<PAGE> 1
[LOGO]
Dear Inventor Funds Shareholder:
On May 2, 1996, Inventor Funds shareholders approved the appointment of
National City as investment adviser. This change occurred in conjunction with
the merger of Integra Financial into National City. Affiliates of National City
also serve as the investment advisers to ARMADA FUNDS, a mutual fund family of
eleven portfolios.
As the new investment adviser to Inventor Funds, National City has proposed
specific strategies to create one consolidated family of mutual funds under the
ARMADA FUNDS brand with a goal to maximize opportunities for economies of scale
and to offer shareholders more investment options. There will be a special
meeting of the Inventor Funds shareholders on August 1, 1996 to vote on these
recommendations.
THE INVENTOR FUNDS BOARD OF DIRECTORS BELIEVES THAT THESE ACTIONS ARE IN
THE BEST INTERESTS OF THE INVENTOR FUNDS' SHAREHOLDERS. The Board has carefully
reviewed management's proposal which would combine each Inventor Funds portfolio
with an ARMADA FUNDS portfolio with similar investment objectives and policies
(the "Reorganization"). The Board has considered the probable effects of the
Reorganization with respect to investment performance, expense levels, and
shareholder service. In light of their consideration, the Board of Directors
unanimously recommends the approval of the Reorganization. As you evaluate the
proposal, please note the following points:
- The absolute dollar value of your investment in the Inventor Funds before
the Reorganization will NOT change and will be the same immediately after
the Reorganization although the portfolios you have invested in, as well
as the number of shares and the net asset value of each share may be
different.
- The Reorganization will be tax-free and will not involve any sales loads,
commissions or transaction charges.
- The investment objective and policies of your new portfolio will be
substantially similar to your portfolio's current objective and policies,
with certain minor differences as stated in the enclosures.
The enclosed package contains specific information regarding the
reorganization proposal. Please take a few minutes to read the proposal and cast
your vote on the enclosed proxy ballot(s). Please mark, sign and date the proxy
card and return it in the enclosed postage paid envelope. We encourage you to
support the Trustees' recommendations.
If you have questions about the proposals, please call 1-800-6INVENT
(1-800-646-8368). Your prompt response is very important. Without sufficient
response from shareholders, we must re-solicit shareholders at an added cost.
Thank you again for taking the time to consider and act upon these issues
pertaining to your investments.
Sincerely,
/s/ David G. Lee
David G. Lee
President
<PAGE> 2
INVENTOR FUNDS, INC.
c/o The Corporation Trust Incorporated
32 South Street
Baltimore, Maryland 21202
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON AUGUST 1, 1996
To the Shareholders of Inventor Funds:
NOTICE IS HEREBY GIVEN that a Special Meeting of Shareholders (the "Special
Meeting") of the Inventor Funds, Inc. ("Inventor") and of each portfolio of
Inventor will be held on August 1, 1996 at 10:00 a.m. (Eastern time) at the
offices of SEI Financial Management Corporation, 680 East Swedesford Road,
Wayne, Pennsylvania 19087-1658, for the following purposes:
ITEM 1. With respect to the shareholders of each investment portfolio of
Inventor:
To consider and act upon a proposal to approve an Agreement and Plan of
Reorganization (the "Reorganization Agreement") and the transactions
contemplated thereby (the "Reorganization"), including (a) the transfer
of substantially all of the assets and liabilities of each investment
portfolio of Inventor (each, an "Inventor Portfolio") to a corresponding
investment portfolio of Armada Funds in exchange for Institutional class
shares of the corresponding Armada Portfolio; (b) the distribution of
such shares of the corresponding Armada Portfolio to the shareholders of
the Inventor Portfolio according to their respective interests; and (c)
the termination of Inventor under state law and the Investment Company
Act of 1940, as amended.
ITEM 2.
To transact such other business as may properly come before the Special
Meeting or any adjournment(s) thereof.
The proposed Reorganization and related matters are described in the
attached Combined Proxy Statement/Prospectus. Appendix I to the Combined Proxy
Statement/Prospectus is a copy of the Reorganization Agreement.
Shareholders of record as of the close of business on May 31, 1996 have the
right to vote at the Special Meeting.
SHAREHOLDERS ARE REQUESTED TO EXECUTE AND RETURN PROMPTLY IN THE ENCLOSED
ENVELOPE THE ACCOMPANYING PROXY CARD WHICH IS BEING SOLICITED BY INVENTOR'S
BOARD OF DIRECTORS. IT IS IMPORTANT THAT WE RECEIVE ENOUGH VOTES TO HOLD THE
SPECIAL MEETING. PROXIES MAY BE REVOKED AT ANY TIME BEFORE THEY ARE EXERCISED BY
SUBMITTING TO INVENTOR A WRITTEN NOTICE OF REVOCATION OR A SUBSEQUENTLY EXECUTED
PROXY OR BY ATTENDING THE SPECIAL MEETING AND VOTING IN PERSON.
WE ENCOURAGE YOU TO SUPPORT THE DIRECTORS' RECOMMENDATION TO APPROVE THIS
REORGANIZATION.
By Order Of The Board Of Directors
Richard W. Grant, Secretary
June 27, 1996
<PAGE> 3
COMBINED PROXY STATEMENT/PROSPECTUS
DATED JUNE 27, 1996
ARMADA FUNDS
4400 Computer Drive
Westborough, Massachusetts 01581
1-800-622-FUND(3863)
INVENTOR FUNDS, INC.
c/o The Corporation Trust Incorporated
32 South Street
Baltimore, Maryland 21202
1-800-6INVENT(1-800-646-8368)
This Combined Proxy Statement/Prospectus is furnished in connection with
the solicitation of proxies by the Board of Directors of Inventor Funds, Inc.
("Inventor") in connection with a Special Meeting (the "Special Meeting") of
Shareholders ("Shareholders") to be held on August 1, 1996 at 10:00 a.m.
(Eastern time) at the offices of SEI Financial Management Company, 680 East
Swedesford Road, Wayne, Pennsylvania 19087-1658, at which Shareholders will be
asked to consider and approve a proposed Agreement and Plan of Reorganization
dated May 13, 1996 (the "Reorganization Agreement"), by and between Inventor and
Armada Funds ("Armada") and the matters contemplated therein. A copy of the
Reorganization Agreement is attached as Appendix I.
Inventor and Armada are both open-end, management investment companies. As
a result of the recent merger of Integra Financial Corporation and National City
Corporation (the "Holding Company Merger"), National City Bank ("National City")
is now providing investment advisory services to Inventor. National City and
certain of its affiliates, National City Bank, Columbus; National City Bank,
Kentucky; and National Asset Management Corporation (collectively, the "Armada
Advisers"), provide investment advisory services to various portfolios of
Armada. In reviewing the proposed reorganization (the "Reorganization"), the
Board of Directors of Inventor considered the consummation of the Holding
Company Merger, the recommendations of National City and the Armada Advisers
with respect to the proposed consolidation of Inventor and Armada; the tax-free
nature of the Reorganization; and the fact that, based on representations made
by management of Armada with regard to the level of unrealized gains and losses
in the Inventor Equity Growth Fund, the Board of Directors has concluded that
the interests of Shareholders would not be diluted as a result of the
Reorganization.
The Reorganization Agreement provides that the Inventor Equity Growth Fund,
one of the investment portfolios of Inventor, will transfer substantially all
its known assets and known liabilities to an existing investment portfolio of
Armada, the Armada Equity Fund. The Reorganization Agreement also provides that
each of the following four investment portfolios of Inventor (collectively, the
"Continuing Portfolios") will transfer all their known assets and known
liabilities to the newly-organized Armada investment portfolios (collectively,
the "New Armada Portfolios") identified below opposite each name:
<TABLE>
<CAPTION>
CONTINUING PORTFOLIOS NEW ARMADA PORTFOLIOS
- --------------------------------------------------------------- -----------------------------
<S> <C>
GNMA Securities Fund........................................... GNMA Fund
Intermediate Government Securities Fund........................ Intermediate Government Fund
Pennsylvania Municipal Bond Fund............................... Pennsylvania Municipal Fund
Pennsylvania Tax-Exempt Money Market Fund...................... Pennsylvania Tax Exempt Fund
</TABLE>
In exchange for the transfers of these assets and liabilities, Armada will
simultaneously issue shares in the five Armada investment portfolios discussed
above (collectively, the "Armada Portfolios") to the corresponding Inventor
investment portfolios listed above (collectively, the "Inventor Portfolios").
These transfers are expected to occur on or after September 6, 1996.
<PAGE> 4
The Inventor Portfolios have one class of shares outstanding (Class A
Shares), and the Armada Portfolios have two classes of shares outstanding
(Institutional and Retail Shares). Holders of Class A shares of each Inventor
Portfolio will receive shares of the Institutional class of the corresponding
Armada Portfolio, as set forth in the table on page 14 under "Information
Relating to the Proposed Reorganization -- Description of the Reorganization
Agreement."
Immediately after the transfer of Inventor's assets and liabilities, the
Inventor Portfolios will make liquidating distributions of the Armada
Portfolios' shares to the shareholders of the Inventor Portfolios, so that a
holder of Class A shares in an Inventor Portfolio at the Effective Time of the
Reorganization (as hereinafter defined) will receive Institutional class shares
(as described herein) of the corresponding Armada Portfolio with the same
aggregate net asset value as the Shareholder had in the Inventor Portfolio
immediately before the Reorganization. Following the Reorganization,
shareholders of the Inventor Portfolios will be shareholders of the
corresponding Armada Portfolios, and Inventor will be terminated under state law
and the Investment Company Act of 1940, as amended (the "1940 Act").
A small percentage of the outstanding shares of the Inventor Portfolios are
held by Shareholders who may wish to acquire Retail class shares of the Armada
Portfolios. Armada has been advised that promptly after the Reorganization,
these holders of Institutional shares of the Armada Equity Fund and the New
Armada Portfolios will be offered the opportunity to exchange their
Institutional class shares for Retail class shares of such portfolios without
incurring any sales charges.
This Combined Proxy Statement/Prospectus sets forth the information that a
Shareholder of Inventor should know before voting on the Reorganization
Agreement (and related transactions), and should be retained for future
reference. The Prospectus dated September 28, 1995 relating to the shares of the
Armada Equity Fund, which describes the operations of the Armada Equity Fund,
accompanies this Combined Proxy Statement/Prospectus, and is incorporated herein
by reference. Additional information is set forth in the Statement of Additional
Information dated September 28, 1995 relating to the Armada Equity Fund and the
Statement of Additional Information dated June 28, 1996 relating to this
Combined Proxy Statement/Prospectus, and in the Prospectuses dated August 28,
1995 (as supplemented May 2, 1996) and Statement of Additional Information dated
August 28, 1995 relating to Inventor. Each of these documents is on file with
the Securities and Exchange Commission (the "SEC"), and is available without
charge upon oral or written request by writing or calling Inventor or Armada, as
appropriate, at the respective addresses or telephone numbers indicated on page
1. The information contained in the Statement of Additional Information dated
September 28, 1995 relating to the Armada Equity Fund, and the Prospectuses
dated August 28, 1995 (as supplemented May 2, 1996) and Statement of Additional
Information dated August 28, 1995 relating to Inventor, is incorporated herein
by reference.
This Combined Proxy Statement/Prospectus constitutes the Proxy Statement of
Inventor for the Special Meeting of its Shareholders, and Armada's Prospectus
for the shares of its Armada Equity Fund that have been registered with the SEC
and are to be issued in connection with the Reorganization. The operations of
the Continuing Portfolios will be continued by the New Armada Portfolios and
this Combined Proxy Statement/ Prospectus does not constitute a prospectus
(because none is required) for the shares that will be issued in the
Reorganization with respect to the Continuing Portfolios.
This Combined Proxy Statement/Prospectus is expected to first be sent to
Shareholders on or about June 28, 1996.
THE SECURITIES OF THE ARMADA PORTFOLIOS HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS COMBINED PROXY
STATEMENT/PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS COMBINED PROXY
-2-
<PAGE> 5
STATEMENT/PROSPECTUS AND IN THE MATERIALS EXPRESSLY INCORPORATED HEREIN BY
REFERENCE AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST
NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY INVENTOR OR ARMADA.
SHARES OF THE ARMADA PORTFOLIOS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR
GUARANTEED OR ENDORSED BY, NATIONAL CITY, NATIONAL CITY BANK, COLUMBUS, NATIONAL
CITY BANK, KENTUCKY, NATIONAL ASSET MANAGEMENT CORPORATION, THEIR PARENT COMPANY
OR ANY OF THEIR AFFILIATES. SHARES OF THE ARMADA PORTFOLIOS ARE NOT FEDERALLY
INSURED BY, GUARANTEED BY, OBLIGATIONS OF OR OTHERWISE SUPPORTED BY THE U.S.
GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD
OR ANY OTHER GOVERNMENTAL AGENCY. INVESTMENT RETURN AND PRINCIPAL VALUE WILL
VARY AS A RESULT OF MARKET CONDITIONS OR OTHER FACTORS SO THAT SHARES OF THE
ARMADA PORTFOLIOS, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL
COST. AN INVESTMENT IN THE ARMADA PORTFOLIOS INVOLVES INVESTMENT RISKS,
INCLUDING POSSIBLE LOSS OF PRINCIPAL AMOUNT INVESTED. THERE IS NO ASSURANCE THAT
THE ARMADA PENNSYLVANIA TAX-EXEMPT FUND WILL BE ABLE TO MAINTAIN A STABLE NET
ASSET VALUE OF $1.00 PER SHARE.
-3-
<PAGE> 6
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
------
<S> <C>
SUMMARY.............................................................................. 1
Proposed Reorganization.................................................... 1
Reasons for the Reorganization............................................. 1
Federal Income Tax Consequences............................................ 1
Overview of the Inventor Portfolios and Armada Portfolios.................. 1
Certain Arrangements with Service Providers -- Inventor Portfolios......... 2
Certain Arrangements with Service Providers -- Armada Portfolios........... 3
Comparative Fee Tables..................................................... 5
Expense Ratios -- Inventor Portfolios...................................... 11
Expense Ratios -- Armada Portfolios........................................ 11
Voting Information......................................................... 12
Risk Factors............................................................... 13
INFORMATION RELATING TO THE PROPOSED REORGANIZATION.................................. 14
Description of the Reorganization Agreement................................ 14
Capitalization............................................................. 16
Federal Income Tax Consequences............................................ 16
COMPARISON OF INVESTMENT POLICIES AND RISK FACTORS................................... 17
Inventor Equity Growth Fund and Armada Equity Fund......................... 17
Investment Policies and Risks -- General................................... 18
Investment Limitations..................................................... 18
Purchase and Redemption Information, Exchange Privileges, Distribution and
Pricing.................................................................... 20
Other Information.......................................................... 20
INFORMATION RELATING TO VOTING MATTERS............................................... 20
General Information........................................................ 20
Shareholder and Board Approvals............................................ 21
Appraisal Rights........................................................... 26
Quorum..................................................................... 26
ADDITIONAL INFORMATION ABOUT ARMADA.................................................. 26
ADDITIONAL INFORMATION ABOUT INVENTOR................................................ 29
LITIGATION........................................................................... 31
FINANCIAL HIGHLIGHTS................................................................. 31
Inventor Financial Highlights.............................................. 31
Armada Financial Highlights................................................ 36
FINANCIAL STATEMENTS................................................................. 37
OTHER BUSINESS....................................................................... 37
SHAREHOLDER INQUIRIES................................................................ 37
APPENDIX I AGREEMENT AND PLAN OF REORGANIZATION................................... I-1
APPENDIX II FUND OVERVIEW -- ARMADA EQUITY FUND.................................... II-1
APPENDIX III SHAREHOLDER TRANSACTIONS AND SERVICES.................................. III-1
</TABLE>
-i-
<PAGE> 7
SUMMARY
The following is a summary of certain information relating to the proposed
Reorganization, the parties thereto and the related transactions, and is
qualified by reference to the more complete information contained elsewhere in
this Combined Proxy Statement/Prospectus, the prospectuses and statements of
additional information of Inventor and Armada, and the Reorganization Agreement
attached to this Combined Proxy Statement/Prospectus as Appendix I. Inventor's
Annual Report to Shareholders may be obtained free of charge by calling
1-800-6INVENT(1-800-646-8368) or writing 680 East Swedesford Road, Wayne,
Pennsylvania 19087-1658. Armada's Annual Report to Shareholders may be obtained
free of charge by calling 1-800-622-FUND(3863) or writing 4400 Computer Drive,
Westborough, Massachusetts 01581.
PROPOSED REORGANIZATION. Based upon their evaluation of the relevant
information presented to them, and in light of their fiduciary duties under
federal and state law, Inventor's and Armada's Boards, including their members
who are not "interested persons" within the meaning of the 1940 Act, have
determined that the proposed Reorganization is in the best interests of
Inventor's and Armada's Shareholders, respectively, and that the interests of
existing Shareholders of Inventor and Armada, respectively, will not be diluted
as a result of such Reorganization.
The Cover Page and pages 1-17 hereof summarize the proposed Reorganization.
REASONS FOR THE REORGANIZATION. The primary reason for the Reorganization
is the Holding Company Merger of Integra Financial Corporation and National City
Corporation. Consummation of the Holding Company Merger on May 2, 1996 resulted
in the automatic termination of the existing investment advisory agreement
between the Inventor Portfolios and Integra Trust Company, a wholly-owned
subsidiary of Integra Financial Corporation, and of the existing investment
sub-advisory agreements between Integra Trust Company and Wellington Management
Company, STI Capital Management, N.A. and Weiss, Peck & Greer, L.L.C.,
respectively. In anticipation of the Holding Company Merger and to provide
continuity in investment advisory services to the Inventor Portfolios,
shareholders of the Inventor Portfolios approved a new investment advisory
agreement with National City and new investment sub-advisory agreements with
Wellington Management Company, STI Capital Management, N.A. and Weiss, Peck &
Greer, L.L.C., respectively, effective May 2, 1996.
Both National City and the Armada Advisers have recommended that each of
the Inventor Portfolios be reorganized as described in this Combined Proxy
Statement/Prospectus. In light of this recommendation, after consideration of
the reasons therefor and the proposed operations of the combined funds after the
Reorganization, and in consideration of the fact that the Reorganization will be
tax-free and will not dilute the interests of Inventor Shareholders, the Board
of Directors of Inventor has authorized the Agreement and Plan of Reorganization
and recommended approval of the Reorganization by Shareholders.
FEDERAL INCOME TAX CONSEQUENCES. Shareholders of the Inventor Portfolios
will recognize no gain or loss for federal income tax purposes on their receipt
of shares of the Armada Portfolios. Shareholders of the Armada Portfolios will
have no federal tax consequences from the Reorganization. The Armada Portfolios
will incur no federal tax consequences on their issuance of shares in the
Reorganization. See "Information Relating to the Proposed
Reorganization -- Federal Income Tax Consequences."
OVERVIEW OF THE INVENTOR PORTFOLIOS AND ARMADA PORTFOLIOS. There are no
material differences between the investment objectives and policies of the
Continuing Portfolios and the corresponding New Armada Portfolios. The
investment objectives and policies of the Inventor Equity Growth Fund are
similar to those of the Armada Equity Fund.
The Inventor Equity Growth Fund's investment objective is capital
appreciation. The Armada Equity Fund's investment objective is to seek a high
level of total return arising out of capital appreciation and income. Each
pursues its investment objective by investing in a diversified portfolio of
common stocks and convertible securities. There is no assurance that either
portfolio will achieve its investment objective.
See "Comparison of Investment Objectives and Risk Factors" on page 17 and
the Inventor and Armada prospectuses, which are incorporated by reference
herein, for a description of the similarities and differences
-1-
<PAGE> 8
between the investment objectives and policies of the Inventor Equity Growth
Fund and the Armada Equity Fund.
CERTAIN ARRANGEMENTS WITH SERVICE PROVIDERS -- INVENTOR
PORTFOLIOS. National City serves as investment adviser for Inventor and is
entitled to receive advisory fees from it, computed daily and paid monthly, at
the following annual rates, expressed as a percentage of average daily net
assets:
<TABLE>
<CAPTION>
ACTUAL ADVISORY
FEE FOR YEAR
MAXIMUM ENDED APRIL 30, 1996
INVENTOR PORTFOLIOS ADVISORY FEE (AFTER WAIVERS)*
- ------------------------------------------------------- ------------ ---------------------
<S> <C> <C>
Equity Growth Fund..................................... 0.85% 0.62%
GNMA Securities Fund................................... 0.70% 0.51%
Intermediate Government Securities Fund................ 0.70% 0.55%
Pennsylvania Municipal Bond Fund....................... 0.70% 0.58%
Pennsylvania Tax-Exempt Money Market Fund.............. 0.45% 0.29%
- ---------------
<FN>
* Paid to Integra Trust Company pursuant to the investment advisory agreement
then in effect.
</TABLE>
Wellington Management Company ("Wellington") provides sub-advisory services
to the GNMA Securities Fund and the Intermediate Government Securities Fund
under a sub-advisory agreement among National City, Wellington and Inventor. For
these services, Wellington receives a fee from National City, computed daily and
paid monthly at an annual rate of .20% on the first $50 million, .15% on the
next $50 million, .10% on the next $400 million and .075% on the excess of $500
million of the average daily net assets for each of the GNMA Securities Fund and
Intermediate Government Securities Fund.
STI Capital Management, N.A. (formerly SunBank Capital Management, N.A.)
("STI") provides sub-advisory services to the Equity Growth Fund under a
sub-advisory agreement by and between National City and STI. For these services,
STI receives a fee from National City accrued daily and payable quarterly at an
annual rate of .30% on the portfolio's aggregate net assets.
Weiss, Peck & Greer, L.L.C. ("WPG") provides sub-advisory services to the
Pennsylvania Municipal Bond Fund and Pennsylvania Tax-Exempt Money Market Fund
under a sub-advisory agreement by and between National City and WPG. For these
services, WPG receives a fee from National City accrued daily and payable
quarterly at an annual rate of .18% of the average daily net assets of the
Pennsylvania Municipal Bond Fund and .05% of the average daily net assets of the
Pennsylvania Tax-Exempt Money Market Fund.
After the Reorganization, it is expected that WPG will, but that Wellington
and STI will not, provide sub-advisory services to Armada.
Administrative services are provided to Inventor by SEI Financial
Management Corporation ("SFM"), a wholly-owned subsidiary of SEI Corporation
("SEI"). The Administration Agreement was adopted August 1, 1994 and provides
for a three-year term. For its services, SFM receives a fee, calculated daily
and paid monthly. The annual rate of the fee payable by the Pennsylvania
Municipal Bond Fund is .18% of its average daily net assets. The annual rate of
the fee payable by the other portfolios is the higher of (a) .15% of the average
daily net assets of the Pennsylvania Tax-Exempt Money Market Fund and .18% of
the aggregate average daily net assets of each of the Equity Growth Fund, GNMA
Securities Fund and Intermediate Government Securities Fund, or (b) an aggregate
of $600,000 allocated pro-rata among the Pennsylvania Tax-Exempt Money Market
Fund, Equity Growth Fund, GNMA Securities Fund and Intermediate Government
Securities Fund based on each Portfolio's average daily net assets. For
Inventor's fiscal year ended April 30, 1996, SFM received administration fees
(after fee waivers) at the effective annual rates of .18%, .18%, .18%, .16% and
.15% of the average daily net assets of the Equity Growth Fund, GNMA Securities
Fund, Intermediate Government Securities Fund, Pennsylvania Municipal Bond Fund,
and Pennsylvania Tax-Exempt Money Market Fund, respectively.
-2-
<PAGE> 9
DST Systems, Inc. ("DST") serves as Inventor's transfer agent. For these
services, DST receives an annual fee equal to $15,000 for the first 400 accounts
per portfolio and $24.00 per account in excess of 400 accounts; $25.00 per IRA
plan; and out-of-pocket expenses including postage, printing, custom
programming, telephone and line charges, proxy production and tabulation, etc.
The Fifth Third Bank provides custodial services to each Inventor
Portfolio.
SEI Financial Services Company ("SFS") is the distributor for Inventor.
Under the distribution agreement, SFS acts as the agent of Inventor in
connection with the offering of shares of each Inventor Portfolio.
Inventor has adopted a Distribution and Services Plan pursuant to Rule
12b-1 under the 1940 Act (the "Inventor 12b-1 Plan"), but has not made any
payments thereunder. Under the Inventor 12b-1 Plan, each of the Inventor
Portfolios may bear the expense of distribution fees payable to SFS at an annual
rate of up to 0.25% of its average daily net asset value to finance activities
which are principally intended to result in the sale of Class A shares.
The Inventor 12b-1 Plan is a "compensation" type plan as opposed to a
"reimbursement" type plan. Accordingly, payments by shareholders of the Inventor
Portfolios under the Inventor 12b-1 Plan are based on the expressed fee rather
than on the specific amounts expended by SFS for distribution purposes. SFS may
be able to recover such amounts or may earn a profit from payments made by
shareholders of the Inventor Portfolios under the Inventor 12b-1 Plan.
CERTAIN ARRANGEMENTS WITH SERVICE PROVIDERS -- ARMADA PORTFOLIOS. The
Armada Advisers, wholly-owned subsidiaries of National City Corporation, serve
as investment advisers to Armada and are entitled to receive advisory fees from
the Armada Portfolios computed daily and paid monthly, at the following annual
rates:
<TABLE>
<CAPTION>
ACTUAL ADVISORY
FEE FOR YEAR ENDED
MAY 31, 1996
ADVISORY FEE (AFTER WAIVERS)
(% OF AVERAGE (% OF AVERAGE
ARMADA PORTFOLIOS DAILY NET ASSETS) DAILY NET ASSETS)
- ---------------------------------------------------------- ------------------ ------------------
<S> <C> <C>
Equity Fund............................................... 0.75% 0.75%
GNMA Fund................................................. 0.55% 0.00%*
Intermediate Government Fund.............................. 0.55% 0.00%*
Pennsylvania Municipal Fund............................... 0.55% 0.00%*
Pennsylvania Tax Exempt Fund.............................. 0.40% 0.00%*
- ---------------
<FN>
*The GNMA, Intermediate Government, Pennsylvania Municipal and Pennsylvania Tax
Exempt Funds have not yet commenced operations.
</TABLE>
As investment advisers, the Armada Advisers manage the investments of each
Armada Portfolio, make decisions with respect to and place orders for all
purchases and sales of a Portfolio's securities, and maintain certain records
relating to such purchases and sales.
See "Management of the Trust -- Investment Advisers" in Armada's Prospectus
which accompanies this Combined Proxy Statement/Prospectus and which is
incorporated herein by reference, for additional information on the Armada
Advisers.
Administrative and accounting services are provided to Armada by PFPC, Inc.
("PFPC"). For its services, PFPC is entitled to receive a fee from each Armada
Portfolio, calculated daily and paid monthly, as follows: .10% of the first $200
million of net assets, .075% of the next $200 million of net assets, .05% of the
next $200 million of net assets and .03% of net assets in excess of $600
million.
For the fiscal year ended May 31, 1996, PFPC received administration fees
at the annual rate of 0.10% of the net assets of the Equity Fund. The GNMA,
Intermediate Government, Pennsylvania Municipal and Pennsylvania Tax Exempt
Funds were not operational during this period.
-3-
<PAGE> 10
See "Management of the Trust -- Administrator" in Armada's Prospectus
accompanying this Combined Proxy Statement/Prospectus, which are incorporated
herein by reference, for additional information on Armada's administrator.
First Data Investor Services Group, Inc., formerly known as The Shareholder
Services Group, Inc. d/b/a 440 Financial ("FDISG") serves as Armada's transfer
agent. See "Management of the Trust -- Custodian Services and Transfer Agency
Agreement" in Armada's Prospectus accompanying this Combined Proxy
Statement/Prospectus, which is incorporated herein by reference, for additional
information about Armada's transfer agent.
Custodial services are provided to Armada by National City. See "Advisory,
Administration, Distribution, Custodian Services and Transfer Agency
Agreements -- Custodian Services and Transfer Agency Agreement" in Armada's
Statement of Additional Information, which is incorporated herein by reference,
for additional information about Armada's custodian.
440 Financial Distributors, Inc. ("440 Financial Distributors") serves as
distributor of the shares of Armada's portfolios. Armada has adopted a
Distribution Plan pursuant to Rule 12b-1 under the 1940 Act (the "Armada 12b-1
Plan"). Under the Armada 12b-1 Plan, the class of shares known as the Retail
shares of each of Armada's portfolios bears certain distribution expenses to
finance activities which are principally intended to result in the sale of such
shares. There is an aggregate annual distribution fee of $250,000 payable to 440
Financial Distributors, payable monthly and accrued daily among the portfolios.
In addition, each portfolio reimburses 440 Financial Distributors monthly for
its direct and indirect costs and expenses incurred in providing the portfolio
with advertising, marketing, printing and other distribution services. The
distribution fee and expense reimbursements may not exceed .10% per annum of a
portfolio's average net assets. For the fiscal year ended May 31, 1996, Armada
paid 440 Financial Distributors $69,215 with respect to the Equity Fund pursuant
to the Distribution Plan, representing 0.06% of the Equity Fund's average net
assets during the year. The GNMA, Intermediate Government, Pennsylvania
Municipal and Pennsylvania Tax Exempt Funds were not operational during the
period.
The Armada 12b-1 Plan is, in part, a "compensation" type plan as opposed to
an entirely "reimbursement" type plan. Accordingly, payments by shareholders of
the Armada portfolios under the Armada 12b-1 Plan are based, in part, on the
expressed fee rather than on the specific amounts expended by 440 Financial
Distributors for distribution purposes. 440 Financial Distributors may be able
to recover such amounts or may earn a profit from payments made by shareholders
of the Armada portfolios under the Armada 12b-1 Plan.
COMPARATIVE FEE TABLES. Set forth in the tables on the following pages is
(i) information regarding the fees and expenses paid by each Inventor Portfolio
as of April 30, 1996 and the Retail and Institutional classes of shares of each
Armada Portfolio as of May 31, 1996, restated, in the case of the Armada Equity
Fund, to reflect current fees and expenses and (ii) pro forma information for
each Armada Portfolio assuming the Reorganization had taken place on May 31,
1996.
-4-
<PAGE> 11
COMPARATIVE FEE TABLES
<TABLE>
<CAPTION>
INVENTOR ARMADA PRO FORMA
EQUITY GROWTH EQUITY FUND COMBINED
FUND ------------------------ ------------------------
------------- RETAIL INSTITUTIONAL RETAIL INSTITUTIONAL
CLASS A SHARES SHARES SHARES SHARES
------------- ------ ------------- ------ -------------
<S> <C> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Charge
Imposed on Purchases............... 4.00% 3.75% None 3.75% None
Sales Charge Imposed on
Reinvested Dividends............... None None None None None
Deferred Sales Charge................ None None None None None
Redemption Fee....................... $ 10(1) None None None None
Exchange Fee......................... None None None None None
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)
Advisory Fees........................ .62%(2) .75% .75% .75% .75%
12b-1 Fees (after fee waivers)....... .00%(4) .05%(5) .05%(5) .05%(5) .05%(5)
Other Expenses....................... .33% .46%(3,7) .21%(7) .45%(3,7) .20%(7)
----- ----- ----- ------ -----
Total Operating Expenses
(after fee waivers)................ .95%(6) 1.26%(7) 1.01%(7) 1.25%(8) 1.00%(8)
===== ===== ===== ==== =====
- ---------------
<FN>
(1) For wire redemptions.
(2) The Adviser of the Inventor Equity Growth Fund has agreed to waive a portion
of its fees and has advised Inventor that it intends to continue such waiver
for the current fiscal year. The Adviser of the Inventor Equity Growth Fund
reserves the right to terminate this waiver at any time in its sole
discretion. Absent this waiver, advisory fees would be .85%.
(3) Armada has implemented a Shareholder Services Plan (the "Services Plan")
with respect to Retail shares in the Fund. Under the Services Plan, Armada
may enter into shareholder servicing agreements with certain financial
institutions pursuant to which they agree to provide shareholder
administrative services to their customers who beneficially own Retail
shares in consideration for the payment of up to .25% (on an annualized
basis) of the net asset value of such shares.
(4) The Inventor Equity Growth Fund's distribution plan ("Class A Plan")
provides that shares will bear the costs of distribution expenses and
related service fees at the annual rate of .25% of the Fund's average daily
net assets. The Distributor has agreed to voluntarily waive any fees payable
pursuant to the Class A Plan and reserves the right to terminate this waiver
at any time at its sole discretion.
(5) The Armada Equity Fund has in effect a 12b-1 Plan pursuant to which the Fund
may bear fees in an amount of up to .10% of average daily net assets. As a
result of the payment of sales charges and 12b-1 fees, long-term
shareholders may pay more than the economic equivalent of the maximum
front-end sales charge permitted by the National Association of Securities
Dealers, Inc. ("NASD"). The NASD has adopted rules which generally limit the
aggregate sales charges and payments under Armada's Service and Distribution
Plan and Shareholder Services Plan to a certain percentage of total new
gross share sales, plus interest. Armada would stop accruing 12b-1 and
related fees if, to the extent, and for as long as, such limit would
otherwise be exceeded.
(6) Absent the advisory and distribution fee waivers afforded the Inventor
Equity Growth Fund, total operating expenses would be 1.43%.
(7) The expense table relating to the Armada Equity Fund has been restated to
reflect current fees. Absent a voluntary fee waiver by the custodian through
March 1, 1996, other expenses for the Armada Equity Fund would have been
.48% and .23% for the Retail and Institutional shares, respectively.
Similarly, absent such waiver, and if the maximum distribution fee permitted
under the Armada Equity Fund 12b-1 Plan were imposed, total operating
expenses would be 1.33% and 1.08% for the Retail and Institutional shares,
respectively.
(8) If the maximum distribution fee permitted under the Armada Equity Fund 12b-1
Plan were imposed, total operating expenses would be 1.30% and 1.05%, for
the pro forma combined Retail and Institutional shares, respectively.
</TABLE>
-5-
<PAGE> 12
Example: An investor would pay the following expenses on a $1,000 investment,
assuming (1) 5% annual return, and (2) redemption at the end of the
following periods:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Inventor Equity Growth Fund
Class A Shares......................................... $ 49 $69 $ 90 $152
Armada Equity Fund
Retail Shares.......................................... 50 76 104 184
Institutional Shares................................... 10 32 56 124
Pro Forma Combined
Retail Shares.......................................... 50 76 104 183
Institutional Shares................................... 10 32 55 122
</TABLE>
<TABLE>
<CAPTION>
INVENTOR ARMADA PRO FORMA
GNMA SECURITIES GNMA FUND* COMBINED
FUND ------------------------ ------------------------
--------------- RETAIL INSTITUTIONAL RETAIL INSTITUTIONAL
CLASS A SHARES SHARES SHARES SHARES
--------------- ------ ------------- ------ -------------
<S> <C> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Charge
Imposed on Purchases............. 4.00% None None 3.75% None
Sales Charge Imposed on
Reinvested Dividends............. None None None None None
Deferred Sales Charge.............. None None None None None
Redemption Fee..................... $ 10(1) None None None None
Exchange Fee....................... None None None None None
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)
Advisory Fees...................... .51%(2) N/A N/A .55% .55%
12b-1 Fees (after fee waivers)..... .00%(5) N/A N/A .05%(4) .05%(4)
Other Expenses..................... .34% N/A N/A .49%(3) .24%
----- ----- ----- ----- -----
Total Operating Expenses
(after fee waivers).............. .85%(6) N/A N/A 1.09%(6) .84%(6)
===== ===== ===== ===== =====
- ---------------
<FN>
* The Armada GNMA Fund has not yet commenced operations. The Armada GNMA Fund
will continue the operations of the Inventor GNMA Securities Fund upon
consummation of the Reorganization relating to the Fund.
(1) For wire redemptions.
(2) The Adviser of the Inventor GNMA Securities Fund has agreed to waive a
portion of its fees and has advised Inventor that it intends to continue
such waiver for the current fiscal year. The Adviser of the Inventor GNMA
Fund reserves the right to terminate this waiver at any time in its sole
discretion. Absent this waiver, advisory fees would be .70%.
(3) Armada has implemented a Shareholder Services Plan (the "Services Plan")
with respect to Retail Shares in the Fund. Under the Services Plan, Armada
may enter into shareholder servicing agreements with certain financial
institutions pursuant to which they would agree to provide shareholder
administrative services to their customers who beneficially own Retail
shares in consideration for the payment of up to .25% (on an annualized
basis) of the net asset value of such shares.
(4) The Armada GNMA Fund has in effect a 12b-1 Plan pursuant to which the Fund
may bear fees in an amount of up to .10% of average daily net assets. As a
result of the payment of sales charges and 12b-1 fees, long-term
shareholders of the Armada Equity Fund may pay more than the economic
equivalent of the maximum front-end sales charge permitted by the National
Association of Securities Dealers, Inc. ("NASD"). The NASD has adopted rules
which generally limit the aggregate sales charges and payments under
Armada's Service and Distribution Plan and Shareholder Services Plan to a
certain percentage of total new gross share sales, plus interest. Armada
would stop accruing 12b-1 and related fees if, to the extent, and for as
long as, such limit would otherwise be exceeded.
(5) The Inventor GNMA Securities Fund provides that Class A shares will bear the
costs of distribution expenses and related service fees at the annual rate
of .25% of the Fund's average net assets. The Distributor has agreed to
voluntarily waive any fees payable and reserves the right to terminate this
waiver at any time in its sole discretion.
</TABLE>
-6-
<PAGE> 13
(6) Absent the voluntary waivers by the investment adviser and distributor, the
total operating expenses for the Inventor GNMA Securities Fund would be
1.29%. If the maximum distribution fee permitted under the Armada GNMA Fund
12b-1 Plan were imposed, total operating expenses would be 1.14% and .89%,
respectively, for the pro forma combined Retail and Institutional shares.
Example: An investor would pay the following expenses on a $1,000 investment,
assuming (1) 5% annual return, and (2) redemption at the end of the
following periods:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Inventor GNMA Securities Fund
Class A Shares......................................... $ 48 $66 $85 $141
Armada GNMA Fund
Retail Shares.......................................... N/A N/A N/A N/A
Institutional Shares................................... N/A N/A N/A N/A
Pro Forma Combined
Retail Shares.......................................... 48 71 95 165
Institutional Shares................................... 9 27 47 104
</TABLE>
<TABLE>
<CAPTION>
INVENTOR
INTERMEDIATE ARMADA
GOVERNMENT INTERMEDIATE PRO FORMA
SECURITIES GOVERNMENT FUND* COMBINED
FUND ------------------------ ------------------------
------------ RETAIL INSTITUTIONAL RETAIL INSTITUTIONAL
CLASS A SHARES SHARES SHARES SHARES
------------ ------ ------------- ------ -------------
<S> <C> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Charge
Imposed on Purchases................. 4.00% None None 3.75% None
Sales Charge Imposed on
Reinvested Dividends................. None None None None None
Deferred Sales Charge.................. None None None None None
Redemption Fee......................... $ 10(1) None None None None
Exchange Fee........................... None None None None None
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)
Advisory Fees.......................... .55%(2) N/A N/A .55% .55%
12b-1 Fees (after fee waivers)......... .00%(5) N/A N/A .05%(4) .05%(4)
Other Expenses......................... .30% N/A N/A .46%(3) .21%
----- ----- ------ ----- -----
Total Operating Expenses
(after fee waivers).................. .85%(6) N/A N/A 1.06%(6) .81%(6)
===== ===== ====== ===== =====
<FN>
- ---------------
* The Armada Intermediate Government Fund has not yet commenced operations. The
Armada Intermediate Government Fund will continue the operations of the
Inventor Intermediate Government Securities Fund upon consummation of the
Reorganization relating to the Fund.
(1) For wire redemptions.
(2) The Adviser of the Inventor Intermediate Government Securities Fund has
agreed to waive a portion of its fees and has advised Inventor that it
intends to continue such waiver for the current fiscal year. The Adviser of
the Inventor Intermediate Government Fund reserves the right to terminate
this waiver at any time in its sole discretion. Absent such waiver, advisory
fees would be .70%.
(3) Armada has implemented a Shareholder Services Plan (the "Services Plan")
with respect to Retail Shares in the Fund. Under the Services Plan, Armada
may enter into shareholder servicing agreements with certain financial
institutions pursuant to which they would agree to provide shareholder
administrative services to their customers who beneficially own Retail
shares in consideration for the payment of up to .25% (on an annualized
basis) of the net asset value of such shares.
(4) The Armada Intermediate Government Fund has in effect a 12b-1 Plan pursuant
to which the Fund may bear fees in an amount of up to .10% of average daily
net assets. As a result of the payment of sales charges and 12b-1 fees,
long-term shareholders may pay more than the economic equivalent of the
maximum front-end sales charge permitted by the
</TABLE>
-7-
<PAGE> 14
National Association of Securities Dealers, Inc. ("NASD"). The NASD has
adopted rules which generally limit the aggregate sales charges and payments
under Armada's Service and Distribution Plan and Shareholder Services Plan
to a certain percentage of total new gross share sales, plus interest.
Armada would stop accruing 12b-1 and related fees if, to the extent, and for
as long as, such limit would otherwise be exceeded.
(5) The Inventor Intermediate Government Securities Fund provides that Class A
shares will bear the costs of distribution expenses and related service fees
at the annual rate of .25% of the Fund's average net assets. The Distributor
has agreed to voluntarily waive any fees payable and reserves the right to
terminate this waiver at any time in its sole discretion.
(6) Absent the voluntary waivers by the investment adviser and distributor, the
total operating expenses for the Inventor Intermediate Government Securities
Fund would be 1.25%. If the maximum distribution fee permitted under the
Armada Intermediate Government 12b-1 Plan were imposed, total operating
expenses would be 1.11% and .86%, respectively, for the pro forma combined
Retail and Institutional shares.
Example: An investor would pay the following expenses on a $1,000 investment,
assuming (1) 5% annual return, and (2) redemption at the end of the
following periods:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Inventor Intermediate Government Securities Fund
Class A Shares......................................... $ 48 $66 $85 $141
Armada Intermediate Government Fund
Retail Shares.......................................... N/A N/A N/A N/A
Institutional Shares................................... N/A N/A N/A N/A
Pro Forma Combined
Retail Shares.......................................... 48 70 94 162
Institutional Shares................................... 8 26 45 100
</TABLE>
<TABLE>
<CAPTION>
INVENTOR ARMADA
PENNSYLVANIA PENNSYLVANIA PRO FORMA
TAX-EXEMPT MONEY TAX EXEMPT FUND* COMBINED
MARKET FUND ---------------------- ---------------------
---------------- RETAIL INSTITUTIONAL RETAIL INSTITUTIONAL
CLASS A SHARES SHARES SHARES SHARES
---------------- ------- ------------- ------ -------------
<S> <C> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Charge
Imposed on Purchases................. None None None None None
Sales Charge Imposed on
Reinvested Dividends................. None None None None None
Deferred Sales Charge.................. None None None None None
Redemption Fee......................... $ 10(1) None None None None
Exchange Fee........................... None None None None None
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net
assets)
Advisory Fees (after fee waivers)(2)... .29% N/A N/A .15% .15%
12b-1 Fees (after fee waivers)......... .00%(5) N/A N/A .05%(4) .05%(4)
Other Expenses......................... .26% N/A N/A .24%(3) .14%
----- ---- ----- ----- -----
Total Operating Expenses
(after fee waivers).................. .55%(6) N/A N/A .44%(7) .34%(7)
======= ==== ===== ===== =====
<FN>
- ---------------
* The Armada Pennsylvania Tax Exempt Fund has not yet commenced operations. The
Armada Pennsylvania Tax Exempt Fund will continue the operations of the
Inventor Pennsylvania Tax-Exempt Money Market Fund upon consummation of the
Reorganization relating to the Fund.
(1) For wire redemptions.
(2) The Adviser of the Inventor Pennsylvania Tax-Exempt Money Market Fund has
agreed to waive a portion of its fees and has advised Inventor that it
intends to continue such waiver for the current fiscal year. The Adviser of
the Inventor Pennsylvania Tax-Exempt Money Market Fund reserves the right to
terminate this waiver at any time in its sole discretion. Absent such
waiver, advisory fees would be .45%. The Adviser to the Armada Pennsylvania
Tax Exempt Fund has agreed to waive a portion of its fees and has advised
Armada that it intends to continue such waiver for the
</TABLE>
-8-
<PAGE> 15
current fiscal year. The Adviser to the Armada Pennsylvania Tax Exempt Fund
reserves the right to terminate this waiver at any time in its sole
discretion. Absent this waiver, advisory fees would be .40% for the Armada
Pennsylvania Tax Exempt Fund.
(3) Armada has implemented a Shareholder Services Plan (the "Services Plan")
with respect to Retail Shares in the Fund. Under the Services Plan, Armada
may enter into shareholder servicing agreements with certain financial
institutions pursuant to which they would agree to provide shareholder
administrative services to their customers who beneficially own Retail
shares in consideration for the payment of up to .10% (on an annualized
basis) of the net asset value of such shares.
(4) The Armada Pennsylvania Tax Exempt Fund has in effect a 12b-1 Plan pursuant
to which the Fund may bear fees in an amount of up to .10% of average daily
net assets. As a result of the payment of sales charges and 12b-1 fees,
long-term shareholders may pay more than the economic equivalent of the
maximum front-end sales charge permitted by the National Association of
Securities Dealers, Inc. ("NASD"). The NASD has adopted rules which
generally limit the aggregate sales charges and payments under Armada's
Service and Distribution Plan and Shareholder Services Plan to a certain
percentage of total new gross share sales, plus interest. Armada would stop
accruing 12b-1 and related fees if, to the extent, and for as long as, such
limit would otherwise be exceeded.
(5) The Inventor Pennsylvania Tax-Exempt Money Market Fund provides that Class A
shares will bear the costs of distribution expenses and related service fees
at the annual rate of .25% of the Fund's average net assets. The Distributor
has agreed to voluntarily waive any fees payable and reserves the right to
terminate this waiver at any time at its sole discretion.
(6) Absent the voluntary waivers by the investment adviser and distributor, the
total operating expenses for the Inventor Pennsylvania Tax-Exempt Money
Market Fund would be .96%.
(7) The expense information in the table relating to the Armada Pennsylvania Tax
Exempt Fund has been restated to reflect current fees. If the maximum
distribution fee permitted under the Armada Pennsylvania Tax Exempt Fund
12b-1 Plan were imposed and absent advisory fee waivers, total operating
expenses would be .74% and .64%, respectively, for the pro forma combined
Retail and Institutional shares.
Example: An investor would pay the following expenses on a $1,000 investment,
assuming (1) 5% annual return, and (2) redemption at the end of the
following periods:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Inventor Pennsylvania Tax-Exempt Money Market Fund
Class A Shares................................... $ 6 $18 $31 $ 69
Armada Pennsylvania Tax Exempt Fund
Retail Shares.................................... N/A N/A N/A N/A
Institutional Shares............................. N/A N/A N/A N/A
Pro Forma Combined
Retail Shares.................................... 5 14 25 55
Institutional Shares............................. 3 11 19 43
</TABLE>
-9-
<PAGE> 16
<TABLE>
<CAPTION>
INVENTOR ARMADA
PENNSYLVANIA PENNSYLVANIA PRO FORMA
MUNICIPAL BOND MUNICIPAL FUND* COMBINED
FUND ---------------------- ----------------------
---------------- RETAIL INSTITUTIONAL RETAIL INSTITUTIONAL
CLASS A SHARES SHARES SHARES SHARES
---------------- ------- ------------- ------ -------------
<S> <C> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Charge
Imposed on Purchases............. 4.00% None None 3.00% None
Sales Charge Imposed on
Reinvested Dividends............. None None None None None
Deferred Sales Charge.............. None None None None None
Redemption Fee..................... $ 10(1) None None None None
Exchange Fee....................... None None None None None
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net
assets)
Advisory Fees (after fee
waivers)(2)...................... .58% N/A N/A .54% .54%
12b-1 Fees (after fee waivers)..... .00%(5) N/A N/A .01%(4) .01%(4)
Other Expenses..................... .27% N/A N/A .39%(3) .29%
----- ---- ----- ------ ----
Total Operating Expenses
(after fee waivers).............. .85%(6) N/A N/A .94%(7) .84%(7)
===== ==== ===== ===== ====
- ---------------
<FN>
* The Armada Pennsylvania Municipal Fund has not yet commenced operations. The
Armada Pennsylvania Municipal Fund will continue the operations of the
Inventor Pennsylvania Municipal Bond Fund upon consummation of the
Reorganization relating to the Fund.
(1) For wire redemptions.
(2) The Adviser and administrator of the Inventor Pennsylvania Municipal Bond
Fund have agreed to waive a portion of their fees and have advised Inventor
that they intend to continue such waiver for the current fiscal year. The
Adviser and the administrator of the Inventor Pennsylvania Municipal Bond
Fund reserve the right to terminate these waivers at any time in their sole
discretion. Absent these waivers, advisory fees would be .70%. The Adviser
to the Armada Pennsylvania Municipal Fund has agreed to waive a portion of
its fees and has advised Armada that it intends to continue such waiver for
the current fiscal year. The Adviser to the Pennsylvania Municipal Fund
reserves the right to terminate this waiver at any time in its sole
discretion. Absent this waiver, advisory fees would be .55% for the Armada
Pennsylvania Municipal Fund.
(3) Armada has implemented a Shareholder Services Plan the "Services Plan") with
respect to Retail Shares in the Fund. Under the Services Plan, Armada may
enter into shareholder servicing agreements with certain financial
institutions pursuant to which they would agree to provide shareholder
administrative services to their customers who beneficially own Retail
shares in consideration for the payment of up to .10% (on an annualized
basis) of the net asset value of such shares.
(4) The Armada Pennsylvania Municipal Fund has in effect a 12b-1 Plan pursuant
to which the Fund may bear fees in an amount of up to .10% of average daily
net assets. As a result of the payment of sales charges and 12b-1 fees,
long-term shareholders may pay more than the economic equivalent of the
maximum front-end sales charge permitted by the National Association of
Securities Dealers, Inc. ("NASD"). The NASD has adopted rules which
generally limit the aggregate sales charges and payments under the Armada's
Service and Distribution Plan and Shareholder Services Plan to a certain
percentage of total new gross share sales, plus interest. Armada would stop
accruing 12b-1 and related fees if, to the extent, and for as long as, such
limit would otherwise be exceeded.
(5) The Inventor Pennsylvania Municipal Bond Fund provides that Class A shares
will bear the costs of distribution expenses and related service fees at the
annual rate of .25% of the Fund's average net assets. The Distributor has
agreed to voluntarily waive any fees payable and reserves the right to
terminate this waiver at any time at its sole discretion.
(6) Absent the voluntary waivers by the investment adviser, administrator and
distributor, the total operating expenses for the Inventor Pennsylvania
Municipal Bond Fund would be 1.24%.
(7) The expense information in the table relating to the Armada Pennsylvania
Municipal Fund has been restated to reflect current fees. If the maximum
distribution fee permitted under the Armada Pennsylvania Municipal Fund
12b-1 Plan were imposed and absent advisory fee waivers, total operating
expenses would be 1.04% and .94%, respectively, for the pro forma combined
Retail and Institutional shares. Total Fund Operating Expenses absent
advisory fee before waivers would be .95% for Retail shares and .85% for
Institutional shares.
</TABLE>
-10-
<PAGE> 17
Example: An investor would pay the following expenses on a $1,000 investment,
assuming (1) 5% annual return, and (2) redemption at the end of the
following periods:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Inventor Pennsylvania Municipal Bond Fund
Class A Shares................................... $ 48 $66 $85 $141
Armada Pennsylvania Municipal Fund
Retail Shares.................................... N/A N/A N/A N/A
Institutional Shares............................. N/A N/A N/A N/A
Pro Forma Combined
Retail Shares.................................... 39 59 80 142
Institutional Shares............................. 9 27 47 104
</TABLE>
EXPENSE RATIOS -- INVENTOR PORTFOLIOS. The following table sets forth (i)
the ratios of operating expenses to average net assets of the Inventor
Portfolios for the fiscal year ended April 30, 1995 (a) after fee waivers and
(b) absent fee waivers, and (ii) the ratios of operating expenses to average net
assets of the Inventor Portfolios for the fiscal year ended April 30, 1996 (a)
after fee waivers and (b) absent fee waivers:
<TABLE>
<CAPTION>
FISCAL YEAR ENDED APRIL 30, 1995
-----------------------------------------
RATIO OF OPERATING RATIO OF OPERATING
EXPENSES TO AVERAGE EXPENSES TO AVERAGE
NET ASSETS AFTER NET ASSETS ABSENT
INVENTOR PORTFOLIOS FEE WAIVERS(1) FEE WAIVERS(1)
- ---------------------------------------------------- ------------------- -------------------
<S> <C> <C>
Inventor Equity Growth Fund......................... 0.95% 1.48%
Inventor Intermediate Government Securities Fund.... 0.85% 1.33%
Inventor GNMA Securities Fund....................... 0.85% 1.40%
Inventor Pennsylvania Municipal Bond Fund........... 0.85% 1.36%
Inventor Pennsylvania Tax-Exempt Money Market
Fund.............................................. 0.55% 1.04%
- ---------------
<FN>
(1)Annualized for the period of commencement through April 30, 1995.
</TABLE>
<TABLE>
<CAPTION>
FISCAL YEAR ENDED APRIL 30, 1996
-----------------------------------------
RATIO OF OPERATING RATIO OF OPERATING
EXPENSES TO AVERAGE EXPENSES TO AVERAGE
NET ASSETS AFTER NET ASSETS ABSENT
INVENTOR PORTFOLIOS FEE WAIVERS FEE WAIVERS
- ---------------------------------------------------- ------------------- -------------------
<S> <C> <C>
Inventor Equity Growth Fund......................... 0.95% 1.43%
Inventor Intermediate Government Securities Fund.... 0.85% 1.25%
Inventor GNMA Securities Fund....................... 0.85% 1.29%
Inventor Pennsylvania Municipal Bond Fund........... 0.85% 1.24%
Inventor Pennsylvania Tax-Exempt Money Market
Fund.............................................. 0.55% 0.96%
</TABLE>
EXPENSE RATIOS -- ARMADA PORTFOLIOS. The following tables set forth (i)
the ratios of operating expenses to average net assets of the Armada Portfolios
for the fiscal year ended May 31, 1995 (a) after fee
-11-
<PAGE> 18
waivers and (b) absent fee waivers, and (ii) the ratios of operating expenses to
average net assets of the Armada Portfolios for the fiscal year ended May 31,
1996 (a) after fee waivers and (b) absent fee waivers:
<TABLE>
<CAPTION>
FISCAL YEAR ENDED MAY 31, 1995
-------------------------------------------
RATIO OF OPERATING RATIO OF OPERATING
EXPENSES TO AVERAGE EXPENSES TO AVERAGE
NET ASSETS AFTER NET ASSETS ABSENT
ARMADA PORTFOLIOS FEE WAIVERS FEE WAIVERS
- -------------------------------------------------- ------------------- -------------------
<S> <C> <C>
Armada Equity Fund
Institutional Shares............................ 1.01% 1.02%
Retail Shares................................... 1.27% 1.28%
Armada GNMA Fund
Institutional Shares............................ (1) (1)
Retail Shares................................... (1) (1)
Armada Government Income Fund
Institutional Shares............................ (1) (1)
Retail Shares................................... (1) (1)
Armada Pennsylvania Municipal Fund
Institutional Shares............................ (1) (1)
Retail Shares................................... (1) (1)
Armada Pennsylvania Tax Exempt Fund
Institutional Shares............................ (1) (1)
Retail Shares................................... (1) (1)
- ---------------
<FN>
(1) Had not commenced operations as of May 31, 1995.
</TABLE>
<TABLE>
<CAPTION>
FISCAL YEAR ENDED MAY 31, 1996
-------------------------------------------
RATIO OF OPERATING RATIO OF OPERATING
EXPENSES TO AVERAGE EXPENSES TO AVERAGE
NET ASSETS AFTER NET ASSETS ABSENT
ARMADA PORTFOLIOS FEE WAIVERS FEE WAIVERS
- -------------------------------------------------- ------------------- -------------------
<S> <C> <C>
Armada Equity Fund
Institutional Shares............................ 1.01% 1.03%
Retail Shares................................... 1.26% 1.28%
Armada GNMA Fund
Institutional Shares............................ (1) (1)
Retail Shares................................... (1) (1)
Armada Government Income Fund
Institutional Shares............................ (1) (1)
Retail Shares................................... (1) (1)
Armada Pennsylvania Municipal Fund
Institutional Shares............................ (1) (1)
Retail Shares................................... (1) (1)
Armada Pennsylvania Tax Exempt Fund
Institutional Shares............................ (1) (1)
Retail Shares................................... (1) (1)
- ---------------
<FN>
(1) Had not commenced operations as of May 31, 1996.
</TABLE>
VOTING INFORMATION. This Combined Proxy Statement/Prospectus is being
furnished in connection with the solicitation of proxies by Inventor's Board of
Directors in connection with a Special Meeting of Shareholders to be held on
Thursday, August 1, 1996 at 10:00 a.m. (Eastern time), at 680 East Swedesford
Road, Wayne, Pennsylvania 19087-1658 (such meeting and any adjournments thereof
hereinafter referred to as the "Special Meeting"). Only shareholders of record
at the close of business on May 31, 1996 will be
-12-
<PAGE> 19
entitled to notice of and to vote at the Special Meeting. Each share or fraction
thereof is entitled to one vote or fraction thereof and all shares will vote
separately by portfolio. Shares represented by a properly executed proxy will be
voted in accordance with the instructions thereon, or if no specification is
made, the persons named as proxies will vote in favor of each proposal set forth
in the Notice of Special Meeting. Proxies may be revoked at any time before they
are exercised by submitting to Inventor a written notice of revocation or a
subsequently executed proxy or by attending the Special Meeting and voting in
person. For additional information, including a description of the shareholder
vote required for approval of the Reorganization Agreement and related
transactions contemplated thereby, see "Information Relating to Voting Matters."
RISK FACTORS. The following discussion highlights the principal risk
factors associated with an investment in the Inventor Equity Growth Fund and the
Armada Equity Fund and is qualified in its entirety by the more extensive
discussion of risk factors in "Comparison of Investment Policies and Risk
Factors."
Because of the similarities of the investment objectives and policies of
the Inventor Equity Growth Fund and the Armada Equity Fund, management believes
that an investment in the Armada Equity Fund involves risks that are similar to
those of the Inventor Equity Growth Fund. These investment risks include those
typically associated with investing in a portfolio of common stocks and
securities convertible into common stocks. Funds investing in equity securities
and debt securities which are convertible to equity securities are subject to
market risk. Market risk is the possibility that prices of securities held by a
Fund will decline over a short or even extended period. Stock markets tend to be
cyclical, with periods of generally declining prices. The cycles will affect the
value of a Fund investing in equity securities. Funds investing in debt
securities which are convertible to equity securities are subject to market risk
caused by fluctuations in interest rates and are subject to the risk that
particular issuers will be unable to meet their obligations.
There are differences, however, between the Inventor Equity Growth Fund and
the Armada Equity Fund as described on Page 17 under "Comparison of Investment
Policies and Risk Factors." These differences can result in different risks.
For example, within specified limits, the Armada Equity Fund may seek to
achieve its investment objectives through investments directly in securities of
foreign issuers. Investments in foreign securities involve risks not typically
associated with investments in securities of U.S. issuers. Investments in
foreign securities involve certain inherent risks, such as political or economic
instability of the issuer or the country of issue, the difficulty of predicting
international trade patterns, changes in exchange rates of foreign currencies
and the possibility of adverse changes in investment or exchange control
regulations. There may be less publicly available information about a foreign
company than about a domestic company. Foreign companies generally are not
subject to uniform accounting, auditing and financial reporting standards
comparable to those applicable to domestic companies. Further, foreign stock
markets are generally not as developed or efficient as those in the U.S., and in
most foreign markets volume and liquidity are less than in the U.S. Fixed
commissions on foreign stock exchanges are generally higher than the negotiated
commissions on U.S. exchanges, and there is generally less government
supervision and regulation of foreign stock exchanges, brokers and companies
than in the U.S. With respect to certain foreign countries, there is a
possibility of expropriation or confiscatory taxation, limitations on the
removal of funds or other assets, or diplomatic developments that could affect
investment within those countries. Because of these and other factors,
securities of foreign companies acquired by the Fund may be subject to greater
fluctuation in price than securities of domestic companies.
The Armada Equity Fund may also borrow funds for temporary purposes by
entering into reverse repurchase agreements. Reverse repurchase agreements are
considered to be borrowings by the Fund under the 1940 Act. Engaging in the use
of reverse repurchase agreements can cause the portfolio's net asset value to
rise or fall faster than it otherwise would. Reverse repurchase agreements
involve the risk that the market value of the securities sold by a portfolio may
decline below the price of the securities the portfolio is obligated to
purchase.
The Inventor Equity Growth Fund cannot invest in these types of
investments; however, it may seek to achieve its investment objective through
investments, within specified limits, in certain options and futures and
Standard and Poor's Depository Receipts ("SPDRs"). When a portfolio purchases an
option, it runs the risk
-13-
<PAGE> 20
that it will lose its entire investment in the option in a relatively short
period of time, unless the portfolio exercises the option or enters into a
closing sale transaction with respect to the option during the life of the
option. SPDRs are interests in a unit investment trust ("UIT"). SPDRs are not
individually redeemable, except upon termination of the UIT. The liquidity of
small holdings of SPDRs will depend upon the existence of a secondary market.
The Armada Equity Fund may not invest in options, futures or SPDRs.
Further, the Inventor Equity Growth Fund may have higher portfolio turnover
rates (e.g., 168% for the fiscal year ended April 30, 1996), resulting in higher
portfolio costs, while the Armada Equity Fund's annual portfolio turnover is not
expected to exceed 100% under normal market conditions.
INFORMATION RELATING TO THE PROPOSED REORGANIZATION
Inventor has entered into an agreement whereby its investment portfolios
are to be acquired by portfolios of Armada. Significant provisions of the
Reorganization Agreement are summarized below; however, this summary is
qualified in its entirety by reference to the Reorganization Agreement, a copy
of which is attached as Appendix I to this Combined Proxy Statement/Prospectus.
DESCRIPTION OF THE REORGANIZATION AGREEMENT. There are five separate
Inventor investment portfolios. The assets of one of these portfolios will be
acquired by a similar investment portfolio currently offered by Armada. The
remaining four portfolios will be acquired by four new Armada Portfolios which
have been organized to continue the operations of these Inventor Portfolios.
The Reorganization Agreement provides that at the Effective Time of the
Reorganization, substantially all of the known assets and known liabilities of
the Inventor Portfolios will be transferred to the corresponding Armada
Portfolios identified in the table below. The holders of Class A shares of an
Inventor Portfolio will receive Institutional class shares of the corresponding
Armada Portfolio identified in the table. The number of Institutional class
shares to be issued by each Armada Portfolio will have an aggregate net asset
value equal to the aggregate net asset value of the Class A shares of the
corresponding Inventor Portfolio as of the regular close of the New York Stock
Exchange, currently 4:00 p.m. New York time, at the Valuation Time.
<TABLE>
<CAPTION>
INVENTOR REORGANIZING PORTFOLIOS ARMADA PORTFOLIOS
- --------------------------------------------------------------- -----------------------------
<S> <C>
Equity Growth Fund............................................. Equity Fund
GNMA Securities Fund........................................... GNMA Fund
Intermediate Government Securities Fund........................ Intermediate Government Fund
Pennsylvania Municipal Bond Fund............................... Pennsylvania Municipal Fund
Pennsylvania Tax-Exempt Money Market Fund...................... Pennsylvania Tax Exempt Fund
</TABLE>
The Reorganization Agreement provides that Inventor will declare a dividend
or dividends prior to the Valuation Time which, together with all previous
dividends, will have the effect of distributing to the shareholders of the
Inventor Equity Growth Fund all of such Fund's undistributed net investment
company income, if any, for the period up to and including the Effective Time of
the Reorganization. Inventor plans to declare similar dividends with respect to
the other funds involved in the Reorganization.
Following the transfers of assets and liabilities from the Inventor
Portfolios to the Armada Portfolios, and the issuances of shares by the Armada
Portfolios to the Inventor Portfolios, each of the Inventor Portfolios will
distribute Institutional class shares of the Armada Portfolios PRO RATA to the
holders of Class A shares of the Inventor Portfolios as described above in
liquidation of the Inventor Portfolios. Each holder of Class A shares of an
Inventor Portfolio at the Effective Time of the Reorganization will receive
Institutional class shares of the corresponding Armada Portfolio of equal value,
plus the right to receive any dividends or distributions which were declared by
Inventor before the Effective Time of the Reorganization but which remained
unpaid at that time. Following the Reorganization, the registration of Inventor
as an investment company under the 1940 Act will be terminated, and Inventor
will be terminated under state law.
The stock transfer books of Inventor will be permanently closed at the
Effective Time of the Reorganization.
-14-
<PAGE> 21
The Reorganization is subject to a number of conditions, including approval
by the shareholders of Inventor of the Reorganization Agreement and the
transactions contemplated thereby, as described in this Combined Proxy
Statement/Prospectus; the receipt of certain legal opinions described in the
Reorganization Agreement; the receipt of certain certificates from the parties
concerning the continuing accuracy of the representations and warranties in the
Reorganization Agreement and other matters; and the parties' performance in all
material respects of their agreements and undertakings in the Reorganization
Agreement. Assuming satisfaction of the conditions in the Reorganization
Agreement, the Effective Time of the Reorganization is expected to occur on
September 6, 1996 or such other date as is agreed to by the parties.
Section 15(f)(1) of the 1940 Act provides that when a change in the control
of an investment adviser of a registered investment company occurs, the
investment adviser or any of its affiliated persons may receive any amount or
benefit in connection therewith as long as (a) there is not imposed an unfair
burden on the investment company as a result of such transactions or any express
or implied terms, conditions or understandings applicable thereto, and (b) for a
period of three years after the time of such action, at least 75% of the members
of the board of directors of such registered investment company are not
interested persons of the investment adviser of such registered investment
company or interested persons of the predecessor investment adviser. Armada has
represented in the Reorganization Agreement that (i) its Board of Trustees
complied with the foregoing requirements as of the date thereof, and (ii) in the
event that its Board of Trustees ceases to comply with such requirements at any
time within three years after the Effective Time of the Reorganization, Armada
will take all necessary action to restore compliance as soon as is reasonably
practicable.
The Reorganization Agreement provides that, to the extent not borne by
their respective investment advisers, Armada and Inventor will each be
responsible for the payment of its own expenses incurred in connection with the
Reorganization. Armada estimates that it will bear approximately $130,000 of the
total costs of the Reorganization. Inventor does not expect to bear any of such
costs.
The Reorganization Agreement may be terminated at any time prior to the
Effective Time of the Reorganization by either Armada or Inventor if the
conditions specified in the Reorganization Agreement are not satisfied or by the
mutual consent of Armada and Inventor. The Reorganization Agreement provides
further that at any time prior to or (to the fullest extent permitted by law)
after approval of the Reorganization Agreement by the shareholders of Inventor
(i) the parties thereto may, by written agreement approved by their respective
Boards of Trustees or Directors, or authorized officers and with or without the
approval of their Shareholders, amend any of the provisions of the
Reorganization Agreement; and (ii) either party may waive any breach by the
other party or the failure to satisfy any of the conditions to its obligations
with or without the approval of such party's shareholders.
In its consideration and approval of the Reorganization at a meeting on
March 18, 1996, the Board of Directors of Inventor considered, primarily, the
Holding Company Merger of Integra Financial Corporation and National City
Corporation. Specifically, the Board of Directors of Inventor considered the
effect of the Holding Company Merger on Inventor; the recommendation of National
City and the Armada Advisers with respect to the proposed consolidation of
Inventor and Armada; the tax-free nature of the Reorganization; and the fact
that, based on representations made by management of Armada with respect to the
level of unrealized gains and losses in the Inventor Equity Growth Fund, the
interests of Shareholders would not be diluted as a result of the
Reorganization. Prior to the Holding Company Merger, new advisory and
sub-advisory agreements, including advisory and sub-advisory fees charged
thereunder which were the same in all material respects as those under the prior
advisory and sub-advisory agreements, were approved by the Board of Directors
and Shareholders of Inventor.
After consideration of all of the foregoing factors, together with certain
other factors and information considered to be relevant, Inventor's Directors
unanimously approved the Reorganization Agreement and directed that it be
submitted to shareholders for approval. INVENTOR'S BOARD OF DIRECTORS RECOMMENDS
THAT SHAREHOLDERS VOTE "FOR" APPROVAL OF THE REORGANIZATION AGREEMENT.
-15-
<PAGE> 22
The Board of Directors of Inventor has not determined what action it will
take in the event the shareholders of any Inventor Portfolio fail to approve the
Reorganization Agreement or for any reason the Reorganization is not
consummated. In either such event, the Directors may choose to consider
alternative dispositions of Inventor's assets, including the sale of assets to,
or merger with, another investment company, or the possible liquidation of any
of its portfolios.
At a meeting held on February 15, 1996, the Armada Board of Trustees
considered the proposed Reorganization. Based upon their evaluation of the
relevant information provided to them, and in light of their fiduciary duties
under federal and state law, the Board of Trustees unanimously determined that
the proposed Reorganization was in the best interests of Armada and its
respective shareholders and that the interests of existing shareholders of
Armada would not be diluted as a result of effecting the transaction.
CAPITALIZATION. Because the Inventor Equity Growth Fund will be combined
in the Reorganization with the Armada Equity Fund, the total capitalization of
the Armada Equity Fund after the Reorganization is expected to be greater than
the current capitalization of the Inventor Equity Growth Fund. The following
table sets forth: (i) the capitalization of the Armada Equity Fund as of October
31, 1995, (ii) the capitalization of the Inventor Equity Growth Fund as of
October 31, 1995, and (iii) the pro forma capitalization of the Armada Equity
Fund as adjusted to give effect to the Reorganization. If consummated, the
capitalization of the Armada Equity Fund is likely to be different at the
Effective Time of the Reorganization as a result of daily share purchase and
redemption activity in the portfolio.
CAPITALIZATION TABLE
<TABLE>
<CAPTION>
INVENTOR
ARMADA EQUITY
EQUITY GROWTH PRO-FORMA
FUND FUND COMBINED
------------ ----------- ------------
<S> <C> <C> <C>
Total Net Assets.................................. $141,558,113 $55,421,278 $196,979,391
Institutional Shares............................ $135,821,501 $55,421,278 $191,242,779
Retail Shares................................... $ 5,736,612 $ -- $ 5,736,612
Shares Outstanding
Institutional Shares............................ $ 8,464,447 $ 4,612,149 $ 11,917,486
Retail Shares................................... $ 356,886 $ -- $ 356,886
Net Asset Value per Share
Institutional Shares............................ $ 16.05 $ 12.02 $ 16.05
Retail Shares................................... $ 16.07 $ -- $ 16.07
</TABLE>
FEDERAL INCOME TAX CONSEQUENCES. Consummation of the Reorganization is
subject to the condition that Inventor and Armada receive an opinion from
Drinker Biddle & Reath to the effect that for federal income tax purposes: (i)
the transfer of all of the assets and liabilities of the Inventor Equity Growth
Fund and each of the Continuing Portfolios to the corresponding Armada Portfolio
in exchange for shares of the corresponding Armada Portfolio and liquidating
distributions to shareholders of the Inventor Portfolios of the shares of the
Armada Portfolios so received, as described in the Reorganization Agreement,
will constitute reorganizations within the meaning of Section 368(a)(1)(C),
Section 368(a)(1)(D) or Section 368(a)(1)(F) of the Internal Revenue Code of
1986, as amended (the "Code"), and with respect to the Reorganization, each
Inventor Portfolio and Armada Portfolio will be considered "a party to a
reorganization" within the meaning of Section 368(b) of the Code; (ii) no gain
or loss will be recognized by the Inventor Portfolios as a result of such
transactions; (iii) no gain or loss will be recognized by the Armada Portfolios
as a result of such transactions; (iv) no gain or loss will be recognized by the
shareholders of any Inventor Portfolio on the distribution to them by Inventor
of Institutional class shares of the corresponding Armada Portfolio in exchange
for their Class A shares of the Inventor Portfolio; (v) the aggregate basis of
the Armada shares received by a shareholder of an Inventor Portfolio will be the
same as the aggregate basis of the Shareholder's Inventor shares immediately
prior to the Reorganization; (vi) the basis of each Armada Portfolio in the
assets of the corresponding Inventor Portfolio received pursuant to the
Reorganization will be the same as the basis
-16-
<PAGE> 23
of the assets in the hands of the Inventor Portfolio immediately before the
Reorganization; (vii) a shareholder's holding period for Armada shares will be
determined by including the period for which the shareholder held the Inventor
shares exchanged therefor, provided that the shareholder held such Inventor
shares as a capital asset; (viii) each Armada Portfolio's holding period with
respect to the assets received in the Reorganization will include the period for
which such assets were held by the corresponding Inventor Portfolio; and (ix)
each Armada Portfolio will succeed to the tax attributes of the corresponding
Inventor Portfolio.
Armada and Inventor have not sought a tax ruling from the Internal Revenue
Service ("IRS"), but are acting in reliance upon the opinion of counsel
discussed in the previous paragraph. That opinion is not binding on the IRS and
does not preclude the IRS from adopting a contrary position. Shareholders should
consult their own advisers concerning the potential tax consequences to them,
including state and local income taxes.
COMPARISON OF INVESTMENT POLICIES AND RISK FACTORS
The investment objectives and policies of the Inventor Equity Growth Fund
are, in many respects, similar to those of the Armada Equity Fund. There are,
however, certain differences. The following discussion summarizes some of the
more significant similarities and differences in the investment policies and
risk factors of the Inventor Equity Growth Fund and Armada Equity Fund and is
qualified in its entirety by the discussion elsewhere herein, and in the
prospectuses and statements of additional information of the Inventor Equity
Growth Fund and the Armada Equity Fund incorporated herein by reference.
INVENTOR EQUITY GROWTH FUND AND ARMADA EQUITY FUND
The investment policies of both portfolios are similar. The principal
difference between the policies is that the Inventor Equity Growth Fund seeks
capital appreciation only, whereas the Armada Equity Fund seeks a high level of
total return arising out of capital appreciation and income. For the Inventor
Equity Growth Fund, dividend income is an incidental consideration compared to
growth of capital. Also, under normal market conditions, at least 80% of the
Armada Equity Fund's total assets will be invested in common stock and
securities convertible into common stocks, whereas the Inventor Equity Growth
Fund is only required to hold 65% of its total assets in common stocks and
convertible securities. Another difference is that the Inventor Equity Growth
Fund may invest up to 15% of its net assets in illiquid securities, whereas the
Armada Equity Fund may only invest up to 10% of its net assets in such
securities.
Both Funds may invest in American Depository Receipts ("ADRs"), but such
holdings are limited to 20% of the Armada Equity Fund's total assets. The
Inventor Equity Growth Fund is not bound by this restriction. The Armada Equity
Fund may also invest in securities issued by foreign issuers.
The Inventor Equity Growth Fund may purchase and sell put and call options
on securities for the purposes of hedging against market risks related to its
portfolio securities. The Armada Equity Fund is permitted under its fundamental
limitations to purchase and sell futures and options thereon.
In order to meet liquidity needs and for temporary defensive purposes, the
Inventor Equity Growth Fund may hold cash reserves and may invest up to 100% of
its assets in money market instruments. The Inventor Equity Growth Fund may also
borrow money in amounts up to 33 1/3% of its net assets. As a matter of
fundamental policy, the Armada Equity Fund may not borrow money, except that it
may borrow from banks and enter into reverse repurchase agreements for temporary
purposes in amounts not to exceed 10% of the value of its total assets at the
time of such borrowing. The Inventor Equity Growth Fund may not engage in
reverse repurchase agreements. During temporary defensive periods, the Armada
Equity Fund can invest in guaranteed investment contracts, in which the Inventor
Equity Growth Fund may not invest.
The Armada Equity Fund is permitted to invest in foreign currency
transactions and variable and floating rate obligations, whereas the Inventor
Equity Growth Fund may not invest in either type of investment.
-17-
<PAGE> 24
INVESTMENT POLICIES AND RISKS -- GENERAL
The investment objectives of the Inventor Equity Growth Fund and the Armada
Equity Fund are fundamental, meaning that they may not be changed without a vote
of the holders of a majority of the respective portfolios' outstanding shares,
as defined by the 1940 Act. The investment policies (except certain investment
limitations) of the Inventor Portfolios and the Armada Portfolios are not
fundamental and may be changed by the respective Boards of Directors and
Trustees.
This section describes certain policies and risks that are common to the
Inventor Equity Growth Fund and the Armada Equity Fund. The Inventor Equity
Growth Fund and the Armada Equity Fund are permitted to: (i) purchase
when-issued and delayed delivery securities; (ii) lend portfolio securities;
(iii) invest in money market instruments such as certificates of deposit, time
deposits, bankers' acceptances and commercial paper; (iv) engage in repurchase
agreements; (v) purchase obligations of the U.S. Government, its agencies and
instrumentalities; and (vi) invest in securities of other investment companies.
INVESTMENT LIMITATIONS
Neither the Inventor Equity Growth Fund nor the Armada Equity Fund may
change their fundamental investment limitations without the affirmative vote of
the holders of a majority of the respective Fund's outstanding shares (as
defined in the 1940 Act). The investment limitations of the Inventor Equity
Growth Fund and the Armada Equity Fund are similar, but not identical.
Both the Inventor Equity Growth Fund and the Armada Equity Fund are
"diversified" investment portfolios and, therefore, have fundamental policies
limiting investments in securities of any one issuer, other than securities
issued by the U.S. Government, its agencies and instrumentalities, and
repurchase agreements collateralized by such securities, to 5% of the value of a
portfolio's total assets, except that up to 25% of the value of a portfolio's
total assets may be invested without regard to this 5% limitation.
In addition, the Inventor Equity Growth Fund and the Armada Equity Fund may
not purchase any securities which would cause the Fund to be invested in the
securities of one or more issuers conducting their principal business activities
in the same industry in excess of 25% of the total assets of the former, and 25%
or more of the total assets of the latter, provided that this limitation does
not apply to investments in obligations issued or guaranteed by the U.S.
Government or its agencies and instrumentalities, and repurchase agreements
involving such securities. The Armada Equity Fund policy further provides: (i)
wholly owned finance companies will be considered to be in the industries of
their parents if their activities are primarily related to financing the
activities of their parents, and (ii) utilities will be classified according to
their services, for example, gas, gas transmission, electric and gas, electric,
and telephone will each be considered a separate industry.
Neither the Inventor Equity Growth Fund nor the Armada Equity Fund may (i)
borrow money or issue senior securities, except that the Armada Equity Fund may
borrow from banks and enter into reverse repurchase agreements for temporary
purposes in amounts not in excess of 10% of the value of the Armada Equity
Fund's total assets and the Inventor Equity Growth Fund may borrow from anyone
for temporary purposes in an amount not exceeding 5% of total assets or may
borrow from a bank for non-temporary purposes in an amount not exceeding 33 1/3%
of net assets; or (ii) mortgage, pledge, or hypothecate any assets except in
connection with any such borrowing and in amounts not in excess of, for Armada,
the lesser of the dollar amounts borrowed or 10% of the value of the Armada
Equity Fund's total assets and, for Inventor, 33 1/3% of the Inventor Equity
Growth Fund's total assets at the time of such borrowing. To the extent that a
bank borrowing exceeds 5% of the Inventor Equity Growth Fund's total assets,
asset coverage of at least 300% is required. Neither Fund will purchase
securities while borrowings (including reverse repurchase agreements, for
Armada) are in excess of, for Armada, or are equal to or are in excess of, for
Inventor, 5% of its total assets.
The investment limitations described in the foregoing paragraphs regarding
diversification, borrowing and pledging of assets are fundamental with respect
to both Inventor and Armada.
-18-
<PAGE> 25
Neither the Inventor Equity Growth Fund nor the Armada Equity Fund may make
loans, except that both Funds may purchase or hold debt instruments, lend
portfolio securities and enter into repurchase agreements in accordance with
their respective investment objective and policies.
Neither Fund may act as an underwriter of securities of other issuers
except as it may be deemed an underwriter in selling a portfolio security. Nor
may either Fund purchase or sell real estate, except that the Armada Equity Fund
may invest in securities secured by real estate or interests therein or issued
by companies or investment trusts which invest in real estate or interests
therein and the Inventor Equity Growth Fund may invest in companies which invest
in real estate.
The Inventor Equity Growth Fund and the Armada Equity Fund may not invest
in any issuer for the purpose of exercising control or management. Neither Fund
may purchase securities on margin, make short sales of securities, or, for
Armada, maintain a short position, except that both Funds may purchase and sell
futures contracts and options on futures contracts in accordance with their
investment objectives. The policies of the Armada Equity Fund do not currently
permit investments in futures and options thereon.
Neither the Inventor Equity Growth Fund nor the Armada Equity Fund may
purchase or sell commodity contracts, or invest in oil, gas or mineral
exploration or development programs or, in the case of Inventor, leases, except
that the Inventor Equity Growth Fund may invest in companies which invest in
financial commodities contracts and the Armada Equity Fund may to the extent
appropriate to its investment objective: (i) invest in securities issued by
companies which purchase or sell commodities or commodity contracts or which
invest in such programs; and (ii) purchase and sell futures contracts and
options on futures contracts. In addition, the Armada Equity Fund may enter into
forward currency contracts and other financial instruments in accordance with
its investment objective and policies.
The following fundamental investment limitation of the Armada Equity Fund
has no fundamental counterpart in the Inventor Equity Growth Fund: the Armada
Equity Fund may invest no more than 10% of the value of its net assets in
illiquid securities, including repurchase agreements with remaining maturities
in excess of seven days, non-negotiable time deposits, certificates of
participation without corresponding remarketing agreements, and other securities
which are not readily marketable. The Inventor Equity Growth Fund, however, has
the following non-fundamental investment limitation: the Inventor Equity Growth
Fund may not invest in illiquid securities in an amount exceeding, in the
aggregate, 15% of its net assets.
The Armada Equity Fund is prohibited from purchasing or retaining the
securities of any issuer if the officers or trustees of Armada or the officers
or directors of its investment advisers owning beneficially more than one-half
of 1% of the securities of such issuer together own beneficially more than 5% of
such securities.
So long as the Armada Equity Fund is offering and selling its shares in the
state of Texas, it may not: (i) invest more than 5% of its net assets in
warrants (included within that amount, but not to exceed 2%, may be warrants
which are not listed on the New York or American Stock Exchange), (ii) invest in
oil, gas or other mineral leases, or (iii) invest in real estate limited
partnership interests.
The Armada Equity Fund may not purchase or sell put options, call options,
straddles, spreads or any combination thereof, except that the Fund may purchase
and sell futures contracts and options on futures contracts in accordance with
its investment objective.
As a non-fundamental policy, the Inventor Equity Growth Fund may not
purchase securities of any company which has (with predecessors) a record of
less than three years of continuous operations, if as a result, more than 5% of
the Fund's total assets would be invested in such securities.
As a matter of fundamental policy, the Inventor Equity Growth Fund, with
respect to 75% of its net assets, will not acquire more than 10% of the voting
securities of any one issuer.
See "Risk Factors, Investment Objectives and Policies" in Armada's
Statement of Additional Information which is incorporated by reference herein
for additional investment limitations of the Armada Equity Fund.
-19-
<PAGE> 26
PURCHASE AND REDEMPTION INFORMATION, EXCHANGE PRIVILEGES, DISTRIBUTION AND
PRICING. The purchase, redemption, exchange privileges and distribution
policies of the Inventor Portfolios and the Armada Portfolios are discussed
above under "Summary -- Overviews of the Inventor Portfolios and Armada
Portfolios" and below in Appendix III to this Combined Proxy
Statement/Prospectus.
OTHER INFORMATION. Inventor and Armada are registered as open-end
management investment companies under the 1940 Act. Currently, Inventor offers
five investment portfolios and Armada offers eleven investment portfolios.
Inventor is organized as a Maryland corporation and is subject to the
provisions of its Articles of Incorporation and By-Laws. Armada is organized as
a Massachusetts business trust and is subject to the provisions of its
Declaration of Trust and Code of Regulations. Shares of both Inventor and
Armada: (i) are entitled to one vote for each full share held and a
proportionate fractional vote for each fractional share held; (ii) will vote in
the aggregate and not by class except as otherwise expressly required by law or,
with respect to Armada only, when class voting is permitted by the Board of
Trustees; and (iii) are entitled to participate equally in the dividends and
distributions that are declared with respect to a particular investment
portfolio and in the net distributable assets of such portfolio on liquidation.
Shares of the Armada Portfolios have no par value while shares of the Inventor
Portfolios have a par value of $.0001. In addition, shares of the Inventor
Portfolios and Armada Portfolios have no preemptive rights and only such
conversion and exchange rights as the respective Boards of Directors or Trustees
may grant in their discretion. When issued for payment as described in their
prospectuses, Inventor shares and Armada shares are fully paid and
non-assessable by such entities except as required under Maryland law with
respect to Inventor. Armada is not required under the laws of Massachusetts to
hold annual meetings of shareholders and intends to do so only if required by
the 1940 Act or other applicable law. To the extent required by law, Armada will
assist in shareholder communications in such matters.
The foregoing is only a summary. Shareholders may obtain copies of the
Articles of Incorporation and By-laws of Inventor and the Declaration of Trust
and By-laws of Armada upon written request at the addresses shown on the cover
page of this Combined Proxy Statement/Prospectus.
INFORMATION RELATING TO VOTING MATTERS
GENERAL INFORMATION. This Combined Proxy Statement/Prospectus is being
furnished in connection with the solicitation of proxies by Inventor's Board of
Directors in connection with the Special Meeting. It is expected that the
solicitation of proxies will be primarily by mail. Officers and service
contractors of Inventor may also solicit proxies by telephone, telegraph,
facsimile or personal interview. Any shareholder giving a proxy may revoke it at
any time before it is exercised by submitting to Inventor a written notice of
revocation or a subsequently executed proxy or by attending the Special Meeting
and voting in person.
Only shareholders of record at the close of business on May 31, 1996 will
be entitled to vote at the Special Meeting. On that date there were outstanding
and entitled to be voted 4,574,966.674 shares of the Inventor Equity Growth
Fund, 6,033,136.360 shares of the Inventor GNMA Securities Fund, 8,906,456.588
shares of the Inventor Intermediate Government Securities Fund, 3,843,131.607
shares of the Inventor Pennsylvania Municipal Bond Fund and 68,475,316.900
shares of the Inventor Pennsylvania Tax-Exempt Money Market Fund. Each share or
fraction thereof is entitled to one vote or fraction thereof, and all shares
will vote separately by portfolio.
National City has advised Inventor and Armada that National City will vote
the shares of each Inventor Portfolio for which it is record owner as follows:
(i) for each account as to which there is an individual designated both to vote
proxies and to receive annual and semi-annual reports and other disclosure
documents, such individual shall be entitled to vote the shares beneficially
owned by such account; and (ii)(A) for each account as to which there is an
individual designated as aforesaid but such individual fails to vote and as to
which National City is a fiduciary, and (B) for each account as to which
National City is responsible to vote proxies, National City shall vote such
shares as advised by an independent third party unrelated to either National
City or the account.
-20-
<PAGE> 27
If the accompanying proxy is executed and returned in time for the Special
Meeting, the shares covered thereby will be voted in accordance with the proxy
on all matters that may properly come before the Special Meeting or any
adjournment thereof. For information on adjournment of the meeting, see "Quorum"
below.
SHAREHOLDER AND BOARD APPROVALS. The Reorganization Agreement (and the
transactions contemplated thereby) is being submitted for approval at the
Special Meeting by the holders of a majority of the outstanding shares of each
of the Inventor Equity Growth Fund, GNMA Securities Fund, Intermediate
Government Securities Fund, Pennsylvania Municipal Bond Fund and Pennsylvania
Tax-Exempt Money Market Fund, in accordance with the provisions of Inventor's
Articles of Incorporation and the requirements of the 1940 Act. The term
"majority of the outstanding shares" as used herein means more than 50% of the
outstanding shares.
In tallying shareholder votes, abstentions and broker non-votes (e.g.,
proxies sent in by brokers and other nominees that cannot be voted on a proposal
because instructions have not been received from the beneficial owners) will be
counted to determine whether or not a quorum is present for purposes of
convening the meeting. As to the Reorganization proposal, abstentions and broker
non-votes will be considered to be a vote against the Reorganization proposal.
The approval of the Reorganization by the shareholders of the Armada Equity
Fund is not being solicited because their approval or consent is not necessary
for the Reorganization to be consummated.
For purposes of the 1940 Act, any person who owns directly or through one
or more controlled companies more than 25 percent of the voting securities of a
company is presumed to "control" such company. Under this definition, National
City and its affiliates may be deemed to be controlling persons of both Armada
and Inventor.
At May 31, 1996, National City, which has its principal place of business
at 1900 East Ninth Street, Cleveland, Ohio 44114, and its affiliates held of
record substantially all of the outstanding shares of each of the Armada Funds
and Inventor Funds on behalf of their customer accounts. At such date, the name,
address and share ownership of the persons who beneficially owned 5% or more of
the Inventor Funds are as follows:
<TABLE>
<CAPTION>
# OF OUTSTANDING SHARES % OF OUTSTANDING SHARES
----------------------- -----------------------
<S> <C> <C>
PENNSYLVANIA TAX-EXEMPT MONEY MARKET FUND
------------------------------------------------------------------------------------------------
Keith James, Vice President.................... 7,970,567.58 11.64%
Polycom Huntsman, Inc.
90 West Chestnut Street
Washington, PA 15301
</TABLE>
It is expected that (a) National City and its affiliates will continue to
hold substantially all of the outstanding shares of Armada Funds upon
consumation of the proposed Reorganization, and (b) the percentage of the
Institutional shares of the Armada Pennsylvania Tax Exempt Fund that will be
owned at that time by the shareholder of the Inventor Pennsylvania Tax-Exempt
Money Market Fund named above will remain substantially the same as such
shareholder's holdings noted above, based on holdings at May 31, 1996.
At May 31, 1996, the name, address, and share ownership of the persons who
beneficially owned 5% or more of the Armada Funds are as follows:
<TABLE>
<CAPTION>
# OF OUTSTANDING SHARES % OF OUTSTANDING SHARES
----------------------- -----------------------
<S> <C> <C>
ARMADA GOVERNMENT FUND (INSTITUTIONAL)
------------------------------------------------------------------------------------------------
National City Corporation Custodian............ 84,976,951.78 11.45%
National City Bank, Kentucky
Corporate Trust, 14th Floor
101 South Fifth Street
Louisville, KY 40202
</TABLE>
-21-
<PAGE> 28
<TABLE>
<CAPTION>
# OF OUTSTANDING SHARES % OF OUTSTANDING SHARES
----------------------- -----------------------
<S> <C> <C>
Deloitte Touche & Company...................... 56,228,454.13 7.58%
Attn: Jim Carpenter
220 West Main Street, Suite 2100
Louisville, KY 40202
Baker & Hostetler.............................. 38,842,055.80 5.24%
3200 National City Center
1900 East Ninth Street
Cleveland, OH 44114-3485
Robert G. Markey, Esq.......................... 38,841,152.00 5.24%
3200 National City Center
1900 East Ninth Street
Cleveland, OH 44114-3485
ARMADA Tax Exempt Fund (Institutional)
------------------------------------------------------------------------------------------------
American Electric Power Service Corp........... 25,564,369.82 9.76%
One Riverside Plaza
P. O. Box 16631
Columbus, OH 43216-6631
ARMADA Treasury Fund (Institutional)
------------------------------------------------------------------------------------------------
Escrow-Employers Health/Lincoln Nat'l.......... 17,068,684.81 5.47%
Employers Health Insurance Company and
Lincoln National Life Insurance Company
c/o National City Bank, Indiana
101 West Washington Street, Suite 600
Indianapolis, IN 46255
ARMADA Enhanced Income Fund (Institutional)
------------------------------------------------------------------------------------------------
Whayne Supply.................................. 822,242.54 12.32%
Attn: Ora Nell Burke
P. O. Box 35900
Louisville, KY 40232
Kitchen Kompact, Inc........................... 784,483.29 11.76%
Attn: Robert G. Wilson
P. O. Box 868
Jeffersonville, IN 47131
Key Trust Company.............................. 564,476.144 8.44%
FBO SLHA Endowment
P. O. Box 94870
Cleveland, OH 44101
Hayes Utley & Associates Insurance Agency...... 396,742.43 5.95%
6100 Dutchmans Lane
Louisville, KY 40205
Denison University Operating Fund.............. 379,436.01 5.69%
Attn: Seth H. Patton
V.P. for Finance & Management
Granville, OH 43023
</TABLE>
-22-
<PAGE> 29
<TABLE>
<CAPTION>
# OF OUTSTANDING SHARES % OF OUTSTANDING SHARES
----------------------- -----------------------
<S> <C> <C>
ARMADA Equity Income Fund (Institutional)
------------------------------------------------------------------------------------------------
National City Corporation...................... 2,122,436,64 43.37%
Karl A. Johns, Secretary Pension Committee
1900 East Ninth Street
Cleveland, OH 44114
National City Savings & Investment Plan........ 346,489.95 7.08%
1900 East Ninth Street
Cleveland, OH 44114
ARMADA Fixed Income Fund (Institutional)
------------------------------------------------------------------------------------------------
National City Corporation...................... 2,028,504.82 18.79%
Karl A. Johns, Secretary Pension Committee
1900 East Ninth Street
Cleveland, OH 44114
National City Bank, Columbus................... 555,636.72 5.15%
Trustee under Agreement with Columbus
Foundation
155 East Broad Street
Columbus, OH 43251
ARMADA Mid Cap Regional Fund (Institutional)
------------------------------------------------------------------------------------------------
National City Corporation...................... 2,144,732.86 28.26%
Karl A. Johns, Secretary Pension Committee
1900 East Ninth Street
Cleveland, OH 44114
National City Savings & Investment Plan........ 626,014.86 8.25%
1900 East Ninth Street
Cleveland, OH 44114
Cleveland Foundation CIF Balanced Account...... 441,605.09 5.82%
c/o National City Bank
1900 East Ninth Street
Cleveland, OH 44114
ARMADA Total Return Advantage Fund (Institutional)
------------------------------------------------------------------------------------------------
Mr. Paul Richard............................... 1,999,764.81 7.07%
Director, Human Resources
1000 Lakeside Avenue
Cleveland, OH 44114
Appalachian Regional Healthcare................ 1,905,440.72 6.73%
Attn: Frank McCracken
1220 Harrodsburg
Lexington, KY 40533
University of Louisville....................... 1,832,371.16 6.47%
Attn: Larry Goldstein
Belknap Campus Service Complex
Louisville, KY 40292
</TABLE>
-23-
<PAGE> 30
<TABLE>
<CAPTION>
# OF OUTSTANDING SHARES % OF OUTSTANDING SHARES
----------------------- -----------------------
<S> <C> <C>
The Community Foundation of Louisville......... 1,805,793.97 6.38%
National City Trust Custodian
c/o National City Bank, Kentucky
101 South Fifth Street
Louisville, KY 40202
Appalchian Regional Healthcare................. 1,417,834.60 5.01%
Attn: Paula Eden
P. O. Box 8086
Lexington, KY 40533
ARMADA Government Fund (Retail)
------------------------------------------------------------------------------------------------
Ringold's School District...................... 6,694,752.68 5.10%
Parent Account
400 Main Street
New Eagle, PA 15067
ARMADA Tax Exempt Fund (Retail)
------------------------------------------------------------------------------------------------
Fairbanks Communications, Inc.................. 23,093,437.56 26.88%
1601 Belvedere Road, Suite 202E
West Palm Beach, FL 33406
ARMADA Treasury Fund (Retail)
------------------------------------------------------------------------------------------------
Doctors Hospital Development Foundation........ 454,318.860 10.43%
1100 Dennison Avenue
Columbus, OH 43201
Doraty Chevrolet, Inc.......................... 326,541.070 7.50%
c/o National City, Loc. #2067
P. O. Box 5756
Cleveland, OH 44101
Pittsburgh Pediatric Research, Inc............. 291,892.930 6.69%
253 Kenforest Drive
Pittsburgh, PA 15216
Johnson's Heating and Supplies, Inc............ 261,352.950 5.99%
P. O. Box 175
Norvelt, PA 15674
ARMADA Ohio Tax Exempt Fund (Retail)
------------------------------------------------------------------------------------------------
William J. Strippy............................. 16,688.273 6.22%
Mary Strippy
14450 Regency Drive
Strongsville, OH 44136
Edward B. Brandon.............................. 15,975.428 5.96%
3201 Enterprise Parkway, Suite 470
Lakepoint Office Park
Beachwood, OH 44122
Elisabeth H. Baker............................. 13,441.272 5.01%
3901 Northbrook Drive
Zanesville, OH 43701
</TABLE>
-24-
<PAGE> 31
<TABLE>
<CAPTION>
# OF OUTSTANDING SHARES % OF OUTSTANDING SHARES
----------------------- -----------------------
<S> <C> <C>
ARMADA Total Return Advantage Fund (Retail)
------------------------------------------------------------------------------------------------
Intrac......................................... 196,218.207 95.49%
Gary Ream
8440 Woodfield Crossing Blvd., South
Indianapolis, IN 46240
ARMADA Fixed Income Fund (Retail)
------------------------------------------------------------------------------------------------
The Somerset Group, Inc........................ 144,634.496 24.19%
Joseph M. Richter
135 North Pennsylvania Street, Suite 2800
Indianapolis, IN 46204
Intrac......................................... 94,939.090 15.88%
Gary Ream
8440 Woodfield Crossing Blvd., South
Indianapolis, IN 46240
B-F Beverage Company, Inc...................... 47,946.392 8.02%
3150 Shelby Street
Indianapolis, IN 46227
ARMADA Enhanced Income Fund (Retail)
------------------------------------------------------------------------------------------------
Intrac......................................... 103,851.062 60.87%
Gary Ream
8440 Woodfield Crossing Blvd., South
Indianapolis, IN 46240
B-F Beverage Company, Inc...................... 30,794.933 18.05%
3150 Shelby Street
Indianapolis, IN 46227
FNB Custodian.................................. 11,636.323 6.82%
IRA of Harvey M. Brunner, Jr.
700 Brick Mill Run #106
Westlake, OH 44145
ARMADA Mid Cap Regional Fund (Retail)
------------------------------------------------------------------------------------------------
Susan G. Ledford............................... 19,608.992 5.40%
1241 Carron Drive
Columbus, OH 43220
ARMADA Equity Income Fund (Retail)
------------------------------------------------------------------------------------------------
Carroll C. Homans, TTEE........................ 5,421.481 26.07%
Alan & Carroll C. Homans
Declaration of Trust, U/A 5/19/92
1190 Sugar Sand Blvd., #517
Riviera Beach, FL 33404
NFSC/FMTC IRA.................................. 1,999.881 9.17%
FBO Lawanah Harris
244 Natale Drive
Cortland, OH 44410
</TABLE>
-25-
<PAGE> 32
<TABLE>
<CAPTION>
# OF OUTSTANDING SHARES % OF OUTSTANDING SHARES
----------------------- -----------------------
<S> <C> <C>
NFSC/FMTC IRA.................................. 1,540.832 7.41%
FBO Melva D. Upshaw
15100 Minerva Avenue
Dolton, IL 60419
John E. Hoeffel................................ 1,162.231 5.59%
Carol L. Hoeffel
972 Glenwood
Napoleon, OH 43545
</TABLE>
At May 31, 1996, the directors and officers of Inventor, as a group, owned
less than 1% of the outstanding shares of each of the Inventor Funds. At May 31,
1996, the trustees and officers of Armada owned less than 1% of the outstanding
shares of each of the Armada Funds.
APPRAISAL RIGHTS. Shareholders are not entitled to any rights of share
appraisal under Inventor's Articles of Incorporation or under the laws of the
State of Maryland in connection with the Reorganization. Shareholders have,
however, the right to redeem from Inventor their Inventor shares at net asset
value until the Effective Time of the Reorganization, and thereafter
shareholders may redeem from Armada the Armada shares acquired by them in the
Reorganization at net asset value.
QUORUM. In the event that a quorum is not present at the Special Meeting,
or in the event that a quorum is present at the Special Meeting but sufficient
votes to approve the Reorganization Agreement and the transactions contemplated
thereby are not received, the persons named as proxies may propose one or more
adjournments of the Special Meeting to permit further solicitation of proxies.
Any such adjournment will require the affirmative vote of a majority of those
shares affected by the adjournment that are represented at the Special Meeting
in person or by proxy. If a quorum is present, the persons named as proxies will
vote those proxies which they are entitled to vote FOR the Reorganization
Agreement, in favor of such adjournments, and will vote those proxies required
to be voted AGAINST such proposals against any adjournment. A shareholder vote
may be taken with respect to one or more Inventor Portfolios prior to any such
adjournment if sufficient votes have been received for approval. A quorum is
constituted with respect to an Inventor Portfolio by the presence in person or
by proxy of the holders of one-third of the outstanding shares of the Portfolio
entitled to vote at the Special Meeting. Inventor proxies properly executed and
marked with a negative vote or an abstention will be considered to be present at
the Special Meeting for the purposes of determining the existence of a quorum
for the transaction of business.
ADDITIONAL INFORMATION ABOUT ARMADA
Information about the Armada Equity Fund is included in the Prospectus
accompanying this Combined Proxy Statement/Prospectus, which is incorporated by
reference herein. Additional information about the Armada Equity Fund is
included in its Statement of Additional Information dated September 28, 1995
which has been filed with the SEC and which is incorporated by reference herein.
A copy of the Statement of Additional Information may be obtained without charge
by writing or calling Armada at the address and telephone number shown on the
cover page of this Combined Proxy Statement/Prospectus. Armada is subject to the
informational requirements of the Securities Exchange Act of 1934 and the 1940
Act, as applicable, and, in accordance with such requirements, files proxy
materials, reports and other information with the SEC. These materials can be
inspected and copied at the Public Reference Facilities maintained by the SEC at
450 Fifth Street, N.W., Washington, D.C. 20549, and at Armada's address shown on
the cover page of this Combined Proxy Statement/Prospectus and at the SEC's
Regional Offices at 7 World Trade Center, Suite 1300, New York, New York 10048
and 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such
material can also be obtained from the Public Reference Branch, Office of
Consumer Affairs and Information Services, Securities and Exchange Commission,
Washington, D.C. 20549, at prescribed rates.
-26-
<PAGE> 33
The current trustees and officers of Armada will continue as trustees and
officers following the Reorganization. The name of each trustee as well as
information concerning his principal occupations during the past five years are
set forth below.
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATIONS
POSITION(S) HELD DURING PAST 5 YEARS
NAME AND ADDRESS WITH ARMADA AND OTHER AFFILIATIONS
- ------------------------- ------------------------ -------------------------------------------
<S> <C> <C>
Richard B. Tullis Chairman Chairman Emeritus, Harris Corporation
5150 Three Village Drive (electronic communication and information
Lyndhurst, OH 44124 processing equipment), since October 1985;
Age 82 Director, NACCO Materials Handling Group,
Inc. (manufacturer of industrial fork lift
trucks), since 1984; Director, Hamilton
Beach/Proctor-Silex, Inc. (manufacturer of
household appliances), since 1990;
Director, Waste-Quip, Inc. (waste handling
equipment), since 1989.
Thomas R. Benua, Jr. Trustee Chairman, EBCO Manufacturing Company and
564 Hackberry Drive subsidiaries (manufacture, sale and
Westerville, OH 43081 financing of water coolers and
Age 51 dehumidifiers), since January 1996 and
President, January 1987 to January 1996;
Vice President and Executive Committee
Member of Ebtech Corp. (market and sell
bottled and point-of-use water coolers),
since March 1991.
*Leigh Carter Trustee, Retired President and Chief Operating
13901 Shaker Blvd., #6B President and Treasurer Officer, BFGoodrich Company, August 1986 to
Cleveland, OH 44120 September 1990; Director, Adams Express
Age 70 Company (closed-end investment company),
since April 1982; Director, Lamson &
Sessions Co. (electrical supplies
production for construction, consumer power
and communications industries), since April
1991; Director, Petroleum & Resources
Corp., since April 1987; Director, Morrison
Products (manufacturer of blower fans and
air moving equipment), since April 1983.
John F. Durkott Trustee President and Chief Operating Officer,
8600 Allisonville Road Kittle's Home Furnishings Center, Inc.,
Indianapolis, IN 46250 since January 1982; partner, Kittles
Age 51 Bloomington Property Company, since January
1981; partner, KK&D (Affiliated Real Estate
Companies of Kittle's Home Furnishings
Center), since January 1989.
Richard W. Furst, Dean Trustee Professor of Finance and Dean, Carol Martin
Carol Martin Gatton Gatton College of Business and Economics,
College of Business University of Kentucky, since 1981;
Economics Director, Studio Plus Hotels, Inc., since
University of Kentucky 1994.
Lexington, KY 40506-0034
Age 57
</TABLE>
-27-
<PAGE> 34
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATIONS
POSITION(S) HELD DURING PAST 5 YEARS
NAME AND ADDRESS WITH ARMADA AND OTHER AFFILIATIONS
- ------------------------- ------------------------ -------------------------------------------
<S> <C> <C>
Robert D. Neary Trustee Retired Co-Chairman, Ernst & Young, April
32980 Creekside Drive 1984 to September, 1993; Director, Cold
Pepper Pike, OH 44124 Metal Products, Inc., since March 1994;
Age 62 Director, Zurn Industries, Inc.
(environmental systems and engineering and
construction services), since June 1995.
J. William Pullen Trustee President and Chief Executive Officer,
Whayne Supply Company Whayne Supply Co. (engine and heavy
1400 Cecil Avenue equipment distribution), since 1986;
P.O. Box 35900 President and Chief Executive Officer,
Louisville, KY 40232-5900 American Contractors Rentals & Sales
Age 57 (rental subsidiary of Whayne Supply Co.),
since 1988.
W. Bruce McConnel, III Secretary Partner of the law firm of Drinker Biddle &
Drinker Biddle & Reath Reath, Philadelphia, Pennsylvania.
Philadelphia National
Bank Building
1345 Chestnut Street
Philadelphia, PA 19107
Age 53
John J. Burke, III Assistant Treasurer Client Service Officer, First Data Investor
First Data Investor Services Group, Inc. since 1991; prior
Services Group, Inc. thereto, Management Associate, Fidelity
4400 Computer Drive Investments.
Westborough, MA 01581
Age 31
- ---------------
<FN>
* May be deemed to be an "interested person" of Armada as defined in the 1940
Act.
</TABLE>
-28-
<PAGE> 35
ADDITIONAL INFORMATION ABOUT INVENTOR
Information about Inventor is incorporated herein by reference from its
Prospectuses dated August 28, 1995 (as supplemented May 2, 1996) and Statement
of Additional Information dated August 28, 1995, copies of which may be obtained
without charge by writing or calling Inventor at the address and telephone
number shown on the cover page of this Combined Proxy Statement/Prospectus.
Reports and other information filed by Inventor can be inspected and copied at
the Public Reference Facilities maintained by the SEC at 450 Fifth Street, N.W.,
Washington, D.C. 20549, and copies of such material can be obtained from the
Public Reference Branch, Office of Consumer Affairs and Information Services,
Securities and Exchange Commission, Washington, D.C. 20549, at prescribed rates.
The name and address of each director and officer of Inventor as well as
information concerning his or her principal occupations during the past five
years are as follows:
<TABLE>
<CAPTION>
POSITION(S) HELD PRINCIPAL OCCUPATIONS
NAME AND ADDRESS WITH INVENTOR DURING PAST 5 YEARS
- ------------------------- --------------------------- -----------------------------------------
<S> <C> <C>
*Robert A. Nesher Chairman and Director Retired; Executive Vice President of SEI
680 East Swedesford Road Financial Management 1986-1994; Director
Wayne, PA 19087-1658 and Executive Vice President of SEI
Age 51 Financial Management 1981-1994.
John T. Cooney Director Retired; Former Vice Chairman of
573 N. Post Oak Lane Ameritrust Texas N.A. (1989-92); Vice
Houston, TX 77024 Chairman of MTrust Corp. (1985-1989).
Age 69
*William M. Doran Director Partner, Morgan Lewis & Bockius, LLP;
2000 One Logan Square Counsel to Inventor, SEI Financial
Philadelphia, PA 19103 Management Corporation and SEI Financial
Age 56 Services Company for past five years;
Director and Secretary of SEI Financial
Management.
Frank E. Morris Director Retired; Peter Drucker Professor of
105 Walpole Street Management, Boston College since 1989;
Dover, DE 02030 President, Federal Reserve Bank of Boston
Age 72 (1968-1988).
Robert A. Patterson Director Pennsylvania State University, Senior
408 Old Main Vice President, Treasurer (Emeritus),
University Park, PA 16802 Financial and Investment Consultant,
Age 78 Professor of Transportation
(1984-present); Vice President-
Investments, Treasurer, Senior Vice
President (Emeritus) (1982-1984);
Director, Pennsylvania Research Corp.;
Member and Treasurer, Board of Trustees
of Grove City College.
Gene Peters Director Private investor from 1987 to present.
943 Oblong Road Vice President and Chief Financial
Williamstown, MA 01267 Officer, Western Company of North America
Age 67 (petroleum service company) (1980-1986);
President of Gene Peters and Associates
(import company) (1978-1980); President
and Chief Financial Officer of Jos.
Schlitz Brewing Company before 1978.
</TABLE>
-29-
<PAGE> 36
<TABLE>
<CAPTION>
POSITION(S) HELD PRINCIPAL OCCUPATIONS
NAME AND ADDRESS WITH INVENTOR DURING PAST 5 YEARS
- ------------------------- --------------------------- -----------------------------------------
<S> <C> <C>
James M. Storey Director Retired; formerly Partner in the law firm
Ten Post Office Square of Dechert Price & Rhoads.
South
Boston, MA 02109
Age 65
David G. Lee President, Chief Executive Held this position since 1993. Vice
680 East Swedesford Road Officer -- Senior Vice President of SEI Financial (1991-1993);
Wayne, PA 19087-1658 President President, GW Sierra Trust Funds before
Age 44 1991.
Sandra K. Orlow Vice President, Vice President and Assistant Secretary of
680 East Swedesford Road Assistant Secretary the Administrator and Distributor since
Wayne, PA 19087-1658 1981.
Age 42
Kevin P. Robins Vice President, Senior Vice President and General Counsel
680 East Swedesford Road Assistant Secretary of SEI, the Administrator and the
Wayne, PA 19087-1658 Distributor since 1994; Vice President of
Age 35 SEI, the Administrator and the
Distributor (1992-1994); Associate,
Morgan, Lewis & Bockius, LLP (law firm)
prior to 1992.
Kathryn L. Stanton Vice President, Vice President, Assistant Secretary of
680 East Swedesford Road Assistant Secretary SEI, the Administrator and Distributor
Wayne, PA 19087-1658 since 1994; Associate, Morgan, Lewis &
Age 37 Bockius, LLP (law firm) (1989-1994).
Todd Cipperman Vice President and Vice President, Assistant Secretary of
680 East Swedesford Road Assistant Secretary SEI, the Administrator and Distributor
Wayne, PA 19087-1658 since May 1995; Associate, Dewey
Age 30 Ballantine (law firm) (1994- 1995);
Associate, Winston & Strawn (law firm)
(1991-1994).
Joseph Lydon Vice President, Director of Business Administration, SEI
680 East Swedesford Road Assistant Secretary Corporation since April 1995; Vice
Wayne, PA 19087-1658 President of Fund Group, Vice President
Age 36 of the Adviser -- Dreman Value
Management, LP; President of Dreman
Financial Services, Inc. from 1989 to
1994.
Jeffrey A. Cohen Controller, Chief CPA, Director, International and Domestic
680 East Swedesford Road Accounting Officer Funds Accounting, SEI Corporation from
Wayne, PA 19087-1658 1991 to present; Price Waterhouse, Audit
Age 35 Manager, before 1991.
Richard W. Grant Secretary Partner of Morgan, Lewis & Bockius, LLP
2000 One Logan Square (law firm); Counsel to Inventor,
Philadelphia, PA 19103 Administrator and the Distributor.
Age 50
- ---------------
<FN>
* May be deemed to be an "interested person" of Inventor as defined in the 1940
Act. At the time of the approval of the Reorganization by the Board of
Directors of Inventor, and as of the date hereof, Robert A. Nesher and William
M. Doran were "interested" members of the Inventor Board of Directors, because
Mr. Nesher is a shareholder and a former officer of the parent corporation of
the distributor of Inventor, and Mr. Doran is a partner in Morgan, Lewis &
Bockius, LLP, counsel to Inventor.
</TABLE>
-30-
<PAGE> 37
LITIGATION
Neither Inventor nor Armada is involved in any litigation that would have
any material adverse financial effect upon either the Inventor Portfolios or the
Armada Portfolios.
FINANCIAL HIGHLIGHTS
INVENTOR FINANCIAL HIGHLIGHTS. The tables set forth below present
financial information for the Class A shares of the Inventor Equity Growth Fund,
GNMA Securities Fund, Intermediate Government Securities Fund, Pennsylvania
Municipal Bond Fund and Pennsylvania Tax-Exempt Money Market Fund. This
information is derived from the Inventor Portfolios' unaudited financial
statements for the six-month period ended October 31, 1995. The data should be
read in conjunction with the unaudited financial statements and related notes,
which are included in the Statement of Additional Information related to this
Combined Proxy Statement/Prospectus. The financial highlights for the Inventor
Portfolios for prior periods are contained in Inventor's Prospectuses dated
August 28, 1995 (as supplemented May 2, 1996) and the financial statements for
prior periods are included in Inventor's Statement of Additional Information
dated August 28, 1995, which Prospectuses and Statement of Additional
Information are incorporated herein by reference.
SELECTED DATA FOR AN INVENTOR CLASS A SHARE OF CAPITAL STOCK
OUTSTANDING THROUGHOUT THE PERIOD INDICATED:
EQUITY GROWTH FUND
<TABLE>
<CAPTION>
SIX-MONTH
PERIOD ENDED
OCTOBER 31, 1995
(UNAUDITED)
----------------
CLASS A SHARES
----------------
<S> <C>
Net Asset Value, Beginning of Period.......................................... $ 10.69
Net Investment Income......................................................... 0.08
Net Realized and Unrealized Gains on Securities............................... 1.33
Distributions from Net Investment Income...................................... (0.08)
Distributions from Realized Capital Gains..................................... --
------------
Net Asset Value, End of period................................................ $ 12.02
============
Total Return.................................................................. 13.20%(1,3)
Net Assets, End of Period (000)............................................... $ 55,421
Ratio of Expenses to Average Net Assets....................................... 0.95%(2)
Ratio of Net Investment Income to Average Net Assets.......................... 1.34%(2)
Ratio of Expenses to Average Net Assets (Excluding Waivers)................... 1.43%(2)
Ratio of Net Investment Income to Average Net Assets (Excluding Waivers)...... 0.86%(2)
Portfolio Turnover Rate....................................................... 85%
- ---------------
<FN>
1 Not Annualized.
2 Annualized.
3 Does not reflect sales charge.
</TABLE>
-31-
<PAGE> 38
SELECTED DATA FOR AN INVENTOR CLASS A SHARE OF CAPITAL STOCK
OUTSTANDING THROUGHOUT THE PERIOD INDICATED:
GNMA SECURITIES FUND
<TABLE>
<CAPTION>
SIX-MONTH
PERIOD ENDED
OCTOBER 31, 1995
(UNAUDITED)
----------------
CLASS A SHARES
----------------
<S> <C>
Net Asset Value, Beginning of Period.......................................... $ 10.16
Net Investment Income......................................................... 0.34
Net Realized and Unrealized Gains on Securities............................... 0.30
Distributions from Net Investment Income...................................... (0.34)
Distributions from Realized Capital Gains..................................... --
------------
Net Asset Value, End of Period................................................ $ 10.46
============
Total Return.................................................................. 6.36%(1,3)
Net Assets, End of Period (000 omitted)....................................... $ 54,130
Ratio of Expenses to Average Net Assets....................................... 0.85%(2)
Ratio of Net Investment Income to Average Net Assets.......................... 6.47%(2)
Ratio of Expenses to Average Net Assets (Excluding Waivers)................... 1.31%(2)
Ratio of Net Investment Income to Average Net Assets (Excluding Waivers)...... 6.01%(2)
Portfolio Turnover Rate....................................................... 103%
- ---------------
<FN>
1 Not Annualized.
2 Annualized.
3 Does not reflect sales charge.
</TABLE>
-32-
<PAGE> 39
SELECTED DATA FOR AN INVENTOR CLASS A SHARE OF CAPITAL STOCK
OUTSTANDING THROUGHOUT THE PERIOD INDICATED:
INTERMEDIATE GOVERNMENT SECURITIES FUND
<TABLE>
<CAPTION>
SIX-MONTH
PERIOD ENDED
OCTOBER 31, 1995
(UNAUDITED)
----------------
CLASS A SHARES
----------------
<S> <C>
Net Asset Value, Beginning of Period.......................................... $ 10.02
Net Investment Income......................................................... 0.32
Net Realized and Unrealized Gains on Securities............................... 0.29
Distributions from Net Investment Income...................................... (0.32)
Distributions from Realized Capital Gains..................................... --
------------
Net Asset Value, End of Period................................................ $ 10.31
============
Total Return.................................................................. 6.15%(1,3)
Net Assets, End of Period (000 omitted)....................................... $ 91,429
Ratio of Expenses to Average Net Assets....................................... 0.85%(2)
Ratio of Net Investment Income to Average Net Assets.......................... 6.20%(2)
Ratio of Expenses to Average Net Assets (Excluding Waivers)................... 1.27%(2)
Ratio of Net Investment Income to Average Net Assets (Excluding Waivers)...... 5.78%(2)
Portfolio Turnover Rate....................................................... 53%
- ---------------
<FN>
1 Not Annualized.
2 Annualized.
3 Does not reflect sales charge.
</TABLE>
-33-
<PAGE> 40
SELECTED DATA FOR AN INVENTOR CLASS A SHARE OF CAPITAL STOCK
OUTSTANDING THROUGHOUT THE PERIOD INDICATED:
PENNSYLVANIA MUNICIPAL BOND FUND
<TABLE>
<CAPTION>
SIX-MONTH
PERIOD ENDED
OCTOBER 31, 1995
(UNAUDITED)
----------------
CLASS A SHARES
----------------
<S> <C>
Net Asset Value, Beginning of Period.......................................... $ 10.04
Net Investment Income......................................................... 0.21
Net Realized and Unrealized Gains on Securities............................... 0.21
Distributions from Net Investment Income...................................... (0.21)
Distributions from Realized Capital Gains..................................... --
------------
Net Asset Value, End of Period................................................ $ 10.25
============
Total Return.................................................................. 4.21%(1,3)
Net Assets, End of Period (000 omitted)....................................... $ 38,556
Ratio of Expenses to Average Net Assets....................................... 0.85%(2)
Ratio of Net Investment Income to Average Net Assets.......................... 4.08%
Ratio of Expenses to Average Net Assets (Excluding Waivers)................... 1.25%(2)
Ratio of Net Investment Income to Average Net Assets (Excluding Waivers)...... 3.68%(2)
Portfolio Turnover Rate....................................................... 4%
- ---------------
<FN>
1 Not Annualized.
2 Annualized.
3 Does not reflect sales charge.
</TABLE>
-34-
<PAGE> 41
SELECTED DATA FOR AN INVENTOR CLASS A SHARE OF CAPITAL STOCK
OUTSTANDING THROUGHOUT THE PERIOD INDICATED:
PENNSYLVANIA TAX-EXEMPT MONEY MARKET FUND
<TABLE>
<CAPTION>
SIX-MONTH
PERIOD ENDED
OCTOBER 31, 1995
(UNAUDITED)
----------------
CLASS A SHARES
----------------
<S> <C>
Net Asset Value, Beginning of Period.......................................... $ 1.00
Net Investment Income......................................................... 0.02
Net Realized and Unrealized Gains on Securities............................... --
Distributions from Net Investment Income...................................... (0.02)
Distributions from Realized Capital Gains..................................... --
------------
Net Asset Value, End of Period................................................ $ 1.00
============
Total Return.................................................................. 1.75%(1)
Net Assets, End of Period (000 omitted)....................................... $ 62,157
Ratio of Expenses to Average Net Assets....................................... 0.55%(2)
Ratio of Net Investment Income to Average Net Assets.......................... 3.44%(2)
Ratio of Expenses to Average Net Assets (Excluding Waivers)................... 0.95%(2)
Ratio of Net Investment Income to Average Net Assets (Excluding Waivers)...... 3.04%(2)
- ---------------
<FN>
1 Not Annualized.
2 Annualized.
</TABLE>
-35-
<PAGE> 42
ARMADA FINANCIAL HIGHLIGHTS. The table set forth below presents financial
information for the Institutional Shares and Retail Shares of the Armada Equity
Fund. This information is derived from the Armada Equity Fund's unaudited
financial statements for the six-month period ended November 30, 1995. The data
should be read in conjunction with the unaudited financial statements and
related notes, which are included in the Statement of Additional Information
related to this Combined Proxy Statement/Prospectus. The financial highlights
for the Armada Equity Fund for prior periods are contained in the Fund's
Prospectus dated September 28, 1995 and the financial statements for prior
periods are contained in the Fund's Annual Report for the year ended May 31,
1995 and are incorporated by reference into the Fund's Statement of Additional
Information dated September 28, 1995, which Prospectus and Statement of
Additional Information are incorporated herein by reference.
SELECTED DATA FOR A FUND SHARE
OUTSTANDING THROUGHOUT THE PERIOD INDICATED:
ARMADA EQUITY FUND
<TABLE>
<CAPTION>
FOR THE
SIX MONTHS ENDED
NOVEMBER 30, 1995
(UNAUDITED)
-------------------------
INSTITUTIONAL RETAIL
------------- -------
<S> <C> <C>
Net asset value, beginning of period....................... $ 14.77 $ 14.79
------------- -------
INCOME FROM INVESTMENT OPERATIONS
Net investment income.................................... .07 .05
Net gains on securities (realized and unrealized)........ 1.83 1.83
------------- -------
Total from investment operations...................... 1.90 1.88
------------- -------
LESS DISTRIBUTIONS
Dividends from net investment income..................... (.07) (.05)
Dividends in excess of net investment income............. (.02) (.02)
Dividends from net realized capital gains................ (.00) (.00)
Dividends in excess of net realized capital gains........ (.00) (.00)
------------- -------
Total distributions................................... (.09) (.07)
------------- -------
Net Asset value, end of period............................. $ 16.58 $ 16.60
============= =======
TOTAL RETURN............................................... 27.41%(3) 27.05%(3,4)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000's)..................... $ 141,084 $ 5,864
Ratio of expenses to average net assets.................. 1.00%(1,3) 1.25%(2,3)
Ratio of net investment income to average net assets..... .89%(1,3) .64%(2,3)
Portfolio turnover rate.................................. 38% 38%
- ---------------
<FN>
1 The operating expense ratio and net investment income ratio before fee waivers
by the Custodian for the Institutional class for the period ended November 30,
1995 would have been 1.03% and .86%, respectively.
2 The operating expense ratio and net investment income ratio before fee waivers
by the Custodian for the Retail class for the period ended November 30, 1995
would have been 1.27% and .62%, respectively.
3 Annualized.
4 Total return excludes sales load.
</TABLE>
-36-
<PAGE> 43
FINANCIAL STATEMENTS
The financial highlights for the Inventor Portfolios for the fiscal year
ended April 30, 1995 are included in Inventor's Prospectuses dated August 28,
1995 (as supplemented May 2, 1996) and the financial statements for the Inventor
Portfolios for the fiscal year ended April 30, 1995 are included in Inventor's
Statement of Additional Information dated September 28, 1995, which Prospectuses
and Statement of Additional Information are incorporated by reference in this
Combined Proxy Statement/Prospectus. Such financial highlights and financial
statements have been incorporated herein in reliance on the reports of Coopers &
Lybrand L.L.P., independent auditors, given on the authority of that firm as
experts in accounting and auditing.
The financial highlights of the Armada Equity Fund for the fiscal year
ended May 31, 1995 are included in the Prospectus for the Armada Equity Fund
dated September 28, 1995, and the financial statements for the Armada Equity
Fund for the fiscal year ended May 31, 1995 are included in Armada's Annual
Report and incorporated by reference in the Armada Equity Fund's Statement of
Additional Information dated September 28, 1995, which Prospectus and Statement
of Additional Information are incorporated by reference in this Combined Proxy
Statement/Prospectus. Such financial highlights and financial statements have
been incorporated herein in reliance on the reports of Ernst & Young LLP,
independent auditors, given on the authority of that firm as experts in
accounting and auditing.
OTHER BUSINESS
Inventor's Board knows of no other business to be brought before the
Special Meeting. However, if any other matters come before the Special Meeting,
it is the intention that proxies which do not contain specific restrictions to
the contrary will be voted on such matters in accordance with the judgment of
the persons named in the enclosed form of proxy.
SHAREHOLDER INQUIRIES
Shareholder inquiries may be addressed to Inventor in writing at the
address on the cover page of this Combined Proxy Statement/Prospectus or by
telephoning 1-800-6INVENT(1-800-646-8368).
* * *
SHAREHOLDERS WHO DO NOT EXPECT TO BE PRESENT AT THE SPECIAL MEETING ARE
REQUESTED TO DATE AND SIGN THE ENCLOSED PROXY AND RETURN IT IN THE ENCLOSED
ENVELOPE. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES.
-37-
<PAGE> 44
APPENDIX I
AGREEMENT AND PLAN OF REORGANIZATION
BETWEEN
ARMADA FUNDS
AND
INVENTOR FUNDS, INC.
MAY 13, 1996
I-1
<PAGE> 45
CONTENTS
<TABLE>
<C> <S> <C>
I. Transfer of Assets of Inventor Funds.......................................... I-3
II. Liquidating Distributions and Termination of Inventor......................... I-4
III. Valuation Time................................................................ I-5
IV. Certain Representations, Warranties and Agreements of Inventor................ I-5
V. Certain Representations, Warranties and Agreements of Armada.................. I-7
VI. Shareholder Action on Behalf of the Acquired Funds............................ I-8
VII. N-14 Registration Statement and Proxy Solicitation Materials.................. I-8
VIII. Effective Time of the Reorganization.......................................... I-8
IX. Armada Conditions............................................................. I-9
X. Inventor Conditions........................................................... I-10
XI. Tax Documents................................................................. I-11
XII. Finder's Fees................................................................. I-12
XIII. Announcements................................................................. I-12
XIV. Further Assurances............................................................ I-12
XV. Termination of Representations and Warranties................................. I-12
XVI. Termination of Agreement...................................................... I-12
XVII. Amendment and Waiver.......................................................... I-12
XVIII. Governing Law................................................................. I-12
XIX. Successors and Assigns........................................................ I-13
XX. Beneficiaries................................................................. I-13
XXI. Armada Liability.............................................................. I-13
XXII. Inventor Liability............................................................ I-13
XXIII. Notices....................................................................... I-13
XXIV. Expenses...................................................................... I-14
XXV. Entire Agreement.............................................................. I-14
XXVI. Counterparts.................................................................. I-14
</TABLE>
I-2
<PAGE> 46
AGREEMENT AND PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") made as of May 13,
1996 between Armada Funds, a Massachusetts business trust ("Armada"), and
Inventor Funds, Inc., a Maryland corporation ("Inventor").
WHEREAS, the parties intend that substantially all of the known assets and
liabilities of Inventor's portfolios as of the Effective Time of the
Reorganization (as defined in Article VIII) be transferred to, and be acquired
and assumed by, certain Armada portfolios in exchange for Institutional Shares
of the Armada portfolios which shall thereafter be distributed by Inventor to
the holders of its Class A shares of its portfolios, all as described in this
Agreement (the "Reorganization");
WHEREAS, the parties intend that four of the Armada portfolios, the GNMA
Fund, the Intermediate Government Fund, the Pennsylvania Tax Exempt Fund and the
Pennsylvania Municipal Fund, will have nominal assets and liabilities before the
Reorganization and will continue the investment operations of the Inventor GNMA
Securities Fund, the Intermediate Government Securities Fund, the Pennsylvania
Tax Exempt Money Market Fund and the Pennsylvania Municipal Bond Fund
(collectively, the "Continuing Funds"), respectively, after the Reorganization;
WHEREAS, the parties intend that substantially all of the known assets and
liabilities of the Inventor Equity Growth Fund (the Continuing Funds and the
Inventor Equity Growth Fund collectively, the "Acquired Funds") shall be
acquired and assumed by the Armada Equity Fund;
WHEREAS, the parties have been advised that the shareholders of the
Inventor Prime Obligations Money Market Fund and the Inventor Treasury
Securities Money Market Fund will redeem their shares in these funds prior to
the Effective Time of the Reorganization;
WHEREAS, the parties intend that the transfers of assets, assumptions of
liabilities, and distributions of Institutional Shares be treated as tax-free
reorganizations under Section 368(a)(1)(C), (D) or (F) of the Internal Revenue
Code of 1986, as amended (the "Code"); and
WHEREAS, the parties intend that in connection with the Reorganization each
of the Inventor portfolios shall be terminated and Inventor shall be
deregistered as an investment company and dissolved under state law as described
in this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
hereinafter set forth and subject to the terms and conditions hereof, and
intending to be legally bound hereby, Armada and Inventor agree as follows:
I. TRANSFER OF ASSETS OF INVENTOR FUNDS.
1.01(a) At the Effective Time of the Reorganization (as defined in
Article VIII), all property of every description, and all interests,
rights, privileges and powers of each Acquired Fund other than cash in an
amount necessary to pay any unpaid dividends and distributions as provided
in Section 4.01(h) (such assets, the "Acquired Fund Assets") shall be
transferred and conveyed by such Acquired Fund to Armada on behalf of one
of its portfolios as set forth in Section 1.02 (each, an "Acquiring Fund"),
and shall be accepted by Armada on behalf of such Acquiring Fund, and
Armada, on behalf of such Acquiring Fund, shall assume all known
liabilities whether accrued, absolute, contingent or otherwise, of such
Acquired Fund reflected in the calculation of such Acquired Fund's net
asset value (the "Acquired Fund Liabilities"), so that at and after the
Effective Time of the Reorganization: (i) all assets of such Acquired Fund
shall become and be the assets of its Acquiring Fund; and (ii) all known
liabilities of each Acquired Fund reflected as such in the calculation of
the Acquired Fund's net asset value shall attach to its Acquiring Fund as
aforesaid and may thenceforth be enforced against such Acquiring Fund to
the extent as if the same had been incurred by it. Without limiting the
generality of the foregoing, the Acquired Fund Assets shall include all
property and assets of any nature whatsoever, including, without
limitation, all cash, cash equivalents, securities, claims and receivables
(including dividend and interest receivables) owned by an Acquired Fund,
and (subject to Section 1.01(b)) any deferred or prepaid
I-3
<PAGE> 47
expenses shown as an asset on an Acquired Fund's books, at the Effective
Time of the Reorganization, and all good will, all other intangible
property and all books and records belonging to an Acquired Fund. Recourse
by any person for the Acquired Fund Liabilities assumed by an Acquiring
Fund shall, at and after the Effective Time of the Reorganization, be
limited to such Acquiring Fund.
1.01(b) Notwithstanding Section 1.01(a), unamortized organizational
expenses of the Inventor Equity Growth Fund shall not be transferred or
assumed hereunder. The parties have been advised that such expenses will be
paid to such Fund by the investment adviser to one of the parties hereto
and will be eliminated from the balance sheet of such Fund prior to the
Effective Time of the Reorganization.
1.02 The assets of each Acquired Fund shall be acquired by the Acquiring
Fund identified below opposite its name.
<TABLE>
<CAPTION>
INVENTOR FUNDS ARMADA FUNDS
--------------------------------------------- ----------------------------------------
<S> <C>
Equity Growth Fund Equity Fund
GNMA Securities Fund GNMA Fund
Intermediate Government Securities Fund Intermediate Government Fund
Pennsylvania Municipal Bond Fund Pennsylvania Municipal Fund
Pennsylvania Tax-Exempt Money Market Fund Pennsylvania Tax Exempt Fund
</TABLE>
1.03 In exchange for the transfer of the Acquired Fund Assets and the
assumption of the Acquired Fund Liabilities, Armada shall simultaneously issue
at the Effective Time of the Reorganization to each Acquired Fund a number of
full and fractional (to the third decimal place) Institutional Shares of the
Acquiring Fund specified in Section 1.02, all determined and adjusted as
provided in this Agreement. The number of Institutional Shares of each Acquiring
Fund so issued will have an aggregate net asset value equal to the value of the
Acquired Fund Assets that are represented by the Class A shares of the Acquired
Fund, the holders of which shall receive Institutional Shares of the Acquiring
Fund, as specified in Section 1.02, all determined and adjusted as provided in
this Agreement.
1.04 The net asset value of the Institutional Shares of the Acquiring Funds
and the net asset value of the Class A shares of the Acquired Funds shall be
determined as of the Valuation Time specified in Article III.
1.05 The net asset value of the Institutional Shares of each Acquiring Fund
shall be computed in the manner set forth in such Acquiring Fund's then current
prospectus under the Securities Act of 1933, as amended (the "1933 Act"). In
determining the value of the securities transferred by the Acquired Funds to the
Acquiring Funds, each security shall be priced in accordance with the policies
and procedures (including amortized cost valuation procedures in the case of the
Pennsylvania Tax Exempt Fund) of Armada described in its then current
prospectuses and statements of additional information and adopted by Armada's
Board of Trustees. For such purposes, price quotations and the security
characteristics relating to establishing such quotations shall be determined by
Armada, such determination being subject to the approval of Inventor, and shall
be subject to adjustment by the amount, if any, agreed to by the parties hereto.
II. LIQUIDATING DISTRIBUTIONS AND TERMINATION OF INVENTOR. Immediately
after the Effective Time of the Reorganization, each Acquired Fund shall
distribute in complete liquidation pro rata to the shareholders of record as of
the Valuation Time of such Acquired Fund's Class A shares at the Effective Time
of the Reorganization the Institutional Shares of the Acquiring Fund to be
received by the record holders as of the Valuation Time of the Class A shares of
such Acquired Fund. In addition, each record holder of the Valuation Time of an
Acquired Fund shall have the right to receive any unpaid dividends or other
distributions which were declared before the Effective Time of the
Reorganization with respect to the shares of such Acquired Fund that are held by
the shareholder at the Effective Time of the Reorganization. In accordance with
instructions it receives from Inventor, Armada shall record on its books the
ownership of Institutional Shares of each Acquiring Fund by the record holders
of the Class A shares of the Acquired Fund identified in Section 1.02. All of
the issued and outstanding Class A shares of each Acquired Fund shall be
cancelled on the books of Inventor at the Effective Time of the Reorganization
and shall thereafter represent only the right to receive
I-4
<PAGE> 48
the Institutional Shares of the Acquiring Fund identified in Section 1.02, and
the Acquired Fund's transfer books shall be closed permanently. As soon as
practicable after the Effective Time of the Reorganization, Inventor shall make
all filings and take all other steps as shall be necessary and proper to effect
its complete dissolution, and shall file an application pursuant to Section 8(f)
of the Investment Company Act of 1940, as amended (the "1940 Act") for an order
declaring that it has ceased to be an investment company. After the Effective
Time of the Reorganization, Inventor shall not conduct any business except in
connection with its liquidation, dissolution, and deregistration.
III. VALUATION TIME. The Valuation Time shall be 4:00 p.m., Eastern Time,
on August 2, 1996, or on such other date as may be agreed in writing by the duly
authorized officers of both parties hereto.
IV. CERTAIN REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF INVENTOR.
4.01 Inventor, on behalf of itself and each Acquired Fund, represents and
warrants to, and agrees with, Armada as follows:
4.01(a) Inventor is a corporation duly organized and validly existing
under the laws of the State of Maryland. It is registered with the
Securities and Exchange Commission (the "SEC") as an open-end, diversified
management investment company under the 1940 Act and such registration is
in full force and effect.
4.01(b) Inventor has power to own all of its properties and assets
and, subject to the approvals of shareholders required by law and by the
Inventor Articles of Incorporation, as supplemented and amended, and
By-Laws, to carry out and consummate the transactions contemplated herein,
and has all necessary federal, state and local authorizations to carry on
its business as now being conducted and to consummate the transactions
contemplated by this Agreement.
4.01(c) This Agreement has been duly authorized, executed and
delivered by Inventor, and represents Inventor's valid and binding
contract, enforceable in accordance with its terms. The execution and
delivery of this Agreement does not and will not, and the consummation of
the transactions contemplated by this Agreement will not, violate
Inventor's Articles of Incorporation, as supplemented and amended, or
By-laws or any agreement or arrangement to which it is a party or by which
it is bound.
4.01(d) Each Acquired Fund has elected to qualify and has qualified as
a regulated investment company under Part I of Subchapter M of the Code, as
of and since its first taxable year; has been a regulated investment
company under such Part of the Code at all times since the end of its first
taxable year when it so qualified; and qualifies and shall continue to
qualify as a regulated investment company until the Effective Time of the
Reorganization.
4.01(e) All federal, state, local and foreign income, profits,
franchise, sales, withholding, customs, transfer and other taxes, including
interest, additions to tax and penalties (collectively, "Taxes") relating
to the Acquired Fund Assets due or properly shown to be due on any return
filed by any Acquired Fund with respect to taxable periods ending on or
prior to, and the portion of any interim period up to, the date hereof have
been fully and timely paid or provided for; and there are no levies, liens,
or other encumbrances relating to Taxes existing, threatened or pending
with respect to the Acquired Fund Assets. At the Effective Time of the
Reorganization, all returns and reports of Inventor and each Acquired Fund
respecting Taxes required by law to have been filed by such time shall have
been filed.
4.01(f) The financial statements of each Acquired Fund for its fiscal
year ended April 30, 1995, examined by Coopers & Lybrand L.L.P., copies of
which have been previously furnished to Armada, present fairly the
financial position of each Acquired Fund as of such date and the results of
its operations for the periods then ended, in conformity with generally
accepted accounting principles.
4.01(g) The unaudited financial statements of each Acquired Fund for
the six-month period ended October 31, 1995, copies of which have been
previously furnished to Armada, present fairly the financial position of
each Acquired Fund as of such date and the results of its operations for
the six-month period then ended, in conformity with generally accepted
accounting principles.
I-5
<PAGE> 49
4.01(h) Prior to the Valuation Time, the Inventor Equity Growth Fund
shall have declared a dividend, with a record date and ex-dividend date
prior to the Valuation Time, which, together with all previous dividends,
shall have the effect of distributing to its shareholders all of its net
investment company income, if any, for the taxable period ended on April
30, 1995 and for the period from said date to and including the Effective
Time of the Reorganization (computed without regard to any deduction for
dividends paid), and all of its net capital gain, if any, realized in such
taxable periods.
4.01(i) At both the Valuation Time and the Effective Time of the
Reorganization, there shall be no known liabilities of any Acquired Fund,
whether accrued, absolute, contingent or otherwise, not reflected in the
net asset values per share of its outstanding classes of shares.
4.01(j) There are no legal, administrative or other proceedings
pending or, to Inventor's knowledge, threatened against Inventor or an
Acquired Fund which could result in liability on the part of Inventor or an
Acquired Fund.
4.01(k) Subject to the approvals of shareholders required by law and
by the Inventor Articles of Incorporation, as supplemented and amended, and
By-Laws, at both the Valuation Time and the Effective Time of the
Reorganization, Inventor shall have full right, power and authority to
sell, assign, transfer and deliver the Acquired Fund Assets and, upon
delivery and payment for the Acquired Fund Assets as contemplated herein,
an Acquiring Fund shall acquire good and marketable title thereto, free and
clear of all liens and encumbrances, and subject to no restrictions on the
ownership or transfer thereof (except as imposed by federal or state
securities laws).
4.01(l) No consent, approval, authorization or order of any court or
governmental authority is required for the consummation by Inventor of the
transactions contemplated by this Agreement, except such as may be required
under the 1933 Act, the Securities Exchange Act of 1934, as amended ("1934
Act"), the 1940 Act, the rules and regulations under those Acts, and state
securities laws.
4.01(m) Insofar as the following relate to Inventor, the registration
statement filed by Armada on Form N-14 relating to the shares of certain
Acquiring Funds that will be registered with the SEC pursuant to this
Agreement, which, without limitation, shall include a proxy statement of
Inventor and the prospectuses of Inventor and Armada with respect to the
transactions contemplated by this Agreement, and any supplement or
amendment thereto or to the documents contained or incorporated therein by
reference (the "N-14 Registration Statement"), on the effective date of the
N-14 Registration Statement, at the time of any shareholders' meeting
referred to herein and at the Effective Time of the Reorganization: (i)
shall comply in all material respects with the provisions of the 1933 Act,
the 1934 Act and the 1940 Act, the rules and regulations thereunder, and
state securities laws, and (ii) shall not contain any untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading.
4.01(n) All of the issued and outstanding Class A shares of each
Acquired Fund have been duly and validly issued, are fully paid and
non-assessable, and were offered for sale and sold in conformity with all
applicable federal and state securities laws, and no shareholder of an
Acquired Fund has any preemptive right of subscription or purchase in
respect of such shares.
4.01(o) Inventor shall not sell or otherwise dispose of any shares of
an Acquiring Fund to be received in the transactions contemplated herein,
except in distribution to its shareholders as contemplated herein.
4.01(p) Inventor has valued, and will continue to value, its portfolio
securities and other assets in accordance with applicable legal
requirements.
4.01(q) Each Acquired Fund shall provide a list of all portfolio
securities held by it to Armada at least 15 days before the Effective Time
of the Reorganization and shall immediately notify Armada of any portfolio
security thereafter acquired by any Acquired Fund. Upon notice by Armada,
the Inventor Equity Growth shall, as promptly as practicable, but in any
event prior to the Valuation Time, sell any
I-6
<PAGE> 50
portfolio security that Armada identifies as impermissible under the
investment policies, objectives and limitations of the Armada Equity Fund.
V. CERTAIN REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF ARMADA
5.01 Armada, on behalf of itself and each Acquiring Fund, represents and
warrants to, and agrees with, Inventor as follows:
5.01(a) Armada is a Massachusetts business trust duly created pursuant
to its Declaration of Trust for the purpose of acting as a management
investment company under the 1940 Act and is validly existing under the
laws of, and duly authorized to transact business in, the Commonwealth of
Massachusetts. It is registered with the SEC as an open-end management
investment company under the 1940 Act and such registration is in full
force and effect.
5.01(b) Armada has power to own all of its properties and assets and
to carry out and consummate the transactions contemplated herein, and has
all necessary federal, state and local authorizations to carry on its
business as now being conducted and to consummate the transactions
contemplated by this Agreement.
5.01(c) This Agreement has been duly authorized, executed and
delivered by Armada, and represents Armada's valid and binding contract,
enforceable in accordance with its terms. The execution and delivery of
this Agreement does not and will not, and the consummation of the
transactions contemplated by this Agreement will not, violate Armada's
Declaration of Trust or Code of Regulations or any agreement or arrangement
to which it is a party or by which it is bound.
5.01(d) Each Acquiring Fund has elected or will elect to qualify as a
regulated investment company under Part I of Subchapter M of the Code, and
the Armada Equity Fund has so qualified as of and at all times since its
first taxable year and Armada intends that it will continue to so qualify.
5.01(e) The financial statements of the Armada Equity Fund for its
fiscal year ended May 31, 1995 examined by Ernst & Young LLP, and for the
six-month period ended November 30, 1995, copies of which have been
previously furnished to Inventor, present fairly the financial position of
such Fund as of the dates indicated and the results of its operations for
the periods indicated, in conformity with generally accepted accounting
principles.
5.01(f) At both the Valuation Time and the Effective Time of the
Reorganization, there shall be no known liabilities applicable to the
Institutional Shares of any Acquiring Fund, whether accrued, absolute,
contingent or otherwise, not reflected in the net asset values per share of
such Institutional Shares.
5.01(g) There are no legal, administrative or other proceedings
pending or, to Armada's knowledge, threatened against Armada or an
Acquiring Fund which could result in liability on the part of Armada or an
Acquiring Fund.
5.01(h) No consent, approval, authorization or order of any court or
governmental authority is required for the consummation by Armada of the
transactions contemplated by this Agreement, except such as may be required
under the 1933 Act, the 1934 Act, the 1940 Act, the rules and regulations
under those Acts, and state securities laws.
5.01(i) Insofar as the following relate to Armada, the N-14
Registration Statement on its effective date, at the time of any
shareholders' meetings referred to herein and at the Effective Time of the
Reorganization: (i) shall comply in all material respects with the
provisions of the 1933 Act, the 1934 Act and the 1940 Act, the rules and
regulations thereunder, and state securities laws, and (ii) shall not
contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements
therein not misleading.
5.01(j) The Institutional Shares of each Acquiring Fund to be issued
and delivered to an Acquired Fund for the account of record holders of
shares of an Acquired Fund, pursuant to the terms hereof, shall have been
duly authorized as of the Effective Time of the Reorganization and, when so
issued and
I-7
<PAGE> 51
delivered, shall be registered under the 1933 Act and under applicable
state securities laws, duly and validly issued, fully paid and
non-assessable, and were offered for sale and sold in conformity with all
applicable federal and state securities laws and no shareholder of Armada
shall have any preemptive right of subscription or purchase in respect
thereto.
5.01(k) Armada has valued, and will continue to value, its portfolio
securities and other assets in accordance with applicable legal
requirements.
5.01(l) The Board of Trustees of Armada complies with the requirements
of Section 15(f)(1)(A) of the 1940 Act as of the date hereof. If its Board
of Trustees ceases to comply with such requirements at any time within
three years after the Effective Time of the Reorganization, Armada will
take such action as is necessary to restore such compliance as soon as is
reasonably practicable.
VI. SHAREHOLDER ACTION ON BEHALF OF THE ACQUIRED FUNDS.
6.01 As soon as practicable after the effective date of the N-14
Registration Statement, but in any event prior to the Effective Time of the
Reorganization and as a condition thereto, Inventor shall hold a meeting of its
shareholders for the purposes of considering and voting upon:
6.01(a) Approval of this Agreement and the transactions contemplated
hereby, including, without limitation:
(i) The transfer of the Acquired Fund Assets belonging to each
Acquired Fund to an Acquiring Fund, and the assumption by such Acquiring
Fund of the Acquired Fund Liabilities of such Acquired Fund, in exchange
for Institutional Shares of such Acquiring Fund, as set forth in Section
1.02.
(ii) The liquidation of each Acquired Fund through the distribution
to its record holders of Institutional Shares of an Acquiring Fund as
described in this Agreement.
6.01(b) Such other matters as may be determined by the parties hereto.
6.02 Approval of this Agreement and the transactions contemplated herein by
the shareholders of the Acquired Funds shall constitute the waiver of the
application of any fundamental policy of such Acquired Funds that might be
deemed to prevent them from taking the actions necessary to effectuate the
Reorganization as described, and such policies, if any, shall be deemed to have
been amended accordingly.
VII. N-14 REGISTRATION STATEMENT AND PROXY SOLICITATION MATERIALS. Armada
shall file the N-14 Registration Statement under the 1933 Act, which shall
include or incorporate by reference the proxy statement of the Acquired Funds
and the prospectuses of the Acquiring Funds, and any supplement or amendment
thereto or to the documents contained or incorporated by reference, with the SEC
as promptly as practicable. Each of Armada and Inventor has cooperated and shall
continue to cooperate with the other, and has furnished and shall continue to
furnish the other with the information relating to itself that is required by
the 1933 Act, the 1934 Act, the 1940 Act, the rules and regulations under each
of those Acts and state securities laws, to be included in the N-14 Registration
Statement.
VIII. EFFECTIVE TIME OF THE REORGANIZATION. Delivery of the Acquired Fund
Assets and the Institutional Shares of each Acquiring Fund to be issued pursuant
to Article I and the liquidation of Inventor pursuant to Article II shall occur
at the opening of business on the next business day following the Valuation
Time, or on such other date, and at such place and time and date, agreed to by
the Boards of Trustees and Directors or authorized officers of Armada and
Inventor, respectively. The date and time at which such actions are taken are
referred to herein as the "Effective Time of the Reorganization." To the extent
any Acquired Fund Assets are, for any reason, not transferred at the Effective
Time of the Reorganization, Inventor shall cause such Acquired Fund Assets to be
transferred in accordance with this Agreement at the earliest practicable date
thereafter.
I-8
<PAGE> 52
IX. ARMADA CONDITIONS.
9.01 The obligations of Armada hereunder with respect to each Acquired Fund
shall be subject to the following conditions precedent:
9.01(a) This Agreement and the transactions contemplated by this
Agreement shall have been approved by the shareholders of each Acquired
Fund, in the manner required by law.
9.01(b) Inventor shall have duly executed and delivered to Armada such
bills of sale, assignments, certificates and other instruments of transfer
("Transfer Documents") as may be necessary or desirable to transfer all
right, title and interest of Inventor and such Acquired Fund in and to the
Acquired Fund Assets of such Acquired Fund. The Acquired Fund Assets shall
be accompanied by all necessary state stock transfer stamps or cash for the
appropriate purchase price therefor.
9.01(c) All representations and warranties of Inventor made in this
Agreement shall be true and correct in all material respects as if made at
and as of the Valuation Time and the Effective Time of the Reorganization.
As of the Valuation Time and the Effective Time of the Reorganization there
shall have been no material adverse change in the financial condition of an
Acquired Fund since October 31, 1995 other than those changes incurred in
the ordinary course of business as an investment company. No action, suit
or other proceeding shall be threatened or pending before any court or
governmental agency in which it is sought to restrain or prohibit, or
obtain damages or other relief in connection with, this Agreement or the
transactions contemplated herein.
9.01(d) Armada shall have received an opinion of Morgan, Lewis &
Bockius LLP, addressed to Armada in form reasonably satisfactory to Armada
and dated the Effective Time of the Reorganization, substantially to the
effect that: (i) Inventor is a corporation duly organized and validly
existing under the laws of the State of Maryland; (ii) the shares of each
Acquired Fund outstanding at the Effective Time of the Reorganization are
duly authorized, validly issued, fully paid and non-assessable by such
Acquired Fund, and to such counsel's knowledge no shareholder of such
Acquired Fund has any option, warrant or pre-emptive right to subscription
or purchase in respect thereof; (iii) this Agreement and the Transfer
Documents have been duly authorized, executed and delivered by Inventor and
represent legal, valid and binding contracts or instruments, enforceable in
accordance with their terms, subject to the effect of bankruptcy,
insolvency, moratorium, fraudulent conveyance and similar laws relating to
or affecting creditors' rights generally, and court decisions with respect
thereto, and such counsel shall not be required to express an opinion with
respect to the application of equitable principles in any proceeding,
whether at law or in equity, or with respect to the provisions of this
Agreement intended to limit liability for particular matters to an Acquired
Fund and its assets; (iv) the execution and delivery of this Agreement did
not, and the consummation of the transactions contemplated by this
Agreement will not, violate the Articles of Incorporation, as supplemented
and amended, or By-laws of Inventor or any material agreement known to such
counsel to which Inventor is a party or by which Inventor is bound; and (v)
to such counsel's knowledge, no consent, approval, authorization or order
of any court or governmental authority is required for the consummation by
Inventor of the transactions contemplated by this Agreement, except such as
have been obtained under the 1933 Act, the 1934 Act, the 1940 Act, the
rules and regulations under those Acts, and such as may be required under
the state securities laws. Such opinion may rely on the opinion of other
counsel to the extent set forth in such opinion, provided such other
counsel is reasonably acceptable to Armada.
9.01(e) Armada shall have received an opinion of Drinker Biddle &
Reath, addressed to Armada and Inventor in the form reasonably satisfactory
to them and dated the Effective Time of the Reorganization, substantially
to the effect that for federal income tax purposes (i) the transfers by
each Acquired Fund of all of its Acquired Fund Assets and Acquired Fund
Liabilities to the corresponding Acquiring Fund, in exchange for
Institutional Shares of such Acquiring Fund, and the distribution of said
shares to the shareholders of such Acquired Fund, as provided in this
Agreement, will each constitute a reorganization within the meaning of
Section 368(a)(1)(C), (D) or (F) of the Code and with respect to each
reorganization, the Acquired Fund and the Acquiring Fund will each be
considered "a party to a reorganization" within the meaning of Section
368(b) of the Code; (ii) in accordance with
I-9
<PAGE> 53
Sections 361(a), 361(c)(1) and 357(a) of the Code, no gain or loss will be
recognized by any Acquired Fund as a result of such transactions; (iii) in
accordance with Section 1032(a) of the Code, no gain or loss will be
recognized by an Acquiring Fund as a result of such transactions; (iv) in
accordance with Section 354(a)(1) of the Code, no gain or loss will be
recognized by the shareholders of any Acquired Fund on the distribution to
them by such Acquired Fund of Institutional Shares of an Acquiring Fund in
exchange for their Class A Shares of such Acquired Fund; (v) in accordance
with Section 358(a)(1) of the Code, the aggregate basis of Institutional
Shares of an Acquiring Fund received by each holder of Class A Shares of an
Acquired Fund will be the same as the aggregate basis of the shareholder's
Acquired Fund shares immediately prior to the transactions; (vi) in
accordance with Section 362(b) of the Code, the basis of the Acquired Fund
Assets to each Acquiring Fund will be the same as the basis of such
Acquired Fund Assets in the hands of an Acquired Fund immediately prior to
the exchange; (vii) in accordance with Section 1223 of the Code, a
shareholder's holding period for Acquiring Fund shares will be determined
by including the period for which the shareholder held the shares of an
Acquired Fund exchanged therefor, provided that the shareholder held such
shares of an Acquired Fund as a capital asset; (viii) in accordance with
Section 1223 of the Code, the holding period of an Acquiring Fund with
respect to the Acquired Fund Assets will include the period for which such
Acquired Fund Assets were held by an Acquired Fund; and (ix) in accordance
with Section 381(a) of the Code, each Acquiring Fund will succeed to the
tax attributes of the corresponding Acquired Fund described in Section
381(c) of the Code.
9.01(f) The SEC shall not have issued any unfavorable advisory report
under Section 25(b) of the 1940 Act nor instituted any proceeding seeking
to enjoin consummation of the transactions contemplated by this Agreement
under Section 25(c) of the 1940 Act.
9.01(g) The N-14 Registration Statement shall have become effective
under the 1933 Act and no stop order suspending such effectiveness shall
have been instituted or, to the knowledge of Armada, contemplated by the
SEC and the parties shall have received all permits and other
authorizations necessary under state securities laws to consummate the
transactions contemplated by this Agreement.
9.01(h) Inventor shall have delivered or caused to be delivered to
Armada each account, book, record or other document of Inventor applicable
to such Acquired Fund which is required to be maintained by Section 31(a)
of the 1940 Act and Rule 31a-1 to 31a-3 thereunder (regardless of what
person possesses the same), and a copy of all agreements and instruments to
which Inventor is a party or signatory. Inventor has instructed its service
contractors to provide Armada upon request with access to and copies of all
documents belonging to Inventor. Inventor shall have delivered to Armada a
list of the tax costs of the securities of each Acquired Fund by lot and
the holding periods of such securities, as of the Valuation Time.
9.01(i) The President or any Vice President of Inventor shall have
certified that Inventor has performed and complied in all material respects
with each of its agreements and covenants required by this Agreement to be
performed or complied with by it prior to or at the Valuation Time and the
Effective Time of the Reorganization.
9.01(j) The Bank Holding Company Merger shall have been consummated.
9.01(k) The Acquired Fund Assets to be transferred to an Acquiring
Fund under this Agreement shall include no assets which such Acquiring Fund
may not properly acquire pursuant to its investment limitations or
objectives or may not otherwise lawfully acquire.
X. INVENTOR CONDITIONS.
10.01 The obligations of Inventor hereunder with respect to each Acquired
Fund shall be subject to the following conditions precedent:
10.01(a) This Agreement and the transactions contemplated by this
Agreement shall have been approved by the shareholders of each Acquired
Fund in the manner required by law.
I-10
<PAGE> 54
10.01(b) All representations and warranties of Armada made in this
Agreement shall be true and correct in all material respects as if made at
and as of the Valuation Time and the Effective Time of the Reorganization.
As of the Valuation Time and the Effective Time of the Reorganization there
shall have been no material adverse change in the financial condition of
the Armada Equity Fund since November 30, 1995 other than those changes
incurred in the ordinary course of business as an investment company. No
action, suit or other proceeding shall be threatened or pending before any
court or governmental agency in which it is sought to restrain or prohibit,
or obtain damages or other relief in connection with, this Agreement or the
transactions contemplated herein.
10.01(c) Inventor shall have received an opinion of Drinker Biddle &
Reath, addressed to Inventor in form reasonably satisfactory to it and
dated the Effective Time of the Reorganization, substantially to the effect
that: (i) Armada is a Massachusetts business trust duly organized and
validly existing under the laws of the Commonwealth of Massachusetts; (ii)
the Institutional Shares of each Acquiring Fund to be delivered to an
Acquired Fund as provided for by this Agreement are duly authorized and
upon delivery will be validly issued, fully paid and non-assessable by such
Acquiring Fund, and to such counsel's knowledge no shareholder of an
Acquiring Fund has any option, warrant or pre-emptive right to subscription
or purchase in respect thereof; (iii) this Agreement has been duly
authorized, executed and delivered by Armada and represents a legal, valid
and binding contract, enforceable in accordance with its terms, subject to
the effect of bankruptcy, insolvency, moratorium, fraudulent conveyance and
similar laws relating to or affecting creditors' rights generally and court
decisions with respect thereto, and such counsel shall not be required to
express an opinion with respect to the application of equitable principles
in any proceeding, whether at law or in equity, or with respect to the
provisions of this Agreement intended to limit liability for particular
matters to an Acquiring Fund and its assets; (iv) the execution and
delivery of this Agreement did not, and the consummation of the
transactions contemplated by this Agreement will not, violate the
Declaration of Trust or Code of Regulations of Armada, or any material
agreement known to such counsel to which Armada is a party or by which
Armada is bound; and (v) to such counsel's knowledge no consent, approval,
authorization or order of any court or governmental authority is required
for the consummation by Armada of the transactions contemplated by this
Agreement, except such as have been obtained under the 1933 Act, the 1934
Act, the 1940 Act, the rules and regulations under those Acts and such as
may be required under the state securities laws. Such opinion may rely on
the opinion of other counsel to the extent set forth in such opinion,
provided such other counsel is reasonably acceptable to Inventor.
10.01(d) Inventor shall have received an opinion of Drinker Biddle &
Reath, addressed to Armada and Inventor in the form reasonably satisfactory
to them and dated the Effective Time of the Reorganization, with respect to
the matters specified in Section 9.01(e).
10.01(e) The N-14 Registration Statement shall have become effective
under the 1933 Act and no stop order suspending such effectiveness shall
have been instituted, or, to the knowledge of Armada, contemplated by the
SEC and the parties shall have received all permits and other
authorizations necessary under state securities laws to consummate the
transactions contemplated by this Agreement.
10.01(f) The SEC shall not have issued any unfavorable advisory report
under Section 25(b) of the 1940 Act nor instituted any proceeding seeking
to enjoin consummation of the transactions contemplated by this Agreement
under Section 25(c) of the 1940 Act.
10.01(g) The President or any Vice President of Armada shall have
certified that Armada has performed and complied in all material respects
with each of its agreements and covenants required by this Agreement to be
performed or complied with by it prior to or at the Valuation Time and the
Effective Time of the Reorganization.
10.01(h) The Bank Holding Company Merger shall have been consummated.
XI. TAX DOCUMENTS. Inventor shall deliver to Armada at the Effective Time
of the Reorganization confirmations or other adequate evidence as to the
adjusted tax basis of the Acquired Fund Assets delivered to an Acquiring Fund in
accordance with the terms of this Agreement.
I-11
<PAGE> 55
XII. FINDER'S FEES. Each party represents and warrants to each of the
other parties hereto that there is no person who is entitled to any finder's or
other similar fee or commission arising out of the transactions contemplated by
this Agreement.
XIII. ANNOUNCEMENTS. Any announcements or similar publicity with respect
to this Agreement or the transactions contemplated herein shall be at such time
and in such manner as the parties shall agree; PROVIDED, that nothing herein
shall prevent either party upon notice to the other party from making such
public announcements as such party's counsel may consider advisable in order to
satisfy the party's legal and contractual obligations.
XIV. FURTHER ASSURANCES. Subject to the terms and conditions herein
provided, each of the parties hereto shall use its best efforts to take, or
cause to be taken, such action, to execute and deliver, or cause to be executed
and delivered, such additional documents and instruments and to do, or cause to
be done, all things necessary, proper or advisable under the provisions of this
Agreement and under applicable law to consummate and make effective the
transactions contemplated by this Agreement.
XV. TERMINATION OF REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the parties set forth in this Agreement shall terminate upon the
delivery of the Acquired Fund Assets to the Acquiring Funds and the issuance of
the shares of the Acquiring Funds at the Effective Time of the Reorganization.
XVI. TERMINATION OF AGREEMENT.
16.01 This Agreement may be terminated as to one or more investment
portfolios by a party at any time at or prior to the Effective Time of the
Reorganization by its Board of Trustees, in the case of Armada, or its Board of
Directors, in the case of Inventor, as provided below:
(a) By Armada if the conditions set forth in Article IX are not
satisfied as specified in said Section;
(b) By Inventor if the conditions set forth in Article X are not
satisfied as specified in said Section; or
(c) By the mutual consent of the parties.
16.02 If a party terminates this Agreement as to one or more investment
portfolios because one or more of the conditions precedent have not been
fulfilled, or if this Agreement is terminated by mutual consent, this Agreement
will become null and void without any liability of either party or any of their
investment portfolios to the other; provided, however, that if such termination
is by Armada pursuant to Section 16.01(a) as a result of a breach by Inventor of
any of its representations, warranties or covenants in this Agreement, or such
termination is by Inventor pursuant to Section 16.01(b) as a result of a breach
by Armada of any of its representations, warranties or covenants in this
Agreement, nothing herein shall affect the non-breaching party's right to
damages on account of such other party's breach.
XVII. AMENDMENT AND WAIVER. At any time prior to or (to the fullest extent
permitted by law) after approval of this Agreement by the shareholders of
Inventor, (a) the parties hereto may, by written agreement authorized by the
Board of Trustees of Armada and the Board of Directors of Inventor or their
authorized officers and with or without the approval of their shareholders,
amend any of the provisions of this Agreement, and (b) either party may waive
any breach by the other party or the failure to satisfy any of the conditions to
its obligations (such waiver to be in writing and authorized by the President or
any Vice President of the waiving party with or without the approval of such
party's shareholders).
XVIII. GOVERNING LAW. This Agreement and the transactions contemplated
hereby shall be governed, construed and enforced in accordance with the laws of
the Commonwealth of Massachusetts, without giving effect to the conflicts of law
principles otherwise applicable therein.
I-12
<PAGE> 56
XIX. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon the
respective successors and permitted assigns of the parties hereto. This
Agreement and the rights, obligations and liabilities hereunder may not be
assigned by either party without the consent of the other party.
XX. BENEFICIARIES. Nothing contained in this Agreement shall be deemed to
create rights in or eliminate liabilities of persons not parties hereto, other
than the successors and permitted assigns of the parties.
XXI. ARMADA LIABILITY.
21.01 The names "Armada Funds" and "Board of Trustees of Armada Funds"
refer respectively to the trust created and the trustees, as trustees but not
individually or personally, acting from time to time under a Declaration of
Trust dated January 28, 1986, which is hereby referred to and a copy of which is
on file at the office of the State Secretary of the Commonwealth of
Massachusetts and at the principal office of Armada. The obligations of Armada
entered into in the name or on behalf thereof by any of the trustees,
representatives or agents are made not individually, but in such capacities, and
are not binding upon any of the trustees, shareholders or representatives of
Armada personally, but bind only the trust property, and all persons dealing
with any series of shares of Armada must look solely to the trust property
belonging to such series for the enforcement of any claims against Armada.
21.02 Both parties specifically acknowledge and agree that any liability of
Armada under this Agreement with respect to an Acquiring Fund, or in connection
with the transactions contemplated herein with respect to an Acquiring Fund,
shall be discharged only out of the assets of that Acquiring Fund and that no
other fund of Armada shall be liable with respect thereto.
XXII. INVENTOR LIABILITY. Both parties specifically acknowledge and agree
that any liability of Inventor under this Agreement with respect to an Acquired
Fund, or in connection with the transactions contemplated herein with respect to
an Acquired Fund, shall be discharged only out of the assets of that Acquired
Fund and that no other portfolio of Inventor shall be liable with respect
thereto.
XXIII. NOTICES. All notices required or permitted herein shall be in
writing and shall be deemed to be properly given when delivered personally or by
telecopier to the party entitled to receive the notice or when sent by certified
or registered mail, postage prepaid, or delivered to a nationally recognized
overnight courier service, in each case properly addressed to the party entitled
to receive such notice at the address or telecopier number stated below or to
such other address or telecopier number as may hereafter be furnished in writing
by notice similarly given by one party to the other party hereto:
If to Armada:
Richard B. Tullis
Chairman of the Board
Armada Funds
5150 Three Village Drive
Lyndhurst, OH 44124
Telecopier Number: (216) 461-3753
With a copy to:
W. Bruce McConnel, III, Esq.
Drinker Biddle & Reath
Philadelphia National Bank Building
1345 Chestnut Street
Philadelphia, PA 19107
Telecopier Number: (215) 988-2757
I-13
<PAGE> 57
If to Inventor:
Inventor Funds, Inc.
c/o David G. Lee, President
680 East Swedesford Road
Wayne, PA 19087-1658
Telecopier Number: (610) 963-5299
With copies to:
John H. Grady, Jr., Esq.
Morgan, Lewis & Bockius LLP
1800 M Street, N.W.
Washington, DC 20036
Telecopier Number: (202) 467-7176
and
Richard W. Grant, Esq.
Morgan, Lewis & Bockius LLP
2000 One Logan Square
Philadelphia, PA 19103
Telecopier Number: (215) 963-5299
XXIV. EXPENSES. To the extent not borne by their respective investment
advisers, each party shall be responsible for the payment of all expenses
incurred by such party in connection with this Agreement and the transactions
contemplated hereby.
XXV. ENTIRE AGREEMENT. This Agreement embodies the entire agreement and
understanding of the parties hereto with respect to the subject matter hereof
and supersedes any and all prior agreements, arrangements and understandings
relating to matters provided for herein.
XXVI. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which, when executed and delivered shall be deemed to be
an original, but all of which together shall constitute one and the same
instrument.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their duly authorized officers designated below as of the date first
written above.
[SIGNATURES OMITTED]
I-14
<PAGE> 58
APPENDIX II
FUND OVERVIEW -- ARMADA EQUITY FUND
II-1
<PAGE> 59
FUND OVERVIEW
ARMADA EQUITY FUND
ASSET MANAGER:
Gerald H. Gray, Vice President,
National City Bank
FUND'S DATE OF INCEPTION:
December 20, 1989 (Institutional Shares)
April 15, 1991 (Retail Shares)
ASSETS:
$119,633,506 (Institutional Shares)
$5,974,356 (Retail Shares)
INVESTMENT OBJECTIVE:
Seek a high level of total return arising out of capital appreciation and
income. The Fund invests in Common Stocks and securities convertible into
Common Stocks.
As a result of the favorable economic environment during the past year, the
Armada Equity Fund was able to produce a total return of 10.62% to Institutional
shareholders and 10.35% to Retail shareholders before sales load for the year
ended May 31, 1995. Although solidly positive, these returns fell short of the
broader S&P 500, which returned 20.18% for the same period. For the six months
ended May 31, 1995, the Equity Fund had aggregate total returns of 11.94% and
11.78% (before sales load) to Institutional and Retail shareholders,
respectively.
Market leadership during the past year was very narrow and concentrated
primarily in the technology sector. While the Equity Fund did benefit from some
strong performers in the technology area, such as Motorola, AMP, and General
Motors Class E, the Fund did not have positions in turnaround situations like
IBM or the more cyclical companies like Micron Technology, which far outpaced
the sector. The Equity Fund emphasizes the higher quality, more consistent,
growth companies and, therefore, will tend to lag the market in periods when
advances are led by the most leveraged, volatile firms. Health care companies
returned to favor and the Fund enjoyed strong gains from Medtronic, Inc., as
well as several pharmaceutical firms such as Abbot Labs, Schering Plough and
Bristol Myers Squibb. However, retailers performed poorly as consumers spent
sparingly and mostly on durable good items such as electronics during this
period. Dillards Department Stores, Toys 'R' Us and Nordstrom were particularly
hurt in this environment.
LOOKING FORWARD
We believe that stocks will continue to benefit from a positive economic
backdrop. However, with traditional market valuations at lofty levels, we feel
most of the good news is already in stock prices. While we do not expect a
significant market decline, we believe equity markets will not achieve the
double-digit gains produced over the prior period.
The stocks which will perform best during the coming year will likely be
ones that can achieve good earnings growth without a consistently strong
economy. Accordingly, companies with a high percentage of earnings coming from
recurring revenues should fare well. These firms include Pitney-Bowes, Xerox
Corp., Automatic Data Processing and Reuters Holdings. The Fund's holdings in
health care firms should also do well in this scenario. We also believe a
reasonably healthy U.S. economy combined with improving economies overseas will
help capital goods and technology companies produce good earnings reports.
Stocks that should benefit are Motorola, 3M, Intel Corp. and Hubbell, Inc.
Overall, our focus continues to be to invest in high-quality, growth
companies at reasonable valuations. Despite periods of underperformance, we
believe this strategy should reap long-term, above average performance.
II-2
<PAGE> 60
FUND OVERVIEW -- CONTINUED
ARMADA EQUITY FUND
TOTAL RETURNS AS OF 5/31/95
<TABLE>
<CAPTION>
1-YEAR 3-YEARS(1) 5-YEARS(1) SINCE INCEPTION(1)*
------ ---------- ---------- -------------------
<S> <C> <C> <C> <C>
Armada Equity Fund
Institutional Shares+............ 10.62% 6.34% 9.11% 9.96%
Armada Equity Fund
Retail Shares With Sales Load...... 6.24% 4.75% 8.04% 8.97%
Without Sales Load... 10.35% 6.09% 8.87% 9.74%
</TABLE>
- ---------------
Past performance is not predictive of future performance.
GROWTH OF A $10,000 INVESTMENT*
<TABLE>
<CAPTION>
ARMADA ARMADA
EQUITY FUND EQUITY FUND
MEASUREMENT PERIOD (INSTITUTIONAL (RETAIL
(FISCAL YEAR COVERED) S&P 500 SHARES) SHARES)
<S> <C> <C> <C>
DEC.-1989 10,000 10,370 9,981
MAY-1990 10,402 10,847 10,439
MAY-1991 11,606 12,810 12,329
MAY-1992 12,746 13,950 13,374
MAY-1993 14,223 14,955 14,311
MAY-1994 14,829 15,166 14,471
MAY-1995 17,823 16,776 15,969
- ---------------
<FN>
+ Institutional shares are sold primarily to Banks and clients of National Asset
Management Corporation (NAM), acting on behalf of their respective customers.
Certain account level charges may apply.
* The Armada Equity Fund's date of inception was December 20, 1989 for
Institutional shares and April 15, 1991 for Retail shares. The return and
principal value of an investment will fluctuate. When redeemed, shares may be
worth more or less than their original cost.
1 Annualized.
</TABLE>
II-3
<PAGE> 61
APPENDIX III
SHAREHOLDER TRANSACTIONS AND SERVICES
This Appendix compares the shareholder transactions and services that are
available in connection with: (1) Institutional shares and Retail shares of the
Armada Portfolios, and (2) Class A shares of the Inventor Portfolios.
A. GENERAL
1. SALES CHARGES AND EXEMPTIONS
ARMADA PORTFOLIOS -- INSTITUTIONAL AND RETAIL SHARES
(a) Institutional shares of each Armada Portfolio are sold without a sales
charge.
(b) Retail shares of the Armada Equity, GNMA and Intermediate Government
Funds are sold with a maximum 3.75% front-end sales charge. Retail shares of the
Armada Pennsylvania Municipal Fund are sold with a maximum 3.00% front-end sales
charge. Retail shares of the Armada Pennsylvania Tax Exempt Fund are sold
without a sales charge.
(c) The Armada Portfolios offer sales charge exemptions to the following
classes of shareholders: (i) trustees and officers of Armada; (ii) directors,
employees and participants in employee benefit/retirement plans (annuitants) of
National City Corporation or any of its affiliates; (iii) the spouses, children,
grandchildren, and parents of individuals referred to in clauses (i) and (ii)
above; (iv) qualified retirement plans purchasing shares through National City
Investments Corporation or NatCity Investments, Inc.; (v) individuals investing
in a portfolio by way of a direct transfer or a rollover from a qualified plan
distribution and subsequent transactions into the same account where affiliates
of National City Corporation are serving as a trustee or agent; and (vi)
investors purchasing portfolio shares through a payroll deduction plan; and
(vii) individuals investing in a portfolio by way of an asset allocation program
sponsored by financial institutions, although certain account level fees may
apply.
There is no sales charge charged on shares acquired through the
reinvestment of dividends or distributions on such shares. The sales charge also
will not apply to exchanges between Armada portfolios to the extent that a
shareholder has credit for previously paid sales charges on purchases of any of
the Armada portfolios.
(d) The Armada Portfolios also offer rights of accumulation and letter of
intent programs that can reduce the sales charge payable on Retail share
purchases.
INVENTOR PORTFOLIOS -- CLASS A SHARES
(a) Class A shares of the Equity Growth, GNMA Securities, Intermediate
Government Securities, and Pennsylvania Municipal Bond Funds (the "Equity and
Fixed Income" portfolios) are sold with a 4.00% maximum front-end sales charge.
(b) No sales charge is imposed on Class A shares of the Equity and Fixed
Income portfolios: (i) issued as dividends and capital gain distributions; (ii)
acquired through the exercise of exchange privileges described in the
prospectus; (iii) sold to officers, directors, employees, or retirees of NCC,
National City and its subsidiaries and affiliates; (iv) sold to certain accounts
for which National City or subsidiaries, affiliates and correspondents of
National City, serve in a fiduciary, agency or custodial capacity; (v) issued in
plans of reorganization, such as mergers, asset acquisitions and exchange
offers, to which Inventor is a party; (vi) purchased with the proceeds of
distributions from employee benefit plans for which National City or its
affiliates act in a custodial or fiduciary capacity, (vii) purchased within
thirty days of a redemption of Class A shares of such portfolios (only up to the
amount of such redemption) or (viii) sold to tax-exempt organizations enumerated
in Section 501(c) of the Code or qualified employee benefit plans created under
III-1
<PAGE> 62
Sections 401, 403(b)(7) or 457 of the Code (but not IRAs or SEPs). Reduced sales
charges are available on shares of the portfolios sold to certain eligible
customers of National City or its affiliates.
(c) The Inventor Portfolios also offer rights of accumulation and letter of
intent programs that can reduce the sales charge payable on Class A share
purchases.
2. PURCHASE POLICIES
<TABLE>
<CAPTION>
ARMADA PORTFOLIOS
RETAIL AND INVENTOR PORTFOLIOS
INSTITUTIONAL SHARES CLASS A SHARES
-------------------------------- --------------------------------
<S> <C> <C>
Minimum Initial Retail -- $2,500 (except $500 $500 ($250 for IRAs and $100 for
Investments for purchases for an IRA or officers, directors, employees
other retirement plan and $50 or retirees of National City or
for Automatic Investment Plans). its affiliates). The Distributor
may waive the minimum investment
at its discretion.
Institutional -- None.
Minimum Subsequent Retail -- $250 ($50 for $25.
Investments Automatic Investment Plans).
Institutional -- None (except
$50 for Automatic Investment
Plans).
Automatic Investment Plan Retail shares may be purchased Periodic investments may be made
on a monthly basis through through automatic deductions by
automatic deductions by from a Automated Clearing House ("ACH")
shareholder's checking or from a checking account. The
savings account with a $50 minimum pre-authorized
initial investment and a $50 investment is $25 per month.
subsequent investment minimum.
Such investments are not subject
to minimum account balance
requirements.
Institutional shareholders
participating in an Asset
Diversification Account may
purchase Institutional shares
through an Automatic Investment
Plan with a minimum monthly
investment of $50.
Purchase Methods Retail shares are sold by Shares may be purchased directly
National City Investments by mail, by wire or through an
Corporation, NatCity Automatic Investment Plan.
Investments, Inc., and 440 Shares may also be purchased
Financial Distributors directly through broker-dealers that have
and through financial a dealer agreement with SEI
institutions (some of which may Financial Services Company.
enter into shareholder servicing
agreements with Armada) by mail
or by telephone. Institutional
shares are purchased by banks on
behalf of their trust customers.
</TABLE>
III-2
<PAGE> 63
<TABLE>
<CAPTION>
ARMADA PORTFOLIOS
RETAIL AND INVENTOR PORTFOLIOS
INSTITUTIONAL SHARES CLASS A SHARES
-------------------------------- --------------------------------
<S> <C> <C>
Payment methods By check, federal funds, wire, By check (or other negotiable
certified check or cashier's bank instrument or money order),
check. wire or ACH.
</TABLE>
An Inventor shareholder who, at the Effective Time of the Reorganization,
meets the Inventor, but not the Armada, minimum investment requirement, will not
be required to redeem the Armada shares received in connection with the
Reorganization, unless voluntary redemptions occur and the balance in the
shareholder's account is thereafter below the Inventor minimum.
The Armada Portfolios and Inventor Portfolios each reserve the right to
reject any purchase order.
3. REDEMPTION POLICIES
<TABLE>
<CAPTION>
ARMADA PORTFOLIOS
RETAIL AND INVENTOR PORTFOLIOS
INSTITUTIONAL SHARES CLASS A SHARES
-------------------------------- --------------------------------
<S> <C> <C>
Redemption Methods Retail -- by mail, telephone, By mail, telephone, electronic
electronic funds transfer funds transfer service or
service or through a systematic through a systematic withdrawal
withdrawal plan. plan.
Institutional -- per
instructions and limitations of
investor's account at his/her
financial institution.
Payment Methods Retail -- by check or credited By wire, check or automatic
to investor's account with deductions by Automated Clearing
his/her financial institution. House from a checking account
(if purchased through an
Automatic Investment Plan).
Institutional -- by wire or
other methods available at
investor's financial
institution.
Check Writing Privilege Yes, for the Pennsylvania Tax Yes, for the Pennsylvania Tax-
Exempt Fund ($250 minimum). Exempt Money Market Fund ($500
minimum).
Automatic Cash No. Yes ($1,000 minimum balance/$100
Withdrawal Plan minimum per transaction).
</TABLE>
Armada reserves the right to redeem at net asset value shares in any Armada
Portfolio if the balance in the shareholder's account in that Portfolio drops
below $1,000 as the result of a redemption request and the shareholder does not
increase the balance to at least $1,000 upon sixty days' notice. The Inventor
Portfolios may redeem involuntarily, upon sixty days' notice, Class A shares of
a shareholder whose account decreases to a value of less than the minimum
initial purchase amount because of redemptions unless the shareholder makes an
additional investment during that period in an amount that will increase the
value of the account to at least the minimum amount. Armada Portfolios and the
Inventor Portfolios may also redeem shares involuntarily when appropriate in
light of their responsibilities under the 1940 Act, and may make payment for
redemptions in securities in lieu of cash.
III-3
<PAGE> 64
4. SHARE EXCHANGES
<TABLE>
<CAPTION>
ARMADA PORTFOLIOS-- INVENTOR PORTFOLIOS
RETAIL AND INSTITUTIONAL SHARES -- CLASS A SHARES
--------------------------------- -------------------
<S> <C> <C>
By Mail Retail -- Yes Yes.
Institutional -- Yes.
By Telephone Retail -- Yes Yes.
Institutional -- Yes.
Minimum Any Retail shares exchanged must N/A.
have a value at least equal to
the minimum initial investment
required by the particular
investment portfolio into which
the exchange is being made.
</TABLE>
Armada Retail shares may be exchanged for Retail shares in other Armada
portfolios. Shareholders who exchange into any Armada portfolio that imposes a
sales charge may be subject to such sales charge, if applicable and not
previously paid. Exchanges are only available in states where exchanges can
lawfully be made from one portfolio to another, and must satisfy the
requirements relating to the minimum initial investment in a portfolio. Armada
reserves the right to reject any telephone exchange request and to modify or
terminate exchange privileges at any time. Inventor reserves the right to change
the terms or conditions of the telephone exchange privilege upon 60 days'
notice.
5. RESPONSIBILITY FOR TELEPHONE INSTRUCTIONS
The Armada Portfolios, Inventor Portfolios and their transfer agents are
not liable for any loss, liability, cost or expense for acting upon telephone
(or wire, in the case of Inventor) instructions that are reasonably believed to
be genuine. In attempting to confirm that telephone instructions are genuine,
procedures are used that are considered reasonable, which may include recording
telephone instructions and requesting information as to account registration
such as the name in which an account is registered, the shareholder account
number and recent account transactions (in the case of Armada) or requiring a
form of personal identification prior to acting upon instructions received by
telephone and recording telephone instructions (in the case of Inventor).
6. DIVIDEND REINVESTMENT PROGRAMS
The Armada Portfolios and Inventor Portfolios offer dividend reinvestment
programs.
B. DIVIDENDS AND DISTRIBUTIONS
All Armada Portfolios and Inventor Portfolios distribute their net capital
gains to shareholders at least annually. The following table shows the policies
concerning the declaration and payment of dividends from net investment income.
1. DIVIDENDS DECLARED DAILY/PAID MONTHLY
<TABLE>
<CAPTION>
ARMADA PORTFOLIOS INVENTOR PORTFOLIOS
-------------------------------- -------------------------------------------------
<S> <C>
Intermediate Government Fund Intermediate Government Securities Fund
GNMA Fund GNMA Securities Fund
Pennsylvania Tax Exempt Fund Pennsylvania Tax-Exempt Money Market Fund
Pennsylvania Municipal Fund Pennsylvania Municipal Bond Fund
</TABLE>
III-4
<PAGE> 65
2. DIVIDENDS DECLARED MONTHLY/PAID MONTHLY
<TABLE>
<CAPTION>
ARMADA PORTFOLIOS INVENTOR PORTFOLIOS
-------------------------------- -------------------------------------------------
<S> <C>
None. Equity Growth Fund
</TABLE>
3. DIVIDENDS DECLARED QUARTERLY/PAID QUARTERLY
<TABLE>
<CAPTION>
ARMADA PORTFOLIOS INVENTOR PORTFOLIOS
-------------------------------- -------------------------------------------------
<S> <C>
Equity Fund None.
</TABLE>
III-5
<PAGE> 66
INVENTOR FUNDS, INC.
C/O THE CORPORATION TRUST INCORPORATED
32 SOUTH STREET
BALTIMORE, MARYLAND 21202
ARMADA FUNDS
4400 COMPUTER DRIVE
WESTBOROUGH, MASSACHUSETTS 01581
STATEMENT OF ADDITIONAL INFORMATION
(SPECIAL MEETING OF SHAREHOLDERS OF INVENTOR FUNDS, INC.)
This Statement of Additional Information is not a prospectus but
should be read in conjunction with the Combined Proxy Statement/Prospectus
dated June 27, 1996 for the Special Meeting of Shareholders of Inventor, to be
held on August 1, 1996. Copies of the Combined Proxy Statement/Prospectus may
be obtained at no charge by calling Inventor at 1-800-6INVENT(1-800-646-8368).
Unless otherwise indicated, capitalized terms used herein and not
otherwise defined have the same meanings as are given to them in the Combined
Proxy Statement/Prospectus.
Further information about Institutional and Retail shares of the
Armada Equity Fund is contained in and incorporated by reference to said Fund's
Statement of Additional Information dated September 28, 1995, a copy of which
is included herewith. The audited financial statements and related independent
accountant's report for the Armada Equity Fund contained in the Annual Report
dated April 30, 1995, are hereby incorporated herein by reference. No other
parts of the Annual Report are incorporated by reference herein.
Further information about Class A shares of the Inventor Portfolios is
contained in and incorporated by reference to Inventor's Statement of
Additional Information dated August 28, 1995, a copy of which is included
herewith. The audited financial statements and related independent
accountant's report for the Inventor Portfolios contained in the 1995 Annual
Report to Shareholders dated April 30, 1995 are hereby incorporated herein by
reference. No other parts of the Annual Report are incorporated by reference
herein.
The date of this Statement of Additional Information is June 27, 1996.
B-1
<PAGE> 67
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
General Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-3
Pro Forma Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . PFS-1
Unaudited Financial Statements for the
Armada Equity Fund for the six-months
ended November 30, 1995 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . FS-
Unaudited Financial Statements for the
Inventor Portfolios for the six months
ended October 31, 1995 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . FS-
</TABLE>
B-2
<PAGE> 68
GENERAL INFORMATION
The Shareholders of the Inventor Portfolios are being asked to approve
an Agreement and Plan of Reorganization (the "Reorganization Agreement") dated
as of May 13, 1996 between Inventor and Armada, and the transactions
contemplated thereby. The Reorganization Agreement contemplates the transfer
of substantially all of the known assets and known liabilities of Inventor's
Equity Growth Fund, GNMA Securities Fund, Intermediate Government Securities
Fund, Pennsylvania Municipal Bond Fund and Pennsylvania Tax-Exempt Money Market
Fund to corresponding Armada Portfolios in exchange for full and fractional
shares representing interests in such corresponding Armada Portfolios. The
shares issued by Armada will have an aggregate net asset value equal to the
aggregate net asset value of the shares of the respective Inventor Portfolios
that are outstanding immediately before the Effective Time of the
Reorganization.
Following the exchange, the Inventor Portfolios will make a
liquidating distribution of the corresponding Armada Portfolios' shares to
their shareholders. Each shareholder owning shares of a particular Inventor
Portfolio at the Effective Time of the Reorganization will receive shares of
the corresponding Armada Portfolio of equal value, plus the right to receive
any unpaid dividends and distributions that were declared before the Effective
Time of the Reorganization on the Inventor Portfolio's shares. Upon completion
of the Reorganization, Inventor will be terminated under state law and
deregistered under the Investment Company Act of 1940.
The Special Meeting of Shareholders of Inventor to consider the
Reorganization Agreement and the related transactions will be held on August 1,
1996 at 10:00 a.m. (Eastern time), at 680 East Swedesford Road, Wayne,
Pennsylvania 19087-1658. For further information about the transaction, see
the Combined Proxy Statement/Prospectus.
Banking laws and regulations currently prohibit a bank holding company
registered under the Bank Holding Company Act of 1956, as amended, or any bank
or non-bank affiliate thereof from sponsoring, organizing, controlling, or
distributing the shares of a registered, open- end investment company
continuously engaged in the issuance of its shares, and prohibit banks
generally from issuing, underwriting, selling, or distributing securities such
as shares of the Armada Portfolios, but do not prohibit such a bank holding
company or its affiliates or banks generally from acting as investment adviser,
transfer agent, or custodian to such an investment company or from purchasing
shares of such a company as agent for and upon the order of customers. The
Armada Advisers, their affiliates and financial intermediaries which agree to
provide shareholder support services that are banks or bank affiliates are
subject to such banking laws and regulations.
B-3
<PAGE> 69
Should legislative, judicial, or administrative action prohibit or restrict the
activities of such companies in connection with their services to the Armada
Portfolios, Armada might be required to alter materially or discontinue its
arrangement with such companies and change its method of operation. It is
anticipated, however, that any resulting change in Armada's method of operation
would not affect an Armada Portfolio's net asset value per share or result in
financial loss to any shareholder.
B-4
<PAGE> 70
INTRODUCTORY NOTE TO PRO FORMA
------------------------------
FINANCIAL INFORMATION
---------------------
The following unaudited pro forma financial information gives effect
to the proposed transfer of the known assets and known liabilities of the
Inventor Equity Growth Fund to the Armada Equity Fund.
Pro forma financial information giving effect to the proposed transfer of the
known assets and known liabilities of the other Inventor Portfolios to their
corresponding Armada Portfolios is not presented in this Statement of
Additional Information because such corresponding Armada Portfolios will not
commence operations prior to the Effective Time of the Reorganization and are
being organized for the purpose of continuing the investment operations of such
Inventor Portfolios. Each combination of Portfolios will be accounted for as a
tax-free reorganization. The pro forma financial information should be read in
conjunction with the historical financial statements and notes thereto of the
Inventor Equity Growth Fund and Armada Equity Fund included or incorporated by
reference in this Statement of Additional Information.
B-5
<PAGE> 71
ARMADA FUNDS
PRO FORMA COMBINED STATEMENT OF OPERATIONS
(UNAUDITED) ARMADA INVENTOR
<TABLE>
<CAPTION>
ARMADA INVENTOR
EQUITY EQUITY GROWTH
YEAR ENDED YEAR ENDED PRO-FORMA
10/31/95 10/31/95 ADJUSTMENTS COMBINED
----------- ------------- ----------- -----------
<S> <C> <C> <C> <C>
Investment Income
Interest.............................. $ 372,572 $ 293,748 $ 666,320
Dividends............................. $ 2,496,235 857,152 3,353,387
Less Foreign Taxes.................... $ (15,163) 0 (15,163)
----------- ---------- -----------
Total Investment Income.......... 2,853,644 1,150,900 4,004,544
----------- ---------- -----------
Expenses
Investment Advisory................... 925,837 412,916 (44,778)(2) 1,293,975
Administration........................ 123,445 87,440 (38,355)(3) 172,530
Custody............................... 33,428 15,996 (15,996)(6) 33,428
Transfer Agent........................ 42,840 23,765 66,605
Professional Fees..................... 7,813 9,106 (9,106)(7) 7,813
Printing.............................. 16,291 10,643 26,934
12b-1 and Distribution................ 67,694 121,443 (116,468)(4) 72,669
Shareholder Servicing
Fees -- Retail..................... 15,196 0 15,196
Trustees' fees........................ 4,555 2,115 (2,115)(5) 4,555
Registration and filing fees.......... 11,059 10,412 21,471
Miscellaneous......................... 814 17,430 (3,354)(8) 14,890
Waivers............................... (22,954) (250,024) 230,172(9) (42,806)
----------- ---------- ------- -----------
Total Expenses................... 1,226,018 461,242 0 1,687,260
----------- ---------- ------- -----------
NET INVESTMENT INCOME................... 1,627,626 689,658 2,317,284
----------- ---------- ------- -----------
Realized and Unrealized Gain(Loss) on
Investments
Net Realized Gain (Loss).............. 1,688,640 4,447,445 6,136,085
Net change in unrealized apprec
(deprec)........................... 17,868,357 4,051,808 21,920,165
----------- ---------- ------- -----------
Net gain (loss) on investments... 19,556,997 8,499,253 28,056,250
----------- ---------- ------- -----------
INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS............................ $21,184,623 $ 9,188,911 $30,373,534
=========== ========== ======= ===========
</TABLE>
- ---------------
(2) To adjust Advisory fees to reflect Armada's fee structure for the combined
assets.
(3) To adjust Administration fees to reflect Armada's fee structure for the
combined assets.
(4) To adjust Distribution fees to reflect Armada's fee structure on combined
assets.
(5) To eliminate duplication of Trustees' fees.
(6) To eliminate duplication of Custody fees.
(7) To eliminate duplication of Professional fees.
(8) To eliminate amortization of organization expenses for the pro-forma period.
(9) To reflect elimination of Inventor Equity Growth Fund's expense cap
guarantee.
The accompanying notes are an integral part of these financial statments.
1
<PAGE> 72
ARMADA FUNDS
PROFORMA COMBINED SCHEDULE OF INVESTMENTS (AS OF OCTOBER 31, 1995)
(UNAUDITED)
<TABLE>
<CAPTION>
MARKET MARKET MARKET
SHARES SHARES SHARES VALUE VALUE VALUE
- --------- ---------- ---------- -------- -------- ----------
INVENTOR (PRO INVENTOR (PRO
ARMADA EQUITY FORMA) ARMADA EQUITY FORMA)
EQUITY GROWTH (COMBINED) SECURITY DESCRIPTION EQUITY GROWTH (COMBINED)
- --------- ---------- ---------- ---------------------------- -------- -------- ----------
(000) (000) (000)
<C> <C> <C> <S> <C> <C> <C> <C>
COMMON STOCK 95.1%
ADVERTISING 1.7%
88,310 88,310 Interpublic Group, Inc. $ 3,422 $ 3,422
-------- --------
AEROSPACE 1.0%
20,900 20,900 Allied Signal $ 888 888
3,700 3,700 Boeing 243 243
3,800 3,800 Textron 261 261
7,400 7,400 United Technologies 657 657
-------- --------
2,049 2,049
-------- --------
AUTOMOTIVE 1.3%
10,900 10,900 General Motors Corp. 477 477
26,540 11,600 38,140 General Motors Corp., Class
E 1,251 547 1,798
6,000 6,000 Goodyear Tire & Rubber 228 228
-------- -------- --------
1,251 1,252 2,503
-------- -------- --------
BANKING 3.0%
4,000 4,000 Bank of Boston 178 178
1,700 1,700 BankAmerica 98 98
12,300 12,300 Chemical Banking 700 700
14,400 14,400 Mellon Bank 722 722
5,800 5,800 Midlantic 307 307
69,000 69,000 Norwest Corp. 2,035 2,035
5,000 5,000 Summit Bancorporation of NJ 142 142
8,000 8,000 Wells Fargo & Company 1,681 1,681
-------- -------- --------
3,716 2,147 5,863
-------- -------- --------
BUILDING & BUILDING SUPPLIES 1.3%
5,700 5,700 American Standard 152 152
8,100 8,100 Foster Wheeler 304 304
28,666 27,700 56,366 Home Depot, Inc. 1,068 1,032 2,100
-------- -------- --------
1,068 1,488 2,556
BUSINESS SERVICES 1.0%
26,880 26,880 Automatic Data Processing 1,922 1,922
-------- --------
CHEMICALS 2.3%
8,200 8,200 Air Products & Chemicals,
Inc. 423 423
28,320 28,320 Dow Chemical Co. 1,943 1,943
14,600 14,600 E.I. du Pont de Nemours 911 911
25,000 25,000 Loctite 1,181 1,181
6,000 6,000 Praxair 162 162
-------- -------- --------
3,124 1,496 4,620
-------- -------- --------
DIVERSIFIED 1.3%
46,370 46,370 Minnesota Mining &
Manufacturing Co. 2,637 2,637
-------- --------
</TABLE>
2
<PAGE> 73
ARMADA FUNDS
PROFORMA COMBINED SCHEDULE OF INVESTMENTS (AS OF OCTOBER 31, 1995)
(UNAUDITED)
<TABLE>
<CAPTION>
MARKET MARKET MARKET
SHARES SHARES SHARES VALUE VALUE VALUE
- --------- ---------- ---------- -------- -------- ----------
INVENTOR (PRO INVENTOR (PRO
ARMADA EQUITY FORMA) ARMADA EQUITY FORMA)
EQUITY GROWTH (COMBINED) SECURITY DESCRIPTION EQUITY GROWTH (COMBINED)
- --------- ---------- ---------- ---------------------------- -------- -------- ----------
(000) (000) (000)
<C> <C> <C> <S> <C> <C> <C> <C>
ELECTRICAL EQUIPMENT 4.2%
19,000 16,800 35,800 AMP, Inc. $ 746 $ 659 $ 1,405
27,200 10,900 38,100 Emerson Electric Co. 1,938 777 2,715
16,000 16,000 General Electric 1,011 1,011
17,500 17,500 General Signal 558 558
42,920 42,920 Hubbell Inc., Class B 2,586 2,586
-------- -------- --------
5,270 3,005 8,275
-------- -------- --------
ELECTRONICS 0.9%
55,000 55,000 MEMC Electronic Materials,
Inc. 1,760 1,760
-------- --------
ENERGY 5.8%
30,655 11,700 42,355 Amoco Corp. 1,958 748 2,706
2,900 2,900 Atlantic Richfield 310 310
6,400 6,400 Chevron 299 299
1,300 1,300 Duracell International 68 68
27,000 27,000 Exxon 2,062 2,062
4,800 4,800 Halliburton 199 199
5,400 5,400 Mobil 544 544
11,100 11,100 Royal Dutch Petroleum 1,364 1,364
48,495 4,600 53,095 Schlumberger Limited 3,019 286 3,305
900 900 Sonat 26 26
11,000 11,000 Union Texas Petroleum 198 198
15,500 15,500 Unocal 407 407
-------- -------- --------
8,403 3,085 11,488
-------- -------- --------
ENVIRONMENT 2.6%
120,000 9,600 129,600 Browning Ferris Industries 3,495 280 3,775
14,000 14,000 Molten Metal Technology 539 539
23,000 23,000 Wheelabrator Technologies 331 331
21,600 21,600 WMX Technologies 607 607
-------- -------- --------
3,495 1,757 5,252
-------- -------- --------
FINANCIAL SERVICES 3.4%
9,100 9,100 Federal Home Loan Mortgage 630 630
11,730 11,730 Federal National Mortgage
Association 1,230 1,230
105,000 105,000 Greenpoint Financial Corp. 2,848 2,848
50,000 50,000 State Street Boston Corp. 1,944 1,944
-------- -------- --------
6,022 630 6,652
-------- -------- --------
</TABLE>
3
<PAGE> 74
ARMADA FUNDS
PROFORMA COMBINED SCHEDULE OF INVESTMENTS (AS OF OCTOBER 31, 1995)
(UNAUDITED)
<TABLE>
<CAPTION>
MARKET MARKET MARKET
SHARES SHARES SHARES VALUE VALUE VALUE
- --------- ---------- ---------- -------- -------- ----------
INVENTOR (PRO INVENTOR (PRO
ARMADA EQUITY FORMA) ARMADA EQUITY FORMA)
EQUITY GROWTH (COMBINED) SECURITY DESCRIPTION EQUITY GROWTH (COMBINED)
- --------- ---------- ---------- ---------------------------- -------- -------- ----------
(000) (000) (000)
<C> <C> <C> <S> <C> <C> <C> <C>
FOOD, BEVERAGE, TOBACCO, &
HOUSEHOLD PRODUCTS 9.3%
30,000 30,000 Anheuser-Busch Companies,
Inc. $ 1,980 $ 1,980
5,500 5,500 Bush Boake Allen $ 151 151
7,300 7,300 Coca Cola Co. 525 525
4,200 4,200 CPC International 279 279
42,000 5,700 47,700 Gillette Co. 2,032 276 2,308
4,100 4,100 Kellogg 296 296
77,900 5,500 83,400 Pepsico, Inc. 4,109 290 4,399
24,000 14,900 38,900 Philip Morris Companies,
Inc. 2,028 1,257 3,285
35,520 9,000 44,520 Procter & Gamble Co. 2,877 729 3,606
5,160 5,160 RJR Nabisco Holdings 159 159
18,200 18,200 Sara Lee 535 535
15,200 15,200 Sunbeam-Oster 228 228
12,800 12,800 Sysco 389 389
11,500 11,500 UST 345 345
-------- -------- --------
13,026 5,459 18,485
-------- -------- --------
FOREIGN 2.8%
68,000 68,000 Reuters Holdings PLC, ADS 3,778 3,778
76,700 76,700 Singer Co. N.V. 1,802 1,802
-------- --------
5,580 5,580
-------- --------
HOME FURNISHINGS/HOUSEWARES 0.7%
51,000 51,000 Masco Corp. 1,434 1,434
-------- --------
INSURANCE 6.7%
7,000 7,000 American General 230 230
44,083 7,350 51,433 American International Group 3,720 620 4,340
24,400 6,800 31,200 Chubb Corp. 2,193 611 2,804
35,700 35,700 Cincinnati Financial Corp. 2,204 2,204
10,000 10,000 Marsh & McLennan Co., Inc. 819 819
9,030 4,900 13,930 General Re 1,308 710 2,018
16,000 16,000 Travelers 808 808
-------- -------- --------
10,244 2,979 13,223
-------- -------- --------
LEISURE 2.7%
16,600 16,600 Autotote, Class A 50 50
31,600 31,600 Carnival Cruise Lines, Class
A 734 734
75,000 75,000 GTECH Holdings Corp. 1,837 1,837
6,500 6,500 Marriott International 240 240
15,000 15,000 Mattel 431 431
28,055 6,100 34,155 Walt Disney Co. 1,617 352 1,969
-------- -------- --------
3,454 1,807 5,261
-------- -------- --------
</TABLE>
4
<PAGE> 75
ARMADA FUNDS
PROFORMA COMBINED SCHEDULE OF INVESTMENTS (AS OF OCTOBER 31, 1995)
(UNAUDITED)
<TABLE>
<CAPTION>
MARKET MARKET MARKET
SHARES SHARES SHARES VALUE VALUE VALUE
- --------- ---------- ---------- -------- -------- ----------
INVENTOR (PRO INVENTOR (PRO
ARMADA EQUITY FORMA) ARMADA EQUITY FORMA)
EQUITY GROWTH (COMBINED) SECURITY DESCRIPTION EQUITY GROWTH (COMBINED)
- --------- ---------- ---------- ---------------------------- -------- -------- ----------
(000) (000) (000)
<C> <C> <C> <S> <C> <C> <C> <C>
MANUFACTURING 3.4%
90,000 90,000 Wolverine Tube, Inc. $ 3,206 $ 3,206
80,000 80,000 York International Corp. 3,500 3,500
-------- --------
6,706 6,706
-------- --------
MEDIA
5,000 5,000 American Greetings, Class A 1.1% $ 158 158
5,600 5,600 Capital Cities ABC 664 664
41,100 41,100 Tele-Communications, Class A 699 699
13,300 13,300 Viacom, Class B Non-Voting 665 665
-------- --------
2,186 2,186
-------- --------
MEDICAL PRODUCTS & SERVICES 12.5%
50,860 16,400 67,260 Abbott Laboratories 2,022 652 2,674
20,620 2,000 22,620 American Home Products Corp. 1,827 177 2,004
4,100 4,100 Amgen 197 197
29,950 4,700 34,650 Bristol Meyers Squibb Co. 2,284 358 2,642
74,800 74,800 Caremark International, Inc. 1,543 1,543
22,620 22,620 Columbia/HCA Healthcare 1,111 1,111
4,400 4,400 Fisher Scientific 138 138
10,000 10,000 Healthsouth Rehabilitation 261 261
7,400 7,400 Johnson & Johnson 603 603
64,000 64,000 Medtronic, Inc. 3,696 3,696
15,900 15,900 Merck & Company, Inc. 914 914
64,620 8,500 73,120 Pfizer, Inc. 3,708 488 4,196
2,400 2,400 Pharmacia AB ADR 84 84
56,304 6,600 62,904 Schering-Plough Corp. 3,019 354 3,373
20,000 20,000 Smith Kline Beecham PLC 1,038 1,038
18,500 18,500 Tenet Healthcare 331 331
900 900 Warner Lambert 77 77
-------- -------- --------
18,099 6,783 24,882
-------- -------- --------
METALS & MINING 0.1%
600 600 Alumax 18 18
15,000 15,000 Worthington Industries 249 249
-------- --------
267 267
-------- --------
MISCELLANEOUS 0.9%
8,000 8,000 ITT 980 980
13,800 13,800 Tyco International 838 838
-------- --------
1,818 1,818
-------- --------
OFFICE & BUSINESS EQUIPMENT 3.5%
78,050 78,050 Pitney Bowes, Inc. 3,405 3,405
22,000 4,900 26,900 Xerox Corp. 2,854 636 3,490
-------- -------- --------
6,259 636 6,895
-------- -------- --------
</TABLE>
5
<PAGE> 76
ARMADA FUNDS
PROFORMA COMBINED SCHEDULE OF INVESTMENTS (AS OF OCTOBER 31, 1995)
(UNAUDITED)
<TABLE>
<CAPTION>
MARKET MARKET MARKET
SHARES SHARES SHARES VALUE VALUE VALUE
- --------- ---------- ---------- -------- -------- ----------
INVENTOR (PRO INVENTOR (PRO
ARMADA EQUITY FORMA) ARMADA EQUITY FORMA)
EQUITY GROWTH (COMBINED) SECURITY DESCRIPTION EQUITY GROWTH (COMBINED)
- --------- ---------- ---------- ---------------------------- -------- -------- ----------
(000) (000) (000)
<C> <C> <C> <S> <C> <C> <C> <C>
PAPER & FOREST PRODUCTS 2.5%
50,000 50,000 Chesapeake Corp. $ 1,531 $ 1,531
172,500 172,500 Fort Howard Corp. 2,879 2,879
5,900 5,900 Georgia Pacific $ 487 487
-------- -------- --------
4,410 487 4,897
-------- -------- --------
PAPER & PAPER PRODUCTS 0.1%
4,500 4,500 Williamette Industries 261 261
-------- --------
PRINTING & PUBLISHING 0.3%
16,600 16,600 Houghton Mifflin Co. 681 681
-------- --------
RAILROAD 0.3%
8,800 8,800 Union Pacific 575 575
-------- --------
RETAIL 0.2%
10,500 10,500 Intimate Brands, Class A 176 176
8,300 8,300 Newell 200 200
-------- --------
376 376
-------- --------
RETAIL FOOD CHAINS 0.7%
6,500 6,500 Albertson's, Inc. 216 216
17,500 17,500 McDonalds 718 718
18,000 18,000 Wendy's International 358 358
-------- --------
1,292 1,292
-------- --------
RETAIL MERCHANDISING 1.7%
68,000 68,000 Dillard Dept. Stores, Class
A 1,845 1,845
40,000 30,900 70,900 Wal-Mart Stores, Inc. 865 668 1,533
-------- -------- --------
2,710 668 3,378
-------- -------- --------
RETAIL STORES 1.8%
8,000 8,000 American Stores 239 239
29,800 29,800 Federated Department Stores 756 756
82,500 82,500 Lowe's Companies, Inc. 2,228 2,228
12,800 12,800 Office Depot, Inc. 366 366
-------- -------- --------
2,228 1,361 3,589
-------- -------- --------
</TABLE>
6
<PAGE> 77
ARMADA FUNDS
PROFORMA COMBINED SCHEDULE OF INVESTMENTS (AS OF OCTOBER 31, 1995)
(UNAUDITED)
<TABLE>
<CAPTION>
MARKET MARKET MARKET
SHARES SHARES SHARES VALUE VALUE VALUE
- --------- ---------- ---------- -------- -------- ----------
INVENTOR (PRO INVENTOR (PRO
ARMADA EQUITY FORMA) ARMADA EQUITY FORMA)
EQUITY GROWTH (COMBINED) SECURITY DESCRIPTION EQUITY GROWTH (COMBINED)
- --------- ---------- ---------- ---------------------------- -------- -------- ----------
(000) (000) (000)
<C> <C> <C> <S> <C> <C> <C> <C>
TECHNOLOGY 5.6%
6,200 6,200 Arrow Electronics $ 315 $ 315
4,500 4,500 Bell Howell 113 113
27,000 27,000 Cisco Systems, Inc. $ 2,094 2,094
900 900 DSC Communications 33 33
9,700 9,700 Eastman Kodak 607 607
39,000 12,200 51,200 Intel Corp. 2,728 852 3,580
8,400 8,400 International Business
Machines 817 817
8,200 8,200 Microsoft 820 820
14,500 14,500 Oracle Systems 633 633
100,000 100,000 Planar Systems, Inc. 1,725 1,725
32,500 32,500 Scientific-Atlanta 402 402
-------- -------- --------
6,547 4,592 11,139
-------- -------- --------
TELECOMMUNICATIONS 6.2%
35,000 35,000 Alltel Corp. 1,072 1,072
45,260 16,700 61,960 AT&T Corp. 2,897 1,069 3,966
90,000 90,000 MCI Communications Corp. 2,244 2,244
43,920 16,400 60,320 Motorola, Inc. 2,882 1,076 3,958
30,000 30,000 Qualcomm, Inc. 1,157 1,157
-------- -------- --------
10,252 2,145 12,397
-------- -------- --------
TRANSPORTATION 0.9%
70,000 70,000 Harley-Davidson 1,873 1,873
-------- --------
UTILITIES -- TELEPHONE 1.3%
16,015 16,015 Bell Atlantic Corp. 1,019 1,019
21,650 21,650 BellSouth Corp. 1,656 1,656
-------- --------
2,675 2,675
-------- --------
3,105,223 1,161,130 4,266,353 TOTAL COMMON STOCK 138,268 50,601 188,869
-------- -------- --------
(Cost $150,926,062)
PREFERRED STOCK 0.1%
6,000 6,000 Time Warner Financing 192 192
-------- -------- --------
0 6,000 6,000 TOTAL PREFERRED STOCK 0 192 192
-------- -------- --------
(Cost $186,000)
TEMPORARY INVESTMENT 1.6%
6,013,916 6,013,916 Fidelity Domestic Market
Portfolio 3,274 3,274
-------- -------- --------
6,013,916 0 6,013,916 TOTAL TEMPORARY INVESTMENT 3,274 0 3,274
-------- -------- --------
(Cost $3,273,832)
</TABLE>
7
<PAGE> 78
ARMADA FUNDS
PROFORMA COMBINED SCHEDULE OF INVESTMENTS (AS OF OCTOBER 31, 1995)
(UNAUDITED)
<TABLE>
<CAPTION>
MARKET MARKET MARKET
SHARES SHARES SHARES VALUE VALUE VALUE
- --------- ---------- ---------- -------- -------- ----------
INVENTOR (PRO INVENTOR (PRO
ARMADA EQUITY FORMA) ARMADA EQUITY FORMA)
EQUITY GROWTH (COMBINED) SECURITY DESCRIPTION EQUITY GROWTH (COMBINED)
- --------- ---------- ---------- ---------------------------- -------- -------- ----------
(000) (000) (000)
<C> <C> <C> <S> <C> <C> <C> <C>
(PAR) (PAR ) REPURCHASE AGREEMENT 3.1%
$6,162,000 $6,162,000 Paine Webber, 5.88% dated
10/31/95, matures 11/1/95,
repurchase price 6,163,504
(collateralized by various
U.S. Government
mortgage-backed securities,
total par value 17,930,362,
0.00% -- 7.00%: total market
value 6,347,496) $ 6,162 $ 6,162
-------- -------- --------
0 6,162,000 6,162,000 TOTAL REPURCHASE AGREEMENT $ 0 6,162 6,162
-------- -------- --------
(Cost $6,162,000)
======== ======== ========
TOTAL INVESTMENTS 100.0% $141,542 $ 56,955 $198,497
======== ======== ========
(Cost $160,547,894)
</TABLE>
The accompanying notes are an integral part of these financial statements.
8
<PAGE> 79
[ARROW LOGO] PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1995 ARMADA MID CAP REGIONAL FUND (CONTINUED)
(UNAUDITED)
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
---------- -----------
<S> <C> <C>
STEEL - 6.8%
Huntco, Inc. ................ 45,000 $ 793,125
Insteel Industries, Inc. .... 184,900 1,224,963
Olympic Steel, Inc.+......... 90,500 808,844
Reliance Steel &
Aluminum Co. ............... 20,000 375,000
Rouge Steel Co. ............. 20,000 435,000
Shiloh Industries, Inc.+..... 21,200 238,500
Steel Technologies, Inc. .... 135,700 1,187,375
------------
5,062,807
------------
TECHNOLOGY - 3.3%
Apple Computer, Inc.......... 30,000 1,145,625
Stratus Computer, Inc.+...... 35,000 1,163,750
Government Technology
Services, Inc.+............. 30,000 120,000
------------
2,429,375
------------
TEXTILES - 1.0%
Oneita Industries, Inc.+..... 106,000 755,250
------------
TIRE & RUBBER - 2.0%
Bandag, Inc., Class A........ 30,000 1,477,500
------------
TOBACCO - 4.6%
Dimon, Inc. ................. 116,000 2,001,000
Universal Corp. ............. 63,300 1,503,375
------------
3,504,375
------------
TRUCKING - 3.4%
M.S. Carriers, Inc.+......... 105,000 $ 1,981,875
TNT Freightways Corp. ....... 30,000 588,750
------------
2,570,625
------------
UTILITIES - ELECTRIC - 3.0%
Cinergy Corp................. 30,000 885,000
Ohio Edison Co............... 60,000 1,365,000
------------
2,250,000
------------
TOTAL COMMON STOCK........... 71,954,934
(Cost $68,648,363) ------------
TEMPORARY INVESTMENT - 3.6%
Fidelity Domestic
Market Portfolio............ 2,711,407 2,711,407
(Cost $2,711,407) ------------
TOTAL INVESTMENTS - 100.0% $74,666,341
(Cost $71,359,770*) ============
+ Non-income producing.
Cost for Federal income tax
* purposes - $71,390,234
The gross unrealized appreciation (depreciation)
for Federal income tax purposes is as follows:
Gross appreciation................... $ 6,911,219
Gross depreciation................... (3,635,112)
-----------
$ 3,276,107
-----------
</TABLE>
See Accompanying Notes
FS-1
<PAGE> 80
[ARROW LOGO]
FINANCIAL STATEMENTS
ARMADA MID CAP REGIONAL FUND
STATEMENT OF ASSETS AND LIABILITIES
NOVEMBER 30, 1995 (UNAUDITED)
<TABLE>
<S> <C>
ASSETS
Investments at value
(Cost $71,359,770)................... $74,666,341
Interest and dividends receivable.... 124,774
Receivable for Fund shares sold...... 42,643
Receivable for investments sold...... 679,312
Prepaid expenses..................... 18,902
----------
TOTAL ASSETS................ 75,531,972
- ------------------------------------------------------
LIABILITIES
Payable for Fund shares redeemed..... 10,573
Payable for investments purchased.... 332,250
Accrued expenses..................... 75,941
----------
TOTAL LIABILITIES........... 418,764
- ------------------------------------------------------
NET ASSETS (based on
6,137,391 shares of
beneficial interest
having no par value)........ $75,113,208
======================================================
NET ASSETS CONSIST OF:
Paid-in capital............. $65,885,511
Undistributed net investment
income...................... 556,548
Undistributed net realized
gain on investments sold.... 5,364,578
Net unrealized appreciation
on investments.............. 3,306,571
----------
$75,113,208
======================================================
NET ASSET VALUE,
OFFERING PRICE AND
REDEMPTION PRICE PER
SHARE -- Institutional class
($70,624,830 divided by 5,766,429
shares of beneficial
interest).................. $ 12.25
======================================================
NET ASSET VALUE AND
REDEMPTION PRICE
PER SHARE -- Retail class
($4,488,378 divided by 370,962 shares
of beneficial interest)..... $ 12.10
======================================================
MAXIMUM OFFERING
PRICE PER RETAIL SHARE
($12.10 divided by .9625)... $ 12.57
======================================================
</TABLE>
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED NOVEMBER 30, 1995 (UNAUDITED)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends............................. $ 663,765
---------
EXPENSES:
Investment Advisory fees.............. 252,610
Administration fees................... 33,459
12b-1 fees............................ 25,858
Transfer Agent fees................... 14,395
Registration and filing fees.......... 9,377
Custodian fees........................ 8,520
Printing and shareholder reports...... 8,111
Shareholder servicing fees - Retail
class only.......................... 5,227
Legal fees............................ 4,698
Miscellaneous......................... 3,104
Distribution fees..................... 2,275
Amortization of organization costs.... 1,852
Audit fees............................ 1,561
Trustees' fees........................ 846
Insurance............................. 324
Fees waived by Custodian.............. (8,520)
---------
Total expenses............... 363,697
- ------------------------------------------------------
NET INVESTMENT INCOME.................... 300,068
- ------------------------------------------------------
REALIZED AND UNREALIZED
GAIN ON INVESTMENTS
Net realized gain on
investments sold............. 3,528,083
Net change in unrealized
appreciation on
investments.................. 865,177
---------
Net gain on investments...... 4,393,260
- ------------------------------------------------------
NET INCREASE IN NET
ASSETS RESULTING
FROM OPERATIONS.............. $4,693,328
======================================================
</TABLE>
See Accompanying Notes
FS-2
<PAGE> 81
[ARROW LOGO]
FINANCIAL STATEMENTS
ARMADA MID CAP REGIONAL FUND
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE FOR THE
SIX MONTHS ENDED PERIOD ENDED
NOVEMBER 30, 1995 MAY 31, 1995
----------------- --------------------
(UNAUDITED)
<S> <C> <C>
INCREASE IN NET ASSETS:
Operations:
Net investment income.............................................. $ 300,068 $ 367,124
Net realized gain on investments sold.............................. 3,528,083 1,936,082
Net change in unrealized appreciation on investments............... 865,177 2,441,394
----------- -----------
Net increase in net assets resulting from operations............... 4,693,328 4,744,600
Distribution to shareholders from net investment income................ 0 (110,644)
Distribution to shareholders from net realized capital gains........... 0 (99,587)
Increase in net assets derived from capital share transactions......... 15,860,121 50,025,390
----------- -----------
Total increase in net assets........................................... 20,553,449 54,559,759
----------- -----------
NET ASSETS:
Beginning of period................................................ 54,559,759 0
----------- -----------
End of period...................................................... $75,113,208 $54,559,759
=========== ===========
</TABLE>
<TABLE>
<CAPTION>
NOVEMBER 30, 1995 MAY 31, 1995
-------------------- --------------------
<S> <C> <C>
UNDISTRIBUTED NET INVESTMENT INCOME AS OF............................. $ 556,548 $ 256,480
=========== ===========
</TABLE>
See Accompanying Notes
FS-3
<PAGE> 82
[ARROW LOGO] FINANCIAL HIGHLIGHTS
ARMADA MID CAP REGIONAL FUND
FINANCIAL HIGHLIGHTS
FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED FOR THE PERIOD ENDED
NOVEMBER 30, 1995 MAY 31, 1995
------------------------- ---------------------------
(UNAUDITED)
INSTITUTIONAL RETAIL INSTITUTIONAL(3) RETAIL(3)
------------- ------ ---------------- ---------
<S> <C> <C> <C> <C>
Net asset value, beginning of period............................ $ 11.38 $11.26 $10.00 $10.16
------- ------ ------- ------
INCOME FROM INVESTMENT OPERATIONS
Net investment income......................................... .04 .03 .10 .07
Net gains on securities (realized and unrealized)............. .83 .81 1.36 1.11
------- ------ ------- ------
Total from investment operations............................ .87 .84 1.46 1.18
------- ------ ------- ------
LESS DISTRIBUTIONS
Dividends from net investment income.......................... .00 .00 (.04) (.04)
Dividends from net realized capital gains..................... .00 .00 (.04) (.04)
------- ------ ------- ------
Total distributions......................................... .00 .00 (.08) (.08)
------- ------ ------- ------
Net asset value, end of period.................................. $ 12.25 $12.10 $11.38 $11.26
======= ====== ======= ======
TOTAL RETURN.................................................... 15.83%(4) 15.43%(4,5) 17.42%(4) 14.80%(4,5)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000's).......................... $70,625 $4,488 $50,993 $3,567
Ratio of expenses to average net assets....................... 1.06%(1,4) 1.32%(2,4) 1.01%(1,4) 1.34%(2,4)
Ratio of net investment income to average net assets.......... .91%(1,4) .64%(2,4) 1.31%(1,4) 1.09%(2,4)
Portfolio turnover rate....................................... 63% 63% 69% 69%
</TABLE>
(1) The operating expense ratio and the net investment income ratio before fee
waivers by the Custodian for the Institutional class for the period ended
November 30, 1995 would have been 1.09% and .88%, respectively.
The operating expense ratio and the net investment income ratio before fee
waivers by the Investment Advisers, Administrator, and Custodian for the
Institutional class for the period ended May 31, 1995 would have been
1.15%, and 1.18%, respectively.
(2) The operating expense ratio and the net investment income ratio before fee
waivers by the Custodian for the Retail class for the period ended November
30, 1995 would have been 1.34% and .62%, respectively. The operating expense
ratio and the net investment income ratio before fee waivers by the
Investment Advisers, Administrator, and Custodian for the Retail class for
the period ended May 31, 1995 would have been 1.38% and 1.05%, respectively.
(3) Institutional and Retail classes commenced operations on July 26, 1994, and
August 15, 1994 respectively.
(4) Annualized.
(5) Total Return excludes sales load.
See Accompanying Notes
FS-4
<PAGE> 83
[ARROW LOGO]
PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1995 ARMADA EQUITY FUND
(UNAUDITED)
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
---------- ------------
<S> <C> <C>
COMMON STOCK - 96.0%
ADVERTISING - 2.2%
Interpublic Group, Inc...... 88,310 $ 3,388,896
------------
BANKING - 4.0%
Norwest Corp. .............. 69,000 2,277,000
Wells Fargo & Company....... 18,000 3,784,500
------------
6,061,500
------------
BEVERAGES - 7.1%
Anheuser-Busch Companies,
Inc........................ 30,000 1,987,500
Coca-Cola Co................ 58,000 4,393,500
Pepsico, Inc................ 77,900 4,303,975
------------
10,684,975
------------
BUILDING & BUILDING SUPPLIES - 1.9%
Home Depot, Inc............. 63,666 2,825,179
------------
BUSINESS SERVICES - 3.1%
Automatic Data Processing... 26,880 2,140,320
General Motors Corp.,
Class E.................... 51,540 2,602,770
------------
4,743,090
------------
CHEMICALS - 2.6%
Air Products & Chemicals,
Inc........................ 35,000 1,942,500
Dow Chemical Co............. 28,320 2,007,180
------------
3,949,680
------------
COMPUTERS - 3.9%
Cisco Systems, Inc.+........ 27,000 2,273,063
Intel Corp. ................ 59,000 3,587,938
------------
5,861,001
------------
CONSUMER NON-DURABLES - 3.5%
Gillette Co................. 42,000 2,178,750
Procter & Gamble Co. ....... 35,520 3,068,040
------------
5,246,790
------------
DIVERSIFIED - 2.0%
Minnesota Mining &
Manufacturing Co........... 46,370 3,037,235
------------
DRUGS & HEALTH CARE - 13.4%
Abbott Laboratories......... 50,860 2,066,187
American Home Products
Corp....................... 20,620 1,881,575
Bristol Myers Squibb Co..... 29,950 2,403,487
Eli Lilly & Co.............. 29,000 2,885,500
Merck & Company, Inc........ 50,000 3,093,750
Pfizer, Inc. ............... 82,620 4,791,960
Schering-Plough Corp. ...... 56,304 3,230,442
------------
20,352,901
------------
ELECTRICAL EQUIPMENT - 3.6%
AMP, Inc. .................. 19,000 762,375
Emerson Electric Co. ....... 27,200 2,121,600
Hubbell, Inc., Class B...... 42,920 2,623,485
------------
5,507,460
------------
ELECTRONICS - 1.7%
Honeywell, Inc. ............ 15,000 714,375
MEMC Electronic
Materials, Inc.+........... 55,000 1,821,875
------------
2,536,250
------------
ENTERTAINMENT - 1.1%
Walt Disney Co. ............ 28,055 1,686,807
------------
</TABLE>
See Accompanying Notes
FS-5
<PAGE> 84
[ARROW LOGO] PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1995 ARMADA EQUITY FUND (CONTINUED)
(UNAUDITED)
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
---------- ------------
<S> <C> <C>
FINANCIAL SERVICES - 3.3%
Federal National Mortgage
Association................ 9,730 $ 1,065,435
Greenpoint Financial
Corp. ..................... 65,000 1,698,125
State Street Boston Corp.... 50,000 2,250,000
------------
5,013,560
------------
FOREIGN - 2.5%
Reuters Holdings PLC, ADS... 68,000 3,842,000
------------
HOME FURNISHINGS/HOUSEWARES - 1.0%
Masco Corp.................. 51,000 1,504,500
------------
INSURANCE - 4.2%
American International
Group...................... 44,083 3,956,449
Chubb Corp. ................ 24,400 2,372,900
------------
6,329,349
------------
MANUFACTURING - 4.4%
Wolverine Tube, Inc.+....... 90,000 3,048,750
York International Corp. ... 80,000 3,580,000
------------
6,628,750
------------
MEDICAL & MEDICAL
SERVICES - 2.3%
Medtronic, Inc. ............ 64,000 3,512,000
------------
OFFICE & BUSINESS EQUIPMENT - 4.3%
Pitney Bowes, Inc........... 78,050 3,492,738
Xerox Corp.................. 22,000 3,016,750
------------
6,509,488
------------
OIL & GAS - 1.1%
Amoco Corp.................. 23,655 1,602,626
------------
OIL EQUIPMENT &
SERVICES - 2.0%
Schlumberger Limited........ 48,495 3,079,433
------------
PAPER & FOREST PRODUCTS - 2.2%
Fort Howard Corp.+.......... 172,500 3,396,094
------------
PHARMACEUTICALS - 0.9%
Johnson & Johnson........... 15,000 1,299,375
------------
RETAIL FOOD CHAINS - 1.6%
Albertson's, Inc. .......... 77,000 2,367,750
------------
RETAIL MERCHANDISING - 0.6%
Wal-Mart Stores, Inc. ...... 40,000 960,000
------------
RETAIL STORES - 2.7%
Lowe's Companies, Inc. ..... 82,500 2,598,750
Walgreen Co................. 50,000 1,456,250
------------
4,055,000
------------
TECHNOLOGY - 2.4%
Hewlett Packard Co.......... 43,000 3,563,625
------------
TELECOMMUNICATIONS - 6.8%
AT&T Corp. ................. 60,260 3,977,160
MCI Communications Corp..... 90,000 2,401,875
Motorola, Inc............... 43,920 2,690,100
Qualcomm, Inc.+............. 30,000 1,245,000
------------
10,314,135
------------
</TABLE>
See Accompanying Notes
FS-6
<PAGE> 85
[ARROW LOGO] PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1995 ARMADA EQUITY FUND (CONTINUED)
(UNAUDITED)
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
---------- ------------
<S> <C> <C>
TOBACCO - 2.5%
Philip Morris Companies,
Inc........................ 44,000 $ 3,861,000
------------
UTILITIES - TELEPHONE - 1.1%
BellSouth Corp.............. 43,300 1,683,287
------------
TOTAL COMMON STOCK.......... 145,403,736
(Cost $110,266,574) ------------
TEMPORARY INVESTMENT - 4.0%
Fidelity Domestic
Market Portfolio........... 6,013,916 6,013,916
(Cost $6,013,916) ------------
TOTAL INVESTMENTS - 100.0% $151,417,652
(Cost $116,280,490*) ============
+ Non-income producing.
* Also cost for Federal income tax
purposes.
The gross unrealized appreciation (depreciation)
for Federal income tax purposes is as follows:
Gross appreciation.................. $ 35,644,281
Gross depreciation.................. (507,119)
------------
$ 35,137,162
============
</TABLE>
See Accompanying Notes
FS-7
<PAGE> 86
[ARROW LOGO]
FINANCIAL STATEMENTS
ARMADA EQUITY FUND
STATEMENT OF ASSETS AND LIABILITIES
NOVEMBER 30, 1995 (UNAUDITED)
<TABLE>
<S> <C>
ASSETS
Investments at value
(Cost $116,280,490)................. $151,417,652
Interest and dividends receivable... 238,843
Receivable for Fund shares sold..... 9,658
Receivable for investments sold..... 7,173,855
Prepaid expenses.................... 6,167
-----------
TOTAL ASSETS............... 158,846,175
- ------------------------------------------------------
LIABILITIES
Payable for Fund shares redeemed.... 64,099
Payable for investments purchased... 11,689,778
Accrued expenses.................... 144,083
-----------
TOTAL LIABILITIES.......... 11,897,960
- ------------------------------------------------------
NET ASSETS (based on
8,862,884 shares of
beneficial interest having
no par value).............. $146,948,215
======================================================
NET ASSETS CONSIST OF:
Paid-in capital............ $107,166,111
Undistributed net
investment income.......... 179,794
Undistributed net realized
gain on investments sold... 4,465,148
Net unrealized appreciation
on investments............. 35,137,162
-----------
$146,948,215
======================================================
NET ASSET VALUE, OFFERING
PRICE AND REDEMPTION PRICE
PER SHARE - Institutional
class
($141,084,467 divided by 8,509,745
shares of beneficial
interest).................. $ 16.58
======================================================
NET ASSET VALUE AND
REDEMPTION PRICE PER
SHARE - Retail class
($5,863,748 divided by 353,139
shares of beneficial
interest).................. $ 16.60
======================================================
MAXIMUM OFFERING
PRICE PER RETAIL SHARE
($16.60 divided by .9625).. $ 17.25
======================================================
</TABLE>
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED NOVEMBER 30, 1995 (UNAUDITED)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends............................ $ 1,230,465
Interest............................. 87,203
Less foreign taxes withheld.......... (10,079)
----------
Total investment income.............. 1,307,589
----------
EXPENSES:
Investment Advisory fees............. 517,967
Administration fees.................. 69,062
12b-1 fees........................... 44,839
Transfer Agent fees.................. 26,203
Custodian fees....................... 17,266
Registration and filing fees......... 8,166
Shareholder servicing fees - Retail
class only......................... 7,434
Legal fees........................... 6,940
Printing and shareholder reports..... 6,220
Distribution fees.................... 5,360
Audit fees........................... 2,825
Miscellaneous........................ 2,345
Trustees' fees....................... 1,928
Insurance............................ 1,254
Fees waived by Custodian............. (17,266)
----------
Total expenses.............. 700,543
- ------------------------------------------------------
NET INVESTMENT INCOME................... 607,046
- ------------------------------------------------------
REALIZED AND UNREALIZED
GAIN ON INVESTMENTS
Net realized gain on
investments sold............ 5,546,896
Net change in unrealized
appreciation on
investments................. 10,345,097
----------
Net gain on investments..... 15,891,993
- ------------------------------------------------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS... $16,499,039
======================================================
</TABLE>
See Accompanying Notes
FS-8
<PAGE> 87
[ARROW LOGO]
FINANCIAL STATEMENTS
ARMADA EQUITY FUND
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE FOR THE
SIX MONTHS ENDED YEAR ENDED
NOVEMBER 30, 1995 MAY 31, 1995
----------------- ------------
(UNAUDITED)
<S> <C> <C>
INCREASE IN NET ASSETS:
Operations:
Net investment income...................................................... $ 607,046 $ 1,640,942
Net realized gain/(loss) on investments sold............................... 5,546,896 (117,954)
Net change in unrealized appreciation on investments....................... 10,345,097 10,348,115
------------ ------------
Net increase in net assets resulting from operations....................... 16,499,039 11,871,103
Distributions to shareholders from net investment income....................... (607,046) (1,520,691)
Distributions to shareholders in excess of net investment income............... (178,961) 0
Distributions to shareholders in excess of net realized capital gains.......... 0 (888,715)
Increase in net assets derived from capital share transactions................. 5,627,321 18,179,790
------------ ------------
Total increase in net assets................................................... 21,340,353 27,641,487
------------ ------------
NET ASSETS:
Beginning of period........................................................ 125,607,862 97,966,375
------------ ------------
End of period.............................................................. $146,948,215 $125,607,862
============ ============
<CAPTION>
NOVEMBER 30, 1995 MAY 31, 1995
----------------- ------------
<S> <C> <C>
UNDISTRIBUTED NET INVESTMENT INCOME AS OF...................................... $ 179,794 $ 358,755
============= ===========
</TABLE>
See Accompanying Notes
FS-9
<PAGE> 88
[ARROW LOGO] FINANCIAL HIGHLIGHTS
ARMADA EQUITY FUND
FINANCIAL HIGHLIGHTS
FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
FOR THE
SIX MONTHS ENDED FOR THE YEAR ENDED MAY 31
NOVEMBER 30, 1995 -----------------------------------------------------------
-----------------------
1995 1994
(UNAUDITED) --------------------- ------------------------
INSTITUTIONAL RETAIL INSTITUTIONAL RETAIL INSTITUTIONAL RETAIL
------------- ------ ------------- ------ ------------- ------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period.............. $14.77 $14.79 $13.66 $13.68 $13.78 $13.80
-------- ------ ------ ------ ------ ------
INCOME FROM
INVESTMENT OPERATIONS
Net investment income............ .07 .05 .21 .18 .18 .15
Net gains on securities (realized
and unrealized)................ 1.83 1.83 1.21 1.21 .01 .00
-------- ------ ------ ------ ------- ------
Total from investment
operations.................. 1.90 1.88 1.42 1.39 .19 .15
-------- ------ ------ ------ ------- ------
LESS DISTRIBUTIONS
Dividends from net
investment income.............. (.07) (.05) (.20) (.17) (.18) (.15)
Dividends in excess of net
investment income.............. (.02) (.02) (.00) (.00) (.01) (.00)
Dividends from net realized
capital gains.................. (.00) (.00) (.00) (.00) (.11) (.11)
Dividends in excess of net
realized capital gains......... (.00) (.00) (.11) (.11) (.01) (.01)
-------- ------ ------ ------ ------- ------
Total distributions........... (.09) (.07) (.31) (.28) (.31) (.27)
-------- ------ ------ ------ ------- ------
Net asset value, end of period.... $16.58 $16.60 $14.77 $14.79 $13.66 $13.68
======== ====== ====== ====== ======= ======
TOTAL RETURN...................... 27.41%(4) 27.05%(4,5) 10.62% 10.35%(5) 1.41% 1.12%(5)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period
(in 000's)..................... $141,084 $5,864 $119,634 $5,974 $90,446 $7,521
Ratio of expenses to average
net assets..................... 1.00%(1,4) 1.25%(2,4) 1.01%(1) 1.27%(2) 1.07% 1.32%
Ratio of net investment income to
average net assets............. .89%(1,4) .64%(2,4) 1.53%(1) 1.23%(2) 1.33% 1.08%
Portfolio turnover rate.......... 38% 38% 17% 17% 15% 15%
</TABLE>
<TABLE>
<CAPTION>
1993 1992 1991
--------------------- --------------------- ----------------------
INSTITUTIONAL RETAIL INSTITUTIONAL RETAIL INSTITUTIONAL RETAIL(3)
------------- ------ ------------- ------ ------------- -------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period.............. $13.13 $13.13 $12.35 $12.35 $10.77 $12.04
------- ------ ------- ------ ------- ------
INCOME FROM
INVESTMENT OPERATIONS
Net investment income............ .27 .23 .30 .25 .31 .04
Net gains on securities (realized
and unrealized)................ .67 .68 .78 .78 1.58 .27
------- ------ ------- ------ ------- ------
Total from investment
operations.................. .94 .91 1.08 1.03 1.89 .31
------- ------ ------- ------ ------- ------
LESS DISTRIBUTIONS
Dividends from net
investment income.............. (.27) (.23) (.30) (.25) (.31) (.00)
Dividends in excess of net
investment income.............. (.02) (.01) (.00) (.00) (.00) (.00)
Dividends from net realized
capital gains.................. (.00) (.00) (.00) (.00) (.00) (.00)
Dividends in excess of net
realized capital gains......... (.00) (.00) (.00) (.00) (.00) (.00)
------- ------ ------- ------ ------- ------
Total distributions........... (.29) (.24) (.30) (.25) (.31) (.00)
------- ------ ------- ------ ------- ------
Net asset value, end of period.... $13.78 $13.80 $13.13 $13.13 $12.35 $12.35
======= ====== ======= ====== ======= ======
TOTAL RETURN...................... 7.20% 7.00%(5) 8.90% 8.48%(5) 18.10% 21.82%(4,5)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period
(in 000's)..................... 85,256 $7,707 $48,673 $2,767 $42,112 $1,389
Ratio of expenses to average
net assets..................... .34% .59%(2) .26%(1) .51%(2) .31%(1) .53%(2,4)
Ratio of net investment income to
average net assets............. 2.13% 1.88%(2) 2.36%(1) 2.15%(2) 2.90%(1) 2.94%(2,4)
Portfolio turnover rate.......... 15% 15% 9% 9% 11% 11%
</TABLE>
(1) The operating expense ratio and net investment income ratio before fee
waivers by the Custodian for the Institutional class for the period ended
November 30, 1995 and the year ended May 31, 1995 would have been 1.03%
and .86%, and 1.02% and 1.51%, respectively. The operating expense ratio
and the net investment income ratio before fee waivers by the Investment
Advisers for the Institutional class for the years ended May 31, 1993,
1992 and 1991 would have been 1.01% and 1.46%, 1.01% and 1.61%, and 1.06%
and 2.15%, respectively.
(2) The operating expense ratio and net investment income ratio before fee
waivers by the Custodian for the Retail class for the period ended
November 30, 1995 and the year ended May 31, 1995 would have been 1.27%
and .62%, and 1.28% and 1.22%, respectively. The operating expense ratio
and the net investment income ratio before fee waivers by the Investment
Advisers for the Retail class for the years ended May 31, 1993 and 1992
and for the period ended May 31, 1991 would have been 1.26% and 1.21%,
1.27% and 1.40%, and 1.28% and 2.19%, respectively.
(3) Retail class commenced operations on April 15, 1991.
(4) Annualized.
(5) Total return excludes sales load.
See Accompanying Notes
FS-10
<PAGE> 89
[ARROW LOGO] PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1995 ARMADA EQUITY INCOME FUND
(UNAUDITED)
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
--------- ------------
<S> <C> <C>
COMMON STOCK - 93.4%
AEROSPACE - 1.7%
Boeing Co. .................. 6,500 $ 473,687
Raytheon Co. ................ 7,400 329,300
------------
802,987
------------
AUTOMOBILES - 1.6%
Ford Motor Co. .............. 27,000 762,750
------------
BANKING - 9.4%
Banc One Corp. .............. 12,000 457,500
Fleet Financial Group,
Inc. ....................... 18,700 780,725
Mellon Bank Corp. ........... 17,100 914,850
Morgan (J.P.) & Co., Inc. ... 10,200 800,700
PNC Bank Corp. .............. 25,800 754,650
Wachovia Corp. .............. 18,600 837,000
------------
4,545,425
------------
BEVERAGES - 0.5%
Anheuser-Busch
Companies, Inc. ............ 4,000 265,000
------------
BUSINESS SERVICES - 2.9%
Dun & Bradstreet Corp. ...... 13,900 867,012
H.& R. Block, Inc. .......... 12,000 534,000
------------
1,401,012
------------
CHEMICALS - 4.9%
Dow Chemical Co. ............ 12,200 864,675
E.I. duPont de
Nemours & Co. .............. 11,700 778,050
WD-40 Co. ................... 18,500 740,000
------------
2,382,725
------------
COMPUTERS - 1.0%
International Business
Machines Corp. ............. 5,000 483,125
------------
CONSUMER NON-DURABLES - 3.2%
Clorox Co. .................. 9,500 719,625
Tambrands, Inc. ............. 15,800 823,575
------------
1,543,200
------------
DIVERSIFIED - 2.0%
Minnesota Mining &
Manufacturing Co. .......... 14,700 962,850
------------
DRUGS & HEALTH CARE - 4.7%
American Home
Products Corp. ............. 7,400 675,250
Bristol Myers Squibb Co. .... 10,500 842,625
Pharmacia Upjohn, Inc. ...... 20,300 728,262
------------
2,246,137
------------
ELECTRICAL EQUIPMENT - 1.1%
General Electric Co.......... 8,000 538,000
------------
FINANCIAL SERVICES - 3.4%
Federal National Mortgage
Association................. 8,200 897,900
Norwest Corp................. 22,000 726,000
------------
1,623,900
------------
FOOD & BEVERAGE - 2.7%
General Mills, Inc........... 8,200 452,025
Heinz (H.J.) Co.............. 25,950 827,156
------------
1,279,181
------------
</TABLE>
See Accompanying Notes
FS-11
<PAGE> 90
[ARROW LOGO] PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1995 ARMADA EQUITY INCOME FUND (CONTINUED)
(UNAUDITED)
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
--------- ------------
<S> <C> <C>
HOUSEWARES - 0.4%
Procter & Gamble Co.......... 2,000 $ 172,750
------------
INSURANCE - 3.9%
American General Corp........ 21,000 711,375
Lincoln National Corp........ 9,000 420,750
Marsh & McLennan Cos.,
Inc......................... 8,900 772,075
------------
1,904,200
------------
MACHINERY & HEAVY EQUIPMENT - 2.1%
Caterpillar, Inc. ........... 9,000 552,375
Cooper Industries, Inc. ..... 13,000 474,500
------------
1,026,875
------------
NATURAL GAS - 1.8%
Consolidated Natural Gas
Co. ........................ 19,400 860,875
------------
OFFICE & BUSINESS EQUIPMENT - 1.6%
Pitney Bowes, Inc. .......... 8,500 380,375
Xerox Corp. ................. 2,700 370,237
------------
750,612
------------
OIL & GAS - 12.7%
Amoco Corp. ................. 18,400 1,246,600
Atlantic Richfield Co. ...... 4,900 531,037
Chevron Corp. ............... 15,300 755,437
Exxon Corp. ................. 17,500 1,354,063
Mobil Corp. ................. 13,900 1,450,813
Royal Dutch Petroleum Co. ... 6,300 808,763
------------
6,146,713
------------
OIL EQUIPMENT & SERVICES - 0.7%
Schlumberger Ltd., Curacao... 5,000 317,500
------------
PAPER & FOREST PRODUCTS - 2.5%
International Paper Co. ..... 7,000 266,875
Kimberly-Clark Corp. ........ 2,300 176,812
Weyerhaeuser Co. ............ 17,000 769,250
------------
1,212,937
------------
REAL ESTATE - 3.7%
Duke Realty Investments,
Inc. ....................... 17,500 485,625
Kimco Realty Corp. .......... 13,800 552,000
Sun Communities, Inc. ....... 29,000 725,000
------------
1,762,625
------------
RETAIL MERCHANDISING - 3.0%
Melville Corp. .............. 23,300 725,213
Penney (J.C.) Co., Inc. ..... 15,300 717,188
------------
1,442,401
------------
TELECOMMUNICATIONS - 1.6%
American Telephone and
Telegraph Co. .............. 11,500 759,000
------------
TOBACCO - 3.8%
American Brands, Inc. ....... 19,500 814,125
Philip Morris Cos., Inc. .... 8,400 737,100
UST, Inc. ................... 9,100 296,888
------------
1,848,113
------------
TRANSPORTATION - 1.1%
Norfolk Southern Corp. ...... 7,000 551,250
------------
UTILITIES - GAS &
ELECTRIC - 1.1%
LG&E Energy Corp. ........... 12,500 515,625
------------
</TABLE>
See Accompanying Notes
FS-12
<PAGE> 91
[ARROW LOGO] PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1995 ARMADA EQUITY INCOME FUND (CONTINUED)
(UNAUDITED)
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
--------- ------------
<S> <C> <C>
UTILITIES - ELECTRIC - 4.1%
American Electric Power
Co. ........................ 13,000 $ 489,125
Consolidated Edison Co. of
New York, Inc. ............. 21,300 615,038
Florida Progress Corp. ...... 6,000 206,250
FPL Group, Inc. ............. 10,000 433,750
Kansas City Power &
Light Co. .................. 10,000 250,000
------------
1,994,163
------------
UTILITIES - TELEPHONE - 8.8%
Bell Atlantic Corp........... 15,700 989,100
Bell South Corp.............. 19,400 754,175
GTE Corp..................... 28,800 1,227,600
Nynex Corp................... 25,700 1,275,363
------------
4,246,238
------------
MISCELLANEOUS - 1.4%
Ogden Corp................... 32,000 680,000
------------
TOTAL COMMON STOCK........... 45,028,169
(Cost $40,355,058) ------------
PREFERRED STOCK - 1.0%
General Motors Corp., Class
E, Preferred C.............. 6,400 459,200
(Cost $372,087) ------------
</TABLE>
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
-------- ---------- -----------
<S> <C> <C> <C>
CORPORATE BONDS - 2.4%
INSURANCE - 1.0%
Chubb Corp. (Aa3, AA)
6.00%............. 05/15/98 $ 400 $ 461,500
------------
WASTE COLLECTION & DISPOSAL - 1.4%
Browning Ferris, Inc.
6.25%............. 08/15/12 700 702,625
------------
TOTAL CORPORATE
BONDS....................... 1,164,125
(Cost $1,108,388) ------------
</TABLE>
<TABLE>
<CAPTION>
NUMBER
OF SHARES
---------
<S> <C> <C>
TEMPORARY INVESTMENT - 3.2%
Fidelity Domestic Market
Portfolio................... 1,557,751 1,557,751
------------
(Cost $1,557,751)
TOTAL INVESTMENTS - 100.0% $ 48,209,245
(Cost $43,393,284*) ============
* Also cost for Federal income tax purposes.
The gross unrealized appreciation (depreciation) for
Federal income tax purposes is as follows:
Gross appreciation.................... $5,029,463
Gross depreciation.................... (213,502)
------------
$4,815,961
------------
</TABLE>
See Accompanying Notes
FS-13
<PAGE> 92
[ARROW LOGO]
FINANCIAL STATEMENTS
ARMADA EQUITY INCOME FUND
STATEMENT OF ASSETS AND LIABILITIES
NOVEMBER 30, 1995 (UNAUDITED)
<TABLE>
<S> <C>
ASSETS
Investments at value
(Cost $43,393,284)................... $48,209,245
Interest and dividends receivable.... 215,648
Receivable for Fund shares sold...... 302,931
Prepaid expenses..................... 20,755
----------
TOTAL ASSETS................ 48,748,579
- ------------------------------------------------------
LIABILITIES
Payable for Fund shares redeemed..... 53,286
Accrued expenses..................... 57,432
----------
TOTAL LIABILITIES........... 110,718
- ------------------------------------------------------
NET ASSETS (based on
4,078,750 shares of
beneficial interest
having no par value)........ $48,637,861
======================================================
NET ASSETS CONSIST OF:
Paid-in capital............. $42,244,332
Undistributed net
investment income........... 267,406
Undistributed net realized
gain on investments sold.... 1,310,161
Net unrealized appreciation
on investments.............. 4,815,962
----------
$48,637,861
======================================================
NET ASSET VALUE, OFFERING
PRICE AND REDEMPTION PRICE
PER SHARE - Institutional
class
($48,424,746 divided by 4,060,865
shares of beneficial
interest)................... $ 11.92
======================================================
NET ASSET VALUE AND
REDEMPTION PRICE PER
SHARE - Retail class
($213,115 divided by 17,885 shares of
beneficial interest)........ $ 11.92
======================================================
MAXIMUM OFFERING
PRICE PER RETAIL SHARE
($11.92 divided by .9625)... $ 12.38
======================================================
</TABLE>
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED NOVEMBER 30, 1995 (UNAUDITED)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends............................. $ 875,563
Interest.............................. 57,676
Less foreign taxes withheld........... (6,152)
---------
Total investment income............... 927,087
EXPENSES:
Investment Advisory fees.............. 159,043
Administration fees................... 21,206
Transfer Agent fees................... 17,666
Registration and filing fees.......... 8,879
12b-1 fees............................ 8,482
Custodian fees........................ 5,328
Printing and shareholder reports...... 4,092
Legal fees............................ 3,466
Amortization of organization costs.... 2,228
Distribution fees..................... 1,771
Audit fees............................ 897
Trustees' fees........................ 772
Miscellaneous......................... 649
Insurance............................. 302
Shareholder servicing fees - Retail
class only.......................... 197
Fees waived by Custodian.............. (5,328)
---------
Total expenses............... 229,650
- ------------------------------------------------------
NET INVESTMENT INCOME.................... 697,437
- ------------------------------------------------------
REALIZED AND UNREALIZED
GAIN ON INVESTMENTS
Net realized gain on
investments sold............. 1,403,399
Net change in unrealized
appreciation on
investments.................. 2,058,692
---------
Net gain on investments
sold......................... 3,462,091
- ------------------------------------------------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS.... $4,159,528
======================================================
</TABLE>
See Accompanying Notes
FS-14
<PAGE> 93
[ARROW LOGO]
FINANCIAL STATEMENTS
ARMADA EQUITY INCOME FUND
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE FOR THE
SIX MONTHS ENDED PERIOD ENDED
NOVEMBER 30, 1995 MAY 31, 1995
----------------- -------------
(UNAUDITED)
<S> <C> <C>
INCREASE IN NET ASSETS:
Operations:
Net investment income............................................. $ 697,437 $ 878,326
Net realized gain/(loss) on investments sold...................... 1,403,399 (93,238)
Net change in unrealized appreciation on investments.............. 2,058,692 2,757,270
------------ ------------
Net increase in net assets resulting from operations.............. 4,159,528 3,542,358
Distributions to shareholders from net investment income.............. (662,322) (646,035)
Increase in net assets derived from capital share transactions........ 8,822,399 33,421,933
------------ ------------
Total increase in net assets.......................................... 12,319,605 36,318,256
------------ ------------
NET ASSETS:
Beginning of period............................................... 36,318,256 0
------------ ------------
End of period..................................................... $ 48,637,861 $ 36,318,256
============ ============
</TABLE>
<TABLE>
<CAPTION>
NOVEMBER 30, 1995 MAY 31, 1995
----------------- ------------
<S> <C> <C>
UNDISTRIBUTED NET INVESTMENT INCOME AS OF............................. $ 267,406 $ 232,291
============ ============
</TABLE>
See Accompanying Notes
FS-15
<PAGE> 94
[ARROW LOGO]
FINANCIAL HIGHLIGHTS
ARMADA EQUITY INCOME FUND
FINANCIAL HIGHLIGHTS
FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED FOR THE PERIOD ENDED
NOVEMBER 30, 1995 MAY 31, 1995
------------------------- ---------------------------
(UNAUDITED)
INSTITUTIONAL RETAIL INSTITUTIONAL(3) RETAIL(3)
------------- ------ ---------------- ---------
<S> <C> <C> <C> <C>
Net asset value, beginning of period............................ $11.01 $11.01 $10.00 $10.26
------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS
Net investment income......................................... .18 .17 .34 .26
Net gains on securities (realized and unrealized)............. .91 .91 .94 .75
------- ------- ------- -------
Total from investment operations............................ 1.09 1.08 1.28 1.01
------- ------- ------- -------
LESS DISTRIBUTIONS
Dividends from net investment income.......................... (.18) (.17) (.27) (.26)
------- ------- ------- -------
Total distributions......................................... (.18) (.17) (.27) (.26)
------- ------- ------- -------
Net asset value, end of period.................................. $11.92 $11.92 $11.01 $11.01
======= ======= ======= =======
TOTAL RETURN.................................................... 20.93%(4) 20.68%(4,5) 14.34%(4) 13.18%(4,5)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000's).......................... $48,425 $213 $36,194 $125
Ratio of expenses to average net assets....................... 1.08%(1,4) 1.33%(2,4) .99%(1,4) 1.41%(2,4)
Ratio of net investment income to average net assets.......... 3.29%(1,4) 3.06%(2,4) 3.87%(1,4) 3.45%(2,4)
Portfolio turnover rate....................................... 34% 34% 12% 12%
</TABLE>
(1) The operating expense ratio and net investment income ratio before fee
waivers by the Custodian for the Institutional class for the period ended
November 30, 1995 would have been 1.11% and 3.26%, respectively. The
operating expense ratio and the net investment income ratio before fee
waivers by the Investment Advisers, Administrator, and Custodian for the
Institutional class for the period ended May 31, 1995 would have been 1.21%
and 3.66%, respectively.
(2) The operating expense ratio and net investment income ratio before fee
waivers by the Custodian for the Retail class for the period ended
November 30, 1995 would have been 1.35% and 3.04%, respectively. The
operating expense ratio and the net investment income ratio before fee
waivers by the Investment Advisers, dministrator, and Custodian for
Retail class for the period ended May 31, 1995 would have been
% and 3.40%, respectively.
(3) Institutional and Retail classes commenced operations on July 1, 1994
and August 22, 1994, respectively.
(4) Annualized.
(5) Total return excludes sales load.
See Accompanying Notes
FS-16
<PAGE> 95
[ARROW LOGO]
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
1. SIGNIFICANT ACCOUNTING POLICIES
Armada Funds (the "Trust") is registered under the Investment Company Act of
1940, as amended, as an open-end management investment company. Effective May
22, 1995, the Trust changed its name from NCC Funds to Armada Funds. The Trust
was organized as a Massachusetts business trust on January 28, 1986. The Trust
is a series fund which is authorized to issue twenty-four classes of shares of
beneficial interest, each of which evidences an interest in one of twelve
investment funds:
Money Market Fund (Class A "Institutional" shares and Class A-Special Series 1
"Retail" shares),
Government Fund (Class B "Institutional" shares and Class B-Special Series 1
"Retail" shares),
Treasury Fund (Class C "Institutional" shares and Class C-Special Series 1
"Retail" shares),
Tax Exempt Fund (Class D "Institutional" shares and Class D-Special Series 1
"Retail" shares),
Equity Fund (Class H "Institutional" shares and Class H-Special Series 1
"Retail" shares),
Fixed Income Fund, (Class I "Institutional" shares and Class I-Special Series
1 "Retail" shares),
Ohio Tax Exempt Fund (Class K "Institutional" shares and Class K-Special
Series 1 "Retail" shares),
National Tax Exempt Fund (Class L "Institutional" shares and Class L-Special
Series 1 "Retail" shares),
Equity Income Fund (Class M "Institutional" shares and Class M-Special Series
1 "Retail" Shares),
Mid Cap Regional Fund (Class N "Institutional" shares and Class N-Special
Series 1 "Retail" shares),
Enhanced Income Fund (Class O "Institutional" shares and Class O-Special
Series 1 "Retail" shares), and
Total Return Advantage Fund (Class P "Institutional" shares and Class
P-Special Series 1 "Retail" shares).
As of the date of this report, the National Tax Exempt Fund has not commenced
operations.
The following is a summary of significant accounting policies followed by the
Equity, Equity Income, and Mid Cap Regional Funds (the "Funds") in preparation
of their financial statements.
PORTFOLIO VALUATION: Investments in securities traded on an exchange are
valued at the last quoted sale price for a given day, or if a sale is not
reported for that day, at the mean between the most recent quoted bid and asked
prices. Unlisted securities for which market quotations are readily available
are valued at the mean between the most recent bid and asked prices. Securities
for which no quotations are readily available are valued at the fair value
determined in good faith pursuant to Board of Trustees guidelines.
SECURITY TRANSACTIONS AND INVESTMENT INCOME: Security transactions are
recorded on the trade date. Realized gains and losses on investments sold are
recorded on the identified cost basis. Interest income is accrued on a daily
basis. Dividends are recorded on the ex-dividend date.
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS: Dividends from net investment
income of the Equity and Equity Income Funds are declared and paid quarterly;
dividends from the net investment income of the Mid Cap Regional Fund are
declared and paid annually. With respect to each Fund, net income for dividend
purposes consists of dividends, interest income, and discount earned (including
both original issue and market discount), less amortization of any market
premium and accrued expenses. Any net realized capital gains will be distributed
at least annually.
FS-17
<PAGE> 96
[ARROW LOGO] NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
FEDERAL INCOME TAXES: Each of the Funds is classified as a separate taxable
entity for Federal income tax purposes. Each of the Funds intends to qualify as
a separate "regulated investment company" under the Internal Revenue Code and
makes the requisite distributions to its shareholders that will be sufficient to
relieve it from Federal income tax and Federal excise tax. Therefore, no Federal
tax provision is required. To the extent distributions from net investment
income and realized net capital gains exceed amounts reported in the financial
statements, such amounts are reported separately.
As of May 31, 1995, the Equity and Equity Income Funds had available capital
loss carryforwards amounting to $117,954 and $93,238, respectively. If not
utilized such amounts will expire by the year 2002.
ORGANIZATIONAL COSTS: The Trust bears all costs in connection with its
organization, including the fees and expenses of registering and qualifying its
shares for distribution under Federal and state securities regulations. All
organization expenses are being amortized on the straight-line method over a
period of five years from the date of commencement of operations.
2. INVESTMENT ADVISERS, DISTRIBUTION FEE AND OTHER RELATED PARTY TRANSACTIONS
Fees paid by the Trust pursuant to the Advisory Agreements with National City
Bank, National City Bank, Columbus and National City Bank, Kentucky
(collectively, the "Adviser" or "Advisers"), wholly-owned subsidiaries of
National City Corporation, are payable monthly based on the annual rate of .75%
of each Fund's average daily net assets. For the period ended November 30, 1995,
the Advisers have earned fees as follows:
<TABLE>
<S> <C>
Mid Cap Regional Fund........................ $252,610
Equity Fund.................................. 517,967
Equity Income Fund........................... 159,043
</TABLE>
At November 30, 1995, advisory fees accrued and unpaid amounted to:
<TABLE>
<S> <C>
Mid Cap Regional Fund......................... $45,571
Equity Fund................................... 89,168
Equity Income Fund............................ 58,168
</TABLE>
Fees paid by the Trust, under a Shareholder Servicing Plan (the "Plan") to
NatCity Investments, Inc. and National City Investments Corporation, both
wholly-owned subsidiaries of National City Corporation, are payable monthly,
based on an aggregate annual rate of up to .25% of the average daily net assets
of the Retail class of the Mid Cap Regional, Equity, and Equity Income Funds.
NatCity Investments, Inc. and National City Investments Corporation earned fees
for the period ended November 30, 1995 in the following amounts:
<TABLE>
<CAPTION>
NATCITY NATIONAL CITY
INVESTMENTS, INC. INVESTMENTS CORPORATION
----------------- -----------------------
<S> <C> <C>
Mid Cap Regional
Fund $261 $4,829
Equity Fund 190 7,093
Equity Income
Fund 2 188
</TABLE>
National City Bank, a wholly-owned subsidiary of National City Corporation,
serves as the Funds' Custodian. For the period ended November 30, 1995, National
City Bank has earned and waived custodian fees representing $8,520, $17,266, and
$5,328, for the Mid Cap Regional, Equity, and the Equity Income Funds,
respectively.
440 Financial Distributors, Inc., a wholly-owned subsidiary of The Shareholder
Services Group, Inc., and an indirect wholly-owned subsidiary of First
FS-18
<PAGE> 97
[ARROW LOGO] NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
Data Corp. ("Distributor"), serves as the Trust's Distributor. Under the Trust's
Distribution Agreement and related Distribution Plan adopted pursuant to Rule
12b-1 of the Investment Company Act of 1940, each Fund reimburses the
Distributor monthly for the direct and indirect expenses incurred by the
Distributor in providing Fund advertising, marketing, prospectus printing and
other distribution services up to a maximum of .10% per annum of the average
daily net assets of each Fund, inclusive of an annual distribution fee of
$250,000 which is payable monthly and accrued daily among the investment funds
with respect to which the Distributor is distributing shares.
Each Trustee receives an annual fee of $6,000 plus $2,000 for each Board
meeting attended and reimbursement of out-of-pocket expenses. The Chairman of
the Board receives an additional $2,000 per annum for services in such capacity.
Such fees are paid for services rendered to all of the Funds and are allocated
accordingly. No person who is an officer, director, trustee, or employee of the
Investment Advisers, Administrator, Distributor, or of any parent or subsidiary
thereof, who serves as an officer, trustee, or employee of the Trust receives
any compensation from the Trust.
Expenses for the period ended November 30, 1995 include legal fees paid to
Drinker Biddle & Reath. A partner of that firm is Secretary of the Trust.
3. PURCHASES AND SALES OF SECURITIES
During the period ended November 30, 1995, purchases and sales of securities,
other than short-term investments or U.S. Government obligations, aggregated:
<TABLE>
<CAPTION>
PURCHASES SALES
---------- ----------
<S> <C> <C>
Mid Cap Regional Fund $59,798,993 $39,944,877
Equity Fund 59,734,407 50,512,049
Equity Income Fund 23,492,602 14,267,587
</TABLE>
4. SHARES OF BENEFICIAL INTEREST
The Trust's Declaration of Trust authorizes the Board of Trustees to issue an
unlimited number of shares of beneficial interest and to classify or reclassify
any unissued shares of the Trust into one or more additional classes of shares
and to classify or reclassify any class of shares into one or more series of
shares. Transactions in capital shares are summarized on the following page for
the Mid Cap Regional, Equity, and Equity Income Funds.
FS-19
<PAGE> 98
[ARROW LOGO]
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED NOVEMBER 30, 1995
--------------------------------------------------------
INSTITUTIONAL CLASS RETAIL CLASS
--------------- ----------
SHARES VALUE SHARES VALUE
--------- ----------- -------- ----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
MID CAP REGIONAL FUND
Shares sold.................................................... 1,497,787 $17,743,564 95,122 $1,107,974
Shares reinvested.............................................. 0 0 0 0
Shares repurchased............................................. (210,433) (2,508,957) (40,900) (482,460)
--------- ----------- -------- ----------
Net increase................................................... 1,287,354 $15,234,607 54,222 $ 625,514
========= =========== ======== ==========
EQUITY FUND
Shares sold.................................................... 729,814 $11,539,882 7,836 $ 124,268
Shares reinvested.............................................. 23,396 366,984 1,738 27,283
Shares repurchased............................................. (345,807) (5,483,649) (60,461) (947,447)
--------- ----------- -------- ----------
Net increase (decrease)........................................ 407,403 $ 6,423,217 (50,887) $ (795,896)
========= =========== ======== ==========
EQUITY INCOME FUND
Shares sold.................................................... 849,652 $ 9,619,081 8,597 $ 97,766
Shares reinvested.............................................. 34,834 393,877 200 2,263
Shares repurchased............................................. (109,990) (1,265,402) (2,226) (25,186)
--------- ----------- -------- ----------
Net increase................................................... 774,496 $ 8,747,556 6,571 $ 74,843
========= =========== ======== ==========
</TABLE>
<TABLE>
<CAPTION>
FOR THE PERIOD ENDED MAY 31, 1995
----------------------------------------------------------
INSTITUTIONAL CLASS RETAIL CLASS
--------------------------- -------------------------
SHARES VALUE SHARES VALUE
--------- ------------ -------- -----------
<S> <C> <C> <C> <C>
MID CAP REGIONAL FUND
Shares sold.................................................. 4,561,720 $ 47,581,271 365,213 $ 3,858,435
Shares reinvested............................................ 14,908 158,322 1,456 15,289
Shares repurchased........................................... (97,553) (1,057,490) (49,929) (530,437)
--------- ------------ -------- -----------
Net increase................................................. 4,479,075 $ 46,682,103 316,740 $ 3,343,287
========= ============ ======== ===========
EQUITY FUND
Shares sold.................................................. 2,204,373 $ 30,453,279 29,328 $ 408,345
Shares reinvested............................................ 95,010 1,289,744 9,835 133,458
Shares repurchased........................................... (818,100) (11,561,697) (184,733) (2,543,339)
--------- ------------ -------- -----------
Net increase (decrease)...................................... 1,481,283 $ 20,181,326 (145,570) $(2,001,536)
========= ============ ======== ===========
EQUITY INCOME FUND
Shares sold.................................................. 3,319,667 $ 33,658,233 11,161 $ 114,046
Shares reinvested............................................ 55,277 562,440 187 1,933
Shares repurchased........................................... (88,575) (914,369) (34) (350)
--------- ------------ -------- -----------
Net increase................................................. 3,286,369 $ 33,306,304 11,314 $ 115,629
========= ============ ======== ===========
</TABLE>
FS-20
<PAGE> 99
STATEMENT OF NET ASSETS UNAUDITED INVENTOR FUNDS
================================================================================
<TABLE>
<CAPTION>
MARKET
VALUE
EQUITY GROWTH FUND SHARES (000)
======================================================
<S> <C> <C>
COMMON STOCK (91.4%)
- ------------------------------------------------------
AEROSPACE (3.7%)
Allied Signal 20,900 $ 888
Boeing 3,700 243
Textron 3,800 261
United Technologies 7,400 657
---------------------------------------------------
Total Aerospace 2,049
-------
AUTOMOTIVE (1.3%)
General Motors 10,900 477
Goodyear Tire & Rubber 6,000 228
---------------------------------------------------
Total Automotive 705
-------
BANKS (3.9%)
Bank of Boston 4,000 178
BankAmerica 1,700 98
Chemical Banking 12,300 700
Mellon Bank 14,400 722
Midlantic 5,800 307
Summit Bancorporation
of New Jersey 5,000 142
---------------------------------------------------
Total Banks 2,147
-------
BUILDING (0.8%)
American Standard* 5,700 152
Foster Wheeler 8,100 304
---------------------------------------------------
Total Building 456
-------
CHEMICALS (2.7%)
Air Products & Chemical 8,200 423
E.I. Du Pont de Nemours 14,600 911
Praxair 6,000 162
---------------------------------------------------
Total Chemicals 1,496
-------
ELECTRICAL EQUIPMENT (4.2%)
Emerson Electric 10,900 777
General Electric 16,000 1,011
General Signal 17,500 558
---------------------------------------------------
Total Electrical Equipment 2,346
-------
ENERGY (5.6%)
Amoco 11,700 748
Atlantic Richfield 2,900 310
Chevron 6,400 299
Duracell International 1,300 68
Halliburton 4,800 199
Mobil 5,400 544
Schlumberger 4,600 286
Sonat 900 26
Union Texas Petroleum 11,000 198
Unocal 15,500 407
---------------------------------------------------
Total Energy 3,085
-------
ENVIRONMENTAL SERVICES (3.2%)
Browning Ferris Industries 9,600 280
Molton Metal Technology* 14,000 539
Wheelabrator Technologies 23,000 331
WMX Technologies 21,600 607
---------------------------------------------------
Total Environmental Services 1,757
-------
FINANCIAL SERVICES (1.1%)
Federal Home Loan Mortgage 9,100 630
---------------------------------------------------
Total Financial Services 630
-------
</TABLE>
The accompanying notes are an integral part of the financial statements.
================================================================================
October 31, 1995 FS-1
<PAGE> 100
STATEMENT OF NET ASSETS UNAUDITED INVENTOR FUNDS
================================================================================
<TABLE>
<CAPTION>
MARKET
VALUE
EQUITY GROWTH FUND (cont'd) SHARES (000)
======================================================
<S> <C> <C>
FOOD, BEVERAGE, TOBACCO &
HOUSEHOLD PRODUCTS (9.9%)
Bush Boake Allen* 5,500 $ 151
Coca Cola 7,300 525
CPC International 4,200 279
Gillette 5,700 276
Kellogg 4,100 296
PepsiCo 5,500 290
Philip Morris Companies 14,900 1,257
Procter & Gamble 9,000 729
RJR Nabisco Holdings 5,160 159
Sara Lee 18,200 535
Sunbeam-Oster 15,200 228
Sysco 12,800 389
UST 11,500 345
---------------------------------------------------
Total Food, Beverage,
Tobacco & Household Products 5,459
-------
INSURANCE (5.4%)
American General 7,000 230
American International Group 7,350 620
Chubb 6,800 611
General Re 4,900 710
Travelers 16,000 808
---------------------------------------------------
Total Insurance 2,979
-------
LEISURE (3.3%)
Autotote, Cl A* 16,600 50
Carnival Cruise Lines, Cl A 31,600 734
Disney 6,100 352
Marriott International 6,500 240
Mattel 15,000 431
---------------------------------------------------
Total Leisure 1,807
-------
MEDIA (3.9%)
American Greetings, Cl A 5,000 158
Capital Cities ABC 5,600 664
Tele-Communications, Cl A* 41,100 699
Viacom, Cl B Non-Voting* 13,300 665
---------------------------------------------------
Total Media 2,186
-------
MEDICAL PRODUCTS & SERVICES (12.2%)
Abbott Laboratories 16,400 652
American Home Products 2,000 177
Amgen* 4,100 197
Bristol Myers Squibb 4,700 358
Columbia/HCA Healthcare 22,620 1,111
Fisher Scientific 4,400 138
Healthsouth Rehabilitation* 10,000 261
Johnson & Johnson 7,400 603
Merck 15,900 914
Pfizer 8,500 488
Pharmacia AB ADR 2,400 84
Schering Plough 6,600 354
Smith Kline Beecham PLC 20,000 1,038
Tenet Healthcare* 18,500 331
Warner Lambert 900 77
---------------------------------------------------
Total Medical Products & Services 6,783
-------
METALS & MINING (0.5%)
Alumax* 600 18
Worthington Industries 15,000 249
---------------------------------------------------
Total Metals & Mining 267
-------
MISCELLANEOUS (3.3%)
ITT 8,000 980
Tyco International 13,800 838
---------------------------------------------------
Total Miscellaneous 1,818
-------
</TABLE>
The accompanying notes are an integral part of the financial statements.
================================================================================
FS-2 October 31, 1995
<PAGE> 101
STATEMENT OF NET ASSETS UNAUDITED INVENTOR FUNDS
================================================================================
<TABLE>
<CAPTION>
MARKET
VALUE
EQUITY GROWTH FUND (cont'd) SHARES (000)
======================================================
<S> <C> <C>
PAPER & FOREST PRODUCTS (0.9%)
Georgia Pacific 5,900 $ 487
---------------------------------------------------
Total Paper & Forest Products 487
-------
PAPER & PAPER PRODUCTS (0.5%)
Willamette Industries 4,500 261
---------------------------------------------------
Total Paper & Paper Products 261
-------
RAILROADS (1.0%)
Union Pacific 8,800 575
---------------------------------------------------
Total Railroads 575
-------
RETAIL (8.5%)
Albertson's 6,500 216
American Stores 8,000 239
Federated Department Stores* 29,800 756
Home Depot 27,700 1,032
Intimate Brands, Cl A* 10,500 176
McDonalds 17,500 718
Newell 8,300 200
Office Depot* 12,800 366
Wal-Mart Stores 30,900 668
Wendy's International 18,000 358
---------------------------------------------------
Total Retail 4,729
-------
TECHNOLOGY (13.6%)
AMP 16,800 659
Arrow Electronics* 6,200 315
Bell Howell* 4,500 113
DSC Communications* 900 33
Eastman Kodak 9,700 607
General Motors, Cl E 11,600 547
Intel 12,200 852
International Business Machines 8,400 817
Microsoft* 8,200 820
Motorola 16,400 1,076
</TABLE>
<TABLE>
<CAPTION>
SHARES/ MARKET
FACE AMOUNT VALUE
(000) (000)
======================================================
<S> <C> <C>
Oracle Systems* 14,500 $ 633
Scientific-Atlanta 32,500 402
Xerox 4,900 636
---------------------------------------------------
Total Technology 7,510
--------
TELEPHONES &
TELECOMMUNICATION (1.9%)
AT&T 16,700 1,069
---------------------------------------------------
Total Telephones &
Telecommunication 1,069
--------
- ------------------------------------------------------
TOTAL COMMON STOCK
(Cost $46,003) 50,601
- ------------------------------------------------------
PREFERRED STOCKS (0.3%)
- ------------------------------------------------------
PRINTING & PUBLISHING (0.3%)
Time Warner Financing,
Convertible to 1.0 Shares
of Hasbro 6,000 192
---------------------------------------------------
Total Printing & Publishing 192
--------
- ------------------------------------------------------
TOTAL PREFERRED STOCK
(Cost $186) 192
- ------------------------------------------------------
REPURCHASE AGREEMENT (11.1%)
- ------------------------------------------------------
Paine Webber
5.88%, dated 10/31/95,
matures 11/01/95,
repurchase price $6,163,504
(collateralized by various U.S.
Government mortgage-backed
securities, total par value
$17,930,362, 0.00% - 7.00%:
total market value $6,347,496) 6,162 6,162
- ------------------------------------------------------
TOTAL REPURCHASE AGREEMENT
(Cost $6,162) 6,162
- ------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
================================================================================
October 31, 1995 FS-3
<PAGE> 102
STATEMENT OF NET ASSETS UNAUDITED INVENTOR FUNDS
================================================================================
<TABLE>
<CAPTION>
MARKET
VALUE
EQUITY GROWTH FUND (cont'd) (000)
======================================================
<S> <C>
TOTAL INVESTMENTS (102.8%)
(Cost $52,351) $ 56,955
- ------------------------------------------------------
OTHER ASSETS AND LIABILITIES, NET (-2.8%) (1,534)
- ------------------------------------------------------
NET ASSETS:
Portfolio shares of Class A ($.00001
par value - 2 billion authorized)
based on 4,612,149 outstanding
shares of beneficial interest 46,368
Accumulated net realized gain
on investments 4,449
Net unrealized appreciation on investments 4,604
- ------------------------------------------------------
TOTAL NET ASSETS: (100.0%) $ 55,421
- ------------------------------------------------------
NET ASSET VALUE AND REDEMPTION
PRICE PER SHARE - CLASS A $ 12.02
Maximum Sales Charge of 4.00% 0.50
--------
OFFERING PRICE PER SHARE - CLASS A(+) $ 12.52
========
- ------------------------------------------------------
</TABLE>
- ----------
* Non-income producing security
+ The offering price is calculated by dividing the net asset value by 1 minus
the maximum sales charge of 4.00%.
ADR American Depository Receipt
PLC Public Limited Corporation
<TABLE>
<CAPTION>
INTERMEDIATE FACE MARKET
GOVERNMENT AMOUNT VALUE
SECURITIES FUND (000) (000)
- ------------------------------------------------------
U.S. GOVERNMENT MORTGAGE-BACKED BONDS (47.0%)
- ------------------------------------------------------
<S> <C> <C>
FHLMC
5.200%, 11/15/99 $ 500 $ 497
5.250%, 09/15/06 798 782
5.750%, 05/15/07 2,243 2,120
7.500%, 08/01/07 10 10
6.000%, 08/15/07 400 391
6.500%, 12/01/09 TBA 1,000 992
9.000%, 07/15/20 108 110
6.000%, 05/15/21 1,000 972
9.250%, 06/01/23 162 169
7.000%, 05/01/24 1,272 1,263
7.000%, 07/01/25 1,984 1,969
6.500%, 09/01/25 696 677
7.000%, 09/01/25 3,977 3,949
7.000%, 10/01/25 1,990 1,976
FHLMC REMIC
8.000%, 11/15/99 2,000 2,089
5.200%, 09/15/05 500 489
8.000%, 01/15/06 500 518
4.750%, 07/25/11 500 489
6.000%, 06/15/19 500 489
8.700%, 02/15/20 500 515
8.500%, 10/15/20 2,000 2,062
FNMA
6.500%, 03/01/14 455 442
7.567%, 11/01/17 ARM 623 640
9.500%, 05/01/18 211 223
FNMA REMIC
7.000%, 01/25/99 1,250 1,266
6.000%, 03/25/07 1,000 977
7.500%, 08/25/07 1,000 1,054
6.500%, 05/25/15 945 949
6.000%, 11/25/17 400 393
6.000%, 11/25/19 500 495
8.125%, 01/25/20 1,086 1,108
8.250%, 10/25/20 168 170
GNMA
6.500%, 11/15/08 187 186
9.500%, 06/15/09 64 68
9.500%, 07/15/09 64 68
</TABLE>
The accompanying notes are an integral part of the financial statements.
================================================================================
FS-4 October 31, 1995
<PAGE> 103
STATEMENT OF NET ASSETS UNAUDITED INVENTOR FUNDS
================================================================================
<TABLE>
<CAPTION>
INTERMEDIATE FACE MARKET
GOVERNMENT AMOUNT VALUE
SECURITIES FUND (cont'd) (000) (000)
- ------------------------------------------------------
<S> <C> <C>
9.500%, 08/15/09 $ 10 $ 11
9.500%, 09/15/09 34 36
9.500%, 10/15/09 137 146
9.000%, 07/15/16 119 125
9.000%, 08/15/16 559 587
9.000%, 10/15/16 207 217
9.000%, 11/15/16 594 625
9.000%, 12/15/16 534 562
9.000%, 03/15/17 694 729
8.000%, 05/15/17 923 951
9.000%, 11/15/17 201 213
9.500%, 06/15/19 425 455
8.500%, 09/15/21 45 47
8.500%, 11/15/21 1,455 1,516
8.500%, 07/15/22 1,323 1,378
7.500%, 08/15/22 25 25
8.500%, 08/15/22 202 210
7.500%, 04/15/23 503 510
7.500%, 05/15/23 493 500
7.000%, 07/20/25 ARM 1,487 1,520
7.500%, 08/15/25 709 719
7.500%, 09/15/25 273 277
7.500%, 10/15/25 995 1,009
- ------------------------------------------------------
TOTAL U.S. GOVERNMENT MORTGAGE-
BACKED BONDS
(Cost $42,379) 42,935
- ------------------------------------------------------
U.S. TREASURY OBLIGATIONS (43.7%)
- ------------------------------------------------------
United States Treasury Bond
12.000%, 08/15/13 6,000 8,995
United States Treasury Notes
8.500%, 07/15/97 1,000 1,046
6.500%, 08/15/97 4,200 4,261
8.875%, 11/15/97 6,200 6,580
5.625%, 01/31/98 5,000 4,996
5.125%, 11/30/98 1,800 1,771
7.000%, 04/15/99 2,000 2,076
10.750%, 02/15/03 8,000 10,242
- ------------------------------------------------------
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $38,780) 39,967
- ------------------------------------------------------
U.S. GOVERNMENT AGENCY OBLIGATIONS (6.4%)
- ------------------------------------------------------
FNMA
5.200%, 04/30/98 3,000 2,944
5.390%, 08/05/98 3,000 2,953
- ------------------------------------------------------
TOTAL U.S. GOVERNMENT AGENCY
OBLIGATIONS
(Cost $5,752) 5,897
- ------------------------------------------------------
REPURCHASE AGREEMENT (3.8%)
- ------------------------------------------------------
J.P. Morgan
5.87%, dated 10/31/95,
matures 11/01/95,
repurchase price $3,449,562
(collateralized by U.S. Treasury Note,
par value $3,387,000,
8.50%, matures 11/15/95:
market value $3,520,161) 3,449 3,449
- ------------------------------------------------------
TOTAL REPURCHASE AGREEMENT
(Cost $3,449) 3,449
- ------------------------------------------------------
TOTAL INVESTMENTS (100.9%)
(Cost $90,360) 92,248
- ------------------------------------------------------
OTHER ASSETS AND LIABILITIES,
NET (-0.9%) (819)
- ------------------------------------------------------
NET ASSETS:
Portfolio shares of Class A
($.00001 par value - 2 billion
authorized) based on 8,865,082
outstanding shares of
beneficial interest 89,133
</TABLE>
The accompanying notes are an integral part of the financial statements.
================================================================================
October 31, 1995 FS-5
<PAGE> 104
STATEMENT OF NET ASSETS UNAUDITED INVENTOR FUNDS
================================================================================
<TABLE>
<CAPTION>
INTERMEDIATE MARKET
GOVERNMENT VALUE
SECURITIES FUND (cont'd) (000)
- ------------------------------------------------------
<S> <C>
Accumulated net realized gain on
investments $ 408
Net unrealized appreciation on
investments 1,888
- ------------------------------------------------------
TOTAL NET ASSETS: (100.0%) $ 91,429
- ------------------------------------------------------
NET ASSET VALUE AND REDEMPTION
PRICE PER SHARE - CLASS A $ 10.31
Maximum Sales Charge of 4.00% 0.43
--------
Offering Price per Share - Class A(+) $ 10.74
========
- ------------------------------------------------------
</TABLE>
- ----------
+ The offering price is calculated by dividing the net asset value by 1 minus
the maximum sales charge of 4.00%.
ARM Adjustable Rate Mortgage
FHLMC Federal Home Loan Mortgage Corporation
FNMA Federal National Mortgage Association
GNMA Government National Mortgage Association
REMIC Real Estate Mortgage Investment Conduit
TBA "To Be Announced" Mortgage Backed Security (See Note 2)
<TABLE>
<CAPTION>
FACE MARKET
GNMA AMOUNT VALUE
SECURITIES FUND (000) (000)
- ------------------------------------------------------
U.S. GOVERNMENT MORTGAGE-BACKED BONDS (87.8%)
- ------------------------------------------------------
<S> <C> <C>
FHLMC
7.500%, 04/01/00 $ 257 $ 263
7.500%, 10/01/01 79 80
8.000%, 01/15/06 500 518
7.000%, 12/01/09 TBA 1,200 1,210
7.000%, 06/01/23 440 437
7.000%, 03/01/24 223 221
7.000%, 07/01/25 329 327
7.000%, 09/01/25 502 499
FNMA IO
7.000%, 09/25/19 2,444 347
GNMA
7.000%, 10/15/07 339 343
7.000%, 05/15/08 324 328
7.000%, 01/15/09 24 24
7.000%, 02/15/09 171 174
7.000%, 03/15/09 281 284
9.000%, 05/15/09 GPM 982 1,026
6.500%, 06/15/09 49 49
9.000%, 06/15/09 GPM 108 113
9.500%, 07/15/09 206 219
9.500%, 08/15/09 518 550
9.500%, 09/15/09 33 35
9.500%, 10/15/09 6 7
6.500%, 11/01/09 TBA 1,000 997
9.500%, 11/15/09 54 58
10.000%, 11/15/09 383 416
10.000%, 12/15/09 32 35
11.500%, 01/15/13 35 39
11.500%, 02/15/13 71 81
11.500%, 03/15/13 29 33
11.500%, 05/15/13 90 102
7.500%, 06/15/13 314 319
11.500%, 06/15/13 92 104
11.500%, 07/15/13 23 26
11.500%, 08/15/13 12 13
11.500%, 06/15/15 58 65
11.250%, 08/15/15 257 282
11.500%, 10/15/15 44 50
9.500%, 12/15/15 12 13
11.500%, 01/15/16 18 21
9.500%, 03/15/16 172 184
9.000%, 06/15/16 2,336 2,455
9.000%, 07/15/16 18 19
9.500%, 07/15/16 7 7
9.000%, 08/15/16 19 20
9.500%, 08/15/16 171 182
9.000%, 08/20/16 2,300 2,394
</TABLE>
The accompanying notes are an integral part of the financial statements.
================================================================================
FS-6 October 31, 1995
<PAGE> 105
STATEMENT OF NET ASSETS UNAUDITED INVENTOR FUNDS
================================================================================
<TABLE>
<CAPTION>
FACE MARKET
GNMA AMOUNT VALUE
SECURITIES FUND (cont'd) (000) (000)
- ------------------------------------------------------
<S> <C> <C>
10.250%, 08/20/16 GPM $ 31 $ 33
9.000%, 09/15/16 19 20
9.500%, 09/15/16 23 25
9.500%, 10/15/16 19 20
9.500%, 11/15/16 78 84
9.000%, 12/15/16 66 70
8.500%, 01/15/17 166 172
9.500%, 01/15/17 19 20
8.500%, 02/15/17 230 240
9.000%, 02/15/17 16 17
8.000%, 03/15/17 17 17
8.500%, 03/15/17 244 254
8.000%, 04/15/17 118 122
8.500%, 04/15/17 177 184
8.000%, 05/15/17 84 87
8.500%, 05/15/17 175 182
9.500%, 05/15/17 28 30
9.000%, 06/15/17 489 514
8.000%, 07/15/17 106 109
9.500%, 07/15/17 60 64
9.000%, 08/15/17 332 349
9.500%, 08/15/17 183 195
9.500%, 09/15/17 136 145
9.500%, 10/15/17 258 276
8.500%, 11/15/17 633 662
9.500%, 12/15/17 28 30
9.500%, 03/15/18 36 38
10.250%, 03/20/18 GPM 157 168
9.500%, 04/15/18 36 39
9.500%, 06/15/18 88 94
9.500%, 07/15/18 15 16
9.500%, 08/15/18 42 45
9.500%, 09/15/18 12 13
10.250%, 09/20/18 GPM 191 205
9.500%, 10/15/18 22 23
9.500%, 11/15/18 15 16
9.500%, 12/15/18 89 95
9.500%, 01/15/19 40 43
9.500%, 03/15/19 10 11
9.500%, 05/15/19 37 39
9.500%, 07/15/19 12 13
9.500%, 09/15/19 25 27
9.500%, 10/15/19 40 43
9.500%, 12/15/19 29 31
9.500%, 06/15/20 21 22
9.000%, 07/15/20 262 275
9.500%, 07/15/20 32 35
9.500%, 08/15/20 333 356
9.500%, 10/15/20 58 62
9.500%, 11/15/20 271 290
9.500%, 12/15/20 131 140
8.500%, 04/15/21 441 459
8.500%, 05/15/21 43 44
8.500%, 06/15/21 431 449
9.000%, 06/15/21 476 500
8.500%, 07/15/21 77 80
9.500%, 07/15/21 465 497
8.500%, 09/15/21 725 755
8.500%, 10/15/21 96 100
8.500%, 11/15/21 796 829
8.500%, 12/15/21 1,095 1,141
8.500%, 02/15/22 376 392
8.500%, 03/01/22 190 198
8.500%, 03/15/22 264 275
8.500%, 05/15/22 357 372
8.500%, 08/15/22 390 407
8.500%, 09/15/22 539 562
7.000%, 10/15/22 26 26
7.000%, 11/15/22 GPM 469 467
8.500%, 11/15/22 312 325
7.500%, 02/15/23 394 400
7.000%, 04/15/23 29 29
7.500%, 04/15/23 34 34
7.500%, 06/15/23 473 479
</TABLE>
The accompanying notes are an integral part of the financial statements.
================================================================================
October 31, 1995 FS-7
<PAGE> 106
STATEMENT OF NET ASSETS UNAUDITED INVENTOR FUNDS
================================================================================
<TABLE>
<CAPTION>
FACE MARKET
GNMA AMOUNT VALUE
SECURITIES FUND (cont'd) (000) (000)
- ------------------------------------------------------
<S> <C> <C>
7.000%, 07/15/23 $ 497 $ 494
7.500%, 07/15/23 989 1,003
7.000%, 08/15/23 926 921
7.500%, 08/15/23 206 209
6.500%, 09/15/23 147 143
7.000%, 09/15/23 333 331
7.500%, 09/15/23 117 119
6.500%, 10/15/23 409 397
7.000%, 10/15/23 949 944
7.500%, 10/15/23 1,878 1,905
7.000%, 11/15/23 87 87
6.000%, 12/20/23 455 428
7.000%, 01/15/24 695 691
7.500%, 01/15/24 135 137
7.000%, 02/15/24 1,472 1,463
7.000%, 03/15/24 41 41
7.500%, 03/15/24 319 324
7.000%, 05/15/24 660 657
7.500%, 05/15/24 384 389
7.000%, 08/15/25 44 44
7.000%, 09/15/25 1,706 1,696
7.500%, 09/15/25 2,469 2,504
7.500%, 10/15/25 2,713 2,752
- ------------------------------------------------------
TOTAL U.S. GOVERNMENT MORTGAGE-
BACKED BONDS 47,528
(Cost $46,953)
- ------------------------------------------------------
U.S. TREASURY OBLIGATION (10.5%)
- ------------------------------------------------------
United States Treasury Bond
12.000%, 08/15/13 3,800 5,697
- ------------------------------------------------------
TOTAL U.S. TREASURY OBLIGATION
(Cost $5,263) 5,697
- ------------------------------------------------------
REPURCHASE AGREEMENT (3.2%)
- ------------------------------------------------------
Aubrey G. Lanston
5.875%, dated 10/31/95,
matures 11/01/95,
repurchase price $1,739,284
(collateralized by U.S.
Treasury Bill, par value
$1,870,000, matures 10/17/96,
market value $1,773,275) 1,739 1,739
- ------------------------------------------------------
TOTAL REPURCHASE AGREEMENT
(Cost $1,739) 1,739
- ------------------------------------------------------
TOTAL INVESTMENTS (101.5%)
(Cost $53,955) 54,964
- ------------------------------------------------------
OTHER ASSETS AND LIABILITIES,
NET (-1.5%) (834)
- ------------------------------------------------------
NET ASSETS:
Portfolio shares of Class A
($.00001 par value - 2 billion
authorized) based on 5,175,228
outstanding shares of
beneficial interest 52,052
Accumulated net realized
gain on investments 1,074
Net unrealized appreciation
on investments 1,009
Distributions in excess of net
investment income (5)
- ------------------------------------------------------
TOTAL NET ASSETS: (100.0%) $54,130
- ------------------------------------------------------
NET ASSET VALUE AND REDEMPTION
PRICE PER SHARE - CLASS A $ 10.46
Maximum Sales Charge of 4.00% 0.44
----
OFFERING PRICE PER SHARE - CLASS A(+) $ 10.90
-------
- ------------------------------------------------------
</TABLE>
- ----------
+ The offering price is calculated by dividing the net asset value by 1 minus
the maximum sales charge of 4.00%.
FHLMC Federal Home Loan Mortgage Association
FNMA Federal National Mortgage Association
GNMA Government National Mortgage Association
GPM Graduated Payment Mortgage
IO Interest Only
TBA "To Be Announced" Mortgage Backed Security (See Note 2)
The accompanying notes are an integral part of the financial statements.
================================================================================
FS-8 October 31, 1995
<PAGE> 107
STATEMENT OF NET ASSETS UNAUDITED INVENTOR FUNDS
================================================================================
<TABLE>
<CAPTION>
FACE MARKET
PENNSYLVANIA AMOUNT VALUE
MUNICIPAL BOND FUND (000) (000)
========================================================
MUNICIPAL BONDS (99.0%)
- --------------------------------------------------------
<S> <C> <C>
PENNSYLVANIA (99.0%)
Allegheny County, Pennsylvania
Children's Hospital of Pittsburgh,
Ser 85B, MBIA, RB
3.900%, 11/07/95 (A) $ 200 $ 200
Allegheny County, Pennsylvania
Hospital Development Authority
Magee Woman's Hospital
Project, Ser O, RB
10.125%, 10/01/02 125 153
Bradford, Pennsylvania
School District, FGIC, GO
5.250%, 10/01/07 1,000 1,006
Bucks County, Pennsylvania
Middletown Township Special
Obligation, Escrowed to Maturity
6.100%, 10/01/00 385 411
Butler County, Pennsylvania
Sewer Authority, RB,
Prerefunded 01/01/04 at 100
7.250%, 07/01/12 100 111
Danville, Pennsylvania
School District, MBIA, GO
6.650%, 05/01/04 100 101
Dauphin County, Pennsylvania
General Authority Health
Center, RB
5.150%, 01/01/97 1,000 1,005
Delaware County, Pennsylvania
Industrial Development Authority
Airport Facilities United Parcel
Services Project, Ser 85, RB
3.800%, 11/07/95 (A) 300 300
Delaware County, Pennsylvania
Industrial Development Authority
BP Exploration & Oil Project, RB
4.000%, 11/07/95 (A) 100 100
Delaware County, Pennsylvania, GO
4.500%, 10/01/01 500 504
Delaware River, Pennsylvania
Port Authority PA & NJ
bridges, AMBAC, RB
7.375%, 01/01/07 1,500 1,665
Elizabeth Forward, Pennsylvania
School District, MBIA, GO,
Prerefunded 05/01/96 at 100
8.000%, 05/01/02 1,000 1,020
Erie County, Pennsylvania
Prison Authority, MBIA, RB,
Prerefunded 11/01/01 at 100
6.600%, 11/01/02 1,000 1,106
Hampton Township, Pennsylvania
School District, Ser A, FGIC, GO,
Prerefunded 02/15/01 at 100
6.900%, 02/15/10 1,000 1,109
Langhorne, Pennsylvania
Saint Mary's Hospital Authority
Franciscan Health Systems,
Ser C, RB
3.800%, 11/07/95 (A) (B) 800 800
Lehigh County, Pennsylvania,
Ser A, AMBAC, GO,
Prerefunded 10/15/99 at 100
6.000%, 10/15/11 1,250 1,323
Monroeville, Pennsylvania Hospital
Authority East Suburban
Health Center Project, RB,
Prerefunded 07/01/04 at 100
7.600%, 07/01/08 780 902
</TABLE>
The accompanying notes are an integral part of the financial statements.
================================================================================
October 31, 1995 FS-9
<PAGE> 108
STAEMENT OF NET ASSETS UNAUDITED INVENTOR FUNDS
================================================================================
<TABLE>
<CAPTION>
FACE MARKET
PENNSYLVANIA AMOUNT VALUE
MUNICIPAL BOND FUND (cont'd) (000) (000)
========================================================
<S> <C> <C>
Montgomery County, Pennsylvania
Hospital Authority Suburban
General Hospital Project, RB
7.750%, 05/01/02 $ 100 $ 112
Mount Lebanon, Pennsylvania
Hospital Authority, FGIC, RB,
Prerefunded 01/01/96 at 102
9.125%, 07/01/06 1,500 1,542
Northampton County, Pennsylvania
Higher Education Authority
Lehigh University Project, RB
5.500%, 09/01/98 1,030 1,063
Pennsylvania Infrastructure
Investment Authority Pennvest,
Ser 94, RB
3.900%, 11/07/95 (A) (B) 100 100
Pennsylvania Infrastructure
Investment Authority Pennvest,
Subser B, RB
6.450%, 09/01/04 1,500 1,665
Pennsylvania State Certificates
of Participation
4.000%, 12/01/95 450 450
Pennsylvania State Higher
Educational Facilities Authority
University of Pennsylvania Project,
Ser A, RB
6.500%, 09/01/04 250 281
5.550%, 09/01/09 1,300 1,326
Pennsylvania State Intergovern-
mental Co-op Authority
Special Tax City of Philadelphia
Funding Project, RB,
Prerefunded 06/15/02 at 100
6.800%, 06/15/22 1,500 1,684
Pennsylvania State Turnpike
Commission, Ser D, FGIC, RB,
Escrowed to Maturity
6.700%, 12/01/97 1,100 1,165
Pennsylvania State Turnpike
Commission, Ser K, RB,
Escrowed to Maturity
7.250%, 12/01/99 1,230 1,362
Pennsylvania State Turnpike
Commission, Ser O, FGIC, RB
5.250%, 12/01/01 1,010 1,049
Pennsylvania State, Ser 1, GO
6.200%, 09/15/04 900 974
Pennsylvania State, Ser 2, GO
4.750%, 06/15/98 565 571
Philadelphia, Pennsylvania Gas
Works, Ser 13, RB,
Prerefunded 06/15/01 at 102
7.700%, 06/15/11 460 538
Philadelphia, Pennsylvania Gas
Works, Ser 14, RB
6.250%, 07/01/08 300 319
Philadelphia, Pennsylvania
Graduate Hospital Project, RB
7.000%, 07/01/10 290 324
Philadelphia, Pennsylvania
Hospital & Higher Educational
Facilities Authority Children's
Hospital Project, Ser A, RB,
Prerefunded 07/01/97 at 100
7.000%, 07/01/15 1,000 1,046
Philadelphia, Pennsylvania
Hospital & Higher Educational
Facilities Authority Children's
Hospital Project, Ser A, RB,
Prerefunded 02/15/02 at 102
6.500%, 02/15/21 200 223
</TABLE>
The accompanying notes are an integral part of the financial statements.
================================================================================
FS-10 October 31, 1995
<PAGE> 109
STATEMENT OF NET ASSETS UNAUDITED INVENTOR FUNDS
================================================================================
<TABLE>
<CAPTION>
FACE MARKET
PENNSYLVANIA AMOUNT VALUE
MUNICIPAL BOND FUND (cont'd) (000) (000)
=========================================================
<S> <C> <C>
Philadelphia, Pennsylvania Water
& Waste Authority, MBIA, RB
5.500%, 06/15/07 $ 1,500 $ 1,556
Pittsburgh & Allegheny County,
Pennsylvania Auditorium
Authority, RB
6.400%, 12/01/01 800 801
Pittsburgh, Pennsylvania Water
& Sewer Authority, Ser A,
FGIC, RB, Escrowed to Maturity
6.000%, 09/01/97 1,000 1,036
Pittsburgh, Pennsylvania,
Ser A, MBIA, GO
5.500%, 09/01/06 955 991
Schuylkill County, Pennsylvania
Industrial Development Authority
Northeastern Power Project, RB
4.000%, 11/07/95 (A) (B) 300 300
Schuylkill County, Pennsylvania
Industrial Development Authority
Westwood Energy Project, RB
4.200%, 11/07/95 (A) (B) 200 200
Scranton-Lackawanna, Pennsylvania
Health & Welfare Authority, RB,
Escrowed to Maturity
6.625%, 07/01/09 570 630
Seneca Valley, Pennsylvania School
District, Ser A, FGIC, GO
5.700%, 07/01/06 1,000 1,038
Southeastern Pennsylvania
Transportation Authority Lease
Project, RB
5.750%, 12/01/04 775 776
Swarthmore Borough, Pennsylvania
College Authority, RB
6.000%, 09/15/06 855 917
Tyrone, Pennsylvania School
District, MBIA, GO
5.700%, 09/15/08 1,250 1,269
Union City, Pennsylvania Higher
Educational Facilities Financing
Authority Bucknell University
Project, MBIA, RB
6.200%, 04/01/06 1,000 1,061
- ---------------------------------------------------------
TOTAL MUNICIPAL BONDS
(Cost $37,226) 38,185
- ---------------------------------------------------------
TOTAL INVESTMENTS (99.0%)
(Cost $37,226) 38,185
- ---------------------------------------------------------
OTHER ASSETS AND LIABILITIES, NET (1.0%) 371
- ---------------------------------------------------------
NET ASSETS:
Portfolio shares of Class A
($.00001 par value -- 2 billion
authorized) based on 3,762,329
outstanding shares of beneficial
interest 37,596
Net unrealized appreciation
on investments 959
Undistributed net
investment income 1
- ---------------------------------------------------------
TOTAL NET ASSETS: (100.0%) $38,556
- ---------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
================================================================================
October 31, 1995 FS-11
<PAGE> 110
STATEMENT OF NET ASSETS UNAUDITED INVENTOR FUNDS
================================================================================
<TABLE>
<CAPTION>
MARKET
PENNSYLVANIA VALUE
MUNICIPAL BOND FUND (cont'd) (000)
======================================================
<S> <C>
NET ASSET VALUE AND REDEMPTION
PRICE PER SHARE -- CLASS A $10.25
Maximum Sales Charge of 4.00% 0.43
------
OFFERING PRICE PER SHARE -- CLASS A(+) $10.68
- ------------------------------------------------------
</TABLE>
- ----------------
+ This offering price is calculated by dividing the net asset value by 1 minus
the maximum sales charge of 4.00%.
(A) Floating Rate Instrument with Demand Features. Rate reflected on the
Statement of Net Assets is the rate in effect on October 31, 1995. The
date shown is the longer of the reset date or the demand date.
(B) Security is backed by a letter of credit.
AMBAC American Municipal Bond Assurance Company
FGIC Financial Guaranty Insurance Company
GO General Obligation
MBIA Municipal Bond Insurance Association
RB Revenue Bond
<TABLE>
<CAPTION>
FACE
PRIME OBLIGATIONS AMOUNT VALUE
MONEY MARKET FUND (000) (000)
- ------------------------------------------------------
COMMERCIAL PAPER (80.7%)
- ------------------------------------------------------
<S> <C> <C>
American Express Credit
5.700%, 12/11/95 $5,000 $4,968
5.640%, 03/13/96 5,000 4,896
American General Finance
5.690%, 01/30/96 3,000 2,957
5.650%, 02/09/96 5,000 4,922
American Home Products
5.740%, 11/09/95 3,000 2,996
5.720%, 01/30/96 5,000 4,929
5.720%, 02/09/96 1,000 984
Associates Corporation
of North America
5.710%, 11/15/95 4,000 3,991
5.680%, 02/12/96 5,000 4,919
Avco Financial Services
5.730%, 11/16/95 5,000 4,988
5.750%, 01/25/96 4,000 3,946
Bear Stearns Companies
5.700%, 11/13/95 3,000 2,994
5.720%, 11/20/95 5,000 4,985
Beneficial
5.650%, 12/12/95 8,000 7,949
Chase Manhattan
5.720%, 11/17/95 8,000 7,980
CIESCO
5.650%, 11/22/95 6,450 6,429
5.630%, 02/29/96 4,000 3,925
CIT Group Holdings
5.680%, 12/06/95 4,000 3,978
5.650%, 02/12/96 2,000 1,968
Clipper Receivables
5.750%, 11/06/95 5,000 4,996
Coca-Cola Enterprises
5.900%, 11/03/95 3,500 3,499
5.750%, 12/13/95 4,000 3,973
CSW Credit
5.710%, 11/15/95 3,000 2,993
Delaware Funding
5.660%, 11/20/95 5,056 5,041
Ford Motor Credit
5.700%, 11/20/95 8,000 7,976
5.680%, 02/09/96 2,000 1,968
General Electric Capital
5.590%, 03/01/96 4,000 3,925
General Motors Acceptance
5.760%, 01/23/96 5,000 4,934
5.750%, 02/16/96 4,000 3,932
Household Finance
5.700%, 01/31/96 8,000 7,885
ITT Hartford Group
5.660%, 12/06/95 2,699 2,684
</TABLE>
The accompanying notes are an integral part of the financial statements.
================================================================================
FS-12 October 31, 1995
<PAGE> 111
STATEMENT OF NET ASSETS UNAUDITED INVENTOR FUNDS
================================================================================
<TABLE>
<CAPTION>
FACE
PRIME OBLIGATIONS AMOUNT VALUE
MONEY MARKET FUND (cont'd) (000) (000)
- ------------------------------------------------------
<S> <C> <C>
John Deere Capital
5.680%, 11/21/95 $8,000 $ 7,975
Merrill Lynch
5.700%, 11/16/95 8,000 7,979
National Fuel Gas
5.770%, 01/22/96 5,000 4,934
Nationsbanc
5.635%, 04/03/96 4,000 3,904
New Center Asset Trust
5.780%, 11/30/95 4,000 3,981
Norwest Corporation
5.660%, 11/20/95 5,000 4,985
5.690%, 11/30/95 2,000 1,991
Philip Morris
5.730%, 11/09/95 5,000 4,994
PNC Funding
5.770%, 02/05/96 8,000 7,877
Preferred Receivables Funding
5.750%, 11/29/95 2,815 2,802
5.730%, 01/25/96 5,000 4,932
Prudential Funding
5.720%, 11/14/95 3,000 2,994
5.680%, 11/15/95 5,000 4,989
Puerto Rico Government
Development Bank
5.700%, 11/16/95 5,000 4,988
Riverwood Funding
5.730%, 11/07/95 5,000 4,995
5.730%, 11/14/95 3,495 3,488
Sears Roebuck Acceptance
5.720%, 11/10/95 4,000 3,994
5.700%, 02/13/96 2,000 1,967
Warner-Lambert
5.670%, 12/07/95 3,500 3,480
- ------------------------------------------------------
TOTAL COMMERCIAL PAPER
(Cost $225,759) 225,759
- ------------------------------------------------------
U.S. GOVERNMENT AGENCY OBLIGATION (0.2%)
- ------------------------------------------------------
FNMA
5.945%, 11/13/95 665 664
- ------------------------------------------------------
TOTAL U.S. GOVERNMENT AGENCY
OBLIGATION (Cost $664) 664
- ------------------------------------------------------
FLOATING RATE INSTRUMENTS (7.5%)
- ------------------------------------------------------
Corestates Capital
5.850%, 01/05/96 (A) 3,000 3,000
First Bank of South Dakota
5.855%, 05/06/96 (A) 6,000 5,999
SMM Trust, 1995-I
5.856%, 05/29/96 (A) 9,000 8,999
South Trust Bank of Alabama
5.855%, 04/19/96 (A) 3,000 3,000
- ------------------------------------------------------
TOTAL FLOATING RATE INSTRUMENTS
(Cost $20,998) 20,998
- ------------------------------------------------------
BANK NOTES (3.6%)
- ------------------------------------------------------
First National Bank, Chicago
6.150%, 08/26/96 5,000 5,000
Nationsbank of Texas
6.150%, 08/28/96 5,000 5,000
- ------------------------------------------------------
TOTAL BANK NOTES
(Cost $10,000) 10,000
- ------------------------------------------------------
CERTIFICATES OF DEPOSIT (2.7%)
- ------------------------------------------------------
Chase Manhattan
5.770%, 04/15/96 2,000 2,000
</TABLE>
The accompanying notes are an integral part of the financial statements.
================================================================================
October 31, 1995 FS-13
<PAGE> 112
STATEMENT OF NET ASSETS UNAUDITED INVENTOR FUNDS
================================================================================
<TABLE>
<CAPTION>
FACE
PRIME OBLIGATIONS AMOUNT VALUE
MONEY MARKET FUND (cont'd) (000) (000)
- -------------------------------------------------------
<S> <C> <C>
First National Bank, Maryland
5.740%, 02/05/96 $3,000 $ 3,000
Society National Bank
6.000%, 04/25/96 2,500 2,502
- -------------------------------------------------------
TOTAL CERTIFICATES OF DEPOSIT
(Cost $7,502) 7,502
- -------------------------------------------------------
BANKERS ACCEPTANCES (2.5%)
- -------------------------------------------------------
Corestates Bank
5.560%, 03/04/96 2,000 1,962
State Street Bank
5.680%, 11/17/95 5,147 5,134
- -------------------------------------------------------
TOTAL BANKERS ACCEPTANCES
(Cost $7,096) 7,096
- -------------------------------------------------------
REPURCHASE AGREEMENT (3.2%)
- -------------------------------------------------------
Lehman Brothers
5.860%, dated 10/31/95,
matures 11/01/95,
repurchase price $8,879,445
(collateralized by U.S.
Treasury Note, par value
$8,885,000, 6.625%,
matures 03/31/97:
market value $9,050,084) 8,878 8,878
- -------------------------------------------------------
TOTAL REPURCHASE AGREEMENT
(Cost $8,878) 8,878
- -------------------------------------------------------
TOTAL INVESTMENTS (100.4%)
(Cost $280,897) 280,897
- -------------------------------------------------------
OTHER ASSETS AND LIABILITIES,
NET(-0.4%) (1,201)
- -------------------------------------------------------
NET ASSETS:
Portfolio shares of Class A
($.00001 par value -- 2
billion authorized) based
on 279,698,405 outstanding
shares of beneficial
interest 279,698
Accumulated net realized
loss on investments (2)
- -------------------------------------------------------
TOTAL NET ASSETS: (100.0%) $279,696
- -------------------------------------------------------
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER
SHARE -- CLASS A $ 1.00
- -------------------------------------------------------
</TABLE>
- ------------
(A) Floating Rate Instrument. The rate reflected on the Statement of Net
Assets is the rate in effect on October 31, 1995. The date shown is the
longer of the reset date or the demand date.
FNMA Federal National Mortgage Association
<TABLE>
<CAPTION>
FACE
TREASURY SECURITIES AMOUNT VALUE
MONEY MARKET FUND (000) (000)
- -------------------------------------------------------
U.S. TREASURY OBLIGATIONS (17.6%)
- -------------------------------------------------------
<S> <C> <C>
United States Treasury Bills
5.876%, 05/30/96 $ 7,000 $ 6,773
5.877%, 05/30/96 12,000 11,610
United States Treasury Note
4.375%, 08/15/96 5,000 4,947
- -------------------------------------------------------
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $23,330) 23,330
- -------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
================================================================================
FS-14 October 31, 1995
<PAGE> 113
STATEMENT OF NET ASSETS UNAUDITED INVENTOR FUNDS
================================================================================
<TABLE>
<CAPTION>
FACE
TREASURY SECURITIES AMOUNT VALUE
MONEY MARKET FUND (cont'd) (000) (000)
- -------------------------------------------------------
REPURCHASE AGREEMENTS (82.8%)
- -------------------------------------------------------
<S> <C> <C>
Aubrey G. Lanston
5.875%, dated 10/31/95,
matures 11/01/95, repurchase
price $11,554,885
(collateralized by U.S.
Treasury Bill, par value
$12,420,000, matures
10/17/96: market
value $11,783,654) $11,553 $ 11,553
Donaldson, Lufkin & Jenrette
Securities 5.890%, dated
10/31/95, matures 11/01/95,
repurchase price $25,004,090
(collateralized by U.S.
Treasury Note, par value
$25,186,000, 6.50%, matures
04/30/97: market
value $25,500,825) (A) 25,000 25,000
J.P. Morgan
5.870%, dated 10/31/95,
matures 11/01/95, repurchase
price $11,501,875
(collateralized by U.S
Treasury Note, par value
$7,946,000, 12.00%, matures
05/15/05: market value
$11,741,079) 11,500 11,500
Lehman Brothers
5.860%, dated 10/31/95,
matures 11/01/95, repurchase
price $11,501,872
(collateralized by various
U.S. Treasury Notes, total
par value $11,400,000, 7.875%
- 8.50%, 11/15/95 - 02/15/96:
total market value $11,730,088) 11,500 11,500
Nomura Securities
5.900%, dated 10/31/95,
matures 11/01/95, repurchase
price $25,004,097
(collateralized by U.S.
Treasury Note, par value
$25,028,000, 6.125%, matures
07/31/96: market value
$25,500,931) (A) 25,000 25,000
Union Bank of Switzerland
5.900%, dated 10/31/95,
matures 11/01/95, repurchase
price $25,004,097
(collateralized by U.S.
Treasury Note, par value
$24,825,000, 6.875%, matures
02/28/97: market value
$25,500,612) (A) 25,000 25,000
- -------------------------------------------------------
TOTAL REPURCHASE AGREEMENTS
(Cost $109,553) 109,553
- -------------------------------------------------------
TOTAL INVESTMENTS (100.4%)
(Cost $132,883) 132,883
- -------------------------------------------------------
OTHER ASSETS AND
LIABILITIES, NET (-0.4%) (540)
- -------------------------------------------------------
NET ASSETS:
Portfolio shares of Class A
($.00001 par value - 2
billion authorized) based on
132,326,052 outstanding
shares of beneficial
interest 132,326
Accumulated net realized gain
on investments 17
- -------------------------------------------------------
TOTAL NET ASSETS: (100.0%) $132,343
- -------------------------------------------------------
NET ASSET VALUE, OFFERING
AND REDEMPTION PRICE
PER SHARE - CLASS A $ 1.00
- -------------------------------------------------------
</TABLE>
- -----------
(A) Tri-party repurchase agreement
The accompanying notes are an integral part of the financial statements.
================================================================================
October 31, 1995 FS-15
<PAGE> 114
STATEMENT OF NET ASSETS UNAUDITED INVENTOR FUNDS
================================================================================
<TABLE>
<CAPTION>
FACE
PENNSYLVANIA TAX-EXEMPT AMOUNT VALUE
MONEY MARKET FUND (000) (000)
- --------------------------------------------------------
MUNICIPAL BONDS (100.2%)
- --------------------------------------------------------
<S> <C> <C>
PENNSYLVANIA (100.2%)
Allegheny County, Pennsylvania
Higher Education Building
Authority University of
Pittsburgh Project, Ser 85B,
RB 3.850%, 11/07/95 (A) (C) $ 650 $ 650
Allegheny County, Pennsylvania
Hospital Development Authority
Children's Hospital Project,
Ser B, MBIA, RB
3.900%, 11/07/95 (A) 1,300 1,300
Allegheny County, Pennsylvania,
Ser C-41, GO
3.850%, 11/07/95 (A) (C) 900 900
Allegheny County, Pennsylvania,
Ser C-44, FGIC, GO
4.000%, 06/01/96 685 685
Beaver County, Pennsylvania
Industrial Development
Authority Duquesne Light &
Power Project, TECP
3.700%, 12/08/95 (C) 1,500 1,500
Beaver County, Pennsylvania
Industrial Development
Authority Duquesne Light
Project, Ser C, TECP
3.750%, 12/14/95 (C) 1,500 1,500
Berks County, Pennsylvania
Industrial Development
Authority Elf Aquitaine, RB
4.075%, 11/07/95 (A) (C) 2,400 2,400
Bethlehem, Pennsylvania School
District, RB
6.150%, 11/01/95 (B) 355 355
Bucks County, Pennsylvania
Industrial Development
Authority CPC International
Project, Ser 85, RB
4.550%, 11/07/95 (A) 2,000 2,000
Bucks County, Pennsylvania
Industrial Development
Authority Edge Comb Metals
Project, RB
4.075%, 11/07/95 (A) (C) 1,830 1,830
Bucks County, Pennsylvania Water
& Sewer Authority Neshaminy
Interceptor Sewer System
Project, RB, Prerefunded at
100 7.700%, 12/01/95 (B) 400 401
Bucks County, Pennsylvania Water
& Sewer Authority Neshaminy
Sewer System Project, RB,
Prerefunded at 100
7.600%, 12/01/95 (B) 500 501
Chartiers Valley, Pennsylvania
Industrial Development
Authority Sycamore Creek
Project, RB
3.900%, 03/01/96 (A) (C) 1,805 1,805
Cumberland County, Pennsylvania
United Methodist Homes
Project, RB
3.950%, 07/01/96 (C) 500 500
</TABLE>
The accompanying notes are an integral part of the financial statements.
================================================================================
FS-16 October 31, 1995
<PAGE> 115
STATEMENT OF NET ASSETS UNAUDITED INVENTOR FUNDS
================================================================================
<TABLE>
<CAPTION>
FACE
PENNSYLVANIA TAX-EXEMPT AMOUNT VALUE
MONEY MARKET FUND (cont'd) (000) (000)
- --------------------------------------------------------
<S> <C> <C>
Delaware County, Pennsylvania
Industrial Development
Authority Airport Facilities
United Parcel Services
Project, Ser 85, RB
3.800%, 11/01/95 (A) $1,300 $1,300
Delaware County, Pennsylvania
Industrial Development
Authority Henderson Radner
Joint Venture Project, RB
4.200%, 11/07/95 (C) 1,150 1,150
Delaware County, Pennsylvania
Philadelphia Industrial
Development Authority Electric
Company Project, FGIC, TECP
3.600%, 11/29/95 (C) 700 700
Delaware Valley, Pennsylvania
Regional Finance Authority
4.050%, 11/07/95 (A) (C) 2,200 2,200
Delaware Valley, Pennsylvania
Regional Finance Authority
Local Government, Ser D, RB
4.050%, 11/07/95 (A) (C) 800 800
Erie County, Pennsylvania Hospital
Authority Union City Memorial
Hospital Project, RB
4.150%, 11/07/95 (A) (C) 1,100 1,100
Lancaster, Pennsylvania Higher
Education Authority Franklin
& Marshall Project, RB
3.950%, 11/07/95 (A) 1,650 1,650
Langhorne, Pennsylvania Saint
Mary's Hospital Authority
Franciscan Health Systems,
Ser C, RB 3.800%,
11/07/95 (A) (C) 1,200 1,200
Lehigh County, Pennsylvania Sewer
Authority, Ser B, FGIC, RB
3.850%, 11/07/95 (A) 480 480
Montgomery County, Pennsylvania
Higher Education & Health
Authority Hospital Revenue,
AMBAC, RB 3.850%, 11/07/95 (A) 2,200 2,200
Montgomery County, Pennsylvania
Higher Education & Health
Authority United Hospitals
Project, Ser A, RB,
Prerefunded at 102
10.000%, 11/01/95 (B) 990 1,010
Montgomery County, Pennsylvania
Higher Education & Health
Authority United Hospitals
Project, Ser B, RB,
Prerefunded at 102
9.750%, 11/01/95 (B) 230 235
Montgomery County, Pennsylvania
Hospital Authority Abington
Memorial Hospital, RB,
Prerefunded at 103
8.000%, 06/01/96 (B) 2,300 2,418
Montgomery County, Pennsylvania
Industrial Development
Authority Ikea Property
Project, RB 4.000%,
11/07/95 (A) (C) 1,500 1,500
Montgomery County, Pennsylvania
Industrial Development
Authority Merck & Company, RB
4.450%, 11/07/95 (A) 1,000 1,000
Montgomery County Pennsylvania
Industrial Development
Authority Valley Square
Project, RB 3.950%,
11/07/95 (C) 1,400 1,400
</TABLE>
The accompanying notes are an integral part of the financial statements.
================================================================================
October 31, 1995 FS-17
<PAGE> 116
STATEMENT OF NET ASSETS UNAUDITED INVENTOR FUNDS
================================================================================
<TABLE>
<CAPTION>
FACE
PENNSYLVANIA TAX-EXEMPT AMOUNT VALUE
MONEY MARKET FUND (cont'd) (000) (000)
- --------------------------------------------------------
<S> <C> <C>
Montgomery County, Pennsylvania
Philadelphia Electric Company
Project, TECP
3.750%, 11/21/95 (C) $ 500 $ 500
Moon Township, Pennsylvania
Industrial Development
Authority Executive Office
Project, RB
4.000%, 11/07/95 (A) (C) 1,500 1,500
Northumberland County,
Pennsylvania Industrial
Development Authority Atlas
Development Project, RB
4.000%, 11/07/95 (A) (C) 840 840
Pennsylvania Infrastructure
Investment Authority Pennvest,
Ser 94, RB
3.900%, 11/07/95 (A) (C) 600 600
Pennsylvania Intergovernmental
Co-op Authority Special Tax
Revenue City of Philadelphia
Funding Project, FGIC, RB
5.200%, 06/15/96 300 302
Pennsylvania State Higher
Education Facilities Authority
Thomas Jefferson University
Project, RB
3.900%, 02/26/96 (A) (C) 1,500 1,500
Pennsylvania State Public School
Building Authority Hazleton
Area School District Project,
RB 5.250%, 03/01/96 1,000 1,005
Pennsylvania State University
Project, Ser A
5.500%, 12/21/95 1,800 1,801
Pennsylvania State, Ser 2, GO,
Prerefunded at 101.50
7.250%, 05/01/96 (B) 250 257
Philadelphia, Pennsylvania Hospital
& Higher Educational
Facilities Authority, RB,
Prerefunded at 102
8.625%, 08/01/96 (B) 1,500 1,581
Philadelphia, Pennsylvania
Industrial Development
Authority Multi-Family Housing
Harbor View Towers Project, RB
4.000%, 11/07/95 (A) (C) 1,900 1,900
Philadelphia, Pennsylvania
Redevelopment Authority Penn
School for the Deaf Project,
RB 3.900%, 11/07/95 (C) 2,405 2,405
Philadelphia, Pennsylvania School
District, GO, TRAN
4.500%, 06/28/96 2,000 2,007
Philadelphia, Pennsylvania School
District, MBIA, GO,
Prerefunded at 100.50
7.400%, 11/01/95 (B) 150 151
Philadelphia, Pennsylvania
Updates, GO ,TECP
3.800%, 11/21/95 (C) 1,800 1,800
Philadelphia, Pennsylvania Water
& Sewer Authority, Ser 12,
MBIA, RB, Prerefunded at 101
7.250%, 07/01/96 (B) 200 206
Philadelphia, Pennsylvania Water
And Sewer Authority, Ser 11,
RB, Prerefunded at 102
8.800%, 12/01/95 (B) 110 113
Philadelphia, Pennsylvania,
Ser A, GO, TRAN
4.500%, 06/27/96 1,000 1,003
</TABLE>
The accompanying notes are an integral part of the financial statements.
================================================================================
FS-18 October 31, 1995
<PAGE> 117
STATEMENT OF NET ASSETS UNAUDITED INVENTOR FUNDS
================================================================================
<TABLE>
<CAPTION>
FACE
PENNSYLVANIA TAX-EXEMPT AMOUNT VALUE
MONEY MARKET FUND (cont'd) (000) (000)
- --------------------------------------------------------
<S> <C> <C>
Pittsburgh, Pennsylvania
Equipment Leasing Authority,
AMBAC, RB
5.950%, 07/01/96 $ 300 $ 304
Pittsburgh, Pennsylvania Public
Parking Authority, RB,
Prerefunded at 102
9.500%, 12/01/95 (B) 150 154
Quakertown, Pennsylvania
Hospital Authority Group
Pooled Financing, RB
3.750%, 11/07/95 (A) (C) 1,800 1,800
Rose Tree Media, Pennsylvania
School District, Ser A, FGIC,
GO 5.150%, 03/15/96 500 503
Sayre, Pennsylvania Health Care
Facilities Authority Capital
Financing Project, Ser F,
AMBAC, RB
3.850%, 11/07/95 (A) 1,300 1,300
Schuylkill County, Pennsylvania
Industrial Development
Authority Gilberton Power
Project, RB
4.000%, 11/07/95 (A) (C) 1,000 1,000
Schuylkill County, Pennsylvania
Industrial Development
Authority Westwood Energy
Project, RB
4.200%, 11/01/95 (A) (C) 91 91
Wyoming Valley, Pennsylvania
Sanitation Authority, Ser 85,
RB, Prerefunded at 101
9.200%, 11/15/95 (B) 150 152
York County, Pennsylvania
Industrial Development
Authority Edgecomb Corporate
Project, Ser 84, RB
4.075%, 11/07/95 (A) (C) 850 850
- --------------------------------------------------------
TOTAL MUNICIPAL BONDS
(Cost $62,295) 62,295
- --------------------------------------------------------
TOTAL INVESTMENTS (100.2%)
(Cost $62,295) 62,295
- --------------------------------------------------------
OTHER ASSETS AND
LIABILITIES, NET (-0.2%) (138)
- --------------------------------------------------------
NET ASSETS:
Portfolio shares of Class A
($.00001 par value - 2 billion
authorized) based on
62,157,108 outstanding shares
of beneficial interest 62,157
- --------------------------------------------------------
TOTAL NET ASSETS: (100.0%) $62,157
- --------------------------------------------------------
NET ASSET VALUE, OFFERING PRICE AND
REDEMPTION PRICE PER SHARE -- CLASS A $ 1.00
- --------------------------------------------------------
</TABLE>
- -----------
(A) Floating Rate Instrument with Demand Features. The rate reflected on
the Statement of Net Assets is the rate in effect on October 31, 1995.
The date shown is the longer of the reset date or the demand date.
(B) Prerefunded Security - the maturity date shown is the prerefunded date.
(C) Security is backed by a letter of credit.
AMBAC American Municipal Bond Assurance Company
FGIC Financial Guaranty Insurance Company
GO General Obligation
MBIA Municipal Bond Insurance Association
RB Revenue Bond
TECP Tax Exempt Commercial Paper
TRAN Tax And Revenue Anticipation Note
The accompanying notes are an integral part of the financial statements.
================================================================================
October 31, 1995 FS-19
<PAGE> 118
STATEMENTS OF OPERATIONS INVENTOR FUNDS
================================================================================
For the period ended October 31, 1995 (Unaudited)
<TABLE>
<CAPTION>
EQUITY INTERMEDIATE
GROWTH GOVERNMENT
FUND SECURITIES FUND
(000) (000)
================================================================================================
<S> <C> <C>
INVESTMENT INCOME:
Dividends .................................................... $ 448 $ --
Interest ..................................................... 143 2,968
------- -------
Total investment income ................................... 591 2,968
------- -------
EXPENSES:
Investment advisory fees ..................................... 220 295
12b-1 fees ................................................... 65 105
Administrative fees .......................................... 46 76
Transfer agent fees & expenses ............................... 12 14
Registration & filing fees ................................... 1 12
Custody fees ................................................. 12 9
Trustee fees ................................................. 1 2
Miscellaneous fees ........................................... 12 20
------- -------
Total expenses ............................................ 369 533
Less: Expenses waived ..................................... (124) (175)
------- -------
Total net expenses ........................................ 245 358
------- -------
NET INVESTMENT INCOME ........................................... 346 2,610
------- -------
REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS
Net realized gain (loss) on investments ......................... 3,978 770
Net change in unrealized appreciation of investments ............ 1,856 1,256
------- -------
Net realized and unrealized gain (loss) on investments .... 5,834 2,026
------- -------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ............ $ 6,180 $ 4,636
======= =======
</TABLE>
The accompanying notes are an integral part of the financial statements.
================================================================================
FS-20 October 31, 1995
<PAGE> 119
STATEMENTS OF OPERATIONS INVENTOR FUNDS
================================================================================
<TABLE>
<CAPTION>
PRIME TREASURY PENNSYLVANIA
GNMA PENNSYLVANIA OBLIGATIONS SECURITIES TAX-EXEMPT
SECURITIES MUNICIPAL BOND MONEY MARKET MONEY MARKET MONEY MARKET
FUND FUND FUND FUND FUND
(000) (000) (000) (000) (000)
==========================================================================================================================
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends ........................ $ -- $ -- $ -- $ -- $ --
Interest ......................... 1,844 911 8,435 3,344 1,249
------ ------ ------ ------ ------
Total investment income ....... 1,844 911 8,435 3,344 1,249
------ ------ ------ ------ ------
EXPENSES:
Investment advisory fees ......... 176 129 633 253 141
12b-1 fees ....................... 63 46 351 141 78
Administrative fees .............. 45 34 211 85 47
Transfer agent fees & expenses ... 12 9 30 17 12
Registration & filing fees ....... 3 1 -- 12 1
Custody fees ..................... 18 3 14 15 4
Trustee fees ..................... 1 1 7 2 1
Miscellaneous fees ............... 12 8 48 32 14
------ ------ ------ ------ ------
Total expenses ................ 330 231 1,294 557 298
Less: Expenses waived ......... (116) (74) (520) (247) (126)
------ ------ ------ ------ ------
Total net expenses ............ 214 157 774 310 172
------ ------ ------ ------ ------
NET INVESTMENT INCOME ............... 1,630 754 7,661 3,034 1,077
------ ------ ------ ------ ------
REALIZED AND UNREALIZED GAINS
(LOSSES) ON INVESTMENTS
Net realized gain (loss) on
investments ...................... 994 -- (2) 3 --
Net change in unrealized appreciation
of investments ................... 371 755 -- -- --
------ ------ ------ ------ ------
Net realized and unrealized
gain (loss) on investments .. 1,365 755 (2) 3 --
------ ------ ------ ------ ------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS ........ $2,995 $1,509 $7,659 $3,037 $1,077
====== ====== ====== ====== ======
</TABLE>
The accompanying notes are an integral part of the financial statements.
================================================================================
October 31, 1995 FS-21
<PAGE> 120
STATEMENTS OF CHANGES IN NET ASSETS INVENTOR FUNDS
================================================================================
For the period ended October 31, 1995 (Unaudited)
<TABLE>
<CAPTION>
EQUITY GROWTH FUND
5/1/95 8/10/94(1)
TO 10/31/95 TO 4/30/95
(000) (000)
=======================================================================================================================
<S> <C> <C>
OPERATIONS:
Net investment income ................................................ $ 346 $ 513
Net realized gain (loss) on investments .............................. 3,978 556
Net change in unrealized appreciation on investments ................. 1,856 2,748
------- -------
Net increase resulting from operations ............................ 6,180 3,817
------- -------
DIVIDENDS DISTRIBUTED FROM:
Net investment income ................................................ (346) (513)
Net realized gains ................................................... -- (85)
------- -------
Total dividends distributed ....................................... (346) (598)
------- -------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares issued .......................................... 5,166 55,864
Shares issued in lieu of cash distributions .......................... 9 1
Cost of shares repurchased ........................................... (2,245) (12,427)
------- -------
Increase in net assets derived from capital share transactions .... 2,930 43,438
------- -------
Net increase in net assets .............................................. 8,764 46,657
------- -------
NET ASSETS:
Beginning of period .................................................. 46,657 --
------- -------
End of period ........................................................ $55,421 $46,657
======= =======
CAPITAL SHARE TRANSACTIONS:
Capital shares outstanding at beginning of period ....................... 4,363 --
Shares issued ..................................................... 447 5,577
Shares issued in lieu of cash distributions ....................... 1 --
Shares repurchased ................................................ (199) (1,214)
------- -------
Increase derived from capital share transactions .................. 249 4,363
------- -------
Capital shares outstanding at end of period ............................. 4,612 4,363
======= =======
</TABLE>
- ----------------------------
(1) Commenced operations on August 10, 1994.
The accompanying notes are an integral part of the financial statements.
================================================================================
FS-22 October 31, 1995
<PAGE> 121
STATEMENTS OF CHANGES IN NET ASSETS INVENTOR FUNDS
================================================================================
<TABLE>
<CAPTION>
INTERMEDIATE GOVERNMENT PENNSYLVANIA MUNICIPAL
SECURITIES FUND GNMA SECURITIES FUND BOND FUND
5/1/95 8/10/94(1) 5/1/95 8/10/94(1) 5/1/95 8/10/94(1)
TO 10/31/95 TO 4/30/95 TO 10/31/95 TO 4/30/95 TO 10/31/95 TO 4/30/95
(000) (000) (000) (000) (000) (000)
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income ....................... $ 2,610 $ 2,251 $ 1,630 $ 1,954 $ 754 $ 972
Net realized gain (loss) on investments ..... 770 (362) 994 80 -- --
Net change in unrealized appreciation
on investments ........................... 1,256 632 371 638 755 204
------- -------- ------- ------- ------- -------
Net increase resulting from operations ... 4,636 2,521 2,995 2,672 1,509 1,176
------- -------- ------- ------- ------- -------
DIVIDENDS DISTRIBUTED FROM:
Net investment income ....................... (2,610) (2,251) (1,635) (1,954) (753) (972)
Net realized gains .......................... -- -- -- -- -- --
------- -------- ------- ------- ------- -------
Total dividends distributed .............. (2,610) (2,251) (1,635) (1,954) (753) (972)
------- -------- ------- ------- ------- -------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares issued ................. 37,543 66,686 11,427 48,509 4,131 38,051
Shares issued in lieu of cash
distributions ............................ 22 2 24 1 1 --
Cost of shares repurchased .................. (1,478) (13,642) (893) (7,016) (970) (3,617)
------- -------- ------- ------- ------- -------
Increase in net assets derived from
capital share transactions ............. 36,087 53,046 10,558 41,494 3,162 34,434
------- -------- ------- ------- ------- -------
Net increase in net assets ..................... 38,113 53,316 11,918 42,212 3,918 34,638
------- -------- ------- ------- ------- -------
NET ASSETS:
Beginning of period ......................... 53,316 -- 42,212 -- 34,638 --
------- -------- ------- ------- ------- -------
End of period ............................... $91,429 $ 53,316 $54,130 $42,212 $38,556 $34,638
======= ======== ======= ======= ======= =======
CAPITAL SHARE TRANSACTIONS:
Capital shares outstanding at beginning
of period ................................... 5,319 -- 4,154 -- 3,451 --
Shares issued ............................ 3,688 6,685 1,105 4,855 406 3,816
Shares issued in lieu of cash
distributions .......................... 2 -- 2 -- -- --
Shares repurchased ....................... (144) (1,366) (86) (701) (95) (365)
------- -------- ------- ------- ------- -------
Increase derived from capital share
transactions ............................ 3,546 5,319 1,021 4,154 311 3,451
------- -------- ------- ------- ------- -------
Capital shares outstanding at end of period .... 8,865 5,319 5,175 4,154 3,762 3,451
======= ======== ======= ======= ======= =======
</TABLE>
- ----------------------------
(1) Commenced operations on August 10, 1994.
The accompanying notes are an integral part of the financial statements.
================================================================================
October 31, 1995 FS-23
<PAGE> 122
STATEMENTS OF CHANGES IN NET ASSETS INVESTOR FUNDS
================================================================================
For the period ended October 31, 1995 (Unaudited)
<TABLE>
<CAPTION>
PRIME OBLIGATIONS
MONEY MARKET FUND
5/1/95 8/8/94(1)
to 10/31/95 to 4/30/95
(000) (000)
==================================================================================
<S> <C> <C>
OPERATIONS:
Net investment income ........................... $ 7,661 $ 8,619
Net realized gain (loss) on investments ......... (2) --
--------- ---------
Net increase resulting from operations ....... 7,659 8,619
--------- ---------
DIVIDENDS DISTRIBUTED FROM:
Net investment income ........................... (7,661) (8,619)
Net realized gains .............................. -- --
--------- ---------
Total dividends distributed .................. (7,661) 8,619
--------- ---------
CAPITAL SHARE TRANSACTIONS (ALL AT $1.00 PER SHARE):
Proceeds from shares issued ..................... 323,658 647,086
Shares issued in lieu of cash distributions ..... 198 52
Cost of shares repurchased ...................... (334,216) (357,179)
--------- ---------
Increase (decrease) in net assets derived
from capital share transactions ........... (10,360) 289,959
--------- ---------
Net increase (decrease) in net assets .............. (10,362) 289,959
--------- ---------
NET ASSETS:
Beginning of period ............................. 290,058 99
--------- ---------
End of period ................................... $ 279,696 $ 290,058
========= =========
</TABLE>
- ----------------------------
(1) Commenced operations on August 8, 1994.
The accompanying notes are an integral part of the financial statements.
================================================================================
FS-24 October 31, 1995
<PAGE> 123
STATEMENTS OF CHANGES IN NET ASSETS INVENTOR FUNDS
================================================================================
For the period ended October 31, 1995 (Unaudited)
<TABLE>
<CAPTION>
TREASURY SECURITIES PENNSYLVANIA TAX-EXEMPT
MONEY MARKET FUND MONEY MARKET FUND
5/1/95 8/8/94(1) 5/1/95 8/8/94(1)
to 10/31/95 to 4/30/95 to 10/31/95 to 4/30/95
(000) (000) (000) (000)
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income ........................... $ 3,034 $ 2,151 $ 1,077 $ 1,145
Net realized gain (loss) on investments ......... 3 14 -- --
--------- --------- --------- ---------
Net increase resulting from operations ....... 3,037 2,165 1,077 1,145
--------- --------- --------- ---------
DIVIDENDS DISTRIBUTED FROM:
Net investment income ........................... (3,034) (2,151) (1,077) (1,145)
Net realized gains .............................. -- -- -- --
--------- --------- --------- ---------
Total dividends distributed .................. (3,034) (2,151) (1,077) (1,145)
--------- --------- --------- ---------
CAPITAL SHARE TRANSACTIONS (ALL AT $1.00 PER SHARE):
Proceeds from shares issued ..................... 361,008 330,496 69,001 119,764
Shares issued in lieu of cash distributions ..... 83 71 29 11
Cost of shares repurchased ...................... (309,242) (250,090) (63,541) (63,107)
--------- --------- --------- ---------
Increase (decrease) in net assets derived
from capital share transactions ........... 51,849 80,477 5,489 56,668
--------- --------- --------- ---------
Net increase (decrease) in net assets .............. 51,852 80,491 5,489 56,668
--------- --------- --------- ---------
NET ASSETS:
Beginning of period ............................. 80,491 -- 56,668 --
--------- --------- --------- ---------
End of period ................................... $ 132,343 $ 80,491 $ 62,157 $ 56,668
========= ========= ========= =========
</TABLE>
- ----------
(1) Commenced operations on August 8, 1994.
The accompanying notes are on integral part of the financial statements.
================================================================================
October 31, 1995 FS-25
<PAGE> 124
FINANCIAL HIGHLIGHTS INVENTOR FUNDS
================================================================================
For the period ended October 31, 1995 (Unaudited)
<TABLE>
<CAPTION>
NET REALIZED DISTRIBUTIONS
NET ASSET AND DISTRIBUTIONS FROM
VALUE NET UNREALIZED FROM NET REALIZED
BEGINNING INVESTMENT GAINS INVESTMENT CAPITAL
For a Share Outstanding Throughout the Period OF PERIOD INCOME ON SECURITIES INCOME GAINS
=========================================================================================================================
<S> <C> <C> <C> <C> <C>
EQUITY GROWTH
- -------------
Class A(3)
1996*.................................... $10.69 $0.08 $1.33 $(0.08) $ --
1995(1).................................. 10.00 0.12 0.71 (0.12) (0.02)
- ----------------------------------
INTERMEDIATE GOVERNMENT SECURITIES
- ----------------------------------
Class A(3)
1996*.................................... 10.02 0.32 0.29 (0.32) --
1995(1).................................. 10.00 0.44 0.02 (0.44) --
- ---------------
GNMA SECURITIES
- ---------------
Class A(3)
1996*.................................... 10.16 0.34 0.30 (0.34) --
1995(1).................................. 10.00 0.48 0.16 (0.48) --
- ---------------------------
PENNSYLVANIA MUNICIPAL BOND
- ---------------------------
Class A(3)
1996*.................................... 10.04 0.21 0.21 (0.21) --
1995(1).................................. 10.00 0.29 0.04 (0.29) --
- ------------------------------
PRIME OBLIGATIONS MONEY MARKET
- ------------------------------
Class A
1996*.................................... 1.00 0.03 -- (0.03) --
1995(2).................................. 1.00 0.04 -- (0.04) --
- --------------------------------
TREASURY SECURITIES MONEY MARKET
- --------------------------------
Class A
1996*.................................... 1.00 0.03 -- (0.03) --
1995(2).................................. 1.00 0.04 -- (0.04) --
- -----------------------
PENNSYLVANIA TAX-EXEMPT
MONEY MARKET
- -----------------------
Class A
1996*.................................... 1.00 0.02 -- (0.02) --
1995(2).................................. 1.00 0.02 -- (0.02) --
</TABLE>
- ----------
* All ratios for the semi-annual period ended October 31, 1995 (unaudited)
have been annualized.
+ Returns are for the period indicated and have not been annualized.
(1) Commenced operations on August 10, 1994. All ratios for the period have
been annualized.
(2) Commenced operations on August 8, 1994. All ratios for the period have been
annualized.
(3) Total Return does not reflect the sales charge.
The accompanying notes are an integral part of the financial statements.
================================================================================
FS-26 October 31, 1995
<PAGE> 125
FINANCIAL HIGHLIGHTS INVENTOR FUNDS
================================================================================
<TABLE>
<CAPTION>
RATIO OF NET
NET ASSET NET ASSETS RATIO OF INVESTMENT
VALUE END EXPENSES INCOME TO
END TOTAL OF PERIOD TO AVERAGE AVERAGE
For a Share Outstanding Throughout the Period OF PERIOD RETURN (000) NET ASSETS NET ASSETS
===========================================================================================================
<S> <C> <C> <C> <C> <C>
EQUITY GROWTH
- -------------
Class A(3)
1996*................................... $12.02 13.20%+ $55,421 0.95% 1.34%
1995(1)................................. 10.69 8.33+ 46,657 0.95 1.57
- ----------------------------------
INTERMEDIATE GOVERNMENT SECURITIES
- ----------------------------------
Class A(3)
1996*................................... 10.31 6.15+ 91,429 0.85 6.20
1995(1)................................. 10.02 4.75+ 53,316 0.85 6.17
- ---------------
GNMA SECURITIES
- ---------------
Class A(3)
1996*................................... 10.46 6.36+ 54,130 0.85 6.47
1995(1)................................. 10.16 6.61+ 42,212 0.85 6.68
- ---------------------------
PENNSYLVANIA MUNICIPAL BOND
- ---------------------------
Class A(3)
1996*................................... 10.25 4.21+ 38,556 0.85 4.08
1995(1)................................. 10.04 3.38+ 34,638 0.85 4.05
- ------------------------------
PRIME OBLIGATIONS MONEY MARKET
- ------------------------------
Class A
1996*................................... 1.00 2.78+ 279,696 0.55 5.45
1995(2)................................. 1.00 3.76+ 290,058 0.55 5.16
- --------------------------------
TREASURY SECURITIES MONEY MARKET
- --------------------------------
Class A
1996*................................... 1.00 2.75+ 132,343 0.55 5.39
1995(2)................................. 1.00 3.60+ 80,491 0.55 5.00
- -----------------------
PENNSYLVANIA TAX-EXEMPT
MONEY MARKET
- -----------------------
Class A
1996*................................... 1.00 1.75+ 62,157 0.55 3.44
1995(2)................................. 1.00 2.32+ 56,668 0.55 3.21
</TABLE>
<TABLE>
<CAPTION>
RATIO OF NET
RATIO OF INVESTMENT
EXPENSES INCOME TO
TO AVERAGE AVERAGE
NET ASSETS NET ASSETS PORTFOLIO
(EXCLUDING (EXCLUDING TURNOVER
For a Share Outstanding Throughout the Period WAIVERS) WAIVERS) RATE
=====================================================================================
<S> <C> <C> <C>
EQUITY GROWTH
- -------------
Class A(3)
1996*................................... 1.43% 0.86% 85%
1995(1)................................. 1.48 1.04 110
- ----------------------------------
INTERMEDIATE GOVERNMENT SECURITIES
- ----------------------------------
Class A(3)
1996*................................... 1.27 5.78 53
1995(1)................................. 1.33 5.69 172
- ---------------
GNMA SECURITIES
- ---------------
Class A(3)
1996*................................... 1.31 6.01 103
1995(1)................................. 1.40 6.13 226
- ---------------------------
PENNSYLVANIA MUNICIPAL BOND
- ---------------------------
Class A(3)
1996*................................... 1.25 3.68 4
1995(1)................................. 1.36 3.54 4
- ------------------------------
PRIME OBLIGATIONS MONEY MARKET
- ------------------------------
Class A
1996*................................... 0.92 5.08 --
1995(2)................................. 1.01 4.70 --
- --------------------------------
TREASURY SECURITIES MONEY MARKET
- --------------------------------
Class A
1996*................................... 0.99 4.95 --
1995(2)................................. 1.05 4.50 --
- -----------------------
PENNSYLVANIA TAX-EXEMPT
MONEY MARKET
- -----------------------
Class A
1996*................................... 0.95 3.04 --
1995(2)................................. 1.04 2.72 --
</TABLE>
- ----------------------------
(*) All ratios for the semi-annual period ended October 31, 1995 (unaudited)
have been annualized.
(+) Returns are for the period indicated and have not been annualized.
(1) Commenced operations on August 10, 1994. All ratios for the period have
been annualized.
(2) Commenced operations on August 8, 1994. All ratios for the period have
been annualized.
(3) Total Return does not reflect the sales charge.
================================================================================
October 31, 1995 FS-27
<PAGE> 126
NOTES TO FINANCIAL STATEMENTS INVENTOR FUNDS
================================================================================
October 31, 1995 (Unaudited)
1. ORGANIZATION
Inventor Funds, Inc. (the "Corporation") was organized as a Maryland
corporation under Articles of Incorporation dated April 22, 1994. The
Corporation is registered under the Investment Company Act of 1940, as amended,
as a diversified, open-end management investment company with seven funds:
Equity Growth Fund, Intermediate Government Securities Fund, GNMA Securities
Fund, Pennsylvania Municipal Bond Fund, Prime Obligations Money Market Fund,
Treasury Securities Money Market Fund, and Pennsylvania Tax-Exempt Money Market
Fund (referred to as a "Fund" or collectively as the "Funds"). The assets of
each Fund are segregated, and a shareholder's interest is limited to the Fund in
which shares are held.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies followed by the
Funds.
Security Valuation -- Investment securities of the Prime Obligations Money
Market Fund, Treasury Securities Money Market Fund and the Pennsylvania
Tax-Exempt Money Market Fund (the "Money Market Funds") are stated at amortized
cost which approximates market value. Under this valuation method, purchase
discounts and premiums are accreted and amortized ratably to maturity and are
included in interest income. Investment securities of the Equity Growth Fund,
Intermediate Government Securities Fund, GNMA Securities Fund and the
Pennsylvania Municipal Bond Fund (the "Non-Money Market Funds") which are listed
on a securities exchange for which market quotations are available are valued by
an independent pricing service at the last quoted sales price for such
securities on each business day. If there is no such reported sale, these
securities and unlisted securities for which market quotations are readily
available are valued at the most recent quoted bid price.
Security Transactions and Investment Income -- Security transactions are
accounted for on the trade date of the security purchase or sale. Cost used in
determining net realized capital gains and losses on the sale of securities are
those of the specific securities sold, adjusted for the accretion and
amortization of purchase discounts or premiums during the respective holding
period which is calculated using the effective interest method. Interest income
is recorded on the accrual basis. Dividend income is recorded on ex- dividend
date. Gains and losses from pay-downs of mortgage-backed securities are included
in net investment income.
Repurchase Agreements -- Securities pledged as collateral for Repurchase
Agreements are held by the custodian bank until maturity of the Repurchase
Agreements. Provisions of the Agreements and procedures adopted by Integra Trust
Company (the "Adviser") ensure that the market value of the collateral,
including interest thereon, is sufficient in the event of default by the
counterparty. If the counterparty defaults and the value of the collateral
declines or if the counterparty enters an insolvency proceeding, realization of
the collateral by the Fund may be delayed or limited.
TBA Purchase Commitments -- The Intermediate Government Securities Fund and
the GNMA Securities Fund may enter into "TBA" (to be announced) purchase
commitments to purchase securities for a fixed price at a future date beyond
customary settlement time. TBA purchase commitments may be considered securities
in themselves, and involve a risk of loss if the value of the security to be
purchased declines prior to settlement date, which risk is in addition to the
risk of decline in the value of the funds' other assets. Unsettled TBA purchase
commitments are valued at the current market value of the underlying securities,
generally according to the procedures described under "Security Valuation"
above.
TBA Sale Commitments -- The Intermediate Government Securities Fund and the
GNMA Securities Fund may enter into sale commitments to hedge its portfolio
positions or to sell mortgage-backed securities it owns under delayed delivery
agreements. Proceeds of TBA sale commitments are not received until the contract
settlement date. Unsettled TBA sale commitments are valued at the current market
value of the underlying securities, generally according to the procedures
described under "Security
================================================================================
FS-28 October 31, 1995
<PAGE> 127
NOTES TO FINANCIAL STATEMENTS CONTINUED INVENTOR FUNDS
================================================================================
Valuation" above. The contract is "marked to market" daily and the change in
value is recorded by the fund as unrealized gain or loss. If the TBA sale
commitment is closed through the acquisition of an offsetting purchase
commitment the fund realizes a gain or loss without regard to any unrealized
gain or loss on the underlying security. If securities are delivered under the
commitment, the fund realizes a gain or loss from the sale of the securities
based upon the unit price at the date the commitment was entered into.
Expenses -- Expenses that are directly related to one of the Funds are
charged directly to that Fund. Other operating expenses of the Funds are
prorated to the Funds on the basis of relative net assets.
Distributions to Shareholders -- The Equity Growth Fund declares and pays
dividends from net investment income on a monthly basis. The Intermediate
Government Securities Fund, GNMA Securities Fund, Pennsylvania Municipal Bond
Fund, Prime Obligations Money Market Fund, Treasury Securities Money Market
Fund, and Pennsylvania Tax-Exempt Money Market Fund distributions from net
investment income are declared on a daily basis and are payable monthly. Any net
realized capital gains on sales of securities are distributed to shareholders at
least annually.
Federal Income Taxes -- It is each Fund's intention to continue to qualify as
a regulated investment company and distribute all of its taxable income.
Accordingly, no provision for Federal income taxes is required.
Organization Costs -- Organizational costs have been capitalized by the Funds
and are being amortized over sixty months commencing with operations. In the
event any of the initial shares of the Funds are redeemed by any holder thereof
during the period that the Funds are amortizing their organizational costs, the
redemption proceeds payable to the holder thereof by the Funds will be reduced
by the unamortized organizational costs in the same ratio as the number of
initial shares being redeemed bears to the number of initial shares outstanding
at the time of redemption. These costs include legal fees of approximately
$53,415 for organizational work performed by a law firm of which an officer and
trustee of the Funds is a partner.
Other -- Certain officers of the Funds are also officers of the Administrator
and/or Distributor. Such officers are paid no fees by the Funds for serving as
officers of the Corporation.
3. FEES AND EXPENSES
The Funds and the Adviser have entered into an investment advisory agreement,
dated August 1, 1994, under which the Adviser will receive an annual fee equal
to 0.85% of the average daily net assets of the Equity Growth Fund; 0.70% of the
average daily net assets of the Intermediate Government Securities, GNMA
Securities and Pennsylvania Municipal Bond Funds; and 0.45% of the average daily
net assets of the Prime Obligations Money Market, Treasury Securities Money
Market and Pennsylvania Tax-Exempt Money Market Funds.
Sub-Advisory services are provided to the Adviser for the Equity Growth Fund
by STI Capital Management, N.A. (formerly Sun Bank Capital Management, N.A.);
for the Intermediate Government Securities, GNMA Securities, Prime Obligations
Money Market and Treasury Securities Money Market Funds by Wellington Management
Company; and for the Pennsylvania Municipal Bond and Pennsylvania Tax-Exempt
Money Market Funds by Weiss, Peck & Greer L.L.C. (the "Sub-Advisers") pursuant
to sub-advisory agreements dated August 1, 1994. Under the terms of such
agreements, the Sub-Advisers are entitled to receive a fee from the Adviser.
Such a fee is computed daily and paid monthly. The Adviser is responsible for
the supervision of, and payment of fees to, the Sub-Advisers in connection with
their services.
SEI Financial Services Company (the "Distributor"), a wholly-owned subsidiary
of SEI Corporation ("SEI"), became the Fund's Distributor pursuant to an
agreement dated August 1, 1994. The Class A shares of the Funds have a Rule
12b-1 Distribution Plan (the "Class A Plan"), under which such shares bear
distribution expenses and related service fees at the annual rate of up to 0.25%
of their average daily net assets.
================================================================================
October 31, 1995 FS-29
<PAGE> 128
NOTES TO FINANCIAL STATEMENTS CONTINUED INVENTOR FUNDS
================================================================================
October 31, 1995 (Unaudited)
Pursuant to an administration agreement dated August 1, 1994, SEI Financial
Management Company (the "Administrator"), a wholly-owned subsidiary of SEI, acts
as the Fund's Administrator. Under the terms of the administration agreement,
the Administrator will receive an annual fee which is calculated daily and paid
monthly at a maximum annual rate of 0.18% of the average daily net assets of the
Equity Growth, Intermediate Government Securities, GNMA Securities, and
Pennsylvania Municipal Bond Funds, and 0.15% of the average daily net assets of
the Prime Obligations Money Market, Treasury Securities Money Market and
Pennsylvania Tax-Exempt Money Market Funds.
During the period ended October 31, 1995, the Adviser and other parties
waived a portion of their contractual fees in order to assist the Funds in
maintaining a competitive expense ratio. Expenses were waived as follows (in
thousands):
<TABLE>
<CAPTION>
PRIME TREASURY PENNSYLVANIA
OBLIGATIONS SECURITIES TAX-EXEMPT
EQUITY INTERMEDIATE GNMA PENNSYLVANIA MONEY MONEY MONEY
GROWTH GOVERNMENT SECURITIES MUNICIPAL MARKET MARKET MARKET
FUND SECURITIES FUND FUND BOND FUND FUND FUND FUND
============================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
Waiver of investment
advisory fees ............... $ 59 $ 70 $ 53 $18 $169 $106 $ 48
Waiver of administrative fee ... -- -- -- 10 -- -- --
Waiver of 12b-1 fees ........... 65 105 63 46 351 141 78
============================================================================================================================
Total Waivers ............. $124 $175 $116 $74 $520 $247 $126
============================================================================================================================
</TABLE>
4. INVESTMENT TRANSACTIONS
During the period ended October 31, 1995, purchases of securities and
proceeds from sales of securities, other than temporary investments in
short-term securities, were as follows (000):
<TABLE>
<CAPTION>
EQUITY INTERMEDIATE GNMA PENNSYLVANIA
GROWTH GOVERNMENT SECURITIES MUNICIPAL
FUND SECURITIES FUND FUND BOND FUND
=====================================================================================
<S> <C> <C> <C> <C>
PURCHASES
U.S. Government .... $ -- $71,045 $61,811 $ --
Other .............. 42,674 -- -- 5,284
SALES
U.S. Government .... $ -- $39,464 $49,044 $ --
Other .............. 39,367 -- -- 1,045
</TABLE>
At October 31, 1995, the total cost of securities and net realized gains or
losses on securities sold for federal income tax purposes was not materially
different from amounts reported for financial reporting purposes. The aggregate
gross unrealized appreciation and depreciation for securities held at October
31, 1995 is as follows (000):
<TABLE>
<CAPTION>
EQUITY INTERMEDIATE GNMA PENNSYLVANIA
GROWTH GOVERNMENT SECURITIES MUNICIPAL
FUND SECURITIES FUND FUND BOND FUND
==============================================================================================================
<S> <C> <C> <C> <C>
Aggregate gross unrealized appreciation ..... $ 5,997 $ 1,948 $ 1,050 $959
Aggregate gross unrealized depreciation ..... (1,393) (60) (41) --
- --------------------------------------------------------------------------------------------------------------
Net unrealized appreciation ................. $ 4,604 $ 1,888 $ 1,009 $959
==============================================================================================================
</TABLE>
================================================================================
FS-30 October 31, 1995
<PAGE> 129
VOTE THIS PROXY CARD TODAY!
------
YOUR PROMPT RESPONSE WILL SAVE YOUR FUND
THE EXPENSE OF ADDITIONAL MAILINGS
Please fold and detach card at perforation before mailing
PENNSYLVANIA MUNICIPAL BOND FUND
INVENTOR FUNDS, INC.
EACH FUND VOTING SEPARATELY
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF INVENTOR FUNDS,
INC. (THE "CORPORATION") FOR USE AT A SPECIAL MEETING OF SHAREHOLDERS TO BE
HELD AT THE OFFICES OF SEI FINANCIAL MANAGEMENT CORPORATION, 680 EAST
SWEDESFORD ROAD, WAYNE, PENNSYLVANIA 19087-1658 ON AUGUST 1, 1996 AT 10:00 A.M.
(EASTERN TIME).
The undersigned hereby appoints Kevin P. Robins and Sandra Oechslin,
and each of them, with full power of substitution, as proxies of the
undersigned to vote at the above-slated Special Meeting and at all adjournments
or postponements thereof, all shares of common stock, evidencing interests in
the Corporation's Pennsylvania Tax-Exempt Money market, Intermediate Government
Securities, GNMA Securities, Pennsylvania Municipal Bond and Equity Growth
Funds (the "Funds"), held of record by the undersigned on May 31, 1996, the
record date for the Special Meeting, upon the following matters AND UPON ANY
OTHER MATTER WHICH MAY COME BEFORE THE MEETING, IN THEIR DISCRETION:
<TABLE>
<S> <S>
PLEASE SIGN, DATE AND RETURN THE PROXY CARD
PROMPTLY USING THE ENCLOSED ENVELOPE.
779 SAMPLE0003 538 0 3 DATE: ______________________, 1996
Please sign exactly as name appears hereon. When
shares are held by joint tenants, both should sign. When
signing as attorney or as executor, administrator,
trustee or guardian, please give full title as such.
If a corporation, please sign in full corporate name
MANAGEMENT INFORMATION SERVICES CORP. by president or other authorized officer. If a partnership,
SAMPLE PROXY please sign in partnership name by authorized person.
61 ACCORD PARK DRIVE ----------------------------------------------------------
NORWELL MA 02061-1614
----------------------------------------------------------
Signature(s) (Both if held jointly) INVENTOR-ALL
</TABLE>
10000001
<PAGE> 130
VOTE THIS PROXY CARD TODAY!
------
YOUR PROMPT RESPONSE WILL SAVE YOUR FUND
THE EXPENSE OF ADDITIONAL MAILINGS
Please fold and detach card at perforation before mailing
Every properly signed Proxy will be voted in the manner specified hereon and, IN
THE ABSENCE OF SPECIFICATION, WILL BE TREATED AS GRANTING AUTHORITY TO VOTE FOR
PROPOSAL 1.
PLEASE VOTE BY FILLING IN THE APPROPRIATE BOX BELOW, AS SHOWN, USING BLUE OR
BLACK INK OR DARK PENCIL. DO NOT USE RED INK. /X/
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN
<S> <C> <C> <C>
1. Proposal to approve an Agreement and Plan of Reorganization and the / / / / / /
transactions contemplated thereby, including (a) the transfer of
substantially all of the known assets and liabilities of the Corporation's
Pennsylvania Tax-Exempt Money Market, Intermediate Government Securities,
GNMA Securities, Pennsylvania Municipal Bond and Equity Growth Funds (the
"Inventor Portfolios") to Armada Funds' Pennsylvania Tax Exempt, Intermediate
Government, GNMA, Pennsylvania Municipal and Equity Funds, respectively, (the
"Armada Portfolios") in exchange for institutional class shares of the
respective Armada Portfolios; (b) the distribution of the Armada Portfolios'
shares so received to shareholders of the Inventor Portfolios according to
their respective interests; and (c) the termination of the Corporation under
state law and the Investment Company Act of 1940, as amended.
2. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting.
</TABLE>
PLEASE DO NOT FORGET TO SIGN THE REVERSE SIDE OF CARD. INVENTOR-ALL
<PAGE> 131
VOTE THIS PROXY CARD TODAY!
------
YOUR PROMPT RESPONSE WILL SAVE YOUR FUND
THE EXPENSE OF ADDITIONAL MAILINGS
Please fold and detach card at perforation before mailing
INTERMEDIATE GOVERNMENT SECURITY FUND
INVENTOR FUNDS, INC.
EACH FUND VOTING SEPARATELY
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF INVENTOR FUNDS,
INC. (THE "CORPORATION") FOR USE AT A SPECIAL MEETING OF SHAREHOLDERS TO BE
HELD AT THE OFFICES OF SEI FINANCIAL MANAGEMENT CORPORATION, 680 EAST
SWEDESFORD ROAD, WAYNE, PENNSYLVANIA 19087-1658 ON AUGUST 1, 1996 AT 10:00 A.M.
(EASTERN TIME).
The undersigned hereby appoints Kevin P. Robins and Sandra Oechslin,
and each of them, with full power of substitution, as proxies of the
undersigned to vote at the above-slated Special Meeting and at all adjournments
or postponements thereof, all shares of common stock, evidencing interests in
the Corporation's Pennsylvania Tax-Exempt Money market, Intermediate Government
Securities, GNMA Securities, Pennsylvania Municipal Bond and Equity Growth
Funds (the "Funds"), held of record by the undersigned on May 31, 1996, the
record date for the Special Meeting, upon the following matters AND UPON ANY
OTHER MATTER WHICH MAY COME BEFORE THE MEETING, IN THEIR DISCRETION:
<TABLE>
<S> <S>
PLEASE SIGN, DATE AND RETURN THE PROXY CARD
PROMPTLY USING THE ENCLOSED ENVELOPE.
779 SAMPLE0003 538 0 3 DATE: ______________________, 1996
Please sign exactly as name appears hereon. When
shares are held by joint tenants, both should sign. When
signing as attorney or as executor, administrator,
trustee or guardian, please give full title as such.
If a corporation, please sign in full corporate name
MANAGEMENT INFORMATION SERVICES CORP. by president or other authorized officer. If a partnership,
SAMPLE PROXY please sign in partnership name by authorized person.
61 ACCORD PARK DRIVE ----------------------------------------------------------
NORWELL MA 02061-1614
----------------------------------------------------------
Signature(s) (Both if held jointly) INVENTOR-ALL
</TABLE>
10000001
<PAGE> 132
VOTE THIS PROXY CARD TODAY!
------
YOUR PROMPT RESPONSE WILL SAVE YOUR FUND
THE EXPENSE OF ADDITIONAL MAILINGS
Please fold and detach card at perforation before mailing
Every properly signed Proxy will be voted in the manner specified hereon and, IN
THE ABSENCE OF SPECIFICATION, WILL BE TREATED AS GRANTING AUTHORITY TO VOTE FOR
PROPOSAL 1.
PLEASE VOTE BY FILLING IN THE APPROPRIATE BOX BELOW, AS SHOWN, USING BLUE OR
BLACK INK OR DARK PENCIL. DO NOT USE RED INK. /X/
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN
<S> <C> <C> <C>
1. Proposal to approve an Agreement and Plan of Reorganization and the / / / / / /
transactions contemplated thereby, including (a) the transfer of
substantially all of the known assets and liabilities of the Corporation's
Pennsylvania Tax-Exempt Money Market, Intermediate Government Securities,
GNMA Securities, Pennsylvania Municipal Bond and Equity Growth Funds (the
"Inventor Portfolios") to Armada Funds' Pennsylvania Tax Exempt, Intermediate
Government, GNMA, Pennsylvania Municipal and Equity Funds, respectively, (the
"Armada Portfolios") in exchange for institutional class shares of the
respective Armada Portfolios; (b) the distribution of the Armada Portfolios'
shares so received to shareholders of the Inventor Portfolios according to
their respective interests; and (c) the termination of the Corporation under
state law and the Investment Company Act of 1940, as amended.
2. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting.
</TABLE>
PLEASE DO NOT FORGET TO SIGN THE REVERSE SIDE OF CARD. INVENTOR-ALL
<PAGE> 133
VOTE THIS PROXY CARD TODAY!
------
YOUR PROMPT RESPONSE WILL SAVE YOUR FUND
THE EXPENSE OF ADDITIONAL MAILINGS
Please fold and detach card at perforation before mailing
GNMA SECURITIES FUND
INVENTOR FUNDS, INC.
EACH FUND VOTING SEPARATELY
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF INVENTOR FUNDS,
INC. (THE "CORPORATION") FOR USE AT A SPECIAL MEETING OF SHAREHOLDERS TO BE
HELD AT THE OFFICES OF SEI FINANCIAL MANAGEMENT CORPORATION, 680 EAST
SWEDESFORD ROAD, WAYNE, PENNSYLVANIA 19087-1658 ON AUGUST 1, 1996 AT 10:00 A.M.
(EASTERN TIME).
The undersigned hereby appoints Kevin P. Robins and Sandra Oechslin,
and each of them, with full power of substitution, as proxies of the
undersigned to vote at the above-slated Special Meeting and at all adjournments
or postponements thereof, all shares of common stock, evidencing interests in
the Corporation's Pennsylvania Tax-Exempt Money market, Intermediate Government
Securities, GNMA Securities, Pennsylvania Municipal Bond and Equity Growth
Funds (the "Funds"), held of record by the undersigned on May 31, 1996, the
record date for the Special Meeting, upon the following matters AND UPON ANY
OTHER MATTER WHICH MAY COME BEFORE THE MEETING, IN THEIR DISCRETION:
<TABLE>
<S> <S>
PLEASE SIGN, DATE AND RETURN THE PROXY CARD
PROMPTLY USING THE ENCLOSED ENVELOPE.
779 SAMPLE0003 538 0 3 DATE: ______________________, 1996
Please sign exactly as name appears hereon. When
shares are held by joint tenants, both should sign. When
signing as attorney or as executor, administrator,
trustee or guardian, please give full title as such.
If a corporation, please sign in full corporate name
MANAGEMENT INFORMATION SERVICES CORP. by president or other authorized officer. If a partnership,
SAMPLE PROXY please sign in partnership name by authorized person.
61 ACCORD PARK DRIVE ----------------------------------------------------------
NORWELL MA 02061-1614
----------------------------------------------------------
Signature(s) (Both if held jointly) INVENTOR-ALL
</TABLE>
10000001
<PAGE> 134
VOTE THIS PROXY CARD TODAY!
------
YOUR PROMPT RESPONSE WILL SAVE YOUR FUND
THE EXPENSE OF ADDITIONAL MAILINGS
Please fold and detach card at perforation before mailing
Every properly signed Proxy will be voted in the manner specified hereon and, IN
THE ABSENCE OF SPECIFICATION, WILL BE TREATED AS GRANTING AUTHORITY TO VOTE FOR
PROPOSAL 1.
PLEASE VOTE BY FILLING IN THE APPROPRIATE BOX BELOW, AS SHOWN, USING BLUE OR
BLACK INK OR DARK PENCIL. DO NOT USE RED INK. /X/
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN
<S> <C> <C> <C>
1. Proposal to approve an Agreement and Plan of Reorganization and the / / / / / /
transactions contemplated thereby, including (a) the transfer of
substantially all of the known assets and liabilities of the Corporation's
Pennsylvania Tax-Exempt Money Market, Intermediate Government Securities,
GNMA Securities, Pennsylvania Municipal Bond and Equity Growth Funds (the
"Inventor Portfolios") to Armada Funds' Pennsylvania Tax Exempt, Intermediate
Government, GNMA, Pennsylvania Municipal and Equity Funds, respectively, (the
"Armada Portfolios") in exchange for institutional class shares of the
respective Armada Portfolios; (b) the distribution of the Armada Portfolios'
shares so received to shareholders of the Inventor Portfolios according to
their respective interests; and (c) the termination of the Corporation under
state law and the Investment Company Act of 1940, as amended.
2. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting.
</TABLE>
PLEASE DO NOT FORGET TO SIGN THE REVERSE SIDE OF CARD. INVENTOR-ALL
<PAGE> 135
VOTE THIS PROXY CARD TODAY!
------
YOUR PROMPT RESPONSE WILL SAVE YOUR FUND
THE EXPENSE OF ADDITIONAL MAILINGS
Please fold and detach card at perforation before mailing
EQUITY GROWTH FUND
INVENTOR FUNDS, INC.
EACH FUND VOTING SEPARATELY
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF INVENTOR FUNDS,
INC. (THE "CORPORATION") FOR USE AT A SPECIAL MEETING OF SHAREHOLDERS TO BE
HELD AT THE OFFICES OF SEI FINANCIAL MANAGEMENT CORPORATION, 680 EAST
SWEDESFORD ROAD, WAYNE, PENNSYLVANIA 19087-1658 ON AUGUST 1, 1996 AT 10:00 A.M.
(EASTERN TIME).
The undersigned hereby appoints Kevin P. Robins and Sandra Oechslin,
and each of them, with full power of substitution, as proxies of the
undersigned to vote at the above-slated Special Meeting and at all adjournments
or postponements thereof, all shares of common stock, evidencing interests in
the Corporation's Pennsylvania Tax-Exempt Money market, Intermediate Government
Securities, GNMA Securities, Pennsylvania Municipal Bond and Equity Growth
Funds (the "Funds"), held of record by the undersigned on May 31, 1996, the
record date for the Special Meeting, upon the following matters AND UPON ANY
OTHER MATTER WHICH MAY COME BEFORE THE MEETING, IN THEIR DISCRETION:
<TABLE>
<S> <S>
PLEASE SIGN, DATE AND RETURN THE PROXY CARD
PROMPTLY USING THE ENCLOSED ENVELOPE.
779 SAMPLE0003 538 0 3 DATE: ______________________, 1996
Please sign exactly as name appears hereon. When
shares are held by joint tenants, both should sign. When
signing as attorney or as executor, administrator,
trustee or guardian, please give full title as such.
If a corporation, please sign in full corporate name
MANAGEMENT INFORMATION SERVICES CORP. by president or other authorized officer. If a partnership,
SAMPLE PROXY please sign in partnership name by authorized person.
61 ACCORD PARK DRIVE ----------------------------------------------------------
NORWELL MA 02061-1614
----------------------------------------------------------
Signature(s) (Both if held jointly) INVENTOR-ALL
</TABLE>
10000001
<PAGE> 136
VOTE THIS PROXY CARD TODAY!
------
YOUR PROMPT RESPONSE WILL SAVE YOUR FUND
THE EXPENSE OF ADDITIONAL MAILINGS
Please fold and detach card at perforation before mailing
Every properly signed Proxy will be voted in the manner specified hereon and, IN
THE ABSENCE OF SPECIFICATION, WILL BE TREATED AS GRANTING AUTHORITY TO VOTE FOR
PROPOSAL 1.
PLEASE VOTE BY FILLING IN THE APPROPRIATE BOX BELOW, AS SHOWN, USING BLUE OR
BLACK INK OR DARK PENCIL. DO NOT USE RED INK. /X/
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN
<S> <C> <C> <C>
1. Proposal to approve an Agreement and Plan of Reorganization and the / / / / / /
transactions contemplated thereby, including (a) the transfer of
substantially all of the known assets and liabilities of the Corporation's
Pennsylvania Tax-Exempt Money Market, Intermediate Government Securities,
GNMA Securities, Pennsylvania Municipal Bond and Equity Growth Funds (the
"Inventor Portfolios") to Armada Funds' Pennsylvania Tax Exempt, Intermediate
Government, GNMA, Pennsylvania Municipal and Equity Funds, respectively, (the
"Armada Portfolios") in exchange for institutional class shares of the
respective Armada Portfolios; (b) the distribution of the Armada Portfolios'
shares so received to shareholders of the Inventor Portfolios according to
their respective interests; and (c) the termination of the Corporation under
state law and the Investment Company Act of 1940, as amended.
2. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting.
</TABLE>
PLEASE DO NOT FORGET TO SIGN THE REVERSE SIDE OF CARD. INVENTOR-ALL
<PAGE> 137
VOTE THIS PROXY CARD TODAY!
------
YOUR PROMPT RESPONSE WILL SAVE YOUR FUND
THE EXPENSE OF ADDITIONAL MAILINGS
Please fold and detach card at perforation before mailing
PENNSYLVANIA TAX-EXEMPT MONEY MARKET FUND
INVENTOR FUNDS, INC.
EACH FUND VOTING SEPARATELY
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF INVENTOR FUNDS,
INC. (THE "CORPORATION") FOR USE AT A SPECIAL MEETING OF SHAREHOLDERS TO BE
HELD AT THE OFFICES OF SEI FINANCIAL MANAGEMENT CORPORATION, 680 EAST
SWEDESFORD ROAD, WAYNE, PENNSYLVANIA 19087-1658 ON AUGUST 1, 1996 AT 10:00 A.M.
(EASTERN TIME).
The undersigned hereby appoints Kevin P. Robins and Sandra Oechslin,
and each of them, with full power of substitution, as proxies of the
undersigned to vote at the above-slated Special Meeting and at all adjournments
or postponements thereof, all shares of common stock, evidencing interests in
the Corporation's Pennsylvania Tax-Exempt Money market, Intermediate Government
Securities, GNMA Securities, Pennsylvania Municipal Bond and Equity Growth
Funds (the "Funds"), held of record by the undersigned on May 31, 1996, the
record date for the Special Meeting, upon the following matters AND UPON ANY
OTHER MATTER WHICH MAY COME BEFORE THE MEETING, IN THEIR DISCRETION:
<TABLE>
<S> <S>
PLEASE SIGN, DATE AND RETURN THE PROXY CARD
PROMPTLY USING THE ENCLOSED ENVELOPE.
779 SAMPLE0003 538 0 3 DATE: ______________________, 1996
Please sign exactly as name appears hereon. When
shares are held by joint tenants, both should sign. When
signing as attorney or as executor, administrator,
trustee or guardian, please give full title as such.
If a corporation, please sign in full corporate name
MANAGEMENT INFORMATION SERVICES CORP. by president or other authorized officer. If a partnership,
SAMPLE PROXY please sign in partnership name by authorized person.
61 ACCORD PARK DRIVE ----------------------------------------------------------
NORWELL MA 02061-1614
----------------------------------------------------------
Signature(s) (Both if held jointly) INVENTOR-ALL
</TABLE>
10000001
<PAGE> 138
VOTE THIS PROXY CARD TODAY!
------
YOUR PROMPT RESPONSE WILL SAVE YOUR FUND
THE EXPENSE OF ADDITIONAL MAILINGS
Please fold and detach card at perforation before mailing
Every properly signed Proxy will be voted in the manner specified hereon and, IN
THE ABSENCE OF SPECIFICATION, WILL BE TREATED AS GRANTING AUTHORITY TO VOTE FOR
PROPOSAL 1.
PLEASE VOTE BY FILLING IN THE APPROPRIATE BOX BELOW, AS SHOWN, USING BLUE OR
BLACK INK OR DARK PENCIL. DO NOT USE RED INK. /X/
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN
<S> <C> <C> <C>
1. Proposal to approve an Agreement and Plan of Reorganization and the / / / / / /
transactions contemplated thereby, including (a) the transfer of
substantially all of the known assets and liabilities of the Corporation's
Pennsylvania Tax-Exempt Money Market, Intermediate Government Securities,
GNMA Securities, Pennsylvania Municipal Bond and Equity Growth Funds (the
"Inventor Portfolios") to Armada Funds' Pennsylvania Tax Exempt, Intermediate
Government, GNMA, Pennsylvania Municipal and Equity Funds, respectively, (the
"Armada Portfolios") in exchange for institutional class shares of the
respective Armada Portfolios; (b) the distribution of the Armada Portfolios'
shares so received to shareholders of the Inventor Portfolios according to
their respective interests; and (c) the termination of the Corporation under
state law and the Investment Company Act of 1940, as amended.
2. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting.
</TABLE>
PLEASE DO NOT FORGET TO SIGN THE REVERSE SIDE OF CARD. INVENTOR-ALL
