<PAGE> 1
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ARMADA FUNDS
ARMADA OHIO TAX EXEMPT FUNDS
SEMI-ANNUAL REPORT - NOVEMBER 30, 1995
(UNAUDITED)
<TABLE>
<S> <C>
ARMADA TABLE OF CONTENTS
OHIO TAX
EXEMPT FUND Chairman's Message .......................................... 1
Tax Exempt Series Overview ................................. 3
FUND OVERVIEW
Armada Ohio Tax Exempt Fund ............................... 5
PORTFOLIO OF INVESTMENTS ................................... 7
FINANCIAL STATEMENTS ........................................ 11
NOTES TO FINANCIAL STATEMENTS ................................ 14
</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.
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
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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 pleased 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.
As you read ahead, you will find commentaries
which discuss market and fund activities during the
past six months for the Armada Ohio Tax Exempt Fund.
Please remember that 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,
[SIGNATURE]
Richard B. Tullis
Chairman
Armada Funds Board of Trustees
2
<PAGE> 4
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ARMADA FUNDS SEMI-ANNUAL REPORT
TAX EXEMPT SERIES OVERVIEW
"CRITICAL TO THE BOND
MARKET'S ADVANCE FOR THIS
PERIOD WAS THE CONTINUED
GOOD NEWS WITH RESPECT
TO INFLATION." As Armada Funds progressed through the first half
of fiscal year 1996, ending November 30, 1995, the
bond market advance born in early calendar year 1995
continued its impressive upward path. Based on
investor perceptions of both low and controlled
inflation, rising productivity, and the anticipation
of further Federal Reserve initiated interest rate
reductions, the bond market was free to continue its
impressive rally. This was evidenced by the strong
4.80% rate of total return generated by the Lehman
Brothers Seven-Year Municipal Bond Index for the
six-month period ending November 30, 1995.
Critical to the bond market's advance for this
period was the continued good news with respect to
inflation. While the consumer price index is in fact
generating inflation rates above that experienced
during the unusually docile 1994 year, the 2.9%
year-to-date inflation level being generated today
is impressive not only in the low absolute
percentage, but also when viewed in the context of
the fifth year of an economic recovery. Furthermore,
during this first half fiscal year, most forward
looking indicators of inflationary pressure building
in the economy showed no signs of significant upward
trends. This was evidenced by the fact that the
producer price index has only generated a 1.4%
growth rate for the calendar year-to-date.
MARKET OUTLOOK
While the tax-exempt bond market must react to the
same influences affecting taxable fixed-income
securities, it must also reflect all that has
bearing on specific issues relating to the status of
their taxation. As the municipal market progressed
during the first six months of the Armada Funds'
fiscal 1996 year, the various flat tax-rate
proposals were forced off the newspaper headlines by
the budget debate. However, the effect of these tax
proposals continues to be felt in the tax-exempt
markets. This is especially true in the shorter term
maturities, where after-tax yields on U.S. Treasury
notes are almost exactly equal to returns available
on tax-exempt securities. It would appear that
investors have concluded that due to the flat tax
proposals, there is no advantage in tax-exempt
securities. Furthermore, as the Funds' first half
fiscal year came to a close, investors were
demanding a full 1% yield increase to extend their
tax-exempt maturities from two years to ten years,
another sign of investor-perceived risk associated
with buying long-term tax-exempt securities in a
flat tax environment. Simply stated, the tax-exempt
security market seems to already be reflecting some
type of flat tax program.
3
<PAGE> 5
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ARMADA FUNDS SEMI-ANNUAL REPORT
TAX EXEMPT SERIES OVERVIEW (CONTINUED)
"SIMPLY STATED, THE
TAX-EXEMPT SECURITY MARKET
SEEMS TO ALREADY BE
REFLECTING SOME TYPE OF
FLAT TAX PROGRAM." LOOKING FORWARD
As we look forward, we see good value in
tax-exempt securities in the seven to ten-year
maturity range. This is based on our belief that the
market has underestimated the difficulty in enacting
any flat tax proposal quickly. The road of tax
reform is simply not as straight or smooth as the
current structure of tax-exempt security yields
would have investors believe. Consider perhaps the
single biggest issues which will have to be
addressed in any flat tax proposal. This issue
involves a state's ability to finance, at the least
cost to taxpayers, the multitude of social programs
delegated from the federal government as the federal
government shrinks, reflective of the budget
debates. This is an issue which will take years to
resolve, if ever.
As the Armada Funds close fiscal year 1996, we
would expect the influence of the various flat tax
proposals to continue. However, as long as the
effects are present, coupled with what we see as a
low probability of an actual flat tax proposal being
enacted soon, good value will be available in
tax-exempt securities.
4
<PAGE> 6
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FUND OVERVIEW
ARMADA OHIO TAX EXEMPT FUND
ASSET MANAGER:
STEPHEN P. CARPENTER
VICE PRESIDENT
NATIONAL CITY
JANUARY 5, 1990
(INSTITUTIONAL SHARES)
APRIL 15, 1991 (RETAIL SHARES)
ASSETS:
$78,355,291 (INSTITUTIONAL SHARES)
$ 3,239,387 (RETAIL SHARES)
INVESTMENT OBJECTIVE:
PROVIDE AS HIGH A LEVEL OF
INTEREST INCOME EXEMPT FROM
FEDERAL INCOME TAX AND, TO
THE EXTENT POSSIBLE, FROM OHIO
INCOME TAX, AS IS CONSISTENT
WITH CONSERVATION OF CAPITAL.
THE FUND NORMALLY INVESTS IN
TAX-EXEMPT OBLIGATIONS HAVING
AVERAGE REMAINING MATURITIES
OF TWO TO TEN YEARS.
The Armada Ohio Tax Exempt Fund Institutional
shares and Retail shares experienced positive
returns of 4.64% and 4.65% (before sales load),
respectively, for the six months ended November 30,
1995. This compares to 4.80% for the Fund's
benchmark Lehman Brothers Seven-Year Municipal Bond
Index (the "Index"). The Fund has an average
maturity of 6.3 years and a duration of 5.2 years,
both slightly shorter than the Index, but well
within intermediate bond parameters. The 30-day SEC
yield at November 30, 1995 was 4.38% (Institutional)
and 4.24% (Retail) - equivalent to yields of 7.84%
and 7.59%, respectively, for Ohio residents in the
maximum tax brackets (assuming 39.6% federal and
7.5% Ohio state tax).
The overall composition of the Fund has remained
the same during the past six months. The Fund
continues to be of AA quality with more than half of
the Fund's holdings in general obligations. The
Fund's largest holdings are the State of Ohio, the
Ohio Public Facilities, Ohio Water Development
Authority, Franklin County and the City of Columbus.
5
<PAGE> 7
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FUND OVERVIEW
ARMADA OHIO TAX EXEMPT FUND (CONTINUED)
<TABLE>
<CAPTION>
TOTAL RETURNS as of 11/30/95
Six Months 1-Year 3-Years(4) 5-Years(4) Since Inception(2,4)
---------- ------ ---------- ---------- --------------------
<S> <C> <C> <C> <C> <C>
Armada Ohio Tax Exempt Fund
Institutional Shares(1) 4.64% 14.15% 6.36% 6.66% 16.83%
Armada Ohio Tax Exempt Fund
Retail Shares With Sales Load 1.52% 10.68% 5.32% 6.01% 5.81%
Without Sales Load 4.65% 14.09% 6.38% 6.66% 6.36%
</TABLE>
Past performance is not predictive of future performance.
<TABLE>
<CAPTION>
GROWTH OF A $10,000 INVESTMENT (BEGINNING 1/5/90)(3)
Lehman
Brothers Armada Ohio Armada Ohio
Seven-Year Tax Exempt Tax Exempt
Municipal Fund (Insti- Fund (Retail
Measurement Period Bond Index as tutional Shares with
(Fiscal Year Covered) of 1/2/90 Shares)(1) sales load)
<S> <C> <C> <C>
Dec-1989 $10,000 $10,000 $10,000
June-1990 10,274 10,093 9,789
Dec-1990 10,740 10,379 10,067
June-1991 11,188 10,730 10,407
Dec-1991 11,993 11,314 10,974
June-1992 12,409 11,584 11,238
Dec-1992 12,959 12,095 11,724
June-1993 13,744 12,777 12,386
Dec-1993 14,311 13,318 12,912
June-1994 13,919 12,841 12,448
Dec-1994 13,917 12,750 12,371
June-1994 15,062 13,732 13,315
Nov-1995 15,799 14,393 13,958
</TABLE>
(1) Institutional shares are sold primarily to Banks
and clients of National Asset Management
Corporation (NAM) customers. Certain account level
charges may apply.
(2) The Armada Ohio Tax Exempt Fund's date of
inception was January 5, 1990 for Institutional
shares and April 15, 1991 for Retail shares.
(3) The return and principal value of an investment
will fluctuate. When redeemed, shares may be worth
more or less than their original cost.
(4) Annualized.
6
<PAGE> 8
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PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1995 OHIO TAX EXEMPT FUND
(UNAUDITED)
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
------- ----- ----
<S> <C> <C> <C>
OHIO - 98.4%
Akron General Obligation
4.50%.............. 12/01/05 $ 500 $ 479,375
Akron Waterworks Revenue
5.15%.............. 03/01/01 500 516,875
Allen County General
Obligation
4.95%.............. 12/01/04 500 511,875
Avon Lake Water Revenues
4.80%.............. 10/01/03 345 351,038
Brown County General
Obligation
5.20%.............. 12/01/04 455 473,769
Butler County Sewer System
Revenue
6.00%.............. 12/01/04 500 540,625
Centerville Local School
District
4.40%.............. 03/14/96 600 601,500
Cincinnati City School
District General Obligation
5.60%.............. 02/01/01 250 258,750
Cincinnati City School
District RANS
5.60%.............. 06/15/97 500 510,625
6.05%.............. 06/15/00 250 265,000
Cincinnati General Obligation
5.25%.............. 12/01/97 400 410,500
5.375%............. 12/01/97 250 257,188
5.25%.............. 12/01/98 250 258,750
5.375%............. 12/01/99 250 261,563
4.50%.............. 12/01/01 1,000 1,012,500
Clermont County Waterworks
Revenue
5.30%.............. 12/01/05 500 520,625
Cleveland Heights General
Obligation
5.40%.............. 12/01/00 900 946,125
Cleveland State University
Revenue Bond
5.00%.............. 06/01/03 250 256,563
Cleveland Waterworks
5.40%.............. 01/01/06 500 528,750
Columbus General Obligation
5.45%.............. 01/01/98 900 927,000
4.55%.............. 09/15/99 775 788,563
5.25%.............. 05/01/02 1,000 1,055,000
5.30%.............. 05/01/03 1,000 1,058,750
5.70%.............. 07/01/04 300 325,500
Columbus Sewer Revenue
6.20%.............. 06/01/04 1,500 1,657,500
Columbus Water System Revenue
5.15%.............. 11/01/96 375 380,486
5.80%.............. 02/15/01 500 535,000
6.00%.............. 11/01/02 330 361,763
Cuyahoga County General
Obligation
4.50%.............. 10/01/00 500 504,375
5.00%.............. 10/01/05 1,610 1,652,263
Cuyahoga County Hospital
Revenues (Cleveland Clinic)
6.00%.............. 11/15/03 890 975,663
6.125%............. 11/15/04 840 925,050
Cuyahoga Heights Local School
District General Obligation
5.20%.............. 12/01/04 255 264,563
Franklin County General
Obligation
4.85%.............. 12/01/03 1,500 1,541,250
6.00%.............. 12/01/03 500 549,375
5.05%.............. 12/01/05 2,000 2,080,000
6.375%............. 12/01/17 500 559,375
Franklin County Hospital
Revenue (Doctor's Hospital)
4.85%.............. 12/01/98 250 252,813
</TABLE>
See Accompanying Notes
7
<PAGE> 9
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PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1995 OHIO TAX EXEMPT FUND (CONTINUED)
(UNAUDITED)
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
------- ----- ----
<S> <C> <C> <C>
OHIO (CONT'D.)
Franklin County Hospital
Revenue (Grant Medical
Center)
6.25%.............. 12/01/97 $ 500 $ 520,560
Gahanna-Jefferson City School
District General Obligation
5.40%.............. 12/01/04 280 291,900
Granville Local School
District General Obligation
4.65%.............. 12/01/05 500 495,000
Greene County Water Works
Systems Revenue
5.30%.............. 12/01/05 500 518,125
Hamilton County General
Obligation
5.75%.............. 12/01/01 250 267,188
Hamilton County Sewer Revenue
6.20%.............. 12/01/00 1,000 1,091,250
5.30%.............. 12/01/06 1,000 1,031,250
Hilliard City Schools General
Obligation
5.30%.............. 12/01/99 250 260,625
4.75%.............. 12/01/01 250 256,250
5.90%.............. 12/01/04 1,000 1,077,500
Hudson Local School District
General Obligation
5.00%.............. 12/15/02 500 518,750
Kenston Local School District
General Obligation
5.55%.............. 12/01/03 500 523,125
Kent State University General
Receipts
6.15%.............. 05/01/04 250 273,750
Kettering General Obligation
3.60%.............. 12/01/95 520 519,995
4.90%.............. 12/01/02 300 308,250
5.15%.............. 12/01/05 550 567,875
Lake County General Obligation
5.30%.............. 12/01/98 250 258,750
Lakewood City School District
General Obligation
5.05%.............. 12/01/00 275 285,313
Lebanon City Schools General
Obligation
4.65%.............. 12/01/99 750 770,625
Loveland City School District
General Obligation
5.30%.............. 12/01/96 250 253,483
6.00%.............. 12/01/00 250 265,313
Marysville Exempted Local
School District General
Obligation
5.10%.............. 12/01/04 500 513,125
Miami University General
Receipts
5.40%.............. 12/01/05 1,000 1,048,750
Newark General Obligation
5.45%.............. 12/01/02 1,000 1,053,750
North Canton City School
District General Obligation
5.25%.............. 12/01/01 500 522,500
Northeast Ohio Regional Sewer
Revenue
6.40%.............. 11/15/03 250 279,063
Ohio Higher Education Facility
(University of Dayton)
4.40%.............. 05/15/99 250 251,875
5.875%............. 12/01/04 250 269,375
Ohio Public Facilities
(Mental Health)
5.00%.............. 12/01/02 1,000 1,023,750
</TABLE>
See Accompanying Notes
8
<PAGE> 10
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PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1995 OHIO TAX EXEMPT FUND (CONTINUED)
(UNAUDITED)
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
------- ----- ----
<S> <C> <C> <C>
OHIO (CONT'D.)
Ohio State Building Authority
4.40%.............. 04/01/02 $ 250 $ 249,688
4.40%.............. 04/01/03 250 245,938
5.80%.............. 10/01/03 250 269,063
5.20%.............. 10/01/04 500 521,250
Ohio State Capital Facilities
General Obligation Series A
5.40%.............. 10/01/07 1,000 1,041,250
Ohio State Higher Education
(John Carroll)
5.00%.............. 10/01/02 250 256,563
4.85%.............. 11/15/04 250 251,875
Ohio State Public Facilities
(Higher Education)
4.25%.............. 12/01/96 750 753,674
4.625%............. 12/01/98 500 507,500
4.60%.............. 06/01/99 500 507,500
5.50%.............. 12/01/00 500 526,875
4.625%............. 12/01/01 500 506,250
4.80%.............. 05/01/02 530 533,312
5.20%.............. 05/01/06 500 511,250
Ohio State University General
Receipt Bond Series A2
5.15%.............. 12/01/00 250 260,312
Ohio State University General
Receipts
4.55%.............. 12/01/96 500 504,810
5.40%.............. 12/01/02 1,500 1,588,124
4.70%.............. 12/01/05 1,000 982,500
Ohio State Water Development
Authority
5.00%.............. 12/01/98 1,500 1,545,000
5.90%.............. 06/01/00 500 529,374
4.35%.............. 12/01/00 1,000 1,002,500
5.50%.............. 12/01/01 1,000 1,057,500
5.90%.............. 12/01/02 320 343,600
5.55%.............. 06/01/04 1,000 1,060,000
5.60%.............. 06/01/07 1,500 1,580,624
5.00%.............. 12/01/07 1,000 998,750
Parma City School District
General Obligation
6.05%.............. 12/01/01 270 287,550
Perry Local School District
General Obligation
4.35%.............. 06/01/99 750 753,750
Portage County General
Obligation
6.00%.............. 12/01/03 915 972,187
Solon General Obligation
5.30%.............. 12/01/03 210 220,238
5.50%.............. 12/01/04 220 232,100
Springfield Local School
District General Obligation
6.10%.............. 12/01/03 250 273,750
State of Ohio General
Obligation
5.10%.............. 08/01/96 500 505,320
5.00%.............. 05/15/97 500 507,500
5.70%.............. 05/15/98 500 518,750
5.00%.............. 05/15/99 1,000 1,027,500
4.50%.............. 05/15/00 1,000 1,010,000
5.00%.............. 08/01/00 500 515,625
4.60%.............. 05/15/01 500 505,625
5.15%.............. 09/01/01 500 520,000
4.70%.............. 05/15/02 2,000 2,042,500
4.70%.............. 08/01/03 1,000 1,017,500
</TABLE>
See Accompanying Notes
9
<PAGE> 11
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PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1995 OHIO TAX EXEMPT FUND (CONTINUED)
(UNAUDITED)
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
------- ----- ----
<S> <C> <C> <C>
OHIO (CONT'D.)
State of Ohio Highways
4.80%.............. 05/15/99 $ 3,000 $ 3,082,500
University of Cincinnati
General Receipts
4.80%.............. 06/01/03 250 253,124
5.70%.............. 06/01/03 250 268,750
4.75%.............. 06/01/04 500 496,250
5.80%.............. 06/01/04 200 216,750
Upper Arlington General
Obligation
6.20%.............. 12/01/01 270 295,987
Westerville General Obligation
5.60%.............. 12/01/01 325 345,718
Westlake General Obligation
5.30%.............. 12/01/03 500 523,124
Worthington City School
District General Obligation
5.80%.............. 12/01/01 1,200 1,285,500
4.35%.............. 12/01/02 600 585,750
5.85%.............. 12/01/02 500 540,624
Wright State University
General Receipts
4.90%.............. 05/01/05 500 510,000
Youngstown Public Housing
Authority - U.S. Government
Backed
5.25%.............. 07/01/98 670 684,237
-----------
TOTAL MUNICIPAL BONDS......... 78,806,641
(Cost $76,424,895) -----------
<CAPTION>
NUMBER
OF SHARES
(000)
---------
<S> <C> <C> <C>
TEMPORARY INVESTMENT - 1.6%
Federated Ohio Municipal
Cash Trust................... 1,319 $ 1,318,979
(Cost $1,318,979) -----------
TOTAL INVESTMENTS - 100.0%...... $80,125,620
(Cost $77,743,874*) ===========
* Also cost for Federal income tax purposes.
The gross unrealized appreciation (depreciation)
for federal income tax purposes is as follows:
Gross appreciation.................... $2,472,660
Gross depreciation.................... (90,914)
----------
$2,381,746
----------
</TABLE>
See Accompanying Notes
10
<PAGE> 12
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FINANCIAL STATEMENTS
OHIO TAX EXEMPT FUND
STATEMENT OF ASSETS AND LIABILITIES
NOVEMBER 30, 1995 (UNAUDITED)
<TABLE>
<S> <C>
ASSETS
Investments at value
(Cost $77,743,874)................... $80,125,620
Interest receivable.................. 1,451,928
Receivable for Fund shares sold...... 350,000
Prepaid expenses..................... 1,545
----------
TOTAL ASSETS................ 81,929,093
- ------------------------------------------------------
LIABILITIES
Dividends payable - Institutional
class.............................. 281,601
Payable for Fund shares redeemed..... 8,880
Accrued expenses..................... 43,934
----------
TOTAL LIABILITIES........... 334,415
- ------------------------------------------------------
NET ASSETS (based on
7,429,519 shares of
beneficial interest having
no par value)............... $81,594,678
======================================================
NET ASSETS CONSIST OF:
Paid-in capital............. $79,261,340
Accumulated net realized
loss on investments sold.... (48,408)
Net unrealized appreciation
on investments.............. 2,381,746
----------
$81,594,678
======================================================
NET ASSET VALUE, OFFERING
PRICE AND REDEMPTION PRICE
PER SHARE - Institutional
class
($78,355,291 / 7,133,537
shares of beneficial
interest)................ $ 10.98
======================================================
NET ASSET VALUE AND
REDEMPTION PRICE PER
SHARE - Retail class
($3,239,387 / 295,982 shares
of beneficial interest)..... $ 10.94
======================================================
MAXIMUM OFFERING PRICE PER
RETAIL SHARE
($10.94 / .9700)............ $ 11.28
======================================================
</TABLE>
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED NOVEMBER 30, 1995 (UNAUDITED)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest.............................. $1,913,020
---------
EXPENSES:
Investment Advisory fees.............. 211,749
Administration fees................... 39,049
12b-1 fees............................ 15,620
Transfer Agent fees................... 12,338
Custodian fees........................ 9,740
Miscellaneous......................... 8,871
Legal fees............................ 6,234
Printing and shareholder reports...... 5,505
Distribution fees..................... 3,161
Registration and filing fees.......... 2,048
Audit fees............................ 1,729
Trustees' fees........................ 981
Insurance............................. 810
Fees waived by Investment Advisers.... (211,749)
Fees waived by Custodian.............. (9,740)
---------
Total expenses............... 96,346
- ------------------------------------------------------
NET INVESTMENT INCOME.................... 1,816,674
- ------------------------------------------------------
REALIZED AND UNREALIZED
GAIN ON INVESTMENTS
Net realized gain on
investments sold............. 42,081
Net change in unrealized
appreciation on
investments.................. 1,688,331
---------
Net gain on investments...... 1,730,412
- ------------------------------------------------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS.... $3,547,086
======================================================
</TABLE>
See Accompanying Notes
11
<PAGE> 13
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FINANCIAL STATEMENTS
OHIO 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>
INCREASE IN NET ASSETS:
Operations:
Net investment income...................................................... $ 1,816,674 $ 3,416,458
Net realized gain/(loss) on investments sold............................... 42,081 (85,521)
Net change in unrealized appreciation on investments....................... 1,688,331 1,365,823
----------- -----------
Net increase in net assets resulting from operations....................... 3,547,086 4,696,760
Distributions to shareholders from net investment income....................... (1,816,674) (3,416,458)
Increase in net assets derived from capital share transactions................. 4,700,474 8,026,080
----------- -----------
Total increase in net assets................................................... 6,430,886 9,306,382
----------- -----------
NET ASSETS:
Beginning of period........................................................ 75,163,792 65,857,410
----------- -----------
End of period.............................................................. $81,594,678 $75,163,792
=========== ===========
</TABLE>
See Accompanying Notes
12
<PAGE> 14
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FINANCIAL HIGHLIGHTS
OHIO TAX EXEMPT 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..... $10.74 $10.70 $10.57 $10.53 $10.84 $10.80
------ ------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS
Net investment income................... .25 .25 .50 .50 .52 .52
Net gains (losses) on securities
(realized and unrealized)............. .24 .24 .17 .17 (.26) (.26)
------ ------ ------ ------ ------ ------
Total from investment operations...... .49 .49 .67 .67 .26 .26
------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS
Dividends from net investment income.... (.25) (.25) (.50) (.50) (.52) (.52)
Dividends in excess of net
investment income..................... (.00) (.00) (.00) (.00) (.00) (.00)
Dividends in excess of net realized
capital gains......................... (.00) (.00) (.00) (.00) (.01) (.01)
------ ------ ------ ------ ------ ------
Total distributions................... (.25) (.25) (.50) (.50) (.53) (.53)
------ ------ ------ ------ ------ ------
Net asset value, end of period........... $10.98 $10.94 $10.74 $10.70 $10.57 $10.53
====== ====== ====== ====== ====== ======
TOTAL RETURN............................. 9.46%(4) 9.49%(4,5) 6.61% 6.64%(5) 2.28% 2.29%(5)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000's).... $78,355 $3,239 $71,996 $3,168 $63,133 $2,725
Ratio of expenses to average net
assets................................ .25%(1,4) .25%(2,4) .24%(1) .24%(2) .33%(1) .33%(2)
Ratio of net investment income to
average net assets.................... 4.65%(1,4) 4.65%(2,4) 4.82%(1) 4.82%(2) 4.54%(1) 4.54%(2)
Portfolio turnover rate................. 3% 3% 3% 3% 2% 2%
<CAPTION>
FOR THE YEAR ENDED MAY 31
1993 1992 1991
---- ---- ----
INSTITUTIONAL RETAIL INSTITUTIONAL RETAIL(3)
------------- ------ ------------- ---------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period..... $10.33 $10.30 $10.14 $10.14 $ 9.93
------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS
Net investment income................... .51 .51 .19 .46 .50
Net gains (losses) on securities
(realized and unrealized)............. .56 .54 .15 .16 .22
------ ------ ------ ------ ------
Total from investment operations...... 1.07 1.05 .34 .62 .72
------ ------ ------ ------ ------
LESS DISTRIBUTIONS
Dividends from net investment income.... (.51) (.51) (.15) (.46) (.50)
Dividends in excess of net
investment income..................... (.05) (.04) (.00) (.00) (.01)
Dividends in excess of net realized
capital gains......................... (.00) (.00) (.00) (.00) (.00)
------ ------ ------ ------ ------
Total distributions................... (.56) (.55) (.15) (.46) (.51)
------ ------ ------ ------ ------
Net asset value, end of period........... $10.84 $10.80 $10.33 $10.30 $10.14
====== ====== ====== ====== ======
TOTAL RETURN............................. 10.36% 10.27%(5) 8.23% 6.22%(4,5) 7.40%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000's).... $40,080 $1,466 $10,453 $437 $246
Ratio of expenses to average net
assets................................ .09%(1) .09%(2) .73%(1) .93%(2,4) 1.25%(1)
Ratio of net investment income to
average net assets.................... 5.00%(1) 5.00%(2) 4.56%(1) 4.49%(2,4) 4.89%(1)
Portfolio turnover rate................. 11% 11% 1% 1% 25%
</TABLE>
(1) The operating expense ratio and the 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 .81% and 4.09%, and .80% and 4.26%, 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,
1994, 1993, 1992 and 1991 would have been .88% and 3.99%, .64% and 4.45%,
1.28% and 4.01%, and 1.80% and 4.34%, respectively.
(2) The operating expense ratio and the 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 .81% and 4.09%, and .78% and 4.27%, 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,
1994, 1993 and for the period ended May 31, 1992 would have been .88%
and 3.99%, .64% and 4.45%, and 1.48% and 3.94%, respectively.
(3) Retail class commenced operations on April 15, 1991.
(4) Annualized.
(5) Total Return excludes sales load.
See Accompanying Notes
13
<PAGE> 15
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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 Ohio Tax Exempt Fund (the "Fund") in preparation of its financial
statements.
PORTFOLIO VALUATION: Securities for which market quotations are readily
available are valued at their market values determined on the basis of the mean
between their current available bid and asked prices in the principal market
(closing sales prices if the principal market is an exchange) in which such
securities are normally traded. Securities and other assets for which quotations
are not readily available are valued at their fair market value under procedures
approved by the Board of Trustees. Short-term investments having maturities of
60 days or less are generally valued on the basis of amortized cost.
The Ohio Tax Exempt Fund follows an investment policy of investing primarily
in municipal obligations of one state. Economic changes affecting the state and
certain of its public bodies and municipalities may affect the ability of
issuers within the 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: It is the policy of the Fund to
declare dividends daily from net investment income and to pay such dividends no
later than five business days after the end of the month. Net investment income
of the Fund consists of interest accrued and original issue discount earned,
less amortization of any market premium and accrued expenses.
14
<PAGE> 16
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NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
FEDERAL INCOME TAXES: The Fund is classified as a separate taxable entity
for Federal income tax purposes. The Fund 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 that distributions from net investment
income and realized net capital gains exceed amounts reported in the financial
statements, such amounts are reported separately.
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 .55%
of the average daily net assets of the Fund. The Advisers have earned fees from
the Fund in the amount $211,749 for the period ended November 30, 1995. The
Advisers may from time to time waive their fees payable by the Fund. For the
period ended November 30, 1995, the Advisers have waived $211,749 with respect
to the Fund.
National City Bank, a wholly owned subsidiary of National City Corporation,
serves as the Fund's Custodian. National City Bank has earned and waived
custodian fees for the period ended November 30, 1995 totaling $9,740 for the
Fund.
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 Trust's Distribution Agreement and related Distribution Plan adopted under
Rule 12b-1 of the Investment Company Act of 1940, the Trust 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 the Trust, 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 investment 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.
15
<PAGE> 17
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NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
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 $6,953,619 and $2,055,503, respectively, for the Ohio Tax Exempt
Fund.
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 Ohio Tax Exempt Fund.
16
<PAGE> 18
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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>
OHIO TAX EXEMPT FUND
Shares sold...................................................... 944,045 $10,223,816 14,120 $ 152,348
Shares reinvested................................................ 4,049 43,905 6,847 73,963
Shares repurchased............................................... (515,011) (5,567,327) (20,883) (226,231)
-------- ----------- ------- ---------
Net increase..................................................... 433,083 $ 4,700,394 84 $ 80
======== =========== ======= =========
</TABLE>
<TABLE>
<CAPTION>
FOR THE YEAR ENDED MAY 31, 1995
-----------------------------------------------
INSTITUTIONAL CLASS RETAIL CLASS
------------------- ------------
SHARES VALUE SHARES VALUE
------ ----- ------ -----
<S> <C> <C> <C> <C>
OHIO TAX EXEMPT FUND
Shares sold.................................................... 1,965,695 $ 20,520,160 70,940 $ 742,119
Shares reinvested.............................................. 8,271 86,343 12,897 134,092
Shares repurchased............................................. (1,246,336) (12,973,045) (46,646) (483,589)
---------- ----------- ------- ---------
Net increase................................................... 727,630 $ 7,633,458 37,191 $ 392,622
========== ============ ======= =========
</TABLE>
17
<PAGE> 19
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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
<PAGE> 20
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NOTES
<PAGE> 21
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NOTES
<PAGE> 22
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NOTES
