INDEPENDENCE ONE MUTUAL FUNDS, 485BPOS, 1999-08-26

INDEPENDENCE ONE MUTUAL FUNDS
485BPOS, 1999-08-26

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1933 Act File No. 33-26516
1940 Act File No. 811-5752

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Form N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 X
------

Pre-Effective Amendment No. ..............................

Post-Effective Amendment No. 26 ............................... X
------ ------

and/or

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 X
------

Amendment No. 25 ............................................ X
------ ------

INDEPENDENCE ONE MUTUAL FUNDS

(Exact Name of Registrant as Specified in Charter)

5800 Corporate Drive
Pittsburgh, Pennsylvania 15237-7010
(Address of Principal Executive Offices)

(412) 288-1900
(Registrant's Telephone Number)

John W. McGonigle, Esquire,
Federated Investors Tower
1000 Liberty Avenue
Pittsburgh, Pennsylvania 15222-3779
(Name and Address of Agent for Service)
(Notices should be sent to the Agent for Service)

It is proposed that this filing will become effective:

immediately upon filing pursuant to paragraph (b) _X on August 26, 1999
pursuant to paragraph (b) __ 60 days after filing pursuant to paragraph (a)(i)
__ on _____________ pursuant to paragraph (a)(i) _ 75 days after filing pursuant
to paragraph (a)(ii)
on pursuant to paragraph (a)(ii) of Rule 485.

If appropriate, check the following box:

This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.

Copies To:

Matthew G. Maloney, Esquire
Dickstein Shapiro Morin & Oshinsky, LLP
2101 L Street, N.W.
Washington, D.C. 20037

Prospectus

[graphic]

Independence One(R)
Mutual Funds

Independence One(R) Mutual Funds offers nine portfolios, including three equity
funds, three income funds and three money market funds. This prospectus relates
to the three income funds:

Independence One
U.S. Government Securities Fund

Independence One
Fixed Income Fund

Independence One
Michigan Municipal Bond Fund

August 31, 1999

[Independence One logo]

As with all mutual funds, the Securities and Exchange Commission has not
approved or disapproved these securities or passed upon the adequacy of this
prospectus, and any representation to the contrary is a criminal offense.

Independence One(R) Mutual Funds
[graphic]
<TABLE>
<CAPTION>

<S> <C>
Contents
Fund Goals, Strategies, Performance and Risk.... 1
Principal Risks of the Funds.................... 2
What are the Funds' Fees and Expenses?.......... 7
Principal Securities in Which the Funds Invest.. 8
Specific Risks of Investing in the Funds........ 13
What do Shares Cost?............................ 15
How are the Funds Sold?......................... 16
How to Purchase Shares.......................... 16
How to Redeem and Exchange Shares............... 18
Account and Share Information................... 21
Who Manages the Funds?.......................... 22
Financial Information........................... 24
</TABLE>

Fund Goals, Strategies, Performance and Risk

[graphic]

The following describes the investment goals, strategies, and principal risks of
Independence One U.S. Government Securities Fund, Independence One Fixed Income
Fund and Independence One Michigan Municipal Bond Fund (the "Funds"). There can
be no assurance that a Fund will achieve its goal. Independence One U.S.
Government Securities Fund Goal: Seeks to provide high current income.
Strategy: The Fund pursues its investment objective by investing only in U.S.
Treasury and government agency securities. U.S. government securities are
subject to varying levels of backing as to payment of principal and interest by
the United States. In addition to seeking high current income relative to fixed
income funds with shorter average durations than that of the Fund, the Fund's
portfolio will be managed in an effort to seek total return which includes both
changes in the principal value of the Fund's portfolio and interest income
earned. Accordingly, the investment Adviser does not select securities purely to
maximize the current yield of the Fund.

In an effort to manage the Fund's current income and total performance, the
Adviser attempts to anticipate the opportunities and risks of changes in market
interest rates. When the Adviser expects that market interest rates may decline,
it may extend the average duration of the Fund's portfolio, and when, in the
Adviser's judgment, market interest rates may rise, it may shorten the average
duration of the Fund. Duration measures the price sensitivity of a fixed income
security to changes in interest rates. Generally, the Adviser will limit the
Fund's duration to fall within a four to seven year range.

The Adviser may also attempt to improve the Fund's total return by weighing the
relative value of different types of U.S. government securities having similar
maturities in selecting portfolio securities.

Independence One Fixed Income Fund
Goal: Seeks to provide total return.

Strategy: The Fund pursues its investment objective by investing at least 65% of
its assets in a diversified portfolio of fixed income securities consisting
primarily of corporate obligations rated A or higher by a national rating
agency; U.S. government securities; and mortgage backed and asset backed
securities.

The Fund will attempt to deliver share price and/or income performance in excess
of the bond market in general as measured by such broad indices as the Lehman
Brothers Intermediate Government/Corporate Bond Index. The Fund currently
expects to maintain an average dollar-weighted maturity of between 3 and 8
years, although securities of longer or shorter maturities may be purchased.

In an effort to manage the Fund's total return, the Adviser attempts to
anticipate the opportunities and risks of changes in market interest rates. When
the Adviser expects that market interest rates may decline, it may extend the
average maturity of the Fund's portfolio, and when, in the Adviser's judgment,
market interest rates may rise, it may shorten the average maturity of the Fund.
The Adviser may also attempt to improve the Fund's total return by weighing the
relative value of the various types of fixed income securities having similar
maturities in selecting portfolio securities.

Independence One Michigan Municipal Bond Fund
Goal: Seeks to provide current income which is exempt from federal regular
income tax and the personal income taxes imposed by the State of Michigan and
Michigan municipalities. The Fund also intends to qualify as an investment
substantially exempt from Michigan intangibles personal property tax.
Strategy: The Fund pursues its investment objective by investing its assets so
that, under normal circumstances, at least 80% of its total assets are invested
in Michigan municipal securities rated A or higher by a national rating agency.
In an effort to manage the Fund's current income, the Adviser attempts to
anticipate the opportunities and risks of changes in market interest rates. When
the Adviser expects that market interest rates may decline, it may extend the
average duration of the Fund's portfolio, and when, in the Adviser's judgment,
market interest rates may rise, it may shorten the average duration of the Fund.
Duration measures the price sensitivity of a fixed income security to changes in
interest rates. Generally, the Adviser will limit the Fund's duration to fall
within a four to eight year range. Principal Risks of the Funds

[graphic]

In addition to the risks set forth below that are specific to an investment in a
particular Fund, there are risks common to all mutual funds.

For example, a Fund's share price may decline and an investor could lose money.
Also, there is no assurance that a Fund will achieve its investment objective.
The Shares offered by this prospectus are not deposits or obligations of any
bank including Michigan National Bank, and are not endorsed or guaranteed by the
U.S. government, the Federal Deposit Insurance Corporation, the Federal Reserve
Board, or any other government agency. <TABLE> <CAPTION>
U.S. Government Fixed Income Michigan
Municipal
Risk Securities Fund Fund Bond Fund/7/
<S> <C> <C> <C>
Credit Risks /1/ . . .
Interest Rate Risks /2/ . . .
Tax Risks /3/ .
Call Risks /4/ . . .
Prepayment Risks /5/ .
Sector Risks /6/ .
</TABLE>

1 The possibility that an issuer will default on a security by failing to pay
interest or principal when due.

2 Prices of fixed income securities rise and fall in response to interest rate
changes. Interest rate changes have a greater effect on the price of fixed
income securities with longer durations.

3 Changes in federal tax laws may cause the prices of municipal securities to
fall.

4 An issuer may redeem a fixed income security before maturity at a price below
its current market price.

5 The relative volatility of mortgage-backed securities is due to the likelihood
of prepayments which increase in a declining interest rate environment and
decrease in a rising interest rate environment.

6 Because the Michigan Municipal Bond Fund's portfolio may be comprised of
securities issued or credit enhanced by issuers located in the same state, the
Fund will be more susceptible to any economic, business, political, or other
developments which generally affect these issuers

7 The Michigan Municipal Bond Fund is non-diversified. Compared to diversified
mutual funds, it may invest a higher percentage of its assets among fewer
issuers of portfolio securities. This increases the Fund's risk by magnifying
the impact (positively or negatively) that any one issuer has on the Fund's
Share price and performance. Independence One U.S. Government
Securities Fund Risk/Return Bar Chart and Table The `y' axis reflects the
"% Total Return" beginning with "-5%" and increasing in increments of 5% up to
20%.

The `x' axis represents calculation periods from the earliest first full
calendar year end of the Fund's start of business through the calendar year
ended December 31, 1998. The light gray shaded chart features five distinct
vertical bars, each shaded in charcoal, and each visually representing by height
the total return percentages for the calendar year stated directly at its base.
The calculated total return percentage for the Fund for each calendar year is
stated directly at the top of each respective bar, for the calendar years 1994
through 1998. The percentages noted are: -3.04%, 18.14%, 2.32%, 9.06% and 8.96%.

The bar chart shows the variability of the Fund's total returns on a calendar
year-end basis.

The Fund's shares are not sold subject to a sales charge (load). The total
returns displayed above are based upon net asset value.

The Fund's total return from January 1, 1999 to June 30, 1999 was (2.72%).

Within the period shown in the Chart, the Fund's highest quarterly return was
6.17% (quarter ended June 30, 1995). Its lowest quarterly return was (2.38%)
(quarter ended March 31, 1996).

Independence One U.S. Government Securities Fund Average Annual Total Return
Table

The following table represents the Fund's Average Annual Total Returns for the
calendar periods ended December 31, 1998. The table shows the Fund's total
returns averaged over a period of years relative to the Lehman Brothers
Government Bond Index (LBGBI), a broad based market index. Indexes are
unmanaged, and it is not possible to invest directly in an index. Total returns
for the index shown do not reflect sales charges, expenses or other fees that
the Securities and Exchange Commission requires to be reflected in the Fund's
performance. <TABLE> <CAPTION> Calendar Fund LBGBI <S> <C> <C> 1 Year 8.96%
9.85% 5 Years 6.85% 7.18% Start of Performance/1/ 7.15% 5.32% </TABLE>

1 The Fund's start of performance date was January 11, 1993.

Past performance does not necessarily predict future performance. This
information provides you with historical performance so that you can analyze
whether the Fund's investment risks are balanced by its potential rewards.

Independence One Fixed Income Fund Risk/Return Bar Chart and Table

The `y' axis reflects the "% Total Return" beginning with "0%" and increasing in
increments of 1% up to 8%.

The `x' axis represents calculation periods from the earliest first full
calendar year end of the Fund's start of business through the calendar year
ended December 31, 1998. The light gray shaded chart features three distinct
vertical bars, each shaded in charcoal, and each visually representing by height
the total return percentages for the calendar year stated directly at its base.
The calculated total return percentage for the Fund for each calendar year is
stated directly at the top of each respective bar, for the calendar years 1996
through 1998. The percentages noted are: 3.45%, 7.47% and 7.77%.

The bar chart shows the variability of the Fund's total returns on a calendar
year-end basis. The Fund's shares are not sold subject to a sales charge (load).
The total returns displayed above are based upon net asset value.

The Fund's total return from January 1, 1999 to June 30, 1999 was (1.02%).

Within the period shown in the Chart, the Fund's highest quarterly return was
4.27% (quarter ended September 30, 1998). Its lowest quarterly return was
(0.97%) (quarter ended March 31, 1996).

Independence One Fixed Income Fund Average Annual Total Return Table

The following table represents the Fund's Average Annual Total Returns for the
calendar periods ended December 31, 1998. The table shows the Fund's total
returns averaged over a period of years relative to the Lehman Brothers
Intermediate Government/Corporate Bond Index (LBIGCBI), a broad based market
index. Total returns for the index shown do not reflect sales charges, expenses
or other fees that the Securities and Exchange Commission requires to be
reflected in the Fund's performance. Indexes are unmanaged, and it is not
possible to invest directly in an index. <TABLE> <CAPTION> Calendar Period
Fund LBIGCBI <S> <C> <C> 1 Year 7.77% 8.43% Start of Performance1 6.67% 7.19%
</TABLE>

1 The Fund's start of performance date was October 23, 1995.

Independence One Michigan Municipal Bond Fund Risk/Return Bar Chart and Table
The `y' axis reflects the "% Total Return" beginning with "0%" and
increasing in increments of 1% up
to 8%.

The `x' axis represents calculation periods from the earliest first full
calendar year end of the Fund's start of business through the calendar year
ended December 31, 1998. The light gray shaded chart features three distinct
vertical bars, each shaded in charcoal, and each visually representing by height
the total return percentages for the calendar year stated directly at its base.
The calculated total return percentage for the Fund for each calendar year is
stated directly at the top of each respective bar, for the calendar years 1996
through 1998. The percentages noted are: 4.39%, 7.73% and 5.14%.

The Fund's total return from January 1, 1999 to June 30, 1999 was (1.91%).

Within the period shown in the Chart, the Fund's highest quarterly return was
2.99% (quarter ended September 30, 1998). Its lowest quarterly return was
(0.27%) (quarter ended March 31, 1997).

Independence One Michigan Municipal Bond Fund Average Annual Total Return Table

The following table represents the Fund's Average Annual Total Returns for the
calendar periods ended December 31, 1998. The table shows the Fund's total
returns averaged over a period of years relative to the Lehman Brothers 7-Year
General Obligations Bond Index (LB7YGOBI), a broad based market index. Total
returns for the index shown do not reflect sales charges or other fees that the
Securities and Exchange Commission requires to be reflected in the Fund's
performance. Indexes are unmanaged, and it is not possible to invest directly in
an index. <TABLE> <CAPTION> Calendar Period Fund LB7YGOBI <S> <C> <C> 1
Year 5.14% 6.36% Start of Performance1 5.95% 6.19% </TABLE>

1 The Fund's start of performance date was November 20, 1995.

What are the Funds' Fees and Expenses?
[graphic]
Independence One(R) Mutual Funds Fees and Expenses

This table describes the fees and expenses that you may pay if you buy and hold
Shares of the Independence One U.S. Government Securities Fund, Independence One
Fixed Income Fund, or the Independence One Michigan Municipal Bond Fund.

U.S. Michigan
Shareholder Fees Government Fixed Income Municipal
Fees Paid Directly from Your Investment Securities Fund Fund Bond Fund
<S> <C> <C> <C>
Maximum Sales Charge (Load) Imposed on Purchases (as a
percentage of offering price) None None None
Maximum Deferred Sales Charge (Load) (as a percentage
of original purchase price or redemption proceeds, as
applicable) None None None
Maximum Sales Charge (Load) Imposed on Reinvested
Dividends (and other Distributions)(as a percentage of
offering price). None None None
Redemption Fee (as a percentage of amount redeemed, if
applicable) None None None
Exchange Fee None None None
</TABLE>

<TABLE>
<CAPTION>
Annual Fund Operating Expenses (Before U.S. Michigan
Waivers)/1/ Expenses That Deducted From Government Fixed Income Municipal
Fund Assets (as percentage of average net assets Securities Fund Bond Fund
<S> <C> <C> <C>
Management Fee /2/ 0.70% 0.75% 0.75%
Distribution (12b-1) Fee None None None
Shareholder Services Fee None None None
Other Expenses /3/ 0.35% 0.28% 0.90%
Total Annual Fund Operating Expenses 1.05% 1.03% 1.65%
</TABLE>
1 Although not contractually obligated to do so, the adviser and administrator
waived certain amounts. These are shown below along with the net expenses the
Funds expects to pay for the fiscal year ending April 30, 2000.

<TABLE>
<S> <C> <C> <C>
Total Waivers of Fund Expenses 0.40% 0.45% 0.65%
Total Annual Fund Operating Expenses 0.65% 0.58% 1.00%
(after waivers)
</TABLE>
2 The adviser expects to voluntarily waived a portion of the management fee for
the U.S. Government Securities Fund, the Fixed Income Fund and the Michigan
Municipal Bond Fund. The adviser can terminate this voluntary waiver at any
time. The management fee is expected to be 0.30%, 0.30%, and 0.25% (after
voluntary waiver) for the U.S. Government Securities Fund, the Fixed Income Fund
and the Michigan Municipal Bond Fund, respectively, for the fiscal year ending
April 30, 2000.

3 The administrator for the Michigan Municipal Bond Fund expects to voluntarily
reduce certain operating expenses of the Fund. This voluntary reduction can be
terminated at any time. Total other expenses expected to be paid by the Michigan
Municipal Bond Fund (after the voluntary reduction) are 0.75% for the fiscal
year ending April 30, 2000. Example This Example is intended to help
you compare the cost of investing in the U.S. Government Securities Fund, the
Fixed Income Fund and the Michigan Municipal Bond Fund with the cost of
investing in other mutual funds.

The Example assumes that you invest $10,000 in the U.S. Government Securities
Fund, the Fixed Income Fund and the Michigan Municipal Bond Fund for the time
periods indicated and then redeem all of your Shares at the end of those
periods. The Example also assumes that your investment has a 5% return each year
and that each of the Fund's Shares operating expenses are before waivers as
shown in the Table and remain the same. Although your actual costs may be higher
or lower, based on these assumptions your costs would be:

<TABLE>
<CAPTION>
U.S. Michigan
Government Fixed Income Municipal
Securities Fund Fund Bond Fund
<S> <C> <C> <C>
1 Year $ 107 $ 105 $ 168
3 Years $ 334 $ 328 $ 520
5 Years $ 579 $ 569 $ 897
10 Years $1,283 $1,259 $1,955
</TABLE>

Principal Securities in Which the Funds Invest

[graphic]

Fixed Income Securities

Fixed income securities pay interest, dividends or distributions at a specified
rate. The rate may be a fixed percentage of the principal or adjusted
periodically. In addition, the issuer of a fixed income security must repay the
principal amount of the security, normally within a specified time. Fixed income
securities provide more regular income than equity securities. However, the
returns on fixed income securities are limited and normally do not increase with
the issuer's earnings. This limits the potential appreciation of fixed income
securities as compared to equity securities.

The following describes the principal types of fixed income securities in which
the Funds may invest.

Treasury Securities

Treasury securities are direct obligations of the federal government of the
United States. Treasury securities are generally regarded as having the lowest
credit risks.

Agency Securities

Agency securities are issued or guaranteed by a federal agency or other
government sponsored entity acting under federal authority (a GSE). The United
States supports some GSEs with its full faith and credit. Other GSEs receive
support through federal subsidies, loans or other benefits. A few GSEs have no
explicit financial support, but are regarded as having implied support because
the federal government sponsors their activities. Agency securities are
generally regarded as having low credit risks, but not as low as treasury
securities.

The Funds treat mortgage backed securities guaranteed by GSEs as agency
securities. Although a GSE guarantee protects against credit risks, it does not
reduce the market and prepayment risks of these mortgage backed securities.

Corporate Debt Securities

Corporate debt securities are fixed income securities issued by businesses.
Notes, bonds, debentures and commercial paper are the most prevalent types of
corporate debt securities. A Fund may also purchase interests in bank loans to
companies. The credit risks of corporate debt securities vary widely among
issuers.

In addition, the credit risk of an issuer's debt security may vary based on its
priority for repayment. For example, higher ranking (senior) debt securities
have a higher priority than lower ranking (subordinated) securities. This means
that the issuer might not make payments on subordinated securities while
continuing to make payments on senior securities. In addition, in the event of
bankruptcy, holders of senior securities may receive amounts otherwise payable
to the holders of subordinated securities. Some subordinated securities, such as
trust preferred and capital securities notes, also permit the issuer to defer
payments under certain circumstances. For example, insurance companies issue
securities known as surplus notes that permit the insurance company to defer any
payment that would reduce its capital below regulatory requirements.

Commercial Paper

Fixed Income Fund may invest in commercial paper. Commercial paper is an
issuer's obligation with a maturity of less than nine months. Companies
typically issue commercial paper to pay for current expenditures. Most issuers
constantly reissue their commercial paper and use the proceeds (or bank loans)
to repay maturing paper. If the issuer cannot continue to obtain liquidity in
this fashion, its commercial paper may default.

Demand Instruments

Demand instruments are corporate debt securities that the issuer must repay
upon demand. Other demand instruments require a third party, such as a dealer
or bank, to repurchase the security for its face value upon demand. The Funds
treat demand instruments as short-term securities, even though their stated
maturity may extend beyond one year.

Mortgage Backed Securities

The mortgage backed securities which may be held by the Fixed Income Fund
represent interests in pools of mortgages. The mortgages that comprise a pool
normally have similar interest rates, maturities and other terms. Mortgages may
have fixed or adjustable interest rates. Interests in pools of adjustable rate
mortgages are known as ARMs.

Mortgage backed securities come in a variety of forms. Many have extremely
complicated terms. The simplest form of mortgage backed securities are
pass-through certificates. An issuer of pass-through certificates gathers
monthly payments from an underlying pool of mortgages. Then, the issuer deducts
its fees and expenses and passes the balance of the payments onto the
certificate holders once a month. Holders of pass-through certificates receive a
pro rata share of all payments and pre-payments from the underlying mortgages.
As a result, the holders assume all the prepayment risks of the underlying
mortgages.

Collateralized Mortgage Obligations (CMOs)

CMOs, including interests in real estate mortgage investment conduits
(REMICs), allocate payments and prepayments from an underlying pass-through
certificate among holders of different classes of mortgage backed securities.
The Fixed Income Fund will only invest in CMOs which, at the time of purchase,
are rated AAA by a nationally recognized statistical rating organization
("NRSRO") or are of comparable quality as determined by the Adviser, and which
may be: (a) collateralized by pools of mortgages in which each mortgage is
guaranteed as to payment of principal and interest by an agency or
instrumentality of the U.S. government; (b) collateralized by pools of
mortgages in which payment of principal and interest is guaranteed by the
issuer and such guarantee is collateralized by U.S. government securities; or
(c) collateralized by pools of mortgages without a government guarantee as to
payment of principal and interest, but which have some form of credit
enhancement. This creates different prepayment and interest rate risks for
each CMO class.

Sequential CMOs

In a sequential pay CMO, one class of CMOs receives all principal payments and
prepayments. The next class of CMOs receives all principal payments after the
first class is paid off. This process repeats for each sequential class of
CMO. As a result, each class of sequential pay CMOs reduces the prepayment
risks of subsequent classes. The degree of increased or decreased prepayment
risks depends upon the structure of the CMOs. However, the actual returns on
any type of mortgage backed security depend upon the performance of the
underlying pool of mortgages, which is difficult to predict and will vary
among pools.

Asset Backed Securities

The Fixed Income Fund may invest in asset backed securities. Asset backed
securities are payable from pools of obligations other than mortgages. Most
asset backed securities involve consumer or commercial debts with maturities of
less than ten years. However, almost any type of fixed income assets (including
other fixed income securities) may be used to create an asset backed security.
Asset backed securities may take the form of notes or pass through certificates.
Asset backed securities have prepayment risks.

Credit Enhancement

Credit enhancement consists of an arrangement in which a company agrees to pay
amounts due on a fixed income security if the issuer defaults. In some cases the
company providing credit enhancement makes all payments directly to the security
holders and receives reimbursement from the issuer. Normally, the credit
enhancer has greater financial resources and liquidity than the issuer. For this
reason, the Adviser usually evaluates the credit risk of a fixed income security
based in part upon its credit enhancement.

Certain of the Fixed Income Fund and Michigan Municipal Bond Fund's investments
may be credit enhanced Common types of credit enhancement include guarantees,
letters of credit, bond insurance and surety bonds. Credit enhancement also
includes arrangements where securities or other liquid assets secure payment of
a fixed income security. If a default occurs, these assets may be sold and the
proceeds paid to security's holders. Either form of credit enhancement reduces
credit risks by providing another source of payment for a fixed income security.

Tax Exempt Securities

The Michigan Municipal Bond Fund invests in tax-exempt securities. Tax exempt
securities are fixed income securities that pay interest that is not subject to
regular federal income taxes. Typically, states, counties, cities and other
political subdivisions and authorities issue tax exempt securities. The market
categorizes tax exempt securities by their source of repayment.

General Obligation Bonds

General obligation bonds are supported by the issuer's power to exact property
or other taxes. The issuer must impose and collect taxes sufficient to pay
principal and interest on the bonds. However, the issuer's authority to impose
additional taxes may be limited by its charter or state law.

Special Revenue Bonds

Special revenue bonds are payable solely from specific revenues received by
the issuer such as specific taxes, assessments, tolls, or fees. Bondholders
may not collect from the municipality's general taxes or revenues. For
example, a municipality may issue bonds to build a toll road, and pledge the
tolls to repay the bonds. Therefore, a shortfall in the tolls could
potentially result in a default on the bonds.

Private Activity Bonds

Private activity bonds are special revenue bonds used to finance private
entities. For example, a municipality may issue bonds to finance a new factory
to improve its local economy. The municipality would lend the proceeds from
its bonds to the company using the factory, and the company would agree to
make loan payments sufficient to repay the bonds. The bonds would be payable
solely from the company's loan payments, not from any other revenues of the
municipality. Therefore, any default on the loan normally would result in a
default on the bonds.

The interest on many types of private activity bonds is subject to the federal
alternative minimum tax (AMT). The Fund may invest in bonds subject to AMT.

Municipal Notes

Municipal notes are short-term tax exempt securities. Many municipalities issue
such notes to fund their current operations before collecting taxes or other
municipal revenues. Municipalities may also issue notes to fund capital projects
prior to issuing long-term bonds. The issuers typically repay the notes at the
end of their fiscal year, either with taxes, other revenues or proceeds from
newly issued notes or bonds.

Variable Rate Demand Instruments

Variable rate demand instruments are tax exempt securities that require the
issuer or a third party, such as a dealer or bank, to repurchase the security
for its face value upon demand. The securities also pay interest at a variable
rate intended to cause the securities to trade at their face value. The Fund
treats demand instruments as short-term securities, because their variable
interest rate adjusts in response to changes in market rates, even though their
stated maturity may extend beyond thirteen months.

Municipal Leases

Municipalities may enter into leases for equipment or facilities. In order to
comply with state public financing laws, these leases are typically subject to
annual appropriation. In other words, a municipality may end a lease, without
penalty, by not providing for the lease payments in its annual budget. After the
lease ends, the lessor can resell the equipment or facility but may lose money
on the sale.

The Fund may invest in securities supported by pools of municipal leases. The
most common type of lease backed securities are certificates of participation
(COPs). However, a Fund may also invest directly in individual leases,
installment purchase contracts and conditional sales contracts.

Portfolio Turnover

The Funds may actively trade their portfolio securities in an attempt to achieve
their investment objective. Active trading will cause a Fund to have an
increased portfolio turnover rate, which is likely to generate shorter-term
gains (losses) for its shareholders, which are taxed at a higher rate than
longer-term gains (losses). Actively trading portfolio securities increases a
Fund's trading costs and may have an adverse impact on a Fund's performance.

Temporary Defensive Investments

The Michigan Municipal Bond Fund may temporarily depart from its principal
investment strategies by investing its assets in short-term non-Michigan
municipal tax-exempt obligations or taxable temporary investments. These
temporary investments include: notes issued by or on behalf of municipal or
corporate issuers; obligations issued or guaranteed by the U.S. government, its
agencies, or instrumentalities; other debt securities; commercial paper;
certificates of deposit of banks; and repurchase agreements (arrangements in
which the organization selling the Fund a bond or temporary investment agrees at
the time of sale to repurchase it at a mutually agreed upon time and price). It
may do this to minimize potential losses and maintain liquidity to meet
shareholder redemptions during adverse market conditions. This may cause the
Fund to give up greater investment returns to maintain the safety of principal,
that is, the original amount invested by shareholders.

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

The U.S. Government Securities Fund and Fixed Income Fund may temporarily depart
from their principal investment strategies by investing their assets in cash,
cash items, and shorter-term, higher-quality debt securities and similar
obligations. They may do this to minimize potential losses and maintain
liquidity to meet shareholder redemptions during adverse market conditions. This
may cause the Funds to give up greater investment returns to maintain the safety
of principal, that is, the original amount invested by shareholders.

Specific Risks of Investing in the Funds

[graphic]

Credit Risks
.Credit risk is the possibility that an issuer will default on a security by
failing to pay interest or principal when due. If an issuer defaults, a Fund
will lose money.

.Many fixed income securities receive credit ratings from services such as
Standard & Poor's and Moody's Investor Services, Inc. These services assign
ratings to securities by assessing the likelihood of issuer default. Lower
credit ratings correspond to higher credit risk. If a security has not received
a rating, a Fund must rely entirely upon the Adviser's credit assessment.

.Fixed income securities generally compensate for greater credit risk by paying
interest at a higher rate. The difference between the yield of a security and
the yield of a U.S. Treasury security with a comparable maturity (the spread)
measures the additional interest paid for risk. Spreads may increase generally
in response to adverse economic or market conditions. A security's spread may
also increase if the security's rating is lowered, or the security is perceived
to have an increased credit risk. An increase in the spread will cause the
price of the security to decline.

.Credit risk includes the possibility that a party to a transaction involving a
Fund will fail to meet its obligations. This could cause a Fund to lose the
benefit of the transaction or prevent a Fund from selling or buying other
securities to implement its investment strategy.

Interest Rate Risks

.Prices of fixed income securities rise and fall in response to changes in the
interest rate paid by similar securities. Generally, when interest rates rise,
prices of fixed income securities fall. However, market factors, such as the
demand for particular fixed income securities, may cause the price of certain
fixed income securities to fall while the prices of other securities rise or
remain unchanged.

.Interest rate changes have a greater effect on the price of fixed income
securities with longer durations. Duration measures the price sensitivity of a
fixed income security to changes in interest rates.

Tax Risks

.In order to be tax-exempt, municipal securities must meet certain legal
requirements. Failure to meet such requirements may cause the interest received
and distributed by the Fund to shareholders to be taxable.

. Changes or proposed changes in federal tax laws may cause the prices of
municipal securities to fall.

Call Risks

.Call risk is the possibility that an issuer may redeem a fixed income security
before maturity (a call) at a price below its current market price. An increase
in the likelihood of a call may reduce the security's price.

.If a fixed income security is called, a Fund may have to reinvest the proceeds
in other fixed income securities with lower interest rates, higher credit
risks, or other less favorable characteristics.

Prepayment Risks

.Unlike traditional fixed income securities, which may pay a fixed rate of
interest until maturity, when the entire principal amount is due, payments on
mortgage backed securities include both interest and a partial payment of
principal. This partial payment of principal may be comprised of a scheduled
principal payment as well as an unscheduled payment from the voluntary
prepayment, refinancing, or foreclosure of the underlying loans. These
unscheduled payments of principal can adversely affect the price and yield of
mortgage backed securities held by a Fund. For example, during periods of
declining interest rates, prepayments can be expected to accelerate, and the
Fund would be required to reinvest the proceeds at the lower interest rates
then available. In addition, like other interest-bearing securities, the values
of mortgage backed securities generally fall when interest rates rise.

.Since rising interest rates generally result in decreased prepayments of
mortgage backed securities, this could cause mortgage securities to have
greater average lives than expected and their value may decline more than other
fixed income securities. Conversely, when interest rates fall, their potential
for capital appreciation is limited due to the existence of the prepayment
feature.

.Generally, mortgage backed securities compensate for greater prepayment risk
by paying a higher yield. The additional interest paid for risk is measured by
the difference between the yield of a mortgage backed security and the yield of
a U.S. Treasury security with a comparable maturity (the spread). An increase
in the spread will cause the price of the security to decline. Spreads
generally increase in response to adverse economic or market conditions.

Sector Risks

.A substantial part of a Fund's portfolio may be comprised of securities issued
or credit enhanced by companies in similar businesses, by issuers located in
the same state, or with other similar characteristics. As a result, the Fund
will be more susceptible to any economic, business, political, or other
developments which generally affect these issuers.

Michigan Risks

.Since the Michigan Municipal Bond Fund invests primarily in issuers from a
single state, the Fund may be subject to additional risks compared to funds
that invest in multiple states. Michigan's economy is among the most cyclical
of states, remaining heavily dependent on domestic auto production and durable
goods consumption. Any downturn in these and other industries may adversely
affect the economy of the state.

What Do Shares Cost?

[graphic]

You can purchase, redeem, or exchange Shares any day the New York Stock Exchange
(NYSE) is open. Shares of the Funds are sold at net asset value (NAV). When a
Fund receives your transaction request in proper form, it is processed at the
next calculated NAV. The Funds do not charge a front-end sales charge or a
contingent deferred sales charge. Investors who purchase, redeem or exchange
through a financial intermediary may be charged a service fee by that financial
intermediary. Financial intermediaries are authorized to accept purchase and
redemption orders from their customers on behalf of the Funds. NAV is determined
at the end of regular trading (normally 4:00 p.m. Eastern time) each day the
NYSE is open. The Funds value fixed income securities at the last sale price on
a national securities exchange, if available, and otherwise, as determined by an
independent pricing service. Short-term obligations with remaining maturities of
less than 60 days at the time of purchase may be valued at amortized cost or at
fair market value as determined in good faith by the Board.

How are the Funds Sold?

The Funds' Distributor, Federated Securities Corp., markets the Shares described
in this prospectus to institutions, corporations, fiduciaries and individuals.

The Distributor and its affiliates may pay out of their assets other amounts
(including items of material value) to investment professionals for marketing
and servicing Shares. The Distributor is a subsidiary of Federated Investors,
Inc. (Federated).

How to Purchase Shares

[graphic]

Through an Investment Professional
[graphic]
. Establish an account with the investment professional; and

.Submit your purchase order to the investment professional before the end of
regular trading on the NYSE (normally 4:00 p.m. Eastern time). You will receive
the next calculated NAV if the investment professional forwards the order to
the Fund before 5:00 p.m. on the same day and the Fund receives payment within
three business days. You will become the owner of Shares and receive dividends
when the Fund receives your payment.

Through Michigan National Bank or Independence One

[graphic]
. Establish your account with the Fund by calling toll free 1-800-334-2292; and
. Send your payment to the Fund by Federal Reserve wire or check.

Orders must be received by 4:00 (Eastern time) in order for shares to be
purchased at that day's price. For shares purchased directly from the
Distributor, payment by wire or check must be received before 4:00 p.m. (Eastern
time) on that day.

[graphic]

By Wire Send your wire to:
Federated Shareholder Services Company c/o
Michigan National Bank
Farmington Hills, MI
Dollar Amount of Wire
For Credit to: Independence One (include name of Fund)
Account Number: 6856238933
ABA Number: 072000805
Wire Order Number, Dealer Number, or Group Number
Nominee/Institution Name
You cannot purchase Shares by wire on holidays when wire transfers are
restricted.

By Check

[graphic]

Make your check payable to "Independence One (include name of Fund)", note your
account number on the check, and mail it to:
Independence One Mutual Funds
27777 Inkster Road
Mail Code 10-52
Farmington Hills, Michigan 48333-9065
Payment should be made in U.S. dollars and drawn on a U.S. bank. The Funds will
not accept third-party checks (checks originally payable to someone other than
you or the Fund).

Through an Exchange

You may purchase Shares through an exchange from another Independence One Mutual
Fund. You must meet the minimum initial investment requirement for purchasing
Shares and both accounts must have identical registrations.

By Systematic Investment Program

Once you have opened an account, you may automatically purchase additional
Shares on a regular basis in a minimum amount of $100. A shareholder may apply
for participation in this program through Michigan National Bank by calling 1-
800-334-2292.

By Automated Clearing House (ACH)

Once you have opened an account, you may purchase additional Shares through a
depository institution that is an ACH member. This purchase option can be
established by completing the appropriate sections of the New Account Form.

Retirement Investments

You may purchase Shares of the U.S. Government Securities Fund and Fixed Income
Fund as retirement investments (such as qualified plans and IRAs or transfer or
rollover of assets). Call your investment professional or the Fund for
information on retirement investments. We suggest that you discuss retirement
investments with your tax adviser. You may be subject to an annual IRA account
fee.

How to Redeem and Exchange Shares

[graphic]

You should redeem or exchange Shares:
. through an investment professional if you purchased Shares through an
investment professional; or
. through Michigan National Bank or Independence One.

Through an Investment Professional

[graphic]

Submit your redemption or exchange request to your investment professional by
the end of regular trading on the NYSE (normally 4:00 p.m. Eastern time). The
redemption amount you will receive is based upon the next calculated NAV after
the Fund receives the order from your investment professional.

Through Michigan National Bank or Independence One

By Telephone

You may redeem or exchange Shares by calling 1-800-334-2292once you have
completed the appropriate authorization form for telephone transactions. If you
call before the end of regular trading on the NYSE (normally 4:00 p.m. Eastern
time) you will receive a redemption amount based on that day's NAV.

Any shares held in certificate form cannot be exchanged by telephone but must be
forwarded to the transfer agent by a Michigan National Bank or Independence One
representative, or an authorized broker, and deposited to the shareholder's
account before being exchanged. Certificates should be sent to: Federated
Shareholder Services Company, P.O. Box 8609, Boston, Massachusetts 02266-8609.

[graphic]

By Mail

You may redeem or exchange Shares by mailing a written request to the Fund
through Michigan National Bank, Independence One or an authorized broker.
Shareholders redeeming or exchanging through an authorized broker should mail
requests directly to the broker. You will receive a redemption amount based on
the next calculated NAV after the Fund receives your written request in proper
form.

Redemption and exchange requests through Michigan National Bank or Independence
One should be sent to:
Independence One(R) Mutual Funds
27777 Inkster Road
Mail Code 10-52
Farmington Hills, Michigan 48333-9065 All requests must include:
. Fund Name, account number and account registration;
. amount to be redeemed or exchanged;
. signatures of all shareholders exactly as registered; and
. if exchanging, the Fund Name, account number and account registration into
which you are exchanging.
Call your investment professional or the Fund if you need special instructions.

Signature Guarantees Signatures must be guaranteed if:
. your redemption will be sent to an address other than the address of record;
. your redemption will be sent to an address of record that was changed within
the last 30 days;
. a redemption is payable to someone other than the shareholder(s) of record;
or
. if exchanging (transferring) into another fund with a different shareholder
registration.

A signature guarantee is designed to protect your account from fraud. Obtain a
signature guarantee from a bank or trust company, savings association, credit
union or broker, dealer, or securities exchange member. A notary public cannot
provide a signature guarantee.

Payment Methods for Redemptions

Your redemption proceeds will be mailed by check to your address of record. The
following payment options are available if you complete the appropriate section
of the New Account Form or an Account Service Options Form. These payment
options require a signature guarantee if they were not established when the
account was opened:

. an electronic transfer to your account at a financial institution that is an
ACH member; or
. wire payment to your account at a domestic commercial bank that is a Federal
Reserve System member.

Redemption in Kind

Although the Funds intend to pay Share redemptions in cash, they reserve the
right to pay the redemption price in whole or in part by a distribution of a
Fund's portfolio securities.

Limitations on Redemption Proceeds
Redemption proceeds normally are wired or mailed within one business day after
receiving a request in proper form. Payment may be delayed up to seven days:
. to allow your purchase to clear;
. during periods of market volatility; or
. when a shareholder's trade activity or amount adversely impacts a Fund's
ability to manage its assets.
You will not accrue interest or dividends on uncashed checks from a Fund if
those checks are undeliverable and returned to the Fund.

Redemptions from Retirement Accounts

In the absence of your specific instructions, 10% of the value of your
redemption from a retirement account in the U.S. Government Securities Fund and
the Fixed Income Fund may be withheld for taxes. This withholding only applies
to certain types of retirement accounts.

Exchange Privileges

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

To execute an order to exchange, you must:

. ensure that the account registrations are identical;
. meet any minimum initial investment requirements; and
. receive a prospectus for the fund into which you wish to exchange.
An exchange is treated as a redemption and a subsequent purchase, and is a
taxable transaction.

The Funds may modify or terminate the exchange privilege at any time. The Funds'
management or investment adviser may determine from the amount, frequency and
pattern of exchanges that a shareholder is engaged in excessive trading that is
detrimental to a Fund and other shareholders. If this occurs, a Fund may
terminate the availability of exchanges to that shareholder and may bar that
shareholder from purchasing other participating funds.

[graphic]

Systematic Withdrawal Program

Shareholders may automatically redeem Shares in an amount directed by the
shareholder on a regular basis. To be eligible to participate in this program, a
shareholder must have an account value of at least $10,000, other than
retirement accounts subject to required minimum distributions. To apply for
participation in this program, contact Michigan National Bank at 1-800-334-2292.
This program may reduce, and eventually deplete, your account. Payments should
not be considered yield or income.

[graphic]

Additional Conditions
Telephone Transactions

The Funds will record your telephone instructions. If a Fund does not follow
reasonable procedures, it may be liable for losses due to unauthorized or
fraudulent telephone instructions.

Account and Share Information

Share Certificates
The Funds do not issue share certificates.
Confirmation and Account Statements

You will receive confirmation of purchases, redemptions and exchanges (except
for systematic transactions). In addition, you will receive periodic statements
reporting all account activity, including systematic transactions, dividends and
capital gains paid.

Dividends and Capital Gains

Each Fund declares and pays dividends monthly. Dividends are paid to all
shareholders invested in a Fund on the record date. The record date is the date
on which a shareholder must officially own Shares in order to earn a dividend.

In addition, the Funds pay any capital gains at least annually. Your dividends
and capital gains distributions will be automatically reinvested in additional
Shares without a sales charge, unless you elect cash payments.

If you purchase Shares just before a Fund declares a dividend or capital gain
distribution, you will pay the full price for the Shares and then receive a
portion of the price back in the form of a taxable distribution, whether or not
you reinvest the distribution in Shares. Therefore, you should consider the tax
implications of purchasing Shares shortly before the Fund declares a dividend or
capital gain. Contact your investment professional or the Fund for information
concerning when dividends and capital gains will be paid.

Accounts with Low Balances

Due to the high cost of maintaining accounts with low balances, non-retirement
accounts may be closed if redemptions or exchanges cause the account balance to
fall below the minimum initial investment amount. Before an account is closed,
you will be notified and allowed 30 days to purchase additional Shares to meet
the minimum.

Tax Information
The Funds send an annual statement of your account activity to assist you in
completing your federal, state and local tax returns.

U.S. Government Securities Fund and Fixed Income Fund distributions of dividends
and capital gains are taxable to you whether paid in cash or reinvested in the
Fund. Dividends are taxable as ordinary income; capital gains are taxable at
different rates depending upon the length of time the Fund holds its assets.
U.S. Government Securities Fund distributions are expected to be primarily
dividends. Fixed Income Fund distributions are expected to be both dividends and
capital gains. Redemptions and exchanges are taxable sales.

Michigan Municipal Bond Fund distributions will be primarily dividends that are
exempt from federal income tax, although a portion of the Fund's dividends may
not be exempt. Dividends may be subject to state and local taxes, although the
Michigan Municipal Bond Fund's dividends will be exempt from Michigan state
personal income tax to the extent they are derived from interest on obligations
exempt from Michigan personal income taxes. Capital gains and non-exempt
dividends are taxable whether paid in cash or reinvested in the Fund.
Redemptions and exchanges are taxable sales.

Who Manages the Funds?
[Logo of Michigan National]

Please consult your tax adviser regarding your federal, state and local tax
liability.

The Board of Trustees governs the Funds. The Board selects and oversees the
Adviser, Michigan National Bank. The Adviser manages the Funds' assets,
including buying and selling portfolio securities. The Adviser's address is
27777 Inkster Road, Mail Code 10-52, Farmington Hills, Michigan, 48333-9065.

The Adviser has delegated daily management of some of the U.S. Government
Securities Fund's assets to the Sub-Adviser, Independence One Capital Management
Corporation, who will perform its duties at no cost to the Adviser or the Fund.
The Sub-Adviser's address is 27777 Inkster Road, Mail Code 10-52, Farmington
Hills, Michigan, 48333-9065.

Michigan National Bank, a national banking association, is a wholly owned
subsidiary of Michigan National Corporation ("MNC"). MNC is a wholly owned
subsidiary of National Australia Bank Limited, which is a transnational banking
organization, headquartered in Melbourne, Australia. Through its subsidiaries
and affiliates, MNC offers a full range of financial services to the public,
including commercial lending, depository services, cash management, brokerage
services, retail banking, mortgage banking, investment advisory services and
trust services. Independence One Capital Management Corporation ("IOCM"), a
nationally recognized investment advisory subsidiary of MNC, provides investment
advisory services for trust and other managed assets. IOCM and the Trust
Division of Michigan National Bank (the "Trust Division") have managed custodial
assets totaling $9 billion. Of this amount, IOCM and the Trust Division have
investment discretion over $1.7 billion.

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

The Funds' portfolio manager is Bruce Beaumont. Mr. Beaumont has been Vice
President and Portfolio Manager for Michigan National Bank and IOCM in
Farmington Hills since 1994. Mr. Beaumont has been responsible for management of
Fixed Income Fund's portfolio since February 1998 and Michigan Municipal Bond
Fund's portfolio since its inception in November 1995. Mr. Beaumont has been
primarily responsible for management of Government Securities Fund's portfolio
since January 1995, previously having assisted with those duties. He joined
Michigan National Bank in 1987 and served as Vice President--Head Government
Bond Trader until 1994. He earned his BA from Alma College and a MBA from
Northwestern University. Mr. Beaumont is a Chartered Financial Analyst and a
Certified Public Accountant.

Advisory Fees

The Adviser receives an annual investment advisory fee at annual rates equal to
percentages of the relevant Fund's average net assets as follows: U.S.
Government Securities Fund - 0.70%, Fixed Income Fund and Michigan Municipal
Bond Fund - 0.75%. The Adviser may voluntarily waive a portion of its fee or
reimburse a Fund for certain operating expenses.

Year 2000 Readiness

The "Year 2000" problem is the potential for computer errors or failures because
certain computer systems may be unable to interpret dates after December 31,
1999 or experience other date-related problems. The Year 2000 problem may cause
systems to process information incorrectly and could disrupt businesses, such as
the Funds, that rely on computers.

While it is impossible to determine in advance all of the risks to a Fund, a
Fund could experience interruptions in basic financial and operational While it
is impossible to determine in advance all of the risks to a Fund, a Fund could
experience interruptions in basic financial and operational functions. Fund
shareholders could experience errors or disruptions in Fund share transactions
or Fund communications.

The Funds' service providers are making changes to their computer systems to fix
any Year 2000 problems. In addition, they are working to gather information from
third-party providers to determine their Year 2000 readiness.

Year 2000 problems would also increase the risks of the Funds' investments. To
assess the potential effect of the Year 2000 problem, the Adviser is reviewing
information regarding the Year 2000 readiness of issuers of securities the Funds
may purchase.

Financial Information
[graphic]

The financial impact of these issues for the Funds is still being determined.
There can be no assurance that potential Year 2000 problems would not have a
material adverse effect on the Funds. FINANCIAL HIGHLIGHTS The
Financial Highlights will help you understand the Funds' financial performance
for their past five fiscal years, or since inception, if the life of a Fund is
shorter. Some of the information is presented on a per share basis. Total
returns represent the rate an investor would have earned (or lost) on an
investment in a Fund, assuming reinvestment of any dividends and capital gains.

This information has been audited by KPMG LLP, whose report, along with the
Funds' audited financial statements, is included in the Annual Report.

INDEPENDENCE ONE U.S. GOVERNMENT SECURITIES FUND
FINANCIAL HIGHLIGHTS
(For a share outstanding throughout each period)

<TABLE>
<CAPTION>
Year Ended April 30,
1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
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
investment 0.00 1 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
investment -- -- (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 /2/ 5.41% 10.37% 6.15% 7.97% 5.90%
Ratios to average net assets
Expenses /3/ 1.01% 1.06% 1.02% 1.06% 1.05%
Net income ratio /3/ 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%
</TABLE>

1 Amount represents less than $0.01 per share.
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 as
indicated. INDEPENDENCE ONE FIXED INCOME FUND Financial Highlights (For
a share outstanding throughout each period)

<TABLE>
<CAPTION>
Year Ended April 30,
1999 1998 1997 1996
/1/
<S> <C> <C> <C> <C>
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% 5
Net investment income /4/ 5.39% 5.42% 5.33%
5.12% 5
Expenses (after waivers/reimbursements) 0.57% 0.56% 0.55%
0.54% 5
Net investment income (after waivers/reimbursements) 5.85% 5.92% 5.83%
5.73% 5
Supplemental data
Net assets, end of period (000 omitted) $86,920 $80,342 $70,884 $
62,256
Portfolio turnover 20% 21%
23% 4%
</TABLE>

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 $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. 5 Computed on an annualized basis.

INDEPENDENCE ONE MICHIGAN MUNICIPAL BOND FUND
Financial Highlights

(For a share outstanding throughout each period)

<TABLE>
<CAPTION>
Year Ended April 30,
1999 1998 1997
1996 /1/
<S> <C> <C> <C> <C>
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% 5
Net investment income /4/ 3.13% 3.35% 3.18%
3.07% 5
Expenses (after waivers/reimbursements) 0.96% 0.81% 0.70%
0.57% 5
Net investment income (after waivers/reimbursements) 3.86% 4.07% 4.12%
3.83% 5
Supplemental data
Net assets, end of period (000 omitted) $19,417 $21,027 $ 23,483 $
25,123
Portfolio turnover 3% 11%
48% 39%
</TABLE>

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. 5 Computed on an annualized basis. A Statement of Additional
Information (SAI) dated August 31, 1999, is incorporated by reference into this
prospectus. Additional information about the Funds' investments is contained in
the Funds' Annual and Semi-Annual Reports to shareholders as they become
available. The Annual Report discusses market conditions and investment
strategies that significantly affected the Funds' performance during their last
fiscal year. To obtain the SAI, the Annual Report, the Semi-Annual Report and
other information without charge, and make inquiries, call your investment
professional or the Funds at 1-800-334-2292.

You can obtain information about the Funds (including the SAI) by visiting or
writing the Public Reference Room of the Securities and Exchange Commission in
Washington, DC 20549-6009 or from the Commission's Internet site at
http://www.sec.gov. You can call 1-800-SEC-0330 for information on the Public
Reference Room's operations and copying charges.

Independence One(R)
Mutual Funds

Independence One
U.S. Government Securities Fund

Independence One
Fixed Income Fund

Independence One
Michigan Municipal Bond Fund

800-334-2292
www.MichiganNational.com

Investment Company Act File No: 811-5752
Cusip 453777864
Cusip 453777856
Cusip 453777807
G01285-02

[Logo of Independence One Mutual Funds]
[Logo Of Michigan National]
Investment Adviser

Prospectus

[graphic]

Independence One(R)
Mutual Funds

Independence One(R) Mutual Funds offers nine portfolios, including three equity
funds, three income funds and three money market funds. This prospectus relates
to the three equity funds:

Independence One
Equity Plus Fund

Independence One
Small Cap Fund

Independence One
International Equity Fund

August 31, 1999

[Logo of Independence One Mutual Funds]

Independence One(R) Mutual Funds
<TABLE>
<CAPTION>

[graphic]
<S> <C>

Contents
Fund Goals, Strategies, Performance and Risk.... 1
Principal Risks of the Funds.................... 3
What are the Funds' Fees and Expenses?.......... 5
Principal Securities in Which the Funds Invest.. 6
Specific Risks of Investing in the Funds........ 9
What do Shares Cost?............................ 11
How are the Funds Sold?......................... 11
How to Purchase Shares.......................... 11
How to Redeem and Exchange Shares............... 13

Account and Share Information................... 16
Who Manages the Funds?.......................... 17
Financial Information........................... 20
</TABLE>

Fund Goals, Strategies, Performance and Risk

[graphic]

The following describes the investment goals, strategies, and principal risks of
Independence One Equity Plus Fund, Independence One Small Cap Fund and
Independence One International Equity Fund (the "Funds"). There can be no
assurance that a Fund will achieve its goal.

Independence One Equity Plus Fund
Goal: Seeks to provide total return.

The Fund's total return will consist of two components: (1) changes in the
market value of its portfolio securities (both realized and unrealized
appreciation); and (2) income received from its portfolio securities. The Fund
expects that capital appreciation will comprise the largest component of its
total return. Strategy: The Fund pursues its investment objective by
investing primarily in the common stocks that comprise the Standard & Poor's
Composite Stock Price Index ("S&P 100"), in an effort to provide investment
results that correspond to or exceed the aggregate price and dividend
performance of the S&P 100.

The S&P 100 is a market capitalization-weighted index of 100 common stocks from
a broad range of industries. The S&P 100 provides a measure of overall large
company performance because the stocks selected for inclusion tend to be the
leading companies in leading industries in the U.S. economy. Selection criteria
include total market value of an issuer's outstanding shares (market
capitalization), trading activity and liquidity of the issuer's shares, and the
issuer's financial and operating soundness. Normally at least 80% of the
Fund's assets will be invested to correspond as closely as possible to the
relative weighting of the S&P 100 in order to attempt to achieve a high degree
of correlation between the performance of the Fund's portfolio and that of the
S&P 100. The remaining 20% of the Fund's assets will normally also be invested
in stocks that are included in the S&P 100, but the Fund's position in such
stocks may be greater (overweighted) compared to such stocks' weightings in the
S&P 100. These weightings will be determined by the Fund's Adviser and
Subadviser in an effort to exceed the total return performance of the S&P 100.
Independence One Small Cap Fund Goal: Seeks to provide total return.
The Fund's total return will consist of two components: (1) changes in the
market value of its portfolio securities (both realized and unrealized
appreciation); and (2) income received from its portfolio securities. The Fund
expects that capital appreciation will comprise the largest component of its
total return. Strategy: The Fund pursues its investment objective by
investing at least 65% of its assets in a representative sample of common stocks
comprising the S&P SmallCap 600 Index ("S&P SmallCap 600"), in an effort to
provide investment results that correspond to or exceed the aggregate price and
dividend performance of the S&P SmallCap 600.

The S&P SmallCap 600 is a market capitalization-weighted index of 600 common
stocks from a variety of economic sectors and industrial groups. Selection
criteria include total market capitalization of an issuer's outstanding shares
(market capitalization), market size, trading activity and liquidity of the
issuer's shares, the issuer's financial and operating soundness, industry
representation and public ownership. The Fund's Adviser and Subadviser
invest the Fund's holdings in approximately 200 stocks which achieve a
representative sampling of the various industry groups contained in the S&P
SmallCap 600. In addition, the stocks selected generally meet the following
criteria: (i) the stock must have a history of beta (price volatility) similar
to the average beta of all stocks in the index; (ii) the stock's price must be
equal to or greater than that of the average index stock, and (iii) the stock
must have a total capitalization equal to or greater than the average index
stock's capitalization. The Advisers believe that application of these criteria
will help focus the Fund's holding in stocks that are relatively more liquid and
that can be bought and sold with relatively lower transactions costs.
Independence One International Equity Fund Goal: Seeks to provide total return.
The Fund's total return will consist of two components: (1) changes in the
market value of its portfolio securities (both realized and unrealized
appreciation); and (2) income received from its portfolio securities. The Fund
expects that capital appreciation will comprise the largest component of its
total return.

Strategy: The Fund pursues its investment objective by investing primarily in
foreign equity securities. Under normal market conditions, the Fund will invest
substantially all, and at least 65%, of its total assets in equity securities
denominated in foreign currencies of established companies located in at least
three developed countries outside the United States. The equity securities in
which the Fund principally invests include common stocks; depositary receipts;
units and interests in investment companies or other investment vehicles; and
stock index futures.

The Fund will seek to approximate or exceed the performance of the Morgan
Stanley Capital International Europe, Australia and Far East Accumulation Index
(the "EAFE Index") (net) in U.S. dollars over a rolling three-year period. In
allocating the Fund's investments among countries, the Fund's Subadviser uses a
three step process involving an assessment of the relative value of each market
(that is, which markets are undervalued in relation to others); an analysis of
the fundamental factors (primarily interest rates, corporate profits, inflation
rates and growth rates) driving each market; and a judgment about market
sentiment (such as momentum indicators, put/call ratios and flow of funds.)

In selecting particular stocks, the Subadviser generally employs the value style
of investing, using fundamental research to determine why a stock may be
undervalued in relation to other stocks. The research includes investigating
company strategy, industry competition, management changes and financial data.
For Hong Kong, Malaysia and Singapore, the Subadviser uses the growth style of
investing, focusing on assessment of a company's growth prospects on a 2-to-3
year outlook.

The Fund may enter into foreign exchange and foreign currency forward contracts
to settle trades and to hedge against the decline of a particular foreign
currency. Principal Risks of the Funds [graphic]

In addition to the risks set forth below that are specific to an investment in a
particular Fund, there are risks common to all mutual funds.

<TABLE>
<CAPTION>
Risks Equity Plus Small Cap International
Fund Fund Equity Fund
<S> <C> <C> <C>
Stock Market Risks /1/ . . .
Currency Risks /2/ .
Risks Related to Investing for Value /3/ .
Risks Related to Investing for Growth /4/ .
Risks Related to Company Size /5/ .
Risks of Foreign Investing /6/ .
Liquidity Risks /7/ .
</TABLE>

1 The value of equity securities rise and fall. 2 Exchange rates for currencies
fluctuate daily.
3 Value stocks depend less on price changes for returns and may lag behind
growth stocks in an up market.
4 Growth stocks depend more on price changes for returns and may be more
adversely affected in a down market compared to value stocks.

5 The smaller the capitalization of a company, the less liquid its stock and
the more volatile its price.
6 Foreign economic, political or regulatory conditions may be less favorable
than those of the United States.
7 Limited trading opportunities for certain securities and the inability to
sell a security at will could result in losses to a Fund.

Risk/Return Bar Chart and Table

A performance bar chart and total return information is included for the Equity
Plus Fund below. Performance bar charts and total return information for the
Small Cap Fund and International Equity Fund will be provided after these funds
have been in operation for one full calendar year.

Independence One Equity Plus Fund Risk/Return Bar Chart and Table The
graphic presentation displayed here consists of a bar chart representing the
annual total returns of Independence One Equity Plus Fund as of the calendar
year-end for each of three years.

The `y' axis reflects the "% Total Return" beginning with "0" and increasing in
increments of 5% up to 35%. The `x' axis represents calculation periods from the
earliest first full calendar year end of the Fund's start of business through
the calendar year ended December 31, 1998. The light gray shaded chart features
three distinct vertical bars, each shaded in charcoal, and each visually
representing by height the total return percentages for the calendar year stated
directly at its base. The calculated total return percentage for the Fund for
each calendar year is stated directly at the top of each respective bar, for the
calendar years 1996 through 1998. The percentages noted are: 24.48%, 28.69% and
31.64%. The bar chart shows the variability of the Fund's total returns on a
calendar year-end basis. The Fund's shares are not sold subject to a sales
charge (load). The total returns displayed above are based upon net asset value.
The Fund's total return from January 1, 1999 to June 30, 1999 was 16.42%.

Within the period shown in the Chart, the Fund's highest quarterly return was
22.05% (quarter ended December 31, 1998). Its lowest quarterly return was
(10.63%) (quarter ended September 30, 1998).

Independence One Equity Plus Fund Average Annual Total Return Table

The following table represents the Fund's Average Annual Total Returns for the
calendar periods ended December 31, 1998. The table shows the Fund's total
returns averaged over a period of years relative to the Standard & Poor's 100
Composite Stock Price Index, a broad-based market index. Total returns for the
index shown do not reflect sales charges, expenses or other fees that the
Securities and Exchange Commission requires to be reflected in the Fund's
performance. Indexes are unmanaged, and it is not possible to invest directly in
an index. <TABLE> <CAPTION> Calendar Period Fund S&P 100 <S> <C> <C> 1 Year
31.64% 33.22% Start of Performance /1/ 28.05% 29.27% </TABLE>

1The Fund's start of performance date was September 25, 1995.

What are the Funds' Fees and Expenses?

[graphic]
Independence One(R) Equity Funds Fees and Expenses

This table describes the fees and expenses that you may pay if you buy and hold
Shares of the Independence One Equity Plus Fund, Independence One Small Cap
Fund, or the Independence One International Equity Fund.

<TABLE>
<CAPTION>
Shareholder Fees Equity Plus Small Cap
International
Fees Paid Directly from Your Investment Fund Fund Equity
Fund
<S> <C> <C> <C>
Maximum Sales Charge (Load) Imposed on Purchases (as a None None None
percentage of offering price)
Maximum Deferred Sales Charge (Load)(as a percentage of None None None
original purchase price or redemption proceeds, as applicable)
Maximum Sales Charge (Load) Imposed on Reinvested Dividends None None None
(and other Distributions)(as a percentage of offering price)
Redemption Fee (as a percentage of amount redeemed, if None None None
applicable)
Exchange Fee None None None

Annual Fund Operating Expenses (Before Waivers) /1/ Equity Plus Small Cap
International
Expenses That are Deducted From Fund Assets (as percentage Fund Fund Equity
Fund
of average net assets)
Management Fee /2/ 0.40% 0.50% 1.00%
Distribution (12b-1) Fee None None None
Shareholder Services Fee None None None
Other Expenses /3/ 0.19% 1.19% 2.09%
Total Annual Fund Operating Expenses 0.59% 1.69% 3.09%

1 Although not contractually obligated to do so, the adviser, administrator and
transfer agent waived certain amounts. These are shown below along with the net
expenses the Funds actually paid for the fiscal period ended April 30, 1999.

Total Waivers of Fund Expenses 0.11% 0.42% 1.54%
Total Annual Fund Operating Expenses(after waiver) 0.48% 1.27% 1.55%

2 The adviser voluntarily waived a portion of the management fee for the Equity
Plus Fund, the Small Cap Fund and the International Equity Fund. The adviser can
terminate this voluntary waiver at any time. The management fee paid by the
Equity Plus Fund, the Small Cap Fund and the International Equity Fund (after
the voluntary waiver) was 0.29%, 0.29%, and 0.00%, respectively, for the fiscal
year ended April 30, 1999.

3 The administrator for the Small Cap Fund and administrator and transfer agent
for the International Equity Fund voluntarily reduced certain operating expenses
of the Funds. These voluntary reductions can be terminated at any time. Total
other expenses paid by the Small Cap Fund and the International Equity Fund
(after the voluntary reductions) were 0.98% and 1.55%, respectively, for the
fiscal year ended April 30, 1999. </TABLE> Example This Example is intended
to help you compare the cost of investing in the Equity Plus Fund, Small Cap
Fund, or the International Equity Fund with the cost of investing in other
mutual funds.

The Example assumes that you invest $10,000 in the Equity Plus Fund, Small Cap
Fund, or the International Equity Fund for the time periods indicated and then
redeem all of your Shares at the end of those periods. The Example also assumes
that your investment has a 5% return each year and that each of the Fund's
Shares operating expenses are before waivers as shown in the Table and remain
the same. Although your actual costs may be higher or lower, based on these
assumptions your costs would be:

<TABLE>
<CAPTION>
Equity Plus Small Cap International
Fund Fund Equity Fund
<S> <C> <C> <C>
1 Year $ 60 $ 172 $ 312
3 Years $189 $ 533 $ 954
5 Years $329 $ 918 $1,620
10 Years $738 $1,998 $3,402
</TABLE>

Principal Securities in Which the Funds Invest

[graphic]
Equity Securities

Equity securities represent a share of an issuer's earnings and assets, after
the issuer pays its liabilities. The Funds cannot predict the income they will
receive from equity securities because issuers generally have discretion as to
the payment of any dividends or distributions. However, equity securities offer
greater potential for appreciation than many other types of securities, because
their value increases directly with the value of the issuer's business.

The following describes the principal types of equity securities in which a Fund
may invest.

Common Stocks

The Funds may invest in common stocks. Common stocks are the most prevalent
type of equity security. Common stocks receive the issuer's earnings after the
issuer pays its creditors and any preferred stockholders. As a result, changes
in an issuer's earnings may influence the value of its common stock.

Foreign Securities

The foreign securities held by the International Equity Fund are securities of
issuers based outside the United States. The Fund considers an issuer to be
based outside the United States if:

. it is organized under the laws of, or has a principal office located in,
another country;
. the principal trading market for its securities is in another country; or

. it (or its subsidiaries) derived in its most current fiscal year at least 50%
of its total assets, capitalization, gross revenue or profit from goods
produced, services performed, or sales made in another country.

Foreign securities are primarily denominated in foreign currencies. Along with
the risks normally associated with domestic securities of the same type, foreign
securities are subject to currency risks and risks of foreign investing. Trading
in certain foreign markets is also subject to liquidity risks.

Depositary Receipts

Depositary receipts represent interests in underlying securities issued by a
foreign company. Depositary receipts held by the International Equity Fund are
not traded in the same market as the underlying security. The foreign
securities underlying American Depositary Receipts (ADRs) are not traded in
the United States. ADRs provide a way to buy shares of foreign-based companies
in the United States rather than in overseas markets. ADRs are also traded in
U.S. dollars, eliminating the need for foreign exchange transactions. The
foreign securities underlying European Depositary Receipts (EDRs), Global
Depositary Receipts (GDRs), and International Depositary Receipts (IDRs), are
traded globally or outside the United States. Depositary receipts involve many
of the same risks of investing directly in foreign securities, including
currency risks and risks of foreign investing.

Foreign Exchange Contracts

In order to convert U.S. dollars into the currency needed to buy a foreign
security, or to convert foreign currency received from the sale of a foreign
security into U.S. dollars, the International Equity Fund may enter into spot
currency trades. In a spot trade, a Fund agrees to exchange one currency for
another at the current exchange rate. A Fund may also enter into derivative
contracts in which a foreign currency is an underlying asset. The exchange
rate for currency derivative contracts may be higher or lower than the spot
exchange rate. Use of these derivative contracts may increase or decrease a
Fund's exposure to currency risks.

Derivative Contracts

Derivative contracts are financial instruments that require payments based upon
changes in the values of designated (or underlying) securities, currencies,
commodities, financial indices or other assets. Some derivative contracts (such
as futures, forwards and options) require payments relating to a future trade
involving the underlying asset. Other derivative contracts (such as swaps)
require payments relating to the income or returns from the underlying asset.
The other party to a derivative contract is referred to as a counterparty.

Many derivative contracts are traded on securities or commodities exchanges. In
this case, the exchange sets all the terms of the contract except for the price.
Investors make payments due under their contracts through the exchange. Most
exchanges require investors to maintain margin accounts through their brokers to
cover their potential obligations to the exchange. Parties to the contract make
(or collect) daily payments to the margin accounts to reflect losses (or gains)
in the value of their contracts. This protects investors against potential
defaults by the counterparty. Trading contracts on an exchange also allows
investors to close out their contracts by entering into offsetting contracts.

For example, a Fund could close out an open contract to buy an asset at a future
date by entering into an offsetting contract to sell the same asset on the same
date. If the offsetting sale price is more than the original purchase price, the
Fund realizes a gain; if it is less, the Fund realizes a loss. Exchanges may
limit the amount of open contracts permitted at any one time. Such limits may
prevent the Fund from closing out a position. If this happens, the Fund will be
required to keep the contract open (even if it is losing money on the contract),
and to make any payments required under the contract (even if it has to sell
portfolio securities at unfavorable prices to do so). Inability to close out a
contract could also harm the Fund by preventing it from disposing of or trading
any assets it has been using to secure its obligations under the contract.
A Fund may also trade derivative contracts over-the-counter (OTC) in
transactions negotiated directly between the Fund and the counterparty. OTC
contracts do not necessarily have standard terms, so they cannot be directly
offset with other OTC contracts. In addition, OTC contracts with more
specialized terms may be more difficult to price than exchange traded contracts.

Depending upon how a Fund uses derivative contracts and the relationships
between the market value of a derivative contract and the underlying asset,
derivative contracts may increase or decrease the Fund's exposure to market and
currency risks, and may also expose the Fund to liquidity and leverage risks.
OTC contracts also expose the Fund to credit risks in the event that a
counterparty defaults on the contract.

International Equity Fund may principally trade in the following types of
derivative contracts.

Futures Contracts

Futures contracts provide for the future sale by one party and purchase by
another party of a specified amount of an underlying asset at a specified
price, date, and time. Entering into a contract to buy an underlying asset is
commonly referred to as buying a contract or holding a long position in the
asset. Entering into a contract to sell an underlying asset is commonly
referred to as selling a contract or holding a short position in the asset.

International Equity Fund may principally buy/sell the following types of
futures contracts: stock index futures and foreign currency forward contracts.

Hedging
Hedging transactions are intended to reduce specific risks. For example, to
protect a Fund against circumstances that would normally cause a Fund's
portfolio securities to decline in value, a Fund may buy or sell a derivative
contract that would normally increase in value under the same circumstances. A
Fund may also attempt to hedge by using combinations of different derivatives
contracts, or derivatives contracts and securities. A Fund's ability to hedge
may be limited by the costs of the derivatives contracts. A Fund may attempt to
lower the cost of hedging by entering into transactions that provide only
limited protection, including transactions that (1) hedge only a portion of its
portfolio, (2) use derivatives contracts that cover a narrow range of
circumstances or (3) involve the sale of derivatives contracts with different
terms. Consequently, hedging transactions will not eliminate risk even if they
work as intended. In addition, hedging strategies are not always successful, and
could result in increased expenses and losses to a Fund.

Temporary Defensive Investments

A Fund may temporarily depart from its principal investment strategies by
investing its assets in cash, cash items, and shorter-term, higher-quality debt
securities and similar obligations. It may do this to minimize potential losses
and maintain liquidity to meet shareholder redemptions during adverse market
conditions. This may cause a Fund to give up greater investment returns to
maintain the safety of principal, that is, the original amount invested by
shareholders. Specific Risks of Investing in the Funds [graphic]

Stock Market Risks

.The value of equity securities in each Fund's portfolio will rise and fall.
These fluctuations could be a sustained trend or a drastic movement. Each
Fund's portfolio will reflect changes in prices of individual portfolio stocks
or general changes in stock valuations. Consequently, a Fund's share price may
decline.

.The Adviser attempts to manage market risk by limiting the amount a Fund may
invest in each company's equity securities. However, diversification will not
protect a Fund against widespread or prolonged declines in the stock market.

Currency Risks

.Exchange rates for currencies fluctuate daily. The combination of currency
risk and market risk tends to make securities traded in foreign markets more
volatile than securities traded exclusively in the U.S.

Risks Related to Investing for Value

.Due to their relatively low valuations, value stocks are typically less
volatile than growth stocks. For instance, the price of a value stock may
experience a smaller increase on a forecast of higher earnings, a positive
fundamental development, or positive market development. Further, value stocks
tend to have higher dividends than growth stocks. This means they depend less
on price changes for returns and may lag behind growth stocks in an up market.

Risks Related to Investing for Growth

.Due to their relatively high valuations, growth stocks are typically more
volatile than value stocks. For instance, the price of a growth stock may
experience a larger decline on a forecast of lower earnings, a negative
fundamental development, or an adverse market development. Further, growth
stocks may not pay dividends or may pay lower dividends than value stocks. This
means they depend more on price changes for returns and may be more adversely
affected in a down market compared to value stocks that pay higher dividends.

Risks Related to Company Size

.Generally, the smaller the market capitalization of a company, the fewer the
number of shares traded daily, the less liquid its stock and the more volatile
its price. Market capitalization is determined by multiplying the number of its
outstanding shares by the current market price per share.

.Companies with smaller market capitalizations also tend to have unproven track
records, a limited product or service base and limited access to capital. These
factors also increase risks and make these companies more likely to fail than
companies with larger market capitalizations.

Risks of Foreign Investing

.Foreign securities pose additional risks because foreign economic or political
conditions may be less favorable than those of the United States. Securities in
foreign markets may also be subject to taxation policies that reduce returns
for U.S. investors.

.Foreign companies may not provide information (including financial statements)
as frequently or to as great an extent as companies in the United States.
Foreign companies may also receive less coverage than United States companies
by market analysts and the financial press. In addition, foreign countries may
lack uniform accounting, auditing and financial reporting standards or
regulatory requirements comparable to those applicable to U.S. companies. These
factors may prevent a Fund and its Adviser/Subadviser from obtaining
information concerning foreign companies that is as frequent, extensive and
reliable as the information available concerning companies in the United
States.

.Foreign countries may have restrictions on foreign ownership of securities or
may impose exchange controls, capital flow restrictions or repatriation
restrictions which could adversely affect the liquidity of a Fund's
investments.

Liquidity Risks

.Liquidity risk also refers to the possibility that a Fund may not be able to
sell a security or close out a derivative contract when it wants to. If this
happens, the Fund will be required to continue to hold the security or keep the
position open, and the Fund could incur losses.

. OTC derivative contracts generally carry greater liquidity risk than
exchange-traded contracts.

What Do Shares Cost?
[graphic]

You can purchase, redeem, or exchange Shares any day the New York Stock Exchange
(NYSE) is open. Shares of the Funds are sold at net asset value (NAV). When a
Fund receives your transaction request in proper form, it is processed at the
next calculated NAV. If a Fund purchases foreign securities that trade in
foreign markets on days the NYSE is closed, the value of a Fund's assets may
change on days you cannot purchase or redeem Shares. The Funds do not charge a
front-end sales charge or a contingent deferred sales charge. Investors who
purchase, redeem or exchange through a financial intermediary may be charged a
service fee by that financial intermediary. Financial intermediaries are
authorized to accept purchase and redemption orders from their customers on
behalf of the Funds. NAV is determined at the end of regular trading (normally
4:00 p.m. Eastern time) each day the NYSE is open. The Funds generally value
equity securities according to the last sale price in the market in which they
are primarily traded (either a national securities exchange or the
over-the-counter market), if available.

Futures contracts and options futures contracts and options are valued at market
values established by the exchanges on which they are traded at the close of
trading on such exchanges. Options traded in the over-the-counter market are
valued according to the mean between the last bid and the last asked price for
the option as provided by an investment dealer or other financial institution
that deals in the option. The Board may determine in good faith that another
method of valuing such investments is necessary to appraise their fair market
value. How are the Funds Sold? The Funds' Distributor, Federated
Securities Corp, markets the Shares described in this prospectus to
institutions, corporations, fiduciaries and individuals. The Distributor
and its affiliates may pay out of their assets other amounts (including items of
material value) to investment professionals for marketing and servicing Shares.
The Distributor is a subsidiary of Federated Investors, Inc. (Federated).

How to Purchase Shares
[graphic]

[graphic]
Through an Investment Professional
. Establish an account with the investment professional; and

[graphic]
Through Michigan National Bank or Independence One
. Establish your account with the Fund by calling toll free 1-800-334-2292; and
. Send your payment to the Fund by Federal Reserve wire or check.

[graphic]
By Wire
Send your wire to:
Federated Shareholder Services Company c/o Michigan National Bank
Farmington Hills, MI
Dollar Amount of Wire
For Credit to: Independence One (include name of Fund)
Account Number: 6856238933
ABA Number: 072000805
Wire Order Number, Dealer Number, or Group Number
Nominee/Institution Name
You cannot purchase Shares by wire on holidays when wire transfers are
restricted.

[graphic]
By Check
Make your check payable to "Independence One (include name of Fund)", note your
account number on the check, and mail it to:
Independence One Mutual Funds
27777 Inkster Road
Mail Code 10-52
Farmington Hills, Michigan 48333-9065
Payment should be made in U.S. dollars and drawn on a U.S. bank. The Funds will
not accept third-party checks (checks originally payable to someone other than
you or the Fund).

Through an Exchange

[graphic]
By Systematic Investment Program

By Automated Clearing House (ACH)

Retirement Investments

You may purchase Shares as retirement investments (such as qualified plans and
IRAs or transfer or rollover of assets). Call your investment professional or
the Fund for information on retirement investments. We suggest that you discuss
retirement investments with your tax adviser. You may be subject to an annual
IRA account fee.

How to Redeem and Exchange Shares

You should redeem or exchange Shares:
. through an investment professional if you purchased Shares through an
investment professional; or
. through Michigan National Bank or Independence One.

[graphic]
Through an Investment Professional

[graphic]
Through Michigan National Bank or Independence One
By Telephone

You may redeem or exchange Shares by calling 1-800-334-2292 once you have
completed the appropriate authorization form for telephone transactions. If you
call before the end of regular trading on the NYSE (normally 4:00 p.m. Eastern
time) you will receive a redemption amount based on that day's NAV.

[graphic]
By Mail
You may redeem or exchange Shares by mailing a written request to the Fund
through Michigan National Bank, Independence One or an authorized broker.
Shareholders redeeming or exchanging through an authorized broker should mail
requests directly to the broker. You will receive a redemption amount based on
the next calculated NAV after the Fund receives your written request in proper
form.

Redemption or exchange requests through Michigan National Bank or Independence
One should be sent to:
Independence One(R) Mutual Funds
27777 Inkster Road
Mail Code 10-52
Farmington Hills, Michigan 48333-9065 All requests must include:
. Fund Name, account number and account registration;
. amount to be redeemed or exchanged;
. signatures of all shareholders exactly as registered; and
. if exchanging, the Fund Name, account number and account registration into
which you are exchanging.
Call your investment professional or the Fund if you need special instructions.

Payment Methods for Redemptions

. an electronic transfer to your account at a financial institution that is an
ACH member; or
. wire payment to your account at a domestic commercial bank that is a Federal
Reserve System member.

Redemption in Kind

Although the Funds intend to pay Share redemptions in cash, they reserve the
right to pay the redemption price in whole or in part by a distribution of a
Fund's portfolio securities.

Redemptions from Retirement Accounts

In the absence of your specific instructions, 10% of the value of your
redemption from a retirement account in the Fund may be withheld for taxes. This
withholding only applies to certain types of retirement accounts.

Exchange Privileges

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

To execute an order to exchange, you must:
. ensure that the account registrations are identical;
. meet any minimum initial investment requirements; and
. receive a prospectus for the fund into which you wish to exchange.
An exchange is treated as a redemption and a subsequent purchase, and is a
taxable transaction.

[graphic]
Systematic Withdrawal Program

[graphic]
Additional Conditions
Telephone Transactions

The Funds will record your telephone instructions. If a Fund does not follow
reasonable procedures, it may be liable for losses due to unauthorized or
fraudulent telephone instructions.

Share Certificates
The Funds do not issue share certificates.

Account and Share Information
Confirmations and Account Statements

Dividends and Capital Gains

The Equity Plus Fund declares and pays dividends quarterly, the Small Cap Fund
declares and pays dividends semi-annually and the International Equity Fund
declares and pays dividends annually. Dividends are paid to all shareholders
invested in a Fund on the record date. The record date is the date on which a
shareholder must officially own Shares in order to earn a dividend.

Accounts with Low Balances

Tax Information

The Funds send an annual statement of your account activity to assist you in
completing your federal, state and local tax returns. Fund distributions of
dividends and capital gains are taxable to you whether paid in cash or
reinvested in a Fund. Dividends are taxable as ordinary income; capital gains
are taxable at different rates depending upon the length of time a Fund holds
its assets.

Fund distributions are expected to be both dividends and capital gains.
Redemptions and exchanges are taxable sales. Please consult your tax adviser
regarding your federal, state, and local tax liability.

Who Manages the Funds?
[Logo of Michigan National]

The Adviser has delegated daily management of some of the Equity Plus Fund and
Small Cap Fund's assets to a Sub-Adviser, Sosnoff Sheridan Weiser Corporation
(doing business as Sosnoff Sheridan Group), who is paid by the Adviser and not
by the Funds. Sosnoff Sheridan Weiser Corporation is controlled by Tom Sosnoff,
its Director and President, and Scott Sheridan, its Director, Executive Vice-
President and Secretary. The Corporation's address is 440 South LaSalle Street,
Suite 2301, Chicago, Illinois 60605.

The Adviser has delegated daily management of some of the International Equity
Fund's assets to a Sub-Adviser, National Australia Asset Management, Ltd., who
is paid by the Adviser and not by the Funds. National Australia Asset
Management, Ltd's ("NAM") address is 333 Collins Street, Melbourne, Victoria
3000, Australia.

Stephen Fallet, B.Ec., Grad Dip Ec. Australian National University. Manager,
Global Strategy. Mr. Fallet has been working in the funds management industry
for eight years. He joined NAM in September 1998 as investment strategist.
Previously, he was Head of Fixed Interest and Economics at Colonial Investment
Management with direct portfolio responsibility for the management of $2.3
billion (Australian) in fixed interest, mortgage and money markets assets a
role he undertook in April 1996. His responsibilities also included management
of Colonial Investment Management's international equity regional allocation.
From 1992 to 1996, Mr. Fallet worked as Senior Economist and Senior Investment
Strategist for Colonial Investment Management.

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

The portfolio manager for the Equity Plus Fund and Small Cap Fund is Sharon
Dischinger. Ms. Dischinger is Second Vice President and Portfolio Manager for
Michigan National Bank and Independence One Capital Management Corporation in
Farmington Hills, and has been responsible for management of the Equity Plus
Fund and Small Cap Fund since their inception. Ms. Dischinger joined Michigan
National in 1990 and is currently the head equity trader. She is also a General
Securities Representative. Prior to joining Michigan National, Ms. Dischinger
was the head equity trader at Morison Asset Management. Ms. Dischinger is
responsible for the supervision of Sosnoff Sheridan Weiser Corporation's
management of the Equity Plus Fund and Small Cap Fund portfolios.

Derick W. Grembi has been the portfolio manager of the International Equity Fund
since June 1999. Mr Grembi began his career at Michigan National in 1993 in the
commercial lending department and in 1995 transferred to Independence One
Capital Management as an analyst. In addition to portfolio management, Mr.
Grembi manages individual accounts for the Personal Trust and Employee Benefit
groups. Mr. Grembi earned a B.S. in Economics from Oakland University. He is
also a Chartered Financial Analyst and is a member of the Financial Analyst
Society of Detroit. Mr. Grembi is responsible for the supervision of National
Australia Management Ltd.'s management of the International Equity Fund's
portfolio.

Advisory Fees

The Adviser receives an annual investment advisory fee at annual rates equal to
percentages of the relevant Fund's average net assets as follows: Equity Plus
Fund - 0.40%, Small Cap Fund - 0.50% and International Equity Fund - 1.00%. The
Adviser may voluntarily waive a portion of its fee or reimburse a Fund for
certain operating expenses.

Year 2000 Readiness

While it is impossible to determine in advance all of the risks to a Fund, a
Fund could experience interruptions in basic financial and operational
functions. Fund shareholders could experience errors or disruptions in Fund
share transactions or Fund communications.

However, this may be difficult with certain issuers. For example, funds dealing
with foreign service providers or investing in foreign securities will have
difficulty determining the Year 2000 readiness of those entities. The financial
impact of these issues for the Funds is still being determined. There can be no
assurance that potential Year 2000 problems would not have a material adverse
effect on the Funds.

Standard & Poor's

"Standard & Poor's(R)", "S&P(R)", "S&P 100(R)", and "S&P SmallCap 600(R)" are
trademarks of the McGraw-Hill Companies, Inc. and have been licensed for use by
Michigan National Bank. The Independence One Equity Plus Fund and Independence
One Small Cap Fund (the "Funds") are not sponsored, endorsed, sold or promoted
by, or affiliated with, Standard & Poor's ("S&P").

S&P makes no representation or warranty, express or implied, to the owners of
the Funds or any member of the public regarding the advisability of investing in
securities generally or in the Funds particularly or the ability of the Standard
& Poor's 100 Index ("S&P 100 Index") and the Standard & Poor's SmallCap 600
Index ("S&P SmallCap 600 Index") to track general stock market performance.
S&P's only relationship to Michigan National Bank (the "Licensee") is the
licensing of certain trademarks and trade names of S&P, S&P 100 Index and S&P
SmallCap 600 Index which are determined, composed and calculated by S&P without
regard to the Licensee or the Funds. S&P has no obligation to take the needs of
the Licensee or the owners of the Funds into consideration in the determination
of the timing of, prices at, or quantities of the Funds to be issued or in the
determination or calculation of the equation by which the Funds are to be
converted into cash. S&P has no obligation or liability in connection with the
administration, marketing or trading of the Funds.

S&P DOES NOT GUARANTEE THE ACCURACY AND/OR THE COMPLETENESS OF THE S&P 100
INDEX, THE S&P SMALLCAP 600 INDEX OR ANY DATA INCLUDED THEREIN. S&P MAKES NO
WARRANTY, EXPRESS OR IMPLIED, AS TO RESULTS TO BE OBTAINED BY THE LICENSEE,
OWNERS OF THE FUNDS, OR ANY OTHER PERSON OR ENTITY FROM THE USE OF THE S&P 100
INDEX, THE S&P SMALLCAP 600 INDEX OR ANY DATA INCLUDED THEREIN IN CONNECTION
WITH THE RIGHTS LICENSED HEREUNDER OR FOR ANY OTHER USE. S&P MAKES NO EXPRESS OR
IMPLIED WARRANTIES, AND EXPRESSLY DISCLAIMS ALL WARRANTIES OR MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE OR USE WITH RESPECT TO THE S&P 100 INDEX, THE
S&P SMALLCAP 600 INDEX OR ANY DATA INCLUDED THEREIN.

WITHOUT LIMITING ANY OF THE FOREGOING, IN NO EVENT SHALL S&P HAVE ANY LIABILITY
FOR ANY SPECIAL, PUNITIVE, INDIRECT OR CONSEQUENTIAL DAMAGES (INCLUDING LOST
PROFITS), EVEN IF NOTIFIED OF THE POSSIBILITY OF SUCH DAMAGES.

Financial Information
[graphic]

Financial Highlights

The Financial Highlights will help you understand the Funds' financial
performance for their past five fiscal years, or since inception, if the life of
a Fund is shorter. Some of the information is presented on a per share basis.
Total returns represent the rate an investor would have earned (or lost) on an
investment in a Fund, assuming reinvestment of any dividends and capital gains.

THIS INFORMATION HAS BEEN AUDITED BY KPMG LLP, WHOSE REPORT, ALONG WITH THE
FUNDS' AUDITED FINANCIAL STATEMENTS, IS INCLUDED IN THE ANNUAL REPORT.

INDEPENDENCE ONE EQUITY PLUS FUND

FINANCIAL HIGHLIGHTS

(For a share outstanding throughout each period)

<TABLE>
<CAPTION>
Year Ended April 30,
1999 1998 1997 1996 /1/
<S> <C> <C> <C> <C>
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%/4/
Net investment income /3/ 0.85% 1.09% 1.50%
1.61%/4/
Expenses (after waivers/reimbursements) 0.48% 0.42% 0.40%
0.39%/4/
Net investment income (after waivers/reimbursements) 0.96% 1.28% 1.74%
1.92%/4/
Supplemental data
Net assets, end of period (000 omitted) $295,436 $209,753 $169,328 $ 112,609
Porfolio turnover 19% 11% 8%
6%
</TABLE>

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. 4 Computed on an annualized basis.

INDEPENDENCE ONE SMALL CAP FUND
Financial Highlights
(For a share outstanding throughout each period)

<TABLE>
<CAPTION>
Period Ended
April 30,
1999/1/
<S> <C>
Net asset value, beginning of period $ 10.00
Income from investment operations
Net investment income (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)/3/
Distributions from net realized gain on investments (0.00)/3/
Total distributions (0.00)/3/
Net asset value, end of period $ 9.40
Total return /4/ (5.94%)
Ratios to average net assets
Expenses /5/ 1.69%/6/
Net investment income /5/ (0.51%)/6/
Expenses (after waivers/reimbursements) 1.27%/6/
Net operating loss (after waivers/reimbursements) (0.09%)/6/
Supplemental data
Net assets, end of period (000 omitted) $ 29,587
Porfolio turnover 36%
</TABLE>

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 Amount represents less than $0.01 per share. 4
Based on net asset value. 5 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. 6 Computed on an annualized
basis.

INDEPENDENCE ONE INTERNATIONAL EQUITY FUND Financial Highlights (For a share
outstanding throughout each period)

Period Ended

April 30,

1999 /1/
<S> <C>
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%/4/
Net investment income /3/
(1.47%)/4/
Expenses (after waivers/reimbursements)
1.55%/4/
Net investment income (after waivers/reimbursements)
0.07%/4/
Supplemental data
Net assets, end of period (000 omitted) $
15,646
Porfolio
turnover 1%
</TABLE>

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. 4 Computed on an annualized basis.

A Statement of Additional Information (SAI) dated August 31, 1999, is
incorporated by reference into this prospectus. Additional information about the
Funds' investments is contained in the Funds' Annual and Semi-Annual Reports to
shareholders as they become available. The Annual Report discusses market
conditions and investment strategies that significantly affected the Funds'
performance during their last fiscal year. To obtain the SAI, the Annual Report,
the Semi-Annual Report and other information without charge, and make inquiries,
call your investment professional or the Funds at 1-800-334-2292.

Independence One(R)
Mutual Funds

Independence One
Equity Plus Fund

Independence One
Small Cap Fund

Independence One
International Equity Fund

800-334-2292
www.MichiganNational.com

Investment Company Act File No: 811-5752
Cusip 453777872
Cusip 453777831
Cusip 453777849
G00979-08
[Logo of Independence One Mutual Funds]
[Logo of Michigan National]
Investment Adviser

Prospectus

Independence One(R)
Mutual Funds

Independence One(R) Mutual Funds offers nine portfolios, including three equity
funds, three income funds and three money market funds. This prospectus relates
to the three money market funds: [graphic] Independence One Prime Money
Market Fund Class A Shares Class B Shares

Independence One
U.S. Treasury Money Market Fund

Independence One
Michigan Municipal Cash Fund

August 31, 1999

[Logo of Independence One Mutual Funds]

Independence One(R) Mutual Funds
<TABLE>
<CAPTION>
<S> <C>
[graphic]
Contents
Fund Goals, Strategies, Performance and Risk 1
Principal Risks of the Funds 2
What are the Funds' Fees and Expenses? 6
Principal Securities in Which the Funds Invest 7
Specific Risks of Investing in the Funds 11
What do Shares Cost? 12
How are the Funds Sold? 12
How to Purchase Shares 12
How to Redeem and Exchange Shares 15
Account and Share Information 19
Who Manages the Funds? 20
Financial Information 21

</TABLE>
Fund Goals, Strategies, Performance and Risk
[graphic]

The following describes the investment goals, strategies, and principal risks of
Independence One Prime Money Market Fund, Independence One U.S. Treasury Money
Market Fund and Independence One Michigan Municipal Cash Fund (the "Funds").
There can be no assurance that a Fund will achieve its goal.

Independence One Prime Money Market Fund
Goal: Seeks to provide current income consistent with stability of principal.

Strategy: The Fund pursues its investment objective by investing exclusively in
a portfolio of corporate, municipal, U.S. government and other money market
instruments (high quality, short-term debt securities) maturing in 397 days or
less. The securities in which the Fund invests must be either rated in the
highest short-term category by at least one nationally recognized statistical
rating organization ("NRSRO") or be of comparable quality thereto.

The investment adviser uses macroeconomic credit and market analysis to select
portfolio securities. In so doing, it assesses a variety of factors, including
the current and expected U.S. economic growth, interest rates and inflation
rates.

Independence One U.S. Treasury Money Market Fund
Goal: Seeks to provide current income consistent with stability of principal.

Strategy: The Fund pursues its investment objective by investing only in a
portfolio of short-term U.S. Treasury obligations. U.S. Treasury obligations are
issued by the U.S. government, and are fully guaranteed as to payment of
principal and interest by the United States. The investment adviser selects
securities after assessing macroeconomic factors, including current and expected
interest rates.

Independence One Michigan Municipal Cash Fund
Goal: Seeks to provide stability of income and current income exempt from
federal regular income tax and Michigan state income tax consistent with
stability of principal. In addition, the Fund provides income exempt from
the Michigan intangibles tax and income taxes of Michigan municipalities.
Strategy: The Fund pursues its investment objective by investing at least 80% of
its assets in a portfolio of Michigan municipal securities maturing in 397 days
or less. The securities in which the Fund invests must be either rated in one of
the two highest short-term rating categories by at least one NRSRO or be of
comparable quality thereto. In addition to the Fund's investment objective as
stated above, the Fund provides income exempt from the Michigan intangible tax
and income taxes of Michigan municipalities.

Principal Risks of the Funds
[graphic]
In addition to the risks set forth below that are specific to an investment in a
particular Fund, there are risks common to all mutual funds.

For example, a Fund's share price may decline and an investor could lose money.
Thus, although the Funds seek to preserve the value of your investment at $1.00
per share, it is possible to lose money. Also, there is no assurance that a Fund
will achieve its investment objective. The Shares offered by this prospectus are
not deposits or obligations of any bank including Michigan National Bank, and
are not endorsed or guaranteed by the U.S. government, the Federal Deposit
Insurance Corporation, the Federal Reserve Board, or any other government
agency.

<TABLE>
<CAPTION>
U.S. Treasury
Risks Prime Money Money Market Michigan Municipal
Market Fund Fund Cash Fund
<S> <C> <C> <C>
Credit Risks /1/ . .
Interest Rate Risks /2/ . . .
Tax Risks /3/ .
Sector Risks /4, 5/ .
</TABLE>

1 The possibility that an issuer will default on a security by failing to pay
interest or principal when due.

2 Prices of fixed income securities rise and fall in response to interest rate
changes.

3 Changes in federal tax laws may cause the prices of municipal securities to
fall.

4 Because the Michigan Municipal Cash Fund's portfolio may be comprised of
securities issued or credit enhanced by issuers located in the same state, the
Fund will be more susceptible to any economic, business, political, or other
developments which generally affect these issuers.

5 Because the Michigan Municipal Cash Fund may invest a significant portion of
its assets in securities of a single issuer, an investment in the Fund may
involve additional risks compared to a fully diversified money market fund.

Independence One Prime Money Market Fund Risk/Return
Bar Chart and Table

The graphic presentation displayed here consists of a bar chart representing the
annual total returns of Independence One Prime Money Market Fund as of the
calendar year-end for each of nine years. The `y' axis reflects the "% Total
Return" beginning with "0%" and increasing in increments of 1% up to 9%.

The `x' axis represents calculation periods from the earliest first full
calendar year end of the Fund's Class A Shares start of business through the
calendar year ended December 31, 1998. The light gray shaded chart features nine
distinct vertical bars, each shaded in charcoal, and each visually representing
by height the total return percentages for the calendar year stated directly at
its base. The calculated total return percentage for the Fund's Class A Shares
for each calendar year is stated directly at the top of each respective bar, for
the calendar years 1990 through 1998. The percentages noted are: 8.06%, 5.80%,
3.38%, 2.69%, 3.74%, 5.51%, 4.95%, 5.13% and 5.05%.

Historically, the Fund has maintained a constant $1.00 net asset value per
share. The bar chart shows the variability of the Fund's Class A Shares total
returns on a calendar year-end basis.

The Fund's shares are not sold subject to a sales charge (load). The total
returns displayed above are based upon net asset value.

The Fund's Class A Shares total return from January 1, 1999 to June 30, 1999 was
2.26%.

Within the period shown in the Chart, the Fund's Class A Shares highest
quarterly return was 1.98% (quarter ended June 30, 1990). Its lowest quarterly
return was 0.63% (quarter ended June 30, 1993).

Independence One Prime Money Market Fund
Average Annual Total Return Table

The following table represents the Fund's Class A Shares and Class B Shares
Average Annual Total Returns for the calendar periods ended December 31, 1998.

<TABLE>
<CAPTION>
Calendar Period Class A Class B
<S> <C> <C>
1 Year 5.05% 5.31%
5 Years 4.88% N/A
Start of Performance /1/ 5.16% 5.38%
</TABLE>

1 The Fund's Class A Shares and Class B Shares start of performance dates were
June 1, 1989 and May 1, 1995, respectively.

The Fund's Class A Shares and Class B Shares 7-Day Net Yields as of December 31,
1998 were 4.68% and 4.93%, respectively. Investors may call the Fund at 1-800-
334-2292 to acquire the current 7-Day Net Yield.

Independence One U.S. Treasury Money Market Fund Risk/Return
Bar Chart and Table

The graphic presentation displayed here consists of a bar chart representing the
annual total returns of Independence One U.S. Treasury Money Market Fund as of
the calendar year-end for each of nine years. The `y' axis reflects the "% Total
Return" beginning with "0%" and increasing in increments of 1% up to 9%.

The `x' axis represents calculation periods from the earliest first full
calendar year end of the Fund's start of business through the calendar year
ended December 31, 1998. The light gray shaded chart features nine distinct
vertical bars, each shaded in charcoal, and each visually representing by height
the total return percentages for the calendar year stated directly at its base.
The calculated total return percentage for the Fund for each calendar year is
stated directly at the top of each respective bar, for the calendar years 1990
through 1998. The percentages noted are: 7.78%, 5.58%, 3.31%, 2.61%, 3.63%,
5.42%, 4.89%, 4.97% and 4.88%.

Historically, the Fund has maintained a constant $1.00 net asset value per
share. The bar chart shows the variability of the Fund's total returns on a
calendar year-end basis. The Fund's shares are not sold subject to a sales
charge (load). The total returns displayed above are based upon net asset value.
The Fund's total return from January 1, 1999 to June 30, 1999 was 2.08%.
Within the period shown in the Chart, the Fund's highest quarterly return
was 1.93% (quarter ended March 31, 1990). Its lowest quarterly return was 0.64%
(quarter ended December 31, 1993). Independence One U.S. Treasury Money
Market Fund Average Annual Total Return Table

The following table represents the Fund's Average Annual Total Returns for the
calendar periods ended December 31, 1998.

<TABLE>
<CAPTION>
Calendar Period Fund
<S> <C>
1 Year 4.88%
5 Years 4.75%
Start of Performance /1/ 5.02%
</TABLE>
1 The Fund's start of performance date was June 1, 1989.

The Fund's 7-Day Net Yield as of December 31, 1998 was 4.26%. Investors may call
the Fund at 1-800-334-2292 to acquire the current 7-Day Net Yield.

Independence One Michigan Municipal Cash Fund Risk/Return Bar Chart and Table

<PAGE>

The graphic presentation displayed here consists of a bar chart representing the
annual total returns of Independence One Michigan Municipal Cash Fund as of the
calendar year-end for each of nine years. The `y' axis reflects the "% Total
Return" beginning with "0%" and increasing in increments of 1% up to 6%.

The `x' axis represents calculation periods from the earliest first full
calendar year end of the Fund's start of business through the calendar year
ended December 31, 1998. The light gray shaded chart features nine distinct
vertical bars, each shaded in charcoal, and each visually representing by height
the total return percentages for the calendar year stated directly at its base.
The calculated total return percentage for the Fund for each calendar year is
stated directly at the top of each respective bar, for the calendar years 1990
through 1998 The percentages noted are: 5.57%, 4.14%, 2.61%, 1.99%, 2.39%,
3.35%, 3.00%, 3.20% and 3.03%.

Historically, the Fund has maintained a constant $1.00 net asset value per
share. The bar chart shows the variability of the Fund's total returns on a
calendar year-end basis.

The Fund's shares are not sold subject to a sales charge (load). The total
returns displayed above are based upon net asset value.

The Fund's total return from January 1, 1999 to June 30, 1999 was 1.30%.
Within the period shown in the Chart, the Fund's highest quarterly return was
1.39% (quarter ended December 31, 1990). Its lowest quarterly return was 0.48%
(quarter ended March 31, 1994).

Independence One Michigan Municipal Cash Fund
Average Annual Total Return Table
The following table represents the Fund's Average Annual Total Returns for the
calendar periods ended December 31, 1998.

<TABLE>
<CAPTION>
Calendar Period Fund
<S> <C>
1 Year 3.03%
5 Years 2.99%
Start of Performance/1/ 3.39%
</TABLE>
1 The Fund's start of performance date was June 1, 1989.

The Fund's 7-Day Net Yield as of December 31, 1998 was 2.93%. Investors may call
the Fund at 1-800-334-2292 to acquire the current 7-Day Net Yield.

What are the Funds'
Fees and Expenses?
[graphic]
Independence One(R) Money Market Funds
Fees and Expenses

This table describes the fees and expenses that you may pay if you buy and hold
Shares of the Independence One Prime Money Market Fund Class A Shares and Class
B Shares, Independence One U.S. Treasury Money Market Fund, or the Independence
One Michigan Municipal Cash Fund. <TABLE> <CAPTION>

Prime Money U.S. Treasury Michigan
Shareholder Fees Market Fund Money Market
Municipal
Fees Paid Directly From Your Investment Class A Class B Fund Cash Fund
<S> <C> <C> <C> <C>
Maximum Sales Charge (Load) Imposed
on Purchases (as a percentage of
offering price) None None None None
Maximum Deferred Sales Charge
(Load) (as a percentage of original
purchase price or redemption
proceeds, as applicable) None None None None
Maximum Sales Charge (Load)
Imposed on Reinvested Dividends
(and other Distributions) (as a
percentage of offering price) None None None None
Redemption Fee (as a percentage of
amount redeemed, if applicable) None None None None
Exchange Fee None None None None

Annual Fund Operating Expenses Before Waivers /1/
Expenses That are Deducted From Prime Money U.S. Treasury Michigan
Fund Assets (as a percentage of Market Fund Money Market Municipal
average net assets) Class A Class B Fund Cash Fund
Management Fee /2/ 0.40% 0.40% 0.40% 0.40%
Distribution (12b-1) Fee /3/ None None 0.00% 0.00%
Shareholder Services Fee 0.25% None None None
Other Expenses 0.16% 0.16% 0.19% 0.23%
Total Annual Fund Operating Expenses 0.81% 0.56% 0.59% 0.63%

1 Although not contractually obligated to do so, the adviser waived certain
amounts. These are shown below along with the net expenses the Funds actually
paid for the fiscal year ended April 30, 1999.

Total Waivers of Fund Expenses 0.25% 0.25% 0.00% 0.15%
Total Annual Fund Operating Expenses
(after waivers) 0.56% 0.31% 0.59% 0.48%

2 The adviser voluntarily waived a portion of the management fee for the Prime
Money Market Fund and the Michigan Municipal Cash Fund. The adviser can
terminate this voluntary waiver at any time. The management fee paid by the
Prime Money Market Fund and the Michigan Municipal Cash Fund (after the
voluntary waiver) was 0.15% and 0.25%, respectively, for the fiscal year ended
April 30, 1999.

3 The U.S. Treasury Money Market Fund and the Michigan Municipal Cash Fund did
not pay or accrue the distribution (12b-1) fee during the fiscal year ended
April 30, 1999. The Funds will not pay or accrue the distribution (12b-1) fee
until a separate class of shares has been created for certain institutional
investors. The Funds' distributor can pay up to 25% as a 12b-1 fee which is
reimbursed to the distributor by the Funds. See "How are the Funds Sold".
</TABLE>

Example
This Example is intended to help you compare the cost of investing in the Prime
Money Market Fund, U.S. Treasury Money Market Fund, or the Michigan Municipal
Cash Fund with the cost of investing in other mutual funds.

The Example assumes that you invest $10,000 in the Prime Money Market Fund Class
A and B Shares, U.S. Treasury Money Market Fund, or the Michigan Municipal Cash
Fund for the time periods indicated and then redeem all of your Shares at the
end of those periods. The Example also assumes that your investment has a 5%
return each year and that each of the Fund's Shares operating expenses are
before waivers as shown in the Table and remain the same. Although your actual
costs may be higher or lower, based on these assumptions your costs would be:

<TABLE>
<CAPTION>
Prime Money U.S. Treasury Michigan
Shareholder Fees Market Fund Money Market Municipal
Fees Paid Directly from Your Investment Class A Class B Fund Cash Fund
<S> <C> <C> <C> <C>
1 Year $ 83 $ 57 $ 60 $ 64
3 Years $ 259 $179 $189 $202
5 Years $ 450 $313 $329 $351
10 Years $1,002 $701 $738 $786
</TABLE>

Principal Securities in Which the Funds Invest
[graphic]
Fixed Income Securities

The following describes the principal types of fixed income securities in which
the Funds may invest.
Treasury Securities
Treasury securities are direct obligations of the federal government of the
United States. Treasury securities are generally regarded as having the lowest
credit risks.
Agency Securities

Agency securities are issued or guaranteed by a federal agency or other
government sponsored entity acting under federal authority (GSE). The United
States supports some GSEs with its full, faith and credit. Other GSEs receive
support through federal subsidies, loans or other benefits. A few GSEs have no
explicit financial support, but are regarded as having implied support because
the federal government sponsors their activities. Agency securities are
generally regarded as having low credit risks, but not as low as treasury
securities.

Corporate Debt Securities

The corporate debt securities held by the Prime Money Market Fund are fixed
income securities issued by businesses. Notes, bonds, debentures and commercial
paper are the most prevalent types of corporate debt securities. The Fund may
also purchase interests in bank loans to companies. The credit risks of
corporate debt securities vary widely among issuers.

Commercial Paper

Commercial paper is an issuer's obligation with a maturity of less than nine
months. Companies typically issue commercial paper to pay for current
expenditures. Most issuers constantly reissue their commercial paper and use
the proceeds (or bank loans) to repay maturing paper. If the issuer cannot
continue to obtain liquidity in this fashion, its commercial paper may
default. The short maturity of commercial paper reduces both the market and
credit risks as compared to other debt securities of the same issuer.

Demand Instruments

Bank Instruments

The Prime Money Market Fund may invest in bank instruments. Bank instruments are
unsecured interest bearing deposits with banks. Bank instruments include bank
accounts, time deposits, certificates of deposit and banker's acceptances.

Credit Enhancement

Certain of the Prime Money Market Fund and Michigan Municipal Cash Fund's
investments may be credit enhanced. Common types of credit enhancement include
guarantees, letters of credit, bond insurance and surety bonds. Credit
enhancement also includes arrangements where securities or other liquid assets
secure payment of a fixed income security. If a default occurs, these assets may
be sold and the proceeds paid to security's holders. Either form of credit
enhancement reduces credit risks by providing another source of payment for a
fixed income security.

Tax Exempt Securities

The Michigan Municipal Cash Fund invests in tax-exempt securities. Tax exempt
securities are fixed income securities that pay interest that is not subject to
regular federal income taxes. Typically, states, counties, cities and other
political subdivisions and authorities issue tax exempt securities. The market
categorizes tax exempt securities by their source of repayment.

General Obligation Bonds

Special Revenue Bonds

Municipal Notes

Municipal notes are short-term tax exempt securities. Many municipalities
issue such notes to fund their current operations before collecting taxes or
other municipal revenues. Municipalities may also issue notes to fund capital
projects prior to issuing long-term bonds. The issuers typically repay the
notes at the end of their fiscal year, either with taxes, other revenues or
proceeds from newly issued notes or bonds.

Variable Rate Demand Instruments

Variable rate demand instruments are tax exempt securities that require the
issuer or a third party, such as a dealer or bank, to repurchase the security
for its face value upon demand. The securities also pay interest at a variable
rate intended to cause the securities to trade at their face value. The Funds
treat demand instruments as short-term securities, because their variable
interest rate adjusts in response to changes in market rates, even though
their stated maturity may extend beyond thirteen months.

Special Transactions
Repurchase Agreements

Repurchase agreements are transactions in which a Fund buys a security from a
dealer or bank and agrees to sell the security back at a mutually agreed upon
time and price. The repurchase price exceeds the sale price, reflecting a
Fund's return on the transaction. This return is unrelated to the interest
rate on the underlying security. A Fund will enter into repurchase agreements
only with banks and other recognized financial institutions, such as
securities dealers, deemed creditworthy by the Adviser.

The Fund's custodian or subcustodian will take possession of the securities
subject to repurchase agreements. The Adviser will monitor the value of the
underlying security each day to ensure that the value of the security always
equals or exceeds the repurchase price.

Repurchase agreements are subject to credit risks.

Temporary Defensive Investments

The Michigan Municipal Cash Fund may temporarily depart from its principal
investment strategies by investing its assets in temporary investments. Interest
income from temporary investments may be taxable to shareholders as ordinary
income. These temporary investments may include: obligations issued by or on
behalf of municipal or corporate issuers having the same quality characteristics
as municipal securities purchased by the Fund (including obligations whose
interest is subject to the federal alternative minimum income tax); marketable
obligations issued or guaranteed by the U.S. government, its agencies or
instrumentalities; instruments issued by banks or savings associations which
have capital, surplus, and undivided profits in excess of $100,000,000 at the
time of investment and if their deposits are insured by the BIF or the SAIF,
which are both administered by the Federal Deposit Insurance Corporation
("FDIC"); repurchase agreements and prime commercial paper rated A-1 by Standard
& Poor's ("S&P"), Prime-1 by Moody's Investor Service, Inc. ("Moody's"), or F-1
by Fitch IBCA, Inc. ("Fitch"), and variable amount demand master notes.

Investment Ratings

The securities in which the Prime Money Market Fund invests must be rated in the
highest short-term rating category by one or more nationally recognized rating
services or be of comparable quality to securities having such ratings. The
securities in which the Michigan Municipal Cash Fund invests must be rated in
one of the two highest short-term rating categories by one or more nationally
recognized rating services or be of comparable quality to securities having such
ratings.

Specific Risks of Investing in the Funds
[graphic]
Credit Risks
.Credit risk is the possibility that an issuer will default on a security by
failing to pay interest or principal when due. If an issuer defaults, a Fund
will lose money.

Tax Risks

. Changes or proposed changes in federal tax laws may cause the prices of
municipal securities to fall.

Sector Risks

Michigan Risks

.Since the Michigan Municipal Cash Fund invests primarily in issuers from a
single state, the Fund may be subject to additional risks compared to funds
that invest in multiple states. Michigan's economy is among the most cyclical
of states, remaining heavily dependent on domestic auto production and durable
goods consumption. Any downturn in these and other industries may adversely
affect the economy of the state.

What Do Shares Cost?
[graphic]

You can purchase, redeem, or exchange Shares any day the New York Stock Exchange
(NYSE) is open. Shares of the Funds are sold at net asset value (NAV). The Funds
attempt to stabilize the NAV of their Shares at $1.00 by valuing the portfolio
securities using the amortized cost method. The Funds cannot guarantee that
their NAV will always remain at $1.00 per Share. The Funds do not charge a
front-end sales charge or a contingent deferred sales charge. Investors who
purchase, redeem or exchange through a financial intermediary may be charged a
service fee by that financial intermediary. Financial intermediaries are
authorized to accept purchase and redemption orders from their customers on
behalf of the Funds.

NAV is determined at 12:00 noon and 4:00 p.m. (Eastern time) and as of the end
of regular trading (normally 4:00 p.m. Eastern time) each day the NYSE is open.

How are the Funds Sold?

The Funds' Distributor, Federated Securities Corp., markets the Shares described
in this prospectus to institutional investors and individuals, directly or
through investment professionals.

When the Distributor receives marketing fees, it may pay some or all of them to
investment professionals. The Distributor and its affiliates may pay out of
their assets other amounts (including items of material value) to investment
professionals for marketing and servicing Shares. The Distributor is a
subsidiary of Federated Investors, Inc. (Federated).

Rule 12b-1 Plan

The U.S. Treasury Money Market Fund and Michigan Municipal Cash Fund have
adopted a Rule 12b-1 Plan, which allows them to pay marketing fees to the
Distributor and investment professionals for the sale, distribution and customer
servicing of the Funds' Shares. Because these Shares pay marketing fees on an
ongoing basis, your investment cost may be higher over time than other shares
with different sales charges and marketing fees. The Funds will not accrue to
pay any distribution expenses pursuant to the Plan until a separate class of
shares has been registered with the Securities and Exchange Commission.

How to Purchase Shares
[graphic]

You may purchase Shares through Michigan National Bank and Independence One
Brokerage Services, Inc. ("Independence One"), or through brokers or dealers
which have a sales agreement with the Distributor. The Funds reserve the right
to reject any request to purchase or exchange Shares. The minimum initial
investment in Prime Money Market Fund (Class A Shares), the U.S. Treasury Money
Market Fund, and Michigan Municipal Cash Fund by an investor is $1,000. The
minimum initial investment in Prime Money Market Fund (Class B Shares) by an
investor is $1,000,000. An institutional investor's minimum investment will be
calculated by combining all accounts it maintains with the Fund for Class B
Shares. Subsequent investments in all the Funds must be in amounts of at least
$100. [graphic] Through an Investment Professional . Establish an
account with the investment professional; and . Submit your purchase order to
the investment professional.

.You will receive that day's dividend if the investment professional forwards
the order to the Fund and the Fund receives payment by 11:00 a.m. (Eastern
time). You will become the owner of Shares and receive dividends when the Fund
receives your payment.

.In the case of Prime Money Market Fund (Class B Shares only), under limited
circumstances, you will receive that day's dividend if orders are received by
the Fund before 2:00 p.m. (Eastern time).

Investment professionals should send payments according to the instructions in
the sections "By Wire" or "By Check."

[graphic]

Through Michigan National Bank or
Independence One
. Establish your account with the Fund by calling toll free
1-800-334-2292; and
. Send your payment to the Fund by Federal Reserve wire or check.

You will become the owner of Shares after the Fund receives your wire or your
check. If your check does not clear, your purchase will be canceled and you
could be liable for any losses or fees the Fund or its transfer agent incurs.

[graphic]
By Wire
Send your wire to:
Federated Shareholder Services Company c/o Michigan National Bank
Farmington Hills, MI
Dollar Amount of Wire
For Credit to: Independence One (include name of Fund and, if applicable,
"Class A Shares" or "Class B Shares")
Account Number: 6856238933
ABA Number: 072000805
Wire Order Number, Dealer Number, or Group Number
Nominee/Institution Name
You cannot purchase Shares by wire on holidays when wire transfers are
restricted. [graphic] By Check Make your check payable to [Independence One
(include name of Fund and, if applicable, "Class A Shares" or "Class B
Shares")], note your account number on the check, and mail it to:
Independence One Mutual Funds
27777 Inkster Road
Mail Code 10-52
Farmington Hills, Michigan 48333-9065

Payment should be made in U.S. dollars and drawn on a U.S. bank. The Funds will
not accept third-party checks (checks originally payable to someone other than
you or the Fund). Orders by mail are considered received when payment by check
is converted into federal funds (normally the business day after the check is
received) and Shares begin earning dividends the next day.

Through an Exchange

Through a Cash Sweep Program

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

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

[graphic]
By Systematic Investment Program

Once you have opened an account, shareholders of Prime Money Market Fund (Class
A Shares), U.S. Treasury Money Market Fund and Michigan Municipal Cash Fund may
automatically purchase additional Shares on a regular basis in a minimum amount
of $100. A shareholder may apply for participation in this program through
Michigan National Bank by calling 1-800-334-2292.

By Automated Clearing House (ACH)

Retirement Investments

You may purchase Shares of the Prime Money Market Fund and U.S. Treasury Money
Market Fund as retirement investments (such as qualified plans and IRAs or
transfer or rollover of assets). Call your investment professional or the Fund
for information on retirement investments. We suggest that you discuss
retirement investments with your tax adviser. You may be subject to an annual
IRA account fee.

How to Redeem and Exchange Shares

You should redeem or exchange Shares:
. through an investment professional if you purchased Shares through an
investment professional; or
. through Michigan National Bank or Independence One.
[graphic]
Through an Investment Professional

[graphic]
Through Michigan National Bank or
Independence One
By Telephone

You may redeem or exchange Shares by calling 1-800-334-2292 once you have
completed the appropriate authorization form for telephone transactions. If you
call before 11:00 a.m. (Eastern time) your redemption will be wired to you the
same day. You will not receive that day's dividend. If you call after 11:00 a.m.
(Eastern time) your redemption will be wired to you the following business day.
You will receive that day's dividend.

Exchange orders must be received by the Fund by 4:00 p.m. (Eastern time) for
Shares to be exchanged the same day. Investment professionals are responsible
for promptly submitting redemption and exchange requests.

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

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

With a Fund checking account, shares may be redeemed simply by writing a check
for $250 or more. The redemption will be made at the net asset value on the date
that the transfer agent presents the check to the Fund. A check may not be
written to close an account. Checks should never be sent to the transfer agent
to redeem shares. Cancelled checks are sent to the shareholder each month.

Payment Methods for Redemptions

. an electronic transfer to your account at a financial institution that is an
ACH member; or
. wire payment to your account at a domestic commercial bank that is a Federal
Reserve System member.
Redemption in Kind

Although the Funds intend to pay Share redemptions in cash, they reserve the
right to pay the redemption price in whole or in part by a distribution of a
Fund's portfolio securities.

Redemptions from Retirement Accounts

In the absence of your specific instructions, 10% of the value of your
redemption from a retirement account in the Prime Money Market Fund and the U.S.
Treasury Money Market Fund may be withheld for taxes. This withholding only
applies to certain types of retirement accounts. The Michigan Municipal Cash
Fund may not be a suitable investment for retirement plans or for non-Michigan
taxpayers because it invests in Michigan municipal securities.

Exchange Privileges

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

[graphic]
Systematic Investment Program

Shareholders of Prime Money Market Fund (Class A Shares), U.S. Treasury Money
Market Fund and Michigan Municipal Cash Fund may automatically redeem Shares in
an amount directed by the shareholder on a regular basis. To be eligible to
participate in this program, a shareholder must have an account value of at
least $10,000, other than retirement accounts subject to required minimum
distributions. To apply for participation in this program, contact Michigan
National Bank at 1-800-334-2292. This program may reduce, and eventually
deplete, your account. Payments should not be considered yield or income.

[graphic]
Additional Conditions
Telephone Transactions

The Funds will record your telephone instructions. If a Fund does not follow
reasonable procedures, it may be liable for losses due to unauthorized or
fraudulent telephone instructions.

Share Certificates
The Funds do not issue share certificates.
Account and Share Information

Account Activity
You will receive periodic statements reporting all account activity, including
systematic transactions, dividends and capital gains paid.
Dividends and Capital Gains

The Funds declare any dividends daily and pay them monthly to shareholders. If
you purchase Shares by wire, you begin earning dividends on the day your wire is
received. If you purchase Shares by check, you begin earning dividends on the
business day after the Fund receives your check. In either case, you earn
dividends through the day your redemption request is received.

The Funds do not expect to realize any capital gains or losses. If capital gains
or losses were to occur, they could result in an increase or decrease in
dividends. The Funds pay any capital gains at least annually. Your dividends and
capital gains distributions will be automatically reinvested in additional
Shares without a sales charge, unless you elect cash payments.

Accounts with Low Balances

Tax Information
The Funds send an annual statement of your account activity to assist you in
completing your federal, state and local tax returns.

Prime Money Market Fund and U.S. Treasury Money Market Fund distributions of
dividends and capital gains are taxable to you whether paid in cash or
reinvested in the Fund. Dividends are taxable as ordinary income; capital gains
are taxable at different rates depending upon the length of time the Fund holds
its assets. Fund distributions are expected to be primarily dividends.
Redemptions and exchanges are taxable sales.

It is anticipated that Michigan Municipal Cash Fund distributions will be
primarily dividends that are exempt from federal income tax, although a portion
of the Fund's dividends may not be exempt. Dividends may be subject to state and
local taxes, although the Michigan Municipal Cash Fund's dividends will be
exempt from Michigan state personal income tax to the extent they are derived
from interest on obligations exempt from Michigan personal income taxes. Capital
gains and non-exempt dividends are taxable whether paid in cash or reinvested in
the Fund. Redemptions and exchanges are taxable sales.

Please consult your tax adviser regarding your federal, state and local tax
liability.
Who Manages the Funds?
[Logo of Michigan National]

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

Advisory Fees

The Adviser receives an annual investment advisory fee of 0.40% of each Fund's
average daily net assets. The Adviser may voluntarily waive a portion of its fee
or reimburse a Fund for certain operating expenses.

Year 2000 Readiness

The financial impact of these issues for the Funds is still being determined.
There can be no assurance that potential Year 2000 problems would not have a
material adverse effect on the Funds.

Financial Information
[graphic]

Financial Highlights

This information has been audited by KPMG LLP, whose report, along with the
Funds' audited financial statements, is included in the Annual Report.

INDEPENDENCE ONE PRIME MONEY MARKET FUND

FINANCIAL HIGHLIGHTS--CLASS A SHARES

(For a share outstanding throughout each period)

<TABLE>
<CAPTION>
Year Ended April 30,
1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
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
</TABLE>

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.

INDEPENDENCE ONE PRIME MONEY MARKET FUND

FINANCIAL HIGHLIGHTS--CLASS B SHARES

(For a share outstanding throughout each period)

<TABLE>
<CAPTION>
Year Ended April 30,
1999 1998 1997
1996 /1/
<S> <C> <C> <C> <C>
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% 4
Net investment income /3/ 4.77% 5.06% 4.81%
5.09% 4
Expenses (after waivers/reimbursements) 0.31% 0.34% 0.35%
0.36% 4
Net investment income (after waivers/reimbursements) 5.02% 5.31% 5.06%
5.34% 4
Supplemental data
Net assets, end of period (000 omitted) $191,373 $81,723 $71,168 $
85,780
</TABLE>

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.
4 Computed on an annualized basis.

INDEPENDENCE ONE U.S. TREASURY MONEY MARKET FUND

FINANCIAL HIGHLIGHTS

(For a share outstanding throughout each period)

<TABLE>
<CAPTION>
Year Ended April 30,
1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
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
</TABLE>

1 Based on net asset value.

INDEPENDENCE ONE MICHIGAN MUNICIPAL CASH FUND

FINANCIAL HIGHLIGHTS

(For a share outstanding throughout each period)

<TABLE>
<CAPTION>
Year Ended April 30,
1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
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
</TABLE>

Independence One(R)
Mutual Funds

Independence One
Prime Money Market Fund
Class A Shares
Class B Shares

Independence One
U.S. Treasury Money Market Fund

Independence One
Michigan Municipal Cash Fund

800-334-2292
www.MichiganNational.com

Investment Company Act File No: 811-5752
Cusip 453777203
Cusip 453777302
Cusip 453777708
Cusip 453777401
G01285-01
[Logo of Independence One Mutual Funds]

[Logo of Michigan National]

Investment Adviser

INDEPENDENCE ONE MUTUAL FUNDS
Independence One Prime Money Market Fund
Class A Shares
Class B Shares
Independence One U.S. Treasury Money Market Fund
Independence One Michigan Municipal Cash Fund
Independence One U.S. Government Securities Fund
Independence One Fixed Income Fund
Independence One Michigan Municipal Bond Fund
Independence One Equity Plus Fund
Independence One Small Cap Fund
Independence One International Equity Fund
Statement of Additional Information
August 31, 1999

This Statement of Additional Information (SAI) is not a prospectus. Read this
SAI in conjunction with the prospectuses of the Independence One Mutual Funds
dated August 31, 1999.

This SAI incorporates by reference the Funds' Annual Report. Obtain the
prospectuses or the Annual Report without charge by calling 1-800-334-2292.

CONTENTS

How Are the Funds Organized?.......................................2
Securities in Which the Funds Invest...............................2
What do Shares Cost?..............................................20
How Are the Funds Sold?...........................................20
Exchanging Securities for Fund Shares.............................20
Subaccounting Services............................................20
Redemption in Kind................................................21
Massachusetts Partnership Law.....................................21
Account and Share Information.....................................21
Tax Information...................................................22
Who Manages and Provides Services to the Funds?...................23
Fees Paid by the Funds for Services...............................26
How do the Funds Measure Performance?.............................27
Investment Ratings................................................32
Financial Information.............................................31
Addresses.................................................Back Cover

Federated Securities Corp., Distributor,
subsidiary of Federated Investors, Inc.
G01285-03 (8/99)

<PAGE>

HOW ARE THE FUNDS ORGANIZED?

Independence One Mutual Funds (Trust) is an open-end, management investment
company that was established under the laws of the Commonwealth of Massachusetts
on January 9, 1989. The Trust may offer separate series of shares representing
interests in separate portfolios of securities. The Trust currently offers nine
portfolios: Independence One Prime Money Market Fund (Class A Shares and Class B
Shares), Independence One U.S. Treasury Money Market Fund and Independence One
Michigan Municipal Cash Fund (the "Money Market Funds"); Independence One U.S.
Government Securities Fund, Independence One Fixed Income Fund and Independence
One Michigan Municipal Bond Fund (the "Income Funds"); and Independence One
Equity Plus Fund, Independence One Small Cap Fund and Independence One
International Equity Fund (the "Equity Funds").

SECURITIES IN WHICH THE FUNDS INVEST

In pursuing their investment strategy, the Funds may invest in the following
securities for any purpose that is consistent with their investment objective.
Following tables indicate which types of securities are a: o P = Principal
investment of a Fund; o A = Acceptable (but not principal) investment of a Fund;
or o N = Not an acceptable investment of a Fund.

EQUITY AND INCOME FUNDS
- ------------------------------------ --------------- ------------- --------------- ------------------ -------------- ---------------
Securities Equity Plus Small Cap International U.S. Government Fixed Income Michigan
Fund Fund Equity Fund Securities Fund Fund Municipal Bond
Fund
- ------------------------------------ --------------- ------------- --------------- ------------------ -------------- ---------------
Common Stocks P P P N N N
- ------------------------------------ --------------- ------------- --------------- ------------------ -------------- ---------------
Preferred Stocks N N A N N N
- ------------------------------------ --------------- ------------- --------------- ------------------ -------------- ---------------
Warrants N N A N A N
- ------------------------------------ --------------- ------------- --------------- ------------------ -------------- ---------------
- ------------------------------------ --------------- ------------- --------------- ------------------ -------------- ---------------
World Equity Bechmark Shares N N A N N N
- ------------------------------------ --------------- ------------- --------------- ------------------ -------------- ---------------
- ------------------------------------ --------------- ------------- --------------- ------------------ -------------- ---------------
Optimised Portfolios as Listed N N A N N N
Securities
- ------------------------------------ --------------- ------------- --------------- ------------------ -------------- ---------------
- ------------------------------------ --------------- ------------- --------------- ------------------ -------------- ---------------
Treasury Securities A A A P P A
- ------------------------------------ --------------- ------------- --------------- ------------------ -------------- ---------------
- ------------------------------------ --------------- ------------- --------------- ------------------ -------------- ---------------
Agency Securities A A A P P A
- ------------------------------------ --------------- ------------- --------------- ------------------ -------------- ---------------
- ------------------------------------ --------------- ------------- --------------- ------------------ -------------- ---------------
Corporate Debt Securities(1) A A A N P A
- ------------------------------------ --------------- ------------- --------------- ------------------ -------------- ---------------
- ------------------------------------ --------------- ------------- --------------- ------------------ -------------- ---------------
Commercial Paper (2) A A A N A A
- ------------------------------------ --------------- ------------- --------------- ------------------ -------------- ---------------
- ------------------------------------ --------------- ------------- --------------- ------------------ -------------- ---------------
Demand Instruments A A A A A A
- ------------------------------------ --------------- ------------- --------------- ------------------ -------------- ---------------
- ------------------------------------ --------------- ------------- --------------- ------------------ -------------- ---------------
Municipal Securities N N N N N A
- ------------------------------------ --------------- ------------- --------------- ------------------ -------------- ---------------
- ------------------------------------ --------------- ------------- --------------- ------------------ -------------- ---------------
Mortgage Backed Securities N N N N A N
- ------------------------------------ --------------- ------------- --------------- ------------------ -------------- ---------------
- ------------------------------------ --------------- ------------- --------------- ------------------ -------------- ---------------
Collateralized Mortgage Obligations N N N N A N
- ------------------------------------ --------------- ------------- --------------- ------------------ -------------- ---------------
- ------------------------------------ --------------- ------------- --------------- ------------------ -------------- ---------------
Asset Backed Securities N N N N A N
- ------------------------------------ --------------- ------------- --------------- ------------------ -------------- ---------------
- ------------------------------------ --------------- ------------- --------------- ------------------ -------------- ---------------
Zero Coupon Securities N N N A A A
- ------------------------------------ --------------- ------------- --------------- ------------------ -------------- ---------------
- ------------------------------------ --------------- ------------- --------------- ------------------ -------------- ---------------
Bank Instruments A A A N A A
- ------------------------------------ --------------- ------------- --------------- ------------------ -------------- ---------------
- ------------------------------------ --------------- ------------- --------------- ------------------ -------------- ---------------
Credit Enhancement N N N N A A
- ------------------------------------ --------------- ------------- --------------- ------------------ -------------- ---------------
- ------------------------------------ --------------- ------------- --------------- ------------------ -------------- ---------------
Convertible Securities N N A N A N
- ------------------------------------ --------------- ------------- --------------- ------------------ -------------- ---------------
- ------------------------------------ --------------- ------------- --------------- ------------------ -------------- ---------------
Tax Exempt Securities (3) N N N N N P
- ------------------------------------ --------------- ------------- --------------- ------------------ -------------- ---------------
- ------------------------------------ --------------- ------------- --------------- ------------------ -------------- ---------------
General Obligation Bonds N N N N N P
- ------------------------------------ --------------- ------------- --------------- ------------------ -------------- ---------------
- ------------------------------------ --------------- ------------- --------------- ------------------ -------------- ---------------
Special Revenue Bonds N N N N N P
- ------------------------------------ --------------- ------------- --------------- ------------------ -------------- ---------------
- ------------------------------------ --------------- ------------- --------------- ------------------ -------------- ---------------
Private Activity Bonds N N N N N P
- ------------------------------------ --------------- ------------- --------------- ------------------ -------------- ---------------
- ------------------------------------ --------------- ------------- --------------- ------------------ -------------- ---------------
Municipal Notes N N N N N P
- ------------------------------------ --------------- ------------- --------------- ------------------ -------------- ---------------
- ------------------------------------ --------------- ------------- --------------- ------------------ -------------- ---------------
Variable Rate Demand Instruments N N N N N P
- ------------------------------------ --------------- ------------- --------------- ------------------ -------------- ---------------
- ------------------------------------ --------------- ------------- --------------- ------------------ -------------- ---------------
Municipal Leases N N N N N P
- ------------------------------------ --------------- ------------- --------------- ------------------ -------------- ---------------
- ------------------------------------ --------------- ------------- --------------- ------------------ -------------- ---------------
Foreign Securities N N P N N N
- ------------------------------------ --------------- ------------- --------------- ------------------ -------------- ---------------
- ------------------------------------ --------------- ------------- --------------- ------------------ -------------- ---------------
Foreign Exchange Contracts (4) N N P N N N
- ------------------------------------ --------------- ------------- --------------- ------------------ -------------- ---------------
- ------------------------------------ --------------- ------------- --------------- ------------------ -------------- ---------------
Foreign Government Securities N N A N N N
- ------------------------------------ --------------- ------------- --------------- ------------------ -------------- ---------------
- ------------------------------------ --------------- ------------- --------------- ------------------ -------------- ---------------
Depositary Receipts N N P N N N
- ------------------------------------ --------------- ------------- --------------- ------------------ -------------- ---------------

<PAGE>

EQUITY AND INCOME FUNDS (cont'd)
- ---------------------------------- --------------- -------------- --------------- ------------------ --------------- ---------------
Securities Equity Plus Small Cap International U.S. Government Fixed Income Michigan
Fund Fund Equity Fund Securities Fund Fund Municipal Bond
Fund
- ---------------------------------- --------------- -------------- --------------- ------------------ --------------- ---------------
- ---------------------------------- --------------- -------------- --------------- ------------------ --------------- ---------------
Derivatives N N P N A N
- ---------------------------------- --------------- -------------- --------------- ------------------ --------------- ---------------
- ---------------------------------- --------------- -------------- --------------- ------------------ --------------- ---------------
Futures Contracts (5) A A A N A N
- ---------------------------------- --------------- -------------- --------------- ------------------ --------------- ---------------
- ---------------------------------- --------------- -------------- --------------- ------------------ --------------- ---------------
Options (6) A A A N A N
- ---------------------------------- --------------- -------------- --------------- ------------------ --------------- ---------------
- ---------------------------------- --------------- -------------- --------------- ------------------ --------------- ---------------
Repurchase Agreements A A A A A A
- ---------------------------------- --------------- -------------- --------------- ------------------ --------------- ---------------
- ---------------------------------- --------------- -------------- --------------- ------------------ --------------- ---------------
Reverse Repurchase Agreements A A A N A A
- ---------------------------------- --------------- -------------- --------------- ------------------ --------------- ---------------
- ---------------------------------- --------------- -------------- --------------- ------------------ --------------- ---------------
Delayed Delivery Transactions (7) N N A A A A
- ---------------------------------- --------------- -------------- --------------- ------------------ --------------- ---------------
- ---------------------------------- --------------- -------------- --------------- ------------------ --------------- ---------------
Securities Lending A A A N A N
- ---------------------------------- --------------- -------------- --------------- ------------------ --------------- ---------------
- ---------------------------------- --------------- -------------- --------------- ------------------ --------------- ---------------
Investing in Securities of Other A A A N A A
Investment Companies
- ---------------------------------- --------------- -------------- --------------- ------------------ --------------- ---------------
</TABLE>

1. The Fixed Income Fund may invest in corporate debt obligations rated Aaa, Aa,
or A by Moody's or A by S&P and Fitch, or if unrated, of comparable quality as
determined by the investment adviser. 2. The commercial paper in which the
International Equity Fund and Fixed Income Fund invest will be rated A-1 by
Standard & Poor's (S&P), P-1 by Moody's Investor's Service, Inc. ("Moody's"), or
F-1 by Fitch IBCA, Inc ("Fitch). 3. The Michigan Municipal Bond Fund may invest
in Michigan municipal securities rated Aaa, Aa, or A by Moody's or A by S&P and
Fitch, or if unrated of comparable quality as determined by the investment
adviser. 4. No more than 30% of the International Equity Fund's assets will be
committed to forward contracts for hedging purposes at any time. 5. The value of
futures contracts will not exceed 20% of the Equity Plus Fund and Small Cap
Fund's total assets. The Equity Plus Fund, Small Cap Fund and International
Equity Fund will not enter into futures contracts and options on futures
contracts, for purposes other than "bona fide hedging" as defined in regulations
adopted by the Commodity Futures Trading Commission for which aggregate initial
margin and premiums paid for unexpired options exceed 5% of the fair market
value of each Fund's total assets. 6. The Equity Plus Fund and Small Cap Fund
will not purchase options to the extent that more than 5% of the value of each
Fund's total assets would be invested in premiums on open option positions. 7.
The Funds do not intend to engage in when-issued and delayed delivery
transactions to an extent that would cause the segregation of more than 20% of
the value of their respective total assets.

<S> <C> <C> <C>
MONEY MARKET FUNDS
- --------------------------------------------- ------------------- -------------------- --------------------
Securities Prime Money U.S. Treasury Michigan Municipal
Market Fund Money Market Fund Cash Fund
- --------------------------------------------- ------------------- -------------------- --------------------
- --------------------------------------------- ------------------- -------------------- --------------------
Treasury Securities A P A
- --------------------------------------------- ------------------- -------------------- --------------------
- --------------------------------------------- ------------------- -------------------- --------------------
Agency Securities A P A
- --------------------------------------------- ------------------- -------------------- --------------------
- --------------------------------------------- ------------------- -------------------- --------------------
Corporate Debt Securities A N A
- --------------------------------------------- ------------------- -------------------- --------------------
- --------------------------------------------- ------------------- -------------------- --------------------
Commercial Paper P N A
- --------------------------------------------- ------------------- -------------------- --------------------
- --------------------------------------------- ------------------- -------------------- --------------------
Demand Instruments A N A
- --------------------------------------------- ------------------- -------------------- --------------------
- --------------------------------------------- ------------------- -------------------- --------------------
Municipal Securities A N A
- --------------------------------------------- ------------------- -------------------- --------------------
- --------------------------------------------- ------------------- -------------------- --------------------
Asset Backed Securities A N N
- --------------------------------------------- ------------------- -------------------- --------------------
- --------------------------------------------- ------------------- -------------------- --------------------
Bank Instruments P N A
- --------------------------------------------- ------------------- -------------------- --------------------
- --------------------------------------------- ------------------- -------------------- --------------------
Credit Enhancement A N A
- --------------------------------------------- ------------------- -------------------- --------------------
- --------------------------------------------- ------------------- -------------------- --------------------
Tax Exempt Securities (1) N N P
- --------------------------------------------- ------------------- -------------------- --------------------
- --------------------------------------------- ------------------- -------------------- --------------------
General Obligation Bonds N N P
- --------------------------------------------- ------------------- -------------------- --------------------
- --------------------------------------------- ------------------- -------------------- --------------------
Special Revenue Bonds N N P
- --------------------------------------------- ------------------- -------------------- --------------------
- --------------------------------------------- ------------------- -------------------- --------------------
Municipal Notes N N P
- --------------------------------------------- ------------------- -------------------- --------------------
- --------------------------------------------- ------------------- -------------------- --------------------
Variable Rate Demand Instruments A N A
- --------------------------------------------- ------------------- -------------------- --------------------
- --------------------------------------------- ------------------- -------------------- --------------------
Foreign Securities P N N
- --------------------------------------------- ------------------- -------------------- --------------------
- --------------------------------------------- ------------------- -------------------- --------------------
Foreign Government Securities P N N
- --------------------------------------------- ------------------- -------------------- --------------------
- --------------------------------------------- ------------------- -------------------- --------------------
Repurchase Agreements A A A
- --------------------------------------------- ------------------- -------------------- --------------------
- --------------------------------------------- ------------------- -------------------- --------------------
Reverse Repurchase Agreements A A A
- --------------------------------------------- ------------------- -------------------- --------------------
- --------------------------------------------- ------------------- -------------------- --------------------
Delayed Delivery Transactions (2) A A A
- --------------------------------------------- ------------------- -------------------- --------------------
- --------------------------------------------- ------------------- -------------------- --------------------
Securities Lending N N N
- --------------------------------------------- ------------------- -------------------- --------------------
- --------------------------------------------- ------------------- -------------------- --------------------
Investing in Securities of Other Investment A A A
Companies
- --------------------------------------------- ------------------- -------------------- --------------------
</TABLE>

1. The Michigan Municipal Cash Fund will not invest more than 5% of its assets
in industrial revenue bonds where the payment of principal and interest is the
responsibility of companies (or guarantors, if applicable) with less than three
years of continuous operations, including the operation of any predecessor. 2
The Funds do not intend to engage in when-issued and delayed delivery
transactions to an extent that would cause the segregation of more than 20% of
the value of their respective total assets.

<PAGE>

Securities Descriptions and Techniques
Equity Securities
Equity securities represent a share of an issuer's earnings and assets, after
the issuer pays its liabilities. The Funds cannot predict the income it will
receive from equity securities because issuers generally have discretion as to
the payment of any dividends or distributions. However, equity securities offer
greater potential for appreciation than many other types of securities, because
their value may increase with the value of the issuer's business. The following
describes the types of equity securities in which the Funds invest.
Common Stocks
Common stocks are the most prevalent type of equity security. Common stocks
receive the issuer's earnings after the issuer pays its creditors and any
preferred stockholders. As a result, changes in an issuer's earnings may
influence the value of its common stock. Preferred Stocks Preferred stocks
have the right to receive specified dividends or distributions before the
issuer makes payments on its common stock. Some preferred stocks also
participate in dividends and distributions paid on common stock. Preferred
stocks may also permit the issuer to redeem the stock. A Fund may treat
such redeemable preferred stock as a fixed income security. Warrants
Warrants give a Fund the option to buy the issuer's equity securities at a
specified price (the exercise price) at a specified future date (the
expiration date). A Fund may buy the designated securities by paying the
exercise price before the expiration date. Warrants may become worthless if
the price of the stock does not rise above the exercise price by the
expiration date. This increases the market risks of warrants as compared to
the underlying security. Rights are the same as warrants, except companies
typically issue rights to existing stockholders.

World Equity Bechmark Shares (WEBS)
WEBS are shares of structured index funds that trade continuously on the
American Stock Exchange and represent shares in an open-end investment
company. WEBS provide a Fund with a passive approach to investing in a
broad range of equity securities in various foreign markets. Each WEB index
is designed to follow the performance of a different Morgan Stanley Capital
International ("MSCI") country index. WEBS give a Fund the ability to
remain in a local trading environment while still obtaining exposure to
foreign markets.

Optimised Portfolios As Listed Securities (OPALS)
OPALS are listed on the Luxembourg Stock Exchange and are designed to
provide a Fund with a return which tracks a specific equity index. With
OPALS, a Fund lends money to the issuer of the OPALS, and, in return,
receives an income stream that tracks, within agreed limits, the movement
in a specified equity index-like the S&P 500. At the end of the loan term,
a Fund may redeem the OPALS for the physical shares of the underlying
equity index.
Fixed Income Securities
Fixed income securities pay interest, dividends or distributions at a specified
rate. The rate may be a fixed percentage of the principal or adjusted
periodically. In addition, the issuer of a fixed income security must repay the
principal amount of the security, normally within a specified time. Fixed income
securities provide more regular income than equity securities. However, the
returns on fixed income securities are limited and normally do not increase with
the issuer's earnings. This limits the potential appreciation of fixed income
securities as compared to equity securities.

<PAGE>

A security's yield measures the annual income earned on a security as a
percentage of its price. A security's yield will increase or decrease depending
upon whether it costs less (a discount) or more (a premium) than the principal
amount. If the issuer may redeem the security before its scheduled maturity, the
price and yield on a discount or premium security may change based upon the
probability of an early redemption. Securities with higher risks generally have
higher yields. The following describes the types of fixed income securities in
which a Fund may invest.
Treasury Securities
Treasury securities are direct obligations of the federal government of the
United States. Treasury securities are generally regarded as having the
lowest credit risks. Agency Securities Agency securities are issued or
guaranteed by a federal agency or other government sponsored entity acting
under federal authority (a GSE). The United States supports some GSEs with
its full faith and credit. Other GSEs receive support through federal
subsidies, loans or other benefits. A few GSEs have no explicit financial
support, but are regarded as having implied support because the federal
government sponsors their activities. Agency securities are generally
regarded as having low credit risks, but not as low as treasury securities.
The Funds treat mortgage backed securities guaranteed by GSEs as agency
securities. Although a GSE guarantee protects against credit risks, it does not
reduce the market and prepayment risks of these mortgage
Corporate Debt Securities
Corporate debt securities are fixed income securities issued by businesses.
Notes, bonds, debentures and commercial paper are the most prevalent types
of corporate debt securities. A Fund may also purchase interests in bank
loans to companies. The credit risks of corporate debt securities vary
widely among issuers. In addition, the credit risk of an issuer's debt
security may vary based on its priority for repayment. For example, higher
ranking (senior) debt securities have a higher priority than lower ranking
(subordinated) securities. This means that the issuer might not make
payments on subordinated securities while continuing to make payments on
senior securities. In addition, in the event of bankruptcy, holders of
senior securities may receive amounts otherwise payable to the holders of
subordinated securities. Some subordinated securities, such as trust
preferred and capital securities notes, also permit the issuer to defer
payments under certain circumstances. For example, insurance companies
issue securities known as surplus notes that permit the insurance company
to defer any payment that would reduce its capital below regulatory
requirements.
Commercial Paper
Commercial paper is an issuer's obligation with a maturity of less than
nine months. Companies typically issue commercial paper to pay for
current expenditures. Most issuers constantly reissue their commercial
paper and use the proceeds (or bank loans) to repay maturing paper. If
the issuer cannot continue to obtain liquidity in this fashion, its
commercial paper may default. Demand Instruments Demand instruments are
corporate debt securities that the issuer must repay upon demand. Other
demand instruments require a third party, such as a dealer or bank, to
repurchase the security for its face value upon demand. The Funds treat
demand instruments as short-term securities, even though their stated
maturity may extend beyond one year.
Municipal Securities
Municipal securities are issued by states, counties, cities and other
political subdivisions and authorities. Although the majority of municipal
securities are exempt from federal income tax, a Fund may invest in taxable
municipal securities.

<PAGE>

Mortgage Backed Securities
Mortgage backed securities represent interests in pools of mortgages. The
mortgages that comprise a pool normally have similar interest rates,
maturities and other terms. Mortgages may have fixed or adjustable interest
rates. Interests in pools of adjustable rate mortgages are known as ARMs.
Mortgage backed securities come in a variety of forms. Many have extremely
complicated terms. The simplest form of mortgage backed securities are
pass-through certificates. An issuer of pass-through certificates gathers
monthly payments from an underlying pool of mortgages. Then, the issuer
deducts its fees and expenses and passes the balance of the payments onto
the certificate holders once a month. Holders of pass-through certificates
receive a pro rata share of all payments and pre-payments from the
underlying mortgages. As a result, the holders assume all the prepayment
risks of the underlying mortgages.
Collateralized Mortgage Obligations (CMOs)
CMOs, including interests in real estate mortgage investment conduits
(REMICs), allocate payments and prepayments from an underlying
pass-through certificate among holders of different classes of mortgage
backed securities. This creates different prepayment and interest rate
risks for each CMO class. The degree of increased or decreased
prepayment risks depends upon the structure of the CMOs. However, the
actual returns on any type of mortgage backed security depend upon the
performance of the underlying pool of mortgages, which no one can
predict and will vary among pools.
Sequential CMOs
In a sequential pay CMO, one class of CMOs receives all principal
payments and prepayments. The next class of CMOs receives all
principal payments after the first class is paid off. This process
repeats for each sequential class of CMO. As a result, each class
of sequential pay CMOs reduces the prepayment risks of subsequent
classes. PACs, TACs and Companion Classes More sophisticated CMOs
include planned amortization classes (PACs) and targeted
amortization classes (TACs). PACs and TACs are issued with
companion classes. PACs and TACs receive principal payments and
prepayments at a specified rate. The companion classes receive
principal payments and prepayments in excess of the specified
rate. In addition, PACs will receive the companion classes' share
of principal payments, if necessary, to cover a shortfall in the
prepayment rate. This helps PACs and TACs to control prepayment
risks by increasing the risks to their companion classes. IOs and
POs CMOs may allocate interest payments to one class (Interest
Only or IOs) and principal payments to another class (Principal
Only or POs). POs increase in value when prepayment rates
increase. In contrast, IOs decrease in value when prepayments
increase, because the underlying mortgages generate less interest
payments. However, IOs tend to increase in value when interest
rates rise (and prepayments decrease), making IOs a useful hedge
against interest rate risks. Floaters and Inverse Floaters Another
variant allocates interest payments between two classes of CMOs.
One class (Floaters) receives a share of interest payments based
upon a market index such as LIBOR. The other class (Inverse
Floaters) receives any remaining interest payments from the
underlying mortgages. Floater classes receive more interest (and
Inverse Floater classes receive correspondingly less interest) as
interest rates rise. This shifts prepayment and interest rate
risks from the Floater to the Inverse Floater class, reducing the
price volatility of the Floater class and increasing the price
volatility of the Inverse Floater class. Z Classes and Residual
Classes CMOs must allocate all payments received from the
underlying mortgages to some class. To capture any unallocated
payments, CMOs generally have an accrual (Z) class. Z classes do
not receive any payments from the underlying mortgages until all
other CMO classes have been paid off. Once this happens, holders
of Z class CMOs receive all payments and prepayments. Similarly,
REMICs have residual interests that receive any mortgage payments
not allocated to another REMIC class.
Asset Backed Securities
Asset backed securities are payable from pools of obligations other than
mortgages. Most asset backed securities involve consumer or commercial
debts with maturities of less than ten years. However, almost any type of
fixed income assets (including other fixed income securities) may be used
to create an asset backed security. Asset backed securities may take the
form of commercial paper, notes, or pass through certificates. Asset backed
securities have prepayment risks. Like CMOs, asset backed securities may be
structured like Floaters, Inverse Floaters, IOs and POs. Zero Coupon
Securities Zero coupon securities do not pay interest or principal until
final maturity unlike debt securities that provide periodic payments of
interest (referred to as a coupon payment). Investors buy zero coupon
securities at a price below the amount payable at maturity. The difference
between the purchase price and the amount paid at maturity represents
interest on the zero coupon security. Investors must wait until maturity to
receive interest and principal, which increases the interest rate risks and
credit risks of a zero coupon security. There are many forms of zero coupon
securities. Some are issued at a discount and are referred to as zero
coupon or capital appreciation bonds. Others are created from interest
bearing bonds by separating the right to receive the bond's coupon payments
from the right to receive the bond's principal due at maturity, a process
known as coupon stripping. Treasury STRIPs, IOs and POs are the most common
forms of stripped zero coupon securities. In addition, some securities give
the issuer the option to deliver additional securities in place of cash
interest payments, thereby increasing the amount payable at maturity. These
are referred to as pay-in-kind or PIK securities.
Bank Instruments
Bank instruments are unsecured interest bearing deposits with banks. Bank
instruments include bank accounts, time deposits, certificates of deposit and
banker's acceptances. Yankee instruments are denominated in U.S. dollars and
issued by U.S. branches of foreign banks. Eurodollar instruments are denominated
in U.S. dollars and issued by non-U.S. branches of U.S. or foreign banks. Credit
Enhancement Credit enhancement consists of an arrangement in which a company
agrees to pay amounts due on a fixed income security if the issuer defaults. In
some cases the company providing credit enhancement makes all payments directly
to the security holders and receives reimbursement from the issuer. Normally,
the credit enhancer has greater financial resources and liquidity than the
issuer. For this reason, the Adviser usually evaluates the credit risk of a
fixed income security based in part upon its credit enhancement. Common types of
credit enhancement include guarantees, letters of credit, bond insurance and
surety bonds. Credit enhancement also includes arrangements where securities or
other liquid assets secure payment of a fixed income security. If a default
occurs, these assets may be sold and the proceeds paid to security's holders.
Either form of credit enhancement reduces credit risks by providing another
source of payment for a fixed income security. Convertible Securities
Convertible securities are fixed income securities that a Fund has the option to
exchange for equity securities at a specified conversion price. The option
allows the Fund to realize additional returns if the market price of the equity
securities exceeds the conversion price. For example, a Fund may hold fixed
income securities that are convertible into shares of common stock at a
conversion price of $10 per share. If the market value of the shares of common
stock reached $12, the Fund could realize an additional $2 per share by
converting its fixed income securities. Convertible securities have lower yields
than comparable fixed income securities. In addition, at the time a convertible
security is issued the conversion price exceeds the market value of the
underlying equity securities. Thus, convertible securities may provide lower
returns than non-convertible fixed income securities or equity securities
depending upon changes in the price of the underlying equity securities.
However, convertible securities permit the Fund to realize some of the potential
appreciation of the underlying equity securities with less risk of losing its
initial investment. Tax Exempt Securities Tax exempt securities are fixed income
securities that pay interest that is not subject to regular federal income
taxes. Typically, states, counties, cities and other political subdivisions and
authorities issue tax exempt securities. The market categorizes tax exempt
securities by their source of repayment.
General Obligation Bonds
General obligation bonds are supported by the issuer's power to exact
property or other taxes. The issuer must impose and collect taxes
sufficient to pay principal and interest on the bonds. However, the
issuer's authority to impose additional taxes may be limited by its charter
or state law. Special Revenue Bonds Special revenue bonds are payable
solely from specific revenues received by the issuer such as specific
taxes, assessments, tolls, or fees. Bondholders may not collect from the
municipality's general taxes or revenues. For example, a municipality may
issue bonds to build a toll road, and pledge the tolls to repay the bonds.
Therefore, a shortfall in the tolls normally would result in a default on
the bonds.
Private Activity Bonds
Private activity bonds are special revenue bonds used to finance
private entities. For example, a municipality may issue bonds to
finance a new factory to improve its local economy. The municipality
would lend the proceeds from its bonds to the company using the
factory, and the company would agree to make loan payments sufficient
to repay the bonds. The bonds would be payable solely from the
company's loan payments, not from any other revenues of the
municipality. Therefore, any default on the loan normally would result
in a default on the bonds. The interest on many types of private
activity bonds is subject to the federal alternative minimum tax (AMT).
A Fund may invest in bonds subject to AMT.
Variable Rate Demand Instruments
Variable rate demand instruments are tax exempt securities that require the
issuer or a third party, such as a dealer or bank, to repurchase the
security for its face value upon demand. The securities also pay interest
at a variable rate intended to cause the securities to trade at their face
value. The Funds treat demand instruments as short-term securities, because
their variable interest rate adjusts in response to changes in market
rates, even though their stated maturity may extend beyond thirteen months.

Foreign Securities
Foreign securities are securities of issuers based outside the United States.
The Fund considers an issuer to be based outside the United States if: o it is
organized under the laws of, or has a principal office located in, another
country; o the principal trading market for its securities is in another
country; or o it (or its subsidiaries) derived in its most current fiscal year
at least 50% of its total assets,
capitalization, gross revenue or profit from goods produced, services
performed, or sales made in another country.
The foreign securities in which the Prime Money Market Fund invest are primarily
denominated in U.S. dollars. The foreign securities in which the International
Equity Fund invests are primarily denominated in foreign currencies. Along with
the risks normally associated with domestic securities of the same type, foreign
securities are subject to risks of foreign investing.
Depositary Receipts
Depositary receipts represent interests in underlying securities issued by
a foreign company. Depositary receipts are not traded in the same market as
the underlying security. The foreign securities underlying American
Depositary Receipts (ADRs) are traded in the United States. ADRs provide a
way to buy shares of foreign-based companies in the United States rather
than in overseas markets. ADRs are also traded in U.S. dollars, eliminating
the need for foreign exchange transactions. The foreign securities
underlying European Depositary Receipts (EDRs), Global Depositary Receipts
(GDRs), and International Depositary Receipts (IDRs), are traded globally
or outside the United States. Depositary receipts involve many of the same
risks of investing directly in foreign securities, including currency risks
and risks of foreign investing.

Derivative Contracts
Derivative contracts are financial instruments that require payments based upon
changes in the values of designated (or underlying) securities, currencies,
commodities, financial indices or other assets. Some derivative contracts (such
as futures, forwards and options) require payments relating to a future trade
involving the underlying asset. Other derivative contracts (such as swaps)
require payments relating to the income or returns from the underlying asset.
The other party to a derivative contract is referred to as a counterparty. Many
derivative contracts are traded on securities or commodities exchanges. In this
case, the exchange sets all the terms of the contract except for the price.
Investors make payments due under their contracts through the exchange. Most
exchanges require investors to maintain margin accounts through their brokers to
cover their potential obligations to the exchange. Parties to the contract make
(or collect) daily payments to the margin accounts to reflect losses (or gains)
in the value of their contracts. This protects investors against potential
defaults by the counterparty. Trading contracts on an exchange also allows
investors to close out their contracts by entering into offsetting contracts.
For example, a Fund could close out an open contract to buy an asset at a future
date by entering into an offsetting contract to sell the same asset on the same
date. If the offsetting sale price is more than the original purchase price, the
Fund realizes a gain; if it is less, the Fund realizes a loss. Exchanges may
limit the amount of open contracts permitted at any one time. Such limits may
prevent a Fund from closing out a position. If this happens, a Fund will be
required to keep the contract open (even if it is losing money on the contract),
and to make any payments required under the contract (even if it has to sell
portfolio securities at unfavorable prices to do so). Inability to close out a
contract could also harm a Fund by preventing it from disposing of or trading
any assets it has been using to secure its obligations under the contract. A
Fund may also trade derivative contracts over-the-counter (OTC) in transactions
negotiated directly between the Fund and the counterparty. OTC contracts do not
necessarily have standard terms, so they cannot be directly offset with other
OTC contracts. In addition, OTC contracts with more specialized terms may be
more difficult to price than exchange traded contracts. Depending upon how a
Fund uses derivative contracts and the relationships between the market value of
a derivative contract and the underlying asset, derivative contracts may
increase or decrease a Fund's exposure to market and currency risks, and may
also expose a Fund to liquidity and leverage risks. OTC contracts also expose a
Fund to credit risks in the event that a counterparty defaults on the contract.
A Fund may trade in the following types of derivative contracts.
Futures Contracts
Futures contracts provide for the future sale by one party and purchase by
another party of a specified amount of an underlying asset at a specified
price, date, and time. Entering into a contract to buy an underlying asset
is commonly referred to as buying a contract or holding a long position in
the asset. Entering into a contract to sell an underlying asset is commonly
referred to as selling a contract or holding a short position in the asset.
The Equity Funds may buy and sell stock index futures contracts, financial
futures and futures on portfolio securities. The International Equity Fund
may also enter into forward foreign currency exchange contracts. The Fixed
Income Fund may buy and sell financial futures contracts. Options Options
are rights to buy or sell an underlying asset for a specified price (the
exercise price) during, or at the end of, a specified period. A call option
gives the holder (buyer) the right to buy the underlying asset from the
seller (writer) of the option. A put option gives the holder the right to
sell the underlying asset to the writer of the option. The writer of the
option receives a payment, or premium, from the buyer, which the writer
keeps regardless of whether the buyer uses (or exercises) the option.

<PAGE>

The Fixed Income Fund may:
Buy call options on portfolio securities and on financial futures contracts
in anticipation of an increase in the value of the underlying asset; Buy
put options on portfolio securities and on financial futures contracts in
anticipation of a decrease in the value of the underlying asset; and Buy or
write options to close out existing options positions.

The Equity Funds may:
Buy call options on portfolio securities and on stock index and financial
futures contracts in anticipation of an increase in the value of the
underlying asset; Buy put options on portfolio securities and on stock
index and financial futures contracts in anticipation of a decrease in the
value of the underlying asset; and Buy or write options to close out
existing options positions. The Equity Fund and Fixed Income Fund may also
write call options on portfolio securities to generate income from
premiums, and in anticipation of a decrease or only limited increase in the
value of the underlying asset. If a call written by the Fund is exercised,
the Fund foregoes any possible profit from an increase in the market price
of the underlying asset over the exercise price plus the premium received.
When a Fund writes options on futures contracts, it will be subject to
margin requirements similar to those applied to futures contracts.
Special Transactions
Repurchase Agreements
Repurchase agreements are transactions in which a Fund buys a security from
a dealer or bank and agree to sell the security back at a mutually agreed
upon time and price. The repurchase price exceeds the sale price,
reflecting a Fund's return on the transaction. This return is unrelated to
the interest rate on the underlying security. The Funds will enter into
repurchase agreements only with banks and other recognized financial
institutions, such as securities dealers, deemed creditworthy by the
Adviser. The Funds' custodian or subcustodian will take possession of the
securities subject to repurchase agreements. The Adviser or subcustodian
will monitor the value of the underlying security each day to ensure that
the value of the security always equals or exceeds the repurchase price.
Repurchase agreements are subject to counterparty risks.
Reverse Repurchase Agreements
Reverse repurchase agreements are repurchase agreements in which a Fund is
the seller (rather than the buyer) of the securities, and agrees to
repurchase them at an agreed upon time and price. A reverse repurchase
agreement may be viewed as a type of borrowing by a Fund. Reverse
repurchase agreements are subject to counterparty risks. Delayed Delivery
Transactions Delayed delivery transactions, including when issued
transactions, are arrangements in which a Fund buys securities for a set
price, with payment and delivery of the securities scheduled for a future
time. During the period between purchase and settlement, no payment is made
by the Fund to the issuer and no interest accrues to a Fund. A Fund records
the transaction when it agrees to buy the securities and reflects their
value in determining the price of its shares. Settlement dates may be a
month or more after entering into these transactions so that the market
values of the securities bought may vary from the purchase prices.
Therefore, delayed delivery transactions create market risks for the Fund.
Delayed delivery transactions also involve credit risks in the event of a
counterparty default. These transactions create leverage risks.

<PAGE>

Securities Lending
A Fund may lend portfolio securities to borrowers that the Adviser deems
creditworthy. In return, the Fund receives cash or liquid securities from
the borrower as collateral. The borrower must furnish additional collateral
if the market value of the loaned securities increases. Also, the borrower
must pay the Fund the equivalent of any dividends or interest received on
the loaned securities. The Fund will reinvest cash collateral in securities
that qualify as an acceptable investment for the Fund. However, the Fund
must pay interest to the borrower for the use of cash collateral. Loans are
subject to termination at the option of the Fund or the borrower. The Fund
will not have the right to vote on securities while they are on loan, but
they will terminate a loan in anticipation of any important vote. The Fund
may pay administrative and custodial fees in connection with a loan and may
pay a negotiated portion of the interest earned on the cash collateral to a
securities lending agent or broker. Securities lending activities are
subject to market risks and counterparty risks. These transactions create
leverage risks. Asset Coverage In order to secure their obligations in
connection with derivatives contracts or special transactions, a Fund will
either own the underlying assets, enter into an offsetting transaction or
set aside readily marketable securities with a value that equals or exceeds
the Fund's obligations. Unless the Fund has other readily marketable assets
to set aside, it cannot trade assets used to secure such obligations
without entering into an offsetting derivative contract or terminating a
special transaction. This may cause the Fund to miss favorable trading
opportunities or to realize losses on derivative contracts or special
transactions.
Investing in Securities of Other Investment Companies
A Fund may invest its assets in securities of other investment companies,
including the securities of affiliated money market funds, as an efficient means
of carrying out its investment policies and managing its uninvested cash.

Investment Ratings
A nationally recognized statistical rating organization's ("NRSRO") rating
categories are determined without regard for sub-categories and gradations. For
example, with respect to the Prime Money Market Fund, securities rated A-1 or
A-1+ by Standard & Poor's Ratings Group ("S&P"), Prime-1 by Moody's Investors
Service, Inc. ("Moody's"), or F-1 (+ or -) by Fitch Investors Service, Inc.
("Fitch"), are all considered rated in the highest short-term rating category,
and with respect to the Michigan Municipal Cash Fund, securities rated SP-1+,
SP-1 or SP-2 by S&P, MIG-1 or MIG-by Moody's, or F-1+, F-1 and F-2 by Fitch, are
all considered rated in one of the two highest short-term rating categories.
Investment Ratings for Investment Grade Securities The Adviser will determine
whether a security is investment grade based upon the credit ratings given by
one or more nationally recognized rating services. For example, Standard and
Poor's, a rating service, assigns ratings to investment grade securities (AAA,
AA, A, and BBB) based on their assessment of the likelihood of the issuer's
inability to pay interest or principal (default) when due on each security.
Lower credit ratings correspond to higher credit risk. If a security has not
received a rating, the Fund must rely entirely upon the Adviser's credit
assessment that the security is comparable to investment grade.

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INVESTMENT RISKS

There are many factors which may affect an investment in the Funds. The Funds'
risks are described below. Stock Market Risks o The value of equity securities
in a Fund's portfolio will rise and fall. These fluctuations could be a
sustained trend or a drastic movement. A Fund's portfolio will reflect
changes in prices of individual portfolio stocks or general changes in
stock valuations. Consequently, the Fund's share price may decline.
o The Adviser attempts to manage market risk by limiting the amount a Fund
invests in each company's equity securities. However, diversification will
not protect a Fund against widespread or prolonged declines in the stock
market.
Liquidity Risks
o Trading opportunities are more limited for equity securities that are not
widely held and for fixed income securities that have not received any
credit ratings, have received ratings below investment grade or are not
widely held. This may make it more difficult to sell or buy a security at a
favorable price or time. Consequently, the Fund may have to accept a lower
price to sell a security, sell other securities to raise cash or give up an
investment opportunity, any of which could have a negative effect on the
Fund's performance. Infrequent trading of securities may also lead to an
increase in their price volatility.
o Liquidity risk also refers to the possibility that a Fund may not be able
to sell a security or close out a derivative contract when it wants to. If
this happens, a Fund will be required to continue to hold the security or
keep the position open, and the Fund could incur losses.

o OTC derivative contracts generally carry greater liquidity risk than
exchange-traded contracts. Currency Risks o Exchange rates for currencies
fluctuate daily. The combination of currency risk and market risks tends to
make securities traded in foreign markets more volatile than securities
traded exclusively in the U.S.

o The Adviser attempts to manage currency risk by limiting the amount the
Fund invests in securities denominated in a particular currency. However,
diversification will not protect the Fund against a general increase in the
value of the U.S. dollar relative to other currencies.

Risks Related to Investing for Value

o Due to their relatively low valuations, value stocks are typically less
volatile than growth stocks. For instance, the price of a value stock may
experience a smaller increase on a forecast of higher earnings, a positive
fundamental development, or positive market development. Further, value
stocks tend to have higher dividends than growth stocks. This means they
depend less on price changes for returns and may lag behind growth stocks
in an up market.
Risks Related to Investing for Growth
o Due to their relatively high valuations, growth stocks are typically more
volatile than value stocks. For instance, the price of a growth stock may
experience a larger decline on a forecast of lower earnings, a negative
fundamental development, or an adverse market development. Further, growth
stocks may not pay dividends or may pay lower dividends than value stocks.
This means they depend more on price changes for returns and may be more
adversely affected in a down market compared to value stocks that pay
higher dividends.
Risks Related to Company Size
o Generally, the smaller the market capitalization of a company, the fewer
the number of shares traded daily, the less liquid its stock and the more
volatile its price. Market capitalization is determined by multiplying the
number of its outstanding shares by the current market price per share.
o Companies with smaller market capitalizations also tend to have unproven
track records, a limited product or service base and limited access to
capital. These factors also increase risks and make these companies more
likely to fail than companies with larger market capitalizations.
o Risks of Foreign Investing
o Foreign securities pose additional risks because foreign economic or
political conditions may be less favorable than those of the United States.
Securities in foreign markets may also be subject to taxation policies that
reduce returns for U.S. investors.
o Foreign companies may not provide information (including financial
statements) as frequently or to as great an extent as companies in the
United States. Foreign companies may also receive less coverage than United
States companies by market analysts and the financial press. In addition,
foreign countries may lack uniform accounting, auditing and financial
reporting standards or regulatory requirements comparable to those
applicable to U.S. companies. These factors may prevent a Fund and its
Adviser from obtaining information concerning foreign companies that is as
frequent, extensive and reliable as the information available concerning
companies in the United States.
o Foreign countries may have restrictions on foreign ownership of securities
or may impose exchange controls, capital flow restrictions or repatriation
restrictions which could adversely affect the liquidity of a Fund's
investments.
Credit Risks
o Credit risk is the possibility that an issuer will default on a security by
failing to pay interest or principal when due. If an issuer defaults, a
Fund will lose money.
o Many fixed income securities receive credit ratings from services such as
Standard & Poor's and Moody's Investor Services, Inc. These services assign
ratings to securities by assessing the likelihood of issuer default. Lower
credit ratings correspond to higher credit risk. If a security has not
received a rating, a Fund must rely entirely upon the Adviser's credit
assessment.
o Fixed income securities generally compensate for greater credit risk by
paying interest at a higher rate. The difference between the yield of a
security and the yield of a U.S. Treasury security with a comparable
maturity (the spread) measures the additional interest paid for risk.
Spreads may increase generally in response to adverse economic or market
conditions. A security's spread may also increase if the security's rating
is lowered, or the security is perceived to have an increased credit risk.
An increase in the spread will cause the price of the security to decline.
o Credit risk includes the possibility that a party to a transaction
involving a Fund will fail to meet its obligations. This could cause a Fund
to lose the benefit of the transaction or prevent a Fund from selling or
buying other securities to implement its investment strategy.
Interest Rate Risks
o Prices of fixed income securities rise and fall in response to changes in
the interest rate paid by similar securities. Generally, when interest
rates rise, prices of fixed income securities fall. However, market
factors, such as the demand for particular fixed income securities, may
cause the price of certain fixed income securities to fall while the prices
of other securities rise or remain unchanged.
o Interest rate changes have a greater effect on the price of fixed income
securities with longer durations. Duration measures the price sensitivity
of a fixed income security to changes in interest rates.
Tax Risks
o In order to be tax-exempt, municipal securities must meet certain legal
requirements. Failure to meet such requirements may cause the interest
received and distributed by the Fund to shareholders to be taxable.
o Changes or proposed changes in federal tax laws may cause the prices of
municipal securities to fall. Call Risks o Call risk is the possibility
that an issuer may redeem a fixed income security before maturity (a call)
at a price below its current market price. An increase in the likelihood of
a call may reduce the security's price.
o If a fixed income security is called, the Fund may have to reinvest the
proceeds in other fixed income securities with lower interest rates, higher
credit risks, or other less favorable characteristics.
Prepayment Risks

o Generally, homeowners have the option to prepay their mortgages at any time
without penalty. Homeowners frequently refinance high interest rate
mortgages when mortgage rates fall. This results in the prepayment of
mortgage backed securities with higher interest rates. Conversely,
prepayments due to refinancings decrease when mortgage rates increase. This
extends the life of mortgage backed securities with lower interest rates.
Other economic factors can also lead to increases or decreases in
prepayments. Increases in prepayments of high interest rate mortgage backed
securities, or decreases in prepayments of lower interest rate mortgage
backed securities, may reduce their yield and price. These factors,
particularly the relationship between interest rates and mortgage
prepayments makes the price of mortgage backed securities more volatile
than many other types of fixed income securities with comparable credit
risks.

o Mortgage backed securities generally compensate for greater prepayment risk
by paying a higher yield. The difference between the yield of a mortgage
backed security and the yield of a U.S. Treasury security with a comparable
maturity (the spread) measures the additional interest paid for risk.
Spreads may increase generally in response to adverse economic or market
conditions. A security's spread may also increase if the security is
perceived to have an increased prepayment risk or perceived to have less
market demand. An increase in the spread will cause the price of the
security to decline.

o A Fund may have to reinvest the proceeds of mortgage prepayments in other
fixed income securities with lower interest rates, higher prepayment risks,
or other less favorable characteristics. Leverage Risks

o Leverage risk is created when an investment exposes the Funds to a level of
risk that exceeds the amount invested. Changes in the value of such an
investment magnify the Funds' risk of loss and potential for gain.
o Investments can have these same results if their returns are based on a
multiple of a specified index, security, or other benchmark.
o Euro Risks
o A Fund may make significant investments in securities denominated in the
Euro, the new single currency of the European Monetary Union (EMU).
Therefore, the exchange rate between the Euro and the U.S. dollar will have
a significant impact on the value of the Fund's investments.
o With the advent of the Euro, the participating countries in the EMU can no
longer follow independent monetary policies. This may limit these
countries' ability to respond to economic downturns or political upheavals,
and consequently reduce the value of their foreign government securities.
Investment Limitations

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

Issuing Senior Securities and Borrowing Money
The Money Market Funds and Government Securities Fund will not issue senior
securities except that they may borrow money in amounts up to one-third of
the value of their respective total assets, including the amounts borrowed.
The Funds will not borrow money for investment leverage, but rather as a
temporary, extraordinary, or emergency measure to facilitate management of
the portfolio by enabling a Fund to meet redemption requests when the
liquidation of portfolio securities is deemed to be inconvenient or
disadvantageous. The Funds will not purchase any securities while
borrowings in excess of 5% of their respective total assets are
outstanding. The Equity Funds, Fixed Income Fund and Michigan Municipal
Bond Fund will not issue senior securities except that they may borrow
money and engage in reverse repurchase agreements in amounts up to
one-third of the

<PAGE>

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

Concentration of Investments
The Equity Plus Fund and the Fixed Income Fund will not invest 25% or more
of the value of their respective total assets in any one industry, except
that the Funds may invest 25% or more of the value of their respective
total assets in securities issued or guaranteed by the U.S. government, its
agencies or instrumentalities, and repurchase agreements collateralized by
such securities. The International Equity Fund and Small Cap Fund will not
invest 25% or more of the value of their respective total assets in any one
industry, except that the Funds may invest 25% or more of the value of
their respective total assets in U.S. Government Securities, and repurchase
agreements collateralized by such securities. Government Securities Fund
will not concentrate in any one industry. Michigan Municipal Bond Fund will
not purchase securities if, as a result of such purchase, 25% or more of
the value of its total assets would be invested in any one industry or in
industrial development bonds or other securities, the interest upon which
is paid from revenues of similar types of projects. However, the Fund may
invest as temporary investments 25% or more of the value of its assets in
cash or cash items, securities issued or guaranteed by the U.S. government,
its agencies, or instrumentalities, or instruments secured by these money
market instruments, i.e., repurchase agreements. Prime Money Market Fund
will not invest 25% or more of the value of its total assets in any one
industry. However, investing in bank instruments (such as time and demand
deposits and certificates of deposit), U.S. government obligations or
instruments secured by these money market instruments, such as repurchase
agreements, shall not be considered investments in any one industry.

Underwriting
The Equity Funds, Government Securities Fund, Michigan Municipal Bond Fund,
Prime Money Market Fund and Michigan Municipal Cash Fund will not
underwrite any issue of securities except as each Fund may be deemed to be
an underwriter under the Securities Act of 1933 in connection with the sale
of securities in accordance with its investment objective, policies, and
limitations. Fixed Income Fund will not underwrite any issue of securities
except as it may be deemed to be an underwriter under the Securities Act of
1933 in connection with the sale of restricted securities in accordance
with its investment objective, policies, and limitations.

Lending Cash or Securities
The Equity Funds and the Fixed Income Fund will not lend any of their
assets except portfolio securities up to one-third of the value of their
respective total assets. This shall not prevent the Funds from purchasing
U.S. government obligations, money market instruments, bonds, debentures,
notes, certificates of indebtedness, or other debt securities, and with
respect to Fixed Income Fund purchasing variable rate demand notes,
entering into repurchase agreements, or engaging in other transactions
where permitted by the Funds' investment objective, policies and
limitations. Government Securities Fund will not lend any of its assets.
(This shall not prevent the purchase or holding of U.S. Treasury
securities, repurchase agreements, or other transactions which are
permitted by the Fund's investment objective and policies.) Michigan
Municipal Bond Fund and Michigan Municipal Cash Fund will not lend any of
their assets except that they may acquire publicly or non-publicly issued
municipal bonds or temporary investments or enter into repurchase
agreements in accordance with their respective investment objective,
policies, and limitations. Prime Money Market Fund will not lend any of its
assets, except that it may purchase or hold money market instruments,
including repurchase agreements and variable amount demand master notes, in
accordance with its investment objective, policies, and limitations. U.S.
Treasury Money Market Fund will not lend any of its assets, except that it
may purchase or hold U.S. Treasury obligations, including repurchase
agreements, in accordance with its investment objective, policies, and
limitations.

Pledging Assets
The Equity Funds, Fixed Income Fund and Michigan Municipal Bond Fund will
not mortgage, pledge, or hypothecate any assets except to secure permitted
borrowings. With respect to the Equity Funds and Fixed Income Fund, for
purposes of this limitation, the following are not deemed to be pledges:
margin deposits for the purchase and sale of futures contract and related
options, and segregation or collateral arrangements made in connection with
options activities. With respect to Fixed Income Fund, the purchase of
securities on a when-issued basis is not deemed to be a pledge of assets.
The Money Market Funds will not mortgage, pledge, or hypothecate any assets
except to secure permitted borrowings. In these cases, a Fund may pledge
assets having a market value not exceeding the lesser of the dollar amounts
borrowed or 10% of the value of total assets at the time of the pledge.

Investing in Real Estate
The Equity Plus Fund and Fixed Income Fund will not purchase or sell real
estate, including limited partnership interests, although they may invest
in the securities of issuers whose business involves the purchase or sale
of real estate or in securities which are secured by real estate or
interests in real estate. Small Cap Fund, International Equity Fund, Prime
Money Market Fund and Michigan Municipal Cash Fund will not purchase or
sell real estate, although they may invest in the securities of issuers
whose business involves the purchase or sale of real estate or in
securities which are secured by real estate or interests in real estate.
Michigan Municipal Bond Fund will not purchase or sell real estate,
including limited partnership interests, although it may invest in
municipal bonds secured by real estate or interests in real estate.

Investing in Commodities, Commodity Contracts, or Commodity Futures Contracts
The Equity Funds and Fixed Income Fund will not purchase or sell
commodities, commodity contracts, or commodity futures contracts except to
the extent that the Funds may engage in transactions involving futures
contracts and related options. Michigan Municipal Bond Fund, Prime Money
Market Fund and Michigan Municipal Cash Fund will not buy or sell
commodities, commodity contracts, or commodities futures contracts.

Diversification of Investments
With respect to 75% of the value of its assets, the Equity Funds, Fixed
Income Fund and Prime Money Market Fund will not purchase securities of any
one issuer (other than securities issued or guaranteed by the government of
the United States or its agencies or instrumentalities) if, as a result,
more than 5% of the value of its total assets would be invested in the
securities of that issuer. Also, the Fixed Income Fund and Equity Plus Fund
will not acquire more than 10% of the outstanding voting securities of any
one issuer. With respect to securities comprising 75% of the value of their
total assets, the Small Cap Fund and International Equity Fund will not
purchase securities of any one issuer (other than cash; cash items; U.S.
Government Securities and repurchase agreements collateralized by such U.S.
Government Securities; and securities of other investment companies) if, as
a result, more than 5% of the value of their respective total assets would
be invested in the securities of that issuer, or they would own more than
10% of the voting securities of that issuer. Michigan Municipal Cash Fund
will not invest more than 10% of its total assets in the securities of any
one issuer (except cash and cash items, repurchase agreements
collateralized by U.S. government securities and U.S. government
obligations) with respect to securities comprising 75% of its assets. Under
this limitation each governmental subdivision, including states and the
District of Columbia, territories, possessions of the United States, or
their political subdivisions, agencies, authorities, instrumentalities, or
similar entities, will be considered a separate issuer if its assets and
revenues are separate from those of the governmental body creating it and
the security is backed only by its own assets and revenues. Industrial
development bonds, backed only by the assets and revenues of a
nongovernmental user, are considered to be issued solely by that user. If
in the case of an industrial development bond or governmental-issued
security, a governmental or other entity guarantees the security, such
guarantee would be considered a separate security issued by the guarantor
as well as the other issuer, subject to limited exclusions allowed by the
Investment Company Act of 1940.

Investing in Restricted Securities
Prime Money Market Fund will not invest more than 10% of its net assets in
securities subject to restrictions on resale under the federal securities
laws, except for Section 4(2) commercial paper. Michigan Municipal Cash
Fund will not invest more than 10% of the value of its net assets in
securities subject to restrictions on resale under the Securities Act of
1933.
The above Investment Limitations cannot be changed unless authorized by the
"vote of a majority of its outstanding voting securities," as defined by the
Investment Company Act. The following limitations, however, may be changed by
the Board without shareholder approval. Shareholders will be notified before any
material change in these limitations becomes effective.

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

Investing in Restricted and Illiquid Securities
Government Securities Fund will not invest more than 15% of the value of
its net assets in securities which are not readily marketable or which are
otherwise considered illiquid, including repurchase agreements providing
for settlement more than seven days after notice. Small Cap Fund and
International Equity Fund will not invest more than 15% of the value of
their respective net assets in illiquid securities including certain
restricted securities not determined to be liquid under criteria
established by the Trustees, including non-negotiable time deposits,
repurchase agreements providing for settlement in more than seven days
after notice, and over-the-counter options. Equity Plus Fund and Fixed
Income Fund will not invest more than 15% of the value of its net assets in
illiquid obligations, including repurchase agreements providing for
settlement in more than seven days after notice, over-the-counter options,
certain restricted securities not determined by the Trustees to be liquid,
and non-negotiable fixed time deposits with maturities over seven days.
Michigan Municipal Bond Fund will not invest more than 15% of the value of
its net assets in illiquid obligations, including repurchase agreements
providing for settlement in more than seven days after notice, and certain
restricted securities not determined by the Trustees to be liquid. The
Money Market Funds will not invest more than 10% of the value of their
respective net assets in illiquid securities, including repurchase
agreements providing for settlement in more than seven days after notice,
certain restricted securities not determined by the Trustees to be liquid,
and non-negotiable fixed time deposits with maturities over seven days.

Investing in Securities of Other Investment Companies
The Equity Funds, Fixed Income Fund, Michigan Municipal Bond Fund, Prime
Money Market Fund and Michigan Municipal Cash Fund can each acquire up to 3
% of the total outstanding stock of other investment companies, and may
invest in the securities of affiliated money market funds as an efficient
means of managing the Funds' uninvested cash. The Funds will not be subject
to any other limitations with regard to the acquisition of securities of
other investment companies so long as the public offering price of each
Fund's shares does not include a sales charge exceeding 1 1/2 %. With
respect to the Equity Funds, Fixed Income Fund, Michigan Municipal Bond
Fund, and Money Market Funds, these limitations are not applicable if the
securities are acquired in a merger, consolidation, reorganization, or
acquisition of assets. Nor are they applicable, with respect to Fixed
Income Fund, to securities of investment companies that have been exempted
from registration under the Investment Company Act of 1940. It should be
noted with respect to the Equity Funds, Prime Money Market Fund and
Michigan Municipal Cash Fund, that investment companies incur certain
expenses, such as investment advisory, custodian and transfer agent fees,
and therefore, any investment by a Fund in shares of another investment
company would be subject to such duplicate expenses.

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

Writing Covered Call Options
The Equity Funds and Fixed Income Fund will not write call options on
securities unless the securities are held in the Funds' portfolio or unless
a Fund is entitled to them in deliverable form without further payment or
after segregating cash in the amount of any further payment.

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

Purchasing Securities to Exercise Control
The Equity Funds and Fixed Income Fund will not purchase securities of a
company for purpose of exercising control or management. Except with
respect to borrowing money, if a percentage limitation is adhered to at the
time of investment, a later increase or decrease in percentage resulting
from any change in value or net assets will not result in a violation of
such restriction. For purposes of the Funds' policies and limitations, each
Fund considers certificates of deposit and demand and time deposits issued
by a U.S. branch of a domestic bank or savings association having capital,
surplus, and undivided profits in excess of $100,000,000 at the time of
investment to be "cash items."
Determining Market Value of Securities
With respect to the Prime Money Market Fund, U.S. Treasury Money Market Fund,
and Michigan Municipal Cash Fund, the Trustees have decided that the best method
for determining the value of portfolio instruments is amortized cost. Under this
method, portfolio instruments are valued at the acquisition cost as adjusted for
amortization of premium or accumulation of discount rather than at current
market value. Accordingly, neither the amount of daily income nor the net asset
value is affected by any unrealized appreciation or depreciation of the
portfolio. In periods of declining interest rates, the indicated daily yield on
shares of a Fund computed by dividing the annualized daily income on a Fund's
portfolio by the net asset value computed as above may tend to be higher than a
similar computation made by using a method of valuation based upon market prices
and estimates. In periods of rising interest rates, the opposite may be true.

The Funds' use of the amortized cost method of valuing portfolio instruments
depends on its compliance with certain conditions in Rule 2a-7 (the "Rule")
promulgated by the Securities and Exchange Commission under the Investment
Company Act of 1940. Under the Rule, the Trustees must establish procedures
reasonably designed to stabilize the net asset value per share, as computed for
purposes of distribution and redemption, at $1.00 per share, taking into account
current market conditions and a Fund's investment objective. The procedures
include monitoring the relationship between the amortized cost value per share
and the net asset value per share based upon available indications of market
value. The Trustees will decide what, if any, steps should be taken if there is
a difference of more than 0.5 of 1% between the two values. The Trustees will
take any steps they consider appropriate (such as redemption in kind or
shortening the average portfolio maturity) to minimize any material dilution or
other unfair results arising from differences between the two methods of
determining net asset value.

With respect to the Equity Plus Fund, Small Cap Fund, International Equity Fund,
U.S. Government Securities Fund, Fixed Income Fund and Michigan Municipal Bond
Fund, the market values of the Funds' portfolio securities are determined as
follows:

for equity securities, according to the last sale price in the market
in which they are primarily traded (either a national securities exchange or
the over-the-counter market), if available;

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

for bonds and other fixed income securities, at the last sale price on
a national securities exchange, if available, otherwise, as determined by an
independent pricing service;

o futures contracts and options are valued at market values established by the
exchanges on which they are traded at the close of trading on such exchanges.
Options traded in the over-the-counter market are valued according to the
mean between the last bid and the last asked price for the option as provided
by an investment dealer or other financial institution that deals in the
option. The Board may determine in good faith that another method of valuing
such investments is necessary to appraise their fair market value;

for short-term obligations, according to the mean between bid and asked
prices as furnished by an independent pricing service, except that short-term
obligations with remaining maturities of less than 60 days at the time of
purchase may be valued at amortized cost or at fair market value as
determined in good faith by the Board; and

for all other securities at fair value as determined in good faith by the
Board.

Prices provided by independent pricing services may be determined without
relying exclusively on quoted prices and may consider institutional trading in
similar groups of securities, yield, quality, stability, risk, coupon rate,
maturity, type of issue, trading characteristics, and other market data or
factors. From time to time, when prices cannot be obtained from an independent
pricing service, securities may be valued based on quotes from broker-dealers or
other financial institutions that trade the securities.

Trading in Foreign Securities
Trading in foreign securities may be completed at times which vary from the
closing of the New York Stock Exchange (NYSE). In computing its NAV, the Funds
value foreign securities at the latest closing price on the exchange on which
they are traded immediately prior to the closing of the NYSE. Certain foreign
currency exchange rates may also be determined at the latest rate prior to the
closing of the NYSE. Foreign securities quoted in foreign currencies are
translated into U.S. dollars at current rates. Occasionally, events that affect
these values and exchange rates may occur between the times at which they are
determined and the closing of the NYSE. If such events materially affect the
value of portfolio securities, these securities may be valued at their fair
value as determined in good faith by the Funds' Board, although the actual
calculation may be done by others.

<PAGE>

WHAT DO SHARES COST?
You can purchase, redeem or exchange Fund shares any day the New York Stock
Exchange (NYSE) is open. The Equity Funds' and Income Funds' net asset value
(NAV) per Shares fluctuates and is based on the market value of all securities
and other assets of the Funds. The Money Market Funds attempt to stabilize the
net asset value (NAV) of their Shares at $1.00 by valuing the portfolio
securities using the amortized cost method. The Funds cannot guarantee that
their NAV will always remain at $1.00 per Share. The Prime Money Market Funds'
NAV for each class of Shares may differ due to the variance in daily net income
realized by each class. Such variance will reflect only accrued net income to
which the shareholders of a particular class are entitled.

HOW ARE THE FUNDS SOLD?

Under the Distributor's Contract with the Funds, the Distributor (Federated
Securities Corp.) offers Shares on a continuous, best-efforts basis.

RULE 12b-1 PLAN (U.S. Treasury Money Market Fund and Michigan Municipal Cash
Fund)
As a compensation-type plan, the Rule 12b-1 Plan is designed to pay the
Distributor (who may then pay investment professionals such as banks,
broker/dealers, trust departments of banks, and registered investment advisers)
for marketing activities (such as advertising, printing and distributing
prospectuses, and providing incentives to investment professionals) to promote
sales of Shares so that overall Fund assets are maintained or increased. This
helps the Funds achieve economies of scale, reduce per share expenses, and
provide cash for orderly portfolio management and Share redemptions. In
addition, the Funds' service providers that receive asset-based fees also
benefit from stable or increasing Fund assets. The Funds may compensate the
Distributor more or less than its actual marketing expenses. In no event will
the Funds pay for any expenses of the Distributor that exceed the maximum Rule
12b-1 Plan fee.

The maximum Rule 12b-1 Plan fee that can be paid in any one year may not be
sufficient to cover the marketing-related expenses the Distributor has incurred.
Therefore, it may take the Distributor a number of years to recoup these
expenses.

SHAREHOLDER SERVICES (Prime Money Market Fund - Class A Shares)
With respect to the Prime Money Market Fund Class A Shares, the Fund may pay
Federated Shareholder Services Company, a subsidiary of Federated Investors,
Inc. (Federated), for providing shareholder services and maintaining shareholder
accounts. Federated Shareholder Services Company may select others to perform
these services for their customers and may pay them fees.

EXCHANGING SECURITIES FOR FUND SHARES
With respect to the Equity Funds and Income Funds, you may contact the
Distributor to request a purchase of Shares in exchange for securities you own.
The Funds reserve the right to determine whether to accept your securities and
the minimum market value to accept. The Funds will value your securities in the
same manner as they value their assets. This exchange is treated as a sale of
your securities for federal tax purposes.

SUBACCOUNTING SERVICES
Certain investment professionals may wish to use the transfer agent's
subaccounting system to minimize their internal recordkeeping requirements. The
transfer agent may charge a fee based on the level of subaccounting services
rendered. Investment professionals holding Shares in a fiduciary, agency,
custodial, or similar capacity may charge or pass through subaccounting fees as
part of or in addition to normal trust or agency account fees. They may also
charge fees for other services that may be related to the ownership of Shares.
This information should, therefore, be read together with any agreement between
the customer and the investment professional about the services provided, the
fees charged for those services, and any restrictions and limitations imposed.

<PAGE>

REDEMPTION IN KIND
Although the Funds intend to pay Share redemptions in cash, they reserve the
right, as described below, to pay the redemption price in whole or in part by a
distribution of the Funds' portfolio securities.

Because the Funds have elected to be governed by Rule 18f-1 under the Investment
Company Act of 1940, the Funds are obligated to pay Share redemptions to any one
shareholder in cash only up to the lesser of $250,000 or 1% of the net assets
represented by such Share class during any 90-day period.

Any Share redemption payment greater than this amount will also be in cash
unless the Funds' Board determines that payment should be in kind. In such a
case, the Funds will pay all or a portion of the remainder of the redemption in
portfolio securities, valued in the same way as the Funds determine their NAV.
The portfolio securities will be selected in a manner that the Funds' Board
deems fair and equitable and, to the extent available, such securities will be
readily marketable.

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

MASSACHUSETTS PARTNERSHIP LAW
Under certain circumstances, shareholders may be held personally liable as
partners under Massachusetts law for obligations of the Trust. To protect its
shareholders, the Trust has filed legal documents with Massachusetts that
expressly disclaim the liability of its shareholders for acts or obligations of
the Trust.

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

ACCOUNT AND SHARE INFORMATION

VOTING RIGHTS
Each share of each Fund gives the shareholder one vote in Trustee elections and
other matters submitted to shareholders for vote. All Shares of the Trust have
equal voting rights, except that in matters affecting only a particular Fund
class are entitled to vote.

Trustees may be removed by the Board or by shareholders at a special meeting. A
special meeting of shareholders will be called by the Board upon the written
request of shareholders who own at least 10% of the Trust's outstanding shares
of all series entitled to vote.

As of August 2, 1999, the following shareholders owned of record,
beneficially, or both, 5% or more of outstanding Shares of the following Funds:

Prime Money Market Fund
Pierson & Co., Farmington Hills, MI, owned approximately 147,952,476 Class A
Shares (29.88%).

Pierson & Co., Farmington Hills, MI, owned approximately 129,791,835 Class B
Shares (58.85%). Oak Mall Shopping Center, Troy, MI, owned approximately
32,824,082 Class B Shares (14.88%).

U.S. Treasury Money Market Fund
Pierson & Co., Farmington Hills, MI, owned approximately 72,766,115 shares
(34.77%).

Michigan Municipal Cash Fund
Pierson & Co., Farmington Hills, MI, owned approximately 14,917,091 shares
(16.06%); Christman Company, Lansing, MI, owned approximately 9,510,693 shares
(10.24%); Art Van Furniture Tech Plaza, Warren, MI, owned approximately
8,524,970 shares (9.18%); and Clark Construction Company Inc., Lansing, MI,
owned approximately 5,411,324 shares (5.83%).

U.S. Government Securities Fund
Pierson & Co., Farmington Hills, MI, owned approximately 5,020,112 shares
(93.45%).

Michigan Municipal Bond Fund
Pierson & Co., Farmington Hills, MI, owned approximately 1,822,590 shares
(97.32%).

Fixed Income Fund
Pierson & Co., Farmington Hills, MI, owned approximately 8,276,659 shares
(91.36%).

Equity Plus Fund
Pierson & Co., Farmington Hills, MI, owned approximately 11,071,635 shares
(81.77%); and Fidelity Investment Institutional Operations Co. Inc., Covington,
KY, as agent for certain employee benefit plans, owned approximately 2,052,544
shares (15.16%).

Small Cap Fund
Pierson & Co., Farmington Hills, MI, owned approximately 3,156,371 shares
(97.89%).

International Equity Fund
Pierson & Co., Farmington Hills, MI, owned approximately 1,282,420 shares
(99.90%).

Shareholders owning 25% or more of outstanding Shares may be in control and be
able to affect the outcome of certain matters presented for a vote of
shareholders.

TAX INFORMATION

FEDERAL INCOME TAX
The Funds intend to meet requirements of Subchapter M of the Internal Revenue
Code applicable to regulated investment companies. If these requirements are not
met, they will not receive special tax treatment and will pay federal income
tax.

Each Fund will be treated as a single, separate entity for federal income tax
purposes so that income earned and capital gains and losses realized by the
Trust's other portfolios will be separate from those realized by a Fund.

FOREIGN INVESTMENTS
If the Funds purchase foreign securities, their investment income may be subject
to foreign withholding or other taxes that could reduce the return on these
securities. Tax treaties between the United States and foreign countries,
however, may reduce or eliminate the amount of foreign taxes to which a Fund
would be subject. The effective rate of foreign tax cannot be predicted since
the amount of Fund assets to be invested within various countries is uncertain.
However, the Funds intend to operate so as to qualify for treaty-reduced tax
rates when applicable.

Distributions from a Fund may be based on estimates of book income for the year.
Book income generally consists solely of the coupon income generated by the
portfolio, whereas tax-basis income includes gains or losses attributable to
currency fluctuation. Due to differences in the book and tax treatment of
fixed-income securities denominated in foreign currencies, it is difficult to
project currency effects on an interim basis. Therefore, to the extent that
currency fluctuations cannot be anticipated, a portion of distributions to
shareholders could later be designated as a return of capital, rather than
income, for income tax purposes, which may be of particular concern to simple
trusts.

If a Fund invests in the stock of certain foreign corporations, they may
constitute Passive Foreign Investment Companies (PFIC), and the Fund may be
subject to Federal income taxes upon disposition of PFIC investments.

If more than 50% of the value of a Fund's assets at the end of the tax year is
represented by stock or securities of foreign corporations, the Fund intends to
qualify for certain Code stipulations that would allow shareholders to claim a
foreign tax credit or deduction on their U.S. income tax returns. The Code may
limit a shareholder's ability to claim a foreign tax credit. Shareholders who
elect to deduct their portion of a Fund's foreign taxes rather than take the
foreign tax credit must itemize deductions on their income tax returns.

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

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

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

Other State and Local Taxes. Income from the Michigan Municipal Bond Fund and
Michigan Municipal Cash Fund is not necessarily free from state income taxes in
states other than Michigan or from personal property taxes. Shareholders are
urged to consult their own tax advisers regarding the status of their accounts
under state and local tax laws.

WHO MANAGES AND PROVIDES SERVICES TO THE FUNDS?

BOARD OF TRUSTEES
The Board is responsible for managing the Trust's business affairs and for
exercising all the Trust's powers except those reserved for the shareholders.
Information about each Board member is provided below and includes each
person's: name, address, birth date, present position(s) held with the Trust,
principal occupations for the past five years and positions held prior to the
past five years, total compensation received as a Trustee from the Trust for its
most recent fiscal year. The Trust is comprised of nine funds.

As of August 2, 1999, the Funds' Board and Officers as a group owned less than
1% of the Funds' outstanding Shares.

An asterisk (*) denotes a Trustee who is deemed to be an interested person as
defined in the Investment Company Act of 1940. A pound sign (#) denotes a Member
of the Board's Executive Committee, which handles the Board's responsibilities
between its meetings.

<PAGE>

Name Aggregate
Birth Date Compensation
Address From Trust
Position With Trust Principal Occupations
for Past Five Years
Robert E. Baker Retired; formerly, Vice Chairman, Chrysler Financial $12,000
Birth Date: May 6, 1930 Corporation.
4327 Stoneleigh Road
Bloomfield Hills, MI
TRUSTEE
Harold Berry Managing Partner, Berry Enterprises; Chairman, $12,000
Birth Date: September 17, 1925 Independent Sprinkler Companies, Inc.; Chairman, Berry
290 Franklin Center Ziegelman & Company.
29100 Northwestern Highway
Southfield, MI
TRUSTEE
Nathan Forbes* President, Forbes/Cohen Properties, President and $12,000
Birth Date: December 5, 1962 Partner, The Forbes Company.
1945 Long Point Drive
Bloomfield Hills, MI
TRUSTEE
Harry J. Nederlander# Chairman, Nederlander Enterprises $10,800
Birth Date: September 5, 1917
231 S. Old Woodward, Suite 219
Birmingham, MI
TRUSTEE
Thomas S. Wilson# President and Executive Administrator of the Detroit $12,000
Birth Date: October 8, 1949 Pistons; President and CEO, Palace Sports Entertainment.
Two Championship Drive
Auburn Hills, MI
TRUSTEE
Edward C. Gonzales Trustee or Director of some of the Funds in the
Birth Date: October 22, 1930 Federated Fund Complex; President, Executive Vice $0
Federated Investors Tower President and Treasurer of some of the Funds in the
1001 Liberty Avenue Federated Fund Complex; Vice Chairman, Federated
Pittsburgh, PA Investors, Inc.; Vice President, Federated Investment
PRESIDENT AND TREASURER Management Company and Federated Investment
Counseling, Federated Global Investment Management
Corp. and Passport Research, Ltd.; Executive Vice
President and Director, Federated Securities Corp.;
Trustee, Federated Shareholder Services Company.
Jeffrey W. Sterling Treasurer of the Federated Fund Complex; Vice President $0
Birth Date: February 5, 1947 - Funds Financial Services Division, Federated
Federated Investors Tower Investors, Inc.; formerly: various management positions
1001 Liberty Avenue within Funds Financial Services Division of Federated
Pittsburgh, PA Investors, Inc.
VICE PRESIDENT AND ASSISTANT
TREASURER

C. Grant Anderson Corporate Counsel, Federated Investors, Inc. $0
Birth Date: November 6, 1940
Federated Investors Tower
1001 Liberty Avenue
Pittsburgh, PA
SECRETARY
- ----------------------------------------------------------------
</TABLE>

INVESTMENT ADVISER
The Adviser conducts investment research and makes investment decisions for the
Funds.

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

Other Related Services
Affiliates of the Adviser may, from time to time, provide certain electronic
equipment and software to institutional customers in order to facilitate the
purchase of Fund Shares offered by the Distributor.

BROKERAGE TRANSACTIONS
When selecting brokers and dealers to handle the purchase and sale of portfolio
instruments, the Adviser looks for prompt execution of the order at a favorable
price. The Adviser will generally use those who are recognized dealers in
specific portfolio instruments, except when a better price and execution of the
order can be obtained elsewhere. With respect to the Equity Funds and Income
Funds, the Adviser may select brokers and dealers based on whether they also
offer research services (as described below). In selecting among firms believed
to meet these criteria, the Adviser may give consideration to those firms which
have sold or are selling Shares of the Funds and other funds distributed by the
Distributor and its affiliates. The Adviser makes decisions on portfolio
transactions and selects brokers and dealers subject to review by the Funds'
Board.

Research Services
Research services may include advice as to the advisability of investing in
securities; security analysis and reports; economic studies; industry studies;
receipt of quotations for portfolio evaluations; and similar services. Research
services may be used by the Adviser in advising other accounts. To the extent
that receipt of these services may replace services for which the Adviser or its
affiliates might otherwise have paid, it would tend to reduce their expenses.
The Adviser and its affiliates exercise reasonable business judgment in
selecting those brokers who offer brokerage and research services to execute
securities transactions. They determine in good faith that commissions charged
by such persons are reasonable in relationship to the value of the brokerage and
research services provided.

For the fiscal years ended April 30, 1999, 1998 and 1997, the Equity Plus
Fund paid total brokerage commissions of $56,051 $20,319 and $26,727,
respectively. For the fiscal year ended April 30, 1999, the Small Cap Fund and
International Equity Fund paid total brokerage commissions of $37,216 and
43,448, respectively.

Investment decisions for the Funds are made independently from those of other
accounts managed by the Adviser. When the Funds and one or more of those
accounts invests in, or disposes of, the same security, available investments or
opportunities for sales will be allocated among the Funds and the account(s) in
a manner believed by the Adviser to be equitable. While the coordination and
ability to participate in volume transactions may benefit the Funds, it is
possible that this procedure could adversely impact the price paid or received
and/or the position obtained or disposed of by the Funds.

ADMINISTRATOR
Federated Administrative Services, a subsidiary of Federated, provides
administrative personnel and services (including certain legal and financial
reporting services) necessary to operate the Funds. Federated Administrative
Services provides these at the following annual rate of the average aggregate
daily net assets of the Trust as specified below:

Maximum Administrative Fee Average Aggregate Daily Net Assets of the Trust 0.150
of 1% on the first $250 million 0.125 of 1% on the next $250 million 0.100 of 1%
on the next $250 million 0.075 of 1% on assets in excess of $750 million The
administrative fee received during any fiscal year shall be at least $50,000 per
portfolio. Federated Administrative Services may voluntarily waive a portion of
its fee and may reimburse the Funds for expenses.

Federated Administrative Services also provides certain accounting and
recordkeeping services with respect to the Funds' portfolio investments for a
fee based on the Funds' assets plus out-of-pocket expenses.

CUSTODIAN
Michigan National Bank, Farmington Hills, Michigan, is custodian for the
securities and cash of the Funds. Under the Custodian Agreement, Michigan
National Bank holds the Funds' portfolio securities in safekeeping and keeps all
necessary records and documents relating to its duties.

TRANSFER AGENT AND DIVIDEND DISBURSING AGENT
Federated Services Company, through its registered transfer agent subsidiary,
Federated Shareholder Services Company, maintains all necessary shareholder
records. The Funds pay the transfer agent a fee based on the size, type, and
number of accounts and transactions made by shareholders.

INDEPENDENT auditors
The independent auditors for the Funds, KPMG LLP, plans and performs their audit
so that it may provide an opinion as to whether the Funds' financial statements
and financial highlights are free of material mistatements.

FEES PAID BY THE FUNDS FOR SERVICES
- ------------------------ ---------------------------------------- -------------------------------- ---------------------------------
Fund Advisory Fee Paid/ Sub-Advisory Fee Paid/ Administrative Fee Paid/
Advisory Fee Waived Sub-Advisory Fee Waived Administrative Fee Waived
-------------------------------- ---------------------------------
---------------------------------------- -------------------------------- ---------------------------------
For the fiscal year ended For the fiscal year ended For the fiscal year ended
April 30, April 30, April 30,
---------------------------------------- -------------------------------- ---------------------------------
------------------------------------------------------------------------------------------------------------
1999 1998 1997 1999 1998 1997 1999 1998 1997
- ------------------------------------------------------------------------------------------------------------------------------------
Equity Plus Fund $946,337/ $758,348/ $588,469/ $85,083/$0 $65,680/ $50,260/ $241,610/ $202,102/ $160,370/
$259,906 $284,380 $262,493 $0 $0 $0 $80,996 $88,264
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Small Cap Fund $77,419/ N/A N/A N/A N/A N/A $43,699/ N/A N/A
$32,156 $34,504
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
International Equity $63,745/ N/A N/A $16,359/$0 N/A N/A $29,864/ N/A N/A
Fund $63,745 $29,864
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
U.S. Government $467,877/ $507,916/ $509,098/ $0 $0 $0 $68,475/ $77,385/ $79,408/
Securities Fund $273,903 $326,518 $327,278 $0 $0 $0
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Fixed Income Fund $608,131/ $574,565/ $500,293/ N/A N/A N/A $82,964/ $81,673/ $72,776/
$372,219 $383,043 $333,528 $0 $0 $0
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Michigan Municipal $152,659/ $184,611/ $182,176/ N/A N/A N/A $50,000/ $50,000/ $50,000/
Bond Fund $100,606 $129,534 $182,176 $47,477 $46,548 $44,944
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Prime Money Market Fund $2,307,358/ $1,861,933/ $1,720,845/$1,N/A,528 N/A N/A $588,977/ $495,020/ $469,358/
$1,442,099 $1,163,708 $0 $0 $0
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
U.S. Treasury Money $1,028,200/ $1,062,526/ $1,099,098/ N/A N/A N/A $263,394/ $283,031/ $299,881/
Market Fund $0 $0 $0 $0 $0 $0
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Michigan Municipal $467,103/ $375,284/ $355,606/ N/A N/A N/A $119,511/ $99,977/ $91,469/
Cash Fund $175,163 $146,672 $167,803 $0 $0 $0
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

Fees are allocated among classes based on their pro rata share of Fund assets,
except for marketing (Rule 12b-1) fees and shareholder services fees, which are
borne only by the applicable class of Shares.

12b-1Fees

The U.S. Treasury Money Market Fund and Michigan Municipal Cash Fund are not
currently paying 12b-1 fees under the Distribution Plan. Should the Funds begin
to pay these fees, shareholders will be notified.

Shareholder Services Fees

For the fiscal year ended April 30, 1999, Prime Money Market Fund (Class A
Shares) paid $1,141,575 in shareholder services fees.

<PAGE>

HOW DO THE FUNDS MEASURE PERFORMANCE?
The Funds may advertise Share performance by using the Securities and Exchange
Commission's (SEC) standard method for calculating performance applicable to all
mutual funds. The SEC also permits this standard performance information to be
accompanied by non-standard performance information.

share performance reflects the effect of non-recurring charges, such as maximum
sales charges, which, if excluded, would increase the total return and yield.
The performance of Shares depends upon such variables as: portfolio quality;
average portfolio maturity; type and value of portfolio securities; changes in
interest rates; changes or differences in the Funds' or any class of Shares'
expenses; and various other factors.

Share performance fluctuates on a daily basis largely because net earnings
fluctuate daily. Both net earnings and offering price per Share are factors in
the computation of yield and total return.

average Annual Total Returns,Yield, effective yield and tax equivalent yield

- ---------------------------- ----------- ------------- ------------ ---------- ----------- ---------- ---------- ---------- --------
FUNDS Equity Small Cap International U.S. Fixed Michigan Prime Prime U.S. Michigan
Plus Fund Fund Equity Fund Government Income Municipal Money Money Treasury Municipal
Securities Fund Bond Fund Market Market Money Cash Fund
Fund Fund Fund Market
(Class A (Class B Fund
Shares) Shares)
- ---------------------------- ----------- ----------- ------------ ---------- ----------- ---------- ---------- ---------- ----------
Average Annual
Total Return
for the following
periods ended
April 30, 1999 26.10% N/A N/A 5.41% 5.60% 5.83% 4.88% 5.14% 4.62% 2.85%
One Year N/A N/A N/A 7.14% N/A N/A 5.00% N/A 4.85% 3.03%
Five Years 29.10% (5.94%) (b) 29.42% (c) 6.50% (d) 5.98% (e) 5.53% (f) 5.15% (g) 5.35% (h) 5.00% (i) 3.37% (j)
Since Inception (a)
- -------------------- ---------- ----------- ------------- ------------ ---------- ----------- ---------- ---------- ---------- ----
- -------------------- ---------- ----------- ------------- ------------ ---------- ----------- ---------- ---------- ---------- ----
Yield N/A N/A N/A N/A N/A N/A 4.44% 4.69% 4.18% 2.96%
for the 7-day
period ended April
30, 1999
- -------------------- ---------- ----------- ------------- ------------ ---------- ----------- ---------- ---------- ---------- -----
- -------------------- ---------- ----------- ------------- ------------ ---------- ----------- ---------- ---------- ---------- -----
Yield 0.66% 0.00% 0.00% 4.99% 4.85% 3.13% N/A N/A N/A N/A
for the 30-day
period ended April
30, 1999
- -------------------- ---------- ----------- ------------- ------------ ---------- ----------- ---------- ---------- ---------- -----
- -------------------- ---------- ----------- ------------- ------------ ---------- ----------- ---------- ---------- ---------- -----
Effective Yield N/A N/A N/A N/A N/A N/A 4.53% 4.80% 4.26% 3.00%
for the 7-day
period ended April
30, 1999
- -------------------- ---------- ----------- ------------- ------------ ---------- ----------- ---------- ---------- ---------- -----
- -------------------- ---------- ----------- ------------- ------------ ---------- ----------- ---------- ---------- ---------- -----
Tax Equivalent N/A N/A N/A N/A N/A N/A N/A N/A N/A 4.90%
Yield
for the 7-day
period ended April
30, 1999
---------- ----------- ------------- ------------ ---------- ----------- ---------- ---------- ---------- -----
- -------------------- ---------- ----------- ------------- ------------ ---------- ----------- ---------- ---------- ---------- -----
Tax Equivalent N/A N/A N/A N/A N/A 5.18% N/A N/A N/A N/A
Yield
for the 30-day
period ended April
30, 1999
- -------------------- ---------- ----------- ------------- ------------ ---------- ----------- ---------- ---------- ---------- -----
</TABLE>

Start of performance dates: (a) September 25, 1995; (b) June 22, 1998; (c)
September 25, 1998; (d) January 11, 1993; (e) October 23, 1995; (f) November 20,
1995; (g) June 1, 1989; (h) May 1, 1995; (i) June 1, 1989; and (j) June 1,
1989.

<PAGE>

TOTAL RETURN

Total return represents the change (expressed as a percentage) in the value of
Shares over a specific period of time, and includes the investment of income and
capital gains distributions.

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

yield

With respect to the Equity Funds and Income Funds, the yield of Shares is
calculated by dividing: (i) the net investment income per Share earned by the
Shares over a 30-day period; by (ii) the maximum offering price per Share on the
last day of the period. This number is then annualized using semi-annual
compounding. This means that the amount of income generated during the 30-day
period is assumed to be generated each month over a 12-month period and is
reinvested every six months. The effective yield is calculated by compounding
the unannualized base-period return by: adding one to the base-period return,
raising the sum to the 365/7th power; and subtracting one from the result. The
yield and effective yield do not necessarily reflect income actually earned by
Shares because of certain adjustments required by the SEC and, therefore, may
not correlate to the dividends or other distributions paid to shareholders.

To the extent investment professionals and broker/dealers charge fees in
connection with services provided in conjunction with an investment in Shares,
the Share performance is lower for shareholders paying those fees.

With respect to the Money Market Funds, the yield of Shares is based upon the
seven days ending on the day of the calculation, called the "base period." This
yield is calculated by: determining the net change in the value of a
hypothetical account with a balance of one Share at the beginning of the base
period, with the net change excluding capital changes but including the value of
any additional Shares purchased with dividends earned from the original one
Share and all dividends declared on the original and any purchased Shares;
dividing the net change in the account's value by the value of the account at
the beginning of the base period to determine the base period return; and
multiplying the base period return by 365/7. The effective yield is calculated
by compounding the unannualized base-period return by: adding one to the
base-period return, raising the sum to the 365/7th power; and subtracting one
from the result.

TAX EQUIVALENCY TABLE (Michigan Municipal Bond Fund and Michigan Municipal Cash
Fund)

Set forth below is a sample of a tax-equivalency table that may be used in
advertising and sales literature. This table is for illustrative purposes only
and is not representative of past or future performance of the Funds. The
interest earned by the municipal securities owned by the Funds generally remains
free from federal regular income tax and is often free from state and local
taxes as well. However, some of the Funds' income may be subject to the federal
alternative minimum tax and state and/or local taxes.

<PAGE>

TAX EQUIVALENCY TABLE

Taxable Yield Equivalent for 1999 - STATE OF MICHIGAN

Tax Bracket:
Federal 15.00% 28.00% 31.00% 36.00% 39.60%

Combined Federal and State 19.400% 32.400% 35.400% 40.400% 44.000%
- ----------------------------------------------------------------------------------------------------------------------
Joint Return $1-43,050 $43,051-104,050 $104,051-158,550 $158,551-283,150 Over 283,150
Single Return $1-25,750 $25,751-62,450 $62,451-130,250 $130,251-283,150 Over 283,150
Tax Exempt Yield: Taxable Yield Equivalent:
1.50% 1.86% 2.22% 2.32% 2.52% 2.68%
2.00% 2.48% 2.96% 3.10% 3.36% 3.57%
2.50% 3.10% 3.70% 3.87% 4.19% 4.46%
3.00% 3.72% 4.44% 4.64% 5.03% 5.36%
3.50% 4.34% 5.18% 5.42% 5.87% 6.25%
4.00% 4.96% 5.92% 6.19% 6.71% 7.14%
4.50% 5.58% 6.66% 6.97% 7.55% 8.04%
5.00% 6.20% 7.40% 7.74% 8.39% 8.93%
5.50% 6.82% 8.14% 8.51% 9.23% 9.82%
6.00% 7.44% 8.88% 9.29% 10.07% 10.71%

</TABLE>

Note: The maximum marginal tax rate for each bracket was used in calculating the
taxable yield equivalent. Furthermore, additional state and local taxes paid on
comparable taxable investments were not used to increase federal deductions.

PERFORMANCE COMPARISONS
Advertising and sales literature may include:

o references to ratings, rankings, and financial publications and/or
performance comparisons of Shares to
certain indices;

o charts, graphs and illustrations using the Funds' returns, or returns in
general, that demonstrate investment concepts such as tax-deferred
compounding, dollar-cost averaging and systematic investment;

o discussions of economic, financial and political developments and their
impact on the securities market, including the portfolio manager's views on
how such developments could impact the Funds; and

o information about the mutual fund industry from sources such as the Investment
Company Institute.

The Funds may compare their performance, or performance for the types of
securities in which they invest, to a variety of other investments, including
federally insured bank products such as bank savings accounts, certificates of
deposit, and Treasury bills.

The Funds may quote information from reliable sources regarding individual
countries and regions, world stock exchanges, and economic and demographic
statistics.

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

<PAGE>

EQUITY FUNDS

Standard & Poor's Composite Index of 500 Stocks, Standard & Poor's 100
Index and Standard & Poor's SmallCap 600 Composite Stock Price Index, which
are composite indices of common stocks in industry, transportation, and
financial and public utility companies, can be compared to the total returns
of funds whose portfolios are invested primarily in common stocks. In
addition, the Standard & Poor's indices assume reinvestment of all dividends
paid by stocks listed on the index. Taxes due on any of these distributions
are not included, nor are brokerage or other fees calculated in Standard &
Poor's figures.

o Lipper Analytical Services, Inc. ranks funds in various fund categories by
making comparative calculations using total return. Total return assumes the
reinvestment of all capital gains distributions and income dividends and
takes into account any change in the maximum offering price over a specific
period of time. From time to time, a Fund will quote its Lipper ranking and
category in advertising and sales literature.

o Morningstar, Inc. is an independent rating service, is the publisher of the
bi-weekly Mutual Fund Values. Mutual Fund Values rates more than 1,000
NASDAQ-listed mutual funds of all types, according to their risk-adjusted
returns. The maximum rating is five stars, and ratings are effective for two
weeks.

o Morgan Stanley Capital International EAFE Index is an arithmetic, market
value-weighted average of the performance of over 1,000 securities on the
stock exchanges of countries in Europe, Australia and the Far East.

o Morgan Stanley Capital International Europe Index is an unmanaged index of
common stocks that includes fourteen countries throughout Europe.

o Morgan Stanley Capital International Japan Index is an unmanaged index of
common stocks.

Morgan Stanley Capital International World Index is an arithmetic,
market value-weighted average of the performance of over 1,470 securities
listed on the stock exchanges of countries in Europe, Australia, the Far
East, Canada and the United States.

INCOME FUNDS

Lipper Analytical Services, Inc. ranks funds in various fund categories
by making comparative calculations using total return. Total return assumes
the reinvestment of all capital gains distributions and income dividends and
takes into account any change in net asset value over a specific period of
time. From time to time, a Fund will quote its ranking from its respective
Lipper category in advertising and sales literature.

Morningstar, Inc., an independent rating service, is the publisher of
the bi-weekly Mutual Fund Values. Mutual Fund Values rates more than 1,000
NASDAQ listed mutual funds of all types, according to their risk-adjusted
returns. The maximum rating is five stars, and ratings are effective for two
weeks.

Lehman Brothers Government Bond Index is an unmanaged index comprised
of all publicly issued, non-convertible domestic debt of the U.S. government,
or any agency thereof, or any quasi-federal corporation and of corporate debt
guaranteed by the U.S. government. Lehman Brothers Government/Corporate
(Total) Index is comprised of approximately 5,000 issues which include:
non-convertible bonds publicly issued by the U.S. government or its agencies;
corporate bonds guaranteed by the U.S. government and quasi-federal
corporations; and publicly issued, fixed rate, non-convertible domestic bonds
of companies in industry, public utilities, and finance. The average maturity
of these bonds approximates nine years. Tracked by Lehman Brothers, the index
calculates total returns for one-month, three-month, twelve-month, and
ten-year periods and year-to-date.

Lehman Brothers Intermediate Government/Corporate Bond Index is an
unmanaged index comprised of all the bonds issued by the U.S. Government its
agencies and instrumentalities and corporations with maturities between 1 and
9.99 years. Total return is based on price appreciation/depreciation and
income as a percentage of the original investment. Indices are rebalanced
monthly by market capitalization.

Lehman Brothers Seven Year State General Obligation Bond Index is an
index of general obligation bonds rated Baa or better with 6-8 years to
maturity.

<PAGE>

MONEY MARKET FUNDS

Lipper Analytical Services, Inc. ranks funds in various fund categories
using total return. Total return assumes the reinvestment of all capital
gains distributions and income dividends and takes into account any change in
net asset value over a specific period of time. From time to time, a Fund
will quote its Lipper ranking in advertising and sales literature.

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

FINANCIAL INFORMATION
The Financial Statements for the Funds for the fiscal year ended April 30, 1999,
are incorporated herein by reference to the Annual Report to Shareholders of the
Independence One Mutual Funds dated April 30, 1999.

<PAGE>

INVESTMENT RATINGS

Standard & Poor's Short-Term Municipal Obligation Ratings

A Standard & Poor's (S&P) note rating reflects the liquidity concerns and market
access risks unique to notes.

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

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

Variable Rate Demand Notes (VRDNs) And Tender Option Bonds (TOBs) Ratings

S&P assigns dual ratings to all long-term debt issues that have as part of their
provisions a variable rate demand feature. The first rating (long-term rating)
addresses the likelihood of repayment of principal and interest when due, and
the second rating (short-term rating) describes the demand characteristics.
Several examples are AAA/A-1+, AA/A-1+, A/A-1. (The definitions for the
long-term and the short-term ratings are provided below.)

Commercial Paper (CP) Ratings

An S&P commercial paper rating is a current assessment of the likelihood of
timely payment of debt having an original maturity of no more than 365 days.

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

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

Long-Term Debt Ratings

AAA--Debt rated AAA has the highest rating assigned by S&P. Capacity to pay
interest and repay principal is extremely strong.

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

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

Moody's Investors Service, Inc., Short-Term Municipal Obligation Ratings

Moody's Investor Service, Inc. (Moody's) short-term ratings are designated
Moody's Investment Grade (MIG or VMIG). (See below.) The purpose of the MIG or
VMIG ratings is to provide investors with a simple system by which the relative
investment qualities of short-term obligations may be evaluated.

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

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

Variable Rate Demand Notes (VRDNs) And Tender Option Bonds (TOBs) Ratings

Short-term ratings on issues with demand features are differentiated by the use
of the VMIG symbol to reflect such characteristics as payment upon periodic
demand rather than fixed maturity dates and payment relying on external
liquidity. In this case, two ratings are usually assigned, (for example,
Aaa/VMIG-1); the first representing an evaluation of the degree of risk
associated with scheduled principal and interest payments, and the second
representing an evaluation of the degree of risk associated with the demand
feature. The VMIG rating can be assigned a 1 or 2 designation using the same
definitions described above for the MIG rating.

Commercial Paper (CP) Ratings

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

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

Long-Term Debt Ratings

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

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

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

NR--Indicates that both the bonds and the obligor or credit enhancer are not
currently rated by S&P or Moody's with respect to short-term indebtedness.
However, management considers them to be of comparable quality to securities
rated A-1 or P-1.

NR(1)--The underlying issuer/obligor/guarantor has other outstanding debt rated
AAA by S&P or Aaa by Moody's.

NR(2)--The underlying issuer/obligor/guarantor has other outstanding debt rated
AA by S&P or Aa by Moody's.

NR(3)--The underlying issuer/obligor/guarantor has other outstanding debt rated
A by S&P or Moody's.

Fitch Investors Service, L.P. Short-Term Debt Rating Definitions

F-1+--Exceptionally Strong Credit Quality. Issues assigned this rating are
regarded as having the strongest degree of assurance for timely payment.

F-1--Very Strong Credit Quality. Issues assigned this rating reflect an
assurance for timely payment, only slightly less in degree than issues rated
F-1+.

F-2--Good Credit Quality. Issues carrying this rating have a satisfactory degree
of assurance for timely payment, but the margin of safety is not as great as for
issues assigned F-1+ and F-1 ratings.

Standard and Poor's Long-Term Debt Rating Definitions

BB--Debt rated BB has less near-term vulnerability to default than other
speculative issues. However, it faces major ongoing uncertainties or exposure to
adverse business, financial, or economic conditions which could lead to
inadequate capacity to meet timely interest and principal payments. The BB
rating category is also used for debt subordinated to senior debt that is
assigned an actual or implied BBB rating.

B--Debt rated B has a greater vulnerability to default but currently has the
capacity to meet interest payments and principal repayments. Adverse business,
financial, or economic conditions will likely impair capacity or willingness to
pay interest and repay principal. The B rating category is also used for debt
subordinated to senior debt that is assigned an actual or implied BB or BB-
rating.

CCC--Debt rated CCC has a currently identifiable vulnerability to default, and
is dependent upon favorable business, financial, and economic conditions to meet
timely payment of interest and repayment of principal. In the event of adverse
business, financial, or economic conditions, it is not likely to have the
capacity to pay interest and repay principal. The CCC rating category is also
used for debt subordinated to senior debt that is assigned an actual or implied
B or B rating.

CC--The rating CC typically is applied to debt subordinated to senior debt that
is assigned an actual or implied CCC debt rating.

C--The rating C typically is applied to debt subordinated to senior debt which
is assigned an actual or implied CCC debt rating. The C rating may be used to
cover a situation where a bankruptcy petition has been filed, but debt service
payments are continued.

Moody's Investors Service, Inc. Long-Term Bond Rating Definitions

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

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

BAA--Bonds which are rated BAA are considered as medium-grade obligations,
(i.e., they are neither highly protected nor poorly secured). Interest payments
and principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.

BA--Bonds which are BA are judged to have speculative elements; their future
cannot be considered as well assured. Often the protection of interest and
principal payments may be very moderate and thereby not well safeguarded during
both good and bad times over the future. Uncertainty of position characterizes
bonds in this class.

B--Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.

CAA--Bonds which are rated CAA are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.

CA--Bonds which are rated CA represent obligations which are speculative in a
high degree. Such issues are often in default or have other marked shortcomings.

C--Bonds which are rated C are the lowest-rated class of bonds, and issues so
rated can be regarded as having extremely poor prospects of ever attaining any
real investment standing.

Fitch IBCA, Inc. Long-Term Debt Rating Definitions

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

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

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

BBB--Bonds considered to be investment grade and of satisfactory credit quality.
The obligor's ability to pay interest and repay principal is considered to be
adequate. Adverse changes in economic conditions and circumstances, however, are
more likely to have adverse impact on these bonds, and therefore impair timely
payment. The likelihood that the ratings of these bonds will fall below
investment grade is higher than for bonds with higher ratings.

BB--Bonds are considered speculative. The obligor's ability to pay interest and
repay principal may be affected over time by adverse economic changes. However,
business and financial alternatives can be identified which could assist the
obligor in satisfying its debt service requirements.

B--Bonds are considered highly speculative. While bonds in this class are
currently meeting debt service requirements, the probability of continued timely
payment of principal and interest reflects the obligor's limited margin of
safety and the need for reasonable business and economic activity throughout the
life of the issue.

CCC--Bonds have certain identifiable characteristics which, if not remedied, may
lead to default. The ability to meet obligations requires an advantageous
business and economic environment.

CC--Bonds are minimally protected. Default in payment of interest and/or
principal seems probable over time.

C--Bonds are imminent default in payment of interest or principal.

Moody's Investors Service, Inc. Commercial Paper Ratings

Prime-1--Issuers rated Prime-1 (or related supporting institutions) have a
superior capacity for repayment of short-term promissory obligations. Prime-1
repayment capacity will normally be evidenced by the following characteristics:

o Leading market positions in well-established industries;

o High rates of return on funds employed;

o Conservative capitalization structure with moderate reliance on debt and
ample asset protection;

o Broad margins in earning coverage of fixed financial charges and high
internal cash generation; and

o Well-established access to a range of financial markets and assured sources of
alternate liquidity.

Prime-2--Issuers rated Prime-1 (or related supporting institutions) have a
strong capacity for repayment of short-term promissory obligations. This will
normally be evidenced by many of the characteristics cited above but to a lesser
degree. Earnings trends and coverage ratios, while sound, will be more subject
to variation. Capitalization characteristics, while still appropriate, may be
more affected by external conditions. Ample alternate liquidity is maintained.

Standard and Poor's Commercial Paper Ratings

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

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

Fitch IBCA, Inc. Commercial Paper Rating Definitions

FITCH-1--(Highest Grade) Commercial paper assigned this rating is regarded as
having the strongest degree of assurance for timely payment.

FITCH-2--(Very Good Grade) Issues assigned this rating reflect an assurance of
timely payment only slightly less in degree than the strongest issues.

<PAGE>

ADDRESSES

independence one mutual funds
5800 Corporate Drive
Pittsburgh, PA 15237-7010

Distributor
Federated Securities Corp.
Federated Investors Tower
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Investment Adviser
Michigan National Bank.
27777 Inkster Road
Mail Code 10-30
Farmington Hills, Michigan 48333-9065

Investment Sub-Advisers:

Equity Plus Fund and Small Cap Fund
Sosnoff Sheridan Weiser Corporation
440 South LaSalle Street
Suite 2301
Chicago, Illinois 60605

International Equity Fund
National Australia Asset Management Ltd.
333 Collins Street
Melbourne, Victoria 3000, Australia

U.S. Government Securities Fund
Independence One Capital Management Corporation
27777 Inkster Road
Mail Code 10-52
Farmington Hills, Michigan 48333-9065

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, MA 02266-8600

Independent Auditors
KPMG LLP
99 High Street
Boston, MA 02110-2371

Cusip
453777203
Cusip
453777302
Cusip
453777401
Cusip
453777708
Cusip
453777807
Cusip
453777864
Cusip
453777856
Cusip
453777872
Cusip
453777831
Cusip
453777856

PART C. OTHER INFORMATION.

Item 24. Exhibits:

(a) Conformed copy of Declaration of Trust of the Registrant; (1.)
(i) Conformed copy of Amendment No. 1 to the Declaration of
Trust; (2.)
(ii) Conformed copy of Amendment No. 2 to the Declaration of
Trust; (2.)
(iii) Conformed copy of Amendment No. 3 to the Declaration of
Trust; (4.)
(iv) Conformed copy of Amendment No. 4 to the Declaration of
Trust; (6.)
(v) Conformed copy of Amendment No. 5 to the Declaration of
Trust; (6.)
(vi) Conformed copy of Amendment No. 6 to the Declaration of
Trust; (10.)
(vii) Conformed copy of Amendment No. 8 to the Declaration of
Trust; (10.)
(viii) Conformed copy of Certification dated December 6, 1994; (10.)
(ix) Conformed copy of Amendment No. 9 to the Declaration of
Trust; (12.)
(x) Conformed copy of Amendment No. 10 to the Declaration of
Trust; (20)
(b) Copy of By-Laws of the Registrant; (1.)
- --------------------
+ All exhibits have been filed electronically.

1. Response is incorporated by reference to Registrant's Initial Registration
Statement on Form N-1A filed on January 13, 1989. (File Nos. 33-26516 and
811-5752)

2. Response is incorporated by reference to Registrant's Pre-Effective
Amendment No. 1 on Form N-1A filed on May 5, 1989. (File Nos. 33-26516 and
811-5752)

4. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 2 on Form N-1A filed on June 27, 1990. (File Nos. 33-26516
and 811-5752)

6. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 5 on Form N-1A filed June 24, 1992. (File Nos. 33-26516 and
811-5752)

10. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 10 on Form N-1A filed February 8, 1995. (File Nos. 33-26516
and 811-5752)

12. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 14 on Form N-1A filed on June 28, 1995. (File Nos. 33-26516
and 811-5752)

20. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 23 on Form N-1A filed on June 26, 1998. (File Nos. 33-26516
and 811-5752)

<PAGE>

(c) (i)Copy of Specimen Certificate for Shares of Beneficial Interest
of Independence One U.S. Government Securities Fund; (7.)
(ii) Copy of Specimen Certificate for
Shares of Beneficial Interest of
Independence One Equity Plus Fund,
Independence One Fixed Income Fund,
and Independence One Michigan
Municipal Bond Fund; (14.)
(iii) Copy of Specimen Certificate for Shares of Beneficial
Interest of Independence One U.S. Treasury Money Market
Fund; (2.)
(iv) Copy of Specimen Certificates for
Shares of Beneficial Interest of
Independence One Michigan Municipal
Cash Fund and Independence One
Prime Money Market Fund-Class A
Shares and Class B Shares; (16.)
(v) Copy of Specimen Certificates for Shares of Beneficial
Interest of Independence One Small Cap Fund and
Independence One International Equity Fund ; (19.)
(d) Conformed copy of Investment Advisory Contract of the Registrant as
amended; (8.)
(i) Conformed copy of Investment Sub-Advisory Contract for
Independence One U.S. Government Securities Fund; (8.)
(ii) Conformed copy of Exhibit G to the
Present Investment Advisory
Contract of the Registrant to add
Independence One Fixed Income Fund
to the Present Investment
.........Advisory Contract of the
Registrant; (14.)
(iii) Conformed copy of Exhibit H to the
Present Investment Advisory
Contract of the Registrant to add
Independence One Michigan Municipal
Bond Fund to the Present Investment
Advisory Contract of the
Registrant; (14.)
- --------------------

1. Response is incorporated by reference to Registrant's Initial Registration
Statement on Form N-1A filed on January 13, 1989. (File Nos. 33-26516 and
811-5752)

2. Response is incorporated by reference to Registrant's Pre-Effective
Amendment No. 1 on Form N-1A filed on May 5, 1989. (File Nos. 33-26516 and
811-5752)

7. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 6 on Form N-1A filed September 2, 1992. (File Nos. 33-26516
and 811-5752)

8. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 7 on Form N-1A filed June 24, 1993. (File Nos. 33-26516 and
811-5752)

14. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 16 on Form N-1A filed on August 29, 1995. (File Nos. 33-26516
and 811-5752)

16. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 14 on Form N-1A filed on June 28, 1996. (File Nos. 33-26516
and 811-5752)

19. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 22 on Form N-1A filed on April 2, 1998. (File Nos. 33-26516
and 811-5752)

<PAGE>

(iv) Conformed copy of Exhibit I to the
Present Investment Advisory
Contract of the Registrant to add
Independence One Equity Plus Fund
to the Present Investment Advisory
Contract of the Registrant; (14.)
(v) Conformed copy of Exhibit H to the
Present Investment Advisory
Contract of the Registrant to add
Independence One International
Equity Fund; (19.)
(vi) Conformed copy of Exhibit I to the
Present Investment Advisory
Contract of the Registrant to add
Independence One Small Cap Fund;
(19.)
(vii) Conformed copy of Investment Sub-Advisory Agreement for
Independence One Equity Plus Fund; (14.)
(viii) Conformed Copy of Investment Sub-Advisory Agreement for
Independence One Small Cap Fund; (21.)
(ix) Conformed Copy of Sub-Advisory Agreement for Independence
One International Equity Fund; (21.)
(e) Conformed Copy of Distributor's Contract of
Registrant through and including Exhibit C;
(16.)
(i) Conformed Copy of Exhibit D to the
Distributor's Contract; (10.) (ii)
Conformed Copy of Exhibit E to the
Distributor's Contract; (10.)
(iii) Conformed copy of Exhibit F to the
Distributor's Contract; (13.) (iv)
Conformed copy of Exhibit G to the
Distributor's Contract; (13.)
(v) Conformed copy of Exhibit H to the
Distributor's Contract; (13.) (vi)
Conformed copy of Exhibit I to the
Distributor's Contract; (13.)
(vii) Conformed copy of Exhibit J to the
Distributor's Contract; (13.) (viii) Conformed copy
of Exhibit K to the Distributor's Contract; (13.)
(f) Not applicable;
- --------------------
+ All exhibits have been filed electronically.

10. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 10 on Form N-1A filed February 8, 1995. (File Nos. 33-26516
and 811-5752)

13. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 16 on Form N-1A filed on July 25, 1995. (File Nos. 33-26516
and 811-5752)

14. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 16 on Form N-1A filed on August 29, 1995. (File Nos. 33-26516
and 811-5752)

16. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 14 on Form N-1A filed on June 28, 1996. (File Nos. 33-26516
and 811-5752)

19. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 22 on Form N-1A filed on April 2, 1998. (File Nos. 33-26516
and 811-5752)

<PAGE>

(g) (i) Conformed Copy of Custodian
Agreement of the Registrant through
and including Exhibit A; (16.)
(a) Conformed Copy of Amendment No. 2 to Exhibit A of the
Custodian Agreement; (19.)
(ii) Conformed Copy of the Agency Agreement of the Registrant;
(3.)
(iii) Conformed Copy of the Administrative Services Agreement of
the Registrant; (16.)
(iv) Conformed Copy of Amendment No. 1 to Exhibit A of Agency
Agreement of the Registrant; (7.)
(h) (i) Conformed Copy of Agreement for Fund Accounting, Shareholder
Recordkeeping,
and Custody Services Procurement;(10.)
(a) Amendment to Exhibit 1 of the
Agreement for Fund Accounting,
Shareholder Recordkeeping, and
Custody Services Procurement; (19.)
(ii) Conformed copy of Shareholder Services Plan; (13.)
(iii) Conformed Copy of Exhibit 1 to the Shareholder Services Plan
of the Registrant; (12.)
(iv) Conformed copy of Shareholder
Services Agreement (Amended and
Restated 9/19/95); (15.)
- --------------------
+ All exhibits have been filed electronically.

3. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 1 on Form N-1A filed on December 12, 1989. (File Nos.
33-26516 and 811-5752)

7. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 6 on Form N-1A filed September 2, 1992. (File Nos. 33-26516
and 811-5752)

10. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 10 on Form N-1A filed February 8, 1995. (File Nos. 33-26516
and 811-5752)

12. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 14 on Form N-1A filed on June 28, 1995. (File Nos. 33-26516
and 811-5752)

13. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 16 on Form N-1A filed on July 25, 1995. (File Nos. 33-26516
and 811-5752)

15. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 17 on Form N-1A filed on December 5, 1995. (File Nos.
33-26516 and 811-5752)

16. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 14 on Form N-1A filed on June 28, 1996. (File Nos. 33-26516
and 811-5752)

18. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 22 on Form N-1A filed on April 2, 1998. (File Nos. 33-26516
and 811-5752)

20. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 23 on Form N-1A filed on June 26, 1998. (File Nos. 33-26516
and 811-5752)

21. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 24 on Form N-1A filed on June 24, 1999. (File Nos. 33-26516
and 811-5752)

(v) Conformed Copy of Exhibit 1 to the
Shareholder Services Agreement of
the Registrant; (12.)
(i) Conformed Copy of Opinion and Consent of
Counsel as to legality of shares being
registered; (16.)
(j) Conformed Copy of Independent Auditors Consent;+
(k) Not applicable;
(l) Conformed Copy of Initial Capital Understanding; (16.)
(m) (i) Conformed Copy of Distribution
Plan through and including Exhibit
A; (16.)
(ii) Copy of Sales Agreement with Federated Securities Corp.
and Administrative
Agreement - Appendix B; (2.)
(iii) Conformed copy of Exhibit B of
Distribution Plan; (8.)
(iv) Copy of Schedule A of Sales Agreement with
Federated Securities Corp.; (7.)
(v) Copy of Fee Schedule for Rule 12b-1 Agreement with
Federated Securities
Corp.; (7.)
(n) Copy of Financial Data Schedules; (20.)
(o) Conformed copy of 18f-3 Plan; (17.)
(p) (i) Conformed copy of Power of Attorney; (16.)
(ii) Conformed copy of Power of Attorney
(adding Nathan Forbes as Trustee); (20.)

Item 24. Persons Controlled by or Under Common Control with Registrant:

None
- --------------------
+ All exhibits have been filed electronically.

2. Response is incorporated by reference to Registrant's Pre-Effective
Amendment No. 1 on Form N-1A filed on May 5, 1989. (File Nos. 33-26516 and
811-5752)

3. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 1 on Form N-1A filed on December 12, 1989. (File Nos.
33-26516 and 811-5752)

7. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 6 on Form N-1A filed September 2, 1992. (File Nos. 33-26516
and 811-5752)

8. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 7 on Form N-1A filed June 24, 1993. (File Nos. 33-26516 and
811-5752)

16. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 18 on Form N-1A filed on June 28, 1996. (File Nos. 33-26516
and 811-5752)

17. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 19 on Form N-1A filed on August 26, 1996. (File Nos. 33-26516
and 811-5752)

20. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 23 on Form N-1A filed on June 26, 1998. (File Nos. 33-26516
and 811-5752)

<PAGE>

Item 25. Indemnification: (4.)

Item 26. Business and Other Connections of Investment Adviser:

Michigan National Bank, a national banking association (the
"Adviser"), is a wholly owned subsidiary of Michigan National
Corporation ("MNC"). Through its subsidiaries and affiliates,
MNC, offers a full range of financial services to the public
including commercial lending, depository services, cash
management, brokerage services, retail banking, credit card
services, mortgage banking, investment advisory services and
trust services. Michigan National Bank has managed mutual
funds since May 1989. The Trust Division has managed pools of
commingled funds since 1964. For more information on the
business of the Adviser, see the Prospectus under the heading
"Who Manages the Funds?"
- --------------------

4. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 2 on Form N-1A filed on June 27, 1990. (File Nos. 33-26516 and
811-5752)

<PAGE>

The officers and directors of the Adviser and any other business, profession,
vocation or employment of a substantial nature in which each such officer and
director is or has been engaged during the past two years is set forth below.
Unless otherwise noted, the position listed under Other Business, Profession,
Vocation or Employment is with Michigan National Bank. The business address of
each such director and officer is 27777 Inkster Road, Farmington Hills,
Michigan, 48333-9065.

Other Substantial Business
Position with Profession, Vocation or
Name the Adviser Employment

Glenn L. Barnes Director Executive General Manager,
Business and Personal Financial Services, National
Australia Bank Limited.

John S. Carton Director Director, Michigan National Corporation; Chairman,
President, and CEO,
Pine View, Inc.

Sidney E. Forbes Director Director, Michigan National Corporation; Partner,
Forbes/Cohen Properties.

William F. Pickard Director Director, Michigan National Corporation, Chairman
and Chief Executive Officer, Regal Plastics Company.

Douglas E. Ebert Director, Chief Executive Officer,
and Chief Michigan National Corporation
Executive Officer

Stephen A. VanAndel Director Director, Michigan National Corporation; Chairman,
Amway Corporation.

Frank J. Cicutto Director Managing Director & Chief
Executive Officer, National Australia Bank Limited

James B. Meyer Director Director, Michigan National
Corporation, President and
Chief Operating Officer,
Spartan Stores, Inc.

James A. Williams Chairman Chairman, Michigan National Corporation; Chairman
and President Williams, Williams, Ruby & Plunkett
P.C.

<PAGE>

Other Substantial Business
Position with Profession, Vocation or
Name the Adviser Employment
Richard C. Webb Head CBFS Head, Custom Business
Financial Services ("CBFS"), Michigan National Corporation.

Susan Barbour Head of Preminum Head of Premium Financial
Financial Services Services, Michigan National
Corporation
Joel Blom Head-Direct Retailing
& Channel Mgt.

Robert Hutchinson Head of Retail Head of Retail Financial Services
Financial Services Michigan National Corporation

Robert Stapleton Head-Investment
Services

Leslie V. Starr Head-Information
Technology

Charles Van Swearingen Chief Financial Chief Financial Officer,
Officer Michigan National Corporation.

Kevin J. Van Solkema Head/Risk Head of Risk Management,
Management Michigan National Bank.

Errol Talbott Chief Operations Director, Michigan
Officer National Corporation.

Joseph L. Fritzsche Head-Corporate Human Head-Corporate Human Resources,
Resources Michigan National Corporation.

James C. Rose Acting General Counsel Acting General Counsel &
& Secretary Secretary
</TABLE>

Independence One Capital Management Corporation ("IOCM"), a nationally
recognized investment advisory subsidiary of MNC, provides investment advisory
services for trust and other managed assets. IOCM and the Trust Division of
Michigan National Bank ("Trust Division") have managed custodial assets totaling
$9 billion. IOCM and the Trust Division have investment discretion over $1.7
billion.

For further information about IOCM, its officers and directors, response is
incorporated by reference to IOCM's Form ADV, File No. 801-29728, dated
September 14, 1994, as amended.

Michigan National Bank has delegated daily management of some of the Equity Plus
Fund and Small Cap Fund's assets to a Sub-Adviser, Sosnoff Sheridan Weiser
Corporation (doing business as Sosnoff Sheridan Group), who is paid by the
Adviser and not by the Funds. Sosnoff Sheridan Weiser Corporation is controlled
by Tom Sosnoff, its Director and President, and Scott Sheridan, it Director,
Executive Vice-President and Secretary. The Corporation's address is 440 South
LaSalle Street, Suite 2301, Chicago, Illinois 60605.

For further information about Sosnoff Sheridan Weiser Corporation, its officers
and directors, response is incorporated by reference to IOCM's Form ADV, File
No. 801-49181, dated May 17, 1995, as amended.

National Australia Bank Limited ("NAB") is a transnational banking organization
headquartered at 333 Collins Street, Melbourne, Australia. NAB is a publicly
owned company, whose shares are widely held and traded on the Australian Stock
Exchange Limited. On February 4, 1995, the Board of Directors of MNC approved a
definitive agreement for the acquisition (the "Merger") of MNC by NAB.
Shareholders of MNC approved the Merger on June 2, 1995. As a result, MNC and
its subsidiaries, including the Adviser, would become direct or indirect
subsidiaries of NAB upon completion of the Merger. The Merger was completed on
November 2, 1995 and Operations will continue to be conducted under the Michigan
National Corporation and Michigan National

For further information about NAB, its officers and directors, response is
incorporated by reference to NAB's Form ADV, File No. 801-55308, dated
May 1, 1998 as amended.

Item 27. Principal Underwriters:

(a)......Federated Securities Corp. the Distributor for shares of the
Registrant, acts as principal underwriter for the following .........open-end
investment companies, including the Registrant:

Automated Government Money Trust; Cash Trust Series II; Cash Trust Series, Inc.;
CCB Funds; Edward D. Jones & Co. Daily Passport Cash Trust; Federated Adjustable
Rate U.S. Government Fund, Inc.; Federated American Leaders Fund, Inc.;
Federated ARMs Fund; Federated Core Trust; Federated Equity Funds; Federated
Equity Income Fund, Inc.; Federated Fund for U.S. Government Securities, Inc.;
Federated GNMA Trust; Federated Government Income Securities, Inc.; Federated
Government Trust; Federated High Income Bond Fund, Inc.; Federated High Yield
Trust; Federated Income Securities Trust; Federated Income Trust; Federated
Index Trust; Federated Institutional Trust; Federated Insurance Series;
Federated Master Trust; Federated Municipal Opportunities Fund, Inc.; Federated
Municipal Securities Fund, Inc.; Federated Municipal Trust; Federated Short-Term
Municipal Trust; Federated Short-Term U.S. Government Trust; Federated Stock and
Bond Fund, Inc.; Federated Stock Trust; Federated Tax-Free Trust; Federated
Total Return Series, Inc.; Federated U.S. Government Bond Fund; Federated U.S.
Government Securities Fund: 1-3 Years; Federated U.S. Government Securities
Fund: 2-5 Years; Federated U.S. Government Securities Fund: 5-10 Years;
Federated Utility Fund, Inc.; Fixed Income Securities, Inc.; ; Hibernia Funds;
Independence One Mutual Funds; Intermediate Municipal Trust; International
Series, Inc.; Investment Series Funds, Inc.; Liberty U.S. Government Money
Market Trust; Liquid Cash Trust; Managed Series Trust; Marshall Funds, Inc.;
Money Market Management, Inc.; Money Market Obligations Trust; Money Market
Obligations Trust II; Money Market Trust; Municipal Securities Income Trust;
Newpoint Funds; Regions Funds; RIGGS Funds; SouthTrust Funds; Tax-Free
Instruments Trust; The Planters Funds; The Wachovia Funds; The Wachovia
Municipal Funds; Trust for Government Cash Reserves; Trust for Short-Term U.S.
Government Securities; Trust for U.S. Treasury Obligations; Vision Group of
Funds, Inc.; World Investment Series, Inc.; Blanchard Funds; Blanchard Precious
Metals Fund, Inc.; DG Investor Series; High Yield Cash Trust; Investment Series
Trust; Star Funds; Targeted Duration Trust; The Virtus Funds; Trust for
Financial Institutions;

Federated Securities Corp. also acts as principal underwriter for the
following closed-end investment company: Liberty Term Trust, Inc.- 1999.

(b)

(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address With Distributor With Registrant

Richard B. Fisher Director, Chairman, Chief
Federated Investors Tower Executive Officer, Chief
1001 Liberty Avenue Operating Officer, Asst.
Pittsburgh, PA 15222-3779 Secretary and Asst.
Treasurer, Federated
Securities Corp.

Arthur L. Cherry Director
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

John B. Fisher Director
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Thomas R. Donahue Director, Assistant Secretary
Federated Investors Tower and Assistant Treasurer
1001 Liberty Avenue Federated Securities Corp.
Pittsburgh, PA 15222-3779

James F. Getz President-Broker/Dealer and --
Federated Investors Tower Director
1001 Liberty Avenue Federated Securities Corp.
Pittsburgh, PA 15222-3779

John B. Fisher President-Institutional Sales, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Edward C. Gonzales Executive Vice President --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

David M. Taylor Executive Vice President --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

<PAGE>

Mark W. Bloss Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Richard W. Boyd Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Laura M. Deger Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Theodore Fadool, Jr. Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Bryant R. Fisher Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Christopher T. Fives Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

James S. Hamilton Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

James M. Heaton Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Keith Nixon Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Solon A. Person, IV Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Timothy C. Pillion Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

<PAGE>

Thomas E. Territ Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Ernest G. Anderson Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Teresa M. Antoszyk Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

John B. Bohnet Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Jane E. Broeren-Lambesis Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Matthew W. Brown Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

David J. Callahan Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Mark Carroll Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Steven R. Cohen Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Mary J. Combs Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

R. Edmond Connell, Jr. Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

<PAGE>

R. Leonard Corton, Jr. Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Kevin J. Crenny Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Daniel T. Culbertson Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

G. Michael Cullen Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Marc C. Danile Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Robert J. Deuberry Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

William C. Doyle Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Jill Ehrenfeld Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Mark D. Fisher Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Mark A. Gessner Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Joseph D. Gibbons Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

<PAGE>

John K. Goettlicher Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Craig S. Gonzales Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

G. Tad Gullickson Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Dayna C. Haferkamp Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Raymond Hanley Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Bruce E. Hastings Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Beth A. Hetzel Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

James E. Hickey Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Charlene H. Jennings Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

H. Joseph Kennedy Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Michael W. Koenig Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

<PAGE>

Christopher A. Layton Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Michael H. Liss Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Michael R. Manning Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Mark J. Miehl Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Richard C. Mihm Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Thomas P. Moretti Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Alec H. Neilly Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Thomas A. Peters III Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Robert F. Phillips Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Richard A. Recker Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Eugene B. Reed Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

<PAGE>

Paul V. Riordan Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

John Rogers Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Brian S. Ronayne Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Thomas S. Schinabeck Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Edward J. Segura Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Edward L. Smith Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

David W. Spears Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

John A. Staley Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Colin B. Starks Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Jeffrey A. Stewart Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

William C. Tustin Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

<PAGE>

Paul A. Uhlman Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Miles J. Wallace Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

John F. Wallin Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Richard B. Watts Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Edward J. Wojnarowski Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Michael P. Wolff Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Robert W. Bauman Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Edward R. Bozek Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Terri E. Bush Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Beth C. Dell Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

David L. Immonen Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

<PAGE>

John T. Glickson Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Renee L. Martin Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Robert M. Rossi Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Matthew S. Hardin Secretary, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Denis McAuley Treasurer, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Leslie K. Ross Assistant Secretary, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779

</TABLE>

<PAGE>

Item 28. Location of Accounts and Records:

All accounts and records required to be maintained by Section
31(a) of the Investment Company Act of 1940 and Rules 31a-1
through 31a-3 promulgated thereunder are maintained at one of
the following locations:

<S> <C>
Independence One Mutual Funds 5800 Corporate Drive
(Registrant) Pittsburgh, PA 15237-7010

Federated Services Company P.O. Box 8609
(Transfer Agent, Dividend Boston, Massachusetts 02266-
Disbursing Agent and Portfolio 8609
Recordkeeper)

Federated Administrative Services Federated Investors Tower
(Administrator) 1001 Liberty Avenue
Pittsburgh, PA 15222-3779

Michigan National Bank 27777 Inkster Road
(Adviser) Mail Code 10-52
Farmington Hills, MI 48333

National Australia Asset 333 Collins Street
Management Ltd. Melbourne, Victoria 3000,
(Sub-Adviser to International
Australia
Equity Fund)

Independence One Capital 27777 Inkster Road
Management Corporation Mail Code 10-52
(Sub-Adviser to U.S. Farmington Hills, MI 48333
Government Securities
Fund)

Sosnoff Sheridan Corporation 440 South LaSalle Street
(Sub-Adviser to Equity Plus Fund Suite 2301
and Small Cap Fund) Chicago, IL 60605

Michigan National Bank 27777 Inkster Road
(Custodian) Mail Code 10-52
Farmington Hills, MI 48333

</TABLE>

Item 31. Management Services: Not applicable.

Item 32. Undertakings:

Registrant hereby undertakes to comply with the provisions of
Section 16(c) of the 1940 Act with respect to the removal of
Trustees and the calling of special shareholder meetings by
shareholders.

<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant, INDEPENDENCE ONE MUTUAL FUNDS,
certifies that it meets all of the requirements for effectiveness of this
Amendment to its Registration Statement pursuant to Rule 485(b) under the
Securities Act of 1933 and has duly caused this Amendment to its Registration
Statement to be signed on its behalf by the undersigned, thereto duly
authorized, in the City of Pittsburgh and Commonwealth of Pennsylvania, on the
26th day of August, 1999.

INDEPENDENCE ONE MUTUAL FUNDS

BY: /s/ C. Grant Anderson
C. Grant Anderson, Secretary
Attorney in Fact for Edward C. Gonzales
August 26, 1999

Pursuant to the requirements of the Securities Act of 1933, this Amendment
to its Registration Statement has been signed below by the following person in
the capacity and on the date indicated:

NAME TITLE DATE

By: /s/ C. Grant Anderson
C. Grant Anderson Attorney In Fact August 26, 1999
SECRETARY For the Persons
Listed Below

NAME TITLE

Edward C. Gonzales* President and Treasurer
(Chief Executive Officer
and Principal Financial and
Accounting Officer)

Robert E. Baker* Trustee

Harold Berry* Trustee

Nathan Forbes* Trustee

Harry J. Nederlander* Trustee

Thomas S. Wilson* Trustee

* By Power of Attorney

</TABLE>

Exhibit j under Form N-1A
Exhibit 23 under Item 601/Reg. S-K

CONSENT OF INDEPENDENT AUDITORS

The Trustees and Shareholders
Independence One Mutual Funds

We consent to the use of our report dated June 16, 1999 for Independence One
Equity Plus Fund, Independence One Small Cap Fund, Independence One
International Equity Fund, Independence One U.S. Government Securities Fund,
Independence One Fixed Income Fund, Independence One Michigan Municipal Bond
Fund, Independence One Prime Money Market Fund, Independence One U.S. Treasury
Fund and Independence One Michigan Municipal Cash Fund, incorporated herein by
reference and to the references to our firm under the captions "Financial
Highlights" in the prospectuses and "Independent Auditors" in the Statement of
Additional Information.

/s/ KPMG LLP
Boston, Massachusetts
August 31, 1999