INDEPENDENCE
ONE(R)
MUTUAL
FUNDS
COMBINED
ANNUAL REPORT
TO SHAREHOLDERS
APRIL 30, 1997
Indpendence One U.S. Government
Securities Fund
Independence One Fixed Income Fund
Independence One Michigan
Municipal Bond Fund
[LOGO OF MICHIGAN NATIONAL BANK]
Investment Adviser
[BIRD LOGO] FEDERATED INVESTORS
Federated Securities Corp., Distributor
[LOGO OF INDEPENDENCE ONE]
Mutual Funds
Cusip 453777856
Cusip 453777807
Cusip 453777864
G01200-11 (6/97)
[RECYCLED LOGO]
PRESIDENT'S MESSAGE
- --------------------------------------------------------------------------------
Dear Investor:
I am pleased to present the Annual Report of Independence One U.S.
Government Securities Fund, Independence One Fixed Income Fund and
Independence One Michigan Municipal Bond Fund, which covers the period
from May 1, 1996 through April 30, 1997. The report begins with a
discussion by each fund's portfolio manager, followed by a complete
list of each fund's holdings and the financial
statements.
The following highlights summarize fund performance over the 12-month
reporting period ended April 30, 1997:
INDEPENDENCE ONE U.S. GOVERNMENT SECURITIES FUND
This fund's all-government bond portfolio produced an income stream
totaling $0.59 per share in addition to a capital gain of $0.01 per
share. The fund's net asset value began and ended the period at $9.98.
Through income, gains, and share price increase, the fund achieved a
total return of 6.15%.* At the end of the period, more than 72% of the
holdings were invested in U.S. Treasury securities, with another 27%
invested in U.S. government agency securities. Fund net assets stood
at $71.9 million at the end of the reporting period.
INDEPENDENCE ONE FIXED INCOME FUND
This fund provides a diversified approach to bond investing through a
portfolio that consists of a mix of U.S. government and agency and
corporate bonds. This diversified bond portfolio produced an income
stream totaling $0.57 per share. Share price declined a modest $0.02
from the first day to the last day of the period. Through its income,
the fund achieved a total return of 5.79%.* At the end of the
reporting period, fund net assets reached $70.9 million.
INDEPENDENCE ONE MICHIGAN MUNICIPAL BOND FUND
Designed for tax-sensitive Michigan investors, this fund invests in
investment-grade Michigan municipal bonds to pursue double-tax-free
income.+ The fund's portfolio produced an income stream totaling $0.41
per share, while share price increased by $0.04 per share. Through
income and share price increase, the fund achieved a total return of
4.62%.* At the end of the reporting period, fund net assets reached
$23.5 million.
Thank you for selecting one or more Independence One Mutual Funds to
pursue your financial goals. We look forward to keeping you informed
about the progress of your investment.
Sincerely,
/s/ Edward C. Gonzales
Edward C. Gonzales
President
June 15, 1997
* Performance quoted reflects past performance and is not indicative
of future results. Investment return and principal value will
fluctuate so that an investor's shares, when redeemed, may be worth
more or less than their original cost.
+ Income may be subject to the federal alternative minimum tax.
MANAGEMENT DISCUSSION & ANALYSIS
- --------------------------------------------------------------------------------
Q
What is your analysis of the bond market during the reporting
period, which produced positive but somewhat lackluster returns
in the wake of mixed economic signals and volatility?
A
During the 12-month period ended April 30, 1997, the fixed income markets
were in an investment environment characterized by strong economic growth,
modest inflation, and unexpectedly strong gains in corporate profits. The
yield of the benchmark 30-year U.S. Treasury bond fluctuated from a
low of 6.35% to a high of 7.189% over this time period. Inflationary
pressures remained in check throughout most of 1996.
In the latter half of the first quarter 1997, inflationary pressures
began to emerge. Numerous economic indicators pointed toward an
economy that was expanding rapidly, perhaps too rapidly. Economic
indicators such as low unemployment, increasing wage pressures,
expanding manufacturing activity, and strong housing demand helped to
fuel this notion. The Federal Reserve Board apparently felt that the
economy was expanding too quickly, because on March 25, 1997 at the
Federal Open Market Committee Meeting, the Federal Reserve Board, in
its first move in 26 months, decided to raise the Federal Funds target
rate by 25 basis points to 5.50%, as a "preemptive strike" against
impending inflation.
Q
How did the Independence One Mutual Funds perform for
shareholders during the 12-month reporting period ended April 30,
1997?
A
Total return for the funds can be divided into a capital appreciation
(depreciation) component as well as interest income and capital gain
distribution segments. The total return of Independence One U.S. Government
Securities Fund was 6.15%, composed of all income and capital gain
distributions. The total return of Independence One Fixed Income Fund
was 5.79%, composed of (0.20%) capital depreciation and 5.99% interest
income. The total return of Independence One Michigan Municipal Bond
Fund was 4.62%, composed of 0.40% capital appreciation and 4.22%
interest income distributions.* Q
How was the portfolio of Independence One Fixed Income Fund
structured among U.S. government and corporate bonds at the end
of the reporting period, and why?
A
As of April 30, 1997, the Fixed Income Fund's portfolio was
composed of 65.6% U.S. Treasury notes and bonds, 9.2% Federal
Agency bonds, 24.4% corporate bonds and .8% cash. The fund
attempted to pick up incremental
yield by slightly altering the asset allocation away from U.S.
Treasury bonds and into higher yielding corporate bonds. This sector
rotation was slight however, as the fund increased its total corporate
exposure over the 12-month period ended April 30, 1997 from 20.5% to
24.0% of the fund's net assets.
* Performance quoted represents past performance. Investment return
and principal value will fluctuate so that an investor's shares,
when redeemed, may be worth more or less than their original cost.
- --------------------------------------------------------------------------------
Q
What is the current health of the Michigan economy?
A
The unemployment rate in the State of Michigan averaged 4.7% in
1996, its lowest rate in 23 years. With the national rate of
5.4%, this marked the third consecutive year that Michigan had a
lower unemployment rate than the
national average. In addition, the Michigan per capita income has
exceeded the national average for two consecutive years and has grown
faster than the national average for the last four years. The State
has demonstrated significant improvement in financial performance in
recent years, and has continued to maintain sizeable levels of cash
reserves in its Budget Stabilization Fund which has grown from only
$20.1 million at the end of fiscal year 1992 to an expected $1.2
billion by the end of fiscal year 1996. Q
With one interest rate increase behind us, what is your outlook
for the bond market for the balance of 1997 and beyond?
A
Despite favorable readings on the inflation front, fixed income
markets should be wary of further short-term interest rate hikes
by the Federal Reserve Board unless there are visible signs that
the economy is slowing
significantly from its torrid first quarter pace. This uncertainty
should increase market volatility as each economic release is
scrutinized by traders and economists. For the longer term, we feel
that the outlook is more positive. The federal deficit has continued
to show improvement and is expected to shrink to around $60 billion by
the end of the current fiscal year. This improvement can be attributed
to lower outlays (especially on health care) and higher taxes (as
economic growth surpassed forecasts). By way of comparison, as
recently as 1994 the deficit exceeded $200 billion. If the current
projections prove to be accurate, the federal deficit would equal only
0.8% of Gross Domestic Product, the smallest since 1974.
INDEPENDENCE ONE U.S. GOVERNMENT SECURITIES FUND
- --------------------------------------------------------------------------------
GROWTH OF $10,000 INVESTED IN INDEPENDENCE ONE U.S. GOVERNMENT SECURITIES FUND
The graph below illustrates the hypothetical investment of
$10,000 in the Independence One U.S. Government Securities Fund (the
"Fund") from January 11, 1993 (start of performance) to April 30,
1997, compared to the Lehman Brothers Government/Corporate Bond Index
and the Lehman Brothers Government Bond Index.+
GRAPHIC REPRESENTATION OMITTED. SEE APPENDIX A
AVERAGE ANNUAL TOTAL RETURN FOR THE PERIOD ENDED APRIL 30, 1997
1 Year 6.15%
Start of Performance (1/11/93) 5.86%
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE. YOUR
INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE SO WHEN SHARES
ARE REDEEMED, THEY MAY BE WORTH MORE OR LESS THAN THE ORIGINAL COST.
MUTUAL FUNDS ARE NOT OBLIGATIONS OF OR GUARANTEED BY ANY BANK AND ARE
NOT FEDERALLY INSURED.
*The Fund's performance assumes the reinvestment of all dividends and
distributions. The Lehman Brothers Government/ Corporate Bond Index
and the Lehman Brothers Government Bond Index have been adjusted to
reflect reinvestment of dividends on securities in the indices.
+The Lehman Brothers Government/Corporate Bond Index and the Lehman
Brothers Government Bond Index are not adjusted to reflect sales
charges, expenses, or other fees that the Securities and Exchange
Commission requires to be reflected in the Fund's performance. These
indices are unmanaged. The Investment Adviser has elected to change
the benchmark of the Fund from the Lehman Brothers
Government/Corporate Bond Index to the Lehman Brothers Government
Bond Index. The Lehman Brothers Government Bond Index is a much more
narrow index which is more representative of the securities typically
held by the Fund. The Lehman Brothers Government/Corporate Bond Index
includes bonds issued by the U.S. government, its agencies or
instrumentalities and corporations. In contrast, Lehman Brothers
Government Bond Index includes bonds issued only by the U.S.
government, its agencies and instrumentalities.
INDEPENDENCE ONE FIXED INCOME FUND
- --------------------------------------------------------------------------------
GROWTH OF $10,000 INVESTED IN INDEPENDENCE ONE FIXED INCOME FUND
The graph below illustrates the hypothetical investment of
$10,000 in the Independence One Fixed Income Fund (the "Fund") from
October 23, 1995 (start of performance) to April 30, 1997, compared to
the Lehman Brothers Intermediate Government/Corporate Bond Index.+
GRAPHIC REPRESENTATION OMITTED. SEE APPENDIX B
AVERAGE ANNUAL TOTAL RETURN FOR THE PERIOD ENDED APRIL 30, 1997
1 Year 5.79%
Start of Performance (10/23/95) 4.54%
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE. YOUR
INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE SO WHEN SHARES
ARE REDEEMED, THEY MAY BE WORTH MORE OR LESS THAN THE ORIGINAL COST.
MUTUAL FUNDS ARE NOT OBLIGATIONS OF OR GUARANTEED BY ANY BANK AND ARE
NOT FEDERALLY INSURED.
*The Fund's performance assumes the reinvestment of all dividends and
distributions. The Lehman Brothers Intermediate Government/Corporate
Bond Index has been adjusted to reflect reinvestment of dividends on
securities in the index.
+The Lehman Brothers Intermediate Government/Corporate Bond Index is
not adjusted to reflect sales charges, expenses, or other fees that
the Securities and Exchange Commission requires to be reflected in
the Fund's performance.
This index is unmanaged.
INDEPENDENCE ONE MICHIGAN MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
GROWTH OF $10,000 INVESTED IN INDEPENDENCE ONE MICHIGAN MUNICIPAL BOND FUND
The graph below illustrates the hypothetical investment of
$10,000 in the Independence One Michigan Municipal Bond Fund (the
"Fund") from November 20, 1995 (start of performance) to April 30,
1997, compared to the Lehman Brothers 7-Year General Obligations Bond
Index.+
GRAPHIC REPRESENTATION OMITTED. SEE APPENDIX C
AVERAGE ANNUAL TOTAL RETURN FOR THE PERIOD ENDED APRIL 30, 1997
1 Year 4.62%
Start of Performance (11/20/95) 4.03%
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE. YOUR
INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE SO WHEN SHARES
ARE REDEEMED, THEY MAY BE WORTH MORE OR LESS THAN THE ORIGINAL COST.
MUTUAL FUNDS ARE NOT OBLIGATIONS OF OR GUARANTEED BY ANY BANK AND ARE
NOT FEDERALLY INSURED.
*The Fund's performance assumes the reinvestment of all dividends and
distributions. The Lehman Brothers
7-Year General Obligations Bond Index has been adjusted to reflect
reinvestment of dividends on securities in the index.
+The Lehman Brothers 7-Year General Obligations Bond Index is not
adjusted to reflect sales charges, expenses, or other fees that the
Securities and Exchange Commission requires to be reflected in the
Fund's performance. This index is unmanaged.
INDEPENDENCE ONE U.S. GOVERNMENT SECURITIES FUND
PORTFOLIO OF INVESTMENTS
APRIL 30, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------------- ----------------------------------------------------------------------------------- -------------
<C> <S> <C>
GOVERNMENT AGENCIES--26.7%
- --------------------------------------------------------------------------------------------------
FEDERAL HOME LOAN BANK--5.6%
-----------------------------------------------------------------------------------
$ 4,000,000 7.20%, Bond, 6/14/2011 $ 4,028,000
----------------------------------------------------------------------------------- -------------
FEDERAL HOME LOAN MORTGAGE CORPORATION--5.5%
-----------------------------------------------------------------------------------
1,000,000 6.50%, Bond, 1/14/2000 994,620
-----------------------------------------------------------------------------------
3,000,000 6.55%, Bond, 10/2/2002 2,981,520
----------------------------------------------------------------------------------- -------------
Total 3,976,140
----------------------------------------------------------------------------------- -------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION--15.6%
-----------------------------------------------------------------------------------
4,000,000 5.52%, FRN, 6/20/1997 4,001,560
-----------------------------------------------------------------------------------
3,000,000 6.80%, Bond, 1/10/2003 3,007,890
-----------------------------------------------------------------------------------
4,000,000 7.65%, Bond, 3/10/2005 4,190,360
----------------------------------------------------------------------------------- -------------
Total 11,199,810
----------------------------------------------------------------------------------- -------------
TOTAL GOVERNMENT AGENCIES (IDENTIFIED COST $19,286,446) 19,203,950
----------------------------------------------------------------------------------- -------------
U.S. TREASURY OBLIGATIONS--71.1%
- --------------------------------------------------------------------------------------------------
U.S. TREASURY BONDS--19.1%
-----------------------------------------------------------------------------------
5,500,000 7.125%, 2/15/2023 5,549,115
-----------------------------------------------------------------------------------
4,340,000 8.00%, 11/15/2021 4,815,186
-----------------------------------------------------------------------------------
3,000,000 8.125%, 8/15/2019 3,359,190
----------------------------------------------------------------------------------- -------------
Total 13,723,491
----------------------------------------------------------------------------------- -------------
U.S. TREASURY NOTES--52.0%
-----------------------------------------------------------------------------------
12,000,000 6.125%, 5/15/1998 12,020,760
-----------------------------------------------------------------------------------
10,000,000 6.375%, 3/31/2001 9,952,100
-----------------------------------------------------------------------------------
10,000,000 7.00%, 4/15/1999 10,138,400
-----------------------------------------------------------------------------------
2,000,000 7.50%, 11/15/2001 2,073,520
-----------------------------------------------------------------------------------
3,000,000 7.50%, 2/15/2005 3,142,470
----------------------------------------------------------------------------------- -------------
Total 37,327,250
----------------------------------------------------------------------------------- -------------
TOTAL U.S. TREASURY OBLIGATIONS (IDENTIFIED COST $50,587,874) 51,050,741
----------------------------------------------------------------------------------- -------------
</TABLE>
INDEPENDENCE ONE U.S. GOVERNMENT SECURITIES FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------------- ----------------------------------------------------------------------------------- -------------
<C> <S> <C>
(A) REPURCHASE AGREEMENT--1.1%
- --------------------------------------------------------------------------------------------------
$ 813,000 First Chicago Capital Markets, Inc., 5.42%, dated 4/30/1997,
due 5/1/1997 (AT AMORTIZED COST) $ 813,000
----------------------------------------------------------------------------------- -------------
TOTAL INVESTMENTS (IDENTIFIED COST $70,687,320) (B) $ 71,067,691
----------------------------------------------------------------------------------- -------------
(a) The repurchase agreement is fully collateralized by U.S. government and/or
agency obligations based on market prices at the date of the portfolio.
(b) The cost of investments for federal tax purposes amounts to
$70,687,320. The net unrealized appreciation of investments on a
federal tax basis amounts to $380,371 which is comprised of
$614,919 appreciation and $234,548 depreciation at April 30, 1997.
Note: The categories of investments are shown as a percentage of net assets
($71,883,270) at April 30, 1997.
The following acronym is used throughout this portfolio:
FRN--Floating Rate Note
(See Notes which are an integral part of the Financial Statements)
INDEPENDENCE ONE U.S. GOVERNMENT SECURITIES FUND
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1997
- --------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C> <C>
ASSETS:
- ---------------------------------------------------------------------------------------------------
Total investments in securities, at value
(identified and tax cost $70,687,320) $ 71,067,691
- ---------------------------------------------------------------------------------------------------
Cash 258
- ---------------------------------------------------------------------------------------------------
Income receivable 1,106,639
- ---------------------------------------------------------------------------------------------------
Receivable for shares sold 15,395
- ---------------------------------------------------------------------------------------------------
Deferred expenses 6,013
- --------------------------------------------------------------------------------------------------- -------------
Total assets 72,195,996
- ---------------------------------------------------------------------------------------------------
LIABILITIES:
- ---------------------------------------------------------------------------------------
Payable for shares redeemed $ 4,000
- ---------------------------------------------------------------------------------------
Income distribution payable 308,090
- ---------------------------------------------------------------------------------------
Accrued expenses 636
- --------------------------------------------------------------------------------------- ----------
Total liabilities 312,726
- --------------------------------------------------------------------------------------------------- -------------
NET ASSETS for 7,206,247 shares outstanding $ 71,883,270
- --------------------------------------------------------------------------------------------------- -------------
NET ASSETS CONSIST OF:
- ---------------------------------------------------------------------------------------------------
Paid in capital $ 72,557,378
- ---------------------------------------------------------------------------------------------------
Net unrealized appreciation of investments 380,371
- ---------------------------------------------------------------------------------------------------
Accumulated net realized loss on investments (1,054,479)
- --------------------------------------------------------------------------------------------------- -------------
Total Net Assets $ 71,883,270
- --------------------------------------------------------------------------------------------------- -------------
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE:
- ---------------------------------------------------------------------------------------------------
$71,883,270 / 7,206,247 shares outstanding $9.98
- --------------------------------------------------------------------------------------------------- -------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
INDEPENDENCE ONE U.S. GOVERNMENT SECURITIES FUND
STATEMENT OF OPERATIONS
YEAR ENDED APRIL 30, 1997
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
- ---------------------------------------------------------------------------------------------------
Interest $ 4,647,067
- ---------------------------------------------------------------------------------------------------
EXPENSES:
- --------------------------------------------------------------------------------------
Investment advisory fee $ 509,098
- --------------------------------------------------------------------------------------
Administrative personnel and services fee 79,408
- --------------------------------------------------------------------------------------
Custodian fees 18,287
- --------------------------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses 27,105
- --------------------------------------------------------------------------------------
Directors'/Trustees' fees 5,475
- --------------------------------------------------------------------------------------
Auditing fees 12,611
- --------------------------------------------------------------------------------------
Legal fees 3,412
- --------------------------------------------------------------------------------------
Portfolio accounting fees 47,831
- --------------------------------------------------------------------------------------
Share registration costs 20,086
- --------------------------------------------------------------------------------------
Printing and postage 6,395
- --------------------------------------------------------------------------------------
Insurance premiums 4,544
- --------------------------------------------------------------------------------------
Miscellaneous 7,850
- -------------------------------------------------------------------------------------- -----------
Total expenses 742,102
- --------------------------------------------------------------------------------------
Waiver--
- --------------------------------------------------------------------------------------
Waiver of investment advisory fee (327,278)
- -------------------------------------------------------------------------------------- -----------
Net expenses 414,824
- --------------------------------------------------------------------------------------------------- -------------
Net investment income 4,232,243
- --------------------------------------------------------------------------------------------------- -------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
- ---------------------------------------------------------------------------------------------------
Net realized loss on investments (1,052,708)
- ---------------------------------------------------------------------------------------------------
Net change in unrealized appreciation of investments 1,178,565
- --------------------------------------------------------------------------------------------------- -------------
Net realized and unrealized gain on investments 125,857
- --------------------------------------------------------------------------------------------------- -------------
Change in net assets resulting from operations $ 4,358,100
- --------------------------------------------------------------------------------------------------- -------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
INDEPENDENCE ONE U.S. GOVERNMENT SECURITIES FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
APRIL 30, 1997 APRIL 30, 1996
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- -----------------------------------------------------------------------------
OPERATIONS--
- -----------------------------------------------------------------------------
Net investment income $ 4,232,243 $ 4,026,005
- -----------------------------------------------------------------------------
Net realized gain (loss) on investments ($1,054,816
net loss and $354,700 net gain, respectively,
as computed for federal tax purposes) (1,052,708) 1,859,938
- -----------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) 1,178,565 (999,752)
- ----------------------------------------------------------------------------- ---------------- ----------------
Change in net assets resulting from operations 4,358,100 4,886,191
- ----------------------------------------------------------------------------- ---------------- ----------------
DISTRIBUTIONS TO SHAREHOLDERS--
- -----------------------------------------------------------------------------
Distributions from net investment income (4,232,243) (4,026,005)
- -----------------------------------------------------------------------------
Distributions from net realized gains (63,376) --
- ----------------------------------------------------------------------------- ---------------- ----------------
Change in net assets resulting from
distributions to shareholders (4,295,619) (4,026,005)
- ----------------------------------------------------------------------------- ---------------- ----------------
SHARE TRANSACTIONS--
- -----------------------------------------------------------------------------
Proceeds from sale of shares 18,183,268 22,565,389
- -----------------------------------------------------------------------------
Net asset value of shares issued to shareholders
in payment of distributions declared 428,510 --
- -----------------------------------------------------------------------------
Cost of shares redeemed (19,082,325) (13,648,382)
- ----------------------------------------------------------------------------- ---------------- ----------------
Change in net assets resulting from share transactions (470,547) 8,917,007
- ----------------------------------------------------------------------------- ---------------- ----------------
Change in net assets (408,066) 9,777,193
- -----------------------------------------------------------------------------
NET ASSETS:
- -----------------------------------------------------------------------------
Beginning of period 72,291,336 62,514,143
- ----------------------------------------------------------------------------- ---------------- ----------------
End of period $ 71,883,270 $ 72,291,336
- ----------------------------------------------------------------------------- ---------------- ----------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
INDEPENDENCE ONE U.S. GOVERNMENT SECURITIES FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
YEAR ENDED APRIL 30,
1997 1996 1995 1994 1993(A)
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.98 $ 9.79 $ 9.84 $ 10.31 $ 10.00
- -----------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- -----------------------------------------------------------------
Net investment income 0.59 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
inital public investment) to April 30, 1993.
(b) Based on net asset value.
(c) This voluntary expense decrease is reflected in both the expense
and net investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
INDEPENDENCE ONE FIXED INCOME FUND
PORTFOLIO OF INVESTMENTS
APRIL 30, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------------- ----------------------------------------------------------------------------------- -------------
<C> <S> <C>
CORPORATE BONDS--24.0%
- --------------------------------------------------------------------------------------------------
AUTOMOTIVE--1.3%
-----------------------------------------------------------------------------------
$ 1,000,000 Ford Motor Credit Corp., Note, 6.125%, 1/9/2006 $ 926,200
----------------------------------------------------------------------------------- -------------
BANKING--2.8%
-----------------------------------------------------------------------------------
1,000,000 Citicorp, Sr. Note, 5.625%, 2/15/2001 958,890
-----------------------------------------------------------------------------------
1,000,000 NationsBank Corp., Sr. Note, 7.00%, 9/15/2001 1,000,360
----------------------------------------------------------------------------------- -------------
Total 1,959,250
----------------------------------------------------------------------------------- -------------
ENTERTAINMENT--1.4%
-----------------------------------------------------------------------------------
1,000,000 Disney (Walt) Co., Bond, Series B, 6.75%, 3/30/2006 974,760
----------------------------------------------------------------------------------- -------------
FINANCE-COMMERCIAL--2.6%
-----------------------------------------------------------------------------------
1,000,000 Associates Corp. of North America, Sr. Note, 6.26%, 2/15/2006 937,470
-----------------------------------------------------------------------------------
1,000,000 General Electric Financial Services, Inc., Deb., 5.50%, 11/1/2001 947,410
----------------------------------------------------------------------------------- -------------
Total 1,884,880
----------------------------------------------------------------------------------- -------------
FINANCIAL SERVICES--2.8%
-----------------------------------------------------------------------------------
1,000,000 Dean Witter, Discover & Co., Note, 7.75%, 6/1/2001 1,030,360
-----------------------------------------------------------------------------------
1,000,000 Merrill Lynch & Co., Inc., Note, 7.00%, 3/15/2006 982,690
----------------------------------------------------------------------------------- -------------
Total 2,013,050
----------------------------------------------------------------------------------- -------------
FOOD & BEVERAGE--1.4%
-----------------------------------------------------------------------------------
1,000,000 Sara Lee Corp., Note, 6.30%, 11/7/2005 957,140
----------------------------------------------------------------------------------- -------------
INDUSTRIAL SERVICES--1.6%
-----------------------------------------------------------------------------------
1,000,000 General Mills, Inc., Medium Term Note, 8.90%, 6/15/2006 1,113,560
----------------------------------------------------------------------------------- -------------
PHARMACEUTICALS--1.5%
-----------------------------------------------------------------------------------
1,000,000 Lilly (Eli) & Co., Unsecured Note, 8.375%, 12/1/2006 1,090,380
----------------------------------------------------------------------------------- -------------
RETAIL--4.3%
-----------------------------------------------------------------------------------
1,000,000 May Department Stores Co., Deb., 9.875%, 6/15/2000 1,083,110
-----------------------------------------------------------------------------------
1,000,000 Penney (J.C.) Co., Inc., Medium Term Note, Series A, 6.375%,
9/15/2000 985,770
-----------------------------------------------------------------------------------
</TABLE>
INDEPENDENCE ONE FIXED INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------------- ----------------------------------------------------------------------------------- -------------
<C> <S> <C>
CORPORATE BONDS--CONTINUED
- --------------------------------------------------------------------------------------------------
RETAIL--CONTINUED
-----------------------------------------------------------------------------------
$ 1,000,000 Wal-Mart Stores, Inc., Unsecured Note, 6.125%, 10/1/1999 $ 989,370
----------------------------------------------------------------------------------- -------------
Total 3,058,250
----------------------------------------------------------------------------------- -------------
TELECOMMUNICATIONS--4.3%
-----------------------------------------------------------------------------------
1,000,000 AT&T Corp., Note, 7.50%, 6/1/2006 1,021,170
-----------------------------------------------------------------------------------
1,000,000 MCI Communications Corp., Sr. Note, 7.50%, 8/20/2004 1,026,120
-----------------------------------------------------------------------------------
1,000,000 U.S. West Communications, Inc., Note, 6.625%, 9/15/2005 969,230
----------------------------------------------------------------------------------- -------------
Total 3,016,520
----------------------------------------------------------------------------------- -------------
TOTAL CORPORATE BONDS (IDENTIFIED COST $17,345,174) 16,993,990
----------------------------------------------------------------------------------- -------------
GOVERNMENT AGENCIES--9.1%
- --------------------------------------------------------------------------------------------------
FEDERAL FARM CREDIT BANK--1.0%
-----------------------------------------------------------------------------------
300,000 5.96%, Bond, 7/14/2003 287,850
-----------------------------------------------------------------------------------
410,000 6.05%, Bond, 4/21/2003 395,958
----------------------------------------------------------------------------------- -------------
Total 683,808
----------------------------------------------------------------------------------- -------------
FEDERAL HOME LOAN BANK--2.2%
-----------------------------------------------------------------------------------
880,000 7.46%, Bond, 9/9/2004 911,636
-----------------------------------------------------------------------------------
650,000 7.57%, Bond, 8/19/2004 677,300
----------------------------------------------------------------------------------- -------------
Total 1,588,936
----------------------------------------------------------------------------------- -------------
FEDERAL HOME LOAN MORTGAGE CORPORATION--1.0%
-----------------------------------------------------------------------------------
700,000 7.90%, Bond, 1/27/2000 724,990
----------------------------------------------------------------------------------- -------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION--4.9%
-----------------------------------------------------------------------------------
1,000,000 5.37%, Medium Term Note, 2/7/2001 960,440
-----------------------------------------------------------------------------------
490,000 6.16%, Bond, 4/3/2001 482,866
-----------------------------------------------------------------------------------
2,000,000 6.69%, Bond, 8/7/2001 2,005,840
----------------------------------------------------------------------------------- -------------
Total 3,449,146
----------------------------------------------------------------------------------- -------------
TOTAL GOVERNMENT AGENCIES (IDENTIFIED COST $6,505,263) 6,446,880
----------------------------------------------------------------------------------- -------------
</TABLE>
INDEPENDENCE ONE FIXED INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------------- ----------------------------------------------------------------------------------- -------------
<C> <S> <C>
U.S. TREASURY OBLIGATIONS--64.7%
- --------------------------------------------------------------------------------------------------
U.S. TREASURY BOND--3.4%
-----------------------------------------------------------------------------------
$ 2,000,000 10.75%, 5/15/2003 $ 2,404,540
----------------------------------------------------------------------------------- -------------
U.S. TREASURY NOTES--61.3%
-----------------------------------------------------------------------------------
5,500,000 5.125%, 12/31/1998 5,413,045
-----------------------------------------------------------------------------------
5,000,000 6.00%, 12/31/1997 5,007,850
-----------------------------------------------------------------------------------
1,950,000 6.00%, 8/31/1997 1,952,359
-----------------------------------------------------------------------------------
11,250,000 6.125%, 7/31/2000 11,148,750
-----------------------------------------------------------------------------------
1,000,000 6.25%, 2/15/2007 967,830
-----------------------------------------------------------------------------------
7,000,000 6.375%, 8/15/2002 6,941,690
-----------------------------------------------------------------------------------
6,800,000 6.75%, 6/30/1999 6,864,056
-----------------------------------------------------------------------------------
5,000,000 7.50%, 10/31/1999 5,129,300
----------------------------------------------------------------------------------- -------------
Total 43,424,880
----------------------------------------------------------------------------------- -------------
TOTAL U.S. TREASURY OBLIGATIONS (IDENTIFIED COST $46,710,821) 45,829,420
----------------------------------------------------------------------------------- -------------
(A) REPURCHASE AGREEMENT--0.8%
- --------------------------------------------------------------------------------------------------
561,000 First Chicago Capital Markets, Inc., 5.42%, dated 4/30/1997,
due 5/1/1997 (AT AMORTIZED COST) 561,000
----------------------------------------------------------------------------------- -------------
TOTAL INVESTMENTS (IDENTIFIED COST $71,122,258)(B) $ 69,831,290
----------------------------------------------------------------------------------- -------------
(a) The repurchase agreement is fully collateralized by U.S. Treasury
obligations based on market prices at the date of the portfolio.
(b) The cost of investments for federal tax purposes amounts to
$71,166,437. The net unrealized depreciation of investments on a
federal tax basis amounts to $1,335,147 which is comprised of
$93,761 appreciation and $1,428,908 depreciation at April 30,
1997.
</TABLE>
Note: The categories of investments are shown as a percentage of net assets
($70,883,545) at April 30, 1997.
(See Notes which are an integral part of the Financial Statements)
INDEPENDENCE ONE FIXED INCOME FUND
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1997
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- ---------------------------------------------------------------------------------------------------
Total investments in securities, at value
(identified cost $71,122,258, and tax cost $71,166,437) $ 69,831,290
- ---------------------------------------------------------------------------------------------------
Income receivable 1,113,439
- ---------------------------------------------------------------------------------------------------
Receivable for shares sold 28,608
- ---------------------------------------------------------------------------------------------------
Deferred expenses 10,237
- --------------------------------------------------------------------------------------------------- -------------
Total assets 70,983,574
- ---------------------------------------------------------------------------------------------------
LIABILITIES:
- ----------------------------------------------------------------------------------------
Payable for shares redeemed $ 39,959
- ----------------------------------------------------------------------------------------
Income distribution payable 52,837
- ----------------------------------------------------------------------------------------
Accrued expenses 7,233
- ---------------------------------------------------------------------------------------- ---------
Total liabilities 100,029
- --------------------------------------------------------------------------------------------------- -------------
NET ASSETS for 7,234,918 shares outstanding $ 70,883,545
- --------------------------------------------------------------------------------------------------- -------------
NET ASSETS CONSIST OF:
- ---------------------------------------------------------------------------------------------------
Paid in capital $ 72,376,635
- ---------------------------------------------------------------------------------------------------
Net unrealized depreciation of investments (1,290,968)
- ---------------------------------------------------------------------------------------------------
Accumulated net realized loss on investments (202,122)
- --------------------------------------------------------------------------------------------------- -------------
Total Net Assets $ 70,883,545
- --------------------------------------------------------------------------------------------------- -------------
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE:
- ---------------------------------------------------------------------------------------------------
$70,883,545 / 7,234,918 shares outstanding $9.80
- --------------------------------------------------------------------------------------------------- -------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
INDEPENDENCE ONE FIXED INCOME FUND
STATEMENT OF OPERATIONS
YEAR ENDED APRIL 30, 1997
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
- ----------------------------------------------------------------------------------------------------
Interest $ 4,261,538
- ----------------------------------------------------------------------------------------------------
EXPENSES:
- ---------------------------------------------------------------------------------------
Investment advisory fee $ 500,293
- ---------------------------------------------------------------------------------------
Administrative personnel and services fee 72,776
- ---------------------------------------------------------------------------------------
Custodian fees 10,056
- ---------------------------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses 30,126
- ---------------------------------------------------------------------------------------
Directors'/Trustees' fees 603
- ---------------------------------------------------------------------------------------
Auditing fees 11,823
- ---------------------------------------------------------------------------------------
Legal fees 841
- ---------------------------------------------------------------------------------------
Portfolio accounting fees 46,720
- ---------------------------------------------------------------------------------------
Share registration costs 19,488
- ---------------------------------------------------------------------------------------
Printing and postage 7,279
- ---------------------------------------------------------------------------------------
Insurance premiums 730
- ---------------------------------------------------------------------------------------
Miscellaneous 2,100
- --------------------------------------------------------------------------------------- -----------
Total expenses 702,835
- ---------------------------------------------------------------------------------------
Waiver--
- ---------------------------------------------------------------------------------------
Waiver of investment advisory fee (333,528)
- --------------------------------------------------------------------------------------- -----------
Net expenses 369,307
- ---------------------------------------------------------------------------------------------------- ------------
Net investment income 3,892,231
- ---------------------------------------------------------------------------------------------------- ------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
- ----------------------------------------------------------------------------------------------------
Net realized loss on investments (202,277)
- ----------------------------------------------------------------------------------------------------
Net change in unrealized depreciation of investments 64,749
- ---------------------------------------------------------------------------------------------------- ------------
Net realized and unrealized loss on investments (137,528)
- ---------------------------------------------------------------------------------------------------- ------------
Change in net assets resulting from operations $ 3,754,703
- ---------------------------------------------------------------------------------------------------- ------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
INDEPENDENCE ONE FIXED INCOME FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
APRIL 30, 1997 APRIL 30, 1996*
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- ---------------------------------------------------------------------------
OPERATIONS--
- ---------------------------------------------------------------------------
Net investment income $ 3,892,231 $ 1,621,001
- ---------------------------------------------------------------------------
Net realized gain (loss) on investments ($72,088 net loss and $11,172 net
gain, respectively, as computed for federal tax purposes) (202,277) 11,172
- ---------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) 64,749 (1,355,717)
- --------------------------------------------------------------------------- ---------------- ------------------
Change in net assets resulting from operations 3,754,703 276,456
- --------------------------------------------------------------------------- ---------------- ------------------
DISTRIBUTIONS TO SHAREHOLDERS--
- ---------------------------------------------------------------------------
Distributions from net investment income (3,892,231) (1,621,001)
- ---------------------------------------------------------------------------
Distributions from net realized gains (11,017) --
- --------------------------------------------------------------------------- ---------------- ------------------
Change in net assets resulting from distributions to shareholders (3,903,248) (1,621,001)
- --------------------------------------------------------------------------- ---------------- ------------------
SHARE TRANSACTIONS--
- ---------------------------------------------------------------------------
Proceeds from sale of shares 18,128,850 64,728,100
- ---------------------------------------------------------------------------
Net asset value of shares issued to shareholders in payment of
distributions declared 3,100,848 --
- ---------------------------------------------------------------------------
Cost of shares redeemed (12,454,102) (1,127,061)
- --------------------------------------------------------------------------- ---------------- ------------------
Change in net assets resulting from share transactions 8,775,596 63,601,039
- --------------------------------------------------------------------------- ---------------- ------------------
Change in net assets 8,627,051 62,256,494
- ---------------------------------------------------------------------------
NET ASSETS:
- ---------------------------------------------------------------------------
Beginning of period 62,256,494 --
- --------------------------------------------------------------------------- ---------------- ------------------
End of period $ 70,883,545 $ 62,256,494
- --------------------------------------------------------------------------- ---------------- ------------------
</TABLE>
*For the period from October 23, 1995 (date of initial public
investment) to April 30, 1996.
(See Notes which are an integral part of the Financial Statements)
INDEPENDENCE ONE FIXED INCOME FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
YEAR ENDED
APRIL 30,
1997 1996(A)
<S> <C> <C>
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.
(c) Based on net asset value.
(d) This voluntary expense decrease is reflected in both the expense
and net investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
INDEPENDENCE ONE MICHIGAN MUNICIPAL BOND FUND
PORTFOLIO OF INVESTMENTS
APRIL 30, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING
PRINCIPAL MOODY'S
AMOUNT & S&P* VALUE
- --------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C>
LONG-TERM MUNICIPALS_98.1%
- --------------------------------------------------------------------------------------------------------------------
MICHIGAN--98.1%
---------------------------------------------------------------------
$ 825,000 Allegan, MI Public School District, GO UT Bonds, 5.55% (AMBAC
INS)/(Original Issue Yield: 5.60%), (Michigan State GTD), 5/1/2010 AAA/Aaa $ 828,836
---------------------------------------------------------------------
100,000 Auburn Hills, MI Local Development Financial Authority, Tax Increment
Revenue Bonds (Series A), 7.00% (Dai-Ichi Kangyo Bank Ltd., Tokyo
LOC), 11/1/2000 NR/A1 103,363
---------------------------------------------------------------------
500,000 Bay City, MI, Electric Utility Revenue Refunding Bonds, 5.00% (AMBAC
INS), 1/1/2001 AAA/NR 504,885
---------------------------------------------------------------------
400,000 Beaverton, MI Rural Schools, GO UT Bonds, 4.70% (FGIC INS)/(Original
Issue Yield: 4.75%), (Michigan State GTD), 5/1/2008 AAA/Aaa 376,840
---------------------------------------------------------------------
100,000 Calhoun County, MI, UT GO (Series II), 6.60% (AMBAC INS), 7/1/2002 AAA/Aaa 102,258
---------------------------------------------------------------------
485,000 Central Michigan University, Revenue Bonds, 5.30% (FGIC
LOC)/(Original Issue Yield: 5.40%), 10/1/2011 AAA/Aaa 476,115
---------------------------------------------------------------------
150,000 Clare County, MI, GO UT Refunding Bonds, 5.00% (Sewage Disposal
System No.3)/(AMBAC INS)/(Original Issue Yield: 5.10%), 11/1/2003 AAA/Aaa 151,367
---------------------------------------------------------------------
480,000 Detroit, MI City School District, GO UT Bonds (Series A), 6.50%
(AMBAC INS), (Michigan State GTD), 5/1/2008 AAA/Aaa 530,722
---------------------------------------------------------------------
100,000 Detroit, MI City School District, GO UT Bonds (Series XXIII), 7.10%
(Michigan State GTD), 5/1/1999 AA/Aa2 104,572
---------------------------------------------------------------------
500,000 East Detroit Michigan School District, GO UT Refunding Bonds, 5.45%
(FGIC INS), (Michigan State GTD), 5/1/2006 AAA/Aaa 547,575
---------------------------------------------------------------------
175,000 Grand Haven, MI Area Public Schools, GO UT Refunding Bonds, 5.50%
(MBIA INS)/(Original Issue Yield: 5.55%),
5/1/2005 AAA/Aaa 180,073
---------------------------------------------------------------------
</TABLE>
INDEPENDENCE ONE MICHIGAN MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING
PRINCIPAL MOODY'S
AMOUNT & S&P* VALUE
- -----------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C>
LONG-TERM MUNICIPALS--CONTINUED
- -----------------------------------------------------------------------------------
MICHIGAN--CONTINUED
---------------------------------------------------------------------
$ 100,000 Grand Rapid & Kent County, MI Joint Building Authority, Revenue
Bonds, 6.40%, 10/1/1998 AAA/Aa3 $ 102,903
---------------------------------------------------------------------
680,000 Grand Rapids, MI Community College, GO UT Bonds, 5.30% (MBIA
INS)/(Original Issue Yield: 5.35%), 5/1/2009 AAA/Aaa 677,668
---------------------------------------------------------------------
400,000 Greater Detroit Resource Recovery Authority, MI, Refunding Revenue
Bonds (Series A), 4.30% (AMBAC INS)/(Original Issue Yield: 4.35%),
12/13/1998 AAA/Aaa 400,448
---------------------------------------------------------------------
500,000 Greater Detroit Resource Recovery Authority, MI, Refunding Revenue
Bonds (Series A), 5.00% (AMBAC INS), 12/13/2000 AAA/Aaa 504,765
---------------------------------------------------------------------
550,000 Holland, MI Area Community Swimming Pool Authority, GO UT Bonds,
5.125% (FGIC INS)/(Original Issue Yield: 5.40%), 5/1/2010 AAA/Aaa 533,302
---------------------------------------------------------------------
100,000 Holland, MI Electric, Revenue Bonds, 6.30%, 7/1/2000 AA-/Aa3 103,487
---------------------------------------------------------------------
1,000,000 Kenowa Hills Michigan Public Schools, GO UT Bonds, 5.60% (MBIA INS),
5/1/2009 AAA/Aaa 1,016,600
---------------------------------------------------------------------
600,000 Lakewood, MI Public Schools, GO UT Bonds, 5.30% (Original Issue
Yield: 5.45%), 5/1/2009 AAA/Aaa 597,942
---------------------------------------------------------------------
150,000 Lanse Creuse, MI Public Schools, GO UT Bonds, 7.10% (Michigan State
GTD), 5/1/1998 AA/NR 153,013
---------------------------------------------------------------------
100,000 Lapeer, MI, GO LT Refunding Bonds, 6.10% (AMBAC INS)/(Original Issue
Yield: @ par), 10/1/1999 AAA/Aaa 104,032
---------------------------------------------------------------------
1,055,000 Lincoln Park, MI School District, GO UT Bonds, 5.70%,
5/1/2008 AAA/Aaa 1,092,062
---------------------------------------------------------------------
600,000 Marquette, MI Hospital Finance Authority, Refunding Revenue Bonds
(Series D), 4.95% (Marquette General Hospital, MI)/(FSA INS),
4/1/2002 AAA/Aaa 600,756
---------------------------------------------------------------------
1,000,000 Michigan Municipal Bond Authority, Revenue Bonds (Series B), 5.35%
(Original Issue Yield: 5.45%), 10/1/2007 AA/Aa 1,007,900
---------------------------------------------------------------------
</TABLE>
INDEPENDENCE ONE MICHIGAN MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING
PRINCIPAL MOODY'S
AMOUNT & S&P* VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C>
LONG-TERM MUNICIPALS--CONTINUED
- -----------------------------------------------------------------------------------
MICHIGAN--CONTINUED
---------------------------------------------------------------------
$ 400,000 Michigan Municipal Bond Authority, Revenue Bonds, 4.60% (AMBAC INS),
11/1/2003 AAA/Aaa $ 390,452
---------------------------------------------------------------------
500,000 Michigan Municipal Bond Authority, Revenue Bonds, 5.25% (Local
Government Loan Program)/(AMBAC INS), 5/1/2006 AAA/Aaa 502,670
---------------------------------------------------------------------
100,000 Michigan State Building Authority, Revenue Bonds (Series I), 5.50%
(Original Issue Yield: 5.60%), 10/1/2004 AA-/A1 102,783
---------------------------------------------------------------------
150,000 Michigan State Building Authority, Revenue Bonds, 6.20% (Grand Rapids
Center)/(BIG INS), 3/1/2001 AAA/Aaa 157,454
---------------------------------------------------------------------
460,000 Michigan State Hospital Finance Authority, Refunding Revenue Bonds,
5.60% (Oakwood Hospital Obligated Group)/(FGIC INS)/(Original Issue
Yield: 5.70%), 5/1/1999 AAA/Aaa 469,011
---------------------------------------------------------------------
100,000 Michigan State Hospital Finance Authority, Revenue Bonds, 6.45%
(Oakwood Hospital Obligated Group)/(FGIC INS), 7/1/1997 AAA/Aaa 100,444
---------------------------------------------------------------------
100,000 Michigan State Housing Development Authority, Refunding Revenue Bonds
(Series A), 6.40% (FHA/VA mtgs GTD), 6/1/2000 AA+/NR 103,191
---------------------------------------------------------------------
500,000 Michigan State Housing Development Authority, Refunding Revenue,
4.85% (AMBAC INS), 10/1/2002 AAA/Aaa 498,025
---------------------------------------------------------------------
510,000 Michigan State, GO UT Recreation Bonds, 5.50% (Original Issue Yield:
5.55%), 11/1/1999 AA/Aa2 523,097
---------------------------------------------------------------------
150,000 Michigan State, GO UT Recreation Bonds, 6.00% (Original Issue Yield:
6.10%), 11/1/2004 AA/Aa2 159,625
---------------------------------------------------------------------
150,000 Michigan Strategic Fund, Small Business Refunding Revenue Bonds
(Series A1-A2), 5.90% (SBA GTD),
10/1/2000 NR/Aaa 156,210
---------------------------------------------------------------------
900,000 Northview Michigan Public School District, GO UT Bonds, 5.05% (MBIA
INS), (Michigan State GTD), 5/1/2005 AAA/Aaa 899,703
---------------------------------------------------------------------
500,000 Novi, MI, Refunding GO Bonds, 5.25%, 10/1/2009 A+/A1 496,155
---------------------------------------------------------------------
</TABLE>
INDEPENDENCE ONE MICHIGAN MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING
PRINCIPAL MOODY'S
AMOUNT & S&P* VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C>
LONG-TERM MUNICIPALS--CONTINUED
- -----------------------------------------------------------------------------------
MICHIGAN--CONTINUED
---------------------------------------------------------------------
$ 90,000 Oakland County, MI Building Authority, GO LT Bonds, 6.70%, 5/1/1997
(@102) NR $ 91,807
---------------------------------------------------------------------
100,000 Oakland County, MI, GO LT Bonds, 6.80%, 5/1/1999 AA/A1 102,008
---------------------------------------------------------------------
150,000 Ottawa County, MI, GO LT Refunding Bonds, 6.00% (Holland Township
1985 Extension), 8/1/1997 AA-/A1 150,807
---------------------------------------------------------------------
1,000,000 Oxford, MI Area Community Schools, GO UT Bonds, 4.95% (FGIC INS),
(Michigan State GTD), 5/1/2007 AAA/Aaa 981,530
---------------------------------------------------------------------
100,000 Portage, MI, GO LT City Share Bonds, 5.90%, 12/1/2003 AA-/NR 105,250
---------------------------------------------------------------------
700,000 Redford, MI University School District, GO UT Bonds, 6.25% (FGIC
INS), (Michigan State GTD), 5/1/2007 AAA/Aaa 758,184
---------------------------------------------------------------------
350,000 Reeths Puffer Schools, GO UT Refunding Bonds, 4.90% (FGIC INS),
(Michigan State GTD), 5/1/2003 AAA/Aaa 349,010
---------------------------------------------------------------------
390,000 Rochester, MI, GO UT Refunding Bonds, 4.90%, 10/1/2006 AAA/Aaa 382,122
---------------------------------------------------------------------
400,000 St. Clair County, MI, GO LT Water Supply System Bonds, 5.00%
(Burtchville)/(MBIA INS)/(Original Issue Yield: 5.10%), 11/1/2009 AAA/Aaa 389,308
---------------------------------------------------------------------
500,000 Three Rivers Michigan Community Schools, GO UT Bonds, 5.40% (Michigan
State GTD)/(MBIA INS), 5/1/2008 AAA/Aaa 506,665
---------------------------------------------------------------------
765,000 University of Michigan, Revenue Bonds (Series A), 5.40%, 11/15/2008 AA/Aa1 775,549
---------------------------------------------------------------------
350,000 University of Michigan, Revenue Bonds (Series A), 5.60% (Original
Issue Yield: 5.70%), 11/15/2012 AA/Aa1 350,903
---------------------------------------------------------------------
500,000 Washtenaw Community College, MI, GO UT, 5.00% (Original Issue Yield:
5.10%), 4/1/2008 AA/Aa3 490,705
---------------------------------------------------------------------
500,000 Washtenaw Community College, MI, GO UT, 5.00% (Original Issue Yield:
5.35%), 4/1/2011 AA/Aa3 476,585
---------------------------------------------------------------------
100,000 Wayne County, MI Community College, GO UT Refunding Bonds, 6.15%
(FGIC INS), 4/1/1999 AAA/Aaa 102,138
---------------------------------------------------------------------
</TABLE>
INDEPENDENCE ONE MICHIGAN MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
PRINCIPAL RATING
AMOUNT MOODY'S
OR SHARES & S&P* VALUE
- ---------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C>
LONG-TERM MUNICIPALS--CONTINUED
- -----------------------------------------------------------------------------------
MICHIGAN--CONTINUED
---------------------------------------------------------------------
$ 440,000 Western School District, MI, GO UT Refunding Bonds, (Michigan State
GTD), 5.50%, 5/1/2002 AAA/Aaa $ 452,470
---------------------------------------------------------------------
750,000 Williamston, MI Community School District, GO UT Bonds, 4.80% (MBIA
INS), (Michigan State GTD), 5/1/2004 AAA/Aaa 738,750
---------------------------------------------------------------------
500,000 Wixon, MI, UT GO Bonds, 4.70% (AMBAC INS)/(Original Issue Yield:
4.85%), 5/1/2009 AAA/Aaa 461,425
--------------------------------------------------------------------- -------------
TOTAL LONG-TERM MUNICIPALS (IDENTIFIED COST $22,992,274) 23,025,520
--------------------------------------------------------------------- -------------
MUTUAL FUND--0.2%
- -----------------------------------------------------------------------------------
38,000 Goldman Sachs Tax Exempt Fund (AT NET ASSET VALUE) 38,000
--------------------------------------------------------------------- -------------
TOTAL INVESTMENTS (IDENTIFIED COST $23,030,274)(A) $ 23,063,520
--------------------------------------------------------------------- -------------
</TABLE>
Securities that are subject to Alternative Minimum Tax represent 2% of
the portfolio as calculated based upon total portfolio market value.
(a) The cost of investments for federal tax purposes amounts to
$23,030,274. The net unrealized appreciation of investments on a
federal tax basis amounts to $33,246 which is comprised of
$173,340 appreciation and $140,094 depreciation at April 30, 1997.
* Please refer to the Appendix of the Statement of Additional
Information for an explanation of the credit ratings. Current
credit ratings are unaudited.
Note: The categories of investments are shown as a percentage of net assets
($23,482,945) at April 30, 1997.
The following acronym(s) are used throughout this portfolio:
AMBAC--American Municipal Bond Assurance Corporation BIG--Bond
Investors Guaranty FGIC--Financial Guaranty Insurance Company
FHA/VA--Federal Housing Administration/Veterans Administration
FSA--Financial Security Assurance GO--General Obligation GTD--Guaranty
INS--Insured LOC--Letter of Credit
INDEPENDENCE ONE MICHIGAN MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
LT--Limited Tax
MBIA--Municipal Bond Investors Assurance
SBA--Small Business Association
UT--Unlimited Tax
(See Notes which are an integral part of the Financial Statements)
INDEPENDENCE ONE MICHIGAN MUNICIPAL BOND FUND
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1997
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- ---------------------------------------------------------------------------------------------------
Total investments in securities, at value
(identified and tax cost $23,030,274) $ 23,063,520
- ---------------------------------------------------------------------------------------------------
Cash 636
- ---------------------------------------------------------------------------------------------------
Income receivable 514,550
- ---------------------------------------------------------------------------------------------------
Receivable for shares sold 9,091
- ---------------------------------------------------------------------------------------------------
Deferred expenses 4,943
- --------------------------------------------------------------------------------------------------- -------------
Total assets 23,592,740
- ---------------------------------------------------------------------------------------------------
LIABILITIES:
- ----------------------------------------------------------------------------------------
Payable for shares redeemed $ 3,996
- ----------------------------------------------------------------------------------------
Income distribution payable 83,686
- ----------------------------------------------------------------------------------------
Accrued expenses 22,113
- ---------------------------------------------------------------------------------------- ---------
Total liabilities 109,795
- --------------------------------------------------------------------------------------------------- -------------
NET ASSETS for 2,350,116 shares outstanding $ 23,482,945
- --------------------------------------------------------------------------------------------------- -------------
NET ASSETS CONSIST OF:
- ---------------------------------------------------------------------------------------------------
Paid in capital $ 23,518,340
- ---------------------------------------------------------------------------------------------------
Net unrealized appreciation of investments 33,246
- ---------------------------------------------------------------------------------------------------
Accumulated net realized loss on investments (68,641)
- --------------------------------------------------------------------------------------------------- -------------
Total Net Assets $ 23,482,945
- --------------------------------------------------------------------------------------------------- -------------
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE:
- ---------------------------------------------------------------------------------------------------
$23,482,945 / 2,350,116 shares outstanding $9.99
- --------------------------------------------------------------------------------------------------- -------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
INDEPENDENCE ONE MICHIGAN MUNICIPAL BOND FUND
STATEMENT OF OPERATIONS
YEAR ENDED APRIL 30, 1997
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
- ----------------------------------------------------------------------------------------------------
Interest $ 1,170,057
- ----------------------------------------------------------------------------------------------------
EXPENSES:
- ----------------------------------------------------------------------------------------
Investment advisory fee $ 182,176
- ----------------------------------------------------------------------------------------
Administrative personnel and services fee 50,000
- ----------------------------------------------------------------------------------------
Custodian fees 17,887
- ----------------------------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses 32,584
- ----------------------------------------------------------------------------------------
Directors'/Trustees' fees 1,798
- ----------------------------------------------------------------------------------------
Auditing fees 12,955
- ----------------------------------------------------------------------------------------
Legal fees 2,895
- ----------------------------------------------------------------------------------------
Portfolio accounting fees 62,735
- ----------------------------------------------------------------------------------------
Share registration costs 12,416
- ----------------------------------------------------------------------------------------
Printing and postage 13,926
- ----------------------------------------------------------------------------------------
Insurance premiums 3,345
- ----------------------------------------------------------------------------------------
Miscellaneous 4,428
- ---------------------------------------------------------------------------------------- ----------
Total expenses 397,145
- ----------------------------------------------------------------------------------------
Waivers--
- ---------------------------------------------------------------------------
Waiver of investment advisory fee $ (182,176)
- ---------------------------------------------------------------------------
Waiver of administrative personnel and services fee (44,944)
- --------------------------------------------------------------------------- -----------
Total waivers (227,120)
- ---------------------------------------------------------------------------------------- ----------
Net expenses 170,025
- ---------------------------------------------------------------------------------------------------- ------------
Net investment income 1,000,032
- ---------------------------------------------------------------------------------------------------- ------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
- ----------------------------------------------------------------------------------------------------
Net realized loss on investments (68,257)
- ----------------------------------------------------------------------------------------------------
Net change in unrealized appreciation of investments 152,405
- ---------------------------------------------------------------------------------------------------- ------------
Net realized and unrealized gain on investments 84,148
- ---------------------------------------------------------------------------------------------------- ------------
Change in net assets resulting from operations $ 1,084,180
- ---------------------------------------------------------------------------------------------------- ------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
INDEPENDENCE ONE MICHIGAN MUNICIPAL BOND FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
APRIL 30, 1997 APRIL 30, 1996*
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- ---------------------------------------------------------------------------
OPERATIONS--
- ---------------------------------------------------------------------------
Net investment income $ 1,000,032 $ 443,584
- ---------------------------------------------------------------------------
Net realized gain (loss) on investments ($69,400 net loss and $2,733 net
gain, respectively, as computed for federal tax purposes) (68,257) 2,733
- ---------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) 152,405 (119,159)
- --------------------------------------------------------------------------- ---------------- ------------------
Change in net assets resulting from operations 1,084,180 327,158
- --------------------------------------------------------------------------- ---------------- ------------------
DISTRIBUTIONS TO SHAREHOLDERS--
- ---------------------------------------------------------------------------
Distributions from net investment income (1,000,032) (443,584)
- ---------------------------------------------------------------------------
Distributions from net realized gains (3,117) --
- --------------------------------------------------------------------------- ---------------- ------------------
Change in net assets resulting from distributions to shareholders (1,003,149) (443,584)
- --------------------------------------------------------------------------- ---------------- ------------------
SHARE TRANSACTIONS--
- ---------------------------------------------------------------------------
Proceeds from sale of shares 3,957,232 28,064,937
- ---------------------------------------------------------------------------
Net asset value of shares issued to shareholders in payment of
distributions declared 15,386 --
- ---------------------------------------------------------------------------
Cost of shares redeemed (5,693,966) (2,825,249)
- --------------------------------------------------------------------------- ---------------- ------------------
Change in net assets resulting from share transactions (1,721,348) 25,239,688
- --------------------------------------------------------------------------- ---------------- ------------------
Change in net assets (1,640,317) 25,123,262
- ---------------------------------------------------------------------------
NET ASSETS:
- ---------------------------------------------------------------------------
Beginning of period 25,123,262 --
- --------------------------------------------------------------------------- ---------------- ------------------
End of period $ 23,482,945 $ 25,123,262
- --------------------------------------------------------------------------- ---------------- ------------------
</TABLE>
*For the period from November 20, 1995 (date of initial public
investment) to April 30, 1996.
(See Notes which are an integral part of the Financial Statements)
INDEPENDENCE ONE MICHIGAN MUNICIPAL BOND FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
YEAR ENDED
APRIL 30,
1997 1996(a)
<S> <C> <C>
- --------------------------------------------------------------------------------------------
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 was less than one cent
per share.
(c) Based on net asset value.
(d) This voluntary expense decrease is reflected in both the expense
and net investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
INDEPENDENCE ONE MUTUAL FUNDS
COMBINED NOTES TO FINANCIAL STATEMENTS
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 of the following portfolios (individually
referred to as the "Fund", or collectively as the "Funds") are
presented herein:
<TABLE>
<CAPTION>
PORTFOLIO NAME INVESTMENT OBJECTIVE
<S> <C>
Independence One U.S. Government Securities Fund ("U.S. To seek high current income.
Government Securities Fund")(d)
Independence One Fixed Income Fund ("Fixed Income To seek total return.
Fund")(d)
Independence One Michigan Municipal Bond Fund ("Michigan To provide
current income which is exempt from Municipal Bond Fund")(n) federal
regular income tax and the personal income
taxes imposed by the state of Michigan and
Michigan municipalities.
</TABLE>
(d) Diversified portfolio
(n) Non-diversified portfolio
The financial statements of the other portfolios are presented
separately. The assets of each portfolio are segregated and a
shareholder's interest is limited to the portfolio in which shares are
held.
(2) SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies
consistently followed by the Funds in the preparation of their
financial statements. These policies are in conformity with generally
accepted accounting principles.
INVESTMENT VALUATIONS--Municipal bonds are valued by an
independent pricing service, taking into consideration yield,
liquidity, risk, credit quality, coupon, maturity, type of issue,
and any other factors or market data the pricing service deems
relevant. U.S. government securities, listed corporate bonds,
other fixed income and asset-backed securities, and unlisted
securities and private placement securities are generally valued
at the mean of the latest bid and asked price as furnished by an
independent pricing service. Short-term securities are
INDEPENDENCE ONE MUTUAL FUNDS
- --------------------------------------------------------------------------------
valued at the prices provided by an independent pricing service.
However, short-term securities with remaining maturities of sixty
days or less at the time of purchase may be valued at amortized
cost, which approximates fair market value.
REPURCHASE AGREEMENTS--It is the policy of the Funds to require
the custodian bank to take possession, to have legally segregated
in the Federal Reserve Book Entry System, or to have segregated
within the custodian bank's vault, all securities held as
collateral under repurchase agreement transactions. Additionally,
procedures have been established by the Funds to monitor, on a
daily basis, the market value of each repurchase agreement's
collateral to ensure that the value of collateral at least equals
the repurchase price to be paid under the repurchase agreement
transaction.
The Funds will only enter into repurchase agreements with banks
and other recognized financial institutions, such as
broker/dealers, which are deemed by the Funds' adviser to be
creditworthy pursuant to the guidelines and/or standards reviewed
or established by the Board of Trustees (the "Trustees"). Risks
may arise from the potential inability of counterparties to honor
the terms of the repurchase agreement. Accordingly, the Funds
could receive less than the repurchase price on the sale of
collateral securities.
INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS--Interest income
and expenses are accrued daily. Bond premium and discount, if
applicable, are amortized as required by the Internal Revenue
Code, as amended (the "Code"). Distributions to shareholders are
recorded on the ex-dividend date.
Income and capital gain distributions are determined in
accordance with income tax regulations which may differ from
generally accepted accounting principles. These differences are
primarily due to tax adjustments made to premium amortization
accounts. The following reclassifications have been made to the
financial statements of U.S. Government Securities Fund:
<TABLE>
<CAPTION>
INCREASE (DECREASE)
<S> <C>
PAID-IN CAPITAL ACCUMULATED NET REALIZED LOSS ON INVESTMENTS
$ 2,109 ($ 2,109)
</TABLE>
FEDERAL TAXES--It is the Funds' policy to comply with the
provisions of the Code applicable to regulated investment
companies and to distribute to shareholders each year
substantially all of their income. Accordingly, no provisions for
federal tax are necessary.
At April 30, 1997, the Funds, for federal tax purposes, had
capital loss carryforwards, as noted below, which will reduce
each Fund's taxable income arising from future net realized gain
on investments, if any, to the extent permitted by the Code, and
thus will reduce the amount of the distributions to shareholders
which would otherwise be necessary to relieve each Fund of any
liability for federal tax. Pursuant to the Code, such capital
loss carryforwards will expire as follows:
INDEPENDENCE ONE MUTUAL FUNDS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TOTAL TAX LOSS EXPIRATION
FUND NAME CARRYFORWARD YEAR
<S> <C> <C>
U.S. Government Securities Fund $1,054,816 2005
Fixed Income Fund $72,088 2005
Michigan Municipal Bond Fund $69,400 2005
</TABLE>
Additionally, net capital losses, as noted below, attributable to
security transactions incurred after October 31, 1996, are
treated as arising on the first day of the Fund's next taxable
year.
<TABLE>
<CAPTION>
FUND NAME TOTAL TAX LOSS PUSHFORWARD
<S> <C>
Fixed Income Fund $86,010
</TABLE>
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Funds may
engage in when-issued or delayed delivery transactions. The Funds
record when-issued securities on the trade date and maintain
security positions such that sufficient liquid assets will be
available to make payment for the securities purchased.
Securities purchased on a when-issued or delayed delivery basis
are marked to market daily and begin earning interest on the
settlement date.
DEFERRED EXPENSES--The costs incurred by each Fund with respect
to registration of its shares in its first fiscal year, excluding
the initial expense of registering its shares, have been deferred
and are being amortized over a period not to exceed five years
from each Fund's commencement date.
USE OF ESTIMATES--The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the
amounts of assets, liabilities, expenses and revenues reported in
the financial statements. Actual results could differ from those
estimated.
OTHER--Investment transactions are accounted for on the trade
date.
(3) SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited
number of full and fractional shares of beneficial interest (without
par value) for each Fund. Transactions in shares were as follows:
INDEPENDENCE ONE MUTUAL FUNDS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
U.S. GOVERNMENT
SECURITIES FUND
YEAR ENDED APRIL 30,
1997 1996
<S> <C> <C>
Shares sold 1,820,631 2,192,059
- --------------------------------------------------------------------------------------
Shares issued to shareholders in payment of distributions declared 42,792 --
- --------------------------------------------------------------------------------------
Shares redeemed (1,902,451) (1,329,593)
- -------------------------------------------------------------------------------------- ----------- -----------
Net change resulting from share transactions (39,028) 862,466
- -------------------------------------------------------------------------------------- ----------- -----------
<CAPTION>
FIXED INCOME FUND
YEAR ENDED APRIL 30,
1997 1996(A)
<S> <C> <C>
Shares sold 1,843,716 6,455,118
- --------------------------------------------------------------------------------------
Shares issued to shareholders in payment of distributions declared 314,984 --
- --------------------------------------------------------------------------------------
Shares redeemed (1,266,239) (112,661)
- -------------------------------------------------------------------------------------- ----------- -----------
Net change resulting from share transactions 892,461 6,342,457
- -------------------------------------------------------------------------------------- ----------- -----------
</TABLE>
(a) For the period from October 23, 1995 (date of initial public
investment) to April 30, 1996.
<TABLE>
<CAPTION>
MICHIGAN MUNICIPAL
BOND FUND
YEAR ENDED APRIL 30,
1997 1996(B)
<S> <C> <C>
Shares sold 394,505 2,805,078
- ---------------------------------------------------------------------------------------
Shares issued to shareholders in payment of distributions declared 1,535 --
- ---------------------------------------------------------------------------------------
Shares redeemed (570,983) (280,019)
- --------------------------------------------------------------------------------------- --------- ----------
Net change resulting from share transactions (174,943) 2,525,059
- --------------------------------------------------------------------------------------- --------- ----------
</TABLE>
(b) For the period from November 20, 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 Funds' investment
adviser (the "Adviser") receives for its services an annual investment
advisory fee based on a percentage of each Fund's average daily net
assets (see below).
INDEPENDENCE ONE MUTUAL FUNDS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Fund Name Investment Advisory Fee
<S> <C>
U.S. Government Securities Fund 0.70%
Fixed Income Fund 0.75%
Michigan Municipal Bond Fund 0.75%
</TABLE>
The Adviser may voluntarily choose to waive any portion of its fee.
The Adviser can modify or terminate this voluntary waiver at any time
at its sole discretion.
Under the terms of a sub-advisory agreement between the Adviser and
Independence One Capital Management Corporation (the "Sub-Adviser"),
the Sub-Adviser will assist the Adviser in the purchase or sale of the
U.S. Government Securities Fund's portfolio instruments. The
Sub-Adviser will perform its duties at no cost to the Adviser or the
Fund.
ADMINISTRATIVE FEE--Federated Administrative Services ("FAS") provides
the Funds with certain administrative personnel and services. The fee
paid to FAS is based on the level of average aggregate net assets of
the Trust for the period. The administrative fee received during any
fiscal year shall be at least $50,000 for each portfolio in the Trust.
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT FEES--Federated Services
Company ("FServ"), through its subsidiary, Federated Shareholder
Services Company ("FSSC") serves as transfer and dividend disbursing
agent for the Funds. The fee paid to FSSC is based on the size, type,
and number of accounts and transactions made by shareholders.
PORTFOLIO ACCOUNTING FEES--FServ maintains the Funds' accounting
records for which it receives a fee. The fee is based on the level of
each Fund's average daily net assets for the period, plus out-of-
pocket expenses.
CUSTODIAN FEES--Michigan National Bank is the Funds' custodian. The
fee is based on the level of each Fund's average daily net assets for
the period, plus out-of-pocket expenses.
ORGANIZATIONAL EXPENSES--Organizational expenses were borne initially
by FAS. The Funds have agreed to reimburse FAS for the organizational
expenses during the five year period following effective date. For the
year ended April 30, 1997, the Funds paid the following pursuant to
this agreement:
INDEPENDENCE ONE MUTUAL FUNDS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
AMOUNT REIMBURSED TO
EXPENSES OF FAS FOR THE YEAR ENDED
FUND NAME ORGANIZING THE FUND APRIL 30, 1997
<S> <C> <C>
U.S. Government Securities Fund $49,664 $14,116
Fixed Income Fund $21,477 $2,506
Michigan Municipal Bond Fund $24,175 $2,820
</TABLE>
GENERAL--Certain of the Officers of the Trust are Officers and/or
Directors or Trustees of the above companies.
(5) INVESTMENT TRANSACTION
Purchases and sales of investments, excluding short-term securities,
for the year ended April 30, 1997, were as follows:
<TABLE>
<CAPTION>
FUND NAME PURCHASES SALES
<S> <C> <C>
U.S. Government Securities Fund $51,370,306 $51,467,213
Fixed Income Fund $23,550,083 $15,098,459
Michigan Municipal Bond Fund $11,237,707 $13,025,883
</TABLE>
(6) CONCENTRATION OF CREDIT RISK
Since Michigan Municipal Bond Fund invests a substantial portion of
its assets in issuers located in one state, it will be more
susceptible to factors adversely affecting issuers of that state than
would be a comparable tax-exempt mutual fund that invests nationally.
In order to reduce the credit risk associated with such factors, at
April 30, 1997, 69.0% of the securities in the portfolio of
investments are backed by letters of credit or bond insurance of
various financial institutions and financial guaranty assurance
agencies. The value of investments insured by or supported (backed) by
a letter of credit from any one institution or agency did not exceed
21.6% of total investments.
REPORT OF KPMG PEAT MARWICK LLP,
INDEPENDENT AUDITORS
- --------------------------------------------------------------------------------
To the Board of Trustees and Shareholders INDEPENDENCE ONE MUTUAL
FUNDS:
We have audited the accompanying statements of assets and liabilities,
including the portfolio of investments, of Independence One Mutual
Funds listed below, as of April 30, 1997, and the related statements
of operations and changes in net assets, and the financial highlights
for each of the periods listed below:
INDEPENDENCE ONE U.S. GOVERNMENT SECURITIES FUND--statement of
operations for the year ended April 30, 1997, the statement of
changes in net assets for each of the years in the two-year
period then ended, and the financial highlights for each of the
years or period from January 11, 1993 (commencement of
operations) to April 30, 1997.
INDEPENDENCE ONE FIXED INCOME FUND--statement of operations for
the year ended April 30, 1997, the statement of changes in net
assets and the financial highlights for each of the years or
period from October 23, 1995 (commencement of operations) to
April 30, 1997.
INDEPENDENCE ONE MICHIGAN MUNICIPAL BOND FUND--statement of
operations for the year ended April 30, 1997, the statement of
changes in net assets and the financial highlights for each of
the years or period from November 20, 1995 (commencement of
operations) to April 30, 1997.
These financial statements and financial highlights are the
responsibility of the Funds' 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 U.S. Government Securities
Fund, Independence One Fixed Income Fund and Independence One Michigan
Municipal Bond Fund as of April 30, 1997, and the results of their
operations, changes in their net assets, and their 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
TRUSTEES OFFICERS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Robert E. Baker Edward C. Gonzales
Harold Berry President and Treasurer
Clarence G. Frame Jeffrey W. Sterling
Harry J. Nederlander Vice President and Assistant Treasurer
Thomas S. Wilson Jay S. Neuman
Secretary
Gail Cagney
Assistant Secretary
</TABLE>
Mutual funds are not bank deposits or obligations, are not guaranteed
by any bank, and are not insured or guaranteed by the U.S. government,
the Federal Deposit Insurance Corporation, the Federal Reserve Board,
or any other government agency. Investment in mutual funds involves
investment risk, including possible loss of principal.
This report is authorized for distribution to prospective investors
only when preceded or accompanied by the Funds' prospectus which
contains facts concerning their objectives and policies, management
fees, expenses and other information.
INDEPENDENCE
ONE/R/
MUTUAL
FUNDS
COMBINED
ANNUAL REPORT
TO SHAREHOLDERS
APRIL 30, 1997
Independence One Prime
Money Market Fund
Independence One U.S. Treasury
[LOGO] Money Market Fund
Michigan
National Independence One Michigan
Bank Municipal Cash Fund
Investment Adviser
[LOGO] FEDERATED INVESTORS
Federated Securities Corp., Distributor
Cusip 453777709 [LOGO]
Cusip 453777203 Independence One
Cusip 453777302 Mutual Funds
Cusip 453777401
G01200-01 (6/97)
[Recycled LOGO]
PRESIDENT'S MESSAGE
- --------------------------------------------------------------------------------
Dear Investor:
I am pleased to present the Annual Report for Independence One Prime
Money Market Fund, Independence One U.S. Treasury Money Market Fund
and Independence One Michigan Municipal Cash Fund which covers the
12-month period from May 1, 1996 through April 30, 1997. The report
begins with a discussion with each fund's portfolio manager, which is
followed by a complete listing of fund holdings and the financial
information.
During the period, each fund continued to give shareholders a
convenient, stable way to put their ready cash to work pursuing daily
income--with daily access to their money.+ For the 12-month period
ended April 30, 1997, the fund-by-fund highlights are as follows:
INDEPENDENCE ONE PRIME MONEY MARKET FUND paid competitive dividends of
$0.05 per share for Class A Shares and Class B Shares--translating to
total returns of 4.94% and 5.20%,* respectively-- through its
high-quality, diversified portfolio of high-quality money market
securities. Total assets reached $409 million on the last day of the
period.
INDEPENDENCE ONE U.S. TREASURY MONEY MARKET FUND, which invests
exclusively in a portfolio of U.S. Treasury money market securities,
paid dividends totaling $0.05 per share that contributed to a total
return of 4.86%.* Total assets stood at $245.3 million on the last day
of the period.
INDEPENDENCE ONE MICHIGAN MUNICIPAL CASH FUND helped its tax-sensitive
shareholders earn $0.03 in double-tax-free dividends per share,**
which contributed to a total return of 3.04%.* Total net assets in the
fund's high-quality portfolio of Michigan municipal money market
securities reached $84 million at the end of the period.
Thank you for keeping your cash at work--and accessible--on a daily
basis through one of the Independence One Mutual Funds. As always, we
welcome your questions, comments, or suggestions.
Sincerely,
/s/ Edward C. Gonzales
Edward C. Gonzales
President
June 15, 1997
+ Although money market mutual funds pursue a stable $1.00 net asset
value, there is no guarantee that a stable net asset value will be
maintained. Investments in money market mutual funds are neither
insured nor guaranteed by the U.S. government.
* Past performance is not indicative of future results.
** Income may be subject to the federal alternative minimum tax.
MANAGEMENT DISCUSSION & ANALYSIS
- --------------------------------------------------------------------------------
Q
After much uncertainty about the direction of the economy and
anticipation of Federal Reserve Board action, the period saw the
first change in monetary policy in over a year. What are your
comments?
A
In the latter half of the first quarter 1997, inflationary
pressures began to emerge. Numerous economic indicators pointed
toward an economy that was expanding rapidly, perhaps too
rapidly. Economic indicators such as low
unemployment, increasing wage pressures, expanding manufacturing
activity, and strong housing demand helped to fuel this notion. The
Federal Reserve Board apparently felt that the economy was expanding
too quickly, because on March 25, 1997 at the Federal Open Market
Committee Meeting, the Federal Reserve Board, in its first move in 26
months, decided to raise the Federal Funds target rate by 25 basis
points to 5.50%, as a "preemptive strike" against impending inflation.
Q
In this environment, how did the Independence One Money Market
Funds perform for shareholders in terms of income and 7-day yield
during the 12-month reporting period ended April 30, 1997?
A
INDEPENDENCE ONE PRIME MONEY MARKET FUND
Independence One Prime Money Market Fund earned a total return of
4.94% for Class A Shares and 5.20% for Class B Shares during the
12-month period
ended April 30, 1997. The 7-day yield began the period on May 1, 1996
at 4.77% and ended the period on April 30, 1997 at 4.95% for Class A
Shares. The yield for Class B shares was 25 basis points higher for
both dates. The 7-day yield for Class B Shares as of April 30, 1997
was 5.20%.* The average maturity for the fund as of April 30, 1997 was
42 days.
INDEPENDENCE ONE U.S. TREASURY MONEY MARKET FUND
Independence One U.S. Treasury Money Market Fund earned a total return
of 4.86% during the 12-month period ended April 30, 1997. The 7-day
yield rose from 4.71% on May 1, 1996 to 4.82% on April 30, 1997.* The
average maturity for this fund as of April 30, 1997 was 59 days.
INDEPENDENCE ONE MICHIGAN MUNICIPAL CASH FUND
Independence One Michigan Municipal Cash Fund earned a total return of
3.04% during the 12-month period ended April 30, 1997. The 7-day yield
rose from 3.25% on May 1, 1996 to 3.71% on April 30, 1997.* The
average maturity for the fund as of April 30, 1997 was 28 days.
Q
With one interest rate increase behind us, what is your outlook
for short-term interest rates for the balance of 1997?
A
Despite favorable readings on the inflation front, the short-term
markets should be wary of further short-term interest rate hikes
by the Federal Reserve Board unless there are visible signs that
the economy is slowing
significantly from its first quarter pace.
* Past performance is not indicative of future results. Yield will vary.
INDEPENDENCE ONE PRIME MONEY MARKET FUND
PORTFOLIO OF INVESTMENTS
APRIL 30, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------------ ---------------------------------------------------------------------------------- --------------
<C> <S> <C>
CERTIFICATE OF DEPOSIT--38.6%
- -------------------------------------------------------------------------------------------------
$ 15,000,000 ABN-AMRO Bank NV, Amsterdam, 5.40%-5.44%, 5/7/1997-7/24/1997 $ 15,000,335
----------------------------------------------------------------------------------
15,000,000 Abbey National Bank PLC, London, 5.47%, 6/16/1997 14,999,799
----------------------------------------------------------------------------------
15,000,000 Bank of Tokyo-Mitsubishi Ltd., 5.435%, 5/27/1997 14,942,042
----------------------------------------------------------------------------------
15,000,000 Banque Nationale de Paris, 5.68%, 7/1/1997 14,999,454
----------------------------------------------------------------------------------
15,000,000 Bayerische Landesbank Girozentrale, 5.325%, 5/27/1997 15,000,160
----------------------------------------------------------------------------------
10,000,000 Canadian Imperial Bank of Commerce, Toronto, 5.97%, 3/17/1998 9,997,486
----------------------------------------------------------------------------------
15,000,000 Credit Suisse, Zurich, 5.45%-5.49%, 7/14/1997-8/27/1997 15,000,914
----------------------------------------------------------------------------------
10,000,000 Dai-Ichi Kangyo Bank Ltd., Tokyo, 5.81%, 7/9/1997 10,000,378
----------------------------------------------------------------------------------
15,000,000 Deutsche Bank, AG, 5.40%-5.451%, 6/13/1997-6/19/1997 14,968,247
----------------------------------------------------------------------------------
15,000,000 Rabobank Nederland, Utrecht, 5.34%, 5/12/1997 15,000,136
----------------------------------------------------------------------------------
10,000,000 Toronto-Dominion Bank, 5.65%, 6/30/1997 10,000,587
----------------------------------------------------------------------------------
8,000,000 Westdeutsche Landesbank Girozentrale, 5.32%, 5/19/1997 8,000,169
---------------------------------------------------------------------------------- --------------
TOTAL CERTIFICATES OF DEPOSIT 157,909,707
---------------------------------------------------------------------------------- --------------
(A) COMMERCIAL PAPER--40.7%
- -------------------------------------------------------------------------------------------------
AGRICULTURE--4.0%
----------------------------------------------------------------------------------
16,269,000 Cargill, Inc., 5.376%-5.401%, 5/15/1997-6/2/1997 16,218,610
---------------------------------------------------------------------------------- --------------
BANKS--13.4%
----------------------------------------------------------------------------------
15,000,000 Banca CRT Financial Corp., 5.546%-5.617%, 5/15/1997-5/29/1997 14,946,217
----------------------------------------------------------------------------------
10,000,000 BankAmerica Corp., 5.517%, 6/20/1997 9,924,444
----------------------------------------------------------------------------------
15,000,000 Commerzbank U.S. Finance, Inc., 5.35%, 5/12/1997 14,975,800
----------------------------------------------------------------------------------
15,000,000 Svenska Handelsbanken, Inc., 5.452%, 5/27/1997 14,942,150
---------------------------------------------------------------------------------- --------------
Total 54,788,611
---------------------------------------------------------------------------------- --------------
</TABLE>
INDEPENDENCE ONE PRIME MONEY MARKET FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------------ ---------------------------------------------------------------------------------- --------------
<C> <S> <C>
(A) COMMERCIAL PAPER--CONTINUED
- -------------------------------------------------------------------------------------------------
CHEMICALS--3.4%
----------------------------------------------------------------------------------
$ 14,000,000 Monsanto Co., 5.624%, 6/3/1997 $ 13,928,518
---------------------------------------------------------------------------------- --------------
CONSUMER LOAN RECEIVABLES--6.1%
----------------------------------------------------------------------------------
15,000,000 Fleet Funding Corp., 5.556%-5.564%, 5/5/1997-5/22/1997 14,964,722
----------------------------------------------------------------------------------
10,000,000 Receivables Capital Corp., 5.589%, 6/12/1997 9,935,250
---------------------------------------------------------------------------------- --------------
Total 24,899,972
---------------------------------------------------------------------------------- --------------
FINANCE--3.7%
----------------------------------------------------------------------------------
15,000,000 Transamerica Finance Corp., 5.458%, 5/14/1997 14,970,967
---------------------------------------------------------------------------------- --------------
OFFICE/BUSINESS MACHINES--1.7%
----------------------------------------------------------------------------------
7,000,000 Pitney Bowes Credit Corp., 5.798%, 9/22/1997 6,841,520
---------------------------------------------------------------------------------- --------------
MISCELLANEOUS RECEIVABLES--2.4%
----------------------------------------------------------------------------------
10,000,000 Asset Securitization Cooperative Corp., 5.653%, 6/20/1997 9,922,361
---------------------------------------------------------------------------------- --------------
SECURITIES SERVICES--2.4%
----------------------------------------------------------------------------------
10,000,000 Merrill Lynch & Co., Inc., 5.701%, 7/8/1997 9,893,844
---------------------------------------------------------------------------------- --------------
UTILITIES--3.6%
----------------------------------------------------------------------------------
15,000,000 Pacificorp, 5.369%-5.588%, 5/12/1997-5/16/1997 14,968,747
---------------------------------------------------------------------------------- --------------
TOTAL COMMERCIAL PAPER 166,433,150
---------------------------------------------------------------------------------- --------------
GOVERNMENT AGENCY--1.2%
- -------------------------------------------------------------------------------------------------
FEDERAL HOME LOAN BANK--1.2%
----------------------------------------------------------------------------------
5,000,000 5.875%, 3/24/1998 5,000,000
---------------------------------------------------------------------------------- --------------
(B) REPURCHASE AGREEMENTS--19.3%
- -------------------------------------------------------------------------------------------------
39,071,000 Daiwa Securities America, Inc., 5.40%, dated 4/30/1997, due 5/1/1997 39,071,000
----------------------------------------------------------------------------------
</TABLE>
INDEPENDENCE ONE PRIME MONEY MARKET FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------------ ---------------------------------------------------------------------------------- --------------
<C> <S> <C>
(B) REPURCHASE AGREEMENTS--CONTINUED
- -------------------------------------------------------------------------------------------------
$ 40,000,000 Donaldson, Lufkin and Jenrette Securities Corp., 5.42%,dated
4/30/1997, due 5/1/1997 $ 40,000,000
---------------------------------------------------------------------------------- --------------
TOTAL REPURCHASE AGREEMENTS 79,071,000
---------------------------------------------------------------------------------- --------------
TOTAL INVESTMENTS (AT AMORTIZED COST) (C) $ 408,413,857
---------------------------------------------------------------------------------- --------------
</TABLE>
(a) Each issue shows the rate of discount at the time of purchase.
(b) The repurchase agreements are fully collateralized by U.S. Treasury
obligations based on market prices at the date of the portfolio.
(c) Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($409,003,976) at April 30, 1997.
The following acronym is used throughout this portfolio:
PLC--Public Limited Company
(See Notes which are an integral part of the Financial Statements)
INDEPENDENCE ONE PRIME MONEY MARKET FUND
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1997
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- ---------------------------------------------------------------------------------
Investments in repurchase agreements $ 79,071,000
- ---------------------------------------------------------------------------------
Investments in securities 329,342,857
- --------------------------------------------------------------------------------- --------------
Total investments in securities, at amortized cost and value $ 408,413,857
- -------------------------------------------------------------------------------------------------
Cash 494
- -------------------------------------------------------------------------------------------------
Income receivable 1,427,911
- -------------------------------------------------------------------------------------------------
Receivable for shares sold 20,181
- ------------------------------------------------------------------------------------------------- --------------
Total assets 409,862,443
- -------------------------------------------------------------------------------------------------
LIABILITIES:
- ---------------------------------------------------------------------------------
Payable for shares redeemed 32,826
- ---------------------------------------------------------------------------------
Income distribution payable 789,431
- ---------------------------------------------------------------------------------
Accrued expenses 36,210
- --------------------------------------------------------------------------------- --------------
Total liabilities 858,467
- ------------------------------------------------------------------------------------------------- --------------
NET ASSETS for 409,003,976 shares outstanding $ 409,003,976
- ------------------------------------------------------------------------------------------------- --------------
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE:
- -------------------------------------------------------------------------------------------------
CLASS A SHARES:
- -------------------------------------------------------------------------------------------------
$337,836,340 / 337,836,340 shares outstanding $1.00
- ------------------------------------------------------------------------------------------------- --------------
CLASS B SHARES:
- -------------------------------------------------------------------------------------------------
$71,167,636 / 71,167,636 shares outstanding $1.00
- ------------------------------------------------------------------------------------------------- --------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
INDEPENDENCE ONE PRIME MONEY MARKET FUND
STATEMENT OF OPERATIONS
YEAR ENDED APRIL 30, 1997
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
- ---------------------------------------------------------------------------------------------------
Interest $ 23,357,636
- ---------------------------------------------------------------------------------------------------
EXPENSES:
- ------------------------------------------------------------------------------------
Investment advisory fee $ 1,720,845
- ------------------------------------------------------------------------------------
Administrative personnel and services fee 469,358
- ------------------------------------------------------------------------------------
Custodian fees 75,888
- ------------------------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses 96,443
- ------------------------------------------------------------------------------------
Directors'/Trustees' fees 17,626
- ------------------------------------------------------------------------------------
Auditing fees 15,785
- ------------------------------------------------------------------------------------
Legal fees 5,766
- ------------------------------------------------------------------------------------
Portfolio accounting fees 98,219
- ------------------------------------------------------------------------------------
Shareholder services fee--Class A Shares 866,504
- ------------------------------------------------------------------------------------
Share registration costs 40,917
- ------------------------------------------------------------------------------------
Printing and postage 36,240
- ------------------------------------------------------------------------------------
Insurance premiums 9,490
- ------------------------------------------------------------------------------------
Miscellaneous 3,687
- ------------------------------------------------------------------------------------ -------------
Total expenses 3,456,768
- ------------------------------------------------------------------------------------
Waivers--
- ------------------------------------------------------------------------------------
Waiver of investment advisory fee (1,075,528)
- ------------------------------------------------------------------------------------ -------------
Net expenses 2,381,240
- --------------------------------------------------------------------------------------------------- -------------
Net investment income $ 20,976,396
- --------------------------------------------------------------------------------------------------- -------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
INDEPENDENCE ONE PRIME MONEY MARKET FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
APRIL 30, 1997 APRIL 30, 1996
- ---------------------------------------------------------------------------- -------------- --------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- ----------------------------------------------------------------------------
OPERATIONS--
- ----------------------------------------------------------------------------
Net investment income $ 20,976,396 $ 18,578,193
- ---------------------------------------------------------------------------- ----------------- -----------------
DISTRIBUTIONS TO SHAREHOLDERS--
- ----------------------------------------------------------------------------
Distributions from net investment income
- ----------------------------------------------------------------------------
Class A Shares (16,743,570) (14,939,049)
- ----------------------------------------------------------------------------
Class B Shares (4,232,826) (3,639,144)
- ---------------------------------------------------------------------------- ----------------- -----------------
Change in net assets resulting from
distributions to shareholders (20,976,396) (18,578,193)
- ---------------------------------------------------------------------------- ----------------- -----------------
SHARE TRANSACTIONS--
- ----------------------------------------------------------------------------
Proceeds from sale of shares 2,703,226,336 2,512,058,572
- ----------------------------------------------------------------------------
Net asset value of shares issued to shareholders
in payment of distributions declared 10,473,533 8,436,607
- ----------------------------------------------------------------------------
Cost of shares redeemed (2,701,466,548) (2,357,331,372)
- ---------------------------------------------------------------------------- ----------------- -----------------
Change in net assets resulting from share transactions 12,233,321 163,163,807
- ---------------------------------------------------------------------------- ----------------- -----------------
Change in net assets 12,233,321 163,163,807
- ----------------------------------------------------------------------------
NET ASSETS:
- ----------------------------------------------------------------------------
Beginning of period 396,770,655 233,606,848
- ---------------------------------------------------------------------------- ----------------- -----------------
End of period $ 409,003,976 $ 396,770,655
- ---------------------------------------------------------------------------- ----------------- -----------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
INDEPENDENCE ONE PRIME MONEY MARKET FUND
FINANCIAL HIGHLIGHTS--CLASS A SHARES
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
YEAR ENDED APRIL 30,
1997 1996 1995 1994 1993 1992 1991 1990(A)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF
PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- -------------------------------
INCOME FROM INVESTMENT
OPERATIONS
- -------------------------------
Net investment income 0.05 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
inital 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.
(See Notes which are an integral part of the Financial Statements)
INDEPENDENCE ONE PRIME MONEY MARKET FUND
FINANCIAL HIGHLIGHTS--CLASS B SHARES
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
YEAR ENDED
APRIL 30,
---------------------
1997 1996(A)
---- -------
<S> <C> <C>
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
inital public investment) to April 30, 1996.
(b) Based on net asset value.
(c) This voluntary expense decrease is reflected in both the expense
and net investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
INDEPENDENCE ONE U.S. TREASURY MONEY MARKET FUND
PORTFOLIO OF INVESTMENTS
APRIL 30, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------------- --------------
<C> <S> <C>
U.S. TREASURY BILLS--39.9%
- -------------------------------------------------------------------------------------------------
$ 10,000,000 5/1/1997 $ 10,000,000
----------------------------------------------------------------------------------
15,000,000 5/29/1997 14,939,625
----------------------------------------------------------------------------------
10,000,000 9/18/1997 9,802,834
----------------------------------------------------------------------------------
20,000,000 10/16/1997 19,519,800
----------------------------------------------------------------------------------
20,000,000 11/13/1997 19,428,061
----------------------------------------------------------------------------------
25,000,000 12/11/1997 24,190,022
---------------------------------------------------------------------------------- --------------
TOTAL U.S. TREASURY BILLS 97,880,342
---------------------------------------------------------------------------------- --------------
(A) REPURCHASE AGREEMENTS--60.3%
- -------------------------------------------------------------------------------------------------
9,000,000 BA Securities, Inc., 5.400%, dated 4/30/1997, due 5/1/1997 9,000,000
----------------------------------------------------------------------------------
60,000,000 Daiwa Securities America, Inc., 5.400%, dated 4/30/1997, due 5/1/1997 60,000,000
----------------------------------------------------------------------------------
60,000,000 Donaldson, Lufkin and Jenrette Securities Corp., 5.420%, dated
4/30/1997, due 5/1/1997 60,000,000
----------------------------------------------------------------------------------
9,798,000 First Chicago Capital Markets, Inc., 5.420%, dated 4/30/1997, due
5/1/1997 9,798,000
----------------------------------------------------------------------------------
9,000,000 UBS Securities, Inc., 5.300%, dated 4/30/1997, due 5/1/1997 9,000,000
---------------------------------------------------------------------------------- --------------
TOTAL REPURCHASE AGREEMENTS 147,798,000
---------------------------------------------------------------------------------- --------------
TOTAL INVESTMENTS, AT AMORTIZED COST (B) $ 245,678,342
---------------------------------------------------------------------------------- --------------
</TABLE>
(a) The repurchase agreements are fully collateralized by U.S. Treasury
Obligations based on market prices at the date of the portfolio.
(b) Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($245,289,366) at April 30, 1997.
(See Notes which are an integral part of the Financial Statements)
INDEPENDENCE ONE U.S. TREASURY MONEY MARKET FUND
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1997
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- ---------------------------------------------------------------------------------
Investments in repurchase agreements $ 147,798,000
- ---------------------------------------------------------------------------------
Investments in securities 97,880,342
- --------------------------------------------------------------------------------- --------------
Total investments in securities, at amortized cost and value $ 245,678,342
- -------------------------------------------------------------------------------------------------
Cash 119
- -------------------------------------------------------------------------------------------------
Income receivable 22,183
- ------------------------------------------------------------------------------------------------- --------------
Total assets 245,700,644
- -------------------------------------------------------------------------------------------------
LIABILITIES:
- ---------------------------------------------------------------------------------
Payable for shares redeemed 2,746
- ---------------------------------------------------------------------------------
Income distribution payable 380,740
- ---------------------------------------------------------------------------------
Accrued expenses 27,792
- --------------------------------------------------------------------------------- --------------
Total liabilities 411,278
- ------------------------------------------------------------------------------------------------- --------------
NET ASSETS for 245,289,366 shares outstanding $ 245,289,366
- ------------------------------------------------------------------------------------------------- --------------
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE:
- -------------------------------------------------------------------------------------------------
$245,289,366 / 245,289,366 shares outstanding $1.00
- ------------------------------------------------------------------------------------------------- --------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
INDEPENDENCE ONE U.S. TREASURY MONEY MARKET FUND
STATEMENT OF OPERATIONS
YEAR ENDED APRIL 30, 1997
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
- ---------------------------------------------------------------------------------------------------
Interest $ 14,668,857
- ---------------------------------------------------------------------------------------------------
EXPENSES:
- -------------------------------------------------------------------------------------
Investment advisory fee $ 1,099,098
- -------------------------------------------------------------------------------------
Administrative personnel and services fee 299,881
- -------------------------------------------------------------------------------------
Custodian fees 63,943
- -------------------------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses 37,285
- -------------------------------------------------------------------------------------
Directors'/Trustees' fees 11,071
- -------------------------------------------------------------------------------------
Auditing fees 12,865
- -------------------------------------------------------------------------------------
Legal fees 2,026
- -------------------------------------------------------------------------------------
Portfolio accounting fees 60,764
- -------------------------------------------------------------------------------------
Share registration costs 9,985
- -------------------------------------------------------------------------------------
Printing and postage 6,720
- -------------------------------------------------------------------------------------
Insurance premiums 4,110
- -------------------------------------------------------------------------------------
Miscellaneous 365
- ------------------------------------------------------------------------------------- ------------
Total expenses 1,608,113
- --------------------------------------------------------------------------------------------------- -------------
Net investment income $ 13,060,744
- --------------------------------------------------------------------------------------------------- -------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
INDEPENDENCE ONE U.S. TREASURY MONEY MARKET FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
APRIL 30, 1997 APRIL 30, 1996
- ---------------------------------------------------------------------------- --------------- ---------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- ----------------------------------------------------------------------------
OPERATIONS--
- ----------------------------------------------------------------------------
Net investment income $ 13,060,744 $ 14,047,606
- ---------------------------------------------------------------------------- ----------------- -----------------
DISTRIBUTIONS TO SHAREHOLDERS--
- ----------------------------------------------------------------------------
Distributions from net investment income (13,060,744) (14,047,606)
- ---------------------------------------------------------------------------- ----------------- -----------------
SHARE TRANSACTIONS--
- ----------------------------------------------------------------------------
Proceeds from sale of shares 2,388,962,959 2,423,363,168
- ----------------------------------------------------------------------------
Net asset value of shares issued to shareholders
in payment of distributions declared 8,194,683 8,401,826
- ----------------------------------------------------------------------------
Cost of shares redeemed (2,449,101,104) (2,379,419,355)
- ---------------------------------------------------------------------------- ----------------- -----------------
Change in net assets resulting from share transactions (51,943,462) 52,345,639
- ---------------------------------------------------------------------------- ----------------- -----------------
Change in net assets (51,943,462) 52,345,639
- ----------------------------------------------------------------------------
NET ASSETS:
- ----------------------------------------------------------------------------
Beginning of period 297,232,828 244,887,189
- ---------------------------------------------------------------------------- ----------------- -----------------
End of period $ 245,289,366 $ 297,232,828
- ---------------------------------------------------------------------------- ----------------- -----------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
INDEPENDENCE ONE U.S. TREASURY MONEY MARKET FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
YEAR ENDED APRIL 30,
---------------------------------------------------------------------------------------
1997 1996 1995 1994 1993 1992 1991 1990(A)
- ------------------------------- --------- --------- --------- --------- -------- --------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF
PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- -------------------------------
INCOME FROM INVESTMENT
OPERATIONS
- -------------------------------
Net investment income 0.05 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
inital 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.
(See Notes which are an integral part of the Financial Statements)
INDEPENDENCE ONE MICHIGAN MUNICIPAL CASH FUND
PORTFOLIO OF INVESTMENTS
APRIL 30, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
- ---------- ------------ ------------
<C> <S> <C> <C>
(A) SHORT-TERM MUNICIPALS--99.7%
- -----------------------------------------------------------------------------
KANSAS--2.4%
---------------------------------------------------------------
$ 2,000,000 Burlington, KS, PCR Bonds (Series A), 3.40% CP (Kansas City
Power And Light Co.), Mandatory Tender 6/11/1997 NR/A-1+ $ 2,000,000
--------------------------------------------------------------- -------------
MICHIGAN--92.9%
---------------------------------------------------------------
2,000,000 Delta County, MI Economic Development Corp., Environmental
Improvement Revenue Refunding Bonds (Series 1985 A), 3.30% CP
(Mead-Escanaba Paper Co. Project)/(Swiss Bank Corp., Basle
LOC), Mandatory Tender 6/5/1997 P-1/NR 2,000,000
---------------------------------------------------------------
1,200,000 Delta County, MI Economic Development Corp., Environmental
Improvement Revenue Refunding Bonds (Series 1985 A), 3.45% CP
(Mead-Escanaba Paper Co. Project)/(Swiss Bank Corp., Basle
LOC), Mandatory Tender 6/10/1997 P-1/NR 1,200,000
---------------------------------------------------------------
1,100,000 Delta County, MI Economic Development Corp., Environmental
Improvement Revenue Refunding Bonds (Series 1985 A), 4.15% CP
(Mead-Escanaba Paper Co. Project)/(Swiss Bank Corp., Basle
LOC), Mandatory Tender 5/8/1997 P-1/NR 1,100,000
---------------------------------------------------------------
1,250,000 Delta County, MI Economic Development Corp., Environmental
Improvement Revenue Refunding Bonds (Series 1985 B), 3.30% CP
(Mead-Escanaba Paper Co. Project)/(Union Bank of Switzerland,
Zurich LOC), Mandatory Tender 5/13/1997 P-1/NR 1,250,000
---------------------------------------------------------------
1,000,000 Delta County, MI Economic Development Corp., Environmental
Improvement Revenue Refunding Bonds (Series 1985 B), 3.35% CP
(Mead-Escanaba Paper Co. Project)/(Union Bank of Switzerland,
Zurich LOC), Mandatory Tender 5/5/1997 P-1/NR 1,000,000
---------------------------------------------------------------
</TABLE>
INDEPENDENCE ONE MICHIGAN MUNICIPAL CASH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
- ---------- ------------ ------------
<C> <S> <C> <C>
(A) SHORT-TERM MUNICIPALS--CONTINUED
- -----------------------------------------------------------------------------
MICHIGAN--CONTINUED
---------------------------------------------------------------
$ 1,000,000 Delta County, MI Economic Development Corp., Environmental
Improvement Revenue Refunding Bonds (Series 1985 B), 3.35% CP
(Mead-Escanaba Paper Co. Project)/(Union Bank of Switzerland,
Zurich LOC), Mandatory Tender 6/2/1997 P-1/NR $ 1,000,000
---------------------------------------------------------------
915,000 Farmington Hills, MI Economic Development Corp., Limited
Obligations Revenue Bonds, 3.70% TOBs (Marketing
Displays)/(Comerica Bank, Detroit, MI LOC) 9/1/1997 NR/NR 915,000
---------------------------------------------------------------
1,000,000 Grand Rapids, MI EDR Weekly VRDNs (Amway Hotel Corp.)/(Old Kent
Bank & Trust Co., Grand Rapids LOC) NR/NR 1,000,000
---------------------------------------------------------------
1,000,000 Grand Rapids, MI EDR, EDRB Weekly VRDNs (Amway Hotel
Corp.)/(Old Kent Bank & Trust Co., Grand Rapids LOC) NR/NR 1,000,000
---------------------------------------------------------------
955,000 Grand Rapids, MI EDR, GO LT (Series C) Weekly VRDNs (Calder
Plaza)/(Old Kent Bank & Trust Co., Grand Rapids LOC) NR/A-1+ 955,000
---------------------------------------------------------------
815,000 Grand Rapids, MI IDR Weekly VRDNs (Classic Die, Inc.)/(NBD
Bank, Michigan LOC) NR/NR 815,000
---------------------------------------------------------------
2,300,000 Huron Valley, MI School District, 4.25% TRANs,
5/1/1998 NR/NR 2,302,070
---------------------------------------------------------------
3,000,000 Michigan Higher Education Student Loan Authority, Refunding
Revenue Bonds (Series X11-B) Weekly VRDNs (AMBAC
INS)/(Kredietbank N.V., Brussels SA) VMIG1/A-1+ 3,000,000
---------------------------------------------------------------
2,000,000 Michigan Higher Education Student Loan Authority, Series
XXII--F Weekly VRDNs (Kredietbank N.V., Brussels SA) VMIG1/A-1+ 2,000,000
---------------------------------------------------------------
1,000,000 Michigan Municipal Bond Authority, (Series B), 4.50% Bonds,
7/25/1997 NR/SP-1+ 1,001,232
---------------------------------------------------------------
</TABLE>
INDEPENDENCE ONE MICHIGAN MUNICIPAL CASH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
- ---------- ------------ ------------
<C> <S> <C> <C>
(A) SHORT-TERM MUNICIPALS--CONTINUED
- -----------------------------------------------------------------------------
MICHIGAN--CONTINUED
---------------------------------------------------------------
$ 2,000,000 Michigan Municipal Bond Authority, (Series A), 4.50% Bonds,
7/3/1997 NR/SP-1+ $ 2,001,992
---------------------------------------------------------------
1,485,000 Michigan State Hospital Finance Authority Weekly VRDNs (Chelsea
Community Hospital ) VMIG1/NR 1,485,000
---------------------------------------------------------------
2,000,000 Michigan State Hospital Finance Authority Weekly VRDNs
(Hospital Equipment Loan Program)/(First of America
Bank--Kalamazoo, MI LOC) VMIG1/NR 2,000,000
---------------------------------------------------------------
2,580,000 Michigan State Hospital Finance Authority, (Series 1994) Weekly
VRDNs (Mt. Clemens General Hospital)/(Comerica Bank, Detroit,
MI LOC) VMIG1/NR 2,580,000
---------------------------------------------------------------
2,200,000 Michigan State Hospital Finance Authority, Hospital Equipment
Loan Program Bonds (Series A) Weekly VRDNs (First of American
Bank LOC) VMIG1/NR 2,200,000
---------------------------------------------------------------
1,200,000 Michigan State Hospital Finance Authority, Revenue Bonds
(Series A) Weekly VRDNs (First of America Bank--Michigan LOC) VMIG1/NR 1,200,000
---------------------------------------------------------------
800,000 Michigan State Hospital Finance Authority, Revenue Bonds
(Series A) Weekly VRDNs (First of America Bank--Michigan LOC) VMIG1/NR 800,000
---------------------------------------------------------------
500,000 Michigan State Hospital Finance Authority, (Series A) Weekly
VRDNs VMIG1/NR 500,000
---------------------------------------------------------------
2,600,000 Michigan State Housing Development Authority, Rental Housing
Revenue Bonds (1994 Series C) Weekly VRDNs (Credit Suisse,
Zurich LOC) NR/A-1 2,600,000
---------------------------------------------------------------
1,100,000 Michigan State Housing Development Authority, Revenue Bonds
(Series A), 3.55% CP, Mandatory Tender 5/27/1997 P-1/A-1+ 1,100,000
---------------------------------------------------------------
2,500,000 Michigan State, 4.50% TRANs, 9/30/1997 SP-1+/MIG1 2,510,739
---------------------------------------------------------------
1,200,000 Michigan Strategic Fund Daily VRDNs (Blair Equipment Co.) NR/NR 1,200,000
---------------------------------------------------------------
</TABLE>
INDEPENDENCE ONE MICHIGAN MUNICIPAL CASH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
- ---------- ------------ ------------
<C> <S> <C> <C>
(A) SHORT-TERM MUNICIPALS--CONTINUED
- -----------------------------------------------------------------------------
MICHIGAN--CONTINUED
---------------------------------------------------------------
$ 2,000,000 Michigan Strategic Fund Weekly VRDNs (Goodwill Industries of
Detroit)/(NBD Bank, Michigan LOC) NR/NR $ 2,000,000
---------------------------------------------------------------
1,400,000 Michigan Strategic Fund, (Series 1995) Weekly VRDNs (Rood
Industries, Inc. Project)/(NBD Bank, Michigan LOC) NR/NR 1,400,000
---------------------------------------------------------------
1,500,000 Michigan Strategic Fund, 3.35% CP (Dow Chemical Co.), Mandatory
Tender 5/21/1997 P-1/NR 1,500,000
---------------------------------------------------------------
1,000,000 Michigan Strategic Fund, 3.35% CP (Dow Chemical Co.), Mandatory
Tender 5/7/1997 P-1/NR 1,000,000
---------------------------------------------------------------
2,000,000 Michigan Strategic Fund, 3.40% CP (Dow Chemical Co.), Mandatory
Tender 5/19/1997 P-1/NR 2,000,000
---------------------------------------------------------------
1,500,000 Michigan Strategic Fund, 3.60% CP (Dow Chemical Co.), Mandatory
Tender 7/9/1997 P-1/NR 1,500,000
---------------------------------------------------------------
2,000,000 Michigan Strategic Fund, IDRB Weekly VRDNs (Allen Group,
Inc.)/(Dresdner Bank Ag, Frankfurt LOC) VMIG1/NR 2,000,000
---------------------------------------------------------------
855,000 Michigan Strategic Fund, Limited Obligation Refunding Revenue
Bonds Daily VRDNs (Peachwood Center Association) NR/A-1+ 855,000
---------------------------------------------------------------
920,000 Michigan Strategic Fund, Limited Obligation Revenue Bonds
(Series 1995) Weekly VRDNs (Rowe Thomas Company
Project)/(Comerica Bank, Detroit, MI LOC) NR/NR 920,000
---------------------------------------------------------------
2,000,000 Michigan Strategic Fund, Limited Obligation Revenue Bonds
(Series 1995) Weekly VRDNs (United Waste Systems, Inc.)/(Bank
of America Illinois LOC) VMIG1/A-1 2,000,000
---------------------------------------------------------------
895,000 Michigan Strategic Fund, Limited Obligation Revenue Bonds
(Series 1995) Weekly VRDNs (Wayne Disposal-Oakland, Inc.
Project)/(Comerica Bank, Detroit, MI LOC) NR/A-1 895,000
---------------------------------------------------------------
4,925,000 Michigan Strategic Fund, PCR Bonds Weekly VRDNs (General Motors
Corp.) VMIG1/NR 4,925,000
---------------------------------------------------------------
</TABLE>
INDEPENDENCE ONE MICHIGAN MUNICIPAL CASH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
- ---------- ------------ ------------
<C> <S> <C> <C>
(A) SHORT-TERM MUNICIPALS--CONTINUED
- -----------------------------------------------------------------------------
MICHIGAN--CONTINUED
---------------------------------------------------------------
$ 1,050,000 Michigan Strategic Fund, Refunding Revenue Bonds (Series B)
Weekly VRDNs (Riverfront Development Co.) NR/NR $ 1,050,000
---------------------------------------------------------------
3,000,000 Michigan Strategic Fund, Refunding Revenue Bonds Weekly VRDNs
(Louisiana-Pacific Corp.)/(Wachovia Bank & Trust Co. LOC) NR/NR 3,000,000
---------------------------------------------------------------
2,000,000 Michigan Strategic Fund, Revenue Bonds Weekly VRDNs (Waltec
American Forgings Inc.) NR/NR 2,000,000
---------------------------------------------------------------
1,000,000 Michigan Strategic Fund, Revenue Bonds Weekly VRDNs (YWY
Investments LLC) NR/NR 1,000,000
---------------------------------------------------------------
3,300,000 Michigan Strategic Fund, Solid Waste Disposal Revenue Bonds
Weekly VRDNs (Grayling Generating)/(Barclays Bank, New York
LOC) NR/Aa2 3,300,000
---------------------------------------------------------------
2,000,000 Muskegon County, MI Economic Development Corp. Weekly VRDNs
(Baker College)/(Old Kent Bank & Trust Co., Grand Rapids LOC) NR/NR 2,000,000
---------------------------------------------------------------
4,000,000 Wayne County, MI , Airport Revenue Bonds (Series B) Daily VRDNs
(Detroit Metropolitan County) AAA 4,000,000
--------------------------------------------------------------- -------------
Total Michigan 78,061,033
--------------------------------------------------------------- -------------
SOUTH CAROLINA--4.4%
---------------------------------------------------------------
3,700,000 Piedmont Municipal Power Agency, SC, Electric Power & Light
Revenue Refunding Bonds Weekly VRDNs (MBIA INS)/(Morgan
Guaranty Trust Co., New York SA) VMIG1/A-1 3,700,000
--------------------------------------------------------------- -------------
TOTAL SHORT-TERM MUNICIPALS 83,761,033
--------------------------------------------------------------- -------------
</TABLE>
INDEPENDENCE ONE MICHIGAN MUNICIPAL CASH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
- ---------- ------------ ------------
<C> <S> <C> <C>
MUTUAL FUND SHARES--2.6%
- ---------------------------------------------------------------------------------------------------
2,157,000 Nuveen Tax Exempt Money Market Fund
(AT NET ASSET VALUE) $ 2,157,000
------------------------------------------------------------------------------------- -------------
TOTAL INVESTMENTS (AT AMORTIZED COST) (B) $ 85,918,033
------------------------------------------------------------------------------------- -------------
</TABLE>
* Please refer to the Appendix of the Statement of Additional
Information for an explanation of the credit ratings. Current
credit ratings are unaudited.
(a) At April 30, 1997, 23.7% of the total investments at market value
were subject to alternative minimum tax.
(b) Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($84,019,313) at April 30, 1997.
The following acronyms are used throughout this portfolio:
AMBAC-- American Municipal Bond Assurance Corporation
CP--Commercial Paper
EDR--Economic Development Revenue
EDRB-- Economic Development Revenue Bonds
GO--General Obligation
IDR--Industrial Development Revenue
IDRB--Industrial Development Revenue Bond
INS--Insured
LOC--Letter of Credit
LT--Limited Tax
MBIA--Municipal Bond Investors Assurance
PCR--Pollution Control Revenue
SA--Support Agreement
TOBs--Tender Option Bonds
TRANs--Tax and Revenue Anticipation Notes
VRDNs--Variable Rate Demand Notes
(See Notes which are an integral part of the Financial Statements)
INDEPENDENCE ONE MICHIGAN MUNICIPAL CASH FUND
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1997
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- ---------------------------------------------------------------------------------------------------
Total investments in securities, at amortized cost and value $ 85,918,033
- ---------------------------------------------------------------------------------------------------
Cash 604
- ---------------------------------------------------------------------------------------------------
Income receivable 511,262
- ---------------------------------------------------------------------------------------------------
Receivable for shares sold 1,444
- --------------------------------------------------------------------------------------------------- -------------
Total assets 86,431,343
- ---------------------------------------------------------------------------------------------------
LIABILITIES:
- -------------------------------------------------------------------------------------
Payable for investments purchased $ 2,303,971
- -------------------------------------------------------------------------------------
Payable for shares redeemed 38,934
- -------------------------------------------------------------------------------------
Income distribution payable 36,672
- -------------------------------------------------------------------------------------
Accrued expenses 32,453
- ------------------------------------------------------------------------------------- ------------
Total liabilities 2,412,030
- --------------------------------------------------------------------------------------------------- -------------
NET ASSETS for 84,019,313 shares outstanding $ 84,019,313
- --------------------------------------------------------------------------------------------------- -------------
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE:
- ---------------------------------------------------------------------------------------------------
$84,019,313 / 84,019,313 shares outstanding $1.00
- --------------------------------------------------------------------------------------------------- -------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
INDEPENDENCE ONE MICHIGAN MUNICIPAL CASH FUND
STATEMENT OF OPERATIONS
YEAR ENDED APRIL 30, 1997
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
- ----------------------------------------------------------------------------------------------------
Interest $ 2,929,550
- ----------------------------------------------------------------------------------------------------
EXPENSES:
- ---------------------------------------------------------------------------------------
Investment advisory fee $ 335,606
- ---------------------------------------------------------------------------------------
Administrative personnel and services fee 91,469
- ---------------------------------------------------------------------------------------
Custodian fees 18,843
- ---------------------------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses 46,795
- ---------------------------------------------------------------------------------------
Directors'/Trustees' fees 3,486
- ---------------------------------------------------------------------------------------
Auditing fees 10,585
- ---------------------------------------------------------------------------------------
Legal fees 3,338
- ---------------------------------------------------------------------------------------
Portfolio accounting fees 43,467
- ---------------------------------------------------------------------------------------
Share registration costs 9,744
- ---------------------------------------------------------------------------------------
Printing and postage 3,840
- ---------------------------------------------------------------------------------------
Insurance premiums 3,814
- ---------------------------------------------------------------------------------------
Miscellaneous 2,190
- --------------------------------------------------------------------------------------- -----------
Total expenses 573,177
- ---------------------------------------------------------------------------------------
Waivers--
- ---------------------------------------------------------------------------------------
Waiver of investment advisory fee (167,803)
- --------------------------------------------------------------------------------------- -----------
Net expenses 405,374
- ---------------------------------------------------------------------------------------------------- ------------
Net investment income $ 2,524,176
- ---------------------------------------------------------------------------------------------------- ------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
INDEPENDENCE ONE MICHIGAN MUNICIPAL CASH FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
APRIL 30, 1997 APRIL 30, 1996
- ----------------------------------------------------------------------------- --------------- ---------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- -----------------------------------------------------------------------------
OPERATIONS--
- -----------------------------------------------------------------------------
Net investment income $ 2,524,176 $ 2,292,897
- ----------------------------------------------------------------------------- ---------------- ----------------
DISTRIBUTIONS TO SHAREHOLDERS--
- -----------------------------------------------------------------------------
Distributions from net investment income (2,524,176) (2,292,897)
- ----------------------------------------------------------------------------- ---------------- ----------------
SHARE TRANSACTIONS--
- -----------------------------------------------------------------------------
Proceeds from sale of shares 594,439,241 497,552,563
- -----------------------------------------------------------------------------
Net asset value of shares issued to shareholders
in payment of distributions declared 2,021,101 1,800,093
- -----------------------------------------------------------------------------
Cost of shares redeemed (587,153,264) (491,496,824)
- ----------------------------------------------------------------------------- ---------------- ----------------
Change in net assets resulting from share transactions 9,307,078 7,855,832
- ----------------------------------------------------------------------------- ---------------- ----------------
Change in net assets 9,307,078 7,855,832
- -----------------------------------------------------------------------------
NET ASSETS:
- -----------------------------------------------------------------------------
Beginning of period 74,712,235 66,856,403
- ----------------------------------------------------------------------------- ---------------- ----------------
End of period $ 84,019,313 $ 74,712,235
- ----------------------------------------------------------------------------- ---------------- ----------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
INDEPENDENCE ONE MICHIGAN MUNICIPAL CASH FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
YEAR ENDED APRIL 30,
---------------------------------------------------------------------------
1997 1996 1995 1994 1993 1992 1991
- ------------------------------------------- --------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- -------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- -------------------------------------------
Net investment income 0.03 0.03 0.03 0.02 0.02 0.04 0.05
- -------------------------------------------
LESS DISTRIBUTIONS
- -------------------------------------------
Distributions from net investment income (0.03) (0.03) (0.03) (0.02) (0.02) (0.04) (0.05)
- ------------------------------------------- --------- --------- --------- --------- --------- --------- -------
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 1.00
- ------------------------------------------- --------- --------- --------- --------- --------- --------- -------
TOTAL RETURN (B) 3.04% 3.24% 2.81% 1.98% 2.27% 3.68% 5.18%
- -------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- -------------------------------------------
Expenses 0.48% 0.53% 0.59% 0.50% 0.53% 0.50% 0.67%
- -------------------------------------------
Net investment income 3.01% 3.18% 2.80% 1.96% 2.23% 3.51% 5.02%
- -------------------------------------------
Expense waiver (c) 0.20% 0.20% 0.21% 0.22% 0.20% 0.39% 0.19%
- -------------------------------------------
SUPPLEMENTAL DATA
- -------------------------------------------
Net assets, end of period (000 omitted) $84,019 $74,712 $66,856 $55,013 $84,763 $71,745 $31,705
- -------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
1990(A)
- ------------------------------------------- ----------
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00
- -------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- -------------------------------------------
Net investment income 0.05
- -------------------------------------------
LESS DISTRIBUTIONS
- -------------------------------------------
Distributions from net investment income (0.05)
- ------------------------------------------- -----------
NET ASSET VALUE, END OF PERIOD $ 1.00
- ------------------------------------------- -----------
TOTAL RETURN (B) 5.14%
- -------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- -------------------------------------------
Expenses 0.44%*
- -------------------------------------------
Net investment income 5.70%*
- -------------------------------------------
Expense waiver (c) 0.39%*
- -------------------------------------------
SUPPLEMENTAL DATA
- -------------------------------------------
Net assets, end of period (000 omitted) $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.
(c) This voluntary expense decrease is reflected in both the expense
and net investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
INDEPENDENCE ONE MUTUAL FUNDS
COMBINED 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 of the following portfolios (individually
referred to as the "Fund", or collectively as the "Funds") are
presented herein:
<TABLE>
<CAPTION>
PORTFOLIO NAME INVESTMENT OBJECTIVE
<S> <C>
Independence One Prime Money Market Fund ("Prime Money To provide
current income consistent with Market Fund") stability of principal.
Independence One U.S. Treasury Money Market Fund ("U.S. To provide current income consistent with
Treasury Money Market Fund") stability of principal.
Independence One Michigan Municipal Cash Fund ("Michigan To provide stability of income and
Municipal Cash Fund") current income exempt from federal
regular income tax and Michigan state
income tax consistent with stability
of principal.
</TABLE>
The financial statements of the other portfolios are presented
separately. The assets of each portfolio are segregated and a
shareholder's interest is limited to the portfolio in which shares are
held.
Effective May 1, 1995, Prime Money Market Fund's existing shares
(Investment Shares) were designated "Class A Shares" and a new class
of shares was designated "Class B Shares."
(2) SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies
consistently followed by the Funds in the preparation of their
financial statements. These policies are in conformity with generally
accepted accounting principles.
INVESTMENT VALUATIONS--The Funds use the amortized cost method to
value their portfolio securities in accordance with Rule 2a-7
under the Act. Investments in other open-end regulated investment
companies are valued at net asset value.
REPURCHASE AGREEMENTS--It is the policy of the Funds to require
the custodian bank to take possession, to have legally segregated
in the Federal Reserve Book Entry System, or to have segregated
within the custodian bank's vault, all securities held as
collateral under repurchase agreement transactions. Additionally,
procedures have been established by the Funds to monitor, on a
daily basis, the market value of each repurchase agreement's
collateral to ensure that
INDEPENDENCE ONE MUTUAL FUNDS
- --------------------------------------------------------------------------------
the value of collateral at least equals the repurchase price to
be paid under the repurchase agreement transaction.
The Funds will only enter into repurchase agreements with banks
and other recognized financial institutions, such as
broker/dealers, which are deemed by the Funds' adviser to be
creditworthy pursuant to the guidelines and/or standards reviewed
or established by the Board of Trustees (the "Trustees"). Risks
may arise from the potential inability of counterparties to honor
the terms of the repurchase agreement. Accordingly, the Funds
could receive less than the repurchase price on the sale of
collateral securities.
INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS--Interest income
and expenses are accrued daily. Bond premium and discount, if
applicable, are amortized as required by the Internal Revenue
Code, as amended (the "Code"). Distributions to shareholders are
recorded on the ex-dividend date.
FEDERAL TAXES--It is the Funds' policy to comply with the
provisions of the Code applicable to regulated investment
companies and to distribute to shareholders each year
substantially all of their income. Accordingly, no provisions for
federal tax are necessary.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Funds may
engage in when-issued or delayed delivery transactions. The Funds
record when-issued securities on the trade date and maintain
security positions such that sufficient liquid assets will be
available to make payment for the securities purchased.
Securities purchased on a when-issued or delayed delivery basis
are marked to market daily and begin earning interest on the
settlement date.
USE OF ESTIMATES--The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the
amounts of assets, liabilities, expenses and revenues reported in
the financial statements. Actual results could differ from those
estimated.
OTHER--Investment transactions are accounted for on the trade
date.
(3) SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited
number of full and fractional shares of beneficial interest (without
par value) for each class of shares. At April 30, 1997, capital
paid-in for Prime Money Market Fund, U.S. Treasury Money Market Fund,
and Michigan Municipal Cash Fund aggregated $409,003,976,
$245,289,366, and $84,019,313, respectively. Transactions in shares
were as follows:
INDEPENDENCE ONE MUTUAL FUNDS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRIME MONEY MARKET FUND
----------------------------------
YEAR ENDED APRIL 30,
----------------------------------
CLASS A SHARES 1997 1996
- ----------------------------------------------------------------------------- ---------------- ----------------
<S> <C> <C>
Shares sold 2,380,466,586 2,125,876,995
- -----------------------------------------------------------------------------
Shares issued to shareholders in payment of distributions declared 8,476,115 7,678,573
- -----------------------------------------------------------------------------
Shares redeemed (2,362,097,479) (2,056,171,298)
- ----------------------------------------------------------------------------- ---------------- ----------------
Net change resulting from Class A Share transactions 26,845,222 77,384,270
- ----------------------------------------------------------------------------- ---------------- ----------------
</TABLE>
<TABLE>
<CAPTION>
PRIME MONEY MARKET FUND
----------------------------------
YEAR ENDED APRIL 30,
----------------------------------
CLASS B SHARES 1997 1996*
- ----------------------------------------------------------------------------- ---------------- ----------------
<S> <C> <C>
Shares sold 322,759,750 386,181,577
- -----------------------------------------------------------------------------
Shares issued to shareholders in payment of distributions declared 1,997,418 758,034
- -----------------------------------------------------------------------------
Shares redeemed (339,369,069) (301,160,074)
- ----------------------------------------------------------------------------- ---------------- ----------------
Net change resulting from Class B Share transactions (14,611,901) 85,779,537
- ----------------------------------------------------------------------------- ---------------- ----------------
Net change resulting from share transactions 12,233,321 163,163,807
- ----------------------------------------------------------------------------- ---------------- ----------------
</TABLE>
*For the period from June 13, 1995 (date of initial public investment)
to April 30, 1996.
<TABLE>
<CAPTION>
U.S. TREASURY
MONEY MARKET FUND
----------------------------------
YEAR ENDED APRIL 30,
----------------------------------
1997 1996
- ----------------------------------------------------------------------------- ---------------- ----------------
<S> <C> <C>
Shares sold 2,388,962,959 2,423,363,168
- -----------------------------------------------------------------------------
Shares issued to shareholders in payment of distributions declared 8,194,683 8,401,826
- -----------------------------------------------------------------------------
Shares redeemed (2,449,101,104) (2,379,419,355)
- ----------------------------------------------------------------------------- ---------------- ----------------
Net change resulting from share transactions (51,943,462) 52,345,639
- ----------------------------------------------------------------------------- ---------------- ----------------
</TABLE>
INDEPENDENCE ONE MUTUAL FUNDS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MICHIGAN MUNICIPAL
CASH FUND
----------------------------------
YEAR ENDED APRIL 30,
----------------------------------
1997 1996
- ----------------------------------------------------------------------------- ---------------- ----------------
<S> <C> <C>
Shares sold 594,439,241 497,552,563
- -----------------------------------------------------------------------------
Shares issued to shareholders in payment of distributions declared 2,021,101 1,800,093
- -----------------------------------------------------------------------------
Shares redeemed (587,153,264) (491,496,824)
- ----------------------------------------------------------------------------- ---------------- ----------------
Net change resulting from share transactions 9,307,078 7,855,832
- ----------------------------------------------------------------------------- ---------------- ----------------
</TABLE>
(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE--Michigan National Bank, the Funds' investment
adviser (the "Adviser") receives for its services an annual investment
advisory fee equal to 0.40% of each Fund's average daily net assets.
The Adviser may voluntarily choose to waive any portion of its fee.
The Adviser can modify or terminate this voluntary waiver at any time
at its sole discretion.
ADMINISTRATIVE FEE--Federated Administrative Services ("FAS") provides
the Funds with certain administrative personnel and services. The fee
paid to FAS is based on the level of average aggregate net assets of
the Trust for the period. The administrative fee during any fiscal
year shall be at least $50,000 for each portfolio in the Trust.
SHAREHOLDER SERVICES FEE--Under the terms of a Shareholder Services
Agreement with Michigan National Bank, Prime Money Market Fund will
pay Michigan National Bank up to 0.25% of average daily net assets of
the Class A Shares for the period. The fee paid to Michigan National
Bank is used to finance certain services for shareholders and to
maintain shareholder accounts.
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT FEES--Federated Services
Company ("FServ"), through its subsidiary, Federated Shareholder
Services Company ("FSSC") serves as transfer and dividend disbursing
agent for the Funds. The fee paid to FSSC is based on the size, type,
and number of accounts and transactions made by shareholders.
PORTFOLIO ACCOUNTING FEES--FServ maintains the Funds' accounting
records for which it receives a fee. The fee is based on the level of
each Fund's average daily net assets for the period, plus
out-of-pocket expenses.
CUSTODIAN FEES--Michigan National Bank is the Funds' custodian. The
fee is based on the level of each Fund's average daily net assets for
the period, plus out-of-pocket expenses.
GENERAL--Certain of the Officers of the Trust are Officers and/or
Directors or Trustees of the above companies.
INDEPENDENCE ONE MUTUAL FUNDS
- --------------------------------------------------------------------------------
(5) CONCENTRATION OF CREDIT RISK
Since Michigan Municipal Cash Fund invests a substantial portion of
its assets in issuers located in one state, it will be more
susceptible to factors adversely affecting issuers of that state than
would be a comparable tax-exempt mutual fund that invests nationally.
In order to reduce the credit risk associated with such factors, at
April 30, 1997, 55.7% of the securities in the portfolio of
investments are backed by letters of credit or bond insurance of
various financial institutions and financial guaranty assurance
agencies. The value of investments insured by or supported (backed) by
a letter of credit from any one institution or agency did not exceed
6.2% of total investments.
REPORT OF KPMG PEAT MARWICK LLP,
INDEPENDENT AUDITORS
- --------------------------------------------------------------------------------
To the Board of Trustees and Shareholders INDEPENDENCE ONE MUTUAL
FUNDS:
We have audited the accompanying statements of assets and liabilities,
including the portfolio of investments, for the Independence One
Mutual Funds listed below, as of April 30, 1997, and the related
statements of operations and changes in net assets, and the financial
highlights for each of the periods listed below:
INDEPENDENCE ONE PRIME MONEY MARKET FUND--statement of operations
for the year ended April 30, 1997, the statement of changes in
net assets for each of the years in the two-year period then
ended, and the financial highlights for each of the years or
period from June 1, 1989 (commencement of operations) to April
30, 1997.
INDEPENDENCE ONE U.S. TREASURY MONEY MARKET FUND--statement of
operations for the year ended April 30, 1997, the statement of
changes in net assets for each of the years in the two-year
period then ended, and the financial highlights for each of the
years or period from June 1, 1989 (commencement of operations) to
April 30, 1997.
INDEPENDENCE ONE MICHIGAN MUNICIPAL CASH FUND--statement of
operations for the year ended April 30, 1997, the statement of
changes in net assets for each of the years in the two-year
period then ended, and the financial highlights for each of the
years or period from June 14, 1989 (commencement of operations)
to April 30, 1997.
These financial statements and financial highlights are the
responsibility of the Funds' 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 Prime Money Market Fund,
Independence One U.S. Treasury Money Market Fund and Independence One
Michigan Municipal Cash Fund as of April 30, 1997, and the results of
their operations, changes in their net assets, and their 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
TRUSTEES OFFICERS
- --------------------------------------------------------------------------------
Robert E. Baker Edward C. Gonzales
Harold Berry President and Treasurer
Clarence G. Frame Jeffrey W. Sterling
Harry J. Nederlander Vice President and Assistant Treasurer
Thomas S. Wilson Jay S. Neuman
Secretary
Gail Cagney
Assistant Secretary
Mutual funds are not bank deposits or obligations, are not guaranteed
by any bank, and are not insured or guaranteed by the U.S. government,
the Federal Deposit Insurance Corporation, the Federal Reserve Board,
or any other government agency. Investment in mutual funds involves
investment risk, including possible loss of principal. Although money
market funds seek to maintain a stable net asset value of $1.00 per
share, there is no assurance that they will be able to do so.
This report is authorized for distribution to prospective investors
only when preceded or accompanied by the fund's prospectus which
contains facts concerning its objective and policies, management fees,
expenses and other information.
APPENDIX FOR INDEPENDENCE ONE MUTUAL FUNDS
A. The graphic presentation here displayed consists of a line graph
titled "Growth of $10,000 Invested in Independence One Government
Securities Fund (the "Fund"). The corresponding components of the line
graph are listed underneath. The Fund is represented by a solid line.
The Lehman Brothers Government Bond Index is represented by a dotted
line. The Lehman Brothers Government/Corporate Bond Index is
represented by a broken line. The line graph is a visual
representation of a comparison of change in value of a hypothetical
$10,000 purchase in the Fund, the Lehman Brothers Government Bond
Index and the Lehman Brothers Government/Corporate Bond Index. The "y"
axis reflects the cost of the investment. The "x" axis reflects
computation periods from the Fund's start of performance, 1/11/93
through 4/30/97. The right margin reflects the ending value of the
hypothetical investment in the Fund as compared the Lehman Brothers
Government Bond Index and the Lehman Brothers Government/Corporate
Bond Index; the ending values are $12,780, $13,083 and $13,226,
respectively.
B. The graphic presentation here displayed consists of a line graph
titled "Growth of $10,000 Invested in Independence One Fixed Income
Fund (the "Fund"). The corresponding components of the line graph are
listed underneath. The Fund is represented by a solid line. The Lehman
Brothers Intermediate Government/Corporate Bond Index is represented
by a broken line. The line graph is a visual representation of a
comparison of change in value of a hypothetical $10,000 purchase in
the Fund and the Lehman Brothers Intermediate Government/Corporate
Bond Index. The "y" axis reflects the cost of the investment. The "x"
axis reflects computation periods from the Fund's start of
performance, 10/23/95 through 4/30/97. The right margin reflects the
ending value of the hypothetical investment in the Fund as compared to
the Lehman Brothers Intermediate Government/Corporate Bond Index; the
ending values are $10,701 and $10,764, respectively.
C. The graphic presentation here displayed consists of a line graph
titled "Growth of $10,000 Invested in Independence One Michigan
Municipal Bond Fund (the "Fund"). The corresponding components of the
line graph are listed underneath. The Fund is represented by a solid
line. The Lehman Brothers 7-Year General Obligation Bond Index is
represented by a broken line. The line graph is a visual
representation of a comparison of change in value of a hypothetical
$10,000 purchase in the Fund and the Lehman Brothers 7-Year General
Obligation Bond Index. The "y" axis reflects the cost of the
investment. The "x" axis reflects computation periods from the Fund's
start of performance, 11/20/95 through 4/30/97. The right margin
reflects the ending value of the hypothetical investment in the Fund
as compared to the Lehman Brothers7-Year General Obligation Bond
Index; the ending values are $10,589 and $10,540, respectively.
