<PAGE> 1
[ARROW LOGO]
ARMADA FUNDS
EQUITY SERIES
SEMI-ANNUAL REPORT - NOVEMBER 30, 1995
(UNAUDITED)
<TABLE>
<S> <C>
ARMADA TABLE OF CONTENTS
MID CAP
REGIONAL Chairman's Message ......................................... 1
FUND
ARMADA Equity Series Overview .................................... 3
EQUITY
FUND FUND OVERVIEWS
ARMADA
EQUITY INCOME Armada Mid Cap Regional Fund ............................... 6
FUND
Armada Equity Fund ......................................... 8
Armada Equity Income Fund .................................. 10
PORTFOLIOS OF INVESTMENTS AND FINANCIAL STATEMENTS
Armada Mid Cap Regional Fund ............................... 12
Armada Equity Fund ........................................ 18
Armada Equity Income Fund ................................. 24
NOTES TO FINANCIAL STATEMENTS .............................. 30
</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
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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 Equity Series. 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
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[ARROW LOGO] ARMADA FUNDS SEMI-ANNUAL REPORT
EQUITY SERIES OVERVIEW
"THE CATALYSTS FOR BOTH THE
STRENGTH AND CONSISTENCY OF
THIS STOCK MARKET ADVANCE CAN
BE FOUND IN THE CONTINUING
DOWNWARD TREND OF INTEREST
RATES, BETTER-THAN-EXPECTED
CORPORATE PROFIT GROWTH AND
STRONG CASH FLOWS INTO THE
EQUITY MARKETS FROM BOTH
INDIVIDUAL INVESTORS AND
CORPORATIONS." As Armada Funds reached the November 30, 1995,
mid-point of fiscal year 1996, the powerful
financial market advance born in the early months of
calendar year 1995 remained fully intact. The power
and consistency of this stock market rally is
evidenced not only in the fiscal year to date 14.98%
total return for the Standard and Poor's 500 Stock
Index (the "S&P 500"), but also in the fact that the
S&P 500 suffered only one month of negative returns
thus far in the calendar year. The catalysts for
both the strength and consistency of this stock
market advance can be found in the continuing
downward trend of interest rates,
better-than-expected corporate profit growth and
strong cash flows into the equity markets from both
individual investors and corporations.
As the first half of fiscal year 1996 progressed,
market leadership was squarely centered on large
capitalization, high beta (price volatility) and
high-earnings growth stocks. As a result, technology
stock groups (including computer software and
hardware, aerospace, instrumentation and
telecommunication equipment companies) were among
the best performing areas. Investor focus on themes
closely associated with technology issues such as
capital spending, productivity and global
competitiveness engendered heavy flows of funds into
these issues. Healthcare stocks - particularly HMOs,
drugs and medical products - turned in very strong
performances as they came roaring back from the
ashes of the healthcare reform scare of 1993-94.
Financial stocks, both banks and brokerage issues,
also delivered impressive performances. Downward
trending interest rates and the rapidly escalating
consolidation within the banking industry were two
themes associated with financial stocks which
investors found hard to resist. Consumer staples
groups such as household products, beverages,
tobacco and cosmetics reported steady earnings gains
as they continued their emphasis on international
expansion.
The market environment was much more difficult for
the energy, basic materials, consumer cyclical and
industrial cyclical industries. The earnings
prospects for these sectors depend on improving
economic growth and the consensus outlook for the
economy was tepid, at best, during the past several
months. We have seen no reason to disagree with that
outlook. More importantly, the Federal Reserve also
seemed to agree with it, as reflected in the July
reduction of the Fed discount rate. However, the
Fed's reluctance to ease further has caused the
yield curve to become virtually flat.
3
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[ARROW LOGO] ARMADA FUNDS SEMI-ANNUAL REPORT
EQUITY SERIES OVERVIEW (CONTINUED)
"THE HIGHER EXPECTED GROWTH
AND BETTER RETURNS ON EQUITY
OF THE SPBGROWTH COMPANIES IS
ACCOMPANIED BY HIGHER
VALUATIONS, WHETHER MEASURED
AS THE HIGHER PRICE-EARNINGS
RATIO OR LOWER DIVIDEND YIELD.
THE HIGHER BETA OF THE SPBGROWTH
SHOWS THAT ONE SHOULD ALSO EXPECT
GREATER PRICE VOLATILITY FROM
A FUND THAT IS BENCHMARKED TO
THE SPBGROWTH." While still lagging for the calendar year, the
smaller capitalization stock indices kept up with
the S&P 500 during the most recent six months. The
Standard & Poor's Midcap 400 Index (the "S&P Midcap
400") returned 16.16% and the Russell 2000 was up
15.05%. The smaller capitalization end of the stock
market was also led by the high beta technology
group as well as banks and specialty financials. For
further elaboration on this area, please see the
Armada Mid Cap Regional Fund commentary.
With this commentary, we are introducing
additional "style" benchmarks for Armada Equity Fund
and Armada Equity Income Fund. Style benchmarks are
useful for making comparisons of the portfolio
characteristics (growth rates, yields, betas,
profitability, etc.), industry sector weightings and
investment returns of each fund to the most
appropriate market index. The Armada Equity Fund
will be compared to the Standard and Poor's BARRA
Growth Index ("SPBGrowth"), as the SPBGrowth is the
industry standard benchmark for large capitalization
growth funds.
Likewise, we have identified the Standard and
Poor's BARRA Value Index ("SPBValue") as the
benchmark for the Equity Income Fund. Data as of
November 30, 1995, shown in the table below,
indicates that the higher expected growth and better
return on equity of the SPBGrowth companies is
accompanied by higher valuations, whether measured
as the higher price-earnings ratio or lower dividend
yield. The higher beta of the SPBGrowth shows that
one should also expect greater price volatility from
a fund that is benchmarked to the SPBGrowth.
----------------------------------------------------
<TABLE>
<CAPTION>
5 YR. PRICE/ RETURN
EPS EARNINGS DIVIDEND ON
GROWTH RATIO YIELD EQUITY BETA
------- --------- --------- ------- -----
<S> <C> <C> <C> <C> <C>
S&P 500 +12% 15x 2.3% 16% 1.00
SPBGrowth +14% 17x 1.7% 23% 1.06
SPBValue + 9% 12x 3.0% 14% 0.94
</TABLE>
----------------------------------------------------
As would be expected in the market environment
described in this report, the SPBGrowth gained
17.03% over the past six months while the SPBValue
was up only 12.69%.
4
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[ARROW LOGO] ARMADA FUNDS SEMI-ANNUAL REPORT
EQUITY SERIES OVERVIEW (CONTINUED)
"WITHOUT A DOUBT,
THE STOCK MARKET HAS
BEEN A MOST REWARDING
USE OF INVESTOR FUNDS
THIS YEAR."
INVESTMENT OUTLOOK
During the first half of the Armada Funds fiscal
year 1996, the stock market set a series of all time
high levels. The S&P 500 shot past the 600 level and
the Dow Jones Industrial Average rocketed through
the 5000 level in November. Incredibly, these
"century marks" were reached only nine months after
the indices first surpassed the 500 and 4000 levels.
Without a doubt, the stock market has been a most
rewarding use of investor funds this year. After
these huge gains, the stock market currently does
seem rather expensive, but we see no immediate
danger of a serious reversal in prices.
The reason for that posture is that the key
factors behind the great bull market that began over
a decade ago remain firmly in place. Those factors
are disinflation and demographics. "Disinflation"
means stable, moderate levels of inflation (the
Consumer Price Index increases at a 2-3% annual
rate) which provides enough pricing "grease" to keep
the wheels of the economy moving smoothly, but not
so much as to cause deterioration of profit margins.
Historically, such eras have been very good periods
to own financial assets such as stocks and bonds.
The 1980s - 1990s have certainly proven that. The
demographics factor arises from the fact that the
Baby Boomer generation is now in the midst of the
peak earning and saving segment of its life cycle.
This creates an enormous flow of funds that not only
helps keep the economy growing, but also must be
invested somewhere. Surveys show that most Boomers
do not believe they can count on Social Security to
provide for them in their old age, so they have an
added incentive to save - and invest. We believe
that stocks will continue to be the asset class of
choice over the next few years.
Clearly, the stock market will not rise forever
without cyclical setbacks, so we are constantly on
the lookout for signs of trouble. We would become
concerned if the bond market experienced a major
reversal, if earnings growth slowed dramatically, or
if investor sentiment became extremely bullish. As
of this writing, none of these factors are in place.
5
<PAGE> 7
[ARROW LOGO] FUND OVERVIEW
ARMADA MID CAP REGIONAL FUND
ASSET MANAGER:
LAWRENCE E. BAUMGARTNER,
PRESIDENT
BROAD STREET
ASSET MANAGEMENT
FUND'S DATE OF INCEPTION:
JULY 26, 1994 (INSTITUTIONAL SHARES)
AUGUST 15, 1994 (RETAIL SHARES)
ASSETS:
$70,624,830 (INSTITUTIONALSHARES)
$ 4,488,378 (RETAIL SHARES)
INVESTMENT OBJECTIVE:
SEEK CAPITAL APPRECIATION BY
INVESTING IN A DIVERSIFIED
FUND OF PUBLICLY TRADED EQUITY
SECURITIES OF ISSUERS WHICH ARE
DOMICILED PRIMARILY IN OHIO, INDIANA
AND KENTUCKY AND CONTIGUOUS
STATES AND OTHER STATES IN WHICH
NATIONAL CITY CORPORATION
AFFILIATES ARE LOCATED.
The small/mid cap markets followed the cue of the
large cap Standard and Poor's 500 Stock Index (the
"S&P 500") during the six months ending November 30,
1995, showing 15.05% appreciation for the small cap
Russell 2000, and 16.16% for the Standard & Poor's
Midcap 400 Stock Index (the "S&P Midcap 400"). These
two indices are the most widely recognized benchmark
indices for the stocks of mid- and small-sized
companies and will jointly serve as the performance
benchmarks for this fund, henceforth. By comparison,
the Armada Mid Cap Regional Fund (the "Fund") had
total returns of 7.64% and 7.46% (before sales load)
for Institutional and Retail shareholders,
respectively, during the same time frame. Since
inception in July 1994, annualized return of 16.83%
for the Mid Cap Regional Fund Institutional shares
and 15.04% for Retail shares (before sales load)
compare to 19.8% annualized for the Russell 2000 and
23.2% for the S&P Midcap 400.
The technology and financial services stocks
continue to lead the charge in this latest market
advance, as any stock remotely tied to a rapidly-
evolving Internet, semiconductor or software theme
moved sharply (or even explosively) ahead. In the
finance sector, brokers, banks and most any company
related to consumer lending were the leaders during
this fiscal period.
On the flip side, most any small company tied to
the goods producing sectors (steel, autos and
chemicals) underperformed the averages, while retail
stocks were in a general free fall over the summer
months. It is readily apparent there is too much
retail space in America and this is leading to a
severe shake out of marginal players.
The Fund was largely on the sidelines during this
techno-mania due to our value discipline and
regional bias. We owned several stocks which showed
very strong performance during the last six months.
These include Wilmington, Ohio-based Airborne
Freight (+49%), Mansfield, Ohio-based Shiloh
Industries (+33%), Bensalem, Pa.-based American
Travelers (+39%) and Malvern, Pa.-based Amerisource
Health (+38%). Holding back the Fund's performance
were several consumer-related and basic products
companies which were feeling the brunt of a sharp
slowing in goods producing and consumer end markets.
The earnings picture in smaller companies turned
sharply negative as 1995 progressed, with more than
40% of the small cap Russell 2000 companies now
reporting negative year-to-year earnings
comparisons. As 1996 unfolds, we believe the slower
earnings trend will shift to the technology sector
as capital spending slows and to the credit
cyclicals as delinquencies and credit quality
questions begin to emerge.
6
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[ARROW LOGO] FUND OVERVIEW
ARMADA MID CAP REGIONAL FUND (CONTINUED)
"AS 1996 UNFOLDS, WE BELIEVE
THE SLOWER EARNINGS TREND
WILL SHIFT TO THE TECHNOLOGY
SECTOR AS CAPITAL SPENDING SLOWS AND TO
THE CREDIT CYCLICALS AS
DELINQUENCIES AND CREDIT
QUALITY QUESTIONS BEGIN TO EMERGE."
LOOKING FORWARD
As noted, we are largely onlookers when it comes
to the tech sectors, as valuations appear excessive
and holes are beginning to show in the earnings
outlook. Our overweighting in the basic products
sector reflects a group with low expectations,
inexpensive valuations, and high potential returns.
As usual, we continue our value-oriented discipline,
maintaining a portfolio of stocks with low
price-earnings, price-book, and price-cash flow
ratios. We believe that an aggressive Federal
Reserve easing in interest rates during 1996 will
have a positive effect on our Midwest economy, and
our outlook for each stock in this Fund is positive.
TOTAL RETURNS as of 11/30/95
<TABLE>
<CAPTION>
Six Months 1-Year Since Inception(2)(4)
<S> <C> <C> <C>
Armada Mid Cap Regional Fund
Institutional Shares(1) 7.64% 17.62% 16.83%
Armada Mid Cap Regional Fund
Retail Shares With Sales Load 3.42% 12.91% 11.66%
Without Sales Load 7.46% 17.26% 15.04%
</TABLE>
Past performance is not predictive of future performance.
GROWTH OF A $10,000 INVESTMENT (BEGINNING 7/26/94)(3)
<TABLE>
<CAPTION>
Armada Mid Armada Mid
Cap Regional Cap Regional
Fund (Instit- Fund (Retail
Measurement Period S&P Midcap Russell 2000 utional Shares with
(Fiscal Year Covered) 400 Index Index Shares)(1) sales load)
<S> <C> <C> <C> <C>
June-1994 $10000 $10000 $10000 $10000
Aug-1994 10524 10557 10590 9934
Oct-1994 10440 10479 10700 10028
Dec-1994 10061 10325 10736 10059
Feb-1995 10699 10619 10887 10202
Apr-1995 11104 11041 11180 10478
June-1995 11834 11786 11653 10908
Aug-1995 12662 12723 12036 11260
Oct-1995 12667 12372 11814 11051
Nov-1995 13209 12892 12338 11537
</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 Mid Cap Regional Fund's date of inception
was July 26, 1994 for Institutional shares and
August 15, 1994 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.
7
<PAGE> 9
[ARROW LOGO]
FUND OVERVIEW
ARMADA EQUITY FUND
ASSET MANAGER:
ROBERT M. LEGGETT,
VICE PRESIDENT
NATIONAL CITY
ASSET MANAGEMENT GROUP --
DIRECTOR OF EQUITIES
FUND'S DATE OF INCEPTION:
DECEMBER 20, 1989
(INSTITUTIONAL SHARES)
APRIL 15, 1991 (RETAIL SHARES)
ASSETS:
$141,084,467 (INSTITUTIONAL SHARES)
$ 5,863,748 (RETAIL SHARES)
INVESTMENT OBJECTIVE:
SEEK A HIGH LEVEL OF TOTAL
RETURN ARISING OUT OF CAPITAL
APPRECIATION AND INCOME. THE
FUND INVESTS IN COMMON STOCKS
AND SECURITIES CONVERTIBLE
INTO COMMON STOCKS. The Armada Equity Fund (the "Fund") produced a
very solid 12.91% return for Institutional
shareholders and 12.75% (before sales load) for
Retail shareholders in the first six months of
Fiscal 1996 which ended November 30, 1995. We are
disappointed to report that we nonetheless lost
ground to our primary benchmark over that timeframe,
as the Standard & Poor's 500 Stock Index (the "S&P
500") was up 14.98%. Likewise, during this six-month
period, Standard and Poor's/BARRA Growth Index
appreciated 17.03%. Market leadership was very
narrow during these six months which made it a
difficult period for active managers in the stock
market. This was compounded by the fact that most
stocks which performed well ran up very rapidly. The
lack of price pullbacks made it very hard to find
reasonable levels at which to buy the leadership,
which kept us out of most of the technology
leadership stocks.
Fortunately, our holdings in the healthcare and
financial sectors were at the forefront of market
leadership. Medtronic, Schering Plough, Pfizer and
American Home Products were the featured stocks in
our healthcare overweight and each of them
outperformed the S&P 500 by more than 10% for the
past six months. Likewise, we were well overweighted
in financials and earned very strong returns from a
diversified group of stocks that included State
Street Bank, Fannie Mae and Chubb. While we were
only market weighted in technology, our stock picks
helped Fund performance, as Qualcomm (a wireless
communications equipment company), Automatic Data
Processing and Xerox all had very strong returns.
The Fund's overweight in long distance telephones
also worked out well; both AT&T and MCI
Communications outgained the S&P 500 by over 15%!
Our large holdings in the capital goods and consumer
cyclicals groups were the primary negative for the
Fund's six-month performance. Pollution control
stocks (Browning-Ferris) building-related companies
(Masco and York International), and retailers (Kmart
and Dillard's) were all weak as fears of an economic
slowdown grew.
LOOKING FORWARD
In examining the Fund's performance, we concluded
that a stronger focus on our large capitalization
growth stock portfolio style should lead to improved
performance over the longer term. Within that
context, we have introduced the Standard and
Poor's/BARRA Growth Index as a more suitable
benchmark for the Fund. While the Fund has always
been managed as a large cap growth fund, in recent
years, the stock selection methodology emphasized
diversification and de-emphasized higher
price/earnings ratio, high-quality, longer term
growth companies. After a
8
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[ARROW LOGO] FUND OVERVIEW
ARMADA EQUITY FUND (CONTINUED)
"WE WERE WELL OVERWEIGHTED IN
FINANCIALS AND EARNED VERY
STRONG RETURNS FROM A
DIVERSIFIED GROUP OF STOCKS
THAT INCLUDED STATE STREET
BANK, FANNIE MAE AND
CHUBB." portfolio restructuring, which was basically
completed in November, the majority of the Fund's
holdings will henceforth consist of high-quality
companies with longer term earnings growth rates
projected at well above the S&P 500 growth rate. We
will still search out, and invest in, cyclical
growth companies which are in the "sweet spot" of
their earnings cycle.
In summary, we foresee an environment of continued
moderate economic growth, low interest rates,
virtually non-existent inflation and slowing overall
earnings growth. Until these factors reverse or
weaken to the point of recession, the outlook for
growth stock investing should remain positive. We
are optimistic that the remainder of the fiscal year
will show favorable returns for the Fund.
<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>
Amanda Equity Fund
Institutional Shares(1) 12.91% 26.39% 7.70% 13.45% 11.33%
Amanda Equity Fund
Retail Shares With Sales Load 8.50% 21.33% 6.08% 12.32% 10.39%
Without Sales Load 12.75% 26.03% 7.44% 13.17% 11.10%
</TABLE>
Past performance is not predictive of future performance.
GROWTH OF A $10,000 INVESTMENT (BEGINNING 12/30/89)(3)
<TABLE>
<CAPTION>
Armada Equity Armada Equity
Fund Fund (Retail
Measurement Period S&P BARRA (Institutional Shares with
(Fiscal Year Covered) Growth Index S&P 500 Index Shares)(1) sales load)
<S> <C> <C> <C> <C>
Nov-1989 $10000.00 $10000.00 $10000.00 $10000.00
May-1990 10599.00 10628.52 10846.50 10439.30
Nov-1990 9710.80 9653.18 10073.90 9695.70
May-1991 12088.60 11881.79 12809.70 12328.80
Nov-1991 12152.40 11616.65 12578.90 12071.50
May-1992 13387.70 13052.42 13950.10 13374.30
Nov-1992 14471.70 13762.47 15163.90 14519.20
May-1993 14318.30 14567.84 14954.90 14311.00
Nov-1993 14708.70 15152.34 14911.80 14246.00
May-1994 14467.90 15188.35 15165.60 14470.70
Nov-1994 15016.20 15310.27 14986.60 14286.70
May-1995 17827.90 18246.43 16776.10 15969.10
Nov-1995 20863.40 19649.22 18942.30 18005.70
</TABLE>
(1) Institutional shares are sold primarily to Banks and
National Asset Management Corporation (NAM)
customers. Certain account level charges may apply.
(2) The Armada Equity Fund's date of inception was
December 20, 1989 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.
9
<PAGE> 11
[ARROW LOGO]
FUND OVERVIEW
ARMADA EQUITY INCOME FUND
ASSET MANAGER:
JAMES R. KIRK,
VICE PRESIDENT
NATIONAL CITY
ASSET MANAGEMENT GROUP --
INVESTMENT STRATEGIST
FUND'S DATE OF INCEPTION:
JULY 1, 1994 (INSTITUTIONAL SHARES)
AUGUST 22, 1994 (RETAIL SHARES)
ASSETS:
$48,424,746 (INSTITUTIONAL SHARES)
$ 213,115 (RETAIL SHARES)
INVESTMENT OBJECTIVE:
SEEK A COMPETITIVE TOTAL RATE
OF RETURN THROUGH INVESTMENTS IN
EQUITY AND EQUITY EQUIVALENT
SECURITIES WHICH CARRY
PREMIUM YIELDS. The Armada Equity Income Fund (the "Fund")
returned 10.0% for Institutional shareholders and
9.88% (before sales load) for Retail shareholders in
the first six months of Fiscal 1996 (period ending
November 30, 1995). This compares with 14.98% for
the Standard and Poor's 500 Stock Index (the "S&P
500"). During this six-month period, there was a
large difference between the performance of growth
and value stocks, as indicated by the return of
12.69% for Standard and Poor's/BARRA Value Index
(the "SPBValue").
This was a market in which high growth, low yield,
and high beta stocks outperformed. Because of its
emphasis on income, the Fund is concentrated in
lower growth, higher yield, lower beta stocks. From
a sector perspective, the Fund's performance was
hurt by its overweighting in consumer cyclical
stocks, by its slight overweighting in energy and
utilities stocks and by its underweighting in
technology. The Fund was helped by its moderate
overweight in financial stocks, the best performing
sector during this period.
During the last two months, the Fund's positions
in oil, telephone, electric utility, banking and
insurance stocks have increased. Positions in
publishing and printing stocks, tobacco, drug and
food stocks have been reduced. Relative to the S&P
500, the Fund is now overweighted in the energy,
financial and utilities sectors and underweighted in
the technology, consumer non-durables, consumer
cyclicals and capital goods sectors. Relative to the
SPBValue, the Fund is overweighted in consumer
staples, moderately overweighted in utilities and
underweighted in consumer cyclicals and financial
stocks. The weighted average market capitalization
of the Fund has increased over the last two months
from about $15 billion to about $20 billion. This
compares with $29 billion for the S&P 500 and $20
billion for the SPBValue. The Fund has an SEC 30-Day
Yield of 3.1% (Institutional Shares) and 2.7%
(Retail Shares). The beta is .85, compared with a
beta of 1.00 for the S&P 500 and .94 for the
SPBValue.
LOOKING FORWARD
As to future direction, we will be looking for
additional opportunities to lighten up on consumer
staples, particularly drug stocks and tobacco
stocks, which have performed very well this year and
in which the Fund is overweighted relative to the
SPBValue. Going forward, the Fund will be using
S&P/BARRA Value Index as the Fund's performance
benchmark rather than the S&P 500 Index because its
characteristics more closely
10
<PAGE> 12
[ARROW LOGO] FUND OVERVIEW
ARMADA EQUITY INCOME FUND (CONTINUED)
"THE FUND WAS HELPED BY
ITS MODERATE OVERWEIGHT
IN FINANCIAL STOCKS, THE
BEST PERFORMING SECTOR
DURING THIS PERIOD." match those of the Fund. These characteristics
include yield, beta, market capitalization and
industry weightings. We will also be looking for
opportunities to increase the Fund's position in
auto and retail stocks, which have lagged the market
this year and look increasingly interesting.
<TABLE>
<CAPTION>
TOTAL RETURNS as of 11/30/95
- -------------------------------------------------------------------------------------------
Six Months 1-Year Since Inception(2,4)
<S> <C> <C> <C>
Armada Equity Income Fund 10.00% 24.91% 16.63%
Institutional Shares(1)
- -------------------------------------------------------------------------------------------
Armada Equity Income Fund
Retail Shares With Sales Load 5.75% 19.97% 12.64%
Without Sales Load 9.88% 24.69% 16.07%
- -------------------------------------------------------------------------------------------
Past performance is not predictive of future performance.
</TABLE>
GROWTH OF A $10,000 INVESTMENT (BEGINNING 7/7/94)(3)
<TABLE>
<CAPTION>
Armada Equity Armada Equity
Income Fund Income Fund
(Institu- (Retail
Measurement Period S&P/BARRA S&P 500 Stock tional Shares with
(Fiscal Year Covered) Value Index Index Shares)(1) sales load)
<S> <C> <C> <C> <C>
June-1994 $10000.00 $10000.00 $10000.00 $10000.00
Aug-1994 10630.30 10751.45 10450.00 9821.80
Oct-1994 10479.70 10725.12 10283.20 9647.50
Dec-1994 10178.70 10467.68 10073.20 9438.30
Feb-1995 10860.20 11178.92 10562.50 9893.60
Apr-1995 11527.10 11847.06 10959.90 10267.60
Jun-1995 12131.60 12606.75 11350.20 10623.70
Aug-1995 12656.80 13057.89 11701.80 10946.30
Oct-1995 12892.90 13010.88 11980.60 11202.30
Nov-1995 13568.50 13583.36 12439.80 11641.80
</TABLE>
(1) Institutional shares are sold primarily to Banks and
National Asset Management Corporation (NAM)
customers. Certain account level charges may apply.
(2) The Armada Equity Income Fund's date of inception
was July 1, 1994 for Institutional shares and August
22, 1994 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.
11
<PAGE> 13
[ARROW LOGO] PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1995 ARMADA MID CAP REGIONAL FUND
(UNAUDITED)
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
---------- -----------
<S> <C> <C>
COMMON STOCK - 96.4%
AUTOMOTIVE PARTS - EQUIPMENT - 2.9%
Amcast Industrial Corp....... 49,900 $ 923,150
Borge-Warner Automotive,
Inc......................... 25,000 740,625
Douglas & Lomason Co......... 44,000 500,500
------------
2,164,275
------------
BANKING - 1.8%
First of America Bank
Corp........................ 10,000 448,750
Huntington Bancshares,
Inc......................... 36,750 893,484
------------
1,342,234
------------
BUILDING & BUILDING SUPPLIES - 5.0%
Interface, Inc............... 40,000 652,500
Pulte Corp................... 40,000 1,230,000
Ryland Group, Inc............ 100,000 1,237,500
Wolohan Lumber Co............ 65,000 580,937
------------
3,700,937
------------
BUSINESS SERVICES - 4.3%
Flightsafety International,
Inc......................... 27,300 1,433,250
Unifirst Corp................ 111,200 1,765,300
------------
3,198,550
------------
CHEMICALS - 2.3%
Arco Chemical Co............. 10,000 475,000
Geon Co...................... 50,000 1,237,500
------------
1,712,500
------------
CONSUMER-DURABLES - 0.2%
Baldwin Piano & Organ Co.+... 12,000 151,500
------------
DRUGS & HEALTH CARE - 4.2%
Amerisource Health Corp.+.... 40,000 1,150,000
Bergen Brunswig Corp., Class
A........................... 40,000 960,000
Bindley Western Industries,
Inc......................... 57,000 1,018,875
------------
3,128,875
------------
ELECTRONICS - 0.6%
Premier Industrial Corp...... 18,100 450,237
------------
FERTILIZER - 0.7%
Scotts Co., Class A+......... 24,600 496,612
------------
FINANCIAL SERVICES - 3.0%
U.S. Trust Corp.............. 47,100 2,237,250
------------
FOODS - 0.5%
Midwest Grain Products,
Inc......................... 5,000 59,687
Thorn Apple Valley, Inc...... 17,000 280,500
------------
340,187
------------
FREIGHT & SHIPPING - 3.1%
Airborne Freight Corp........ 83,200 2,340,000
------------
HEALTH CARE - 1.2%
Caremark International,
Inc......................... 45,000 883,125
------------
INSURANCE - 18.6%
Acordia, Inc................. 50,000 1,400,000
American Travellers Corp.+... 15,000 377,813
Amerin Corp. +............... 25,500 559,406
AON Corp..................... 30,000 1,413,750
Capitol American Financial
Corp........................ 30,000 615,000
Gallagher (Arthur J.) &
Co.......................... 20,000 655,000
</TABLE>
See Accompanying Notes
12
<PAGE> 14
[ARROW LOGO] PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1995 ARMADA MID CAP REGIONAL FUND (CONTINUED)
(UNAUDITED)
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
---------- -----------
<S> <C> <C>
INSURANCE (CONT'D.)
Harleysville Group, Inc...... 65,400 $ 1,888,425
Horace Mann Educators
Corp........................ 163,300 4,735,700
John Alden Financial Corp.... 85,000 1,753,125
Kansas City Life Insurance
Co.......................... 9,000 474,750
------------
13,872,969
------------
MACHINERY & HEAVY EQUIPMENT - 0.5%
Cascade Corp................. 20,000 287,500
Johnstown America
Industries, Inc.+........... 22,500 119,531
------------
407,031
------------
METALS & MINING - 2.3%
Brush Wellman, Inc........... 17,500 306,250
Carbide Graphite Group,
Inc.+....................... 31,000 457,250
Commonwealth Aluminum
Corp. ...................... 30,000 511,875
Mine Safety Appliances
Co. ........................ 10,400 451,100
------------
1,726,475
------------
NATURAL RESOURCES - 1.7%
Florida Rock Industries,
Inc. ....................... 30,000 795,000
Nord Resources Corp.+........ 210,700 447,738
------------
1,242,738
------------
OIL & GAS - 1.2%
Ashland Oil, Inc. ........... 5,000 174,375
Belden & Blake Corp.+........ 45,400 732,075
------------
906,450
------------
PAPER & FOREST PRODUCTS - 5.3%
Caraustar Industries......... 75,000 1,500,000
Glatfelter (P.H.) Co. ....... 15,000 286,875
Mead Corp. .................. 25,000 1,428,125
Mosinee Paper Corp. ......... 30,000 727,500
------------
3,942,500
------------
PHOTO-EQUIPMENT & SUPPLIES - 0.1%
CPI Corp. ................... 3,100 64,713
------------
RETAIL FOOD CHAINS - 3.1%
Food Lion, Inc., Class B..... 180,000 1,063,125
Kroger Co.+.................. 20,000 670,000
Smiths Food & Drug Centers,
Inc. ....................... 26,000 627,250
------------
2,360,375
------------
RETAIL MERCHANDISING - 2.8%
Dillard Department Stores,
Inc. ....................... 40,000 1,155,000
Hi-Lo Automotive, Inc.+...... 76,400 429,750
Shoe Carnival, Inc.+......... 50,000 203,125
Sun T.V. & Appliances,
Inc. ....................... 55,000 309,375
------------
2,097,250
------------
SPECIALTY CHEMICALS - 6.9%
Adco Technologies, Inc. ..... 31,500 226,406
Blessings Corp. ............. 30,000 292,500
Ferro Corp. ................. 48,500 1,079,125
Fuller (H.B.) Co. ........... 40,000 1,295,000
O.M. Group, Inc. ............ 48,000 1,464,000
Schulman (A.), Inc. ......... 43,100 781,188
------------
5,138,219
------------
</TABLE>
See Accompanying Notes
13
<PAGE> 15
[ARROW LOGO] PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1995 ARMADA MID CAP REGIONAL FUND (CONTINUED)
(UNAUDITED)
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
---------- -----------
<S> <C> <C>
STEEL - 6.8%
Huntco, Inc. ................ 45,000 $ 793,125
Insteel Industries, Inc. .... 184,900 1,224,963
Olympic Steel, Inc.+......... 90,500 808,844
Reliance Steel &
Aluminum Co. ............... 20,000 375,000
Rouge Steel Co. ............. 20,000 435,000
Shiloh Industries, Inc.+..... 21,200 238,500
Steel Technologies, Inc. .... 135,700 1,187,375
------------
5,062,807
------------
TECHNOLOGY - 3.3%
Apple Computer, Inc.......... 30,000 1,145,625
Stratus Computer, Inc.+...... 35,000 1,163,750
Government Technology
Services, Inc.+............. 30,000 120,000
------------
2,429,375
------------
TEXTILES - 1.0%
Oneita Industries, Inc.+..... 106,000 755,250
------------
TIRE & RUBBER - 2.0%
Bandag, Inc., Class A........ 30,000 1,477,500
------------
TOBACCO - 4.6%
Dimon, Inc. ................. 116,000 2,001,000
Universal Corp. ............. 63,300 1,503,375
------------
3,504,375
------------
TRUCKING - 3.4%
M.S. Carriers, Inc.+......... 105,000 $ 1,981,875
TNT Freightways Corp. ....... 30,000 588,750
------------
2,570,625
------------
UTILITIES - ELECTRIC - 3.0%
Cinergy Corp................. 30,000 885,000
Ohio Edison Co............... 60,000 1,365,000
------------
2,250,000
------------
TOTAL COMMON STOCK........... 71,954,934
(Cost $68,648,363) ------------
TEMPORARY INVESTMENT - 3.6%
Fidelity Domestic
Market Portfolio............ 2,711,407 2,711,407
(Cost $2,711,407) ------------
TOTAL INVESTMENTS - 100.0% $74,666,341
(Cost $71,359,770*) ============
+ Non-income producing.
Cost for Federal income tax
* purposes - $71,390,234
The gross unrealized appreciation (depreciation)
for Federal income tax purposes is as follows:
Gross appreciation................... $ 6,911,219
Gross depreciation................... (3,635,112)
-----------
$ 3,276,107
-----------
</TABLE>
See Accompanying Notes
14
<PAGE> 16
[ARROW LOGO]
FINANCIAL STATEMENTS
ARMADA MID CAP REGIONAL FUND
STATEMENT OF ASSETS AND LIABILITIES
NOVEMBER 30, 1995 (UNAUDITED)
<TABLE>
<S> <C>
ASSETS
Investments at value
(Cost $71,359,770)................... $74,666,341
Interest and dividends receivable.... 124,774
Receivable for Fund shares sold...... 42,643
Receivable for investments sold...... 679,312
Prepaid expenses..................... 18,902
----------
TOTAL ASSETS................ 75,531,972
- ------------------------------------------------------
LIABILITIES
Payable for Fund shares redeemed..... 10,573
Payable for investments purchased.... 332,250
Accrued expenses..................... 75,941
----------
TOTAL LIABILITIES........... 418,764
- ------------------------------------------------------
NET ASSETS (based on
6,137,391 shares of
beneficial interest
having no par value)........ $75,113,208
======================================================
NET ASSETS CONSIST OF:
Paid-in capital............. $65,885,511
Undistributed net investment
income...................... 556,548
Undistributed net realized
gain on investments sold.... 5,364,578
Net unrealized appreciation
on investments.............. 3,306,571
----------
$75,113,208
======================================================
NET ASSET VALUE,
OFFERING PRICE AND
REDEMPTION PRICE PER
SHARE -- Institutional class
($70,624,830 / 5,766,429
shares of beneficial
interest).................. $ 12.25
======================================================
NET ASSET VALUE AND
REDEMPTION PRICE
PER SHARE -- Retail class
($4,488,378 / 370,962 shares
of beneficial interest)..... $ 12.10
======================================================
MAXIMUM OFFERING
PRICE PER RETAIL SHARE
($12.10 / .9625)............ $ 12.57
======================================================
</TABLE>
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED NOVEMBER 30, 1995 (UNAUDITED)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends............................. $ 663,765
---------
EXPENSES:
Investment Advisory fees.............. 252,610
Administration fees................... 33,459
12b-1 fees............................ 25,858
Transfer Agent fees................... 14,395
Registration and filing fees.......... 9,377
Custodian fees........................ 8,520
Printing and shareholder reports...... 8,111
Shareholder servicing fees - Retail
class only.......................... 5,227
Legal fees............................ 4,698
Miscellaneous......................... 3,104
Distribution fees..................... 2,275
Amortization of organization costs.... 1,852
Audit fees............................ 1,561
Trustees' fees........................ 846
Insurance............................. 324
Fees waived by Custodian.............. (8,520)
---------
Total expenses............... 363,697
- ------------------------------------------------------
NET INVESTMENT INCOME.................... 300,068
- ------------------------------------------------------
REALIZED AND UNREALIZED
GAIN ON INVESTMENTS
Net realized gain on
investments sold............. 3,528,083
Net change in unrealized
appreciation on
investments.................. 865,177
---------
Net gain on investments...... 4,393,260
- ------------------------------------------------------
NET INCREASE IN NET
ASSETS RESULTING
FROM OPERATIONS.............. $4,693,328
======================================================
</TABLE>
See Accompanying Notes
15
<PAGE> 17
[ARROW LOGO]
FINANCIAL STATEMENTS
ARMADA MID CAP REGIONAL FUND
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE FOR THE
SIX MONTHS ENDED PERIOD ENDED
NOVEMBER 30, 1995 MAY 31, 1995
----------------- --------------------
(UNAUDITED)
<S> <C> <C>
INCREASE IN NET ASSETS:
Operations:
Net investment income.............................................. $ 300,068 $ 367,124
Net realized gain on investments sold.............................. 3,528,083 1,936,082
Net change in unrealized appreciation on investments............... 865,177 2,441,394
----------- -----------
Net increase in net assets resulting from operations............... 4,693,328 4,744,600
Distribution to shareholders from net investment income................ 0 (110,644)
Distribution to shareholders from net realized capital gains........... 0 (99,587)
Increase in net assets derived from capital share transactions......... 15,860,121 50,025,390
----------- -----------
Total increase in net assets........................................... 20,553,449 54,559,759
----------- -----------
NET ASSETS:
Beginning of period................................................ 54,559,759 0
----------- -----------
End of period...................................................... $75,113,208 $54,559,759
=========== ===========
</TABLE>
<TABLE>
<CAPTION>
NOVEMBER 30, 1995 MAY 31, 1995
-------------------- --------------------
<S> <C> <C>
UNDISTRIBUTED NET INVESTMENT INCOME AS OF............................. $ 556,548 $ 256,480
=========== ===========
</TABLE>
See Accompanying Notes
16
<PAGE> 18
[ARROW LOGO] FINANCIAL HIGHLIGHTS
ARMADA MID CAP REGIONAL FUND
FINANCIAL HIGHLIGHTS
FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED FOR THE PERIOD ENDED
NOVEMBER 30, 1995 MAY 31, 1995
------------------------- ---------------------------
(UNAUDITED)
INSTITUTIONAL RETAIL INSTITUTIONAL(3) RETAIL(3)
------------- ------ ---------------- ---------
<S> <C> <C> <C> <C>
Net asset value, beginning of period............................ $ 11.38 $11.26 $10.00 $10.16
------- ------ ------- ------
INCOME FROM INVESTMENT OPERATIONS
Net investment income......................................... .04 .03 .10 .07
Net gains on securities (realized and unrealized)............. .83 .81 1.36 1.11
------- ------ ------- ------
Total from investment operations............................ .87 .84 1.46 1.18
------- ------ ------- ------
LESS DISTRIBUTIONS
Dividends from net investment income.......................... .00 .00 (.04) (.04)
Dividends from net realized capital gains..................... .00 .00 (.04) (.04)
------- ------ ------- ------
Total distributions......................................... .00 .00 (.08) (.08)
------- ------ ------- ------
Net asset value, end of period.................................. $ 12.25 $12.10 $11.38 $11.26
======= ====== ======= ======
TOTAL RETURN.................................................... 15.83%(4) 15.43%(4,5) 17.42%(4) 14.80%(4,5)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000's).......................... $70,625 $4,488 $50,993 $3,567
Ratio of expenses to average net assets....................... 1.06%(1,4) 1.32%(2,4) 1.01%(1,4) 1.34%(2,4)
Ratio of net investment income to average net assets.......... .91%(1,4) .64%(2,4) 1.31%(1,4) 1.09%(2,4)
Portfolio turnover rate....................................... 63% 63% 69% 69%
</TABLE>
(1) The operating expense ratio and the net investment income ratio before fee
waivers by the Custodian for the Institutional class for the period ended
November 30, 1995 would have been 1.09% and .88%, respectively.
The operating expense ratio and the net investment income ratio before fee
waivers by the Investment Advisers, Administrator, and Custodian for the
Institutional class for the period ended May 31, 1995 would have been
1.15%, and 1.18%, respectively.
(2) The operating expense ratio and the net investment income ratio before fee
waivers by the Custodian for the Retail class for the period ended November
30, 1995 would have been 1.34% and .62%, respectively. The operating expense
ratio and the net investment income ratio before fee waivers by the
Investment Advisers, Administrator, and Custodian for the Retail class for
the period ended May 31, 1995 would have been 1.38% and 1.05%, respectively.
(3) Institutional and Retail classes commenced operations on July 26, 1994, and
August 15, 1994 respectively.
(4) Annualized.
(5) Total Return excludes sales load.
See Accompanying Notes
17
<PAGE> 19
[ARROW LOGO]
PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1995 ARMADA EQUITY FUND
(UNAUDITED)
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
---------- ------------
<S> <C> <C>
COMMON STOCK - 96.0%
ADVERTISING - 2.2%
Interpublic Group, Inc...... 88,310 $ 3,388,896
------------
BANKING - 4.0%
Norwest Corp. .............. 69,000 2,277,000
Wells Fargo & Company....... 18,000 3,784,500
------------
6,061,500
------------
BEVERAGES - 7.1%
Anheuser-Busch Companies,
Inc........................ 30,000 1,987,500
Coca-Cola Co................ 58,000 4,393,500
Pepsico, Inc................ 77,900 4,303,975
------------
10,684,975
------------
BUILDING & BUILDING SUPPLIES - 1.9%
Home Depot, Inc............. 63,666 2,825,179
------------
BUSINESS SERVICES - 3.1%
Automatic Data Processing... 26,880 2,140,320
General Motors Corp.,
Class E.................... 51,540 2,602,770
------------
4,743,090
------------
CHEMICALS - 2.6%
Air Products & Chemicals,
Inc........................ 35,000 1,942,500
Dow Chemical Co............. 28,320 2,007,180
------------
3,949,680
------------
COMPUTERS - 3.9%
Cisco Systems, Inc.+........ 27,000 2,273,063
Intel Corp. ................ 59,000 3,587,938
------------
5,861,001
------------
CONSUMER NON-DURABLES - 3.5%
Gillette Co................. 42,000 2,178,750
Procter & Gamble Co. ....... 35,520 3,068,040
------------
5,246,790
------------
DIVERSIFIED - 2.0%
Minnesota Mining &
Manufacturing Co........... 46,370 3,037,235
------------
DRUGS & HEALTH CARE - 13.4%
Abbott Laboratories......... 50,860 2,066,187
American Home Products
Corp....................... 20,620 1,881,575
Bristol Myers Squibb Co..... 29,950 2,403,487
Eli Lilly & Co.............. 29,000 2,885,500
Merck & Company, Inc........ 50,000 3,093,750
Pfizer, Inc. ............... 82,620 4,791,960
Schering-Plough Corp. ...... 56,304 3,230,442
------------
20,352,901
------------
ELECTRICAL EQUIPMENT - 3.6%
AMP, Inc. .................. 19,000 762,375
Emerson Electric Co. ....... 27,200 2,121,600
Hubbell, Inc., Class B...... 42,920 2,623,485
------------
5,507,460
------------
ELECTRONICS - 1.7%
Honeywell, Inc. ............ 15,000 714,375
MEMC Electronic
Materials, Inc.+........... 55,000 1,821,875
------------
2,536,250
------------
ENTERTAINMENT - 1.1%
Walt Disney Co. ............ 28,055 1,686,807
------------
</TABLE>
See Accompanying Notes
18
<PAGE> 20
[ARROW LOGO] PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1995 ARMADA EQUITY FUND (CONTINUED)
(UNAUDITED)
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
---------- ------------
<S> <C> <C>
FINANCIAL SERVICES - 3.3%
Federal National Mortgage
Association................ 9,730 $ 1,065,435
Greenpoint Financial
Corp. ..................... 65,000 1,698,125
State Street Boston Corp.... 50,000 2,250,000
------------
5,013,560
------------
FOREIGN - 2.5%
Reuters Holdings PLC, ADS... 68,000 3,842,000
------------
HOME FURNISHINGS/HOUSEWARES - 1.0%
Masco Corp.................. 51,000 1,504,500
------------
INSURANCE - 4.2%
American International
Group...................... 44,083 3,956,449
Chubb Corp. ................ 24,400 2,372,900
------------
6,329,349
------------
MANUFACTURING - 4.4%
Wolverine Tube, Inc.+....... 90,000 3,048,750
York International Corp. ... 80,000 3,580,000
------------
6,628,750
------------
MEDICAL & MEDICAL
SERVICES - 2.3%
Medtronic, Inc. ............ 64,000 3,512,000
------------
OFFICE & BUSINESS EQUIPMENT - 4.3%
Pitney Bowes, Inc........... 78,050 3,492,738
Xerox Corp.................. 22,000 3,016,750
------------
6,509,488
------------
OIL & GAS - 1.1%
Amoco Corp.................. 23,655 1,602,626
------------
OIL EQUIPMENT &
SERVICES - 2.0%
Schlumberger Limited........ 48,495 3,079,433
------------
PAPER & FOREST PRODUCTS - 2.2%
Fort Howard Corp.+.......... 172,500 3,396,094
------------
PHARMACEUTICALS - 0.9%
Johnson & Johnson........... 15,000 1,299,375
------------
RETAIL FOOD CHAINS - 1.6%
Albertson's, Inc. .......... 77,000 2,367,750
------------
RETAIL MERCHANDISING - 0.6%
Wal-Mart Stores, Inc. ...... 40,000 960,000
------------
RETAIL STORES - 2.7%
Lowe's Companies, Inc. ..... 82,500 2,598,750
Walgreen Co................. 50,000 1,456,250
------------
4,055,000
------------
TECHNOLOGY - 2.4%
Hewlett Packard Co.......... 43,000 3,563,625
------------
TELECOMMUNICATIONS - 6.8%
AT&T Corp. ................. 60,260 3,977,160
MCI Communications Corp..... 90,000 2,401,875
Motorola, Inc............... 43,920 2,690,100
Qualcomm, Inc.+............. 30,000 1,245,000
------------
10,314,135
------------
</TABLE>
See Accompanying Notes
19
<PAGE> 21
[ARROW LOGO] PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1995 ARMADA EQUITY FUND (CONTINUED)
(UNAUDITED)
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
---------- ------------
<S> <C> <C>
TOBACCO - 2.5%
Philip Morris Companies,
Inc........................ 44,000 $ 3,861,000
------------
UTILITIES - TELEPHONE - 1.1%
BellSouth Corp.............. 43,300 1,683,287
------------
TOTAL COMMON STOCK.......... 145,403,736
(Cost $110,266,574) ------------
TEMPORARY INVESTMENT - 4.0%
Fidelity Domestic
Market Portfolio........... 6,013,916 6,013,916
(Cost $6,013,916) ------------
TOTAL INVESTMENTS - 100.0% $151,417,652
(Cost $116,280,490*) ============
+ Non-income producing.
* Also cost for Federal income tax
purposes.
The gross unrealized appreciation (depreciation)
for Federal income tax purposes is as follows:
Gross appreciation.................. $ 35,644,281
Gross depreciation.................. (507,119)
------------
$ 35,137,162
============
</TABLE>
See Accompanying Notes
20
<PAGE> 22
[ARROW LOGO]
FINANCIAL STATEMENTS
ARMADA EQUITY FUND
STATEMENT OF ASSETS AND LIABILITIES
NOVEMBER 30, 1995 (UNAUDITED)
<TABLE>
<S> <C>
ASSETS
Investments at value
(Cost $116,280,490)................. $151,417,652
Interest and dividends receivable... 238,843
Receivable for Fund shares sold..... 9,658
Receivable for investments sold..... 7,173,855
Prepaid expenses.................... 6,167
-----------
TOTAL ASSETS............... 158,846,175
- ------------------------------------------------------
LIABILITIES
Payable for Fund shares redeemed.... 64,099
Payable for investments purchased... 11,689,778
Accrued expenses.................... 144,083
-----------
TOTAL LIABILITIES.......... 11,897,960
- ------------------------------------------------------
NET ASSETS (based on
8,862,884 shares of
beneficial interest having
no par value).............. $146,948,215
======================================================
NET ASSETS CONSIST OF:
Paid-in capital............ $107,166,111
Undistributed net
investment income.......... 179,794
Undistributed net realized
gain on investments sold... 4,465,148
Net unrealized appreciation
on investments............. 35,137,162
-----------
$146,948,215
======================================================
NET ASSET VALUE, OFFERING
PRICE AND REDEMPTION PRICE
PER SHARE - Institutional
class
($141,084,467 / 8,509,745
shares of beneficial
interest).................. $ 16.58
======================================================
NET ASSET VALUE AND
REDEMPTION PRICE PER
SHARE - Retail class
($5,863,748 / 353,139
shares of beneficial
interest).................. $ 16.60
======================================================
MAXIMUM OFFERING
PRICE PER RETAIL SHARE
($16.60 / .9625)........... $ 17.25
======================================================
</TABLE>
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED NOVEMBER 30, 1995 (UNAUDITED)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends............................ $ 1,230,465
Interest............................. 87,203
Less foreign taxes withheld.......... (10,079)
----------
Total investment income.............. 1,307,589
----------
EXPENSES:
Investment Advisory fees............. 517,967
Administration fees.................. 69,062
12b-1 fees........................... 44,839
Transfer Agent fees.................. 26,203
Custodian fees....................... 17,266
Registration and filing fees......... 8,166
Shareholder servicing fees - Retail
class only......................... 7,434
Legal fees........................... 6,940
Printing and shareholder reports..... 6,220
Distribution fees.................... 5,360
Audit fees........................... 2,825
Miscellaneous........................ 2,345
Trustees' fees....................... 1,928
Insurance............................ 1,254
Fees waived by Custodian............. (17,266)
----------
Total expenses.............. 700,543
- ------------------------------------------------------
NET INVESTMENT INCOME................... 607,046
- ------------------------------------------------------
REALIZED AND UNREALIZED
GAIN ON INVESTMENTS
Net realized gain on
investments sold............ 5,546,896
Net change in unrealized
appreciation on
investments................. 10,345,097
----------
Net gain on investments..... 15,891,993
- ------------------------------------------------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS... $16,499,039
======================================================
</TABLE>
See Accompanying Notes
21
<PAGE> 23
[ARROW LOGO]
FINANCIAL STATEMENTS
ARMADA EQUITY FUND
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE FOR THE
SIX MONTHS ENDED YEAR ENDED
NOVEMBER 30, 1995 MAY 31, 1995
----------------- ------------
(UNAUDITED)
<S> <C> <C>
INCREASE IN NET ASSETS:
Operations:
Net investment income...................................................... $ 607,046 $ 1,640,942
Net realized gain/(loss) on investments sold............................... 5,546,896 (117,954)
Net change in unrealized appreciation on investments....................... 10,345,097 10,348,115
------------ ------------
Net increase in net assets resulting from operations....................... 16,499,039 11,871,103
Distributions to shareholders from net investment income....................... (607,046) (1,520,691)
Distributions to shareholders in excess of net investment income............... (178,961) 0
Distributions to shareholders in excess of net realized capital gains.......... 0 (888,715)
Increase in net assets derived from capital share transactions................. 5,627,321 18,179,790
------------ ------------
Total increase in net assets................................................... 21,340,353 27,641,487
------------ ------------
NET ASSETS:
Beginning of period........................................................ 125,607,862 97,966,375
------------ ------------
End of period.............................................................. $146,948,215 $125,607,862
============ ============
<CAPTION>
NOVEMBER 30, 1995 MAY 31, 1995
----------------- ------------
<S> <C> <C>
UNDISTRIBUTED NET INVESTMENT INCOME AS OF...................................... $ 179,794 $ 358,755
============= ===========
</TABLE>
See Accompanying Notes
22
<PAGE> 24
[ARROW LOGO] FINANCIAL HIGHLIGHTS
ARMADA EQUITY FUND
FINANCIAL HIGHLIGHTS
FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
FOR THE
SIX MONTHS ENDED FOR THE YEAR ENDED MAY 31
NOVEMBER 30, 1995 -----------------------------------------------------------
-----------------------
1995 1994
(UNAUDITED) --------------------- ------------------------
INSTITUTIONAL RETAIL INSTITUTIONAL RETAIL INSTITUTIONAL RETAIL
------------- ------ ------------- ------ ------------- ------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period.............. $14.77 $14.79 $13.66 $13.68 $13.78 $13.80
-------- ------ ------ ------ ------ ------
INCOME FROM
INVESTMENT OPERATIONS
Net investment income............ .07 .05 .21 .18 .18 .15
Net gains on securities (realized
and unrealized)................ 1.83 1.83 1.21 1.21 .01 .00
-------- ------ ------ ------ ------- ------
Total from investment
operations.................. 1.90 1.88 1.42 1.39 .19 .15
-------- ------ ------ ------ ------- ------
LESS DISTRIBUTIONS
Dividends from net
investment income.............. (.07) (.05) (.20) (.17) (.18) (.15)
Dividends in excess of net
investment income.............. (.02) (.02) (.00) (.00) (.01) (.00)
Dividends from net realized
capital gains.................. (.00) (.00) (.00) (.00) (.11) (.11)
Dividends in excess of net
realized capital gains......... (.00) (.00) (.11) (.11) (.01) (.01)
-------- ------ ------ ------ ------- ------
Total distributions........... (.09) (.07) (.31) (.28) (.31) (.27)
-------- ------ ------ ------ ------- ------
Net asset value, end of period.... $16.58 $16.60 $14.77 $14.79 $13.66 $13.68
======== ====== ====== ====== ======= ======
TOTAL RETURN...................... 27.41%(4) 27.05%(4,5) 10.62% 10.35%(5) 1.41% 1.12%(5)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period
(in 000's)..................... $141,084 $5,864 $119,634 $5,974 $90,446 $7,521
Ratio of expenses to average
net assets..................... 1.00%(1,4) 1.25%(2,4) 1.01%(1) 1.27%(2) 1.07% 1.32%
Ratio of net investment income to
average net assets............. .89%(1,4) .64%(2,4) 1.53%(1) 1.23%(2) 1.33% 1.08%
Portfolio turnover rate.......... 38% 38% 17% 17% 15% 15%
</TABLE>
<TABLE>
<CAPTION>
1993 1992 1991
--------------------- --------------------- ----------------------
INSTITUTIONAL RETAIL INSTITUTIONAL RETAIL INSTITUTIONAL RETAIL(3)
------------- ------ ------------- ------ ------------- -------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period.............. $13.13 $13.13 $12.35 $12.35 $10.77 $12.04
------- ------ ------- ------ ------- ------
INCOME FROM
INVESTMENT OPERATIONS
Net investment income............ .27 .23 .30 .25 .31 .04
Net gains on securities (realized
and unrealized)................ .67 .68 .78 .78 1.58 .27
------- ------ ------- ------ ------- ------
Total from investment
operations.................. .94 .91 1.08 1.03 1.89 .31
------- ------ ------- ------ ------- ------
LESS DISTRIBUTIONS
Dividends from net
investment income.............. (.27) (.23) (.30) (.25) (.31) (.00)
Dividends in excess of net
investment income.............. (.02) (.01) (.00) (.00) (.00) (.00)
Dividends from net realized
capital gains.................. (.00) (.00) (.00) (.00) (.00) (.00)
Dividends in excess of net
realized capital gains......... (.00) (.00) (.00) (.00) (.00) (.00)
------- ------ ------- ------ ------- ------
Total distributions........... (.29) (.24) (.30) (.25) (.31) (.00)
------- ------ ------- ------ ------- ------
Net asset value, end of period.... $13.78 $13.80 $13.13 $13.13 $12.35 $12.35
======= ====== ======= ====== ======= ======
TOTAL RETURN...................... 7.20% 7.00%(5) 8.90% 8.48%(5) 18.10% 21.82%(4,5)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period
(in 000's)..................... 5,256 $7,707 $48,673 $2,767 $42,112 $1,389
Ratio of expenses to average
net assets..................... .34% .59%(2) .26%(1) .51%(2) .31%(1) .53%(2,4)
Ratio of net investment income to
average net assets............. 2.13% 1.88%(2) 2.36%(1) 2.15%(2) 2.90%(1) 2.94%(2,4)
Portfolio turnover rate.......... 15% 15% 9% 9% 11% 11%
</TABLE>
(1) The operating expense ratio and net investment income ratio before fee
waivers by the Custodian for the Institutional class for the period ended
November 30, 1995 and the year ended May 31, 1995 would have been 1.03%
and .86%, and 1.02% and 1.51%, respectively. The operating expense ratio
and the net investment income ratio before fee waivers by the Investment
Advisers for the Institutional class for the years ended May 31, 1993,
1992 and 1991 would have been 1.01% and 1.46%, 1.01% and 1.61%, and 1.06%
and 2.15%, respectively.
(2) The operating expense ratio and net investment income ratio before fee
waivers by the Custodian for the Retail class for the period ended
November 30, 1995 and the year ended May 31, 1995 would have been 1.27%
and .62%, and 1.28% and 1.22%, respectively. The operating expense ratio
and the net investment income ratio before fee waivers by the Investment
Advisers for the Retail class for the years ended May 31, 1993 and 1992
and for the period ended May 31, 1991 would have been 1.26% and 1.21%,
1.27% and 1.40%, and 1.28% and 2.19%, respectively.
(3) Retail class commenced operations on April 15, 1991.
(4) Annualized.
(5) Total return excludes sales load.
See Accompanying Notes
23
<PAGE> 25
[ARROW LOGO] PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1995 ARMADA EQUITY INCOME FUND
(UNAUDITED)
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
--------- ------------
<S> <C> <C>
COMMON STOCK - 93.4%
AEROSPACE - 1.7%
Boeing Co. .................. 6,500 $ 473,687
Raytheon Co. ................ 7,400 329,300
------------
802,987
------------
AUTOMOBILES - 1.6%
Ford Motor Co. .............. 27,000 762,750
------------
BANKING - 9.4%
Banc One Corp. .............. 12,000 457,500
Fleet Financial Group,
Inc. ....................... 18,700 780,725
Mellon Bank Corp. ........... 17,100 914,850
Morgan (J.P.) & Co., Inc. ... 10,200 800,700
PNC Bank Corp. .............. 25,800 754,650
Wachovia Corp. .............. 18,600 837,000
------------
4,545,425
------------
BEVERAGES - 0.5%
Anheuser-Busch
Companies, Inc. ............ 4,000 265,000
------------
BUSINESS SERVICES - 2.9%
Dun & Bradstreet Corp. ...... 13,900 867,012
H.& R. Block, Inc. .......... 12,000 534,000
------------
1,401,012
------------
CHEMICALS - 4.9%
Dow Chemical Co. ............ 12,200 864,675
E.I. duPont de
Nemours & Co. .............. 11,700 778,050
WD-40 Co. ................... 18,500 740,000
------------
2,382,725
------------
COMPUTERS - 1.0%
International Business
Machines Corp. ............. 5,000 483,125
------------
CONSUMER NON-DURABLES - 3.2%
Clorox Co. .................. 9,500 719,625
Tambrands, Inc. ............. 15,800 823,575
------------
1,543,200
------------
DIVERSIFIED - 2.0%
Minnesota Mining &
Manufacturing Co. .......... 14,700 962,850
------------
DRUGS & HEALTH CARE - 4.7%
American Home
Products Corp. ............. 7,400 675,250
Bristol Myers Squibb Co. .... 10,500 842,625
Pharmacia Upjohn, Inc. ...... 20,300 728,262
------------
2,246,137
------------
ELECTRICAL EQUIPMENT - 1.1%
General Electric Co.......... 8,000 538,000
------------
FINANCIAL SERVICES - 3.4%
Federal National Mortgage
Association................. 8,200 897,900
Norwest Corp................. 22,000 726,000
------------
1,623,900
------------
FOOD & BEVERAGE - 2.7%
General Mills, Inc........... 8,200 452,025
Heinz (H.J.) Co.............. 25,950 827,156
------------
1,279,181
------------
</TABLE>
See Accompanying Notes
24
<PAGE> 26
[ARROW LOGO] PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1995 ARMADA EQUITY INCOME FUND (CONTINUED)
(UNAUDITED)
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
--------- ------------
<S> <C> <C>
HOUSEWARES - 0.4%
Procter & Gamble Co.......... 2,000 $ 172,750
------------
INSURANCE - 3.9%
American General Corp........ 21,000 711,375
Lincoln National Corp........ 9,000 420,750
Marsh & McLennan Cos.,
Inc......................... 8,900 772,075
------------
1,904,200
------------
MACHINERY & HEAVY EQUIPMENT - 2.1%
Caterpillar, Inc. ........... 9,000 552,375
Cooper Industries, Inc. ..... 13,000 474,500
------------
1,026,875
------------
NATURAL GAS - 1.8%
Consolidated Natural Gas
Co. ........................ 19,400 860,875
------------
OFFICE & BUSINESS EQUIPMENT - 1.6%
Pitney Bowes, Inc. .......... 8,500 380,375
Xerox Corp. ................. 2,700 370,237
------------
750,612
------------
OIL & GAS - 12.7%
Amoco Corp. ................. 18,400 1,246,600
Atlantic Richfield Co. ...... 4,900 531,037
Chevron Corp. ............... 15,300 755,437
Exxon Corp. ................. 17,500 1,354,063
Mobil Corp. ................. 13,900 1,450,813
Royal Dutch Petroleum Co. ... 6,300 808,763
------------
6,146,713
------------
OIL EQUIPMENT & SERVICES - 0.7%
Schlumberger Ltd., Curacao... 5,000 317,500
------------
PAPER & FOREST PRODUCTS - 2.5%
International Paper Co. ..... 7,000 266,875
Kimberly-Clark Corp. ........ 2,300 176,812
Weyerhaeuser Co. ............ 17,000 769,250
------------
1,212,937
------------
REAL ESTATE - 3.7%
Duke Realty Investments,
Inc. ....................... 17,500 485,625
Kimco Realty Corp. .......... 13,800 552,000
Sun Communities, Inc. ....... 29,000 725,000
------------
1,762,625
------------
RETAIL MERCHANDISING - 3.0%
Melville Corp. .............. 23,300 725,213
Penney (J.C.) Co., Inc. ..... 15,300 717,188
------------
1,442,401
------------
TELECOMMUNICATIONS - 1.6%
American Telephone and
Telegraph Co. .............. 11,500 759,000
------------
TOBACCO - 3.8%
American Brands, Inc. ....... 19,500 814,125
Philip Morris Cos., Inc. .... 8,400 737,100
UST, Inc. ................... 9,100 296,888
------------
1,848,113
------------
TRANSPORTATION - 1.1%
Norfolk Southern Corp. ...... 7,000 551,250
------------
UTILITIES - GAS &
ELECTRIC - 1.1%
LG&E Energy Corp. ........... 12,500 515,625
------------
</TABLE>
See Accompanying Notes
25
<PAGE> 27
[ARROW LOGO] PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1995 ARMADA EQUITY INCOME FUND (CONTINUED)
(UNAUDITED)
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
--------- ------------
<S> <C> <C>
UTILITIES - ELECTRIC - 4.1%
American Electric Power
Co. ........................ 13,000 $ 489,125
Consolidated Edison Co. of
New York, Inc. ............. 21,300 615,038
Florida Progress Corp. ...... 6,000 206,250
FPL Group, Inc. ............. 10,000 433,750
Kansas City Power &
Light Co. .................. 10,000 250,000
------------
1,994,163
------------
UTILITIES - TELEPHONE - 8.8%
Bell Atlantic Corp........... 15,700 989,100
Bell South Corp.............. 19,400 754,175
GTE Corp..................... 28,800 1,227,600
Nynex Corp................... 25,700 1,275,363
------------
4,246,238
------------
MISCELLANEOUS - 1.4%
Ogden Corp................... 32,000 680,000
------------
TOTAL COMMON STOCK........... 45,028,169
(Cost $40,355,058) ------------
PREFERRED STOCK - 1.0%
General Motors Corp., Class
E, Preferred C.............. 6,400 459,200
(Cost $372,087) ------------
</TABLE>
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
-------- ---------- -----------
<S> <C> <C> <C>
CORPORATE BONDS - 2.4%
INSURANCE - 1.0%
Chubb Corp. (Aa3, AA)
6.00%............. 05/15/98 $ 400 $ 461,500
------------
WASTE COLLECTION & DISPOSAL - 1.4%
Browning Ferris, Inc.
6.25%............. 08/15/12 700 702,625
------------
TOTAL CORPORATE
BONDS....................... 1,164,125
(Cost $1,108,388) ------------
</TABLE>
<TABLE>
<CAPTION>
NUMBER
OF SHARES
---------
<S> <C> <C>
TEMPORARY INVESTMENT - 3.2%
Fidelity Domestic Market
Portfolio................... 1,557,751 1,557,751
------------
(Cost $1,557,751)
TOTAL INVESTMENTS - 100.0% $ 48,209,245
(Cost $43,393,284*) ============
* Also cost for Federal income tax purposes.
The gross unrealized appreciation (depreciation) for
Federal income tax purposes is as follows:
Gross appreciation.................... $5,029,463
Gross depreciation.................... (213,502)
------------
$4,815,961
------------
</TABLE>
See Accompanying Notes
26
<PAGE> 28
[ARROW LOGO]
FINANCIAL STATEMENTS
ARMADA EQUITY INCOME FUND
STATEMENT OF ASSETS AND LIABILITIES
NOVEMBER 30, 1995 (UNAUDITED)
<TABLE>
<S> <C>
ASSETS
Investments at value
(Cost $43,393,284)................... $48,209,245
Interest and dividends receivable.... 215,648
Receivable for Fund shares sold...... 302,931
Prepaid expenses..................... 20,755
----------
TOTAL ASSETS................ 48,748,579
- ------------------------------------------------------
LIABILITIES
Payable for Fund shares redeemed..... 53,286
Accrued expenses..................... 57,432
----------
TOTAL LIABILITIES........... 110,718
- ------------------------------------------------------
NET ASSETS (based on
4,078,750 shares of
beneficial interest
having no par value)........ $48,637,861
======================================================
NET ASSETS CONSIST OF:
Paid-in capital............. $42,244,332
Undistributed net
investment income........... 267,406
Undistributed net realized
gain on investments sold.... 1,310,161
Net unrealized appreciation
on investments.............. 4,815,962
----------
$48,637,861
======================================================
NET ASSET VALUE, OFFERING
PRICE AND REDEMPTION PRICE
PER SHARE - Institutional
class
($48,424,746 / 4,060,865
shares of beneficial
interest)................... $ 11.92
======================================================
NET ASSET VALUE AND
REDEMPTION PRICE PER
SHARE - Retail class
($213,115 / 17,885 shares of
beneficial interest)........ $ 11.92
======================================================
MAXIMUM OFFERING
PRICE PER RETAIL SHARE
($11.92 / .9625)............ $ 12.38
======================================================
</TABLE>
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED NOVEMBER 30, 1995 (UNAUDITED)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends............................. $ 875,563
Interest.............................. 57,676
Less foreign taxes withheld........... (6,152)
---------
Total investment income............... 927,087
EXPENSES:
Investment Advisory fees.............. 159,043
Administration fees................... 21,206
Transfer Agent fees................... 17,666
Registration and filing fees.......... 8,879
12b-1 fees............................ 8,482
Custodian fees........................ 5,328
Printing and shareholder reports...... 4,092
Legal fees............................ 3,466
Amortization of organization costs.... 2,228
Distribution fees..................... 1,771
Audit fees............................ 897
Trustees' fees........................ 772
Miscellaneous......................... 649
Insurance............................. 302
Shareholder servicing fees - Retail
class only.......................... 197
Fees waived by Custodian.............. (5,328)
---------
Total expenses............... 229,650
- ------------------------------------------------------
NET INVESTMENT INCOME.................... 697,437
- ------------------------------------------------------
REALIZED AND UNREALIZED
GAIN ON INVESTMENTS
Net realized gain on
investments sold............. 1,403,399
Net change in unrealized
appreciation on
investments.................. 2,058,692
---------
Net gain on investments
sold......................... 3,462,091
- ------------------------------------------------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS.... $4,159,528
======================================================
</TABLE>
See Accompanying Notes
27
<PAGE> 29
[ARROW LOGO]
FINANCIAL STATEMENTS
ARMADA EQUITY INCOME FUND
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE FOR THE
SIX MONTHS ENDED PERIOD ENDED
NOVEMBER 30, 1995 MAY 31, 1995
----------------- -------------
(UNAUDITED)
<S> <C> <C>
INCREASE IN NET ASSETS:
Operations:
Net investment income............................................. $ 697,437 $ 878,326
Net realized gain/(loss) on investments sold...................... 1,403,399 (93,238)
Net change in unrealized appreciation on investments.............. 2,058,692 2,757,270
------------ ------------
Net increase in net assets resulting from operations.............. 4,159,528 3,542,358
Distributions to shareholders from net investment income.............. (662,322) (646,035)
Increase in net assets derived from capital share transactions........ 8,822,399 33,421,933
------------ ------------
Total increase in net assets.......................................... 12,319,605 36,318,256
------------ ------------
NET ASSETS:
Beginning of period............................................... 36,318,256 0
------------ ------------
End of period..................................................... $ 48,637,861 $ 36,318,256
============ ============
</TABLE>
<TABLE>
<CAPTION>
NOVEMBER 30, 1995 MAY 31, 1995
----------------- ------------
<S> <C> <C>
UNDISTRIBUTED NET INVESTMENT INCOME AS OF............................. $ 267,406 $ 232,291
============ ============
</TABLE>
See Accompanying Notes
28
<PAGE> 30
[ARROW LOGO]
FINANCIAL HIGHLIGHTS
ARMADA EQUITY INCOME FUND
FINANCIAL HIGHLIGHTS
FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED FOR THE PERIOD ENDED
NOVEMBER 30, 1995 MAY 31, 1995
------------------------- ---------------------------
(UNAUDITED)
INSTITUTIONAL RETAIL INSTITUTIONAL(3) RETAIL(3)
------------- ------ ---------------- ---------
<S> <C> <C> <C> <C>
Net asset value, beginning of period............................ $11.01 $11.01 $10.00 $10.26
------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS
Net investment income......................................... .18 .17 .34 .26
Net gains on securities (realized and unrealized)............. .91 .91 .94 .75
------- ------- ------- -------
Total from investment operations............................ 1.09 1.08 1.28 1.01
------- ------- ------- -------
LESS DISTRIBUTIONS
Dividends from net investment income.......................... (.18) (.17) (.27) (.26)
------- ------- ------- -------
Total distributions......................................... (.18) (.17) (.27) (.26)
------- ------- ------- -------
Net asset value, end of period.................................. $11.92 $11.92 $11.01 $11.01
======= ======= ======= =======
TOTAL RETURN.................................................... 20.93%(4) 20.68%(4,5) 14.34%(4) 13.18%(4,5)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000's).......................... $48,425 $213 $36,194 $125
Ratio of expenses to average net assets....................... 1.08%(1,4) 1.33%(2,4) .99%(1,4) 1.41%(2,4)
Ratio of net investment income to average net assets.......... 3.29%(1,4) 3.06%(2,4) 3.87%(1,4) .45%(2,4)
Portfolio turnover rate....................................... 34% 34% 12% 12%
</TABLE>
(1) The operating expense ratio and net investment income ratio before fee
waivers by the Custodian for the Institutional class for the period ended
November 30, 1995 would have been 1.11% and 3.26%, respectively. The
operating expense ratio and the net investment income ratio before fee
waivers by the Investment Advisers, Administrator, and Custodian for the
Institutional class for the period ended May 31, 1995 would have been 1.21%
and 3.66%, respectively.
(2) The operating expense ratio and net investment income ratio before fee
waivers by the Custodian for the Retail class for the period ended
November 30, 1995 would have been 1.35% and 3.04%, respectively. The
operating expense ratio and the net investment income ratio before fee
waivers by the Investment Advisers, dministrator, and Custodian for
Retail class for the period ended May 31, 1995 would have been
% and 3.40%, respectively.
(3) Institutional and Retail classes commenced operations on July 1, 1994
and August 22, 1994, respectively.
(4) Annualized.
(5) Total return excludes sales load.
See Accompanying Notes
29
<PAGE> 31
[ARROW LOGO]
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
1. SIGNIFICANT ACCOUNTING POLICIES
Armada Funds (the "Trust") is registered under the Investment Company Act of
1940, as amended, as an open-end management investment company. Effective May
22, 1995, the Trust changed its name from NCC Funds to Armada Funds. The Trust
was organized as a Massachusetts business trust on January 28, 1986. The Trust
is a series fund which is authorized to issue twenty-four classes of shares of
beneficial interest, each of which evidences an interest in one of twelve
investment funds:
Money Market Fund (Class A "Institutional" shares and Class A-Special Series 1
"Retail" shares),
Government Fund (Class B "Institutional" shares and Class B-Special Series 1
"Retail" shares),
Treasury Fund (Class C "Institutional" shares and Class C-Special Series 1
"Retail" shares),
Tax Exempt Fund (Class D "Institutional" shares and Class D-Special Series 1
"Retail" shares),
Equity Fund (Class H "Institutional" shares and Class H-Special Series 1
"Retail" shares),
Fixed Income Fund, (Class I "Institutional" shares and Class I-Special Series
1 "Retail" shares),
Ohio Tax Exempt Fund (Class K "Institutional" shares and Class K-Special
Series 1 "Retail" shares),
National Tax Exempt Fund (Class L "Institutional" shares and Class L-Special
Series 1 "Retail" shares),
Equity Income Fund (Class M "Institutional" shares and Class M-Special Series
1 "Retail" Shares),
Mid Cap Regional Fund (Class N "Institutional" shares and Class N-Special
Series 1 "Retail" shares),
Enhanced Income Fund (Class O "Institutional" shares and Class O-Special
Series 1 "Retail" shares), and
Total Return Advantage Fund (Class P "Institutional" shares and Class
P-Special Series 1 "Retail" shares).
As of the date of this report, the National Tax Exempt Fund has not commenced
operations.
The following is a summary of significant accounting policies followed by the
Equity, Equity Income, and Mid Cap Regional Funds (the "Funds") in preparation
of their financial statements.
PORTFOLIO VALUATION: Investments in securities traded on an exchange are
valued at the last quoted sale price for a given day, or if a sale is not
reported for that day, at the mean between the most recent quoted bid and asked
prices. Unlisted securities for which market quotations are readily available
are valued at the mean between the most recent bid and asked prices. Securities
for which no quotations are readily available are valued at the fair value
determined in good faith pursuant to Board of Trustees guidelines.
SECURITY TRANSACTIONS AND INVESTMENT INCOME: Security transactions are
recorded on the trade date. Realized gains and losses on investments sold are
recorded on the identified cost basis. Interest income is accrued on a daily
basis. Dividends are recorded on the ex-dividend date.
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS: Dividends from net investment
income of the Equity and Equity Income Funds are declared and paid quarterly;
dividends from the net investment income of the Mid Cap Regional Fund are
declared and paid annually. With respect to each Fund, net income for dividend
purposes consists of dividends, interest income, and discount earned (including
both original issue and market discount), less amortization of any market
premium and accrued expenses. Any net realized capital gains will be distributed
at least annually.
31
<PAGE> 32
[ARROW LOGO] NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
FEDERAL INCOME TAXES: Each of the Funds is classified as a separate taxable
entity for Federal income tax purposes. Each of the Funds intends to qualify as
a separate "regulated investment company" under the Internal Revenue Code and
makes the requisite distributions to its shareholders that will be sufficient to
relieve it from Federal income tax and Federal excise tax. Therefore, no Federal
tax provision is required. To the extent distributions from net investment
income and realized net capital gains exceed amounts reported in the financial
statements, such amounts are reported separately.
As of May 31, 1995, the Equity and Equity Income Funds had available capital
loss carryforwards amounting to $117,954 and $93,238, respectively. If not
utilized such amounts will expire by the year 2002.
ORGANIZATIONAL COSTS: The Trust bears all costs in connection with its
organization, including the fees and expenses of registering and qualifying its
shares for distribution under Federal and state securities regulations. All
organization expenses are being amortized on the straight-line method over a
period of five years from the date of commencement of operations.
2. INVESTMENT ADVISERS, DISTRIBUTION FEE AND OTHER RELATED PARTY TRANSACTIONS
Fees paid by the Trust pursuant to the Advisory Agreements with National City
Bank, National City Bank, Columbus and National City Bank, Kentucky
(collectively, the "Adviser" or "Advisers"), wholly-owned subsidiaries of
National City Corporation, are payable monthly based on the annual rate of .75%
of each Fund's average daily net assets. For the period ended November 30, 1995,
the Advisers have earned fees as follows:
<TABLE>
<S> <C>
Mid Cap Regional Fund........................ $252,610
Equity Fund.................................. 517,967
Equity Income Fund........................... 159,043
</TABLE>
At November 30, 1995, advisory fees accrued and unpaid amounted to:
<TABLE>
<S> <C>
Mid Cap Regional Fund......................... $45,571
Equity Fund................................... 89,168
Equity Income Fund............................ 58,168
</TABLE>
Fees paid by the Trust, under a Shareholder Servicing Plan (the "Plan") to
NatCity Investments, Inc. and National City Investments Corporation, both
wholly-owned subsidiaries of National City Corporation, are payable monthly,
based on an aggregate annual rate of up to .25% of the average daily net assets
of the Retail class of the Mid Cap Regional, Equity, and Equity Income Funds.
NatCity Investments, Inc. and National City Investments Corporation earned fees
for the period ended November 30, 1995 in the following amounts:
<TABLE>
<CAPTION>
NATCITY NATIONAL CITY
INVESTMENTS, INC. INVESTMENTS CORPORATION
----------------- -----------------------
<S> <C> <C>
Mid Cap Regional
Fund $261 $4,829
Equity Fund 190 7,093
Equity Income
Fund 2 188
</TABLE>
National City Bank, a wholly-owned subsidiary of National City Corporation,
serves as the Funds' Custodian. For the period ended November 30, 1995, National
City Bank has earned and waived custodian fees representing $8,520, $17,266, and
$5,328, for the Mid Cap Regional, Equity, and the Equity Income Funds,
respectively.
440 Financial Distributors, Inc., a wholly-owned subsidiary of The Shareholder
Services Group, Inc., and an indirect wholly-owned subsidiary of First
31
<PAGE> 33
[ARROW LOGO] NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
Data Corp. ("Distributor"), serves as the Trust's Distributor. Under the Trust's
Distribution Agreement and related Distribution Plan adopted pursuant to Rule
12b-1 of the Investment Company Act of 1940, each Fund reimburses the
Distributor monthly for the direct and indirect expenses incurred by the
Distributor in providing Fund advertising, marketing, prospectus printing and
other distribution services up to a maximum of .10% per annum of the average
daily net assets of each Fund, inclusive of an annual distribution fee of
$250,000 which is payable monthly and accrued daily among the investment funds
with respect to which the Distributor is distributing shares.
Each Trustee receives an annual fee of $6,000 plus $2,000 for each Board
meeting attended and reimbursement of out-of-pocket expenses. The Chairman of
the Board receives an additional $2,000 per annum for services in such capacity.
Such fees are paid for services rendered to all of the Funds and are allocated
accordingly. No person who is an officer, director, trustee, or employee of the
Investment Advisers, Administrator, Distributor, or of any parent or subsidiary
thereof, who serves as an officer, trustee, or employee of the Trust receives
any compensation from the Trust.
Expenses for the period ended November 30, 1995 include legal fees paid to
Drinker Biddle & Reath. A partner of that firm is Secretary of the Trust.
3. PURCHASES AND SALES OF SECURITIES
During the period ended November 30, 1995, purchases and sales of securities,
other than short-term investments or U.S. Government obligations, aggregated:
<TABLE>
<CAPTION>
PURCHASES SALES
---------- ----------
<S> <C> <C>
Mid Cap Regional Fund $59,798,993 $39,944,877
Equity Fund 59,734,407 50,512,049
Equity Income Fund 23,492,602 14,267,587
</TABLE>
4. SHARES OF BENEFICIAL INTEREST
The Trust's Declaration of Trust authorizes the Board of Trustees to issue an
unlimited number of shares of beneficial interest and to classify or reclassify
any unissued shares of the Trust into one or more additional classes of shares
and to classify or reclassify any class of shares into one or more series of
shares. Transactions in capital shares are summarized on the following page for
the Mid Cap Regional, Equity, and Equity Income Funds.
32
<PAGE> 34
[ARROW LOGO]
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED NOVEMBER 30, 1995
--------------------------------------------------------
INSTITUTIONAL CLASS RETAIL CLASS
--------------- ----------
SHARES VALUE SHARES VALUE
--------- ----------- -------- ----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
MID CAP REGIONAL FUND
Shares sold.................................................... 1,497,787 $17,743,564 95,122 $1,107,974
Shares reinvested.............................................. 0 0 0 0
Shares repurchased............................................. (210,433) (2,508,957) (40,900) (482,460)
--------- ----------- -------- ----------
Net increase................................................... 1,287,354 $15,234,607 54,222 $ 625,514
========= =========== ======== ==========
EQUITY FUND
Shares sold.................................................... 729,814 $11,539,882 7,836 $ 124,268
Shares reinvested.............................................. 23,396 366,984 1,738 27,283
Shares repurchased............................................. (345,807) (5,483,649) (60,461) (947,447)
--------- ----------- -------- ----------
Net increase (decrease)........................................ 407,403 $ 6,423,217 (50,887) $ (795,896)
========= =========== ======== ==========
EQUITY INCOME FUND
Shares sold.................................................... 849,652 $ 9,619,081 8,597 $ 97,766
Shares reinvested.............................................. 34,834 393,877 200 2,263
Shares repurchased............................................. (109,990) (1,265,402) (2,226) (25,186)
--------- ----------- -------- ----------
Net increase................................................... 774,496 $ 8,747,556 6,571 $ 74,843
========= =========== ======== ==========
</TABLE>
<TABLE>
<CAPTION>
FOR THE PERIOD ENDED MAY 31, 1995
----------------------------------------------------------
INSTITUTIONAL CLASS RETAIL CLASS
--------------------------- -------------------------
SHARES VALUE SHARES VALUE
--------- ------------ -------- -----------
<S> <C> <C> <C> <C>
MID CAP REGIONAL FUND
Shares sold.................................................. 4,561,720 $ 47,581,271 365,213 $ 3,858,435
Shares reinvested............................................ 14,908 158,322 1,456 15,289
Shares repurchased........................................... (97,553) (1,057,490) (49,929) (530,437)
--------- ------------ -------- -----------
Net increase................................................. 4,479,075 $ 46,682,103 316,740 $ 3,343,287
========= ============ ======== ===========
EQUITY FUND
Shares sold.................................................. 2,204,373 $ 30,453,279 29,328 $ 408,345
Shares reinvested............................................ 95,010 1,289,744 9,835 133,458
Shares repurchased........................................... (818,100) (11,561,697) (184,733) (2,543,339)
--------- ------------ -------- -----------
Net increase (decrease)...................................... 1,481,283 $ 20,181,326 (145,570) $(2,001,536)
========= ============ ======== ===========
EQUITY INCOME FUND
Shares sold.................................................. 3,319,667 $ 33,658,233 11,161 $ 114,046
Shares reinvested............................................ 55,277 562,440 187 1,933
Shares repurchased........................................... (88,575) (914,369) (34) (350)
--------- ------------ -------- -----------
Net increase................................................. 3,286,369 $ 33,306,304 11,314 $ 115,629
========= ============ ======== ===========
</TABLE>
33
<PAGE> 35
[ARROW LOGO]
ARMADA FUNDS
BOARD OF TRUSTEES Richard B. Tullis
Chairman of the Board, President and Treasurer
Chairman Emeritus, Harris
Corporation
Director, NACCO Materials
Handling Group, Inc.
Director, Hamilton Beach/Proctor-
Silex, Inc.
Director, Waste-Quip, Inc.
Thomas R. Benua, Jr.
Trustee
President, EBCO Manufacturing Company
and Subsidiaries
Leigh Carter
Trustee
Retired President and Chief
Operating Officer,
B.F. Goodrich Company
John F. Durkott
Trustee
President and Chief
Operating Officer, Kittle's Home
Furnishings Center, Inc.
Richard W. Furst, Dean
Trustee
Professor of Finance and Dean,
College of Business and Economics,
University of Kentucky
J. William Pullen
Trustee
President and Chief Executive Officer,
Whayne Supply Company
<PAGE> 36
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NOTES
<PAGE> 37
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NOTES
<PAGE> 38
[ARROW LOGO]
NOTES
