1933 Act File No. 33-26516
1940 Act File No. 811-5752
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 X
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Pre-Effective Amendment No. ...............................
Post-Effective Amendment No. 27 ................................. X
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and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 X
Amendment No. 26 ............................................... X
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INDEPENDENCE ONE MUTUAL FUNDS
(Exact Name of Registrant as Specified in Charter)
5800 Corporate Drive
Pittsburgh, Pennsylvania 15237-7010
(Address of Principal Executive Offices)
(412) 288-1900
(Registrant's Telephone Number)
John W. McGonigle, Esquire,
Federated Investors Tower
1000 Liberty Avenue
Pittsburgh, Pennsylvania 15222-3779
(Name and Address of Agent for Service)
(Notices should be sent to the Agent for Service)
It is proposed that this filing will become effective:
immediately upon filing pursuant to paragraph (b) _ on _____________
pursuant to paragraph (b) _X 60 days after filing pursuant to paragraph (a)(i)
__ on _____________ pursuant to paragraph (a)(i) _ 75 days after filing pursuant
to paragraph (a)(ii)
on pursuant to paragraph (a)(ii) of Rule 485.
If appropriate, check the following box:
This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
Copies To:
Matthew G. Maloney, Esquire
Dickstein Shapiro Morin & Oshinsky, LLP
2101 L Street, N.W.
Washington, D.C. 20037
Prospectus
[graphic]
Independence One(R)
Mutual Funds
Independence One(R) Mutual Funds offers nine portfolios, including three equity
funds, three income funds and three money market funds. This prospectus relates
to Class B Shares of Independence One U.S. Government Securities Fund.
Independence One
U.S. Government Securities Fund
Class B Shares
October 1, 1999
[Independence One logo]
As with all mutual funds, the Securities and Exchange Commission (SEC) has not
approved or disapproved these securities or passed upon the adequacy of this
prospectus, and any representation to the contrary is a criminal offense.
Independence One(R) Mutual Funds
[graphic]
<PAGE>
Contents
Fund Goals, Strategies, Performance and Risk..........__
Principal Risks of the Fund...........................__
What are the Fund's Fees and Expenses?................__
Principal Securities in Which the Fund Invests........__
Specific Risks of Investing in the Fund...............__
What do Shares Cost?..................................__
How is the Fund Sold?.................................__
How to Purchase Shares................................__
How to Redeem and Exchange Shares.....................__
Account and Share Information.........................__
Who Manages the Fund?.................................__
Financial Information.................................__
<PAGE>
Fund Goals, Strategies, Performance and Risk
[graphic]
The following describes the investment goals, strategies, and principal risks of
the Fund. There can be no assurance that the Fund will achieve its goal.
INDEPENDENCE ONE U.S. GOVERNMENT SECURITIES FUND
GOAL: SEEKS TO PROVIDE HIGH CURRENT INCOME.
Strategy: The Fund pursues its investment objective by investing only in U.S.
Treasury and government agency securities. U.S. government securities are
subject to varying levels of backing as to payment of principal and interest by
the United States. In addition to seeking high current income relative to fixed
income funds with shorter average durations than that of the Fund, the FundOs
portfolio will be managed in an effort to seek total return which includes both
changes in the principal value of the Fund's portfolio and interest income
earned. Accordingly, the investment Adviser does not select securities purely to
maximize the current yield of the Fund. In an effort to manage the Fund's
current income and total performance, the Adviser attempts to anticipate the
opportunities and risks of changes in market interest rates. When the Adviser
expects that market interest rates may decline, it may extend the average
duration of the FundOs portfolio, and when, in the AdviserOs judgment, market
interest rates may rise, it may shorten the average duration of the Fund.
Duration measures the price sensitivity of a fixed income security to changes in
interest rates.
Generally, the Adviser will limit the Fund's duration to fall within a four to
seven year range.
The Adviser may also attempt to improve the Fund's total return by weighing the
relative value of different types of U.S. government securities having similar
maturities in selecting portfolio securities. Principal Risks of the Fund
[graphic] In addition to the risks set forth below that are specific to an
investment in the Fund, there are risks common to all mutual funds. For example,
the Fund's share price may decline and an investor could lose money. Also, there
is no assurance that the Fund will achieve its investment objective. The Shares
offered by this prospectus are not deposits or obligations of any bank including
Michigan National Bank, and are not endorsed or guaranteed by the U.S.
government, the Federal Deposit Insurance Corporation, the Federal Reserve
Board, or any other government agency.
INTEREST RATE RISKs
Prices of fixed income securities rise and fall in response to interest rate
changes. Interest rate changes have a greater effect on the price of fixed
income securities with longer durations.
<PAGE>
Independence One U.S. Government Securities Fund Risk/Return Bar Chart and Table
[graph goes here]
The total returns shown here are for Class K Shares which is another class of
shares offered by Independence One U.S. Government Securities Fund. Class K
Shares are not offered in this prospectus for the Fund's Class B Shares. The
total returns for Class K Shares are disclosed here because Class B Shares have
only been offered since October 1, 1999. These total returns would be
substantially similar to the annual returns for Class B Shares over the same
period and would differ only to the extent that the two classes do not have the
same expenses. It is anticipated that expenses of Class B Shares will exceed
those of the Class K Shares. The bar chart shows the variability of the Fund's
total returns on a calendar year-end basis. The Fund's Class K Shares are not
sold subject to a sales charge (load). The total returns displayed above are
based upon net asset value. The Fund's Class K Shares total return from January
1, 1999 to June 30, 1999 was (2.72%). Within the period shown in the Chart, the
Fund's Class K Shares highest quarterly return was 6.17% (quarter ended June 30,
1995). Its lowest quarterly return was (2.38%) (quarter ended March 31, 1996).
INDEPENDENCE ONE U.S. GOVERNMENT SECURITIES FUND AVERAGE ANNUAL TOTAL
RETURN TABLE
The following table represents the Fund's Class K Shares Average Annual Total
Returns for the calendar periods ended December 31, 1998. The table shows the
Fund's total returns averaged over a period of years relative to the Lehman
Brothers Government Bond Index (LBGBI), a broad based market index. Indexes are
unmanaged, and it is not possible to invest directly in an index. Total returns
for the index shown do not reflect sales charges, expenses or other fees that
the Securities and Exchange Commission requires to be reflected in the Fund's
performance.
CALENDAR CLASS K SHARES LBGBI
1 Year 8.96% 9.85%
5 Years 6.85% 7.18%
Start of Performance/1/ 7.15% 5.32%
1 The Fund's Class K Shares start of performance date was January 11, 1993.
Past performance does not necessarily predict future performance. This
information provides you with historical performance so that you can analyze
whether the Fund's investment risks are balanced by its potential rewards.
<PAGE>
WHAT ARE THE FUND'S FEES AND EXPENSES?
INDEPENDENCE ONE(R) U. S. GOVERNMENT SECURITIES FUND
FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy and hold
Shares of the Fund's Class B Shares.
SHAREHOLDER FEES
FEES PAID DIRECTLY FROM YOUR INVESTMENT
Maximum Sales Charge (Load) Imposed on Purchases
(as a percentage of offering price) None
Maximum Deferred Sales Charge (Load)
(as a percentage of original purchase price or redemption
proceeds, as applicable) .............................. 5.00%
Maximum Sales Charge (Load) Imposed on Reinvested Dividends
(and other Distributions)
(as a percentage of offering price)..............................None
Redemption Fee (as a percentage of amount redeemed, if applicable).........None
Exchange Fee...............................................................None
ANNUAL FUND OPERATING EXPENSES (BEFORE WAIVER) 1
Expenses That are Deducted From Fund Assets
(as a percentage of average net assets)
Management Fee2....................................................0.70%
Distribution (12b-1) Fee...........................................0.75%
Shareholder Services Fee ..........................................0.25%
Other Expenses.....................................................0.35%
Total Annual Fund Operating Expenses...............................2.05%
1 Although not contractually obligated to do so, the Adviser will waive certain
amounts. These are shown below along with the net expenses the Fund EXPECTS TO
PAY for the fiscal year ending April 30, 2000.
Total Waiver of Fund Expenses............... 0.40%
Total Annual Fund Operating Expenses (after waiver)... 1.65%
2 The Adviser expects to voluntarily waive a portion of the management fee. The
Adviser can terminate this anticipated voluntary waiver at any time. The
management fee the Fund expects to pay (after the anticipated voluntary waiver)
will be 0.30% for the year ending April 30, 2000.
EXAMPLE
This Example is intended to help you compare the cost of investing in the Fund'
s Class B Shares with the cost of investing in other mutual funds.
The Example assumes that you invest $10,000 in the Fund's Class B Shares for the
time periods indicated and then redeem all of your Shares at the end of those
periods. Expenses assuming no redemption are also shown. The Example also
assumes that your investment has a 5% return each year and that the Fund's Class
B Shares operating expenses are BEFORE WAIVERS as estimated in the table and
remain the same. Although your actual costs may be higher or lower, based on
these assumptions your costs would be:
1 Year 3 Years 5 Years 10 Years
Fund
Expenses assuming
redemption............$708..........$943.... $1,303 $2,379
Expenses assuming
no redemption.........$208..........$643.... $1,103 $2,379
PRINCIPAL
SECURITIES IN
WHICH THE FUND
INVESTS
[graphic]
FIXED INCOME
SECURITIES
Fixed income securities pay interest, dividends or distributions at a specified
rate. The rate may be a fixed percentage of the principal or adjusted
periodically. In addition, the issuer of a fixed income security must repay the
principal amount of the security, normally within a specified time. Fixed income
securities provide more regular income than equity securities. However, the
returns on fixed income securities are limited and normally do not increase with
the issuerOs earnings. This limits the potential appreciation of fixed income
securities as compared to equity securities. A security's yield measures the
annual income earned on a security as a percentage of its price. A security's
yield will increase or decrease depending upon whether it costs less (a
discount) or more (a premium) than the principal amount. If the issuer may
redeem the security before its scheduled maturity, the price and yield on a
discount or premium security may change based upon the probability of an early
redemption. Securities with higher risks generally have higher yields. The
following describes the principal types of fixed income securities in which the
Fund may invest.
TREASURY SECURITIES Treasury securities are direct obligations of the
federal government of the United States. Treasury securities are generally
regarded as having the lowest credit risks. AGENCY SECURITIES Agency
securities are issued or guaranteed by a federal agency or other government
sponsored entity acting under federal authority (a GSE). The United States
supports some GSEs with its full faith and credit. Other GSEs receive
support through federal subsidies, loans or other benefits. A few GSEs have
no explicit financial support, but are regarded as having implied support
because the federal government sponsors their activities. Agency securities
are generally regarded as having low credit risks, but not as low as
treasury securities.
PORTFOLIO
TURNOVER
The Fund may actively trade its portfolio securities in an attempt to achieve
its investment objective. Active trading will cause the Fund to have an
increased portfolio turnover rate, which is likely to generate shorter-term
gains (losses) for its shareholders, which are taxed at a higher rate than
longer-term gains (losses). Actively trading portfolio securities increases the
Fund's trading costs and may have an adverse impact on the Fund's performance.
TEMPORARY
DEFENSIVE
INVESTMENTS
The Fund may temporarily depart from its principal investment strategies by
investing its assets in cash, cash items, and shorter-term, higher-quality debt
securities and similar obligations. It may do this to minimize
potential losses and maintain liquidity to meet shareholder redemptions during
adverse market conditions. This may cause the Fund to give up greater investment
returns to maintain the safety of principal, that is, the original amount
invested by shareholders.
SPECIFIC RISKS
OF INVESTING IN
THE FUND
[graphic]
INTEREST RATE
RISKS
o Prices of fixed income securities rise and fall in response to changes in the
interest rate paid by similar securities. Generally, when interest rates rise,
prices of fixed income securities fall. However, market factors, such as the
demand for particular fixed income securities, may cause the price of certain
fixed income securities to fall while the prices of other securities rise or
remain unchanged.
o Interest rate changes have a greater effect on the price of fixed income
securities with longer durations. Duration measures the price sensitivity of a
fixed income security to changes in interest rates.
WHAT DO SHARES COST? [graphic] You can purchase, redeem, or exchange Shares any
day the New York Stock Exchange (NYSE) is open. Shares of the Fund are sold at
net asset value (NAV). When the Fund receives your transaction request in proper
form, it is processed at the next calculated NAV. The Fund does not charge a
front-end sales charge. Investors who purchase, redeem or exchange through a
financial intermediary may be charged a service fee by that financial
intermediary. Financial intermediaries are authorized to accept purchase and
redemption orders from their customers on behalf of the Fund. NAV is determined
at the end of regular trading (normally 4:00 p.m. Eastern time) each day the
NYSE is open. The Fund values fixed income securities at the last sale price on
a national securities exchange, if available, and otherwise, as determined by an
independent pricing service. Short-term obligations with remaining maturities of
less than 60 days at the time of purchase may be valued at amortized cost or at
fair market value as determined in good faith by the Board.
SALES CHARGE WHEN YOU REDEEM Your redemption proceeds may be reduced by a
sales charge, commonly referred to as a contingent deferred sales charge (CDSC).
CLASS B SHARES
Shares Held Up To: CDSC
1 year 5.0%
2 years 4.0%
3 years 3.0%
4 years 3.0%
5 years 2.0%
6 years 1.0%
7 years or more 0.0%
Class B Shares will automatically convert into Class K Shares after eight full
years from the purchase date. This conversion is a non-taxable event.
YOU WILL NOT BE CHARGED A CDSC WHEN REDEEMING SHARES:
o purchased with reinvested dividends or capital gains;
o that you exchanged into Class B Shares of Independence One Equity Plus Fund
or Class K Shares of Independence One Prime Money Market Fund as long as
the shares were held for the applicable CDSC holding period;
o purchased through investment professionals who did not receive advanced
sales payments; if, after you purchase Shares, you become disabled as
defined by the IRS;
o if the Fund redeems your Shares and closes your account for not meeting the
minimum balance requirement;
o if your redemption is a required retirement plan distribution; or
o upon the death of the last surviving shareholder of the account.
If your redemption qualifies, you or your investment professional should notify
the Distributor at the time of redemption to eliminate the CDSC. If the
Distributor is not notified, the CDSC will apply.
TO KEEP THE SALES CHARGE AS LOW AS POSSIBLE, THE FUND REDEEMS YOUR SHARES IN
THIS ORDER:
o Shares that are not subject to a CDSC; and
o Shares held the longest (to determine the number of years your Shares have
been held, include the time you held shares of other Federated Funds that
have been exchanged for Shares of this Fund).
The CDSC is then calculated using the share price at the time of purchase
or redemption, whichever is lower.
HOW IS THE FUND SOLD?
The Fund offers two share classes: Class K Shares and Class B Shares, each
representing interests in a single portfolio of securities. This prospectus
relates only to Class B Shares. Each share class has different sales charges and
other expenses, which affect its performance. Contact your investment
professional or call 1-800-334-2292 for more information concerning the other
class.
The Fund's Distributor, Federated Securities Corp., markets the Shares described
in this prospectus to institutions, corporations, fiduciaries and individuals.
When the Distributor receives marketing fees, it may pay some or all of them to
investment professionals. The Distributor and its affiliates may pay out of
their assets other amounts (including items of material value) to investment
professionals for marketing and servicing Shares. The Distributor is a
subsidiary of Federated Investors, Inc. (Federated). RULE 12B-1 PLAN (CLASS B
SHARES) The Fund has adopted a Rule 12b-1 Plan, which allows it to pay marketing
fees to the Distributor and investment professionals for the sale, distribution
and customer servicing of the Fund's Class B Shares. Because these Shares pay
marketing fees on an ongoing basis, your investment cost may be higher over time
than other shares with different sales charges and marketing fees.
HOW TO PURCHASE SHARES
[graphic]
You may purchase Shares through Michigan National Bank and Independence One
Brokerage Services, Inc. ("Independence One"), or through brokers or dealers
which have a sales agreement with the Distributor. The Fund reserves the right
to reject any request to purchase or exchange Shares. The required minimum
initial investment for the Fund is $1,000. Subsequent investments must be in the
amount of at least $100.
THROUGH AN INVESTMENT PROFESSIONAL
[graphic]
o Establish an account with the investment professional; and
o Submit your purchase order to the investment professional before the end of
regular trading on the NYSE (normally 4:00 p.m. Eastern time). You will
receive the next calculated NAV if the investment professional forwards the
order to the Fund before 5:00 p.m. on the same day and the Fund receives
payment within three business days.
You will become the owner of Shares and receive dividends when the Fund
receives your payment.
THROUGH MICHIGAN NATIONAL BANK OR INDEPENDENCE ONE
[graphic]
o Establish your account with the Fund by calling toll free 1-800-334-2292; and
o Send your payment to the Fund by Federal Reserve wire or check.
Orders must be received by 4:00 (Eastern time) in order for Shares to be
purchased at that day's price. For Shares purchased directly from the
Distributor, payment by wire or check must be received before 4:00 p.m. (Eastern
time) on that day.
BY WIRE Send your wire to:
Federated Shareholder Services Company c/o
Michigan National Bank
Farmington Hills, MI
Dollar Amount of Wire
For Credit to: Independence One U.S. Government Securities Fund - Class B
Shares Account Number: 6856238933
ABA Number: 072000805
Wire Order Number, Dealer Number, or Group Number
Nominee/Institution Name
You cannot purchase Shares by wire on holidays when wire transfers are
restricted.
BY CHECK
[graphic]
Make your check payable to "INDEPENDENCE ONE U.S. GOVERNMENT SECURITIES FUND -
CLASS B SHARES," note your account number on the check, and mail it to:
Independence One Mutual Funds
27777 Inkster Road
Mail Code 10-52
Farmington Hills, Michigan 48333-9065
Payment should be made in U.S. dollars and drawn on a U.S. bank. The Fund
will not accept third-party checks (checks originally payable to someone other
than you or the Fund).
THROUGH AN EXCHANGE
You may purchase Shares through an exchange from Class B Shares of Independence
One U.S. Government Securities Fund. You must meet the minimum initial
investment requirement for purchasing Shares and both accounts must have
identical registrations. BY SYSTEMATIC INVESTMENT PROGRAM Once you have
opened an account, you may automatically purchase additional Shares on a regular
basis in a minimum amount of $100. A shareholder may apply for participation
in this program through Michigan National Bank by calling 1-800-334-2292.
BY AUTOMATED CLEARING HOUSE (ACH)
Once you have opened an account, you may purchase additional Shares through a
depository institution that is an ACH member. This purchase option can be
established by completing the appropriate sections of the New Account Form.
RETIREMENT INVESTMENTS
You may purchase Shares of the Fund as retirement investments (such as qualified
plans and IRAs or transfer or rollover of assets). Call your investment
professional or the Fund for information on retirement investments. We suggest
that you discuss retirement investments with your tax adviser. You may be
subject to an annual IRA account fee. How to Redeem and Exchange Shares
[graphic] You should redeem or exchange Shares: o through an investment
professional if you purchased Shares through an investment professional; or o
through Michigan National Bank or Independence One. THROUGH AN INVESTMENT
PROFESSIONAL [graphic] Submit your redemption or exchange request to your
investment professional by the end of regular trading on the NYSE (normally 4:00
p.m. Eastern time). The redemption amount you will receive is based upon the
next calculated NAV after the Fund receives the order from your investment
professional. THROUGH MICHIGAN NATIONAL BANK OR INDEPENDENCE ONE
BY TELEPHONE
You may redeem or exchange Shares by calling 1-800-334-2292 once you have
completed the appropriate authorization form for telephone transactions. If you
call before the end of regular trading on the NYSE (normally 4:00 p.m. Eastern
time) you will receive a redemption amount based on that dayOs NAV. Any shares
held in certificate form cannot be exchanged by telephone but must be forwarded
to the transfer agent by a Michigan National Bank or Independence One
representative, or an authorized broker, and deposited to the shareholder's
account before being exchanged. Certificates should be sent to: Federated
Shareholder Services Company, P.O. Box 8609, Boston, Massachusetts 02266-8609.
[graphic]
BY MAIL
You may redeem or exchange Shares by mailing a written request to the Fund
through Michigan National Bank, Independence One or an authorized broker.
Shareholders redeeming or exchanging through an authorized broker should mail
requests directly to the broker. You will receive a redemption amount based on
the next calculated NAV after the Fund receives your written request in proper
form. Redemption and exchange requests through Michigan National Bank or
Independence One should be sent to:
Independence One(R) Mutual Funds
27777 Inkster Road
Mail Code 10-52
Farmington Hills, Michigan 48333-9065 All requests must include: o Fund
Name, account number and account registration; o amount to be redeemed or
exchanged;
o signatures of all shareholders exactly as registered; and
o if exchanging, the Fund Name, account number and account registration into
which you are exchanging. Call your investment professional or the Fund if you
need special instructions.
SIGNATURE GUARANTEES Signatures must be guaranteed if:
o your redemption will be sent to an address other than the address of record; o
your redemption will be sent to an address of record that was changed within the
last 30 days; o a redemption is payable to someone other than the shareholder(s)
of record; or o if exchanging (transferring) into another fund with a different
shareholder registration.
A signature guarantee is designed to protect your account from fraud. Obtain a
signature guarantee from a bank or trust company, savings association, credit
union or broker, dealer, or securities exchange member. A notary public cannot
provide a signature guarantee. PAYMENT METHODS FOR REDEMPTIONS Your redemption
proceeds will be mailed by check to your address of record. The following
payment options are available if you complete the appropriate section of the New
Account Form or an Account Service Options Form. These payment options require a
signature guarantee if they were not established when the account was opened: o
an electronic transfer to your account at a financial institution that is an
electronic transfer to your account at a financial institution that is an ACH
member; or o wire payment to your account at a domestic commercial bank that is
a Federal Reserve System member.
REDEMPTION IN KIND
Although the Fund intends to pay Share redemptions in cash, it reserves the
right to pay the redemption price in whole or in part by a distribution of the
Fund's portfolio securities. LIMITATIONS ON REDEMPTION PROCEEDS Redemption
proceeds normally are wired or mailed within one business day after receiving a
request in proper form. Payment may be delayed up to seven days:
o to allow your purchase to clear;
o during periods of market volatility; or
o when a shareholder's trade activity or amount adversely impacts the Fund's
ability to manage its assets.
You will not accrue interest or dividends on uncashed checks from the Fund if
those checks are undeliverable and returned to the Fund. REDEMPTIONS FROM
RETIREMENT ACCOUNTS In the absence of your specific instructions, 10% of the
value of your redemption from a retirement account in the Fund and may be
withheld for taxes. This withholding
only applies to certain types of retirement accounts.
EXCHANGE PRIVILEGES
You may exchange Shares of the Fund into Class B Shares of Independence One
Equity Plus Fund and Class K Shares of Independence One Prime Money Market Fund.
Shareholders of the Fund have access to these funds ("participating funds")
through an exchange program. To execute an order to exchange, you must: o
ensure that the account registrations are identical; o meet any minimum initial
investment requirements; and o receive a prospectus for the fund into which you
wish to exchange. An exchange is treated as a redemption and a subsequent
purchase, and is a taxable transaction. The Fund may modify or terminate the
exchange privilege at any time. The Fund's management or investment adviser may
determine from the amount, frequency and pattern of exchanges that a shareholder
is engaged in excessive trading that is detrimental to the Fund and other
shareholders. If this occurs, the Fund may terminate the availability of
exchanges to that shareholder and may bar that shareholder from purchasing other
participating funds. [graphic] SYSTEMATIC WITHDRAWAL PROGRAM Shareholders may
automatically redeem Shares in an amount directed by the shareholder on a
regular basis. To be eligible to participate in this program, a shareholder must
have an account value of at least $10,000, other than retirement accounts
subject to required minimum distributions. To apply for participation in this
program, contact Michigan National Bank at 1-800-334-2292. This program may
reduce, and eventually deplete, your account. Payments should not be considered
yield or income. [graphic] ADDITIONAL CONDITIONS
TELEPHONE TRANSACTIONS
The Fund will record your telephone instructions. If the Fund does not
follow reasonable procedures, it may be liable for losses due to unauthorized or
fraudulent telephone instructions.
ACCOUNT AND SHARE INFORMATION
SHARE CERTIFICATES
The Fund does not issue share certificates.
CONFIRMATION AND ACCOUNT STATEMENTS
You will receive confirmation of purchases, redemptions and exchanges (except
for systematic transactions). In addition, you will receive periodic statements
reporting all account activity, including systematic transactions, dividends and
capital gains paid. DIVIDENDS AND CAPITAL GAINS The Fund declares and pays
dividends monthly. Dividends are paid to all shareholders invested in the Fund
on the record date. The record date is the date on which a
shareholder must officially own Shares in order to earn a dividend.
In addition, the Fund pays any capital gains at least annually. Your dividends
and capital gains distributions will be automatically reinvested in additional
Shares without a sales charge, unless you elect cash payments. If you purchase
Shares just before the Fund declares a dividend or capital gain distribution,
you will pay the full price for the Shares and then receive a portion of the
price back in the form of a taxable distribution, whether or not you reinvest
the distribution in Shares. Therefore, you should consider the tax implications
of purchasing Shares shortly before the Fund declares a dividend or capital
gain. Contact your investment professional or the Fund for information
concerning when dividends and capital gains will be paid. ACCOUNTS WITH LOW
BALANCES Due to the high cost of maintaining accounts with low balances,
non-retirement accounts may be closed if redemptions or exchanges cause the
account balance to fall below the minimum initial investment amount. Before an
account is closed, you will be notified and allowed 30 days to purchase
additional Shares to meet the minimum. TAX INFORMATION The Fund sends an annual
statement of your account activity to assist you in completing your federal,
state and local tax returns. Fund distributions of dividends and capital gains
are taxable to you whether paid in cash or reinvested in the Fund. Dividends are
taxable as ordinary income; capital gains are taxable at different rates
depending upon the length of time the Fund holds its assets. Fund distributions
are expected to be primarily dividends. Redemptions and exchanges are taxable
sales.
WHO MANAGES THE FUND?
[Logo of Michigan National]
Please consult your tax adviser regarding your federal, state and local tax
liability.
The Board of Trustees governs the Fund. The Board selects and oversees the
Adviser, Michigan National Bank. The Adviser manages the Fund's assets,
including buying and selling portfolio securities. The Adviser's address is
27777 Inkster Road, Mail Code 10-52, Farmington Hills, Michigan, 48333-9065. The
Adviser has delegated daily management of the Fund's assets to the Sub-Adviser,
Independence One Capital Management Corporation, who will perform its duties at
no cost to the Adviser or the Fund. The Sub-Adviser's address is 27777 Inkster
Road, Mail Code 10-52, Farmington Hills, Michigan, 48333-9065. Michigan National
Bank, a national banking association, is a wholly owned subsidiary of Michigan
National Corporation ("MNC"). MNC is a wholly owned subsidiary of National
Australia Bank Limited, which is a transnational banking organization,
headquartered in Melbourne, Australia. Through its subsidiaries and affiliates,
MNC offers a full range of financial services to the public, including
commercial lending, depository services, cash management, brokerage services,
retail banking, mortgage banking, investment advisory services and trust
services. Independence One Capital Management Corporation ("IOCM"), a nationally
recognized investment advisory subsidiary of MNC, provides investment advisory
services for trust and other managed assets. IOCM and the Trust Division of
Michigan National Bank (the OTrust DivisionO) have managed custodial assets
totaling $9 billion. Of this amount, IOCM and the Trust Division have investment
discretion over $1.7 billion. Michigan National Bank has managed mutual funds
since May 1989. The Trust Division has managed pools of commingled funds since
1964. The Fund's portfolio manager is Bruce Beaumont. Mr. Beaumont has been Vice
President and Portfolio Manager for Michigan National Bank and IOCM in
Farmington Hills since 1994. Mr. Beaumont has been primarily responsible for
management of Government Securities Fund's portfolio since January 1995,
previously having assisted with those duties. He joined Michigan National Bank
in 1987 and served as Vice President--Head Government Bond Trader until 1994. He
earned his BA from Alma College and a MBA from Northwestern University. Mr.
Beaumont is a Chartered Financial Analyst and a Certified Public Accountant.
ADVISORY FEES
The Adviser receives an annual investment advisory fee equal to 0.70% of the
Fund's average daily net assets. The Adviser may voluntarily waive a portion of
its fee or reimburse the Fund for certain operating expenses.
YEAR 2000 READINESS
The "Year 2000" problem is the potential for computer errors or failures because
certain computer systems may be unable to interpret dates after December 31,
1999 or experience other date-related problems. The Year 2000 problem may cause
systems to process information incorrectly and could disrupt businesses, such as
the Fund, that rely on computers. While it is impossible to determine in advance
all of the risks to the Fund, the Fund could experience interruptions in basic
financial and operational functions. Fund shareholders could experience errors
or disruptions in Fund share transactions or Fund communications. The Fund's
service providers are making changes to their computer systems to fix any Year
2000 problems. In addition, they are working to gather information from
third-party providers to determine their Year 2000 readiness. Year 2000 problems
would also increase the risks of the Fund's investments. To assess the potential
effect of the Year 2000 problem, the Adviser is reviewing information regarding
the Year 2000 readiness of issuers of securities the Fund may purchase. The
financial impact of these issues for the Fund is still being determined. There
can be no assurance that potential Year 2000 problems would not have a material
adverse effect on the Fund.
FINANCIAL INFORMATION
[graphic]
FINANCIAL HIGHLIGHTS
The Fund's fiscal year end is April 30. As this is the Fund's Class B Shares
first fiscal year, financial information is not yet available.
<PAGE>
A Statement of Additional Information (SAI) dated October 1, 1999, is
incorporated by reference into this prospectus. Additional information about the
Fund and its investments is contained in the Fund's SAI and Class K Shares
Annual Report and will be contained in the Class B Shares Semi-Annual Report as
soon as it becomes available. The Annual Report's Management Discussion &
Analysis discusses market conditions and investment strategies that
significantly affected the Fund's performance during its last fiscal year. To
obtain the SAI, the Annual Report, Semi-Annual Report and other information
without charge, and make inquiries, call your investment professional or the
Fund at 1-800-334-2292.
You can obtain information about the Fund (including the SAI) by writing to or
visiting the Public Reference Room in Washington, D.C. You may also access fund
information from the EDGAR Database on the SEC's Internet site at
http://www.sec.gov. You can purchase copies of this information by contacting
the SEC by email at [email protected]. or by writing to the SEC's Public
Reference Section, Washington, D.C 20549-0102. Call 1-202-942-8090 for
information on the Public Reference Room's operations and copying fees.
Independence One(R)
Mutual Funds
Independence One
U.S. Government Securities Fund
Class B Shares
800-334-2292
www.MichiganNational.com
Investment Company Act File No: 811-5752
Cusip _________
G00979-14
[Logo of Independence One Mutual Funds]
[Logo Of Michigan National]
Investment Adviser
INDEPENDENCE ONE MUTUAL FUNDS
INDEPENDENCE ONE U.S. GOVERNMENT SECURITIES FUND
CLASS B SHARES
STATEMENT OF ADDITIONAL INFORMATION
OCTOBER 1, 1999
This Statement of Additional Information (SAI) is not a prospectus. Read this
SAI in conjunction with the Class B prospectus of the Independence One U.S.
Government Securities Fund dated October 1, 1999. Obtain the prospectus without
charge by calling 1-800-334-2292.
CONTENTS
HOW IS THE FUND ORGANIZED?.......................................2
SECURITIES IN WHICH THE FUND INVESTS.............................2
WHAT DO SHARES COST?............................................20
HOW IS THE FUND SOLD?...........................................20
EXCHANGING SECURITIES FOR FUND SHARES...........................20
SUBACCOUNTING SERVICES..........................................20
REDEMPTION IN KIND..............................................21
MASSACHUSETTS PARTNERSHIP LAW...................................21
ACCOUNT AND SHARE INFORMATION...................................21
TAX INFORMATION.................................................22
WHO MANAGES AND PROVIDES SERVICES TO THE FUND?..................23
FEES PAID BY THE FUND FOR SERVICES..............................26
HOW DOES THE FUND MEASURE PERFORMANCE?..........................27
INVESTMENT RATINGS..............................................32
ADDRESSES...............................................BACK COVER
Federated Securities Corp., Distributor,
subsidiary of Federated Investors, Inc.
G00979-15 (10/99)
<PAGE>
HOW IS THE FUND ORGANIZED?
Independence One Mutual Funds (Trust) is an open-end, management investment
company that was established under the laws of the Commonwealth of Massachusetts
on January 9, 1989. The Trust may offer separate series of shares representing
interests in separate portfolios of securities. The Trust currently offers nine
portfolios: Independence One Prime Money Market Fund (Class K Shares and Class Y
Shares), Independence One U.S. Treasury Money Market Fund (Class K Shares) and
Independence One Michigan Municipal Cash Fund (Class K Shares) (the "Money
Market Funds"); Independence One U.S. Government Securities Fund (Class K Shares
and Class B Shares), Independence One Fixed Income Fund (Class Y Shares) and
Independence One Michigan Municipal Bond Fund (Class Y Shares) (the "Income
Funds"); and Independence One Equity Plus Fund (Class Y Shares and Class B
Shares), Independence One Small Cap Fund (Class Y Shares) and Independence One
International Equity Fund (Class Y Shares) (the "Equity Funds"). This SAI
relates to Class B Shares of Independence One U.S. Government Securities Fund
only.
SECURITIES IN WHICH THE FUND INVESTS
In pursuing its investment strategy, the Fund may invest in the following
securities for any purpose that is consistent with its investment objective. The
following tables indicate which types of securities are a:
o P = PRINCIPAl investment of the Fund;
o A = ACCEPTABLe (but not principal) investment of the Fund; or
o N = NOT AN ACCEPTABLe investment of the Fund.
- ------------------------------ --------------
SECURITIES U.S.
GOVERNMENT
SECURITIES
FUND
- ------------------------------ --------------
COMMON STOCKS N
- ------------------------------ --------------
PREFERRED STOCKS N
- ------------------------------ --------------
WARRANTS N
- ------------------------------ --------------
- ------------------------------ --------------
WORLD EQUITY BECHMARK SHARES N
- ------------------------------ --------------
- ------------------------------ --------------
OPTIMISED PORTFOLIOS AS N
LISTED SECURITIES
- ------------------------------ --------------
- ------------------------------ --------------
TREASURY SECURITIES P
- ------------------------------ --------------
- ------------------------------ --------------
AGENCY SECURITIES P
- ------------------------------ --------------
- ------------------------------ --------------
CORPORATE DEBT SECURITIES N
- ------------------------------ --------------
- ------------------------------ --------------
COMMERCIAL PAPER N
- ------------------------------ --------------
- ------------------------------ --------------
DEMAND INSTRUMENTS A
- ------------------------------ --------------
- ------------------------------ --------------
MUNICIPAL SECURITIES N
- ------------------------------ --------------
- ------------------------------ --------------
MORTGAGE BACKED SECURITIES N
- ------------------------------ --------------
- ------------------------------ --------------
COLLATERALIZED MORTGAGE N
OBLIGATIONS
- ------------------------------ --------------
- ------------------------------ --------------
ASSET BACKED SECURITIES N
- ------------------------------ --------------
- ------------------------------ --------------
ZERO COUPON SECURITIES A
- ------------------------------ --------------
- ------------------------------ --------------
BANK INSTRUMENTS N
- ------------------------------ --------------
- ------------------------------ --------------
CREDIT ENHANCEMENT N
- ------------------------------ --------------
- ------------------------------ --------------
CONVERTIBLE SECURITIES N
- ------------------------------ --------------
- ------------------------------ --------------
TAX EXEMPT SECURITIES N
- ------------------------------ --------------
- ------------------------------ --------------
GENERAL OBLIGATION BONDS N
- ------------------------------ --------------
- ------------------------------ --------------
SPECIAL REVENUE BONDS N
- ------------------------------ --------------
- ------------------------------ --------------
PRIVATE ACTIVITY BONDS N
- ------------------------------ --------------
- ------------------------------ --------------
MUNICIPAL NOTES N
- ------------------------------ --------------
- ------------------------------ --------------
VARIABLE RATE DEMAND N
INSTRUMENTS
- ------------------------------ --------------
- ------------------------------ --------------
MUNICIPAL LEASES N
- ------------------------------ --------------
- ------------------------------ --------------
FOREIGN SECURITIES N
- ------------------------------ --------------
- ------------------------------ --------------
FOREIGN EXCHANGE CONTRACTS N
- ------------------------------ --------------
- ------------------------------ --------------
FOREIGN GOVERNMENT SECURITIES N
--------------
- ------------------------------ --------------
DEPOSITARY RECEIPTS N
- ------------------------------ --------------
- ------------------------------ --------------
DERIVATIIVES N
- ------------------------------ --------------
- ------------------------------ --------------
FUTURES CONTRACTS N
- ------------------------------ --------------
- ------------------------------ --------------
OPTIONS N
- ------------------------------ --------------
- ------------------------------ --------------
REPURCHASE AGREEMENTS A
- ------------------------------ --------------
- ------------------------------ --------------
REVERSE REPURCHASE AGREEMENTS N
- ------------------------------ --------------
- ------------------------------ --------------
DELAYED DELIVERY A
TRANSACTIONS (1)
- ------------------------------ --------------
- ------------------------------ --------------
SECURITIES LENDING N
- ------------------------------ --------------
- ------------------------------ --------------
INVESTING IN SECURITIES OF N
OTHER INVESTMENT COMPANIES
- ------------------------------ --------------
1. The Fund does not intend to engage in when-issued and delayed delivery
transactions to an extent that would cause the segregation of more than 20% of
the value of its respective total assets.
SECURITIES DESCRIPTIONS AND TECHNIQUES
FIXED INCOME SECURITIES
Fixed income securities pay interest, dividends or distributions at a specified
rate. The rate may be a fixed percentage of the principal or adjusted
periodically. In addition, the issuer of a fixed income security must repay the
principal amount of the security, normally within a specified time. Fixed income
securities provide more regular income than equity securities. However, the
returns on fixed income securities are limited and normally do not increase with
the issuer's earnings. This limits the potential appreciation of fixed income
securities as compared to equity securities. A security's yield measures the
annual income earned on a security as a percentage of its price. A security's
yield will increase or decrease depending upon whether it costs less (a
discount) or more (a premium) than the principal amount. If the issuer may
redeem the security before its scheduled maturity, the price and yield on a
discount or premium security may change based upon the probability of an early
redemption. Securities with higher risks generally have higher yields. The
following describes the types of fixed income securities in which the Fund may
invest.
TREASURY SECURITIES
Treasury securities are direct obligations of the federal government of the
United States. Treasury securities are generally regarded as having the
lowest credit risks. AGENCY SECURITIES Agency securities are issued or
guaranteed by a federal agency or other government sponsored entity acting
under federal authority (a GSE). The United States supports some GSEs with
its full faith and credit. Other GSEs receive support through federal
subsidies, loans or other benefits. A few GSEs have no explicit financial
support, but are regarded as having implied support because the federal
government sponsors their activities. Agency securities are generally
regarded as having low
credit risks, but not as low as treasury securities.
The Fund treats mortgage backed securities guaranteed by GSEs as agency
securities. Although a GSE guarantee protects against credit risks, it does not
reduce the market and prepayment risks of these mortgage
ZERO COUPON SECURITIES
Zero coupon securities do not pay interest or principal until final maturity
unlike debt securities that provide periodic payments of interest (referred
to as a coupon payment). Investors buy zero coupon securities at a price
below the amount payable at maturity. The difference between the purchase
price and the amount paid at maturity represents interest on the zero coupon
security. Investors must wait until maturity to receive interest and
principal, which increases the interest rate risks and credit risks of a
zero coupon security. There are many forms of zero coupon securities. Some
are issued at a discount and are referred to as zero coupon or capital
appreciation bonds. Others are created from interest bearing bonds by
separating the right to receive the bond's coupon payments from the right to
receive the bond's principal due at maturity, a process known as coupon
stripping. Treasury STRIPs, IOs and POs are the most common forms of
stripped zero coupon securities. In addition, some securities give the
issuer the option to deliver additional securities in place of cash interest
payments, thereby increasing the amount payable at maturity. These are
referred to as pay-in-kind or PIK securities.
SPECIAL TRANSACTIONS
REPURCHASE AGREEMENTS
Repurchase agreements are transactions in which the Fund buys a security
from a dealer or bank and agree to sell the security back at a mutually
agreed upon time and price. The repurchase price exceeds the sale price,
reflecting the Fund's return on the transaction. This return is unrelated to
the interest rate on the underlying security. The Fund will enter into
repurchase agreements only with banks and other recognized financial
institutions, such as securities dealers, deemed creditworthy by the
Adviser. The Fund's custodian or subcustodian will take possession of the
securities subject to repurchase agreements. The Adviser or subcustodian
will monitor the value of the underlying security each day to ensure that
the value of the security always equals or exceeds the repurchase price.
Repurchase agreements are subject to counterparty risks.
DELAYED DELIVERY TRANSACTIONS Delayed delivery transactions, including when
issued transactions, are arrangements in which the Fund buys securities for a
set price, with payment and delivery of the securities scheduled for a future
time. During the period between purchase and settlement, no payment is made by
the Fund to the issuer and no interest accrues to the Fund. The Fund records the
transaction when it agrees to buy the securities and reflects their value in
determining the price of its shares. Settlement dates may be a month or more
after entering into these transactions so that the market values of the
securities bought may vary from the purchase prices. Therefore, delayed delivery
transactions create market risks for the Fund. Delayed delivery transactions
also involve credit risks in the event of a counterparty default. These
transactions create leverage risks.
INVESTMENT RISKS
There are many factors which may affect an investment in the Fund. The Fund's
risks are described below.
INTEREST RATE RISKS
o Prices of fixed income securities rise and fall in response to changes in
the interest rate paid by similar securities. Generally, when interest rates
rise, prices of fixed income securities fall. However, market factors, such
as the demand for particular fixed income securities, may cause the price of
certain fixed income securities to fall while the prices of other securities
rise or remain unchanged.
o Interest rate changes have a greater effect on the price of fixed income
securities with longer durations. Duration measures the price sensitivity of
a fixed income security to changes in interest rates.
INVESTMENT LIMITATIONS
SELLING SHORT AND BUYING ON MARGIN
The Fund will not sell any securities short or purchase any securities on
margin but may obtain such short- term credits as may be necessary for clearance
of transactions.
ISSUING SENIOR SECURITIES AND BORROWING MONEY
The Fund will not issue senior securities except that they may borrow money
in amounts up to one-third of the value of its total assets, including the
amounts borrowed. The Fund will not borrow money for investment leverage,
but rather as a temporary, extraordinary, or emergency measure to facilitate
management of the portfolio by enabling the Fund to meet redemption requests
when the liquidation of portfolio securities is deemed to be inconvenient or
disadvantageous. The Fund will not purchase any securities while borrowings
in excess of 5% of total assets are outstanding.
CONCENTRATION OF INVESTMENTS
The Fund will not concentrate in any one industry.
UNDERWRITING
The Fund will not underwrite any issue of securities except as the Fund may
be deemed to be an underwriter under the Securities Act of 1933 in connection
with the sale of securities in accordance with its investment objective,
policies, and limitations.
LENDING CASH OR SECURITIES
The Fund will not lend any of its assets. (This shall not prevent the
purchase or holding of U.S. Treasury securities, repurchase agreements, or
other transactions which are permitted by the Fund's investment objective
and policies.)
The above Investment Limitations cannot be changed unless authorized by the
"vote of a majority of its outstanding voting securities," as defined by the
Investment Company Act. The following limitations, however, may be changed by
the Board without shareholder approval. Shareholders will be notified before any
material change in these limitations becomes effective.
PLEDGING ASSETS
The Fund will not mortgage, pledge, or hypothecate any assets except to
secure permitted borrowings. In these cases, it may pledge assets having a
market value not exceeding the lesser of the dollar amounts borrowed or 10%
of the value of total assets at the time of the borrowing.
INVESTING IN RESTRICTED AND ILLIQUID SECURITIES
The Fund will not invest more than 15% of the value of its net assets in
securities which are not readily marketable or which are otherwise
considered illiquid, including repurchase agreements providing for
settlement more than seven days after notice.
Except with respect to borrowing money, if a percentage limitation is adhered to
at the time of investment, a later increase or decrease in percentage resulting
from any change in value or net assets will not result in a violation of such
restriction. For purposes of the Fund's policies and limitations, the Fund
considers certificates of deposit and demand and time deposits issued by a U.S.
branch of a domestic bank or savings association having capital, surplus, and
undivided profits in excess of $100,000,000 at the time of investment to be
"cash items."
DETERMINING MARKET VALUE OF SECURITIES
The market values of the Fund's portfolio securities are determined as follows:
for bonds and other fixed income securities, at the last sale price on a
national securities exchange, if available, otherwise, as determined by an
independent pricing service;
for short-term obligations, according to the mean between bid and asked
prices as furnished by an independent pricing service, except that short-term
obligations with remaining maturities of less than 60 days at the time of
purchase may be valued at amortized cost or at fair market value as determined
in good faith by the Board; and
for all other securities at fair value as determined in good faith by the
Board.
Prices provided by independent pricing services may be determined without
relying exclusively on quoted prices and may consider institutional trading in
similar groups of securities, yield, quality, stability, risk, coupon rate,
maturity, type of issue, trading characteristics, and other market data or
factors. From time to time, when prices cannot be obtained from an independent
pricing service, securities may be valued based on quotes from broker-dealers or
other financial institutions that trade the securities.
WHAT DO SHARES COST?
You can purchase, redeem or exchange Fund shares any day the New York Stock
Exchange (NYSE) is open. The Fund's net asset value (NAV) per Shares fluctuates
and is based on the market value of all securities and other assets of the Fund.
The NAV for each class of Shares may differ due to the variance in daily net
income realized by each Share class. Such variance will reflect only accrued net
income to which the shareholders of a particular class are entitled.
REDUCING OR ELIMINATING THE CONTINGENT DEFERRED SALES CHARGE
These reductions or eliminations are offered because: no sales commissions have
been advanced to the investment professional selling Shares; the shareholder has
already paid a Contingent Deferred Sales Charge (CDSC); or nominal sales efforts
are associated with the original purchase of Shares.
Upon notification to the Distributor or the Fund's transfer agent, no CDSC will
be imposed on redemptions:
o following the death or post-purchase disability, as defined in Section
72(m)(7) of the Internal Revenue Code of 1986, of the last surviving
shareholder;
o representing minimum required distributions from an Individual Retirement
Account or other retirement plan to a shareholder who has attained the age
of 70 1/2;
o of Shares that represent a reinvestment of dividends and capital gains;
o of Shares originally purchased through a bank trust department, a
registered investment adviser or retirement plans where the third party
administrator has entered into certain arrangements with the Distributor or
its affiliates, or any other investment professional, to the extent that no
payments were advanced for purchases made through these entities;
o representing a portion of proceeds attributable to increases in value of
the account due to increases in the net asset value per share;
o which are involuntary redemptions processed by the Fund because the
accounts do not meet the minimum balance requirements; and
o which are qualifying redemptions of Class B Shares under a Systematic
Withdrawal Program.
HOW IS THE FUND SOLD?
Under the Distributor's Contract with the Fund, the Distributor (Federated
Securities Corp.) offers Shares on a continuous, best-efforts basis.
RULE 12B-1 PLAN (CLASS B SHARES)
As a compensation-type plan, the Rule 12b-1 Plan is designed to pay the
Distributor (who may then pay investment professionals such as banks,
broker/dealers, trust departments of banks, and registered investment advisers)
for marketing activities (such as advertising, printing and distributing
prospectuses, and providing incentives to investment professionals) to promote
sales of Shares so that overall Fund assets are maintained or increased. This
helps the Fund achieve economies of scale, reduce per share expenses, and
provide cash for orderly portfolio management and Share redemptions. In
addition, the Fund's service providers that receive asset-based fees also
benefit from stable or increasing Fund assets. The Fund may compensate the
Distributor more or less than its actual marketing expenses. In no event will
the Fund pay for any expenses of the Distributor that exceed the maximum Rule
12b-1 Plan fee.
The maximum Rule 12b-1 Plan fee that can be paid in any one year may not be
sufficient to cover the marketing-related expenses the Distributor has incurred.
Therefore, it may take the Distributor a number of years to recoup these
expenses.
SHAREHOLDER SERVICES
The Fund may pay Federated Shareholder Services Company, a subsidiary of
Federated Investors, Inc. (Federated), for providing shareholder services and
maintaining shareholder accounts. Federated Shareholder Services Company may
select others to perform these services for their customers and may pay them
fees.
EXCHANGING SECURITIES FOR FUND SHARES
You may contact the Distributor to request a purchase of Class B Shares of
Independence One Equity Plus Fund or Class K Shares of Independence One Prime
Money Market Fund in exchange for securities you own. The Fund reserves the
right to determine whether to accept your securities and the minimum market
value to accept. The Fund will value your securities in the same manner as it
value its assets. This exchange is treated as a sale of your securities for
federal tax purposes.
SUBACCOUNTING SERVICES
Certain investment professionals may wish to use the transfer agent's
subaccounting system to minimize their internal recordkeeping requirements. The
transfer agent may charge a fee based on the level of subaccounting services
rendered. Investment professionals holding Shares in a fiduciary, agency,
custodial, or similar capacity may charge or pass through subaccounting fees as
part of or in addition to normal trust or agency account fees. They may also
charge fees for other services that may be related to the ownership of Shares.
This information should, therefore, be read together with any agreement between
the customer and the investment professional about the services provided, the
fees charged for those services, and any restrictions and limitations imposed.
REDEMPTION IN KIND
Although the Fund intends to pay Share redemptions in cash, they reserve the
right, as described below, to pay the redemption price in whole or in part by a
distribution of the Fund's portfolio securities.
Because the Fund has elected to be governed by Rule 18f-1 under the Investment
Company Act of 1940, the Fund is obligated to pay Share redemptions to any one
shareholder in cash only up to the lesser of $250,000 or 1% of the net assets
represented by such Share class during any 90-day period.
Any Share redemption payment greater than this amount will also be in cash
unless the Fund's Board determines that payment should be in kind. In such a
case, the Fund will pay all or a portion of the remainder of the redemption in
portfolio securities, valued in the same way as the Fund determines its NAV. The
portfolio securities will be selected in a manner that the Fund's Board deems
fair and equitable and, to the extent available, such securities will be readily
marketable.
Redemption in kind is not as liquid as a cash redemption. If redemption is made
in kind, shareholders receiving the portfolio securities and selling them before
their maturity could receive less than the redemption value of the securities
and could incur certain transaction costs.
MASSACHUSETTS PARTNERSHIP LAW
Under certain circumstances, shareholders may be held personally liable as
partners under Massachusetts law for obligations of the Trust. To protect its
shareholders, the Trust has filed legal documents with Massachusetts that
expressly disclaim the liability of its shareholders for acts or obligations of
the Trust.
In the unlikely event a shareholder is held personally liable for the Trust's
obligations, the Trust is required by the Declaration of Trust to use its
property to protect or compensate the shareholder. On request, the Trust will
defend any claim made and pay any judgment against a shareholder for any act or
obligation of the Trust. Therefore, financial loss resulting from liability as a
shareholder will occur only if the Trust itself cannot meet its obligations to
indemnify shareholders and pay judgments against them. ACCOUNT AND SHARE
INFORMATION
VOTING RIGHTS
Each share of the Fund gives the shareholder one vote in Trustee elections and
other matters submitted to shareholders for vote. All Shares of the Trust have
equal voting rights, except that in matters affecting only a particular Fund
class are entitled to vote.
Trustees may be removed by the Board or by shareholders at a special meeting. A
special meeting of shareholders will be called by the Board upon the written
request of shareholders who own at least 10% of the Trust's outstanding shares
of all series entitled to vote.
As of September 16, 1999, the following shareholders owned of record,
beneficially, or both, 5% or more of outstanding Class K Shares:
Pierson & Co., Farmington Hills, MI, owned approximately 4,139,451 Class K
Shares (78.57%).
TAX INFORMATION
FEDERAL INCOME TAX
The Fund intends to meet requirements of Subchapter M of the Internal Revenue
Code applicable to regulated investment companies. If these requirements are not
met, they will not receive special tax treatment and will pay federal income
tax.
The Fund will be treated as a single, separate entity for federal income tax
purposes so that income earned and capital gains and losses realized by the
Trust's other portfolios will be separate from those realized by the Fund.
WHO MANAGES AND PROVIDES SERVICES TO THE FUND?
BOARD OF TRUSTEES
The Board is responsible for managing the Trust's business affairs and for
exercising all the Trust's powers except those reserved for the shareholders.
Information about each Board member is provided below and includes each
person's: name, address, birth date, present position(s) held with the Trust,
principal occupations for the past five years and positions held prior to the
past five years, total compensation received as a Trustee from the Trust for its
most recent fiscal year. The Trust is comprised of nine funds.
As of September 16, 1999, the Fund's Board and Officers as a group owned
less than 1% of the Fund's outstanding Shares.
An asterisk (*) denotes a Trustee who is deemed to be an interested person as
defined in the Investment Company Act of 1940. A pound sign (#) denotes a Member
of the Board's Executive Committee, which handles the Board's responsibilities
between its meetings.
<TABLE>
<CAPTION>
NAME AGGREGATE
BIRTH DATE COMPENSATION
ADDRESS FROM TRUST
POSITION WITH TRUST PRINCIPAL OCCUPATIONS
FOR PAST FIVE YEARS
<S> <C> <C>
ROBERT E. BAKER Retired; formerly, Vice Chairman, Chrysler $12,000
Birth Date: May 6, 1930 Financial Corporation.
4327 Stoneleigh Road
Bloomfield Hills, MI
TRUSTEE
HAROLD BERRY Managing Partner, Berry Enterprises; $12,000
Birth Date: September Chairman, Independent Sprinkler Companies,
17, 1925 Inc.; Chairman, Berry Ziegelman & Company.
290 Franklin Center
29100 Northwestern
Highway
Southfield, MI
TRUSTEE
NATHAN FORBES* President, Forbes/Cohen Properties, President $12,000
Birth Date: December 5, and Partner, The Forbes Company.
1962
1945 Long Point Drive
Bloomfield Hills, MI
TRUSTEE
HARRY J. NEDERLANDER# Chairman, Nederlander Enterprises $10,800
Birth Date: September
5, 1917
231 S. Old Woodward,
Suite 219
Birmingham, MI
TRUSTEE
THOMAS S. WILSON# President and Executive Administrator of the $12,000
Birth Date: October 8, Detroit Pistons; President and CEO, Palace
1949 Sports Entertainment.
Two Championship Drive
Auburn Hills, MI
TRUSTEE
EDWARD C. GONZALES Trustee or Director of some of the Funds in
Birth Date: October 22, the Federated Fund Complex; President, $0
1930 Executive Vice President and Treasurer of
Federated Investors some of the Funds in the Federated Fund
Tower Complex; Vice Chairman, Federated Investors,
1001 Liberty Avenue Inc.; Vice President, Federated Investment
Pittsburgh, PA Management Company and Federated Investment
PRESIDENT AND TREASURER Counseling, Federated Global Investment
Management Corp. and Passport Research, Ltd.;
Executive Vice President and Director,
Federated Securities Corp.; Trustee,
Federated Shareholder Services Company.
JEFFREY W. STERLING Treasurer of the Federated Fund Complex; Vice $0
Birth Date: February 5, President - Funds Financial Services
1947 Division, Federated Investors, Inc.;
Federated Investors formerly: various management positions within
Tower Funds Financial Services Division of
1001 Liberty Avenue Federated Investors, Inc.
Pittsburgh, PA
VICE PRESIDENT AND
ASSISTANT TREASURER
C. GRANT ANDERSON Corporate Counsel, Federated Investors, Inc. $0
Birth Date: November 6,
1940
Federated Investors
Tower
1001 Liberty Avenue
Pittsburgh, PA
</TABLE>
SECRETARY
INVESTMENT ADVISER
The Adviser conducts investment research and makes investment decisions for the
Fund.
The Adviser shall not be liable to the Trust or any Fund shareholder for any
losses that may be sustained in the purchase, holding, or sale of any security
or for anything done or omitted by it, except acts or omissions involving
willful misfeasance, bad faith, gross negligence, or reckless disregard of the
duties imposed upon it by its contract with the Trust.
OTHER RELATED SERVICES
Affiliates of the Adviser may, from time to time, provide certain electronic
equipment and software to institutional customers in order to facilitate the
purchase of Fund Shares offered by the Distributor.
BROKERAGE TRANSACTIONS
When selecting brokers and dealers to handle the purchase and sale of portfolio
instruments, the Adviser looks for prompt execution of the order at a favorable
price. The Adviser will generally use those who are recognized dealers in
specific portfolio instruments, except when a better price and execution of the
order can be obtained elsewhere. The Adviser may select brokers and dealers
based on whether they also offer research services (as described below). In
selecting among firms believed to meet these criteria, the Adviser may give
consideration to those firms which have sold or are selling Shares of the Fund
and other funds distributed by the Distributor and its affiliates. The Adviser
makes decisions on portfolio transactions and selects brokers and dealers
subject to review by the Fund's Board.
RESEARCH SERVICES
Research services may include advice as to the advisability of investing in
securities; security analysis and reports; economic studies; industry studies;
receipt of quotations for portfolio evaluations; and similar services. Research
services may be used by the Adviser in advising other accounts. To the extent
that receipt of these services may replace services for which the Adviser or its
affiliates might otherwise have paid, it would tend to reduce their expenses.
The Adviser and its affiliates exercise reasonable business judgment in
selecting those brokers who offer brokerage and research services to execute
securities transactions. They determine in good faith that commissions charged
by such persons are reasonable in relationship to the value of the brokerage and
research services provided.
Investment decisions for the Fund are made independently from those of other
accounts managed by the Adviser. When the Fund and one or more of those accounts
invests in, or disposes of, the same security, available investments or
opportunities for sales will be allocated among the Fund and the account(s) in a
manner believed by the Adviser to be equitable. While the coordination and
ability to participate in volume transactions may benefit the Fund, it is
possible that this procedure could adversely impact the price paid or received
and/or the position obtained or disposed of by the Fund.
ADMINISTRATOR
Federated Administrative Services, a subsidiary of Federated, provides
administrative personnel and services (including certain legal and financial
reporting services) necessary to operate the Fund. Federated Administrative
Services provides these at the following annual rate of the average aggregate
daily net assets of the Trust as specified below:
MAXIMUM ADMINISTRATIVE AVERAGE AGGREGATE DAILY NET ASSETS OF THE TRUST
FEE
0.150 of 1% on the first $250 million
0.125 of 1% on the next $250 million
0.100 of 1% on the next $250 million
0.075 of 1% on assets in excess of $750 million
The administrative fee received during any fiscal year shall be at least
$50,000 per portfolio. Federated Administrative Services may voluntarily waive a
portion of its fee and may reimburse the Fund for expenses.
Federated Administrative Services also provides certain accounting and
recordkeeping services with respect to the Fund's portfolio investments for a
fee based on the Fund's assets plus out-of-pocket expenses.
CUSTODIAN
Michigan National Bank, Farmington Hills, Michigan, is custodian for the
securities and cash of the Fund. Under the Custodian Agreement, Michigan
National Bank holds the Fund's portfolio securities in safekeeping and keeps all
necessary records and documents relating to its duties.
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT
Federated Services Company, through its registered transfer agent subsidiary,
Federated Shareholder Services Company, maintains all necessary shareholder
records. The Fund pays the transfer agent a fee based on the size, type, and
number of accounts and transactions made by shareholders.
INDEPENDENT AUDITORS
The independent auditor for the Fund, KPMG LLP, plans and performs their audit
so that it may provide an opinion as to whether the Fund's financial statements
and financial highlights are free of material mistatements.
<TABLE>
<CAPTION>
FEES PAID BY THE FUND FOR SERVICES
<S> <C> <C> <C>
- -------------------- --------------------------------- ------------------------- ----------------------------
CLASS K SHARES ADVISORY FEE PAID/ SUB-ADVISORY FEE PAID/ ADMINISTRATIVE FEE PAID/
ADVISORY FEE WAIVED SUB-ADVISORY FEE WAIVED ADMINISTRATIVE FEE WAIVED
------------------------- ----------------------------
--------------------------------- ------------------------- ----------------------------
FOR THE FISCAL YEAR ENDED FOR THE FISCAL YEAR FOR THE FISCAL YEAR ENDED
APRIL 30, ENDED APRIL 30,
APRIL 30,
--------------------------------- ------------------------- ----------------------------
-----------------------------------------------------------------------------------------
1999 1998 1997 1999 1998 1997 1999 1998 1997
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
U.S. GOVERNMENT $467,877/ $507,916/ $509,098/ $0 $0 $0 $68,475/ $77,385/ $79,408/
SECURITIES FUND $273,903 $326,518 $327,278 $0 $0 $0
- -------------------------------------------------------------------------------------------------------------
</TABLE>
HOW DOES THE FUND MEASURE PERFORMANCE?
The Fund may advertise Share performance by using the Securities and Exchange
Commission's (SEC) standard method for calculating performance applicable to all
mutual funds. The SEC also permits this standard performance information to be
accompanied by non-standard performance information.
Share performance reflects the effect of non-recurring charges, such as maximum
sales charges, which, if excluded, would increase the total return and yield.
The performance of Shares depends upon such variables as: portfolio quality;
average portfolio maturity; type and value of portfolio securities; changes in
interest rates; changes or differences in the Fund's or any class of Shares'
expenses; and various other factors.
Share performance fluctuates on a daily basis largely because net earnings
fluctuate daily. Both net earnings and offering price per Share are factors in
the computation of yield and total return.
TOTAL RETURN
Total return represents the change (expressed as a percentage) in the value
of Shares over a specific period of time, and includes the investment of income
and capital gains distributions.
The average annual total return for Shares is the average compounded rate of
return for a given period that would equate a $1,000 initial investment to the
ending redeemable value of that investment. The ending redeemable value is
computed by multiplying the number of Shares owned at the end of the period by
the NAV per Share at the end of the period. The number of Shares owned at the
end of the period is based on the number of Shares purchased at the beginning of
the period with $1,000, less any applicable sales charge, adjusted over the
period by any additional Shares, assuming the annual reinvestment of all
dividends and distributions.
When Shares of a Fund are in existence for less than a year, the Fund
may advertise cumulative total return for that specific period of time, rather
than annualizing the total return.
YIELD
The yield of Shares is calculated by dividing: (i) the net investment income per
Share earned by the Shares over a 30-day period; by (ii) the maximum offering
price per Share on the last day of the period. This number is then annualized
using semi-annual compounding. This means that the amount of income generated
during the 30-day period is assumed to be generated each month over a 12-month
period and is reinvested every six months. The effective yield is calculated by
compounding the unannualized base-period return by: adding one to the
base-period return, raising the sum to the 365/7th power; and subtracting one
from the result. The yield and effective yield do not necessarily reflect income
actually earned by Shares because of certain adjustments required by the SEC
and, therefore, may not correlate to the dividends or other distributions paid
to shareholders.
To the extent investment professionals and broker/dealers charge fees in
connection with services provided in conjunction with an investment in Shares,
the Share performance is lower for shareholders paying those fees.
PERFORMANCE COMPARISONS
Advertising and sales literature may include:
o references to ratings, rankings, and financial publications and/or
performance comparisons of Shares to certain indices;
o charts, graphs and illustrations using the Fund's returns, or returns in
general, that demonstrate investment concepts such as tax-deferred
compounding, dollar-cost averaging and systematic investment;
o discussions of economic, financial and political developments and their
impact on the securities market, including the portfolio manager's views on
how such developments could impact the Fund; and
o information about the mutual fund industry from sources such as the
Investment Company Institute.
The Fund may compare its performance, or performance for the types of securities
in which they invest, to a variety of other investments, including federally
insured bank products such as bank savings accounts, certificates of deposit,
and Treasury bills.
The Fund may quote information from reliable sources regarding individual
countries and regions, world stock exchanges, and economic and demographic
statistics.
You may use financial publications and/or indices to obtain a more complete view
of Share performance. When comparing performance, you should consider all
relevant factors such as the composition of the index used, prevailing market
conditions, portfolio compositions of other funds, and methods used to value
portfolio securities and compute offering price. The financial publications
and/or indices which the Fund uses in advertising may include:
LIPPER ANALYTICAL SERVICES, INC. ranks funds in various fund categories by
making comparative calculations using total return. Total return assumes the
reinvestment of all capital gains distributions and income dividends and
takes into account any change in net asset value over a specific period of
time. From time to time, a Fund will quote its ranking from its respective
Lipper category in advertising and sales literature.
MORNINGSTAR, INC., an independent rating service, is the publisher of
the bi-weekly MUTUAL FUND VALUES. MUTUAL FUND VALUES rates more than 1,000
NASDAQ listed mutual funds of all types, according to their risk-adjusted
returns. The maximum rating is five stars, and ratings are effective for two
weeks.
LEHMAN BROTHERS GOVERNMENT BOND INDEX is an unmanaged index comprised of
all publicly issued, non-convertible domestic debt of the U.S. government, or
any agency thereof, or any quasi-federal corporation and of corporate debt
guaranteed by the U.S. government. Lehman Brothers Government/Corporate
(Total) Index is comprised of approximately 5,000 issues which include:
non-convertible bonds publicly issued by the U.S. government or its agencies;
corporate bonds guaranteed by the U.S. government and quasi-federal
corporations; and publicly issued, fixed rate, non-convertible domestic bonds
of companies in industry, public utilities, and finance. The average maturity
of these bonds approximates nine years. Tracked by Lehman Brothers, the index
calculates total returns for one-month, three-month, twelve-month, and
ten-year periods and year-to-date.
INVESTMENT RATINGS
STANDARD & POOR'S (S&P) LONG-TERM DEBT RATINGS
AAA--Debt rated AAA has the highest rating assigned by S&P. Capacity to pay
interest and repay principal is extremely strong.
AA--Debt rated AA has a very strong capacity to pay interest and repay principal
and differs from the highest-rated issues only in small degree.
A--Debt rated A has a strong capacity to pay interest and repay principal
although it is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in higher-rated categories.
MOODY'S INVSESTOR SERVICES LONG-TERM DEBT RATINGS
AAA--Bonds which are rated Aaa are judged to be of the best quality. They carry
the smallest degree of investment risk and are generally referred to as "gilt
edged." Interest payments are protected by a large or by an exceptionally stable
margin and principal is secure. While the various protective elements are likely
to change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
AA--Bonds which are rated Aa are judged to be of high quality by all standards.
Together with the Aaa group, they comprise what are generally known as
high-grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long-term risks appear somewhat larger than in Aaa securities.
A--Bonds which are rated A possess many favorable investment attributes and are
to be considered as upper-medium-grade obligations. Factors giving security to
principal and interest are considered adequate but elements may be present which
suggest a susceptibility to impairment sometime in the future.
NR--Indicates that both the bonds and the obligor or credit enhancer are not
currently rated by S&P or Moody's with respect to short-term indebtedness.
However, management considers them to be of comparable quality to securities
rated A-1 or P-1.
NR(1)--The underlying issuer/obligor/guarantor has other outstanding debt rated
AAA by S&P or Aaa by Moody's.
NR(2)--The underlying issuer/obligor/guarantor has other outstanding debt rated
AA by S&P or Aa by Moody's.
NR(3)--The underlying issuer/obligor/guarantor has other outstanding debt rated
A by S&P or Moody's.
FITCH IBCA, INC. SHORT-TERM DEBT RATING DEFINITIONS
F-1+--Exceptionally Strong Credit Quality. Issues assigned this rating are
regarded as having the strongest degree of assurance for timely payment.
F-1--Very Strong Credit Quality. Issues assigned this rating reflect an
assurance for timely payment, only slightly less in degree than issues rated
F-1+.
F-2--Good Credit Quality. Issues carrying this rating have a satisfactory degree
of assurance for timely payment, but the margin of safety is not as great as for
issues assigned F-1+ and F-1 ratings.
STANDARD & POOR'S LONG-TERM DEBT RATING DEFINITIONS
BB--Debt rated BB has less near-term vulnerability to default than other
speculative issues. However, it faces major ongoing uncertainties or exposure to
adverse business, financial, or economic conditions which could lead to
inadequate capacity to meet timely interest and principal payments. The BB
rating category is also used for debt subordinated to senior debt that is
assigned an actual or implied BBB rating.
B--Debt rated B has a greater vulnerability to default but currently has the
capacity to meet interest payments and principal repayments. Adverse business,
financial, or economic conditions will likely impair capacity or willingness to
pay interest and repay principal. The B rating category is also used for debt
subordinated to senior debt that is assigned an actual or implied BB or BB-
rating.
CCC--Debt rated CCC has a currently identifiable vulnerability to default, and
is dependent upon favorable business, financial, and economic conditions to meet
timely payment of interest and repayment of principal. In the event of adverse
business, financial, or economic conditions, it is not likely to have the
capacity to pay interest and repay principal. The CCC rating category is also
used for debt subordinated to senior debt that is assigned an actual or implied
B or B rating.
CC--The rating CC typically is applied to debt subordinated to senior debt that
is assigned an actual or implied CCC debt rating.
C--The rating C typically is applied to debt subordinated to senior debt which
is assigned an actual or implied CCC debt rating. The C rating may be used to
cover a situation where a bankruptcy petition has been filed, but debt service
payments are continued.
MOODY'S INVESTORS SERVICE, INC. LONG-TERM BOND RATING DEFINITIONS
AAA--Bonds which are rated AAA are judged to be of the best quality. They carry
the smallest degree of investment risk and are generally referred to as gilt
edged. Interest payments are protected by a large or by an exceptionally stable
margin and principal is secure. While the various protective elements are likely
to change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
AA--Bonds which are rated AA are judged to be of high quality by all standards.
Together with the AAA group, they comprise what are generally known as
high-grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in AAA securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long-term risks appear somewhat larger than in AAA securities.
A--Bonds which are rated A possess many favorable investment attributes and are
to be considered as upper-medium-grade obligations. Factors giving security to
principal and interest are considered adequate but elements may be present which
suggest a susceptibility to impairment sometime in the future.
BAA--Bonds which are rated BAA are considered as medium-grade obligations,
(i.e., they are neither highly protected nor poorly secured). Interest payments
and principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
BA--Bonds which are BA are judged to have speculative elements; their future
cannot be considered as well assured. Often the protection of interest and
principal payments may be very moderate and thereby not well safeguarded during
both good and bad times over the future. Uncertainty of position characterizes
bonds in this class.
B--Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
CAA--Bonds which are rated CAA are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.
CA--Bonds which are rated CA represent obligations which are speculative in a
high degree. Such issues are often in default or have other marked shortcomings.
C--Bonds which are rated C are the lowest-rated class of bonds, and issues so
rated can be regarded as having extremely poor prospects of ever attaining any
real investment standing.
FITCH IBCA, INC. LONG-TERM DEBT RATING DEFINITIONS
AAA--Bonds considered to be investment grade and of the highest credit quality.
The obligor has an exceptionally strong ability to pay interest and repay
principal, which is unlikely to be affected by reasonably foreseeable events.
AA--Bonds considered to be investment grade and of very high credit quality. The
obligor's ability to pay interest and repay principal is very strong, although
not quite as strong as bonds rated AAA. Because bonds rated in the AAA and AA
categories are not significantly vulnerable to foreseeable future developments,
short-term debt of these issuers is generally rated F-1+.
A--Bonds considered to be investment grade and of high credit quality. The
obligor's ability to pay interest and repay principal is considered to be
strong, but may be more vulnerable to adverse changes in economic conditions and
circumstances than bonds with higher ratings.
BBB--Bonds considered to be investment grade and of satisfactory credit quality.
The obligor's ability to pay interest and repay principal is considered to be
adequate. Adverse changes in economic conditions and circumstances, however, are
more likely to have adverse impact on these bonds, and therefore impair timely
payment. The likelihood that the ratings of these bonds will fall below
investment grade is higher than for bonds with higher ratings.
BB--Bonds are considered speculative. The obligor's ability to pay interest and
repay principal may be affected over time by adverse economic changes. However,
business and financial alternatives can be identified which could assist the
obligor in satisfying its debt service requirements.
B--Bonds are considered highly speculative. While bonds in this class are
currently meeting debt service requirements, the probability of continued timely
payment of principal and interest reflects the obligor's limited margin of
safety and the need for reasonable business and economic activity throughout the
life of the issue.
CCC--Bonds have certain identifiable characteristics which, if not remedied, may
lead to default. The ability to meet obligations requires an advantageous
business and economic environment.
CC--Bonds are minimally protected. Default in payment of interest and/or
principal seems probable over time.
C--Bonds are imminent default in payment of interest or principal.
<PAGE>
58
ADDRESSES
INDEPENDENCE ONE MUTUAL FUNDS
U.S. Government Securities Fund
Class B Shares
5800 Corporate Drive
Pittsburgh, PA 15237-7010
DISTRIBUTOR
Federated Securities Corp.
Federated Investors Tower
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
INVESTMENT ADVISER
Michigan National Bank.
27777 Inkster Road
Mail Code 10-30
Farmington Hills, Michigan 48333-9065
INVESTMENT SUB-ADVISER
Independence One Capital Management Corporation
27777 Inkster Road
Mail Code 10-52
Farmington Hills, Michigan 48333-9065
CUSTODIAN
Michigan National Bank.
27777 Inkster Road
Mail Code 10-30
Farmington Hills, Michigan 48333-9065
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT
Federated Shareholder Services Company
P.O. Box 8600
Boston, MA 02266-8600
INDEPENDENT AUDITORS
KPMG LLP
99 High Street
Boston, MA 02110-2371
Cusip __________
Prospectus
[graphic]
Independence One(R)
Mutual Funds
Independence One(R) Mutual Funds offers nine portfolios, including three equity
funds, three income funds and three money market funds. This prospectus relates
to Class B Shares of Independence One Equity Plus Fund.
Independence One
Equity Plus Fund
Class B Shares
October 1, 1999
{Logo of Independence One Mutual Funds
As with all mutual funds, the Securities and Exchange Commission (SEC) has not
approved or disapproved these securities or passed upon the adequacy of this
prospectus, and any representation to the contrary is a criminal offense.
Independence One(R) Mutual Funds
[graphic]
<PAGE>
Contents
Fund Goals, Strategies, Performance and Risk.1
Principal Risks of the Fund..................3
What are the Fund's Fees and Expenses?.......5
Principal Securities in Which the Fund Invests.........6
Specific Risks of Investing in the Fund......9
What do Shares Cost?........................11
How is the Fund Sold?.......................11
How to Purchase Shares......................11
How to Redeem and Exchange Shares...........13
Account and Share Information...............16
Who Manages the Fund?.......................17
Financial Information.......................20
<PAGE>
Fund Goals, Strategies, Performance and Risk
[graphic]
The following describes the investment goals, strategies, and principal risks
of the Fund. There can be no assurance that the Fund will achieve its goal.
INDEPENDENCE ONE EQUITY PLUS FUND
GOAL: SEEKS TO PROVIDE TOTAL RETURN.
The Fund's total return will consist of two components: (1) changes in the
market value of its portfolio securities (both realized and unrealized
appreciation); and (2) income received from its portfolio securities. The Fund
expects that capital appreciation will comprise the largest component of its
total return. Strategy: The Fund pursues its investment objective by investing
primarily in the common stocks that comprise the Standard & Poor's Composite
Stock Price Index ("S&P 100"), in an effort to provide investment results that
correspond to or exceed the aggregate price and dividend performance of the S&P
100. The S&P 100 is a market capitalization-weighted index of 100 common stocks
from a broad range of industries. The S&P 100 provides a measure of overall
large company performance because the stocks selected for inclusion tend to be
the leading companies in leading industries in the U.S. economy. Selection
criteria include total market value of an issuer's outstanding shares (market
capitalization), trading activity and liquidity of the issuer's shares, and the
issuer's financial and operating soundness. Normally at least 80% of the Fund's
assets will be invested to correspond as closely as possible to the relative
weighting of the S&P 100 in order to attempt to achieve a high degree of
correlation between the performance of the FundOs portfolio and that of the S&P
100. The remaining 20% of the FundOs assets will normally also be invested in
stocks that are included in the S&P 100, but the Fund's position in such stocks
may be greater (overweighted) compared to such stocks' weightings in the S&P
100. These weightings will be determined by the Fund's Adviser and Subadviser in
an effort to exceed the total return performance of the S&P 100. Principal Risks
of the Fund [graphic]
In addition to the risks set forth below that are specific to an investment in
the Fund, there are risks common to all mutual funds.
For example, the Fund's share price may decline and an investor could lose
money. Also, there is no assurance that the Fund will achieve its investment
objective. The Shares offered by this prospectus are not deposits or obligations
of any bank including Michigan National Bank, and are not endorsed or guaranteed
by the U.S. government, the Federal Deposit Insurance Corporation, the Federal
Reserve Board, or any other government agency.
O .......STOCK MARKET RISKs
The value of equity securities rise and fall.
<PAGE>
Independence One Equity Plus Fund Risk/Return Bar Chart and Table
[Chart goes here]
THE TOTAL RETURNS SHOWN HERE ARE FOR CLASS Y SHARES WHICH IS ANOTHER CLASS OF
SHARES OFFERED BY INDEPENDENCE ONE EQUITY PLUS FUND. CLASS Y SHARES ARE NOT
OFFERED IN THIS PROSPECTUS FOR THE FUND'S CLASS B SHARES. THE TOTAL RETURNS FOR
CLASS Y SHARES ARE DISCLOSED HERE BECAUSE CLASS B SHARES HAVE ONLY BEEN OFFERED
SINCE OCTOBER 1, 1999. THESE TOTAL RETURNS WOULD BE SUBSTANTIALLY SIMILAR TO THE
ANNUAL RETURNS FOR CLASS B SHARES OVER THE SAME PERIOD AND WOULD DIFFER ONLY TO
THE EXTENT THAT THE TWO CLASSES DO NOT HAVE THE SAME EXPENSES. IT IS ANTICIPATED
THAT EXPENSES OF CLASS B SHARES WILL EXCEED THOSE OF THE CLASS Y SHARES.
The bar chart shows the variability of the Fund's Class Y Shares total returns
on a calendar year-end basis.
The Fund's Class Y Shares are not sold subject to a sales charge (load). The
total returns displayed above are based upon net asset value. The Fund's Class Y
Shares total return from January 1, 1999 to June 30, 1999 was 16.42%. Within the
period shown in the Chart, the Fund's Class Y Shares highest quarterly return
was 22.05% (quarter ended December 31, 1998). Its lowest quarterly return was
(10.63%) (quarter ended September 30, 1998).
INDEPENDENCE ONE EQUITY PLUS FUND AVERAGE ANNUAL TOTAL RETURN TABLE
The following table represents the Fund's Class Y Shares Average Annual Total
Returns for the calendar periods ended December 31, 1998. The table shows the
Fund's total returns averaged over a period of years relative to the Standard &
Poor's 100 Composite Stock Price Index, a broad-based market index. Total
returns for the index shown do not reflect sales charges, expenses or other fees
that the Securities and Exchange Commission requires to be reflected in the
Fund's performance. Indexes are unmanaged, and it is not possible to invest
directly in an index. CALENDAR PERIOD CLASS Y S&P 100
SHARES
1 Year 31.64% 33.22%
Start of Performance /1/ 28.05% 29.27%
1The Fund's Class Y Shares start of performance date was September 25, 1995.
Past performance does not necessarily predict future performance. This
information provides you with historical performance so that you can analyze
whether the FundOs investment risks are balanced by its potential rewards.
<PAGE>
What are the Fund's Fees and Expenses?
INDEPENDENCE ONE(R) EQUITY PLUS FUND
FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy and hold
Shares of the Fund's Class B Shares.
SHAREHOLDER FEES
FEES PAID DIRECTLY FROM YOUR INVESTMENT
Maximum Sales Charge (Load) Imposed on Purchases
(as a percentage of offering price) None
Maximum Deferred Sales Charge (Load)
(as a percentage of original purchase price or redemption
proceeds, as applicable) .............................. 5.00%
Maximum Sales Charge (Load) Imposed on Reinvested Dividends
(and other Distributions)
(as a percentage of offering price)..............................None
Redemption Fee (as a percentage of amount redeemed, if applicable)........ None
Exchange Fee...............................................................None
ANNUAL FUND OPERATING EXPENSES (BEFORE WAIVER) 1
EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
Management Fee2.............................................. 0.40%
Distribution (12b-1) Fee..................................... 0.75%
Shareholder Services Fee .................................... 0.25%
Other Expenses............................................... 0.18%
Total Annual Fund Operating Expenses......................... 1.58%
1 Although not contractually obligated to do so, the Adviser will waive certain
amounts. These are shown below along with the net expenses the Fund EXPECTS TO
PAY for the fiscal year ending April 30, 2000.
Total Waiver of Fund Expenses..................................... 0.10%
Total Annual Fund Operating Expenses (after waiver) O ........... 1.48%
2 The Adviser expects to voluntarily waive a portion of the management fee. The
Adviser can terminate this anticipated voluntary waiver at any time. The
management fee the Fund expects to pay (after the anticipated voluntary waiver)
will be 0.30% for the year ending April 30, 2000.
EXAMPLE
This Example is intended to help you compare the cost of investing in the Fund's
Class B Shares with the cost of investing in other mutual funds.
The Example assumes that you invest $10,000 in the Fund's Class B Shares for the
time periods indicated and then redeem all of your Shares at the end of those
periods. Expenses assuming no redemption are also shown. The Example also
assumes that your investment has a 5% return each year and that the Fund's Class
B Shares operating expenses are BEFORE WAIVERS as estimated in the table and
remain the same. Although your actual costs may be higher or lower, based on
these assumptions your costs would be:
......................1 YEAR........3 YEARS 5 YEARS 10 YEARS
Fund....
Expenses assuming
redemption............$661..........$799 $1,060 $1,878
Expenses assuming
no redemption.........$161..........$499 $860 $1,878
Principal Securities in Which the Fund
Invests
[graphic]
Equity Securities
Equity securities represent a share of an issuer's earnings and assets, after
the issuer pays its liabilities. The Fund cannot predict the income they will
receive from equity securities because issuers generally have discretion as to
the payment of any dividends or distributions. However, equity securities offer
greater potential for appreciation than many other types of securities, because
their value increases directly with the value of the issuerOs business. The
following describes the principal types of equity securities in which the Fund
may invest.
Common Stocks
The Fund may invest in common stocks. Common stocks are the most prevalent
type of equity security. Common stocks receive the issuer's earnings after
the issuer pays its creditors and any preferred stockholders. As a result,
changes in an issuer's earnings may influence the value of its common stock.
TEMPORARY DEFENSIVE INVESTMENTS The Fund may temporarily depart from its
principal investment strategies by investing its assets in cash, cash items, and
shorter-term, higher-quality debt securities and similar obligations. It may do
this to minimize potential losses and maintain liquidity to meet shareholder
redemptions during adverse market conditions. This may cause the Fund to give up
greater investment returns to maintain the safety of principal, that is, the
original amount invested by shareholders.
Specific Risks of Investing in the Fund
[graphic]
STOCK MARKET RISKS
o The value of equity securities in the
Fund's portfolio will rise and fall. These fluctuations could be a sustained
trend or a drastic movement. The Fund's portfolio will reflect changes in
prices of individual portfolio stocks or general changes in stock valuations.
Consequently, the Fund's share price may decline.
o The Adviser attempts to manage market risk by limiting the amount the Fund may
invest in each company's equity securities. However, diversification will not
protect the Fund against widespread or prolonged declines in the stock market.
What Do Shares Cost?
[graphic]
You can purchase, redeem, or exchange Shares any day the New York Stock Exchange
(NYSE) is open. Shares of the Fund are sold at net asset value (NAV). When the
Fund receives your transaction request in proper form, it is processed at the
next calculated NAV. The Fund does not charge a front-end sales charge.
Investors who purchase, redeem or exchange through a financial intermediary may
be charged a service fee by that financial intermediary. Financial
intermediaries are authorized to accept purchase and redemption orders from
their customers on behalf of the Fund. NAV is determined at the end of regular
trading (normally 4:00 p.m. Eastern time) each day the NYSE is open. The Fund
generally values equity securities according to the last sale price in the
market in which they are primarily traded (either a national securities exchange
or the over-the-counter market), if available.
SALES CHARGE WHEN YOU REDEEM Your redemption proceeds may be reduced by a sales
charge, commonly referred to as a contingent deferred sales charge (CDSC).
CLASS B SHARES
Shares Held Up To: CDSC
1 year 5.0%
2 years 4.0%
3 years 3.0%
4 years 3.0%
5 years 2.0%
6 years 1.0%
7 years or more 0.0%
Class B Shares will automatically convert into Class Y Shares after eight full
years from the purchase date. This conversion is a non-taxable event.
YOU WILL NOT BE CHARGED A CDSC WHEN REDEEMING SHARES:
o purchased with reinvested dividends or capital gains;
o representing the portion of redemption proceeds attributable to increases
in value of the account due to increases in the net asset value per share;
o that you exchanged into Class B Shares of Independence One U.S. Government
Securities Fund or Class K Shares of Independence One Prime Money Market
Fund as long as the shares were held for the applicable CDSC holding
period;
o purchased through investment professionals who did not receive advanced
sales payments;
O if, after you purchase Shares, you become disabled as defined by the IRS;
o if the Fund redeems your Shares and closes your account for not meeting the
minimum balance requirement; if your redemption is a minimum required
distribution to a shareholder over the age of 701/2from an IRA or other
retirement plan; or
o upon the death of the last surviving shareholder of the account.
If your redemption qualifies, you or your investment professional should notify
the Distributor at the time of redemption to eliminate the CDSC. If the
Distributor is not notified, the CDSC will apply.
TO KEEP THE SALES CHARGE AS LOW AS POSSIBLE, THE FUND REDEEMS YOUR SHARES IN
THIS ORDER:
o Shares that are not subject to a CDSC; and
o Shares held the longest (to determine the number of years your Shares have
been held, include the time you held shares of other Independence One Funds
that have been exchanged for Shares of this Fund).
The CDSC is then calculated using the share price at the time of purchase or
redemption, whichever is lower.
How is the Fund Sold?
The Fund offers two share classes: Class Y Shares and Class B Shares, each
representing interests in a single portfolio of securities. This prospectus
relates only to Class B Shares. Each share class has different sales charges and
other expenses, which affect their performance. Contact your investment
professional or call 1-800-334-2292 for more information concerning the other
class. The Fund's Distributor, Federated Securities Corp, markets the Shares
described in this prospectus to institutions, corporations, fiduciaries and
individuals. When the Distributor receives marketing fees, it may pay some or
all of them to investment professionals. The Distributor and its affiliates may
pay out of their assets other amounts (including items of material value) to
investment professionals for marketing and servicing Shares. The Distributor is
a subsidiary of Federated Investors, Inc. (Federated).
RULE 12B-1 PLAN (CLASS B SHARES)
The Fund has adopted a Rule 12b-1 Plan, which allows it to pay marketing fees to
the Distributor and investment professionals for the sale, distribution and
customer servicing of the Fund's Class B Shares. Because these Shares pay
marketing fees on an ongoing basis, your investment cost may be higher over time
than other shares with different sales charges and marketing fees.
How to Purchase Shares
[graphic]
You may purchase Shares through Michigan National Bank and Independence One
Brokerage Services, Inc. ("Independence One"), or through brokers or dealers
which have a sales agreement with the Distributor. The Fund reserves the right
to reject any request to purchase or exchange Shares. The required minimum
initial investment for the Fund is $1,000. Subsequent investments must be in the
amount of at least $100.
[graphic]
THROUGH AN INVESTMENT PROFESSIONAL
o Establish an account with the investment professional; and
o Submit your purchase order to the investment professional before the end of
regular trading on the NYSE (normally 4:00 p.m. Eastern time). You will
receive the next calculated NAV if the investment professional forwards the
order to the Fund before 5:00 p.m. on the same day and the Fund receives
payment within three business days.
You will become the owner of Shares and receive dividends when the Fund
receives your payment. [graphic]
THROUGH MICHIGAN NATIONAL BANK OR INDEPENDENCE ONE
o Establish your account with the Fund by calling toll free 1-800-334-2292; and
o Send your payment to the Fund by Federal Reserve wire or check.
Orders must be received by 4:00 (Eastern time) in order for Shares to be
purchased at that day's price. For Shares purchased directly from the
Distributor, payment by wire or check must be received before 4:00 p.m. (Eastern
time) on that day.
[graphic]
BY WIRE Send your wire to:
Federated Shareholder Services Company c/o Michigan National Bank
Farmington Hills, MI
Dollar Amount of Wire
For Credit to: Independence One Equity Plus Fund - Class B Shares
Account Number: 6856238933
ABA Number: 072000805
Wire Order Number, Dealer Number, or Group Number
Nominee/Institution Name
You cannot purchase Shares by wire on holidays when wire transfers are
restricted.
[graphic]
BY CHECK
Make your check payable to "INDEPENDENCE ONE EQUITY PLUS FUND - CLASS B SHARES",
note your account number on the check, and mail it to:
Independence One Mutual Funds
27777 Inkster Road
Mail Code 10-52
Farmington Hills, Michigan 48333-9065
Payment should be made in U.S. dollars and drawn on a U.S. bank. The Fund
will not accept third-party checks (checks originally payable to someone other
than you or the Fund).
Through an Exchange
You may purchase Shares through an exchange from Class B Shares of Independence
One U.S. Government Securities Fund. You must meet the minimum initial
investment requirement for purchasing Shares and both accounts must have
identical registrations. [graphic] By Systematic Investment Program Once you
have opened an account, you may automatically purchase additional Shares on a
regular basis in a minimum amount of $100. A shareholder may apply for
participation
in this program through Michigan National Bank by calling 1-800-334-2292.
By Automated Clearing House (ACH)
Once you have opened an account, you may purchase additional Shares through a
depository institution that is an ACH member. This purchase option can be
established by completing the appropriate sections of the New Account Form.
Retirement Investments
You may purchase Shares as retirement investments (such as qualified plans
and IRAs or transfer or rollover of assets). Call your investment professional
or the Fund for information on retirement investments. We suggest that you
discuss retirement investments with your tax adviser. You may be subject to an
annual IRA account fee. How to Redeem and Exchange Shares
You should redeem or exchange Shares:
o through an investment professional if you purchased Shares through an
investment professional; or o through Michigan National Bank or Independence
One.
[graphic]
Through an Investment Professional
Submit your redemption or exchange request to your investment professional by
the end of regular trading on the NYSE (normally 4:00 p.m. Eastern time). The
redemption amount you will receive is based upon the next calculated NAV after
the Fund receives the order from your investment professional.
[graphic]
Through Michigan National Bank or Independence One
BY TELEPHONE
You may redeem or exchange Shares by calling 1-800-334-2292 once you have
completed the appropriate authorization form for telephone transactions. If you
call before the end of regular trading on the NYSE (normally 4:00 p.m. Eastern
time) you will receive a redemption amount based on that dayOs NAV. Any shares
held in certificate form cannot be exchanged by telephone but must be forwarded
to the transfer agent by a Michigan National Bank or Independence One
representative, or an authorized broker, and deposited to the shareholderOs
account before being exchanged. Certificates should be sent to: Federated
Shareholder Services Company, P.O. Box 8609, Boston, Massachusetts 02266-8609.
[graphic]
BY MAIL
You may redeem or exchange Shares by mailing a written request to the Fund
through Michigan National Bank, Independence One or an authorized broker.
Shareholders redeeming or exchanging through an authorized broker should mail
requests directly to the broker. You will receive a redemption amount based on
the next calculated NAV after the Fund receives your written request in proper
form. Redemption or exchange requests through Michigan National Bank or
Independence One should be sent to:
Independence One(R) Mutual Funds
27777 Inkster Road
Mail Code 10-52
Farmington Hills, Michigan 48333-9065 All requests must include: o Fund
Name, account number and account registration; o amount to be redeemed or
exchanged;
o signatures of all shareholders exactly as registered; and
o if exchanging, the Fund Name, account number and account registration into
which you are exchanging. Call your investment professional or the Fund if you
need special instructions.
SIGNATURE GUARANTEES Signatures must be guaranteed if:
o your redemption will be sent to an address other than the address of record; o
your redemption will be sent to an address of record that was changed within the
last 30 days; o a redemption is payable to someone other than the shareholder(s)
of record; or o if exchanging (transferring) into another fund with a different
shareholder registration.
A signature guarantee is designed to protect your account from fraud. Obtain a
signature guarantee from a bank or trust company, savings association, credit
union or broker, dealer, or securities exchange member. A notary public cannot
provide a signature guarantee.
PAYMENT METHODS FOR REDEMPTIONS
Your redemption proceeds will be mailed by check to your address of record. The
following payment options are available if you complete the appropriate section
of the New Account Form or an Account Service Options Form. These payment
options require a signature guarantee if they were not established when the
account was opened:
o an electronic transfer to your account at a financial institution that is an
ACH member; or o wire payment to your account at a domestic commercial bank that
is a Federal Reserve System member.
REDEMPTION IN KIND
Although the Fund intends to pay Share redemptions in cash, it reserves the
right to pay the redemption price in whole or in part by a distribution of the
Fund's portfolio securities.
LIMITATIONS ON REDEMPTION PROCEEDS
Redemption proceeds normally are wired or mailed within one business day after
receiving a request in proper form. Payment may be delayed up to seven days: o
to allow your purchase to clear; o during periods of market volatility; or o
when a shareholder's trade activity or amount adversely impacts the Fund's
ability to manage its assets. You will not accrue interest or dividends on
uncashed checks from the Fund if those checks are undeliverable and returned to
the Fund.
REDEMPTIONS FROM RETIREMENT ACCOUNTS
In the absence of your specific instructions, 10% of the value of your
redemption from a retirement account in the Fund may be withheld for taxes. This
withholding only applies to certain types of retirement accounts.
EXCHANGE PRIVILEGES
You may exchange Shares of the Fund into Class B Shares of Independence One U.S.
Government Securities Fund and Class Y Shares of Independence One Prime Money
Market Fund. Shareholders of the Fund have access to these funds ("participating
funds") through an exchange program. To execute an order to exchange, you
must: o ensure that the account registrations are identical; o meet any minimum
initial investment requirements; and o receive a prospectus for the fund into
which you wish to exchange. An exchange is treated as a redemption and a
subsequent purchase, and is a taxable transaction. The Fund may modify or
terminate the exchange privilege at any time. The Fund's management or
investment adviser may determine from the amount, frequency and pattern of
exchanges that a shareholder is engaged in excessive trading that is detrimental
to the Fund and other shareholders. If this occurs, the Fund may terminate the
availability of exchanges to that shareholder and may bar that shareholder from
purchasing other participating funds.
[graphic]
SYSTEMATIC WITHDRAWAL PROGRAM
Shareholders may automatically redeem Shares in an amount directed by the
shareholder on a regular basis. To be eligible to participate in this program, a
shareholder must have an account value of at least $10,000, other than
retirement accounts subject to required minimum distributions. To apply for
participation in this program, contact Michigan National Bank at 1-800-334-2292.
This program may reduce, and eventually deplete, your account. Payments should
not be considered yield or income.
[graphic]
ADDITIONAL CONDITIONS
TELEPHONE TRANSACTIONS
The Fund will record your telephone instructions. If the Fund does not follow
reasonable procedures, it may be liable for losses due to unauthorized or
fraudulent telephone instructions.
SHARE CERTIFICATES
The Fund does not issue share certificates.
Account and Share Information
CONFIRMATIONS AND ACCOUNT STATEMENTS
You will receive confirmation of purchases, redemptions and exchanges (except
for systematic transactions). In addition, you will receive periodic statements
reporting all account activity, including systematic transactions, dividends and
capital gains paid.
DIVIDENDS AND CAPITAL GAINS
The Fund declares and pays dividends quarterly. Dividends are paid to all
shareholders invested in the Fund on the record date. The record date is the
date on which a shareholder must officially own Shares in order to earn a
dividend. In addition, the Fund pays any capital gains at least annually. Your
dividends and capital gains distributions will be automatically reinvested in
additional Shares without a sales charge, unless you elect cash payments. If you
purchase Shares just before the Fund declares a dividend or capital gain
distribution, you will pay the full price for the Shares and then receive a
portion of the price back in the form of a taxable distribution, whether or not
you reinvest the distribution in Shares. Therefore, you should consider the tax
implications of purchasing Shares shortly before the Fund declares a dividend or
capital gain. Contact your investment professional or the Fund for information
concerning when dividends and capital gains will be paid.
ACCOUNTS WITH LOW BALANCES
Due to the high cost of maintaining accounts with low balances, non-retirement
accounts may be closed if redemptions or exchanges cause the account balance to
fall below the minimum initial investment amount. Before an account is closed,
you will be notified and allowed 30 days to purchase additional Shares to meet
the minimum.
TAX INFORMATION
The Fund sends an annual statement of your account activity to assist you in
completing your federal, state and local tax returns. Fund distributions of
dividends and capital gains are taxable to you whether paid in cash or
reinvested in the Fund. Dividends are taxable as ordinary income; capital gains
are taxable at different rates depending upon the length of time the Fund holds
its assets. Fund distributions are expected to be both dividends and capital
gains. Redemptions and exchanges are taxable sales. Please consult your tax
adviser regarding your federal, state, and local tax liability.
Who Manages the Fund?
[Logo of Michigan National]
The Board of Trustees governs the Fund. The Board selects and oversees the
Adviser, Michigan National Bank. The Adviser manages the Fund's assets,
including buying and selling portfolio securities. The Adviser's address is
27777 Inkster Road, Mail Code 10-52, Farmington Hills, Michigan, 48333-9065. The
Adviser has delegated daily management of some of the Fund's assets to a
Sub-Adviser, Sosnoff Sheridan Weiser Corporation (doing business as Sosnoff
Sheridan Group), who is paid by the Adviser and not by the Fund. Sosnoff
Sheridan Weiser Corporation is controlled by Tom Sosnoff, its Director and
President, and Scott Sheridan, its Director, Executive Vice-President and
Secretary. The Corporation's address is 440 South LaSalle Street, Suite 2301,
Chicago, Illinois 60605. Michigan National Bank, a national banking association,
is a wholly owned subsidiary of Michigan National Corporation ("MNC"). MNC is a
wholly owned subsidiary of National Australia Bank Limited, which is a
transnational banking organization, headquartered in Melbourne, Australia.
Through its subsidiaries and affiliates, MNC offers a full range of financial
services to the public, including commercial lending, depository services, cash
management, brokerage services, retail banking, mortgage banking, investment
advisory services and trust services. Independence One Capital Management
Corporation ("IOCM"), a nationally recognized investment advisory subsidiary of
MNC, provides investment advisory services for trust and other managed assets.
IOCM and the Trust Division of Michigan National Bank (the OTrust DivisionO)
have managed custodial assets totaling $9 billion. Of this amount, IOCM and the
Trust Division have investment discretion over $1.7 billion. Michigan National
Bank has managed mutual funds since May 1989. The Trust Division has managed
pools of commingled funds since 1964. Sharon Dischinger is the portfolio manager
of the Fund. Ms. Dischinger is Second Vice President and Portfolio Manager for
Michigan National Bank and Independence One Capital Management Corporation in
Farmington Hills, and has been responsible for management of the Equity Plus
Fund since its inception. Ms. Dischinger joined Michigan National in 1990 and is
currently the head equity trader. She is also a General Securities
Representative. Prior to joining Michigan National, Ms. Dischinger was the head
equity trader at Morison Asset Management. Ms. Dischinger is responsible for the
supervision of Sosnoff Sheridan Weiser CorporationOs management of the Equity
Plus Fund and Small Cap Fund portfolios. ADVISORY FEES The Adviser receives an
annual investment advisory fee equal to 0.40% of the Fund's average daily net
assets. The Adviser may voluntarily choose to waive a portion of its fee or
reimburse certain operating expenses of the Fund.
YEAR 2000 READINESS
The "Year 2000" problem is the potential for computer errors or failures because
certain computer systems may be unable to interpret dates after December 31,
1999 or experience other date-related problems. The Year 2000 problem may cause
systems to process information incorrectly and could disrupt businesses, such as
the Fund, that relies on computers. While it is impossible to determine in
advance all of the risks to the Fund, the Fund could experience interruptions in
basic financial and operational functions. Fund shareholders could experience
errors or disruptions in Fund share transactions or Fund communications. The
Fund's service providers are making changes to their computer systems to fix any
Year 2000 problems. In addition, they are working to gather information from
third-party providers to determine their Year 2000 readiness. Year 2000 problems
would also increase the risks of the Fund's investments. To assess the potential
effect of the Year 2000 problem, the Adviser is reviewing information regarding
the Year 2000 readiness of issuers of securities the Fund may purchase.
Standard & Poor's
"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 Michigan National
Bank. The Fund is not sponsored, endorsed, sold or promoted by, or affiliated
with, Standard & Poor's ("S&P"). S&P makes no representation or warranty,
express or implied, to the owners of the Fund or any member of the public
regarding the advisability of investing in securities generally or in the Fund
particularly or the ability of the Standard & Poor's 100 Index ("S&P 100 Index")
to track general stock market performance. S&P's only relationship to Michigan
National Bank (the "Licensee") is the licensing of certain trademarks and trade
names of S&P, and S&P 100 Index which are determined, composed and calculated by
S&P without regard to the Licensee or the Fund. S&P has no obligation to take
the needs of the Licensee or the owners of the Fund into consideration in the
determination of the timing of, prices at, or quantities of the Fund to be
issued or in the determination or calculation of the equation by which the Fund
is to be converted into cash. S&P has no obligation or liability in connection
with the administration, marketing or trading of the Fund. S&P does not
guarantee the accuracy and/or the completeness of the S&P 100 Index or any data
included therein. S&P makes no warranty, express or implied, As to results to be
obtained by the licensee, owners of the fund, or any other person or entity from
the use of the S&P 100 index or any data included therein in connection with the
rights licensed hereunder or for any other use. S&P makes no express or implied
warranties, and expressly disclaims all warranties or merchantability or fitness
for a particular purpose or use with respect to the S&P 100 index or any data
included therein. WITHOUT LIMITING ANY OF THE FOREGOING, IN NO EVENT SHALL S&P
HAVE ANY LIABILITY FOR ANY SPECIAL, PUNITIVE, INDIRECT OR CONSEQUENTIAL DAMAGES
(INCLUDING LOST PROFITS), EVEN IF NOTIFIED OF THE POSSIBILITY OF SUCH DAMAGES.
Financial Information
[graphic]
Financial Highlights
The Fund's fiscal year end is April 30. As this is the Fund's Class B Shares
first fiscal year, financial information is not yet available.
<PAGE>
A Statement of Additional Information (SAI) dated October 1, 1999, is
incorporated by reference into this prospectus. Additional information about the
Fund and its investments is contained in the Fund's SAI and Class Y Shares
Annual Report and will be contained in the Class B Shares Semi-Annual Report as
soon as it becomes available. The Annual Report's Management Discussion &
Analysis discusses market conditions and investment strategies that
significantly affected the Fund's performance during its last fiscal year. To
obtain the SAI, the Annual Report, Semi-Annual Report and other information
without charge, and make inquiries, call your investment professional or the
Fund at 1-800-334-2292.
You can obtain information about the Fund (including the SAI) by writing to or
visiting the Public Reference Room in Washington, D.C. You may also access fund
information from the EDGAR Database on the SEC's Internet site at
http://www.sec.gov. You can purchase copies of this information by contacting
the SEC by email at [email protected]. or by writing to the SEC's Public
Reference Section, Washington, D.C 20549-0102. Call 1-202-942-8090 for
information on the Public Reference Room's operations and copying fees.
Independence One(R)
Mutual Funds
Independence One
Equity Plus Fund
Class B Shares
800-334-2292
www.MichiganNational.com
Investment Company Act File No: 811-5752
Cusip __________
G00979-16
[Logo of Independence One Mutual Funds]
[Logo of Michigan National]
Investment Adviser
INDEPENDENCE ONE MUTUAL FUNDS
INDEPENDENCE ONE EQUITY PLUS FUND
CLASS B SHARES
STATEMENT OF ADDITIONAL INFORMATION
OCTOBER 1, 1999
This Statement of Additional Information (SAI) is not a prospectus. Read
this SAI in conjunction with the Class B Share prospectus of the Independence
One Equity Plus Fund dated October 1, 1999.
Obtain the prospectus without charge by calling 1-800-334-2292.
CONTENTS
HOW IS THE FUND ORGANIZED?.......................................2
SECURITIES IN WHICH THE FUND INVESTS.............................2
WHAT DO SHARES COST?............................................20
HOW IS THE FUND SOLD?...........................................20
EXCHANGING SECURITIES FOR FUND SHARES...........................20
SUBACCOUNTING SERVICES..........................................20
REDEMPTION IN KIND..............................................21
MASSACHUSETTS PARTNERSHIP LAW...................................21
ACCOUNT AND SHARE INFORMATION...................................21
TAX INFORMATION.................................................22
WHO MANAGES AND PROVIDES SERVICES TO THE FUND?..................23
FEES PAID BY THE FUND FOR SERVICES..............................26
HOW DOES THE FUND MEASURE PERFORMANCE?..........................27
ADDRESSES...............................................BACK COVER
Federated Securities Corp., Distributor,
subsidiary of Federated Investors, Inc.
G00979-17 (10/99)
<PAGE>
HOW IS THE FUND ORGANIZED?
Independence One Mutual Funds (Trust) is an open-end, management investment
company that was established under the laws of the Commonwealth of Massachusetts
on January 9, 1989. The Trust may offer separate series of shares representing
interests in separate portfolios of securities. The Trust currently offers nine
portfolios: Independence One Prime Money Market Fund (Class K Shares and Class Y
Shares), Independence One U.S. Treasury Money Market Fund (Class K Shares) and
Independence One Michigan Municipal Cash Fund (Class K Shares) (the "Money
Market Funds"); Independence One U.S. Government Securities Fund (Class K Shares
and Class B Shares), Independence One Fixed Income Fund (Class Y Shares) and
Independence One Michigan Municipal Bond Fund (Class Y Shares) (the "Income
Funds"); and Independence One Equity Plus Fund (Class Y Shares and Class B
Shares), Independence One Small Cap Fund (Class Y Shares) and Independence One
International Equity Fund (Class Y Shares) (the "Equity Funds"). This SAI
relates only to Class B Shares of Independence One Equity Plus Fund.
SECURITIES IN WHICH THE FUND INVESTS
In pursuing its investment strategy, the Fund may invest in the following
securities for any purpose that is consistent with its investment objective. The
following tables indicate which types of securities are a:
o P = PRINCIPAl investment of the Fund;
o A = ACCEPTABLe (but not principal) investment of the Fund; or
o N = NOT AN ACCEPTABLe investment of the Fund.
- ------------------------------ ------------
SECURITIES EQUITY
PLUS FUND
- ------------------------------ ------------
COMMON STOCKS P
- ------------------------------ ------------
PREFERRED STOCKS N
- ------------------------------ ------------
WARRANTS N
- ------------------------------ ------------
- ------------------------------ ------------
WORLD EQUITY BECHMARK SHARES N
- ------------------------------ ------------
- ------------------------------ ------------
OPTIMISED PORTFOLIOS AS N
LISTED SECURITIES
- ------------------------------ ------------
- ------------------------------ ------------
TREASURY SECURITIES A
- ------------------------------ ------------
- ------------------------------ ------------
AGENCY SECURITIES A
- ------------------------------ ------------
- ------------------------------ ------------
CORPORATE DEBT SECURITIES A
- ------------------------------ ------------
- ------------------------------ ------------
COMMERCIAL PAPER A
- ------------------------------ ------------
- ------------------------------ ------------
DEMAND INSTRUMENTS A
- ------------------------------ ------------
- ------------------------------ ------------
MUNICIPAL SECURITIES N
- ------------------------------ ------------
- ------------------------------ ------------
MORTGAGE BACKED SECURITIES N
- ------------------------------ ------------
- ------------------------------ ------------
COLLATERALIZED MORTGAGE N
OBLIGATIONS
- ------------------------------ ------------
- ------------------------------ ------------
ASSET BACKED SECURITIES N
- ------------------------------ ------------
- ------------------------------ ------------
ZERO COUPON SECURITIES N
- ------------------------------ ------------
- ------------------------------ ------------
BANK INSTRUMENTS A
- ------------------------------ ------------
- ------------------------------ ------------
CREDIT ENHANCEMENT N
- ------------------------------ ------------
- ------------------------------ ------------
CONVERTIBLE SECURITIES N
- ------------------------------ ------------
- ------------------------------ ------------
TAX EXEMPT SECURITIES N
- ------------------------------ ------------
- ------------------------------ ------------
GENERAL OBLIGATION BONDS N
- ------------------------------ ------------
- ------------------------------ ------------
SPECIAL REVENUE BONDS N
- ------------------------------ ------------
- ------------------------------ ------------
PRIVATE ACTIVITY BONDS N
- ------------------------------ ------------
- ------------------------------ ------------
MUNICIPAL NOTES N
- ------------------------------ ------------
- ------------------------------ ------------
VARIABLE RATE DEMAND N
INSTRUMENTS
- ------------------------------ ------------
- ------------------------------ ------------
MUNICIPAL LEASES N
- ------------------------------ ------------
- ------------------------------ ------------
FOREIGN SECURITIES N
- ------------------------------ ------------
- ------------------------------ ------------
FOREIGN EXCHANGE CONTRACTS N
- ------------------------------ ------------
- ------------------------------ ------------
FOREIGN GOVERNMENT SECURITIES N
- ------------------------------ ------------
- ------------------------------ ------------
DERIVATIVES A
------------
- ------------------------------ ------------
FUTURES CONTRACTS (5) A
- ------------------------------ ------------
- ------------------------------ ------------
OPTIONS (6) A
- ------------------------------ ------------
- ------------------------------ ------------
REPURCHASE AGREEMENTS A
- ------------------------------ ------------
- ------------------------------ ------------
REVERSE REPURCHASE AGREEMENTS A
- ------------------------------ ------------
- ------------------------------ ------------
DELAYED DELIVERY N
TRANSACTIONS (7)
- ------------------------------ ------------
- ------------------------------ ------------
SECURITIES LENDING A
- ------------------------------ ------------
- ------------------------------ ------------
INVESTING IN SECURITIES OF A
OTHER INVESTMENT COMPANIES
- ------------------------------ ------------
1. The value of futures contracts will not exceed 20% of the Equity Plus Fund's
total assets. The Equity Plus Fund will not enter into futures contracts and
options on futures contracts, for purposes other than "bona fide hedging" as
defined in regulations adopted by the Commodity Futures Trading Commission for
which aggregate initial margin and premiums paid for unexpired options exceed 5%
of the fair market value of the Fund's total assets. 2. The Equity Plus Fund
will not purchase options to the extent that more than 5% of the value of the
Fund's total assets would be invested in premiums on open option positions.
SECURITIES DESCRIPTIONS AND TECHNIQUES
EQUITY SECURITIES
Equity securities represent a share of an issuer's earnings and assets, after
the issuer pays its liabilities. The Fund cannot predict the income it will
receive from equity securities because issuers generally have discretion as to
the payment of any dividends or distributions. However, equity securities offer
greater potential for appreciation than many other types of securities, because
their value may increase with the value of the issuer's business. The following
describes the types of equity securities in which the Fund invests.
COMMON STOCKS
Common stocks are the most prevalent type of equity security. Common stocks
receive the issuer's earnings after the issuer pays its creditors and any
preferred stockholders. As a result, changes in an issuer's earnings may
influence the value of its common stock.
FIXED INCOME SECURITIES
Fixed income securities pay interest, dividends or distributions at a specified
rate. The rate may be a fixed percentage of the principal or adjusted
periodically. In addition, the issuer of a fixed income security must repay the
principal amount of the security, normally within a specified time. Fixed income
securities provide more regular income than equity securities. However, the
returns on fixed income securities are limited and normally do not increase with
the issuer's earnings. This limits the potential appreciation of fixed income
securities as compared to equity securities. A security's yield measures the
annual income earned on a security as a percentage of its price. A security's
yield will increase or decrease depending upon whether it costs less (a
discount) or more (a premium) than the principal amount. If the issuer may
redeem the security before its scheduled maturity, the price and yield on a
discount or premium security may change based upon the probability of an early
redemption. Securities with higher risks generally have higher yields. The
following describes the types of fixed income securities in which the Fund may
invest.
TREASURY SECURITIES
Treasury securities are direct obligations of the federal government of the
United States. Treasury securities are generally regarded as having the
lowest credit risks. AGENCY SECURITIES Agency securities are issued or
guaranteed by a federal agency or other government sponsored entity acting
under federal authority (a GSE). The United States supports some GSEs with
its full faith and credit. Other GSEs receive support through federal
subsidies, loans or other benefits. A few GSEs have no explicit financial
support, but are regarded as having implied support because the federal
government sponsors their activities. Agency securities are generally
regarded as having low
credit risks, but not as low as treasury securities.
The Fund treats mortgage backed securities guaranteed by GSEs as agency
securities. Although a GSE guarantee protects against credit risks, it does not
reduce the market and prepayment risks of these mortgage
CORPORATE DEBT SECURITIES
Corporate debt securities are fixed income securities issued by businesses.
Notes, bonds, debentures and commercial paper are the most prevalent types
of corporate debt securities. The Fund may also purchase interests in bank
loans to companies. The credit risks of corporate debt securities vary
widely among issuers. In addition, the credit risk of an issuer's debt
security may vary based on its priority for repayment. For example, higher
ranking (senior) debt securities have a higher priority than lower ranking
(subordinated) securities. This means that the issuer might not make
payments on subordinated securities while continuing to make payments on
senior securities. In addition, in the event of bankruptcy, holders of
senior securities may receive amounts otherwise payable to the holders of
subordinated securities. Some subordinated securities, such as trust
preferred and capital securities notes, also permit the issuer to defer
payments under certain circumstances. For example, insurance companies issue
securities known as surplus notes that permit the insurance company to defer
any payment that would reduce its capital below regulatory requirements.
COMMERCIAL PAPER
Commercial paper is an issuer's obligation with a maturity of less than
nine months. Companies typically issue commercial paper to pay for
current expenditures. Most issuers constantly reissue their commercial
paper and use the proceeds (or bank loans) to repay maturing paper. If
the issuer cannot continue to obtain liquidity in this fashion, its
commercial paper may default.
DEMAND INSTRUMENTS Demand instruments are corporate debt securities that
the issuer must repay upon demand. Other demand instruments require a third
party, such as a dealer or bank, to repurchase the security for its face value
upon demand. The Fund treats demand instruments as short-term securities, even
though their stated maturity may extend beyond one year.
BANK INSTRUMENTS
Bank instruments are unsecured interest bearing deposits with banks. Bank
instruments include bank accounts, time deposits, certificates of deposit and
banker's acceptances. Yankee instruments are denominated in U.S. dollars and
issued by U.S. branches of foreign banks. Eurodollar instruments are denominated
in U.S. dollars and issued by non-U.S. branches of U.S. or foreign banks.
DERIVATIVE CONTRACTS Derivative contracts are financial instruments that require
payments based upon changes in the values of designated (or underlying)
securities, currencies, commodities, financial indices or other assets. Some
derivative contracts (such as futures, forwards and options) require payments
relating to a future trade involving the underlying asset. Other derivative
contracts (such as swaps) require payments relating to the income or returns
from the underlying asset. The other party to a derivative contract is referred
to as a counterparty. Many derivative contracts are traded on securities or
commodities exchanges. In this case, the exchange sets all the terms of the
contract except for the price. Investors make payments due under their contracts
through the exchange. Most exchanges require investors to maintain margin
accounts through their brokers to cover their potential obligations to the
exchange. Parties to the contract make (or collect) daily payments to the margin
accounts to reflect losses (or gains) in the value of their contracts. This
protects investors against potential defaults by the counterparty. Trading
contracts on an exchange also allows investors to close out their contracts by
entering into offsetting contracts. For example, the Fund could close out an
open contract to buy an asset at a future date by entering into an offsetting
contract to sell the same asset on the same date. If the offsetting sale price
is more than the original purchase price, the Fund realizes a gain; if it is
less, the Fund realizes a loss. Exchanges may limit the amount of open contracts
permitted at any one time. Such limits may prevent the Fund from closing out a
position. If this happens, the Fund will be required to keep the contract open
(even if it is losing money on the contract), and to make any payments required
under the contract (even if it has to sell portfolio securities at unfavorable
prices to do so). Inability to close out a contract could also harm the Fund by
preventing it from disposing of or trading any assets it has been using to
secure its obligations under the contract. The Fund may also trade derivative
contracts over-the-counter (OTC) in transactions negotiated directly between the
Fund and the counterparty. OTC contracts do not necessarily have standard terms,
so they cannot be directly offset with other OTC contracts. In addition, OTC
contracts with more specialized terms may be more difficult to price than
exchange traded contracts. Depending upon how the Fund uses derivative contracts
and the relationships between the market value of a derivative contract and the
underlying asset, derivative contracts may increase or decrease the Fund's
exposure to market and currency risks, and may also expose the Fund to liquidity
and leverage risks. OTC contracts also expose the Fund to credit risks in the
event that a counterparty defaults on the contract. The Fund may trade in the
following types of derivative contracts.
FUTURES CONTRACTS
Futures contracts provide for the future sale by one party and purchase by
another party of a specified amount of an underlying asset at a specified
price, date, and time. Entering into a contract to buy an underlying asset
is commonly referred to as buying a contract or holding a long position in
the asset. Entering into a contract to sell an underlying asset is commonly
referred to as selling a contract or holding a short position in the asset.
The Fund may buy and sell stock index futures contracts, financial futures
and futures on portfolio securities.
OPTIONS
Options are rights to buy or sell an underlying asset for a specified price
(the exercise price) during, or at the end of, a specified period. A call option
gives the holder (buyer) the right to buy the underlying asset from the seller
(writer) of the option. A put option gives the holder the right to sell the
underlying asset to the writer of the option. The writer of the option receives
a payment, or premium, from the buyer, which the writer keeps regardless of
whether the buyer uses (or exercises) the option. The Fund may: Buy call options
on portfolio securities and on stock index and financial futures contracts in
anticipation of an increase in the value of the underlying asset; Buy put
options on portfolio securities and on stock index and financial futures
contracts in anticipation of a decrease in the value of the underlying asset;
and Buy or write options to close out existing options positions. The Fund may
also write call options on portfolio securities to generate income from
premiums, and in anticipation of a decrease or only limited increase in the
value of the underlying asset. If a call written by the Fund is exercised, the
Fund foregoes any possible profit from an increase in the market price of the
underlying asset over the exercise price plus the premium received. When the
Fund writes options on futures contracts, it will be subject to margin
requirements similar to those applied to futures contracts.
SPECIAL TRANSACTIONS
REPURCHASE AGREEMENTS
Repurchase agreements are transactions in which the Fund buys a security
from a dealer or bank and agree to sell the security back at a mutually agreed
upon time and price. The repurchase price exceeds the sale price, reflecting the
Fund's return on the transaction. This return is unrelated to the interest rate
on the underlying security. The Fund will enter into repurchase agreements only
with banks and other recognized financial institutions, such as securities
dealers, deemed creditworthy by the Adviser. The Fund's custodian or
subcustodian will take possession of the securities subject to repurchase
agreements. The Adviser or subcustodian will monitor the value of the underlying
security each day to ensure that the value of the security always equals or
exceeds the repurchase price. Repurchase agreements are subject to counterparty
risks.
REVERSE REPURCHASE AGREEMENTS Reverse repurchase agreements are repurchase
agreements in which the Fund is the seller (rather than the buyer) of the
securities, and agrees to repurchase them at an agreed upon time and price. A
reverse repurchase agreement may be viewed as a type of borrowing by the Fund.
Reverse repurchase agreements are subject to counterparty risks.
SECURITIES LENDING The Fund may lend portfolio securities to borrowers that
the Adviser deems creditworthy. In return, the Fund receives cash or liquid
securities from the borrower as collateral. The borrower must furnish additional
collateral if the market value of the loaned securities increases. Also, the
borrower must pay the Fund the equivalent of any dividends or interest received
on the loaned securities. The Fund will reinvest cash collateral in securities
that qualify as an acceptable investment for the Fund. However, the Fund must
pay interest to the borrower for the use of cash collateral. Loans are subject
to termination at the option of the Fund or the borrower. The Fund will not have
the right to vote on securities while they are on loan, but they will terminate
a loan in anticipation of any important vote. The Fund may pay administrative
and custodial fees in connection with a loan and may pay a negotiated portion of
the interest earned on the cash collateral to a securities lending agent or
broker. Securities lending activities are subject to market risks and
counterparty risks. These transactions create leverage risks.
ASSET COVERAGE In order to secure their obligations in connection with
derivatives contracts or special transactions, the Fund will either own the
underlying assets, enter into an offsetting transaction or set aside readily
marketable securities with a value that equals or exceeds the Fund's
obligations. Unless the Fund has other readily marketable assets to set aside,
it cannot trade assets used to secure such obligations without entering into an
offsetting derivative contract or terminating a special transaction. This may
cause the Fund to miss favorable trading opportunities or to realize losses on
derivative contracts or special transactions.
INVESTING IN SECURITIES OF OTHER INVESTMENT COMPANIES
The Fund may invest its assets in securities of other investment companies,
including the securities of affiliated money market funds, as an efficient means
of carrying out its investment policies and managing its uninvested cash.
INVESTMENT RISKS
There are many factors which may affect an investment in the Fund. The Fund's
risks are described below.
STOCK MARKET RISKS
o The value of equity securities in a Fund's portfolio will rise and fall.
These fluctuations could be a sustained trend or a drastic movement. A
Fund's portfolio will reflect changes in prices of individual portfolio
stocks or general changes in stock valuations. Consequently, the Fund's
share price may decline.
o The Adviser attempts to manage market risk by limiting the amount the Fund
invests in each company's equity securities. However, diversification will
not protect the Fund against widespread or prolonged declines in the stock
market.
INVESTMENT LIMITATIONS
SELLING SHORT AND BUYING ON MARGIN
The Fund will not sell any securities short or purchase any securities on
margin but may obtain such short- term credits as may be necessary for
clearance of transactions. The deposit or payment by the Fund of initial or
variation margin in connection with financial futures contracts or related
options transactions is not considered the purchase of a security on margin.
ISSUING SENIOR SECURITIES AND BORROWING MONEY
The Fund will not issue senior securities except that the Fund may borrow
money and engage in reverse repurchase agreements in amounts up to one-third
of the value of its total assets, including the amount borrowed. The Fund
will not borrow money or engage in reverse repurchase agreements for
investment leverage, but rather as a temporary, extraordinary, or emergency
measure or to facilitate management of the portfolio by enabling the Fund to
meet redemption requests when the liquidation of portfolio securities is
deemed to be inconvenient or disadvantageous. The Fund will not purchase any
securities while borrowings in excess of 5% of the value of the Fund's total
assets are outstanding.
CONCENTRATION OF INVESTMENTS
The Fund will not invest 25% or more of the value of its total assets in any
one industry, except that the Fund may invest 25% or more of the value of
its total assets in securities issued or guaranteed by the U.S. government,
its agencies or instrumentalities, and repurchase agreements collateralized
by such securities.
UNDERWRITING
The Fund will not underwrite any issue of securities, except as it may be
deemed to be an underwriter under the Securities Act of 1933 in connection with
the sale of securities in accordance with its investment objective, policies,
and limitations.
LENDING CASH OR SECURITIES
The Fund will not lend any of its assets except portfolio securities up to
one-third of the value of its total assets. This shall not prevent the Fund
from purchasing U.S. government obligations, money market instruments,
bonds, debentures, notes, certificates of indebtedness, or other debt
securities, entering into repurchase agreements, or engaging in other
transactions where permitted by the Fund's investment objective, policies
and limitations.
PLEDGING ASSETS
The Fund will not mortgage, pledge, or hypothecate any assets except to
secure permitted borrowings. For the purpose of this limitation, the
following are not deemed to be pledges: margin deposits for the purchase and
sale of futures contracts and related options, and segregation or collateral
arrangements made in connection with options activities.
INVESTING IN REAL ESTATE
The Fund will not purchase or sell real estate, including limited
partnership interests, although it may invest in the securities of issuers
whose business involves the purchase or sale of real estate or in securities
which are secured by real estate or interests in real estate.
INVESTING IN COMMODITIES, COMMODITY CONTRACTS, OR COMMODITY FUTURES CONTRACTS
The Fund will not purchase or sell commodities, commodity contracts, or
commodity futures contracts except to the extent that the Fund may engage in
transactions involving futures contracts and related options.
DIVERSIFICATION OF INVESTMENTS
With respect to securities comprising 75% of the value of its assets, the
Fund will not purchase securities of any one issuer (other than securities
issued or guaranteed by the government of the United States or its agencies
or instrumentalities) if, as a result, more than 5% of the value of its
total assets would be invested in the securities of that issuer. Also, the
Fund will not acquire more than 10% of the outstanding voting securities of
any one issuer.
The above Investment Limitations cannot be changed unless authorized by the
"vote of a majority of its outstanding voting securities," as defined by the
Investment Company Act. The following limitations, however, may be changed by
the Board of Trustees (Board) without shareholder approval. Shareholders will be
notified before any material change in these limitations becomes effective.
INVESTING IN RESTRICTED AND ILLIQUID SECURITIES
The Fund will not invest more than 15% of the value of its net assets in
illiquid obligations, including repurchase agreements providing for
settlement in more than seven days after notice, over-the-counter options,
certain restricted securities not determined by the Trustees to be liquid,
and non-negotiable fixed time deposits with maturities over seven days.
INVESTING IN SECURITIES OF OTHER INVESTMENT COMPANIES
The Fund can acquire up to 3 % of the total outstanding stock of other
investment companies, and may invest in the securities of affiliated money
market funds as an efficient means of managing the Fund's uninvested cash.
The Fund will not be subject to any other limitations with regard to the
acquisition of securities of other investment companies so long as the
public offering price of the Fund's shares does not include a sales charge
exceeding 1 1/2 %. However, these limitations are not applicable if the
securities are acquired in a merger, consolidation, reorganization, or
acquisition of assets. It should be noted that investment companies incur
certain expenses, such as investment advisory, custodian and transfer agent
fees, and therefore, any investment by the Fund in shares of another
investment company would be subject to such duplicate expenses.
INVESTING IN PUT OPTIONS
The Fund will not purchase put options on securities unless the securities
are held in the Fund's portfolio and not more than 5% of the value of the
Fund's total assets would be invested in premiums on open put option
positions.
WRITING COVERED CALL OPTIONS
The Fund will not write call options on securities unless the securities are
held in the Fund's portfolio or unless the Fund is entitled to them in
deliverable form without further payment or after segregating cash in the
amount of any further payment.
PURCHASING SECURITIES TO EXERCISE CONTROL
The Fund will not purchase securities of a company for purpose of exercising
control or management.
Except with respect to borrowing money, if a percentage limitation is adhered to
at the time of investment, a later increase or decrease in percentage resulting
from any change in value or net assets will not result in a violation of such
restriction. For purposes its policies and limitations, the Fund considers
certificates of deposit and demand and time deposits issued by a U.S. branch of
a domestic bank or savings association having capital, surplus, and undivided
profits in excess of $100,000,000 at the time of investment to be "cash items."
DETERMINING MARKET VALUE OF SECURITIES
Market values of the Fund's portfolio securities are determined as follows:
for equity securities, according to the last sale price in the market in
which they are primarily traded (either a national securities exchange or the
over-the-counter market), if available;
in the absence of recorded sales for equity securities, according to the
mean between the last closing bid and asked prices;
for bonds and other fixed income securities, at the last sale price on a
national securities exchange, if available, otherwise, as determined by an
independent pricing service;
o futures contracts and options are valued at market values established by
the exchanges on which they are traded at the close of trading on such
exchanges. Options traded in the over-the-counter market are valued according to
the mean between the last bid and the last asked price for the option as
provided by an investment dealer or other financial institution that deals in
the option. The Board may determine in good faith that another method of valuing
such investments is necessary to appraise their fair market value;
for short-term obligations, according to the mean between bid and asked
prices as furnished by an independent pricing service, except that short-term
obligations with remaining maturities of less than 60 days at the time of
purchase may be valued at amortized cost or at fair market value as determined
in good faith by the Board; and
for all other securities at fair value as determined in good faith by the
Board.
Prices provided by independent pricing services may be determined without
relying exclusively on quoted prices and may consider institutional trading in
similar groups of securities, yield, quality, stability, risk, coupon rate,
maturity, type of issue, trading characteristics, and other market data or
factors. From time to time, when prices cannot be obtained from an independent
pricing service, securities may be valued based on quotes from broker-dealers or
other financial institutions that trade the securities.
WHAT DO SHARES COST?
You can purchase, redeem or exchange Fund shares any day the New York Stock
Exchange (NYSE) is open. The Fund's net asset value (NAV) per Shares fluctuates
and is based on the market value of all securities and other assets of the Fund.
The NAV for each class of Shares may differ due to the variance in daily net
income realized by each class. Such variance will reflect only accrued net
income to which the shareholders of a particular class are entitled.
REDUCING OR ELIMINATING THE CONTINGENT DEFERRED SALES CHARGE
These reductions or eliminations are offered because: no sales commissions have
been advanced to the investment professional selling Shares; the shareholder has
already paid a Contingent Deferred Sales Charge (CDSC); or nominal sales efforts
are associated with the original purchase of Shares.
Upon notification to the Distributor or the Fund's transfer agent, no CDSC will
be imposed on redemptions:
o following the death or post-purchase disability, as defined in Section
72(m)(7) of the Internal Revenue Code of 1986, of the last surviving
shareholder;
o representing minimum required distributions from an Individual Retirement
Account or other retirement plan to a shareholder who has attained the age
of 70 1/2;
o of Shares that represent a reinvestment of dividends and capital gains;
o of Shares originally purchased through a bank trust department, a
registered investment adviser or retirement plans where the third party
administrator has entered into certain arrangements with the Distributor or
its affiliates, or any other investment professional, to the extent that no
payments were advanced for purchases made through these entities;
o representing a portion of proceeds attributable to increases in value of
the account due to increases in the net asset value per share;
o which are involuntary redemptions processed by the Fund because the
accounts do not meet the minimum balance requirements; and
o which are qualifying redemptions of Class B Shares under a Systematic
Withdrawal Program.
HOW IS THE FUND SOLD?
Under the Distributor's Contract with the Fund, the Distributor (Federated
Securities Corp.) offers Shares on a continuous, best-efforts basis.
RULE 12B-1 PLAN (CLASS B SHARES)
As a compensation-type plan, the Rule 12b-1 Plan is designed to pay the
Distributor (who may then pay investment professionals such as banks,
broker/dealers, trust departments of banks, and registered investment advisers)
for marketing activities (such as advertising, printing and distributing
prospectuses, and providing incentives to investment professionals) to promote
sales of Shares so that overall Fund assets are maintained or increased. This
helps the Fund achieve economies of scale, reduce per share expenses, and
provide cash for orderly portfolio management and Share redemptions. In
addition, the Fund's service providers that receive asset-based fees also
benefit from stable or increasing Fund assets. The Fund may compensate the
Distributor more or less than its actual marketing expenses. In no event will
the Fund pay for any expenses of the Distributor that exceed the maximum Rule
12b-1 Plan fee.
The maximum Rule 12b-1 Plan fee that can be paid in any one year may not be
sufficient to cover the marketing-related expenses the Distributor has incurred.
Therefore, it may take the Distributor a number of years to recoup these
expenses.
SHAREHOLDER SERVICES
The Fund may pay Federated Shareholder Services Company, a subsidiary of
Federated Investors, Inc. (Federated), for providing shareholder services and
maintaining shareholder accounts. Federated Shareholder Services Company may
select others to perform these services for their customers and may pay them
fees.
EXCHANGING SECURITIES FOR FUND SHARES
You may contact the Distributor to request a purchase of Class B Shares of
Independence One U.S. Government Securities Fund or Class A Shares of
Independence One Prime Money Market Fund in exchange for securities you own. The
Fund reserves the right to determine whether to accept your securities and the
minimum market value to accept. The Fund will value your securities in the same
manner as they value their assets. This exchange is treated as a sale of your
securities for federal tax purposes.
SUBACCOUNTING SERVICES
Certain investment professionals may wish to use the transfer agent's
subaccounting system to minimize their internal recordkeeping requirements. The
transfer agent may charge a fee based on the level of subaccounting services
rendered. Investment professionals holding Shares in a fiduciary, agency,
custodial, or similar capacity may charge or pass through subaccounting fees as
part of or in addition to normal trust or agency account fees. They may also
charge fees for other services that may be related to the ownership of Shares.
This information should, therefore, be read together with any agreement between
the customer and the investment professional about the services provided, the
fees charged for those services, and any restrictions and limitations imposed.
REDEMPTION IN KIND
Although the Fund intends to pay Share redemptions in cash, it reserves the
right, as described below, to pay the redemption price in whole or in part by a
distribution of the Fund's portfolio securities.
Because the Fund has elected to be governed by Rule 18f-1 under the Investment
Company Act of 1940, the Fund is obligated to pay Share redemptions to any one
shareholder in cash only up to the lesser of $250,000 or 1% of the net assets
represented by such Share class during any 90-day period.
Any Share redemption payment greater than this amount will also be in cash
unless the Fund's Board determines that payment should be in kind. In such a
case, the Fund will pay all or a portion of the remainder of the redemption in
portfolio securities, valued in the same way as the Fund determines its NAV. The
portfolio securities will be selected in a manner that the Fund's Board deems
fair and equitable and, to the extent available, such securities will be readily
marketable.
Redemption in kind is not as liquid as a cash redemption. If redemption is made
in kind, shareholders receiving the portfolio securities and selling them before
their maturity could receive less than the redemption value of the securities
and could incur certain transaction costs.
MASSACHUSETTS PARTNERSHIP LAW
Under certain circumstances, shareholders may be held personally liable as
partners under Massachusetts law for obligations of the Trust. To protect its
shareholders, the Trust has filed legal documents with Massachusetts that
expressly disclaim the liability of its shareholders for acts or obligations of
the Trust.
In the unlikely event a shareholder is held personally liable for the Trust's
obligations, the Trust is required by the Declaration of Trust to use its
property to protect or compensate the shareholder. On request, the Trust will
defend any claim made and pay any judgment against a shareholder for any act or
obligation of the Trust. Therefore, financial loss resulting from liability as a
shareholder will occur only if the Trust itself cannot meet its obligations to
indemnify shareholders and pay judgments against them.
ACCOUNT AND SHARE INFORMATION
VOTING RIGHTS
Each share of the Fund gives the shareholder one vote in Trustee elections and
other matters submitted to shareholders for vote. All Shares of the Trust have
equal voting rights, except that in matters affecting only a particular Fund
class are entitled to vote.
Trustees may be removed by the Board or by shareholders at a special meeting. A
special meeting of shareholders will be called by the Board upon the written
request of shareholders who own at least 10% of the Trust's outstanding shares
of all series entitled to vote.
As of September 16, 1999, the following shareholders owned of record,
beneficially, or both, 5% or more of outstanding Class Y Shares:
Pierson & Co., Farmington Hills, MI, owned approximately 6,245,874 Class Y
Shares (46.18%).
TAX INFORMATION
FEDERAL INCOME TAX
The Fund intends to meet requirements of Subchapter M of the Internal Revenue
Code applicable to regulated investment companies. If these requirements are not
met, they will not receive special tax treatment and will pay federal income
tax.
The Fund will be treated as a single, separate entity for federal income tax
purposes so that income earned and capital gains and losses realized by the
Trust's other portfolios will be separate from those realized by the Fund.
WHO MANAGES AND PROVIDES SERVICES TO THE FUND?
BOARD OF TRUSTEES
The Board is responsible for managing the Trust's business affairs and for
exercising all the Trust's powers except those reserved for the shareholders.
Information about each Board member is provided below and includes each
person's: name, address, birth date, present position(s) held with the Trust,
principal occupations for the past five years and positions held prior to the
past five years, total compensation received as a Trustee from the Trust for its
most recent fiscal year. The Trust is comprised of nine funds.
As of September 16, 1999, the Fund's Board and Officers as a group owned less
than 1% of the Fund's outstanding Shares.
An asterisk (*) denotes a Trustee who is deemed to be an interested person as
defined in the Investment Company Act of 1940. A pound sign (#) denotes a Member
of the Board's Executive Committee, which handles the Board's responsibilities
between its meetings.
<TABLE>
<CAPTION>
NAME AGGREGATE
BIRTH DATE COMPENSATION
ADDRESS FROM TRUST
POSITION WITH TRUST PRINCIPAL OCCUPATIONS
FOR PAST FIVE YEARS
<S> <C> <C>
ROBERT E. BAKER Retired; formerly, Vice Chairman, Chrysler $12,000
Birth Date: May 6, 1930 Financial Corporation.
4327 Stoneleigh Road
Bloomfield Hills, MI
TRUSTEE
HAROLD BERRY Managing Partner, Berry Enterprises; $12,000
Birth Date: September Chairman, Independent Sprinkler Companies,
17, 1925 Inc.; Chairman, Berry Ziegelman & Company.
290 Franklin Center
29100 Northwestern
Highway
Southfield, MI
TRUSTEE
NATHAN FORBES* President, Forbes/Cohen Properties, President $12,000
Birth Date: December 5, and Partner, The Forbes Company.
1962
1945 Long Point Drive
Bloomfield Hills, MI
TRUSTEE
HARRY J. NEDERLANDER# Chairman, Nederlander Enterprises $10,800
Birth Date: September
5, 1917
231 S. Old Woodward,
Suite 219
Birmingham, MI
TRUSTEE
THOMAS S. WILSON# President and Executive Administrator of the $12,000
Birth Date: October 8, Detroit Pistons; President and CEO, Palace
1949 Sports Entertainment.
Two Championship Drive
Auburn Hills, MI
TRUSTEE
EDWARD C. GONZALES Trustee or Director of some of the Funds in
Birth Date: October 22, the Federated Fund Complex; President, $0
1930 Executive Vice President and Treasurer of
Federated Investors some of the Funds in the Federated Fund
Tower Complex; Vice Chairman, Federated Investors,
1001 Liberty Avenue Inc.; Vice President, Federated Investment
Pittsburgh, PA Management Company and Federated Investment
PRESIDENT AND TREASURER Counseling, Federated Global Investment
Management Corp. and Passport Research, Ltd.;
Executive Vice President and Director,
Federated Securities Corp.; Trustee,
Federated Shareholder Services Company.
JEFFREY W. STERLING Treasurer of the Federated Fund Complex; Vice $0
Birth Date: February 5, President - Funds Financial Services
1947 Division, Federated Investors, Inc.;
Federated Investors formerly: various management positions within
Tower Funds Financial Services Division of
1001 Liberty Avenue Federated Investors, Inc.
Pittsburgh, PA
VICE PRESIDENT AND
ASSISTANT TREASURER
C. GRANT ANDERSON Corporate Counsel, Federated Investors, Inc. $0
Birth Date: November 6,
1940
Federated Investors
Tower
1001 Liberty Avenue
Pittsburgh, PA
SECRETARY
</TABLE>
INVESTMENT ADVISER
The Adviser conducts investment research and makes investment decisions for the
Fund.
The Adviser shall not be liable to the Trust or any Fund shareholder for any
losses that may be sustained in the purchase, holding, or sale of any security
or for anything done or omitted by it, except acts or omissions involving
willful misfeasance, bad faith, gross negligence, or reckless disregard of the
duties imposed upon it by its contract with the Trust.
OTHER RELATED SERVICES
Affiliates of the Adviser may, from time to time, provide certain electronic
equipment and software to institutional customers in order to facilitate the
purchase of Fund Shares offered by the Distributor.
BROKERAGE TRANSACTIONS
When selecting brokers and dealers to handle the purchase and sale of portfolio
instruments, the Adviser looks for prompt execution of the order at a favorable
price. The Adviser will generally use those who are recognized dealers in
specific portfolio instruments, except when a better price and execution of the
order can be obtained elsewhere. The Adviser may select brokers and dealers
based on whether they also offer research services (as described below). In
selecting among firms believed to meet these criteria, the Adviser may give
consideration to those firms which have sold or are selling Shares of the Fund
and other funds distributed by the Distributor and its affiliates. The Adviser
makes decisions on portfolio transactions and selects brokers and dealers
subject to review by the Fund's Board.
RESEARCH SERVICES
Research services may include advice as to the advisability of investing in
securities; security analysis and reports; economic studies; industry studies;
receipt of quotations for portfolio evaluations; and similar services. Research
services may be used by the Adviser in advising other accounts. To the extent
that receipt of these services may replace services for which the Adviser or its
affiliates might otherwise have paid, it would tend to reduce their expenses.
The Adviser and its affiliates exercise reasonable business judgment in
selecting those brokers who offer brokerage and research services to execute
securities transactions. They determine in good faith that commissions charged
by such persons are reasonable in relationship to the value of the brokerage and
research services provided.
For the fiscal years ended April 30, 1999, 1998 and 1997, Class Y Shares of
the Equity Plus Fund paid total brokerage commissions of $56,051 $20,319 and
$26,727, respectively.
Investment decisions for the Fund are made independently from those of other
accounts managed by the Adviser. When the Fund and one or more of those accounts
invests in, or disposes of, the same security, available investments or
opportunities for sales will be allocated among the Fund and the account(s) in a
manner believed by the Adviser to be equitable. While the coordination and
ability to participate in volume transactions may benefit the Fund, it is
possible that this procedure could adversely impact the price paid or received
and/or the position obtained or disposed of by the Fund.
ADMINISTRATOR
Federated Administrative Services, a subsidiary of Federated, provides
administrative personnel and services (including certain legal and financial
reporting services) necessary to operate the Fund. Federated Administrative
Services provides these at the following annual rate of the average aggregate
daily net assets of the Trust as specified below:
MAXIMUM ADMINISTRATIVE AVERAGE AGGREGATE DAILY NET ASSETS OF THE TRUST
FEE
0.150 of 1% on the first $250 million
0.125 of 1% on the next $250 million
0.100 of 1% on the next $250 million
0.075 of 1% on assets in excess of $750 million
The administrative fee received during any fiscal year shall be at least
$50,000 per portfolio. Federated Administrative Services may voluntarily waive a
portion of its fee and may reimburse the Fund for expenses.
Federated Administrative Services also provides certain accounting and
recordkeeping services with respect to the Fund's portfolio investments for a
fee based on the Fund's assets plus out-of-pocket expenses.
CUSTODIAN
Michigan National Bank, Farmington Hills, Michigan, is custodian for the
securities and cash of the Fund. Under the Custodian Agreement, Michigan
National Bank holds the Fund's portfolio securities in safekeeping and keeps all
necessary records and documents relating to its duties.
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT
Federated Services Company, through its registered transfer agent subsidiary,
Federated Shareholder Services Company, maintains all necessary shareholder
records. The Fund pays the transfer agent a fee based on the size, type, and
number of accounts and transactions made by shareholders.
INDEPENDENT AUDITORS
The independent auditor for the Fund, KPMG LLP, plans and performs their audit
so that it may provide an opinion as to whether the Fund's financial statements
and financial highlights are free of material mistatements.
FEES PAID BY THE FUND FOR SERVICES
<TABLE>
<CAPTION>
<S> <C> <C> <C>
- -------------------- --------------------------------- ------------------------- ----------------------------
CLASS Y SHARES ADVISORY FEE PAID/ SUB-ADVISORY FEE PAID/ ADMINISTRATIVE FEE PAID/
ADVISORY FEE WAIVED SUB-ADVISORY FEE WAIVED ADMINISTRATIVE FEE WAIVED
------------------------- ----------------------------
--------------------------------- ------------------------- ----------------------------
FOR THE FISCAL YEAR ENDED FOR THE FISCAL YEAR FOR THE FISCAL YEAR ENDED
APRIL 30, ENDED APRIL 30,
APRIL 30,
--------------------------------- ------------------------- ----------------------------
-----------------------------------------------------------------------------------------
1999 1998 1997 1999 1998 1997 1999 1998 1997
- -------------------------------------------------------------------------------------------------------------
EQUITY PLUS FUND $946,337/ $758,348/ $588,469/ $85,083/$$65,680/ $50,260/$241,610/ $202,102/$160,370/
$259,906 $284,380 $262,493 $0 $0 $0 $80,996 $88,264
- -------------------------------------------------------------------------------------------------------------
</TABLE>
Fees are allocated among classes based on their pro rata share of Fund assets,
except for marketing (Rule 12b-1) fees and shareholder services fees, which are
borne only by the applicable class of Shares.
HOW DOES THE FUND MEASURE PERFORMANCE?
The Fund may advertise Share performance by using the Securities and Exchange
Commission's (SEC) standard method for calculating performance applicable to all
mutual funds. The SEC also permits this standard performance information to be
accompanied by non-standard performance information.
Share performance reflects the effect of non-recurring charges, such as maximum
sales charges, which, if excluded, would increase the total return and yield.
The performance of Shares depends upon such variables as: portfolio quality;
average portfolio maturity; type and value of portfolio securities; changes in
interest rates; changes or differences in the Fund's or any class of Shares'
expenses; and various other factors.
Share performance fluctuates on a daily basis largely because net earnings
fluctuate daily. Both net earnings and offering price per Share are factors in
the computation of yield and total return.
TOTAL RETURN
Total return represents the change (expressed as a percentage) in the value
of Shares over a specific period of time, and includes the investment of income
and capital gains distributions.
The average annual total return for Shares is the average compounded rate of
return for a given period that would equate a $1,000 initial investment to the
ending redeemable value of that investment. The ending redeemable value is
computed by multiplying the number of Shares owned at the end of the period by
the NAV per Share at the end of the period. The number of Shares owned at the
end of the period is based on the number of Shares purchased at the beginning of
the period with $1,000, less any applicable sales charge, adjusted over the
period by any additional Shares, assuming the annual reinvestment of all
dividends and distributions.
When Shares of a Fund are in existence for less than a year, the Fund
may advertise cumulative total return for that specific period of time, rather
than annualizing the total return.
YIELD
The yield of Shares is calculated by dividing: (i) the net investment income per
Share earned by the Shares over a 30-day period; by (ii) the maximum offering
price per Share on the last day of the period. This number is then annualized
using semi-annual compounding. This means that the amount of income generated
during the 30-day period is assumed to be generated each month over a 12-month
period and is reinvested every six months. The effective yield is calculated by
compounding the unannualized base-period return by: adding one to the
base-period return, raising the sum to the 365/7th power; and subtracting one
from the result. The yield and effective yield do not necessarily reflect income
actually earned by Shares because of certain adjustments required by the SEC
and, therefore, may not correlate to the dividends or other distributions paid
to shareholders.
To the extent investment professionals and broker/dealers charge fees in
connection with services provided in conjunction with an investment in Shares,
the Share performance is lower for shareholders paying those fees.
PERFORMANCE COMPARISONS
Advertising and sales literature may include:
o references to ratings, rankings, and financial publications and/or
performance comparisons of Shares to certain indices;
o charts, graphs and illustrations using the Fund's returns, or returns in
general, that demonstrate investment concepts such as tax-deferred
compounding, dollar-cost averaging and systematic investment;
o discussions of economic, financial and political developments and their
impact on the securities market, including the portfolio manager's views on
how such developments could impact the Fund; and
o information about the mutual fund industry from sources such as the
Investment Company Institute.
The Fund may compare its performance, or performance for the types of securities
in which they invest, to a variety of other investments, including federally
insured bank products such as bank savings accounts, certificates of deposit,
and Treasury bills.
The Fund may quote information from reliable sources regarding individual
countries and regions, world stock exchanges, and economic and demographic
statistics.
You may use financial publications and/or indices to obtain a more complete view
of Share performance. When comparing performance, you should consider all
relevant factors such as the composition of the index used, prevailing market
conditions, portfolio compositions of other funds, and methods used to value
portfolio securities and compute offering price. The financial publications
and/or indices which the Fund uses in advertising may include:
STANDARD & POOR'S COMPOSITE INDEX OF 500 STOCKS, STANDARD & POOR'S 100 INDEX AND
STANDARD & POOR'S SMALLCAP 600 COMPOSITE STOCK PRICE INDEX, which are
composite indices of common stocks in industry, transportation, and financial
and public utility companies, can be compared to the total returns of funds
whose portfolios are invested primarily in common stocks. In addition, the
Standard & Poor's indices assume reinvestment of all dividends paid by stocks
listed on the index. Taxes due on any of these distributions are not
included, nor are brokerage or other fees calculated in Standard & Poor's
figures.
o LIPPER ANALYTICAL SERVICES, INc. ranks funds in various fund categories by
making comparative calculations using total return. Total return assumes the
reinvestment of all capital gains distributions and income dividends and
takes into account any change in the maximum offering price over a specific
period of time. From time to time, the Fund will quote its Lipper ranking and
category in advertising and sales literature.
o MORNINGSTAR, INc. is an independent rating service, is the publisher of the
bi-weekly MUTUAL FUND VALUEs. MUTUAL FUND VALUEs rates more than 1,000
NASDAQ-listed mutual funds of all types, according to their risk-adjusted
returns. The maximum rating is five stars, and ratings are effective for
two weeks.
<PAGE>
ADDRESSES
INDEPENDENCE ONE MUTUAL FUNDS
Equity Plus Fund
Class B Shares
5800 Corporate Drive
Pittsburgh, PA 15237-7010
DISTRIBUTOR
Federated Securities Corp.
Federated Investors Tower
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
INVESTMENT ADVISER
Michigan National Bank.
27777 Inkster Road
Mail Code 10-30
Farmington Hills, Michigan 48333-9065
INVESTMENT SUB-ADVISER
Sosnoff Sheridan Weiser Corporation
440 South LaSalle Street
Suite 2301
Chicago, Illinois 60605
CUSTODIAN
Michigan National Bank.
27777 Inkster Road
Mail Code 10-30
Farmington Hills, Michigan 48333-9065
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT
Federated Shareholder Services Company
P.O. Box 8600
Boston, MA 02266-8600
INDEPENDENT AUDITORS
KPMG LLP
99 High Street
Boston, MA 02110-2371
Cusip __________
PART C. OTHER INFORMATION.
Item 24. Exhibits:
(a) Conformed copy of Declaration of Trust of the Registrant; (1)
(i) Conformed copy of Amendment No. 1 to the Declaration of Trust; (2)
(ii) Conformed copy of Amendment No. 2 to the Declaration of Trust; (2)
(iii) Conformed copy of Amendment No. 3 to the Declaration of Trust; (4)
(iv) Conformed copy of Amendment No. 4 to the Declaration of Trust; (6)
(v) Conformed copy of Amendment No. 5 to the Declaration of Trust; (6)
(vi) Conformed copy of Amendment No. 6 to the Declaration of Trust; (10)
(vii) Conformed copy of Amendment No. 8 to the Declaration of Trust; (10)
(viii) Conformed copy of Certification dated December
6, 1994; (10) (ix) Conformed copy of Amendment No.
9 to the Declaration of Trust; (12)
(x) Conformed copy of Amendment No. 10 to the
Declaration of Trust; (20)
(b) Copy of By-Laws of the Registrant; (1)
- --------------------
+ All exhibits have been filed electronically.
1. Response is incorporated by reference to Registrant's Initial
Registration Statement on Form N-1A filed on January 13, 1989. (File
Nos. 33-26516 and 811-5752)
2. Response is incorporated by reference to Registrant's Pre-Effective
Amendment No. 1 on Form N-1A filed on May 5, 1989. (File Nos. 33-26516
and 811-5752)
4. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 2 on Form N-1A filed on June 27, 1990. (File Nos.
33-26516 and 811-5752)
6. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 5 on Form N-1A filed June 24, 1992. (File Nos. 33-26516
and 811-5752)
10. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 10 on Form N-1A filed February 8, 1995. (File Nos.
33-26516 and 811-5752)
12. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 14 on Form N-1A filed on June 28, 1995. (File Nos.
33-26516 and 811-5752)
20. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 23 on Form N-1A filed on June 26, 1998. (File Nos.
33-26516 and 811-5752)
<PAGE>
(c) (i) Copy of Specimen Certificate for Shares of Beneficial Interest of
Independence One U.S. Government Securities Fund; (7)
(ii) Copy of Specimen Certificate for Shares of Beneficial Interest of
Independence One Equity Plus Fund, Independence One Fixed Income Fund,
and Independence One Michigan Municipal Bond Fund; (14)
(iii)Copy of Specimen Certificate for Shares of Beneficial Interest of
Independence One U.S. Treasury Money Market Fund; (2)
(iv) Copy of Specimen Certificates for Shares of Beneficial Interest of
Independence One Michigan Municipal Cash Fund and Independence One
Prime Money Market Fund-Class A Shares and Class B Shares; (16)
(v) Copy of Specimen Certificates for Shares of Beneficial Interest of
Independence One Small Cap Fund and Independence One International
Equity Fund ; (19)
(d) Conformed copy of Investment Advisory Contract of the
Registrant as amended; (8)
(i) Conformed copy of Investment Sub-Advisory
Contract for Independence One U.S.
Government Securities Fund; (8)
(ii) Conformed copy of Exhibit G to the Present
Investment Advisory Contract of the
Registrant to add Independence One Fixed
Income Fund to the Present Investment
Advisory Contract of the Registrant; (14)
(iii) Conformed copy of Exhibit H to the Present
Investment Advisory Contract of the
Registrant to add Independence One Michigan
Municipal Bond Fund to the Present
Investment Advisory Contract of the
Registrant; (14)
- --------------------
2. Response is incorporated by reference to Registrant's Pre-Effective Amendment
No. 1 on Form N-1A filed on May 5, 1989. (File Nos. 33-26516 and 811-5752) 7.
Response is incorporated by reference to Registrant's Post-Effective Amendment
No. 6 on Form N-1A filed September 2, 1992. (File Nos. 33-26516 and 811-5752) 8.
Response is incorporated by reference to Registrant's Post-Effective Amendment
No. 7 on Form N-1A filed June 24, 1993. (File Nos. 33-26516 and 811-5752) 14.
Response is incorporated by reference to Registrant's Post-Effective Amendment
No. 16 on Form N-1A filed on August 29, 1995. (File Nos. 33-26516 and 811-5752)
16. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 14 on Form N-1A filed on June 28, 1996. (File Nos. 33-26516 and
811-5752) 19. Response is incorporated by reference to Registrant's
Post-Effective Amendment No. 22 on Form N-1A filed on April 2, 1998. (File Nos.
33-26516 and 811-5752)
<PAGE>
(iv) Conformed copy of Exhibit I to the Present Investment Advisory
Contract of the Registrant to add Independence One Equity Plus Fund to
the Present Investment Advisory Contract of the Registrant; (14)
(v) Conformed copy of Exhibit H to the Present Investment Advisory
Contract of the Registrant to add Independence One International
Equity Fund; (19)
(vi) Conformed copy of Exhibit I to the Present Investment Advisory
Contract of the Registrant to add Independence One Small Cap Fund;
(19)
(vii)Conformed copy of Investment Sub-Advisory Agreement for Independence
One Equity Plus Fund; (14)
(viii) Conformed Copy of Investment Sub-Advisory Agreement for Independence
One Small Cap Fund; (21)
(ix) Conformed Copy of Sub-Advisory Agreement for Independence One
International Equity Fund; (21)
(e) Conformed Copy of Distributor's Contract of
Registrant through and including Exhibit C; (16)
(i) Conformed Copy of Exhibit D to the
Distributor's Contract; (10)
(ii) Conformed Copy of Exhibit E to the
Distributor's Contract; (10) (iii) Conformed copy
of Exhibit F to the Distributor's Contract; (13)
(iv) Conformed copy of Exhibit G to the
Distributor's Contract; (13) (v) Conformed copy
of Exhibit H to the Distributor's Contract; (13)
(vi) Conformed copy of Exhibit I to the
Distributor's Contract; (13) (vii) Conformed copy
of Exhibit J to the Distributor's Contract; (13)
(viii) Conformed copy of Exhibit K to the
Distributor's Contract; (13)
- --------------------
+ All exhibits have been filed electronically.
10. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 10 on Form N-1A filed February 8, 1995. (File Nos. 33-26516
and 811-5752)
13. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 16 on Form N-1A filed on July 25, 1995. (File Nos. 33-26516
and 811-5752)
14. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 16 on Form N-1A filed on August 29, 1995. (File Nos. 33-26516
and 811-5752)
16. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 14 on Form N-1A filed on June 28, 1996. (File Nos. 33-26516
and 811-5752)
19. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 22 on Form N-1A filed on April 2, 1998. (File Nos. 33-26516
and 811-5752)
21. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 24 on Form N-1A filed on June 24, 1999. (File Nos. 33-26516
and 811-5752)
<PAGE>
(f) Not applicable;
(g) (i) Conformed Copy of Custodian Agreement of the
Registrant through and including Exhibit A; (16)
(a) Conformed Copy of Amendment No. 2 to Exhibit
A of the Custodian Agreement; (19)
(ii) Conformed Copy of the Agency Agreement of the Registrant; (3)
(iii)Conformed Copy of the Administrative Services Agreement of the
Registrant; (16)
(iv) Conformed Copy of Amendment No. 1 to Exhibit A of Agency Agreement of
the Registrant; (7)
(h) (i) Conformed Copy of Agreement for Fund Accounting, Shareholder
Recordkeeping, and Custody Services Procurement; (10) (a)
Amendment to Exhibit 1 of the Agreement for Fund Accounting,
Shareholder Recordkeeping, and Custody Services Procurement; (19)
(ii) Conformed copy of Shareholder Services Plan; (13)
(iii)Conformed Copy of Exhibit 1 to the Shareholder Services
Plan of the Registrant; (12)
(iv) Conformed copy of Shareholder Services Agreement (Amended
and Restated 9/19/95); (15)
(v) Conformed Copy of Exhibit 1 to the Shareholder Services
Agreement of the Registrant; (12)
+ All exhibits have been filed electronically.
3. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 1 on Form N-1A filed on December 12, 1989. (File Nos.
33-26516 and 811-5752)
7. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 6 on Form N-1A filed September 2, 1992. (File Nos. 33-26516
and 811-5752)
10. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 10 on Form N-1A filed February 8, 1995. (File Nos. 33-26516
and 811-5752)
12. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 14 on Form N-1A filed on June 28, 1995. (File Nos. 33-26516
and 811-5752)
13. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 16 on Form N-1A filed on July 25, 1995. (File Nos. 33-26516
and 811-5752)
15. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 17 on Form N-1A filed on December 5, 1995. (File Nos.
33-26516 and 811-5752)
16. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 14 on Form N-1A filed on June 28, 1996. (File Nos. 33-26516
and 811-5752)
19. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 22 on Form N-1A filed on April 2, 1998. (File Nos. 33-26516
and 811-5752)
(i) Conformed Copy of Opinion and Consent of Counsel as to legality of
shares being registered; (16) (j) Conformed Copy of Independent
Auditors Consent; (22) (k) Not applicable; (l) Conformed Copy of
Initial Capital Understanding; (16) (m) (i) Conformed Copy of
Distribution Plan through and including Exhibit A; (16)
(ii) Copy of Sales Agreement with Federated Securities Corp. and
Administrative Agreement - Appendix B; (2)
(iii) Conformed copy of Exhibit B of Distribution Plan; (8)
(iv) Copy of Schedule A of Sales Agreement with Federated Securities Corp.;
(7) (v) Copy of Fee Schedule for Rule 12b-1 Agreement with Federated
Securities Corp.; (7)
(n) Copy of Financial Data Schedules; (not included per footnote 60
of Release No. 33-7684)
(o) Conformed copy of 18f-3 Plan; (17)
(p) (i) Conformed copy of Power of Attorney; (16)
(ii) Conformed copy of Power of Attorney (adding Nathan
Forbes as Trustee). (20)
- --------------------
+ All exhibits have been filed electronically.
2. Response is incorporated by reference to Registrant's Pre-Effective
Amendment No. 1 on Form N-1A filed on May 5, 1989. (File Nos. 33-26516 and
811-5752)
3. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 1 on Form N-1A filed on December 12, 1989. (File Nos.
33-26516 and 811-5752)
7. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 6 on Form N-1A filed September 2, 1992. (File Nos. 33-26516
and 811-5752)
8. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 7 on Form N-1A filed June 24, 1993. (File Nos. 33-26516 and
811-5752)
16. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 18 on Form N-1A filed on June 28, 1996. (File Nos. 33-26516
and 811-5752)
17. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 19 on Form N-1A filed on August 26, 1996. (File Nos. 33-26516
and 811-5752)
20. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 23 on Form N-1A filed on June 26, 1998. (File Nos. 33-26516
and 811-5752)
22. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 24 on Form N-1A filed on August 26, 1999. (File Nos. 33-26516
and 811-5752)
Item 24. Persons Controlled by or Under Common Control with Registrant:
None
Item 25. Indemnification: (4)
Item 26. Business and Other Connections of Investment Adviser:
Michigan National Bank, a national banking association (the "Adviser"), is
a wholly owned subsidiary of Michigan National Corporation ("MNC"). Through its
subsidiaries and affiliates, MNC, offers a full range of financial services to
the public including commercial lending, depository services, cash management,
brokerage services, retail banking, credit card services, mortgage banking,
investment advisory services and trust services. Michigan National Bank has
managed mutual funds since May 1989. The Trust Division has managed pools of
commingled funds since 1964. For more information on the business of the
Adviser, see the Prospectus under the heading "Who Manages the Funds?"
4. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 2 on Form N-1A filed on June 27, 1990. (File Nos. 33-26516
and 811-5752)
<PAGE>
The officers and directors of the Adviser and any other business, profession,
vocation or employment of a substantial nature in which each such officer and
director is or has been engaged during the past two years is set forth below.
Unless otherwise noted, the position listed under Other Business, Profession,
Vocation or Employment is with Michigan National Bank. The business address of
each such director and officer is 27777 Inkster Road, Farmington Hills,
Michigan, 48333-9065.
<TABLE>
<CAPTION>
Other Substantial Business
Position with Profession, Vocation or
NAME THE ADVISER EMPLOYMENT
<S> <C> <C>
Glenn L. Barnes Director Executive General Manager,
Business and Personal Financial Services,
National Australia Bank Limited.
John S. Carton Director Director, Michigan National Corporation;
Chairman, President, and CEO, Pine View, Inc.
Sidney E. Forbes Director Director, Michigan National Corporation; Partner,
Forbes/Cohen Properties.
William F. Pickard Director Director, Michigan National Corporation, Chairman and
Chief Executive Officer, Regal Plastics Company.
Douglas E. Ebert Director, Chief Executive Officer,
and Chief Michigan National Corporation
Executive Officer
Stephen A. VanAndel Director Director, Michigan National Corporation; Chairman, Amway Corporation.
Frank J. Cicutto Director Managing Director & Chief Executive Officer, National Australia
Bank Limited
James B. Meyer Director Director, Michigan National
Corporation, President and
Chief Operating Officer,
Spartan Stores, Inc.
James A. Williams Chairman Chairman, Michigan National Corporation;
Chairman and President Williams, Williams, Ruby & Plunkett P.C.
<PAGE>
Other Substantial Business
Position with Profession, Vocation or
NAME THE ADVISER EMPLOYMENT
Richard C. Webb Head CBFS Head, Custom Business
Financial Services ("CBFS"), Michigan National
Corporation.
Susan Barbour Head of Preminum Head of Premium Financial
Financial Services Services, Michigan National
Corporation
Joel Blom Head-Direct Retailing
& Channel Mgt.
Robert Hutchinson Head of Retail Head of Retail Financial Services
Financial Services Michigan National Corporation
Robert Stapleton Head-Investment
Services
Leslie V. Starr Head-Information
Technology
Charles Van Swearingen Chief Financial Chief Financial Officer,
Officer Michigan National Corporation.
Kevin J. Van Solkema Head/Risk Head of Risk Management,
Management Michigan National Bank.
Errol Talbott Chief Operations Director, Michigan
Officer National Corporation.
Joseph L. Fritzsche Head-Corporate Human Head-Corporate Human Resources,
Resources Michigan National Corporation.
James C. Rose Acting General Counsel Acting General Counsel &
& Secretary Secretary
</TABLE>
Independence One Capital Management Corporation ("IOCM"), a nationally
recognized investment advisory subsidiary of MNC, provides investment advisory
services for trust and other managed assets. IOCM and the Trust Division of
Michigan National Bank ("Trust Division") have managed custodial assets totaling
$9 billion. IOCM and the Trust Division have investment discretion over $1.7
billion.
For further information about IOCM, its officers and directors, response is
incorporated by reference to IOCM's Form ADV, File No. 801-29728, dated
September 14, 1994, as amended.
Michigan National Bank has delegated daily management of some of the Equity Plus
Fund and Small Cap Fund's assets to a Sub-Adviser, Sosnoff Sheridan Weiser
Corporation (doing business as Sosnoff Sheridan Group), who is paid by the
Adviser and not by the Funds. Sosnoff Sheridan Weiser Corporation is controlled
by Tom Sosnoff, its Director and President, and Scott Sheridan, it Director,
Executive Vice-President and Secretary. The Corporation's address is 440 South
LaSalle Street, Suite 2301, Chicago, Illinois 60605.
For further information about Sosnoff Sheridan Weiser Corporation, its officers
and directors, response is incorporated by reference to IOCM's Form ADV, File
No. 801-49181, dated May 17, 1995, as amended.
National Australia Bank Limited ("NAB") is a transnational banking organization
headquartered at 333 Collins Street, Melbourne, Australia. NAB is a publicly
owned company, whose shares are widely held and traded on the Australian Stock
Exchange Limited. On February 4, 1995, the Board of Directors of MNC approved a
definitive agreement for the acquisition (the "Merger") of MNC by NAB.
Shareholders of MNC approved the Merger on June 2, 1995. As a result, MNC and
its subsidiaries, including the Adviser, would become direct or indirect
subsidiaries of NAB upon completion of the Merger. The Merger was completed on
November 2, 1995 and Operations will continue to be conducted under the Michigan
National Corporation and Michigan National
For further information about NAB, its officers and directors, response is
incorporated by reference to NAB's Form ADV, File No. 801-55308, dated May 1,
1998 as amended.
ITEM 27. PRINCIPAL UNDERWRITERS:
(a) Federated Securities Corp. the Distributor for shares of the Registrant,
acts as principal underwriter for the following open-end investment
companies, including the Registrant:
Cash Trust Series II; Cash Trust Series, Inc.; CCB Funds; Edward D. Jones &
Co. Daily Passport Cash Trust; Federated Adjustable Rate U.S. Government Fund,
Inc.; Federated American Leaders Fund, Inc.; Federated ARMs Fund; Federated Core
Trust; Federated Equity Funds; Federated Equity Income Fund, Inc.; Federated
Fund for U.S. Government Securities, Inc.; Federated GNMA Trust; Federated
Government Income Securities, Inc.; Federated Government Trust; Federated High
Income Bond Fund, Inc.; Federated High Yield Trust; Federated Income Securities
Trust; Federated Income Trust; Federated Index Trust; Federated Institutional
Trust; Federated Insurance Series; Federated Master Trust; Federated Municipal
Opportunities Fund, Inc.; Federated Municipal Securities Fund, Inc.; Federated
Municipal Trust; Federated Short-Term Municipal Trust; Federated Short-Term U.S.
Government Trust; Federated Stock and Bond Fund, Inc.; Federated Stock Trust;
Federated Tax-Free Trust; Federated Total Return Series, Inc.; Federated U.S.
Government Bond Fund; Federated U.S. Government Securities Fund: 1-3 Years;
Federated U.S. Government Securities Fund: 2-5 Years; Federated U.S. Government
Securities Fund: 5-10 Years; Federated Utility Fund, Inc.; Fixed Income
Securities, Inc.; ; Hibernia Funds; Independence One Mutual Funds; Intermediate
Municipal Trust; International Series, Inc.; Investment Series Funds, Inc.;
Liberty U.S. Government Money Market Trust; Liquid Cash Trust; Managed Series
Trust; Marshall Funds, Inc.; Money Market Management, Inc.; Money Market
Obligations Trust; Money Market Obligations Trust II; Money Market Trust;
Municipal Securities Income Trust; Newpoint Funds; Regions Funds; RIGGS Funds;
SouthTrust Funds; Tax-Free Instruments Trust; The Planters Funds; The Wachovia
Funds; The Wachovia Municipal Funds; Trust for Government Cash Reserves; Trust
for Short-Term U.S. Government Securities; Trust for U.S. Treasury Obligations;
Vision Group of Funds, Inc.; World Investment Series, Inc.; Blanchard Funds;
Blanchard Precious Metals Fund, Inc.; DG Investor Series; High Yield Cash Trust;
Investment Series Trust; Star Funds; Targeted Duration Trust; The Virtus Funds;
Trust for Financial Institutions; Federated Securities Corp. also acts as
principal underwriter for the following closed-end investment company: Liberty
Term Trust, Inc.- 1999.
<TABLE>
<CAPTION>
(b)
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
BUSINESS ADDRESS WITH DISTRIBUTOR WITH REGISTRANT
<S> <C> <C>
Richard B. Fisher Director, Chairman, Chief
Federated Investors Tower Executive Officer, Chief
1001 Liberty Avenue Operating Officer, Asst.
Pittsburgh, PA 15222-3779 Secretary and Asst.
Treasurer, Federated
Securities Corp.
Arthur L. Cherry Director
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
John B. Fisher Director
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Thomas R. Donahue Director, Assistant Secretary
Federated Investors Tower and Assistant Treasurer
1001 Liberty Avenue Federated Securities Corp.
Pittsburgh, PA 15222-3779
James F. Getz President-Broker/Dealer and --
Federated Investors Tower Director
1001 Liberty Avenue Federated Securities Corp.
Pittsburgh, PA 15222-3779
John B. Fisher President-Institutional Sales and Director --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
David M. Taylor Executive Vice President --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Mark W. Bloss Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Richard W. Boyd Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Laura M. Deger Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Theodore Fadool, Jr. Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Bryant R. Fisher Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Christopher T. Fives Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
James S. Hamilton Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
James M. Heaton Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Keith Nixon Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Solon A. Person, IV Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Ronald M. Petnuch Senior Vice President,
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Timothy C. Pillion Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
<PAGE>
Thomas E. Territ Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Ernest G. Anderson Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Teresa M. Antoszyk Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
John B. Bohnet Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Jane E. Broeren-Lambesis Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Matthew W. Brown Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
David J. Callahan Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Mark Carroll Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Steven R. Cohen Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Mary J. Combs Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
R. Edmond Connell, Jr. Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
<PAGE>
R. Leonard Corton, Jr. Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Kevin J. Crenny Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Daniel T. Culbertson Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
G. Michael Cullen Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Marc C. Danile Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Robert J. Deuberry Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
William C. Doyle Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Jill Ehrenfeld Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Mark D. Fisher Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Mark A. Gessner Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Joseph D. Gibbons Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
<PAGE>
John K. Goettlicher Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Craig S. Gonzales Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
G. Tad Gullickson Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Dayna C. Haferkamp Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Bruce E. Hastings Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
James E. Hickey Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Charlene H. Jennings Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
H. Joseph Kennedy Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Michael W. Koenig Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Dennis M. Laffey Vice President,
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Christopher A. Layton Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
<PAGE>
Michael H. Liss Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Michael R. Manning Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Amy Michalisyn Vice President,
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Mark J. Miehl Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Richard C. Mihm Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Alec H. Neilly Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Thomas A. Peters III Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Robert F. Phillips Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Richard A. Recker Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Eugene B. Reed Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
<PAGE>
Paul V. Riordan Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
John Rogers Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Brian S. Ronayne Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Thomas S. Schinabeck Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Larry Sebbens Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Edward J. Segura Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Edward L. Smith Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
David W. Spears Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
John A. Staley Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Colin B. Starks Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Jeffrey A. Stewart Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
<PAGE>
William C. Tustin Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Paul A. Uhlman Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Miles J. Wallace Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
John F. Wallin Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Richard B. Watts Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Edward J. Wojnarowski Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Michael P. Wolff Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Robert W. Bauman Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Edward R. Bozek Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Beth C. Dell Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
David L. Immonen Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
<PAGE>
John T. Glickson Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Ernest L. Linane Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Renee L. Martin Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Robert M. Rossi Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Timothy S. Johnson Secretary, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Denis McAuley Treasurer, --
Federated Investors Tower Federated Securities Corp.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
</TABLE>
(c) Not applicable.
<PAGE>
Item 28. Location of Accounts and Records:
All accounts and records required to be maintained by Section
31(a) of the Investment Company Act of 1940 and Rules 31a-1
through 31a-3 promulgated thereunder are maintained at one of the
following locations:
Independence One Mutual Funds 5800 Corporate Drive
(Registrant) Pittsburgh, PA 15237-7010
Federated Services Company P.O. Box 8609
(Transfer Agent, Dividend Boston, Massachusetts 02266-8609
Disbursing Agent and Portfolio
Recordkeeper)
Federated Administrative Services Federated Investors Tower
(Administrator) 1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Michigan National Bank 27777 Inkster Road
(Adviser) Mail Code 10-52
Farmington Hills, MI 48333
National Australia Asset 333 Collins Street
Management Ltd. Melbourne, Victoria 3000,
(Sub-Adviser to International Australia
Equity Fund)
Independence One Capital 27777 Inkster Road
Management Corporation Mail Code 10-52
(Sub-Adviser to U.S. Farmington Hills, MI 48333
Government Securities
Fund)
Sosnoff Sheridan Corporation 440 South LaSalle Street
(Sub-Adviser to Equity Plus Fund Suite 2301
and Small Cap Fund) Chicago, IL 60605
Michigan National Bank 27777 Inkster Road
(Custodian) Mail Code 10-52
Farmington Hills, MI 48333
Item 31. Management Services: Not applicable.
Item 32. Undertakings:
Registrant hereby undertakes to comply with the provisions of
Section 16(c) of the 1940 Act with respect to the removal of
Trustees and the calling of special shareholder meetings by
shareholders.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant, INDEPENDENCE ONE MUTUAL FUNDS,
has duly caused this Amendment to its Registration Statement to be signed on its
behalf by the undersigned, thereto duly authorized, in the City of Pittsburgh
and Commonwealth of Pennsylvania, on the 20th day of September, 1999.
INDEPENDENCE ONE MUTUAL FUNDS
BY: /s/ C. Grant Anderson
C. Grant Anderson, Secretary
Attorney in Fact for Edward C. Gonzales
September 20, 1999
Pursuant to the requirements of the Securities Act of 1933, this Amendment
to its Registration Statement has been signed below by the following person in
the capacity and on the date indicated:
NAME TITLE DATE
By: /s/ C. Grant Anderson
C. Grant Anderson Attorney In Fact September 20, 1999
SECRETARY For the Persons
Listed Below
NAME TITLE
Edward C. Gonzales* President and Treasurer
(Chief Executive Officer
and Principal Financial and
Accounting Officer)
Robert E. Baker* Trustee
Harold Berry* Trustee
Nathan Forbes* Trustee
Harry J. Nederlander* Trustee
Thomas S. Wilson* Trustee
* By Power of Attorney
+
