<PAGE> 1
[ARROW LOGO]
ARMADA FUNDS
MONEY MARKET SERIES
SEMI-ANNUAL REPORT - NOVEMBER 30, 1995
(UNAUDITED)
<TABLE>
<S> <C> <C>
ARMADA TABLE OF CONTENTS
MONEY MARKET
FUND Chairman's Message .......................................... 1
ARMADA
GOVERNMENT PORTFOLIOS OF INVESTMENTS AND FINANCIAL STATEMENTS
FUND
ARMADA Armada Money Market Fund ..................................... 3
TREASURY Armada Government Fund ..................................... 11
FUND Armada Treasury Fund ....................................... 15
Armada Tax Exempt Fund ...................................... 19
ARMADA NOTES TO FINANCIAL STATEMENTS................................. 29
TAX EXEMPT
FUND
</TABLE>
- - SHARES OF THE ARMADA FUNDS ARE NOT BANK DEPOSITS OR OBLIGATIONS OF, OR
GUARANTEED OR ENDORSED OR OTHERWISE SUPPORTED BY NATIONAL CITY BANK, ITS
AFFILIATES OR ANY BANK.
- - SHARES OF THE ARMADA FUNDS ARE NOT INSURED OR GUARANTEED BY THE U.S.
GOVERNMENT, FDIC, OR ANY GOVERNMENTAL AGENCY OR STATE.
- - AN INVESTMENT IN THE ARMADA FUNDS INVOLVES INVESTMENT RISKS, INCLUDING THE
POSSIBLE LOSS OF PRINCIPAL.
- - PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE PERFORMANCE, AND THE INVESTMENT
RETURN WILL FLUCTUATE.
- - THERE CAN BE NO ASSURANCE THAT THE ARMADA MONEY MARKET, GOVERNMENT, TREASURY
OR TAX EXEMPT FUNDS WILL BE ABLE TO MAINTAIN A STABLE NET ASSET VALUE OF $1
PER SHARE.
National City Bank and certain of its affiliates serve as investment advisers to
Armada Funds for which they receive an investment advisory fee. For more
complete information about the Armada Funds, including charges and expenses,
please contact your investment specialist or call 1-800-622-FUND (3863) for a
prospectus. Read it carefully before you invest or send money. Armada Funds are
distributed by 440 Financial Distributors, Inc., 290 Donald Lynch Boulevard,
Marlborough, MA, 01752. 440 Financial Distributors, Inc. is not affiliated with
National City Bank and is not a bank.
<PAGE> 2
[ARROW LOGO]
ARMADA FUNDS SEMI-ANNUAL REPORT
CHAIRMAN'S MESSAGE
Dear Armada Shareholders:
For the six months ended November 30, 1995, the
equity and bond markets continued to flourish beyond
many expectations. Armada Funds investment advisers
responded in kind, producing decided gains for our
shareholders during this period.
While we are always pleased to see the markets
perform well in the short term, we continue to
stress to our shareholders the value of following a
disciplined and diversified, long-term investment
strategy. Over the years, a long-term investment
perspective has helped investors attain financial
goals such as providing a college education for
children, purchasing a new home or meeting
retirement needs.
ARMADA NEWS
I am please to announce two significant events
which have taken place during these past six months
with respect to the Armada Family of Funds:
TWO ASSET MANAGERS JOIN ARMADA
On September 28, 1995, Robert M. Leggett and James
R. Kirk joined Armada Funds as asset managers for
the Equity Fund and Equity Income Fund,
respectively. Both have significant investment
management expertise and have successfully managed
large institutional funds over the past two decades.
Mr. Leggett has held equity-related positions
including chief investment officer, director of
equity investments, and director of research. Mr.
Kirk is well-known in the Cleveland investment
community and comes to National City after holding
the investment management positions of chief
investment officer, head of equity asset management
and director of research.
TREASURY FUND RECOGNIZED FOR QUALITY
Armada Treasury Fund, one of the four money market
funds offered by Armada Funds, was recently rated
"AAAm-G" by Standard & Poor's, based on an analysis
of the Fund's credit quality, investment policies
and management and market price exposure. This
rating indicates that the
1
<PAGE> 3
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ARMADA FUNDS SEMI-ANNUAL REPORT
CHAIRMAN'S MESSAGE (CONTINUED)
Fund's safety of invested principal is excellent and
reflects its superior capacity to maintain a $1 per
share net asset value at all times.
The Armada Family of Funds offers a full range of
investment products. Each fund offers a distinctive
investment style and position along the risk/reward
spectrum. As always, Armada is committed to
providing our shareholders with quality investment
products and services. For more information about
Armada Funds, please contact your investment
specialist or call 1-800-622-FUND (3863).
Sincerely,
/s/ Richard B. Tullis
------------------------------
Richard B. Tullis
Chairman
Armada Funds Board of Trustees
2
<PAGE> 4
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PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1995 ARMADA MONEY MARKET FUND
(UNAUDITED)
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
-------- --------- --------------
<S> <C> <C> <C>
AGENCY OBLIGATIONS - 14.9%
FEDERAL FARM CREDIT BANK
INTEREST BEARING NOTES - 4.9%
5.66%.......... 02/01/96 $ 25,000 $ 25,000,000
5.63%.......... 03/01/96 25,000 25,000,000
5.58%.......... 05/01/96 22,000 22,000,000
--------------
72,000,000
--------------
FEDERAL HOME LOAN BANK CONSOLIDATED
DISCOUNT NOTES - 2.4%
5.59%.......... 01/10/96 15,000 14,906,833
5.58%.......... 01/18/96 10,000 9,925,600
5.54%.......... 02/27/96 11,000 10,851,036
--------------
35,683,469
--------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION
DISCOUNT NOTES - 4.0%
5.59%.......... 01/05/96 50,000 49,728,264
5.58%.......... 02/14/96 10,000 9,883,750
--------------
59,612,014
--------------
FEDERAL HOME LOAN MORTGAGE CORPORATION
DISCOUNT NOTES - 3.6%
5.57%.......... 01/08/96 25,000 24,853,014
5.60%.......... 01/10/96 14,000 13,912,889
5.57%.......... 02/12/96 15,000 14,830,579
--------------
53,596,482
--------------
TOTAL AGENCY
OBLIGATIONS.............. 220,891,965
--------------
COMMERCIAL PAPER - 71.5%
AGRICULTURE - 5.0%
Canadian Wheat Board
(P1, A1+)
5.68%.......... 12/01/95 10,000 10,000,000
5.55%.......... 12/18/95 10,000 9,973,792
5.67%.......... 12/18/95 10,000 9,973,225
5.565%......... 12/21/95 10,000 9,969,083
5.65%.......... 01/25/96 10,000 9,913,681
Cargill Financial Services Corp.
(P1, A1+)
5.65%.......... 01/11/96 5,000 4,967,826
Cargill, Inc. (P1, A1+)
5.58%.......... 12/22/95 10,000 9,967,450
5.67%.......... 12/26/95 10,000 9,960,625
--------------
74,725,682
--------------
AUTOMOBILES - 1.7%
Ford Motor Credit Co.
(P1, A1)
5.67%.......... 01/03/96 5,000 4,974,012
5.69%.......... 01/16/96 10,000 9,927,294
5.67%.......... 01/23/96 10,000 9,916,525
--------------
24,817,831
--------------
CHEMICALS - 2.7%
E.I. duPont de Nemours & Co.
(P1, A1+)
5.62%.......... 12/05/95 10,000 9,993,756
5.66%.......... 12/07/95 10,000 9,990,567
5.60%.......... 12/20/95 10,000 9,970,444
5.64%.......... 01/17/96 10,000 9,926,367
--------------
39,881,134
--------------
CONSUMER NON-DURABLES - 4.7%
Clorox Co. (P1, A1+)
5.65%.......... 02/09/96 10,000 9,890,139
5.62%.......... 02/23/96 15,000 14,803,300
Colgate-Palmolive Co.
(P1, A1)
5.72%.......... 12/01/95 5,000 5,000,000
5.59%.......... 12/18/95 10,000 9,973,603
</TABLE>
See Accompanying Notes
3
<PAGE> 5
[ARROW LOGO]
PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1995 ARMADA MONEY MARKET FUND (CONTINUED)
(UNAUDITED)
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
-------- --------- --------------
<S> <C> <C> <C>
CONSUMER NON-DURABLES (CONT'D.)
Procter & Gamble Co.
(P1, A1+)
5.67%.......... 01/22/96 $ 10,000 $ 9,918,100
5.65%.......... 01/26/96 10,000 9,912,111
Sara Lee Corp. (P1, A1+)
5.66%.......... 12/27/95 10,000 9,959,122
--------------
69,456,375
--------------
DIVERSIFIED - 3.4%
General Electric Capital Corp.
(P1, A1+)
5.65%.......... 01/12/96 10,000 9,934,083
5.64%.......... 01/16/96 15,000 14,891,900
Minnesota Mining &
Manufacturing Co.
(P1, A1+)
5.65%.......... 12/20/95 10,000 9,970,181
Philip Morris Companies, Inc.
(P1, A1)
5.67%.......... 12/12/95 15,000 14,974,012
--------------
49,770,176
--------------
DRUGS & HEALTH CARE - 1.7%
Schering-Plough Corp.
(P1, A1+)
5.65%.......... 01/31/96 15,000 14,856,396
5.63%.......... 02/06/96 10,000 9,895,219
--------------
24,751,615
--------------
ELECTRONICS - 2.0%
Vermont American Corp.
(P1, A1+)
5.70%.......... 12/11/95 5,000 4,992,083
5.68%.......... 12/15/95 10,000 9,977,911
5.70%.......... 01/04/96 15,000 14,919,250
--------------
29,889,244
--------------
FINANCE - CONDUIT - 10.1%
Ciesco, L.P. (P1, A1+)
5.67%.......... 01/08/96 10,000 9,940,150
5.70%.......... 01/09/96 10,000 9,938,250
5.68%.......... 01/11/96 10,000 9,935,311
5.68%.......... 01/16/96 10,000 9,927,422
5.68%.......... 01/17/96 10,000 9,925,844
Corporate Asset Funding Co., Inc.
(P1, A1+)
5.67%.......... 12/19/95 10,000 9,971,650
5.68%.......... 01/19/96 10,000 9,922,689
5.70%.......... 01/22/96 10,000 9,917,667
5.65%.......... 02/05/96 10,000 9,896,417
5.67%.......... 02/08/96 10,000 9,891,325
Delaware Funding Corp.
(P1, A1+)
5.70%.......... 12/07/95 5,000 4,995,250
5.71%.......... 12/08/95 10,000 9,988,897
5.71%.......... 12/15/95 5,000 4,988,897
5.74%.......... 12/15/95 5,000 4,988,839
Preferred Receivables
Funding Corp. (P1, A1)
5.70%.......... 12/04/95 10,000 9,995,250
5.70%.......... 12/06/95 10,000 9,992,083
5.72%.......... 01/24/96 5,000 4,957,100
--------------
149,173,041
--------------
FINANCIAL SERVICES - 2.0%
B.A.T. Capital Corp. (P1,
A1)
5.70%.......... 01/24/96 15,000 14,871,750
Transamerica Financial Corp.
(P1, A1)
5.66%.......... 12/05/95 10,000 9,993,711
5.63%.......... 01/18/96 5,000 4,962,467
--------------
29,827,928
--------------
</TABLE>
See Accompanying Notes
4
<PAGE> 6
[ARROW LOGO]
PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1995 ARMADA MONEY MARKET FUND (CONTINUED)
(UNAUDITED)
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
-------- --------- --------------
<S> <C> <C> <C>
FOOD & BEVERAGE - 8.5%
Anheuser-Busch Co., Inc.
(P1, A1+)
5.64%.......... 01/10/96 $ 5,000 $ 4,968,667
Campbell Soup Co. (P1, A1+)
5.65%.......... 12/12/95 10,000 9,982,736
Coca-Cola Co. (P1, A1+)
5.68%.......... 12/08/95 10,000 9,988,956
5.68%.......... 12/11/95 6,500 6,489,744
General Mills, Inc. (P1, A1)
5.60%.......... 12/20/95 10,000 9,970,444
Heinz (H.J.) Co. (P1, A1)
5.70%.......... 12/22/95 5,000 4,983,375
5.70%.......... 12/27/95 15,000 14,938,250
Hershey Foods Corp. (P1, A1+)
5.65%.......... 12/19/95 15,000 14,957,625
5.65%.......... 12/21/95 10,000 9,968,611
Kellogg Co. (P1, A1+)
5.70%.......... 12/06/95 10,000 9,992,083
Pepsico Inc. (P1, A1)
5.68%.......... 01/19/96 5,000 4,961,344
Sysco Corp. (P1, A1+)
5.70%.......... 12/01/95 10,000 10,000,000
5.70%.......... 12/07/95 5,000 4,995,250
5.65%.......... 01/29/96 10,000 9,907,403
--------------
126,104,488
--------------
INSURANCE - 2.3%
American General Investment
Corp. (P1, A1+)
5.58%.......... 12/13/95 10,000 9,981,400
5.64%.......... 01/18/96 10,000 9,924,800
Marsh & McLennan Cos. (P1, A1+)
5.68%.......... 01/23/96 15,000 14,874,567
--------------
34,780,767
--------------
MACHINERY & HEAVY EQUIPMENT - 1.0%
John Deere Capital Corp.
(P1, A1)
5.65%.......... 12/04/95 5,000 4,997,646
5.65%.......... 01/11/96 10,000 9,935,653
--------------
14,933,299
--------------
OFFICE & BUSINESS EQUIPMENT - 4.3%
Pitney Bowes Credit Corp.
(P1, A1+)
5.65%.......... 01/09/96 10,000 9,938,792
5.64%.......... 01/18/96 10,000 9,924,800
5.67%.......... 01/19/96 10,000 9,922,825
5.65%.......... 01/23/96 10,000 9,916,819
5.66%.......... 01/26/96 10,000 9,911,956
Xerox Corp. (P1, A1)
5.65%.......... 01/11/96 5,000 4,967,826
5.65%.......... 01/12/96 5,000 4,967,042
Xerox Credit Corp. (P1, A1)
5.63%.......... 02/07/96 5,000 4,946,828
--------------
64,496,888
--------------
OIL & GAS - 0.9%
Atlantic Richfield Co.
(P1, A1)
5.64%.......... 01/22/96 13,500 13,390,020
--------------
PRINTING & PUBLISHING - 2.7%
Donnelley (R.R.) & Sons Co.
(P1, A1+)
5.68%.......... 12/08/95 10,000 9,988,956
5.70%.......... 12/28/95 10,000 9,957,250
Dow Jones & Co., Inc. (P1, A1+)
5.68%.......... 12/18/95 5,000 4,986,589
</TABLE>
See Accompanying Notes
5
<PAGE> 7
[ARROW LOGO]
PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1995 ARMADA MONEY MARKET FUND (CONTINUED)
(UNAUDITED)
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
-------- --------- --------------
<S> <C> <C> <C>
PRINTING & PUBLISHING (CONT'D.)
McGraw-Hill, Inc.
(P1, A1)
5.68%.......... 12/29/95 $ 5,000 $ 4,977,911
5.67%.......... 01/09/96 10,000 9,938,575
--------------
39,849,281
--------------
RETAIL STORES - 1.0%
Limited, Inc. (The)
(P1, A1)
5.70%.......... 12/06/95 10,000 9,992,083
Melville Corporation
(P1, A1)
5.75%.......... 12/05/95 5,000 4,996,806
--------------
14,988,889
--------------
TECHNOLOGY - 4.0%
Hewlett-Packard Co.
(P1, A1+)
5.65%.......... 01/11/96 5,000 4,967,826
5.64%.......... 01/16/96 5,000 4,963,967
5.60%.......... 02/27/96 15,000 14,794,667
Raytheon Co. (P1, A1+)
5.71%.......... 12/13/95 10,000 9,980,967
5.72%.......... 12/14/95 10,000 9,979,344
Rockwell International Corp.
(P1, A1+)
5.68%.......... 01/17/96 15,000 14,888,767
--------------
59,575,538
--------------
TELECOMMUNICATIONS - 6.1%
AT&T Capital Corp.
(P1, A1)
5.67%.......... 12/08/95 5,000 4,994,487
5.60%.......... 12/14/95 10,000 9,979,778
AT&T Corp. (P1, A1+)
5.67%.......... 01/12/96 10,000 9,933,850
5.69%.......... 01/19/96 10,000 9,922,553
5.66%.......... 01/22/96 5,000 4,959,122
5.60%.......... 02/20/96 10,000 9,874,000
BellSouth Telecommunications,
Inc. (P1, A1+)
5.70%.......... 12/13/95 6,300 6,288,030
Motorola, Inc.
(P1, A1+)
5.66%.......... 12/04/95 10,000 9,995,283
5.72%.......... 12/14/95 13,500 13,472,115
5.62%.......... 02/16/96 10,000 9,879,794
--------------
89,299,012
--------------
UTILITIES - ELECTRIC - 0.7%
Southern California Edison Co.
(P1, A1)
5.70%.......... 12/07/95 10,000 9,990,500
--------------
UTILITIES - GAS - 2.3%
Consolidated Natural Gas Co.
(P1, A1+)
5.68%.......... 12/06/95 10,000 9,992,111
5.67%.......... 01/26/96 15,000 14,867,700
Northern Illinois Gas Co.
(P1, A1+)
5.66%.......... 01/12/96 10,000 9,933,967
--------------
34,793,778
--------------
UTILITIES - GAS & ELECTRIC - 1.7%
National Rural Utilities
Cooperative Finance Corp.
(P1, A1+)
5.66%.......... 01/08/96 5,000 4,970,128
5.68%.......... 01/12/96 5,000 4,966,867
5.68%.......... 01/26/96 5,000 4,955,822
5.65%.......... 02/26/96 10,000 9,863,458
--------------
24,756,275
--------------
</TABLE>
See Accompanying Notes
6
<PAGE> 8
[ARROW LOGO]
PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1995 ARMADA MONEY MARKET FUND (CONTINUED)
(UNAUDITED)
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
-------- --------- --------------
<S> <C> <C> <C>
UTILITIES - TELEPHONE - 2.7%
Ameritech Corp.
(P1, A1+)
5.69%.......... 12/07/95 $ 10,000 $ 9,990,517
GTE North, Inc.
(P1, A1+)
5.71%.......... 12/04/95 15,000 14,992,863
Southwestern Bell Telephone
Co. (P1, A1+)
5.67%.......... 12/21/95 15,000 14,952,750
--------------
39,936,130
--------------
TOTAL COMMERCIAL PAPER....
1,059,187,891
--------------
SHORT TERM FUNDING AGREEMENT - 1.7%
Commonwealth Life
Insurance Co. Variable
Rate Demand Note (P1, D1)
6.04%.......... 12/01/95 25,000 25,000,000
--------------
MASTER DEMAND NOTES - 3.0%
Metropolitan Life Insurance Co.
5.875%......... 12/01/95 20,000 20,000,000
PACCAR Financial (P1, A1+)
5.69%.......... 12/05/95 25,000 25,000,000
--------------
TOTAL MASTER
DEMAND NOTES............. 45,000,000
--------------
REPURCHASE AGREEMENT - 8.0%
First Boston Corp.
5.90%.......... 12/01/95 118,836 118,836,000
--------------
(Agreement dated
11/30/95; to be
repurchased at
$118,855,476 on
12/01/95; collateralized
by $50,000,000 U.S.
Treasury Strips due
11/15/99; $40,000,000
U.S. Treasury Strips due
08/15/00; $8,691,000
U.S. Treasury Strips due
05/15/05; $200,000,000
U.S. Treasury Strips due
02/15/19. The market
value of the collateral
is $121,159,109.)
<CAPTION>
NUMBER
OF SHARES
(000)
---------
<S> <C> <C>
TEMPORARY INVESTMENT - 0.9%
Financial Square Prime
Obligations Portfolio.... 12,594 12,593,746
--------------
TOTAL INVESTMENTS - 100.0% $1,481,509,602
(Cost $1,481,509,602*) ==============
* Also cost for Federal income tax purposes. Credit ratings given by Moody's
Investor Services, Inc. and Standard & Poor's and Phoenix Duff & Phelps are
unaudited.
</TABLE>
See Accompanying Notes
7
<PAGE> 9
[ARROW LOGO]
FINANCIAL STATEMENTS
ARMADA MONEY MARKET FUND
STATEMENT OF ASSETS AND LIABILITIES
NOVEMBER 30, 1995 (UNAUDITED)
<TABLE>
<S> <C>
ASSETS
Investments at value
(Cost $1,481,509,602)
Investment securities................................. $1,362,673,602
Repurchase agreement.................................. 118,836,000
--------------
1,481,509,602
--------------
Interest receivable................................... 879,860
Prepaid expenses...................................... 35,000
--------------
TOTAL ASSETS................................. 1,482,424,462
------------------------------------------------------------------
LIABILITIES
Dividends payable - Institutional class............... 5,473,910
Dividends payable - Retail class...................... 958,790
Payable for investments purchased..................... 25,000,000
Accrued expenses...................................... 948,861
--------------
TOTAL LIABILITIES............................ 32,381,561
------------------------------------------------------------------
NET ASSETS (based on
1,450,051,215 shares of
beneficial interest outstanding)............. $1,450,042,901
==================================================================
NET ASSETS CONSIST OF:
Paid-in capital.............................. $1,450,051,215
Accumulated net realized loss
on investments sold.......................... (8,314)
--------------
$1,450,042,901
==================================================================
NET ASSET VALUE, OFFERING
PRICE AND REDEMPTION PRICE
PER SHARE - Institutional
Class ($1,229,482,125 / 1,229,486,649
shares of beneficial interest
outstanding)................................. $ 1.00
==================================================================
NET ASSET VALUE, OFFERING
PRICE AND REDEMPTION PRICE
PER SHARE - Retail Class
($220,560,776 / 220,564,566
shares of beneficial interest
outstanding)................................. $ 1.00
==================================================================
</TABLE>
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED NOVEMBER 30, 1995 (UNAUDITED)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest............................................. $41,608,667
-----------
EXPENSES:
Investment Advisory fees............................. 2,486,797
12b-1 fees........................................... 282,414
Administration fees.................................. 208,351
Shareholder servicing fees - Retail class only....... 106,871
Legal fees........................................... 105,637
Custodian fees....................................... 94,970
Registration and filing fees......................... 81,290
Distribution fees.................................... 52,980
Audit fees........................................... 33,052
Trustees' fees....................................... 26,188
Miscellaneous........................................ 19,304
Insurance............................................ 13,598
Transfer Agent fees.................................. 12,896
Printing and shareholder reports..................... 11,543
Fees waived by Investment Advisers................... (709,536)
Fees waived by Custodian............................. (94,970)
-----------
Total expenses.............................. 2,731,385
-----------------------------------------------------------
NET INVESTMENT INCOME................................... 38,877,282
- -----------------------------------------------------------------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS................... $38,877,282
===========================================================
</TABLE>
See Accompanying Notes
8
<PAGE> 10
[ARROW LOGO]
FINANCIAL STATEMENTS
ARMADA MONEY MARKET FUND (CONTINUED)
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE
SIX MONTHS ENDED FOR THE
NOVEMBER 30, YEAR ENDED
1995 MAY 31, 1995
---------------- --------------------
(UNAUDITED)
<S> <C> <C>
Net increase in net assets resulting from net investment income and amount of
income distributions to shareholders......................................... $ 38,877,282 $ 57,385,870
============== ==============
Increase in net assets derived from Fund share transactions.................... 191,607,800 447,833,143
Net capital loss acquired in connection with the combination of Money Market
Portfolio (Trust) (See Note 1)............................................... 0 (3,922)
NET ASSETS:
Beginning of period........................................................ 1,258,435,101 810,605,880
-------------- --------------
End of period.............................................................. $1,450,042,901 $1,258,435,101
============== ==============
</TABLE>
See Accompanying Notes
9
<PAGE> 11
[ARROW LOGO]
FINANCIAL HIGHLIGHTS
ARMADA MONEY MARKET FUND
FINANCIAL HIGHLIGHTS
FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
FOR THE FOR THE YEAR ENDED MAY 31
SIX MONTHS ENDED -----------------------------------------------------------
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......... $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
------ ------ ------ ------ ------ ------
INCOME FROM
INVESTMENT OPERATIONS
Net investment income....... .0276 .0271 .0500 .0490 .0287 .0277
LESS DISTRIBUTIONS
Dividends from net
investment income......... (.0276) (.0271) (.0500) (.0490) (.0287) (.0277)
------ ------ ------ ------ ------ ------
Net asset value, end of
period...................... $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
====== ====== ====== ====== ====== ======
TOTAL RETURN................. 5.54%(4) 5.46%(4) 5.11% 5.01% 2.91% 2.81%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period
(in 000's)................ $1,229,482 $220,561 $1,083,243 $175,192 $743,377 $67,229
Ratio of expenses to average
net assets................ .37%(1,4) .47%(2,4) .37%(1) .47%(2) .43%(1) .53%(2)
Ratio of net investment
income to average
net assets................ 5.49%(1,4) 5.39%(2,4) 5.07%(1) 5.12%(2) 2.94%(1) 2.78%(2)
<CAPTION>
1993 1992 1991
----------------------- ----------------------- ------------------------
INSTITUTIONAL RETAIL INSTITUTIONAL RETAIL INSTITUTIONAL RETAIL(3)
------------- ------ ------------- ------ ------------- -------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period......... $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
------ ------ ------ ------ ------ ------
INCOME FROM
INVESTMENT OPERATIONS
Net investment income....... .0289 .0279 .0451 .0441 .0710 .0092
LESS DISTRIBUTIONS
Dividends from net
investment income......... (.0289) (.0279) (.0451) (.0441) (.0710) (.0092)
------ ------ ------ ------ ------ ------
Net asset value, end of
period...................... $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
====== ====== ====== ====== ====== ======
TOTAL RETURN................. 2.93% 2.82% 4.59% 4.50% 7.34% 5.64%(4)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period
(in 000's)................ $399,191 $57,710 $352,578 $28,497 $322,943 $22,658
Ratio of expenses to average
net assets................ .43% .53% .43% .53% .42% .52%(4)
Ratio of net investment
income to average
net assets................ 2.89% 2.79% 4.51% 4.41% 7.52% 6.03%(4)
</TABLE>
(1) The operating expense ratio and net investment income ratio before fee
waivers by the Investment Advisers and Custodian for the Institutional
Class for the period ended November 30, 1995 and the year ended May 31,
1995 would have been .48% and 5.38%, and .48% and 4.96%, respectively. The
operating expense ratio and net investment income ratio before fee waiver
by the Investment Advisers for the Institutional Class for the year ended
May 31, 1994 would have been .45% and 2.92%.
(2) The operating expense ratio and net investment income ratio before fee
waivers by the Investment Advisers and Custodian for the Retail Class for
the period ended November 30, 1995 and the year ended May 31, 1995 would
have been .58% and 5.28%, and .58% and 5.01%, respectively. The operating
expense ratio and net investment income ratio before fee waiver by the
Investment Advisers for the Retail Class for the year ended May 31, 1994
would have been .55% and 2.76%.
(3) Retail class commenced operations on April 1, 1991.
(4) Annualized.
See Accompanying Notes
10
<PAGE> 12
[ARROW LOGO]
PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1995 ARMADA GOVERNMENT FUND
(UNAUDITED)
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
-------- --------- ------------
<S> <C> <C> <C>
AGENCY OBLIGATIONS - 79.8%
FEDERAL FARM CREDIT BANK INTEREST BEARING NOTES - 34.6%
5.70%............ 12/01/95 $ 25,000 $ 25,000,000
5.94%............ 12/07/95 25,000 25,000,000
5.65%............ 01/02/96 25,000 25,000,000
5.70%............ 01/02/96 25,000 25,000,000
5.66%............ 02/01/96 20,000 20,000,000
5.72%............ 02/01/96 25,000 25,000,000
5.63%............ 03/01/96 25,000 25,000,000
5.73%............ 03/01/96 25,000 25,000,000
5.70%............ 04/01/96 25,000 25,000,000
5.58%............ 05/01/96 10,000 10,000,000
------------
230,000,000
------------
FEDERAL HOME LOAN BANK DISCOUNT NOTES - 3.8%
5.67%............. 12/12/95 25,000 24,956,688
------------
FEDERAL HOME LOAN MORTGAGE CORPORATION
DISCOUNT NOTES - 12.9%
5.80%............ 12/01/95 20,000 20,000,000
5.66%............ 12/06/95 25,000 24,980,347
5.57%............ 01/08/96 15,927 15,833,358
5.56%............ 01/17/96 25,000 24,818,528
------------
85,632,233
------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION
DISCOUNT NOTES - 28.5%
5.68%............ 12/08/95 23,040 23,014,553
5.59%............ 01/05/96 25,000 24,864,131
5.55%............ 01/19/96 50,000 49,622,291
5.57%............ 01/19/96 18,245 18,106,678
5.57%............ 02/14/96 25,000 24,709,896
5.43%............ 02/20/96 25,000 24,694,563
5.52%............ 03/08/96 25,000 24,624,333
------------
189,636,445
------------
TOTAL AGENCY OBLIGATIONS.....
530,225,366
------------
REPURCHASE AGREEMENTS - 19.5%
Fuji Securities,
Inc.
5.90%............. 12/01/95 100,000 100,000,000
(Agreement dated 11/30/95,
to be repurchased at
$100,016,389 on 12/01/95;
collateralized by
$49,051,000 U.S. Treasury
Notes, 5.375%, due on
11/30/97; $49,051,000 U.S.
Treasury Notes, 5.375% due
on 11/30/97; $1,898,000
U.S. Treasury Notes, due on
11/30/97. The market value
of the collateral is
$101,935,000.)
Lehman Brothers
5.90%............. 12/01/95 30,000 30,000,000
(Agreement dated 11/30/95,
to be repurchased at
$30,004,917 on 12/01/95;
collateralized by
$20,000,000 Federal Home
Loan Mortgage Corporation,
CMO, 6.50% due on 01/15/24;
$13,414,085 Federal Home
Loan Mortgage Corporation,
CMO, 6.50% due on 09/15/24.
The market value of the
collateral is $32,676,865.)
TOTAL REPURCHASE
AGREEMENTS.................. 130,000,000
------------
<CAPTION>
NUMBER
OF SHARES
(000)
---------
<S> <C> <C>
TEMPORARY INVESTMENT - 0.7%
Goldman Sachs
Government Money
Market Fund........ 4,340 4,340,269
------------
TOTAL INVESTMENTS - 100.0% $664,565,635
(Cost $664,565,635*) ============
* Also cost for Federal income tax purposes.
</TABLE>
See Accompanying Notes
11
<PAGE> 13
[ARROW LOGO]
FINANCIAL STATEMENTS
ARMADA GOVERNMENT FUND
STATEMENT OF ASSETS AND LIABILITIES
NOVEMBER 30, 1995 (UNAUDITED)
<TABLE>
<S> <C>
ASSETS
Investments at value
(Cost $664,565,635)
Investment securities.................. $534,565,635
Repurchase agreements.................. 130,000,000
-----------
664,565,635
-----------
Interest receivable.................... 3,160,290
Prepaid expenses....................... 9,987
-----------
TOTAL ASSETS.................. 667,735,912
--------------------------------------------
LIABILITIES
Dividends payable - Institutional
class................................ 2,538,202
Dividends payable - Retail class....... 84,889
Payable for investments purchased...... 49,624,333
Accrued expenses....................... 497,468
-----------
TOTAL LIABILITIES............. 52,744,892
--------------------------------------------
NET ASSETS (based on
614,993,497 shares of
beneficial interest
outstanding).................. $614,991,020
============================================
NET ASSETS CONSIST OF:
Paid-in capital............... $614,993,497
Accumulated net realized loss
on investments sold........... (2,477)
-----------
$614,991,020
============================================
NET ASSET VALUE, OFFERING
PRICE AND REDEMPTION PRICE PER
SHARE - Institutional Class
($594,370,501 / 594,372,576
shares of beneficial interest
outstanding).................. $ 1.00
============================================
NET ASSET VALUE, OFFERING
PRICE AND REDEMPTION PRICE PER
SHARE - Retail Class
($20,620,519 / 20,620,921
shares of beneficial interest
outstanding).................. $ 1.00
============================================
</TABLE>
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED NOVEMBER 30, 1995 (UNAUDITED)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest................................ $19,094,553
----------
EXPENSES:
Investment Advisory fees................ 1,145,007
12b-1 fees.............................. 128,575
Administration fees..................... 94,223
Legal fees.............................. 47,794
Custodian fees.......................... 47,002
Distribution fees....................... 26,833
Transfer Agent fees..................... 15,630
Audit fees.............................. 13,622
Trustees' fees.......................... 13,026
Insurance............................... 9,105
Miscellaneous........................... 8,861
Shareholder servicing fees - Retail
class only............................ 8,749
Registration and filing fees............ 7,301
Printing and shareholder reports........ 5,284
Fees waived by Investment Advisers...... (326,716)
Fees waived by Custodian................ (47,002)
----------
Total expenses................. 1,197,294
--------------------------------------------
NET INVESTMENT INCOME...................... 17,897,259
- --------------------------------------------------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS...... $17,897,259
============================================
</TABLE>
See Accompanying Notes
12
<PAGE> 14
[ARROW LOGO]
FINANCIAL STATEMENTS
ARMADA GOVERNMENT 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>
Net increase in net assets resulting from net investment income and amount of
income distributions to shareholders........................................ $ 17,897,259 $ 34,122,708
============ =============
Decrease in net assets derived from Fund share transactions................... (22,240,893) (138,049,714)
Net realized loss on investments sold......................................... 0 (200)
NET ASSETS:
Beginning of period....................................................... 637,231,913 775,281,827
------------ -------------
End of period............................................................. $614,991,020 $ 637,231,913
============ =============
</TABLE>
See Accompanying Notes
13
<PAGE> 15
[ARROW LOGO]
FINANCIAL HIGHLIGHTS
ARMADA GOVERNMENT FUND
FINANCIAL HIGHLIGHTS
FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
FOR THE FOR THE YEAR ENDED MAY 31
SIX MONTHS ENDED ------------------------------------------------------
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......... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- ------- -------- ------- -------- ------
INCOME FROM INVESTMENT
OPERATIONS
Net investment income....... .0275 .0270 .0486 .0476 .0287 .0277
LESS DISTRIBUTIONS
Dividends from net
investment income......... (.0275) (.0270) (.0486) (.0476) (.0287) (.0277)
-------- ------- -------- ------- -------- ------
Net asset value, end of
period...................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======= ======== ======= ======== ======
TOTAL RETURN................. 5.54%(4) 5.44%(4) 4.97% 4.87% 2.91% 2.80%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period
(in 000's)................ $594,371 $20,620 $618,058 $19,174 $768,337 $6,945
Ratio of expenses to average
net assets................ .36%(1,4) .46%2,(4) .39%(1) .51%(2) .42%(1) 52%(2)
Ratio of net investment
income to average net
assets.................... 5.48%(1,4) 5.38%(2,4) 4.83%(1) 5.01%(2) 2.92%(1) 2.75%(2)
<CAPTION>
1993 1992 1991
------------------------ ----------------------- ------------------------
INSTITUTIONAL RETAIL INSTITUTIONAL RETAIL INSTITUTIONAL RETAIL(3)
------------- ------ ------------- ------ ------------- -------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period......... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- ------- -------- ------ -------- ------
INCOME FROM INVESTMENT
OPERATIONS
Net investment income....... .0287 .0277 .0456 .0446 .0695 .0093
LESS DISTRIBUTIONS
Dividends from net
investment income......... (.0287) (.0277) (.0456) (.0446) (.0695) (.0093)
-------- ------- -------- ------ -------- ------
Net asset value, end of
period...................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======= ======== ====== ======== ======
TOTAL RETURN................. 2.91% 2.81% 4.65% 4.55% 7.17% 5.63%(4)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period
(in 000's)................ $272,809 $11,050 $148,389 $2,234 $136,376 $3,671
Ratio of expenses to average
net assets................ .45%(1) .55%(2) .45%(1) .55%(2) .45%(1) .55%(2,4)
Ratio of net investment
income to average net
assets.................... 2.84%(1) 2.74%(2) 4.49%(1) 4.39%(2) 6.81%(1) 5.47%(2,4)
</TABLE>
(1) The operating expense ratio and net investment income ratio before fee
waivers by the Investment Advisers and Custodian for the Institutional
Class for the period ended November 30, 1995 and the year ended May 31,
1995 would have been .48% and 5.36% and .50% and 4.72%, respectively. The
operating expense ratio and net investment income ratio before fee waivers
by the Investment Advisers for the Institutional Class for the years ended
May 31, 1994, 1993, 1992, and 1991 would have been .44% and 2.90%, .46% and
2.82%, .46% and 4.48%, and .47% and 6.79%, respectively.
(2) The operating expense ratio and net investment income ratio before fee
waivers by the Investment Advisers and Custodian for the Retail Class for
the period ended November 30, 1995 and the year ended May 31, 1995 would
have been .58% and 5.26%, and .63% and 4.90%, respectively. The operating
expense ratio and net investment income ratio before fee waivers by the
Investment Advisers for the Retail Class for the years ended May 31, 1994,
1993 and 1992 and for the period ended May 31, 1991 would have been .54%
and 2.73%, .56% and 2.72%, .56% and 4.38%, and .56% and 5.46%,
respectively.
(3) Retail class commenced operations on April 1, 1991.
(4) Annualized.
See Accompanying Notes
14
<PAGE> 16
[ARROW LOGO]
PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1995 ARMADA TREASURY FUND
(UNAUDITED)
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
-------- --------- ------------
<S> <C> <C> <C>
U.S. TREASURY OBLIGATIONS - 90.8%
U.S. TREASURY BILLS
5.275%............ 12/07/95 $ 5,000 $ 4,995,604
5.295%............ 12/07/95 10,000 9,991,176
5.37%............. 12/07/95 10,000 9,991,050
5.30%............. 12/14/95 10,000 9,980,861
5.32%............. 12/14/95 5,000 4,990,394
5.18%............. 12/21/95 5,000 4,985,611
5.315%............ 12/21/95 5,000 4,985,236
5.39%............. 12/21/95 10,000 9,970,056
5.60%............. 12/21/95 5,000 4,984,444
5.19%............. 01/04/96 10,000 9,950,983
5.265%............ 01/04/96 5,000 4,975,138
5.295%............ 01/11/96 20,000 19,879,392
5.245%............ 01/18/96 16,000 15,888,107
5.255%............ 01/18/96 10,000 9,929,933
5.34%............. 01/25/96 5,000 4,959,208
5.40%............. 01/25/96 5,000 4,958,750
5.28%............. 02/01/96 5,000 4,954,533
5.255%............ 02/08/96 7,000 6,929,495
5.285%............ 02/08/96 5,000 4,949,352
5.345%............ 02/15/96 10,000 9,887,161
5.345%............ 02/22/96 10,000 9,876,768
------------
TOTAL U.S. TREASURY
OBLIGATIONS................. 172,013,252
------------
<CAPTION>
NUMBER
OF SHARES
(000)
---------
<S> <C> <C>
TEMPORARY INVESTMENTS - 9.2%
Goldman Sachs Treasury
Instruments Portfolio...... 8,524 8,523,553
Federated U.S. Treasury Cash
Reserves................... 8,930 8,929,977
------------
TOTAL TEMPORARY
INVESTMENTS................. 17,453,530
------------
TOTAL INVESTMENTS - 100.0% $189,466,782
(Cost $189,466,782*) ============
</TABLE>
* Also cost for Federal income tax purposes.
See Accompanying Notes
15
<PAGE> 17
[ARROW LOGO]
FINANCIAL STATEMENTS
ARMADA TREASURY FUND
STATEMENT OF ASSETS AND LIABILITIES
NOVEMBER 30, 1995 (UNAUDITED)
<TABLE>
<S> <C>
ASSETS
Investments at value
(Cost $189,466,782 )................... $189,466,782
Interest receivable.................... 33,659
Prepaid expenses....................... 58,620
-----------
TOTAL ASSETS.................. 189,559,061
--------------------------------------------
LIABILITIES
Dividends payable - Institutional
class................................ 715,678
Dividends payable - Retail class....... 3,886
Accrued expenses....................... 112,166
-----------
TOTAL LIABILITIES............. 831,730
--------------------------------------------
NET ASSETS, (based on
188,727,206 shares of
beneficial interest
outstanding).................. $188,727,331
============================================
NET ASSETS CONSIST OF:
Paid-in capital............... $188,727,206
Undistributed net realized
gain on investments sold...... 125
-----------
$188,727,331
============================================
NET ASSET VALUE, OFFERING
PRICE AND REDEMPTION PRICE PER
SHARE - Institutional Class
($187,780,718 / 187,780,590
shares of beneficial interest
outstanding).................. $ 1.00
============================================
NET ASSET VALUE, OFFERING
PRICE AND REDEMPTION PRICE PER
SHARE - Retail Class
($946,613 / 946,616 shares of
beneficial interest
outstanding).................. $ 1.00
============================================
</TABLE>
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED NOVEMBER 30, 1995 (UNAUDITED)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest................................. $4,418,876
---------
EXPENSES:
Investment Advisory fees................. 239,828
12b-1 fees............................... 31,246
Registration and filing fees............. 17,547
Custodian fees........................... 16,255
Transfer Agent fees...................... 11,879
Legal fees............................... 11,182
Distribution fees........................ 6,092
Printing and shareholder reports......... 4,130
Audit fees............................... 3,452
Administration fees...................... 3,192
Trustees' fees........................... 2,225
Miscellaneous............................ 2,133
Amortization of organization costs....... 2,070
Insurance................................ 1,653
Shareholder servicing fees - Retail class
only................................... 496
Fees waived by Investment Advisers....... (39,947)
Fees waived by Custodian................. (16,255)
---------
Total expenses.................. 297,178
--------------------------------------------
NET INVESTMENT INCOME....................... 4,121,698
- --------------------------------------------------------
Net realized gain on
investments sold................ 125
--------------------------------------------
NET INCREASE IN NET ASSETS
RESULTING
FROM OPERATIONS................. $4,121,823
============================================
</TABLE>
See Accompanying Notes
16
<PAGE> 18
[ARROW LOGO]
FINANCIAL STATEMENTS
ARMADA TREASURY 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>
Net increase in net assets resulting from net investment income and amount of
income distributions to shareholders....................................... $ 4,121,698 $ 5,996,861
============ ============
Increase in net assets derived from Fund share transactions.................. 45,484,877 143,242,329
Net realized gain on investments sold........................................ 125 0
NET ASSETS:
Beginning of period...................................................... 143,242,329 0
------------ ------------
End of period............................................................ $188,727,331 $143,242,329
============ ============
</TABLE>
See Accompanying Notes
17
<PAGE> 19
[ARROW LOGO]
FINANCIAL HIGHLIGHTS
ARMADA TREASURY FUND
FINANCIAL HIGHLIGHTS
FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
FOR THE FOR THE
SIX MONTHS ENDED PERIOD ENDED
NOVEMBER 30, 1995 MAY 31, 1995
------------------------- -----------------------------
(UNAUDITED)
INSTITUTIONAL RETAIL INSTITUTIONAL(3) RETAIL(4)
------------- ------ ---------------- ---------
<S> <C> <C> <C> <C>
Net asset value, beginning of period................... $1.00 $1.00 $1.00 $1.00
-------- ------ -------- ------
INCOME FROM INVESTMENT OPERATIONS
Net investment income................................. .0259 .0254 .0456 .0232
LESS DISTRIBUTIONS
Dividends from net investment income.................. (.0259) (.0254) (.0456) (.0232)
-------- ------ -------- ------
Net asset value, end of period......................... $1.00 $1.00 $1.00 $1.00
======== ====== ======== ======
TOTAL RETURN........................................... 5.22%(5) 5.12%(5) 4.86%(5) 5.41%(5)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000's).................. $187,781 $946 $142,877 $366
Ratio of expenses to average net assets............... .37%(1,5) .47%(2,5) .43%(1,5) .56%(2,5)
Ratio of net investment income to average net assets.. 5.16%(1,5) 5.04%(2,5) 4.78%(1,5) 5.35%(2,5)
</TABLE>
(1) The operating expense ratio and net investment income ratio before fee
waivers by the Investment Advisers and Custodian for the Institutional
class for the periods ended November 30, 1995 and May 31, 1995 would have
been .44% and 5.09%, and .49% and 4.72%, respectively.
(2) The operating expense ratio and net investment income ratio before fee
waivers by the Investment Advisers and Custodian for the Retail class for
the periods ended November 30, 1995 and May 31, 1995 would have been .54%
and 4.97%, and .63% and 5.28%, respectively.
(3) Institutional class commenced operations on June 16, 1994.
(4) Retail class commenced operations on December 22, 1994.
(5) Annualized.
See Accompanying Notes
18
<PAGE> 20
[ARROW LOGO]
PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1995 ARMADA TAX EXEMPT FUND
(UNAUDITED)
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
-------- --------- ------------
<S> <C> <C> <C>
ALABAMA - 1.4%
Montgomery Alabama Pollution
Control and Solid Waste
Disposal (General Electric
Company Project) Series 1990
(P-1, A-1+)
3.80%............. 01/10/96 $ 2,000 $ 2,000,000
3.80%............. 02/07/96 2,195 2,195,000
------------
4,195,000
------------
ALASKA - 4.3%
Valdez Marine Terminal
Revenue Bond (Arco
Transportation Alaska, Inc.
Project) Series 1994-A
(VMIG-1, A-1)
3.65%............. 12/07/95 2,000 2,000,000
3.85%............. 01/30/96 2,000 2,000,000
Valdez Marine Terminal
Revenue Bond (Arco
Transportation Alaska, Inc.
Project) Series 1994-B
(VMIG-1, A-1)
3.75%............. 12/07/95 9,000 9,000,000
------------
13,000,000
------------
ARIZONA - 3.6%
Maricopa County Arizona
Pollution Control Revenue
Bond (Southern California
Edison) Series E (P-1, A-1)
3.80%............. 12/06/95 2,000 2,000,000
3.85%............. 01/10/96 1,100 1,100,000
Maricopa County Industrial
Development Authority,
Series 1985-B2 Samaritan
Health Service Systems
(MBIA) (VMIG-1, A-1)
3.80%............. 12/01/95 7,800 7,800,000
------------
10,900,000
------------
ARKANSAS - 1.0%
Arkansas State Health Care
Development Finance
Authority, Sisters of Mercy
Health System, Series B
(VMIG-1, A-1+)
3.55%............. 12/07/95 3,100 3,100,000
------------
FLORIDA - 5.0%
Gainesville Utilities System
Series C (P-1, A-1+)
3.80%............. 12/01/95 2,073 2,073,000
Hillsborough County
Industrial Development
Authority
Pollution Control Revenue
Bond (Tampa Electric
Company Project) Series 1990
(Aa2, AA)
3.80%............. 12/01/95 6,005 6,005,000
Jacksonville Pollution
Control Revenue Bond
(Florida Power
& Light Company Project)
(VMIG-1, A-1)
4.10%............. 12/12/95 1,700 1,700,000
3.80%............. 01/25/96 1,000 1,000,000
3.75%............. 02/29/96 2,200 2,200,000
</TABLE>
See Accompanying Notes
19
<PAGE> 21
[ARROW LOGO]
PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1995 ARMADA TAX EXEMPT FUND (CONTINUED)
(UNAUDITED)
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
-------- --------- ------------
<S> <C> <C> <C>
FLORIDA (CONT'D.)
Pinellas County Educational
Facility Authority Series
1995 (MBIA) (VMIG-1)
3.75%............. 02/08/96 $ 2,100 $ 2,100,000
------------
15,078,000
------------
GEORGIA - 5.8%
Downtown Savannah Parking
Authority (VMIG-1, A-1+)
3.70%............. 12/07/95 4,800 4,800,000
Fulton County General Fund
Tax Anticipation Note
(MIG-1, SP1+)
4.75%............. 12/29/95 4,000 4,001,837
Georgia Tech Foundation
Facility, Series 1992-A
(NR, A-1+)
3.70%............. 12/07/95 3,400 3,400,000
Georgia Tech Foundation
Facility, Series 1992-B
(NR, A-1+)
3.70%............. 12/07/95 3,200 3,200,000
Private Colleges and
Universities Authority Emory
University Project Series
1993-B
(VMIG-1, A-1+)
3.70%............. 12/12/95 2,000 2,000,000
------------
17,401,837
------------
ILLINOIS - 3.9%
Illinois Educational Facility
Authority Revenue Bond
(Northwestern University)
Series 1988 (VMIG-1, A-1+)
3.75%............. 12/07/95 11,836 11,836,000
------------
INDIANA - 12.8%
Evansville Economic
Development Bond (Ball Corp
Project) (LOC Wachovia)
(NR, A-1+)
3.75%............. 12/07/95 1,500 1,500,000
Indiana Health Facility
Finance Authority Capital
Access Designated Pool,
Series 1989-B (LOC Bank One
Indianapolis) (VMIG-1, A-1+)
3.90%............. 12/07/95 2,100 2,100,000
Indiana Health Facility
Finance Authority Capital
Access Designated Pool,
Series 1990 (LOC Bank One
Indianapolis) (VMIG-1, A-1+)
3.90%............. 12/07/95 6,715 6,715,000
Jasper County Pollution
Control Revenue Bond
(Northern Indiana
Public Service)
Series C (LOC Barclays)
(VMIG-1, A-1+)
3.80%............. 02/13/96 1,000 1,000,000
3.75%............. 02/29/96 1,200 1,200,000
Jasper County Pollution
Control Revenue Bond
(Northern Indiana
Public Service)
Series A (LOC Barclays)
(VMIG-1, A-I+)
3.80%............. 01/12/96 2,250 2,250,000
3.85%............. 01/26/96 3,000 3,000,000
3.75%............. 02/23/96 1,550 1,550,000
Mt. Vernon Pollution Control
Revenue Bond (General
Electric Project) Series
1989-A (P-1, NA)
3.60%............. 02/21/96 4,000 4,000,000
3.70%............. 02/09/96 2,000 2,000,000
3.65%............. 12/13/95 2,000 2,000,000
</TABLE>
See Accompanying Notes
20
<PAGE> 22
[ARROW LOGO]
PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1995 ARMADA TAX EXEMPT FUND (CONTINUED)
(UNAUDITED)
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
-------- --------- ------------
<S> <C> <C> <C>
INDIANA (CONT'D.)
Purdue University Trustees
Student Fee Bonds Series E
(VMIG-1, A-1+)
3.80%............. 12/07/95 $ 1,000 $ 1,000,000
Purdue University Trustees
Student Fee Bonds Series H
(VMIG-1, A-1+)
3.65%............. 12/07/95 7,700 7,700,000
Purdue University Trustees
Student Fee Bonds Series K
(VMIG-1, A-1+)
3.65%............. 12/07/95 2,400 2,400,000
------------
38,415,000
------------
KANSAS - 3.5%
Kansas Department of Highways
Revenue Bond Series B
(VMIG-1, A-1+)
3.60%............. 12/07/95 10,500 10,500,000
------------
LOUISIANA - 4.4%
East Baton Rouge Pollution
Control Revenue Bond (Exxon
Project) (VMIG-1, A-1+)
3.80%............. 12/01/95 4,000 4,000,000
Plaquemines Port Harbor
Terminal Coal Transfer
Series A (P-1, A-1+)
3.80%............. 12/13/95 2,000 2,000,000
Plaquemines Port Harbor
Terminal District Marine
Terminal Facility Series B
(P-1, A1+)
3.80%............. 12/06/95 1,600 1,600,000
Plaquemines Port Harbor
Terminal District Marine
Terminal Facility Series C
(P1, A-1+)
3.75%............. 02/13/96 1,000 1,000,000
3.80%............. 02/15/96 2,600 2,600,000
St. Charles Pollution Control
Revenue Bonds (Shell Oil
Company Project) Series 1985
(NR, A-1+)
3.50%............. 12/07/95 2,000 2,000,000
------------
13,200,000
------------
MINNESOTA - 5.5%
Becker Pollution Control
Revenue Bond Northern States
Power (Shelburne County
Generating) Series 1993-A
(VMIG-1, A-1+)
3.85%............. 01/31/96 1,000 1,000,000
Becker Pollution Control
Revenue Bond Northern States
Power (Shelburne County
Generating) Series 1993-B
(VMIG-1, A-1+)
3.85%............. 12/13/95 1,000 1,000,000
3.80%............. 01/16/96 3,600 3,600,000
University of Minnesota
Regents Series 1985-A (P1,
A-1+)
3.75%............. 01/29/96 2,000 2,000,000
University of Minnesota
Regents Series 1985-H
(VMIG-1, A-1+)
3.75%............. 01/12/96 520 520,000
3.80%............. 01/12/96 1,530 1,530,000
3.90%............. 01/12/96 1,000 1,000,000
</TABLE>
See Accompanying Notes
21
<PAGE> 23
[ARROW LOGO]
PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1995 ARMADA TAX EXEMPT FUND (CONTINUED)
(UNAUDITED)
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
-------- --------- ------------
<S> <C> <C> <C>
MINNESOTA (CONT'D.)
University of Minnesota
Regents Series 1985-I
(VMIG-1, A-1+)
3.85%............. 01/26/96 $ 2,100 $ 2,100,000
3.70%............. 02/12/96 1,900 1,900,000
3.75%............. 03/08/96 1,765 1,765,000
------------
16,415,000
------------
MISSISSIPPI - 3.0%
Forest Industrial Development
Revenue Bond (Sara Lee Corp
Project) Series 1992
(NR, A1+)
3.75%............. 12/07/95 8,000 8,000,000
Jackson County General
Obligation Water System
(Chevron Corp Project)
Series 1994 (VMIG-1, NR)
3.60%............. 02/01/96 1,000 1,000,000
------------
9,000,000
------------
MISSOURI - 2.8%
Missouri Health & Educational
Facility Authority (Sisters
of Mercy) Series D
(VMIG-1, A-1+)
3.55%............. 12/07/95 2,000 2,000,000
Missouri Health & Educational
Facility Authority (Sisters
of Mercy) Series 1989-B
(VMIG-1, A-1+)
3.55%............. 12/07/95 4,400 4,400,000
Missouri Health & Educational
Facility Authority (Sisters
of Mercy) Series 1989-C
(VMIG-1, A-1+)
3.55%............. 12/07/95 2,100 2,100,000
------------
8,500,000
------------
MONTANA - 1.7%
Montana State Tax & Revenue
Anticipation Notes Series
1995 (MIG-1, SP1+)
4.50%............. 06/30/96 5,000 5,021,751
------------
NEVADA - 2.2%
Clark County Airport
Improvement Revenue Bond
Series 1995-A (LOC Toronto
Dominion) (VMIG-1, A-1+)
3.60%............. 12/07/95 6,500 6,500,000
------------
</TABLE>
See Accompanying Notes
22
<PAGE> 24
[ARROW LOGO]
PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1995 ARMADA TAX EXEMPT FUND (CONTINUED)
(UNAUDITED)
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
-------- --------- ------------
<S> <C> <C> <C>
NEW MEXICO - 2.1%
Hurley Pollution Control
Revenue Bonds (Kennecott
Santa Fe Corp Project)
Series 1985 (P-1, A-1+)
3.75%............. 12/01/95 $ 6,200 $ 6,200,000
------------
NORTH CAROLINA - 2.9%
North Carolina Educational
Facility Authority (Bowman
Gray School of Medicine)
(LOC Wachovia) (VMIG-1, NR)
3.70%............. 12/07/95 8,800 8,800,000
------------
OHIO - 10.1%
Akron Sanitation & Sewer
System Revenue Bond
Series-1994 (LOC Credit
Suisse) (VMIG-1, NR)
3.80%............. 12/07/95 790 790,000
Columbus Unlimited Tax
Revenue Bond Series 1995-1
(VMIG-1, A-1+)
3.40%............. 12/07/95 5,200 5,200,000
Ohio State University General
Receipts, Series 1985-B
(VMIG-1, A-1+)
3.80%............. 12/07/95 3,835 3,835,000
Ohio State University General
Receipts, Series 1986-B
(VMIG-1, A-1+)
3.80%............. 12/07/95 5,115 5,115,000
Scioto County (V.H.A.
Central, Inc. Capital Asset
Financing Program) Series E
(AMBAC) (NR, A-1)
3.60%............. 12/07/95 1,000 1,000,000
State of Ohio Higher
Education Facility Authority
(Oberlin College), (LOC Bank
of Tokyo) (VMIG-1, A-1+)
3.80%............. 12/07/95 3,550 3,550,000
Summit County General
Obligation Bond Anticipation
Note Limited Tax
Series 1995-B (MIG-1, NR)
4.25%............. 06/06/96 2,000 2,002,465
University of Cincinnati
General Receipts Bond
Anticipation
Note Series K (MIG-1, SP1+)
5.00%............. 03/21/96 1,500 1,501,519
University of Cincinnati
General Receipts Bond
Anticipation
Note Series S (MIG-1, SP1+)
4.25%............. 08/28/96 300 300,934
4.25%............. 08/28/96 7,000 7,012,455
------------
30,307,373
------------
OREGON - 1.3%
Klamath Falls Oregon Electric
Revenue Bond Series A
(Escrowed to Maturity) (NR,
SP1+)
4.40%............. 05/01/96 1,000 1,000,000
Klamath Falls Oregon Electric
Revenue Bond Series B
(Escrowed to Maturity) (NR,
SP-1+)
4.40%............. 05/01/96 3,000 3,008,591
------------
4,008,591
------------
</TABLE>
See Accompanying Notes
23
<PAGE> 25
[ARROW LOGO]
PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1995 ARMADA TAX EXEMPT FUND (CONTINUED)
(UNAUDITED)
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
-------- --------- ------------
<S> <C> <C> <C>
PENNSYLVANIA - 0.7%
College Township Industrial
Development Authority (Ball
Corp Project) Series 1993
(LOC Wachovia Bank)
(NR, A-1)
3.75%............. 12/07/95 $ 2,000 $ 2,000,000
------------
TENNESSEE - 1.2%
Vanderbilt University Health
& Education Facilities
(Nashville & Davidson)
(VMIG-1, A-1+)
3.75%............. 12/14/95 3,700 3,700,000
------------
TEXAS - 10.4%
Angelina and Neches River
Authority IDC Solid Waste
Disposal (TEEC, Inc. Temple-
Inland) Series B (LOC Credit
Suisse) (VMIG-1, NR)
3.85%............. 12/01/95 1,000 1,000,000
Angelina and Neches River
Authority IDC Solid Waste
Disposal (TEEC, Inc. Temple-
Inland) Series C (LOC Credit
Suisse) (VMIG-1, NR)
3.85%............. 12/01/95 7,100 7,100,000
Angelina and Neches River
Authority IDC Solid Waste
Disposal (TEEC, Inc. Temple-
Inland) Series D (LOC Credit
Suisse) (VMIG-1, NR)
3.85%............. 12/01/95 900 900,000
Angelina and Neches River
Authority IDC Solid Waste
Disposal (TEEC, Inc. Temple-
Inland) Series E (LOC Credit
Suisse) (VMIG-1, NR)
3.85%............. 12/01/95 2,400 2,400,000
Harris County Health
Facilities Development
Corporation Revenue Bond
(St. Lukes Hospital) (LOC
Morgan Guaranty Trust)
Series C (NR, A-1+)
3.80%............. 12/01/95 1,000 1,000,000
Houston Certificate of
Obligation Series 1993-C
(VMIG-1, A-1+)
4.00%............. 04/01/96 600 600,000
Houston Certificates of
Obligation Series 1993-B
(VMIG-1, A-1+)
3.65%............. 12/07/95 4,600 4,600,000
Milam County IDC Pollution
Control Revenue Bond (Alcoa
Project) (LOC Credit Suisse)
(VMIG-1, NR)
3.65%............. 12/07/95 1,000 1,000,000
Red River Authority of Texas,
Pollution Control Revenue
Bond (Southwestern Public
Service Company Project)
(VMIG-1, A-1+)
3.60%............. 12/07/95 12,600 12,600,000
------------
31,200,000
------------
UTAH - 0.3%
Emery County Pollution
Control Revenue Bond
(Pacificorp Project) (LOC
Credit Suisse) (VMIG-1,
A-1+)
3.45%............. 12/15/95 1,000 1,000,000
------------
</TABLE>
See Accompanying Notes
24
<PAGE> 26
[ARROW LOGO]
PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1995 ARMADA TAX EXEMPT FUND (CONTINUED)
(UNAUDITED)
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
-------- --------- ------------
<S> <C> <C> <C>
VERMONT - 1.7%
Vermont State General
Obligation Anticipation
Notes
Series F (P-1, A-1+)
3.80%............. 12/01/95 $ 2,100 $ 2,100,000
3.60%............. 12/08/95 3,000 3,000,000
------------
5,100,000
------------
VIRGINIA - 1.2%
Peninsula Port Authority of
Virginia (Shell Oil)
(Aa2, AAA)
3.75%............. 12/01/95 3,600 3,600,000
------------
WASHINGTON - 4.6%
Chelan County Development
Corporation Pollution
Control Revenue Bond (Alcoa
Project) (LOC Credit Suisse)
(VMIG-1, NR)
3.65%............. 12/07/95 3,050 3,050,000
Port of Kalama, Washington
Public Corp. Port Facility
Revenue (Con Agra, Inc.
Project) (LOC Morgan
Guaranty) (NR, A-1+)
3.50%............. 12/07/95 1,500 1,500,000
Washington Health Care
Facility Authority (Fred
Hutchinson Cancer Research
Center) Series 1991-A (LOC
Morgan Guaranty) (VMIG-1, NR)
3.90%............. 12/01/95 4,400 4,400,000
Washington Health Care
Facility Authority (Fred
Hutchinson Cancer Research
Center) Series 1991-C (LOC
Morgan Guaranty) (VMIG-1, NR)
3.90%............. 12/01/95 4,700 4,700,000
------------
13,650,000
------------
WISCONSIN - 1.5%
Milwaukee County, Short Term
Promissory Notes Revenue
Anticipation Note Series
1995-A (MIG-1, SP1+)
5.50%............. 02/22/96 1,200 1,204,276
Oak Creek (Wisconsin Electric
Power Company Project)
Series 1991-C (P-1, NR)
3.75%............. 12/07/95 3,300 3,300,000
------------
4,504,276
------------
<CAPTION>
NUMBER
OF SHARES
(000)
---------
<S> <C> <C> <C>
TEMPORARY INVESTMENTS - 1.1%
Fidelity Institutional Tax-
Exempt Cash................. 2,320 2,320,111
Goldman Sachs Tax Exempt
Diversified Portfolio....... 1,000 1,000,000
------------
TOTAL TEMPORARY
INVESTMENTS................. 3,320,111
------------
TOTAL INVESTMENTS - 100.0% $300,452,939
(Cost $300,452,939*) ============
* Also cost for Federal income tax purposes.
</TABLE>
See Accompanying Notes
25
<PAGE> 27
[ARROW LOGO] FINANCIAL STATEMENTS
ARMADA TAX EXEMPT FUND
STATEMENT OF ASSETS AND LIABILITIES
NOVEMBER 30, 1995 (UNAUDITED)
<TABLE>
<S> <C>
ASSETS
Investments at value
(Cost $300,452,939).................... $300,452,939
Interest receivable.................... 1,561,269
Prepaid expenses....................... 5,900
-----------
TOTAL ASSETS.................. 302,020,108
------------------------------------------------------
LIABILITIES
Dividends payable - Institutional
class................................ 676,609
Dividends payable - Retail class....... 164,677
Accrued expenses....................... 152,220
-----------
TOTAL LIABILITIES............. 993,506
------------------------------------------------------
NET ASSETS (based on
301,028,061 shares of
beneficial interest
outstanding).................. $301,026,602
======================================================
NET ASSETS CONSIST OF:
Paid-in capital............... $301,028,061
Accumulated net realized loss
on investments sold........... (1,459)
-----------
$301,026,602
======================================================
NET ASSET VALUE, OFFERING
PRICE AND REDEMPTION PRICE PER
SHARE - Institutional class
($240,386,314 / 240,387,761)
shares of beneficial interest
outstanding).................. $ 1.00
======================================================
NET ASSET VALUE, OFFERING
PRICE AND REDEMPTION PRICE PER
SHARE - Retail class
($60,640,288 / 60,640,300
shares of beneficial interest
outstanding).................. $ 1.00
======================================================
</TABLE>
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED NOVEMBER 30, 1995 (UNAUDITED)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest................................. $5,083,260
---------
EXPENSES:
Investment Advisory fees................. 475,586
Administration fees...................... 66,873
12b-1 fees............................... 55,421
Shareholder servicing fees - Retail class
only................................... 31,648
Registration and filing fees............. 27,739
Custodian fees........................... 23,355
Legal fees............................... 19,739
Transfer Agent fees...................... 12,724
Distribution fees........................ 9,457
Audit fees............................... 6,312
Printing and shareholder reports......... 4,474
Trustees' fees........................... 4,028
Insurance................................ 2,252
Miscellaneous............................ 695
Fees waived by Investment Advisers....... (271,762)
Fees waived by Custodian................. (23,355)
---------
Total expenses.................. 445,186
- --------------------------------------------------------
NET INVESTMENT INCOME....................... 4,638,074
- --------------------------------------------------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS....... $4,638,074
========================================================
</TABLE>
See Accompanying Notes
26
<PAGE> 28
[ARROW LOGO] FINANCIAL STATEMENTS
ARMADA TAX EXEMPT 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>
Net increase in net assets resulting from net investment income and amount
of income distributions to shareholders................................... $ 4,638,074 $ 6,461,638
Increase in net assets derived from Fund share transactions................. 76,468,128 67,724,399
Net realized loss on investments sold....................................... 0 (291)
NET ASSETS:
Beginning of period..................................................... 224,558,474 156,834,366
End of period........................................................... $301,026,602 $224,558,474
============ ============
</TABLE>
See Accompanying Notes
27
<PAGE> 29
[ARROW LOGO] FINANCIAL HIGHLIGHTS
ARMADA TAX EXEMPT FUND
FINANCIAL HIGHLIGHTS
FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
FOR THE
SIX MONTHS ENDED
NOVEMBER 30, 1995 FOR THE YEAR ENDED MAY 31
------------------------ -----------------------------------------------
1995 1994
(UNAUDITED) ---------------------- ---------------------
INSTITUTIONAL RETAIL INSTITUTIONAL RETAIL INSTITUTIONAL RETAIL
------------- ------ ------------- ------ ------------- ------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of
period.......... $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
-------- ------ ------- ------ ------- ------
INCOME FROM
INVESTMENT
OPERATIONS
Net investment
income.......... .0172 .0167 .0309 .0299 .0204 .0194
LESS DISTRIBUTIONS
Dividends from net
investment
income.......... (.0172) (.0167) (.0309) (.0299) (.0204) (.0194)
-------- ------ ------- ------ ------- ------
Net asset value,
end of period.... $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
======== ====== ======= ====== ======= ======
TOTAL RETURN....... 3.48%(4) 3.37%(4) 3.14% 3.04% 2.06% 1.96%
RATIOS/SUPPLEMENTAL
DATA
Net assets,
end of period
(in 000's)....... $240,386 $60,640 $172,643 $51,916 $139,015 $17,819
Ratio of expenses
to average
net assets....... .30%(1,4) .40%(2,4) .35%(1) .46%(2) .33%(1) .43%(2)
Ratio of net
investment income
to average net
assets........... 3.44%(1,4) 3.34%(2,4) 3.15%(1) 3.17%(2) 2.05%(1) 1.94%(2)
<CAPTION>
1993 1992 1991
----------------------- ------------------------ ------------------------
INSTITUTIONAL RETAIL INSTITUTIONAL RETAIL INSTITUTIONAL RETAIL(3)
------------- ------ ------------- ------ ------------- --------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period......... $1.00 1.00 $1.00 $1.00 $1.00 $1.00
------- ------ ------- ------ ------- ------
INCOME FROM
INVESTMENT OPERATIONS
Net investment income....... .0216 .0206 .0351 .0341 .0517 .0069
LESS DISTRIBUTIONS
Dividends from net
investment income......... (.0216) (.0206) (.0351) (.0341) (.0517) (.0069)
------- ------ ------- ------ ------- ------
Net asset value, end of
period...................... $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
======= ====== ======= ====== ======= ======
TOTAL RETURN................. 2.18% 2.07% 3.57% 3.47% 5.29% 4.24%(4)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period
(in 000's)................ $58,928 $17,791 $60,079 $10,745 $63,559 $4,922
Ratio of expenses to average
net assets................ .36%(1) .46%(2) .28%(1) .38%(2) .20%(1) .28%(2,4)
Ratio of net investment
income to average net
assets.................... 2.16%(1) 2.06%(2) 3.45%(1) 3.35%(2) 5.14%(1) 4.15%(2,4)
</TABLE>
(1) The operating expense ratio and net investment income ratio before fee
waivers by the Investment Advisers and Custodian for the Institutional
class for the period ended November 30, 1995 and the year ended
May 31, 1995 would have been .52% and 3.22%, and .56% and 2.94%,
respectively. The operating expense ratio and net investment income
ratio before fee waivers by the Investment Advisers for the Institutional
class for the years ended May 31, 1994, 1993, 1992, and 1991 would have
been .53% and 1.85%, .56% and 1.96%, .54% and 3.20%, and .55%
and 4.79%, respectively.
(2) The operating expense ratio and net investment income ratio before fee
waivers by the Investment Advisers and Custodian for the Retail class
for the period ended November 30, 1995 and the year ended May 31, 1995
would have been .62% and 3.12%, and .67% and 2.96%, respectively.
The operating expense ratio and net investment income ratio before fee
waivers by the Investment Advisers for the Retail class for the years
ended May 31, 1994, 1993, 1992, and for the period ended May 31, 1991
would have been .63% and 1.74%, .66% and 1.86%, .64% and 3.10%, and
.63% and 3.80%, respectively.
(3) Retail class commenced operations on April 1, 1991.
(4) Annualized.
See Accompanying Notes
28
<PAGE> 30
[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.
Pursuant to the approval of the Board of Trustees on February 10, 1994,
reorganizations of the Money Market Portfolio (Trust), Government Portfolio
(Trust), and the Treasury Portfolio (Trust) were executed. The reorganizations
were effected as tax-free transactions pursuant to Section 368(a)(1)(C) of the
Internal Revenue Code of 1986, as amended. On June 15, 1994, the Money Market
Portfolio (Trust) (Class E) and the Government Portfolio (Trust) (Class F)
transferred all assets and liabilities ($64,295,168 and $19,966,931,
respectively), to the Money Market Fund (Class A) and Government Fund (Class B)
which had net assets immediately after the transfer of $945,837,081 and
$779,412,705, respectively. Similarly, on June 16, 1994, the Treasury Portfolio
(Trust) (Class G) transferred all assets and liabilities ($119,606,770) to the
Treasury Fund (Class C) which had net assets immediately after the transfer of
$119,606,840.
The following is a summary of significant accounting policies followed by
the Money Market, Government, Treasury, and Tax Exempt Funds (the "Funds") in
preparation of their financial statements.
PORTFOLIO VALUATION: Securities in the Money Market, Government, and
Treasury Funds are valued as of 1:00 P.M. and as of the close of trading on the
New York Stock Exchange (the "Exchange") (generally 4:00 P.M. Eastern Time) and
12:00 noon and as of the close of trading on the Exchange for the Tax Exempt
Fund on each business day except those holidays which the Exchange or banks and
trust companies which are affiliated with National City Corporation observe.
Investment securities are valued on the basis of amortized cost which has been
determined by the Board of Trustees to represent the fair value of the Funds'
investments. Amortized cost valuation involves valuing
29
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[ARROW LOGO] NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
an instrument at its cost initially and, thereafter, assuming a constant
amortization to maturity of any applicable discount or premium.
The Tax Exempt Fund has invested a significant amount of its assets in
municipal obligations in three states. Economic changes affecting the states and
certain of their public bodies and municipalities may affect the ability of
issuers within each state to pay interest on, or repay principal of, municipal
obligations held by the Fund.
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 AND DISTRIBUTIONS TO SHAREHOLDERS: Each Fund declares dividends
daily from net investment income and pays such dividends no later than five
business days after the end of the month. Net investment income of the Money
Market, Government, and Treasury Funds consists of interest accrued and discount
earned (including both original issue and market discount), less amortization of
any market premium and accrued expenses. Net investment income of the Tax Exempt
Fund consists of interest accrued, original issue discount earned, less
amortization of any market premium and accrued expenses.
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
make 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 that distributions from net investment
income and net realized capital gains exceed amounts in the financial
statements, such amounts are reported separately.
REPURCHASE AGREEMENTS: Repurchase agreements are considered loans under the
Investment Company Act of 1940 as amended. In connection therewith, the Trust's
Custodian receives and holds collateral of not less than 102% of the repurchase
price plus accrued interest. If the value of the collateral falls below this
amount, the Trust will require the seller to deposit additional collateral by
the next business day. If the request for additional collateral is not met or
the seller defaults on its repurchase obligation, the Trust maintains the right
to sell the underlying securities at market value and may claim any resulting
loss against the seller.
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 an annual rate of .35%
of the average daily net assets of each of the Money Market, Government and Tax
Exempt Funds and .30% of average daily net assets of the Treasury Fund. The
Advisers may from time to time waive their fees payable by the
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[ARROW LOGO] NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
Funds. For the period ended November 30, 1995, the Advisers have earned and
waived the following fees:
<TABLE>
<CAPTION>
EARNED WAIVED
--------- -------
<S> <C> <C>
Money Market Fund $2,486,797 $709,536
Government Fund 1,145,007 326,716
Treasury Fund 239,828 39,947
Tax Exempt Fund 475,586 271,762
</TABLE>
At November 30, 1995, Advisory fees accrued and unpaid amounted to:
<TABLE>
<CAPTION>
EARNED
--------
<S> <C>
Money Market Fund $300,189
Government Fund 121,864
Treasury Fund 35,838
Tax Exempt Fund 36,226
</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 .10% of the average daily net assets
of the Retail class of the Money Market, Government, Treasury, and Tax Exempt
Funds. NatCity Investments, Inc. and National City Investments Corporation
earned fees for the period ended November 30, 1995 in the following amounts:
<TABLE>
<CAPTION>
NATIONAL CITY
NATCITY INVESTMENTS
INVESTMENTS INC. CORPORATION
---------------- -------------
<S> <C> <C>
Money Market Fund $19,198 $87,287
Government Fund 3,682 5,052
Treasury Fund 148 347
Tax Exempt Fund 12,142 19,713
</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 earned and waived custodian fees representing $94,970, $47,002,
$16,255, and $23,355 for the Money Market, Government, Treasury, and Tax Exempt
Funds, respectively.
440 Financial Distributors, Inc., a wholly-owned subsidiary of The
Shareholder Services Group, Inc. and an indirect wholly-owned subsidiary of
First Data Corp. (the "Distributor"), serves as the Trust's Distributor. Under
the Fund's Distribution Agreement and related Distribution Plan adopted under
Rule 12b-1 of the Investment Company Act of 1940, the 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 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
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. 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
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(UNAUDITED)
any class of shares into one or more series of shares. Since the Funds have each
sold and redeemed shares only at a constant net asset value of $1.00 per share,
the number of shares represented by such sales, reinvestments, and redemptions
is the same as the amounts shown on the following page for such transactions.
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<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED FOR THE PERIOD ENDED
NOVEMBER 30, 1995 MAY 31, 1995
------------------------------------- --------------------------------------
INSTITUTIONAL CLASS RETAIL CLASS INSTITUTIONAL CLASS RETAIL CLASS
------------------- ------------- ------------------- -------------
(UNAUDITED)
<S> <C> <C> <C> <C>
MONEY MARKET FUND
Shares sold........................ $ 1,691,248,138 $ 709,300,991 $ 3,072,162,728 $ 772,649,874
Shares issued in connection
with the conversion of the
Money Market Portfolio (Trust)... 0 0 64,295,168 0
Shares reinvested.................. 9,599 5,598,571 15,802 5,892,949
Shares repurchased................. (1,545,018,228) (669,531,271) (2,796,606,951) (670,576,427)
--------------- -------------- --------------- -------------
Net increase....................... $ 146,239,509 $ 45,368,291 $ 339,866,747 $ 107,966,396
=============== ============= =============== =============
GOVERNMENT FUND
Shares sold........................ $ 961,202,553 $ 40,057,167 $ 3,586,346,079 $ 122,104,095
Shares issued in connection with
the conversion of the
Government Portfolio (Trust)..... 0 0 19,966,931 0
Shares reinvested.................. 257,383 482,352 658,884 668,780
Shares repurchased................. (985,148,660) (39,091,688) (3,757,250,177) (110,544,306)
--------------- ------------- --------------- -------------
Net increase (decrease)............ $ (23,688,724) $ 1,447,831 $ (150,278,283) $ 12,228,569
=============== ============= =============== =============
TREASURY FUND
Shares sold........................ $ 313,016,053 $ 2,084,009 $ 558,300,415 $ 1,556,210
Shares issued in connection with
the conversion of the
Treasury Portfolio (Trust)....... 0 0 119,606,770 0
Shares reinvested.................. 0 22,849 0 7,430
Shares repurchased................. (268,112,197) (1,525,837) (535,030,451) (1,198,045)
--------------- ------------- --------------- -------------
Net increase....................... $ 44,903,856 $ 581,021 $ 142,876,734 $ 365,595
=============== ============= =============== =============
TAX EXEMPT FUND
Shares sold........................ $ 253,722,570 $ 114,847,545 $ 344,166,709 $ 169,835,346
Shares reinvested.................. 454 1,060,606 0 1,107,370
Shares repurchased................. (185,979,406) (107,183,641) (310,538,589) (136,846,437)
--------------- ------------- --------------- -------------
Net increase....................... $ 67,743,618 $ 8,724,510 $ 33,628,120 $ 34,096,279
=============== ============= =============== =============
</TABLE>
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[ARROW LOGO] ARMADA FUNDS
BOARD OF TRUSTEES Richard B. Tullis
Chairman of the Board, President and Treasurer
Chairman Emeritus, Harris
Corporation
Director, NACCO Materials
Handling Group, Inc.
Director, Hamilton Beach/Proctor-
Silex, Inc.
Director, Waste-Quip, Inc.
Thomas R. Benua, Jr.
Trustee
President, EBCO Manufacturing Company
and Subsidiaries
Leigh Carter
Trustee
Retired President and Chief Operating
Officer, B.F. Goodrich Company
John F. Durkott
Trustee
President and Chief
Operating Officer, Kittle's Home
Furnishings Center, Inc.
Richard W. Furst, Dean
Trustee
Professor of Finance and Dean,
College of Business and Economics,
University of Kentucky
J. William Pullen
Trustee
President and Chief Executive Officer,
Whayne Supply Company
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