PRESIDENT'S MESSAGE
- ------------------------------------------------------------
Dear Investor:
I am pleased to present the Annual Report for Independence One Money Market
Funds, which covers the 12-month reporting period from May 1, 1998 through April
30, 1999. The report begins with a discussion with the funds' portfolio manager,
which is followed by a complete listing of fund holdings and the financial
information.
During the reporting period, each fund continued to give shareholders a
convenient, stable way to put their ready cash to work earning daily
income--with daily access to their money.* Please note the following highlights:
INDEPENDENCE ONE PRIME MONEY MARKET FUND, a high-quality, diversified portfolio
of money market securities, paid competitive dividends of $0.05 per share for
Class A Shares and Class B Shares. Total net assets reached $633.6 million on
the last day of the reporting period.
INDEPENDENCE ONE U.S. TREASURY MONEY MARKET FUND, which invests exclusively in a
portfolio of short-term U.S. Treasury obligations, paid dividends totaling $0.05
per share. Total net assets reached $193.9 million on the last day of the
reporting period.
Designed for tax-sensitive investors, INDEPENDENCE ONE MICHIGAN MUNICIPAL CASH
FUND paid a total of $0.03 in double tax-free dividends per share.+ Total net
assets in the fund's high-quality portfolio of Michigan municipal securities
reached $86.9 million at the end of the reporting period.
Thank you for keeping your ready cash earning daily income through one of the
Independence One Money Market Funds. As always, we welcome your questions,
comments, or suggestions.
Sincerely,
[EDWARD C. GONZALES SIGNATURE]
Edward C. Gonzales
President
June 16, 1999
* AN INVESTMENT IN MONEY MARKET FUNDS IS NEITHER INSURED NOR GUARANTEED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENT AGENCY.
ALTHOUGH MONEY MARKET FUNDS SEEK TO PRESERVE THE VALUE OF YOUR INVESTMENT AT
$1.00 PER SHARE, IT IS POSSIBLE TO LOSE MONEY BY INVESTING IN THE FUNDS.
+ INCOME MAY BE SUBJECT TO THE FEDERAL ALTERNATIVE MINIMUM TAX.
1
INVESTMENT REVIEW
- ------------------------------------------------------------
Q
What are your comments on the economy and short-term interest rates during
the funds' fiscal year?
A
Turmoil in Asian economies and the effective default on Russia's sovereign
debt threatened to bring an end to the eight year U.S. economic expansion
last summer. World stock markets corrected sharply, and the Dow Jones
Industrial Average suffered its largest point drop in its history. Short-term
interest rates fell significantly during the reporting period. The Federal
Reserve Board (the "Fed") moved to head off a possible credit crunch by lowering
short-term interest rates three times in a span of just seven weeks.
Q
In this environment, how did the Independence One Money Market Funds
perform for shareholders in terms of income and 7-day net yield during the
12-month reporting period ended April 30, 1999? And what was the average
maturity of each Fund?
A
INDEPENDENCE ONE PRIME MONEY MARKET FUND
Independence One Prime Money Market Fund earned a total return of 4.88% for
Class A Shares and 5.14% for Class B Shares during the 12-month reporting
period ended April 30, 1999. The 7-day net yield for Class A Shares began the
reporting period on May 1, 1998 at 5.03% and ended the reporting period on April
30, 1999 at 4.44%. The 7-day net yield for Class B Shares began the reporting
period on May 1, 1998 at 5.28% and ended the reporting period on April 30, 1999
at 4.69%. The average maturity of the fund as of April 30, 1999 was 61 days.*
INDEPENDENCE ONE U.S. TREASURY MONEY MARKET FUND
Independence One U.S. Treasury Money Market Fund earned a total return of 4.62%
during the 12-month reporting period ended April 30, 1999. The 7-day net yield
began the reporting period on May 1, 1998 at 4.91% and ended the reporting
period on April 30, 1999 at 4.18%. The average maturity of the fund as of April
30, 1999 was 76 days.*
INDEPENDENCE ONE MICHIGAN MUNICIPAL CASH FUND
Independence One Michigan Municipal Cash Fund earned a total return of 2.85%
during the 12-month reporting period ended April 30, 1999. The 7-day net yield
began the reporting period on May 1, 1998 at 3.40% and ended the reporting
period on April 30, 1999 at 2.96%. The average maturity of the fund as of April
30, 1999 was 29 days.*
Q
As we reach mid-year, what is your overall outlook for short-term interest
rates for the rest of 1999?
A
The Fed recently announced its bias toward raising rates. We believe there
exists the risk that the resurgence of strong economic growth and the tight
labor markets will increase inflation pressures, and that the Fed will
respond by reversing the easing policies it initiated last fall.
*PERFORMANCE QUOTED REPRESENTS PAST PERFORMANCE AND IS NOT INDICATIVE OF FUTURE
RESULTS. YIELDS WILL VARY. YIELDS QUOTED FOR MONEY MARKET FUNDS MOST CLOSELY
REFLECT THE FUNDS' CURRENT EARNINGS.
2
INDEPENDENCE ONE PRIME MONEY MARKET FUND
PORTFOLIO OF INVESTMENTS
APRIL 30, 1999
- ----------------------------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
- -------------- ---------------------------------------- ------------
CERTIFICATE OF DEPOSIT--22.1%
- --------------------------------------------------------
FINANCE--22.1%
----------------------------------------
$ 10,000,000 ABN AMRO Bank N.V., Amsterdam
(denominated in U.S. dollars), 5.110%,
5/10/1999 $ 10,000,049
----------------------------------------
15,000,000 Abbey National Bank Treasury Services
PLC MTN (denominated in U.S. dollars),
5.130%, 5/4/2000 14,989,861
----------------------------------------
25,000,000 Bayerische Hypo-und Vereinsbank Yankee
CD (denominated in U.S. dollars),
4.850%, 6/16/1999 - 6/22/1999 25,000,340
----------------------------------------
15,000,000 CIBC Wood Gundy Securities Corp.,
5.230%, 2/29/2000 14,996,393
----------------------------------------
15,000,000 Harris Trust & Savings Bank, Chicago,
4.850%, 7/12/1999 15,000,000
----------------------------------------
10,000,000 Rabobank Nederland, Utrecht (denominated
in U.S. dollars), 5.050%, 1/27/2000 10,000,725
----------------------------------------
25,000,000 Societe Generale, Paris (denominated in
U.S. dollars), 4.930% - 5.050%,
9/23/1999 - 1/14/2000 24,998,741
----------------------------------------
25,000,000 UBS AG (denominated in U.S. dollars),
4.880% - 4.900%, 8/11/1999 - 8/18/1999 25,001,006
---------------------------------------- ------------
TOTAL CERTIFICATES OF DEPOSIT 139,987,115
---------------------------------------- ------------
COMMERCIAL PAPER (1)--59.4%
- --------------------------------------------------------
CONSUMER DURABLES--6.3%
----------------------------------------
15,000,000 Fleet Funding Corp., 4.868%, 5/7/1999 14,987,925
----------------------------------------
25,000,000 Receivables Capital Corp., 4.833% -
4.895%, 5/3/1999 - 5/20/1999 24,959,226
---------------------------------------- ------------
Total 39,947,151
---------------------------------------- ------------
FINANCE--19.7%
----------------------------------------
25,000,000 BCI Funding Corp., 4.950% - 5.024%,
5/27/1999 - 8/23/1999 24,735,186
----------------------------------------
15,000,000 Bank of America NT and SA, San
Francisco, 4.940%, 10/7/1999 14,680,675
----------------------------------------
15,000,000 Delaware Funding Corp., 4.861%, 6/9/1999 14,921,675
----------------------------------------
25,325,000 Enterprise Capital Funding Corp., 4.884%
-4.895%, 6/10/1999 - 7/15/1999 25,118,849
----------------------------------------
10,000,000 J.P. Morgan & Co., Inc., 4.877%,
7/21/1999 9,892,900
----------------------------------------
3
INDEPENDENCE ONE PRIME MONEY MARKET FUND
- --------------------------------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
- -------------- ---------------------------------------- ------------
COMMERCIAL PAPER (1)--CONTINUED
- --------------------------------------------------------
FINANCE--CONTINUED
----------------------------------------
$ 25,000,000 Morgan Stanley, Dean Witter & Co.,
4.840% - 4.894%, 5/6/1999 - 6/4/1999 $ 24,924,653
----------------------------------------
10,000,000 Quincy Capital Corp., 4.900%, 5/5/1999 9,994,600
---------------------------------------- ------------
Total 124,268,538
---------------------------------------- ------------
MISCELLANEOUS RECEIVABLES--3.9%
----------------------------------------
25,000,000 Asset Securitization Cooperative Corp.,
4.858% - 4.882%, 5/13/1999 - 7/27/1999 24,809,833
---------------------------------------- ------------
PROCESS INDUSTRIES--3.9%
25,000,000 Monsanto Co., 4.904% - 4.910%, 6/2/1999
-8/4/1999 24,808,931
---------------------------------------- ------------
SECURITIES SERVICES--21.7%
----------------------------------------
15,000,000 AESOP Funding Corp., 4.837%, 5/28/1999 14,945,887
----------------------------------------
10,000,000 Bank of America, 4.970%, 5/17/1999 9,978,444
----------------------------------------
10,000,000 Barton Capital Corp., 4.906%, 5/4/1999 9,995,933
----------------------------------------
10,000,000 BellSouth Capital Funding Corp., 4.831%,
5/25/1999 9,968,000
----------------------------------------
10,000,000 Edison Asset Securitization, LLC,
4.869%, 7/19/1999 9,894,447
----------------------------------------
23,409,000 (2) Fountain Square Commercial Funding
Corp., (Fifth Third Bank, Cincinnati
Support Agreement), 4.897% - 4.908%,
7/1/1999 23,216,851
----------------------------------------
15,000,000 General Electric Capital Corp., 4.918% -
4.974%, 6/14/1999 - 9/14/1999 14,787,517
----------------------------------------
20,000,000 Goldman Sachs Group, LP, 4.892% -
4.896%, 5/14/1999 - 5/25/1999 19,950,153
----------------------------------------
25,000,000 Transamerica Finance Corp., 4.852% -
4.881%, 5/12/1999 - 6/11/1999 24,923,583
---------------------------------------- ------------
Total 137,660,815
---------------------------------------- ------------
TRANSPORTATION--3.9%
----------------------------------------
25,000,000 Kitty Hawk Funding Corp., 4.899% -
4.919%, 6/8/1999 - 6/15/1999 24,862,617
---------------------------------------- ------------
TOTAL COMMERCIAL PAPER 376,357,885
---------------------------------------- ------------
GOVERNMENT AGENCIES--4.3%
- --------------------------------------------------------
FEDERAL HOME LOAN BANK--4.3%
----------------------------------------
10,000,000 4.910%, 11/10/1999 9,996,865
----------------------------------------
17,000,000 5.000%, 10/27/1999 17,000,000
---------------------------------------- ------------
TOTAL GOVERNMENT AGENCIES 26,996,865
---------------------------------------- ------------
4
INDEPENDENCE ONE PRIME MONEY MARKET FUND
- --------------------------------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
- -------------- ---------------------------------------- ------------
REPURCHASE AGREEMENTS (3)--16.5%
- --------------------------------------------------------
$ 50,000,000 Dean Witter Reynolds, Inc., 4.850%,
dated 4/30/1999, due 5/3/1999 $ 50,000,000
----------------------------------------
54,903,000 Donaldson, Lufkin and Jenrette
Securities Corp., 4.870%, dated
4/30/1999, due 5/3/1999 54,903,000
---------------------------------------- ------------
TOTAL REPURCHASE AGREEMENTS (AT COST) 104,903,000
---------------------------------------- ------------
TOTAL INVESTMENTS (AT AMORTIZED COST)
(4) $648,244,865
---------------------------------------- ------------
(1) Each issue shows the rate of discount at the time of purchase.
(2) Denotes a restricted security which is subject to restrictions on resale
under federal securities laws. These securities have been deemed liquid by
criteria approved by the fund's Board of Trustees. At April 30, 1999, these
securities amounted to $23,216,851 which represents 3.7% of net assets.
(3) The repurchase agreements are fully collateralized by U.S. Treasury
obligations based on market prices at the date of the portfolio.
(4) Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($633,573,586) at April 30, 1999.
The following acronyms are used throughout this portfolio:
LLC--Limited Liability Corporation
LP--Limited Partnership
MTN--Medium Term Note
PLC--Public Limited Company
SA--Support Agreement
(See Notes which are an integral part of the Financial Statements)
5
INDEPENDENCE ONE PRIME MONEY MARKET FUND
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1999
- ----------------------------------------------------------------------------
ASSETS:
- ------------------------------------------------------
Investments in securities $543,341,865
- ----------------------------------------
Investments in repurchase agreements 104,903,000
- ---------------------------------------- ------------
Total investments in securities, at amortized cost and
value $648,244,865
- ------------------------------------------------------
Cash 31,867
- ------------------------------------------------------
Income receivable 1,619,569
- ------------------------------------------------------
Receivable for shares sold 67,489
- ------------------------------------------------------ ------------
Total assets 649,963,790
- ------------------------------------------------------
LIABILITIES:
- ----------------------------------------
Payable for investments purchased $ 14,989,861
- ----------------------------------------
Payable for shares redeemed 12,008
- ----------------------------------------
Income distribution payable 1,127,551
- ----------------------------------------
Payable to adviser 90,379
- ----------------------------------------
Other accrued expenses 170,405
- ---------------------------------------- ------------
Total liabilities 16,390,204
- ------------------------------------------------------ ------------
NET ASSETS for 633,573,586 shares outstanding $633,573,586
- ------------------------------------------------------ ------------
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE:
- ------------------------------------------------------
CLASS A SHARES:
- ------------------------------------------------------
$442,200,717 DIVIDED BY 442,200,717 shares
outstanding $1.00
- ------------------------------------------------------ ------------
CLASS B SHARES:
- ------------------------------------------------------
$191,372,869 DIVIDED BY 191,372,869 shares
outstanding $1.00
- ------------------------------------------------------ ------------
(See Notes which are an integral part of the Financial Statements)
6
INDEPENDENCE ONE PRIME MONEY MARKET FUND
STATEMENT OF OPERATIONS
YEAR ENDED APRIL 30, 1999
- --------------------------------------------------------------------------------
INVESTMENT INCOME:
- -----------------------------------------------------
Interest $30,674,652
- -----------------------------------------------------
EXPENSES:
- ----------------------------------------
Investment advisory fee $ 2,307,358
- ----------------------------------------
Administrative personnel and services
fee 588,977
- ----------------------------------------
Custodian fees 77,004
- ----------------------------------------
Transfer and dividend disbursing agent
fees and expenses 98,475
- ----------------------------------------
Directors'/Trustees' fees 24,000
- ----------------------------------------
Auditing fees 15,500
- ----------------------------------------
Legal fees 5,850
- ----------------------------------------
Portfolio accounting fees 99,639
- ----------------------------------------
Shareholder services fee--Class A Shares 1,141,575
- ----------------------------------------
Share registration costs 21,891
- ----------------------------------------
Printing and postage 8,000
- ----------------------------------------
Insurance premiums 4,255
- ----------------------------------------
Miscellaneous 5,855
- ---------------------------------------- -----------
Total expenses 4,398,379
- ----------------------------------------
Waiver--
- ----------------------------------------
Waiver of investment advisory fee (1,442,099)
- ---------------------------------------- -----------
Net expenses 2,956,280
- ----------------------------------------------------- -----------
Net investment income $27,718,372
- ----------------------------------------------------- -----------
(See Notes which are an integral part of the Financial Statements)
7
INDEPENDENCE ONE PRIME MONEY MARKET FUND
STATEMENTS OF CHANGES IN NET ASSETS
- ------------------------------------------------------------
YEAR ENDED APRIL 30,
--------------------------------
1999 1998
- ---------------------------------------- --------------- ---------------
INCREASE (DECREASE) IN NET ASSETS:
- ----------------------------------------
OPERATIONS--
- ----------------------------------------
Net investment income $ 27,718,372 $ 23,845,778
- ---------------------------------------- --------------- ---------------
DISTRIBUTIONS TO SHAREHOLDERS--
- ----------------------------------------
Distributions from net investment income
- ----------------------------------------
Class A Shares (21,765,197) (18,466,487)
- ----------------------------------------
Class B Shares (5,953,175) (5,379,291)
- ---------------------------------------- --------------- ---------------
Change in net assets resulting from
distributions to shareholders (27,718,372) (23,845,778)
- ---------------------------------------- --------------- ---------------
SHARE TRANSACTIONS--
- ----------------------------------------
Proceeds from sale of shares 4,638,090,014 3,127,600,723
- ----------------------------------------
Net asset value of shares issued to
shareholders in payment of
distributions declared 17,286,748 13,841,267
- ----------------------------------------
Cost of shares redeemed (4,493,048,245) (3,079,200,897)
- ---------------------------------------- --------------- ---------------
Change in net assets resulting from
share transactions 162,328,517 62,241,093
- ---------------------------------------- --------------- ---------------
Change in net assets 162,328,517 62,241,093
- ----------------------------------------
NET ASSETS:
- ----------------------------------------
Beginning of period 471,245,069 409,003,976
- ---------------------------------------- --------------- ---------------
End of period $ 633,573,586 $ 471,245,069
- ---------------------------------------- --------------- ---------------
(See Notes which are an integral part of the Financial Statements)
8
INDEPENDENCE ONE PRIME MONEY MARKET FUND
FINANCIAL HIGHLIGHTS--CLASS A SHARES
- ------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
YEAR ENDED APRIL 30,
------------------------------------------------
1999 1998 1997 1996 1995
- ------------------------- -------- -------- -------- -------- --------
NET ASSET VALUE,
BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- -------------------------
INCOME FROM INVESTMENT
OPERATIONS
- -------------------------
Net investment income 0.05 0.05 0.05 0.05 0.05
- -------------------------
LESS DISTRIBUTIONS
- -------------------------
Distributions from net
investment income (0.05) (0.05) (0.05) (0.05) (0.05)
- ------------------------- -------- -------- -------- -------- --------
NET ASSET VALUE, END OF
PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ------------------------- -------- -------- -------- -------- --------
TOTAL RETURN (1) 4.88% 5.20% 4.94% 5.33% 4.66%
- -------------------------
RATIOS TO AVERAGE NET
ASSETS
- -------------------------
Expenses (2) 0.81% 0.84% 0.85% 0.86% 0.61%
- -------------------------
Net investment income
(2) 4.52% 4.82% 4.58% 4.94% 4.51%
- -------------------------
Expenses (after
waivers/reimbursements) 0.56% 0.59% 0.60% 0.61% 0.61%
- -------------------------
Net investment income
(after waivers/
reimbursements) 4.77% 5.07% 4.83% 5.19% 4.51%
- -------------------------
SUPPLEMENTAL DATA
- -------------------------
Net assets, end of
period (000 omitted) $442,201 $389,522 $337,836 $310,991 $233,607
- -------------------------
(1) Based on net asset value.
(2) During the period, certain fees were voluntarily waived or reimbursed. If
such voluntary waivers or reimbursements had not occurred, the ratios would
have been as indicated.
(See Notes which are an integral part of the Financial Statements)
9
INDEPENDENCE ONE PRIME MONEY MARKET FUND
FINANCIAL HIGHLIGHTS--CLASS B SHARES
- ------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
YEAR ENDED APRIL 30,
------------------------------------------------
1999 1998 1997 1996 (1)
- ------------------------------ -------- ------- ------- -------
NET ASSET VALUE, BEGINNING OF
PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ------------------------------
INCOME FROM INVESTMENT
OPERATIONS
- ------------------------------
Net investment income 0.05 0.05 0.05 0.05
- ------------------------------
LESS DISTRIBUTIONS
- ------------------------------
Distributions from net
investment income (0.05) (0.05) (0.05) (0.05)
- ------------------------------ -------- ------- ------- -------
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ------------------------------ -------- ------- ------- -------
TOTAL RETURN (2) 5.14% 5.46% 5.20% 5.07%
- ------------------------------
RATIOS TO AVERAGE NET ASSETS
- ------------------------------
Expenses (3) 0.56% 0.59% 0.60% 0.61%*
- ------------------------------
Net investment income (3) 4.77% 5.06% 4.81% 5.09%*
- ------------------------------
Expenses (after
waivers/reimbursements) 0.31% 0.34% 0.35% 0.36%*
- ------------------------------
Net investment income (after
waivers/reimbursements) 5.02% 5.31% 5.06% 5.34%*
- ------------------------------
SUPPLEMENTAL DATA
- ------------------------------
Net assets, end of period
(000 omitted) $191,373 $81,723 $71,168 $85,780
- ------------------------------
</TABLE>
* Computed on an annualized basis.
(1) Reflects operations for the period from May 1, 1995 (date of initial public
investment) to April, 30, 1996.
(2) Based on net asset value.
(3) During the period, certain fees were voluntarily waived or reimbursed. If
such voluntary waivers or reimbursements had not occurred, the ratios would
have been as indicated.
(See Notes which are an integral part of the Financial Statements)
10
INDEPENDENCE ONE U.S. TREASURY MONEY MARKET FUND
PORTFOLIO OF INVESTMENTS
APRIL 30, 1999
- ----------------------------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
- ----------- ---------------------------------------- ------------
U.S. TREASURY OBLIGATIONS(1)--44.0%
- -----------------------------------------------------
U.S. TREASURY NOTES--44.0%
----------------------------------------
$10,000,000 4.86%, 4/15/2000 $ 10,058,427
----------------------------------------
15,000,000 4.83%, 10/31/1999 15,057,072
----------------------------------------
15,000,000 4.82%, 11/15/1999 15,082,049
----------------------------------------
10,000,000 4.79%, 2/15/2000 10,082,528
----------------------------------------
20,000,000 4.40%, 5/31/1999 20,037,632
----------------------------------------
15,000,000 4.38%, 7/31/1999 15,090,683
---------------------------------------- ------------
TOTAL U.S. TREASURY OBLIGATIONS 85,408,391
---------------------------------------- ------------
REPURCHASE AGREEMENTS(2)--55.4%
----------------------------------------
45,000,000 BA Securities, Inc., 4.850%, dated
4/30/1999, due 5/3/1999 45,000,000
----------------------------------------
8,492,000 Morgan Stanley Dean Witter, Inc.,
4.850%, dated 4/30/1999, due 5/3/1999 8,492,000
----------------------------------------
45,500,000 Donaldson, Lufkin and Jenrette
Securities Corp., 4.870%, dated
4/30/1999, due 5/3/1999 45,500,000
----------------------------------------
8,500,000 First Chicago Capital Markets, Inc.,
4.850%, dated 4/30/1999, due 5/3/1999 8,500,000
---------------------------------------- ------------
TOTAL REPURCHASE AGREEMENTS 107,492,000
---------------------------------------- ------------
TOTAL INVESTMENTS (AT AMORTIZED
COST)(3) $192,900,391
---------------------------------------- ------------
(1) Rate reflects yield to maturity.
(2) The repurchase agreements are fully collateralized by U.S. Treasury
obligations based on market prices at the date of the portfolio.
(3) Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($193,949,026) at April 30, 1999.
(See Notes which are an integral part of the Financial Statements)
11
INDEPENDENCE ONE U.S. TREASURY MONEY MARKET FUND
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1999
- ----------------------------------------------------------------------------
ASSETS:
- ----------------------------------------
Investments in repurchase agreements $107,492,000
- ----------------------------------------
Investments in securities 85,408,391
- ---------------------------------------- ------------
Total investments in securities, at amortized cost and
value $192,900,391
- ------------------------------------------------------
Cash 11,033
- ------------------------------------------------------
Income receivable 1,389,231
- ------------------------------------------------------ ------------
Total assets 194,300,655
- ------------------------------------------------------
LIABILITIES:
- ----------------------------------------
Payable for shares redeemed 1,158
- ----------------------------------------
Income distribution payable 245,248
- ----------------------------------------
Payable to adviser 69,517
- ----------------------------------------
Other accrued expenses 35,706
- ---------------------------------------- ------------
Total liabilities 351,629
- ------------------------------------------------------ ------------
NET ASSETS for 193,949,026 shares outstanding $193,949,026
- ------------------------------------------------------ ------------
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE:
- ------------------------------------------------------
$193,949,026 DIVIDED BY 193,949,026 shares
outstanding $1.00
- ------------------------------------------------------ ------------
(See Notes which are an integral part of the Financial Statements)
12
INDEPENDENCE ONE U.S. TREASURY MONEY MARKET FUND
STATEMENT OF OPERATIONS
YEAR ENDED APRIL 30, 1999
- --------------------------------------------------------------------------------
INVESTMENT INCOME:
- ----------------------------------------------------
Interest $13,170,704
- ----------------------------------------------------
EXPENSES:
- ----------------------------------------
Investment advisory fee $1,028,200
- ----------------------------------------
Administrative personnel and services
fee 263,394
- ----------------------------------------
Custodian fees 60,441
- ----------------------------------------
Transfer and dividend disbursing agent
fees and expenses 29,492
- ----------------------------------------
Directors'/Trustees' fees 12,741
- ----------------------------------------
Auditing fees 12,500
- ----------------------------------------
Legal fees 5,406
- ----------------------------------------
Portfolio accounting fees 66,529
- ----------------------------------------
Share registration costs 15,752
- ----------------------------------------
Printing and postage 2,564
- ----------------------------------------
Insurance premiums 295
- ----------------------------------------
Miscellaneous 7,696
- ---------------------------------------- ----------
Total expenses 1,505,010
- ---------------------------------------- -----------
Net investment income $11,665,694
- ---------------------------------------------------- -----------
(See Notes which are an integral part of the Financial Statements)
13
INDEPENDENCE ONE U.S. TREASURY MONEY MARKET FUND
STATEMENTS OF CHANGES IN NET ASSETS
- ------------------------------------------------------------
YEAR ENDED APRIL 30,
--------------------------------
1999 1998
- ---------------------------------------- --------------- ---------------
INCREASE (DECREASE) IN NET ASSETS:
- ----------------------------------------
OPERATIONS--
- ----------------------------------------
Net investment income $ 11,665,694 $ 13,078,210
- ---------------------------------------- --------------- ---------------
DISTRIBUTIONS TO SHAREHOLDERS--
- ----------------------------------------
Distributions from net investment income (11,665,694) (13,078,210)
- ---------------------------------------- --------------- ---------------
SHARE TRANSACTIONS--
- ----------------------------------------
Proceeds from sale of shares 2,423,407,738 2,653,184,433
- ----------------------------------------
Net asset value of shares issued to
shareholders in payment of
distributions declared 7,185,665 7,978,732
- ----------------------------------------
Cost of shares redeemed (2,557,212,720) (2,585,884,188)
- ---------------------------------------- --------------- ---------------
Change in net assets resulting from
share transactions (126,619,317) 75,278,977
- ---------------------------------------- --------------- ---------------
Change in net assets (126,619,317) 75,278,977
- ----------------------------------------
NET ASSETS:
- ----------------------------------------
Beginning of period 320,568,343 245,289,366
- ---------------------------------------- --------------- ---------------
End of period $ 193,949,026 $ 320,568,343
- ---------------------------------------- --------------- ---------------
(See Notes which are an integral part of the Financial Statements)
14
INDEPENDENCE ONE U.S. TREASURY MONEY MARKET FUND
FINANCIAL HIGHLIGHTS
- ------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
YEAR ENDED APRIL 30,
------------------------------------------------
1999 1998 1997 1996 1995
-------- -------- -------- -------- --------
- -------------------------
NET ASSET VALUE,
BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- -------------------------
INCOME FROM INVESTMENT
OPERATIONS
- -------------------------
Net investment income 0.05 0.05 0.05 0.05 0.04
- -------------------------
LESS DISTRIBUTIONS
- -------------------------
Distributions from net
investment income (0.05) (0.05) (0.05) (0.05) (0.04)
- ------------------------- ----- ----- ----- ----- -----
NET ASSET VALUE, END OF
PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ------------------------- ----- ----- ----- ----- -----
TOTAL RETURN (1) 4.62% 5.03% 4.86% 5.28% 4.49%
- -------------------------
RATIOS TO AVERAGE NET
ASSETS
- -------------------------
Expenses 0.59% 0.59% 0.59% 0.60% 0.63%
- -------------------------
Net investment income 4.54% 4.92% 4.75% 5.14% 4.41%
- -------------------------
SUPPLEMENTAL DATA
- -------------------------
Net assets, end of
period (000 omitted) $193,949 $320,568 $245,289 $297,233 $244,887
- -------------------------
(1) Based on net asset value.
(See Notes which are an integral part of the Financial Statements)
15
INDEPENDENCE ONE MICHIGAN MUNICIPAL CASH FUND
PORTFOLIO OF INVESTMENTS
APRIL 30, 1999
- ----------------------------------------------------------------------------
CREDIT
PRINCIPAL RATING*
AMOUNT S&P/MOODY'S VALUE
- ---------- ----------------------------------- ----------- -----------
SHORT-TERM MUNICIPALS (1)(2)--97.7%
- -----------------------------------------------
MICHIGAN--97.7%
-----------------------------------
$2,600,000 Bruce Township, MI Hospital Finance
Authority, Tender Securities Weekly
VRDNs (Sisters of Charity Health
Care System)/(MBIA INS)/(Morgan
Guaranty Trust Co., New York LIQ) A-1+/VMIG1 $ 2,600,000
-----------------------------------
1,000,000 Cornell, MI EDC, Industrial
Development Revenue Refunding Bonds
(Series 1990), 3.10% CP (Mead-
Escanaba Paper Co. Project)/(Credit
Suisse First Boston LOC), Mandatory
Tender 6/15/1999 A-1+/NR 1,000,000
-----------------------------------
3,000,000 Dearborn, MI EDC, Revenue Bonds
Weekly VRDNs (Henry Ford
Village)/(Comerica Bank, Detroit,
MI LOC) NR/NR 3,000,000
-----------------------------------
2,200,000 Delta County, MI EDC, Environmental
Improvement Revenue Refunding Bonds
(Series 1985 B), 2.65% CP
(Mead-Escanaba Paper Co.
Project)/(Union Bank of
Switzerland, Zurich LOC), Mandatory
Tender 5/10/1999 NR/P-1 2,200,000
-----------------------------------
2,500,000 Detroit, MI City School District,
GO LT, 3.688% Bonds, 7/1/1999 SP-1+/NR 2,503,382
-----------------------------------
3,000,000 Detroit, MI Sewage Disposal System
Weekly VRDNs (MBIA INS) A-1+/VMIG1 3,000,000
-----------------------------------
1,000,000 Detroit, MI Sewage Disposal System,
Sewer Improvement Revenue Bonds,
3.10% Bonds, 7/1/1999 (callable
@101.5) AAA/NR 1,014,728
-----------------------------------
500,000 Detroit, MI Water Supply System,
Water Supply System Revenue
Refunding Bonds (Series 1993)
Weekly VRDNs (FGIC INS)/(FGIC
Securities Purchase, Inc. LIQ) A-1+/VMIG1 500,000
-----------------------------------
900,000 Detroit, MI, 3.10% Bonds, 5/1/1999
(callable @102) (AMBAC INS) AAA/Aaa 918,000
-----------------------------------
340,000 Farmington Hills, MI EDC, LT
Obligation Weekly VRDNs (Brookfield
Building Association)/(Comerica
Bank, Detroit, MI LOC) A-1/A 340,000
-----------------------------------
16
INDEPENDENCE ONE MICHIGAN MUNICIPAL CASH FUND
- --------------------------------------------------------------------------------
CREDIT
PRINCIPAL RATING*
AMOUNT S&P/MOODY'S VALUE
- ---------- ----------------------------------- ----------- -----------
SHORT-TERM MUNICIPALS (1)(2)--CONTINUED
- -----------------------------------------------
MICHIGAN--CONTINUED
-----------------------------------
$ 800,000 Farmington Hills, MI EDC, Limited
Obligations Revenue Bonds, 3.25%
TOBs (Marketing Displays)/(Comerica
Bank, Detroit, MI LOC), Optional
Tender 9/1/1999 NR/NR $ 800,000
-----------------------------------
1,000,000 Grand Rapids, MI EDR Weekly VRDNs
(Amway Hotel Corp.)/(Old Kent Bank
& Trust Co., Grand Rapids LOC) A-1/NR 1,000,000
-----------------------------------
1,000,000 Grand Rapids, MI EDR, Weekly VRDNs
(Amway Hotel Corp.)/(Old Kent Bank
& Trust Co., Grand Rapids LOC) A-1/NR 1,000,000
-----------------------------------
1,500,000 Grand Rapids, MI Water Supply
System, Series 1993 Weekly VRDNs
(FGIC INS)/(Societe Generale, Paris
LIQ) NR/VMIG1 1,500,000
-----------------------------------
3,088,000 Lakeville, MI, Community School,
3.65% Bonds, 6/30/1999 NR/SP-1+ 3,090,204
-----------------------------------
3,125,000 Lincoln, MI Consolidated School
District, Cash Flow Management,
3.75% Bonds, 8/20/1999 NR/NR 3,127,278
-----------------------------------
2,000,000 Michigan Higher Education Student
Loan Authority, Series XXII-F
Weekly VRDNs (AMBAC) AAA/VMIG1 2,000,000
-----------------------------------
3,000,000 Michigan Municipal Bond Authority,
Revenue Bonds (Series B-1), 3.60%
Bonds, 7/2/1999 SP-1+/NR 3,004,423
-----------------------------------
555,000 Michigan State Hospital Finance
Authority Weekly VRDNs (Hospital
Equipment Loan Program)/(First of
America Bank--Kalamazoo, MI LOC) NR/VMIG1 555,000
-----------------------------------
3,020,000 Michigan State Hospital Finance
Authority, (Series 1994) Weekly
VRDNs (Mt. Clemens General
Hospital)/ (Comerica Bank, Detroit,
MI LOC) NR/VMIG1 3,020,000
-----------------------------------
1,100,000 Michigan State Hospital Finance
Authority, (Series A) Health,
Hospital Nursing Home Improvement
Revenue Bonds Weekly VRDNs
(National City Bank, Michigan/
Illinois LOC) NR/VMIG1 1,100,000
-----------------------------------
1,900,000 Michigan State Hospital Finance
Authority, (Series F) Weekly VRDNs
(Daughters of Charity) A-1+/VMIG1 1,900,000
-----------------------------------
1,000,000 Michigan State Hospital Finance
Authority, Refunding Revenue Bonds,
3.15% Bonds (Oakland General
Hospital, MI)/(AMBAC LOC), 7/1/1999
(callable @102) AAA/Aaa 1,017,151
-----------------------------------
17
INDEPENDENCE ONE MICHIGAN MUNICIPAL CASH FUND
- --------------------------------------------------------------------------------
CREDIT
PRINCIPAL RATING*
AMOUNT S&P/MOODY'S VALUE
- ---------- ----------------------------------- ----------- -----------
SHORT-TERM MUNICIPALS (1)(2)--CONTINUED
- -----------------------------------------------
MICHIGAN--CONTINUED
-----------------------------------
$1,000,000 Michigan State Hospital Finance
Authority, Revenue Bonds Weekly
VRDNs (First of America Bank LOC) NR/Aa3 $ 1,000,000
-----------------------------------
1,935,000 Michigan State Trunk Line, (Series
A), 2.85% Bonds (United States
Treasury PRF), 8/15/1999 (callable
@102) AAA/Aa- 1,996,304
-----------------------------------
1,560,000 Michigan Strategic Fund Monthly
VRDNs (Applied Textiles, Inc.) NR/NR 1,560,000
-----------------------------------
300,000 Michigan Strategic Fund Weekly
VRDNs (Cons. Indl.)/ (NBD Bank,
Michigan LOC) NR/NR 300,000
-----------------------------------
790,000 Michigan Strategic Fund Weekly
VRDNs (Advanced Tooling Systems,
Inc.)/(NBD Bank, Michigan LOC) NR/NR 789,980
-----------------------------------
1,500,000 Michigan Strategic Fund Weekly
VRDNs (Morrell, Inc.) (Comerica
LOC) NR/NR 1,500,000
-----------------------------------
200,000 Michigan Strategic Fund Weekly
VRDNs (NBD Bank, Michigan LOC)/(LPB
LLC Project) NR/NR 200,000
-----------------------------------
1,100,000 Michigan Strategic Fund, (Series
1995) Weekly VRDNs (Rood
Industries, Inc. Project)/(NBD
Bank, Michigan LOC) NR/NR 1,100,000
-----------------------------------
3,800,000 Michigan Strategic Fund, 2.60% CP
(Dow Chemical Co.), Mandatory
Tender 5/20/1999 NR/P-1 3,800,000
-----------------------------------
900,000 Michigan Strategic Fund, 2.80% CP
(Dow Chemical Co.), Mandatory
Tender 5/3/1999 NR/P-1 900,000
-----------------------------------
1,000,000 Michigan Strategic Fund, Industrial
Improvement Revenue Bonds Weekly
VRDNs (Eclipse Mold, Inc.
Project)/(NBD Bank, Michigan LOC) NR/NR 1,000,000
-----------------------------------
1,000,000 Michigan Strategic Fund, Industrial
Improvement Revenue Bonds Weekly
VRDNs (Pinnacle Molded
Plastics)/(NBD Bank, Michigan LOC) NR/NR 1,000,000
-----------------------------------
885,000 Michigan Strategic Fund, Industrial
Improvement Revenue Bonds Weekly
VRDNs (Royal Oak Industries,
Inc.)/(Old Kent Bank & Trust LOC) A1/P-1 884,801
-----------------------------------
1,000,000 Michigan Strategic Fund, Industrial
Revenue Refunding Bonds Daily VRDNs
(Consumers Power) (UBS--Union Bank
of Switzerland LOC) NR/P-1 1,000,000
-----------------------------------
18
INDEPENDENCE ONE MICHIGAN MUNICIPAL CASH FUND
- --------------------------------------------------------------------------------
CREDIT
PRINCIPAL RATING*
AMOUNT S&P/MOODY'S VALUE
- ---------- ----------------------------------- ----------- -----------
SHORT-TERM MUNICIPALS (1)(2)--CONTINUED
- -----------------------------------------------
MICHIGAN--CONTINUED
-----------------------------------
$2,525,000 Michigan Strategic Fund, PCR Bonds
Weekly VRDNs (General Motors Corp.) A-/VMIG1 $ 2,525,000
-----------------------------------
885,000 Michigan Strategic Fund, Refunding
Revenue Bonds (Series B) Weekly
VRDNs (Riverfront Development Co.) NR/NR 885,000
-----------------------------------
3,000,000 Michigan Strategic Fund, Refunding
Revenue Bonds Weekly VRDNs
(Louisiana-Pacific Corp.)/(Wachovia
Bank & Trust Co. LOC) NR/Aa2 3,000,000
-----------------------------------
800,000 Michigan Strategic Fund, Resource
Recovery Improvement Bonds Weekly
VRDNs (Great Lakes Recovery
Systems)/(NBD Bank, Michigan LOC) A-1+/NR 800,000
-----------------------------------
1,000,000 Michigan Strategic Fund, Revenue
Bonds Weekly VRDNs (NBD Bank,
Michigan LOC) (Non-Ferrous Cast
Alloy) NR/NR 1,000,000
-----------------------------------
1,000,000 Michigan Strategic Fund, Revenue
Bonds Weekly VRDNs (YWY Investments
LLC)/(NBD Bank, Michigan LOC) NR/NR 1,000,000
-----------------------------------
4,900,000 Michigan Strategic Fund, Solid
Waste Disposal Revenue Bonds Weekly
VRDNs (Grayling
Generating)/(Barclays LOC) NR/VMIG1 4,900,000
-----------------------------------
100,000 Oakland County, MI EDC Weekly VRDNs (Michigan Christian
College)/(NBD
Bank, Michigan LOC) NR/NR 100,000
-----------------------------------
3,200,000 Oscoda, MI Area Shool District,
Student Aid Notes, 3.65% Bonds,
8/20/1999 NR/NR 3,200,468
-----------------------------------
2,600,000 Regents of University of Michigan, (Series A), 2.60% CP (Regents of
University of Michigan GTD),
Mandatory Tender 5/12/1999 A-1+/P-1 2,600,000
-----------------------------------
3,000,000 Regents of University of Michigan, (Series A), 2.70% CP (Regents of
University of Michigan GTD),
Mandatory Tender 5/4/1999 A-1+/P-1 3,000,000
-----------------------------------
1,000,000 Regents of University of Michigan, (Series A), 2.80% CP (Regents of
University of Michigan GTD),
Mandatory Tender 6/17/1999 A-1+/P-1 1,000,000
-----------------------------------
19
INDEPENDENCE ONE MICHIGAN MUNICIPAL CASH FUND
- --------------------------------------------------------------------------------
PRINCIPAL CREDIT
AMOUNT RATING*
OR SHARES S&P/MOODY'S VALUE
- ---------- ----------------------------------- ----------- -----------
SHORT-TERM MUNICIPALS (1)(2)--CONTINUED
- -----------------------------------------------
MICHIGAN--CONTINUED
-----------------------------------
$1,800,000 Vicksburg, MI Community Schools,
Student Aid Notes, 3.70% Bonds,
8/24/1999 NR/NR $ 1,800,546
-----------------------------------
1,945,000 Wayne County, MI , Airport Revenue
Bonds (Series B) Daily VRDNs
(Detroit Metropolitan
County)/(Bayerische Landesbank LOC) A-1+/VMIG1 1,945,000
----------------------------------- -----------
TOTAL SHORT-TERM MUNICIPALS 84,977,265
----------------------------------- -----------
MUTUAL FUND SHARES--1.3%
- -----------------------------------------------
1,094,000 Nuveen Tax Exempt Money Market Fund
(at net asset value) 1,094,000
----------------------------------- -----------
TOTAL INVESTMENTS (AT AMORTIZED
COST)(3) $86,071,265
----------------------------------- -----------
* Please refer to the Appendix of the Statement of Additional Information for
an explanation of the credit ratings. Current credit ratings are unaudited.
(1) At April 30, 1999, 15.6% of the total investments at market value were
subject to alternative minimum tax (unaudited).
(2) Rate reflects yield to maturity. (3) Also represents cost for federal tax
purposes.
Note: The categories of investments are shown as a percentage of net assets
($86,949,705) at April 30, 1999.
The following acronyms are used throughout this portfolio:
<TABLE>
<CAPTION>
<S> <C>
AMBAC-- American Municipal Bond Assurance LIQ--Liquidity Agreement
Corporation LLC--Limited Liability Corporation
CP--Commercial Paper LOC--Letter of Credit
EDC--Economic Development Corporation LT--Limited Tax
EDR--Economic Development Revenue MBIA--Municipal Bond Investors Assurance
FGIC--Financial Guaranty Insurance Company PCR--Pollution Control Revenue
GO--General Obligation PRF--Prerefunded
GTD--Guaranty TOBs--Tender Option Bonds
INS--Insured VRDNs--Variable Rate Demand Notes
</TABLE>
(See Notes which are an integral part of the Financial Statements)
20
INDEPENDENCE ONE MICHIGAN MUNICIPAL CASH FUND
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1999
- ----------------------------------------------------------------------------
ASSETS:
- -------------------------------------------------
Total investments in securities, at amortized
cost and value $86,071,265
- -------------------------------------------------
Cash 6,070
- -------------------------------------------------
Income receivable 936,617
- -------------------------------------------------
Receivable for shares sold 4,138
- ------------------------------------------------- -----------
Total assets 87,018,090
- -------------------------------------------------
LIABILITIES:
- ----------------------------------------
Income distribution payable $24,736
- ----------------------------------------
Payable to adviser 20,098
- ----------------------------------------
Accrued expenses 23,551
- ---------------------------------------- -------
Total liabilities 68,385
- ------------------------------------------------- -----------
NET ASSETS for 86,949,705 shares outstanding $86,949,705
- ------------------------------------------------- -----------
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER
SHARE:
- -------------------------------------------------
$86,949,705 DIVIDED BY 86,949,705 shares
outstanding $ 1.00
- ------------------------------------------------- -----------
(See Notes which are an integral part of the Financial Statements)
21
INDEPENDENCE ONE MICHIGAN MUNICIPAL CASH FUND
STATEMENT OF OPERATIONS
YEAR ENDED APRIL 30, 1999
- --------------------------------------------------------------------------------
INVESTMENT INCOME:
- ---------------------------------------------------
Interest $3,853,383
- ---------------------------------------------------
EXPENSES:
- ----------------------------------------
Investment advisory fee $ 467,103
- ----------------------------------------
Administrative personnel and services
fee 119,511
- ----------------------------------------
Custodian fees 24,851
- ----------------------------------------
Transfer and dividend disbursing agent
fees and expenses 35,156
- ----------------------------------------
Directors'/Trustees' fees 5,001
- ----------------------------------------
Auditing fees 13,500
- ----------------------------------------
Legal fees 5,351
- ----------------------------------------
Portfolio accounting fees 40,264
- ----------------------------------------
Share registration costs 9,594
- ----------------------------------------
Printing and postage 7,004
- ----------------------------------------
Insurance premiums 1,800
- ----------------------------------------
Miscellaneous 2,073
- ---------------------------------------- ---------
Total expenses 731,208
- ----------------------------------------
Waivers--
- ----------------------------------------
Waiver of investment advisory fee (175,163)
- ---------------------------------------- ---------
Net expenses 556,045
- --------------------------------------------------- ----------
Net investment income $3,297,338
- --------------------------------------------------- ----------
(See Notes which are an integral part of the Financial Statements)
22
INDEPENDENCE ONE MICHIGAN MUNICIPAL CASH FUND
STATEMENTS OF CHANGES IN NET ASSETS
- ------------------------------------------------------------
YEAR ENDED APRIL 30,
----------------------------
1999 1998
- ---------------------------------------- ------------- -------------
INCREASE (DECREASE) IN NET ASSETS:
- ----------------------------------------
OPERATIONS--
- ----------------------------------------
Net investment income $ 3,297,338 $ 2,990,068
- ---------------------------------------- ------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS--
- ----------------------------------------
Distributions from net investment income (3,297,338) (2,990,068)
- ---------------------------------------- ------------- -------------
SHARE TRANSACTIONS--
- ----------------------------------------
Proceeds from sale of shares 887,345,373 746,963,146
- ----------------------------------------
Net asset value of shares issued to
shareholders in payment of
distributions declared 2,517,212 2,382,308
- ----------------------------------------
Cost of shares redeemed (905,682,605) (730,595,042)
- ---------------------------------------- ------------- -------------
Change in net assets resulting from
share transactions (15,820,020) 18,750,412
- ---------------------------------------- ------------- -------------
Change in net assets (15,820,020) 18,750,412
- ----------------------------------------
NET ASSETS:
- ----------------------------------------
Beginning of period 102,769,725 84,019,313
- ---------------------------------------- ------------- -------------
End of period $ 86,949,705 $ 102,769,725
- ---------------------------------------- ------------- -------------
(See Notes which are an integral part of the Financial Statements)
23
INDEPENDENCE ONE MICHIGAN MUNICIPAL CASH FUND
FINANCIAL HIGHLIGHTS
- ------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
YEAR ENDED APRIL 30,
--------------------------------------------
1999 1998 1997 1996 1995
- ------------------------- ------- -------- ------- ------- -------
NET ASSET VALUE,
BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- -------------------------
INCOME FROM INVESTMENT
OPERATIONS
- -------------------------
Net investment income 0.03 0.03 0.03 0.03 0.03
- -------------------------
LESS DISTRIBUTIONS
- -------------------------
Distributions from net
investment income (0.03) (0.03) (0.03) (0.03) (0.03)
- ------------------------- ----- ----- ----- ----- -----
NET ASSET VALUE, END OF
PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ------------------------- ----- ----- ----- ----- -----
TOTAL RETURN (1) 2.85% 3.24% 3.04% 3.24% 2.81%
- -------------------------
RATIOS TO AVERAGE NET
ASSETS
- -------------------------
Expenses (2) 0.63% 0.65% 0.68% 0.73% 0.80%
- -------------------------
Net investment income
(2) 2.67% 3.03% 2.81% 2.98% 2.59%
- -------------------------
Expenses (after
waivers/reimbursements) 0.48% 0.49% 0.48% 0.53% 0.59%
- -------------------------
Net investment income
(after waivers/
reimbursements) 2.82% 3.19% 3.01% 3.18% 2.80%
- -------------------------
SUPPLEMENTAL DATA
- -------------------------
Net assets, end of
period (000 omitted) $86,950 $102,770 $84,019 $74,712 $66,856
- -------------------------
(1) Based on net asset value.
(2) During the period, certain fees were voluntarily waived or reimbursed. If
such voluntary waivers or reimbursements had not occurred, the ratios would
have been as indicated.
(See Notes which are an integral part of the Financial Statements)
24
INDEPENDENCE ONE MUTUAL FUNDS
COMBINED NOTES TO FINANCIAL STATEMENTS
APRIL 30, 1999
- ----------------------------------------------------------------------------
(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 nine portfolios. The financial
statements of the following portfolios (individually referred to as the "Fund,"
or collectively as the "Funds") are presented herein:
PORTFOLIO NAME INVESTMENT OBJECTIVE Independence One Prime
Money Market Fund ("Prime To provide current income consistent with Money
Market Fund") stability of principal. Independence One U.S. Treasury Money
Market Fund To provide current income consistent with ("U.S. Treasury Money
Market Fund") stability of principal. Independence One Michigan Municipal Cash
Fund To provide stability of income and current income ("Michigan Municipal
Cash Fund") exempt from federal regular income tax and
Michigan state income tax
consistent with stability of
principal.
The financial statements of the other portfolios are presented separately. The
assets of each portfolio are segregated and a shareholder's interest is limited
to the portfolio in which shares are held.
(2) SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Funds in the preparation of their financial statements. These
policies are in conformity with generally accepted accounting principles.
INVESTMENT VALUATIONS--The Funds use of the amortized cost method, which
approximates fair value, to value their portfolio securities is in
accordance with Rule 2a-7 under the Act. The Funds seek to maintain a stable
net asset value of $1.00 per share. 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 the value of collateral at least equals the
repurchase price to be paid under the repurchase agreement transaction.
25
INDEPENDENCE ONE MUTUAL FUNDS
- --------------------------------------------------------------------------------
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, 1999, capital paid-in for Prime Money Market Fund,
U.S. Treasury Money Market Fund, and Michigan Municipal Cash Fund
26
INDEPENDENCE ONE MUTUAL FUNDS
- --------------------------------------------------------------------------------
aggregated $633,573,586, $193,949,026, and $86,949,705, respectively.
Transactions in dollars and shares were as follows:
PRIME MONEY MARKET FUND
------------------------------
YEAR ENDED APRIL 30,
------------------------------
CLASS A SHARES 1999 1998
- ---------------------------------------- -------------- --------------
Shares sold 3,673,759,787 2,741,778,522
- ----------------------------------------
Shares issued to shareholders in payment
of distributions declared 13,830,889 10,455,588
- ----------------------------------------
Shares redeemed (3,634,911,834) (2,700,548,575)
- ---------------------------------------- -------------- --------------
Net change resulting from Class A Share
transactions 52,678,842 51,685,535
- ---------------------------------------- -------------- --------------
PRIME MONEY MARKET FUND
------------------------------
YEAR ENDED APRIL 30,
------------------------------
CLASS B SHARES 1999 1998
- ---------------------------------------- -------------- --------------
Shares sold 964,330,227 385,822,201
- ----------------------------------------
Shares issued to shareholders in payment
of distributions declared 3,455,859 3,385,679
- ----------------------------------------
Shares redeemed (858,136,411) (378,652,322)
- ---------------------------------------- -------------- --------------
Net change resulting from Class B Share
transactions 109,649,675 10,555,558
- ---------------------------------------- -------------- --------------
Net change resulting from share
transactions 162,328,517 62,241,093
- ---------------------------------------- -------------- --------------
U.S. TREASURY MONEY MARKET
FUND
------------------------------
YEAR ENDED APRIL 30,
------------------------------
1999 1998
-------------- --------------
- ----------------------------------------
Shares sold 2,423,407,738 2,653,184,433
- ----------------------------------------
Shares issued to shareholders in payment
of distributions declared 7,185,665 7,978,732
- ----------------------------------------
Shares redeemed (2,557,212,720) (2,585,884,188)
- ---------------------------------------- -------------- --------------
Net change resulting from share
transactions (126,619,317) 75,278,977
- ---------------------------------------- -------------- --------------
27
INDEPENDENCE ONE MUTUAL FUNDS
- --------------------------------------------------------------------------------
MICHIGAN MUNICIPAL
CASH FUND
------------------------------
YEAR ENDED APRIL 30,
------------------------------
1999 1998
- ---------------------------------------- -------------- --------------
Shares sold 887,345,373 746,963,146
- ----------------------------------------
Shares issued to shareholders in payment
of distributions declared 2,517,212 2,382,308
- ----------------------------------------
Shares redeemed (905,682,605) (730,595,042)
- ---------------------------------------- -------------- --------------
Net change resulting from share
transactions (15,820,020) 18,750,412
- ---------------------------------------- -------------- --------------
(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 received during any fiscal year shall be
at least $50,000 for each portfolio in the Trust. FAS may voluntarily choose
to waive a portion of its fee.
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.
28
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, 1999, 36.7% 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 8.3% of total investments.
(6) YEAR 2000 (UNAUDITED)
Similar to other financial organizations, the Funds could be adversely affected
if the computer systems used by the Funds' service providers do not properly
process and calculate date-related information and data from and after January
1, 2000. The Funds' Adviser and Administrator are taking measures that they
believe are reasonably designed to address the Year 2000 issue with respect to
computer systems that they use and to obtain reasonable assurances that
comparable steps are being taken by each of the Fund's other service providers.
At this time, however, there can be no assurance that these steps will be
sufficient to avoid any adverse impact to the Funds.
29
INDEPENDENT AUDITORS' REPORT
- ------------------------------------------------------------
The Board of Trustees and Shareholders INDEPENDENCE ONE MUTUAL FUNDS:
We have audited the accompanying statements of assets and liabilities of
Independence One Prime Money Market Fund, Independence One U.S. Treasury Money
Market Fund, and Independence One Michigan Municipal Cash Fund, each portfolios
of the Independence One Mutual Funds, including the portfolios of investments,
as of April 30, 1999, the related statements of operations for the year then
ended, the statements of changes in net assets for the each of the years in the
two-year period then ended, and the financial highlights for each of the years
in the five-year period then ended. 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 as of April
30, 1999, by correspondence with the custodian and brokers. 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,
1999, the results of their operations, changes in their net assets, and their
financial highlights for the periods indicated above in conformity with
generally accepted accounting principles.
[KPMG LLP SIGNATURE]
Boston, Massachusetts
June 16, 1999
30
TRUSTEES OFFICERS
- ------------------------------------------------------------
Robert E. Baker
Harold Berry
Nathan Forbes
Harry J. Nederlander
Thomas S. Wilson
Edward C. Gonzales
PRESIDENT AND TREASURER
Jeffrey W. Sterling
VICE PRESIDENT AND ASSISTANT TREASURER
C. Grant Anderson
SECRETARY
Timothy S. Johnson
ASSISTANT SECRETARY
MUTUAL FUNDS ARE NOT BANK DEPOSITS OR OBLIGATIONS, ARE NOT GUARANTEED BY ANY
BANK, AND ARE NOT INSURED OR GUARANTEED BY THE U.S. GOVERNMENT, THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER
GOVERNMENT AGENCY. INVESTMENT IN MUTUAL FUNDS INVOLVES INVESTMENT RISK,
INCLUDING POSSIBLE LOSS OF PRINCIPAL.
This report is authorized for distribution to prospective investors only when
preceded or accompanied by the Funds' prospectus which contains facts concerning
their objectives and policies, management fees, expenses and other information.
31
INDEPENDENCE ONE
MUTUAL FUNDS
5800 Corporate Drive
Pittsburgh, Pennsylvania 15237-7010
INVESTMENT ADVISER
Michigan National Bank
27777 Inkster Road
Mail Code 10-52
Farmington Hills, Michigan 48333-9065
DISTRIBUTOR
Federated Securities Corp.
Federated Investors Tower
1001 Liberty Avenue
Pittsburgh, Pennsylvania 15222-3779
CUSTODIAN
Michigan National Bank
27777 Inkster Road
Mail Code 10-52
Farmington Hills, Michigan 48333-9065
TRANSFER AGENT AND
DIVIDEND DISBURSING AGENT
Federated Shareholder
Services Company
P. O. Box 8600
Boston, Massachusetts 02266-8600
INDEPENDENT AUDITORS
KPMG LLP
99 High Street
Boston, Massachusetts 02110
[LOGO]
Cusip 453777208
Cusip 453777203
Cusip 453777302
Cusip 453777401
G01200-01 (6/99)
INDEPENDENCE ONE-REGISTERED TRADEMARK-
MUTUAL FUNDS
(DISTRIBUTED BY FEDERATED SECURITIES CORP.)
COMBINED
ANNUAL REPORT
TO SHAREHOLDERS
APRIL 30, 1999
- --------------------------------------
Independence One Prime
Money Market Fund
Independence One U.S. Treasury
Money Market Fund
Independence One Michigan
Municipal Cash Fund
- ---------------------------------------
- ---------------------------------------
- ---------------------------------------
- ---------------------------------------
- ---------------------------------------
- ---------------------------------------
- ---------------------------------------
- ---------------------------------------
[MICHIGAN NATIONAL BANK LOGO]
PRESIDENT'S MESSAGE
- ------------------------------------------------------------
Dear Investor:
I am pleased to present the Annual Report of Independence One Equity Plus Fund,
which covers the 12-month reporting period from May 1, 1998 through April 30,
1999. Inside, you'll find complete financial information for the fund --
beginning with the portfolio manager's discussion, followed by a listing of fund
holdings and the financial statements.
Your money is at work where it has the ability grow over time -- in a
diversified portfolio of high-quality stocks that, at the end of the reporting
period, included many household names like ALCOA, Inc., American Express Co.,
Avon Products, Inc., Brunswick Corp., Ford Motor Co., Disney (Walt) Co., DuPont
(E.I.) deNemours & Co., Hewlett-Packard Co., IBM, Intel Corp., Johnson &
Johnson, McDonald's Corp., Microsoft Corp., Pepsico, Inc., Wal-Mart Stores, Inc.
and Xerox Corp.
While the environment was highly volatile, the stock market's upward momentum
continued. As a result, the fund produced a 12-month total return of 26.10% as
the fund's net asset value increased from $18.24 to $22.02*. The fund also paid
income distributions totaling $0.18 per share and capital gains totaling $0.66
per share. The fund ended the reporting period with $295.4 million in assets.
In addition, the fund maintained its 88888 overall Morningstar Rating-TM- out of
2,976 domestic equity funds as of April 30, 1999.** This is Morningstar's
highest rating for risk-adjusted fund performance, and places the fund in the
top 10% of its category.
Thank you for selecting Independence One Equity Plus Fund to pursue the
long-term performance potential of stocks. We look forward to keeping you
informed about the progress of your investment.
Sincerely,
[EDWARD C. GONZALES SIGNATURE]
Edward C. Gonzales
President
June 16, 1999
* PERFORMANCE QUOTED REPRESENTS PAST PERFORMANCE AND IS NOT INDICATIVE OF FUTURE
RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE, SO THAT AN
INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR
ORIGINAL COST.
**MORNINGSTAR PROPRIETARY RATINGS REFLECT RISK-ADJUSTED PERFORMANCE THROUGH
4/30/99. THEY ARE SUBJECT TO CHANGE EVERY MONTH. PAST PERFORMANCE IS NO
GUARANTEE OF FUTURE RESULTS. RATINGS ARE CALCULATED FROM THE FUNDS' 3-, 5-,
AND 10-YEAR AVERAGE ANNUAL RETURNS IN EXCESS OF 90-DAY TREASURY BILL RETURNS
WITH APPROPRIATE FEE ADJUSTMENTS, AND A RISK FACTOR THAT REFLECTS FUND
PERFORMANCE BELOW 90-DAY T-BILL RETURNS. THE TOP 10% OF FUNDS IN A BROAD ASSET
CLASS RECEIVE 5 STARS; THE NEXT 22.5% RECEIVE 4 STARS; THE MIDDLE 35% RECEIVE
3 STARS; THE NEXT 22.5% RECEIVE 2 STARS AND THE BOTTOM 10% RECEIVE 1 STAR. THE
FUND'S 3-YEAR RATING WAS: 88888 OUT OF 2,976 DOMESTIC EQUITY FUNDS AS OF
4/30/99.
1
INVESTMENT REVIEW
- ------------------------------------------------------------
Q
What are your comments on the stock market's upward momentum during the
fiscal year, which has been largely driven by large-cap growth stocks and
internet issues?
A
Through March, the divergence between the large-cap and small-cap market
sectors has continued as investors continued to pour money into the
securities market. In April, we began to see the beginning of a change in
market leadership for the first time in several years. The market breadth
expanded, and we saw the beginning of a rotation out of market-leading stocks,
such as technology and internet companies, and into cyclical and small-cap
companies.
Q
What was the total return of Independence One Equity Plus Fund during the
12-month reporting period ended April 30, 1999 compared to the Standard &
Poor's 100 Composite Price Index (S&P 100)*?
A
The fund produced a total return of 26.10%** compared to the S&P 100 total
return of 27.65%.
Q
What are the fund's top ten holdings at the end of the reporting period?
A
NAME % OF PORTFOLIO
- -------------------------------------------------- --------------
Microsoft Corp. 7.7
General Electric Co. 6.5
Wal-Mart Stores, Inc. 3.8
Intel Corp. 3.8
Exxon Corp. 3.8
International Business
Machines Corp. 3.6
Cisco Systems, Inc. 3.4
Citigroup, Inc. 3.2
Merck & Co. 3.1
Coca Cola Co. 3.1
Q
As we reach mid year, the U.S. economy remains strong and inflation is
subdued as a highly valued market marches on. What factors may influence the
direction of the market for the rest of 1999?
A
It is expected that the two most important factors that will influence the
market will be whether the Federal Reserve Board decides to move on its
recently announced tightening bias to slow down the economy, and investor
pessimism, or lack thereof, regarding the Year 2000 (Y2K) compliance situation.
*STANDARD & POOR'S 100 COMPOSITE STOCK INDEX IS A COMPOSITE INDEX OF COMMON
STOCKS IN INDUSTRY, TRANSPORTATION, AND FINANCIAL AND PUBLIC UTILITY COMPANIES
AND CAN BE USED TO COMPARE THE TOTAL RETURNS OF FUNDS WHOSE PORTFOLIOS ARE
INVESTED PRIMARILY IN COMMON STOCKS. THE INDEX IS UNMANAGED AND INVESTMENTS
CANNOT BE MADE IN AN INDEX. STANDARD & POOR'S-REGISTERED TRADEMARK-,
"S&P-REGISTERED TRADEMARK-", AND "S&P 100-REGISTERED TRADEMARK-" ARE TRADEMARKS
OF THE MCGRAW-HILL COMPANIES, INC. AND HAVE BEEN LICENSED FOR USE BY
INDEPENDENCE ONE EQUITY PLUS FUND. THE FUND IS NOT SPONSORED, ENDORSED, SOLD OR
PROMOTED BY OR AFFILIATED WITH STANDARD & POOR'S.
**PERFORMANCE QUOTED REPRESENTS PAST PERFORMANCE AND IS NOT INDICATIVE OF FUTURE
RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE, SO THAT AN
INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR
ORIGINAL COST.
2
INDEPENDENCE ONE EQUITY PLUS FUND
- ------------------------------------------------------------
GROWTH OF $10,000 INVESTED IN INDEPENDENCE ONE EQUITY PLUS FUND
The graph below illustrates the hypothetical investment of $10,000* in the
Independence One Equity Plus Fund (the "Fund") from September 25, 1995 (start of
performance) to April 30, 1999, compared to the Standard & Poor's 100 Composite
Stock Price Index.+
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
INDEPENDENCE STANDARD & POOR'S
One Equity 100 Composite
Plus Fund Stock Price Index
9/25/95 10,000 10,000
4/30/96 11,496 12,540
4/30/97 14,485 15,952
4/30/98 19,873 20,261
4/30/99 25,060 25,863
(GRAPHIC REPRESENTATION OMITTED. PLEASE SEE APPENDIX A1.)
AVERAGE ANNUAL TOTAL RETURN FOR THE PERIOD ENDED APRIL 30, 1999
1 Year .................................................................. 26.10%
Start of Performance (9/25/95) .......................................... 29.10%
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 THEIR 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 Standard & Poor's 100 Composite Stock Price Index has been
adjusted to reflect reinvestment of dividends on securities in the index.
+The Standard & Poor's 100 Composite Stock Price 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.
3
INDEPENDENCE ONE EQUITY PLUS FUND
PORTFOLIO OF INVESTMENTS
APRIL 30, 1999
- ----------------------------------------------------------------------------
SHARES VALUE
- ---------- ---------------------------------------- ------------
COMMON STOCKS--97.8%
- ----------------------------------------------------
AEROSPACE & DEFENSE--2.1%
----------------------------------------
51,800 Boeing Co. $ 2,104,375
----------------------------------------
7,000 General Dynamics Corp. 491,750
----------------------------------------
18,600 Raytheon Co., Class B 1,306,650
----------------------------------------
10,500 Rockwell International Corp. 542,063
----------------------------------------
12,500 United Technologies Corp. 1,810,938
---------------------------------------- ------------
Total 6,255,776
---------------------------------------- ------------
AUTOMOTIVE--2.5%
----------------------------------------
66,800 Ford Motor Co. 4,271,025
----------------------------------------
36,100 General Motors Corp. 3,210,644
---------------------------------------- ------------
Total 7,481,669
---------------------------------------- ------------
BASIC INDUSTRY--0.4%
----------------------------------------
20,300 ALCOA, Inc. 1,263,675
---------------------------------------- ------------
CAPITAL GOODS--0.7%
----------------------------------------
13,200 Homestake Mining Co. 126,225
----------------------------------------
22,200 Minnesota Mining & Manufacturing Co. 1,975,800
---------------------------------------- ------------
Total 2,102,025
---------------------------------------- ------------
CHEMICALS--2.6%
----------------------------------------
12,200 Dow Chemical Co. 1,600,488
----------------------------------------
62,200 Du Pont (E.I.) de Nemours & Co. 4,392,875
----------------------------------------
3,900 Mallinckrodt, Inc. 136,744
----------------------------------------
34,600 Monsanto Co. 1,565,650
---------------------------------------- ------------
Total 7,695,757
---------------------------------------- ------------
COMMERCIAL SERVICES--1.4%
----------------------------------------
60,700 Ameritech Corp. 4,154,156
---------------------------------------- ------------
COMPUTER SERVICES--17.3%
----------------------------------------
7,800 (1) Ceridian Corp. 285,675
----------------------------------------
87,201 (1) Cisco Systems, Inc. 9,946,307
----------------------------------------
4
INDEPENDENCE ONE EQUITY PLUS FUND
- --------------------------------------------------------------------------------
SHARES VALUE
- ---------- ---------------------------------------- ------------
COMMON STOCKS--CONTINUED
- ----------------------------------------------------
COMPUTER SERVICES--CONTINUED
----------------------------------------
8,800 (1) Computer Sciences Corp. $ 524,150
----------------------------------------
56,000 Hewlett-Packard Co. 4,417,000
----------------------------------------
51,000 International Business Machines Corp. 10,668,563
----------------------------------------
278,500 (1) Microsoft Corp. 22,645,531
----------------------------------------
79,450 (1) Oracle Corp. 2,150,116
----------------------------------------
14,400 (1) Unisys Corp. 452,700
---------------------------------------- ------------
Total 51,090,042
---------------------------------------- ------------
CONSUMER BASICS--1.1%
----------------------------------------
25,000 American Express Co. 3,267,188
---------------------------------------- ------------
CONSUMER NON-DURABLES--2.7%
----------------------------------------
24,500 Campbell Soup Co. 1,004,500
----------------------------------------
73,300 Procter & Gamble Co. 6,876,456
---------------------------------------- ------------
Total 7,880,956
---------------------------------------- ------------
ELECTRICAL EQUIPMENT--7.3%
----------------------------------------
4,900 Black & Decker Corp. 278,075
----------------------------------------
13,600 Entergy Corp. 425,000
----------------------------------------
180,700 General Electric Co. 19,063,850
----------------------------------------
7,000 Honeywell, Inc. 663,250
----------------------------------------
38,500 Southern Co. 1,041,906
---------------------------------------- ------------
Total 21,472,081
---------------------------------------- ------------
ELECTRONIC TECHNOLOGY--4.6%
----------------------------------------
184,200 Intel Corp. 11,270,738
----------------------------------------
9,200 (1) National Semiconductor Corp. 115,000
----------------------------------------
2,400 Polaroid Corp. 49,500
----------------------------------------
2,600 Tektronix, Inc. 63,050
----------------------------------------
21,500 Texas Instruments, Inc. 2,195,688
---------------------------------------- ------------
Total 13,693,976
---------------------------------------- ------------
ENTERTAINMENT--1.3%
----------------------------------------
113,500 Disney (Walt) Co. 3,603,625
----------------------------------------
5
INDEPENDENCE ONE EQUITY PLUS FUND
- --------------------------------------------------------------------------------
SHARES VALUE
- ---------- ---------------------------------------- ------------
COMMON STOCKS--CONTINUED
- ----------------------------------------------------
ENTERTAINMENT--CONTINUED
----------------------------------------
7,000 (1) Harrah's Entertainment, Inc. $ 154,000
---------------------------------------- ------------
Total 3,757,625
---------------------------------------- ------------
FINANCE--8.6%
----------------------------------------
64,900 Bank One Corp. 3,829,100
----------------------------------------
95,600 Bank of America Corp. 6,883,200
----------------------------------------
124,600 Citigroup, Inc. 9,376,150
----------------------------------------
40,200 U.S. Bancorp, Inc. 1,489,913
----------------------------------------
90,800 Wells Fargo & Co. 3,921,425
---------------------------------------- ------------
Total 25,499,788
---------------------------------------- ------------
FINANCIAL SERVICES--0.8%
----------------------------------------
12,900 Hartford Financial Services Group, Inc. 760,294
----------------------------------------
19,600 Merrill Lynch & Co., Inc. 1,645,175
---------------------------------------- ------------
Total 2,405,469
---------------------------------------- ------------
FOOD & BEVERAGE--5.7%
----------------------------------------
136,000 Coca-Cola Co. 9,248,000
----------------------------------------
20,000 Heinz (H.J.) Co. 933,750
----------------------------------------
74,700 McDonald's Corp. 3,165,413
----------------------------------------
81,000 PepsiCo, Inc. 2,991,938
----------------------------------------
18,100 Ralston Purina Co. 552,050
---------------------------------------- ------------
Total 16,891,151
---------------------------------------- ------------
FOREST PRODUCTS & PAPER--0.8%
----------------------------------------
3,100 Boise Cascade Corp. 124,775
----------------------------------------
5,300 Champion International Corp. 289,844
----------------------------------------
22,600 International Paper Co. 1,204,863
----------------------------------------
11,000 Weyerhaeuser Co. 738,375
---------------------------------------- ------------
Total 2,357,857
---------------------------------------- ------------
HOME BUILDING--0.1%
----------------------------------------
4,200 Fluor Corp. 140,175
---------------------------------------- ------------
6
INDEPENDENCE ONE EQUITY PLUS FUND
- --------------------------------------------------------------------------------
SHARES VALUE
- ---------- ---------------------------------------- ------------
COMMON STOCKS--CONTINUED
- ----------------------------------------------------
HOSPITAL SUPPLIES--0.6%
----------------------------------------
15,800 Baxter International, Inc. $ 995,400
----------------------------------------
35,600 Columbia/HCA Healthcare Corp. 878,875
---------------------------------------- ------------
Total 1,874,275
---------------------------------------- ------------
HOUSEHOLD PRODUCTS--0.6%
----------------------------------------
16,200 Colgate-Palmolive Co. 1,659,488
---------------------------------------- ------------
INSURANCE--3.4%
----------------------------------------
13,900 American General Corp. 1,028,600
----------------------------------------
67,800 American International Group, Inc. 7,962,263
----------------------------------------
11,400 CIGNA Corp. 993,938
---------------------------------------- ------------
Total 9,984,801
---------------------------------------- ------------
MANUFACTURING--0.5%
----------------------------------------
10,800 Allegheny Teledyne, Inc. 241,650
----------------------------------------
17,900 Eastman Kodak Co. 1,335,788
---------------------------------------- ------------
Total 1,577,438
---------------------------------------- ------------
OFFICE EQUIPMENT--0.8%
----------------------------------------
4,400 Harris Corp. 152,075
----------------------------------------
36,100 Xerox Corp. 2,120,875
---------------------------------------- ------------
Total 2,272,950
---------------------------------------- ------------
OIL--7.3%
----------------------------------------
18,000 Atlantic Richfield Co. 1,510,875
----------------------------------------
18,100 Baker Hughes, Inc. 540,738
----------------------------------------
11,704 Coastal Corp. 447,678
----------------------------------------
134,300 Exxon Corp. 11,155,294
----------------------------------------
24,300 Halliburton Co. 1,035,788
----------------------------------------
43,100 Mobil Corp. 4,514,725
----------------------------------------
19,100 Occidental Petroleum Corp. 385,581
----------------------------------------
30,100 Schlumberger Ltd. 1,922,638
---------------------------------------- ------------
Total 21,513,317
---------------------------------------- ------------
7
INDEPENDENCE ONE EQUITY PLUS FUND
- --------------------------------------------------------------------------------
SHARES VALUE
- ---------- ---------------------------------------- ------------
COMMON STOCKS--CONTINUED
- ----------------------------------------------------
PERSONAL CARE PRODUCTS--0.3%
----------------------------------------
14,500 Avon Products, Inc. $ 787,531
----------------------------------------
5,900 International Flavors & Fragrances, Inc. 233,050
---------------------------------------- ------------
Total 1,020,581
---------------------------------------- ------------
PHARMACEUTICALS--8.5%
----------------------------------------
109,800 Bristol-Myers Squibb Co. 6,979,163
----------------------------------------
74,300 Johnson & Johnson 7,244,250
----------------------------------------
131,500 Merck & Co., Inc. 9,237,875
----------------------------------------
28,100 Pharmacia & Upjohn, Inc. 1,573,600
---------------------------------------- ------------
Total 25,034,888
---------------------------------------- ------------
RECREATION--0.0%
----------------------------------------
5,100 Brunswick Corp. 122,400
---------------------------------------- ------------
RETAIL--5.0%
----------------------------------------
27,200 (1) K Mart Corp. 404,600
----------------------------------------
12,500 Limited, Inc. 546,875
----------------------------------------
19,400 May Department Stores Co. 772,363
----------------------------------------
21,200 Sears, Roebuck & Co. 975,200
----------------------------------------
5,500 Tandy Corp. 398,406
----------------------------------------
13,900 (1) Toys 'R' Us, Inc. 302,325
----------------------------------------
247,100 Wal-Mart Stores, Inc. 11,366,600
---------------------------------------- ------------
Total 14,766,369
---------------------------------------- ------------
SERVICES--0.6%
----------------------------------------
39,000 CBS Corp. 1,776,938
---------------------------------------- ------------
STEEL--0.0%
----------------------------------------
7,200 (1) Bethlehem Steel Corp. 65,700
---------------------------------------- ------------
TELECOMMUNICATIONS--8.5%
----------------------------------------
173,850 AT&T Corp. 8,779,425
----------------------------------------
85,700 Bell Atlantic Corp. 4,938,463
----------------------------------------
145,000 Lucent Technologies, Inc. 8,718,125
----------------------------------------
8
INDEPENDENCE ONE EQUITY PLUS FUND
- --------------------------------------------------------------------------------
SHARES OR
PRINCIPAL
AMOUNT VALUE
- ---------- ---------------------------------------- ------------
COMMON STOCKS--CONTINUED
- ----------------------------------------------------
TELECOMMUNICATIONS--CONTINUED
----------------------------------------
36,600 Nortel Networks Corp. $ 2,495,663
---------------------------------------- ------------
Total 24,931,676
---------------------------------------- ------------
TRANSPORTATION--1.0%
----------------------------------------
25,900 Burlington Northern Santa Fe 948,588
----------------------------------------
7,800 Delta Air Lines, Inc. 494,813
----------------------------------------
8,200 (1) FDX Corp. 923,013
----------------------------------------
20,900 Norfolk Southern Corp. 683,164
---------------------------------------- ------------
Total 3,049,578
---------------------------------------- ------------
UTILITIES--0.4%
----------------------------------------
23,600 Williams Cos., Inc. (The) 1,115,100
---------------------------------------- ------------
UTILITIES-ELECTRIC--0.3%
----------------------------------------
10,600 American Electric Power Co., Inc. 439,230
----------------------------------------
12,000 Unicom Corp. 465,750
---------------------------------------- ------------
Total 904,980
---------------------------------------- ------------
TOTAL COMMON STOCKS (IDENTIFIED COST
$141,624,321) 289,079,845
---------------------------------------- ------------
REPURCHASE AGREEMENT (2)--2.1%
- ----------------------------------------------------
Dean Witter Reynolds, Inc., 4.85%, dated
4/30/1999, due 5/3/1999 (AT COST) 6,090,000
$6,090,000
---------------------------------------- ------------
TOTAL INVESTMENTS (IDENTIFIED COST
$147,714,321)(3) $295,169,845
---------------------------------------- ------------
(1) Non-income producing security.
(2) The repurchase agreement is fully collateralized by U.S. Treasury
obligations based on market prices at the date of the portfolio.
(3) The cost of investments for federal tax purposes amounts to $148,102,894.
The net unrealized appreciation of investments on a federal tax basis
amounts to $147,066,951 which is comprised of $147,869,557 appreciation and
$802,606 depreciation at April 30, 1999.
Note: The categories of investments are shown as a percentage of net assets
($295,436,104) at April 30, 1999.
(See Notes which are an integral part of the Financial Statements)
9
INDEPENDENCE ONE EQUITY PLUS FUND
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1999
- ----------------------------------------------------------------------------
ASSETS:
- --------------------------------------------------
Total investments in securities, at value
(identified cost $147,714,321 and tax cost
$148,102,894) $295,169,845
- --------------------------------------------------
Income receivable 243,828
- --------------------------------------------------
Receivable for shares sold 675,486
- --------------------------------------------------
Unamortized organizational costs 7,998
- --------------------------------------------------
Other assets 5,762
- -------------------------------------------------- ------------
Total assets 296,102,919
- --------------------------------------------------
LIABILITIES:
- ----------------------------------------
Payable for investments purchased $298,746
- ----------------------------------------
Payable for shares redeemed 237,837
- ----------------------------------------
Payable to bank 14,123
- ----------------------------------------
Payable to adviser 72,841
- ----------------------------------------
Other accrued expenses 43,268
- ---------------------------------------- --------
Total liabilities 666,815
- -------------------------------------------------- ------------
Net Assets for 13,413,979 shares outstanding $295,436,104
- -------------------------------------------------- ------------
NET ASSETS CONSIST OF:
- --------------------------------------------------
Paid in capital $145,551,456
- --------------------------------------------------
Net unrealized appreciation of investments 147,455,524
- --------------------------------------------------
Accumulated net realized gain on investments 2,314,955
- --------------------------------------------------
Undistributed net investment income 114,169
- -------------------------------------------------- ------------
Total Net Assets $295,436,104
- -------------------------------------------------- ------------
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER
SHARE:
- --------------------------------------------------
$295,436,104 DIVIDED BY 13,413,979 shares
outstanding $22.02
- -------------------------------------------------- ------------
(See Notes which are an integral part of the Financial Statements)
10
INDEPENDENCE ONE EQUITY PLUS FUND
STATEMENT OF OPERATIONS
YEAR ENDED APRIL 30, 1999
- --------------------------------------------------------------------------------
INVESTMENT INCOME:
- ----------------------------------------------------
Dividends $ 3,096,016
- ----------------------------------------------------
Interest 317,158
- ---------------------------------------------------- -----------
Total income 3,413,174
- ----------------------------------------------------
EXPENSES:
- ----------------------------------------
Investment advisory fee $ 946,337
- ----------------------------------------
Administrative personnel and services
fee 241,610
- ----------------------------------------
Custodian fees 45,707
- ----------------------------------------
Transfer and dividend disbursing agent
fees and expenses 20,181
- ----------------------------------------
Directors'/Trustees' fees 9,288
- ----------------------------------------
Auditing fees 13,000
- ----------------------------------------
Legal fees 5,404
- ----------------------------------------
Portfolio accounting fees 63,941
- ----------------------------------------
Share registration costs 32,481
- ----------------------------------------
Printing and postage 9,431
- ----------------------------------------
Insurance premiums 1,732
- ----------------------------------------
Amortization of organization costs 6,376
- ----------------------------------------
Miscellaneous 4,747
- ---------------------------------------- ----------
Total expenses 1,400,235
- ----------------------------------------
Waiver--
- ----------------------------------------
Waiver of investment advisory fee (259,906)
- ---------------------------------------- ----------
Net expenses 1,140,329
- ---------------------------------------------------- -----------
Net investment income 2,272,845
- ---------------------------------------------------- -----------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
- ----------------------------------------------------
Net realized gain on investments 7,942,700
- ----------------------------------------------------
Net change in unrealized appreciation of investments 49,664,022
- ---------------------------------------------------- -----------
Net realized and unrealized gain on investments 57,606,722
- ---------------------------------------------------- -----------
Change in net assets resulting from
operations $59,879,567
- ---------------------------------------------------- -----------
(See Notes which are an integral part of the Financial Statements)
11
INDEPENDENCE ONE EQUITY PLUS FUND
STATEMENTS OF CHANGES IN NET ASSETS
- ------------------------------------------------------------
YEAR ENDED APRIL 30,
--------------------------
1999 1998
- ---------------------------------------- ------------ ------------
INCREASE (DECREASE) IN NET ASSETS:
- ----------------------------------------
OPERATIONS--
- ----------------------------------------
Net investment income $ 2,272,845 $ 2,434,695
- ----------------------------------------
Net realized gain on investments
($8,229,214 and $8,551,167,
respectively, as computed for federal
tax purposes) 7,942,700 8,506,760
- ----------------------------------------
Net change in unrealized appreciation of
investments 49,664,022 48,813,788
- ---------------------------------------- ------------ ------------
Change in net assets resulting from
operations 59,879,567 59,755,243
- ---------------------------------------- ------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS--
- ----------------------------------------
Distributions from net investment income (2,243,571) (2,497,120)
- ----------------------------------------
Distributions from net realized gains (8,436,196) (7,427,247)
- ---------------------------------------- ------------ ------------
Change in net assets resulting from
distributions to shareholders (10,679,767) (9,924,367)
- ---------------------------------------- ------------ ------------
SHARE TRANSACTIONS--
- ----------------------------------------
Proceeds from sale of shares 86,195,491 29,050,872
- ----------------------------------------
Net asset value of shares issued to
shareholders in payment of distributions
declared 8,272,236 6,777,113
- ----------------------------------------
Cost of shares redeemed (57,984,567) (45,233,940)
- ---------------------------------------- ------------ ------------
Change in net assets resulting from
share transactions 36,483,160 (9,405,955)
- ---------------------------------------- ------------ ------------
Change in net assets 85,682,960 40,424,921
- ----------------------------------------
NET ASSETS:
- ----------------------------------------
Beginning of period 209,753,144 169,328,223
- ---------------------------------------- ------------ ------------
End of period (including undistributed
net investment income of $114,169 and
$84,895, respectively) $295,436,104 $209,753,144
- ---------------------------------------- ------------ ------------
(See Notes which are an integral part of the Financial Statements)
12
INDEPENDENCE ONE EQUITY PLUS FUND
FINANCIAL HIGHLIGHTS
- ------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
YEAR ENDED APRIL 30,
------------------------------------------------
1999 1998 1997 1996 (1)
- ------------------------------ -------- -------- -------- --------
NET ASSET VALUE, BEGINNING OF
PERIOD $18.24 $14.04 $11.39 $10.00
- ------------------------------
INCOME FROM INVESTMENT
OPERATIONS
- ------------------------------
Net investment income 0.18 0.22 0.21 0.11
- ------------------------------
Net realized and unrealized
gain on investments 4.44 4.85 2.70 1.38
- ------------------------------ ------ ------ ------ ------
Total from investment
operations 4.62 5.07 2.91 1.49
- ------------------------------ ------ ------ ------ ------
LESS DISTRIBUTIONS
- ------------------------------
Distributions from net
investment income (0.18) (0.22) (0.21) ) (0.10
- ------------------------------
Distributions from net
realized gain on investments (0.66) (0.65) (0.05) --
- ------------------------------ ------ ------ ------ ------
Total distributions (0.84) (0.87) (0.26) ) (0.10
- ------------------------------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD $ 22.02 $ 18.24 $ 14.04 $ 11.39
- ------------------------------ ------ ------ ------ ------
TOTAL RETURN (2) 26.10% 37.20% 26.00% % 14.96
- ------------------------------
RATIOS TO AVERAGE NET ASSETS
- ------------------------------
Expenses (3) 0.59% 0.61% 0.64% %* 0.70
- ------------------------------
Net investment income (3) 0.85% 1.09% 1.50% %* 1.61
- ------------------------------
Expenses (after
waivers/reimbursements) 0.48% 0.42% 0.40% %* 0.39
- ------------------------------
Net investment income (after
waivers/reimbursements) 0.96% 1.28% 1.74% %* 1.92
- ------------------------------
SUPPLEMENTAL DATA
- ------------------------------
Net assets, end of period
(000 omitted) $295,436 $209,753 $169,328 $112,609
- ------------------------------
Portfolio turnover 19% 11% 8% % 6
- ------------------------------
</TABLE>
* Computed on an annualized basis.
(1) Reflects operations for the period from September 25, 1995 (date of initial
public investment) to April 30, 1996.
(2) Based on net asset value.
(3) During the period, certain fees were voluntarily waived or reimbursed. If
such voluntary waivers or reimbursements had not occurred, the ratios would
have been as indicated.
(See Notes which are an integral part of the Financial Statements)
13
INDEPENDENCE ONE EQUITY PLUS FUND
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 1999
- ----------------------------------------------------------------------------
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 nine portfolios. The financial
statements included herein are only those of Independence One Equity Plus Fund
(the "Fund"). The financial statements of the other portfolios are presented
separately. The assets of each portfolio are segregated and a shareholder's
interest is limited to the portfolio in which shares are held. The investment
objective is total return.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles.
INVESTMENT VALUATIONS--Listed equity securities are valued at the last sale
price reported on a national securities exchange. Short-term securities are
valued at the prices provided by an independent pricing service. However,
short-term securities with remaining maturities of sixty days or less at the
time of purchase may be valued at amortized cost, which approximates fair
market value. Investment gains and losses are determined on the identified
cost basis.
REPURCHASE AGREEMENTS--It is the policy of the Fund to require the custodian
bank to take possession, to have legally segregated in the Federal Reserve
Book Entry System, or to have segregated within the custodian bank's vault,
all securities held as collateral under repurchase agreement transactions.
Additionally, procedures have been established by the Fund to monitor, on a
daily basis, the market value of each repurchase agreement's collateral to
ensure that the value of collateral at least equals the repurchase price to
be paid under the repurchase agreement transaction.
The Fund will only enter into repurchase agreements with banks and other
recognized financial institutions, such as broker/dealers, which are deemed
by the Fund's adviser to be creditworthy pursuant to the guidelines and/or
standards reviewed or established by the Board of Trustees (the "Trustees").
Risks may arise from the potential inability of counterparties to honor the
terms of the repurchase agreement. Accordingly, the Fund could receive less
than the repurchase price on the sale of collateral securities.
INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS--Interest income and expenses
are accrued daily. Bond premium and discount, if applicable, are amortized
as required by the Internal Revenue Code, as amended (the "Code"). Dividend
income and distributions to shareholders are recorded on the ex-dividend
date.
14
INDEPENDENCE ONE EQUITY PLUS FUND
- --------------------------------------------------------------------------------
Distributions are determined in accordance with income tax regulations which
may differ from generally accepted accounting principles. The following
reclassification has been made to the financial statements.
INCREASE (DECREASE)
- -------------------------------------
ACCUMULATED
NET REALIZED
PAID IN CAPITAL GAIN ON INVESTMENTS
- --------------- -------------------
1,025 (1,025)
Net investment income, net realized gains/losses, and net assets were not
affected by this reclassification.
FEDERAL TAXES--It is the Fund's policy to comply with the provisions of the
Code applicable to regulated investment companies and to distribute to
shareholders each year substantially all of its income. Accordingly, no
provisions for federal tax are necessary.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Fund may engage in
when-issued or delayed delivery transactions. The Fund records when-issued
securities on the trade date and maintains security positions such that
sufficient liquid assets will be available to make payment for the
securities purchased. Securities purchased on a when-issued or delayed
delivery basis are marked to market daily and begin earning interest on the
settlement date.
ORGANIZATIONAL EXPENSES--Organizational expenses of $23,832 were borne
initially by the Adviser. The Fund has reimbursed the Adviser for these
expenses. These expenses have been deferred and are being amortized over the
five year period following the Fund's effective date. For the year ended
April 30, 1999, the Fund expensed $6,376 of organizational expenses.
USE OF ESTIMATES--The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts of assets, liabilities,
expenses and revenues reported in the financial statements. Actual results
could differ from those estimated.
OTHER--Investment transactions are accounted for on the trade date.
3. SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value).
Transactions in shares were as follows:
YEAR ENDED APRIL 30,
------------------------
1999 1998
----------- -----------
Shares sold 4,537,809 1,818,823
- ----------------------------------------
Shares issued to shareholders in payment
of distributions declared 430,398 436,421
- ----------------------------------------
Shares redeemed (3,050,713) (2,818,913)
- ---------------------------------------- ----------- -----------
Net change resulting from share
transactions 1,917,494 (563,669)
- ---------------------------------------- ----------- -----------
15
INDEPENDENCE ONE EQUITY PLUS FUND
- --------------------------------------------------------------------------------
4. INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE--Michigan National Bank, the Fund's investment
adviser (the "Adviser"), earns for its services an annual investment
advisory fee equal to 0.40% of the Fund's average daily net assets. The
Adviser may voluntarily choose to waive any portion of its fee. The Adviser
can modify or terminate this voluntary waiver at any time at its sole
discretion.
Under the terms of a sub-advisory agreement between the Adviser and the
Sosnoff Sheridan Corporation, Sosnoff Sheridan Corporation receives an
annual fee from the Adviser equal to .035% of the average daily net value of
the Fund's equity securities. Sosnoff Sheridan Corporation may voluntarily
choose to reduce its compensation.
ADMINISTRATIVE FEE--Federated Administrative Services ("FAS") provides the
Fund with certain administrative personnel and services. The fee paid to FAS
is based on the level of average aggregate net assets of the Trust for the
period. The administrative fee received during any fiscal year shall be at
least $50,000 for each portfolio in the Trust. FAS may voluntarily choose to
waive a portion of its fee.
TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES--Federated Services
Company ("FServ"), through its subsidiary, Federated Shareholder Services
Company ("FSSC"), serves as transfer and dividend disbursing agent for the
Fund. The fee paid to FSSC is based on the size, type, and number of
accounts and transactions made by shareholders.
PORTFOLIO ACCOUNTING FEES--FServ maintains the Fund's accounting records for
which it receives a fee. The fee is based on the level of the Fund's average
daily net assets for the period, plus out-of-pocket expenses.
CUSTODIAN FEES--Michigan National Bank is the Fund's custodian. The fee is
based on the level of the Fund's average daily net assets for the period,
plus out-of-pocket expenses.
GENERAL--Certain of the Officers of the Trust are Officers and/or Directors
or Trustees of the above companies.
5. INVESTMENT TRANSACTIONS
Purchases and sales of investments, excluding short-term securities, for the
year ended April 30, 1999, were as follows:
- --------------------------------------------------
Purchases $68,457,506
- -------------------------------------------------- -----------
Sales $42,954,830
- -------------------------------------------------- -----------
6. YEAR 2000 (UNAUDITED)
Similar to other financial organizations, the Fund could be adversely affected
if the computer systems used by the Fund's service providers do not properly
process and calculate date-related information and data from and after January
1, 2000. The Fund's Adviser and administrator are taking measures that they
believe are reasonably designed to address the Year 2000 issue with respect to
computer systems that they use and to obtain reasonable assurances that
comparable steps are being taken by each of the Fund's other service providers.
At this time, however, there can be no assurance that these steps will be
sufficient to avoid any adverse impact to the Fund.
16
INDEPENDENT AUDITORS' REPORT
- ------------------------------------------------------------
The Board of Trustees and Shareholders INDEPENDENCE ONE MUTUAL FUNDS:
We have audited the accompanying statement of assets and liabilities of
Independence One Equity Plus Fund, a portfolio of the Independence One Mutual
Funds, including the portfolio of investments, as of April 30, 1999, the related
statement of operations for the year then ended, the statements of changes in
net assets for the each of the years in the two-year period then ended and the
financial highlights for each of the years in the three-year period then ended
and for the period from September 25, 1995 (date of initial public investment)
to April 30, 1996. 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 as of April
30, 1999, by correspondence with the custodian and brokers. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Independence One Equity Plus Fund as of April 30, 1999, the results of its
operations, changes in its net assets, and its financial highlights for the
periods indicated above in conformity with generally accepted accounting
principles.
[KPMG LLP SIGNATURE]
Boston, Massachusetts
June 16, 1999
17
TRUSTEES OFFICERS
- ------------------------------------------------------------
Robert E. Baker
Harold Berry
Nathan Forbes
Harry J. Nederlander
Thomas S. Wilson
Edward C. Gonzales
PRESIDENT AND TREASURER
Jeffrey W. Sterling
VICE PRESIDENT AND ASSISTANT TREASURER
C. Grant Anderson
SECRETARY
Timothy S. Johnson
ASSISTANT SECRETARY
MUTUAL FUNDS ARE NOT BANK DEPOSITS OR OBLIGATIONS, ARE NOT GUARANTEED BY ANY
BANK, AND ARE NOT INSURED OR GUARANTEED BY THE U.S. GOVERNMENT, THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER
GOVERNMENT AGENCY. INVESTMENT IN MUTUAL FUNDS INVOLVES INVESTMENT RISK,
INCLUDING POSSIBLE LOSS OF PRINCIPAL.
This report is authorized for distribution to prospective investors only when
preceded or accompanied by the Fund's prospectus which contains facts concerning
its objectives and policies, management fees, expenses and other information.
18
INDEPENDENCE ONE
MUTUAL FUNDS
5800 Corporate Drive
Pittsburgh, Pennsylvania 15237-7010
INVESTMENT ADVISER
Michigan National Bank
27777 Inkster Road
Mail Code 10-52
Farmington Hills, Michigan 48333-9065
SUB-ADVISER
Sosnoff Sheridan Corporation
440 South LaSalle Street
Suite 2301
Chicago, Illinois 60605
DISTRIBUTOR
Federated Securities Corp.
Federated Investors Tower
1001 Liberty Avenue
Pittsburgh, Pennsylvania 15222-3779
CUSTODIAN
Michigan National Bank
27777 Inkster Road
Mail Code 10-30
Farmington Hills, Michigan 48333-9065
TRANSFER AGENT AND
DIVIDEND DISBURSING AGENT
Federated Shareholder
Services Company
P. O. Box 8600
Boston, Massachusetts 02266-8600
INDEPENDENT AUDITORS
KPMG LLP
99 High Street
Boston, Massachusetts 02110
[LOGO]
G01200-12 (6/99)
INDEPENDENCE ONE-REGISTERED TRADEMARK-
EQUITY PLUS FUND
(DISTRIBUTED BY FEDERATED SECURITIES CORP.)
ANNUAL REPORT
TO SHAREHOLDERS
APRIL 30, 1999
- --------------------------------------
- ---------------------------------------
- ---------------------------------------
- ---------------------------------------
- ---------------------------------------
- ---------------------------------------
- ---------------------------------------
- ---------------------------------------
- ---------------------------------------
[MICHIGAN NATIONAL BANK LOGO]
PRESIDENT'S MESSAGE
- ------------------------------------------------------------
Dear Investor:
I am pleased to present the Annual Report of the Independence One Fixed Income
Funds, which covers the 12-month reporting period from May 1, 1998 through April
30, 1999. Inside, you'll find complete financial information for the
Independence One U.S. Government Securities Fund, the Independence One Fixed
Income Fund, and the Independence One Michigan Municipal Bond Fund. The report
begins with a discussion by the funds' portfolio managers, followed by a
complete listing of each fund's holdings and financial statements.
The following highlights summarize fund performance over the 12-month reporting
period:
INDEPENDENCE ONE U.S. GOVERNMENT SECURITIES FUND
The fund's portfolio of U.S. government bonds produced a total return of 5.41%,
the result of an income stream totaling $0.56 per share.* At the end of the
reporting period, 50.5% of the holdings consisted of U.S. Treasury securities,
with another 40.9% invested in U.S. government agency securities. Fund net
assets totaled $59.5 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, at the end of the reporting period, consisted primarily of U.S. Treasury
securities (49.3% of portfolio), U.S. government agency bonds, (18.3% of
portfolio) and corporate bonds (27.5% of portfolio). This diversified bond fund
produced a total return of 5.60%, primarily the result of an income stream
totaling $0.58 per share.* At the end of the reporting period, fund net assets
reached $86.9 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 a tax-free income stream totaling $0.41 per share,
and capital gains totaling $0.02 per share, while net asset value increased by
$0.17. Through income and share price increase, the fund achieved a total return
of 5.83%.* At the end of the reporting period, fund net assets totaled $19.4
million.
Thank you for selecting one or more Independence One Fixed Income Funds to
pursue your financial goals. We look forward to keeping you informed about the
progress of your investment.
Sincerely,
[EDWARD C. GONZALES SIGNATURE]
Edward C. Gonzales
President
June 16, 1999
*PERFORMANCE QUOTED REPRESENTS PAST PERFORMANCE AND IS NOT INDICATIVE OF FUTURE
RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE, SO THAT AN
INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR
ORIGINAL COST.
**INCOME MAY BE SUBJECT TO THE FEDERAL ALTERNATIVE MINIMUM TAX.
1
INVESTMENT REVIEW
- ------------------------------------------------------------
Q
What were the significant influences on the bond market during the funds'
fiscal year?
A
Turmoil in Asian economics and the effective default on Russia's sovereign
debt threatened to bring an end to the eight year U.S. economic expansion
last summer. World stock markets corrected sharply, and the Dow Jones
Industrial Average suffered its largest point drop in its history (512 points on
August 21st). This turbulence touched off a massive "flight to quality" as
investors sought a safe haven. Debt instruments issued by the U.S. government,
high quality corporations and municipalities benefited. The Federal Reserve
Board (the "Fed") moved to head off a possible credit crunch by lowering short
term interest rates three times in a span of just seven weeks. The stock market
recovered, and the Dow Jones broke the historic 10,000 milestone in late March.
As fears of a global financial meltdown dissipated, interest rates gave back
much of their gains. For example, the bellwether thirty year Treasury bond,
which had traded as low as 4.70% in October, finished the funds' fiscal year at
5.68%.
Q
How did the Independence One Fixed Income Funds perform during the 12-month
reporting period ended April 30, 1999?
A
The Independence One U.S. Government Securities Fund had a total return of
5.41% for the funds' fiscal year. The total return for the Independence One
Fixed Income Fund was 5.60% for the reporting period. The Independence One
Michigan Municipal Bond Fund posted a total return of 5.83% for the twelve
months ended April 30, 1999.*
Q
As we reach mid-year, what is your outlook for bonds for the rest of 1999?
A
A combination of positive news on the inflation front coupled with a
growing budget surplus that reduced the government's borrowing needs,
supported the fixed income markets during the past fiscal year. We expect
those trends to continue for the remainder of 1999. However, there exists the
risk that the resurgence of strong economic growth and the extremely tight labor
markets will increase inflation pressures, and that the Fed will respond by
reversing the easing policies it initiated last fall.
*PERFORMANCE QUOTED REPRESENTS PAST PERFORMANCE AND IS NOT INDICATIVE OF FUTURE
RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE, SO THAT AN
INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR
ORIGINAL COST.
2
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, 1999, compared to the Lehman Brothers
Government Bond Index.+
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
FUND LEHMAN BROTHERS GOVERNMENT BOND INDEX
1/11/93 $10,000 $10,000
4/30/93 $10,461 $10,532
4/30/94 $10,530 $10,648
4/30/95 $11,151 $11,341
4/30/96 $12,040 $12,290
4/30/97 $12,781 $13,087
4/30/98 $14,106 $14,533
4/30/99 $14,869 $15,469
(GRAPHIC REPRESENTATION OMITTED. PLEASE SEE APPENDIX 2.)
AVERAGE ANNUAL TOTAL RETURN FOR THE PERIOD ENDED APRIL 30, 1999
1 Year ................................................................... 5.41%
5 Year ................................................................... 7.14%
Start of Performance (1/11/93) ........................................... 6.50%
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 THEIR 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 Bond Index has been adjusted to
reflect reinvestment of dividends on securities in the index.
+The Lehman Brothers Government 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.
3
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, 1999, compared to the Lehman Brothers Intermediate
Government/Corporate Bond Index.+
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
FUND LBIGCBI
10/23/93 10,000 10,000
4/30/96 10,115 10,233
4/30/97 10,701 10,889
4/30/98 11,617 11,726
4/30/99 12,268 12,473
(GRAPHIC REPRESENTATION OMITTED. PLEASE SEE APPENDIX 3.)
AVERAGE ANNUAL TOTAL RETURN FOR THE PERIOD ENDED APRIL 30, 1999
1 Year ................................................................... 5.60%
Start of Performance (10/23/95) .......................................... 5.98%
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 THEIR 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.
4
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, 1999, compared to the Lehman Brothers
7-Year General Obligations Bond Index.+
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
FUND LB7YG0BI
11/20/95 10,000 10,000
4/30/96 10,121 10,000
4/30/97 10,589 10,540
4/30/98 11,370 11,375
4/30/99 12,035 12,161
(GRAPHIC REPRESENTATION OMITTED. PLEASE SEE APPENDIX 4.)
AVERAGE ANNUAL TOTAL RETURN FOR THE PERIOD ENDED APRIL 30, 1999
1 Year ................................................................... 5.83%
Start of Performance (11/20/95) .......................................... 5.53%
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 THEIR 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.
5
INDEPENDENCE ONE U.S. GOVERNMENT SECURITIES FUND
PORTFOLIO OF INVESTMENTS
APRIL 30, 1999
- ----------------------------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
- ----------- ---------------------------------------- -----------
GOVERNMENT AGENCIES--40.9%
- -----------------------------------------------------
FEDERAL FARM CREDIT BANK--13.4%
----------------------------------------
$ 4,000,000 (1) 4.74%, 11/10/1999 $ 3,899,280
----------------------------------------
4,000,000 5.97%, 3/11/2005 4,039,440
---------------------------------------- -----------
Total 7,938,720
---------------------------------------- -----------
FEDERAL HOME LOAN BANK--27.5%
----------------------------------------
5,000,000 5.005%, 4/20/2000 4,993,750
----------------------------------------
7,000,000 5.65%, 5/19/1999 7,005,530
----------------------------------------
4,000,000 7.20%, 6/14/2011 4,376,080
---------------------------------------- -----------
Total 16,375,360
---------------------------------------- -----------
TOTAL GOVERNMENT AGENCIES (IDENTIFIED
COST $23,862,581) 24,314,080
---------------------------------------- -----------
U.S. TREASURY OBLIGATIONS--50.5%
- -----------------------------------------------------
U.S. TREASURY BONDS--33.3%
----------------------------------------
9,000,000 6.50%, 11/15/2026 9,722,340
----------------------------------------
5,500,000 7.125%, 2/15/2023 6,326,320
----------------------------------------
3,000,000 8.125%, 8/15/2019 3,769,500
---------------------------------------- -----------
Total 19,818,160
---------------------------------------- -----------
U.S. TREASURY NOTE--17.2%
----------------------------------------
10,000,000 6.375%, 3/31/2001 10,231,200
---------------------------------------- -----------
TOTAL U.S. TREASURY OBLIGATIONS
(IDENTIFIED COST $27,699,446) 30,049,360
---------------------------------------- -----------
REPURCHASE AGREEMENT (2)--7.7%
- -----------------------------------------------------
Dean Witter Reynolds, Inc., 4.85%, dated
4/30/1999, due 5/3/1999
(AT COST) 4,566,000
4,566,000
---------------------------------------- -----------
TOTAL INVESTMENTS (IDENTIFIED COST
$56,128,027)(3) $58,929,440
---------------------------------------- -----------
(1) Rate denotes yield to maturity.
(2) The repurchase agreement is fully collateralized by U.S. government and/or
agency obligations based on market prices at the date of the portfolio.
(3) The cost of investments for federal tax purposes amounts to $56,128,027.
The net unrealized appreciation of investments on a federal tax basis
amounts to $2,801,413 which is comprised of $2,808,384 appreciation and
$6,971 depreciation at April 30, 1999.
Note: The categories of investments are shown as a percentage of net assets
($59,458,543) at April 30, 1999.
(See Notes which are an integral part of the Financial Statements)
6
INDEPENDENCE ONE U.S. GOVERNMENT SECURITIES FUND
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1999
- ----------------------------------------------------------------------------
ASSETS:
- --------------------------------------------------
Total investments in securities, at value
(identified and tax cost $56,128,027) $58,929,440
- --------------------------------------------------
Cash 13,472
- --------------------------------------------------
Income receivable 784,261
- --------------------------------------------------
Receivable for shares sold 10,300
- -------------------------------------------------- -----------
Total assets 59,737,473
- --------------------------------------------------
LIABILITIES:
- ----------------------------------------
Payable for shares redeemed $ 5,000
- ----------------------------------------
Income distribution payable 233,069
- ----------------------------------------
Payable to adviser 14,777
- ----------------------------------------
Other accrued expenses 26,084
- ---------------------------------------- --------
Total liabilities 278,930
- -------------------------------------------------- -----------
Net Assets for 5,709,979 shares outstanding $59,458,543
- -------------------------------------------------- -----------
NET ASSETS CONSIST OF:
- --------------------------------------------------
Paid in capital $56,644,265
- --------------------------------------------------
Net unrealized appreciation of investments 2,801,413
- --------------------------------------------------
Accumulated net realized gain on investments 7,711
- --------------------------------------------------
Undistributed net investment income 5,154
- -------------------------------------------------- -----------
Total Net Assets $59,458,543
- -------------------------------------------------- -----------
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER
SHARE:
- --------------------------------------------------
$59,458,543 DIVIDED BY 5,709,979 shares
outstanding $10.41
- -------------------------------------------------- -----------
(See Notes which are an integral part of the Financial Statements)
7
INDEPENDENCE ONE U.S. GOVERNMENT SECURITIES FUND
STATEMENT OF OPERATIONS
YEAR ENDED APRIL 30, 1999
- ----------------------------------------------------------------------------
INVESTMENT INCOME:
- ---------------------------------------------------
Interest $3,936,317
- ---------------------------------------------------
EXPENSES:
- ---------------------------------------------------
Investment advisory fee $ 467,877
- ----------------------------------------
Administrative personnel and services
fee 68,475
- ----------------------------------------
Custodian fees 19,773
- ----------------------------------------
Transfer and dividend disbursing agent
fees and expenses 29,237
- ----------------------------------------
Directors'/Trustees' fees 4,000
- ----------------------------------------
Auditing fees 13,000
- ----------------------------------------
Legal fees 5,350
- ----------------------------------------
Portfolio accounting fees 48,176
- ----------------------------------------
Share registration costs 9,224
- ----------------------------------------
Printing and postage 6,000
- ----------------------------------------
Insurance premiums 2,700
- ----------------------------------------
Miscellaneous 4,344
- ---------------------------------------- ---------
Total expenses 678,156
- ----------------------------------------
Waiver--
- ----------------------------------------
Waiver of investment advisory fee (273,903)
- ---------------------------------------- ---------
Net expenses 404,253
- --------------------------------------------------- ----------
Net investment income 3,532,064
- --------------------------------------------------- ----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
- ---------------------------------------------------
Net realized gain on investments 495,126
- ---------------------------------------------------
Net change in unrealized appreciation
(depreciation) of investments (127,163)
- --------------------------------------------------- ----------
Net realized and unrealized gain on investments 367,963
- --------------------------------------------------- ----------
Change in net assets resulting from
operations $3,900,027
- --------------------------------------------------- ----------
(See Notes which are an integral part of the Financial Statements)
8
INDEPENDENCE ONE U.S. GOVERNMENT SECURITIES FUND
STATEMENTS OF CHANGES IN NET ASSETS
- ------------------------------------------------------------
YEAR ENDED APRIL 30,
--------------------------
1999 1998
- ---------------------------------------- ------------ ------------
INCREASE (DECREASE) IN NET ASSETS:
- ----------------------------------------
OPERATIONS--
- ----------------------------------------
Net investment income $ 3,532,064 $ 4,112,178
- ----------------------------------------
Net realized gain on investments
($495,126 and $567,403,
respectively, as computed for federal
tax purposes) 495,126 567,403
- ----------------------------------------
Net change in unrealized
appreciation/(depreciation) (127,163) 2,548,205
- ---------------------------------------- ------------ ------------
Change in net assets resulting from
operations 3,900,027 7,227,786
- ---------------------------------------- ------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS--
- ----------------------------------------
Distributions from net investment income (3,532,064) (4,112,178)
- ---------------------------------------- ------------ ------------
SHARE TRANSACTIONS--
- ----------------------------------------
Proceeds from sale of shares 6,657,213 10,388,208
- ----------------------------------------
Net asset value of shares issued to
shareholders in payment of
distributions declared 314,112 404,801
- ----------------------------------------
Cost of shares redeemed (18,747,528) (14,925,104)
- ---------------------------------------- ------------ ------------
Change in net assets resulting from
share transactions (11,776,203) (4,132,095)
- ---------------------------------------- ------------ ------------
Change in net assets (11,408,240) (1,016,487)
- ----------------------------------------
NET ASSETS:
- ----------------------------------------
Beginning of period 70,866,783 71,883,270
- ---------------------------------------- ------------ ------------
End of period (including undistributed
net investment income of $5,154 and
$0, respectively) $ 59,458,543 $ 70,866,783
- ---------------------------------------- ------------ ------------
(See Notes which are an integral part of the Financial Statements)
9
INDEPENDENCE ONE U.S. GOVERNMENT SECURITIES FUND
FINANCIAL HIGHLIGHTS
- ------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
YEAR ENDED APRIL 30,
-------------------------------------------
1999 1998 1997 1996 1995
- ------------------------- ------- ------- ------- ------- -------
NET ASSET VALUE,
BEGINNING OF PERIOD $10.41 $ 9.98 $ 9.98 $ 9.79 $ 9.84
- -------------------------
INCOME FROM INVESTMENT
OPERATIONS
- -------------------------
Net investment income 0.56 0.58 0.59 0.59 0.60
- -------------------------
Net realized and
unrealized gain (loss)
on investments 0.00* 0.43 0.01 0.19 (0.05)
- ------------------------- ----- ----- ----- ----- -----
Total from investment
operations 0.56 1.01 0.60 0.78 0.55
- ------------------------- ----- ----- ----- ----- -----
LESS DISTRIBUTIONS
- -------------------------
Distributions from net
investment income (0.56) (0.58) (0.59) (0.59) (0.60)
- -------------------------
Distributions from net
realized gain on
investments -- -- (0.01) -- --
- ------------------------- ----- ----- ----- ----- -----
Total distributions (0.56) (0.58) (0.60) (0.59) (0.60)
- ------------------------- ----- ----- ----- ----- -----
NET ASSET VALUE, END OF
PERIOD $10.41 $10.41 $ 9.98 $ 9.98 $ 9.79
- ------------------------- ----- ----- ----- ----- -----
TOTAL RETURN (1) 5.41% 10.37% 6.15% 7.97% 5.90%
- -------------------------
RATIOS TO AVERAGE NET
ASSETS
- -------------------------
Expenses (2) 1.01% 1.06% 1.02% 1.06% 1.05%
- -------------------------
Net income ratio (2) 4.87% 5.22% 5.37% 5.19% 5.53%
- -------------------------
Expenses (after
waivers/reimbursements) 0.60% 0.61% 0.57% 0.40% 0.35%
- -------------------------
Net investment income
(after waivers/
reimbursements) 5.28% 5.67% 5.82% 5.85% 6.23%
- -------------------------
SUPPLEMENTAL DATA
- -------------------------
Net assets, end of
period (000 omitted) $59,459 $70,867 $71,883 $72,291 $62,514
- -------------------------
Portfolio turnover 31% 28% 73% 104% 75%
- -------------------------
* Amount represents less than $0.01 per share.
(1) Based on net asset value.
(2) During the period, certain fees were voluntarily waived or reimbursed. If
such voluntary waivers or reimbursements had not occurred, the ratios would
have been as indicated.
(See Notes which are an integral part of the Financial Statements)
10
INDEPENDENCE ONE FIXED INCOME FUND
PORTFOLIO OF INVESTMENTS
APRIL 30, 1999
- ----------------------------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
- ---------- ---------------------------------------- -----------
CORPORATE BONDS--27.5%
- ----------------------------------------------------
AUTOMOTIVE--1.1%
----------------------------------------
Ford Motor Credit Corp., Note, 6.125%,
$1,000,000 1/9/2006 $ 995,250
---------------------------------------- -----------
BANKING--6.0%
----------------------------------------
Bank One Corp., Sub. Note, 8.100%,
1,000,000 3/1/2002 1,057,260
----------------------------------------
Bank One Corp., Sub. Note, 8.740%,
1,000,000 9/15/2003 1,103,800
----------------------------------------
1,000,000 Citicorp, Sr. Note, 5.625%, 2/15/2001 999,560
----------------------------------------
NationsBank Corp., Sr. Note, 7.000%,
2,000,000 9/15/2001 2,055,640
---------------------------------------- -----------
Total 5,216,260
---------------------------------------- -----------
COMMERCIAL--4.7%
----------------------------------------
Associates Corp. of North America, Sr.
1,000,000 Note, 6.260%, 2/15/2006 1,000,000
----------------------------------------
General Electric Capital Corp., Note,
2,000,000 6.500%, 11/1/2006 2,046,880
----------------------------------------
General Electric Capital Corp., Deb.,
1,000,000 5.500%, 11/1/2001 997,880
---------------------------------------- -----------
Total 4,044,760
---------------------------------------- -----------
ENTERTAINMENT--1.2%
----------------------------------------
Disney (Walt) Co., Sr. Note, Series B,
1,000,000 6.750%, 3/30/2006 1,035,370
---------------------------------------- -----------
FINANCIAL SERVICES--2.4%
----------------------------------------
Merrill Lynch & Co., Inc., Note, 7.000%,
1,000,000 3/15/2006 1,033,170
----------------------------------------
Morgan Stanley, Dean Witter & Co., Note,
1,000,000 7.750%, 6/1/2001 1,038,740
---------------------------------------- -----------
Total 2,071,910
---------------------------------------- -----------
FOOD & BEVERAGE--1.2%
----------------------------------------
1,000,000 Sara Lee Corp., Note, 6.300%, 11/7/2005 1,010,610
---------------------------------------- -----------
INDUSTRIAL SERVICES--1.3%
----------------------------------------
General Mills, Inc., Note, 8.900%,
1,000,000 6/15/2006 1,156,220
---------------------------------------- -----------
OFFICE EQUIPMENT--1.2%
----------------------------------------
1,000,000 Xerox Corp., Deb., 9.750%, 3/15/2000 1,037,610
---------------------------------------- -----------
PHARMACEUTICALS--1.3%
----------------------------------------
Lilly (Eli) & Co., Unsecured Note,
1,000,000 8.375%, 12/1/2006 1,143,010
---------------------------------------- -----------
11
INDEPENDENCE ONE FIXED INCOME FUND
- --------------------------------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
- ---------- ---------------------------------------- -----------
CORPORATE BONDS--CONTINUED
- ----------------------------------------------------
RETAIL--4.7%
----------------------------------------
$1,000,000 Gap (The), Inc., Note, 6.900%, 9/15/2007 $ 1,048,580
----------------------------------------
May Department Stores Co., Deb., 9.875%,
1,000,000 6/15/2000 1,045,950
----------------------------------------
Penney (J.C.) Co., Inc., MTN, Series A,
1,000,000 6.375%, 9/15/2000 1,003,270
----------------------------------------
Wal-Mart Stores, Inc., Unsecured Note,
1,000,000 6.125%, 10/1/1999 1,005,200
---------------------------------------- -----------
Total 4,103,000
---------------------------------------- -----------
TELECOMMUNICATIONS--2.4%
----------------------------------------
1,000,000 AT&T Corp., Note, 7.500%, 6/1/2006 1,072,020
----------------------------------------
U.S. West Communications, Inc., Note,
1,000,000 6.625%, 9/15/2005 1,025,890
---------------------------------------- -----------
Total 2,097,910
---------------------------------------- -----------
TOTAL CORPORATE BONDS (IDENTIFIED COST
$23,692,806) 23,911,910
---------------------------------------- -----------
GOVERNMENT AGENCIES--18.3%
- ----------------------------------------------------
FEDERAL FARM CREDIT BANK--4.6%
----------------------------------------
1,000,000 5.150%, Medium Term Note, 1/7/2003 984,440
----------------------------------------
2,000,000 5.970%, Medium Term Note, 3/11/2005 2,019,720
----------------------------------------
1,000,000 6.300%, Medium Term Note, 8/8/2007 1,017,370
---------------------------------------- -----------
Total 4,021,530
---------------------------------------- -----------
FEDERAL HOME LOAN BANK--13.7%
----------------------------------------
2,000,000 5.530%, Bond, 1/15/2003 1,993,740
----------------------------------------
1,000,000 5.575%, Bond, 9/2/2003 998,820
----------------------------------------
4,000,000 6.028%, Bond, 5/7/2003 4,010,040
----------------------------------------
4,000,000 5.125%, Note, 9/15/2003 3,926,440
----------------------------------------
880,000 7.460%, Note, 9/9/2004 949,775
---------------------------------------- -----------
Total 11,878,815
---------------------------------------- -----------
TOTAL GOVERNMENT AGENCIES (IDENTIFIED
COST $15,917,893) 15,900,345
---------------------------------------- -----------
U.S. TREASURY OBLIGATIONS--49.3%
- ----------------------------------------------------
U.S. TREASURY BONDS--3.9%
----------------------------------------
1,000,000 6.000%, 2/15/2026 1,012,820
----------------------------------------
12
INDEPENDENCE ONE FIXED INCOME FUND
- --------------------------------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
- ---------- ---------------------------------------- -----------
U.S. TREASURY OBLIGATIONS--CONTINUED
- ----------------------------------------------------
U.S. TREASURY BONDS--CONTINUED
----------------------------------------
$2,000,000 10.750%, 5/15/2003 $ 2,388,540
---------------------------------------- -----------
Total 3,401,360
---------------------------------------- -----------
U.S. TREASURY NOTES--45.4%
----------------------------------------
3,500,000 5.625%, 5/15/2008 3,549,875
----------------------------------------
6,500,000 6.125%, 7/31/2000 6,588,010
----------------------------------------
4,750,000 6.250%, 2/15/2007 4,997,143
----------------------------------------
12,000,000 6.375%, 8/15/2002 12,413,160
----------------------------------------
6,800,000 6.750%, 6/30/1999 6,824,072
----------------------------------------
5,000,000 7.500%, 10/31/1999 5,065,950
---------------------------------------- -----------
Total 39,438,210
---------------------------------------- -----------
TOTAL U.S. TREASURY OBLIGATIONS
(IDENTFIED COST $43,227,055) 42,839,570
---------------------------------------- -----------
REPURCHASE AGREEMENT (1)--3.4%
- ----------------------------------------------------
Dean Witter Reynolds, Inc., 4.850%,
dated 4/30/1999, due 5/3/1999 (AT COST) 2,917,000
2,917,000
---------------------------------------- -----------
TOTAL INVESTMENTS (IDENTIFIED COST
$85,754,754)(2) $85,568,825
---------------------------------------- -----------
(1) The repurchase agreement is fully collateralized by U.S. Treasury
obligations based on market prices at the date of the portfolio.
(2) The cost of investments for federal tax purposes amounts to $85,754,754.
The net unrealized depreciation of investments on a federal tax basis
amounts to $185,929 which is comprised of $948,664 appreciation and
$1,134,593 depreciation at April 30, 1999.
Note: The categories of investments are shown as a percentage of net assets
($86,919,598) at April 30, 1999.
The following acronym is used throughout this portfolio:
MTN--Medium Term Note
(See Notes which are an integral part of the Financial Statements)
13
INDEPENDENCE ONE FIXED INCOME FUND
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1999
- ----------------------------------------------------------------------------
ASSETS:
- -------------------------------------------------
Total investments in securities, at value
(identified and tax cost $85,754,754) $85,568,825
- -------------------------------------------------
Cash 21,597
- -------------------------------------------------
Income receivable 1,300,769
- -------------------------------------------------
Receivable for shares sold 125,000
- -------------------------------------------------
Unamortized organizational costs 7,350
- -------------------------------------------------
Other assets 3,938
- ------------------------------------------------- ------------
Total assets 87,027,479
- -------------------------------------------------
LIABILITIES:
- ----------------------------------------
Payable for shares redeemed $13,654
- ----------------------------------------
Income distribution payable 52,970
- ----------------------------------------
Payable to adviser 21,019
- ----------------------------------------
Other accrued expenses 20,238
- ---------------------------------------- -------
Total liabilities 107,881
- ------------------------------------------------- ------------
Net Assets for 8,704,477 shares outstanding $86,919,598
- ------------------------------------------------- ------------
NET ASSETS CONSIST OF:
- -------------------------------------------------
Paid in capital $87,038,727
- -------------------------------------------------
Net unrealized depreciation of investments (185,929)
- -------------------------------------------------
Accumulated net realized gain on investments 52,280
- -------------------------------------------------
Undistributed net investment income 14,520
- ------------------------------------------------- ------------
Total Net Assets $86,919,598
- ------------------------------------------------- ------------
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER
SHARE:
- -------------------------------------------------
$86,919,598 DIVIDED BY 8,704,477 shares
outstanding $9.99
- ------------------------------------------------- ------------
(See Notes which are an integral part of the Financial Statements)
14
INDEPENDENCE ONE FIXED INCOME FUND
STATEMENT OF OPERATIONS
YEAR ENDED APRIL 30, 1999
- --------------------------------------------------------------------------------
INVESTMENT INCOME:
- ---------------------------------------------------
Interest $5,215,232
- ---------------------------------------------------
EXPENSES:
- ----------------------------------------
Investment advisory fee $ 608,131
- ----------------------------------------
Administrative personnel and services
fee 82,964
- ----------------------------------------
Custodian fees 20,124
- ----------------------------------------
Transfer and dividend disbursing agent
fees and expenses 35,064
- ----------------------------------------
Directors'/Trustees' fees 3,975
- ----------------------------------------
Auditing fees 13,000
- ----------------------------------------
Legal fees 5,205
- ----------------------------------------
Portfolio accounting fees 45,783
- ----------------------------------------
Share registration costs 13,517
- ----------------------------------------
Printing and postage 79
- ----------------------------------------
Insurance premiums 1,172
- ----------------------------------------
Amortization of organization costs 5,854
- ----------------------------------------
Miscellaneous 3,431
- ---------------------------------------- ---------
Total expenses 838,299
- ----------------------------------------
Waiver--
- ----------------------------------------
Waiver of investment advisory fee (372,219)
- ---------------------------------------- ---------
Net expenses 466,080
- --------------------------------------------------- ----------
Net investment income 4,749,152
- --------------------------------------------------- ----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
- ---------------------------------------------------
Net realized gain on investments 273,117
- ---------------------------------------------------
Net change in unrealized appreciation
(depreciation) of investments (661,854)
- --------------------------------------------------- ----------
Net realized and unrealized gain (loss) on
investments (388,737)
- --------------------------------------------------- ----------
Change in net assets resulting from
operations $4,360,415
- --------------------------------------------------- ----------
(See Notes which are an integral part of the Financial Statements)
15
INDEPENDENCE ONE FIXED INCOME FUND
STATEMENTS OF CHANGES IN NET ASSETS
- ------------------------------------------------------------
YEAR ENDED APRIL 30,
--------------------------
1999 1998
- ---------------------------------------- ------------ ------------
INCREASE (DECREASE) IN NET ASSETS:
- ----------------------------------------
OPERATIONS--
- ----------------------------------------
Net investment income $ 4,749,152 $ 4,537,227
- ----------------------------------------
Net realized gain (loss) on investments
($245,461 and $(102,986),
respectively, as computed for federal
tax purposes) 273,117 (16,975)
- ----------------------------------------
Net change in unrealized appreciation
(depreciation) of investments (661,854) 1,766,893
- ---------------------------------------- ------------ ------------
Change in net assets resulting from
operations 4,360,415 6,287,145
- ---------------------------------------- ------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS--
- ----------------------------------------
Distributions from net investment income (4,660,274) (4,537,227)
- ----------------------------------------
Distributions from net realized gains (92,620) --
- ---------------------------------------- ------------ ------------
Change in net assets resulting from
distributions to shareholders (4,752,894) (4,537,227)
- ---------------------------------------- ------------ ------------
SHARE TRANSACTIONS--
- ----------------------------------------
Proceeds from sale of shares 18,804,165 19,644,568
- ----------------------------------------
Net asset value of shares issued to
shareholders in payment of
distributions declared 4,159,874 3,881,214
- ----------------------------------------
Cost of shares redeemed (15,994,186) (15,817,021)
- ---------------------------------------- ------------ ------------
Change in net assets resulting from
share transactions 6,969,853 7,708,761
- ---------------------------------------- ------------ ------------
Change in net assets 6,577,374 9,458,679
- ----------------------------------------
NET ASSETS:
- ----------------------------------------
Beginning of period 80,342,224 70,883,545
- ---------------------------------------- ------------ ------------
End of period (including undistributed
net investment income of $14,520 and
$0, respectively) $ 86,919,598 $ 80,342,224
- ---------------------------------------- ------------ ------------
(See Notes which are an integral part of the Financial Statements)
16
INDEPENDENCE ONE FIXED INCOME FUND
FINANCIAL HIGHLIGHTS
- ------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
YEAR ENDED APRIL 30,
------------------------------------
1999 1998 1997 1996 (1)
------- ------- ------- ---------
- ------------------------------
NET ASSET VALUE, BEGINNING OF
PERIOD $10.03 $ 9.80 $ 9.82 $10.00
INCOME FROM INVESTMENT
OPERATIONS
- ------------------------------
Net investment income 0.58 0.59 0.57 0.30
- ------------------------------
Net realized and unrealized
gain (loss) on investments (0.03) 0.23 (0.02) (0.18)
- ------------------------------ ----- ----- ----- ------
Total from investment
operations 0.55 0.82 0.55 0.12
- ------------------------------ ----- ----- ----- ------
LESS DISTRIBUTIONS
- ------------------------------
Distributions from net
investment income (0.58) (0.59) (0.57) (0.30)
- ------------------------------
Distributions from net
realized gain on investments (0.01) -- 0.00(2) --
- ------------------------------ ----- ----- ----- ------
Total distributions (0.59) (0.59) (0.57) (0.30)
- ------------------------------ ----- ----- ----- ------
NET ASSET VALUE, END OF PERIOD $ 9.99 $10.03 $ 9.80 $ 9.82
- ------------------------------ ----- ----- ----- ------
TOTAL RETURN (3) 5.60% 8.56% 5.79% 1.15%
- ------------------------------
RATIOS TO AVERAGE NET ASSETS
- ------------------------------
Expenses (4) 1.03% 1.06% 1.05% 1.15%*
- ------------------------------
Net investment income (4) 5.39% 5.42% 5.33% 5.12%*
- ------------------------------
Expenses (after
waivers/reimbursements) 0.57% 0.56% 0.55% 0.54%*
- ------------------------------
Net investment income (after
waivers/reimbursements) 5.85% 5.92% 5.83% 5.73%*
- ------------------------------
SUPPLEMENTAL DATA
- ------------------------------
Net assets, end of period
(000 omitted) $86,920 $80,342 $70,884 $62,256
- ------------------------------
Portfolio turnover 20% 21% 23% 4%
- ------------------------------
* Computed on an annualized basis.
(1) Reflects operations for the period from October 23, 1995 (date of initial
public investment) to April 30, 1996.
(2) Distributions from net realized gain on investments was less than one cent
per share.
(3) Based on net asset value.
(4) During the period, certain fees were voluntarily waived or reimbursed. If
such voluntary waivers or reimbursements had not occurred, the ratios would
have been as indicated.
(See Notes which are an integral part of the Financial Statements)
17
INDEPENDENCE ONE MICHIGAN MUNICIPAL BOND FUND
PORTFOLIO OF INVESTMENTS
APRIL 30, 1999
- ----------------------------------------------------------------------------
CREDIT
PRINCIPAL RATING*
AMOUNT S&P/MOODY'S VALUE
- ---------- ----------------------------------- ----------- -------------
LONG-TERM MUNICIPALS (1)--95.6%
- -----------------------------------------------
MICHIGAN--95.6%
-----------------------------------
$ 825,000 Allegan, MI Public School District,
GO UT Bonds, 5.55% (AMBAC
INS)/(Original Issue Yield: 5.60%),
5/1/2010 AAA/Aaa $ 900,917
-----------------------------------
400,000 Beaverton, MI Rural Schools, GO UT
Bonds, 4.70% (FGIC INS)/(Original
Issue Yield: 4.75%), 5/1/2008 AAA/Aaa 409,464
-----------------------------------
485,000 Central Michigan University,
Revenue Bonds, 5.30% (FGIC
LOC)/(Original Issue Yield: 5.40%),
10/1/2011 AAA/Aaa 524,610
-----------------------------------
150,000 Clare County, MI, GO UT Refunding
Bonds, 5.00% (Sewage Disposal
System No.3)/(AMBAC INS)/(Original
Issue Yield: 5.10%), 11/1/2003 AAA/Aaa 154,190
-----------------------------------
480,000 Detroit, MI City School District, GO UT Bonds (Series A), 6.50%
(AMBAC INS), 5/1/2008 AAA/Aaa 555,230
-----------------------------------
500,000 East Detroit Michigan School
District, GO UT Refunding Bonds,
6.50% (FGIC INS), 5/1/2006 AAA/Aaa 569,310
-----------------------------------
680,000 Grand Rapids, MI Community College,
GO UT Bonds, 5.30% (MBIA
INS)/(Original Issue Yield: 5.35%),
5/1/2009 AAA/Aaa 720,922
-----------------------------------
500,000 Greater Detroit Resource Recovery
Authority, MI, Refunding Revenue
Bonds (Series A), 5.00% (AMBAC
INS), 12/13/2000 AAA/Aaa 511,905
-----------------------------------
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 569,283
-----------------------------------
1,000,000 Kenowa Hills Michigan Public
Schools, GO UT Bonds, 5.60% (MBIA
INS), 5/1/2009 AA+/Aaa 1,070,720
-----------------------------------
500,000 Kent County, MI, GO , 4.50%
(Original Issue Yield: 5.00%),
11/1/2011 AAA/Aa2 498,345
-----------------------------------
600,000 Lakewood, MI Public Schools, GO UT
Bonds, 5.30% (MBIA INS)/(Original
Issue Yield: 5.45%), 5/1/2009 AAA/Aaa 631,686
-----------------------------------
100,000 Lapeer, MI, GO LT Refunding Bonds,
6.10% (AMBAC
INS)/(Original Issue Yield: 6.25%),
10/1/1999 AAA/Aaa 101,179
-----------------------------------
18
INDEPENDENCE ONE MICHIGAN MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
CREDIT
PRINCIPAL RATING*
AMOUNT S&P/MOODY'S VALUE
- ---------- ----------------------------------- ----------- -------------
LONG-TERM MUNICIPALS (1)--CONTINUED
- -----------------------------------------------
MICHIGAN--CONTINUED
-----------------------------------
$1,055,000 Lincoln Park, MI School District,
GO UT Bonds, 5.70% (FGIC INS),
5/1/2008 AAA/Aaa $ 1,165,131
-----------------------------------
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 617,958
-----------------------------------
1,000,000 Michigan Municipal Bond Authority,
Revenue Bonds (Series B), 5.35%
(Original Issue Yield: 5.45%),
10/1/2007 AA+/Aa1 1,070,200
-----------------------------------
500,000 Michigan Municipal Bond Authority,
Revenue Bonds, 5.25% (Local
Government Loan Program)/(AMBAC
INS), 5/1/2006 AAA/Aaa 533,595
-----------------------------------
100,000 Michigan State Building Authority,
Revenue Bonds (Series I), 5.50%
(Original Issue Yield: 5.60%),
10/1/2004 AA/Aa2 107,543
-----------------------------------
150,000 Michigan State Building Authority,
Revenue Bonds, 6.20% (Grand Rapids
Center)/(BIG INS), 3/1/2001 AAA/Aaa 156,719
-----------------------------------
100,000 Michigan State Housing Development
Authority, Refunding Revenue Bonds
(Series A), 6.40% (FHA/VA mtgs
GTD), 6/1/2000 AA+/NR 101,984
-----------------------------------
500,000 Michigan State Housing Development
Authority, Refunding Revenue Bonds,
4.85% (AMBAC INS), 10/1/2002 AAA/Aaa 511,785
-----------------------------------
150,000 Michigan Strategic Fund, Small
Business Refunding Revenue Bonds
(Series A1-A2), 5.90% (SBA GTD),
10/1/2000 NR/Aaa 155,127
-----------------------------------
500,000 Novi, MI, Refunding GO Bonds,
5.25%, 10/1/2009 AA-/A1 534,550
-----------------------------------
600,000 Ottawa County, MI Building
Authority, Revenue Bonds (Series
A), 4.90%, 11/1/2009 AA/Aa2 622,860
-----------------------------------
100,000 Portage, MI, GO LT City Share
Bonds, 5.90%, 12/1/2003 AA-/NR 108,345
-----------------------------------
700,000 Redford, MI University School District, GO UT Bonds, 6.25% (FGIC
INS), 5/1/2007 AAA/Aaa 797,447
-----------------------------------
390,000 Rochester, MI, GO UT Refunding
Bonds, 4.90% (FSA INS), 10/1/2006 AAA/Aaa 410,666
-----------------------------------
19
INDEPENDENCE ONE MICHIGAN MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
PRINCIPAL
AMOUNT CREDIT
OR SHARES RATING* VALUE
- ---------- ----------------------------------- ----------- -------------
LONG-TERM MUNICIPALS (1)--CONTINUED
- -----------------------------------------------
MICHIGAN--CONTINUED
-----------------------------------
$ 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 $ 414,664
-----------------------------------
500,000 Three Rivers Michigan Community
Schools, GO UT Bonds, 5.40%
(Michigan State GTD)/(MBIA INS),
5/1/2008 AAA/Aaa 543,140
-----------------------------------
765,000 University of Michigan, Revenue
Bonds (Series A), 5.40%, 11/15/2008 AA/Aa1 823,890
-----------------------------------
350,000 University of Michigan, Revenue
Bonds (Series A), 5.60% (Original
Issue Yield: 5.70%), 11/15/2012 AA/Aa1 374,777
-----------------------------------
500,000 Washtenaw Community College, MI, GO
UT (Series A), 5.00% (Original
Issue Yield: 5.10%), 4/1/2008 AA/Aa3 520,585
-----------------------------------
500,000 Washtenaw Community College, MI, GO
UT (Series A), 5.00% (Original
Issue Yield: 5.35%), 4/1/2011 AA/Aa3 510,680
-----------------------------------
750,000 Western Michigan University,
Revenue Refunding Bonds, 5.00%
(FGIC INS)/(Original Issue Yield:
5.15%), 11/15/2012 AAA/Aaa 759,082
-----------------------------------
500,000 Wixon, MI, UT GO Bonds, 4.70% (AMBAC INS)/(Original Issue Yield:
4.85%), 5/1/2009 AAA/Aaa 508,505
----------------------------------- -------------
TOTAL LONG-TERM MUNICIPALS
(IDENTIFIED COST $17,458,632) 18,566,994
----------------------------------- -------------
MUTUAL FUND--2.8%
- -----------------------------------------------
533,000 Goldman Sachs Tax Exempt Fund
(IDENTIFIED COST $533,000) 533,000
----------------------------------- -------------
TOTAL INVESTMENTS (IDENTIFIED
COST $17,991,632)(2) $ 19,099,994
----------------------------------- -------------
* Please refer to the Appendix of the Statement of Additional Information for
an explanation of the credit ratings. Current credit ratings are unaudited.
(1) At April 30, 1999, 2.6% of the total investments at market value were
subject to alternative minimum tax (unaudited).
(2) The cost of investments for federal tax purposes amounts to $17,991,632.
The net unrealized appreciation of investments on a federal tax basis
amounts to $1,108,362 which is comprised of $1,108,362 appreciation and $0
depreciation at April 30, 1999.
Note: The categories of investments are shown as a percentage of net assets
($19,417,279) at April 30, 1999.
20
INDEPENDENCE ONE MICHIGAN MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
The following acronyms are used throughout this portfolio:
<TABLE>
<CAPTION>
<S> <C>
AMBAC-- American Municipal Bond Assurance GTD--Guaranty
Corporation INS--Insured
BIG--Bond Investors Guaranty LOC--Letter of Credit
FGIC-- Financial Guaranty Insurance Company LT--Limited Tax
FHA/VA-- Federal Housing Administration/ Veterans MBIA--Municipal Bond Investors Assurance
Administration SBA--Small Business Association
FSA--Financial Security Assurance UT--Unlimited Tax
GO--General Obligation
</TABLE>
(See Notes which are an integral part of the Financial Statements)
21
INDEPENDENCE ONE MICHIGAN MUNICIPAL BOND FUND
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1999
- ----------------------------------------------------------------------------
ASSETS:
- -------------------------------------------------
Total investments in securities, at value
(identified and tax cost $17,991,632) $19,099,994
- -------------------------------------------------
Cash 7,806
- -------------------------------------------------
Income receivable 353,228
- -------------------------------------------------
Receivable for shares sold 25,000
- -------------------------------------------------
Unamortized organizational costs 8,271
- -------------------------------------------------
Other assets 1,901
- ------------------------------------------------- -----------
Total assets 19,496,200
- -------------------------------------------------
LIABILITIES:
- ----------------------------------------
Income distribution payable $59,473
- ----------------------------------------
Payable to adviser 3,969
- ----------------------------------------
Other accrued expenses 15,479
- ---------------------------------------- -------
Total liabilities 78,921
- ------------------------------------------------- -----------
Net Assets for 1,854,617 shares outstanding $19,417,279
- ------------------------------------------------- -----------
NET ASSETS CONSIST OF:
- -------------------------------------------------
Paid in capital $18,303,316
- -------------------------------------------------
Net unrealized appreciation of investments 1,108,362
- -------------------------------------------------
Accumulated net realized gain on investments 6,946
- -------------------------------------------------
Distributions in excess of net investment income (1,345)
- ------------------------------------------------- -----------
Total Net Assets $19,417,279
- ------------------------------------------------- -----------
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER
SHARE:
- -------------------------------------------------
$19,417,279 DIVIDED BY 1,854,617 shares
outstanding $10.47
- ------------------------------------------------- -----------
(See Notes which are an integral part of the Financial Statements)
22
INDEPENDENCE ONE MICHIGAN MUNICIPAL BOND FUND
STATEMENT OF OPERATIONS
YEAR ENDED APRIL 30, 1999
- --------------------------------------------------------------------------------
INVESTMENT INCOME:
- ---------------------------------------------------------
Interest $ 981,557
- ----------------------------------------------
EXPENSES:
- ----------------------------------------------
Investment advisory fee $ 152,659
- ----------------------------------------------
Administrative personnel and services fee 50,000
- ----------------------------------------------
Custodian fees 16,396
- ----------------------------------------------
Transfer and dividend disbursing agent fees
and expenses 30,876
- ----------------------------------------------
Directors'/Trustees' fees 1,169
- ----------------------------------------------
Auditing fees 13,500
- ----------------------------------------------
Legal fees 4,728
- ----------------------------------------------
Portfolio accounting fees 46,629
- ----------------------------------------------
Share registration costs 10,847
- ----------------------------------------------
Printing and postage 5,939
- ----------------------------------------------
Insurance premiums 2,380
- ----------------------------------------------
Amortization of organization costs 6,591
- ----------------------------------------------
Miscellaneous 2,366
- ---------------------------------------------- ---------
Total expenses 344,080
- ----------------------------------------------
Waivers--
- -----------------------------------
Waiver of investment advisory
fee $(100,606)
- -----------------------------------
Waiver of administrative
personnel and services fee (47,477)
- ----------------------------------- ---------
Total waivers (148,083)
- ---------------------------------------------- ---------
Net expenses 195,997
- --------------------------------------------------------- ----------
Net investment income 785,560
- --------------------------------------------------------- ----------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
- ---------------------------------------------------------
Net realized gain on investments 19,345
- ---------------------------------------------------------
Net change in unrealized appreciation of investments 366,068
- --------------------------------------------------------- ----------
Net realized and unrealized gain on
investments 385,413
- --------------------------------------------------------- ----------
Change in net assets resulting from
operations $1,170,973
- --------------------------------------------------------- ----------
(See Notes which are an integral part of the Financial Statements)
23
INDEPENDENCE ONE MICHIGAN MUNICIPAL BOND FUND
STATEMENTS OF CHANGES IN NET ASSETS
- ------------------------------------------------------------
YEAR ENDED APRIL 30,
------------------------
1999 1998
- ---------------------------------------- ----------- -----------
INCREASE (DECREASE) IN NET ASSETS:
- ----------------------------------------
OPERATIONS--
- ----------------------------------------
Net investment income $ 785,560 $ 1,003,030
- ----------------------------------------
Net realized gain on investments
($19,345 and $92,311,
respectively, as computed for federal
tax purposes) 19,345 91,171
- ----------------------------------------
Net change in unrealized appreciation of
investments 366,068 709,048
- ---------------------------------------- ----------- -----------
Change in net assets resulting from
operations 1,170,973 1,803,249
- ---------------------------------------- ----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS--
- ----------------------------------------
Distributions from net investment income (785,560) (1,003,030)
- ----------------------------------------
Distributions from net realized gains (35,310) --
- ---------------------------------------- ----------- -----------
Change in net assets resulting from
distributions to shareholders (820,870) (1,003,030)
- ---------------------------------------- ----------- -----------
SHARE TRANSACTIONS--
- ----------------------------------------
Proceeds from sale of shares 1,309,093 3,693,948
- ----------------------------------------
Net asset value of shares issued to
shareholders in payment of
distributions declared 48,738 13,837
- ----------------------------------------
Cost of shares redeemed (3,317,173) (6,964,431)
- ---------------------------------------- ----------- -----------
Change in net assets resulting from
share transactions (1,959,342) (3,256,646)
- ---------------------------------------- ----------- -----------
Change in net assets (1,609,239) (2,456,427)
- ----------------------------------------
NET ASSETS:
- ----------------------------------------
Beginning of period 21,026,518 23,482,945
- ---------------------------------------- ----------- -----------
End of period (including distributions
in excess of net investment income of
($1,345) and $0, respectively) $19,417,279 $21,026,518
- ---------------------------------------- ----------- -----------
(See Notes which are an integral part of the Financial Statements)
24
INDEPENDENCE ONE MICHIGAN MUNICIPAL BOND FUND
FINANCIAL HIGHLIGHTS
- ------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
YEAR ENDED APRIL 30,
-------------------------------------------------
1999 1998 1997 1996 (1)
- ------------------------------ ------- ------- ------- -------
NET ASSET VALUE, BEGINNING OF
PERIOD $10.30 $ 9.99 $ 9.95 $10.00
- ------------------------------
INCOME FROM INVESTMENT
OPERATIONS
- ------------------------------
Net investment income 0.41 0.42 0.41 0.17
- ------------------------------
Net realized and unrealized
gain (loss) on investments 0.19 0.31 0.04 (0.05)
- ------------------------------ ----- ----- ----- ------------
Total from investment
operations 0.60 0.73 0.45 0.12
- ------------------------------ ----- ----- ----- ------------
LESS DISTRIBUTIONS
- ------------------------------
Distributions from net
investment income (0.41) (0.42) (0.41) (0.17)
- ------------------------------
Distributions from net
realized gain on investments (0.02) -- 0.00(2) --
- ------------------------------ ----- ----- ----- ------------
Total distributions (0.43) (0.42) (0.41) (0.17)
- ------------------------------ ----- ----- ----- ------------
NET ASSET VALUE, END OF PERIOD $10.47 $10.30 $ 9.99 $ 9.95
- ------------------------------ ----- ----- ----- ------------
TOTAL RETURN (3) 5.83% 7.38% 4.62% 1.21%
- ------------------------------
RATIOS TO AVERAGE NET ASSETS
- ------------------------------
Expenses (4) 1.69% 1.53% 1.64% 1.33%*
- ------------------------------
Net investment income (4) 3.13% 3.35% 3.18% 3.07%*
- ------------------------------
Expenses (after
waivers/reimbursements) 0.96% 0.81% 0.70% 0.57%*
- ------------------------------
Net investment income (after
waivers/reimbursements) 3.86% 4.07% 4.12% 3.83%*
- ------------------------------
SUPPLEMENTAL DATA
- ------------------------------
Net assets, end of period
(000 omitted) $19,417 $21,027 $23,483 $25,123
- ------------------------------
Portfolio turnover 3% 11% 48% 39%
- ------------------------------
</TABLE>
* Computed on an annualized basis.
(1) Reflects operations for the period from November 20, 1995 (date of initial
public investment) to April 30, 1996.
(2) Distributions from net realized gain on investments were less than $0.01
per share.
(3) Based on net asset value.
(4) During the period, certain fees were voluntarily waived or reimbursed. If
such voluntary waivers or reimbursements had not occurred, the ratios would
have been as indicated.
(See Notes which are an integral part of the Financial Statements)
25
INDEPENDENCE ONE MUTUAL FUNDS
COMBINED NOTES TO FINANCIAL STATEMENTS
APRIL 30, 1999
- ----------------------------------------------------------------------------
(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 nine portfolios. The financial
statements of the following portfolios (individually referred to as the "Fund",
or collectively as the "Funds") are presented herein:
<TABLE>
<CAPTION>
<S> <C>
PORTFOLIO NAME INVESTMENT OBJECTIVE
Independence One U.S. Government Securities Fund To seek high current income.
("U.S. Government Securities Fund")(d)
Independence One Fixed Income Fund ("Fixed Income To seek total return.
Fund")(d)
Independence One Michigan Municipal Bond Fund To provide current income which
is exempt from ("Michigan 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 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. Investment gains and
losses are determined on the identified cost basis.
26
INDEPENDENCE ONE MUTUAL FUNDS
- --------------------------------------------------------------------------------
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.
Distributions are determined in accordance with income tax regulations which
may differ from the generally accepted accounting principles. The following
reclassifications have been made to the financial statements.
INCREASE (DECREASE)
<TABLE>
<CAPTION>
<S> <C> <C> <C>
ACCUMULATED
NET REALIZED UNDISTRIBUTED
GAIN ON NET INVESTMENT
FUND NAME PAID IN CAPITAL INVESTMENTS INCOME
U.S. Government Securities Fund (4,815) (339) 5,154
Fixed Income Fund (16,522) 90,880 (74,358)
Michigan Municipal Bond Fund 964 381 (1,345)
</TABLE>
Net investment income, net realized gains/losses, and net assets were not
affected by this reclassification.
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
27
INDEPENDENCE ONE MUTUAL FUNDS
- --------------------------------------------------------------------------------
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.
ORGANIZATIONAL EXPENSES--Organizational expenses were borne initially by
Federated Administrative Services ("FAS"). The Funds have reimbursed FAS for
these expenses. These expenses have been deferred and are being amortized
over the five year period following the Fund's effective date.
ORGANIZATIONAL
EXPENSES AMORTIZED FOR
ORGANIZATIONAL THE YEAR ENDED
PORTFOLIO NAME EXPENSES APRIL 30, 1999
Fixed Income Fund $21,477 $ 5,854
Michigan Municipal Bond Fund 24,175 6,591
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:
U.S. GOVERNMENT
SECURITIES FUND
----------------------
YEAR ENDED APRIL 30,
----------------------
1999 1998
- ---------------------------------------- ---------- ----------
Shares sold 627,607 1,008,867
- ----------------------------------------
Shares issued to shareholders in payment
of distributions declared 29,512 39,277
- ----------------------------------------
Shares redeemed (1,754,179) (1,447,352)
- ---------------------------------------- ---------- ----------
Net change resulting from share
transactions (1,097,060) (399,208)
- ---------------------------------------- ---------- ----------
28
INDEPENDENCE ONE MUTUAL FUNDS
- --------------------------------------------------------------------------------
FIXED INCOME FUND
----------------------
YEAR ENDED APRIL 30,
----------------------
1999 1998
- ---------------------------------------- ---------- ----------
Shares sold 1,859,584 1,968,892
- ----------------------------------------
Shares issued to shareholders in payment
of distributions declared 410,699 388,432
- ----------------------------------------
Shares redeemed (1,574,201) (1,583,847)
- ---------------------------------------- ---------- ----------
Net change resulting from share
transactions 696,082 773,477
- ---------------------------------------- ---------- ----------
MICHIGAN MUNICIPAL
BOND FUND
----------------------
YEAR ENDED APRIL 30,
----------------------
1999 1998
---------- ----------
- ----------------------------------------
Shares sold 124,438 358,787
- ----------------------------------------
Shares issued to shareholders in payment
of distributions declared 4,616 1,340
- ----------------------------------------
Shares redeemed (315,517) (669,163)
- ---------------------------------------- ---------- ----------
Net change resulting from share
transactions (186,463) (309,036)
- ---------------------------------------- ---------- ----------
(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).
INVESTMENT
ADVISORY
PORTFOLIO NAME FEE
U.S. Government Securities Fund 0.70%
Fixed Income Fund 0.75%
Michigan Municipal Bond Fund 0.75%
The Adviser may voluntarily choose to waive any portion of its fee. The
Adviser can modify or terminate this voluntary waiver at any time at its
sole discretion.
ADMINISTRATIVE FEE--Federated Administrative Services ("FAS") provides the
Funds with certain administrative personnel and services. The fee paid to
FAS is based on the level of average aggregate net assets of the Trust for
the period. The administrative fee received during any fiscal year shall be
at least $50,000 for each portfolio in the Trust. FAS may voluntarily choose
to waive a portion of its fee.
29
INDEPENDENCE ONE MUTUAL FUNDS
- --------------------------------------------------------------------------------
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.
(5) INVESTMENT TRANSACTION
Purchases and sales of investments, excluding short-term securities, for the
year ended April 30, 1999, were as follows:
PORTFOLIO NAME PURCHASES SALES
U.S. Government Securities Fund $20,984,729 $19,822,581
Fixed Income Fund 21,097,051 15,472,550
Michigan Municipal Bond Fund 504,030 1,761,982
(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, 1999, 68.8% 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 22.4% of total investments.
(7) YEAR 2000 (UNAUDITED)
Similar to other financial organizations, the Funds could be adversely affected
if the computer systems used by the Funds' service providers do not properly
process and calculate date-related information and data from and after January
1, 2000. The Funds' Adviser and administrator are taking measures that they
believe are reasonably designed to address the Year 2000 issue with respect to
computer systems that they use and to obtain reasonable assurances that
comparable steps are being taken by each of the Fund's other service providers.
At this time, however, there can be no assurance that these steps will be
sufficient to avoid any adverse impact to the Funds.
30
INDEPENDENT AUDITORS' REPORT
- ------------------------------------------------------------
The Board of Trustees and Shareholders INDEPENDENCE ONE MUTUAL FUNDS:
We have audited the accompanying statements of assets and liabilities of
Independence One U.S. Government Securities Fund, Independence One Fixed Income
Fund, and Independence One Michigan Municipal Bond Fund, each portfolios of the
Independence One Mutual Funds, including the portfolios of investments, as of
April 30, 1999, the related statements of operations for the year then ended,
the statements of changes in net assets for the each of the years in the
two-year period then ended, and financial highlights for each of the years in
the five-year period then ended for U.S. Government Securities Fund, and for
each of the years in the three-year period then ended and for the periods from
October 23, 1995 (date of initial public investment) to April 30, 1996 for Fixed
Income Fund, and from November 20, 1995 (date of initial public investment) to
April 30, 1996 for Michigan Municipal Bond Fund. 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 as of April
30, 1999, 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, 1999,
the results of their operations, changes in their net assets, and their
financial highlights for the periods indicated above in conformity with
generally accepted accounting principles.
[LOGO]
Boston, Massachusetts
June 16, 1999
31
TRUSTEES OFFICERS
- ------------------------------------------------------------
Robert E. Baker
Harold Berry
Nathan Forbes
Harry J. Nederlander
Thomas S. Wilson
Edward C. Gonzales
PRESIDENT AND TREASURER
Jeffrey W. Sterling
VICE PRESIDENT AND ASSISTANT TREASURER
C. Grant Anderson
SECRETARY
Timothy S. Johnson
ASSISTANT SECRETARY
MUTUAL FUNDS ARE NOT BANK DEPOSITS OR OBLIGATIONS, ARE NOT GUARANTEED BY ANY
BANK, AND ARE NOT INSURED OR GUARANTEED BY THE U.S. GOVERNMENT, THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER
GOVERNMENT AGENCY. INVESTMENT IN MUTUAL FUNDS INVOLVES INVESTMENT RISK,
INCLUDING POSSIBLE LOSS OF PRINCIPAL.
This report is authorized for distribution to prospective investors only when
preceded or accompanied by the Funds' prospectus which contains facts concerning
their objectives and policies, management fees, expenses and other information.
32
INDEPENDENCE ONE
MUTUAL FUNDS
5800 Corporate Drive
Pittsburgh, Pennsylvania 15237-7010
INVESTMENT ADVISER
Michigan National Bank
27777 Inkster Road
Mail Code 10-52
Farmington Hills, Michigan 48333-9065
DISTRIBUTOR
Federated Securities Corp.
Federated Investors Tower
1001 Liberty Avenue
Pittsburgh, Pennsylvania 15222-3779
CUSTODIAN
Michigan National Bank
27777 Inkster Road
Mail Code 10-30
Farmington Hills, Michigan 48333-9065
TRANSFER AGENT AND
DIVIDEND DISBURSING AGENT
Federated Shareholder
Services Company
P. O. Box 8600
Boston, Massachusetts 02266-8600
INDEPENDENT AUDITORS
KPMG LLP
99 High Street
Boston, Massachusetts 02110
[LOGO]
Cusip 453777856
Cusip 453777807
Cusip 453777864
GO1200-11 (6/99)
INDEPENDENCE ONE-REGISTERED TRADEMARK-
MUTUAL FUNDS
(DISTRIBUTED BY FEDERATED SECURITIES CORP.)
COMBINED
ANNUAL REPORT
TO SHAREHOLDERS
APRIL 30, 1999
- --------------------------------------
Independence One U.S. Government
Securities Fund
Independence One Fixed Income Fund
Independence One Michigan
Municipal Bond Fund
- ---------------------------------------
- ---------------------------------------
- ---------------------------------------
- ---------------------------------------
- ---------------------------------------
- ---------------------------------------
- ---------------------------------------
- ---------------------------------------
[MICHIGAN NATIONAL BANK LOGO]
PRESIDENT'S MESSAGE
- ------------------------------------------------------------
Dear Investor:
I am pleased to present the first Annual Report of Independence One Small Cap
Fund. The report covers the period from June 22, 1998--when the fund began
operations--through April 30, 1999. Inside, you'll find complete financial
information for the fund, beginning with the portfolio manager's discussion,
followed by a listing of fund holdings and the financial statements.
Stocks issued by smaller companies have historically offered the potential for
higher returns over time than stocks issued by larger companies, in exchange for
a higher level of risk. Over the period covered by this report, small-company
stocks experienced a difficult environment as investor sentiment favored
extremely large, growth-oriented companies. As a result, the well-publicized Dow
Jones Industrial Average continued its momentum and reached new highs while the
returns of stocks issued by smaller companies lagged.
While small-company stocks have underperformed, this undervalued area of the
stock market currently gives investors the opportunity to invest in stocks with
"down-to-earth" prices-- compared to highly valued large-company growth stocks
whose returns have been driving the market.
Thank you for selecting Independence One Small Cap Fund to pursue the long-term
performance potential of small-company stocks. I urge you to keep focused on the
long term, which is the true measure of stock performance. We look forward to
updating you about the progress of your fund.
Sincerely,
[EDWARD C. GONZALES SIGNATURE]
Edward C. Gonzales
President
June 16, 1999
1
INVESTMENT REVIEW
- ------------------------------------------------------------
Q
What are your observations on the small-cap market, which improved later in
the reporting period?
A
The small-cap market continued to underperform the larger-cap market
through March. In April, however, we saw a strong rebound in the small-cap
sector, as investors looked for out-of-favor and value stocks. For the most
part, the small-cap market enjoyed an inflow of cash, although some stocks, such
as internet companies, experienced negative cash flows.
Q
What was the total return of Independence One Small Cap Fund for the
six-month period ended April 30, 1999 compared to the Standard & Poor's
Small Cap 600 Composite Stock Price Index, ("S&P Small Cap 600") and the
Russell 2000?
A
The performance of the Independence One Small Cap Fund for the six-month
period ended April 30, 1999 was 8.49% compared to the S&P SmallCap 600**
being up 9.01% and the Russell 2000 Index*** being up 15.16%. The
Independence One Small Cap Fund lags the S&P SmallCap 600 benchmark because of
management fees and the small cash position maintained to cover cash outflows.
Independence One Small Cap Fund's total return for the period from June 22, 1998
(start of performance) to April 30, 1999 was (5.94%).
Q
What are your comments on the buying opportunities in what remains the only
significantly undervalued area of the stock market?
A
We agree that the small-cap market, based on historical valuations,
represents significant value and believe that, in general, it is a good
opportunity.
Q
As we reach mid year, what do you see ahead for small-caps for the rest of
1999?
A
If the market reacts negatively to the Y2K compliance situation or to an
increase in interest rates by the Federal Reserve Board, the small-cap
market will probably underperform the large-cap market due to its lack of
liquidity.
*PERFORMANCE QUOTED REPRESENTS PAST PERFORMANCE AND IS NOT INDICATIVE OF
FUTURE RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE, SO THAT
AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR
ORIGINAL COST.
**THE S&P SMALLCAP 600 IS AN UNMANAGED, CAPITALIZATION-WEIGHTED INDEX OF 600
COMMON STOCKS. IT IS DESIGNED TO PROVIDE A MEASURE OF OVERALL SMALL
CAPITALIZATION COMPANY PERFORMANCE, AND INCLUDES COMMON STOCKS OF COMPANIES
FROM A VARIETY OF ECONOMIC SECTORS. INVESTMENT CANNOT BE MADE IN AN INDEX.
"STANDARD & POOR'S,-REGISTERED TRADEMARK-" "S&P,-REGISTERED TRADEMARK-" AND
"S&P SMALLCAP 600-REGISTERED TRADEMARK-" ARE TRADEMARKS OF THE MCGRAW-HILL
COMPANIES, INC. AND HAVE BEEN AUTHORIZED FOR USE BY INDEPENDENCE ONE SMALL
CAP FUND. THE FUND IS NOT SPONSORED, ENDORSED, SOLD OR PROMOTED BY OR
AFFILIATED WITH STANDARD & POOR'S.
***RUSSELL 2000-REGISTERED TRADEMARK- INDEX MEASURES THE PERFORMANCE OF THE
2,000 SMALLEST COMPANIES IN THE RUSSELL 3000 INDEX, WHICH REPRESENTS
APPROXIMATELY 11% OF THE TOTAL MARKET CAPITALIZATION OF THE RUSSELL 3000
INDEX. THIS INDEX IS UNMANAGED AND INVESTMENTS CANNOT BE MADE IN AN INDEX.
2
INDEPENDENCE ONE SMALL CAP FUND
- ------------------------------------------------------------
GROWTH OF $10,000 INVESTED IN INDEPENDENCE ONE SMALL CAP FUND
The graph below illustrates the hypothetical investment of $10,000* in the
Independence One Small Cap Fund (the "Fund") from June 22, 1998 (start of
performance) to April 30, 1999, compared to the Standard & Poor's Small Cap 600
Composite Stock Price Index.+
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
IOSCF PLOT POINTS GRAPH
The Fund Standard & Poor's Small Cap 600 Composite Stock Price Index
6/22/98 $10,000 $10,000
4/30/99 $9,406 $9,381
(GRAPHIC REPRESENTATION OMITTED. PLEASE SEE APPENDIX A5.)
AVERAGE ANNUAL TOTAL RETURN FOR THE PERIOD ENDED APRIL 30, 1999
Start of Performance (6/22/98) ......................................... (5.94%)
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 THEIR 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 Standard & Poor's Small Cap 600 Composite Stock Price Index
has been adjusted to reflect reinvestment of dividends on securities in the
index.
+The Standard & Poor's Small Cap 600 Composite Stock Price 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.
3
INDEPENDENCE ONE SMALL CAP FUND
PORTFOLIO OF INVESTMENTS
APRIL 30, 1999
- ----------------------------------------------------------------------------
SHARES VALUE
- ---------- ---------------------------------------- -----------
COMMON STOCKS--91.5%
- ----------------------------------------------------
BASIC INDUSTRY--3.9%
----------------------------------------
4,500 AMCOL International Corp. $ 55,125
----------------------------------------
6,000 Aptargroup, Inc. 168,000
----------------------------------------
4,100 Caraustar Industries, Inc. 104,550
----------------------------------------
3,600 Coeur d'Alene Mines Corp. 16,650
----------------------------------------
5,900 Corn Products International, Inc. 170,363
----------------------------------------
6,300 Delta & Pine Land Co. 214,200
----------------------------------------
9,100 (1) Hecla Mining Co. 27,300
----------------------------------------
2,800 IMCO Recycling, Inc. 47,600
----------------------------------------
3,200 Lone Star Industries, Inc. 114,200
----------------------------------------
4,200 MacDermid, Inc. 176,138
----------------------------------------
1,900 Republic Group, Inc. 33,250
----------------------------------------
2,900 (1) WHX Corp. 24,469
---------------------------------------- -----------
Total 1,151,845
---------------------------------------- -----------
CONSUMER DURABLES--4.6%
----------------------------------------
2,100 Bassett Furniture Industries, Inc. 50,400
----------------------------------------
8,000 (1) Champion Enterprises, Inc. 148,500
----------------------------------------
9,200 D. R. Horton, Inc. 177,675
----------------------------------------
1,900 Dixie Group, Inc. 16,863
----------------------------------------
4,600 Ethan Allen Interiors, Inc. 233,163
----------------------------------------
8,700 La-Z Boy Chair Co. 171,281
----------------------------------------
7,700 Oakwood Homes Corp. 106,838
----------------------------------------
4,200 Polaris Industries, Inc., Class A 158,288
----------------------------------------
2,400 Ryland Group, Inc. 63,000
----------------------------------------
3,900 Smith (A.O.) Corp. 98,475
----------------------------------------
6,100 (1) Toll Brothers, Inc. 130,388
---------------------------------------- -----------
Total 1,354,871
---------------------------------------- -----------
4
INDEPENDENCE ONE SMALL CAP FUND
- --------------------------------------------------------------------------------
SHARES VALUE
- ---------- ---------------------------------------- -----------
COMMON STOCKS--CONTINUED
- ----------------------------------------------------
CONSUMER NON-DURABLES--2.5%
----------------------------------------
2,300 (1) Ashworth, Inc. $ 10,350
----------------------------------------
5,900 (1) Buckeye Technologies, Inc. 85,550
----------------------------------------
1,500 (1) Canandaigua Wine Co., Inc., Class A 77,250
----------------------------------------
3,100 ChemFirst, Inc. 74,013
----------------------------------------
7,100 Earthgrains Co. 150,431
----------------------------------------
2,600 (1) Gibson Greetings, Inc. 16,413
----------------------------------------
6,200 (1) Nautica Enterprise, Inc. 84,088
----------------------------------------
6,200 (1) Smithfield Foods, Inc. 146,475
----------------------------------------
7,300 Wolverine World Wide, Inc. 87,600
---------------------------------------- -----------
Total 732,170
---------------------------------------- -----------
ENERGY MINERALS--3.1%
----------------------------------------
5,300 (1) Barrett Resources 160,988
----------------------------------------
7,600 Cross Timbers Oil Co. 83,125
----------------------------------------
5,400 Devon Energy Corp. 179,550
----------------------------------------
6,700 (1) Newfield Exploration Co. 180,063
----------------------------------------
3,600 (1) Offshore Logistics, Inc. 44,550
----------------------------------------
6,600 Pogo Producing Co. 126,638
----------------------------------------
1,800 St. Mary Land & Exploration Co. 34,650
----------------------------------------
7,400 (1) Tuboscope, Inc. 100,825
---------------------------------------- -----------
Total 910,389
---------------------------------------- -----------
FINANCE--18.3%
----------------------------------------
7,100 American Bankers Insurance Group, Inc. 372,306
----------------------------------------
10,400 (1) Americredit Corp. 172,250
----------------------------------------
7,500 (1) Amresco, Inc. 48,750
----------------------------------------
3,800 CMAC Investment Corp. 174,325
----------------------------------------
4,400 Centura Banks, Inc. 262,075
----------------------------------------
4,000 Commerce Bancorp, Inc. 176,500
----------------------------------------
10,000 Commercial Federal Corp. 242,500
----------------------------------------
4,400 Cullen Frost Bankers, Inc. 237,325
----------------------------------------
5
INDEPENDENCE ONE SMALL CAP FUND
- --------------------------------------------------------------------------------
SHARES VALUE
- ---------- ---------------------------------------- -----------
COMMON STOCKS--CONTINUED
- ----------------------------------------------------
FINANCE--CONTINUED
----------------------------------------
4,700 Downey Financial Corp. $ 94,000
----------------------------------------
6,000 Eaton Vance Corp. 136,875
----------------------------------------
6,200 Enhance Financial Services Group, Inc. 128,263
----------------------------------------
9,900 First American Financial Corp. 176,963
----------------------------------------
4,800 First Midwest Bancorp, Inc. 191,700
----------------------------------------
4,900 First Bancorp. 126,481
----------------------------------------
14,800 Firstmerit Corp. 411,625
----------------------------------------
11,600 Fremont General Corp. 232,000
----------------------------------------
6,101 Frontier Insurance Group, Inc. 84,266
----------------------------------------
7,201 Hudson United Bancorp. 254,733
----------------------------------------
9,200 Legg Mason, Inc. 320,850
----------------------------------------
6,600 Mutual Risk Management Ltd. 256,575
----------------------------------------
3,000 NAC Re Corp. 163,500
----------------------------------------
4,500 Orion Capital Corp. 132,469
----------------------------------------
4,300 Pioneer Group, Inc. 80,088
----------------------------------------
8,000 Raymond James Financial, Inc. 172,500
----------------------------------------
1 Regions Financial Corp. 34
----------------------------------------
5,100 Riggs National Corp. 86,063
----------------------------------------
4,700 Selective Insurance Group, Inc. 91,063
----------------------------------------
3,400 (1) Silicon Valley Bancshares 59,713
----------------------------------------
6,900 St. Paul Bancorp, Inc. 167,325
----------------------------------------
7,100 UST Corp. 171,735
----------------------------------------
7,100 United Bankshares, Inc. 191,700
---------------------------------------- -----------
Total 5,416,552
---------------------------------------- -----------
HEALTH CARE--9.7%
----------------------------------------
4,500 Alpharma, Inc., Class A 132,750
----------------------------------------
4,800 (1) Cephalon, Inc. 58,200
----------------------------------------
5,400 (1) Cerner Corp. 91,800
----------------------------------------
6
INDEPENDENCE ONE SMALL CAP FUND
- --------------------------------------------------------------------------------
SHARES VALUE
- ---------- ---------------------------------------- -----------
COMMON STOCKS--CONTINUED
- ----------------------------------------------------
HEALTH CARE--CONTINUED
----------------------------------------
5,800 (1) Genesis Health Ventures, Inc. $ 40,238
----------------------------------------
6,400 (1) IDEXX Laboratories, Inc. 144,800
----------------------------------------
4,600 (1) Incyte Pharmaceuticals, Inc. 83,088
----------------------------------------
8,700 Integrated Health Services, Inc. 41,869
----------------------------------------
5,000 Invacare Corp. 115,625
----------------------------------------
4,800 Jones Pharma, Inc. 154,200
----------------------------------------
5,200 (1) Magellan Health Services, Inc. 28,275
----------------------------------------
5,400 (1) Medquist, Inc. 184,950
----------------------------------------
4,000 Mentor Corp. 58,000
----------------------------------------
5,300 (1) North American Vaccine, Inc. 28,488
----------------------------------------
3,500 (1) Noven Pharmaceuticals, Inc. 18,375
----------------------------------------
7,900 (1) Orthodontic Centers of America, Inc. 97,763
----------------------------------------
4,100 (1) Parexel International Corp. 98,656
----------------------------------------
5,500 (1) Patterson Dental Co. 198,344
----------------------------------------
6,700 (1) Renal Care Group, Inc. 139,863
----------------------------------------
9,000 (1) Safeskin Corp. 87,750
----------------------------------------
4,500 (1) Sierra Health Services, Inc. 56,250
----------------------------------------
5,400 (1) Universal Health Services, Inc., Class B 279,788
----------------------------------------
5,000 (1) VISX, Inc. 643,750
----------------------------------------
4,200 (1) Vertex Pharmaceuticals, Inc. 88,725
---------------------------------------- -----------
Total 2,871,547
---------------------------------------- -----------
PRODUCER MANUFACTURING--8.2%
----------------------------------------
6,900 (1) Anixter International, Inc. 108,675
----------------------------------------
6,400 Applied Power, Inc., Class A 202,000
----------------------------------------
6,100 Baldor Electric Co. 117,806
----------------------------------------
4,000 Belden, Inc. 77,000
----------------------------------------
6,200 Blount International, Inc., Class A 172,825
----------------------------------------
5,000 (1) Cable Design Technologies, Class A 74,375
----------------------------------------
11,900 (1) Gentex Corp. 357,744
----------------------------------------
7
INDEPENDENCE ONE SMALL CAP FUND
- --------------------------------------------------------------------------------
SHARES VALUE
- ---------- ---------------------------------------- -----------
COMMON STOCKS--CONTINUED
- ----------------------------------------------------
PRODUCER MANUFACTURING--CONTINUED
----------------------------------------
3,300 Graco, Inc. $ 103,950
----------------------------------------
8,700 Interface, Inc. 61,444
----------------------------------------
4,300 Intermet Corp. 63,425
----------------------------------------
5,900 (1) Mueller Industries, Inc. 185,850
----------------------------------------
1,006 (1) Nashua Corp. 10,815
----------------------------------------
2,900 (1) Oak Industries, Inc. 121,075
----------------------------------------
1,800 Robbins & Myers, Inc. 38,813
----------------------------------------
5,200 Roper Industries, Inc. 148,200
----------------------------------------
2,100 (1) SPS Technologies, Inc. 91,613
----------------------------------------
3,000 (1) Scott Technologies, Inc. 55,688
----------------------------------------
2,100 Spartan Motors, Inc. 11,550
----------------------------------------
6,100 Tredegar Industries, Inc. 162,794
----------------------------------------
4,800 (1) Triarc Companies, Inc., Class A 95,100
----------------------------------------
5,200 (1) Zebra Technologies Corp., Class A 172,900
---------------------------------------- -----------
Total 2,433,642
---------------------------------------- -----------
RETAIL TRADE--8.7%
----------------------------------------
4,300 (1) Ann Taylor Stores Corp. 204,250
----------------------------------------
2,300 Baker (J.), Inc. 13,656
----------------------------------------
1,100 (1) Damark International, Inc., Class A 11,275
----------------------------------------
2,800 (1) Discount Auto Parts, Inc. 63,875
----------------------------------------
5,600 (1) Express Scripts, Inc., Class A 412,300
----------------------------------------
4,100 (1) Footstar, Inc. 138,631
----------------------------------------
3,400 Hancock Fabrics, Inc. 21,463
----------------------------------------
5,200 (1) Just For Feet, Inc. 65,650
----------------------------------------
6,500 (1) Linens 'N Things, Inc. 297,375
----------------------------------------
5,900 (1) Mens Wearhouse, Inc. 161,513
----------------------------------------
4,900 (1) Michaels Stores, Inc. 110,863
----------------------------------------
16,101 Pier 1 Imports, Inc. 118,741
----------------------------------------
5,900 Regis Corp. Minnesota 151,188
----------------------------------------
8
INDEPENDENCE ONE SMALL CAP FUND
- --------------------------------------------------------------------------------
SHARES VALUE
- ---------- ---------------------------------------- -----------
COMMON STOCKS--CONTINUED
- ----------------------------------------------------
RETAIL TRADE--CONTINUED
----------------------------------------
4,300 Shopko Stores, Inc. $ 147,544
----------------------------------------
4,400 (1) Whole Foods Market, Inc. 171,600
----------------------------------------
9,200 (1) Williams-Sonoma, Inc. 266,800
----------------------------------------
5,900 (1) Zale Corp. 223,094
---------------------------------------- -----------
Total 2,579,818
---------------------------------------- -----------
SERVICES--11.9%
----------------------------------------
5,000 Applebee's International, Inc. 129,062
----------------------------------------
2,000 (1) Au Bon Pain Co., Inc., Class A 10,625
----------------------------------------
3,000 (1) CEC Entertainment, Inc. 112,500
----------------------------------------
8,600 CKE Restaurants, Inc. 140,827
----------------------------------------
3,000 (1) Catalina Marketing Corp. 256,312
----------------------------------------
4,900 Central Parking Corp. 155,269
----------------------------------------
8,200 (1) CommScope, Inc. 199,875
----------------------------------------
11,500 (1) DeVRY, Inc. 303,312
----------------------------------------
3,700 (1) Dycom Industries, Inc. 169,044
----------------------------------------
6,500 (1) Foodmaker, Inc. 156,813
----------------------------------------
7,400 (1) HA-LO Industries, Inc. 86,950
----------------------------------------
4,300 (1) Hollywood Park, Inc. 55,362
----------------------------------------
7,800 (1) Interim Services, Inc. 135,525
----------------------------------------
5,000 (1) Landrys Seafood Restaurants, Inc. 40,625
----------------------------------------
2,500 (1) Lason Holdings, Inc. 98,906
----------------------------------------
3,500 (1) Primark Corp. 80,718
----------------------------------------
7,900 Richfood Holdings, Inc. 98,750
----------------------------------------
3,000 SEI Investments, Co. 285,000
----------------------------------------
3,200 (1) Sonic Corp. 90,000
----------------------------------------
3,800 TCBY Enterprises, Inc. 25,888
----------------------------------------
2,300 (1) Taco Cabana, Inc., Class A 23,287
----------------------------------------
7,500 True North Communications, Inc. 202,500
----------------------------------------
6,300 (1) Valassis Communications, Inc. 352,800
----------------------------------------
9
INDEPENDENCE ONE SMALL CAP FUND
- --------------------------------------------------------------------------------
SHARES VALUE
- ---------- ---------------------------------------- -----------
COMMON STOCKS--CONTINUED
- ----------------------------------------------------
SERVICES--CONTINUED
----------------------------------------
4,700 (1) Westwood One, Inc. $ 160,975
----------------------------------------
6,400 (1) World Color Press 163,600
---------------------------------------- -----------
Total 3,534,525
---------------------------------------- -----------
TECHNOLOGY--14.9%
----------------------------------------
4,600 AAR Corp. 87,400
----------------------------------------
12,900 (1) Acxiom Corp. 325,725
----------------------------------------
2,500 (1) Adaptive Broadband Corp. 37,813
----------------------------------------
7,000 (1) American Management System, Inc. 240,625
----------------------------------------
8,500 (1) Aspect Telecommunications Corp. 67,734
----------------------------------------
4,300 (1) Auspex Systems, Inc. 30,637
----------------------------------------
1,600 Bell Industries, Inc. 17,200
----------------------------------------
4,400 (1) BISYS Group, Inc. 223,300
----------------------------------------
6,100 (1) Burr Brown Corp. 161,650
----------------------------------------
8,900 (1) Ciber, Inc. 167,987
----------------------------------------
6,600 (1) Cognex Corp. 191,400
----------------------------------------
4,700 Dallas Semiconductor Corp. 199,750
----------------------------------------
2,300 (1) Digi International, Inc. 17,537
----------------------------------------
5,300 (1) Filenet Corp. 45,381
----------------------------------------
3,800 Gerber Scientific, Inc. 71,487
----------------------------------------
4,300 (1) HNC Software 92,450
----------------------------------------
6,800 (1) Harbinger Corp. 74,375
----------------------------------------
4,100 (1) Hutchinson Technology, Inc. 90,456
----------------------------------------
2,400 Innovex, Inc. 33,300
----------------------------------------
4,600 (1) Intervoice, Inc. 45,856
----------------------------------------
6,600 (1) Macromedia, Inc. 273,487
----------------------------------------
2,800 (1) Marshall Industries 45,150
----------------------------------------
5,900 (1) Mercury Interactive Corp. 166,306
----------------------------------------
5,200 National Computer Systems, Inc. 145,600
----------------------------------------
5,600 National Data Corp. 258,300
----------------------------------------
10
INDEPENDENCE ONE SMALL CAP FUND
- --------------------------------------------------------------------------------
SHARES VALUE
- ---------- ---------------------------------------- -----------
COMMON STOCKS--CONTINUED
- ----------------------------------------------------
TECHNOLOGY--CONTINUED
----------------------------------------
5,500 (1) National Instruments Corp. $ 187,000
----------------------------------------
6,300 (1) Novellus Systems, Inc. 297,675
----------------------------------------
6,100 (1) Orbital Sciences Corp. 128,481
----------------------------------------
8,100 (1) Read-Rite Corp. 50,118
----------------------------------------
8,500 (1) S3, Inc. 61,093
----------------------------------------
6,800 (1) Technology Solutions Corp. 53,975
----------------------------------------
1,200 (1) Three-Five Systems, Inc. 13,800
----------------------------------------
3,700 (1) Trimble Navigation Ltd. 42,896
----------------------------------------
5,200 (1) Unitrode Corp. 91,975
----------------------------------------
7,600 (1) VLSI Technology, Inc. 143,450
----------------------------------------
8,500 (1) Whittman-Hart, Inc. 240,125
---------------------------------------- -----------
Total 4,421,494
---------------------------------------- -----------
TRANSPORTATION--2.6%
----------------------------------------
5,600 Air Express International Corp. 122,500
----------------------------------------
4,100 Expeditors International Washington,
Inc. 248,563
----------------------------------------
6,000 (1) Fritz Companies, Inc. 60,750
----------------------------------------
5,000 (1) Heartland Express, Inc. 69,688
----------------------------------------
2,000 (1) M.S. Carriers, Inc. 63,750
----------------------------------------
4,700 (1) Mesa Air Group, Inc. 31,725
----------------------------------------
4,400 USFreightways Corp. 165,000
---------------------------------------- -----------
Total 761,976
---------------------------------------- -----------
UTILITIES--3.1%
----------------------------------------
5,000 Atmos Energy Corp. 126,245
----------------------------------------
6,700 Philadelphia Suburban Corp. 151,168
----------------------------------------
5,100 Piedmont Natural Gas, Inc. 162,560
----------------------------------------
5,100 Sierra Pacific Resources 181,686
----------------------------------------
5,000 Southwest Gas Corp. 142,812
----------------------------------------
11
INDEPENDENCE ONE SMALL CAP FUND
- --------------------------------------------------------------------------------
SHARES OR
PRINCIPAL
AMOUNT VALUE
- ---------- ---------------------------------------- -----------
COMMON STOCKS--CONTINUED
- ----------------------------------------------------
UTILITIES--CONTINUED
----------------------------------------
6,200 WICOR, Inc. $ 146,475
---------------------------------------- -----------
Total 910,946
---------------------------------------- -----------
TOTAL COMMON STOCKS (IDENTIFIED COST
$27,708,594) 27,079,775
---------------------------------------- -----------
REPURCHASE AGREEMENT (2)--6.0%
- ----------------------------------------------------
$1,763,000 Dean Witter Reynolds, Inc., 4.85%, dated
4/30/1999, due 5/3/1999 (at cost) 1,763,000
---------------------------------------- -----------
TOTAL INVESTMENTS (IDENTIFIED COST
$29,471,594)(3) $28,842,775
---------------------------------------- -----------
(1) Non-income producing security.
(2) The repurchase agreement is fully collateralized by U.S. Treasury
obligations based on market prices at the date of the portfolio.
(3) The cost of investments for federal tax purposes amounts to $29,479,906.
The net unrealized depreciation of investments on a federal tax basis
amounts to $637,131 which is comprised of $2,175,482 appreciation and
$2,812,613 depreciation at April 30, 1999.
Note: The categories of investments are shown as a percentage of net assets
($29,586,993) at April 30, 1999.
(See Notes which are an integral part of the Financial Statements)
12
INDEPENDENCE ONE SMALL CAP FUND
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1999
- ----------------------------------------------------------------------------
ASSETS:
- -------------------------------------------------
Total investments in securities, at value
(identified cost $29,471,594 and tax cost
$29,479,906) $28,842,775
- -------------------------------------------------
Cash 7,127
- -------------------------------------------------
Income receivable 6,846
- -------------------------------------------------
Receivable for investments sold 536,607
- -------------------------------------------------
Receivable for shares sold 285,000
- ------------------------------------------------- -----------
Total assets 29,678,355
- -------------------------------------------------
LIABILITIES:
- ----------------------------------------
Payable to adviser $45,263
- ----------------------------------------
Other accrued expenses 46,099
- ---------------------------------------- -------
Total liabilities 91,362
- ------------------------------------------------- -----------
Net Assets for 3,147,705 shares outstanding $29,586,993
- ------------------------------------------------- -----------
NET ASSETS CONSIST OF:
- -------------------------------------------------
Paid in capital $28,975,569
- -------------------------------------------------
Net unrealized depreciation of investments (628,819)
- -------------------------------------------------
Accumulated net realized gain on investments 1,240,243
- ------------------------------------------------- -----------
Total Net Assets $29,586,993
- ------------------------------------------------- -----------
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER
SHARE:
- -------------------------------------------------
$29,586,993 DIVIDED BY 3,147,705 shares
outstanding $9.40
- ------------------------------------------------- -----------
(See Notes which are an integral part of the Financial Statements)
13
INDEPENDENCE ONE SMALL CAP FUND
STATEMENT OF OPERATIONS
PERIOD ENDED APRIL 30, 1999 (1)
- --------------------------------------------------------------------------------
INVESTMENT INCOME:
- -------------------------------------------------------
Dividends $ 88,751
- -------------------------------------------------------
Interest 93,222
- ------------------------------------------------------- ----------
Total income 181,973
- -------------------------------------------------------
EXPENSES:
- ---------------------------------------------
Investment advisory fee $ 77,419
- ---------------------------------------------
Administrative personnel and
services fee 43,699
- ---------------------------------------------
Custodian fees 28,181
- ---------------------------------------------
Transfer and dividend disbursing
agent fees and expenses 30,059
- ---------------------------------------------
Directors'/Trustees' fees 1,955
- ---------------------------------------------
Auditing fees 13,000
- ---------------------------------------------
Legal fees 2,361
- ---------------------------------------------
Portfolio accounting fees 33,610
- ---------------------------------------------
Share registration costs 25,947
- ---------------------------------------------
Printing and postage 5,065
- ---------------------------------------------
Insurance premiums 895
- ---------------------------------------------
Miscellaneous 972
- --------------------------------------------- --------
Total expenses 263,163
- ---------------------------------------------
Waivers--
- -----------------------------------
Waiver of investment advisory
fee $(32,156)
Waiver of administrative
personnel and services fee (34,504)
- ----------------------------------- --------
Total waivers (66,660)
- --------------------------------------------- --------
Net expenses 196,503
- ------------------------------------------------------- ----------
Net operating loss (14,530)
- ------------------------------------------------------- ----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
- -------------------------------------------------------
Net realized gain on investments 1,269,437
- -------------------------------------------------------
Net unrealized depreciation of investments (628,819)
- ------------------------------------------------------- ----------
Net realized and unrealized gain on
investments 640,618
- ------------------------------------------------------- ----------
Change in net assets resulting from
operations $ 626,088
- ------------------------------------------------------- ----------
(1) For the period from June 22, 1998 (date of initial public investment) to
April 30, 1999.
(See Notes which are an integral part of the Financial Statements)
14
INDEPENDENCE ONE SMALL CAP FUND
STATEMENT OF CHANGES IN NET ASSETS
- ------------------------------------------------------------
PERIOD ENDED
APRIL 30,
1999 (1)
- -------------------------------------------------- -------------
INCREASE (DECREASE) IN NET ASSETS:
- --------------------------------------------------
OPERATIONS--
- --------------------------------------------------
Net operating loss $ (14,530)
- --------------------------------------------------
Net realized gain on investments ($1,263,219 as
computed for federal tax purposes) 1,269,437
- --------------------------------------------------
Net unrealized depreciation of investments (628,819)
- -------------------------------------------------- -------------
Change in net assets resulting from operations 626,088
- -------------------------------------------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS--
- --------------------------------------------------
Distributions from net investment income (10,998)
- --------------------------------------------------
Distributions from net realized gains (3,666)
- -------------------------------------------------- -------------
Change in net assets resulting from
distributions to shareholders (14,664)
- -------------------------------------------------- -------------
SHARE TRANSACTIONS--
- --------------------------------------------------
Proceeds from sale of shares 31,157,123
- --------------------------------------------------
Net asset value of shares issued to shareholders
in payment of distributions declared 11,435
- --------------------------------------------------
Cost of shares redeemed (2,192,989)
- -------------------------------------------------- -------------
Change in net assets resulting from share
transactions 28,975,569
- -------------------------------------------------- -------------
Change in net assets 29,586,993
- --------------------------------------------------
NET ASSETS:
- --------------------------------------------------
Beginning of period --
- -------------------------------------------------- -------------
End of period $29,586,993
- -------------------------------------------------- -------------
(1) For the period from June 22, 1998 (date of initial public investment) to
April 30, 1999.
(See Notes which are an integral part of the Financial Statements)
15
INDEPENDENCE ONE SMALL CAP FUND
FINANCIAL HIGHLIGHTS
- ------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
PERIOD ENDED
APRIL 30,
1999 (1)
- -------------------------------------------------- -------------
NET ASSET VALUE, BEGINNING OF PERIOD $10.00
- --------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- --------------------------------------------------
Net operating loss (0.01)
- --------------------------------------------------
Net realized and unrealized gain (loss) on
investments (0.59)(2)
- --------------------------------------------------
------
Total from investment operations (0.60)
- -------------------------------------------------- ------
LESS DISTRIBUTIONS
- --------------------------------------------------
Distributions from net investment income 0.00**
- --------------------------------------------------
Distributions from net realized gain on
investments 0.00**
------
- --------------------------------------------------
Total distributions 0.00**
- -------------------------------------------------- ------
NET ASSET VALUE, END OF PERIOD $9.40
- -------------------------------------------------- ------
TOTAL RETURN (3) (5.94%)
- --------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- --------------------------------------------------
Expenses (4) 1.69%*
- --------------------------------------------------
Net operating loss (4) (0.51%)*
- --------------------------------------------------
Expenses (after waivers/reimbursements) 1.27%*
- --------------------------------------------------
Net operating loss (after
waivers/reimbursements) (0.09%)*
- --------------------------------------------------
SUPPLEMENTAL DATA
- --------------------------------------------------
Net assets, end of period (000 omitted) $29,587
- --------------------------------------------------
Portfolio turnover 36%
- --------------------------------------------------
* Computed on an annualized basis.
** Amount represents less than $0.01 per share
(1) Reflects operations for the period from June 22, 1998 (date of initial
public investment) to April 30, 1999.
(2) The amount shown may not accord with the change in aggregate gains and
losses of portfolio securities due to the timing of sales and redemptions
of Fund shares.
(3) Based on net asset value.
(4) During the period, certain fees were voluntarily waived or reimbursed. If
such voluntary waivers or reimbursements had not occurred, the ratios would
have been as indicated.
(See Notes which are an integral part of the Financial Statements)
16
INDEPENDENCE ONE SMALL CAP FUND
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 1999
- ----------------------------------------------------------------------------
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 nine portfolios. The financial
statements included herein are only those of Independence One Small Cap Fund
(the "Fund"), a diversified portfolio. The financial statements of the other
portfolios are presented separately. The assets of each portfolio are segregated
and a shareholder's interest is limited to the portfolio in which shares are
held.
The investment objective of the Fund is total return. The Fund will pursue this
objective by attempting to provide investment results that correspond to or
exceed the aggregate price and dividend performance of the Standard & Poor's
SmallCap 600 Index (the "S&P SmallCap 600") by investing primarily in a
representative sample of the common stocks comprising the S&P SmallCap 600. The
Fund is neither affiliated with nor sponsored by Standard & Poor's.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles.
INVESTMENT VALUATIONS--Listed equity securities are valued at the last sale
price reported on a national securities exchange. Short-term securities are
valued at the prices provided by an independent pricing service. However,
short-term securities with remaining maturities of sixty days or less at the
time of purchase may be valued at amortized cost, which approximates fair
market value. Investment gains and losses are determined on the identified
cost basis.
REPURCHASE AGREEMENTS--It is the policy of the Fund to require the custodian
bank to take possession, to have legally segregated in the Federal Reserve
Book Entry System, or to have segregated within the custodian bank's vault,
all securities held as collateral under repurchase agreement transactions.
Additionally, procedures have been established by the Fund to monitor, on a
daily basis, the market value of each repurchase agreement's collateral to
ensure that the value of collateral at least equals the repurchase price to
be paid under the repurchase agreement transaction.
The Fund will only enter into repurchase agreements with banks and other
recognized financial institutions, such as broker/dealers, which are deemed
by the Fund's adviser to be creditworthy pursuant to the guidelines and/or
standards reviewed or established by the Board of Trustees (the "Trustees").
Risks may arise from the potential inability of counterparts to honor the
terms of the repurchase agreement. Accordingly, the Fund could receive less
than the repurchase price on the sale of collateral securities.
INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS--Interest income and expenses
are accrued daily. Bond premium and discount, if applicable, are amortized
as required by the Internal Revenue Code, as amended (the "Code"). Dividend
income and distributions to shareholders are recorded on the ex-dividend
date.
17
INDEPENDENCE ONE SMALL CAP FUND
- --------------------------------------------------------------------------------
Distributions are determined in accordance with income tax regulations which
may differ from generally accepted accounting principles. These differences
are due to differing treatments for net operating losses. The following
reclassification has been made to the financial statements.
INCREASE (DECREASE)
- -------------------------------------------
ACCUMULATED
NET REALIZED UNDISTRIBUTED
GAIN ON INVESTMENTS NET INVESTMENT INCOME
- ------------------- ---------------------
(25,528) 25,528
Net investment income, net realized gains/losses, and net assets were not
affected by this reclassification.
FEDERAL TAXES--It is the Fund's policy to comply with the provisions of the
Code applicable to regulated investment companies and to distribute to
shareholders each year substantially all of its income. Accordingly, no
provisions for federal tax are necessary.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Fund may engage in
when-issued or delayed delivery transactions. The Fund records when-issued
securities on the trade date and maintains security positions such that
sufficient liquid assets will be available to make payment for the
securities purchased. Securities purchased on a when-issued or delayed
delivery basis are marked to market daily and begin earning interest on the
settlement date.
USE OF ESTIMATES--The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts of assets, liabilities,
expenses and revenues reported in the financial statements. Actual results
could differ from those estimated.
OTHER--Investment transactions are accounted for on the trade date.
3. SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value).
Transactions in shares were as follows:
PERIOD ENDED
APRIL 30, 1999 (1)
------------------
Shares sold 3,383,646
- --------------------------------------------------
Shares issued to shareholders in payment of
distributions declared 1,257
- --------------------------------------------------
Shares redeemed (237,198)
- -------------------------------------------------- --------
Net change resulting from share transactions 3,147,705
- -------------------------------------------------- --------
(1) Reflects operations for the period from June 22, 1998 (date of initial
public investment) to April 30, 1999.
18
INDEPENDENCE ONE SMALL CAP FUND
- --------------------------------------------------------------------------------
4. INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE--Michigan National Bank, the Fund's investment
adviser (the "Adviser"), receives for its services an annual investment
advisory fee equal to 0.50% of the Fund's average daily net assets. The
Adviser may voluntarily choose to waive any portion of its fee. The Adviser
can modify or terminate this voluntary waiver at any time at its sole
discretion.
Under the terms of a sub-advisory agreement between the Adviser and Sosnoff
Sheridan Corporation, Sosnoff Sheridan Corporation receives an annual fee
from the Adviser equal to 0.05% of the average daily net value of the Fund's
equity securities. Sosnoff Sheridan Corporation may voluntarily choose to
reduce its compensation.
ADMINISTRATIVE FEE--Federated Administrative Services ("FAS") provides the
Fund with certain administrative personnel and services. The fee paid to FAS
is based on the level of average aggregate net assets of the Trust for the
period. The administrative fee received during any fiscal year shall be at
least $50,000 for each portfolio of the Trust. FAS may voluntarily choose to
waive a portion of its fee.
TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES--Federated Services
Company ("FServ"), through its subsidiary, Federated Shareholder Services
Company ("FSSC"), serves as transfer and dividend disbursing agent for the
Fund. The fee paid to FSSC is based on the size, type, and number of
accounts and transactions made by shareholders.
PORTFOLIO ACCOUNTING FEES--FServ maintains the Fund's accounting records for
which it receives a fee. The fee is based on the level of the Fund's average
daily net assets for the period, plus out-of-pocket expenses.
CUSTODIAN FEES--Michigan National Bank is the Fund's custodian. The fee is
based on the level of the Fund's average daily net assets for the period,
plus out-of-pocket expenses.
GENERAL--Certain of the Officers of the Trust are Officers and/or Directors
or Trustees of the above companies.
5. INVESTMENT TRANSACTIONS
Purchases and sales of investments, excluding short-term securities, for the
period ended April 30, 1999, were as follows:
Purchases $32,447,285
- -------------------------------------------------- -----------
Sales $ 5,900,470
- -------------------------------------------------- -----------
6. YEAR 2000 (UNAUDITED)
Similar to other financial organizations, the Fund could be adversely affected
if the computer systems used by the Fund's service providers do not properly
process and calculate date-related information and data from and after January
1, 2000. The Fund's Adviser and administrator are taking measures that they
believe are reasonably designed to address the Year 2000 issue with respect to
computer systems that they use and to obtain reasonable assurances that
comparable steps are being taken by each of the Fund's other service providers.
At this time, however, there can be no assurance that these steps will be
sufficient to avoid any adverse impact to the Fund.
19
INDEPENDENT AUDITORS' REPORT
- ------------------------------------------------------------
The Board of Trustees and Shareholders INDEPENDENCE ONE MUTUAL FUNDS:
We have audited the accompanying statement of assets and liabilities of
Independence One Small Cap Fund, a portfolio of the Independence One Mutual
Funds, including the portfolio of investments, as of April 30, 1999, the related
statement of operations, the statement of changes in net assets, and the
financial highlights for the period from June 22, 1998 (date of initial public
investment) to April 30, 1999. 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 audit.
We conducted our audit 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 as of April 30, 1999, by
correspondence with the custodian and brokers. 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 audit provides 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 Small Cap Fund as of April 30, 1999, the results of its
operations, changes in its net assets, and its financial highlights for the
period indicated above in conformity with generally accepted accounting
principles.
[KPMG LLP SIGNATURE]
Boston, Massachusetts
June 16, 1999
20
TRUSTEES OFFICERS
- ------------------------------------------------------------
Robert E. Baker
Harold Berry
Nathan Forbes
Harry J. Nederlander
Thomas S. Wilson
Edward C. Gonzales
PRESIDENT AND TREASURER
Jeffrey W. Sterling
VICE PRESIDENT AND ASSISTANT TREASURER
C. Grant Anderson
SECRETARY
Timothy S. Johnson
ASSISTANT SECRETARY
MUTUAL FUNDS ARE NOT BANK DEPOSITS OR OBLIGATIONS, ARE NOT GUARANTEED BY ANY
BANK, AND ARE NOT INSURED OR GUARANTEED BY THE U.S. GOVERNMENT, THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER
GOVERNMENT AGENCY. INVESTMENT IN MUTUAL FUNDS INVOLVES INVESTMENT RISK,
INCLUDING POSSIBLE LOSS OF PRINCIPAL.
This report is authorized for distribution to prospective investors only when
preceded or accompanied by the Fund's prospectus which contains facts concerning
its objectives and policies, management fees, expenses and other information.
21
INDEPENDENCE ONE
MUTUAL FUNDS
5800 Corporate Drive
Pittsburgh, Pennsylvania 15237-7010
INVESTMENT ADVISER
Michigan National Bank
27777 Inkster Road
Mail Code 10-52
Farmington Hills, Michigan 48333-9065
SUB-ADVISER
Sosnoff Sheridan Corporation
440 South LaSalle Street
Suite 2301
Chicago, Illinois 60605
DISTRIBUTOR
Federated Securities Corp.
Federated Investors Tower
1001 Liberty Avenue
Pittsburgh, Pennsylvania 15222-3779
CUSTODIAN
Michigan National Bank
27777 Inkster Road
Mail Code 10-30
Farmington Hills, Michigan 48333-9065
TRANSFER AGENT AND
DIVIDEND DISBURSING AGENT
Federated Shareholder
Services Company
P. O. Box 8600
Boston, Massachusetts 02266-8600
INDEPENDENT AUDITORS
KPMG LLP
99 High Street
Boston, Massachusetts 02110
[LOGO]
G01200-14 (6/99)
INDEPENDENCE ONE-REGISTERED TRADEMARK-
SMALL CAP FUND
(DISTRIBUTED BY FEDERATED SECURITIES CORP.)
ANNUAL REPORT
TO SHAREHOLDERS
APRIL 30, 1999
- --------------------------------------
- ---------------------------------------
- ---------------------------------------
- ---------------------------------------
- ---------------------------------------
- ---------------------------------------
- ---------------------------------------
- ---------------------------------------
- ---------------------------------------
[MICHIGAN NATIONAL BANK LOGO]
PRESIDENT'S MESSAGE
- ------------------------------------------------------------
Dear Investor:
I am pleased to present the first Annual Report of Independence One
International Equity Fund. The report covers the period from September 25, 1998,
when the fund began operations, through April 30, 1999. Inside, you'll find
complete financial information for the fund--beginning with the portfolio
manager's discussion, followed by a listing of fund holdings and the financial
statements.
Independence One International Equity Fund gives you the opportunity to invest
in dynamic companies beyond the United States--companies that feed a growing
worldwide appetite for products and services.* The stocks of these companies are
listed on recognized stock exchanges in Australia, Austria, Belgium, Denmark,
Finland, France, Germany, Hong Kong, Ireland, Italy, Japan, Luxembourg,
Malaysia, Netherlands, New Zealand, Norway, Portugal, Singapore, Spain,
Switzerland, and the United Kingdom.
From September 25, 1998 (date of initial public investment) to April 30, 1999,
the fund produced a strong total return of 29.42% through a net asset increase
of $2.75, capital gains totaling $0.16 per share and dividend income totaling
$0.02 per share.** Fund assets totaled $15.6 million as of April 30, 1999.
Thank you for selecting Independence One International Equity Fund to complement
your U.S. stock holdings and pursue your long-term goals. We look forward to
updating you about the progress of your fund.
Sincerely,
[EDWARD C. GONZALES SIGNATURE]
Edward C. Gonzales
President
June 16, 1999
*FOREIGN INVESTING INVOLVES SPECIAL RISKS INCLUDING CURRENCY RISK, INCREASED
VOLATILITY OF FOREIGN SECURITIES, AND DIFFERENCES IN AUDITING AND OTHER
FINANCIAL STANDARDS.
**PERFORMANCE QUOTED REPRESENTS PAST PERFORMANCE AND IS NOT INDICATIVE OF FUTURE
RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE, SO THAT AN
INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR
ORIGINAL COST.
1
INVESTMENT REVIEW
- ------------------------------------------------------------
Q
What is your view of the international marketplace, which, as measured by
the Morgan Stanley Capital International Europe, Australia, and Far East
Index ("MSCI-EAFE")* recorded moderately positive performance for the year?
A
International equity markets have put in a mixed performance over the last
year. European markets performed exceptionally well early as investors
focused on the growing prospects for economic recovery--aided by the German
Bundesbank lowering interest rates--and the promise of an acceleration in
corporate restructuring to improve competitiveness and shareholder value in a
number of European companies.
In contrast, Asian and Japanese equity markets continued to fall
sharply--reflecting, in the case of Asia, the fall-out from the currency crisis
of 1997 and subsequent loss of investor confidence. In the case of Japan, a
deepening recession, more tangible evidence of growing deflation and policy
paralysis by the government all pushed the Nikkei lower.
These trends reversed themselves in the latter half of the year with both the
Asian and Japanese markets benefiting from the move by the U.S. Federal Reserve
Board to cut interest rates. Europe, in contrast, did not perform as well, with
the new European Central Bank (ECB) initially reluctant to lower interest rates
further and European recovery showing signs of stalling.
Q
What was the total return of Independence One International Equity Fund for
the six-month period ended April 30, 1999 compared to the MSCI-EAFE?
A
The Independence One International Equity Fund posted a total return of
14.23% for the six-month period ended April 30, 1999. During the same
period the MSCI-EAFE posted a total return of 14.46%.
*MORGAN STANLEY CAPITAL INTERNATIONAL EUROPE, AUSTRALIA, AND FAR EAST INDEX IS
AN UNMANAGED MARKET CAPITALIZATION WEIGHTED FOREIGN SECURITIES INDEX, WHICH IS
WIDELY USED TO MEASURE THE PERFORMANCE OF EUROPEAN, AUSTRALIAN, NEW ZEALAND
AND FAR EASTERN STOCK MARKETS. THE INDEX COVERS APPROXIMATELY 1,020 COMPANIES
DRAWN FROM 18 COUNTRIES IN THE ABOVE REGIONS. THE MSCI-EAFE IS MONITORED BY
CAPITAL INTERNATIONAL, S.A., GENEVA, SWITZERLAND. INVESTMENTS CANNOT BE MADE
IN AN INDEX.
**PERFORMANCE QUOTED REPRESENTS PAST PERFORMANCE AND IS NOT INDICATIVE OF FUTURE
RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE, SO THAT AN
INVESTOR'S SHARES WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL
COST.
2
Q
What were the fund's country weightings at the end of the reporting period?
A
COUNTRY WEIGHTINGS
- -------------------------------------------------- ----------
United Kingdom 18.1%
Japan 17.9%
Germany 11.8%
France 7.7%
Netherlands 7.3%
Switzerland 7.2%
Italy 5.9%
Spain 3.5%
Sweden 2.9%
Hong Kong 2.3%
Australia 2.0%
Belgium 1.6%
Singapore 1.4%
New Zealand 0.0%
Q
As we reach mid year, what regions offer the most potential for the rest of
1999?
A
European markets, in particular, look well placed for the remainder of
1999. The growth outlook is improving in France and the United Kingdom,
while the peripheral economies such as Ireland, the Netherlands and Finland
continue to experience above trend growth, with low inflation.
The Asian economies are clearly recovering. In March, Indonesia recorded its
first quarter of positive growth since 1997, while in Korea the economy showed
annual growth in excess of 4.5%. Driving the recovery has been the sharp fall in
interest rates across the region as inflation fell and the exchange rates
stabilized. Indeed, most countries in the region should record positive growth
this year--with Korea, China, and Taiwan projected to record the strongest
growth.
The immediate outlook for international equity markets--similar to that of the
U.S. equity market-- appears to be dependent upon the outlook for U.S. interest
rate policy. Given the strong correlation that exists between equity markets, a
setback in U.S. equities will inevitably flow into international markets.
Nevertheless, any setback should be of a temporary nature for the international
markets.
3
INDEPENDENCE ONE INTERNATIONAL EQUITY FUND
- ------------------------------------------------------------
GROWTH OF $10,000 INVESTED IN INDEPENDENCE ONE INTERNATIONAL EQUITY FUND
The graph below illustrates the hypothetical investment of $10,000* in the
Independence One International Equity Fund (the "Fund") from September 25, 1998
(start of performance) to April 30, 1999, compared to the Morgan Stanley Capital
International EAFE Index.+
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
FUND MORGAN STANLEY CAPITAL INTERNATIONAL EAFE INDEX
9/25/98 10,000 10,000
4/30/99 12,942 12,730
(GRAPHIC REPRESENTATION OMITTED. PLEASE SEE APPENDIX 6.)
AVERAGE ANNUAL TOTAL RETURN FOR THE PERIOD ENDED APRIL 30, 1999
Start of Performance (9/25/98) .......................................... 29.42%
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 THEIR 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 Morgan Stanley Capital International EAFE Index has been
adjusted to reflect reinvestment of dividends on securities in the index.
+The Morgan Stanley Capital International EAFE 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.
4
INDEPENDENCE ONE INTERNATIONAL EQUITY FUND
PORTFOLIO OF INVESTMENTS
APRIL 30, 1999
- ----------------------------------------------------------------------------
SHARES VALUE
- ------ ---------------------------------------- -----------
COMMON STOCKS--75.1%
- ------------------------------------------------
AUSTRALIA--1.9%
- ------------------------------------------------
BANKING--0.4%
----------------------------------------
Australia & New Zealand Banking Group,
2,000 Melbourne $ 15,842
----------------------------------------
1,393 Commonwealth Bank of Australia 25,364
----------------------------------------
600 St. George Bank Ltd. 4,427
----------------------------------------
2,700 Westpac Banking Corp. Ltd., Sydney 20,612
---------------------------------------- -----------
Total 66,245
---------------------------------------- -----------
BROADCASTING & PUBLISHING--0.1%
----------------------------------------
1,001 News Corp. Ltd. 8,389
----------------------------------------
2,400 PMP Communications Ltd. 5,400
----------------------------------------
400 Publishing and Broadcasting Ltd. 2,689
----------------------------------------
900 Seven Network Ltd. 3,028
----------------------------------------
1,900 Ten Network Holdings Ltd. 3,118
---------------------------------------- -----------
Total 22,624
---------------------------------------- -----------
BUILDING MATERIALS & COMPONENTS--0.1%
----------------------------------------
3,155 Boral Ltd. 5,157
----------------------------------------
1,000 Pioneer International Ltd. 2,442
---------------------------------------- -----------
Total 7,599
---------------------------------------- -----------
BUSINESS & PUBLIC SERVICES--0.1%
----------------------------------------
6 Transurban City Link Ltd. 7,921
---------------------------------------- -----------
CHEMICALS--0.0%
----------------------------------------
700 Orica Ltd. 4,075
---------------------------------------- -----------
CONSTRUCTION & HOUSING--0.1%
----------------------------------------
2,100 Leighton Holdings Ltd. 7,921
---------------------------------------- -----------
ENERGY MINERALS--0.0%
----------------------------------------
3,000 Oregon Minerals Ltd. 3,653
---------------------------------------- -----------
ENERGY SOURCES--0.2%
----------------------------------------
1,700 Broken Hill Proprietary Co. Ltd. 19,219
----------------------------------------
5
INDEPENDENCE ONE INTERNATIONAL EQUITY FUND
- --------------------------------------------------------------------------------
SHARES VALUE
- ------ ---------------------------------------- -----------
AUSTRALIA--CONTINUED
- ------------------------------------------------
ENERGY SOURCES--CONTINUED
----------------------------------------
1,200 Futuris Corp. Ltd. $ 1,739
----------------------------------------
2,000 Novus Petroleum Ltd. 2,290
---------------------------------------- -----------
Total 23,248
---------------------------------------- -----------
ENTERTAINMENT--0.0%
----------------------------------------
300 Hoyts Cinemas Group 417
---------------------------------------- -----------
FINANCIAL SERVICES--0.1%
----------------------------------------
1,013 Colonial Ltd. 3,814
----------------------------------------
1,000 Suncorp-Metway Ltd. 6,088
---------------------------------------- -----------
Total 9,902
---------------------------------------- -----------
GOLD MINES--0.0%
----------------------------------------
2,000 Acacia Resources, Ltd. 2,779
----------------------------------------
4,892 Normandy Mining Ltd. 4,241
---------------------------------------- -----------
Total 7,020
---------------------------------------- -----------
INDUSTRIAL COMPONENTS--0.0%
----------------------------------------
611 Pacifica Group Ltd. 2,345
---------------------------------------- -----------
INSURANCE--0.1%
----------------------------------------
600 (1) AMP Ltd. 7,008
----------------------------------------
3,600 Reinsurance Australia Corp. 3,550
---------------------------------------- -----------
Total 10,558
---------------------------------------- -----------
LEISURE & TOURISM--0.1%
----------------------------------------
1,500 Aristocrat Leisure Ltd. 9,609
----------------------------------------
9,000 Burswood Ltd. 6,611
---------------------------------------- -----------
Total 16,220
---------------------------------------- -----------
MERCHANDISING--0.1%
----------------------------------------
2,329 Woolworth's Ltd. 7,398
---------------------------------------- -----------
METALS - NON FERROUS--0.1%
----------------------------------------
2,000 North Ltd. 4,235
----------------------------------------
400 Rio Tinto PLC (Australia) 6,737
----------------------------------------
6
INDEPENDENCE ONE INTERNATIONAL EQUITY FUND
- --------------------------------------------------------------------------------
SHARES VALUE
- ------ ---------------------------------------- -----------
AUSTRALIA--CONTINUED
- ------------------------------------------------
METALS - NON FERROUS--CONTINUED
----------------------------------------
2,300 WMC Ltd. $ 9,939
---------------------------------------- -----------
Total 20,911
---------------------------------------- -----------
MISCELLANEOUS MATERIALS &
COMMODITIES--0.0%
----------------------------------------
1,100 Westralian Sands Ltd. 2,460
---------------------------------------- -----------
MULTI-INDUSTRY--0.0%
----------------------------------------
406 Smith(Howard) 3,403
---------------------------------------- -----------
OIL--0.0%
----------------------------------------
5,000 Oil Search Ltd. 6,518
---------------------------------------- -----------
REAL ESTATE--0.1%
----------------------------------------
5,000 Australian Growth Properties Ltd. 2,051
----------------------------------------
4,033 Gen Property Trust 7,190
----------------------------------------
304 Lend Lease Corp., Ltd. 4,098
----------------------------------------
1,600 Schroders Property Fund 2,615
----------------------------------------
1,400 Westpac Property Trust 1,455
---------------------------------------- -----------
Total 17,409
---------------------------------------- -----------
TELECOMMUNICATIONS--0.2%
----------------------------------------
3,600 (1) Cable & Wireless Optus Ltd. 8,100
----------------------------------------
5,000 Telstra Corp. Ltd. 27,132
---------------------------------------- -----------
Total 35,232
---------------------------------------- -----------
TRANSPORTATION - AIRLINES--0.1%
----------------------------------------
4,073 Qantas Airways 11,186
---------------------------------------- -----------
TRANSPORTATION - MARINE--0.0%
----------------------------------------
1,024 Adsteam Marine Ltd. 1,931
---------------------------------------- -----------
TOTAL AUSTRALIA (IDENTIFIED COST
$252,866) 296,196
---------------------------------------- -----------
FRANCE--7.7%
- ------------------------------------------------
AUTOMOBILE--0.2%
----------------------------------------
240 Peugeot SA 39,805
---------------------------------------- -----------
BANKING--0.9%
----------------------------------------
870 Banque Nationale de Paris 72,101
----------------------------------------
7
INDEPENDENCE ONE INTERNATIONAL EQUITY FUND
- --------------------------------------------------------------------------------
SHARES VALUE
- ------ ---------------------------------------- -----------
FRANCE--CONTINUED
- ------------------------------------------------
BANKING--CONTINUED
----------------------------------------
300 Compagnie Financiere de Paribas, Class A $ 31,882
----------------------------------------
180 Societe Generale, Paris 32,212
---------------------------------------- -----------
Total 136,195
---------------------------------------- -----------
BEVERAGE & TOBACCO--0.3%
----------------------------------------
650 Pernod-Ricard 43,843
---------------------------------------- -----------
BUILDING MATERIALS & COMPONENTS--0.1%
----------------------------------------
80 Compagnie de St. Gobain 13,733
----------------------------------------
65 Lafarge SA 6,317
---------------------------------------- -----------
Total 20,050
---------------------------------------- -----------
BUSINESS & PUBLIC SERVICES--0.7%
----------------------------------------
400 Cap Gemini SA 61,144
----------------------------------------
260 Suez Lyonnaise des Eaux 44,221
---------------------------------------- -----------
Total 105,365
---------------------------------------- -----------
CHEMICALS--0.1%
----------------------------------------
150 L'Air Liquide 23,135
---------------------------------------- -----------
ELECTRICAL & ELECTRONICS--0.4%
----------------------------------------
150 Alcatel 18,413
----------------------------------------
720 Schneider SA 46,968
---------------------------------------- -----------
Total 65,381
---------------------------------------- -----------
ENERGY SOURCES--0.9%
----------------------------------------
500 Elf Aquitaine SA 77,645
----------------------------------------
430 Total SA 58,871
---------------------------------------- -----------
Total 136,516
---------------------------------------- -----------
FOOD & HOUSEHOLD PRODUCTS--0.1%
----------------------------------------
40 Groupe Danone 10,691
---------------------------------------- -----------
HEALTH & PERSONAL CARE--0.7%
----------------------------------------
100 L'Oreal 64,018
----------------------------------------
500 Rhone-Poulenc SA 23,769
----------------------------------------
8
INDEPENDENCE ONE INTERNATIONAL EQUITY FUND
- --------------------------------------------------------------------------------
SHARES VALUE
- ------ ---------------------------------------- -----------
FRANCE--CONTINUED
- ------------------------------------------------
HEALTH & PERSONAL CARE--CONTINUED
----------------------------------------
100 Sanofi SA $ 15,666
---------------------------------------- -----------
Total 103,453
---------------------------------------- -----------
INDUSTRIAL COMPONENTS--0.2%
----------------------------------------
800 Michelin, Class B 36,298
---------------------------------------- -----------
INSURANCE--0.5%
----------------------------------------
570 Axa 73,582
---------------------------------------- -----------
LEISURE & TOURISM--0.3%
----------------------------------------
170 Accor SA 44,807
---------------------------------------- -----------
MERCHANDISING--0.5%
----------------------------------------
55 Carrefour SA 43,577
----------------------------------------
200 Pinault-Printemps-Redoute SA 33,171
---------------------------------------- -----------
Total 76,748
---------------------------------------- -----------
METALS - STEEL--0.2%
----------------------------------------
2,000 Usinor SA 30,931
---------------------------------------- -----------
RECREATION, OTHER CONSUMER GOODS--0.1%
----------------------------------------
50 LVMH (Moet-Hennessy) 13,406
---------------------------------------- -----------
TELECOMMUNICATIONS--0.9%
----------------------------------------
1,850 France Telecommunications 149,409
---------------------------------------- -----------
UTILITIES - ELECTRICAL & GAS--0.6%
----------------------------------------
550 Primagaz Cie 44,158
----------------------------------------
230 Vivendi 53,721
---------------------------------------- -----------
Total 97,879
---------------------------------------- -----------
TOTAL FRANCE (IDENTIFIED COST
$1,177,081) 1,207,494
---------------------------------------- -----------
GERMANY--11.3%
- ------------------------------------------------
AUTOMOBILE--1.8%
----------------------------------------
2,450 DaimlerChrysler AG 241,865
----------------------------------------
620 Volkswagen AG 43,948
---------------------------------------- -----------
Total 285,813
---------------------------------------- -----------
9
INDEPENDENCE ONE INTERNATIONAL EQUITY FUND
- --------------------------------------------------------------------------------
SHARES VALUE
- ------ ---------------------------------------- -----------
GERMANY--CONTINUED
- ------------------------------------------------
BANKING--0.9%
----------------------------------------
1,200 Deutsche Bank, AG $ 69,722
----------------------------------------
700 Dresdner Bank AG, Frankfurt 30,171
----------------------------------------
600 HypoVereinsbank AG, Munich 39,108
---------------------------------------- -----------
Total 139,001
---------------------------------------- -----------
BUILDING MATERIALS & COMPONENTS--0.4%
----------------------------------------
1,000 Heidelberger Zement AG 67,715
---------------------------------------- -----------
CHEMICALS--0.6%
----------------------------------------
1,000 BASF AG 43,788
----------------------------------------
1,300 Bayer AG 55,207
---------------------------------------- -----------
Total 98,995
---------------------------------------- -----------
CONSTRUCTION & HOUSING--0.4%
----------------------------------------
1,800 Hochtief AG 69,405
---------------------------------------- -----------
ELECTRICAL & ELECTRONICS--0.6%
----------------------------------------
1,160 Siemens AG 85,780
---------------------------------------- -----------
HEALTH & PERSONAL CARE--0.4%
----------------------------------------
1,800 Merck KGAA 60,849
---------------------------------------- -----------
INDUSTRIAL COMPONENTS--0.3%
----------------------------------------
2,000 Continental AG 49,651
---------------------------------------- -----------
INSURANCE--2.2%
----------------------------------------
830 Allianz AG Holding 264,359
----------------------------------------
Muenchener
400 Rueckversicherungs-Gesellschaft AG 80,286
---------------------------------------- -----------
Total 344,645
---------------------------------------- -----------
MACHINERY & ENGINEERING--0.1%
----------------------------------------
15 Linde AG 9,270
---------------------------------------- -----------
MERCHANDISING--0.3%
----------------------------------------
600 Metro AG 43,355
---------------------------------------- -----------
METALS - STEEL--0.1%
----------------------------------------
1,000 (1) Thyssen Krupp AG 21,867
---------------------------------------- -----------
10
INDEPENDENCE ONE INTERNATIONAL EQUITY FUND
- --------------------------------------------------------------------------------
SHARES VALUE
- ------ ---------------------------------------- -----------
GERMANY--CONTINUED
- ------------------------------------------------
TELECOMMUNICATIONS--2.2%
----------------------------------------
5,600 Deutsche Telekom AG $ 220,661
----------------------------------------
970 Mannesmann AG 127,679
---------------------------------------- -----------
Total 348,340
---------------------------------------- -----------
TRANSPORTATION - AIRLINES--0.2%
----------------------------------------
1,000 Deutsche Lufthansa AG 23,135
---------------------------------------- -----------
UTILITIES - ELECTRICAL & GAS--0.8%
----------------------------------------
1,140 RWE AG 52,146
----------------------------------------
850 Veba AG 46,603
----------------------------------------
40 Viag AG 20,325
---------------------------------------- -----------
Total 119,074
---------------------------------------- -----------
TOTAL GERMANY (IDENTIFIED COST
$1,746,515) 1,766,895
---------------------------------------- -----------
HONG KONG--2.3%
- ------------------------------------------------
BANKING--0.5%
----------------------------------------
2,000 HSBC Holdings PLC (Hong Kong) 74,313
---------------------------------------- -----------
MULTI-INDUSTRY--0.6%
----------------------------------------
15,000 Citic Pacific Ltd. 40,640
----------------------------------------
5,000 Hutchison Whampoa 44,833
---------------------------------------- -----------
Total 85,473
---------------------------------------- -----------
REAL ESTATE--0.3%
----------------------------------------
5,000 Sun Hung Kai Properties 43,865
---------------------------------------- -----------
TELECOMMUNICATIONS--0.3%
----------------------------------------
22,000 (1) China Telecom (Hong Kong) Ltd. 50,239
---------------------------------------- -----------
UTILITIES - ELECTRICAL & GAS--0.6%
----------------------------------------
6,000 Cheung Kong 54,574
----------------------------------------
30,800 Hong Kong and China Gas Co. Ltd. 43,313
---------------------------------------- -----------
Total 97,887
---------------------------------------- -----------
TOTAL HONG KONG (IDENTIFIED COST
$260,937) 351,777
---------------------------------------- -----------
11
INDEPENDENCE ONE INTERNATIONAL EQUITY FUND
- --------------------------------------------------------------------------------
SHARES VALUE
- ------ ---------------------------------------- -----------
JAPAN--17.9%
- ------------------------------------------------
APPLIANCES & HOUSEHOLD DURABLES--1.2%
----------------------------------------
2,000 Sony Corp. $ 186,736
---------------------------------------- -----------
AUTOMOBILE--0.7%
----------------------------------------
4,000 Toyota Motor Credit Corp. 113,549
---------------------------------------- -----------
BANKING--1.4%
----------------------------------------
15,000 Bank of Tokyo-Mitsubishi Ltd. 221,320
---------------------------------------- -----------
BUSINESS & PUBLIC SERVICES--1.2%
----------------------------------------
2,000 Secom Co. 195,277
---------------------------------------- -----------
CHEMICALS--0.9%
----------------------------------------
25,000 Asahi Chemical Industry Co. Ltd. 145,495
---------------------------------------- -----------
ELECTRICAL & ELECTRONICS--0.9%
----------------------------------------
12,000 NEC Corp. 143,293
---------------------------------------- -----------
FOOD & HOUSEHOLD PRODUCTS--1.8%
----------------------------------------
5,000 Kao Corp. 126,863
----------------------------------------
3,000 Nissin Food Products 65,818
----------------------------------------
10,000 Yakult Honsha Co. 93,619
---------------------------------------- -----------
Total 286,300
---------------------------------------- -----------
HEALTH & PERSONAL CARE--1.6%
----------------------------------------
6,000 Sankyo Co. Ltd. 125,858
----------------------------------------
3,000 Takeda Chemical Industries 130,380
---------------------------------------- -----------
Total 256,238
---------------------------------------- -----------
INDUSTRIAL COMPONENTS--2.3%
----------------------------------------
5,000 Bridgestone Corp. 133,981
----------------------------------------
10,000 Minebea Co. 96,717
----------------------------------------
10,000 Sumitomo Electric Industries 121,002
---------------------------------------- -----------
Total 351,700
---------------------------------------- -----------
REAL ESTATE--0.7%
----------------------------------------
10,000 Mitsubishi Estate Co. Ltd. 102,244
---------------------------------------- -----------
TELECOMMUNICATIONS--2.9%
----------------------------------------
3 NTT Mobile Communication Network, Inc. 175,850
----------------------------------------
12
INDEPENDENCE ONE INTERNATIONAL EQUITY FUND
- --------------------------------------------------------------------------------
SHARES VALUE
- ------ ---------------------------------------- -----------
JAPAN--CONTINUED
- ------------------------------------------------
TELECOMMUNICATIONS--CONTINUED
----------------------------------------
25 Nippon Telegraph & Telephone Corp. $ 272,149
---------------------------------------- -----------
Total 447,999
---------------------------------------- -----------
TRANSPORTATION - ROAD & RAIL--1.5%
----------------------------------------
20 East Japan Railway Co. 118,071
----------------------------------------
17,000 Nippon Express Co. Ltd. 111,037
---------------------------------------- -----------
Total 229,108
---------------------------------------- -----------
UTILITIES - ELECTRICAL & GAS--0.8%
----------------------------------------
6,000 Tokyo Electric Power Co. 128,119
---------------------------------------- -----------
TOTAL JAPAN (IDENTIFIED COST
$2,330,380) 2,807,378
---------------------------------------- -----------
NETHERLANDS--7.3%
- ------------------------------------------------
APPLIANCES & HOUSEHOLD DURABLES--0.5%
----------------------------------------
900 Philips Electronics NV 77,487
---------------------------------------- -----------
BANKING--0.5%
----------------------------------------
3,500 ABN-AMRO Holdings NV 83,376
---------------------------------------- -----------
BEVERAGE & TOBACCO--0.3%
----------------------------------------
800 Heineken NV 40,143
---------------------------------------- -----------
BROADCASTING & PUBLISHING--0.4%
----------------------------------------
1,500 Elsevier NV 22,422
----------------------------------------
800 Wolters Kluwer NV 34,819
---------------------------------------- -----------
Total 57,241
---------------------------------------- -----------
CHEMICALS--0.2%
----------------------------------------
500 Akzo Nobel NV 22,581
---------------------------------------- -----------
ENERGY SOURCES--2.1%
----------------------------------------
5,700 Royal Dutch Petroleum Co. 331,784
---------------------------------------- -----------
FINANCIAL SERVICES--0.9%
----------------------------------------
2,400 ING Groep, NV 147,812
---------------------------------------- -----------
FOOD & HOUSEHOLD PRODUCTS--0.8%
----------------------------------------
1,800 Unilever NV 123,219
---------------------------------------- -----------
13
INDEPENDENCE ONE INTERNATIONAL EQUITY FUND
- --------------------------------------------------------------------------------
SHARES VALUE
- ------ ---------------------------------------- -----------
NETHERLANDS--CONTINUED
- ------------------------------------------------
INSURANCE--0.9%
----------------------------------------
1,500 AEGON NV $ 143,803
---------------------------------------- -----------
MERCHANDISING--0.3%
----------------------------------------
1,400 Ahold NV 51,985
---------------------------------------- -----------
TELECOMMUNICATIONS--0.3%
----------------------------------------
1,000 KPN NV 41,728
---------------------------------------- -----------
TRANSPORTATION - AIRLINES--0.1%
----------------------------------------
250 KLM NV 7,580
---------------------------------------- -----------
WHOLESALE & INTERNATIONAL TRADE--0.0%
----------------------------------------
200 Hagemeyer NV 6,761
---------------------------------------- -----------
TOTAL NETHERLANDS (IDENTIFIED COST
$1,124,115) 1,135,500
---------------------------------------- -----------
NEW ZEALAND--0.0%
- ------------------------------------------------
BEVERAGE & TOBACCO--0.0%
----------------------------------------
1,300 Lion Nathan Ltd. 3,264
---------------------------------------- -----------
TELECOMMUNICATIONS--0.0%
----------------------------------------
800 Telecom Corp. of New Zealand 4,161
---------------------------------------- -----------
TOTAL NEW ZEALAND (IDENTIFIED COST
$5,796) 7,425
---------------------------------------- -----------
SINGAPORE--1.4%
- ------------------------------------------------
BANKING--0.5%
----------------------------------------
8,000 Oversea-Chinese Banking Corp. Ltd. 74,987
---------------------------------------- -----------
BEVERAGE & TOBACCO--0.0%
----------------------------------------
1,000 Fraser and Neave Ltd. 4,421
---------------------------------------- -----------
ELECTRONIC COMPONENTS, INSTRUMENTS--0.2%
----------------------------------------
7,000 Venture Manufacturing (Singapore) Ltd. 38,378
---------------------------------------- -----------
REAL ESTATE--0.5%
----------------------------------------
11,000 City Developments Ltd. 73,277
---------------------------------------- -----------
TELECOMMUNICATIONS--0.2%
----------------------------------------
15,000 Singapore Telecom 27,766
---------------------------------------- -----------
TOTAL SINGAPORE (IDENTIFIED COST
$143,427) 218,829
---------------------------------------- -----------
14
INDEPENDENCE ONE INTERNATIONAL EQUITY FUND
- --------------------------------------------------------------------------------
SHARES VALUE
- ------ ---------------------------------------- -----------
SWITZERLAND--7.2%
- ------------------------------------------------
BANKING--1.8%
----------------------------------------
460 Credit Suisse Group $ 91,204
----------------------------------------
550 UBS AG 186,734
---------------------------------------- -----------
Total 277,938
---------------------------------------- -----------
BUSINESS & PUBLIC SERVICES--0.2%
----------------------------------------
70 Adecco SA 35,282
---------------------------------------- -----------
ELECTRICAL & ELECTRONICS--0.1%
----------------------------------------
5 ABB AG 7,292
---------------------------------------- -----------
FOOD & HOUSEHOLD PRODUCTS--0.9%
----------------------------------------
80 Nestle SA 148,024
---------------------------------------- -----------
HEALTH & PERSONAL CARE--3.1%
----------------------------------------
155 Novartis AG 226,653
----------------------------------------
22 Roche Holding AG 258,688
---------------------------------------- -----------
Total 485,341
---------------------------------------- -----------
INSURANCE--1.1%
----------------------------------------
Schweizerische Rueckversicherungs -
45 Gesellschaft 98,453
----------------------------------------
120 Zurich Allied AG 77,315
---------------------------------------- -----------
Total 175,768
---------------------------------------- -----------
TOTAL SWITZERLAND (IDENTIFIED COST
$1,140,759) 1,129,645
---------------------------------------- -----------
UNITED KINGDOM--18.1%
- ------------------------------------------------
BANKING--3.1%
----------------------------------------
2,800 Abbey National Bank PLC, London 63,061
----------------------------------------
2,300 Barclays PLC 73,186
----------------------------------------
4,000 HSBC Holdings PLC 152,826
----------------------------------------
10,300 Lloyds TSB Group PLC 166,027
----------------------------------------
1,000 Royal Bank of Scotland PLC, Edinburgh 23,616
---------------------------------------- -----------
Total 478,716
---------------------------------------- -----------
BEVERAGE & TOBACCO--0.4%
----------------------------------------
5,800 Diageo PLC 66,806
---------------------------------------- -----------
BROADCASTING & PUBLISHING--0.3%
----------------------------------------
6,000 Reed International PLC 54,583
---------------------------------------- -----------
15
INDEPENDENCE ONE INTERNATIONAL EQUITY FUND
- --------------------------------------------------------------------------------
SHARES VALUE
- ------ ---------------------------------------- -----------
UNITED KINGDOM--CONTINUED
- ------------------------------------------------
BUILDING MATERIALS & COMPONENTS--1.1%
----------------------------------------
14,000 Blue Circle Industries $ 90,763
----------------------------------------
10,000 Wolseley PLC 89,564
---------------------------------------- -----------
Total 180,327
---------------------------------------- -----------
BUSINESS & PUBLIC SERVICES--0.7%
----------------------------------------
5,500 Rentokil Initial PLC 32,273
----------------------------------------
3,000 Reuters Group PLC 40,660
----------------------------------------
5,300 Williams PLC 36,662
---------------------------------------- -----------
Total 109,595
---------------------------------------- -----------
CHEMICALS--0.3%
----------------------------------------
2,700 Boc Group PLC 42,653
---------------------------------------- -----------
ELECTRONIC COMPONENTS, INSTRUMENTS--0.2%
----------------------------------------
6,500 Invensys PLC 33,043
---------------------------------------- -----------
ENERGY SOURCES--2.0%
----------------------------------------
16,200 BP Amoco PLC 307,519
---------------------------------------- -----------
FOOD & HOUSEHOLD PRODUCTS--0.4%
----------------------------------------
6,000 Associated British Foods PLC 43,338
----------------------------------------
2,500 Unilever PLC 22,220
---------------------------------------- -----------
Total 65,558
---------------------------------------- -----------
HEALTH & PERSONAL CARE--2.3%
----------------------------------------
1,600 AstraZeneca Group PLC 62,701
----------------------------------------
5,100 Glaxo Wellcome PLC 151,124
----------------------------------------
10,700 Smithkline Beecham Corp. 141,492
---------------------------------------- -----------
Total 355,317
---------------------------------------- -----------
INSURANCE--0.3%
----------------------------------------
2,600 Legal & General Group PLC 7,414
----------------------------------------
1,000 Prudential Corp. PLC 14,221
----------------------------------------
3,000 Royal & Sun Alliance Insurance Group PLC 25,940
---------------------------------------- -----------
Total 47,575
---------------------------------------- -----------
16
INDEPENDENCE ONE INTERNATIONAL EQUITY FUND
- --------------------------------------------------------------------------------
SHARES VALUE
- ------ ---------------------------------------- -----------
UNITED KINGDOM--CONTINUED
- ------------------------------------------------
LEISURE & TOURISM--1.4%
----------------------------------------
3,400 Bass PLC $ 53,383
----------------------------------------
17,500 Ladbroke Group PLC 84,105
----------------------------------------
6,500 Scottish & Newcastle PLC 81,038
---------------------------------------- -----------
Total 218,526
---------------------------------------- -----------
MACHINERY & ENGINEERING--0.2%
----------------------------------------
2,600 Smiths Industries 40,153
---------------------------------------- -----------
MERCHANDISING--1.9%
----------------------------------------
3,500 Boots Co. PLC 46,451
----------------------------------------
3,300 Great Universal Stores PLC 37,904
----------------------------------------
5,000 Marks & Spencer PLC 34,285
----------------------------------------
19,000 Safeway PLC 79,164
----------------------------------------
15,000 Sainsbury (J) PLC 95,255
---------------------------------------- -----------
Total 293,059
---------------------------------------- -----------
METALS - NON FERROUS--0.7%
----------------------------------------
6,500 Rio Tinto PLC 113,454
---------------------------------------- -----------
REAL ESTATE--0.5%
----------------------------------------
6,000 Land Securities 78,714
---------------------------------------- -----------
TELECOMMUNICATIONS--1.5%
----------------------------------------
6,600 British Telecommunication PLC 110,209
----------------------------------------
1,800 Cable & Wireless Communications PLC 25,786
----------------------------------------
5,200 Vodafone Group PLC 95,782
---------------------------------------- -----------
Total 231,777
---------------------------------------- -----------
UTILITIES - ELECTRICAL & GAS--0.8%
----------------------------------------
12,500 BG PLC 70,381
----------------------------------------
5,800 Scottish Power PLC 47,772
---------------------------------------- -----------
Total 118,153
---------------------------------------- -----------
TOTAL UNITED KINGDOM (IDENTIFIED COST
$2,827,951) 2,835,528
---------------------------------------- -----------
TOTAL COMMON STOCKS (IDENTIFIED COST
$11,009,827) 11,756,667
---------------------------------------- -----------
17
INDEPENDENCE ONE INTERNATIONAL EQUITY FUND
- --------------------------------------------------------------------------------
SHARES VALUE
- ------- ---------------------------------------- -----------
PREFERRED STOCKS--0.6%
- -------------------------------------------------
AUSTRALIA--0.1%
- -------------------------------------------------
BROADCASTING & PUBLISHING--0.1%
----------------------------------------
2,708 News Corp. Ltd., Pfd. $ 21,167
---------------------------------------- -----------
LEISURE & TOURISM--0.0%
----------------------------------------
2,200 Village Roadshow Ltd. 3,712
---------------------------------------- -----------
TOTAL AUSTRALIA (IDENTIFIED COST
$19,128) 24,879
---------------------------------------- -----------
GERMANY--0.5%
- -------------------------------------------------
BUSINESS & PUBLIC SERVICES--0.5%
----------------------------------------
Systeme, Anwendungen, Produkte in der
190 Datevnerarbeitung 71,254
---------------------------------------- -----------
TOTAL GERMANY (IDENTIFIED COST
$67,788) 71,254
---------------------------------------- -----------
TOTAL PREFERRED STOCKS (IDENTIFIED
COST $86,916) 96,133
---------------------------------------- -----------
MUTUAL FUNDS--14.0%
- -------------------------------------------------
14,000 WEBS Belgium Index Fund, Inc. 252,875
----------------------------------------
36,300 WEBS Italy Index Fund, Inc. 927,919
----------------------------------------
20,000 WEBS Spain Index Fund, Inc. 553,750
----------------------------------------
22,000 WEBS Sweden Index Fund, Inc. 455,125
---------------------------------------- -----------
TOTAL MUTUAL FUNDS (IDENTIFIED COST
$2,179,992) 2,189,669
---------------------------------------- -----------
PRINCIPAL EXPIRATION STRIKE
AMOUNT DATE PRICE
- ------------- ----------------------------------------
OPTION PURCHASED -- 0.0%
- -------------------------------------------------------
Japanese Yen Put (IDENTIFIED COST
JPY 1,814,016 $19,410) 6/10/1999 123.50 6,460
---------------------------------------- -----------
TOTAL INVESTMENTS (IDENTIFIED COST
$13,296,145)(2) $14,048,929
---------------------------------------- -----------
(1) Non-income producing security.
(2) The cost of investments for federal tax purposes amounts to $13,296,298.
The net unrealized appreciation of investments on a federal tax basis
amounts to $752,631 which is comprised of $913,749 appreciation and
$161,118 depreciation at April 30, 1999.
Note: The categories of investments are shown as a percentage of net assets
($15,645,940) at April 30, 1999.
The following acronyms are used throughout this portfolio:
JPY--Japanese Yen
PLC--Public Limited Company
SA--Support Agreement
WEBS--World Equity Benchmark Shares
18
INDEPENDENCE ONE INTERNATIONAL EQUITY FUND
- --------------------------------------------------------------------------------
The following is the industry classification breakdown:
Appliance & Household Durables 1.7%
Automobile 2.8%
Banking 9.9%
Beverage & Tobacco 1.0%
Broadcasting & Publishing 1.0%
Building Materials & Components 1.8%
Business & Public Services 3.4%
Chemicals 2.2%
Construction & Housing 0.5%
Electrical & Electronics 1.9%
Electronic Components, Instruments 0.5%
Energy Minerals 0.0%*
Energy Sources 5.1%
Entertainment 0.0%*
Financial Services 1.0%
Food & Household Products 4.0%
Gold Mines 0.1%
Health & Personal Care 8.1%
Industrial Components 2.8%
Insurance 5.1%
Leisure & Tourism 1.8%
Machinery & Engineering 0.3%
Merchandising 3.0%
Metals - Non Ferrous 0.8%
Metals - Steel 0.3%
Miscellaneous Materials & Commodities 0.0%*
Multi-Industry 0.6%
Oil 0.0%*
Real Estate 2.0%
Recreation, Other Consumer Goods 0.1%
Telecommunications 8.5%
Transportation - Airlines 0.3%
Transportation - Road & Rail 1.5%
Transportation - Marine 0.0%*
Utilities - Electrical & Gas 3.6%
Wholesale & International Trade 0.0%*
Mutual Funds 14.0%
* Amount is less than 0.1%
Note: The industry classifications are shown as a percentage of net assets
($15,645,940) at April 30, 1999.
(See Notes which are an integral part of the Financial Statements)
19
INDEPENDENCE ONE INTERNATIONAL EQUITY FUND
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1999
- ----------------------------------------------------------------------------
ASSETS:
- ----------------------------------------------------
Total investments in securities, at value
(identified cost $13,296,145 and tax cost
$13,296,298) $14,048,929
- ----------------------------------------------------
Cash denominated in foreign currencies (at
identified cost $3,913,916) (1) 3,754,376
- ----------------------------------------------------
Income receivable 14,878
- ----------------------------------------------------
Receivable for investments sold -- options 50,307
- ----------------------------------------------------
Receivable for shares sold 83,500
- ----------------------------------------------------
Unrealized appreciation on foreign currency exchange
contracts 60,581
- ----------------------------------------------------
Receivable for daily variation margin 1,489,940
- ---------------------------------------------------- -----------
Total assets 19,502,511
- ----------------------------------------------------
LIABILITIES:
- ----------------------------------------
Payable for investments purchased $3,355,312
- ----------------------------------------
Unrealized depreciation on foreign
currency exchange contracts 66,510
- ----------------------------------------
Payable to Bank 405,196
- ----------------------------------------
Accrued expenses 29,553
- ---------------------------------------- ----------
Total liabilities 3,856,571
- ---------------------------------------------------- -----------
Net Assets for 1,226,757 shares outstanding $15,645,940
- ---------------------------------------------------- -----------
NET ASSETS CONSIST OF:
- ----------------------------------------------------
Paid in capital $14,101,597
- ----------------------------------------------------
Net unrealized appreciation of investments,
translation of assets and
liabilities in foreign currency transactions and
futures contracts 682,665
- ----------------------------------------------------
Accumulated net realized gain on investments,
foreign currency transactions
and futures contracts 1,237,206
- ----------------------------------------------------
Distributions in excess of net investment income (375,528)
- ---------------------------------------------------- -----------
Total Net Assets $15,645,940
- ---------------------------------------------------- -----------
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER
SHARE:
- ----------------------------------------------------
$15,645,940 DIVIDED BY 1,226,757 shares outstanding $12.75
- ---------------------------------------------------- -----------
(1) Serves as collateral for futures contracts.
(See Notes which are an integral part of the Financial Statements)
20
INDEPENDENCE ONE INTERNATIONAL EQUITY FUND
STATEMENT OF OPERATIONS
PERIOD ENDED APRIL 30, 1999 (1)
- --------------------------------------------------------------------------------
INVESTMENT INCOME:
- -------------------------------------------------------
Dividends (net of foreign taxes withheld of $2,144) $ 21,242
- -------------------------------------------------------
Interest 81,895
- ------------------------------------------------------- ----------
Total income 103,137
- -------------------------------------------------------
EXPENSES:
- ---------------------------------------------
Investment advisory fee $ 63,745
- ---------------------------------------------
Administrative personnel and services fee 29,864
- ---------------------------------------------
Custodian fees 4,662
- ---------------------------------------------
Transfer and dividend disbursing agent fees
and expenses 17,632
- ---------------------------------------------
Directors'/Trustees' fees 3,096
- ---------------------------------------------
Auditing fees 14,000
- ---------------------------------------------
Legal fees 3,675
- ---------------------------------------------
Portfolio accounting fees 32,337
- ---------------------------------------------
Share registration costs 22,904
- ---------------------------------------------
Printing and postage 4,130
- ---------------------------------------------
Insurance premiums 602
- ---------------------------------------------
Miscellaneous 531
- --------------------------------------------- --------
Total expenses 197,178
- ---------------------------------------------
Waivers--
- ---------------------------------------------
Waiver of investment advisory
fee $(63,745)
- -----------------------------------
Waiver of administrative
personnel and services fee (29,864)
- -----------------------------------
Waiver of transfer and dividend
disbursing agent fees and
expenses (4,760)
- ----------------------------------- --------
Total waivers (98,369)
- --------------------------------------------- --------
Net expenses 98,809
- ------------------------------------------------------- ----------
Net investment income 4,328
- ------------------------------------------------------- ----------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS, FOREIGN CURRENCY
TRANSACTIONS AND FUTURES CONTRACTS:
- -------------------------------------------------------
Net realized gain on investments, foreign currency
transactions, futures contracts and options 1,027,037
- -------------------------------------------------------
Net change in unrealized appreciation of investments
and translation of assets and liabilities in foreign
currency transactions and futures contracts 682,665
- ------------------------------------------------------- ----------
Net realized and unrealized gain on investments,
foreign currency transactions and futures
contracts 1,709,702
- ------------------------------------------------------- ----------
Change in net assets resulting from operations $1,714,030
- ------------------------------------------------------- ----------
(1) Reflects operations for the period from September 25, 1998 (date of initial
public investment) to April 30, 1999.
(See Notes which are an integral part of the Financial Statements)
21
INDEPENDENCE ONE INTERNATIONAL EQUITY FUND
STATEMENT OF CHANGES IN NET ASSETS
- ------------------------------------------------------------
PERIOD ENDED
APRIL 30,
1999 (1)
- -------------------------------------------------- -------------
INCREASE (DECREASE) IN NET ASSETS:
- --------------------------------------------------
OPERATIONS--
- --------------------------------------------------
Net investment income $ 4,328
- --------------------------------------------------
Net realized gain on investments, foreign currency
transactions and futures contracts ($1,467,126, as
computed for federal tax purposes) 1,027,037
- --------------------------------------------------
Net change in unrealized appreciation of
investments and translation of assets and
liabilities in foreign currency and futures
contracts 682,665
- -------------------------------------------------- -------------
Change in net assets resulting from operations 1,714,030
- -------------------------------------------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS--
- --------------------------------------------------
Distributions from net investment income (18,812)
- --------------------------------------------------
Distributions from net realized gains on
investments and foreign currency transactions (150,875)
- -------------------------------------------------- -------------
Change in net assets resulting from
distributions to shareholders (169,687)
- -------------------------------------------------- -------------
SHARE TRANSACTIONS--
- --------------------------------------------------
Proceeds from sale of shares 14,062,192
- --------------------------------------------------
Net asset value of shares issued to shareholders
in payment of distributions declared 169,322
- --------------------------------------------------
Cost of shares redeemed (129,917)
- -------------------------------------------------- -------------
Change in net assets resulting from share
transactions 14,101,597
- -------------------------------------------------- -------------
Change in net assets 15,645,940
- --------------------------------------------------
NET ASSETS:
- --------------------------------------------------
Beginning of period --
- -------------------------------------------------- -------------
End of period (including distributions in excess
of net investment income of ($375,528)) $15,645,940
- -------------------------------------------------- -------------
(1) Reflects operations for the period from September 25, 1998 (date of initial
public investment) to April 30, 1999.
(See Notes which are an integral part of the Financial Statements)
22
INDEPENDENCE ONE INTERNATIONAL EQUITY FUND
FINANCIAL HIGHLIGHTS
- ------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
PERIOD ENDED
APRIL 30,
1999 (1)
- -------------------------------------------------- -------------
NET ASSET VALUE, BEGINNING OF PERIOD $10.00
- --------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- --------------------------------------------------
Net investment income 0.01
- --------------------------------------------------
Net realized and unrealized gain on investments,
foreign currency transactions and futures
contracts 2.92
- -------------------------------------------------- ------
Total from investment operations 2.93
- -------------------------------------------------- ------
LESS DISTRIBUTIONS
- --------------------------------------------------
Distributions from net investment income (0.02)
- --------------------------------------------------
Distributions from net realized gain on
investments, foreign currency transactions and
futures contracts (0.16)
- --------------------------------------------------
------
Total distributions (0.18)
- -------------------------------------------------- ------
NET ASSET VALUE, END OF PERIOD $12.75
- -------------------------------------------------- ------
TOTAL RETURN (2) 29.42%
- --------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- --------------------------------------------------
Expenses (3) 3.09%*
- --------------------------------------------------
Net investment income (3) (1.47%)*
- --------------------------------------------------
Expenses (after waivers/reimbursements) 1.55%*
- --------------------------------------------------
Net investment income (after
waivers/reimbursements) 0.07%*
- --------------------------------------------------
SUPPLEMENTAL DATA
- --------------------------------------------------
Net assets, end of period (000 omitted) $15,646
- --------------------------------------------------
Portfolio turnover 1%
- --------------------------------------------------
* Computed on an annualized basis.
(1) Reflects operations for the period from September 25, 1998 (date of initial
public investment) to April 30, 1999.
(2) Based on net asset value.
(3) During the period, certain fees were voluntarily waived or reimbursed. If
such voluntary waivers or reimbursements had not occurred, the ratios would
have been as indicated.
(See Notes which are an integral part of the Financial Statements)
23
INDEPENDENCE ONE INTERNATIONAL EQUITY FUND
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 1999
- ----------------------------------------------------------------------------
(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 nine portfolios. The financial
statements included herein are only those of Independence One International
Equity Fund (the "Fund"), a diversified portfolio. The financial statements of
the other portfolios are presented separately. The assets of each portfolio are
segregated and a shareholder's interest is limited to the portfolio in which
shares are held. The investment objective of the Fund is to provide total
return.
(2) SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles.
INVESTMENT VALUATIONS--Listed equity securities are valued at the last sale
price reported on a national securities exchange, and in the absence of
recorded sales for listed equity securities, at the mean between the last
closing bid and asked prices. Short-term securities are valued at the mean
between the bid and asked 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. Investments in other open-end regulated
investment companies are valued at net asset value. With respect to
valuation of foreign securities, trading on foreign exchanges may be
completed at times which vary from the closing of the New York Stock
Exchange. Therefore, foreign securities are valued at the latest closing
price on the exchange on which they are traded prior to the closing of the
New York Stock Exchange. Foreign securities quoted in foreign currencies are
translated into U.S. dollars at the foreign exchange rate in effect at noon,
eastern time, on the day the value of the foreign security is determined.
Investment gains and losses are determined on the identified cost basis.
INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS--Interest income and expenses
are accrued daily. Bond premium and discount, if applicable, are amortized
as required by the Internal Revenue Code, as amended (the "Code"). Dividend
income and distributions to shareholders are recorded on the ex-dividend
date.
24
INDEPENDENCE ONE INTERNATIONAL EQUITY FUND
- --------------------------------------------------------------------------------
Distributions are determined in accordance with income tax regulations which
may differ from generally accepted accounting principles. The following
reclassification has been made to the financial statements.
INCREASE (DECREASE)
- ----------------------------
ACCUMULATED UNDISTRIBUTED
NET REALIZED NET
GAIN ON INVESTMENT
INVESTMENTS INCOME
- ------------- -------------
361,044 (361,044)
Net investment income, net realized gains/losses, and net assets were not
affected by this reclassification.
FEDERAL TAXES--It is the Fund's policy to comply with the provisions of the
Code applicable to regulated investment companies and to distribute to
shareholders each year substantially all of its income. Accordingly, no
provisions for federal tax are necessary.
Withholding taxes on foreign interest and dividends have been provided for
in accordance with the applicable country's tax rules and rates.
Additionally, net capital losses of ($353,345) attributable to foreign
currency transactions incurred after October 31, 1998, are treated as
arising on May 1, 1999, the first day of the Fund's next taxable year.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Fund may engage in
when-issued or delayed delivery transactions. The Fund records when-issued
securities on the trade date and maintains security positions such that
sufficient liquid assets will be available to make payment for the
securities purchased. Securities purchased on a when-issued or delayed
delivery basis are marked to market daily and begin earning interest on the
settlement date.
FUTURES CONTRACTS--The Fund may purchase and sell financial futures
contracts to hedge all or a portion of its portfolio against changes in
interest rates or security prices. Upon entering into a stock index futures
contract with a broker, the Fund is required to deposit in a segregated
account a specified amount of cash or cash equivalents. Futures contracts
are valued daily and unrealized gains or losses are recorded in a "variation
margin" account. Daily, the Fund receives from or pays to the counterparty a
specified amount of cash "variation margin" equal to the daily change in
value of the futures contract. When a contract is closed, the Fund
recognizes a realized gain or loss. For the period ended April 30, 1999, the
Fund had a realized gain of $1,358,324 on futures contracts.
25
INDEPENDENCE ONE INTERNATIONAL EQUITY FUND
- --------------------------------------------------------------------------------
At April 30, 1999, the Fund had outstanding futures contracts as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
UNREALIZED
EXPIRATION NOTIONAL APPRECIATION
DATE CONTRACTS TO DELIVER/RECEIVE POSITION VALUE (DEPRECIATION)
- ------------------------------ ------------------------------ -------- ---------- ---------------
Jun 99 1 SPI Index Futures Long $ 51,202 $ 1,390
Jun 99 4 FTSE 100 Index (New) Futures Long 1,689,521 20,640
Jun 99 2 German DAX Index Futures Long 569,875 (5,308)
Jun 99 8 Nikkei 225 Index Futures Long 4,492,384 50,054
Jun 99 7 CAC 40 Index Futures Long 2,271,387 23,172
May 99 2 CAC 40 Index Futures Long 185,673 2,049
-------
Net Unrealized Appreciation on Futures Contracts $91,997
-------
</TABLE>
Futures contracts have market risks, including the risk that the change in
the value of the contract may not correlate with changes in the value of the
underlying securities.
WRITTEN OPTIONS CONTRACTS--The Fund may write option contracts. A written
option obligates the Fund to deliver a call, or to receive a put, the
contracted amount upon exercise by the holder of the option. The value of
the option contract is recorded as a liability and unrealized gain or loss
is measured by the difference between the current value and the premium
received. For the period ended April 30, 1999, the Fund had a realized gain
of $7,732 on written options.
The following is a summary of the Fund's written option activity:
CONTRACT NUMBER OF CONTRACTS PREMIUM
- ---------------------------------------- ------------------- -------------
Outstanding at 9/25/98 -- --
Options written 3,500 7,732
Options expired (3,500) (7,732)
Options closed -- --
------ ------
Outstanding at 4/30/99 -- --
------ ------
------ ------
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS--The Fund may enter into forward
foreign currency exchange contracts to facilitate settlement transactions in
foreign securities and to manage the Fund's foreign currency exposure.
Purchase contracts are used to acquire exposure to foreign currencies;
whereas, contracts to sell are used to hedge the Fund's securities against
currency fluctuations. Risks may arise upon entering these transactions from
the potential inability of counterparts to meet the terms of their
commitments and from unanticipated movements in security prices or foreign
exchange rates. Forward foreign currency contracts are marked-to-market
daily using foreign currency exchange rates supplied by an independent
pricing service. The change in a contract's market value is recorded by the
Fund as an unrealized gain or loss. When the contract is closed or delivery
is taken, the Fund records a realized gain or loss equal to the difference
between the value of the contract at the time it was opened and the value at
the time it was closed.
26
INDEPENDENCE ONE INTERNATIONAL EQUITY FUND
- --------------------------------------------------------------------------------
At April 30, 1999, the Fund had outstanding forward foreign currency
exchange contracts as set forth below:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
CONTRACTS UNREALIZED
SETTLEMENT AT APPRECIATION
DATE CONTRACTS TO DELIVER/RECEIVE IN EXCHANGE FOR VALUE (DEPRECIATION)
- ---------- ---------------------------- ---------------- ------------- ---------------
Contracts Purchased:
5/6/1999 20,727,000 Japanese Yen $ 172,616 $ 173,564 $ 948
5/6/1999 70,726,000 Japanese Yen 633,008 592,246 (40,762)
5/6/1999 91,453,000 Japanese Yen 780,316 766,418 (13,898)
6/17/1999 10,755,000 Japanese Yen 89,868 90,637 769
6/17/1999 123,916,000 Japanese Yen 1,048,359 1,037,649 (10,710)
Contracts Sold:
5/6/1999 20,727,000 Japanese Yen 172,616 173,564 (948)
5/6/1999 70,726,000 Japanese Yen 633,008 592,716 40,292
5/6/1999 91,453,000 Japanese Yen 780,316 765,810 14,506
6/17/1999 10,755,000 Japanese Yen 89,868 90,060 (192)
6/17/1999 123,916,000 Japanese Yen 1,048,359 1,044,293 4,066
---------------
Net Unrealized Depreciation on Forward Foreign Currency Exchange Contracts $ (5,929)
---------------
</TABLE>
FOREIGN CURRENCY TRANSLATION--The accounting records of the Fund are
maintained in U.S. dollars. All assets and liabilities denominated in
foreign currencies ("FC") are translated into U.S. dollars based on the rate
of exchange of such currencies against U.S. dollars on the date of
valuation. Purchases and sales of securities, income and expenses are
translated at the rate of exchange quoted on the respective date that such
transactions are recorded. Differences between income and expense amounts
recorded and collected or paid are adjusted when reported by the custodian
bank. The Fund does not isolate that portion of the results of operations
resulting from changes in foreign exchange rates on investments from the
fluctuations arising from changes in market prices of securities held. Such
fluctuations are included with the net realized and unrealized gain or loss
from investments.
Reported net realized foreign exchange gains or losses arise from sales of
portfolio securities, sales and maturities of short-term securities, sales
of FCs, currency gains or losses realized between the trade and settlement
dates on securities transactions, the difference between the amounts of
dividends, interest, and foreign withholding taxes recorded on the Fund's
books, and the U.S. dollar equivalent of the amounts actually received or
paid. Net unrealized foreign exchange gains and losses arise from changes in
the value of assets and liabilities other than investments in securities at
fiscal year end, resulting from changes in the exchange rate.
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.
27
INDEPENDENCE ONE INTERNATIONAL EQUITY FUND
- --------------------------------------------------------------------------------
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). At April
30, 1999, capital paid-in for International Equity Fund aggregated $14,101,597.
Transactions in shares were as follows:
PERIOD ENDED
APRIL 30, 1999(1)
--------------------
- --------------------------------------------------
Shares sold 1,223,342
- --------------------------------------------------
Shares issued to shareholders in payment of
distributions declared 14,169
- --------------------------------------------------
Shares redeemed (10,754)
- -------------------------------------------------- --------
Net change resulting from share transactions 1,226,757
- -------------------------------------------------- --------
(1) Reflects operations for the period from September 25, 1998 (date of initial
public investment) to April 30, 1999.
(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE--Michigan National Bank, the Fund's investment
adviser (the "Adviser"), receives for its services an annual investment
advisory fee equal to 1.00% of the Fund's average daily net assets. The
Adviser may voluntarily choose to waive any portion of its fee. The Adviser
can modify or terminate this voluntary waiver at any time at its sole
discretion.
Under the terms of a sub-advisory agreement between the Adviser and National
Australia Asset Management Ltd. (the "Sub-Adviser"), the Sub-Adviser is
entitled to receive an annual fee, to be paid by the Adviser, of 0.30% of
the average daily value of the Fund's assets managed by the Sub-Advisor. The
Sub-Advisor may elect to waive some or all of its fees.
ADMINISTRATIVE FEE--Federated Administrative Services ("FAS") provides the
Fund with certain administrative personnel and services. The fee paid to FAS
is based on the level of average aggregate net assets of the Trust for the
period. The administrative fee during any fiscal year shall be at least
$50,000 for each portfolio in the Trust. FAS may voluntarily choose to waive
a portion of its fee.
TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES--Federated Services
Company ("FServ") through its subsidiary, Federated Shareholder Services
Company ("FSSC") serves as transfer and dividend disbursing agent for the
Fund. The fee paid to FSSC is based on the size, type, and number of
accounts and transactions made by shareholders. FSSC may voluntarily choose
to waive a portion of its fee.
28
INDEPENDENCE ONE INTERNATIONAL EQUITY FUND
- --------------------------------------------------------------------------------
PORTFOLIO ACCOUNTING FEES--Fserv maintains the Fund's accounting records for
which it receives a fee. The fee is based on the level of the Fund's average
daily net assets for the period, plus out-of-pocket expenses.
CUSTODIAN FEES--Michigan National Bank is the Fund's custodian. The fee is
based on the level of the Fund's average daily net assets for the period,
plus out-of-pocket expenses.
GENERAL--Certain of the Officers of the Trust are Officers and/or Directors
or Trustees of the above companies.
(5) INVESTMENT TRANSACTIONS
Purchases and sales of investments, excluding short-term securities, for the
period ended April 30, 1999, were as follows:
- --------------------------------------------------
Purchases $13,294,723
- -------------------------------------------------- -----------
Sales $ 19,375
- -------------------------------------------------- -----------
(6) CONCENTRATION OF CREDIT RISK
The Fund invests in securities of non-U.S. issuers. Although the Fund maintains
a diversified investment portfolio, the political or economic developments
within a particular country or region may have an adverse effect on the ability
of domiciled issuers to meet their obligations. Additionally, political or
economic developments may have an effect on the liquidity and volatility of
portfolio securities and currency holdings.
(7) YEAR 2000 (UNAUDITED)
Similar to other financial organizations, the Fund could be adversely affected
if the computer systems used by the Fund's service providers do not properly
process and calculate date-related information and data from and after January
1, 2000. The Fund's Adviser and administrator are taking measures that they
believe are reasonably designed to address the Year 2000 issue with respect to
computer systems that they use and to obtain reasonable assurances that
comparable steps are being taken by each of the Fund's other service providers.
At this time, however, there can be no assurance that these steps will be
sufficient to avoid any adverse impact to the Fund.
29
INDEPENDENT AUDITORS' REPORT
- ------------------------------------------------------------
The Board of Trustees and Shareholders INDEPENDENCE ONE MUTUAL FUNDS:
We have audited the accompanying statement of assets and liabilities of
Independence One International Equity Fund, a portfolio of Independence One
Mutual Funds, including the portfolio of investments, as of April 30, 1999, the
related statement of operations, the statement of changes in net assets, and the
financial highlights for the period from September 25, 1998 (date of initial
public investment) to April 30, 1999. 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 audit.
We conducted our audit 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 as of April 30, 1999, by
correspondence with the custodian and brokers. 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 audit provides 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 International Equity Fund as of April 30, 1999, the results of
its operations, changes in its net assets, and its financial highlights for the
period indicated above in conformity with generally accepted accounting
principles.
[LOGO]
Boston, Massachusetts
June 16, 1999
30
TRUSTEES OFFICERS
- ------------------------------------------------------------
Robert E. Baker
Harold Berry
Nathan Forbes
Harry J. Nederlander
Thomas S. Wilson
Edward C. Gonzales
PRESIDENT AND TREASURER
Jeffrey W. Sterling
VICE PRESIDENT AND ASSISTANT TREASURER
C. Grant Anderson
SECRETARY
Timothy S. Johnson
ASSISTANT SECRETARY
MUTUAL FUNDS ARE NOT BANK DEPOSITS OR OBLIGATIONS, ARE NOT GUARANTEED BY ANY
BANK, AND ARE NOT INSURED OR GUARANTEED BY THE U.S. GOVERNMENT, THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER
GOVERNMENT AGENCY. INVESTMENT IN MUTUAL FUNDS INVOLVES INVESTMENT RISK,
INCLUDING POSSIBLE LOSS OF PRINCIPAL.
This report is authorized for distribution to prospective investors only when
preceded or accompanied by the Fund's prospectus which contains facts concerning
its objectives and policies, management fees, expenses and other information.
31
INDEPENDENCE ONE
MUTUAL FUNDS
5800 Corporate Drive
Pittsburgh, Pennsylvania 15237-7010
INVESTMENT ADVISER
Michigan National Bank
27777 Inkster Road
Mail Code 10-52
Farmington Hills, Michigan 48333-9065
SUB-ADVISER
National Australia Asset Management Ltd.
333 Collins Street
Melbourne, Victoria 3000, Australia
DISTRIBUTOR
Federated Securities Corp.
Federated Investors Tower
1001 Liberty Avenue
Pittsburgh, Pennsylvania 15222-3779
CUSTODIAN
Michigan National Bank
27777 Inkster Road
Mail Code 10-30
Farmington Hills, Michigan 48333-9065
TRANSFER AGENT AND
DIVIDEND DISBURSING AGENT
Federated Shareholder
Services Company
P. O. Box 8600
Boston, Massachusetts 02266-8600
INDEPENDENT AUDITORS
KPMG LLP
99 High Street
Boston, Massachusetts 02110
[LOGO]
G01200-13 (6/99)
INDEPENDENCE ONE-REGISTERED TRADEMARK-
INTERNATIONAL EQUITY FUND
(DISTRIBUTED BY FEDERATED SECURITIES CORP.)
ANNUAL REPORT
TO SHAREHOLDERS
APRIL 30, 1999
- --------------------------------------
- ---------------------------------------
- ---------------------------------------
- ---------------------------------------
- ---------------------------------------
- ---------------------------------------
- ---------------------------------------
- ---------------------------------------
- ---------------------------------------
[MICHIGAN NATIONAL BANK LOGO]
INDEPENDENCE ONE MUTUAL FUNDS
APPENDIX
Independence One Equity Plus Fund
A1. The graphic presentation here displayed consists of a line graph. The
corresponding components of the line graph are listed underneath. The
Independence One Equity Plus Fund (the "Fund") is represented by a solid line.
The Standard & Poor's 100 Composite Stock Price Index (S&P 100) is represented
by a dotted line. The line graph is a visual representation of a comparison of
change in value of a $10,000 hypothetical investment in the Fund, and the S&P
100. The "x" axis reflects computation periods from 9/25/95 to 4/30/99. The "y"
axis reflects the cost of the investment. The right margin reflects the ending
value of the hypothetical investment in the Fund as compared to the S&P 100. The
right margin reflects the ending value of the hypothetical investment in the
Fund as compared to the S&P 100. The ending values were $25,060, and $25,863,
respectively.
Independence One Fixed Income Funds
A2. The graphic presentation here displayed consists of a line graph. The
corresponding components of the line graph are listed underneath. The
Independence One U.S. Government Securities Fund (the "Fund") is represented by
a dashed line. The Lehman Brothers Government Bond Index (LBGB) is represented
by a solid line. The line graph is a visual representation of a comparison of
change in value of a $10,000 hypothetical investment in the Fund, and the LBGB.
The "x" axis reflects computation periods from 1/11/93 to 4/30/99. The "y" axis
reflects the cost of the investment. The right margin reflects the ending value
of the hypothetical investment in the Fund as compared to the LBGB. The right
margin reflects the ending value of the hypothetical investment in the Fund as
compared to the LBGB. The ending values were $14,869, and $15,469, respectively.
A3. The graphic presentation here displayed consists of a line graph. The
corresponding components of the line graph are listed underneath. The
Independence One Fixed Income Fund (the "Fund") is represented by a dashed line.
The Lehman Brothers Intermediate Government/Corporate Bond Index (LBGCB) is
represented by a solid line. The line graph is a visual representation of a
comparison of change in value of a $10,000 hypothetical investment in the Fund,
and the LBGCB. The "x" axis reflects computation periods from 10/23/95 to
4/30/99. The "y" axis reflects the cost of the investment. The right margin
reflects the ending value of the hypothetical investment in the Fund as compared
to the LBGCB. The right margin reflects the ending value of the hypothetical
investment in the Fund as compared to the LBGCB. The ending values were $12,268,
and $12,473, respectively.
A4. The graphic presentation here displayed consists of a line graph. The
corresponding components of the line graph are listed underneath. The
Independence One Michigan Municipal Bond Fund (the "Fund") is represented by a
dashed line. The Lehman Brothers 7-Year General Obligations Bond Index (LBGOB)
is represented by a solid line. The line graph is a visual representation of a
comparison of change in value of a $10,000 hypothetical investment in the Fund,
and the LBGOB. The "x" axis reflects computation periods from 11/20/95 to
4/30/99. The "y" axis reflects the cost of the investment. The right margin
reflects the ending value of the hypothetical investment in the Fund as compared
to the LBGOB. The right margin reflects the ending value of the hypothetical
investment in the Fund as compared to the LBGOB. The ending values were $12,035,
and $12,161, respectively.
Independence One Small Cap Fund
A5. The graphic presentation here displayed consists of a line graph. The
corresponding components of the line graph are listed underneath. The
Independence One Small Cap Fund (the "Fund") is represented by a solid line. The
Standard & Poor's Small Cap 600 Composite Stock Price Index (S&P 600) is
represented by a dotted line. The line graph is a visual representation of a
comparison of change in value of a $10,000 hypothetical investment in the Fund
and the S&P 600. The "x" axis reflects computation periods from 6/22/98 to
4/30/99. The "y" axis reflects the cost of the investment. The right margin
reflects the ending value of the hypothetical investment in the Fund as compared
to the S&P 600. The right margin reflects the ending value of the hypothetical
investment in the Fund as compared to the S&P 600. The ending values were
$9,406, and $9,381, respectively.
Independence One International Equity Fund
A6. The graphic presentation here displayed consists of a line graph. The
corresponding components of the line graph are listed underneath. The
Independence One International Equity Fund (the "Fund") is represented by a
dashed line. The Morgan Stanley Capital International EAFE Index (MSCI-EAFE) is
represented by a solid line. The line graph is a visual representation of a
comparison of change in value of a $10,000 hypothetical investment in the Fund
and the MSCI-EAFE. The "x" axis reflects computation periods from 9/25/98 to
4/30/99. The "y" axis reflects the cost of the investment. The right margin
reflects the ending value of the hypothetical investment in the Fund as compared
to the MSCI-EAFE. The right margin reflects the ending value of the hypothetical
investment in the Fund as compared to the MSCI-EAFE. The ending values were
$12,942, and $12,730, respectively.
