
of Independence One Equity Plus Fund as of April 30, 1997, and the
results of its operations, changes in its net assets, and its
financial highlights for each of the periods listed above, in
conformity with generally accepted accounting principles.

KPMG PEAT MARWICK LLP

Pittsburgh, Pennsylvania
June 17, 1997

INDEPENDENCE ONE
MUTUAL FUNDS

INDEPENDENCE ONE
EQUITY PLUS FUND

Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779

INVESTMENT ADVISER

Michigan National Bank
27777 Inkster Road

Mail Code 10-52

Farmington Hills, Michigan 48333-9065

SUB-ADVISER

Sosnoff Sheridan Corporation
440 South LaSalle Street

Suite 2301
Chicago, Illinois 60605

DISTRIBUTOR
Federated Securities Corp.
Federated Investors Tower

Pittsburgh, Pennsylvania 15222-3779

CUSTODIAN

Michigan National Bank
27777 Inkster Road

Mail Code 10-30

Farmington Hills, Michigan 48333-9065

TRANSFER AGENT AND

DIVIDEND DISBURSING AGENT

Federated Shareholder
Services Company

P.O. Box 8600
Boston, Massachusetts 02266-8600

INDEPENDENT AUDITORS

KPMG Peat Marwick LLP
One Mellon Bank Center

Pittsburgh, Pennsylvania 15219
Independence One(R)
Equity Plus Fund

Distributed by Federated Securities Corp.

Prospectus dated
June 30, 1997

[LOGO OF MICHIGAN NATIONAL BANK INVESTMENT ADVISOR]
[LOGO OF RECYCLED PAPER]

Cusip 453777872
G00979-08 (6/97)

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

STATEMENT OF ADDITIONAL INFORMATION

This Statement of Additional Information should be read with
the prospectus of Independence One Equity Plus Fund (the
"Fund"), a portfolio of Independence One Mutual Funds (the
"Trust") dated June 30, 1997. This Statement is not a
prospectus. You may request a copy of a prospectus free of
charge by calling 1-800-334-2292.

FEDERATED INVESTORS TOWER
PITTSBURGH, PENNSYLVANIA 15222-3779

Statement dated June 30, 1997

[GRAPHIC OMITTED]

Cusip 453777872
G01198 -01 (6/97)

<PAGE>

TABLE OF CONTENTS

GENERAL INFORMATION ABOUT THE FUND 1

INVESTMENT OBJECTIVE AND POLICIES 1
Types of Investments 1
Portfolio Turnover 3
Investment Limitations 3

INDEPENDENCE ONE MUTUAL FUNDS MANAGEMENT 6
Officers and Trustees 6
Fund Ownership 7
Trustees' Compensation 8
Trustee Liability 8
Massachusetts Partnership Law 8

INVESTMENT ADVISORY SERVICES 8
Adviser to the Fund 8
Advisory Fees 9
Sub-Adviser to the Fund 9
Sub-Advisory Fees 9

BROKERAGE TRANSACTIONS 9

OTHER SERVICES 9
Trust Administration 9
Custodian 9
Transfer Agent and Dividend Disbursing Agent 10
Independent Auditors 10

PURCHASING SHARES 10
Conversion to Federal Funds 10

DETERMINING NET ASSET VALUE 10

DETERMINING MARKET VALUE OF SECURITIES 10

REDEEMING SHARES 10
Redemption in Kind 10

TAX STATUS 11
The Fund's Tax Status 11
Shareholders' Tax Status 11
Capital Gains 11

TOTAL RETURN 11

YIELD 12

PERFORMANCE COMPARISONS 12
Economic and Market Information 13

<PAGE>

GENERAL INFORMATION ABOUT THE FUND

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

INVESTMENT OBJECTIVE AND POLICIES

The Fund's investment objective is total return. This investment
objective cannot be changed without the approval of shareholders.

TYPES OF INVESTMENTS

In addition to the common stocks described in the prospectus, the Fund
may also invest in temporary investments which include, but are not
limited to, short-term money market instruments and U.S. government
obligations, and securities in such proportions as, in the judgment of
the Fund's investment adviser, prevailing market conditions warrant.
The following discussion supplements the description of the Fund's
investment policies in the prospectus. Unless otherwise indicated, the
investment policies described below may be changed by the Board of
Trustees (the "Trustees") without shareholder approval. Shareholders
will be notified before any material change in the policies becomes
effective.

U.S. GOVERNMENT OBLIGATIONS

The types of U.S. government obligations in which the Fund may
invest generally include direct obligations of the U.S. Treasury (such
as U.S. Treasury bills, notes, and bonds) and obligations issued or
guaranteed by U.S. government agencies or instrumentalities. These
securities are backed by:

o the full faith and credit of the U.S. Treasury;

o the issuer's right to borrow from the U.S. Treasury;

o the discretionary authority of the U.S. government to purchase
certain obligations of agencies or instrumentalities; or

o the credit of the agency or instrumentality issuing the obligations.

Examples of agencies and instrumentalities which may not
always receive financial support from the U.S. government
are: Farm Credit System, including the National Bank for
Cooperatives, Farm Credit Banks, and Banks for Cooperatives;
Farmers Home Administration; Federal Home Loan Banks; Federal
Home Loan Mortgage Corporation; Federal National Mortgage
Association; Government National Mortgage Association; and
Student Loan Marketing Association.

VARIABLE RATE U.S. GOVERNMENT SECURITIES

In the case of certain U.S. government securities purchased
by the Fund that carry variable interest rates, these rates
will reduce the changes in the market value of such
securities from their original purchase prices.

Accordingly, the potential for capital appreciation or
capital depreciation should not be greater than the potential
for capital appreciation or capital depreciation of fixed
interest rate U.S. government securities having maturities
equal to the interest rate adjustment dates of the variable
rate U.S. government securities.

The Fund may purchase variable rate U.S. government
securities upon the determination by the Trustees that the
interest rate as adjusted will cause the instrument to have a
current market value that approximates its par value on the
adjustment date.

<PAGE>

MONEY MARKET INSTRUMENTS

The Fund may invest in the following money market
instruments:

o instruments of domestic and foreign banks and savings
associations having capital, surplus, and undivided
profits of over $100,000,000, or if the principal amount
of the instrument is insured in full by the Federal
Deposit Insurance Corporation ("FDIC");

o commercial paper issued by domestic or foreign
corporations rated A-1 by Standard & Poor's Ratings Group
("S&P") Prime-1 by Moody's Investors Service, Inc., or F-1
by Fitch Investors Service, Inc. or, if unrated, of
comparable quality as determined by the Fund's investment
adviser;

o time and savings deposits whose accounts are insured by
the Bank Insurance Fund ("BIF") or in institutions whose
accounts are insured by the Savings Association Insurance
Fund, which is also administered by the FDIC, including
certificates of deposit issued by, and other time deposits
in, foreign branches of BIF-insured banks; or

o bankers' acceptances.

REPURCHASE AGREEMENTS

The Fund requires its custodian to take possession of the
securities subject to repurchase agreements and these
securities will be marked to market daily. To the extent that
the original seller does not repurchase the securities from
the Fund, the Fund could receive less than the repurchase
price on any sale of such securities. In the event that a
defaulting seller of the securities filed for bankruptcy or
became insolvent, disposition of such securities by the Fund
might be delayed pending court action. The Fund believes that
under the regular procedures normally in effect for custody
of the Fund's portfolio securities subject to repurchase
agreements, a court of competent jurisdiction would rule in
favor of the Fund and allow retention or disposition of such
securities. The Fund will only enter into repurchase
agreements with banks and other recognized financial
institutions, such as broker/dealers, which are deemed by the
Fund's investment adviser to be creditworthy pursuant to
guidelines established by the Trustees.

STOCK INDEX FUTURES AND OPTIONS

The Fund may utilize stock index futures contracts, options,
and options on futures contracts as discussed in the
prospectus.

A stock index futures contract is a bilateral agreement which
obligates the seller to deliver (and the purchaser to take
delivery of) an amount of cash equal to a specific dollar
amount times the difference between the value of a specific
stock index at the close of trading of the contract and the
price at which the agreement is originally made. There is no
physical delivery of the stocks constituting the index, and
no price is paid upon entering into a futures contract. In
general, contracts are closed out prior to their expiration.
The Fund, when purchasing or selling a futures contract, will
initially be required to deposit in a segregated account in
the broker's name with the Fund's custodian an amount of cash
or U.S. government securities approximately equal to 5-10% of
the contract value. This amount is known as "initial margin,"
and it is subject to change by the exchange or board of trade
on which the contract is traded. Subsequent payments to and
from the broker are made on a daily basis as the price of the
index or the securities underlying the futures contract
fluctuates. These payments are known as "variation margins,"
and the fluctuation in value of the long and short positions
in the futures contract is a process referred to as "marking
to market." The Fund may decide to close its position on a
contract at any time prior to the contract's expiration. This
is accomplished by the Fund taking an opposite position at
the then prevailing price, thereby terminating its existing
position in the contract. Because both the initial and
variation margin resemble a performance bond or good faith
deposit on the contract, they are returned to the Fund upon
the termination of the contract, assuming that all
contractual obligations have been satisfied. Therefore, the
margin utilized in futures contracts is readily
distinguishable from the margin employed in security
transactions, since futures contracts margin does not involve
the borrowing of funds to finance the transaction.

A put option gives the Fund, in return for a premium, the
right to sell the underlying security to the writer (seller)
at a specified price during the term of the option. Put
options on stock indices are similar to put options on stocks
except for the delivery requirements. Instead of giving the
Fund the right to make delivery of stock at a specified
price, a put option on a stock index gives the Fund, as
holder, the right to receive an amount of cash upon exercise
of the option.

<PAGE>

The Fund may also write covered call options. As the writer
of a call option, the Fund has the obligation upon exercise
of the option during the option period to deliver the
underlying security upon payment of the exercise price.
Writing of call options is intended to generate income for
the Fund and thereby protect against price movements in
particular securities in the Fund's portfolio.

The Fund may only: (1) buy listed put options on stock
indices; (2) buy listed put options on securities held in its
portfolio; and (3) sell listed call options either on
securities held in its portfolio or on securities which it
has the right to obtain without payment of further
consideration (or has segregated cash in the amount of any
such additional consideration). The Fund will maintain its
positions in securities, option rights, and segregated cash
subject to puts and calls until the options are exercised,
closed, or expired.

REVERSE REPURCHASE AGREEMENTS

The Fund also may enter into reverse repurchase agreements
under certain circumstances. This transaction is similar to
borrowing cash. In a reverse repurchase agreement, the Fund
transfers possession of a portfolio instrument to another
person, such as a financial institution, broker, or dealer,
in return for a percentage of the instrument's market value
in cash, and agrees that on a stipulated date in the future
the Fund will repurchase the portfolio instrument by
remitting the original consideration plus interest at an
agreed upon rate. The use of reverse repurchase agreements
may enable the Fund to avoid selling portfolio instruments at
a time when a sale may be deemed to be disadvantageous, but
the ability to enter into reverse repurchase agreements does
not ensure that the Fund will be able to avoid selling
portfolio instruments at a disadvantageous time.

When effecting reverse repurchase agreements, liquid assets
of the Fund, in a dollar amount sufficient to make payment
for the obligations to be purchased, are segregated at the
trade date. These securities are marked to market daily and
maintained until the transaction is settled.

LENDING OF PORTFOLIO SECURITIES

In order to generate additional income, the Fund may lend
portfolio securities on a short-term or long-term basis, or
both, to broker/dealers, banks, or other institutional
borrowers of securities. The Fund will only enter into loan
arrangements with broker/dealers, banks, or other
institutions which the Fund's investment adviser has
determined are creditworthy and will receive collateral in
the form of cash or U.S. government securities equal to at
least 102% of the value of the securities loaned.

There is the risk that when lending portfolio securities, the
securities may not be available to the Fund on a timely basis
and the Fund may, therefore, lose the opportunity to sell the
securities at a desirable price. In addition, in the event
that a borrower of securities would file for bankruptcy or
become insolvent, disposition of the securities may be
delayed pending court action.

PORTFOLIO TURNOVER

The Fund may trade or dispose of portfolio securities as considered
necessary to meet its investment objective. It is not anticipated that
the portfolio trading engaged in by the Fund will result in its annual
rate of portfolio turnover exceeding 100%. For the fiscal year ended
April 30, 1997 and for the period from September 25, 1995 (date of
initial public investment) to April 30, 1996, the Fund's portfolio
turnover rates were 8% and 6%, respectively.

INVESTMENT LIMITATIONS

SELLING SHORT AND BUYING ON MARGIN

The Fund will not sell any securities short or purchase any
securities on margin, but may obtain such short-term credits
as are necessary for clearance of transactions. The deposit
or payment by the Fund of initial or variation margin in
connection with futures contracts or related options
transactions is not considered the purchase of a security on
margin.

<PAGE>

ISSUING SENIOR SECURITIES AND BORROWING MONEY

The Fund will not issue senior securities except that the
Fund may borrow money and engage in reverse repurchase
agreements in amounts up to one-third of the value of its
total assets, including the amount borrowed. The Fund will
not purchase any securities while borrowings in excess of 5%
of the value of the Fund's total assets are outstanding.

The Fund will not borrow money or engage in reverse
repurchase agreements for investment leverage, but rather as
a temporary, extraordinary, or emergency measure to
facilitate management of the portfolio by enabling the Fund
to meet redemption requests when the liquidation of portfolio
securities is deemed to be inconvenient or disadvantageous.

PLEDGING ASSETS

The Fund will not mortgage, pledge, or hypothecate any assets
except to secure permitted borrowings. For the purpose of
this limitation, the following are not deemed to be pledges:
margin deposits for the purchase and sale of futures
contracts and related options, and segregation or collateral
arrangements made in connection with options activities.

INVESTING IN REAL ESTATE

The Fund will not purchase or sell real estate, including
limited partnership interests, although it may invest in the
securities of issuers whose business involves the purchase or
sale of real estate or in securities which are secured by
real estate or interests in real estate.

INVESTING IN COMMODITIES, COMMODITY CONTRACTS, OR COMMODITY FUTURES CONTRACTS

The Fund will not purchase or sell commodities, commodity
contracts or commodity futures contracts except to the extent
that the Fund may engage in transactions involving futures
contracts and related options.

UNDERWRITING

The Fund will not underwrite any issue of securities, except
as it may be deemed to be an underwriter under the Securities
Act of 1933 in connection with the sale of securities in
accordance with its investment objective, policies, and
limitations.

DIVERSIFICATION OF INVESTMENTS

With respect to securities comprising 75% of the value of its
assets, the Fund will not purchase securities of any one
issuer (other than securities issued or guaranteed by the
government of the United States or its agencies or
instrumentalities) if, as a result, more than 5% of the value
of its total assets would be invested in the securities of
that issuer. Also, the Fund will not acquire more than 10% of
the voting securities of any one issuer.

CONCENTRATION OF INVESTMENTS

The Fund will not invest 25% or more of the value of its
total assets in any one industry, except that the Fund may
invest 25% or more of the value of its total assets in
securities issued or guaranteed by the U.S. government, its
agencies or instrumentalities, and repurchase agreements
secured by such instruments.

LENDING CASH OR SECURITIES

The Fund will not lend any of its assets except portfolio
securities up to one-third of the value of its total assets.
This shall not prevent the Fund from purchasing U.S.
government obligations, money market instruments, bonds,
debentures, notes, certificates of indebtedness, or other
debt securities, entering into repurchase agreements, or
engaging in other transactions where permitted by the Fund's
investment objective, policies and limitations.

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

<PAGE>

INVESTING IN SECURITIES OF OTHER INVESTMENT COMPANIES

The Fund can acquire up to 3% of the total outstanding stock
of other investment companies. The Fund will not be subject
to any other limitations with regard to the acquisition of
securities of other investment companies so long as the
public offering price of the Fund's shares does not include a
sales charge exceeding 1-1/2 percent. However, these
limitations are not applicable if the securities are acquired
in a merger, consolidation, reorganization, or acquisition of
assets. It should be noted that investment companies incur
certain expenses, such as investment advisory, custodian and
transfer agent fees, and therefore, any investment by the
Fund in shares of another investment company would be subject
to such duplicate expenses.

INVESTING IN RESTRICTED SECURITIES

The Fund will not invest more than 5% of its total assets in
securities subject to restrictions on resale under the
federal securities laws, except for certain restricted
securities which meet the criteria for liquidity as
established by the Trustees.

INVESTING IN ILLIQUID SECURITIES

The Fund will not invest more than 15% of the value of its
net assets in illiquid obligations including repurchase
agreements providing for settlement in more than seven days
after notice, over-the-counter options, certain securities
not determined by the Trustees to be liquid, and
non-negotiable fixed income time deposits with maturities
over seven days.

INVESTING IN PUT OPTIONS

The Fund will not purchase put options on securities, other
than put options on stock indices, unless the securities are
held in the Fund's portfolio and not more than 5% of the
value of the Fund's total assets would be invested in
premiums on open put option positions.

WRITING COVERED CALL OPTIONS

The Fund will not write call options on securities unless the
securities are held in the Fund's portfolio or unless the
Fund is entitled to them in deliverable form without further
payment or after segregating cash in the amount of any
further payment.

INVESTING IN WARRANTS

The Fund will not invest more than 5% of its assets in
warrants. No more than 2% of the Fund's net assets , to be
included within the overall 5% limit on investments in
warrants, may be warrants which are not listed on the New
York Stock Exchange or the American Stock Exchange.

PURCHASING SECURITIES TO EXERCISE CONTROL

The Fund will not purchase securities of a company for
purposes of exercising control or management.

For purposes of its policies and limitations, the Fund considers
certificates of deposit and demand and time deposits issued by a U.S.
branch of a domestic bank or savings association, having capital,
surplus, and undivided profits in excess of $100,000,000 at the time
of investment to be "cash items."

The Fund does not intend to borrow money in excess of 5% of the value
of its total assets during the current year.

<PAGE>

INDEPENDENCE ONE MUTUAL FUNDS MANAGEMENT

OFFICERS AND TRUSTEES

Robert E. Baker
4327 Stoneleigh Road
Bloomfield Hills, MI
Birthdate: May 6, 1930

Trustee

Retired; formerly, Vice Chairman, Chrysler Financial Corporation.

Harold Berry
Berry Enterprises
290 Franklin Center

29100 Northwestern Highway

Southfield, MI

Birthdate: September 17, 1925

Trustee

Managing Partner, Berry Enterprises; Chairman, Independent Sprinkler
Companies, Inc.; Chairman, Berry, Ziegelman & Company.

Clarence G. Frame+
W-875 First Bank Building
332 Minnesota Street

St. Paul, MN

Birthdate: July 26, 1918

Trustee

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

Harry J. Nederlander+
231 S. Old Woodward, Suite 219

Birmingham, MI
Birthdate: September 5, 1917

Trustee

Chairman, Nederlander Enterprises.

<PAGE>

Thomas S. Wilson
Two Championship Drive
Auburn Hills, MI
Birthdate: October 8, 1949

Trustee

President and Executive Administrator of the Detroit Pistons;
President and CEO, Palace Sports and Entertainment.

Edward C. Gonzales
Federated Investors Tower

Pittsburgh, PA
Birthdate: October 22, 1930

President and Treasurer

Jeffrey W. Sterling
Federated Investors Tower

Pittsburgh, PA
Birthdate: February 5, 1947

Vice President and Assistant Treasurer

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

Jay S. Neuman
Federated Investors Tower

Pittsburgh, PA
Birthdate: April 22, 1950

Secretary

Corporate Counsel, Federated Investors.

+ Members of the Trust's Executive Committee. The Executive Committee
of the Board of Trustees handles the responsibilities of the Board of
Trustees between meetings of the Board.

FUND OWNERSHIP

<PAGE>

TRUSTEES' COMPENSATION

AGGREGATE

NAME , COMPENSATION
POSITION WITH FROM
THE TRUST THE TRUST*

Robert E. Baker $10,250
Trustee
Harold Berry $10,250
Trustee
Clarence G. Frame $10,250
Trustee
Harry J. Nederlander $ 9,050
Trustee
Thomas S. Wilson $10,250
Trustee

TRUSTEE LIABILITY

MASSACHUSETTS PARTNERSHIP LAW

INVESTMENT ADVISORY SERVICES

ADVISER TO THE FUND

The Fund's investment adviser is Michigan National Bank (the "Adviser").

The Adviser shall not be liable to the Trust, the Fund, or any
shareholder of the Fund for any losses that may be sustained in the
purchase, holding, or sale of any security, or for anything done or
omitted by it, except acts or omissions involving willful misfeasance,
bad faith, gross negligence, or reckless disregard of the duties
imposed upon it by its contract with the Trust.

<PAGE>

ADVISORY FEES

For its advisory services, Michigan National Bank receives an annual
investment advisory fee as described in the prospectus. For the fiscal
year ended April 30, 1997 and for the period from September 25, 1995
(date of initial public investment) through April 30, 1996, the
Adviser earned $588,469 and $208,897, of which $262,493 and $104,448,
respectively, were voluntarily waived.

SUB-ADVISER TO THE FUND

The Fund's sub-adviser is Sosnoff Sheridan Corporation (doing business
as Sosnoff Sheridan Group)(the "Sub-Adviser").

SUB-ADVISORY FEES

For its sub-advisory services, the Sub-Adviser receives an annual
sub-advisory fee as described in the prospectus.

For the fiscal year ended April 30, 1997 and for the period from
September 25, 1995 (date of initial public investment) through April
30, 1996, the Sub-Adviser earned $50,260 and $19,633, respectively,
none of which was voluntarily waived.

BROKERAGE TRANSACTIONS

The Adviser may select brokers and dealers who offer brokerage and
research services. These services may be furnished directly to the
Fund or to the Adviser and may include: advice as to the advisability
of investing in securities; security analysis and reports; economic
studies; industry studies; receipt of quotations for portfolio
evaluations; and similar services. Research services provided by
brokers and dealers may be used by the Adviser or its affiliates in
advising the Fund and other accounts. To the extent that receipt of
these services may supplant services for which the Adviser or its
affiliates might otherwise have paid, it would tend to reduce their
expenses. The Adviser and its affiliates exercise reasonable business
judgment in selecting brokers who offer brokerage and research
services to execute securities transactions. They determine in good
faith that commissions charged by such persons are reasonable in
relationship to the value of the brokerage and research services
provided. For the fiscal year ended April 30, 1997 and for the period
from September 25, 1995 (date of initial public investment) to April
30, 1996, the Fund paid $26,727 and $13,382, respectively, in
brokerage commissions on brokerage transactions.

OTHER SERVICES

TRUST ADMINISTRATION

Federated Administrative Services, a subsidiary of Federated
Investors, provides administrative personnel and services to the Funds
for the fees set forth in the prospectus. For the fiscal year ended
April 30, 1997 and for the period from September 25 1995 (date of
initial public investment) to April 30, 1996, the administrator earned
$160,370 and $58,574, of which $88,264 and $57,628, respectively, were
voluntarily waived.

CUSTODIAN

Michigan National Bank, Farmington Hills, Michigan, is custodian for
the securities and cash of the Fund. For the services to be provided
to the Trust pursuant to the Custodian Agreement, the Trust pays the
custodian an annual fee based upon the average daily net assets of the
Fund and which is payable monthly. The custodian will also charge
transaction fees and out-of-pocket expenses.

<PAGE>

TRANSFER AGENT AND DIVIDEND DISBURSING AGENT

INDEPENDENT AUDITORS

The independent auditors for the Fund is KPMG Peat Marwick LLP,
Pittsburgh, Pennsylvania.

PURCHASING SHARES

Shares are sold at their net asset value without a sales charge on
days when both the New York Stock Exchange and the Federal Reserve
Wire System are open for business. The procedure for purchasing shares
of the Fund is explained in the prospectus under "Investing in the
Fund."

CONVERSION TO FEDERAL FUNDS

It is the Fund's policy to be as fully invested as possible so that
maximum interest may be earned. To this end, all payments from
shareholders must be in federal funds or be converted into federal
funds before shareholders begin to earn dividends. Michigan National
Bank acts as the shareholder's agent in depositing checks and
converting them to federal funds.

DETERMINING NET ASSET VALUE

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

DETERMINING MARKET VALUE OF SECURITIES

The market values of the Fund's portfolio securities are determined as
follows:

o for equity securities, according to the last sale price on a
national securities exchange, if applicable;

o in the absence of recorded sales for listed equity
securities, according to the mean between the last closing
bid and asked prices;

o for unlisted equity securities, latest bid prices;

o for bonds and other fixed income securities, as determined by an
independent pricing service;

o for all other securities, at fair value as determined in good
faith by the Trustees.

The Fund will value futures contracts and options at their market
values established by the exchanges at the close of options trading on
such exchanges unless the Trustees determine in good faith that
another method of valuing option positions is necessary.

REDEEMING SHARES

The Fund redeems shares at the next computed net asset value after
Federated Shareholder Services Company receives the redemption
request. Redemption procedures are explained in the prospectus under
"Redeeming Fund Shares."

REDEMPTION IN KIND

Although the Fund intends to redeem shares in cash, it reserves the
right under certain circumstances to pay the redemption price in whole
or in part by a distribution of securities from the Fund's portfolio.
To satisfy registration

<PAGE>

requirements in a particular state, redemption in kind will be made
(for any shareholder requesting redemption) in readily marketable
securities to the extent that such securities are available. If this
state's policy changes, the Fund reserves the right to redeem in kind
by delivering those securities it deems appropriate.

Redemption in kind will be made in conformity with applicable SEC
rules, taking such securities at the same value employed in
determining net asset value and selecting the securities in a manner
the Trustees determine to be fair and equitable.

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

TAX STATUS

THE FUND'S TAX STATUS

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

To qualify for this treatment, the Fund must, among other
requirements:

o derive at least 90% of its gross income from dividends, interest,
and gains from the sale of securities;

o derive less than 30% of its gross income from the sale of
securities held less than three months;

o invest in securities within certain statutory limits; and

o distribute to its shareholders at least 90% of its net income
earned during the year.

SHAREHOLDERS' TAX STATUS

Shareholders are subject to federal income tax on dividends received
as cash or additional shares. The dividends received deduction for
corporations will apply to ordinary income distributions to the extent
the distribution represents amounts that would qualify for the
dividends received deduction to the Fund if the Fund were a regular
corporation, and to the extent designated by the Fund as so
qualifying. These dividends, and any short-term capital gains, are
taxable as ordinary income.

CAPITAL GAINS

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

TOTAL RETURN

The average annual total returns for the Fund for the 1-year period
ended April 30, 1997 and the period from September 25, 1995 (date of
initial public investment) through April 30, 1997 were 26.00% and
26.09%, respectively.

Advertisements and other sales literature for the Fund may quote total
returns which are calculated on nonstandardized base periods. These
total returns also represent the historic change in the value of an
investment in the Fund based on quarterly reinvestment of dividends
over a specified period of time.

<PAGE>

YIELD

The Fund's yield for the thirty-day period ended April 30, 1997 was
1.50%.

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

PERFORMANCE COMPARISONS

The Fund's performance depends upon such variables as:

o portfolio quality;

o average portfolio maturity;

o type of instruments in which the portfolio is invested;

o changes in interest rates and market value of portfolio securities;

o changes in the Fund's expenses; and

o various other factors.

The Fund's performance fluctuates on a daily basis largely because net
earnings and the maximum offering price per share fluctuate daily.
Both net earnings and offering price per share are factors in the
computation of yield and total return.

Investors may use financial publications and/or indices to obtain a
more complete view of the Fund's performance. When comparing
performance, investors should consider all relevant factors, such as
the composition of any index used, prevailing market conditions,
portfolio compositions of other funds, and methods used to value
portfolio securities and compute offering price. The financial
publications and/or indices which the Fund uses in advertising may
include:

o STANDARD & POOR'S COMPOSITE INDEX OF 500 STOCKS AND
STANDARD & POOR'S 100 INDEX, a composite indices of common
stocks in industry, transportation, and financial and
public utility companies can be used to compare to the
total returns of funds whose portfolios are invested
primarily in common stocks. In addition, the Standard &
Poor's index assumes reinvestments of all dividends paid
by stocks listed on its index. Taxes due on any of these
distributions are not included, nor are brokerage or other
fees calculated in Standard & Poor's figures.

o LIPPER ANALYTICAL SERVICES, INC. ranks funds in various
fund categories by making comparative calculations using
total return. Total return assumes the reinvestment of all
capital gains distributions and income dividends and takes
into account any change in the maximum offering price over
a specific period of time. From time to time, the Fund
will quote its Lipper ranking in the "index funds"
category in advertising and sales literature.

o MORNINGSTAR, INC., an independent rating service, is the publisher
of the bi-weekly Mutual Fund Values. Mutual Fund Values rates more
than 1,000 NASDAQ-listed mutual funds of all types, according to
their risk-adjusted returns. The maximum rating is five stars, and
ratings are effective for two weeks.

Advertising and other promotional literature may include charts,
graphs and other illustrations using the Fund's returns, or returns in
general, that demonstrate basic investment concepts such as
tax-deferred compounding, dollar-cost averaging and systematic
investment. In addition, the Fund can compare its performance, or
performance for the types of securities in which it invests, to a
variety of other investments, such as bank savings accounts,
certificates of deposit, and Treasury bills.

<PAGE>

ECONOMIC AND MARKET INFORMATION

Advertising and sales literature for the Fund may include discussions
of economic, financial and political developments and their effect on
the securities market. Such discussions may take the form of
commentary on these developments by Fund portfolio managers and their
views and analysis on how such developments could affect the Fund. In
addition, advertising and sales literature may quote statistics and
give general information about the mutual fund industry, including the
growth of the industry, from sources such as the Investment Company
Institute ("ICI"). For example, according to the ICI, thirty-seven
percent of American households are pursuing their financial goals
through mutual funds. These investors, as well as businesses and
institutions, have entrusted over $3.5 trillion to the more than 6,000
funds available.