Semi-Annual Report
Independence One(R)
Mutual Funds
Independence One(R) Mutual Funds offer nine portfolios, including three equity
funds, three income funds and three money market funds. This Semi-Annual Report
relates to the three equity funds:
Independence One
Equity Plus Fund
Class Y Shares
Independence One
Small Cap Fund
Independence One
International Equity Fund
October 31, 1999
[LOGO OF INDEPENDENCE ONE]
Mutual Funds]
For more information about any of the Independence One(R) Mutual Funds, please
call 800-334-2292 for a prospectus, which should be read carefully before
investing.
President's Message
Dear Investor:
I am pleased to present the Semi-Annual Report of the Independence One Equity
Funds, which covers the six-month reporting period from May 1, 1999 through
October 31, 1999. Inside, you'll find complete financial information for each
fund beginning with the portfolio manager's discussion and followed by a listing
of fund holdings and the financial statements.
The following is a fund-by-fund summary of performance over the six- month
reporting period.
Independence One Equity Plus Fund. This fund invests in a portfolio of
high-quality stocks that, at the end of the reporting period, included many
household names like ALCOA, American Express, Bank of America, Black & Decker,
Coca-Cola, DuPont, Ford, General Electric, IBM, Intel, 3M, Sears, and Xerox.
This Fund's Class Y Shares produced a six-month total return of 6.39% as the net
asset value increased from $22.02 to $23.34 and income distributions totaling
$0.08 per share. The fund ended the reporting period with $308.7 million in
assets.*
In addition, the fund achieved a five star (*****) overall Morningstar
Rating(TM) out of 3,272 domestic equity funds as of October 31 1999.** This is
Morningstar's highest rating for risk-adjusted fund performance, and places the
fund in the top 10% of its category.
Independence One Small Cap Fund. During the reporting period, small-cap stocks
produced relatively flat returns. However, small-cap stocks continued to remain
attractively valued compared to large cap stocks.+ In this environment,
Independence One Small Cap Fund produced a six-month total return of 1.81% as
the net asset value increased from $9.40 to $9.57. The fund ended the reporting
period with $31.9 million in assets.*
Independence One International Equity Fund. During the reporting period, the
fund's portfolio of stocks from recognized exchanges throughout the world
produced a total return of 6.20% as the net asset value increased from $12.75 to
$13.54.++ The fund ended the reporting period with $18.3 million in assets.*
* Past performance is no guarantee of future results. Investment return and
principal value will fluctuate, so that an investor's shares, when redeemed,
may be worth more or less than their original cost. Independence One Equity
Plus Fund's Class B Shares produced a total return of 5.37% and 0.11% based
on net asset value and redemption value, respectively, for the period from
October 20, 1999 (date of initial public investment) to October 31, 1999.
** Past performance is no guarantee of future results. Morningstar proprietary
ratings reflect risk-adjusted performance through October 31, 1999. They
are subject to change every month. Ratings are calculated from the fund's
three-, five-, and ten-year average annual returns in excess of 90-day
Treasury bill returns with appropriate fee adjustments, and a risk factor
that reflects fund performance below 90-day Treasury bill returns. The top
10% of funds in a broad asset class receive five stars; the next 22.5%
receive four stars; the middle 35% receive three stars; the next 22.5%
receive two stars and the bottom 10% receive one star. The fund's
three-year rating was five stars (*****) out of 3,272 domestic equity funds
as of 10/31/99.
+ In return for a higher level of growth potential, small-company stocks have
historically experienced a higher degree of price volatility.
++ Foreign investing involves special risks including currency risk, increased
volatility of foreign securities, and differences in auditing and other
financial standards.
Thank you for selecting one or more of the Independence One Equity Funds to
pursue the long-term performance potential of stocks. We look forward to keeping
you informed about the progress of your investment.
Sincerely,
/s/ Edward C. Gonzales
Edward C. Gonzales
President
December 15, 1999
Independence
One Equity
Plus Fund
Question: What is your review of the stock market during the first half of the
fund's fiscal year, which saw a series of interest rate "tightenings" or
increases, by the Federal Reserve Board (the "Fed"), a high level of volatility
and a weak return for the S&P 500?**
Answer: The stock market, anticipating a slower economic growth, pulled back and
became more volatile in response to the Fed's interest rate increases. The
investor reaction, however, has not been as severe as you might expect. The
stock market has fared rather well in spite of the moves by the Fed.
Question: How did the Independence One Equity Plus Fund perform with respect to
total return compared to its benchmark?
Answer: The Independence One Equity Plus Fund's Class Y Shares were up 6.39%*
versus the Standard & Poor's 100 Composite Stock Price Index** being up 6.69%
during the six-month reporting period ended October 31, 1999. Management fees
and a small cash position that is held to cover cash flows caused the fund's lag
in performance.
Question: The fund's portfolio invariably contains some of the largest, most
successful and best-known American companies. What were the fund's top ten
holdings at the end of the reporting period?
Answer: The fund's top ten holdings in descending order at the end of this
period were Microsoft Corp., General Electric Co., Intel Corp., Wal-Mart Stores,
Inc., Cisco Systems, Inc., Lucent Technologies, Inc., International Business
Machines Corp., Citigroup, Inc., Merck & Co., Inc. and Exxon Corp.
Question: As we approach the year 2000, what major factors will influence the
near-term direction of the market?
Answer: Investors' reaction to the upcoming Y2K event will definitely influence
the direction of the market. Another factor that will continue to influence the
market is the interest rate hikes by the Fed in an effort to slow the economy
and curb inflation. The third major factor is the anticipated strong flows of
cash into the equity market in the early part of 2000.
* Performance quoted represents past performance and is no guarantee of future
results. Investment return and principal value will fluctuate, so that an
investor's shares, when redeemed, may be worth more or less than their
original cost.
** The S&P 500 and Standard & Poor's 100 Composite Stock Price Index are
composite indices of common stocks in industry, transportation, and
financial and public utility companies and can be used to compare the total
returns of funds whose portfolios are invested primarily in common stocks.
The index is unmanaged and investments cannot be made in an index. Standard
& Poor's(R), "S&P(R)", and "S&P 100(R)" are trademarks of the McGraw-Hill
Companies, Inc. and have been licensed for use by Independence One Equity
Plus Fund. The fund is not sponsored, endorsed, sold or promoted by or
affiliated with Standard & Poor's.
Independence
One Small
Cap Fund
Question: What is your review of small cap stocks during the first half of the
fund's fiscal year? To what extent did the Fed's rate increases impact the
market?
Answer: The Fed rate increases have reinforced the underperformance of the small
cap sector in comparison to the large cap sector. The end result of the rate
increases is that fewer companies can grow at rates that will attract new
investors and those companies tend to be in the large cap sector.
Question: How did the Independence One Small Cap Fund perform with respect to
its benchmark, the S&P's SmallCap 600 Index ("S&P Small Cap 600")*?
Answer: The Independence One Small Cap Fund was up 1.81%** versus the S&P
SmallCap 600 being up 2.77% during the six-month period ended October 31, 1999.
Management fees and a small cash position that is held to cover cash flows
contributed to the fund's lag in performance.
Question: Small cap stocks have continued to offer compelling valuations versus
large cap stocks. As we approach the end of 1999, what factors may influence the
market's recognition of this under-appreciated sector?
Answer: As portfolios get overweighted in the large cap sector, investors doing
their year-end reallocations may look for opportunities within the small cap
sector.
* The S&P SmallCap 600 is an unmanaged, capitalization-weighted index of 600
common stocks. It is designed to provide a measure of overall small
capitalization company performance, and includes common stocks of companies
from a variety of economic sectors. Investment cannot be made in an index.
"Standard & Poor's,(R)" "S&P(R)," and "S&P SmallCap 600(R)" are trademarks
of the McGraw-Hill Companies, Inc. and have been authorized for use by
Independence One Small Cap Fund. The fund is not sponsored, endorsed, sold
or promoted by or affiliated with Standard & Poor's.
** Past performance is no guarantee of future results.Investment return and
principal value will fluctuate, so that an investor's shares, when redeemed,
may be worth more or less than their original cost.
Independence
One
International
Equity Fund
Question: What are your comments on the international stock market, which, as
measured by the Morgan Stanley Capital International Europe, Australia and Far
East Index ("EAFE"),* outperformed the U.S. stock market during the reporting
period?
Answer: In the first half of the fiscal year, international markets outperformed
the U.S. stock market by just under 4%. However, this disguises some quite
divergent trends. The Japanese stock market rose over 7%, benefiting from
increasing evidence of economic recovery and corporate restructuring. European
equity markets performed broadly in line with the US, but the UK market fell
over 4%, reacting negatively to the move by the Bank of England to lift interest
rates. Asian markets continued their impressive recovery, with the Singapore
market up over 8%. The disparate performance highlights the diversification
benefits that can be achieved by investing in international markets--
particularly given the different stages that these markets are in the business
cycle.
Question: What were the fund's country weightings at the end of the reporting
period based on a percentage of portfolio holdings?
<TABLE>
<CAPTION>
Country Weightings
<S> <C>
Japan 24.0%
United Kingdom 15.4%
Germany 10.8%
France 9.2%
Switzerland 6.6%
Netherlands 6.0%
Italy 4.6%
Sweden 3.1%
Spain 3.0%
Hong Kong 2.3%
Australia 1.9%
Belgium 1.7%
Singapore 0.9%
Liquidity--United States 10.5%
-----
Total 100.0%
=====
</TABLE>
* The EAFE is an unmanaged market capitalization weighted foreign securities
index, which is widely used to measure the performance of European,
Australian, New Zealand and Far Eastern stock markets. The index covers
approximately 1,020 companies drawn from 18 countries in the above regions.
The EAFE is monitored by Capital International, S.A., Geneva, Switzerland.
Investments cannot be made in an index.
Question: What regions do you anticipate will be the strongest performers for
the rest of the fund's fiscal year?
Answer: Japan continues to be our favored region. Valuation is attractive,
monetary policy is unlikely to be tightened for some time and the economy is
showing signs of a self-sustaining recovery. The government recently announced a
(Yen)18 trillion fiscal stimulus package and, coupled with an extension of the
loan guarantee program to small and mid sized companies, should help underpin
both the economy and the equity market. Similarly, European markets are expected
to perform relatively well. Recovery is becoming more entrenched--particularly
in France, Germany and Italy which have lagged the recovery in other European
economies--and valuation is not as stretched as that in the US equity market.
Nonetheless, the increasing globalization of capital flows, means both of these
regions will be unable to ignore a sharp correction in the US equity market.
Indeed, this is the greatest risk we believe presently exists for investors
investing in international markets.
Independence One Equity Plus Fund
Portfolio of Investments
October 31, 1999 (unaudited)
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
Common Stocks--97.3%
Aerospace & Defense--1.8%
51,400 Boeing Co. $ 2,367,612
10,700 General Dynamics Corp. 593,181
18,100 Raytheon Co., Class B 527,162
10,200 Rockwell International Corp. 494,062
25,800 United Technologies Corp. 1,560,900
------------
Total 5,542,917
------------
Automobile--1.9%
64,700 Ford Motor Co. 3,550,413
34,400 General Motors Corp. 2,416,600
------------
Total 5,967,013
------------
Basic Industry--0.4%
19,600 ALCOA, Inc. 1,190,700
Capital Goods--0.7%
13,900 Homestake Mining Co. 116,413
21,500 Minnesota Mining & Manufacturing Co. 2,043,844
------------
Total 2,160,257
------------
Chemicals--2.1%
11,800 Dow Chemical Co. 1,395,350
55,800 Du Pont (E.I.) de Nemours & Co. 3,595,613
3,800 Mallinckrodt, Inc. 128,963
33,900 Monsanto Co. 1,305,150
------------
Total 6,425,076
------------
Computer Services--18.3%
7,700 (1) Ceridian Corp. 168,919
173,800 (1) Cisco Systems, Inc. 12,861,274
8,600 (1) Computer Sciences Corp. 590,712
54,200 Hewlett-Packard Co. 4,014,187
96,700 International Business Machines Corp. 9,512,862
272,900 (1) Microsoft Corp. 25,260,306
77,000 (1) Oracle Corp. 3,662,312
15,700 (1) Unisys Corp. 380,725
------------
Total 56,451,297
------------
Consumer Basics--1.2%
24,000 American Express Co. 3,696,000
Consumer Non-Durables--2.7%
23,200 Campbell Soup Co. 1,044,000
71,000 Procter & Gamble Co. 7,446,125
------------
Total 8,490,125
------------
Electrical Equipment--8.4%
4,700 Black & Decker Corp. 202,100
13,200 Entergy Corp. 395,175
175,400 General Electric Co. 23,777,662
6,800 Honeywell, Inc. 716,975
36,500 Southern Co. 969,531
------------
Total 26,061,443
------------
Electronic Technology--5.8%
176,900 Intel Corp. 13,698,694
9,000 (1) National Semiconductor Corp. 269,438
2,400 Polaroid Corp. 53,550
2,500 Tektronix, Inc. 84,375
42,000 Texas Instruments, Inc. 3,769,500
------------
Total 17,875,557
------------
Entertainment--1.0%
110,300 Disney (Walt) Co. 2,909,163
6,900 (1) Harrah's Entertainment, Inc. 199,669
------------
Total 3,108,832
------------
Finance--7.7%
62,700 Bank One Corp. 2,355,169
92,400 Bank of America Corp. 5,948,250
180,600 Citigroup, Inc. 9,774,975
39,100 U.S. Bancorp, Inc. 1,449,144
88,200 Wells Fargo Co. 4,222,575
------------
Total 23,750,113
------------
Financial Services--0.7%
12,100 Hartford Financial Services Group, Inc. 626,931
19,800 Merrill Lynch & Co., Inc. 1,554,300
------------
Total 2,181,231
------------
Food & Beverage--4.8%
132,000 Coca-Cola Co. 7,788,000
19,200 Heinz (H.J.) Co. 916,800
72,400 McDonald's Corp. 2,986,500
78,200 PepsiCo, Inc. 2,712,563
17,300 Ralston Purina Co. 543,869
------------
Total 14,947,732
------------
Forest Products & Paper--0.7%
3,100 Boise Cascade Corp. 110,438
5,100 Champion International Corp. 294,844
22,100 International Paper Co. 1,163,013
10,800 Weyerhaeuser Co. 644,625
------------
Total 2,212,920
------------
Home Building--0.1%
4,100 Fluor Corp. 163,488
Hospital Supplies--0.6%
15,600 Baxter International, Inc. 1,012,050
30,200 Columbia/HCA Healthcare Corp. 728,575
------------
Total 1,740,625
------------
Household Products--0.6%
31,200 Colgate-Palmolive Co. 1,887,600
Insurance--3.3%
13,300 American General Corp. 986,694
82,800 American International Group, Inc. 8,523,225
10,600 CIGNA Corp. 792,350
------------
Total 10,302,269
------------
Manufacturing--0.4%
10,200 Allegheny Teledyne, Inc. 154,912
16,900 Eastman Kodak Co. 1,165,044
------------
Total 1,319,956
------------
Office Equipment--0.4%
4,300 Harris Corp. 96,481
35,500 Xerox Corp. 994,000
------------
Total 1,090,481
------------
Oil--6.3%
17,200 Atlantic Richfield Co. 1,602,825
17,600 Baker Hughes, Inc. 491,700
11,404 Coastal Corp. 480,393
129,800 Exxon Corp. 9,613,312
23,600 Halliburton Co. 889,425
41,900 Mobil Corp. 4,043,350
18,600 Occidental Petroleum Corp. 424,312
29,300 Schlumberger Ltd. 1,774,481
------------
Total 19,319,798
------------
Personal Care Products--0.2%
13,900 Avon Products, Inc. 448,275
5,700 International Flavors & Fragrances, Inc. 218,025
------------
Total 666,300
------------
Pharmaceuticals--8.8%
106,200 Bristol-Myers Squibb Co. 8,157,487
71,900 Johnson & Johnson 7,531,525
125,400 Merck & Co., Inc. 9,977,138
27,100 Pharmacia & Upjohn, Inc. 1,461,706
------------
Total 27,127,856
------------
Recreation--0.0%
4,900 Brunswick Corp. 110,863
Retail--7.2%
79,300 Home Depot, Inc. 5,987,150
26,400 (1) K Mart Corp. 265,650
11,400 Limited, Inc. 468,825
17,900 May Department Stores Co. 620,906
20,300 Sears, Roebuck & Co. 572,206
10,300 Tandy Corp. 648,256
13,200 (1) Toys `R' Us, Inc. 186,450
238,000 Wal-Mart Stores, Inc. 13,491,625
------------
Total 22,241,068
------------
Services--0.6%
37,700 CBS Corp. 1,840,231
Steel0.0%
7,000 (1) Bethlehem Steel Corp. 48,562
Telecommunications--9.2%
170,900 AT&T Corp. 7,989,575
83,000 Bell Atlantic Corp. 5,389,813
163,800 Lucent Technologies, Inc. 10,524,150
71,000 Nortel Networks Corp. 4,397,563
------------
Total 28,301,101
------------
Transportation--0.8%
24,900 Burlington Northern Santa Fe 793,688
7,500 Delta Air Lines, Inc. 408,281
<CAPTION>
Shares or
Principal
Amount Value
<S> <C> <C>
Common Stocks--continued
Transportation--continued
15,900 (1) FDX Corp. $ 684,694
20,300 Norfolk Southern Corp. 496,081
------------
Total 2,382,744
------------
Utilities--0.3%
23,200 Williams Cos., Inc. (The) 870,000
Utilities - Electric--0.3%
10,300 American Electric Power Co., Inc. 355,350
11,600 Unicom Corp. 444,425
------------
Total 799,775
------------
Total Common Stocks (identified cost $139,349,332) 300,273,930
============
(2) Repurchase Agreement--2.6%
$ 8,039,000 Donaldson, Lufkin and Jenrette Securities Corp., 5.22%,
dated 10/29/1999, due 11/1/1999 (at cost) 8,039,000
------------
Total Investments (identified cost $147,388,332) (3) $308,312,930
============
</TABLE>
(1) Non-income producing security.
(2) The repurchase agreement is fully collateralized by U.S. Treasury
obligations based on market prices at the date of the portfolio.
(3) The cost of investments for federal tax purposes amounts to $147,388,332.
The net unrealized appreciation of investments on a federal tax basis
amounts to $160,924,598 which is comprised of $161,984,045 appreciation and
$1,059,447 depreciation at October 31, 1999.
Note: The categories of investments are shown as a percentage of net assets
($308,654,495) at October 31, 1999.
(See Notes which are an integral part of the Financial Statements)
Independence One Equity Plus Fund
Statement of Assets and Liabilities
October 31, 1999 (unaudited)
<TABLE>
<S>
<C> <C>
Assets:
Total investments in securities, at value (identified and tax cost
$147,388,332) $ 308,312,930
Cash
146,757
Income
receivable
259,597
Unamortized organizational
costs 4,784
Other
assets
5,762
- -------------------
Total
assets
308,729,830
- -------------------
Liabilities:
Accrued expenses $ 75,335
- -------------------
Total
liabilities
75,335
- -------------------
Net Assets for 13,225,230 shares
outstanding $ 308,654,495
Net Assets Consist of:
Paid in
capital
$ 141,561,134
Net unrealized appreciation of
investments 160,924,598
Accumulated net realized gain on
investments 6,060,069
Undistributed net investment
income 108,694
- -------------------
Total Net
Assets $
308,654,495
- -------------------
Net Asset Value, Offering Price and Redemption Proceeds Per Share:
Class Y Shares:
$308,645,328 / 13,224,837 shares
outstanding $ 23.34
Class B Shares:
Net Asset Value Per Share ($9,167 / 393 shares
outstanding) $ 23.33
Offering Price Per
Share $
23.33
Redemption Proceeds Per Share (95.00/100 of $23.33)
(1) $ 22.16
</TABLE>
(1) See "What Do Shares Cost?" in the Prospectus.
(See Notes which are an integral part of the Financial Statements)
Independence One Equity Plus Fund
Statement of Operations
Six Months Ended October 31, 1999 (unaudited)
<TABLE>
<S>
<C> <C>
Investment Income:
Dividends (net of foreign taxes withheld of
$827) $ 1,684,632
Interest
161,027
- ----------------
Total
income
1,845,659
- ----------------
Expenses:
Investment advisory fee $ 605,398
Administrative personnel and services fee 150,482
Custodian fees 23,494
Transfer and dividend disbursing agent fees and expenses 16,854
Directors'/Trustees' fees 5,975
Auditing fees 6,887
Legal fees 2,530
Portfolio accounting fees 33,687
Distribution services fee--Class B Shares 2
Shareholder services fee--Class B Shares 1
Share registration costs 9,902
Printing and postage 6,324
Insurance premiums 855
Miscellaneous 5,061
---------------
Total expenses 867,452
Waiver
Waiver of investment advisory fee (151,350)
Net
expenses
716,102
Net investment
income
1,129,557
Realized and Unrealized Gain on Investments:
Net realized gain on
investments
3,745,114
Net change in unrealized appreciation of
investments 13,469,074
Net realized and unrealized gain on
investments 17,214,188
Change in net assets resulting from
operations $ 18,343,745
</TABLE>
(See Notes which are an integral part of the Financial Statements)
Independence One Equity Plus Fund
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
Six Months Ended
October 31,
1999 Year Ended
(unaudited) April 30, 1999
<S>
<C> <C>
Increase (Decrease) in Net Assets:
Operations
Net investment income $
1,129,557 $ 2,272,845
Net realized gain on investments ($3,745,114 and $8,229,214,
3,745,114 7,942,700
respectively, as computed for federal tax
purposes)
Net change in unrealized appreciation
13,469,074 49,664,022
Change in net assets resulting from operations
18,343,745 59,879,567
Distributions to
Shareholders
Distributions from net investment
income
Class Y Shares
(1,135,032) (2,243,571)
Distributions from net realized
gains
Class Y Shares
- -- (8,436,196)
Change in net assets resulting from distributions to shareholders
(1,135,032) (10,679,767)
Share
Transactions
Proceeds from sale of shares
23,780,966 86,195,491
Net asset value of shares issued to shareholders in payment of
734,287 8,272,236
distributions
declared
Cost of shares redeemed
(28,505,575) (57,984,567)
Change in net assets resulting from share transactions
(3,990,322) 36,483,160
Change in net assets
13,218,391 85,682,960
Net
Assets:
Beginning of period
295,436,104 209,753,144
End of period (including undistributed net investment income of $
308,654,495 $ 295,436,104
$108,694 and $114,169, respectively)
</TABLE>
(See Notes which are an integral part of the Financial Statements)
Independence One Equity Plus Fund
Financial Highlights--Class Y Shares
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Six Months
Ended October Year Ended April
30,
31, 1999
(unaudited) 1999 1998
1997 1996 (1)
<S> <C> <C> <C>
<C> <C>
Net asset value,
beginning
of period $ 22.02 $ 18.24 $ 14.04 $
11.39 $ 10.00
Income
from
investment
operations
Net investment income 0.08 0.18 0.22
0.21 0.11
Net realized and unrealized
gain on investments 1.32 4.44 4.85
2.70 1.38
-------- -------- --------
- -------- --------
Total from investment
operations 1.40 4.62 5.07
2.91 1.49
-------- -------- --------
- -------- --------
Less
distributions
Distributions from net
investment income (0.08) (0.18) (0.22)
(0.21) (0.10)
Distributions from net
realized gain on investments -- (0.66) (0.65)
(0.05) --
-------- -------- --------
- -------- --------
Total distributions (0.08) (0.84) (0.87)
(0.26) (0.10)
-------- -------- --------
- -------- --------
Net asset value, end of period $ 23.34 $ 22.02 $ 18.24 $
14.04 $ 11.39
Total return (2) 6.39% 26.10% 37.20%
26.00% 14.96%
Ratios to average net
assets
Expenses (3) 0.57%(4) 0.59% 0.61%
0.64% 0.70%(4)
Net investment income (3) 0.65%(4) 0.85% 1.09%
1.50% 1.61%(4)
Expenses (after waivers) 0.47%(4) 0.48% 0.42%
0.40% 0.39%(4)
Net investment income 0.75%(4) 0.96% 1.28%
1.74% 1.92%(4)
(after
waivers)
Supplemental
data
Net assets, end of period $308,645 $295,436 $209,753
$169,328 $112,609
(000omitted)
Portfolio turnover 4% 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. If such voluntary
waivers had not occurred, the ratios would have been as indicated.
(4) Computed on an annualized basis.
(See Notes which are an integral part of the Financial Statements)
Independence One Small Cap Fund
Portfolio of Investments
October 31, 1999 (unaudited)
<TABLE>
<CAPTION>
Shares
Value
Common Stocks--95.2%
<S>
<C> <C>
Basic Industry--5.3%
5,000 AMCOL International
Corp. $ 61,250
6,700 (1) Anixter International,
Inc. 139,863
6,800 Aptargroup,
Inc. 182,750
6,600 (1) Buckeye Technologies,
Inc. 99,825
4,700 Caraustar Industries,
Inc. 113,387
3,400 ChemFirst,
Inc. 91,375
4,100 Coeur d'Alene Mines
Corp. 17,937
7,000 Corn Products International,
Inc. 227,937
7,200 Delta & Pine Land
Co. 210,600
12,500 (1) Hecla Mining
Co. 30,469
3,100 IMCO Recycling,
Inc. 45,338
4,700 MacDermid,
Inc. 159,212
2,200 Republic Group,
Inc. 37,950
7,100 (1) Stillwater Mining
Co. 142,887
4,800 (1) Triarc Companies, Inc., Class
A 95,400
3,100 (1) WHX
Corp. 28,481
- ------------------
Total 1,684,661
- ------------------
Consumer Durables--3.6%
3,200 (1) Action Performance Cos.,
Inc. 65,100
2,300 Bassett Furniture Industries,
Inc. 41,400
9,000 (1) Champion Enterprises,
Inc. 82,125
12,000 D. R. Horton,
Inc. 141,750
2,100 Dixie Group,
Inc. 14,175
7,600 Ethan Allen Interiors,
Inc. 270,275
9,800 La-Z-Boy,
Inc. 178,850
8,800 Oakwood Homes
Corp. 25,850
4,700 Polaris Industries, Inc., Class
A 164,206
2,800 Ryland Group,
Inc. 57,750
6,800 (1) Toll Brothers,
Inc. 119,000
- ------------------
Total 1,160,481
- ------------------
Consumer Non-Durables--2.4%
2,600 (1) Ashworth,
Inc. 10,888
3,400 (1) Canandaigua Wine Co., Inc., Class
A 205,700
8,000 Earthgrains
Co. 182,500
3,000 (1) Gibson Greetings,
Inc. 14,625
6,500 (1) Nautica Enterprise,
Inc. 97,906
7,800 (1) Smithfield Foods,
Inc. 177,450
7,700 Wolverine World Wide,
Inc. 78,925
- ------------------
Total 767,994
- ------------------
Energy Minerals--2.3%
6,100 (1) Barrett
Resources 204,731
9,100 Cross Timbers Oil
Co. 101,237
7,700 (1) Newfield Exploration
Co. 226,669
7,500 Pogo Producing
Co. 150,469
2,100 St. Mary Land & Exploration
Co. 53,550
- ------------------
Total 736,656
- ------------------
Finance1--3.8%
13,500 (1) Americredit
Corp. 234,590
9,100 (1) Amresco,
Inc. 26,731
5,300 Centura Banks,
Inc. 279,244
5,200 Commerce Bancorp,
Inc. 233,025
11,300 Commercial Federal
Corp. 221,762
10,000 Cullen Frost Bankers,
Inc. 288,750
5,300 Downey Financial
Corp. 117,262
6,700 Eaton Vance
Corp. 229,056
7,100 Enhance Financial Services Group,
Inc. 129,575
12,200 First American Financial
Corp. 180,712
5,200 First Midwest Bancorp,
Inc. 212,550
5,400 First
BanCorp. 120,825
13,100 Fremont General
Corp. 112,987
6,500 Frontier Insurance Group,
Inc. 57,694
7,300 Hudson United
Bancorp 229,523
8,100 Mutual Risk Management
Ltd. 122,512
5,100 Orion Capital
Corp. 249,262
4,900 Pioneer Group,
Inc. 60,944
6,900 Radian Group,
Inc. 364,406
8,800 Raymond James Financial,
Inc. 178,200
5,300 Riggs National
Corp. 80,162
5,200 Selective Insurance Group,
Inc. 97,175
3,900 (1) Silicon Valley
Bancshares 127,237
8,000 UST
Corp. 248,000
8,100 United Bankshares,
Inc. 199,463
- ------------------
Total 4,401,647
- ------------------
Health Care--7.9%
2,000 (1) Advance Paradigm,
Inc. 85,250
5,100 Alpharma, Inc., Class
A 179,456
5,700 (1) Cephalon,
Inc. 92,625
6,300 (1) Cerner
Corp. 94,106
6,800 (1) Genesis Health Ventures,
Inc. 11,475
7,400 (1) IDEXX Laboratories,
Inc. 111,925
5,200 (1) Incyte Pharmaceuticals,
Inc. 100,100
5,300 Invacare
Corp. 110,637
8,100 Jones Pharma,
Inc. 251,100
5,900 (1) Magellan Health Services,
Inc. 35,769
6,700 (1) Medquist,
Inc. 214,400
4,600 Mentor
Corp. 108,387
6,100 (1) North American Vaccine,
Inc. 32,406
4,000 (1) Noven Pharmaceuticals,
Inc. 39,250
9,000 (1) Orthodontic Centers of America,
Inc. 123,750
4,700 (1) Parexel International
Corp. 44,944
6,300 (1) Patterson Dental
Co. 283,894
8,300 (1) Renal Care Group,
Inc. 154,588
10,400 (1) Safeskin
Corp. 87,100
5,000 (1) Sierra Health Services,
Inc. 36,562
5,900 (1) Universal Health Services, Inc., Class
B 173,312
4,800 (1) Vertex Pharmaceuticals,
Inc. 137,400
- ------------------
Total 2,508,436
- ------------------
Producer Manufacturing--7.3%
7,300 Applied Power, Inc., Class
A 212,156
6,800 Baldor Electric
Co. 132,175
4,600 Belden,
Inc. 84,525
5,300 (1) Cable Design Technologies, Class
A 102,687
13,700 (1) Gentex
Corp. 235,469
3,800 Graco,
Inc. 127,300
9,900 Interface,
Inc. 40,219
4,700 Intermet
Corp. 47,588
6,700 (1) Mueller Industries,
Inc. 213,981
1,100 (1) Nashua
Corp. 9,213
3,400 (1) Oak Industries,
Inc. 139,400
2,000 Robbins & Myers,
Inc. 32,375
5,700 Roper Industries,
Inc. 175,987
6,700 (1) SLI,
Inc. 72,025
2,400 (1) SPS Technologies,
Inc. 74,400
3,400 Scott Technologies,
Inc. 64,600
4,300 Smith (A.O.)
Corp. 104,275
2,300 Spartan Motors,
Inc. 10,063
7,000 Tredegar Industries,
Inc. 153,563
5,800 (1) Zebra Technologies Corp., Class
A 315,375
- ------------------
Total 2,347,376
- ------------------
Retail Trade--7.2%
5,900 (1) Ann Taylor Stores
Corp. 251,119
2,600 Baker (J.),
Inc. 14,463
1,100 (1) Damark International, Inc., Class
A 11,241
3,100 (1) Discount Auto Parts,
Inc. 44,175
7,200 (1) Express Scripts, Inc., Class
A 353,700
4,000 (1) Footstar,
Inc. 140,000
3,600 Hancock Fabrics,
Inc. 14,850
5,800 (1) Just For Feet,
Inc. 7,975
7,400 (1) Linens 'N Things,
Inc. 294,150
7,800 (1) Mens Wearhouse,
Inc. 171,113
5,400 (1) Michaels Stores,
Inc. 181,238
18,000 Pier 1 Imports,
Inc. 106,878
7,200 Regis
Corp. 133,650
5,500 Shopko Stores,
Inc. 137,844
4,900 (1) Whole Foods Market,
Inc. 166,600
6,800 (1) Zale
Corp. 284,750
- ------------------
Total 2,313,746
- ------------------
Services--13.9%
5,300 Applebee's International,
Inc. 152,706
5,100 (1) CEC Entertainment,
Inc. 163,519
9,700 CKE Restaurants,
Inc. 65,476
3,400 (1) Catalina Marketing
Corp. 318,325
6,900 Central Parking
Corp. 185,006
9,500 (1) CommScope,
Inc. 378,812
7,200 (1) Dendrite International,
Inc. 225,900
4,800 (1) Dycom Industries,
Inc. 156,300
9,300 (1) HA-LO Industries,
Inc. 45,338
4,900 (1) Hollywood Park,
Inc. 84,831
12,200 (1) Interim Services,
Inc. 200,538
7,100 (1) Jack in the Box,
Inc. 170,844
8,000 (1) Labor Ready,
Inc. 81,500
4,800 (1) Landrys Seafood Restaurants,
Inc. 36,000
3,500 (1) Lason Holdings,
Inc. 130,047
3,900 (1) Offshore Logistics,
Inc. 36,075
2,300 (1) Panera Bread
Co. 15,813
3,800 (1) Primark
Corp. 96,425
8,900 (1) Profit Recovery Group International,
Inc. 366,569
3,300 SEI Investments,
Co. 321,647
13,700 Snyder Communications,
Inc. 174,675
3,500 (1) Sonic
Corp. 98,000
4,300 TCBY Enterprises,
Inc. 18,006
2,500 (1) Taco Cabana, Inc., Class
A 21,719
8,900 True North Communications,
Inc. 358,781
8,300 (1) Tuboscope,
Inc. 92,338
10,500 (1) Valassis Communications,
Inc. 451,500
- ------------------
Total 4,446,690
- ------------------
Technology--25.0%
5,100 AAR
Corp. 85,106
2,800 (1) Adaptive Broadband
Corp. 103,425
7,900 (1) American Management System,
Inc. 204,413
8,900 (1) Aspect Telecommunications
Corp. 224,169
4,900 (1) Auspex Systems,
Inc. 27,256
5,000 (1) BISYS Group,
Inc. 255,000
6,900 (1) Burr Brown
Corp. 271,256
7,500 (1) C-Cube Microsystems,
Inc. 333,750
5,100 CTS
Corp. 288,469
10,900 (1) Ciber,
Inc. 177,806
7,700 (1) Cognex
Corp. 230,519
7,700 (1) DSP Communications,
Inc. 270,944
5,400 Dallas Semiconductor
Corp. 317,925
2,800 (1) Digi International,
Inc. 34,650
6,000 (1) Filenet
Corp. 99,188
4,100 Gerber Scientific,
Inc. 77,388
4,500 (1) HNC
Software 179,719
7,200 (1) Harbinger
Corp. 114,750
4,600 (1) Hutchinson Technology,
Inc. 117,300
2,800 Innovex,
Inc. 22,400
6,000 (1) Intervoice,
Inc. 74,250
7,400 (1) Kemet
Corp. 236,569
8,900 (1) Lattice Semiconductor
Corp. 314,838
8,000 (1) Macromedia,
Inc. 515,500
3,100 (1) Marshall
Industries 132,593
7,100 (1) Mercury Interactive
Corp. 575,988
7,700 (1) Micrel,
Inc. 418,688
5,900 National Computer Systems,
Inc. 223,094
6,300 National Data
Corp. 151,200
9,300 (1) National Instruments
Corp. 279,581
7,000 (1) Orbital Sciences
Corp. 103,250
3,100 (1) Plantronics,
Inc. 181,544
7,300 (1) RSA Security,
Inc. 259,150
9,300 (1) Read-Rite
Corp. 36,619
13,500 (1) S3,
Inc. 135,000
7,800 (1) Technology Solutions
Corp. 159,900
1,700 (1) Three-Five Systems,
Inc. 57,481
4,200 (1) Trimble Navigation
Ltd. 68,250
5,600 (1) Visio
Corp. 221,725
10,100 (1) Whittman-Hart,
Inc. 388,219
- ------------------
Total 7,968,872
- ------------------
Transportation--3.1%
6,300 Air Express International
Corp. 167,738
9,400 Expeditors International Washington,
Inc. 351,325
6,800 (1) Fritz Companies,
Inc. 76,075
5,600 (1) Heartland Express,
Inc. 75,950
2,300 (1) M.S. Carriers,
Inc. 64,975
6,300 (1) Mesa Air Group,
Inc. 35,438
4,900 USFreightways
Corp. 222,031
- ------------------
Total 993,532
- ------------------
Utilities--3.4%
5,800 Atmos Energy
Corp. 131,588
<CAPTION>
Shares or
Principal
Amount
Value
<S>
<C> <C>
Common Stocks--continued
Utilities--continued
7,600 Philadelphia Suburban
Corp. $ 174,800
5,800 Piedmont Natural Gas,
Inc. 185,600
5,700 Southwest Gas
Corp. 132,525
7,200 United Water Resources,
Inc. 243,000
7,000 WICOR,
Inc. 208,250
- ------------------
Total 1,075,763
- ------------------
Total Common Stocks (identified cost
$30,970,801) 30,405,854
==================
(2) Repurchase Agreement5.0%
$ 1,596,000 Donaldson, Lufkin and Jenrette Securities Corp., 5.22%, dated 10/29/1999,
due 11/1/1999 (at
cost) 1,596,000
- ------------------
Total Investments (identified cost $32,566,801)
(3) $ 32,001,854
==================
</TABLE>
(1) Non-income producing security.
(2) The repurchase agreement is fully collateralized by U.S. Treasury
obligations based on market prices at the date of the portfolio.
(3) The cost of investments for federal tax purposes amounts to $32,566,801.
The net unrealized depreciation of investments on a federal tax basis
amounts to $564,947 which is comprised of $4,296,722 appreciation and
$4,861,669 depreciation at October 31, 1999.
Note: The categories of investments are shown as a percentage of net assets
($31,935,024) at October 31, 1999.
(See Notes which are an integral part of the Financial Statements)
Independence One Small Cap Fund
Statement of Assets and Liabilities
October 31, 1999 (unaudited)
<TABLE>
<S>
<C> <C>
Assets:
Total investments in securities, at value (identified and tax cost
$32,566,801) $ 32,001,854
Income
receivable
7,048
Receivable for investments
sold 707,069
- ------------------
Total
assets
32,715,971
Liabilities:
Payable for investments purchased $ 736,752
Payable to Bank 9,162
Accrued expenses 35,033
Total
liabilities
780,947
- ------------------
Net Assets for 3,337,850 shares
outstanding $ 31,935,024
Net Assets Consist of:
Paid in
capital
$ 30,789,882
Net unrealized depreciation of
investments (564,947)
Accumulated net realized gain on
investments 1,750,994
Distributions in excess of net investment
income (40,905)
- ------------------
Total Net
Assets $
31,935,024
- ------------------
Net Asset Value, Offering Price and Redemption Proceeds Per Share:
$31,935,024 / 3,337,850 shares
outstanding $9.57
</TABLE>
(See Notes which are an integral part of the Financial Statements)
Independence One Small Cap Fund
Statement of Operations
Six Months Ended October 31, 1999 (unaudited)
<TABLE>
<S>
<C> <C>
Investment Income:
Dividends (net of foreign taxes withheld of
$97) $ 98,261
Interest
35,096
- ---------------
Total
income
133,357
Expenses:
Investment advisory fee $ 78,361
Administrative personnel and services fee 15,583
Custodian fees 20,443
Transfer and dividend disbursing agent fees and expenses 15,632
Directors'/Trustees' fees 873
Auditing fees 6,787
Legal fees 2,241
Portfolio accounting fees 23,624
Share registration costs 6,085
Printing and postage 3,594
Insurance premiums 537
Miscellaneous 502
--------------
Total expenses 174,262
Net operating
loss
(40,905)
Realized and Unrealized Gain on Investments:
Net realized gain on
investments 510,751
Net change in unrealized depreciation of
investments 63,872
Net realized and unrealized gain on
investments 574,623
Change in net assets resulting from
operations $ 533,718
</TABLE>
(See Notes which are an integral part of the Financial Statements)
Independence One Small Cap Fund
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
Six
Months
Ended
October 31,
1999 Period Ended
(unaudited) April 30, 1999(1)
<S>
<C> <C>
Increase (Decrease) in Net Assets:
Operations
Net operating loss $
(40,905) $ (14,530)
Net realized gain on investments ($510,751 and $1,263,219,
510,751 1,269,437
respectively, as computed for federal tax purposes)
Net change in unrealized appreciation (depreciation) of investments
63,872 (628,819)
Change in net assets resulting from operations
533,718 626,088
Distributions to Shareholders
Distributions from net investment income
- -- (10,998)
Distributions from net realized gains
- -- (3,666)
Change in net assets resulting from distributions to shareholders
- -- (14,664)
Share Transactions
Proceeds from sale of shares
2,784,221 31,157,123
Net asset value of shares issued to shareholders in payment of
- -- 11,435
distributions declared
Cost of shares redeemed
(969,908) (2,192,989)
Change in net assets resulting from share transactions
1,814,313 28,975,569
Change in net assets
2,348,031 29,586,993
Net Assets:
Beginning of period
29,586,993 --
End of period (including distributions in excess of net investment $
31,935,024 $ 29,586,993
income of $(40,905) and $0, respectively)
</TABLE>
(1) For the period from June 22, 1998 (date of initial public investment) to
April 30, 1999.
(See Notes which are an integral part of the Financial Statements)
Independence One Small Cap Fund
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Six
Months
Ended
October 31,
1999 Period Ended
(unaudited)
April 30, 1999 (1)
<S> <C>
<C>
Net asset value, beginning of period $
9.40 $ 10.00
Income from investment operations
Net investment loss
(0.01) (0.01)
Net realized and unrealized gain (loss) on investments
0.18 (0.59)(2)
- ------- -------
Total from investment operations
0.17 (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 $
9.57 $ 9.40
Total return (4)
1.81% (5.94)%
Ratios to average net assets
Expenses (5) 1.11
%(6) 1.69 %(6)
Net investment income (5)
(0.26)%(6) (0.51)%(6)
Expenses (after waivers) 1.11
%(6) 1.27 %(6)
Net investment income (after waivers)
(0.26)%(6) (0.09)%(6)
Supplemental data
Net assets, end of period (000 omitted)
$31,935 $29,587
Portfolio turnover
20% 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 the Funds 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. If such voluntary
waivers had not occurred, the ratios would have been as indicated.
(6) Computed on an annualized basis.
(See Notes which are an integral part of the Financial Statements)
Independence One International Equity Fund
Portfolio of Investments
October 31, 1999 (unaudited)
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
Common Stocks--70.4%
Australia--1.6%
Banking--0.3%
2,047 Australia & New Zealand Banking Group, Melbourne $ 13,509
1,430 Commonwealth Bank of Australia 23,436
600 St. George Bank Ltd. 3,949
2,585 Westpac Banking Corp. Ltd., Sydney 16,587
------------
Total 57,481
------------
Beverages & Tobacco--0.0%
500 British American Tobacco Australasia Ltd. 4,703
Broadcasting & Publishing--0.1%
1,500 John Fairfax Holdings Ltd. 3,759
1,002 News Corp. Ltd. 7,246
2,400 PMP Communications Ltd. 3,145
500 Publishing and Broadcasting Ltd. 2,965
1,900 Ten Network Holdings Ltd. 2,468
------------
Total 19,583
------------
Building Materials & Components--0.1%
3,251 Boral Ltd. 4,893
1,300 CSR Ltd. 2,918
------------
Total 7,811
------------
Chemicals--0.0%
712 Orica Ltd. 3,764
Construction & Housing--0.1%
2,100 Leighton Holdings Ltd. 7,633
Energy Minerals--0.0%
3,000 Orogen Minerals Ltd. 3,214
Energy Sources--0.1%
1,726 Broken Hill Proprietary Co. Ltd. 17,839
1,320 Futuris Corp. Ltd. 1,675
2,500 Novus Petroleum Ltd. 2,280
------------
Total 21,794
------------
Financial Services--0.1%
1,638 Colonial Ltd. 6,027
6,800 Macquarie Infrastructure Group 6,418
400 Suncorp-Metway Ltd. 2,107
------------
Total 14,552
------------
Gold Mines--0.0%
2,700 Acacia Resources, Ltd. 4,787
1,500 (1) Lihir Gold Ltd. 1,234
------------
Total 6,021
------------
Health & Personal Care--0.0%
505 F.H. Faulding & Co. Ltd. 3,088
Industrial Components--0.0%
618 Pacifica Group Ltd. 1,995
Insurance--0.1%
1,110 AMP Ltd. 11,287
2,800 National Mutual Holdings Ltd. 4,053
------------
Total 15,340
------------
Leisure & Tourism--0.1%
1,000 Aristocrat Leisure Ltd. 9,566
7,700 (1) Star City Holdings, Inc. 7,252
------------
Total 16,818
------------
Merchandising--0.0%
1,495 Woolworth's Ltd. 5,081
Metals - Non Ferrous--0.2%
1,100 Comalco Ltd. 5,315
1,600 North Ltd. 3,092
400 Rio Tinto PLC (Australia) 6,430
3,000 WMC Ltd. 12,875
4,876 Western Metals Ltd. 1,741
------------
Total 29,453
------------
Miscellaneous Materials & Commodities--0.0%
1,100 Iluka Resources Ltd. 2,595
Multi-Industry--0.0%
413 Smith(Howard) 2,961
Oil--0.0%
5,000 Oil Search Ltd. 5,835
Real Estate--0.1%
1,600 AMP Diversified Propertry Trust 2,398
5,000 Australian Growth Properties Ltd. 2,073
4,177 Gen Property Trust 6,710
308 Lend Lease Corp., Ltd. 3,544
1,400 Westpac Property Trust 1,428
------------
Total 16,153
------------
Telecommunications--0.2%
600 (1) AAPT Ltd. 1,940
3,000 (1) Cable & Wireless Optus Ltd. 6,868
1,550 (1) Telstra Corp. Ltd.INS RECP 4,972
5,000 Telstra Corp. Ltd. 25,435
------------
Total 39,215
------------
Transportation - Airlines--0.1%
3,373 Qantas Airways 10,733
------------
Total Australia (identified cost $277,219) 295,823
============
France--8.5%
Automobiles--0.4%
340 Peugeot SA 65,267
Banking--1.2%
1,305 Banque Nationale de Paris 114,618
195 Banque Nationale de Paris, Warrants 1,153
440 Societe Generale, Paris 95,802
------------
Total 211,573
------------
Beverages & Tobacco--0.2%
650 Pernod-Ricard 43,894
Building Materials & Components--0.4%
440 Compagnie de St. Gobain 76,364
Business & Public Services--0.8%
400 Cap Gemini SA 60,587
560 Suez Lyonnaise des Eaux 90,417
------------
Total 151,004
------------
Chemicals--0.4%
450 L'Air Liquide 69,343
Electrical & Electronics--0.5%
150 Alcatel 23,430
940 Schneider Electric SA 64,762
------------
Total 88,192
------------
Energy Sources--0.9%
6 Elf Aquitaine SA 884
1,152 Total Fina SA, Class B 155,707
------------
Total 156,591
------------
Health & Personal Care--0.5%
100 L'Oreal 66,740
790 (1) Sanofi Synthelabo SA 34,859
------------
Total 101,599
------------
Industrial Components--0.4%
1,600 Michelin, Class B 69,675
Insurance--0.3%
400 Axa 56,421
Leisure & Tourism--0.4%
340 Accor SA 76,533
Merchandising--0.5%
330 Carrefour SA 61,091
200 Pinault-Printemps-Redoute SA 38,140
------------
Total 99,231
------------
Recreation, Other Consumer Goods--0.1%
55 LVMH (Moet-Hennessy) 16,603
Telecommunications--1.2%
2,230 France Telecommunications SA 215,446
Utilities - Electrical & Gas--0.3%
690 Vivendi 52,292
------------
Total France (identified cost $1,419,764) 1,550,028
============
Germany--9.5%
Automobiles--1.1%
2,450 DaimlerChrysler AG 190,700
Banking--1.2%
1,950 Deutsche Bank AG 139,886
700 Dresdner Bank AG, Frankfurt 35,894
600 HypoVereinsbank AG, Munich 39,381
------------
Total 215,161
------------
Chemicals--0.5%
1,000 BASF AG 44,967
1,300 Bayer AG 53,192
------------
Total 98,159
------------
Construction & Housing--0.4%
1,800 Hochtief AG 74,029
Electrical & Electronics--0.6%
1,160 Siemens AG 104,139
Health & Personal Care--0.3%
1,800 Merck KGAA 62,101
Insurance--1.4%
560 Allianz AG Holding 170,526
400 Muenchener Rueckversicherungs-Gesellschaft AG 91,721
------------
Total 262,247
------------
Machinery & Engineering--0.6%
950 Linde AG 49,763
950 Linde AG, Rights 3,008
1,650 MAN AG 54,844
------------
Total 107,615
------------
Metals - Steel--l0.4%
3,100 (1) Thyssen Krupp AG 73,367
Telecommunications--2.4%
6,551 Deutsche Telekom AG 301,122
840 Mannesmann AG 132,091
------------
Total 433,213
------------
Transportation - Airlines--0.1%
1,000 Deutsche Lufthansa AG 21,037
Utilities - Electrical & Gas--0.5%
1,140 RWE AG 45,926
850 Veba AG 45,955
------------
Total 91,881
------------
Total Germany (identified cost $1,661,736) 1,733,649
============
Hong Kong--2.1%
Banking--0.4%
6,000 HSBC Holdings PLC 72,215
Multi-Industry--0.5%
15,000 Citic Pacific Ltd. 38,907
5,000 Hutchison Whampoa Ltd. 50,203
------------
Total 89,110
------------
Real Estate--0.2%
5,000 Sun Hung Kai Properties Ltd. 40,548
Telecommunications--0.5%
22,000 (1) China Telecom (Hong Kong) Ltd. 75,188
20,000 (1) Pacific Century CyberWorks Ltd. 15,189
------------
Total 90,377
------------
Utilities - Electrical & Gas--0.5%
6,000 Cheung Kong 54,644
30,800 Hong Kong and China Gas Co. Ltd. 40,837
------------
Total 95,481
------------
Total Hong Kong (identified cost $277,738) 387,731
============
Japan--22.2%
Appliances & Household Durables--1.7%
2,000 Sony Corp. 311,883
Automobiles--0.8%
4,000 Toyota Motor Credit Corp. 138,487
Banking--2.3%
15,000 Bank of Tokyo-Mitsubishi Ltd. 248,585
12,000 Industrial Bank of Japan Ltd., Tokyo 162,271
------------
Total 410,856
------------
Beverages & Tobacco--0.2%
4 Japan Tobacco, Inc. 44,116
Business & Public Services--2.8%
2,000 (1) Secom Co. Ltd.NEW 212,909
2,000 Secom Co. Ltd. 214,443
200 Softbank Corp. 83,054
------------
Total 510,406
------------
Chemicals--0.8%
25,000 Asahi Chemical Industry Co. Ltd. 151,050
Electrical & Electronics--1.3%
12,000 NEC Corp. 242,831
Food & Household Products--1.9%
5,000 Kao Corp. 152,489
3,000 Nissin Food Products 86,027
10,000 Yakult Honsha Co. 102,234
------------
Total 340,750
------------
Health & Personal Care--1.9%
6,000 Sankyo Co. Ltd. 170,902
3,000 Takeda Chemical Industries 172,341
------------
Total 343,243
------------
Industrial Components--1.5%
10,000 Minebea Co. 134,746
10,000 Sumitomo Electric Industries 134,363
------------
Total 269,109
------------
Real Estate--0.6%
10,000 Mitsubishi Estate Co. Ltd. 100,221
Telecommunications--2.9%
15 NTT Mobile Communication Network, Inc. 398,485
9 Nippon Telegraph & Telephone Corp. 138,103
------------
Total 536,588
------------
Transportation - Road & Rail1.--3%
20 East Japan Railway Co. 122,566
17,000 Nippon Express Co. Ltd. 120,322
------------
Total 242,888
------------
Utilities - Electrical & Gas--1.4%
4,000 Tohoku Electric Power Co., Inc. 59,999
6,000 Tokyo Electric Power Co. 134,075
26,000 Tokyo Gas Co., Ltd. 62,460
------------
Total 256,534
------------
Wholesale & International Trade--0.8%
21,000 Mitsubishi Corp. 151,050
------------
Total Japan (identified cost $2,628,499) 4,050,012
============
Netherlands--5.5%
Appliances & Household Durables--0.5%
828 Philips Electronics NV 84,916
Banking--0.5%
3,500 ABN-AMRO Holdings NV 84,637
Broadcasting & Publishing--0.2%
4,000 Elsevier NV 37,993
Business & Public Services--0.2%
800 Getronics NV 39,886
Energy Equipment & Services--0.2%
1,200 Pakhoed NV Kon 33,512
Energy Sources--1.4%
4,500 Royal Dutch Petroleum Co. 268,995
Financial Services--0.8%
2,400 ING Groep NV 141,570
Food & Household Products--0.3%
757 Unilever NV 50,164
Forest Products & Paper--0.2%
2,400 Buhrmann NV 41,375
Insurance--0.5%
1,000 AEGON NV 92,300
Merchandising--0.2%
1,400 Ahold NV 43,000
Telecommunications--0.3%
1,000 KPN NV 51,320
Wholesale & International Trade--0.2%
1,800 Hagemeyer NV 36,901
------------
Total Netherlands (identified cost $1,020,352) 1,006,569
============
Singapore--0.8%
Banking--0.3%
6,300 Oversea-Chinese Banking Corp. Ltd. 47,346
Electronic Components, Instruments--0.2%
5,000 Venture Manufacturing (Singapore) Ltd. 44,490
Real Estate--0.3%
10,000 City Developments Ltd. 51,704
------------
Total Singapore (identified cost $101,293) 143,540
============
Switzerland--6.0%
Banking--1.2%
460 Credit Suisse Group 88,421
430 UBS AG 125,110
------------
Total 213,531
------------
Business & Public Services--0.2%
70 Adecco SA 42,433
Electrical & Electronics--0.3%
481 (1) ABB AG 48,438
Food & Household Products--0.8%
80 Nestle SA 154,300
Health & Personal Care--2.7%
155 Novartis AG 231,844
22 Roche Holdings AG 264,121
------------
Total 495,965
------------
Insurance--0.6%
30 Schweizerische Rueckversicherungs--Gesellschaft 62,193
100 Zurich Allied AG 56,616
------------
Total 118,809
------------
Merchandising--0.2%
30 Jelmoli Holding AG 34,422
------------
Total Switzerland (identified cost $1,126,337) 1,107,898
============
United Kingdom--14.2%
Banking--2.4%
2,800 Abbey National Bank PLC, London 54,659
2,300 Barclays PLC 70,561
12,000 HSBC Holdings PLC 147,592
10,300 Lloyds TSB Group PLC 142,508
1,000 Royal Bank of Scotland PLC, Edinburgh 23,005
------------
Total 438,325
------------
Beverages & Tobacco--0.3%
5,800 Diageo PLC 58,994
Broadcasting & Publishing--0.2%
6,000 Reed International PLC 35,197
Building Materials & Components--0.7%
14,000 Blue Circle Industries PLC 64,989
10,000 Wolseley PLC 68,111
------------
Total 133,100
------------
Business & Public Services--0.4%
5,500 Rentokil Initial PLC 18,414
3,000 Reuters Group PLC 27,606
5,300 Williams PLC 26,562
------------
Total 72,582
------------
Chemicals--0.3%
2,700 Boc Group PLC 58,120
Electronic Components, Instruments--0.2%
6,500 Invensys PLC 31,936
Energy Sources--1.7%
32,400 BP Amoco PLC 314,646
Food & Household Products--0.3%
5,280 Associated British Foods PLC 32,969
2,232 Unilever PLC 20,722
------------
Total 53,691
------------
Health & Personal Care--2.0%
1,600 AstraZeneca Group PLC 72,353
5,100 Glaxo Wellcome PLC 150,510
10,700 Smithkline Beecham Corp. 138,020
------------
Total 360,883
------------
Insurance--0.2%
2,600 Legal & General Group PLC 7,220
1,000 Prudential Corp. PLC 15,676
2,727 Royal & Sun Alliance Insurance Group PLC 18,574
------------
Total 41,470
------------
Leisure & Tourism--0.9%
3,400 Bass PLC 37,264
17,500 Hilton Group PLC 53,486
6,500 Scottish & Newcastle PLC 60,560
------------
Total 151,310
------------
Machinery & Engineering--0.2%
2,600 Smiths Industries PLC 35,289
Merchandising--1.3%
3,500 Boots Co. PLC 35,916
3,300 Great Universal Stores PLC 24,998
5,000 Marks & Spencer PLC 23,087
19,000 Safeway PLC 59,944
15,000 Sainsbury (J) PLC 90,088
------------
Total 234,033
------------
Metals - Non Ferrous--0.6%
6,500 Rio Tinto PLC 110,973
Real Estate--0.4%
6,000 Land Securities PLC 74,733
Telecommunications--1.4%
6,600 British Telecommunication PLC 119,730
1,800 Cable & Wireless Communications PLC 21,000
26,000 Vodafone Group PLC 121,120
------------
Total 261,850
------------
<CAPTION>
Shares or
Principal
Amount Value
<S> <C> <C>
Common Stocks--continued
United Kingdom--continued
Utilities - Electrical & Gas0.7%
12,500 BG PLC $ 69,426
5,800 Scottish Power PLC 53,659
------------
Total 123,085
------------
Total United Kingdom (identified cost $2,827,949) 2,590,217
============
Total Common Stocks (identified cost $11,340,887) 12,865,467
============
Preferred Stocks--0.6%
Australia--0.1%
Broadcasting & Publishing--0.1%
3,622 News Corp. Ltd., Pfd. 24,523
Leisure & Tourism--0.0%
2,200 Village Roadshow Ltd. 3,760
------------
Total Australia (identified cost $26,630) 28,283
============
Germany--0.5%
Business & Public Services--0.5%
190 Systeme, Anwendungen, Produkte in der Datevnerarbeitung 83,738
------------
Total Germany (identified cost $67,788) 83,738
============
Total Preferred Stocks (identified cost $94,418) 112,021
============
Mutual Funds--11.5%
18,000 WEBS Belgium Index Fund, Inc. 279,000
36,300 WEBS Italy Index Fund, Inc. 784,988
20,000 WEBS Spain Index Fund, Inc. 511,250
22,000 WEBS Sweden Index Fund, Inc. 530,750
------------
Total Mutual Funds (identified cost $2,242,709) 2,105,988
============
Repurchase Agreement--9.7%
$1,769,000 Donaldson, Lufkin and Jenrette Securities Corp., 5.22%,
dated 10/29/1999, due 11/1/1999 (at cost) 1,769,000
</TABLE>
<TABLE>
<CAPTION>
Number of Expiration Strike
Contracts Date Price Value
<S> <C> <C> <C> <C>
Put Options Purchased0.3%
300 Dutch Stock Index January 2000 $ 560.00 $ 5,368
20 FTSE 100 Index June 2000 6,000.00 10,213
55 German Stock Index March 2000 5,100.00 9,281
61 CAC 40 Index March 2000 445.00 8,932
10 FTSE 100 Index December 1999 6,000.00 1,549
3,500 Nikkei-225 Stock Average Index March 2000 1,650.00 13,427
------------
Total Put Options Purchased
(identified cost $80,726) 48,770
============
Total Investments (identified
cost $15,527,740) (2) $ 16,901,246
============
</TABLE>
(1) Non-income producing security.
(2) The cost of investments for federal tax purposes amounts to $15,527,740.
The net unrealized appreciation of investments on a federal tax basis
amounts to $1,373,506 which is comprised of $2,134,890 appreciation and
$761,384 depreciation at October 31, 1999.
Note: The categories of investments are shown as a percentage of net assets
($18,264,498) at October 31, 1999.
The following acronyms are used throughout this portfolio:
INS RECP--Institutional Receipt
WEBS--World Equity Benchmark Shares
The following is the industry classification breakdown for the common and
preferred stocks:
<TABLE>
<S> <C>
Appliance & Household Durables 2.2%
Automobiles 2.3%
Banking 9.8%
Beverages & Tobacco 0.7%
Broadcasting & Publishing 0.6%
Building Materials & Components 1.2%
Business & Public Services 4.9%
Chemicals 2.0%
Construction & Housing 0.5%
Electrical & Electronics 2.7%
Electronic Components, Instruments 0.4%
Energy Equipment & Services 0.2%
Energy Minerals 0.0%*
Energy Sources 4.1%
Financial Services 0.9%
Food & Household Products 3.3%
Forest Products & Paper 0.2%
Gold Mines 0.0%*
Health & Personal Care 7.4%
Industrial Components 1.9%
Insurance 3.1%
Leisure & Tourism 1.4%
Machinery & Engineering 0.8%
Merchandising 2.2%
Metals--Non Ferrous 0.8%
Metals--Steel 0.4%
Miscellaneous Materials & Commodities 0.0%*
Multi-Industry 0.5%
Oil 0.0%*
Real Estate 1.6%
Recreation, Other Consumer Goods 0.1%
Telecommunications 8.9%
Transportation--Airlines 0.2%
Transportation--Road & Rail 1.3%
Utilities--Electrical & Gas 3.4%
Wholesale & International Trade 1.0%
</TABLE>
* Amount is less than 0.1%
Note: The industry classifications are shown as a percentage of net assets
($18,264,498) at October 31, 1999.
(See Notes which are an integral part of the Financial Statements)
Independence One International Equity Fund
Statement of Assets and Liabilities
October 31, 1999 (unaudited)
<TABLE>
<S>
<C> <C>
Assets:
Total investments in securities, at value (identified and tax cost
$15,527,740) $ 16,901,246
Cash
51
Cash denominated in foreign currencies (at identified cost $1,438,093)
(1) 1,447,720
Income
receivable
39,585
Receivable for investments
sold 559,451
Unrealized appreciation on foreign currency exchange
contracts 144,379
Receivable for daily variation
margin 238,208
- -------------------
Total
assets
19,330,640
Liabilities:
Payable for investments purchased $ 746,249
Unrealized depreciation on foreign currency exchange contracts 265,384
Options written, at value (at identified cost $22,114) 15,910
Accrued expenses 38,599
-------------
Total
liabilities
1,066,142
Net Assets for 1,348,697 shares
outstanding $ 18,264,498
Net Assets Consist of:
Paid in
capital
$ 15,643,585
Net unrealized appreciation of investments, futures contracts, options
and 1,314,352
translation of assets and liabilities in foreign currency transactions
Accumulated net realized gain on investments, foreign currency
transactions 1,467,396
and futures contracts
- -------------------
Total Net
Assets $
18,264,498
- -------------------
Net Asset Value, Offering Price and Redemption Proceeds Per Share:
$18,264,498 / 1,348,697 shares
outstanding $13.54
</TABLE>
(1) Serves as collateral for futures contracts.
(See Notes which are an integral part of the Financial Statements)
Independence One International Equity Fund
Statement of Operations
Six Months Ended October 31, 1999 (unaudited)
<TABLE>
<S> <C> <C> <C>
Investment Income:
Dividends (net of foreign taxes withheld of $19,840)
$ 296,118
Interest
48,209
- ----------------
Total
income
344,327
Expenses:
Investment advisory fee $ 83,636
Administrative personnel and services fee 25,139
Custodian fees 14,529
Transfer and dividend disbursing agent fees and expenses 21,222
Directors'/Trustees' fees 1,693
Auditing fees 7,906
Legal fees 2,707
Portfolio accounting fees 31,250
Share registration costs 7,560
Printing and postage 5,349
Insurance premiums 475
Miscellaneous 1,045
-------------
Total expenses 202,511
Waivers and reimbursements
Waiver of investment advisory fee $ (51,726)
Waiver of administrative personnel and services fee (21,151)
-------------
Total waivers and reimbursements (72,877)
-------------
Net
expenses
129,634
Net investment
income 214,693
Realized and Unrealized Gain on Investments, Futures
Contracts,
Options and Foreign Currency
Transactions:
Net realized gain on investments, futures contracts,
options 230,190
and foreign currency
transactions
Net change in unrealized appreciation of investments,
futures 631,687
contracts, options and translation of assets and
liabilities
in foreign currency
transactions
Net realized and unrealized gain on investments,
futures 861,877
contracts, options and foreign currency transactions
Change in net assets resulting from operations
$ 1,076,570
</TABLE>
(See Notes which are an integral part of the Financial Statements)
Independence One International Equity Fund
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
Six Months Ended
October 31,
1999 Period Ended
(unaudited) April 30, 1999 (1)
<S>
<C> <C>
Increase (Decrease) in Net Assets:
Operations
Net investment income $
214,693 $ 4,328
Net realized gain on investments, futures contracts, options and
230,190 1,027,037
foreign currency transactions ($230,190 and $1,467,126,
respectively, as computed for federal tax purposes)
Net change in unrealized appreciation of investments, futures
631,687 682,665
contracts, options and translation of assets and liabilities in
foreign currency
Change in net assets resulting from operations
1,076,570 1,714,030
Distributions to Shareholders
Distributions from net investment income
- -- (18,812)
Distributions from net realized gains on investments, futures
- -- (150,875)
contracts, options and foreign currency transactions
Change in net assets resulting from distributions to shareholders
- -- (169,687)
Share Transactions
Proceeds from sale of shares
1,646,969 14,062,192
Net asset value of shares issued to shareholders in payment of
- -- 169,322
distributions
declared
Cost of shares redeemed
(104,981) (129,917)
Change in net assets resulting from share transactions
1,541,988 14,101,597
Change in net assets
2,618,558 15,645,940
Net Assets:
Beginning of period
15,645,940 --
End of period (including distributions in excess of net investment
income of $-- and $(375,528), respectively) $ 18,264,498
$ 15,645,940
</TABLE>
(1) Reflects operations for the period from September 25, 1998 (date of initial
public investment) to April 30, 1999.
(See Notes which are an integral part of the Financial Statements)
Independence One International Equity Fund
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Six Months
Ended
October 31, 1999
Period Ended
(unaudited)
April 30, 1999 (1)
<S> <C>
<C>
Net asset value, beginning of period $
12.75 $ 10.00
Income from investment operations
Net investment income
0.16 0.01
Net realized and unrealized gain on investments, futures
0.63 2.92
contracts, options and foreign currency transactions
- ------- -------
Total from investment operations
0.79 2.93
- ------- -------
Less distributions
Distributions from net investment income
- -- (0.02)
Distributions from net realized gain on investments, futures
- -- (0.16)
contracts, options and foreign currency transactions
- ------- -------
Total distributions
- -- (0.18)
- ------- -------
Net asset value, end of period $
13.54 $ 12.75
Total return (2)
6.20% 29.42%
Ratios to average net assets
Expenses (3)
2.42%(4) 3.09 %(4)
Net investment income (3)
1.70%(4) (1.47)%(4)
Expenses (after waivers)
1.55%(4) 1.55 %(4)
Net investment income (after waivers)
2.57%(4) 0.07 %(4)
Supplemental data
Net assets, end of period (000 omitted)
$18,264 $15,646
Portfolio turnover
16% 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. If such voluntary
waivers had not occurred, the ratios would have been as indicated.
(4) Computed on an annualized basis.
(See Notes which are an integral part of the Financial Statements)
Independence One Mutual Funds
Combined Notes to Financial Statements
October 31, 1999 (unaudited)
(1) Organization
Independence One Mutual Funds (the "Trust") is registered under the Investment
Company Act of 1940, as amended (the "Act") as an open-end, management
investment company. The Trust consists of nine portfolios. The financial
statements of the following portfolios (individually referred to as the "Fund,"
or collectively as the "Funds") are presented herein:
<TABLE>
<CAPTION>
Portfolio Name Investment
Objective
- --------------------------------------------------------------------------------------------------------------
<S> <C>
Independence One Equity Plus Fund ("Equity Plus Fund") To seek total
return.
- --------------------------------------------------------------------------------------------------------------
Independence One Small Cap Fund ("Small Cap Fund") To seek total
return.
- --------------------------------------------------------------------------------------------------------------
Independence One International Equity Fund ("International Equity Fund") To seek total
return.
- --------------------------------------------------------------------------------------------------------------
</TABLE>
The financial statements of the other portfolios are presented separately. The
assets of each portfolio are segregated and a shareholder's interest is limited
to the portfolio in which shares are held.
(2) Significant Accounting Policies
The following is a summary of significant accounting policies consistently
followed by the Funds in the preparation of their financial statements. These
policies are in conformity with generally accepted accounting principles.
Investment Valuations--Listed equity securities are valued at the last sale
price reported on a national securities exchange, and in the absence of recorded
sales for listed equity securities, at the mean between the last closing bid and
asked prices. Short-term securities are valued at the mean between the bid and
asked prices provided by an independent pricing service. However, short-term
securities with remaining maturities of sixty days or less at the time of
purchase may be valued at amortized cost, which approximates fair market value.
Investments in other open-end regulated investment companies are valued at net
asset value. With respect to valuation of foreign securities, trading on foreign
exchanges may be completed at times which vary from the closing of the New York
Stock Exchange. Therefore, foreign securities are valued at the latest closing
price on the exchange on which they are traded prior to the closing of the New
York Stock Exchange. Foreign securities quoted in foreign currencies are
translated into U.S. dollars at the foreign exchange rate in effect at noon,
eastern time, on the day the value of the foreign security is determined.
Investment gains and losses are determined on the identified cost basis.
Repurchase Agreements--It is the policy of the Funds to require the custodian
bank to take possession, to have legally segregated in the Federal Reserve Book
Entry System, or to have segregated within the custodian bank's vault, all
securities held as collateral under repurchase agreement transactions.
Additionally, procedures have been established by the Funds to monitor, on a
daily basis, the market value of each repurchase agreement's collateral to
ensure that the value of collateral at least equals the repurchase price to be
paid under the repurchase agreement transaction.
The Funds will only enter into repurchase agreements with banks and other
recognized financial institutions, such as broker/dealers, which are deemed by
the Funds' adviser to be creditworthy pursuant to the guidelines and/or
standards reviewed or established by the Board of Trustees (the "Trustees").
Risks may arise from the potential inability of counterparties to honor the
terms of the repurchase agreement. Accordingly, the Funds could receive less
than the repurchase price on the sale of collateral securities.
Investment Income, Expenses and Distributions--Interest income and expenses are
accrued daily. Bond premium and discount, if applicable, are amortized as
required by the Internal Revenue Code, as amended (the "Code"). Dividend income
and distributions to shareholders are recorded on the ex-dividend date.
Federal Taxes--It is the Funds' policy to comply with the provisions of the Code
applicable to regulated investment companies and to distribute to shareholders
each year substantially all of their income. Accordingly, no provisions for
federal tax are necessary.
Withholding taxes on foreign interest and dividends have been provided for in
accordance with the applicable country's tax rules and rates.
When-Issued and Delayed Delivery Transactions--The Funds may engage in when-
issued or delayed delivery transactions. The Funds record when-issued securities
on the trade date and maintain security positions such that sufficient liquid
assets will be available to make payment for the securities purchased.
Securities purchased on a when-issued or delayed delivery basis are marked to
market daily and begin earning interest on the settlement date.
Futures Contracts--The International Equity Fund may purchase and sell financial
futures contracts to hedge all or a portion of its portfolio against changes in
interest rates or security prices. Upon entering into a stock index futures
contract with a broker, the Fund is required to deposit in a segregated account
a specified amount of cash or cash equivalents. Futures contracts are valued
daily and unrealized gains or losses are recorded in a "variation margin"
account. Daily, the Fund receives from or pays to the counterparty a specified
amount of cash "variation margin" equal to the daily change in the value of the
futures contracts. When a contract is closed, the Fund recognizes a realized
gain or loss. For the six months ended October 31, 1999, the Fund had a realized
gain of $184,122 on future contracts.
At October 31, 1999, the Fund had outstanding futures contracts as set forth
below:
<TABLE>
<CAPTION>
Unrealized
Notional
Appreciation
Expiration Date Contracts to Deliver/Receive Position Value
(Depreciation)
<S> <C> <C> <C> <C>
Dec 99 3 SPI Index Futures Long $137,743 $
(4,351)
Dec 99 2 German DAX Index Futures Long
263,250 9,848
Dec 99 8 FTSE 100 Index Futures Long 827,191
(6,805)
Nov 99 2 OMX Index Futures Long
22,398 1,544
Nov 99 1 Amsterdam Index Futures Long
108,877 4,204
Dec 99 2 MIB 30 Index Futures Long 316,043
(11,736)
Dec 99 5 Swiss Market Index Futures Long
235,256 4,428
Dec 99 8 Nikkei 225 Index Futures Long 692,241
19,421
Nov 99 1 IBEX Plus Index Futures Long 93,134
(1,352)
Nov 99 6 CAC40 10 Euro Futures Long
280,285 9,592
Nov 99 3 Hang Seng Index Futures Long 257,622
(20,656)
- -------------
Net Unrealized Appreciation on Futures Contracts
$ 4,137
=============
</TABLE>
Futures contracts have market risks, including the risk that the change in the
value of the contract may not correlate with changes in the value of the
underlying securities.
Written Options Contracts--The International Equity Fund may write option
contracts. A written option obligates the Fund to deliver a call, or to receive
a put, for the contracted amount upon exercise by the holder of the option. The
value of the option contract is recorded as a liability and unrealized gain or
loss is measured by the difference between the current value and the premium
received. For the period ended October 31, 1999, the Fund had a realized gain of
$53,003 on written options.
The following is a summary of the Fund's written option activity:
<TABLE>
<CAPTION>
Contracts Number of Contracts Premium
- --------------------------------------------------------------------------------------------
<S> <C> <C>
Outstanding at 4/30/99 -- $ --
- --------------------------------------------------------------------------------------------
Options written 9,370,118 84,953
- --------------------------------------------------------------------------------------------
Options expired (9,369,702) (45,933)
- --------------------------------------------------------------------------------------------
Options closed (55) (16,906)
- --------------------------------------------------------------------------------------------
Outstanding at 10/31/99 361 22,114
- --------------------------------------------------------------------------------------------
</TABLE>
Forward Foreign Currency Exchange Contracts--The International Equity Fund may
enter into foreign currency exchange contacts to facilitate settlement
transactions in foreign securities and to manage the Fund's foreign currency
exposure. Purchased contracts are used to acquire exposure to foreign
currencies; whereas, contracts to sell are used to hedge the Fund's securities
against currency fluctuations. Risks may arise upon entering these transactions
from the potential inability of counterparts to meet the terms of their
commitments and from unanticipated movements in security prices or foreign
exchange rates. Forward foreign currency contracts are marked-to-market daily
using foreign currency exchange rates supplied by an independent pricing
service. The change in a contract's market value is recorded by the Fund as an
unrealized gain or loss. When the contract is closed or delivery is taken, the
Fund records a realized gain or loss equal to the difference between the value
of the contract at the time it was opened and the value at the time it was
closed.
At October 31, 1999, the Fund had outstanding foreign currency commitments as
set forth below:
<TABLE>
<CAPTION>
Unrealized
Settlement Contracts to Contracts at
Appreciation
Date Deliver/Received In Exchange For Value
(Depreciation)
<C> <S> <C> <C> <C>
Contracts Purchased:
11/12/1999 661,688 Euro Currency $ 715,000 $ 696,657 $
(18,343)
11/26/1999 74,333,000 Japanese Yen 715,669
715,744 75
11/26/1999 164,430,000 Japanese Yen 1,504,171
1,583,279 79,108
11/26/1999 37,670,000 Japanese Yen 339,746
362,721 22,975
11/26/1999 52,430,000 Japanese Yen 481,252
502,829 21,577
12/8/1999 129,947 Pound Sterling 214,000
213,573 (427)
12/8/1999 286,517 Pound Sterling 474,000
470,903 (3,097)
12/8/1999 361,184 Pound Sterling 580,000
593,497 13,497
Contracts Sold:
11/12/1999 672,960 Euro Currency 715,000
707,853 7,147
11/26/1999 328,863,000 Japanese Yen 2,923,071 3,166,588
(243,517)
- ----------
Net Unrealized Depreciation on Forward Foreign Currency Exchange Contracts $
(121,005)
==========
</TABLE>
Foreign Currency Translation--The accounting records of the International Equity
Fund are maintained in U.S. dollars. All assets and liabilities denominated in
foreign currencies ("FC") are translated into U.S. dollars based on the rate of
exchange of such currencies against U.S. dollars on the date of valuation.
Purchases and sales of securities, income and expenses are translated at the
rate of exchange quoted on the respective date that such transactions are
recorded. Differences between income and expense amounts recorded and collected
or paid are adjusted when reported by the custodian bank. The Fund does not
isolate that portion of the results of operations resulting from changes in
foreign exchange rates on investments from the fluctuations arising from changes
in market prices of securities held. Such fluctuations are included with the net
realized and unrealized gain or loss from investments.
Reported net realized foreign exchange gains or losses arise from sales of
portfolio securities, sales and maturities of short-term securities, sales of
FCs, currency gains or losses realized between the trade and settlement dates on
securities transactions, the difference between the amounts of dividends,
interest, and foreign withholding taxes recorded on the Fund's books, and the
U.S. dollar equivalent of the amounts actually received or paid. Net unrealized
foreign exchange gains and losses arise from changes in the value of assets and
liabilities other than investments in securities at fiscal year end, resulting
from changes in the exchange rate.
Use of Estimates--The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the amounts of assets, liabilities, expenses and
revenues reported in the financial statements. Actual results could differ from
those estimated.
Other--Investment transactions are accounted for on the trade date.
(3) Shares of Beneficial Interest
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value) for each
Fund. Transactions in shares were as follows:
<TABLE>
<CAPTION>
Equity
Plus Fund
Six
Months
Ended Year Ended
October
31, April 30,
1999 1999
<S>
<C> <C>
Class Y Shares
Shares sold
1,062,597 4,537,809
Shares issued to shareholders in payment of distributions declared
32,501 430,398
Shares redeemed
(1,284,240) (3,050,713)
Net change resulting from Class Y Share transactions
(189,142) 1,917,494
</TABLE>
<TABLE>
<CAPTION>
Equity Plus Fund
Six Months
Ended Year Ended
October
31, April 30,
1999
(1) 1999
<S>
<C> <C>
Class B Shares
Shares sold
393 --
Shares issued to shareholders in payment of distributions declared
- -- --
Shares redeemed
- -- --
Net change resulting from Class B Share transactions
393 --
Net change resulting from share transactions
(188,749) 1,917,494
</TABLE>
<TABLE>
<CAPTION>
Small
Cap Fund
Six Months
Ended Period Ended
October
31, April 30,
1999 1999 (2)
<S>
<C> <C>
Shares sold
290,254 3,383,646
Shares issued to shareholders in payment of distributions declared
- -- 1,257
Shares redeemed
(100,109) (237,198)
Net change resulting from share transactions
190,145 3,147,705
</TABLE>
<TABLE>
<CAPTION>
International Equity Fund
Six
Months
Ended Period Ended
October
31, April 30,
1999 1999 (3)
<S>
<C> <C>
Shares sold
130,068 1,223,342
Shares issued to shareholders in payment of distributions declared
- -- 14,169
Shares redeemed
(8,128) (10,754)
Net change resulting from share transactions
121,940 1,226,757
</TABLE>
(1) Reflects operations for the period from October 20, 1999 (date of initial
public investment) to October 31, 1999.
(2) Reflects operations for the period from June 22, 1998 (date of initial
public investment) to April 30, 1999.
(3) Reflects operations for the period from September 25, 1998 (date of initial
public investment) to April 30, 1999.
(4) Investment Advisory Fee and Other Transactions with Affiliates
Investment Advisory Fee--Michigan National Bank, the Funds' investment adviser
(the "Adviser"), receives for its services an annual investment advisory fee
equal to the percentage of each Fund's average daily net assets (see below). The
Adviser may voluntarily choose to waive any portion of its fee. The Adviser can
modify or terminate this voluntary waiver at any time at its sole discretion.
Under the terms of a sub-advisory agreement between the Adviser and the Sub-
Adviser, the Sub-Adviser is entitled to receive an annual fee from the Adviser
equal to the percentage of each Fund's average daily net value of the Fund's
equity securities. The Sub-Adviser may voluntarily choose to reduce its
compensation.
<TABLE>
<CAPTION>
Sub-Advisory Investment
Portfolio Name Sub-Adviser
Fee Advisory Fee
<S> <C>
<C> <C>
Equity Plus Fund Sosnoff Sheridan Weiser Corporation
0.035% 0.40%
Small Cap Fund Sosnoff Sheridan Weiser Corporation
0.05% 0.50%
International Equity Fund National Australia Asset Management Ltd.
0.30% 1.00%
</TABLE>
Administrative Fee--Federated Administrative Services ("FAS") provides the Funds
with certain administrative personnel and services. The fee paid to FAS is based
on the level of average aggregate net assets of the Trust for the period. The
administrative fee received during any fiscal year shall be at least $50,000 for
each portfolio in the Trust. FAS may voluntarily choose to waive a portion of
its fee.
Distribution Services Fee--The Equity Plus Fund has adopted a Distribution Plan
(the "Plan") pursuant to Rule 12b-1 under the Act. Under the terms of the Plan,
the Fund will compensate Federated Securities Corp.("FSC"), the principal
distributor, from the net assets of the Fund to finance activities intended to
result in the sale of the Fund's Class B Shares. The Plan provides that the Fund
may incur distribution expenses according to the following schedule annually, to
compensate FSC.
<TABLE>
<CAPTION>
Independence One Equity Plus Fund
Percentage of Average
Share Class Name Daily Net Assets of Class
<S> <C>
Class B Shares 0.75%
</TABLE>
The distributor may voluntarily choose to waive any portion of its fee. The
distributor can modify or terminate this voluntary waiver at any time at its
sole discretion.
Shareholder Services Fee--Under the terms of a Shareholder Services Agreement
with Federated Shareholder Services Company ("FSSC"), the Equity Plus Fund will
pay FSSC up to 0.25% of average daily net assets of the Class B Shares for the
period. The fee paid to FSSC is used to finance certain services for
shareholders and to maintain shareholder accounts. FSSC may voluntarily choose
to waive any portion of its fee. FSSC can modify or terminate this voluntary
waiver at any time at its sole discretion.
Transfer Agent and Dividend Disbursing Agent Fees--Federated Services Company
("FServ"), through its subsidiary, FSSC, serves as transfer and dividend
disbursing agent for the Funds. The fee paid to FSSC is based on the size, and
number of accounts and transactions made by shareholders. FSSC may voluntarily
choose to waive a portion of its fee.
Portfolio Accounting Fees--FServ maintains the Funds' accounting records for
which it receives a fee. The fee is based on the level of each Fund's average
daily net assets for the period, plus out-of-pocket expenses.
Custodian Fees--Michigan National Bank is the Funds' custodian. The fee is based
on the level of each Fund's average daily net assets for the period, plus
out-of-pocket expenses.
Organizational Expenses--Organizational expenses of $23,832 for the Equity Plus
Fund were borne initially by the Adviser. The Equity Plus Fund has reimbursed
the Adviser for these expenses. These expenses have been deferred and are being
amortized over the five year period following the Fund's effective date. For the
six months ended October 31, 1999, the Fund expensed $3,214 of organizational
expenses.
General--Certain of the Officers of the Trust are Officers and/or Directors or
Trustees of the above companies.
(5) Investment Transactions
Purchases and sales of investments, excluding short-term securities, for the
period ended October 31, 1999, were as follows:
<TABLE>
<CAPTION>
Portfolio Name
Purchases Sales
<S>
<C> <C>
Equity Plus Fund
$12,899,579 $18,867,368
Small Cap Fund
9,006,180 6,038,200
International Equity Fund
2,403,654 2,247,650
</TABLE>
(6) Concentration of Credit Risk
The International Equity Fund invests in securities of non-U.S. issuers.
Although the Fund maintains a diversified investment portfolio, the political or
economic developments within a particular country or region may have an adverse
effect on the ability of domiciled issuers to meet their obligations.
Additionally, political or economic developments may have an effect on the
liquidity and volatility of portfolio securities and currency holdings.
(7) Year 2000
Similar to other financial organizations, the Funds could be adversely affected
if the computer systems used by the Funds' service providers do not properly
process and calculate date- related information and data from and after January
1, 2000. The Funds' Adviser and administrator are taking measures that they
believe are reasonably designed to address the Year 2000 issue with respect to
computer systems that they use and to obtain reasonable assurances that
comparable steps are being taken by each of the Fund's other service providers.
At this time, however, there can be no assurance that these steps will be
sufficient to avoid any adverse impact to the Funds.
Trustees Robert E. Baker
Harold Berry
Nathan Forbes
Harry J. Nederlander
Thomas S. Wilson
Officers Edward C. Gonzales
President and Treasurer
Jeffrey W. Sterling
Vice President and Assistant Treasurer
C. Grant Anderson
Secretary
Timothy S. Johnson
Assistant Secretary
Mutual funds are not bank deposits or obligations, are not guaranteed by any
bank, and are not insured or guaranteed by the U. S. government, the Federal
Deposit Insurance Corporation, the Federal Reserve Board, or any other
government agency. Investment in mutual funds involves investment risk,
including possible loss of principal.
This report is authorized for distribution to prospective investors only when
preceded or accompanied by the Funds' prospectus which contains facts concerning
their objectives and policies, management fees, expenses and other information.
Independence One(R)
Mutual Funds
(Distributed by Federated Securities Corp.)
Semi-Annual Report
October 31, 1999
Independence One
Equity Plus Fund
Class Y Shares
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
G01889-05 (12/99)
[LOGO OF INDEPENDENCE ONE] [LOGO OF MICHIGAN NATIONAL]
Mutual Funds Investment Adviser
Semi-Annual Report
Independence One(R)
Mutual Funds
Independence One(R) Mutual Funds offer nine portfolios, including three equity
funds, three income funds and three money market funds. This Semi-Annual Report
relates to Class B Shares of Independence One Equity Plus Fund.
Independence One
Equity Plus Fund
Class B Shares
October 31, 1999
[Logo of Independence One]
For more information about any of the Independence One(R) Mutual Funds, please
call 800-334-2292 for a prospectus, which should be read carefully before
investing.
President's Message
Dear Investor:
I am pleased to present the Semi-Annual Report for Class B Shares of the
Independence One Equity Plus Fund for the period from October 20, 1999, the
fund's start of performance, through October 31, 1999. Inside, you'll find
complete financial information for the fund beginning with the portfolio
manager's discussion and followed by a listing of fund holdings and the
financial statements.
Independence One Equity Plus Fund invests in a portfolio of high-quality stocks
that, at the end of the reporting period, included many household names like
ALCOA, American Express, Bank of America, Black & Decker, Coca-Cola, DuPont,
Ford, General Electric, IBM, Intel, 3M, Sears, and Xerox. The fund ended the
reporting period with $308.7 million in assets.
Thank you for selecting the Independence One Equity Plus Fund to pursue the
long-term performance potential of stocks. We look forward to keeping you
informed about the progress of your investment.
Sincerely,
Edward C. Gonzales
President
December 15, 1999
Independence One Equity Plus Fund
Question: What is your review of the stock market during the first half of the
fiscal year, which saw a series of interest rate "tightenings" or increases, by
the Federal Reserve Board (the "Fed"), a high level of volatility and a weak
return for the S&P 500?
Answer: The stock market, anticipating a slower economic growth, pulled back and
became more volatile in response to the Fed's interest rate increases. The
investor reaction, however, has not been as severe as you might expect. The
stock market has fared rather well in spite of the moves by the Fed.
Question: The fund's portfolio invariably contains some of the largest, most
successful and best-known American companies. What were the fund's top ten
holdings at the end of the reporting period?
Answer: The fund's top ten holdings in descending order at the end of this
period were Microsoft Corp., General Electric Co., Intel Corp., Wal-Mart Stores,
Inc., Cisco Systems, Inc., Lucent Technologies, Inc., International Business
Machines Corp., Citigroup, Inc., Merck & Co., Inc. and Exxon Corp.
Question: As we approach the year 2000, what major factors will influence the
near-term direction of the market?
Answer: Investors' reaction to the upcoming Y2K event will definitely influence
the direction of the market. Another factor that will continue to influence the
market is the interest rate hikes by the Fed in an effort to slow the economy
and curb inflation. The third major factor is the anticipated strong flows of
cash into the equity market in the early part of 2000.
Independence One Equity Plus Fund
Portfolio of Investments
October 31, 1999 (unaudited)
<TABLE>
<CAPTION>
Shares Value
Common Stocks--97.3%
<S> <C> <C>
Aerospace & Defense--1.8%
51,400 Boeing Co. $ 2,367,612
10,700 General Dynamics Corp. 593,181
18,100 Raytheon Co., Class B 527,162
10,200 Rockwell International Corp. 494,062
25,800 United Technologies Corp. 1,560,900
Total 5,542,917
Automobile--1.9%
64,700 Ford Motor Co. 3,550,413
34,400 General Motors Corp. 2,416,600
Total 5,967,013
Basic Industry--0.4%
19,600 ALCOA, Inc. 1,190,700
Capital Goods--0.7%
13,900 Homestake Mining Co. 116,413
21,500 Minnesota Mining & Manufacturing Co. 2,043,844
Total 2,160,257
Chemicals--2.1%
11,800 Dow Chemical Co. 1,395,350
55,800 Du Pont (E.I.) de Nemours & Co. 3,595,613
3,800 Mallinckrodt, Inc. 128,963
33,900 Monsanto Co. 1,305,150
Total 6,425,076
Computer Services--18.3%
7,700 (1) Ceridian Corp. 168,919
173,800 (1) Cisco Systems, Inc. 12,861,274
8,600 (1) Computer Sciences Corp. 590,712
54,200 Hewlett-Packard Co. 4,014,187
96,700 International Business Machines Corp. 9,512,862
272,900 (1) Microsoft Corp. 25,260,306
77,000 (1) Oracle Corp. 3,662,312
15,700 (1) Unisys Corp. 380,725
Total 56,451,297
Consumer Basics--1.2%
24,000 American Express Co. 3,696,000
Consumer Non-Durables--2.7%
23,200 Campbell Soup Co. $ 1,044,000
71,000 Procter & Gamble Co. 7,446,125
Total 8,490,125
Electrical Equipment--8.4%
4,700 Black & Decker Corp. 202,100
13,200 Entergy Corp. 395,175
175,400 General Electric Co. 23,777,662
6,800 Honeywell, Inc. 716,975
36,500 Southern Co. 969,531
Total 26,061,443
Electronic Technology--5.8%
176,900 Intel Corp. 13,698,694
9,000 (1) National Semiconductor Corp. 269,438
2,400 Polaroid Corp. 53,550
2,500 Tektronix, Inc. 84,375
42,000 Texas Instruments, Inc. 3,769,500
Total 17,875,557
Entertainment--1.0%
110,300 Disney (Walt) Co. 2,909,163
6,900 (1) Harrah's Entertainment, Inc. 199,669
Total 3,108,832
Finance--7.7%
62,700 Bank One Corp. 2,355,169
92,400 Bank of America Corp. 5,948,250
180,600 Citigroup, Inc. 9,774,975
39,100 U.S. Bancorp, Inc. 1,449,144
88,200 Wells Fargo Co. 4,222,575
Total 23,750,113
Financial Services--0.7%
12,100 Hartford Financial Services Group, Inc. 626,931
19,800 Merrill Lynch & Co., Inc. 1,554,300
Total 2,181,231
Food & Beverage--4.8%
132,000 Coca-Cola Co. 7,788,000
19,200 Heinz (H.J.) Co. 916,800
72,400 McDonald's Corp. 2,986,500
78,200 PepsiCo, Inc. 2,712,563
17,300 Ralston Purina Co. $ 543,869
Total 14,947,732
Forest Products & Paper--0.7%
3,100 Boise Cascade Corp. 110,438
5,100 Champion International Corp. 294,844
22,100 International Paper Co. 1,163,013
10,800 Weyerhaeuser Co. 644,625
Total 2,212,920
Home Building--0.1%
4,100 Fluor Corp. 163,488
Hospital Supplies--0.6%
15,600 Baxter International, Inc. 1,012,050
30,200 Columbia/HCA Healthcare Corp. 728,575
Total 1,740,625
Household Products--0.6%
31,200 Colgate-Palmolive Co. 1,887,600
Insurance--3.3%
13,300 American General Corp. 986,694
82,800 American International Group, Inc. 8,523,225
10,600 CIGNA Corp. 792,350
Total 10,302,269
Manufacturing--0.4%
10,200 Allegheny Teledyne, Inc. 154,912
16,900 Eastman Kodak Co. 1,165,044
Total 1,319,956
Office Equipment--0.4%
4,300 Harris Corp. 96,481
35,500 Xerox Corp. 994,000
Total 1,090,481
Oil--6.3%
17,200 Atlantic Richfield Co. 1,602,825
17,600 Baker Hughes, Inc. 491,700
11,404 Coastal Corp. 480,393
129,800 Exxon Corp. 9,613,312
23,600 Halliburton Co. 889,425
41,900 Mobil Corp. 4,043,350
18,600 Occidental Petroleum Corp. 424,312
29,300 Schlumberger Ltd. $ 1,774,481
Total 19,319,798
Personal Care Products--0.2%
13,900 Avon Products, Inc. 448,275
5,700 International Flavors & Fragrances, Inc. 218,025
Total 666,300
Pharmaceuticals--8.8%
106,200 Bristol-Myers Squibb Co. 8,157,487
71,900 Johnson & Johnson 7,531,525
125,400 Merck & Co., Inc. 9,977,138
27,100 Pharmacia & Upjohn, Inc. 1,461,706
Total 27,127,856
Recreation--0.0%
4,900 Brunswick Corp. 110,863
Retail--7.2%
79,300 Home Depot, Inc. 5,987,150
26,400 (1) K Mart Corp. 265,650
11,400 Limited, Inc. 468,825
17,900 May Department Stores Co. 620,906
20,300 Sears, Roebuck & Co. 572,206
10,300 Tandy Corp. 648,256
13,200 (1) Toys `R' Us, Inc. 186,450
238,000 Wal-Mart Stores, Inc. 13,491,625
Total 22,241,068
Services--0.6%
37,700 CBS Corp. 1,840,231
Steel--0.0%
7,000 (1) Bethlehem Steel Corp. 48,562
Telecommunications--9.2%
170,900 AT&T Corp. 7,989,575
83,000 Bell Atlantic Corp. 5,389,813
163,800 Lucent Technologies, Inc. 10,524,150
71,000 Nortel Networks Corp. 4,397,563
Total 28,301,101
Transportation--0.8%
24,900 Burlington Northern Santa Fe 793,688
7,500 Delta Air Lines, Inc. 408,281
</TABLE>
<TABLE>
<CAPTION>
Shares
or
Value
Principal Amount
<S>
<C> <C>
15,900 (1) FDX
Corp. $ 684,694
20,300 Norfolk Southern
Corp. 496,081
Total 2,382,744
Utilities--0.3%
23,200 Williams Cos., Inc.
(The) 870,000
Utilities - Electric--0.3%
10,300 American Electric Power Co.,
Inc. 355,350
11,600 Unicom
Corp. 444,425
Total 799,775
Total Common Stocks (identified cost
$139,349,332) 300,273,930
(2) Repurchase Agreement--2.6%
$ 8,039,000 Donaldson, Lufkin and Jenrette Securities Corp., 5.22%, dated
10/29/1999, 8,039,000
due 11/1/1999 (at cost)
Total Investments (identified cost $147,388,332)
(3) $ 308,312,930
</TABLE>
(1) Non-income producing security.
(2) The repurchase agreement is fully collateralized by U.S. Treasury
obligations based on market prices at the date of the portfolio.
(3) The cost of investments for federal tax purposes amounts to $147,388,332.
The net unrealized appreciation of investments on a federal tax basis
amounts to $160,924,598 which is comprised of $161,984,045 appreciation and
$1,059,447 depreciation at October 31, 1999.
Note: The categories of investments are shown as a percentage of net assets
($308,654,495) at October 31, 1999.
(See Notes which are an integral part of the Financial Statements)
Independence One Equity Plus Fund
Statement of Assets and Liabilities
October 31, 1999 (unaudited)
<TABLE>
<CAPTION>
Assets:
<S> <C>
<C>
Total investments in securities, at value (identified and tax cost $147,388,332)
$ 308,312,930
Cash
146,757
Income
receivable
259,597
Unamortized organizational
costs 4,784
Other
assets
5,762
Total
assets
308,729,830
Liabilities:
Accrued expenses $ 75,335
Total
liabilities
75,335
Net Assets for 13,225,230 shares outstanding
$ 308,654,495
Net Assets Consist of:
Paid in capital
$ 141,561,134
Net unrealized appreciation of
investments 160,924,598
Accumulated net realized gain on
investments 6,060,069
Undistributed net investment
income 108,694
Total Net Assets
$ 308,654,495
Net Asset Value, Offering Price and Redemption Proceeds Per Share:
Class B Shares:
Net Asset Value Per Share ($9,167 / 393 shares
outstanding) $ 23.33
Offering Price Per
Share $ 23.33
Redemption Proceeds Per Share (95.00/100 of
$23.33)(1) $ 22.16
Class Y Shares:
$308,645,328 / 13,224,837 shares
outstanding $ 23.34
</TABLE>
(1) See "What do Shares Cost?" in the Prospectus.
(See Notes which are an integral part of the Financial Statements)
Independence One Equity Plus Fund
Statement of Operations
Six Months Ended October 31, 1999 (unaudited)
<TABLE>
<CAPTION>
Investment Income:
<S>
<C> <C>
Dividends (net of foreign taxes withheld of
$827) $ 1,684,632
Interest
161,027
Total
income
1,845,659
Expenses:
Investment advisory fee $ 605,398
Administrative personnel and services fee 150,482
Custodian fees 23,494
Transfer and dividend disbursing agent fees and expenses 16,854
Directors'/Trustees' fees 5,975
Auditing fees 6,887
Legal fees 2,530
Portfolio accounting fees 33,687
Distribution services fee Class B Shares 2
Shareholder services fee Class B Shares 1
Share registration costs 9,902
Printing and postage 6,324
Insurance premiums 855
Miscellaneous 5,061
Total expenses 867,452
Waiver
Waiver of investment advisory fee (151,350)
Net
expenses
716,102
Net investment
income
1,129,557
Realized and Unrealized Gain on Investments:
Net realized gain on
investments 3,745,114
Net change in unrealized appreciation of
investments 13,469,074
Net realized and unrealized gain on
investments 17,214,188
Change in net assets resulting from
operations $ 18,343,745
</TABLE>
(See Notes which are an integral part of the Financial Statements)
Independence One Equity Plus Fund
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
Six
Months Year Ended
Ended April 30, 1999
October
31, 1999
(unaudited)
Increase (Decrease) in Net Assets:
Operations
<S>
<C> <C>
Net investment income $
1,129,557 $ 2,272,845
Net realized gain on investments ($3,745,114 and $8,229,214,
3,745,114 7,942,700
respectively, as computed for federal tax purposes)
Net change in unrealized appreciation
13,469,074 49,664,022
Change in net assets resulting from operations
18,343,745 59,879,567
Distributions to Shareholders
Distributions from net investment income
Class Y Shares
(1,135,032) (2,243,571)
Distributions from net realized gains
Class Y
Shares
(8,436,196)
Change in net assets resulting from distributions to shareholders
(1,135,032) (10,679,767)
Share Transactions
Proceeds from sale of shares
23,780,966 86,195,491
Net asset value of shares issued to shareholders in payment of
734,287 8,272,236
distributions declared
Cost of shares redeemed
(28,505,575) (57,984,567)
Change in net assets resulting from share transactions
(3,990,322) 36,483,160
Change in net assets
13,218,391 85,682,960
Net Assets:
Beginning of period
295,436,104 209,753,144
End of period (including undistributed net investment income of $
308,654,495 $ 295,436,104
$108,694 and $114,169, respectively)
</TABLE>
(See Notes which are an integral part of the Financial Statements)
Independence One Equity Plus Fund
Financial Highlights--Class B Shares
(For a share outstanding throughout the period)
<TABLE>
<CAPTION>
Period Ended
October
31, 1999 (1)
(unaudited)
<S>
<C>
Net asset value, beginning of
period $22.14
Income from investment operations
Net investment income
Net realized and unrealized gain on
investments 1.19
Total from investment
operations 1.19
Less distributions
Distributions from net investment income
Distributions from net realized gain on investments
Total distributions
Net asset value, end of
period $23.33
Total return
(2) 5.37%
Ratios to average net assets
Expenses
(3)
1.57%(4)
Net investment income
(3) (0.19%)(4)
Expenses (after
waivers) 1.47%(4)
Net investment income (after
waivers) (0.09%)(4)
Supplemental data
Net assets, end of period (000
omitted) $ 9
Portfolio
turnover
4%
</TABLE>
(1) Reflects operations for the period from October 20, 1999 (date of initial
public investment) to October 31, 1999.
(2) Based on net asset value.
(3) During the period, certain fees were voluntarily waived. If such voluntary
waivers had not occurred, the ratios would have been as indicated.
(4) Computed on an annualized basis.
(See Notes which are an integral part of the Financial Statements)
Independence One Equity Plus Fund
Notes to Financial Statements
October 31, 1999 (unaudited)
(1) Organization
Independence One Mutual Funds (the "Trust") is registered under the Investment
Company Act of 1940, as amended (the "Act") as an open-end, management
investment company. The Trust consists of nine portfolios. The financial
statements included herein are only those of Independence One Equity Plus Fund
(the "Fund"). The investment objective is to seek total return.
The financial statements of the other portfolios are presented separately. The
assets of each portfolio are segregated and a shareholder's interest is limited
to the portfolio in which shares are held.
(2) Significant Accounting Policies
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles.
Investment Valuations--Listed equity securities are valued at the last sale
price reported on a national securities exchange, and in the absence of recorded
sales for listed equity securities, at the mean between the last closing bid and
asked prices. Short-term securities are valued at the mean between the bid and
asked prices provided by an independent pricing service. However, short-term
securities with remaining maturities of sixty days or less at the time of
purchase may be valued at amortized cost, which approximates fair market value.
Investments in other open-end regulated investment companies are valued at net
asset value. Investment gains and losses are determined on the identified cost
basis.
Repurchase Agreements--It is the policy of the Fund to require the custodian
bank to take possession, to have legally segregated in the Federal Reserve Book
Entry System, or to have segregated within the custodian bank's vault, all
securities held as collateral under repurchase agreement transactions.
Additionally, procedures have been established by the Fund to monitor, on a
daily basis, the market value of each repurchase agreement's collateral to
ensure that the value of collateral at least equals the repurchase price to be
paid under the repurchase agreement transaction.
The Fund will only enter into repurchase agreements with banks and other
recognized financial institutions, such as broker/dealers, which are deemed by
the Fund's adviser to be creditworthy pursuant to the guidelines and/or
standards reviewed or established by the Board of Trustees (the "Trustees").
Risks may arise from the potential inability of counterparties to honor the
terms of the repurchase agreement. Accordingly, the Fund could receive less than
the repurchase price on the sale of collateral securities.
Investment Income, Expenses and Distributions--Interest income and expenses are
accrued daily. Bond premium and discount, if applicable, are amortized as
required by the Internal Revenue Code, as amended (the "Code"). Dividend income
and distributions to shareholders are recorded on the ex-dividend date.
Federal Taxes--It is the Fund's policy to comply with the provisions of the Code
applicable to regulated investment companies and to distribute to shareholders
each year substantially all of its income. Accordingly, no provisions for
federal tax are necessary.
Withholding taxes on foreign interest and dividends have been provided for in
accordance with the applicable country's tax rules and rates.
When-Issued and Delayed Delivery Transactions--The Fund may engage in when-
issued or delayed delivery transactions. The Fund records when-issued securities
on the trade date and maintains security positions such that sufficient liquid
assets will be available to make payment for the securities purchased.
Securities purchased on a when-issued or delayed delivery basis are marked to
market daily and begin earning interest on the settlement date.
Use of Estimates--The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the amounts of assets, liabilities, expenses and
revenues reported in the financial statements. Actual results could differ from
those estimated.
Other--Investment transactions are accounted for on the trade date.
(3) Shares of Beneficial Interest
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value).
Transactions in shares were as follows:
<TABLE>
<CAPTION>
Equity Plus
Fund
Six
Months Year Ended
Ended
October April 30, 1999
31, 1999 (1)
<S>
<C> <C>
Class B Shares
Shares sold
393 -
Shares issued to shareholders in payment of distributions declared
Shares redeemed
Net change resulting from Class B Share transactions
393 -
</TABLE>
<TABLE>
<CAPTION>
Equity Plus Fund
Six Months
Ended Year Ended
October 31,
1999 April 30, 1999
<S>
<C> <C>
Class Y Shares
Shares sold
1,062,597 4,537,809
Shares issued to shareholders in payment of distributions declared
32,501 430,398
Shares redeemed
(1,284,240) (3,050,713)
Net change resulting from Class Y Share transactions
(189,142) 1,917,494
Net change resulting from share transactions
(188,749) 1,917,494
</TABLE>
(1) Reflects operations for the period from October 20, 1999 (date of initial
public investment) to October 31, 1999.
(4) Investment Advisory Fee and Other Transactions with Affiliates
Investment Advisory Fee--Michigan National Bank, the Fund's investment adviser
(the "Adviser"), receives for its services an annual investment advisory fee
equal to 0.40% of the Fund's average daily net assets. The Adviser may
voluntarily choose to waive any portion of its fee. The Adviser can modify or
terminate this voluntary waiver at any time at its sole discretion.
Under the terms of a sub-advisory agreement between the Adviser and Sosnoff
Sheridan Weiser Corporation (the "Sub-Adviser"), the Sub-Adviser is entitled to
receive an annual fee from the Adviser equal to 0.035% of the Fund's average
daily net value of the Fund's equity securities. The Sub-Adviser may voluntarily
choose to reduce its compensation.
Administrative Fee--Federated Administrative Services ("FAS") provides the Fund
with certain administrative personnel and services. The fee paid to FAS is based
on the level of average aggregate net assets of the Trust for the period. The
administrative fee received during any fiscal year shall be at least $50,000 for
each portfolio in the Trust. FAS may voluntarily choose to waive a portion of
its fee.
Distribution Services Fee--The Fund has adopted a Distribution Plan (the "Plan")
pursuant to Rule 12b-1 under the Act. Under the terms of the Plan, the Fund will
compensate Federated Securities Corp. ("FSC"), the principal distributor, from
the net assets of the Fund to finance activities intended to result in the sale
of the Fund's Class B Shares. The Plan provides that the Fund may incur up to
0.75% of the average daily net assets of the Class B Shares, annually, to
compensate FSC. The distributor may voluntarily choose to waive any portion of
its fee. The distributor can modify or terminate this voluntary waiver at any
time at its sole discretion.
Shareholder Services Fee--Under the terms of a Shareholder Services Agreement
with Federated Shareholder Services Company ("FSSC"), the Fund will pay FSSC up
to 0.25% of average daily net assets of the Class B Shares for the period. The
fee paid to FSSC is used to finance certain services for shareholders and to
maintain shareholder accounts. FSSC may voluntarily choose to waive any portion
of its fee. FSSC can modify or terminate this voluntary waiver at any time at
its sole discretion.
Transfer Agent and Dividend Disbursing Agent Fees--Federated Services Company
("FServ"), through its subsidiary, FSSC, serves as transfer and dividend
disbursing agent for the Fund. The fee paid to FSSC is based on the size, and
number of accounts and transactions made by shareholders. FSSC may voluntarily
choose to waive a portion of its fee.
Portfolio Accounting Fees--FServ maintains the Fund's accounting records for
which it receives a fee. The fee is based on the level of the Fund's average
daily net assets for the period, plus out-of-pocket expenses.
Custodian Fees--Michigan National Bank is the Funds custodian. The fee is based
on the level of the Fund's average daily net assets for the period, plus
out-of-pocket expenses.
Organizational Expenses--Organizational expenses of $23,832 for the Fund were
borne initially by the Adviser. The Fund has reimbursed the Adviser for these
expenses. These expenses have been deferred and are being amortized over the
five year period following the Fund's effective date. For the six months ended
October 31, 1999, the Fund expensed $3,214 of organizational expenses.
General--Certain of the Officers of the Trust are Officers and/or Directors or
Trustees of the above companies.
(5) Investment Transactions
Purchases and sales of investments, excluding short-term securities, for the
period ended October 31, 1999, were as follows:
<TABLE>
<S> <C>
Purchases
$12,899,579
Sales
$18,867,368
</TABLE>
(6) Year 2000
Similar to other financial organizations, the Fund could be adversely affected
if the computer systems used by the Fund's service providers do not properly
process and calculate date- related information and data from and after January
1, 2000. The Fund's Adviser and administrator are taking measures that they
believe are reasonably designed to address the Year 2000 issue with respect to
computer systems that they use and to obtain reasonable assurances that
comparable steps are being taken by the Fund's other service providers. At this
time, however, there can be no assurance that these steps will be sufficient to
avoid any adverse impact to the Fund.
Trustees
Robert E. Baker
Harold Berry
Nathan Forbes
Harry J. Nederlander
Thomas S. Wilson
Officers
Edward C. Gonzales
President and Treasurer
Jeffrey W. Sterling
Vice President and Assistant Treasurer
C. Grant Anderson
Secretary
Timothy S. Johnson
Assistant Secretary
Mutual funds are not bank deposits or obligations, are not guaranteed by any
bank, and are not insured or guaranteed by the U. S. government, the Federal
Deposit Insurance Corporation, the Federal Reserve Board, or any other
government agency. Investment in mutual funds involves investment risk,
including possible loss of principal.
This report is authorized for distribution to prospective investors only when
preceded or accompanied by the Fund's prospectus which contains facts concerning
its objectives and policies, management fees, expenses and other information.
Independence One(R)
Mutual Funds
(Distributed by Federated Securities Corp.)
Semi-Annual Report
October 31, 1999
Independence One
Equity Plus Fund
Class B Shares
800-334-2292
www.MichiganNational.com
Investment Company Act File No: 811-5752
Cusip 453777823
25007 (12/99)
Investment Adviser
Semi-Annual Report
Independence One(R)
Mutual Funds
Independence One(R) Mutual Funds offer nine portfolios, including three equity
funds, three income funds and three money market funds. This Semi-Annual Report
relates to the three income funds:
Independence One
U.S. Government Securities Fund
Independence One
Fixed Income Fund
Independence One
Michigan Municipal Bond Fund
October 31, 1999
[LOGO of Independence One]
Independence One
Mutual Funds
For more information about any of the Independence One(R) Mutual Funds, please
call 800-334-2292 for a prospectus, which should be read carefully before
investing.
President's
Message
Dear Investor:
I am pleased to present the Semi-Annual Report of the Independence One Fixed
Income Funds, which covers the six-month reporting period from May 1, 1999
through October 31, 1999. Inside, you'll find complete financial information for
the Independence One U.S. Government Securities Fund, the Independence One Fixed
Income Fund, and the Independence One Michigan Municipal Bond Fund. The report
begins with a discussion by the funds' portfolio managers, followed by a listing
of each fund's holdings and financial statements.
The following is a fund-by-fund summary of performance over the six- month
reporting period.
Independence One U.S. Government Securities Fund. This fund's all-government
bond portfolio produced an income stream totaling $0.27 per share. Due to the
rising interest rate environment that caused bond prices to decline, the fund's
Class Y Shares net asset value declined from $10.41 to $10.08. At the end of the
reporting period, 51.0% of the holdings consisted of U.S. Treasury bonds and
notes, while government agency securities accounted for 41.9% of the portfolio.
The remaining holdings were invested in a repurchase agreement. At the end of
the reporting period, fund assets totaled $52.2 million.
Independence One Fixed Income Fund. This fund provides a diversified approach to
bond investing through a portfolio that consists of a mix of U.S. government
agency bonds, U.S. Treasury securities and corporate bonds. This portfolio
produced an income stream totaling $0.29 per share. Due to the rising interest
rate environment that caused bond prices to decline, the fund's net asset value
declined from $9.99 to $9.71. At the end of the reporting period, fund assets
totaled $89.4 million.
Independence One Michigan Municipal Bond Fund. Designed for tax-sensitive
Michigan investors, this fund invests in investment-grade Michigan municipal
bonds to pursue double tax-free income.* The fund's portfolio produced an income
stream totaling $0.20 per share. Due to the rising interest rate environment
that caused bond prices to decline, the fund's net asset value declined from
$10.47 to $10.00. At the end of the reporting period, fund assets totaled $17.7
million.
Thank you for selecting one or more Independence One Fixed Income Funds to
pursue the income potential of bonds. We look forward to keeping you informed
about the progress of your investment.
Sincerely,
/s/ Edward C. Gonzales
Edward C. Gonzales
President
December 15, 1999
* Income may be subject to the federal alternative minimum tax.
Independence
One Fixed
Income Funds
Question: What is your review of the first half of the funds' fiscal year, which
saw a rising interest rate environment that caused an overall decline in bond
prices?
Answer: Economic growth in the United States improved during the summer months.
Gross Domestic Product (GDP) increased at a 4.8% rate in the third calendar
quarter, up from 1.9% in the second quarter. Manufacturing led the rebound as
companies worked to rebuild inventories depleted by stronger than forecasted
consumer purchases of motor vehicles, apparel, and household durable goods.
Employers continued to add new hires at a rapid clip, precipitating a drop in
the unemployment rate to a 29-year low of 4.1% On the negative side, there are
signs that inflation is starting to accelerate. The Consumer Price Index, which
rose only 1.6% during 1998, is now increasing at a 2.6% rate.
Last fall the Federal Reserve Board (the "Fed") lowered short term interest
rates on three occasions to a cumulative 0.75% in reaction to the global
financial crisis which was threatening to put an end to the business expansion.
The resumption of robust economic growth this year has eased concerns over a
global economic collapse. The Fed reacted to the more favorable economic outlook
and the increased uncertainties over the inflation picture by taking steps to
return interest rates to their pre-crisis levels. It raised short term interest
rates 0.25% on June 30 and then another 0.25% on August 24. The bond market
reacted negatively to the tightening moves, as evidenced by the ten-year
Treasury benchmark issue yield which ended the reporting period at 6.0%. This
was an increase of 65 basis points from where it began the six-month period
under review.
Question: How did the Independence One Fixed Income Funds perform during the
six-month reporting period ended October 31, 1999?
Answer: The general increase in interest rates negatively impacted the total
returns of the Independence One Income Funds during the six-month reporting
period. The Independence One Fixed Income Fund had a total return of 0.09%. The
Independence One U.S. Government Securities Fund's Class Y Shares earned a
(0.53%) total return, and the Independence One Michigan Municipal Bond Fund
reported a total return of (2.60%) for the reporting period.*
Question: What factors will determine the direction of the bond market for the
rest of the funds' fiscal year?
Answer: Despite the recent poor performance of the bond market, we see some
reason for optimism looking forward. The increase in interest rates during the
past year has served to improve the relative attractiveness of fixed income
securities. To a large degree, the recent tightening moves by the Fed have been
preemptive in nature. It is attempting to temper economic growth before
inflation pressures boil over. In our opinion, if the Fed is ultimately
successful in achieving this goal, the bond market should react positively.
* Past performance is no guarantee of future results. Investment return and
principal value will fluctuate, so that an investor's shares, when
redeemed, may be worth more or less than their original price.
Independence One U.S. Government Securities Fund
Portfolio of Investments
October 31, 1999 (unaudited)
<TABLE>
<CAPTION>
Principal
Amount
Value
<S>
<C> <C>
Government Agencies--41.9%
Federal Farm Credit Bank--15.1%
$ 4,000,000 (1) 5.150%,
11/10/1999 $ 3,994,360
4,000,000 5.970%,
3/11/2005 3,906,680
- -----------
Total 7,901,040
- -----------
Federal Home Loan Bank26.8%
5,000,000 5.005%,
4/20/2000 4,982,950
5,000,000 6.350%,
6/28/2004 4,908,950
4,000,000 7.200%,
6/14/2011 4,104,640
- -----------
Total 13,996,540
- -----------
Total Government Agencies (identified cost
$21,956,554) 21,897,580
===========
U.S. Treasury Obligations--51.0%
U.S. Treasury Bonds--31.7%
7,000,000 6.500%,
11/15/2026 7,084,490
5,500,000 7.125%,
2/15/2023 5,939,780
3,000,000 8.125%,
8/15/2019 3,536,250
- -----------
Total 16,560,520
- -----------
U.S. Treasury Note--19.3%
10,000,000 6.375%,
3/31/2001 10,085,200
- -----------
Total U.S. Treasury Obligations (identified cost
$25,710,736) 26,645,720
===========
(2) Repurchase Agreement--6.4%
3,319,000 Donaldson, Lufkin and Jenrette Securities Corp., 5.220%, dated
10/29/1999,
due 11/1/1999 (at
cost) 3,319,000
- -----------
Total Investments (identified cost $50,986,290)
(3) $51,862,300
===========
</TABLE>
(1) Rate reflects the rate of discount at the time of purchase. (2) The
repurchase agreement is fully collateralized by U.S. Treasury obligations based
on market prices at the date of the portfolio. (3) The cost of investments for
federal tax purposes amounts to $50,986,290. The net unrealized appreciation of
investments on a federal tax basis amounts to $876,010 which is comprised of
$1,192,927 appreciation and $316,917 depreciation at October 31, 1999.
Note: The categories of investments are shown as a percentage of net assets
($52,247,996) at October 31, 1999.
(See Notes which are an integral part of the Financial Statements)
Independence One U.S. Government Securities Fund
Statement of Assets and Liabilities
October 31, 1999 (unaudited)
<TABLE>
<CAPTION>
Assets:
<S>
<C> <C>
Total investments in securities, at value (identified and tax cost
$50,986,290) $51,862,300
Income
receivable
661,553
- -----------
Total
assets
52,523,853
===========
Liabilities:
Income distribution payable $232,185
Payable to Bank 30,635
Accrued expenses 13,037
-----------
Total
liabilities
275,857
- -----------
Net Assets for 5,182,395 shares
outstanding $52,247,996
===========
Net Assets Consist of:
Paid in
capital
$51,277,484
Net unrealized appreciation of
investments 876,010
Accumulated net realized gain on
investments 89,348
Undistributed net investment
income 5,154
- -----------
Total Net
Assets
$52,247,996
===========
Net Asset Value, Offering Price and Redemption Proceeds Per Share:
Class Y Shares:
$52,247,996 / 5,182,395 shares
outstanding $10.08
- -----------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
Independence One U.S. Government Securities Fund
Statement of Operations
Six Months Ended October 31, 1999 (unaudited)
<TABLE>
<S>
<C> <C>
Investment Income:
Interest
$ 1,664,328
Expenses:
Investment advisory fee $194,520
Administrative personnel and services fee 27,641
Custodian fees 9,465
Transfer and dividend disbursing agent fees and expenses 14,806
Directors'/Trustees' fees 1,540
Auditing fees 6,891
Legal fees 2,539
Portfolio accounting fees 22,909
Share registration costs 7,238
Printing and postage 2,914
Insurance premiums 494
Miscellaneous 1,067
--------
Total expenses 292,024
Waiver
Waiver of investment advisory fee (111,155)
--------
Net
expenses
180,869
- -----------
Net investment
income 1,483,459
- -----------
Realized and Unrealized Gain (Loss) on Investments:
Net realized gain on
investments 81,637
Net change in unrealized appreciation of
investments (1,925,403)
- -----------
Net realized and unrealized loss on
investments (1,843,766)
- -----------
Change in net assets resulting from
operations $ (360,307)
===========
</TABLE>
(See Notes which are an integral part of the Financial Statements)
Independence One U.S. Government Securities Fund
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
Six Months
Ended Year Ended
October 31,
1999 April 30, 1999
(unaudited)
Increase (Decrease) in Net Assets:
Operations
<S>
<C> <C>
Net investment income $
1,483,459 $ 3,532,064
Net realized gain on investments ($81,637 and $495,126, respectively,
as computed for federal tax purposes)
81,637 495,126
Net change in unrealized appreciation (depreciation) on investments
(1,925,403) (127,163)
- ----------- ------------
Change in net assets resulting from operations
(360,307) 3,900,027
- ----------- ------------
Distributions to Shareholders
Distributions from net investment income
Class Y Shares
(1,483,459) (3,532,064)
- ----------- ------------
Share Transactions
Proceeds from sale of shares
2,511,042 6,657,213
Net asset value of shares issued to shareholders in payment of
69,820 314,112
distributions declared
Cost of shares redeemed
(7,947,643) (18,747,528)
- ----------- ------------
Change in net assets resulting from share transactions
(5,366,781) (11,776,203)
- ----------- ------------
Change in net assets
(7,210,547) (11,408,240)
Net Assets:
Beginning of period
59,458,543 70,866,783
- ----------- ------------
End of period (including undistributed net investment income of
$5,154 and $5,154, respectively)
$52,247,996 $ 59,458,543
=========== ============
</TABLE>
(See Notes which are an integral part of the Financial Statements)
Independence One U.S. Government Securities Fund
Financial Highlights--Class Y Shares
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Six Months
Ended
October 31,
1999
(unaudited) Year Ended April 30,
1999 1998
1997 1996 1995
<S> <C> <C> <C> <C>
<C> <C>
Net asset value,
beginning of period $ 10.41 $ 10.41 $ 9.98 $ 9.98
$ 9.79 $ 9.84
Income from investment
operations
Net investment income 0.27 0.56 0.58
0.59 0.59 0.60
Net realized and
unrealized gain (loss)
on investments (0.33) 0.00(1) 0.43
0.01 0.19 (0.05)
------- ------- ------- -------
- ------- -------
Total from investment
operations (0.06) 0.56 1.01
0.60 0.78 0.55
------- ------- ------- -------
- ------- -------
Less distributions
Distributions from net
investment income (0.27) (0.56) (0.58)
(0.59) (0.59) (0.60)
Distributions from net
realized gain on
investments -- -- --
(0.01) -- --
------- ------- ------- -------
- ------- -------
Total distributions (0.27) (0.56) (0.58)
(0.60) (0.59) (0.60)
------- ------- ------- -------
- ------- -------
Net asset value, end
of period $ 10.08 $ 10.41 $ 10.41 $ 9.98
$ 9.98 $ 9.79
------- ------- ------- -------
- ------- -------
Total return (2) (0.53%) 5.41% 10.37%
6.15% 7.97% 5.90%
Ratios to average
net assets
Expenses (3) 1.05%(4) 1.01% 1.06%
1.02% 1.06% 1.05%
Net investment income(3) 4.94%(4) 4.87% 5.22%
5.37% 5.19% 5.53%
Expenses (after waivers) 0.65%(4) 0.60% 0.61%
0.57% 0.40% 0.35%
Net investment income
(after waivers) 5.34%(4) 5.28% 5.67%
5.82% 5.85% 6.23%
Supplemental data
Net assets, end of
period (000 omitted) $52,248 $59,459 $70,867 $71,883
$72,291 $62,514
Portfolio turnover 10% 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. If such voluntary
waivers had not occurred, the ratios would have been as indicated.
(4) Computed on an annualized basis.
(See Notes which are an integral part of the Financial Statements)
Independence One Fixed Income Fund
Portfolio of Investments
October 31, 1999 (unaudited)
<TABLE>
<CAPTION>
Principal
Amount
Value
<S>
<C> <C>
Corporate Bonds--36.9%
Automotive--4.4%
$ 2,000,000 Ford Motor Credit Corp., Note, 6.750%,
8/15/2008 $ 1,942,640
2,000,000 General Motors Acceptance Corp., Note, 6.100%,
6/1/2001 1,984,280
- ---------------
Total 3,926,920
- ---------------
Banking--4.6%
1,000,000 Bank One Corp., Sub. Note, 8.100%,
3/1/2002 1,029,900
1,000,000 Bank One Corp., Sub. Note, 8.740%,
9/15/2003 1,057,840
2,000,000 NationsBank Corp., Sr. Note, 7.000%,
9/15/2001 2,016,220
- ---------------
Total 4,103,960
- ---------------
Commercial--4.3%
1,000,000 Associates Corp. of North America, Sr. Note, 6.260%,
2/15/2006 956,700
1,000,000 General Electric Capital Corp., Deb., 5.500%,
11/1/2001 982,870
2,000,000 General Electric Capital Corp., Note, 6.500%,
11/1/2006 1,934,060
- ---------------
Total 3,873,630
- ---------------
Entertainment--1.1%
1,000,000 Disney (Walt) Co., Sr. Note, Series B, 6.750%,
3/30/2006 995,360
- ---------------
Financial Services--4.5%
1,000,000 Merrill Lynch & Co., Inc., Note, 7.000%,
3/15/2006 987,940
1,000,000 Morgan Stanley, Dean Witter & Co., Note, 7.750%,
6/1/2001 1,016,780
2,000,000 Salomon Smith Barney Holdings, Inc., Note, 7.000%,
3/15/2004 1,988,840
- ---------------
Total 3,993,560
- ---------------
Food & Beverage--1.1%
1,000,000 Sara Lee Corp., Note, 6.300%,
11/7/2005 963,060
- ---------------
Industrial Services1.2%
1,000,000 General Mills, Inc., Note, 8.900%,
6/15/2006 1,101,300
- ---------------
Office Equipment--4.4%
3,000,000 Xerox CapEurope PLC, Company Guarantee, 5.750%,
5/15/2002 2,923,920
1,000,000 Xerox Corp., Deb., 9.750%,
3/15/2000 1,013,270
- ---------------
Total 3,937,190
- ---------------
Pharmaceuticals--1.2%
1,000,000 Lilly (Eli) & Co., Unsecured Note, 8.375%,
12/1/2006 1,085,950
- ---------------
Retail--7.9%
1,000,000 Gap (The), Inc., Note, 6.900%,
9/15/2007 993,170
1,000,000 May Department Stores Co., Deb., 9.875%,
6/15/2000 1,022,780
1,000,000 Penney (J.C.) Co., Inc., MTN, Series A, 6.375%,
9/15/2000 996,230
4,000,000 Wal-Mart Stores, Inc., Unsecured. Note, 6.550%,
8/10/2004 3,999,280
- ---------------
Total 7,011,460
- ---------------
Telecommunications--2.2%
1,000,000 AT&T Corp., Note, 7.500%,
6/1/2006 1,023,810
1,000,000 U.S. West Communications, Inc., Note, 6.625%,
9/15/2005 970,570
- ---------------
Total 1,994,380
- ---------------
Total Corporate Bonds (identified cost
$33,778,990) 32,986,770
===============
Government Agencies--19.6%
Federal Farm Credit Bank--4.4%
1,000,000 5.150%, MTN,
1/7/2003 964,810
2,000,000 5.970%, MTN,
3/11/2005 1,953,340
1,000,000 6.300%, MTN,
8/8/2007 975,180
- ---------------
Total 3,893,330
- ---------------
Federal Home Loan Bank--15.2%
2,000,000 5.530%, Bond,
1/15/2003 1,950,860
4,000,000 6.028%, Bond,
5/7/2003 3,913,480
3,000,000 6.500%, Bond,
7/30/2004 2,955,870
4,000,000 5.125%, Note,
9/15/2003 3,827,520
1,000,000 5.575%, Note,
9/2/2003 972,640
- ---------------
Total 13,620,370
- ---------------
Total Government Agencies (identified cost
$18,014,785) 17,513,700
===============
U.S. Treasury Obligations--33.6%
U.S. Treasury Bonds--3.6%
1,000,000 6.000%,
2/15/2026 949,850
2,000,000 10.750%,
5/15/2003 2,294,560
- ---------------
Total 3,244,410
- ---------------
U.S. Treasury Notes--30.0%
3,500,000 5.625%,
5/15/2008 3,378,235
6,500,000 6.125%,
7/31/2000 6,531,265
4,750,000 6.250%,
2/15/2007 4,776,315
12,000,000 6.375%,
8/15/2002 12,121,440
- ---------------
Total 26,807,255
- ---------------
Total U.S. Treasury Obligations (identified cost
$30,845,664) 30,051,665
===============
(1) Repurchase Agreement--3.1%
$ 2,741,000 Donaldson, Lufkin and Jenrette Securities Corp., 5.220%, dated
10/29/1999,
due 11/1/1999 (at
cost) 2,741,000
- ---------------
Total Investments (identified cost $85,380,439)
(2) $ 83,293,135
===============
</TABLE>
(1) The repurchase agreement is fully collateralized by U.S. Treasury
obligations based on market prices at the date of the portfolio.
(2) The cost of investments for federal tax purposes amounts to $85,380,439. The
net unrealized depreciation of investments on a federal tax basis amounts to
$2,087,304 which is comprised of $210,420 appreciation and $2,297,724
depreciation at October 31, 1999.
Note: The categories of investments are shown as a percentage of net assets
($89,421,279) at October 31, 1999.
The following acronym is used throughout this portfolio:
MTN--Medium Term Note
(See Notes which are an integral part of the Financial Statements)
Independence One Fixed Income Fund
Statement of Assets and Liabilities
<TABLE>
<S> <C> <C>
October 31, 1999 (unaudited)
Assets:
Total investments in securities, at value (identified and tax cost $85,380,439)
$ 83,293,135
Cash
71,311
Income
receivable
1,544,845
Receivable for investments
sold 5,000,000
Unamortized organizational
costs 5,377
Other
assets
3,938
- -------------
Total
assets
89,918,606
Liabilities:
Income distribution payable $465,986
Accrued expenses 31,341
-------------
Total
liabilities
497,327
- -------------
Net Assets for 9,207,030 shares outstanding
$ 89,421,279
- -------------
Net Assets Consist of:
Paid in capital
$ 91,949,646
Net unrealized depreciation of
investments (2,087,304)
Accumulated net realized loss on
investments (455,583)
Undistributed net investment
income 14,520
- -------------
Total Net Assets
$ 89,421,279
- -------------
Net Asset Value, Offering Price and Redemption Proceeds Per Share:
$89,421,279 / 9,207,030 shares
outstanding $9.71
- -------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
Independence One Fixed Income Fund
Statement of Operations
Six Months Ended October 31, 1999 (unaudited)
<TABLE>
<CAPTION>
Investment Income:
<S>
<C> <C>
Interest
$ 2,860,322
- ---------------
Expenses:
Investment advisory fee $ 331,450
Administrative personnel and services fee 43,945
Custodian fees 10,317
Transfer and dividend disbursing agent fees and expenses 16,033
Directors'/Trustees' fees 2,013
Auditing fees 6,984
Legal fees 2,770
Portfolio accounting fees 22,885
Share registration costs 6,609
Printing and postage 3,575
Insurance premiums 597
Miscellaneous 4,397
-------------
Total expenses 451,575
Waiver
Waiver of investment advisory fee (198,870)
-------------
Net
expenses
252,705
- ---------------
Net investment
income
2,607,617
- ---------------
Realized and Unrealized Gain (Loss) on Investments:
Net realized loss on
investments (507,863)
Net change in unrealized depreciation of
investments (1,901,375)
- ---------------
Net realized and unrealized loss on
investments (2,409,238)
- ---------------
Change in net assets resulting from
operations $ 198,379
- ---------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
Independence One Fixed Income Fund
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
Six Months
Ended
October 31,
1999 Year Ended
(unaudited) April 30, 1999
<S>
<C> <C>
Increase (Decrease) in Net Assets:
Operations
Net investment income $
2,607,617 $ 4,749,152
Net realized gain (loss) on investments (($507,863) and $245,461,
(507,863) 273,117
respectively, as computed for federal tax purposes)
Net change in unrealized depreciation of investments
(1,901,375) (661,854)
- ----------- ---------------
Change in net assets resulting from operations
198,379 4,360,415
- ----------- ---------------
Distributions to Shareholders
Distributions from net investment income
(2,607,617) (4,660,274)
Distributions from net realized gains
- -- (92,620)
- ----------- ---------------
Change in net assets resulting from distributions to shareholders
(2,607,617) (4,752,894)
- ----------- ---------------
Share Transactions
Proceeds from sale of shares
6,423,660 18,804,165
Net asset value of shares issued to shareholders in payment of
distributions declared
1,828,727 4,159,874
Cost of shares redeemed
(3,341,468) (15,994,186)
- ----------- ---------------
Change in net assets resulting from share transactions
4,910,919 6,969,853
- ----------- ---------------
Change in net assets
2,501,681 6,577,374
Net Assets:
Beginning of period
86,919,598 80,342,224
- ----------- ---------------
End of period (including undistributed net investment income of
$89,421,279 $ 86,919,598
=========== ===============
$14,520 and$14,520, respectively)
</TABLE>
(See Notes which are an integral part of the Financial Statements)
Independence One Fixed Income Fund
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Six Months
Ended
October 31,
1999
(unaudited) Year Ended April 30,
1999 1998
1997 1996
<S> <C> <C> <C>
<C> <C>
Net asset value,
beginning of period $ 9.99 $ 10.03 $ 9.80 $
9.82 $ 10.00
Income from investment
operations
Net investment income 0.29 0.58 0.59
0.57 0.30
Net realized and unrealized
gain (loss)
on investments (0.28) (0.03) 0.23
(0.02) (0.18)
------- ------- -------
- ------- --------
Total from investment operations 0.01 0.55 0.82
0.55 0.12
------- ------- -------
- ------- --------
Less distributions
Distributions from net investment income (0.29) (0.58) (0.59)
(0.57) (0.30)
Distributions from net realized gain
on investments -- -- (0.01)
- -- (0.00)(2)
------- ------- -------
- ------- --------
Total distributions (0.29) (0.59) (0.59)
(0.57) (0.30)
------- ------- -------
- ------- --------
Net asset value, end of period $ 9.71 $ 9.99 $ 10.03 $
9.80 $ 9.82
======= ======= =======
======= ========
Total return (3) 0.09% 5.60% 8.56%
5.79% 1.15%
Ratios to average net assets
Expenses (4) 1.02%(5) 1.03% 1.06%
1.05% 1.15%(5)
Net investment income (4) 5.45%(5) 5.39% 5.42%
5.33% 5.12%(5)
Expenses (after waivers) 0.57%(5) 0.57% 0.56%
0.55% 0.54%(5)
Net investment income (after waivers) 5.90%(5) 5.85% 5.92%
5.83% 5.73%(5)
Supplemental data
Net assets, end of period (000 omitted) $89,421 $86,920 $80,342
$70,884 $ 62,256
Portfolio turnover 19% 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. If such voluntary
waivers had not occurred, the ratios would have been as indicated. (5) Computed
on an annualized basis.
(See Notes which are an integral part of the Financial Statements)
Independence One Michigan Municipal Bond Fund
Portfolio of Investments
October 31, 1999 (unaudited)
<TABLE>
<CAPTION>
Credit
Principal Rating*
Amount
S&P/Moody's Value
<S> <C>
<C> <C>
(1) Long-Term Municipals--96.4%
Michigan--96.4%
$ 825,000 Allegan, MI Public School District, GO UT Bonds, 5.55%
AAA/Aaa $ 858,602
(AMBAC INS)/(Original Issue Yield: 5.60%), 5/1/2010
400,000 Beaverton, MI Rural Schools, GO UT Bonds, 4.70% (FGIC INS)/
AAA/Aaa 384,292
(Original Issue Yield: 4.75%), 5/1/2008
485,000 Central Michigan University, Revenue Bonds, 5.30% (FGIC
AAA/Aaa 500,467
LOC)/ (Original Issue Yield: 5.40%), 10/1/2011
150,000 Clare County, MI, GO UT Refunding Bonds, 5.00% (Sewage
AAA/Aaa 152,201
Disposal System No. 3)/(AMBAC INS)/(Original Issue Yield:
5.10%), 11/1/2003
480,000 Detroit, MI City School District, GO UT Bonds (Series A),
AAA/Aaa 523,661
6.50% (AMBAC INS), 5/1/2008
500,000 East Detroit Michigan School District, GO UT Refunding
AAA/Aaa 542,515
Bonds, 6.50% (FGIC INS), 5/1/2006
680,000 Grand Rapids, MI Community College, GO UT Refunding Bonds,
AAA/Aaa 685,324
5.30% (MBIA INS)/(Original Issue Yield: 5.35%), 5/1/2009
550,000 Holland, MI Area Community Swimming Pool Authority,
AAA/Aaa 542,102
GOUT Bonds, 5.125% (FGIC INS)/(Original Issue Yield: 5.40%),
5/1/2010
1,000,000 Kenowa Hills Michigan Public Schools, GO UT Bonds, 5.60%
AAA/Aaa 1,023,220
(MBIA INS), 5/1/2009
500,000 Kent County, MI, GO LT (Grand River Floodwalls Drain), 4.50%
AAA/Aa2 459,995
(Original Issue Yield: 5.00%), 11/1/2011
600,000 Lakewood, MI Public Schools, GO UT Bonds, 5.30% (MBIA
AAA/Aaa 603,768
INS)/(Original Issue Yield: 5.45%), 5/1/2009
1,055,000 Lincoln Park, MI School District, GO UT Bonds, 5.70% (FGIC
AAA/Aaa 1,112,540
INS), 5/1/2008
600,000 Marquette, MI Hospital Finance Authority, Refunding Revenue
AAA/Aaa 604,398
Bonds (Series D), 4.95% (Marquette General Hospital, MI)/
(FSA INS), 4/1/2002
1,000,000 Michigan Municipal Bond Authority, Revenue Bonds (Pooled
AA+/Aa1 1,013,810
Project-Series B), 5.35% (Original Issue Yield: 5.45%),
10/1/2007
500,000 Michigan Municipal Bond Authority, Revenue Bonds, 5.25%
AAA/Aaa 509,230
(Local Government Loan Program)/(AMBAC INS), 5/1/2006
100,000 Michigan State Building Authority, Revenue Bonds (Series I),
AA/Aa2 104,729
5.50% (Original Issue Yield: 5.60%), 10/1/2004
150,000 Michigan State Building Authority, Revenue Bonds, 6.20%
AAA/Aaa 153,807
(Grand Rapids Center)/(BIG INS), 3/1/2001
100,000 Michigan State Housing Development Authority, Refunding
AA+/NR 100,737
Revenue Bonds (Series A), 6.40% (FHA/VA mtgs. GTD), 6/1/2000
500,000 Michigan State Housing Development Authority, Refunding
AAA/Aaa 500,750
Revenue Bonds (Series A), 4.85% (AMBAC INS), 10/1/2002
150,000 Michigan Strategic Fund, Small Business Refunding Revenue
NR/Aaa 152,789
Bonds (Series A1-A2), 5.90% (SBA GTD), 10/1/2000 500,000
Novi, MI, Refunding GO Bonds, 5.25%, 10/1/2009
AA-/A1 502,475
600,000 Ottawa County, MI Building Authority, Revenue Bonds (Series
AA/Aa2 583,950
A), 4.90%, 11/1/2009
100,000 Portage, MI, GO LT City Share Bonds, 5.90%, 12/1/2003
AA-/NR 105,121
700,000 Redford, MI University School District, GO UT Bonds, 6.25%
AAA/Aaa 758,982
(FGIC INS), 5/1/2007
390,000 Rochester, MI, GO UT Refunding Bonds, 4.90% (FSA INS),
AAA/Aaa 392,601
10/1/2006
400,000 St. Clair County, MI, GO LT Water Supply System Bonds, 5.00%
AAA/Aaa 394,584
(Burtchville)/(MBIA INS)/(Original Issue Yield: 5.10%),
11/1/2009
500,000 Three Rivers Michigan Community Schools, GO UT Bonds, 5.40%
AAA/Aaa 518,985
(Michigan State GTD)/(MBIA INS), 5/1/2008
765,000 University of Michigan, Housing Revenue Bonds (Series A),
AA/Aa1 781,164
5.40%, 11/15/2008
350,000 University of Michigan, Housing Revenue Bonds (Series A),
AA/Aa1 352,828
5.60% (Original Issue Yield: 5.70%), 11/15/2012
500,000 Washtenaw Community College, MI, GO UT Bonds (Series A),
AA/Aa3 496,420
5.00% (Original Issue Yield: 5.10%), 4/1/2008
500,000 Washtenaw Community College, MI, GO UT Bonds (Series A),
AA/Aa3 481,650
5.00% (Original Issue Yield: 5.35%), 4/1/2011
750,000 Western Michigan University, Revenue Refunding Bonds, 5.00%
AAA/Aaa 711,712
(FGIC INS)/(Original Issue Yield: 5.15%), 11/15/2012
500,000 Wixon, MI, GO UT Bonds, 4.70% (AMBAC INS)/(Original Issue
AAA/Aaa 474,205
Yield:4.85%), 5/1/2009
- ------------
Total Long-Term Municipals (identified cost
$16,851,001) 17,083,614
- ------------
Mutual Fund--2.0%
350,000 Goldman Sachs Tax Exempt
Fund
(identified cost
$350,000) $ 350,000
- ------------
Total Investments (identified cost $17,201,001)
(2) $ 17,433,614
============
</TABLE>
* Please refer to the Appendix of the Statement of Additional Information for an
explanation of the credit ratings. (1) At October 31, 1999, 2.8% of the total
investments at market value were subject to alternative minimum tax. (2) The
cost of investments for federal tax purposes amounts to $17,201,001. The net
unrealized appreciation of investments on a federal tax basis amounts to
$232,613 which is comprised of $321,053 appreciation and $88,440 depreciation at
October 31, 1999.
Notes: The categories of investments are shown as a percentage of net assets
($17,718,111) at October 31, 1999.
The following acronyms are used throughout this portfolio:
AMBAC--American Municipal Bond Assurance Corporation BIG--Bond Investors
Guaranty FGIC--Financial Guaranty Insurance Company FHA/VA--Federal Housing
Administration/Veterans Administration FSA--Financial Security Assurance
GO--General Obligation GTD--Guaranteed INS--Insured LOC--Letter of Credit
LT--Limited Tax MBIA--Municipal Bond Investors Assurance SBA--Small Business
Association UT--Unlimited Tax
(See Notes which are an integral part of the Financial Statements)
Independence One Michigan Municipal Bond Fund
Statement of Assets and Liabilities
<TABLE>
<S> <C>
<C>
October 31, 1999 (unaudited) Assets:
Total investments in securities, at value (identified and tax cost
$17,201,001) $ 17,433,614
Cash
955
Income
receivable
343,810
Unamortized organizational
costs 5,002
Other
assets
1,901
- ------------
Total
assets
17,785,282
Liabilities:
Income distribution payable $60,345
Accrued expenses 6,826
-------
Total
liabilities
67,171
- ------------
Net Assets for 1,772,121 shares
outstanding $ 17,718,111
- ------------
Net Assets Consist of:
Paid in
capital $
17,477,887
Net unrealized appreciation of
investments 232,613
Accumulated net realized gain on
investments 8,956
Distributions in excess of net investment
income (1,345)
- ------------
Total Net
Assets $
17,718,111
- ------------
Net Asset Value, Offering Price and Redemption Proceeds Per Share:
$17,718,111 divided by 72,121 shares
outstanding $10.00
</TABLE>
(See Notes which are an integral part of the Financial Statements)
Independence One Michigan Municipal Bond Fund
Statement of Operations
Six Months Ended October 31, 1999 (unaudited)
<TABLE>
<CAPTION>
Investment Income:
<S> <C>
<C> <C>
Interest
$ 469,893
- -----------
Expenses:
Investment advisory fee $
70,888
Administrative personnel and services fee
9,400
Custodian fees
8,576
Transfer and dividend disbursing agent fees and expenses
16,215
Directors'/Trustees' fees
581
Auditing fees
7,392
Legal fees
2,524
Portfolio accounting fees
25,097
Share registration costs
6,262
Printing and postage
4,139
Insurance premiums
1,150
Miscellaneous
4,890
- -----------
Total expenses
157,114
Waivers
Waiver of investment advisory fee $ (47,259)
Waiver of administrative personnel and services fee (8,507)
-----------
Total waivers
(55,766)
- -----------
Net
expenses
101,348
- -----------
Net investment
income
368,545
- -----------
Realized and Unrealized Gain (Loss) on Investments:
Net realized gain on
investments
2,010
Net change in unrealized appreciation of
investments (875,749)
- -----------
Net realized and unrealized loss on
investments (873,739)
- -----------
Change in net assets resulting from
operations $ (505,194)
===========
</TABLE>
(See Notes which are an integral part of the Financial Statements)
Independence One Michigan Municipal Bond Fund
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
Six
Months
Ended
October
31,
1999 Year Ended
(unaudited) April 30, 1999
<S>
<C> <C>
Increase (Decrease) in Net Assets:
Operations
Net investment income $
368,545 $ 785,560
Net realized gain on investments ($2,010 and $19,345,
respectively, as computed for federal tax purposes)
2,010 19,345
Net change in unrealized appreciation (depreciation) of investments
(875,749) 366,068
- ----------- ----------------
Change in net assets resulting from operations
(505,194) 1,170,973
- ----------- ----------------
Distributions to Shareholders
Distributions from net investment income
(368,545) (785,560)
Distributions from net realized gains
- -- (35,310)
- ----------- ----------------
Change in net assets resulting from distributions to shareholders
(368,545) (820,870)
- ----------- ----------------
Share Transactions
Proceeds from sale of shares
921,822 1,309,093
Net asset value of shares issued to shareholders in payment
of
distributions declared
7,526 48,738
Cost of shares redeemed
(1,754,777) (3,317,173)
- ----------- ----------------
Change in net assets resulting from share transactions
(825,429) (1,959,342)
- ----------- ----------------
Change in net assets
(1,699,168) (1,609,239)
Net Assets:
Beginning of period
19,417,279 21,026,518
- ----------- ----------------
End of period (including distributions in excess of net
investment
income of ($1,345) and ($1,345), respectively)
$17,718,111 $ 19,417,279
=========== ================
</TABLE>
(See Notes which are an integral part of the Financial Statements)
Independence One Michigan Municipal Bond Fund
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Six Months
Ended
October 31,
1999 Year Ended
April 30,
(unaudited) 1999 1998
1997 1996(1)
<S> <C> <C> <C>
<C> <C>
Net asset value, beginning of period $ 10.47 $ 10.30 $ 9.99 $
9.95 $ 10.00
Income from investment operations
Net investment income 0.20 0.41 0.42
0.41 0.17
Net realized and unrealized gain (loss)
on investments (0.47) 0.19 0.31
0.04 (0.05)
------- ------- -------
- ------- --------
Total from investment operations (0.27) 0.60 0.73
0.45 0.12
------- ------- -------
- ------- --------
Less distributions
Distributions from net investment income (0.20) (0.41) (0.42)
(0.41) (0.17)
Distributions from net realized gain
on investments -- (0.02) --
(0.00)(2) --
------- ------- -------
- ------- --------
Total distributions (0.20) (0.43) (0.42)
(0.41) (0.17)
------- ------- -------
- ------- --------
Net asset value, end of period $ 10.00 $ 10.47 $ 10.30 $
9.99 $ 9.95
======= ======= =======
======= ========
Total return (3) (2.60%) 5.83% 7.38%
4.62% 1.21%
Ratios to average net assets
Expenses (4) 1.66%(5) 1.69% 1.53%
1.64% 1.33%(5)
Net investment income (4) 3.31%(5) 3.13% 3.35%
3.18% 3.07%(5)
Expenses (after waivers) 1.07%(5) 0.96% 0.81%
0.70% 0.57%(5)
Net investment income (after waivers) 3.90%(5) 3.86% 4.07%
4.12% 3.83%(5)
Supplemental data
Net assets, end of period (000 omitted) $17,718 $19,417 $21,027
$23,483 $ 25,123
Portfolio turnover 0% 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. If such voluntary
waivers had not occurred, the ratios would have been as indicated. (5) Computed
on an annualized basis. (See Notes which are an integral part of the Financial
Statements)
Independence One Mutual Funds
Combined Notes to Financial Statements
October 31, 1999 (unaudited)
(1) Organization
Independence One Mutual Funds (the "Trust") is registered under the Investment
Company Act of 1940, as amended (the "Act") as an open-end management investment
company. The Trust consists of nine portfolios. The financial statements of the
following portfolios (individually referred to as the "Fund," or collectively as
the "Funds") are presented herein: <TABLE> <CAPTION>
Portfolio Name Investment Objective
- --------------------------------------------------------------------------------------------------------------
<S> <C>
Independence One U.S. Government Securities Fund To seek high current income.
("U.S. Government Securities Fund")(d)
- --------------------------------------------------------------------------------------------------------------
Independence One Fixed Income Fund ("Fixed Income To seek total return.
Fund")(d)
- --------------------------------------------------------------------------------------------------------------
Independence One Michigan Municipal Bond Fund To provide current income which is
exempt from ("Michigan Municipal Bond Fund")(n) federal regular income tax and
the personal income
taxes imposed by the state of Michigan and
Michigan
municipalities.
- --------------------------------------------------------------------------------------------------------------
</TABLE>
(d) Diversified Portfolio
(n) Non-diversified Portfolio
The financial statements of the other portfolios are presented separately. The
assets of each portfolio are segregated and a shareholder's interest is limited
to the portfolio in which shares are held.
(2) Significant Accounting Policies
The following is a summary of significant accounting policies consistently
followed by the Funds in the preparation of their financial statements. These
policies are in conformity with generally accepted accounting principles.
Investment Valuations--Municipal bonds are valued by an independent pricing
service, taking into consideration yield, liquidity, risk, credit quality,
coupon, maturity, type of issue and any other factors or market data the pricing
service deems relevant. U.S. government securities, listed corporate bonds,
other fixed income and asset-backed securities, and unlisted securities and
private placement securities are generally valued at the mean of the latest bid
and asked price as furnished by an independent pricing service. Short-term
securities are valued at the prices provided by an independent pricing service.
However, short-term securities with remaining maturities of sixty days or less
at the time of purchase may be valued at amortized cost, which approximates fair
market value. Investments in other open-end regulated investment companies are
valued at net asset value. Investment gains and losses are determined on the
identified cost basis.
Repurchase Agreements--It is the policy of the Funds to require the custodian
bank to take possession, to have legally segregated in the Federal Reserve Book
Entry System, or to have segregated within the custodian bank's vault, all
securities held as collateral under repurchase agreement transactions.
Additionally, procedures have been established by the Funds to monitor, on a
daily basis, the market value of each repurchase agreement's collateral to
ensure that the value of collateral at least equals the repurchase price to be
paid under the repurchase agreement transaction.
The Funds will only enter into repurchase agreements with banks and other
recognized financial institutions, such as broker/dealers, which are deemed by
the Funds' adviser to be creditworthy pursuant to the guidelines and/or
standards reviewed or established by the Board of Trustees (the "Trustees").
Risks may arise from the potential inability of counterparties to honor the
terms of the repurchase agreement. Accordingly, the Funds could receive less
than the repurchase price on the sale of collateral securities.
Investment Income, Expenses and Distributions--Interest income and expenses are
accrued daily. Bond premium and discount, if applicable, are amortized as
required by the Internal Revenue Code, as amended (the "Code"). Distributions to
shareholders are recorded on the ex- dividend date.
Federal Taxes--It is the Funds' policy to comply with the provisions of the Code
applicable to regulated investment companies and to distribute to shareholders
each year substantially all of their income. Accordingly, no provisions for
federal tax are necessary.
When-Issued and Delayed Delivery Transactions--The Funds may engage in when-
issued or delayed delivery transactions. The Funds record when-issued securities
on the trade date and maintain security positions such that sufficient liquid
assets will be available to make payment for the securities purchased.
Securities purchased on a when-issued or delayed delivery basis are marked to
market daily and begin earning interest on the settlement date.
Organizational Expenses--Organizational expenses were borne initially by
Federated Administrative Services ("FAS"). The Funds have reimbursed FAS for
these expenses. These expenses have been deferred and are being amortized over
the five year period following the Funds effective date.
<TABLE>
<CAPTION>
Organizational Expenses
Organizational Amortized for the Six Months
Portfolio Name Expenses Ended October 31, 1999
- -----------------------------------------------------------------------------------------
<S> <C> <C>
Fixed Income Fund $21,477 $1,973
- -----------------------------------------------------------------------------------------
Michigan Municipal Bond Fund 24,175 3,269
- -----------------------------------------------------------------------------------------
</TABLE>
Use of Estimates--The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the amounts of assets, liabilities, expenses and
revenues reported in the financial statements. Actual results could differ from
those estimated.
Other--Investment transactions are accounted for on the trade date.
(3) Shares of Beneficial Interest
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value) for each
Fund. Transactions in shares were as follows:
<TABLE>
<CAPTION>
U.S.
Government
Securities
Fund
Six Months
Year Ended
Ended April 30,
October
31, 1999
1999
<S> <C>
<C>
Class Y Shares
Shares sold
246,867 627,607
Shares issued to shareholders in payment of distributions declared
6,873 29,512
Shares redeemed
(781,324) (1,754,179)
- -------- ----------
Net change resulting from Class Y Share transaction
(527,584) (1,097,060)
- -------- ----------
</TABLE>
<TABLE>
<CAPTION>
Fixed
Income Fund
Six
Months Year Ended
Ended April 30,
October
31, 1999
1999
<S>
<C> <C>
Shares sold
657,464 1,859,584
Shares issued to shareholders in payment of distributions declared
187,113 410,699
Shares redeemed
(342,024) (1,574,201)
- -------- ----------
Net change resulting from share transaction
502,553 696,082
- -------- ----------
</TABLE>
<TABLE>
<CAPTION>
Michigan
Municipal
Bond Fund
Six Months
Year Ended
Ended
April 30,
October
31, 1999
1999
<S> <C>
<C>
Shares sold
90,451 124,438
Shares issued to shareholders in payment of distributions declared
738 4,616
Shares redeemed
(173,685) (315,517)
--------
- ----------
Net change resulting from share transaction
(82,496) (186,463)
--------
- ----------
</TABLE>
(4) Investment Advisory Fee and Other Transactions with Affiliates
Investment Advisory Fee--Michigan National Bank, the Funds' investment adviser
(the "Adviser"), receives for its services an annual investment advisory fee
equal to the percentage of each Fund's average daily net assets (see below).
<TABLE>
<CAPTION>
Portfolio Name Investment Advisory
Fee
<S> <C>
U.S. Government Securities Fund 0.70%
Fixed Income Fund 0.75%
Michigan Municipal Bond Fund 0.75%
</TABLE>
The Adviser may voluntarily choose to waive any portion of its fee. The Adviser
can modify or terminate this voluntary waiver at any time at its sole
discretion.
Administrative Fee--Federated Administrative Services ("FAS") provides the Funds
with certain administrative personnel and services. The fee paid to FAS is based
on the level of average aggregate net assets of the Trust for the period. The
administrative fee received during any fiscal year shall be at least $50,000 for
each portfolio in the Trust. FAS may voluntarily choose to waive a portion of
its fee.
Transfer Agent and Dividend Disbursing Agent Fees--Federated Services Company
("FServ"), through its subsidiary, Federated Shareholder Services Company
("FSSC") serves as transfer and dividend disbursing agent for the Funds. The fee
paid to FSSC is based on the size, type and number of accounts and transactions
made by shareholders.
Portfolio Accounting Fees--FServ maintains the Funds' accounting records for
which it receives a fee. The fee is based on the level of each Fund's average
daily net assets for the period, plus out-of-pocket expenses.
Custodian Fees--Michigan National Bank is the Funds' custodian. The fee is based
on the level of each Fund's average daily net assets for the period, plus
out-of-pocket expenses. General--Certain of the Officers of the Trust are
Officers and/or Directors or Trustees of the above companies.
(5) Investment Transactions
Purchases and sales of investments, excluding short-term securities, for the six
months ended October 31, 1999, were as follows:
<TABLE>
<CAPTION>
Portfolio Name Purchases
Sales
<S> <C>
<C>
U.S. Government Securities Fund $ 5,000,000 $
9,084,688
Fixed Income Fund 15,983,750
15,704,691
Michigan Municipal Bond
Fund 603,350
</TABLE>
(6) Concentration of Credit Risk
Since Michigan Municipal Bond Fund invests a substantial portion of its assets
in issuers located in one state, it will be more susceptible to factors
adversely affecting issuers of that state than would be a comparable tax-exempt
mutual fund that invests nationally. In order to reduce the credit risk
associated with such factors, at October 31, 1999, 70.0% of the securities in
the portfolio of investments are backed by letters of credit or bond insurance
of various financial institutions and financial guaranty assurance agencies. The
largest percentage of investments insured by or supported (backed) by a letter
of credit from any one institution or agency did not exceed 26.1% of total
investments.
(7) Year 2000
Similar to other financial organizations, the Funds could be adversely affected
if the computer systems used by the Funds' service providers do not properly
process and calculate date- related information and data from and after January
1, 2000. The Funds' Adviser and administrator are taking measures that they
believe are reasonably designed to address the Year 2000 issue with respect to
computer systems that they use and to obtain reasonable assurances that
comparable steps are being taken by each of the Fund's other service providers.
At this time, however, there can be no assurance that these steps will be
sufficient to avoid any adverse impact to the Funds.
Trustees
Robert E. Baker
Harold Berry
Nathan Forbes
Harry J. Nederlander
Thomas S. Wilson
Officers
Edward C. Gonzales
President and Treasurer
Jeffrey W. Sterling
Vice President and Assistant Treasurer
C. Grant Anderson
Secretary
Timothy S. Johnson
Assistant Secretary
Mutual funds are not bank deposits or obligations, are not guaranteed by any
bank, and are not insured or guaranteed by the U. S. government, the Federal
Deposit Insurance Corporation, the Federal Reserve Board, or any other
government agency. Investment in mutual funds involves investment risk,
including possible loss of principal.
This report is authorized for distribution to prospective investors only when
preceded or accompanied by the Funds' prospectus which contains facts concerning
their objectives and policies, management fees, expenses and other information.
Independence One(R)
Mutual Funds
(Distributed by Federated Securities Corp.)
Semi-Annual Report
October 31, 1999
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
G01889-02 (12/99)
[LOGO of Independence One] [LOGO of Michigan National]
Investment Adviser
Semi-Annual Report
Independence One(R)
Mutual Funds
Independence One(R) Mutual Funds offer nine portfolios, including three equity
funds, three income funds and three money market funds. This Semi-Annual Report
relates to the three money market funds:
Independence One
Prime Money Market Fund
Class K Shares
Class Y Shares
Independence One
U.S. Treasury Money Market Fund
Independence One
Michigan Municipal Cash Fund
October 31, 1999
[LOGO OF INDEPENDENCE ONE]
Mutual Funds
For more complete information about any of the Independence One/(R)/ Mutual
Funds, please call 800-334-2292 for a prospectus, which should be read carefully
before investing.
President's Message
Dear Investor:
I am pleased to present the Semi-Annual Report for the Independence One Money
Market Funds, which covers the six-month reporting period from May 1, 1999
through October 31, 1999. This report contains complete financial information
for each fund--beginning with a discussion with the portfolio manager, followed
by a complete listing of investments and financial statements.
Each fund is a convenient, stable way to put your ready cash to work every day
pursing competitive money market income.* Fund-by-fund highlights for the
six-month reporting period are below.
Independence One Prime Money Market Fund, a high-quality portfolio of money
market securities, paid dividends of $0.02 per share for Class K Shares and
$0.02 per share for Class Y Shares over the reporting period. Assets in the fund
reached $663.5 million at the end of the reporting period.
Independence One U.S. Treasury Money Market Fund, a portfolio of short- term
U.S. Treasury money market securities, paid a total of $0.02 per share in
dividends over the reporting period. Assets in the fund reached $222.1 million
at the end of the reporting period end.
Independence One Michigan Municipal Cash Fund, a high-quality portfolio of more
than 50 Michigan municipal money market securities, paid a total of $0.01 per
share in double tax-free dividends per share over the reporting period.** Assets
in the fund reached $103.0 million at the end of the reporting period.
Thank you for keeping your cash working every day through one or more of the
Independence One Money Market Funds.
Sincerely,
/s/ Edward C. Gonzales
Edward C. Gonzales
President
December 15, 1999
*An investment in the funds is neither insured nor guaranteed by the Federal
Deposit Insurance Corporation or any other government agency. Although the
funds seek to preserve the value of your investment at $1.00 per share, it is
possible to lose money by investing in the funds.
** Income may be subject to the federal alternative minimum tax.
Investment Review
Question: What is your analysis of the rising rate environment that
characterized the first half of the funds' fiscal year?
Answer: Last fall the Federal Reserve Board (the "Fed") lowered short- term
interest rates on three occasions in reaction to the global financial crisis
which was threatening to put an end to the business expansion. The resumption of
robust economic growth this year has eased concerns over a global economic
collapse. The Fed reacted to the more favorable economic outlook and the
increased uncertainties over the inflation picture by taking steps to return
interest rates to their pre-crisis levels. To that end, the Fed raised
short-term interest rates 0.25% on June 30, and August 24, 1999.
Question: In this environment, how did the Independence One Money Market Funds
perform for shareholders in terms of income and 7-day net yield during the
six-month reporting period ended October 31, 1999? What was the average maturity
of each fund?
Answer: Independence One Prime Money Market Fund
Independence One Prime Money Market Fund earned a total return of 2.34% for
Class K Shares and 2.47% for Class Y during the 6-month reporting period ended
October 31, 1999. The 7-day net yield for Class K Shares began the period on May
1, 1999 at 4.45% and ended the reporting period on October 31, 1999 at 5.02%.
The 7-day net yield for Class Y Shares began the reporting period on May 1, 1999
at 4.70% and ended the reporting period on October 31, 1999 at 5.27%. The
average maturity of the fund as of October 31, 1999 was 59 days.*
Independence One U.S. Treasury Money Market Fund Independence One U.S. Treasury
Money Market Fund earned a total return of 2.19% during the 6-month reporting
period ended October 31, 1999. The 7-day net yield began the period on May 1,
1999 at 4.19% and ended the reporting period on October 31, 1999 at 4.48%. The
average maturity of the fund as of October 31, 1999 was 39 days.*
Independence One Michigan Municipal Cash Fund Independence One Michigan
Municipal Cash Fund earned a total return of 1.40% during the 6-month reporting
period ended October 31, 1999. The 7-day net yield began the period on May 1,
1999 at 2.99% and ended the reporting period on October 31, 1999 at 3.00%. The
average maturity of the fund as of October 31, 1999 was 38 days.*
Question: As we move toward the end of 1999, expectations are mixed for further
tightenings, or increases in rates, by the Fed. What do you see ahead for short-
term rates?
Answer: To a large degree, the recent tightening moves by the Fed have been
preemptive in nature. The Fed attempted to temper economic growth before
inflation pressures boiled over. Following the most recent rate hike, the Fed
hinted to the market that the current tightening cycle may not be over. In our
opinion, the Fed is likely to raise rates again between now and early 2000.
*Past performance is no guarantee of future results. Yields will vary. Yields
quoted for money market funds most closely reflect the funds' current earnings.
Independence One Prime Money Market Fund
Portfolio of Investments
October 31, 1999 (unaudited)
<TABLE>
<CAPTION>
Principal
Value
Amount
Certificate of Deposit--7.5%
<S>
<C> <C>
Finance--7.5%
$ 15,000,000 Abbey National Treasury Services, PLC MTN (denominated in U.S.
dollars), $ 14,994,875
5.130%, 5/4/2000
15,000,000 CIBC Wood Gundy Securities Corp., 5.200%,
2/29/2000 14,998,576
10,000,000 Rabobank Nederland, Utrecht (denominated in U.S. dollars), 5.060%,
1/27/ 10,000,233
2000
10,000,000 Societe Generale, Paris (denomintaed in U.S. dollars), 5.025%,
1/14/2000 9,999,470
- --------------------
Total Certificate of
Deposit 49,993,154
====================
(1) Commercial Paper--78.5%
Consumer Durables--4.8%
32,000,000 Receivables Capital Corp., 5.400% - 6.010%, 11/5/1999 -
2/15/2000 31,650,878
Finance--49.6%
10,000,000 Abbey National N.A. Corp., (Guaranteed by Abbey National Bank
PLC, 9,948,083
London), 5.340%, 12/6/1999
10,000,000 Asset Portfolio Funding, 5.860%,
2/25/2000 9,811,178
25,000,000 Atlantis One Funding Corp., 5.750% - 5.780%, 2/2/2000 -
2/14/2000 24,598,583
15,000,000 BCI Funding Corp., 5.350%,
12/15/1999 14,901,917
15,000,000 Bank of America, NT and SA, San Francisco, 5.010%,
11/2/1999 14,997,913
20,000,000 Cargill Financial Services, 5.600%,
1/19/2000 19,754,222
30,000,000 Delaware Funding Corp., 5.810% - 5.830%, 1/21/2000 -
2/22/2000 29,529,684
21,000,000 Dresdner U.S. Finance, (Dresdner Bank AG, Frankfurt SA), 5.350%,
12/15/1999 20,862,683
31,470,000 Enterprise Capital Funding Corp., 5.250% - 6.000%, 11/4/1999
- -1/18/2000 31,287,763
10,000,000 Four Winds Funding Corp., 6.070%,
1/25/2000 9,856,680
10,000,000 Goldman Sachs Group, Inc., 5.700% - 5.800%, 11/16/1999 -
2/10/2000 9,909,042
30,000,000 Grand Funding Corp., 5.790% - 6.100%, 1/21/2000 -
2/3/2000 29,571,558
30,000,000 Halifax PLC, 5.300% - 6.070%, 11/22/1999 -
1/10/2000 29,842,694
15,000,000 Merrill Lynch & Co., Inc., 4.930%,
2/4/2000 14,804,854
30,000,000 Quincy Capital Corp., 5.350% - 6.110%, 11/9/1999 -
1/10/2000 29,842,445
30,000,000 Windmill Funding, 5.370% - 5.780%, 11/18/1999 -
1/14/2000 29,801,260
- --------------------
Total 329,320,559
- --------------------
Miscellaneous--2.2%
15,000,000 Asset Securitization Cooperative Corp., 5.830%,
1/28/2000 14,786,233
Process Industries--0.8%
5,000,000 Monsanto Co., 4.800%,
11/5/1999 4,997,333
Producer Manufacturing--2.2%
15,000,000 General Electric Co., 5.300%,
12/23/1999 14,885,167
Securities Services--13.1%
31,170,000 Barton Capital Corp., 5.400% - 5.580%, 11/8/1999 -
1/28/2000 30,987,552
32,000,000 Edison Asset Securitization, LLC, 5.200% - 6.130%, 11/19/1999 -
1/26/2000 31,679,938
24,361,000 Fountain Square Commercial Funding Corp., (Fifth Third Bank,
Cincinnati 24,208,608
SA), 5.380%, 12/6/1999 - 12/20/1999
- --------------------
Total 86,876,098
- --------------------
Transportation--2.1%
13,740,000 Kitty Hawk, Funding Corp. 5.380% - 5.480%, 12/3/1999 -
12/13/1999 13,666,740
Utilities--3.7%
25,000,000 Pacificorp, 5.650% - 5.660%, 2/9/2000 -
2/14/2000 24,595,590
- --------------------
Total Commercial
Paper 520,778,598
- --------------------
Government Agencies1.5%
Federal Home Loan Bank--1.5%
10,000,000 5.290%,
11/10/1999 9,999,854
(2) Repurchase Agreements--12.2%
63,000,000 Donaldson, Lufkin and Jenrette Securities Corp., 5.220%, dated
10/29/1999, 63,000,000
due 11/1/1999
17,903,000 Merrill Lynch, Pierce, Fenner and Smith, 5.190%, dated 10/29/1999,
due 17,903,000
11/1/1999
- --------------------
Total Repurchase Agreements (at
cost) 80,903,000
====================
Total Investments (at amortized cost)
(3) $ 661,674,606
====================
</TABLE>
(1) Rate reflects the rate of discount at the time of purchase.
(2) The repurchase agreements are fully collateralized by U.S. Treasury
obligations based on market prices at the date of the portfolio.
(3) Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($663,503,578) at October 31, 1999.
The following acronym is used throughout this portfolio:
MTN--Medium Term Note
(See Notes which are an integral part of the Financial Statements)
Independence One Prime Money Market Fund
Statement of Assets and Liabilities
October 31, 1999 (unaudited)
<TABLE>
<CAPTION>
Assets:
<S>
<C> <C>
Investments in securities $ 580,771,606
Investments in repurchase agreements 80,903,000
Total investments in securities, at amortized cost and
value $ 661,674,606
Cash
3,097,382
Income
receivable
1,875,025
- --------------------
Total
assets
666,647,013
Liabilities:
Income distribution payable 2,885,996
Accrued expenses 257,439
Total
liabilities
3,143,435
- --------------------
Net Assets for 663,503,578 shares
outstanding $ 663,503,578
Net Asset Value, Offering Price and Redemption Proceeds Per Share:
Class K Shares:
$502,389,103 / 502,389,103 shares
outstanding $ 1.00
Class Y Shares:
$161,114,475 / 161,114,475 shares
outstanding $ 1.00
</TABLE>
(See Notes which are an integral part of the Financial Statements)
Independence One Prime Money Market Fund
Statement of Operations
Six Months Ended October 31, 1999 (unaudited)
<TABLE>
<CAPTION>
Investment Income:
<S>
<C> <C>
Interest
$ 18,429,623
Expenses:
Investment advisory fee $ 1,428,834
Administrative personnel and services fee 355,027
Custodian fees 40,298
Transfer and dividend disbursing agent fees and expenses 62,720
Directors'/Trustees' fees 12,820
Auditing fees 8,411
Legal fees 2,831
Portfolio accounting fees 58,885
Shareholder services feeClass K Shares 624,110
Share registration costs 19,440
Printing and postage 4,510
Insurance premiums 1,752
Miscellaneous 2,813
--------------
Total expenses 2,622,451
Waiver--
Waiver of investment advisory fee (893,022)
Net
expenses
1,729,429
Net investment
income $
16,700,194
</TABLE>
(See Notes which are an integral part of the Financial Statements)
Independence One Prime Money Market Fund
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
Six Months Ended
Year Ended April 30,
October 31,
1999 1999
(unaudited)
<S> <C> <C>
Increase (Decrease) in Net Assets:
Operations--
Net investment income $ 16,700,194
$ 27,718,372
Distributions to Shareholders--
Distributions from net investment income
Class K Shares
(11,501,912) (21,765,197)
Class Y Shares
(5,198,282) (5,953,175)
Change in net assets resulting from distributions to shareholders
(16,700,194) (27,718,372)
Share Transactions--
Proceeds from sale of shares
2,949,449,989 4,638,090,014
Net asset value of shares issued to shareholders in payment of
8,704,945 17,286,748
distributions declared
Cost of shares redeemed
(2,928,224,942) (4,493,048,245)
Change in net assets resulting from share transactions
29,929,992 162,328,517
Change in net assets
29,929,992 162,328,517
Net Assets:
Beginning of period
633,573,586 471,245,069
End of period $ 663,503,578
$ 633,573,586
</TABLE>
(See Notes which are an integral part of the Financial Statements)
Independence One Prime Money Market Fund
Financial Highlights--Class K Shares
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Six Months
Ended
October 31, Year Ended April 30,
1999
(unaudited) 1999 1998 1997
1996 1995
<S> <C> <C> <C> <C>
<C> <C>
Net asset value, beginning $ 1.00 $ 1.00 $ 1.00 $ 1.00 $
1.00 $ 1.00
of
period
Income from
Investment
operations
Net investment income 0.02 0.05 0.05 0.05
0.05 0.05
Less
distributions
Distributions from net (0.02) (0.05) (0.05) (0.05)
(0.05) (0.05)
investment
income
Net asset value, end $ 1.00 $ 1.00 $ 1.00 $ 1.00 $
1.00 $ 1.00
ofperiod
Total return (1) 2.34% 4.88% 5.20% 4.94%
5.33% 4.66%
Ratios to average net
assets
Expenses (2) 0.81%(3) 0.81% 0.84% 0.85%
0.86% 0.61%
Net investment income (2) 4.36%(3) 4.52% 4.82% 4.58%
4.94% 4.51%
Expenses (after waivers) 0.56%(3) 0.56% 0.59% 0.60%
0.61% 0.61%
Net investment income 4.61%(3) 4.77% 5.07% 4.83%
5.19% 4.51%
(after
waivers)
Supplemental
data
Net assets, end of period $502,389 $442,201 $389,522 $337,836
$310,991 $233,607
(000 omitted)
</TABLE>
(1) Based on net asset value.
(2) During the period, certain fees were voluntarily waived. If such voluntary
waivers had not occurred, the ratios would have been as indicated.
(3) Computed on an annualized basis.
(See Notes which are an integral part of the Financial Statements)
Independence One Prime Money Market Fund
Financial Highlights--Class Y Shares
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Six Months
Ended October Year Ended April 30,
31, 1999
(unaudited) 1999 1998
1997 1996(1)
<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 0.02 0.05 0.05
0.05 0.05
Less
distributions
Distributions from net investment (0.02) (0.05) (0.05)
(0.05) (0.05)
income
Net asset value, end of period $ 1.00 $ 1.00 $ 1.00 $
1.00 $ 1.00
Total return (2) 2.47% 5.14% 5.46%
5.20% 5.07%
Ratios to average net
assets
Expenses (3) 0.56%(4) 0.56% 0.59%
0.60% 0.61%(4)
Net investment income (3) 4.61%(4) 4.77% 5.06%
4.81% 5.09%(4)
Expenses (after waivers) 0.31%(4) 0.31% 0.34%
0.35% 0.36%(4)
Net investment income (after waivers) 4.86%(4) 5.02% 5.31%
5.06% 5.34%(4)
Supplemental
data
Net assets, end of period (000 $161,114 $191,373 $81,723
$71,168 $85,780
omitted)
</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. If such voluntary
waivers had not occurred, the ratios would have been as indicated.
(4) Computed on an annualized basis.
(See Notes which are an integral part of the Financial Statements)
Independence One U.S. Treasury Money Market Fund
Portfolio of Investments
October 31, 1999 (unaudited)
<TABLE>
<CAPTION>
Principal
Amount
Value
<S> <C>
<C>
U.S. Treasury Obligations--33.8%
U.S. Treasury Notes33.8%
$15,000,000 5.375%, 1/31/2000
$ 15,008,936
35,000,000 5.500%, 2/29/2000 --
4/15/2000 35,058,135
25,000,000 5.875%, 11/15/1999 --
2/15/2000 25,035,967
Total U.S. Treasury
Obligations 75,103,038
(1) Repurchase Agreements--59.2%
39,000,000 BA Securities, Inc., 5.210%, dated 10/29/1999, due
11/1/1999 39,000,000
42,000,000 Goldman Sachs Group, LP, 5.130%, dated 10/29/1999, due
11/1/1999 42,000,000
50,523,000 Merrill Lynch, Pierce, Fenner and Smith, 5.190%, dated 10/29/1999,
due 50,523,000
11/1/1999
Total Repurchase
Agreements 131,523,000
Total Investments (at amortized cost) (2)
$ 206,626,038
</TABLE>
(1) The repurchase agreements are fully collateralized by U.S. Treasury
obligations based on market prices at the date of the portfolio.
(2) Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($222,051,203) at October 31, 1999.
(See Notes which are an integral part of the Financial Statements)
Independence One U.S. Treasury Money Market Fund
Statement of Assets and Liabilities
October 31, 1999 (unaudited)
<TABLE>
<S> <C>
<C>
Assets:
Investments in securities $ 75,103,038
Investments in repurchase agreements 131,523,000
Total investments in securities, at amortized cost and
value $ 206,626,038
Cash
26,708
Income
receivable
1,371,538
Receivable for investments
sold 15,000,000
Total
assets
223,024,284
- -----------------
Liabilities:
Income distribution payable 858,026
Accrued expenses 115,055
Total
liabilities
973,081
- -----------------
Net Assets for 222,051,203 shares
outstanding $ 222,051,203
Net asset value, offering price and redemption proceeds per share:
$222,051,203 / 222,051,203 shares
outstanding $1.00
</TABLE>
(See Notes which are an integral part of the Financial Statements)
Independence One U.S. Treasury Money Market Fund
Statement of Operations
Six Months Ended October 31, 1999 (unaudited)
<TABLE>
<S>
<C> <C>
Investment Income:
Interest
$ 5,441,197
Expenses:
Investment advisory fee $ 441,032
Administrative personnel and services fee 109,592
Custodian fees 28,258
Transfer and dividend disbursing agent fees and expenses 18,527
Directors'/Trustees' fees 6,697
Auditing fees 6,942
Legal fees 2,572
Portfolio accounting fees 30,708
Share registration costs 12,116
Printing and postage 5,921
Insurance premiums 2,082
Miscellaneous 2,081
Total
expenses
666,528
- --------------
Net investment
income $ 4,774,669
</TABLE>
(See Notes which are an integral part of the Financial Statements)
Independence One U.S. Treasury Money Market Fund
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
Six Months Ended
October 31, 1999
Year Ended
(unaudited)
April 30, 1999
<S> <C>
<C>
Increase (Decrease) in Net Assets:
Operations--
Net investment income $ 4,774,669
$ 11,665,694
Distributions to Shareholders--
Distributions from net investment income
(4,774,669) (11,665,694)
Share Transactions--
Proceeds from sale of shares
1,217,896,370 2,423,407,738
Net asset value of shares issued to shareholders in payment of
2,605,156 7,185,665
distributions declared
Cost of shares redeemed (1,192,399,349)
(2,557,212,720)
Change in net assets resulting from share transactions
28,102,177 (126,619,317)
Change in net assets
28,102,177 (126,619,317)
Net Assets:
Beginning of period
193,949,026 320,568,343
End of period $ 222,051,203
$ 193,949,026
</TABLE>
(See Notes which are an integral part of the Financial Statements)
Independence One U.S. Treasury Money Market Fund
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Six Months
Ended
October 31, Year Ended April 30,
1999
(unaudited) 1999 1998 1997
1996 1995
<S> <C> <C> <C> <C>
<C> <C>
Net asset value, beginning $ 1.00 $ 1.00 $ 1.00 $ 1.00 $
1.00 $ 1.00
of
period
Income from
investment
operations
Net investment income 0.02 0.05 0.05 0.05
0.05 0.04
Less
distributions
Distributions from net (0.02) (0.05) (0.05) (0.05)
(0.05) (0.04)
investment
income
Net asset value, end of $ 1.00 $ 1.00 $ 1.00 $ 1.00 $
1.00 $ 1.00
period
-------- -------- -------- --------
- -------- --------
Total return (1) 2.19% 4.62% 5.03% 4.86%
5.28% 4.49%
Ratios to average net
assets
Expenses 0.60%(2) 0.59% 0.59% 0.59%
0.60% 0.63%
Net investment income 4.33%(2) 4.54% 4.92% 4.75%
5.14% 4.41%
Supplemental
data
Net assets, end of period $222,051 $193,949 $320,568 $245,289
$297,233 $244,887
(000 omitted)
</TABLE>
(1) Based on net asset value.
(2) Computed on an annualized basis.
(See Notes which are an integral part of the Financial Statements)
Independence One Michigan Municipal Cash Fund
Portfolio of Investments
October 31, 1999 (unaudited)
<TABLE>
<CAPTION>
Credit
Principal Rating*
Amount
S&P/Moody's Value
<S> <C>
<C> <C>
(1)(2) Short-Term Municipals--95.5%
Michigan--95.5%
$ 2,600,000 Bruce Township, MI Hospital Finance Authority, Tender
A-1+/VMIG1 $ 2,600,000
Securities Weekly VRDNs (Sisters of Charity Health Care
System)/(MBIA INS)/(Morgan Guaranty Trust Co., New York
LIQ)
1,000,000 Cornell, MI EDC, Industrial Development Revenue Refunding
A-1+/NR 1,000,000
Bonds (Series 1990), 3.30% CP (Mead-Escanaba Paper Co.
Project)/(Credit Suisse First Boston LOC), Mandatory
Tender 11/3/1999
3,000,000 Dearborn, MI EDC, Revenue Bonds Weekly VRDNs (Henry Ford
NR/NR 3,000,000
Village)/(Comerica Bank, Detroit, MI LOC) 1,000,000
Dearborn, MI School District, GO UT, 6.375% Bonds (MBIA
AAA/Aaa 1,033,119
LOC), 5/1/2000 (callable @102)
2,000,000 Dearborn, MI School District, GO UT, 6.625% Bonds (MBIA
AAA/Aaa 2,068,665
LOC), 5/1/2000 (callable @102)
2,800,000 Delta County, MI EDC, Environmental Improvement Revenue
NR/P-1 2,800,000
Refunding Bonds (Series 1985 A), 3.50% CP (Mead-Escanaba
Paper Co. Project), Mandatory Tender 2/3/2000
2,200,000 Delta County, MI EDC, Environmental Improvement Revenue
NR/P-1 2,200,000
Refunding Bonds (Series 1985 B), 3.60% CP (Mead-Escanaba
Paper Co. Project)/(Union Bank of Switzerland, Zurich
LOC), Mandatory Tender 1/20/2000
5,000,000 Detroit, MI City School District, (Series 1999), 4.00%
SP-1+/NR 5,013,972
TANs (Michigan State GTD), 6/1/2000
3,000,000 Detroit, MI Sewage Disposal System Revenue Refunding Bonds
A-1+/VMIG1 3,000,000
(Series A) Weekly VRDNs (MBIA INS)
500,000 Detroit, MI Water Supply System, Water Supply System
A-1+/VMIG1 500,000
Revenue Refunding Bonds (Series 1993) Weekly VRDNs (FGIC
INS)/(FGIC Securities Purchase, Inc. LIQ)
340,000 Farmington Hills, MI EDC, LT Obligation Weekly VRDNs
A-1/A 340,000
(Brookfield Building Association)/ (Comerica Bank,
Detroit, MI LOC)
745,000 Farmington Hills, MI EDC, Limited Obligation Revenue
NR/NR 745,000
Bonds, 3.90% TOBs (Marketing Displays)/(Comerica Bank,
Detroit, MI LOC) 3/1/2000
1,000,000 Grand Rapids, MI EDR, Weekly VRDNs (Amway Hotel Corp.)/
A-1/NR 1,000,000
(Old Kent Bank & Trust Co., Grand Rapids LOC)
1,000,000 Grand Rapids, MI EDR, Weekly VRDNs (Amway Hotel Corp.)/
A-1/NR 1,000,000
(Old Kent Bank & Trust Co., Grand Rapids LOC)
5,500,000 Grand Rapids, MI Water Supply System (Series 1993) Weekly
A-1+/VMIG1 5,500,000
VRDNs (FGIC INS)/(Societe Generale, Paris LIQ)
3,400,000 Kent Hospital Finance Authority, MI, Refunding Revenue
A-1+/VMIG1 3,400,000
Bonds Spectrum Health Weekly VRDNs (MBIA LOC)
2,000,000 Michigan Higher Education Student Loan Authority,
Series 2,000,000
XXIIF Weekly VRDNs (AMBAC GTD) AAA/VMIG1
2,000,000 Michigan Municipal Bond Authority, Revenue Bonds (Series
SP-1+/NR 2,010,679
B-2), 4.25%, 8/25/2000 (Morgan Guaranty Trust LOC)
310,000 Michigan State Hospital Finance Authority Weekly VRDNs
NR/VMIG1 310,000
(Hospital Equipment Loan Program)/ (First of America
Bank-Kalamazoo, MI LOC)
3,885,000 Michigan State Hospital Finance Authority, (Series 1994)
NR/VMIG1 3,885,000
Weekly VRDNs (Mt. Clemens General Hospital)/(Comerica
Bank, Detroit, MI LOC)
4,000,000 Michigan State Hospital Finance Authority, (Series A)
NR/VMIG1 4,000,000
WeeklyVRDNs (Hospital Equipment Loan Program)/(First of
America Bank, LOC)
400,000 Michigan State Hospital Finance Authority, (Series A)
NR/VMIG1 400,000
Weekly VRDNs (Hospital Equipment Loan Program)/(First of
America BankKalamazoo, MI LOC)
3,630,000 Michigan State Hospital Finance Authority, (Series A)
NR/VMIG1 3,630,000
Weekly VRDNs (Hospital Equipment Loan Program)/(First of
America BankKalamazoo, MI LOC)
2,100,000 Michigan State Hospital Finance Authority, (Series
F) 2,100,000
Weekly VRDNs (Daughters of Charity) NR/VMIG1
660,000 Michigan State Hospital Finance Authority, Revenue Bonds
NR/Aa3 660,000
(Series A) Weekly VRDNs (Hospital Equipment Loan Program)/
(First of America BankKalamazoo, MI LOC)
1,370,000 Michigan Strategic Fund Weekly VRDNs (Applied Textiles,
NR/NR 1,370,000
Inc. Project)/(Old Kent Bank & Trust Co., Grand Rapids LOC)
300,000 Michigan Strategic Fund Weekly VRDNs (Cons. Indl. Corp.
NR/NR 300,000
Project)
765,000 Michigan Strategic Fund Weekly VRDNs (Advanced Tooling
NR/NR 764,980
Systems, Inc. Project)/(Bank One, Michigan LOC)
200,000 Michigan Strategic Fund Weekly VRDNs (LPB LLC Project)/
NR/NR 200,000
(Bank One, Michigan LOC)
1,500,000 Michigan Strategic Fund Weekly VRDNs (Morrell, Inc.
NR/NR 1,500,000
Project)/ (Comerica Bank, Detroit, MI LOC)
1,000,000 Michigan Strategic Fund, (Series 1995) Weekly VRDNs (Rood
NR/NR 1,000,000
Industries, Inc. Project)/(Bank One, Michigan LOC)
2,000,000 Michigan Strategic Fund, 3.25% CP (Dow Chemical Co.),
NR/P-1 2,000,000
Mandatory Tender 11/8/1999
1,800,000 Michigan Strategic Fund, 3.35% CP (Dow Chemical Co.),
NR/P-1 1,800,000
Mandatory Tender 11/18/1999
1,000,000 Michigan Strategic Fund, Industrial Improvement Revenue
NR/NR 1,000,000
Bonds Weekly VRDNs (Eclipse Mold, Inc. Project)/(Bank One,
Michigan LOC)
1,000,000 Michigan Strategic Fund, Industrial Improvement Revenue
NR/NR 1,000,000
Bonds Weekly VRDNs (Pinnacle Molded Plastics)/(Bank One,
Michigan LOC)
760,000 Michigan Strategic Fund, Industrial Improvement Revenue
NR/NR 759,852
Bonds Weekly VRDNs (Royal Oak Industries, Inc.)/(Old Kent
Bank & Trust Co., Grand Rapids LOC)
2,000,000 Michigan Strategic Fund, Industrial Revenue Refunding
P-1/VMIG1 2,000,000
Bonds Daily VRDNs (Consumers Power Project)/ (UBSUnion
Bank of Switzerland LOC)(AMBAC INS)
5,175,000 Michigan Strategic Fund, PCR Bonds Weekly VRDNs (General
NR/VMIG1 5,175,000
Motors Corp. Project)
795,000 Michigan Strategic Fund, Refunding Revenue Bonds (Series
NR/NR 795,000
B) Weekly VRDNs (Riverfront Development Co. Project)/(Old
Kent Bank & Trust Co., Grand Rapids LOC)
3,000,000 Michigan Strategic Fund, Refunding Revenue Bonds
NR/Aa2 3,000,000
WeeklyVRDNs (Louisiana-Pacific Corp.)/ (Wachovia Bank &
Trust Co. LOC)
800,000 Michigan Strategic Fund, Resource Recovery Improvement
A-1+/NR 800,000
Bonds Weekly VRDNs (Great Lakes Recovery Systems)/ (Bank
One, Michigan LOC)
1,000,000 Michigan Strategic Fund, Revenue Bonds Weekly VRDNs
NR/NR 1,000,000
(Non-Ferrous Cast Alloys Project)/(Bank One, Michigan LOC)
900,000 Michigan Strategic Fund, Revenue Bonds Weekly VRDNs (YWY
NR/NR 900,000
Investments LLC Project)/(Bank One, Michigan LOC)
5,900,000 Michigan Strategic Fund, Solid Waste Disposal Revenue
NR/VMIG1 5,900,000
Bonds Weekly VRDNs (Grayling Generating Project)
1,500,000 Oakland County, MI EDC Weekly VRDNs (Oakland University
NR/NR 1,500,000
Fndtn. Project)/(Comerica Bank, Detroit, MI LOC)
1,900,000 Pontiac, MI City School District, 3.45% GO UT Bonds (FGIC
AAA/Aaa 1,900,000
LOC), 5/1/2000
1,000,000 Regents of University of Michigan, (Series A), 3.25% CP
A-1+/P-1 1,000,000
(Regents of University of Michigan GTD), Mandatory Tender
11/3/1999
2,600,000 Regents of University of Michigan, (Series A), 3.45% CP
A-1+/P-1 2,600,000
(Regents of University of Michigan GTD), Mandatory Tender
11/17/1999
4,000,000 Regents of University of Michigan, (Series A), 3.45% CP
A-1+/P-1 4,000,000
(Regents of University of Michigan GTD), Mandatory Tender
11/17/1999
1,945,000 Wayne County, MI, Airport Revenue Bonds (Series B) Weekly
A-1+/VMIG1 1,945,000
VRDNs (Detroit Metropolitan County)
Total Short-Term
Municipals 98,406,267
<CAPTION>
Shares
Value
Mutual Fund--4.1%
<S>
<C> <C>
4,251,000 Nuveen Tax Exempt Money Market Fund (at net asset
value) $ 4,251,000
Total Investments (at amortized cost)
(3) $ 102,657,267
</TABLE>
* Please refer to the Appendix of the Statement of Additional Information for
an explanation of the credit ratings.
(1) At October 31, 1999, 14.0% of the total investments at market value were
subject to alternative minimum tax. (2) Rate reflects the rate of discount at
the time of purchase.
(3) Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($103,022,372) at October 31, 1999.
The following acronyms are used throughout this portfolio:
AMBAC--American Municipal Bond Assurance Corporation CP--Commercial Paper
EDC--Economic Development Corporation EDR--Economic Development Revenue
FGIC--Financial Guaranty Insurance Company GO--General Obligation
GTD--Guaranteed INS--Insured LIQ--Liquidity Agreement LOC--Letter of Credit
LT--Limited Tax MBIA--Municipal Bond Investors Assurance PCR--Pollution Control
Revenue TANs--Tax Anticipation Notes TOBs--Tender Option Bonds UT--Unlimited Tax
VRDNs--Variable Rate Demand Notes
(See Notes which are an integral part of the Financial Statements)
Independence One Michigan Municipal Cash Fund
Statement of Assets and Liabilities
October 31, 1999 (unaudited)
<TABLE>
<S> <C>
<C>
Assets:
Total investments in securities, at amortized cost and value
$ 102,657,267
Cash
34,218
Income
receivable
645,188
Total
assets
103,336,673
- -----------------
Liabilities:
Income distribution payable $ 280,945
Accrued expenses 33,356
Total
liabilities
314,301
- -----------------
Net Assets for 103,022,372 shares outstanding
$ 103,022,372
Net Asset Value, Offering Price and Redemption Proceeds Per Share:
$103,022,372 / 103,022,372 shares
outstanding $1.00
</TABLE>
(See Notes which are an integral part of the Financial Statements)
Independence One Michigan Municipal Cash Fund
Statement of Operations
Six Months Ended October 31, 1999 (unaudited)
<TABLE>
<S>
<C> <C>
Investment Income:
Interest
$ 1,619,504
Expenses:
Investment advisory fee $ 192,674
Administrative personnel and services fee 47,882
Custodian fees 10,600
Transfer and dividend disbursing agent fees and expenses 19,862
Directors'/Trustees' fees 2,973
Auditing fees 7,537
Legal fees 2,249
Portfolio accounting fees 20,243
Share registration costs 8,531
Printing and postage 4,774
Insurance premiums 778
Miscellaneous 871
-----------
Total expenses 318,974
Waiver
Waiver of investment advisory fee (72,253)
Net
expenses
246,721
Net investment
income $ 1,372,783
</TABLE>
(See Notes which are an integral part of the Financial Statements)
Independence One Michigan Municipal Cash Fund
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
Six Months Ended
Year Ended April
October 31,
1999 30, 1999
(unaudited)
<S> <C>
<C>
Increase (Decrease) in Net Assets:
Operations--
Net investment income $
1,372,783 $ 3,297,338
Distributions to Shareholders--
Distributions from net investment income
(1,372,783) (3,297,338)
Share Transactions--
Proceeds from sale of shares
379,900,950 887,345,373
Net asset value of shares issued to shareholders in payment of
908,370 2,517,212
distributions declared
Cost of shares redeemed
(364,736,653) (905,682,605)
Change in net assets resulting from share transactions
16,072,667 (15,820,020)
Change in net assets
16,072,667 (15,820,020)
Net Assets:
Beginning of period
86,949,705 102,769,725
End of period $
103,022,372 $ 86,949,705
</TABLE>
(See Notes which are an integral part of the Financial Statements)
Independence One Michigan Municipal Cash Fund
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Six Months
Ended
October 31, Year Ended April 30,
1999
(unaudited) 1999 1998 1997
1996 1995
<S> <C> <C> <C> <C>
<C> <C>
Net asset value, beginning of $ 1.00 $ 1.00 $ 1.00 $ 1.00 $
1.00 $ 1.00
period
Income from
investment
operations
Net investment income 0.01 0.03 0.03 0.03
0.03 0.03
Less
distributions
Distributions from net (0.01) (0.03) (0.03) (0.03)
(0.03) (0.03)
investment
income
Net asset value, end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $
1.00 $ 1.00
Total return (1) 1.40% 2.85% 3.24% 3.04%
3.24% 2.81%
Ratios to average net
assets
Expenses (2) 0.66%(3) 0.63% 0.65% 0.68%
0.73% 0.80%
Net investment income (2) 2.70%(3) 2.67% 3.03% 2.81%
2.98% 2.59%
Expenses (after waivers) 0.51%(3) 0.48% 0.49% 0.48%
0.53% 0.59%
Net investment income 2.85%(3) 2.82% 3.19% 3.01%
3.18% 2.80%
(afterwaivers)
Supplemental
data
Net assets, end of period $103,022 $86,950 $102,770 $84,019
$74,71 $66,856
(000omitted)
</TABLE>
(1) Based on net asset value.
(2) During the period, certain fees were voluntarily waived. If such voluntary
waivers had not occurred, the ratios would have been as indicated.
(3) Computed on an annualized basis.
(See Notes which are an integral part of the Financial Statements)
Independence One Mutual Funds
Combined Notes to Financial Statements
October 31, 1999 (unaudited)
(1) Organization
Independence One Mutual Funds (the "Trust") is registered under the Investment
Company Act of 1940, as amended (the "Act") as an open-end, management
investment company. The Trust consists of nine portfolios. The financial
statements of the following portfolios (individually referred to as the "Fund,"
or collectively as the "Funds") are presented herein:
<TABLE>
<CAPTION>
Portfolio Name Investment Objective
- --------------------------------------------------------------------------------------------------------------
<S> <C>
Independence One Prime Money Market Fund ("Prime To provide current income consistent with
stability
Money Market Fund") of principal.
- --------------------------------------------------------------------------------------------------------------
Independence One U.S. Treasury Money Market Fund To provide current income consistent with
stability
("U.S. Treasury Money Market Fund") of principal.
- --------------------------------------------------------------------------------------------------------------
Independence One Michigan Municipal Cash Fund To provide stability of income and
current income ("Michigan Municipal Cash Fund") exempt from federal regular
income tax and
Michigan
state income tax consistent with stability of
principal.
- --------------------------------------------------------------------------------------------------------------
</TABLE>
The financial statements of the other portfolios are presented separately. The
assets of each portfolio are segregated and a shareholder's interest is limited
to the portfolio in which shares are held.
(2) Significant Accounting Policies
The following is a summary of significant accounting policies consistently
followed by the Funds in the preparation of their financial statements. These
policies are in conformity with generally accepted accounting principles.
Investment Valuations--The Funds use of the amortized cost method, which
approximates fair value, to value their portfolio securities is in accordance
with Rule 2a-7 under the Act. The Funds seek to maintain a stable net asset
value of $1.00 per share. Investments in other open-end regulated investment
companies are valued at net asset value.
Repurchase Agreements--It is the policy of the Funds to require the custodian
bank to take possession, to have legally segregated in the Federal Reserve Book
Entry System, or to have segregated within the custodian bank's vault, all
securities held as collateral under repurchase agreement transactions.
Additionally, procedures have been established by the Funds to monitor, on a
daily basis, the market value of each repurchase agreement's collateral to
ensure that the value of collateral at least equals the repurchase price to be
paid under the repurchase agreement transaction.
The Funds will only enter into repurchase agreements with banks and other
recognized financial institutions, such as broker/dealers, which are deemed by
the Funds' adviser to be creditworthy pursuant to the guidelines and/or
standards reviewed or established by the Board of Trustees (the "Trustees").
Risks may arise from the potential inability of counterparties to honor the
terms of the repurchase agreement. Accordingly, the Funds could receive less
than the repurchase price on the sale of collateral securities.
Investment Income, Expenses and Distributions--Interest income and expenses are
accrued daily. Bond premium and discount, if applicable, are amortized as
required by the Internal Revenue Code, as amended (the "Code"). Distributions to
shareholders are recorded on the ex- dividend date.
Federal Taxes--It is the Funds' policy to comply with the provisions of the Code
applicable to regulated investment companies and to distribute to shareholders
each year substantially all of their income. Accordingly, no provisions for
federal tax are necessary.
When-Issued and Delayed Delivery Transactions--The Funds may engage in when-
issued or delayed delivery transactions. The Funds record when-issued securities
on the trade date and maintain security positions such that sufficient liquid
assets will be available to make payment for the securities purchased.
Securities purchased on a when-issued or delayed delivery basis are marked to
market daily and begin earning interest on the settlement date.
Use of Estimates--The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the amounts of assets, liabilities, expenses and
revenues reported in the financial statements. Actual results could differ from
those estimated.
Other--Investment transactions are accounted for on the trade date.
(3) Shares of Beneficial Interest
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value) for each
class of shares. At October 31, 1999, capital paid-in for Prime Money Market
Fund, U.S. Treasury Money Market Fund, and Michigan Municipal Cash Fund
aggregated $663,503,578, $222,051,203, and $103,022,372, respectively.
Transactions in shares were as follows:
<TABLE>
<CAPTION>
Prime Money Market
Fund
Six Months
Ended
Year Ended
October
31, April 30,
1999 1999
<S> <C> <C>
Class K Shares
Shares sold 2,007,910,203
3,673,759,787
Shares issued to shareholders in payment of distributions declared
6,638,824 13,830,889
Shares redeemed (1,954,360,641)
(3,634,911,834)
Net change resulting from Class K share transactions
60,188,386 52,678,842
</TABLE>
<TABLE>
<CAPTION>
Prime Money
Market Fund
Six Months
Ended
Year Ended
October
31, April 30,
1999 1999
<S> <C> <C>
Class Y Shares
Shares sold 941,539,786
964,330,227
Shares issued to shareholders in payment of distributions declared
2,066,121 3,455,859
Shares redeemed (973,864,301)
(858,136,411)
Net change resulting from Class Y share transactions (30,258,394)
109,649,675
Net change resulting from share transactions 29,929,992
162,328,517
</TABLE>
<TABLE>
<CAPTION>
U.S. Treasury Money
Market Fund
Six Months
Ended
Year Ended
October
31, April 30,
1999 1999
<S> <C> <C>
Shares sold
1,217,896,370 2,423,407,738
Shares issued to shareholders in payment of distributions declared
2,605,156 7,185,665
Shares redeemed (1,192,399,349)
(2,557,212,720)
Net change resulting from share transactions
28,102,177 (126,619,317)
</TABLE>
<TABLE>
<CAPTION>
Michigan Municipal
Cash Fund
Six Months
Ended Year Ended April
October 31,
1999 30, 1999
<S> <C>
<C>
Shares sold
379,900,950 887,345,373
Shares issued to shareholders in payment of distributions declared
908,370 2,517,212
Shares redeemed
(364,736,653) (905,682,605)
Net change resulting from share transactions
16,072,667 (15,820,020)
</TABLE>
(4) Investment Advisory Fee and Other Transactions with Affiliates
Investment Advisory Fee--Michigan National Bank, the Funds' investment adviser
(the "Adviser"), receives for its services an annual investment advisory fee
equal to 0.40% of each of the Fund's average daily net assets. The Adviser may
voluntarily choose to waive any portion of its fee. The Adviser can modify or
terminate this voluntary waiver at any time at its sole discretion.
Administrative Fee--Federated Administrative Services ("FAS") provides the Funds
with certain administrative personnel and services. The fee paid to FAS is based
on the level of average aggregate net assets of the Trust for the period. The
administrative fee received during any fiscal year shall be at least $50,000 for
each portfolio in the Trust. FAS may voluntarily choose to waive a portion of
its fee.
Shareholder Services Fee--Under the terms of a Shareholder Services Agreement
with Michigan National Bank, Prime Money Market Fund will pay Michigan National
Bank up to 0.25% of average daily net assets of the Class K shares for the
period. The fee paid to Michigan National Bank is used to finance certain
services for shareholders and to maintain shareholder accounts.
Transfer Agent and Dividend Disbursing Agent Fees--Federated Services Company
("FServ"), through its subsidiary, Federated Shareholder Services Company
("FSSC"), serves as transfer and dividend disbursing agent for the Funds. The
fee paid to FSSC is based on the size, type, and number of accounts and
transactions made by shareholders.
Portfolio Accounting Fees--FServ maintains the Funds' accounting records for
which it receives a fee. The fee is based on the level of each Fund's average
daily net assets for the period, plus out-of-pocket expenses.
Custodian Fees--Michigan National Bank is the Funds' custodian. The fee is based
on the level of each Fund's average daily net assets for the period, plus
out-of-pocket expenses.
General--Certain of the Officers of the Trust are Officers and/or Directors or
Trustees of the above companies.
(5) Concentration of Credit Risk
Since Michigan Municipal Cash Fund invests a substantial portion of its assets
in issuers located in one state, it will be more susceptible to factors
adversely affecting issuers of that state than would be a comparable tax-exempt
mutual fund that invests nationally. In order to reduce the credit risk
associated with such factors, at October 31, 1999, 74.4% of the securities in
the portfolio of investments are backed by letters of credit or bond insurance
of various financial institutions and financial guaranty assurance agencies. The
value of investments insured by or supported (backed) by a letter of credit from
any one institution or agency did not exceed 11.8% of total investments.
(6) Year 2000
Similar to other financial organizations, the Funds could be adversely affected
if the computer systems used by the Funds' service providers do not properly
process and calculate date- related information and data from and after January
1, 2000. The Funds' Adviser and administrator are taking measures that they
believe are reasonably designed to address the Year 2000 issue with respect to
computer systems that they use and to obtain reasonable assurances that
comparable steps are being taken by each of the Funds' other service providers.
At this time, however, there can be no assurance that these steps will be
sufficient to avoid any adverse impact to the Funds.
Trustees Robert E. Baker
Harold Berry
Nathan Forbes
Harry J. Nederlander
Thomas S. Wilson
Officers Edward C. Gonzales
President and Treasurer
Jeffrey W. Sterling
Vice President and Assistant Treasurer
C. Grant Anderson
Secretary
Timothy S. Johnson
Assistant Secretary
Mutual funds are not bank deposits or obligations, are not guaranteed by any
bank, and are not insured or guaranteed by the U. S. government, the Federal
Deposit Insurance Corporation, the Federal Reserve Board, or any other
government agency. Investment in mutual funds involves investment risk,
including possible loss of principal.
This report is authorized for distribution to prospective investors only when
preceded or accompanied by the Funds' prospectus which contains facts concerning
their objectives and policies, management fees, expenses and other information.
Independence One(R)
Mutual Funds
(Distributed by Federated Securities Corp.)
Semi-Annual Report
October 31, 1999
Independence One
Prime Money Market Fund
Class K Shares
Class Y 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
G01889-03 (12/99)
[LOGO OF INDEPENDENCE ONE] [LOGO OF MICHIGAN NATIONAL]
Mutual Funds Investment Advisor
