<PAGE> 1
ANNUAL REPORT
Armada
May 31, 1996
Funds
Money
Market
Series
Armada Money Market Fund
Armada Government Fund [LOGO]
ARMADA
Armada Treasury Fund FUNDS
Armada Tax Exempt Fund
<PAGE> 2
[LOGO]
ARMADA FUNDS
MONEY MARKET SERIES
ANNUAL REPORT - MAY 31,1996
<TABLE>
<S> <C>
ARMADA TABLE OF CONTENTS
MONEY MARKET
FUND Chairman's Message ............................................. 1
ARMADA PORTFOLIOS OF INVESTMENTS AND FINANCIAL STATEMENTS
GOVERNMENT
FUND Armada Money Market Fund ..................................... 3
ARMADA Armada Government Fund ..................................... 11
TREASURY
FUND Armada Treasury Fund ....................................... 16
ARMADA Armada Tax Exempt Fund ...................................... 20
TAX EXEMPT
FUND NOTES TO FINANCIAL STATEMENTS.................................... 30
Report of Independent Auditors .................................. 35
</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., 4400 Computer Drive,
Westborough, MA 01581-5108. 440 Financial Distributors, Inc. is not affiliated
with National City Bank and is not a bank.
<PAGE> 3
[LOGO]
ARMADA FUNDS ANNUAL REPORT
CHAIRMAN'S MESSAGE
DEAR ARMADA FUNDS SHAREHOLDERS:
During the past year, Armada Funds has experienced
many exciting changes which will further enhance the
investment options offered to our shareholders. We
believe these enhancements will better help you meet
today's investment challenges and achieve your
financial goals.
ARMADA MONEY MARKET FUNDS RECOGNIZED FOR QUALITY
We are proud to announce the Government and
Treasury Funds, two of the four money market funds
offered by Armada Funds, have received the highest
quality ratings from Standard & Poor's, a national
ratings service. Armada Government Fund was recently
rated "AAAm". Armada Treasury Fund has maintained
its rating of "AAAm-G" since October 1995. These
ratings signify that safety of invested principal is
excellent and that the management team's capacity to
maintain a net asset value of $1 per share and limit
exposure to loss is superior. Standard & Poor's
bases its ratings on an analysis of each Fund's
credit quality, investment policies, management and
market price exposure.
CONSOLIDATION WILL CREATE BROADER, STRONGER ARMADA
FUNDS FAMILY
The merger between National City Corporation and
Integra Financial Corporation in early May has
created an opportunity for the Armada Funds family
to expand its current selection of investment
products. On May 2, 1996, National City's Asset
Management Group assumed the investment advisory
responsibilities for Inventor Funds, Integra's
mutual fund family of seven funds with assets of
$800 million.
We are now in the process of integrating Inventor
Funds into Armada Funds. In the first phase of the
integration, we have already moved more than $450
million into the Armada money market funds from
Inventor Funds. With the transfer of these funds and
as a result of the favorable market conditions
during the past year, total assets in Armada Funds
have grown to $4.12 billion -- a 36% increase during
the year. During the second phase of the
integration, we anticipate adding new funds to the
Armada Funds family to provide you with a broader
array of investment options.
1
<PAGE> 4
[LOGO]
ARMADA FUNDS ANNUAL REPORT
CHAIRMAN'S MESSAGE
PERFORMANCE
The Armada Funds Equity Series experienced strong
capital appreciation during the past year as the
equity market performed at favorable levels. As we
look forward, the one goal shared by the entire team
is to continue to provide shareholders with the best
long-term performance results possible, based on
knowledge, experience and consistent investment
policies.
Although the first quarter of 1996 was a difficult
one for the fixed income markets as interest rates
increased, the Armada Funds Income Series generated
positive total returns. The asset managers of the
Armada Funds Income Series remain committed to
maintaining quality, while seeking varying levels of
current income using distinctive management and
maturity policies. That, we believe, is the key to
investment success.
The report that follows details each fund's
specific holdings, assets and operating costs.
Armada Funds continues its commitment to providing
our shareholders with quality investment products
and services. To receive more information about your
investment or any of the Armada Funds, please call
1-800-622-FUND (3863).
Sincerely,
/s/ Richard B. Tullis
Richard B. Tullis
Chairman
Armada Funds Board of Trustees
2
<PAGE> 5
[LOGO] PORTFOLIO OF INVESTMENTS
MAY 31, 1996 ARMADA MONEY MARKET FUND
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
-------- ---------- --------------
<S> <C> <C> <C>
AGENCY OBLIGATIONS - 14.5%
FEDERAL HOME LOAN BANK CONSOLIDATED
DISCOUNT NOTES - 4.1%
5.21%.......... 08/14/96 $ 20,000 $ 19,785,811
5.17%.......... 10/21/96 20,000 19,592,144
5.23%.......... 10/28/96 15,000 14,675,304
5.24%.......... 11/08/96 15,000 14,650,667
--------------
68,703,926
--------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION
DISCOUNT NOTES - 9.3%
5.04%.......... 06/07/96 20,000 19,983,200
5.20%.......... 07/12/96 20,000 19,881,556
5.15%.......... 07/30/96 19,090 18,928,875
5.14%.......... 08/09/96 18,765 18,580,133
5.24%.......... 08/12/96 15,000 14,842,800
5.18%.......... 10/11/96 13,715 13,454,506
5.22%.......... 11/07/96 9,845 9,618,024
5.21%.......... 11/21/96 20,000 19,499,261
5.23%.......... 11/27/96 25,000 24,349,882
--------------
159,138,237
--------------
FEDERAL HOME LOAN MORTGAGE CORPORATION
DISCOUNT NOTES - 1.1%
5.02%.......... 06/03/96 10,000 9,997,211
5.02%.......... 06/04/96 8,000 7,996,653
--------------
17,993,864
--------------
TOTAL AGENCY
OBLIGATIONS.............. 245,836,027
--------------
COMMERCIAL PAPER - 77.2%
AGRICULTURE - 4.3%
Canadian Wheat Board
(P1, A1+)
5.22%.......... 06/17/96 $ 15,000 $ 14,965,200
5.22%.......... 06/19/96 15,000 14,960,850
5.23%.......... 07/03/96 10,000 9,953,511
5.26%.......... 08/01/96 9,000 8,919,785
Cargill, Inc.
(P1, A1+)
5.30%.......... 06/07/96 10,000 9,991,167
5.26%.......... 06/26/96 10,000 9,963,472
5.30%.......... 07/10/96 5,000 4,971,292
--------------
73,725,277
--------------
AUTOMOBILES - 1.5%
Ford Motor Credit Co.
(P1, A1)
5.26%.......... 06/24/96 15,000 14,949,592
5.26%.......... 06/27/96 10,000 9,962,010
--------------
24,911,602
--------------
BUILDING & BUILDING SUPPLIES - 0.9%
Weyerhaeuser Co.
(P1, A1)
5.31%.......... 06/10/96 5,000 4,993,363
5.27%.......... 08/07/96 10,000 9,901,919
--------------
14,895,282
--------------
CHEMICALS - 3.8%
Dow Chemical Co.
(P1, A1)
5.25%.......... 08/27/96 15,000 14,809,688
E.I duPont de Nemours & Co.
(P1, A1+)
5.23%.......... 06/24/96 15,000 14,949,879
5.27%.......... 08/08/96 15,000 14,850,683
5.26%.......... 08/15/96 5,000 4,945,208
5.25%.......... 08/23/96 15,000 14,818,438
--------------
64,373,896
--------------
</TABLE>
See Accompanying Notes
3
<PAGE> 6
[LOGO] PORTFOLIO OF INVESTMENTS
MAY 31, 1996 ARMADA MONEY MARKET FUND
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
-------- ---------- --------------
<S> <C> <C> <C>
CONSUMER NON-DURABLES - 7.3%
Clorox Co.
(P1, A1+)
5.26%.......... 06/21/96 $ 11,000 $ 10,967,856
Colgate-Palmolive Co.
(P1, A1)
5.25%.......... 06/26/96 10,000 9,963,542
5.27%.......... 06/28/96 5,000 4,980,238
5.27%.......... 07/25/96 5,000 4,960,475
Kimberly-Clark Corp.
(P1, A1+)
5.26%.......... 06/28/96 12,500 12,450,688
5.27%.......... 07/17/96 12,000 11,919,193
Procter & Gamble Co.
(P1, A1+)
5.07%.......... 06/10/96 15,000 14,980,988
5.05%.......... 06/12/96 15,000 14,976,854
5.23%.......... 06/25/96 15,000 14,947,700
5.27%.......... 08/22/96 9,000 8,891,965
5.25%.......... 08/29/96 15,000 14,805,313
--------------
123,844,812
--------------
DIVERSIFIED - 4.2%
General Electric Capital Corp.
(P1, A1+)
5.03%.......... 06/21/96 10,000 9,972,056
5.21%.......... 06/26/96 15,000 14,945,729
5.27%.......... 08/28/96 10,000 9,871,178
Minnesota Mining & Manufacturing Co.
(P1, A1+)
5.24%.......... 06/13/96 15,000 14,973,800
5.22%.......... 06/20/96 22,000 21,939,390
--------------
71,702,153
--------------
DRUGS & HEALTH CARE - 2.9%
Schering-Plough Corp.
(P1, A1+)
5.28%.......... 06/27/96 $ 15,000 $ 14,942,800
5.27%.......... 07/16/96 7,000 6,953,888
5.23%.......... 07/26/96 13,000 12,896,126
5.26%.......... 08/27/96 15,000 14,809,324
--------------
49,602,138
--------------
ELECTRONICS - 0.9%
Vermont American Corp.
(P1, A1+)
5.28%.......... 06/14/96 15,000 14,971,400
--------------
ENTERTAINMENT - 1.5%
Walt Disney Company, Inc.
(P1, A1)
5.20%.......... 06/14/96 15,000 14,971,833
5.22%.......... 06/17/96 10,000 9,976,800
--------------
24,948,633
--------------
FINANCE - CONDUIT - 10.6%
Ciesco, L.P.
(P1, A1+)
5.32%.......... 06/04/96 10,000 9,995,567
5.30%.......... 06/18/96 10,000 9,974,972
5.28%.......... 07/09/96 10,000 9,944,267
5.31%.......... 07/12/96 10,000 9,939,525
5.27%.......... 07/22/96 10,000 9,925,342
5.27%.......... 08/12/96 15,000 14,841,900
Corporate Asset Funding Co., Inc.
(P1, A1+)
5.30%.......... 06/12/96 15,000 14,975,708
5.23%.......... 06/17/96 10,000 9,976,756
5.25%.......... 06/27/96 10,000 9,962,083
5.25%.......... 07/19/96 10,000 9,930,000
5.28%.......... 08/16/96 15,000 14,832,800
5.30%.......... 08/19/96 5,000 4,941,847
</TABLE>
See Accompanying Notes
4
<PAGE> 7
[LOGO] PORTFOLIO OF INVESTMENTS
MAY 31, 1996 ARMADA MONEY MARKET FUND
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
-------- ---------- --------------
<S> <C> <C> <C>
FINANCE - CONDUIT (CONT'D.)
Delaware Funding Corp.
(P1, A1+)
5.31%.......... 06/13/96 $ 10,088 $ 10,070,144
5.28%.......... 07/17/96 4,900 4,866,941
5.28%.......... 07/25/96 10,000 9,920,800
Preferred Receivables Funding Corp.
(P1, A1)
5.30%.......... 07/16/96 15,000 14,900,625
5.30%.......... 08/13/96 10,000 9,892,528
--------------
178,891,805
--------------
FINANCIAL SERVICES - 0.9%
Transamerica Financial Corp.
(P1, A1)
5.22%.......... 06/19/96 10,000 9,973,900
5.25%.......... 07/15/96 5,000 4,967,917
--------------
14,941,817
--------------
FOOD & BEVERAGE - 9.0%
Coca-Cola Co. (P1, A1+)
5.26%.......... 07/18/96 15,000 14,896,992
5.26%.......... 07/19/96 15,000 14,894,800
Heinz (H.J.) Co. (P1, A1)
5.29%.......... 06/10/96 10,000 9,986,775
5.28%.......... 06/19/96 10,000 9,973,600
5.29%.......... 07/12/96 15,000 14,909,629
Hershey Foods Corp.
(P1, A1+)
5.28%.......... 06/20/96 13,785 13,746,586
5.25%.......... 07/24/96 15,000 14,884,063
Kellogg Co. (P1, A1+)
5.25%.......... 06/05/96 15,000 14,991,250
5.25%.......... 07/11/96 15,000 14,912,500
Nestle Capital Corp.
(P1, A1+)
5.22%.......... 06/17/96 10,000 9,976,800
Pepsico Inc. (P1, A1)
5.26%.......... 06/11/96 $ 5,000 $ 4,992,694
5.25%.......... 06/28/96 15,000 14,940,937
--------------
153,106,626
--------------
INSURANCE - 2.4%
American General Corp.
(P1, A1+)
5.21%.......... 06/27/96 10,000 9,962,372
5.25%.......... 07/26/96 15,000 14,879,688
Chubb Capital Corp.
(P1, A1+)
5.27%.......... 06/10/96 15,000 14,980,237
--------------
39,822,297
--------------
MACHINERY & HEAVY EQUIPMENT - 1.2%
John Deere Capital Corp.
(P1, A1)
5.09%.......... 06/03/96 15,000 14,995,758
5.28%.......... 08/23/96 5,000 4,939,133
--------------
19,934,891
--------------
OFFICE & BUSINESS EQUIPMENT - 3.8%
Pitney Bowes Credit Corp.
(P1, A1+)
5.26%.......... 06/06/96 10,000 9,992,694
5.30%.......... 06/20/96 10,000 9,972,028
5.25%.......... 07/29/96 10,000 9,915,417
5.28%.......... 08/01/96 10,000 9,910,533
5.25%.......... 08/22/96 10,000 9,880,417
Xerox Credit
Corp.
(P1, A1)
5.29%.......... 07/22/96 10,000 9,925,058
5.28%.......... 08/19/96 5,000 4,942,067
--------------
64,538,214
--------------
OIL & GAS - 0.4%
Amoco Corp. (P1, A1+)
5.25%.......... 06/24/96 7,000 6,976,521
--------------
</TABLE>
See Accompanying Notes
5
<PAGE> 8
[LOGO] PORTFOLIO OF INVESTMENTS
MAY 31, 1996 ARMADA MONEY MARKET FUND
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
-------- ---------- --------------
<S> <C> <C> <C>
PRINTING & PUBLISHING - 2.1%
Donnelley (R.R.) & Sons Co.
(P1, A1)
5.28%.......... 06/25/96 $ 6,000 $ 5,978,880
Gannett Co., Inc.
(P1, A1)
5.28%.......... 06/11/96 15,000 14,978,000
McGraw-Hill, Inc.
(P1, A1)
5.23%.......... 06/25/96 15,000 14,947,700
--------------
35,904,580
--------------
RETAIL STORES - 2.4%
Toys-R-Us, Inc.
(P1, A1+)
5.27%.......... 06/03/96 10,000 9,997,072
5.27%.......... 06/11/96 15,000 14,978,042
Wal-Mart Stores, Inc.
(P1, A1+)
5.23%.......... 06/13/96 15,000 14,973,850
--------------
39,948,964
--------------
TECHNOLOGY - 6.1%
Hewlett-Packard Co.
(P1, A1+)
5.22%.......... 06/18/96 15,000 14,963,025
5.22%.......... 06/21/96 20,000 19,942,000
5.30%.......... 06/28/96 15,000 14,940,375
5.25%.......... 08/29/96 20,000 19,740,417
IBM Credit Corp.
(P1, A1)
5.22%.......... 06/12/96 15,000 14,976,075
5.28%.......... 07/16/96 5,000 4,967,000
5.27%.......... 08/16/96 15,000 14,833,116
--------------
104,362,008
--------------
TELECOMMUNICATIONS - 4.4%
AT&T Capital Corp.
(P1, A1)
5.30%.......... 07/15/96 10,000 9,935,222
AT&T Corp. (P1, A1+)
5.25%.......... 07/29/96 $ 15,000 $ 14,873,125
5.29%.......... 08/16/96 10,000 9,888,322
5.25%.......... 08/26/96 15,000 14,811,875
BellSouth Telecommunications, Inc.
(P1, A1+)
5.30%.......... 06/11/96 15,000 14,977,917
5.25%.......... 06/26/96 10,000 9,963,541
--------------
74,450,002
--------------
UTILITIES - ELECTRIC - 1.5%
Southern California Edison Co.
(P1, A1)
5.30%.......... 06/06/96 15,000 14,988,958
5.26%.......... 07/29/96 10,000 9,915,256
--------------
24,904,214
--------------
UTILITIES - GAS & ELECTRIC - 2.0%
National Rural Utilities
Cooperative Finance Corp.
(P1, A1+)
5.28%.......... 07/19/96 10,000 9,929,600
5.27%.......... 07/22/96 15,000 14,888,013
5.27%.......... 07/30/96 10,000 9,913,631
--------------
34,731,244
--------------
UTILITIES - TELEPHONE - 2.3%
Ameritech Corp.
(P1, A1+)
5.25%.......... 06/04/96 10,000 9,995,625
5.26%.......... 08/13/96 15,000 14,840,008
Southwestern Bell Capital Corp.
(P1, A1)
5.21%.......... 06/10/96 5,000 4,993,488
Southwestern Bell Telephone Co.
(P1, A1+)
5.25%.......... 06/24/96 10,000 9,966,458
--------------
39,795,579
--------------
</TABLE>
See Accompanying Notes
6
<PAGE> 9
[LOGO] PORTFOLIO OF INVESTMENTS
MAY 31, 1996 ARMADA MONEY MARKET FUND
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
-------- ---------- --------------
<S> <C> <C> <C>
WASTE MANAGEMENT - 0.8%
WMX Technologies, Inc.
(P1, A1)
5.25%.......... 06/25/96 $ 13,550 $ 13,502,575
--------------
TOTAL COMMERCIAL PAPER....
1,308,786,530
--------------
MASTER DEMAND NOTES - 2.7%
Metropolitan Life Insurance Co. (A)
5.76%.......... 06/30/96 20,000 20,000,000
Paccar Financial
(P1, A1+) (A)
5.25%.......... 06/04/96 25,000 25,000,000
--------------
TOTAL MASTER DEMAND
NOTES.................... 45,000,000
--------------
REPURCHASE AGREEMENT - 4.4%
First Boston Corp.
5.35%.......... 06/03/96 $ 75,171 $ 75,171,000
--------------
(Agreement dated
05/31/96, to be
repurchased at
$75,204,514 on 06/03/96;
collateralized by
$95,912,000 U.S.
Treasury Strips due
11/15/99. The market
value of the collateral
is $76,655,268.)
</TABLE>
<TABLE>
<CAPTION>
NUMBER
OF SHARES
----------
<S> <C> <C> <C>
TEMPORARY INVESTMENT -- 1.2%
Financial Square Prime
Obligation Portfolio..... 19,920,539 19,920,539
--------------
TOTAL INVESTMENTS - 100.0% $1,694,714,096
(Cost $1,694,714,096*) ==============
* Also cost for Federal income tax purposes.
Credit ratings given by Moody's Investor Services,
Inc., Standard & Poor's Ratings Group and Duff &
Phelps are unaudited.
Interest rates presented reflect the coupon rate of
the security unless otherwise noted.
(A) Variable rate securities. Interest rates vary
periodically based on current market rates. Rates
shown represent interest rates of the security in
effect as of May 31, 1996. Dates shown represent
the latter of the demand date or the next interest
rate change date, which is considered the maturity
date for financial reporting purposes.
</TABLE>
See Accompanying Notes
7
<PAGE> 10
[LOGO] FINANCIAL STATEMENTS
ARMADA MONEY MARKET FUND
STATEMENT OF ASSETS AND LIABILITIES
MAY 31, 1996
<TABLE>
<S> <C>
ASSETS
Investments at value
(Cost $1,694,714,096)................. $1,694,714,096
Interest receivable................... 487,632
Prepaid expenses...................... 58,086
------------
TOTAL ASSETS................. 1,695,259,814
---------------------------------------------
LIABILITIES
Dividends payable - Institutional
class............................... 5,567,944
Dividends payable - Retail class...... 1,171,042
Accrued expenses...................... 1,020,220
------------
TOTAL LIABILITIES............ 7,759,206
---------------------------------------------
NET ASSETS (based on
1,687,508,922 shares of
beneficial interest
outstanding)................. $1,687,500,608
=============================================
NET ASSETS CONSIST OF:
Paid-in capital.............. $1,687,508,922
Accumulated net realized loss
on investments sold.......... (8,314)
------------
$1,687,500,608
=============================================
NET ASSET VALUE, OFFERING
PRICE AND REDEMPTION PRICE
PER SHARE - Institutional
Class
($1,344,413,995 / 1,344,418,519
shares of beneficial interest
outstanding)................. $ 1.00
=============================================
NET ASSET VALUE, OFFERING
PRICE AND REDEMPTION PRICE
PER SHARE - Retail Class
($343,086,613 / 343,090,403
shares of beneficial interest
outstanding)................. $ 1.00
=============================================
</TABLE>
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED MAY 31, 1996
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest................................ $83,411,672
----------
EXPENSES:
Investment Advisory fees................ 5,160,317
12b-1 fees.............................. 587,959
Administration fees..................... 421,493
Shareholder servicing fees - Retail
class only............................ 233,400
Legal fees.............................. 189,613
Registration and filing fees............ 167,390
Custodian fees.......................... 152,366
Distribution fees....................... 108,868
Audit fees.............................. 57,270
Trustees' fees.......................... 48,089
Transfer Agent fees..................... 36,411
Printing and shareholder reports........ 29,185
Insurance............................... 25,509
Miscellaneous........................... 11,546
Fees waived by Investment Advisers...... (1,473,398)
Fees waived by Custodian................ (114,507)
----------
Total expenses................. 5,641,511
--------------------------------------------
NET INVESTMENT INCOME...................... 77,770,161
- --------------------------------------------------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS...... $77,770,161
============================================
</TABLE>
See Accompanying Notes
8
<PAGE> 11
[LOGO] FINANCIAL STATEMENTS
ARMADA MONEY MARKET FUND
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE FOR THE
YEAR ENDED YEAR ENDED
MAY 31, 1996 MAY 31, 1995
---------------- --------------------
<S> <C> <C>
Net increase in net assets resulting from net investment income and amount of
income distributions to shareholders......................................... $ 77,770,161 $ 57,385,870
============== ==============
Increase in net assets derived from Fund share transactions.................... 429,065,507 447,833,143
Net capital loss carry forwards 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.............................................................. $1,687,500,608 $1,258,435,101
============== ==============
</TABLE>
See Accompanying Notes
9
<PAGE> 12
[LOGO] FINANCIAL HIGHLIGHTS
ARMADA MONEY MARKET FUND
FINANCIAL HIGHLIGHTS
FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
FOR THE YEARS ENDED MAY 31
----------------------------------------------------------------------------------------------
1996 1995 1994 1993
----------------------- ----------------------- ----------------------- -------------
INSTITUTIONAL RETAIL INSTITUTIONAL RETAIL INSTITUTIONAL RETAIL INSTITUTIONAL
------------- ------ ------------- ------ ------------- ------ -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period......... $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
------ ------ ------ ------ ------ ------ ------
INCOME FROM
INVESTMENT OPERATIONS
Net investment income....... .0532 .0522 .0500 .0490 .0287 .0277 .0289
LESS DISTRIBUTIONS
Dividends from net
investment income......... (.0532) (.0522) (.0500) (.0490) (.0287) (.0277) (.0289)
------ ------ ------ ------ ------ ------ ------
Net asset value, end of
period...................... $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
====== ====== ====== ====== ====== ====== ======
TOTAL RETURN................. 5.45% 5.35% 5.11% 5.01% 2.91% 2.81% 2.93%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period
(in 000's)................ $1,344,414 $343,087 $1,083,243 $175,192 $743,377 $67,229 $399,191
Ratio of expenses to average
net assets................ .37%(1) .47%(2) .37%(1) .47%(2) .43%(1) .53%(2) .43%
Ratio of net investment
income to average
net assets................ 5.30%(1) 5.18%(2) 5.07%(1) 5.12%(2) 2.94%(1) 2.78%(2) 2.89%
<CAPTION>
1992
------------------------
RETAIL INSTITUTIONAL RETAIL
------ ------------- -------
<S> <C<C> <C> <C>
Net asset value,
beginning of period......... $1.00 $1.00 $1.00
------ ------ ------
INCOME FROM
INVESTMENT OPERATIONS
Net investment income....... .0279 .0451 .0441
LESS DISTRIBUTIONS
Dividends from net
investment income......... (.0279) (.0451) (.0441)
------ ------ ------
Net asset value, end of
period...................... $1.00 $1.00 $1.00
====== ====== ======
TOTAL RETURN................. 2.82% 4.59% 4.50%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period
(in 000's)................ $57,710 $352,578 $28,497
Ratio of expenses to average
net assets................ .53% .43% .53%
Ratio of net investment
income to average
net assets................ 2.79% 4.51% 4.41%
</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
years ended May 31, 1996 and 1995 would have been .48% and 5.19%, 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 years
ended May 31, 1996 and 1995 would have been .58% and 5.07%, 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%.
See Accompanying Notes
10
<PAGE> 13
[LOGO] PORTFOLIO OF INVESTMENTS
MAY 31, 1996 ARMADA GOVERNMENT FUND
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
-------- ---------- ------------
<S> <C> <C> <C>
AGENCY OBLIGATIONS - 85.1%
FEDERAL FARM CREDIT BANK
DISCOUNT NOTES - 14.9%
5.23%............ 06/07/96 $ 7,135 $ 7,128,780
5.21%............ 06/10/96 20,000 19,973,950
5.24%............ 06/19/96 15,000 14,960,700
5.20%............ 06/20/96 22,835 22,772,330
5.24%............ 06/26/96 15,000 14,945,416
5.21%............ 07/12/96 28,310 28,142,020
5.19%............ 07/29/96 10,000 9,916,383
5.23%............ 07/31/96 12,500 12,391,042
------------
130,230,621
------------
FEDERAL FARM CREDIT BANK
INTEREST BEARING NOTES - 2.3%
5.125%........... 06/03/96 20,000 20,000,000
------------
FEDERAL HOME LOAN BANK
DISCOUNT BONDS - 17.7%
5.35%............ 06/03/96 6,000 5,998,217
5.25%............ 06/10/96 15,000 14,980,313
5.23%............ 06/20/96 14,000 13,961,356
5.22%............ 07/15/96 25,000 24,840,500
5.20%............ 07/22/96 25,605 25,416,377
5.21%............ 08/12/96 25,000 24,739,500
5.11%............ 09/06/96 9,600 9,467,820
5.21%............ 11/08/96 14,970 14,623,360
5.21%............ 11/15/96 11,900 11,612,394
5.24%............ 12/04/96 10,000 9,729,267
------------
155,369,104
------------
FEDERAL HOME LOAN MORTGAGE
CORPORATION DISCOUNT NOTES - 22.9%
5.02%............ 06/03/96 $ 20,000 $ 19,994,422
5.24%............ 06/07/96 19,640 19,622,848
5.25%............ 06/13/96 35,000 34,938,750
5.20%............ 07/11/96 20,000 19,884,444
5.25%............ 07/22/96 15,000 14,888,438
5.175%........... 07/26/96 20,000 19,841,875
5.185%........... 07/29/96 20,000 19,832,928
5.24%............ 08/13/96 13,000 12,861,868
5.195%........... 09/03/96 14,200 14,007,381
5.23%............ 10/22/96 25,000 24,480,632
------------
200,353,586
------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION
DISCOUNT NOTES - 21.1%
5.03%............ 06/06/96 25,000 24,982,535
5.15%............ 06/12/96 10,000 9,984,264
5.24%............ 07/24/96 12,100 12,006,655
5.14%............ 08/09/96 25,000 24,753,708
5.23%............ 08/20/96 30,000 29,651,333
5.21%............ 08/22/96 20,000 19,762,656
5.21%............ 08/29/96 25,000 24,677,993
5.10%............ 09/12/96 25,000 24,635,209
5.25%............ 01/30/97 15,000 14,468,438
------------
184,922,791
------------
STUDENT LOAN MARKETING ASSOCIATION
DISCOUNT NOTES - 6.2%
5.20%............ 06/17/96 30,000 29,930,667
5.195%........... 06/28/96 25,000 24,902,594
------------
54,833,261
------------
TOTAL AGENCY OBLIGATIONS....
745,709,363
------------
</TABLE>
See Accompanying Notes
11
<PAGE> 14
[LOGO] PORTFOLIO OF INVESTMENTS
MAY 31, 1996 ARMADA GOVERNMENT FUND
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
-------- ---------- ------------
<S> <C> <C> <C>
REPURCHASE AGREEMENTS - 14.2%
Prudential-Bache Securities
5.36%............ 06/03/96 $ 40,000 $ 40,000,000
(Agreement dated 05/31/96,
to be repurchased at
$40,017,867 on 06/03/96;
collateralized by
$21,995,000 Federal Home
Loan Mortgage Corporation,
6.225% due on 10/25/23;
$22,512,000 Federal Home
Loan Mortgage Corporation,
6.512% due on 11/15/23.
The market value of the
collateral is
$43,557,271.)
Prudential-Bache Securities
5.29%............ 06/05/96 40,000 40,000,000
(Agreement dated 05/29/96,
to be repurchased at
$40,041,144 on 06/05/96;
collateralized by
$50,000,000 Federal Home
Loan Mortgage Corporation,
7.647% due on 03/01/24;
$14,050,000 Federal Home
Loan Mortgage Corporation,
7.805% due on 04/01/24.
The market value of the
collateral is
$40,865,135.)
Smith Barney Capital Corp.
5.34%............ 06/03/96 $ 45,000 $ 45,000,000
------------
(Agreement dated 05/31/96,
to be repurchased at
$45,020,025 on 06/03/96;
collateralized by
$21,560,000 Federal
National Mortgage
Association, 5.44% due on
11/21/96; $100,000,000
U.S. Treasury Strips,
5.34% due on 02/15/16. The
market value of the
collateral is
$45,900,000.)
TOTAL REPURCHASE
AGREEMENTS................. 125,000,000
------------
NUMBER
OF SHARES
----------
TEMPORARY INVESTMENT - 0.7%
Goldman Sachs
Government Money
Market Fund....... 5,735,569 5,735,569
------------
TOTAL INVESTMENTS - 100.0% $876,444,932
============
(Cost $876,444,932*)
* Also cost for Federal income tax purposes.
Interest rates presented reflect the coupon rate of
the security.
</TABLE>
See Accompanying Notes
12
<PAGE> 15
[LOGO] FINANCIAL STATEMENTS
ARMADA GOVERNMENT FUND
STATEMENT OF ASSETS AND LIABILITIES
MAY 31, 1996
<TABLE>
<S> <C>
ASSETS
Investments at value (Cost
$876,444,932)........................ $876,444,932
Interest receivable.................... 312,823
Prepaid expenses....................... 9,035
-----------
TOTAL ASSETS.................. 876,766,790
--------------------------------------------
LIABILITIES
Dividends payable - Institutional
class................................ 3,008,618
Dividends payable - Retail class....... 139,272
Accrued expenses....................... 531,400
-----------
TOTAL LIABILITIES............. 3,679,290
--------------------------------------------
NET ASSETS (based on
873,089,374 shares of
beneficial interest
outstanding).................. $873,087,500
============================================
NET ASSETS CONSIST OF:
Paid-in capital............... $873,089,374
Accumulated net realized loss
on investments sold........... (1,874)
-----------
$873,087,500
============================================
NET ASSET VALUE, OFFERING
PRICE AND REDEMPTION PRICE PER
SHARE - Institutional Class
($741,893,589 / 741,895,081
shares of beneficial interest
outstanding).................. $ 1.00
============================================
NET ASSET VALUE, OFFERING
PRICE AND REDEMPTION PRICE PER
SHARE - Retail Class
($131,193,911 / 131,194,293
shares of beneficial interest
outstanding).................. $ 1.00
============================================
</TABLE>
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED MAY 31, 1996
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest................................ $37,222,526
----------
EXPENSES:
Investment Advisory fees................ 2,316,022
12b-1 fees.............................. 262,406
Administration fees..................... 187,373
Legal fees.............................. 78,790
Custodian fees.......................... 76,204
Distribution fees....................... 49,861
Transfer Agent fees..................... 49,768
Audit fees.............................. 23,142
Trustees' fees.......................... 22,095
Shareholder servicing fees - Retail
class only............................ 20,982
Insurance............................... 15,107
Miscellaneous........................... 15,062
Printing and shareholder reports........ 11,473
Registration and filing fees............ 10,610
Fees waived by Investment Advisers...... (661,292)
Fees waived by Custodian................ (56,295)
----------
Total expenses................. 2,421,308
--------------------------------------------
NET INVESTMENT INCOME...................... 34,801,218
- --------------------------------------------------------
NET REALIZED GAIN ON
INVESTMENTS SOLD............... 603
--------------------------------------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS...... $34,801,821
============================================
</TABLE>
See Accompanying Notes
13
<PAGE> 16
[LOGO] FINANCIAL STATEMENTS
ARMADA GOVERNMENT FUND
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE FOR THE
YEAR ENDED YEAR ENDED
MAY 31, 1996 MAY 31, 1995
----------------- --------------------
<S> <C> <C>
Net increase in net assets resulting from net investment income and amount of
income distributions to shareholders........................................ $ 34,801,218 $ 34,122,708
============ ============
Increase (decrease) in net assets derived from Fund share transactions........ 235,854,984 (138,049,714)
Net realized gain (loss) on investments sold.................................. 603 (200)
NET ASSETS:
Beginning of period....................................................... 637,231,913 775,281,827
------------ ------------
End of period............................................................. $ 873,087,500 $ 637,231,913
============ ============
</TABLE>
See Accompanying Notes
14
<PAGE> 17
[LOGO] FINANCIAL HIGHLIGHTS
ARMADA GOVERNMENT FUND
FINANCIAL HIGHLIGHTS
FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
FOR THE YEARS ENDED MAY 31
----------------------------------------------------------------------------------------------
1996 1995 1994 1993
----------------------- ----------------------- ----------------------- -------------
INSTITUTIONAL RETAIL INSTITUTIONAL RETAIL INSTITUTIONAL RETAIL INSTITUTIONAL
------------- ------ ------------- ------ ------------- ------ -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period......... $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
------- ------ ------- ------ -------- ------ ---------
INCOME FROM INVESTMENT
OPERATIONS
Net investment income....... .0528 .0518 .0486 .0476 .0287 .0277 .0287
LESS DISTRIBUTIONS
Dividends from net
investment income......... (.0528) (.0518) (.0486) (.0476) (.0287) (.0277) (.0287)
------- ------ ------- ------ -------- ------ ---------
Net asset value, end of
period...................... $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
======= ====== ======= ====== ======== ====== ========
TOTAL RETURN................. 5.41% 5.31% 4.97% 4.87% 2.91% 2.80% 2.91%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period
(in 000's)................ $741,894 $131,194 $618,058 $19,174 $768,337 $6,945 $272,809
Ratio of expenses to average
net assets................ .36%(1) .46%(2) .39%(1) .51%(2) .42%(1) .52%(2) .45%(1)
Ratio of net investment
income to average net
assets.................... 5.27%(1) 5.13%(2) 4.83%(1) 5.01%(2) 2.92%(1) 2.75%(2) 2.84%(1)
<CAPTION>
1992
------------------------
RETAIL INSTITUTIONAL RETAIL
------ ------------- -------
<S> <C<C> <C> <C>
Net asset value,
beginning of period......... $1.00 $1.00 $1.00
------- --------- ------
INCOME FROM INVESTMENT
OPERATIONS
Net investment income....... .0277 .0456 .0446
LESS DISTRIBUTIONS
Dividends from net
investment income......... (.0277) (.0456) (.0446)
------- --------- ------
Net asset value, end of
period...................... $1.00 $1.00 $1.00
======= ======== ======
TOTAL RETURN................. 2.81% 4.65% 4.55%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period
(in 000's)................ $11,050 $148,389 $2,234
Ratio of expenses to average
net assets................ .55%(2) .45%(1) .55%(2)
Ratio of net investment
income to average net
assets.................... 2.74%(2) 4.49%(1) 4.39%(2)
</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
years ended May 31, 1996 and 1995 would have been .47% and 5.16%, 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, and 1992 would have been .44%
and 2.90%, .46% and 2.82%, and .46% and 4.48%, 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 years
ended May 31, 1996 and 1995 would have been .57% and 5.02%, 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 would have been .54% and 2.73%,
.56% and 2.72%, and .56% and 4.38%, respectively.
See Accompanying Notes
15
<PAGE> 18
[LOGO] PORTFOLIO OF INVESTMENTS
MAY 31, 1996 ARMADA TREASURY FUND
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
-------- ---------- ------------
<S> <C> <C> <C>
U.S. TREASURY OBLIGATIONS - 91.2%
U.S. TREASURY BILLS
4.85%............ 06/06/96 $ 5,000 $ 4,996,633
4.91%............ 06/06/96 20,000 19,986,361
4.915%........... 06/06/96 15,000 14,989,760
4.97%............ 06/13/96 6,000 5,990,060
4.76%............ 06/20/96 10,000 9,974,878
4.805%........... 06/20/96 5,000 4,987,320
5.005%........... 06/20/96 1,000 997,358
5.015%........... 06/20/96 20,000 19,947,064
5.035%........... 06/20/96 5,000 4,986,713
4.975%........... 06/27/96 25,000 24,910,174
5.035%........... 06/27/96 10,000 9,963,636
4.91%............ 07/05/96 10,000 9,953,628
4.92%............ 07/05/96 10,000 9,953,533
4.98%............ 07/05/96 5,000 4,976,483
4.985%........... 07/05/96 10,000 9,952,919
4.94%............ 07/11/96 5,000 4,972,556
4.945%........... 07/25/96 5,000 4,962,913
4.955%........... 07/25/96 10,000 9,925,675
4.97%............ 08/01/96 25,000 24,789,465
5.02%............ 08/08/96 10,000 9,905,178
5.00%............ 08/15/96 15,000 14,843,750
4.985%........... 08/22/96 10,000 9,886,453
5.025%........... 08/22/96 10,000 9,885,542
5.05%............ 08/22/96 $ 5,000 $ 4,942,486
5.04%............ 08/29/96 10,000 9,875,400
5.03%............ 09/05/96 5,000 4,932,933
4.975%........... 09/19/96 10,000 9,847,986
5.00%............ 09/19/96 5,000 4,923,611
5.035%........... 09/19/96 5,000 4,923,076
5.105%........... 11/14/96 5,000 4,882,301
------------
TOTAL U.S. TREASURY
OBLIGATIONS................ 290,065,845
------------
<CAPTION>
NUMBER
OF SHARES
----------
<S> <C> <C> <C>
TEMPORARY INVESTMENTS - 8.8%
Goldman Sachs Treasury
Instruments Portfolio..... 14,222,216 14,222,216
Federated Investors U.S.
Treasury Cash Reserves.... 13,594,643 13,594,643
------------
TOTAL TEMPORARY
INVESTMENTS................ 27,816,859
------------
TOTAL INVESTMENTS - 100.0% $317,882,704
============
(Cost $317,882,704*)
</TABLE>
* Also cost for Federal income tax purposes.
Interest rates presented reflect the coupon rate of the security.
See Accompanying Notes
16
<PAGE> 19
[LOGO] FINANCIAL STATEMENTS
ARMADA TREASURY FUND
STATEMENT OF ASSETS AND LIABILITIES
MAY 31, 1996
<TABLE>
<S> <C>
ASSETS
Investments at value (Cost
$317,882,704)........................ $317,882,704
Interest receivable.................... 94,863
Prepaid expenses....................... 16,767
-----------
TOTAL ASSETS.................. 317,994,334
--------------------------------------------
LIABILITIES
Dividends payable - Institutional
class................................ 1,132,987
Dividends payable - Retail class....... 7,475
Accrued expenses....................... 243,432
-----------
TOTAL LIABILITIES............. 1,383,894
--------------------------------------------
NET ASSETS, (based on
316,598,736 shares of
beneficial interest
outstanding).................. $316,610,440
============================================
NET ASSETS CONSIST OF:
Paid-in capital............... $316,598,736
Undistributed net realized
gain on investments sold...... 11,704
-----------
$316,610,440
============================================
NET ASSET VALUE, OFFERING
PRICE AND REDEMPTION PRICE PER
SHARE - Institutional Class
($312,255,143 / 312,243,522
shares of beneficial interest
outstanding).................. $ 1.00
============================================
NET ASSET VALUE, OFFERING
PRICE AND REDEMPTION PRICE PER
SHARE - Retail Class
($4,355,297 / 4,355,214 shares
of beneficial interest
outstanding).................. $ 1.00
============================================
</TABLE>
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED MAY 31, 1996
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest................................ $11,179,217
----------
EXPENSES:
Investment Advisory fees................ 633,208
Registration fees....................... 103,114
12b-1 fees.............................. 83,403
Administration fees..................... 37,703
Transfer Agent fees..................... 37,539
Custodian fees.......................... 31,179
Legal fees.............................. 22,331
Miscellaneous........................... 17,881
Distribution fees....................... 12,505
Audit fees.............................. 6,663
Printing, and shareholder reports....... 4,461
Trustees' fees.......................... 4,230
Amortization of organization costs...... 4,132
Insurance............................... 2,991
Shareholder servicing fees - Retail
class only............................ 1,360
Fees waived by Investment Advisers...... (105,510)
Fees waived by Custodian................ (21,835)
----------
Total expenses................. 875,355
--------------------------------------------
NET INVESTMENT INCOME...................... 10,303,862
- --------------------------------------------------------
Net realized gain on
investments sold............... 11,704
--------------------------------------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS...... $10,315,566
============================================
</TABLE>
See Accompanying Notes
17
<PAGE> 20
[LOGO] FINANCIAL STATEMENTS
ARMADA TREASURY FUND
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE FOR THE
YEAR ENDED PERIOD ENDED
MAY 31, 1996 MAY 31, 1995
------------------ --------------------
<S> <C> <C>
Net increase in net assets resulting from net investment income and amount of
income distributions to shareholders....................................... $ 10,303,862 $ 5,996,861
============ ============
Increase in net assets derived from Fund share transactions.................. 173,356,407 143,242,329
Net realized gain on investments sold........................................ 11,704 0
NET ASSETS:
Beginning of period...................................................... 143,242,329 0
------------ ------------
End of period............................................................ $316,610,440 $143,242,329
============ ============
</TABLE>
See Accompanying Notes
18
<PAGE> 21
[LOGO] FINANCIAL HIGHLIGHTS
ARMADA TREASURY FUND
FINANCIAL HIGHLIGHTS
FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
FOR THE
YEAR ENDED
MAY 31, 1996
-----------------------
INSTITUTIONAL RETAIL
------------- ------
<S> <C> <C>
Net asset value, beginning of period........................................................ $1.00 $1.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income...................................................................... .0496 .0486
LESS DISTRIBUTIONS
Dividends from net investment income....................................................... (.0496) (.0486)
-------- ------
Net asset value, end of period.............................................................. $ 1.00 $ 1.00
======== ======
TOTAL RETURN................................................................................ 5.07% 4.97%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000's)....................................................... $312,255 $4,355
Ratio of expenses to average net assets.................................................... .41%(1) .52%(2)
Ratio of net investment income to average net assets....................................... 4.88%(1) 4.77%(2)
<CAPTION>
FOR THE
PERIOD ENDED
MAY 31, 1995
-----------------------
INSTITUTIONAL3 RETAIL4
------------- ------
<S> <C> <C>
Net asset value, beginning of period........................................................ $1.00 $1.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income...................................................................... .0456 .0232
LESS DISTRIBUTIONS
Dividends from net investment income....................................................... (.0456) (.0232)
------- ------
Net asset value, end of period.............................................................. $ 1.00 $ 1.00
======= ======
TOTAL RETURN................................................................................ 4.86%(5) 5.41%(5)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000's)....................................................... $142,877 $366
Ratio of expenses to average net assets.................................................... .43%(1,5) .56%(2,5)
Ratio of net investment income to average net assets....................................... 4.78%(1,5) 5.35%(2,5)
<FN>
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
year ended May 31, 1996 and for the period ended May 31, 1995 would have been
.47% and 4.82%, 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 year
ended May 31, 1996 and for the period ended May 31, 1995 would have been .58%
and 4.71%, 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.
</TABLE>
See Accompanying Notes
19
<PAGE> 22
[LOGO] PORTFOLIO OF INVESTMENTS
MAY 31, 1996 ARMADA TAX EXEMPT FUND
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
-------- --------- ------------
<S> <C> <C> <C>
ALABAMA - 2.5%
Montgomery Pollution Control
and Solid Waste Disposal
(General Electric Company
Project) Series 1990
(P-1, A-1+)
3.20%............. 06/28/96 $ 1,000 $ 1,000,000
3.35%............. 07/12/96 3,700 3,700,000
3.60%............. 07/12/96 2,500 2,500,000
3.55%............. 10/23/96 1,500 1,500,000
------------
8,700,000
------------
ALASKA - 3.7%
Valdez Marine Terminal
Revenue Bonds (Arco
Transportation Alaska, Inc.
Project)
Series 1994-A (VMIG-1, A-1)
3.35%............. 06/07/96 2,000 2,000,000
3.40%............. 06/17/96 2,000 2,000,000
Series 1994-B
(VMIG-1, A-1) (A)
3.70%............. 06/07/96 9,000 9,000,000
------------
13,000,000
------------
ARIZONA - 3.4%
Maricopa County Industrial
Development Authority,
Series 1985-B2 Samaritan
Health Service Systems
(MBIA) (VMIG-1, A-1) (A)
3.70%............. 06/01/96 2,900 2,900,000
Maricopa County Pollution
Control Revenue Bond
(Southern California Edison)
Series D (P-1, A-1)
3.60%............. 08/15/96 $ 1,850 $ 1,850,000
3.65%............. 10/01/96 2,650 2,650,000
Series E (P-1, A-1)
3.65%............. 08/06/96 2,000 2,000,000
3.60%............. 08/15/96 1,500 1,500,000
Series F (P-1, A-1)
3.65%............. 08/06/96 1,100 1,100,000
------------
12,000,000
------------
COLORADO - 1.4%
University of Colorado
Regents Enterprise System
Adjustable Tender Revenue
Bond Series 1996-A
(VMIG-1, A-1+) (A)
3.55%............. 06/07/96 5,000 5,000,000
------------
FLORIDA - 5.0%
Gainesville Utilities System
Series C (P-1, A)
3.55%............. 08/16/96 1,505 1,505,000
3.25%............. 06/14/96 2,073 2,073,000
</TABLE>
See Accompanying Notes
20
<PAGE> 23
[LOGO] PORTFOLIO OF INVESTMENTS
MAY 31, 1996 ARMADA TAX EXEMPT FUND
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
-------- --------- ------------
<S> <C> <C> <C>
FLORIDA - (CONT.)
Hillsborough County
Industrial Development
Authority Pollution Control
Revenue Bond (Tampa Electric
Company Project) Series 1990
(Aa2, AA) (A)
3.70%............. 06/01/96 $ 6,005 $ 6,005,000
Jacksonville Pollution
Control Revenue Bond
(Florida Power & Light
Company Project) (VMIG-1,
A-1+)
3.25%............. 06/03/96 1,000 1,000,000
3.30%............. 06/03/96 2,200 2,200,000
3.45%............. 06/18/96 3,000 3,000,000
3.50%............. 08/30/96 1,700 1,700,000
------------
17,483,000
------------
GEORGIA - 3.2%
Downtown Savannah Parking
Authority (VMIG-1, A-1+) (A)
3.60%............. 06/07/96 2,000 2,000,000
Georgia Municipal Gas
Authority Gas Revenue Bond
(Southern Portfolio)
(NR, A-1+)
3.25%............. 06/05/96 3,000 3,000,000
Georgia Tech Foundation Facility
Series 1992-A (NR, A-1+) (A)
3.55%............. 06/07/96 2,900 2,900,000
Series 1992-B (NR, A-1+) (A)
3.55%............. 06/07/96 3,100 3,100,000
------------
11,000,000
------------
ILLINOIS - 2.8%
Chicago Tender Note General
Obligation Limited Series
1995-A (VMIG-1, SP1+)
3.65%............. 10/31/96 $ 1,800 $ 1,800,000
Illinois Educational Facility
Authority Revenue Bond
(Northwestern University)
Series 1988 (VMIG-1, A-1+)
(A)
3.65%............. 06/07/96 7,836 7,836,000
------------
9,636,000
------------
INDIANA - 10.5%
Evansville Economic
Development Bond (Ball Corp.
Project) (LOC Wachovia) (NR,
A-1+) (A)
3.65%............. 06/07/96 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+) (A)
3.75%............. 06/07/96 2,100 2,100,000
Series 1990
(LOC Bank One Indianapolis)
(VMIG-1, A-1+) (A)
3.75%............. 06/07/96 3,115 3,115,000
Indiana Hospital Equipment
Finance Authority Revenue
Bond, Series 1985-A (MBIA)
(VMIG-1, A-1+) (A)
3.75%............. 06/07/96 3,000 3,000,000
</TABLE>
See Accompanying Notes
21
<PAGE> 24
[LOGO] PORTFOLIO OF INVESTMENTS
MAY 31, 1996 ARMADA TAX EXEMPT FUND
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
-------- --------- ------------
<S> <C> <C> <C>
INDIANA - (CONT.)
Jasper County Pollution
Control Revenue Bonds
(Northern Indiana Public
Service) Series A (LOC
Barclays)
(VMIG-1, A-1+)
3.45%............. 07/11/96 $ 2,250 $ 2,250,000
3.20%............. 07/31/96 1,550 1,550,000
3.50%............. 08/19/96 2,000 2,000,000
Series C (LOC Barclays)
(VMIG-1, A-1+)
3.50%............. 07/25/96 1,200 1,200,000
Mt. Vernon Pollution Control
Revenue Bonds Solid Waste
Disposal (General Electric)
Series 1989-A (P-1, A-1+)
3.15%............. 06/14/96 2,935 2,935,000
3.20%............. 06/28/96 1,000 1,000,000
Purdue University Trustees
Student Fee Bond
Series E (VMIG-1, A-1+) (A)
3.60%............. 06/07/96 1,000 1,000,000
Series H (VMIG-1, A-1+) (A)
3.55%............. 06/07/96 8,365 8,365,000
Series K (VMIG-1, A-1+) (A)
3.55%............. 06/07/96 6,600 6,600,000
------------
36,615,000
------------
KANSAS - 4.0%
Kansas Department of Highways
Revenue Bond Series B
(VMIG-1, A-1+) (A)
3.50%............. 06/07/96 14,000 14,000,000
------------
LOUISIANA - 4.7%
East Baton Rouge Pollution
Control Revenue Bond (Exxon
Project) (VMIG-1, A-1+) (A)
3.60%............. 06/01/96 6,000 6,000,000
Plaquemines Port Harbor
Terminal Coal Transfer
Series A (A-1, A-1+)
3.40%............. 06/27/96 $ 2,000 $ 2,000,000
Series C (P-1, NR)
3.30%............. 06/06/96 2,600 2,600,000
3.25%............. 06/13/96 1,000 1,000,000
Series D (A-1, A-1+)
3.20%............. 06/06/96 2,000 2,000,000
St. Charles Pollution Control
Revenue Bond (Shell Oil
Company Project) Series 1985
(NR, A-1+) (A)
3.45%............. 06/07/96 2,850 2,850,000
------------
16,450,000
------------
MINNESOTA - 6.9%
Becker Pollution Control
Revenue Bonds (Northern
States Power) Series 1992-A
(P-1, A-1+)
3.40%............. 08/01/96 3,000 3,000,000
3.50%............. 09/05/96 1,400 1,400,000
3.60%............. 10/11/96 2,000 2,000,000
Becker Pollution Control
Revenue Bonds Northern
States Power (Shelburne
County Generating) Series
1993-B (VMIG-1, A-1+)
3.25%............. 06/14/96 1,200 1,200,000
3.50%............. 07/31/96 1,000 1,000,000
3.60%............. 10/29/96 1,000 1,000,000
</TABLE>
See Accompanying Notes
22
<PAGE> 25
[LOGO] PORTFOLIO OF INVESTMENTS
MAY 31, 1996 ARMADA TAX EXEMPT FUND
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
-------- --------- ------------
<S> <C> <C> <C>
MINNESOTA - (CONT.)
University of Minnesota
Regents
Series A (P-1, A-1+)
3.65%............. 10/11/96 $ 2,000 $ 2,000,000
3.65%............. 10/15/96 2,525 2,525,000
3.60%............. 10/29/96 2,100 2,100,000
Series B (P-1, A-1+)
3.70%............. 09/11/96 2,000 2,000,000
Series H (VMIG-1, A1+)
3.45%............. 07/11/96 3,050 3,050,000
Series 1985-I (VMIG-1, A-1+)
3.25%............. 06/07/96 1,000 1,000,000
3.65%............. 10/18/96 1,765 1,765,000
------------
24,040,000
------------
MISSISSIPPI - 3.8%
Forest Industrial Development
Revenue Bond (Sara Lee Corp
Project) Series 1992
(NR, A1+) (A)
3.65%............. 06/07/96 8,000 8,000,000
Jackson County General
Obligation Water System
(Chevron Corp Project)
Series 1994 (VMIG-1, NR)
3.30%............. 08/01/96 1,000 1,000,000
Jackson County Pollution
Control Revenue Bond
(Chevron Project)
(VMIG-1, NR) (A)
3.60%............. 06/01/96 4,300 4,300,000
------------
13,300,000
------------
MISSOURI - 1.5%
Missouri Health & Educational
Facility Authority (Sisters
of Mercy)
Series 1989-C (VMIG-1, A-1+) (A)
3.60%............. 06/07/96 $ 2,100 $ 2,100,000
Series D (VMIG-1, A-1+) (A)
3.60%............. 06/07/96 2,000 2,000,000
Missouri Health & Education
Facility Authority Revenue
Bond (Washington University)
Series D (VMIG-1, A-1+) (A)
3.75%............. 06/01/96 1,000 1,000,000
------------
5,100,000
------------
MONTANA - 2.8%
Mt. Forsyth Pollution Control
Revenue Bond (Portland
General Electric Co.) Series
B (P-1, A-1+) (A)
3.35%............. 06/01/96 4,800 4,800,000
Montana State Tax & Revenue
Anticipation Notes Series
1995 (MIG-1, SP1+)
4.50%............. 06/30/96 5,000 5,002,976
------------
9,802,976
------------
NEVADA - 2.0%
Clark County Airport
Improvement Revenue Bond
Series 1995-A (LOC Toronto
Dominion) (VMIG-1, A-1+) (A)
3.50%............. 06/07/96 6,900 6,900,000
------------
</TABLE>
See Accompanying Notes
23
<PAGE> 26
[LOGO] PORTFOLIO OF INVESTMENTS
MAY 31, 1996 ARMADA TAX EXEMPT FUND
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
-------- --------- ------------
<S> <C> <C> <C>
NEW MEXICO - 0.5%
Hurley Pollution Control
Revenue Bond (Kennecott
Santa Fe Corp Project)
Series 1985 (P-1, A-1+) (A)
3.85%............. 06/01/96 $ 1,600 $ 1,600,000
------------
NORTH CAROLINA - 2.9%
North Carolina Educational
Facility Authority (Bowman
Gray School of Medicine)
(LOC Wachovia)
(VMIG-1, NR) (A)
3.60%............. 06/07/96 10,000 10,000,000
------------
OHIO - 11.3%
Akron Sanitation & Sewer
System Revenue Bond Series
1994 (LOC Credit Suisse)
(VMIG-1, NR) (A)
3.65%............. 06/07/96 790 790,000
Brecksville & Broadview
Heights City School District
Ohio School Improvement Note
Series 1996 (MIG-1, NR)
3.90%............. 01/17/97 5,900 5,912,529
County of Scioto (V.H.A.
Central, Inc.)
Series D (AMBAC) (NR, A-1) (A)
3.50%............. 06/07/96 500 500,000
Series G (AMBAC) (NR, A-1) (A)
3.50%............. 06/07/96 2,000 2,000,000
Ohio State University General
Receipts, Series 1986-B
(VMIG-1, A-1+) (A)
3.65%............. 06/07/96 11,745 11,745,000
OHIO - (CONT.)
State of Ohio Higher
Education Facility Authority
(Oberlin College), (LOC Bank
of Tokyo) (VMIG-1, A-1+) (A)
3.70%............. 06/07/96 $ 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 3,000 3,000,182
University of Cincinnati
General
Receipts Bond Anticipation Note
Series N (MIG-1, SP-1)
3.75%............. 03/20/97 3,500 3,512,185
Series S (MIG-1, SP1+)
4.25%............. 08/28/96 300 300,303
4.25%............. 08/28/96 7,000 7,004,045
Series AA (MIG-1, SP1+)
3.89%............. 03/20/97 1,000 1,002,220
------------
39,316,464
------------
PENNSYLVANIA - 0.6%
College Township Industrial
Development Authority (Ball
Corp. Project) Series 1993
(LOC Wachovia Bank)
(NR, A-1) (A)
3.65%............. 06/07/96 2,200 2,200,000
------------
TENNESSEE - 2.3%
Vanderbilt University Health
& Education Facilities
(Nashville & Davidson)
(VMIG-1, NR)
3.60%............. 10/17/96 4,410 4,410,000
3.50%............. 07/09/96 3,700 3,700,000
------------
8,110,000
------------
</TABLE>
See Accompanying Notes
24
<PAGE> 27
[LOGO] PORTFOLIO OF INVESTMENTS
MAY 31, 1996 ARMADA TAX EXEMPT FUND
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
-------- --------- ------------
<S> <C> <C> <C>
TEXAS - 8.7%
Angelina and Neches River
Authority IDC Solid Waste
Disposal (TEEC, Inc. Temple-
Inland) Series B (LOC Credit
Suisse) (VMIG-1, NR) (A)
3.80%............. 06/01/96 $ 2,200 $ 2,200,000
Series C (LOC Credit Suisse)
(VMIG-1, NR) (A)
3.80%............. 06/01/96 4,600 4,600,000
Series D (LOC Credit Suisse)
(VMIG-1, NR) (A)
3.80%............. 06/01/96 2,200 2,200,000
Harris County Health
Facilities Development
Corporation Revenue Bond
(Methodist Hospital) Series
1994
(NR, A-1+) (A)
3.65%............. 06/01/96 2,000 2,000,000
Harris County Health
Facilities Development
Corporation Revenue Bond
(St. Lukes Episcopal
Hospital) Series D (NR,
A-1+) (A)
3.65%............. 06/01/96 1,250 1,250,000
Houston Certificate of
Obligation Series A
(VMIG-1, A-1+) (A)
3.60%............. 06/07/96 3,100 3,100,000
Red River Authority of Texas,
Pollution Control Revenue
Bond (Southwestern Public
Service Company Project)
(VMIG-1, A-1+) (A)
3.55%............. 06/07/96 14,600 14,600,000
------------
29,950,000
------------
UTAH - 0.3%
Emery County Pollution
Control Revenue Bond
(Pacificorp Project)
(VMIG-1, A-1+) (A)
3.70%............. 06/01/96 $ 1,000 $ 1,000,000
------------
VERMONT - 1.3%
Vermont State General
Obligation Anticipation Note
(P-1, A-1+)
3.35%............. 06/13/96 1,400 1,400,000
3.40%............. 06/13/96 2,100 2,100,000
3.45%............. 06/14/96 1,000 1,000,000
------------
4,500,000
------------
VIRGINIA - 5.1%
Commonwealth of Virginia
General Obligation Bond
Anticipation Note Series
1995 (A-1+, P-1)
3.75%............. 06/03/96 5,000 5,000,000
3.35%............. 07/17/96 5,000 5,000,000
3.40%............. 07/10/96 3,000 3,000,000
Peninsula Port Authority of
Virginia (Shell Oil)
(Aa2, AAA) (A)
3.70%............. 06/01/96 3,000 3,000,000
Peninsula Port Authority
Virginia Coal Terminal
Revenue Bond (Dominion
Terminal Association
Project) Series 1987-B (P-1,
A-1+)
3.50%............. 07/09/96 1,835 1,835,000
------------
17,835,000
------------
</TABLE>
See Accompanying Notes
25
<PAGE> 28
[LOGO] PORTFOLIO OF INVESTMENTS
MAY 31, 1996 ARMADA TAX EXEMPT FUND
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
-------- --------- ------------
<S> <C> <C> <C>
WASHINGTON - 0.9%
Washington Health Care
Facility Authority (Fred
Hutchinson Cancer Research
Center) Series 1991-A (LOC
Morgan
Guaranty) (VMIG-1, NR) (A)
3.70%............. 06/01/96 $ 2,030 $ 2,030,000
Series 1991-B (LOC Morgan
Guaranty) (VMIG-1, NR) (A)
3.70%............. 06/01/96 1,060 1,060,000
------------
3,090,000
------------
WISCONSIN - 1.0%
Oak Creek (Wisconsin Electric
Power Company Project)
Series 1991-C (P-1, NR) (A)
3.85%............. 06/07/96 3,300 3,300,000
------------
WYOMING - 4.7%
Sweetwater County Pollution
Control Revenue Bond
(Pacificorp 84) (P-1, A-1+) (A)
3.70%............. 06/03/96 11,400 11,400,000
Uinta County Pollution
Control Revenue Bond
(Chevron USA) Series 1993
(P-1, NR) (A)
3.60%............. 06/01/96 5,000 5,000,000
------------
16,400,000
------------
TOTAL MUNICIPAL BONDS........ 340,328,440
------------
</TABLE>
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
---------- ------------
<S> <C> <C> <C>
TEMPORARY INVESTMENTS - 2.2%
Fidelity Institutional Tax-
Exempt Cash................ 2,710,122 $ 2,710,122
Goldman Sachs Tax Exempt
Diversified Portfolio...... 4,800,000 4,800,000
------------
TOTAL TEMPORARY
INVESTMENTS................ 7,510,122
------------
TOTAL INVESTMENTS - 100.0% $347,838,562
============
(Cost $347,838,562*)
* Also cost for Federal income tax purposes.
Credit ratings given by Moody's Investor Service,
Inc. and Standard & Poor's Rating Group are
unaudited.
AMBAC -- American Municipal Bond Assurance
Corporation
LOC -- Letter of Credit
MBIA -- Municipal Bond Insurance Association
Interest rates presented reflect the coupon rate of
the security unless otherwise noted.
(A) Variable rate securities. Interest rates vary
periodically based on current market rates. Rates
shown represent interest rates of the security in
effect as of May 31, 1996. Dates shown represent
the latter of the demand date or the next interest
rate change date, which is considered the maturity
date for financial reporting purposes.
</TABLE>
See Accompanying Notes
26
<PAGE> 29
[LOGO] FINANCIAL STATEMENTS
ARMADA TAX EXEMPT FUND
STATEMENT OF ASSETS AND LIABILITIES
MAY 31, 1996
<TABLE>
<S> <C>
ASSETS
Investments at value (Cost
$347,838,562)........................ $347,838,562
Interest receivable.................... 1,972,014
Prepaid expenses....................... 5,162
-----------
TOTAL ASSETS.................. 349,815,738
--------------------------------------------
LIABILITIES
Dividends payable - Institutional
class................................ 704,768
Dividends payable - Retail class....... 198,774
Payable for investments purchased...... 1,002,220
Accrued expenses....................... 173,658
-----------
TOTAL LIABILITIES...................... 2,079,420
--------------------------------------------
NET ASSETS (based on
347,737,777 shares of
beneficial interest
outstanding).................. $347,736,318
============================================
NET ASSETS CONSIST OF:
Paid-in capital............... $347,737,777
Accumulated net realized loss
on investments sold........... (1,459)
-----------
$347,736,318
============================================
NET ASSET VALUE, OFFERING
PRICE AND REDEMPTION PRICE PER
SHARE - Institutional class
($261,808,286 / 261,809,695)
shares of beneficial interest
outstanding).................. $ 1.00
============================================
NET ASSET VALUE, OFFERING
PRICE AND REDEMPTION PRICE PER
SHARE - Retail class
($85,928,032 / 85,928,082
shares of beneficial interest
outstanding).................. $ 1.00
============================================
</TABLE>
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED MAY 31, 1996
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest................................ $10,761,284
----------
EXPENSES:
Investment Advisory fees................ 1,036,933
Administration fees..................... 145,303
12b-1 fees.............................. 119,574
Shareholder servicing fees -
Retail class only..................... 64,905
Registration and filing fees............ 63,245
Custodian fees.......................... 39,815
Legal fees.............................. 35,520
Transfer Agent fees..................... 24,680
Distribution fees....................... 21,046
Audit fees.............................. 10,731
Trustees' fees.......................... 6,979
Insurance............................... 4,296
Printing and shareholder reports........ 2,710
Fees waived by Investment Advisers...... (592,531)
Fees waived by Custodian................ (29,055)
----------
Total expenses................. 954,151
--------------------------------------------
NET INVESTMENT INCOME...................... 9,807,133
----------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS...... $ 9,807,133
============================================
</TABLE>
See Accompanying Notes
27
<PAGE> 30
[LOGO] FINANCIAL STATEMENTS
ARMADA TAX EXEMPT FUND
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE FOR THE
YEAR ENDED YEAR ENDED
MAY 31, 1996 MAY 31, 1995
-------------------- --------------------
<S> <C> <C>
Net increase in net assets resulting from net investment income and amount
of income distributions to shareholders................................... $ 9,807,133 $ 6,461,638
============ ============
Increase in net assets derived from Fund share transactions................. 123,177,844 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........................................................... $347,736,318 $224,558,474
============ ============
</TABLE>
See Accompanying Notes
28
<PAGE> 31
[LOGO] FINANCIAL HIGHLIGHTS
ARMADA TAX EXEMPT FUND
FINANCIAL HIGHLIGHTS
FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
FOR THE YEARS ENDED MAY 31
----------------------------------------------------------------------------------------------
1996 1995 1994 1993
----------------------- ----------------------- ----------------------- -------------
INSTITUTIONAL RETAIL INSTITUTIONAL RETAIL INSTITUTIONAL RETAIL INSTITUTIONAL
------------- ------ ------------- ------ ------------- ------ -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period......... $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
------- ------ ------- ------ ------- ------ -------
INCOME FROM
INVESTMENT OPERATIONS
Net investment income....... .0334 .0324 .0309 .0299 .0204 .0194 .0216
LESS DISTRIBUTIONS
Dividends from net
investment income......... (.0334) (.0324) (.0309) (.0299) (.0204) (.0194) (.0216)
------- ------ ------- ------ ------- ------ -------
Net asset value, end of
period...................... $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
======= ====== ======= ====== ======= ====== =======
TOTAL RETURN................. 3.40% 3.29% 3.14% 3.04% 2.06% 1.96% 2.18%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period
(in 000's)................ $261,808 $85,928 $172,643 $51,916 $139,015 $17,819 $58,928
Ratio of expenses to average
net assets................ .30%(1) .40%(2) .35%(1) .46%(2) .33%(1) .43%(2) .36%(1)
Ratio of net investment
income to average net
assets.................... 3.33%(1) 3.23%(2) 3.15%(1) 3.17%(2) 2.05%(1) 1.94%(2) 2.16%(1)
<CAPTION>
1992
------------------------
RETAIL INSTITUTIONAL RETAIL
------ ------------- -------
<S> <C> <C> <C>
Net asset value,
beginning of period......... 1.00 $1.00 $1.00
------ ------- ------
INCOME FROM
INVESTMENT OPERATIONS
Net investment income....... .0206 .0351 .0341
LESS DISTRIBUTIONS
Dividends from net
investment income......... (.0206) (.0351) (.0341 )
------ ------- ------
Net asset value, end of
period...................... $1.00 $1.00 $1.00
====== ======= ======
TOTAL RETURN................. 2.07% 3.57% 3.47%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period
(in 000's)................ $17,791 $60,079 $10,7 45
Ratio of expenses to average
net assets................ .46%(2) .28%(1) .38%(2)
Ratio of net investment
income to average net
assets.................... 2.06%(2) 3.45%(1) 3.35%(2)
<FN>
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
years ended May 31, 1996 and 1995 would have been .51% and 3.12%, 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, and 1992 would have been .53%
and 1.85%, .56% and 1.96%, and .54% and 3.20%, 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 years
ended ended May 31, 1996 and 1995 would have been .61% and 3.02%, 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, and 1992 would have been .63% and 1.74%,
.66% and 1.86%, and .64% and 3.10%, respectively.
</TABLE>
See Accompanying Notes
29
<PAGE> 32
[LOGO] NOTES TO FINANCIAL STATEMENTS
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. 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 preparation of financial statements in accordance with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts and disclosures in the financial
statements. Actual results could differ from those estimates.
The Tax Exempt Fund has invested a significant amount of its assets in
municipal obligations in two 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.
The following is a summary of significant accounting policies followed by
the Money Market,
30
<PAGE> 33
[LOGO] NOTES TO FINANCIAL STATEMENTS
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 an instrument at its cost
initially and, thereafter, assuming a constant amortization to maturity of any
applicable discount or premium.
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
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 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 of Columbus and National City Bank of 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
31
<PAGE> 34
[LOGO] NOTES TO FINANCIAL STATEMENTS
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 Funds. For the year ended
May 31, 1996, the Advisers have earned and waived the following fees:
<TABLE>
<CAPTION>
EARNED WAIVED
--------- -------
<S> <C> <C>
Money Market Fund $5,160,317 $1,473,398
Government Fund 2,316,022 661,292
Treasury Fund 633,208 105,510
Tax Exempt Fund 1,036,933 592,531
</TABLE>
At May 31, 1996, Advisory fees accrued and unpaid amounted to:
<TABLE>
<S> <C>
Money Market Fund $339,148
Government Fund 159,678
Treasury Fund 62,092
Tax Exempt Fund 40,268
</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 year ended May 31, 1996 in the following amounts:
<TABLE>
<CAPTION>
NATIONAL CITY
NATCITY INVESTMENTS
INVESTMENTS INC. CORPORATION
---------------- ----------------
<S> <C> <C>
Money Market Fund $ 44,209 $187,630
Government Fund 7,950 12,092
Treasury Fund 185 1,135
Tax Exempt Fund 24,059 40,654
</TABLE>
National City Bank, a wholly-owned subsidiary of National City Corporation,
serves as the Funds' Custodian. For the year ended May 31, 1996, National City
Bank earned and waived custodian fees as follows:
<TABLE>
<CAPTION>
EARNED WAIVED
--------- -------
<S> <C> <C>
Money Market Fund $ 152,366 $114,507
Government Fund 76,204 56,295
Treasury Fund 31,179 21,835
Tax Exempt Fund 39,815 29,055
</TABLE>
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 $7,500 plus $2,500 for each Board
meeting attended and reimbursement of out-of-pocket expenses. The Chairman of
the Board receives an additional $2,500 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, 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 year ended May 31, 1996 include legal fees paid to Drinker
Biddle & Reath. A partner of that firm is Secretary of the Trust.
32
<PAGE> 35
[LOGO] NOTES TO FINANCIAL STATEMENTS
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 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
below for such transactions.
<TABLE>
<CAPTION>
FOR THE YEAR ENDED FOR THE PERIOD ENDED
MAY 31, 1996 MAY 31, 1995
---------------------------------------- ----------------------------------------
INSTITUTIONAL CLASS RETAIL CLASS INSTITUTIONAL CLASS RETAIL CLASS
------------------- --------------- ------------------- ---------------
<S> <C> <C> <C> <C>
MONEY MARKET FUND
Shares sold............................. $ 3,557,289,942 $ 1,296,339,643 $ 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....................... 19,278 11,706,196 15,802 5,892,949
Shares repurchased...................... (3,296,137,841) (1,140,151,711) (2,796,606,951) (670,576,427)
--------------- ----------------- --------------- -----------------
Net increase............................ $ 261,171,379 $ 167,894,128 $ 339,866,747 $ 107,966,396
=============== ================= =============== =================
GOVERNMENT FUND
Shares sold............................. $ 2,479,104,729 $ 196,026,437 $ 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....................... 357,397 1,033,637 658,884 668,780
Shares repurchased...................... (2,355,628,345) (85,038,871) (3,757,250,177) (110,544,306)
--------------- ----------------- --------------- -----------------
Net increase (decrease)................. $ 123,833,781 $ 112,021,203 $ (150,278,283) $ 12,228,569
=============== ================= =============== =================
TREASURY FUND
Shares sold............................. $ 963,946,179 $ 9,707,933 $ 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 59,062 0 7,430
Shares repurchased...................... (794,579,391) (5,777,376) (535,030,451) (1,198,045)
--------------- ----------------- --------------- -----------------
Net increase............................ $ 169,366,788 $ 3,989,619 $ 142,876,734 $ 365,595
=============== ================= =============== =================
TAX EXEMPT FUND
Shares sold............................. $ 576,468,463 $ 241,105,254 $ 344,166,709 $ 169,835,346
Shares reinvested....................... 1,724 2,069,874 0 1,107,370
Shares repurchased...................... (487,304,635) (209,162,836) (310,538,589) (136,846,437)
--------------- ----------------- --------------- -----------------
Net increase............................ $ 89,165,552 $ 34,012,292 $ 33,628,120 $ 34,096,279
=============== ================= =============== =================
</TABLE>
33
<PAGE> 36
[LOGO] NOTES TO FINANCIAL STATEMENTS
4. SUBSEQUENT EVENT AND FUND REORGANIZATION
On May 2, 1996, Integra Financial Corporation ("Integra Financial") merged
into National City Corporation ("National City"). Since Integra Trust Company,
an affiliate of Integra Financial, served as the Investment Adviser to Inventor
Funds, Inc., the merger of Integra Financial into National City required
approval of a new investment advisory agreement between the Inventor Funds, Inc.
and National City Bank. That approval was received from shareholders of Inventor
Funds, Inc. on May 2, 1996.
National City Bank has now begun the process of reorganizing the Armada
Funds and Inventor Funds, Inc. On February 15, 1996, the Board of Trustees of
Armada Funds and on March 18, 1996, the Board of Trustees of Inventor Funds
each approved the Agreement and Plan of Reorganization between Armada Funds and
Inventor Funds, Inc. (the "Plan"), which is subject to shareholder approval.
The Plan provides that, to the extent not borne by their respective Investment
Advisers, Armada and Inventor will each be responsible for the payments of its
own expenses incurred in connection with the Reorganization. Armada estimates
that it will bear approximately $200,000 of the total costs of the
Reorganization. Inventor does not expect to bear any of such costs. The
reorganization is intended to be effected on a tax-free basis, so that none of
the Funds' shareholders will recognize taxable gains or losses as a result of
the reorganization.
A proxy statement/prospectus describing the reorganization and the reasons
therefore has been sent to Inventor shareholders for their approval.
34
<PAGE> 37
[LOGO] REPORT OF INDEPENDENT AUDITORS
To the Board of Trustees and
Shareholders of Armada Funds:
We have audited the accompanying statements of assets and liabilities,
including the portfolios of investments, of the Armada Money Market Fund, the
Armada Government Fund, the Armada Treasury Fund, and the Armada Tax Exempt Fund
(the "Funds") as of May 31, 1996, and the related statements of operations for
the year then ended, and the statements of changes in net assets and financial
highlights for each of the periods presented herein. These financial statements
and financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and financial highlights. Our procedures included verification by
examination of securities held by the custodian, as of May 31, 1996, and
confirmation of securities not held by the custodian, by correspondence with
others. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of the
Armada Money Market Fund, the Armada Government Fund, the Armada Treasury Fund,
and the Armada Tax Exempt Fund at May 31, 1996, the results of their operations
for the year then ended, and the changes in their net assets and financial
highlights for each of the periods presented herein, in conformity with
generally accepted accounting principles.
/s/ Ernst & Young LLP
Philadelphia, Pennsylvania
July 2, 1996
35
<PAGE> 38
[LOGO] ARMADA FUNDS
BOARD OF TRUSTEES Richard B. Tullis
Chairman of the Board
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
Chairman, EBCO Manufacturing Company
and Subsidiaries
Leigh Carter
Trustee, President and Treasurer
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,
Carol Martin Gatton College of Business
and Economics,
University of Kentucky
Robert D. Neary
Trustee
Retired Co-Chairman, Ernst & Young LLP
J. William Pullen
Trustee
President and Chief Executive Officer,
Whayne Supply Company
<PAGE> 39
BULK RATE
U.S. POSTAGE
[LOGO] PAID
ARMADA BOSTON, MA
FUNDS PERMIT NO. 54201
4400 Computer Drive
Westborough, Massachusetts 01581
INVESTMENT ADVISERS
AFFILIATES OF
NATIONAL CITY
CORPORATION
National City Bank
1900 East Ninth Street
Cleveland, Ohio 44114
National City Bank of Columbus
155 East Broad Street
Columbus, Ohio 43251
National City Bank of Kentucky
101 South Fifth Street
Louisville, Kentucky 40202
NC-140 (6/96)
