<PAGE> 1
SEMI-ANNUAL REPORT ARMADA
NOVEMBER 30, 1996 FUNDS
(UNAUDITED) INCOME
SERIES
ARMADA TOTAL RETURN ADVANTAGE FUND
ARMADA FIXED INCOME FUND
ARMADA ENHANCED INCOME FUND
ARMADA GNMA FUND
ARMADA INTERMEDIATE GOVERNMENT FUND
LOGO (ARMADA FUNDS)
<PAGE> 2
[LOGO] ARMADA FUNDS
INCOME SERIES
SEMI-ANNUAL REPORT - NOVEMBER 30, 1996
(UNAUDITED)
<TABLE>
<S> <C>
TABLE OF CONTENTS
Chairman's Message......................................... 1
Income Market Overview..................................... 3
FUND OVERVIEWS
Armada Total Return Advantage Fund....................... 4
Armada Fixed Income Fund................................. 6
Armada Enhanced Income Fund.............................. 8
Armada GNMA Fund......................................... 10
Armada Intermediate Government Fund...................... 12
PORTFOLIO OF INVESTMENTS AND FINANCIAL HIGHLIGHTS
Armada Total Return Advantage Fund....................... 14
Armada Fixed Income Fund................................. 19
Armada Enhanced Income Fund.............................. 22
Armada GNMA Fund......................................... 25
Armada Intermediate Government Fund...................... 32
FINANCIAL STATEMENTS
Statement of Assets and Liabilities...................... 36
Statement of Operations.................................. 37
Statement of Changes in Assets........................... 38
NOTES TO FINANCIAL STATEMENTS.............................. 39
</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., 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 CHAIRMAN'S MESSAGE
DEAR ARMADA FUNDS SHAREHOLDERS:
As the new Chairman of the Armada Board of
Trustees, I am pleased to bring you this six-month
update. I would like to extend our best wishes and
sincere appreciation to former Chairman Richard B.
Tullis for his many years of dedication and
invaluable service. His counsel will continue to be
available in his ongoing role as Trustee.
EQUITY FUND RATED AMONG TOP PERFORMERS
Have you been following the Lipper performance
rankings of the Armada Equity Fund in the Wall
Street Journal? If so, you have noticed a marked
improvement in its one-year total returns. In fact,
the Institutional and Retail shares of the Fund have
most recently been ranked in the upper 40% of their
peer group of large capitalization stock funds as
represented by an "A" or "B" rating.
NEW INVESTMENT OBJECTIVE FOR THE ENHANCED INCOME
FUND
In September, shareholders of Armada Enhanced
Income Fund agreed to a new investment objective
which seeks increased total return potential. (Total
return is a combination of income and price
appreciation over time.) By lengthening the Fund's
average maturity from two years or less to 1 1/2 to
four years, the Fund now can participate in full
market cycles and strive for better returns. Though
the change may increase the volatility of those
returns, the Fund Managers believe that this
increase will be outweighed by the potential
benefits of its enhanced return.
NEW PRODUCT OFFERINGS
To make investing easy, affordable and convenient,
Armada Funds offers these new investment
opportunities and information resources:
FOUR NEW PORTFOLIOS have been added to the Armada
family: the Intermediate Government Fund, the GNMA
Fund, the Pennsylvania Municipal Fund, and the
Pennsylvania Tax Exempt Fund (a money market fund).
The addition of the two government bond funds means
that you can now further diversify your income
investments.
NATIONAL CITY SWEEP ACCOUNTS make investing
effortless. Sweeps now can be established between a
National City premium checking account
1
<PAGE> 4
LOGO CHAIRMAN'S MESSAGE
and an Armada money market fund. The automatic
"sweep" -- transfer of funds -- occurs when the
checking account exceeds a target balance.
FUTUREQUEST brings sophisticated investment
solutions to the individual investor. This
computer-aided process can help an investor
determine an appropriate strategy for allocating
assets among various mutual funds, including Armada
Funds. The recommended strategy is based on factors
such as an individual's investment time frame,
tolerance for risks, goals, assets and liabilities.
WWW.NATIONAL-CITY.COM is National City's
convenient new address on the World Wide Web.
Up-to-date information and highlights on the Armada
Funds are included and are just a few "clicks" away.
At National City's "Home Page," select Invest It!
and you and prospective investors can gain access to
quarterly performance information and the many
benefits of investing in the Armada Funds.
We hope you share our enthusiasm for these
positive changes. To receive more information about
your investment or any of the Armada Funds, please
call 1-800-622-FUND (3863). We look forward to
serving your investment needs and will continue to
ensure that your loyalty and confidence in the
Armada family is well placed.
Have a happy, healthy and prosperous 1997!
Sincerely,
/s/ Robert D. Neary
Robert D. Neary
Chairman
Armada Funds Board of Trustees
2
<PAGE> 5
[LOGO] INCOME MARKET OVERVIEW
REMARKS FROM THE ADVISERS
"CURRENTLY, FOREIGN HOLDINGS OF
THE OUTSTANDING U.S. TREASURY
DEBT IS AT ITS HIGHEST LEVEL IN
HISTORY."
During the six-month period ended November 30,
1996, the yield on the 5 year Treasury note fell
from 6.90% to 6.08%, an 82 basis point retracement
of the rise in yields since January 1996, with most
occurring since September.
These last six months can be broken down into two
distinct periods. The first period, which lasted
until the end of September, saw rates fluctuate
within a range. The range held because the market's
expectations for an increase in the Fed Funds rate
kept getting pushed back. Through consecutive Fed
meetings in June, July, August, and September, the
market first assigned a high probability to the Fed
increasing rates only to back off as the meeting
approached. In fact, all through the six-month
period, the Fed held overnight rates at 5.25%. The
second period began after the September meeting,
when investors finally threw in the towel and began
to forecast that the Fed would not raise rates and
could possibly cut rates. As this view gained
support, rates rallied across the curve.
Fueling this rally has been the tremendous foreign
appetite for U.S. Treasuries, particularly from
Asian Central Banks. Foreign central banks are
attempting to jump start their economies through
export growth and monetary stimulus. To achieve
these goals, they are supporting the dollar through
their treasury purchases. In addition to central
banks, other international investors find U.S. rates
attractive versus their lower domestic rates. The
magnitude of purchases by these investors has been
so large that foreigners have purchased more
treasuries than have been issued this year. U.S.
domestic investors, on the other hand, have been net
sellers. Currently, foreign holdings of outstanding
U.S. Treasury debt are at their highest levels in
history.
3
<PAGE> 6
[LOGO] ARMADA TOTAL RETURN
ADVANTAGE FUND OVERVIEW
COMMENTS FROM THE MANAGER
PORTFOLIO MANAGER:
INVESTMENT MANAGEMENT GROUP,
NATIONAL ASSET
MANAGEMENT CORPORATION
FUND'S DATE OF INCEPTION:
JULY 7, 1994 (INSTITUTIONAL SHARES)
SEPTEMBER 6, 1994 (RETAIL SHARES)
ASSETS:
$278,482,637 (INSTITUTIONAL SHARES)
$ 2,189,666 (RETAIL SHARES)
INVESTMENT OBJECTIVE:
PROVIDE A TOTAL RATE OF RETURN,
INCOME AND PRICE
APPRECIATION GREATER THAN
THAT OF POPULAR MARKET
INDICES WITH SIMILAR MATURITY
AND QUALITY CHARACTERISTICS.
UNDER NORMAL MARKET
CONDITIONS, THE FUND MAIN-
TAINS AN AVERAGE DOLLAR-
WEIGHTED PORTFOLIO MATURITY
OF TWO YEARS ABOVE OR BELOW
THE AVERAGE MATURITY OF THE
LEHMAN BROTHERS
GOVERNMENT/CORPORATE
BOND INDEX.
KEY INVESTMENT CONCEPTS
In seeking total return for shareholders of the
Armada Total Return Advantage Fund (the "Fund"), we
use three key strategies. First, we allocate the
Fund's investments among different market sectors
based on their return potential. Second, we adjust
the average maturity of the Fund according to our
perceptions of intermediate and long-term trends in
interest rates. Finally, we look for individual
securities whose yields we feel are attractive in
terms of their own historical standards and versus
other securities with similar characteristics.
PERFORMANCE
In the first six months of the fiscal year, the
period ending November 30, 1996, the Fund handily
outperformed the bond market. The Fund's
Institutional and Retail shares had total returns of
8.23% and 8.10% before sales charges, respectively,
versus 7.47% for the Lehman Brothers
Government/Corporate Bond Index (the "Index"). This
performance places the Fund well on its way to
meeting its goal of adding significant incremental
return versus the Index. The resumption of the
decline in interest rates aided results
significantly as the portfolio continued with an
average duration longer than the Index.
RECENT STRATEGY
The average duration of the Fund is approximately
5.9 years or 0.7 years longer than that of the
Index. This is consistent with our belief that the
longer term trend toward lower interest rates (that
began in 1981) is intact and will continue. Interest
rates moved in a fairly narrow band for much of the
first four months of fiscal 1997 before moving
decisively lower in October and November. We expect
this recent move downward to extend into the second
half of the fiscal year. For much of the six months
ended November 30, 1996, approximately 30% of the
Fund was invested in corporate bonds, 10% in
mortgage-backed securities, 25% in asset-backed
securities and about 35% in government issues. In
comparison, the Index had an average duration of 5.2
years, 74% of its assets in government issues, 26%
in corporate issues, and no allocation to mortgage
or asset-backed securities.
LOOKING AHEAD
Very recently, we decreased our exposure to
mortgage-backed securities to 5%, near our minimum.
This move reflects the full valuation of the sector.
We continue overweighted in both corporates and
asset-backed securities. Should the economy show
increasing signs of significant
4
<PAGE> 7
[LOGO] ARMADA TOTAL RETURN
ADVANTAGE FUND OVERVIEW
COMMENTS FROM THE MANAGER
"THE RESUMPTION OF THE DECLINE
IN INTEREST RATES AIDED RESULTS
SIGNIFICANTLY AS THE PORTFOLIO
CONTINUED WITH AN AVERAGE
DURATION LONGER THAN THE
INDEX."
weakness, we would look to decrease the Fund's
exposure to the corporate sector. Adding to the
returns provided by these sector weighting changes
will be our longer duration policy which will
benefit the portfolio as interest rates continue
their declines.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------
TOTAL RETURNS as of 11/30/96
- --------------------------------------------------------------------------------------
Six Months 1-Year Since Inception(2,4)
------------------------------------------------
<S> <C> <C> <C>
Armada Total Return Advantage Fund
Institutional Shares (1) 8.23% 5.91% 9.89%
- --------------------------------------------------------------------------------------
Armada Total Return Advantage Fund
Retail Shares With Sales Charge 4.09% 1.57% 7.57%
Without Sales Charge 8.19% 5.54% 9.44%
- --------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
GROWTH OF A $10,000 INVESTMENT(3)
Armada Total
Lehman Armada Total Return
Brothers Return Advantage
Government/ Advantage Fund Fund (Retail
Measurement Period Corporate (Institutional Shares with
(Fiscal Year Covered) Bond Index Shares)(1) sales charge
<S> <C> <C> <C>
July-1994 10,000.00 10,000.00
Sept-1994 9,725.00
Nov-1994 10,020.87 10,011.30 9,496.50
May-1995 11,186.74 11,122.00 10,500.70
Nov-1995 11,853.41 11,846.00 11,156.70
May-1996 11,645.28 11,591.70 10,892.70
Nov-1996 12,514.92 12,545.75 11,775.05
<FN>
1 Institutional shares are sold primarily to Banks and
National Asset Management Corporation ("NAM")
customers. Certain account level charges may apply.
2 The Armada Total Return Advantage Fund's date of
inception was July 7, 1994 for Institutional shares
and September 6, 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.
</TABLE>
5
<PAGE> 8
[LOGO] ARMADA FIXED INCOME FUND OVERVIEW
COMMENTS FROM THE MANAGER
PORTFOLIO MANAGER:
ASSET MANAGEMENT GROUP--
FIXED INCOME TEAM,
NATIONAL CITY
FUND'S DATE OF INCEPTION:
DECEMBER 20, 1989
(INSTITUTIONAL SHARES)
APRIL 15, 1991 (RETAIL SHARES)
ASSETS:
$108,410,352 (INSTITUTIONAL SHARES)
$ 3,897,025 (RETAIL SHARES)
INVESTMENT OBJECTIVE:
PROVIDE AS HIGH A LEVEL OF
CURRENT INCOME AS IS CONSISTENT
WITH PRUDENT INVESTMENT RISK.
THE FUND INVESTS IN HIGH AND
MEDIUM GRADE BONDS AND OTHER
FIXED INCOME SECURITIES. UNDER
NORMAL MARKET CONDITIONS, THE
FUND MAINTAINS AN AVERAGE
DOLLAR-WEIGHTED PORTFOLIO
MATURITY OF TEN YEARS OR LESS.
KEY INVESTMENT CONCEPTS:
The Armada Fixed Income Fund seeks to provide a
high level of income that exceeds the proportionate
level of risk taken by the Fund. This is
accomplished by actively managing the Fund's sector
allocation to those sectors that offer the best
income and return potential. Furthermore, we add to
performance by managing the Fund's sensitivity to
interest rates; increasing the sensitivity when our
outlook is for lower interest rates, and decreasing
the sensitivity when our outlook is for higher
interest rates. Finally, we seek out only those
securities that are attractive on a relative basis
and are consistent with the Fund's objectives. All
the while the Fund's credit quality is maintained at
a high level. Performance is measured against the
Lehman Intermediate Government/Corporate Index.
PERFORMANCE
During the declining rate environment for the
six-month period ended November 30, 1996, the Armada
Fixed Income Fund (the "Fund") produced a total
return of 5.53% and 5.49% before sales charges for
Institutional and Retail investors, respectively.
During the same period, the Fund's benchmark, the
Lehman Intermediate Government/Corporate Bond Index,
had a total return of 6.05%. At November 30, 1996,
the Fund's Institutional and Retail shares had SEC
30 day annualized yields of 5.69% and 5.31%,
respectively.
RECENT STRATEGY
During these six months, the Armada Fixed Income
Fund has maintained a duration, or interest rate
sensitivity, that equals that of the Lehman
Intermediate Government/Corporate Bond Index. On a
sector basis, the Fund has maintained overweightings
in the mortgage and asset-backed securities due to
the relative value offered by these sectors while
underweighting treasuries. This decision has proved
fruitful since these sectors have outperformed over
this time period. The Fund has been market-weighted
in corporates and agencies where the spread pickup
over treasuries has been favorable, but not as
attractive.
LOOKING AHEAD
In the near term, investors are focusing on
consumer spending during the holiday season and the
strength of the economy. Although the possibility of
a Fed tightening has been removed from the market,
renewed economic growth would introduce the debate
once again. The Fixed Income Team views the current
level of interest rates as reflecting an excessively
optimistic scenario on Fed policy going forward.
6
<PAGE> 9
[LOGO] ARMADA FIXED INCOME FUND OVERVIEW
COMMENTS FROM THE MANAGER
"DURING THESE SIX MONTHS, THE
ARMADA FIXED INCOME FUND HAS
MAINTAINED A DURATION, OR
INTEREST RATE SENSITIVITY, THAT
EQUALS THAT OF THE LEHMAN
INTERMEDIATE GOVERNMENT/CORPORATE BOND
INDEX."
Furthermore, rate levels are increasingly driven
by market technicals which are heavily influenced by
foreign purchases of treasuries and outright
speculation. Although we respect the technicals
driving the market rally, we do not share the
market's fundamental outlook and, therefore, are
maintaining the Fund's duration equal to that of its
benchmark.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
TOTAL RETURNS as of 11/30/96
- -----------------------------------------------------------------------------------------------------------------------
Six Months 1-Year 3-Years(4) 5-Years(4) Since Inception(2,4)
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Armada Fixed Income Fund
Institutional Shares (1) 5.53% 4.83% 4.78% 6.97% 8.02%
- -----------------------------------------------------------------------------------------------------------------------
Armada Fixed Income Fund
Retail Shares With Sales Charge 1.56% .64% 3.21% 5.89% 7.20%
Without Sales Charge 5.49% 4.57% 4.53% 6.70% 7.80%
- -----------------------------------------------------------------------------------------------------------------------
Past performance is not predictive of future performance.
</TABLE>
GROWTH OF A $10,000 INVESTMENT(3)
[GRAPHIC]
<TABLE>
<CAPTION>
Lehman Brothers Armada Fixed Armada Fixed
Intermediate Income Fund Income Fund
Measurement Period Government/Corporate (Institutional (Retail Shares
(Fiscal Year Covered) Bond Index Shares)(1) with sales charge)
<S> <C> <C> <C>
Nov-1989 10,000.00 10,000.00 9,725.00
May-1990 10,169.40 10,098.00 9,718.90
Nov-1990 10,768.80 10,665.60 10,265.30
May-1991 11,381.80 11,332.30 10,905.00
Nov-1991 12,213.50 12,205.40 11,728.60
May-1992 12,701.30 12,801.00 12,283.70
Nov-1992 13,232.20 13,334.90 12,777.70
May-1993 14,022.10 14,250.10 13,637.90
Nov-1993 14,521.20 14,863.70 14,204.70
May-1994 14,204.00 14,249.50 13,606.40
Nov-1994 14,255.60 14,182.40 13,514.80
May-1995 15,575.20 15,610.00 14,866.10
Nov-1995 16,328.70 16,310.50 15,512.60
May-1996 16,291.55 16,201.90 15,377.90
Nov-1996 17,402.44 17,098.35 16,220.88
<FN>
1 Institutional shares are sold primarily to Banks and
National Asset Management Corporation ("NAM")
customers. Certain account level charges may apply.
2 The Armada Fixed Income 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.
</TABLE>
7
<PAGE> 10
[LOGO] ARMADA ENHANCED INCOME FUND OVERVIEW
COMMENTS FROM THE MANAGER
PORTFOLIO MANAGER:
INVESTMENT MANAGEMENT GROUP,
NATIONAL ASSET
MANAGEMENT CORPORATION
FUND'S DATE OF INCEPTION:
JULY 7, 1994 (INSTITUTIONAL SHARES)
SEPTEMBER 9, 1994 (RETAIL SHARES)
ASSETS:
$59,768,104 (INSTITUTIONAL SHARES)
$ 2,060,764 (RETAIL SHARES)
INVESTMENT OBJECTIVE:
SEEK A TOTAL RATE OF RETURN
GREATER THAN THAT OF THE MERRILL
LYNCH 1-3 YEAR TREASURY INDEX.
THE FUND WILL NORMALLY INVEST
AT LEAST 80% OF THE VALUE OF ITS
TOTAL ASSETS IN INVESTMENT
GRADE DEBT SECURITIES OF ALL
TYPES. HOWEVER, UP TO 20% OF
THE VALUE OF ITS TOTAL ASSETS
MAY BE INVESTED IN PREFERRED
STOCKS AND OTHER INVESTMENTS.
UNDER NORMAL MARKET
CONDITIONS, THE FUND INTENDS TO
MAINTAIN AN AVERAGE
DOLLAR-WEIGHTED PORTFOLIO
MATURITY FOR ITS DEBT SECURITIES
OF FROM 1 1/2 YEARS TO 4
YEARS.
INVESTMENT OBJECTIVE CHANGE
The Armada Enhanced Income Fund (the "Fund")
experienced a change in investment objective
effective October 1996. Previously the Fund's
objective was to provide current income that exceeds
industry standard money market returns by 0.5% to
1.5% per year over complete market cycles. The new
objective is to seek a total rate of return greater
than that of the Merrill Lynch 1-3 Year Treasury
Index (the "Index"). The change in the objective was
proposed by the Fund's adviser to make the Fund a
more attractive investment in the limited duration
fixed income market.
PERFORMANCE
In the first six months of the fiscal year, the
period ended November 30, 1996, the Fund slightly
outperformed its market index. The Fund's
Institutional and Retail shares had total returns of
3.88% and 3.82% before sales charges, respectively,
versus 3.69% for the Index. This Index calculation
blends the performance of the Merrill Lynch 91-Day
Treasury Bill and 1-3 Year Treasury indices to
reflect the October change in the Fund's objective.
RECENT STRATEGY
The average duration of the Fund is approximately
1.9 years or 0.2 years longer than that of the
Index. This is consistent with our belief that the
longer term trend toward lower interest rates (that
began in 1981) is intact and will continue. Interest
rates moved in a fairly narrow band for much of the
first four months of fiscal 1997 before moving
decisively lower in October and November. We expect
this recent move downward to extend into the second
half of the fiscal year. With the change in the
Fund's objective, approximately 6% of the Fund is
invested in corporate bonds, 52% in asset-backed
securities and about 42% in government issues. In
comparison, the Index has an average duration of 1.7
years and 100% of its assets are in government
issues.
LOOKING AHEAD
The current duration policy is expected to remain
in place through the end of the fiscal year.
Continuing signs of slowing economic activity should
allow the recent downturn in interest rates to
persist, adding
8
<PAGE> 11
[LOGO] ARMADA ENHANCED INCOME FUND OVERVIEW
COMMENTS FROM THE MANAGER
"CONTINUING SIGNS OF SLOWING
ECONOMIC ACTIVITY SHOULD ALLOW
THE RECENT DOWNTURN IN INTEREST
RATES TO PERSIST, ADDING
INCREMENTAL PRICE RETURN TO THE
PORTFOLIO'S INCOME. WE ARE
LOOKING FOR OPPORTUNITIES TO ADD
TO THE CORPORATE SECTOR."
incremental price return to the portfolio's income.
We are looking for opportunities to add to the
corporate sector. Additions to this sector would be
funded through a reduction in the asset-backed
securities.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------
TOTAL RETURNS as of 11/30/96
- --------------------------------------------------------------------------------------
Six Months 1-Year Since Inception(2,4)
- --------------------------------------------------------------------------------------
<S> <C> <C> <C>
Armada Enhanced Income Fund
Institutional Shares (1) 3.88% 6.00% 6.32%
- --------------------------------------------------------------------------------------
Armada Enhanced Income Fund
Retail Shares With Sales Charge 1.00% 2.83% 4.93%
Without Sales Charge 3.82% 5.78% 6.27%
- --------------------------------------------------------------------------------------
Past performance is not predictive of future performance.
</TABLE>
GROWTH OF A $10,000 INVESTMENT(3)
[GRAPHIC]
<TABLE>
<CAPTION>
Armada Enhanced
Armada Enhanced Income Fund
91-Day U.S. Income Fund (Retail Shares Merrill Lynch
Measurement Period Treasury Bill (Institutional with sales 1-3 Year
(Fiscal Year Covered) Index Shares)(1) charge) Treasury Index
<S> <C> <C> <C> <C>
Jun-1994 10,000.00 10,000.00
Jul-1994 10,000.00
Aug-1994 9,725.80
Nov-1994 10,194.49 10,165.40 9,795.70 10,076.20
May-1995 10,487.46 10,587.30 10,199.40 10,715.10
Nov-1995 10,783.49 10,931.40 10,524.70 11,124.40
May-1996 11,064.71 11,154.70 10,723.10 11,279.76
Nov-1996 11,270.00 11,587.36 11,133.25 11,760.00
<FN>
1 Institutional shares are sold primarily to Banks and
National Asset Management Corporation ("NAM")
customers. Certain account level charges may apply.
2 The Armada Enhanced Income Fund's date of inception
was July 7, 1994 for Institutional shares and
September 9, 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.
</TABLE>
9
<PAGE> 12
[LOGO] ARMADA GNMA FUND OVERVIEW
COMMENTS FROM THE MANAGER
PORTFOLIO MANAGER:
ASSET MANAGEMENT GROUP --
FIXED INCOME TEAM,
NATIONAL CITY
FUND'S DATE OF INCEPTION:
AUGUST 10, 1994 (INSTITUTIONAL)
SEPTEMBER 11, 1996 (RETAIL)
ASSETS:
$62,476,038 (INSTITUTIONAL SHARES)
$ 123,888 (RETAIL SHARES)
INVESTMENT OBJECTIVE:
SEEK THE HIGHEST LEVEL OF
CURRENT INCOME CONSISTENT WITH
PRESERVATION OF CAPITAL AND A
HIGH DEGREE OF LIQUIDITY BY
INVESTING PRIMARILY IN MORTGAGE
PASS-THROUGH SECURITIES
GUARANTEED BY THE GOVERNMENT
NATIONAL MORTGAGE ASSOCIATION.
THE FUND INVESTS PRIMARILY IN
MORTGAGE PASS-THROUGH
SECURITIES GUARANTEED BY THE
GOVERNMENT NATIONAL MORTGAGE
ASSOCIATION.
KEY INVESTMENT CONCEPTS
The Armada GNMA Fund (the "Fund") seeks to
maximize total return by investing primarily in
mortgage-backed securities guaranteed by the
Government National Mortgage Association. The
performance of the Fund is measured against the
Lehman GNMA Index (the "Index"). The Fund seeks to
add value by investing in the most attractive
sectors within the mortgage-backed securities
market.
PERFORMANCE
During the declining rate environment for the
six-month period ended November 30, 1996, the Fund
produced a total return of 6.61% for Institutional
investors and 6.55% (before sales charges) for
Retail investors. The Index posted a total return of
7.07% during this same period. At November 30, 1996,
the Fund's Institutional and Retail shares had SEC
30-day annualized yields of 6.51% and 5.42%,
respectively.
RECENT STRATEGY
During this period, the Fund has maintained a
duration, or interest rate sensitivity, that equals
that of the Index and is near fully invested in
mortgage-backed securities which offer higher yields
than other investment grade fixed income products.
The Fund has an overweighted position in seasoned
mortgage securities, which tend to have lower
prepayment sensitivity than newer issues.
LOOKING AHEAD
In the near term, investors are focusing on
consumer spending during the holiday season and the
strength of the economy. Although the possibility of
a Fed tightening has been removed from the market,
renewed economic growth would introduce the debate
once again. The Fixed Income Team views the current
level of interest rates as reflecting an excessively
optimistic scenario on Fed policy going forward.
Furthermore, rate levels are increasingly driven by
market technicals which are heavily influenced by
foreign purchases of treasuries and outright
speculation. Although we respect the technicals
driving the market rally, we do not share the
market's fundamental outlook and, therefore, are
maintaining the Fund's duration equal to that of its
benchmark.
10
<PAGE> 13
[LOGO] ARMADA GNMA FUND OVERVIEW
COMMENTS FROM THE MANAGER
"THE FUND IS NEAR FULLY
INVESTED IN MORTGAGE-BACKED
SECURITIES WHICH OFFER HIGHER
YIELDS THAN OTHER INVESTMENT
GRADE FIXED INCOME PRODUCTS."
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------
TOTAL RETURNS as of 11/30/96(5)
- --------------------------------------------------------------------------------------
Six Months 1-Year Since Inception(2,4)
- --------------------------------------------------------------------------------------
<S> <C> <C> <C>
Armada GNMA Fund
Institutional Shares (1) 6.61% 6.63% 9.07%
- --------------------------------------------------------------------------------------
Armada GNMA Fund
Retail Shares With Sales Charge 2.56% 2.60% 7.27%
Without Sales Charge 6.55% 6.60% 9.06%
- --------------------------------------------------------------------------------------
Past Performance is not perdictive of future performance.
</TABLE>
GROWTH OF A $10,000 INVESTMENT(3)
[GRAPHIC]
<TABLE>
<CAPTION>
Armada GNMA Armada GNMA Fund
Measurement Period Lehman GNMA Fund (Institutional (Retail Shares
(Fiscal Year Covered) Index Shares)(1) with sales charge)
<S> <C> <C> <C>
Jul-1994 10,000.00
Aug-1994 10,000.00 9,725.80
Nov-1994 9,845.97 9,899.90 9,528.36
May-1995 10,960.29 10,960.80 10,552.26
Nov-1995 11,505.05 11,463.90 11,033.40
May-1996 11,547.23 11,466.40 11,039.25
Nov-1996 12,239.00 12,223.70 11,761.92
<FN>
1 Institutional shares are sold primarily to Banks and
National Asset Management Corporation ("NAM")
customers. Certain account level charges may apply.
2 The Armada GNMA Fund's date of inception was August
10, 1994 for Institutional shares and September 11,
1996 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.
5 The performance history for the Predecessor Fund has
been carried over to both the Institutional and
Retail classes.
</TABLE>
11
<PAGE> 14
[LOGO] ARMADA INTERMEDIATE
GOVERNMENT FUND OVERVIEW
COMMENTS FROM THE MANAGER
PORTFOLIO MANAGER:
ASSET MANAGEMENT GROUP --
FIXED INCOME TEAM,
NATIONAL CITY
FUND'S DATE OF INCEPTION:
AUGUST 10, 1994 (INSTITUTIONAL)
SEPTEMBER 11, 1996 (RETAIL)
ASSETS:
$90,501,747 (INSTITUTIONAL SHARES)
$ 22,878 (RETAIL SHARES)
INVESTMENT OBJECTIVE:
SEEK PRESERVATION OF CAPITAL
AND A HIGH DEGREE OF LIQUIDITY
WHILE PROVIDING CURRENT
INCOME. THE FUND INVESTS
PRIMARILY IN OBLIGATIONS ISSUED
OR GUARANTEED AS TO PRINCIPAL
AND INTEREST BY THE U.S.
GOVERNMENT AND ITS AGENCIES
AND INSTRUMENTALITIES.
KEY INVESTMENT CONCEPTS:
The Armada Intermediate Government Fund (the
"Fund") seeks to maximize total return by investing
in high quality fixed income securities primarily
issued or guaranteed by the U.S. government or its
agencies. The performance of the Fund is measured
against the Lehman Intermediate Government Bond
Index (the "Index"). The Fund seeks to add value
through sector rotation between the treasury, agency
and mortgage-backed sectors and through individual
security selection.
PERFORMANCE
During the declining rate environment for the
six-month period ended November 30, 1996, the Fund
produced a total return of 5.60% for Institutional
investors and 5.55% (before sales charges) for
Retail investors. The Index produced a total return
of 5.70%. At November 30, 1996, the Fund's
Institutional and Retail shares had SEC 30-day
annualized yields of 5.65% and 5.19%, respectively.
RECENT STRATEGY
During this period, the Fund has maintained a
duration, or interest rate sensitivity, that equals
that of the Index. On a sector basis, the Fund has
maintained overweightings in the mortgage and
asset-backed securities due to the relative value
offered by these sectors while underweighting
treasuries and agencies. This decision has proved
fruitful since these sectors have outperformed over
this time period.
LOOKING AHEAD
In the near term, investors are focusing on
consumer spending during the holiday season and the
strength of the economy. Although the possibility of
a Fed tightening has been removed from the market,
renewed economic growth would introduce the debate
once again. The Fixed Income Team views the current
level of interest rates as reflecting an excessively
optimistic scenario on Fed policy going forward.
Furthermore, rate levels are increasingly driven by
the market technicals which are heavily influenced
by foreign purchases of treasuries and outright
speculation. Although we respect the technicals
driving the market rally, we do not share the
market's fundamental outlook and, therefore, are
maintaining the Fund's duration equal to that of its
benchmark.
12
<PAGE> 15
[LOGO] ARMADA INTERMEDIATE
GOVERNMENT FUND OVERVIEW
COMMENTS FROM THE MANAGER
"...THE FUND HAS MAINTAINED
OVERWEIGHTINGS IN THE MORTGAGE
AND ASSET-BACKED SECURITIES
DUE TO THE RELATIVE VALUE
OFFERED BY THESE SECTORS WHILE
UNDERWEIGHTING TREASURIES AND
AGENCIES."
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------
TOTAL RETURNS as of 11/30/96(5)
- --------------------------------------------------------------------------------------
Six Months 1-Year Since Inception(2,4)
- --------------------------------------------------------------------------------------
<S> <C> <C> <C>
Armada Intermediate Government Fund
Institutional Shares (1) 5.60% 5.08% 7.51%
- --------------------------------------------------------------------------------------
Armada Intermediate Government Fund
Retail Shares With Sales Charge 1.57% 1.13% 5.72%
Without Sales Charge 5.55% 5.02% 7.49%
- --------------------------------------------------------------------------------------
Past performance is not predictive of future performance.
</TABLE>
GROWTH OF A $10,000 INVESTMENT(3)
[GRAPHIC]
<TABLE>
<CAPTION>
Lehman Armada Intermediate Armada Intermediate
Brothers Government Fund Government Fund
Measurement Period Government (Institutional (Retail Shares
(Fiscal Year Covered) Bond Index Shares)(1) with sales charge)
<S> <C> <C> <C>
Nov-1989 10,000.00 10,000.00 9,725.00
May-1990 10,169.40 10,098.00 9,718.90
Nov-1990 10,768.80 10,665.60 10,265.30
May-1991 11,381.80 11,332.30 10,905.00
Nov-1991 12,213.50 12,205.40 11,728.60
May-1992 12,701.30 12,801.00 12,283.70
Nov-1992 13,232.20 13,334.90 12,777.70
May-1993 14,022.10 14,250.10 13,637.90
Nov-1993 14,521.20 14,863.70 14,204.70
May-1994 14,204.00 14,249.50 13,606.40
Nov-1994 14,255.60 14,182.40 13,514.80
May-1995 15,575.20 15,610.00 14,866.10
Nov-1995 16,328.70 16,310.50 15,512.60
May-1996 16,291.55 16,201.90 15,377.90
Nov-1996 17,402.44 17,098.35 16,220.88
<FN>
1 Institutional shares are sold primarily to Banks and
National Asset Management Corporation ("NAM")
customers. Certain account level charges may apply.
2 The Armada Intermediate Government Fund's date of
inception was August 10, 1994 for Institutional
shares and September 11, 1996 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.
5 The performance history for the Predecessor Fund has
been carried over to both the Institutional and
Retail classes.
</TABLE>
13
<PAGE> 16
[LOGO] PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1996 ARMADA TOTAL RETURN ADVANTAGE FUND
(UNAUDITED)
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
-------- --------- ------------
<S> <C> <C> <C>
AGENCY OBLIGATIONS -- 1.6%
Medium-Term Structured
Enhanced Return
Series 1993-G1
6.36%............ 11/15/08 $ 1,350 $ 1,341,036
Tennessee Valley Authority
8.25%............ 04/15/42 2,700 3,061,125
------------
TOTAL AGENCY
OBLIGATIONS 4,402,161
------------
(Cost $4,072,546)
ASSET-BACKED SECURITIES (A) -- 27.5%
Boatman's Auto Trust
1996-A, 3
6.75%............ 05/20/99 1,035 1,056,994
Capital Equipment Receivable
Trust Series 1996-1,
Class A4
6.28%............ 11/30/99 4,430 4,467,128
Chase Mortgage
Series 1996-4, Class A
6.73%............ 05/13/99 3,660 3,731,621
Citibank Credit Card Master
Trust
Series 1996-1, Class A
0.00%............ 02/03/01 2,165 1,679,117
Series 1996-1, Class B
0.00%............ 02/07/03 880 674,588
Community Program Trust
Series 1987-A3
4.50%............ 06/22/98 143 143,143
Daimler-Benz
Series 1996-B, Class A
5.85%............ 07/20/03 4,885 4,886,527
Discover Credit Card Trust
Series 1993-B
6.75%............ 02/11/00 5,545 5,640,096
Fingerhut Master Trust
Series 1996-1, Class A
6.4499%.......... 05/02/99 975 985,929
First Deposit Master Trust
Series 1995-2
6.05%............ 06/11/98 5,435 5,463,604
<CAPTION>
PAR
MATURITY (000) VALUE
-------- --------- ------------
<S> <C> <C> <C>
Green Tree Financial Corp.
Series 1996-7, Class A4
6.80%............ 08/04/01 $ 2,440 $ 2,491,181
Series 1994-A, Class A
6.90%............ 07/28/98 1,770 1,770,043
Green Tree Home Improvement
Loan Trust Series 1996-A,
Class A3
6.35%............ 01/01/02 2,870 2,865,432
Independent National
Mortgage Corp. Series
1996-A, Class A5
7.59%............ 08/08/04 2,680 2,754,484
Mid-State Trust II
9.35%............ 08/12/97 8 7,675
Onyx Acceptance Grantor Trust
Series 1996-2, Class A
6.40%............ 09/10/98 2,877 2,888,893
Onyx Acceptance Grantor Trust
Series 1996-3, Class A
6.45%............ 10/09/98 3,415 3,450,819
Premier Auto Trust Series
1996-4, Class A4
6.40%............ 07/25/99 3,215 3,251,602
Residential Asset Security Corporation
Series 1996-Ks2, Class A2
7.04%............ 04/03/99 2,340 2,369,250
Sears Credit Card Master
Trust Series 1996-3,
Class A
7.00%............ 07/29/03 6,985 7,273,131
Sears Credit Card Master
Trust Series 1996-4,
Class A
6.45%............ 10/27/01 7,610 7,731,284
The Money Store Home
Equity Loan
Series 1992-D1, Class A2
8.175%........... 04/13/01 2,163 2,250,196
The Money Store
Home Equity Loan
Series 1994 D-1, Class A4
8.75%............ 12/18/99 1,175 1,243,135
UCFC Equity Loan
Series 1996-A4
7.475%........... 11/04/01 2,510 2,584,516
</TABLE>
See Accompanying Notes
14
<PAGE> 17
[LOGO] PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1996 ARMADA TOTAL RETURN ADVANTAGE FUND
(UNAUDITED)
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
-------- --------- ------------
<S> <C> <C> <C>
ASSET-BACKED SECURITIES -- (CONTINUED)
World Omni
Automobile Lease
Series 1996-A, Class A2
6.55%............ 11/23/99 $ 4,100 $ 4,148,136
World Omni
Automobile Lease
Series 1996-B, Class A2
6.20%............ 11/15/02 1,000 1,004,440
------------
TOTAL ASSET-BACKED
SECURITIES.................. 76,812,964
------------
(Cost $75,795,957)
MORTGAGE OBLIGATIONS (A) -- 11.5%
U.S. GOVERNMENT OBLIGATIONS -- 6.9%
Government National Mortgage
Association
Pool 132781
10.50%........... 08/08/98 30 32,110
Federal Home Loan Mortgage
Corporation
Pool 160045
8.75%............ 06/03/00 7 7,521
Pool 181063
7.50%............ 03/12/00 181 183,633
Federal National Mortgage
Association
Pool 190911
6.00%............ 08/05/01 2,024 1,972,015
Pool 63471
6.50%............ 05/25/99 195 189,372
Pool 73442
7.075%........... 09/17/05 8,511 8,858,246
Pool 36000
6.547%........... 12/01/05 7,935 7,884,366
------------
19,127,263
------------
COLLATERALIZED MORTGAGE OBLIGATIONS -- 4.4%
Collateralized Mortgage
Obligation Trust
5.81%............ 12/07/98 104 104,864
9.00%............ 07/14/98 131 134,869
PAR
MATURITY (000) VALUE
-------- --------- ------------
Conseco Commercial
Mortgage Trust
9.70%............ 03/08/99 $ 497 $ 500,434
General Electric Capital
Mortgage Services, Inc.
1995-25, Class A
6.00%............ 12/06/04 11,776 11,107,253
MDC Asset Investors Trust
9.325%........... 09/10/97 246 251,017
Ryland Acceptance Corp.
9.85%............ 12/25/97 280 288,079
------------
12,386,516
------------
MORTGAGE PASS THROUGH OBLIGATIONS -- 0.2%
Thirty-Seventh FHA
Insurance Project
7.43%............ 03/20/02 463 485,479
------------
TOTAL MORTGAGE
OBLIGATIONS............... 31,999,258
------------
(Cost $31,490,367)
CORPORATE BONDS -- 32.3%
AEROSPACE -- 1.1%
Boeing Corporation
8.75%............ 09/15/31 2,475 3,022,594
------------
AGRICULTURE -- 0.3%
Cargill, Inc.
8.25%............ 03/06/97 900 906,030
------------
BANKING -- 1.9%
BankAmerica Corp.
7.875%........... 12/01/02 4,800 5,172,000
------------
CHEMICALS -- 0.9%
Engelhard Corporation
7.00%............ 08/01/01 2,550 2,630,147
------------
EDUCATION -- 1.0%
Harvard University
8.125%........... 04/15/07 2,400 2,693,750
------------
FINANCIAL SERVICES -- 3.4%
Associates Corp.
6.625%........... 11/15/97 4,200 4,237,422
WF Prop Tower
6.95%............ 09/01/13 5,185 5,227,128
------------
9,464,550
------------
</TABLE>
See Accompanying Notes
15
<PAGE> 18
[LOGO] PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1996 ARMADA TOTAL RETURN ADVANTAGE FUND
(UNAUDITED)
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
-------- --------- ------------
<S> <C> <C> <C>
CORPORATE BONDS -- (CONTINUED)
FOREIGN -- 8.6%
City of Naples, Italy
7.52%.......... 07/15/06 $ 3,800 $ 4,089,750
DSPL Finance
9.12%.......... 04/14/07 2,650 2,770,787
Edelnor Incorporated
7.75%.......... 03/15/06 1,325 1,374,396
Hydro Quebec
9.375%......... 04/15/30 5,240 6,563,100
News America Holdings
9.25%.......... 02/01/13 1,125 1,293,750
Tenaga Nasional Berhad
7.50%.......... 11/01/25 4,850 4,928,813
Transgas de Occidente SA
9.79%.......... 04/03/06 2,850 2,982,725
------------
24,003,321
------------
HEALTH CARE -- 2.8%
Columbia HCA
Healthcare Corp
8.85%.......... 01/01/07 6,750 7,821,563
------------
INSURANCE -- 3.5%
Mutual of New York
0.00%.......... 08/15/24 2,400 2,519,448
Nationwide Capital
Surplus Notes
9.875%......... 02/15/25 4,000 4,525,000
Prudential Insurance
8.10%.......... 07/15/15 2,595 2,695,556
------------
9,740,004
------------
LEISURE & ENTERTAINMENT -- 2.0%
Time Warner Entertainment
10.15%......... 05/01/12 2,900 3,512,625
8.375%......... 07/15/33 1,870 1,942,463
------------
5,455,088
------------
RETAIL STORES -- 1.6%
May Department Stores
8.30%.......... 07/15/26 4,150 4,466,438
------------
<CAPTION>
PAR
MATURITY (000) VALUE
-------- --------- ------------
<S> <C> <C> <C>
SAVINGS & LOAN ASSOCIATIONS -- 0.7%
H.F. Ahmanson Capital Securities
144A
8.36%.......... 12/01/26 2,025 2,100,371
------------
TECHNOLOGY -- 1.1%
CSC Enterprises
6.50%.......... 11/15/01 $ 3,065 $ 3,098,317
------------
TELECOMMUNICATIONS -- 1.9%
BellSouth Communications
6.30%.......... 05/12/08 3,179 3,097,818
U.S. West Communications
7.20%.......... 11/10/26 2,175 2,145,094
------------
5,242,912
------------
UTILITIES -- GAS -- 1.5%
Columbia Gas Systems
7.32%.......... 11/28/10 4,135 4,171,181
------------
TOTAL CORPORATE BONDS.......
89,988,266
------------
(Cost $86,931,899)
U.S. TREASURY OBLIGATIONS -- 24.9%
U.S. TREASURY BONDS -- 7.2%
7.25%.......... 05/15/16 13,475 14,690,982
7.50%.......... 11/15/16 1,480 1,654,742
7.25%.......... 05/15/04 3,590 3,863,020
------------
20,208,744
------------
U.S. TREASURY NOTES -- 10.1%
6.125%......... 07/31/00 9,600 9,716,447
6.875%......... 03/31/00 6,300 6,517,160
5.25%.......... 01/31/01 4,000 3,930,880
6.375%......... 03/31/01 7,815 7,984,115
------------
28,148,602
------------
U.S. TREASURY STRIPS -- 7.6%
0.00%.......... 11/15/01 7,580 5,696,900
0.00%.......... 05/15/08 31,350 15,406,953
------------
21,103,853
------------
TOTAL U.S. TREASURY
OBLIGATIONS............... 69,461,199
------------
(Cost $69,048,770)
</TABLE>
See Accompanying Notes
16
<PAGE> 19
[LOGO] PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1996 ARMADA TOTAL RETURN ADVANTAGE FUND
(UNAUDITED)
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
----------- ------------
<S> <C> <C>
TEMPORARY INVESTMENT -- 2.2%
Fidelity Domestic Market
Portfolio................. $ 6,323,147 $ 6,323,147
------------
(Cost $6,323,147)
TOTAL INVESTMENTS -- 100.0% $278,986,995
============
(Cost $273,662,686)
<FN>
* Cost for Federal income tax
purposes -- $273,706,952.
The gross unrealized appreciation (depreciation) for
Federal income tax purposes is as follows:
Gross appreciation........................ $5,811,709
Gross depreciation........................ (531,666)
----------
$5,280,043
----------
(A) Maturity dates represent weighted average lives of
the underlying obligations.
</TABLE>
See Accompanying Notes
17
<PAGE> 20
[LOGO] FINANCIAL HIGHLIGHTS
ARMADA TOTAL RETURN ADVANTAGE FUND
FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED
NOVEMBER 30, 1996 FOR THE YEAR FOR THE PERIOD
(UNAUDITED) ENDED MAY 31, 1996 ENDED MAY 31, 1995
------------------------ ------------------------ ------------------------
INSTITUTIONAL RETAIL INSTITUTIONAL RETAIL INSTITUTIONAL(3) RETAIL(3)
------------- ------ ------------- ------ ------------- ------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period... $ 9.88 $ 9.87 $ 10.55 $10.54 $ 10.00 $10.16
------------- ------ ------------- ------ ------------- ------
INCOME FROM INVESTMENT OPERATIONS
Net investment income................ .34 .32 .70(7) .62(7) .65(7) .49(7)
Net gain/(loss) on securities
(realized and unrealized).......... .45 .46 (.24) (.22) .43 .40
------------- ------ ------------- ------ ------------- ------
Total from investment
operations.................... .79 .78 .46 .40 1.08 .89
------------- ------ ------------- ------ ------------- ------
LESS DISTRIBUTIONS
Dividends from net investment
income............................. (.34) (.32) (.70) (.62) (.53) (.49)
Dividends in excess of net investment
income............................. (.00) (.00) (.12) (.14) (.00) (.02)
Dividends from net realized capital
gains.............................. (.00) (.00) (.31) (.31) (.00) (.00)
------------- ------ ------------- ------ ------------- ------
Total distributions.............. (.34) (.32) (1.13) (1.07) (.53) (.51)
------------- ------ ------------- ------ ------------- ------
Net asset value, end of period......... $ 10.33 $10.33 $ 9.88 $ 9.87 $ 10.55 $10.54
============ ======= ============ ======= ============ =======
TOTAL RETURN........................... 17.08%(4) 16.80%(4,5) 4.22% 3.74%(5) 12.52%(4,6) 12.65%(4,5,6)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000's)... $ 278,483 $2,190 $ 280,401 $2,040 $ 261,403 $ 106
Ratio of expenses to average net
assets............................... .15%(1,4) .40%(2,4) .13%(1) .36%(2) .18%(1,4) .31%(2,4)
Ratio of net investment income to
average net assets................... 6.74%(1,4) 6.49%(2,4) 6.67%(1) 6.12%(2) 7.23%(1,4) 6.92%(2,4)
Portfolio turnover rate................ 80% 80% 268% 268% 166% 166%
<FN>
(1) The operating expense ratio and the net investment income ratio before fee
waivers by the Investment Adviser for the Institutional class for the period
ended November 30, 1996 would have been .70% and 6.19%, respectively. The
operating expense ratio and the net investment income ratio before waivers
by the Investment Adviser and Custodian for the Institutional class for the
year ended May 31, 1996 would have been .69% and 6.11%, respectively. The
operating expense ratio and the net investment income ratio before fee
waivers by the Investment Adviser, Administrator and Custodian for the
Institutional class for the period ended May 31, 1995 would have been .77%
and 6.64%, respectively.
(2) The operating expense ratio and the net investment income ratio before fee
waivers by the Investment Adviser for the Retail class for the period ended
November 30, 1996 would have been .95% and 5.94%, respectively. The
operating expense ratio and the net investment income ratio before waivers
by the Investment Adviser and Custodian for the Retail class for the year
ended May 31, 1996 would have been .89% and 5.59%, respectively. The
operating expense ratio and the net investment income ratio before fee
waivers by the Investment Adviser, Administrator and Custodian for the
Retail class for the period ended May 31, 1995 would have been .87% and
6.36%, respectively.
(3) Institutional and Retail classes commenced operations on July 7, 1994 and
September 6, 1994, respectively.
(4) Annualized.
(5) Total Return excludes sales charge.
(6) Total returns have been annualized based upon the period from each class'
commencement date through May 31, 1995. Gross total returns of the
Institutional and Retail classes for the period were 11.22% and 9.14%,
respectively.
(7) Calculated based upon average shares outstanding.
</TABLE>
See Accompanying Notes
18
<PAGE> 21
[LOGO] PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1996 ARMADA FIXED INCOME FUND
(UNAUDITED)
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
-------- ----------- ------------
<S> <C> <C> <C>
AGENCY OBLIGATIONS -- 6.4%
Federal Home Loan Bank
7.36%.......... 07/01/04 $ 2,000 $ 2,143,480
Federal National Mortgage
Association
8.05%.......... 05/20/97 1,000 1,008,080
6.49%.......... 11/03/00 2,000 2,009,440
5.80%.......... 12/10/03 2,000 1,966,100
------------
TOTAL AGENCY
OBLIGATIONS.............. 7,127,100
(Cost $6,809,354) ------------
MORTGAGE OBLIGATIONS (A) -- 13.8%
Aegis Auto Funding 1996-3 A
8.80%.......... 03/20/02 4,912 5,035,294
Chase Commercial Mortgage
Securities Corp
Series 1996-1, Class A1
7.60%.......... 12/18/05 2,975 3,128,215
Federal National Mortgage
Association
7.50%.......... 05/26/01 2,452 2,505,865
6.50%.......... 10/21/05 4,833 4,694,332
------------
TOTAL MORTGAGE
OBLIGATIONS.............. 15,363,706
(Cost $15,055,981) ------------
ASSET-BACKED SECURITIES (A) -- 3.7%
Green Tree Financial Corp.
Series 1995-9, Class A4
6.45%.......... 01/15/27 2,000 2,021,128
Green Tree Financial
Corporation
Series 1995-7, Class A4
6.70%.......... 11/16/01 2,000 2,029,776
------------
TOTAL ASSET-BACKED
SECURITIES............... 4,050,904
(Cost $3,936,985) ------------
<CAPTION>
PAR
MATURITY (000) VALUE
-------- ----------- ------------
<S> <C> <C> <C>
CORPORATE BONDS -- 23.6%
AUTOMOBILES -- 3.4%
Ford Motor Credit
8.20%.......... 02/15/02 $ 3,500 $ 3,801,875
------------
CHEMICALS -- 4.6%
Dow Capital B.V.
5.75%.......... 09/15/97 2,000 2,003,880
Dow Chemical Co.
9.35%.......... 03/15/00 1,000 1,090,000
E.I. duPont de Nemours & Co.
8.65%.......... 12/01/97 2,000 2,057,640
------------
5,151,520
------------
FINANCIAL SERVICES -- 3.1%
Scotland International
Bank
8.85%.......... 11/01/06 3,000 3,423,750
------------
FINANCIAL -- 4.5%
First Union Corp.
6.55%.......... 10/15/05 5,000 4,993,750
------------
INSURANCE -- 0.9%
CNA Financial Corp.
8.875%......... 03/01/98 1,000 1,036,250
------------
POLLUTION CONTROL -- 1.8%
WMX Technologies, Inc.
6.375%......... 12/01/03 2,000 2,002,500
------------
RETAIL MERCHANDISING -- 2.5%
Wal-Mart Stores, Inc.
8.625%......... 04/01/01 2,500 2,737,500
------------
UTILITIES -- ELECTRIC -- 2.8%
Florida Power and Light
6.625%......... 02/01/03 3,000 3,052,500
------------
TOTAL CORPORATE BONDS.....
(Cost $25,504,088) 26,199,645
------------
</TABLE>
See Accompanying Notes
19
<PAGE> 22
[LOGO] PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1996 ARMADA FIXED INCOME FUND
(UNAUDITED)
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
-------- ----------- ------------
<S> <C> <C> <C>
U.S. TREASURY OBLIGATIONS -- 48.7%
U.S. TREASURY NOTES
7.00%.......... 07/15/06 $ 4,500 $ 4,797,765
6.25%.......... 06/60/98 4,300 4,347,858
5.625%......... 10/31/97 14,000 14,031,920
5.125%......... 02/28/98 12,000 11,948,520
6.375%......... 07/15/99 7,000 7,124,809
7.75%.......... 02/15/01 11,000 11,796,950
------------
TOTAL U.S. TREASURY
OBLIGATIONS.............. 54,047,822
(Cost $53,492,924) ------------
</TABLE>
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
----------- ------------
<S> <C> <C> <C>
TEMPORARY INVESTMENT -- 3.8%
Fidelity Domestic Market
Portfolio................ 4,246,450 $ 4,246,450
------------
(Cost $4,246,450)
TOTAL INVESTMENTS -- 100.0% $111,035,627
(Cost $109,045,782*) ------------
* Cost for Federal income tax
purposes -- $109,054,397.
The gross unrealized appreciation (depreciation) for
Federal income tax purposes is as follows:
Gross appreciation........................ $ 1,997,739
Gross depreciation........................ (16,509)
-----------
$ 1,981,230
-----------
(A) Maturity dates represent weighted average
lives of the underlying obligations.
</TABLE>
See Accompanying Notes
20
<PAGE> 23
[LOGO] FINANCIAL HIGHLIGHTS
ARMADA FIXED INCOME FUND
FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
FOR THE SIX MONTHS
ENDED
NOVEMBER 30, 1996 FOR THE YEAR FOR THE YEAR
(UNAUDITED) ENDED MAY 31, 1996 ENDED MAY 31, 1995
------------------------ ------------------------ ------------------------
INSTITUTIONAL RETAIL INSTITUTIONAL RETAIL INSTITUTIONAL RETAIL
------------- ------ ------------- ------ ------------- ------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period..... $ 10.30 $10.35 $ 10.54 $10.60 $ 10.24 $10.30
-------- ------ -------- ------ ------- ------
INCOME FROM INVESTMENT
OPERATIONS
Net investment income... .30 .29 .61 .59 .63 .61
Net gain/(loss) on
securities (realized
and unrealized)....... .26 .27 (.22) (.23) .30 .30
-------- ------ -------- ------ ------- ------
Total from investment
operations........... .56 .56 .39 .36 .93 .91
-------- ------ -------- ------ ------- ------
LESS DISTRIBUTIONS
Dividends from net
investment income..... (.30) (.29) (.61) (.59) (.63) (.61)
Dividends in excess of
net investment
income................ (.00) (.00) (.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) (.02) (.02) (.00) (.00)
-------- ------ -------- ------ ------- ------
Total distributions... (.30) (.29) (.63) (.61) (.63) (.61)
-------- ------ -------- ------ ------- ------
Net asset value, end of
period.................. $ 10.56 $10.62 $ 10.30 $10.35 $ 10.54 $10.60
======== ====== ======== ====== ======= ======
TOTAL RETURN............. 11.34%(4) 11.24% (3,4) 3.79% 3.44% (3) 9.55% 9.26%(3)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of
period (in 000's)..... $108,410 $3,897 $111,240 $6,216 $88,047 $5,527
Ratio of expenses to
average net assets...... .73%(1,4) 1.00% (2,4) .80%(1) 1.04% (2) .85%(1) 1.09%(2)
Ratio of net investment
income to average net
assets.................. 5.78%(1,4) 5.56% (2,4) 5.78%(1) 5.50% (2) 6.24%(1) 5.95%(2)
Portfolio turnover
rate.................... 89% 89% 45% 45% 42% 42%
<CAPTION>
FOR THE YEAR
ENDED MAY 31, FOR THE YEAR FOR THE YEAR
1994 ENDED MAY 31, 1993 ENDED MAY 31, 1992
------------- ------------------------ ------------------------
INSTITUTIONAL RETAIL INSTITUTIONAL RETAIL INSTITUTIONAL RETAIL
------------- ------ ------------- ------ ------------- ------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period..... $ 10.93 $10.98 $ 10.60 $10.63 $ 10.15 $10.15
------- ------ ------- ------ ------- ------
INCOME FROM INVESTMENT
OPERATIONS
Net investment income... .61 .58 .70 .65 .81 .79
Net gain/(loss) on
securities (realized
and unrealized)....... (.59) (.58) .46 .48 .45 .45
------- ------ ------- ------ ------- ------
Total from investment
operations........... .02 .00 1.16 1.13 1.26 1.24
------- ------ ------- ------ ------- ------
LESS DISTRIBUTIONS
Dividends from net
investment income..... (.61) (.58) (.70) (.65) (.81) (.76)
Dividends in excess of
net investment
income................ (.05) (.05) (.02) (.02) (.00) (.00)
Dividends from net
realized capital
gains................. (.03) (.03) (.11) (.11) (.00) (.00)
Dividends in excess of
net realized capital
gains................. (.02) (.02) (.00) (.00) (.00) (.00)
------- ------ ------- ------ ------- ------
Total distributions... (.71) (.68) (.83) (.78) (.81) (.76)
------- ------ ------- ------ ------- ------
Net asset value, end of
period.................. $ 10.24 $10.30 $ 10.93 $10.98 $ 10.60 $10.63
======= ====== ======= ====== ======= ======
TOTAL RETURN............. 0.00% (0.23)% (3) 11.32% 11.03% (3) 12.96% 12.64%(3)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of
period (in 000's)..... $5,480 $95,246 $5,208 $40,414 $1,033
Ratio of expenses to $95,907
average net assets...... 1.08% .32%(1) .57% (2) .30%(1) .55%(2)
Ratio of net investment .83%
income to average net
assets.................. 5.34% 6.46%(1) 6.21% (2) 7.84%(1) 7.57%(2)
Portfolio turnover 5.59%
rate.................... 34% 33% 33% 13% 13%
</TABLE> 34%
(1)The operating expense ratio and net investment income ratio before fee
waivers by the Investment Advisers for the Institutional class for the period
ended November 30, 1996 would have been .78% and 5.73%, respectively. The
operating expense ratio and net investment income ratio before fee waivers by
the Custodian for the Institutional class for the years ended May 31, 1996
and 1995 would have been .82% and 5.76%, and .86% and 6.23%, 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, 1993 and 1992 would have been .80% and 5.98%, and .85% and
7.29%, respectively.
(2)The operating expense ratio and net investment income ratio before fee
waivers by the Investment Advisers for the Retail class for the period ended
November 30, 1996 would have been 1.04% and 5.52%, respectively. The
operating expense ratio and net investment income ratio before fee waivers by
the Custodian for the Retail class for the years ended May 31, 1996 and 1995
would have been 1.06% and 5.48%, and 1.10% and 5.94%, 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, 1993
and 1992 would have been 1.05% and 5.73%, and 1.10% and 7.02%, respectively.
(3)Total Return excludes sales charge.
(4)Annualized.
See Accompanying Notes
21
<PAGE> 24
[LOGO] PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1996 ARMADA ENHANCED INCOME FUND
(UNAUDITED)
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
-------- --------- ------------
<S> <C> <C> <C>
ASSET-BACKED SECURITIES (A) -- 55.3%
Capita Receivables Trust
Series 1996-1, Class A4
6.28%............ 12/11/99 $ 3,080 $ 3,105,813
Chase Manhattan Credit Card
Master Trust Series 1996-4
Class A
6.73%........... 05/09/99 3,380 3,446,142
Discover Card Trust Series
1991-D, Class A
8.00%........... 10/10/98 3,200 3,307,639
Series 1993-B, Class A
6.75%........... 02/15/00 2,200 2,237,730
Fingerhut Master Trust
Series 1996-1, Class A
6.45%........... 05/13/99 2,500 2,528,023
First Deposit Master Trust
Series 1995-2, Class A
6.05%........... 2,470 2,483,000
Green Tree Home Improvement Loan Trust
Series 1995-A, Class A1
7.00%........... 02/03/97 77 77,474
NAFCO Auto Trust 3,
6.50%........... 02/21/98 1,172 1,164,215
Premier Auto Trust
Series 1996-4, Class A4
6.40%........... 08/05/99 3,155 3,190,919
Residential Asset Security Corp.
Series 1996-Ks2 Class A2
7.04%........... 04/14/99 485 492,720
Small Business Administration Pool
9.475%.......... 02/07/00 619 676,036
Standard Credit Card Master Trust
Series 1995-6, Class B
6.90%........... 05/31/98 1,595 1,618,147
Series 1994-1, Class A
4.65%........... 01/30/97 1,860 1,857,371
The Money Store Home Equity Trust
Series 1994-D1, Class A4
8.75%........... 12/29/99 240 253,917
<CAPTION>
PAR
MATURITY (000) VALUE
-------- --------- ------------
<S> <C> <C> <C>
World Omni Automobile Lease
Securitization Trust
Series 1996-A, Class A2
6.55%........... 01/27/00 $ 2,060 $ 2,084,185
Series 1996-B, Class A2
6.20%........... 05/09/99 750 753,330
Series 1996-B, Class A3
6.25%........... 11/08/99 4,510 4,528,673
------------
TOTAL ASSET-BACKED
SECURITIES.................. 33,805,334
------------
(Cost $33,683,845)
MORTGAGE OBLIGATION (A) -- 0.1%
MORTGAGE PASS THROUGH OBLIGATION -- 0.1%
Federal Home Loan Mortgage Corp.
7.50%........... 07/17/00 62 63,365
------------
TOTAL MORTGAGE OBLIGATIONS....
63,365
------------
(Cost $62,073)
CORPORATE BONDS -- 6.0%
DIVERSIFIED -- 0.4%
General Electric Credit
6.20%........... 03/15/97 235 235,569
------------
FOREIGN -- 3.0%
Hydro Quebec (Euro)
5.375%.......... 11/15/99 1,850 1,823,730
------------
TECHNOLOGY -- 2.6%
CSC Enterprises
6.50%........... 11/15/01 1,600 1,617,392
------------
TOTAL CORPORATE
BONDS....................... 3,676,691
------------
(Cost $3,644,620)
U.S. TREASURY OBLIGATIONS -- 37.5%
U.S. GOVERNMENT OBLIGATIONS -- 0.3%
Government Trust Certificate
8.00%........... 10/06/97 154 154,393
------------
</TABLE>
See Accompanying Notes
22
<PAGE> 25
[LOGO] PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1996 ARMADA ENHANCED INCOME FUND
(UNAUDITED)
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
-------- --------- ------------
<S> <C> <C> <C>
U.S. TREASURY OBLIGATIONS (CONTINUED)
TREASURY NOTES -- 37.2%
U.S. Treasury Notes
6.50%........... 08/15/97 $ 2,000 $ 2,015,580
8.25%........... 07/15/98 5,000 5,208,200
5.25%........... 07/31/98 7,000 6,970,880
4.75%........... 10/31/98 6,645 6,548,182
5.75%........... 10/31/00 2,000 1,998,500
------------
22,741,342
------------
TOTAL U.S. TREASURY
OBLIGATIONS................. 22,895,735
------------
(Cost $22,771,135)
</TABLE>
<TABLE>
<CAPTION>
NUMBER
OF SHARES
---------
<S> <C> <C> <C>
TEMPORARY INVESTMENT -- 1.1%
Fidelity Domestic
Market
Portfolio......... 643,610 643,610
------------
(Cost $643,610)
TOTAL INVESTMENTS -- 100.0%.............. $ 61,084,735
============
(COST $60,805,283*)
</TABLE>
* Cost for Federal income tax purposes -- $60,807,719.
<TABLE>
<S> <C> <C> <C>
The gross unrealized appreciation (depreciation) for
Federal income tax purposes is as follows:
Gross appreciation..................... $ 289,076
Gross depreciation..................... (7,188)
------------
$ 281,888
------------
</TABLE>
(A) Maturity dates represent average weighted lives of the underlying
obligations.
See Accompanying Notes
23
<PAGE> 26
[LOGO] PORTFOLIO OF INVESTMENTS
ARMADA ENHANCED INCOME FUND
FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED
NOVEMBER 30, 1966 FOR THE YEAR ENDED MAY FOR THE PERIOD ENDED MAY
(UNAUDITED) 31, 1996 31, 1995
-------------------------- ------------------------ --------------------------
INSTITUTIONAL RETAIL INSTITUTIONAL RETAIL INSTITUTIONAL(3) RETAIL(3)
------------- ------ ------------- ------ -------------- -------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period..... $ 10.01 $10.02 $ 10.16 $ 10.18 $ 10.00 $10.10
------- ------ ------- ------- ------- ------
INCOME FROM INVESTMENT OPERATIONS
Net investment income.................. .28 .28 .58 .56 .51(7) .43(7)
Net gain/(loss) on securities (realized
and unrealized)...................... .10 .10 (.05) (.05) .06 .06
------- ------ ------- ------- ------- ------
Total from investment operations..... .38 .38 .53 .51 .57 .49
------- ------ ------- ------- ------- ------
LESS DISTRIBUTIONS
Dividends from net investment income... (.28) (.28) (.58) (.56) (.41) (.41)
Dividends in excess of net investment
income............................... (.00) (.00) (.10) (.11) (.00) (.00)
------- ------ ------- ------- ------- ------
Total distributions.................. (.28) (.28) (.68) (.67) (.41) (.41)
------- ------ ------- ------- ------- ------
Net asset value, end of period........... $ 10.11 $10.12 $ 10.01 $10.02 $ 10.16 $10.18
======= ====== ======= ======= ======= ======
TOTAL RETURN............................. 7.88%(4) 7.77%(4,5) 5.36% 5.13%(5) 6.54%(4,6) 6.84 (4,5,6)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000's)..... $59,768 $2,061 $66,918 $1,718 $60,467 $2,547
Ratio of expenses to average net
assets................................. .19%(1,4) .29%(2,4) .23%(1) .33%(2) .21%(1,4) .32% (2,4)
Ratio of net investment income to average
net assets............................. 5.63%(1,4) 5.50%(2,4) 5.72%(1) 5.55%(2) 5.70%(1,4) 5.89% (2,4)
Portfolio turnover rate.................. 150% 150% 98% 98% 36% 36%
</TABLE>
- ---------------
(1) The operating expense ratio and the net investment income ratio before fee
waivers by the Investment Adviser for the Institutional class for the period
ended November 30, 1996 would have been .64% and 5.18%, respectively. The
operating expense ratio and the net investment income ratio before fee
waivers by the Investment Adviser and Custodian for the Institutional class
for the year ended May 31, 1996 would have been .70% and 5.25%,
respectively. The operating expense ratio and the net investment income
ratio before fee waivers by the Investment Adviser, Administrator, and
Custodian for the Institutional class for the period ended May 31, 1995
would have been .71% and 5.20%, respectively.
(2) The operating expense ratio and the net investment income ratio before fee
waivers by the Investment Adviser for the Retail class for the period ended
November 30, 1996 would have been .74% and 5.05%, respectively. The
operating expense ratio and the net investment income ratio before fee
waivers by the Investment Adviser and Custodian for the Retail class for the
year ended May 31, 1996 would have been .80% and 5.08%, respectively. The
operating expense ratio and the net investment income ratio before fee
waivers by the Investment Adviser, Administrator, and Custodian for the
Retail class for the period ended May 31, 1995 would have been .79% and
5.42%, respectively.
(3) Institutional and Retail classes commenced operations on July 7, 1994 and
September 9, 1994, respectively.
(4) Annualized.
(5) Total return excludes sales charge.
(6) Total returns have been annualized based upon the period from each class'
commencement date through May 31, 1995. Gross total returns of the
Institutional and Retail classes for the period were 5.87% and 4.92%,
respectively.
(7) Calculated based upon average shares outstanding.
See Accompanying Notes
24
<PAGE> 27
[LOGO] PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1996 ARMADA GNMA FUND
(UNAUDITED)
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
-------- ---------- --------------
<S> <C> <C> <C>
U.S. GOVERNMENT OBLIGATIONS (A) -- 99.5%
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION -- 95.4%
Pool# 354106
7.50%.............. 09/11/05 $ 62 $ 62,858
Pool# 130626
11.50%............. 04/19/00 44 50,285
Pool# 132700
9.50%.............. 09/26/01 23 24,857
Pool# 136667
11.50%............. 05/18/00 38 43,519
Pool# 146462
11.50%............. 04/22/00 18 20,328
Pool# 146730
9.50%.............. 07/15/01 8 9,031
Pool# 147994
9.50%.............. 12/01/01 18 19,066
Pool# 148306
9.50%.............. 03/15/16 55 59,868
Pool# 151592
9.50%.............. 12/01/01 8 8,190
Pool# 157464
9.50%.............. 11/05/01 18 19,009
Pool# 161840
9.50%.............. 12/01/01 31 33,476
Pool# 162081
9.50%.............. 12/12/01 4 4,624
Pool# 162246
9.00%.............. 05/18/02 53 55,900
Pool# 166292
9.50%.............. 12/05/01 114 123,849
Pool# 167122
9.50%.............. 11/16/01 19 20,165
Pool# 170994
9.50%.............. 03/17/02 7 7,236
Pool# 177316
9.50%.............. 11/27/01 114 123,746
Pool# 182075
9.50%.............. 12/19/01 16 16,887
Pool# 183426
8.50%.............. 12/12/02 103 107,400
Pool# 188584
9.50%.............. 12/26/01 17 18,188
Pool# 192396
9.50%.............. 01/03/02 8 8,697
<CAPTION>
PAR
MATURITY (000) VALUE
-------- ---------- --------------
<S> <C> <C> <C>
Pool# 197478
9.50%.............. 12/30/01 $ 17 $ 18,028
Pool# 1996459
8.00%.............. 08/21/03 45 46,050
Pool# 200669
8.50%.............. 02/27/03 153 159,459
Pool# 200947
9.50%.............. 02/01/02 24 25,972
Pool# 201773
9.50%.............. 12/19/01 121 131,808
Pool# 202671
8.00%.............. 09/15/03 29 30,422
Pool# 202955
8.50%.............. 03/20/03 174 181,613
Pool# 203154
8.50%.............. 01/25/03 102 106,080
Pool# 2045245
9.50%.............. 01/28/02 3 3,174
Pool# 206979
8.50%.............. 03/13/03 95 99,183
Pool# 208540
8.00%.............. 08/13/03 101 104,037
Pool# 208850
9.50%.............. 12/23/01 15 16,351
Pool# 209632
9.00%.............. 08/28/02 137 145,321
Pool# 209664
9.50%.............. 01/21/02 22 23,814
Pool# 210824
9.50%.............. 02/01/02 9 10,212
Pool# 210849
9.50%.............. 10/18/01 17 18,170
Pool# 212289
9.50%.............. 01/25/02 15 16,085
Pool# 212306
8.50%.............. 03/02/03 116 121,511
Pool# 213458
8.00%.............. 09/12/03 96 98,713
Pool# 216632
8.50%.............. 03/20/03 85 89,176
Pool# 217772
9.50%.............. 02/01/02 24 26,069
Pool# 218738
9.50%.............. 01/17/02 3 3,061
</TABLE>
See Accompanying Notes
25
<PAGE> 28
[LOGO] PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1996 ARMADA GNMA FUND
(UNAUDITED)
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
-------- ---------- --------------
<S> <C> <C> <C>
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION (CONTINUED)
Pool# 220950
9.00%.............. 07/08/02 $ 446 $ 473,510
Pool# 223372
9.50%.............. 02/19/02 7 7,933
Pool# 223598
9.50%.............. 03/20/02 30 32,317
Pool# 225436
9.50%.............. 01/28/02 30 33,017
Pool# 225781
9.50%.............. 02/27/02 32 34,397
Pool# 228388
9.50%.............. 03/17/02 31 33,517
Pool# 228869
8.50%.............. 01/10/03 1,437 1,502,037
Pool# 231765
9.50%.............. 02/01/02 29 31,940
Pool# 231935
9.00%.............. 12/30/01 58 62,564
Pool# 232551
9.50%.............. 07/04/02 270 286,832
Pool# 233836
9.50%.............. 02/08/02 27 29,760
Pool# 234251
9.50%.............. 02/01/02 133 144,591
Pool# 234682
9.50%.............. 01/25/02 43 46,473
Pool# 236745
9.50%.............. 10/04/01 11 12,393
Pool# 237977
9.50%.............. 11/09/01 13 13,815
Pool# 248132
8.50%.............. 11/09/03 389 406,129
Pool# 248356
9.50%.............. 06/15/18 15 16,679
Pool# 248622
9.50%.............. 02/27/02 24 26,336
Pool# 252287
9.50%.............. 03/02/02 10 11,231
Pool# 254406
9.50%.............. 02/16/02 14 15,658
Pool# 258985
9.50%.............. 02/16/02 9 9,233
PAR
MATURITY (000) VALUE
-------- ---------- --------------
Pool# 259514
9.50%.............. 03/20/02 $ 14 $ 15,626
Pool# 259732
9.50%.............. 02/27/02 14 15,595
Pool# 262836
9.50%.............. 03/17/02 34 37,237
Pool# 264384
9.50%.............. 03/17/02 15 16,249
Pool# 266484
7.00%.............. 04/10/06 98 97,342
Pool# 266878
7.50%.............. 09/18/05 502 509,525
Pool# 267508
9.50%.............. 04/04/02 7 7,624
Pool# 268081
9.50%.............. 01/03/02 9 9,521
Pool# 270372
9.50%.............. 02/05/02 20 21,402
Pool# 271374
9.50%.............. 03/24/02 6 6,753
Pool# 276687
9.50%.............. 02/27/02 14 15,142
Pool# 279423
9.50%.............. 03/20/02 20 21,615
Pool# 280875
9.50%.............. 04/08/02 20 21,911
Pool# 284353
9.50%.............. 05/07/02 208 225,911
Pool# 285473
9.50%.............. 03/28/02 11 12,012
Pool# 289354
9.00%.............. 01/10/03 228 241,580
Pool# 289377
9.50%.............. 05/07/02 32 34,575
Pool# 290279
9.50%.............. 05/14/02 146 158,020
Pool# 290698
9.50%.............. 04/19/02 15 16,327
Pool# 293264
9.50%.............. 05/11/02 44 48,026
Pool# 293399
9.50%.............. 04/26/02 64 69,714
Pool# 298330
9.50%.............. 05/03/02 35 38,477
</TABLE>
See Accompanying Notes
26
<PAGE> 29
[LOGO] PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1996 ARMADA GNMA FUND
(UNAUDITED)
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
-------- ---------- --------------
<S> <C> <C> <C>
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION (CONTINUED)
Pool# 299246
9.50%.............. 05/14/02 $ 93 $ 100,397
Pool# 300698
9.00%.............. 12/16/02 447 473,983
Pool# 301286
8.50%.............. 11/02/03 389 406,902
Pool# 302597
8.50%.............. 09/26/03 36 37,699
Pool# 303772
8.50%.............. 12/12/03 301 314,882
Pool# 305294
8.50%.............. 11/16/03 67 70,079
Pool# 308911
9.50%.............. 05/03/02 373 405,062
Pool# 310780
8.50%.............. 01/06/04 276 288,871
Pool# 312896
8.50%.............. 12/08/03 82 85,534
Pool# 312919
8.50%.............. 2/16/03 388 405,912
Pool# 313891
8.50%.............. 01/06/04 347 363,096
Pool# 314292
8.50%.............. 06/23/03 251 262,385
Pool# 315965
8.50%.............. 02/01/04 222 231,904
Pool# 316989
8.50%.............. 11/09/03 120 125,068
Pool# 317586
8.50%.............. 01/06/04 383 400,587
Pool# 317593
8.50%.............. 11/27/03 342 357,415
Pool# 317777
8.50%.............. 11/27/03 183 191,734
Pool# 320229
7.50%.............. 07/07/05 414 419,883
Pool# 323079
8.50%.............. 12/30/03 280 292,524
Pool# 325411
7.00%.............. 01/20/06 24 23,589
Pool# 325994
8.50%.............. 01/21/04 178 185,979
PAR
MATURITY (000) VALUE
-------- ---------- --------------
Pool# 32767
9.00%.............. 11/15/24 $ 3,692 $ 3,931,028
Pool# 327085
7.50%.............. 06/19/05 46 46,949
Pool# 330280
7.00%.............. 04/03/06 138 137,272
Pool# 331837
7.00%.............. 02/22/06 310 308,086
Pool# 333163
8.50%.............. 01/06/04 356 371,712
Pool# 333188
8.50%.............. 12/16/03 265 277,117
Pool# 333977
7.50%.............. 08/16/05 105 106,896
Pool# 334116
7.50%.............. 08/09/05 357 362,333
Pool# 336541
7.50%.............. 09/11/05 224 227,027
Pool# 337353
7.00%.............. 01/31/06 28 27,612
Pool# 337540
7.00%.............. 02/17/06 1,343 1,336,389
Pool# 338766
7.50%.............. 07/29/05 354 359,044
Pool# 338845
7.00%.............. 02/15/06 433 431,196
Pool# 340307
7.50%.............. 07/29/05 355 359,934
Pool# 340792
7.50%.............. 08/31/05 32 32,607
Pool# 344011
8.00%.............. 10/28/04 17 17,524
Pool# 345892
7.00%.............. 04/25/06 91 90,942
Pool# 348356
7.50%.............. 08/01/06 273 277,106
Pool# 351215
8.50%.............. 03/01/04 273 284,974
Pool# 352047
7.00%.............. 04/25/06 886 881,984
Pool# 352108
7.00%.............. 04/10/06 430 427,634
Pool# 352143
7.50%.............. 08/31/05 33 33,447
</TABLE>
See Accompanying Notes
27
<PAGE> 30
[LOGO] PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1996 ARMADA GNMA FUND
(UNAUDITED)
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
-------- ---------- --------------
<S> <C> <C> <C>
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION (CONTINUED)
Pool# 352144
7.50%.............. 08/23/05 $ 428 $ 434,663
Pool# 352189
7.50%.............. 09/25/05 29 29,434
Pool# 352190
7.00%.............. 03/16/06 34 33,377
Pool# 353023
7.50%.............. 12/11/05 353 358,800
Pool# 353162
7.00%.............. 04/10/06 353 350,877
Pool# 355806
7.00%.............. 03/08/06 758 754,171
Pool# 356016
7.00%.............. 03/16/06 420 418,317
Pool# 357235
7.50%.............. 10/21/05 770 781,403
Pool# 357338
7.00%.............. 04/18/06 58 58,090
Pool# 357351
7.00%.............. 05/02/06 79 78,551
Pool# 357841
7.00%.............. 04/10/06 301 299,248
Pool# 358074
7.00%.............. 04/10/06 283 281,766
Pool# 358251
7.00%.............. 04/03/06 446 443,481
Pool# 358308
7.50%.............. 10/06/05 359 364,258
Pool# 358845
7.50%.............. 09/11/05 215 218,596
Pool# 359600
7.50%.............. 09/29/05 85 86,532
Pool# 359897
7.00%.............. 04/03/06 200 199,064
Pool# 36087
9.50%.............. 11/02/00 34 37,056
Pool# 362039
7.00%.............. 05/24/06 100 99,704
Pool# 362141
8.00%.............. 11/15/23 4,914 5,069,543
Pool# 362619
7.50%.............. 08/23/05 452 458,961
PAR
MATURITY (000) VALUE
-------- ---------- --------------
Pool# 363566
7.00%.............. 05/10/06 $ 75 $ 74,652
Pool# 364258
7.50%.............. 07/29/05 343 348,256
Pool# 366037
7.00%.............. 05/24/06 52 51,955
Pool# 366357
7.00%.............. 04/25/06 807 802,566
Pool# 368918
7.00%.............. 05/06/06 32 32,064
Pool# 369696
7.50%.............. 09/29/05 338 342,614
Pool# 369707
7.00%.............. 04/18/06 54 53,251
Pool# 370019
7.50%.............. 07/29/05 208 211,346
Pool# 371816
7.50%.............. 12/15/05 170 172,223
Pool# 371844
7.00%.............. 07/11/06 595 592,038
Pool# 373227
7.00%.............. 05/10/06 23 22,770
Pool# 374837
7.00%.............. 03/08/06 123 122,848
Pool# 374876
7.50%.............. 08/31/05 385 390,895
Pool# 375857
7.00%.............. 05/10/06 458 455,524
Pool# 377922
7.00%.............. 03/16/06 418 415,476
Pool# 377942
7.00%.............. 03/01/06 195 194,270
Pool# 378661
7.00%.............. 04/25/06 20 19,509
Pool# 384077
8.00%.............. 10/21/04 701 723,068
Pool# 384540
7.00%.............. 05/06/06 434 431,641
Pool# 385608
7.00%.............. 06/26/06 40 39,498
Pool# 385654
8.00%.............. 12/29/04 936 965,826
Pool# 388144
7.00%.............. 06/26/06 921 916,470
</TABLE>
See Accompanying Notes
28
<PAGE> 31
[LOGO] PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1996 ARMADA GNMA FUND
(UNAUDITED)
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
-------- ---------- --------------
<S> <C> <C> <C>
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION (CONTINUED)
Pool# 388741
7.50%.............. 11/26/05 $ 349 $ 353,782
Pool# 395142
7.00%.............. 03/01/07 449 447,142
Pool# 402183
7.00%.............. 08/20/07 996 991,426
Pool# 405267
7.00%.............. 08/05/07 997 991,793
Pool# 406421
7.00%.............. 02/22/07 44 43,729
Pool# 407922
7.00%.............. 09/11/07 997 991,703
Pool# 408674
7.00%.............. 02/26/07 748 744,270
Pool# 410588
7.00%.............. 09/11/07 996 991,298
Pool# 412235
7.00%.............. 08/05/07 719 715,866
Pool# 412760
8.75%.............. 09/19/02 986 1,038,324
Pool# 416211
7.00%.............. 08/12/07 997 991,618
Pool# 419305
7.00%.............. 07/01/02 1,916 1,942,030
Pool# 422585
7.00%.............. 05/28/07 142 141,215
Pool# 422720
7.00%.............. 08/12/07 508 505,148
Pool# 425771
7.00%.............. 10/06/07 268 266,700
Pool# 432663
7.00%.............. 09/03/07 498 495,838
Pool# 433050
7.00%.............. 09/22/07 997 991,563
Pool# 59129
11.50%............. 03/09/00 16 18,003
Pool# 59786
11.50%............. 03/06/00 31 35,554
Pool# 60456
11.50%............. 01/15/00 34 38,017
Pool# 60543
11.50%............. 03/28/00 28 32,196
PAR
MATURITY (000) VALUE
-------- ---------- --------------
Pool# 608
9.00%.............. 05/29/02 $ 1,855 $ 1,954,619
Pool# 61230
11.50%............. 03/24/00 17 19,541
Pool# 61730
11.50%............. 04/08/00 17 19,343
Pool# 61733
11.50%............. 04/04/00 24 26,815
Pool# 63551
11.50%............. 03/28/00 24 26,963
Pool# 66093
11.50%............. 12/06/99 8 9,497
Pool# 69510
11.50%............. 03/24/00 16 18,392
Pool# 70538
11.50%............. 03/17/00 25 28,523
Pool# 71263
11.50%............. 04/11/00 23 25,827
Pool# 780048
8.50%.............. 01/17/03 523 548,975
Pool# 90038
10.00%............. 09/14/04 22 23,628
Pool# 90069
9.00%.............. 01/26/99 98 103,881
Pool# 90172
9.50%.............. 03/02/00 53 56,869
Pool# 90193
9.50%.............. 04/11/01 24 26,230
Pool# 90208
9.50%.............. 03/02/00 6 6,313
Pool# 90223
9.00%.............. 11/21/99 71 74,446
Pool# 90250
9.00%.............. 09/09/99 146 153,929
Pool# 90332
9.00%.............. 11/25/98 73 76,876
Pool# 90334
9.50%.............. 03/02/00 108 117,085
Pool# 90337
9.00%.............. 11/05/03 102 108,091
Pool# 90401
9.50%.............. 03/06/00 169 182,401
Pool# 90413
10.00%............. 09/07/04 48 52,847
</TABLE>
See Accompanying Notes
29
<PAGE> 32
[LOGO] PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1996 ARMADA GNMA FUND
(UNAUDITED)
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
-------- ---------- --------------
<S> <C> <C> <C>
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION (CONTINUED)
Pool# 905259
11.25%............. 06/13/97 $ 36 $ 39,704
Pool# 905646
11.25%............. 05/01/09 51 56,039
Pool# 905680
11.25%............. 10/16/08 6 6,607
Pool# 905738
11.25%............. 05/01/09 34 37,075
Pool# 905999
11.25%............. 05/01/09 37 40,535
Pool# 90626
9.00%.............. 03/07/99 117 122,921
Pool# 90727
10.00%............. 10/07/03 6 6,046
Pool# 90923
9.00%.............. 07/04/00 204 215,270
Pool# 91020
10.00%............. 05/30/99 10 10,651
Pool# 91080
10.00%............. 03/09/00 89 97,470
Pool# 91434
10.00%............. 03/09/00 51 55,872
Pool# 9223
10.25%............. 11/14/09 30 32,790
Pool# 92338
9.50%.............. 03/13/00 6 6,354
Pool# 9306
10.25%............. 07/23/03 120 130,330
Pool# 93064
10.00%............. 05/12/99 92 100,668
Pool# 9342
10.25%............. 09/13/11 108 117,025
Poll# 210565
8.00%.............. 04/30/03 16 16,743
Pool #90470
9.50%.............. 01/01/02 295 318,617
Pool# 348778
7.50%.............. 04/15/23 474 481,028
Pool# 351910
7.00%.............. 02/15/24 19 19,401
PAR
MATURITY (000) VALUE
-------- ---------- --------------
Pool# 5147
7.25%.............. 01/22/00 $ 197 $ 198,430
Pool# 352724
7.50%.............. 09/11/05 186 188,476
------------
59,915,342
------------
FEDERAL HOME LOAN MORTGAGE CORP. -- 4.1%
Pool# D35743
7.00%.............. 02/15/05 380 378,465
Pool# D50927
7.00%.............. 02/26/05 197 196,387
Pool# D63132
7.00%.............. 01/27/06 486 483,680
Pool# D66557
7.00%.............. 04/14/06 163 162,146
Pool# E61857
7.00%.............. 01/28/02 1,012 1,021,894
Pool# D61873
7.00%.............. 11/04/05 321 319,456
------------
2,562,028
------------
TOTAL U.S. GOVERNMENT OBLIGATIONS........
62,477,370
------------
(Cost $61,554,761)
</TABLE>
<TABLE>
<CAPTION>
NUMBER
OF SHARES
----------
<S> <C> <C> <C>
TEMPORARY INVESTMENT -- 0.5%
Goldman Financial Square
Government Fund.............. 323,434 $ 323,434
--------------
(Cost $323,434)
TOTAL INVESTMENTS -- 100.0% $ 62,800,804
--------------
(Cost $61,878,195*)
</TABLE>
*Also cost for Federal income tax purposes.
<TABLE>
<S> <C> <C> <C>
The gross unrealized appreciation (depreciation) for
Federal income tax purposes is as follows:
Gross appreciation....................... $ 987,088
Gross depreciation....................... (64,479)
--------------
$ 922,609
--------------
</TABLE>
(A) Maturity dates represent average weighted lives of the underlying
obligations.
See Accompanying Notes
30
<PAGE> 33
[LOGO] FINANCIAL HIGHLIGHTS
ARMADA GNMA FUND
FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED
NOVEMBER 30, 1996(9) FOR THE PERIOD FOR THE YEAR FOR THE PERIOD
(UNAUDITED) ENDED ENDED ENDED
------------------------ MAY 31, APRIL 30, APRIL 30,
INSTITUTIONAL RETAIL(5) 1996(8) 1996 1995(4)
------------- ------ -------------- ------------ --------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period........ $ 10.03 $10.02 $ 10.12 $ 10.16 $ 10.00
------- ------ -------- -------- --------
INCOME FROM INVESTMENT OPERATIONS
Net investment income..................... .33 .14 .05 .66 .48
Net gain/(loss) on securities (realized
and unrealized)......................... .32 .33 (.09) .14 .16
------- ------ -------- -------- --------
Total from investment operations...... .65 .37 (.04) .80 .64
------- ------ -------- -------- --------
LESS DISTRIBUTIONS
Dividends from net investment income...... (.33) (.14) (.05) (.66) (.48)
Dividends in excess of net investment
income.................................. (.00)(7) (.00) (.00) (.00) (.00)
Dividends from net realized capital
gains................................... (.00) (.00) (.00) (.18) (.00)
------- ------ -------- -------- --------
Total distributions................... (.33) (.14) (.05) (.84) (.48)
------- ------ -------- -------- --------
Net asset value, end of period.............. $ 10.35 $10.35 $ 10.03 $ 10.12 $ 10.16
======= ====== ======== ======== ========
TOTAL RETURN................................ 13.61%(2) 13.48%(2,6) (0.35)%(3,6) 7.97%(6) 6.61%(3,6)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000's)........ $62,476 $ 124 $ 60,532 $ 62,161 $ 42,212
Ratio of expenses to average net assets..... .86%(1,2) 1.12%(2) .85%(1,2) .85%(1,2) .85%(1,2)
Ratio of net investment income to average
net assets................................ 6.52%(1,2) 6.19%(2) 6.33%(1,2) 6.30%(1,2) 6.68%(1,2)
Portfolio turnover rate..................... 32% 32% 1% 149% 226%
</TABLE>
(1) The operating expense ratio and the net investment income ratio before fee
waivers by the Investment Advisers and other service providers for the
Institutional class and the Predecessor Fund for the periods ended November
30, 1996 and May 31, 1996, for the year ended April 30, 1996, and for the
period ended April 30, 1995 would have been 1.15% and 6.23%, 1.28% and
5.90%, 1.29% and 5.86%, and 1.40% and 6.13%, respectively.
(2) Annualized.
(3) Not annualized.
(4) Predecessor Fund commenced operations on August 10, 1994.
(5) Retail class commenced operations on September 11, 1996.
(6) Total return excludes sales charge.
(7) Amount rounds to less than $.01
(8) As the Predecessor Fund changed its fiscal year end from April 30 to May 31,
the results of the operations of the Predecessor Fund from May 1, 1996 to
May 31, 1996 are presented here.
(9) Activity for the six months ended November 30, 1996 includes that of the
Predecessor Fund through September 6, 1996.
See Accompanying Notes
31
<PAGE> 34
[LOGO] PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1996 ARMADA INTERMEDIATE GOVERNMENT FUND
(UNAUDITED)
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
-------- ---------- --------------
<S> <C> <C> <C>
AGENCY OBLIGATION -- 3.3%
Federal National
Mortgage Association
5.39%............... 02/05/97 $ 3,000 $ 2,984,130
------------
TOTAL AGENCY OBLIGATIONS 2,984,130
------------
(Cost $2,957,715)
U.S. GOVERNMENT OBLIGATIONS (A) -- 47.7%
FEDERAL HOME LOAN MORTGAGE CORPORATION -- 23.1%
Pool# C80157
7.00%.............. 03/07/08 1,168 1,161,692
Pool# C80327
7.00%.............. 12/15/05 695 691,927
Pool# C80343
7.00%.............. 01/05/06 1,677 1,668,467
Pool# D61803
7.00%.............. 10/17/05 1,195 1,189,243
Pool# D63301
7.00%.............. 01/02/06 920 915,408
Pool# D63486
7.00%.............. 01/05/06 200 198,668
Pool# D63609
7.00%.............. 01/05/06 963 957,933
Pool# D64290
7.00%.............. 12/13/05 673 669,727
Pool# D64441
7.00%.............. 01/27/06 1,251 1,244,704
Pool# E20204
6.50%.............. 06/12/02 925 918,764
Pool# E20206
7.50%.............. 06/01/00 344 352,199
Pool# E60894
7.50%.............. 07/01/01 74 76,050
Pool# E61277
7.50%.............. 08/21/01 217 221,777
Pool# E64179
7.50%.............. 01/10/02 754 771,741
Pool# E64198
7.50%.............. 11/24/01 254 259,639
Pool# E64229
7.50%.............. 02/01/02 28 28,186
Pool# E64248
7.50%.............. 01/25/02 1,213 1,241,378
<CAPTION>
PAR
MATURITY (000) VALUE
-------- ---------- --------------
<S> <C> <C> <C>
Pool# M14983
7.50%.............. 04/23/97 $ 6 $ 6,332
Pool# 141138
7.50%.............. 09/06/09 666 675,257
Pool# 219329
9.25%.............. 01/26/99 120 126,056
Pool# 280417
8.50%.............. 08/21/00 16 16,375
Pool# 294315
8.50%.............. 04/26/03 25 26,377
Pool# 450074
8.50%.............. 04/24/10 181 189,098
Series 1038, Class F
9.00%.............. 04/02/98 66 67,459
Series 1141, Class F
8.50%.............. 12/31/98 1,728 1,774,372
Series 1400, Class A
6.25%.............. 12/31/99 326 327,731
Series 1587, Class Ez
5.75%.............. 10/01/99 2,387 2,291,563
Series 1606, Series Ea
5.75%.............. 11/21/99 300 297,261
Series 1612, Class Pd
5.75%.............. 09/20/99 500 495,606
Series 1635, Class D
5.20%.............. 06/17/98 500 493,801
Series 1673, Class B
4.95%.............. 08/03/97 100 99,415
Series 1679, Class A
5.25%.............. 09/02/98 612 603,925
Series 23, Class PC
4.75%.............. 05/04/97 382 379,052
Series 78, Class D
8.70%.............. 05/15/98 405 414,843
------------
20,852,026
------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION -- 6.2%
Pool# 210452
9.50%.............. 01/25/02 184 198,638
Pool# 250007
6.50%.............. 07/23/03 415 403,211
Pool# 31592
7.50%.............. 02/28/00 224 226,994
Pool# 77831
7.50%.............. 02/06/00 250 253,608
</TABLE>
See Accompanying Notes
32
<PAGE> 35
[LOGO] PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1996 ARMADA INTERMEDIATE GOVERNMENT FUND
(UNAUDITED)
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
-------- ---------- --------------
<S> <C> <C> <C>
FEDERAL NATIONAL MORTGAGE ASSOCIATION (CONTINUED)
Series G92-1, Class C
8.25%.............. 08/14/97 $ 74 $ 74,791
Series G92-48, Class H
7.50%.............. 05/18/03 1,000 1,033,748
Series 1991-66,
Class H
8.125%............. 03/07/98 1,086 1,100,891
Series 1992-170,
Class G
6.75%.............. 11/10/99 500 497,708
Series 1993-29,
Class Pe
6.00%.............. 03/07/99 500 497,459
Series 1994-65,
Class Pd
6.50%.............. 10/19/98 945 950,512
Series 1994-72,
Class e
6.00%.............. 04/19/00 400 398,361
------------
5,635,921
------------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION -- 18.4%
Pool #362141
8.00%.............. 11/15/23 2,605 2,686,857
Pool# 1388
9.00%.............. 10/07/02 510 537,500
Pool# 164759
9.00%.............. 07/15/02 93 99,027
Pool# 164775
9.50%.............. 03/24/02 296 320,749
Pool# 170814
9.00%.............. 07/04/02 186 197,049
Pool# 174837
9.00%.............. 06/20/02 144 153,022
Pool# 183976
7.50%.............. 08/05/05 142 144,334
Pool# 190295
9.00%.............. 07/15/02 526 558,435
Pool# 208541
9.00%.............. 08/06/02 292 309,841
Pool# 211630
8.00%.............. 08/21/03 257 265,189
<CAPTION>
PAR
MATURITY (000) VALUE
-------- ---------- --------------
<S> <C> <C> <C>
Pool# 212415
8.00%.............. 10/14/03 $ 170 $ 175,401
Pool# 213252
9.00%.............. 07/15/02 221 234,678
Pool# 214178
8.00%.............. 09/12/03 354 365,317
Pool# 303442
8.50%.............. 11/24/03 78 81,207
Pool# 304732
7.50%.............. 07/22/05 1,251 1,270,106
Pool# 310780
8.50%.............. 01/06/04 36 37,774
Pool# 314586
8.50%.............. 11/16/03 519 542,695
8.50%.............. 12/12/03 399 416,455
Pool# 319999
8.50%.............. 11/09/03 282 294,169
Pool# 321563
8.50%.............. 01/14/04 139 145,312
Pool# 321786
8.50%.............. 01/21/04 389 407,013
Pool# 325399
7.50%.............. 07/22/05 22 22,410
Pool# 328142
8.00%.............. 09/22/04 29 30,410
Pool# 331869
7.50%.............. 08/09/04 530 538,243
Pool# 332285
8.50%.............. 12/08/03 346 361,736
Pool# 334669
7.50%.............. 10/13/05 357 362,826
Pool# 337049
7.50%.............. 09/03/05 712 722,940
Pool# 337062
7.50%.............. 09/18/05 437 444,050
Pool# 348665
7.50%.............. 08/16/05 426 432,010
Pool# 353996
7.50%.............. 08/16/05 113 114,857
Pool# 363672
7.00%.............. 04/18/06 323 320,896
Pool# 36473
8.50%.............. 12/26/03 203 212,452
</TABLE>
See Accompanying Notes
33
<PAGE> 36
[LOGO] PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1996 ARMADA INTERMEDIATE GOVERNMENT FUND
(UNAUDITED)
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
-------- ---------- --------------
<S> <C> <C> <C>
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION (CONTINUED)
Pool# 369164
7.00%.............. 05/17/06 $ 497 $ 494,511
Pool# 371437
7.00%.............. 01/13/06 281 280,035
Pool# 376350
7.00%.............. 05/02/06 349 347,433
Pool# 378507
8.00%.............. 12/04/04 839 865,685
Pool# 417129
7.00%.............. 03/05/07 251 249,656
Pool# 418003
7.00%.............. 03/12/07 247 245,666
Pool# 420502
7.00%.............. 06/04/07 486 483,518
Pool# 780153
9.00%.............. 06/23/02 163 175,787
Pool# 90030
9.50%.............. 01/28/04 60 65,120
Pool# 90066
9.50%.............. 04/25/04 33 35,212
Pool# 90089
9.50%.............. 06/11/04 10 10,674
Pool# 90129
9.50%.............. 07/16/99 54 57,855
Pool# 90956
9.50%.............. 06/09/03 69 74,860
Pool# 9244
8.25%.............. 03/29/99 149 152,773
Pool# 9279
8.25%.............. 07/20/17 262 268,257
------------
16,612,002
------------
TOTAL U.S. GOVERNMENT OBLIGATIONS......
43,099,949
------------
(Cost $42,681,831)
ASSET-BACKED SECURITIES (A) -- 4.5%
Greentree Financial Corporation Series
1995-8, Class A4
6.60%.............. 12/15/26 4,000 4,061,056
------------
(Cost $3,946,566)
PAR
MATURITY (000) VALUE
-------- ---------- --------------
PRIVATE LABEL MORTGAGE-BACKED SECURITIES (A) -- 7.1%
Residential Asset Securitization Trust
Series 1996-A6, Class A5
7.625%............. 02/01/02 $ 3,000 $ 3,062,760
Structured Asset Sales Inc. Series
1994-5, Class AM
7.00%.............. 07/25/24 3,409 3,379,939
------------
TOTAL PRIVATE LABEL MORTGAGE-BACKED
SECURITIES............................... 6,442,699
------------
(Cost $6,288,925)
U.S. TREASURY OBLIGATIONS -- 35.9%
U.S. TREASURY BONDS -- 12.4%
10.75%............. 02/15/03 9,000 11,227,769
------------
U.S. TREASURY NOTES -- 23.5%
8.875%............. 11/15/97 5,600 5,777,016
5.375%............. 11/30/97 7,250 7,246,809
7.00%.............. 04/15/99 8,000 8,239,199
------------
21,263,024
------------
TOTAL U.S. TREASURY OBLIGATIONS........
32,490,793
(Cost $32,274,953) ------------
</TABLE>
<TABLE>
<CAPTION>
NUMBER
OF SHARES
----------
<S> <C> <C> <C>
TEMPORARY INVESTMENT -- 1.5%
Goldman Sachs Financial Square
Government Fund 1,325,918 1,325,918
--------------
(Cost $1,325,918)
TOTAL INVESTMENTS -- 100.0% $ 90,404,545
=============
(Cost $89,475,908*)
</TABLE>
*Also cost for Federal income tax purposes.
The gross unrealized appreciation (depreciation) for Federal income tax purposes
is as follows:
<TABLE>
<S> <C>
Gross appreciation........................ $992,034
Gross depreciation........................ (63,397)
--------
$928,637
--------
</TABLE>
(A) Maturity dates represent weighted average lives of the underlying
obligations.
See Accompanying Notes
34
<PAGE> 37
[LOGO] FINANCIAL HIGHLIGHTS
ARMADA INTERMEDIATE GOVERNMENT FUND
FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED
NOVEMBER 30, 1996(8) FOR THE PERIOD FOR THE YEAR FOR THE PERIOD
(UNAUDITED) ENDED ENDED ENDED
------------------------ MAY 31, APRIL 30, APRIL 30,
INSTITUTIONAL RETAIL(5) 1996(7) 1996 1995(4)
------------- ------ -------------- ------------ --------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period........ $ 9.97 $ 9.97 $ 10.04 $ 10.02 $ 10.00
------- ------ -------- -------- --------
INCOME FROM INVESTMENT OPERATIONS
Net investment income..................... .29 .12 .05 .64 .44
Net gain/(loss) on securities (realized
and unrealized)......................... .26 .26 (.07) .07 .02
------- ------ -------- -------- --------
Total from investment operations...... .55 .38 (.02) .71 .46
LESS DISTRIBUTIONS
Dividends from net investment income...... (.29) (.12) (.05) (.64) (.44)
Dividends from net realized capital
gains................................... (.00) (.00) (.00) (.05) (.00)
------- ------ -------- -------- --------
Total distributions................... (.29) (.12) (.05) (.69) (.44)
------- ------ -------- -------- --------
Net asset value, end of period.............. $ 10.23 $10.23 $ 9.97 $ 10.04 $ 10.02
======= ====== ======== ======== ========
TOTAL RETURN................................ 11.48%(2) 11.37%(2,6) (0.19)%(3,6) 7.09%(6) 4.75%(3,6)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000's)........ $90,502 $ 23 $ 88,829 $ 89,901 $ 53,316
Ratio of expenses to average net assets..... .84%(1,2) 1.07%(2) .85%(1,2) .85%(1,2) .85%(1,2)
Ratio of net investment income
to average net assets..................... 5.77%(1,2) 5.46%(2) 5.88%(1,2) 6.20%(1,2) 6.17%(1,2)
Portfolio turnover rate..................... 36% 36% 2% 94% 172%
</TABLE>
(1) The operating expense ratio and the net investment income ratio before fee
waivers by the Investment Advisers and other service providers for the
Institutional class and the Predecessor Fund for the periods ended November
30, 1996 and May 31, 1996, for the year ended April 30, 1996, and for the
period ended April 30, 1995 would have been 1.09% and 5.52%, 1.25% and
5.48%, 1.25% and 5.80%, and 1.33% and 5.69%, respectively.
(2) Annualized.
(3) Not annualized.
(4) Predecessor Fund commenced operations on August 10, 1994.
(5) Retail class commenced operations on September 11, 1996.
(6) Total return excludes sales charge.
(7) As the Predecessor Fund changed its fiscal year end from April 30 to May 31,
the results of the operations of the Predecessor Fund from May 1, 1996 to
May 31, 1996 are presented here.
(8) Activity for the six months ended November 30, 1996 includes that of the
Predecessor Fund through September 6, 1996.
See Accompanying Notes
35
<PAGE> 38
[LOGO] FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
NOVEMBER 30, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
TOTAL RETURN ENHANCED INTERMEDIATE
ADVANTAGE FIXED INCOME INCOME GNMA GOVERNMENT
FUND FUND FUND FUND FUND
------------ ------------ ----------- ----------- ------------
<S> <C> <C> <C> <C> <C>
ASSETS
Investments at value (Cost $273,662,686,
$109,045,782, $60,805,283, $61,878,195,
and $89,475,908, respectively)............ $278,986,995 $111,035,627 $61,084,735 $62,800,804 $90,404,545
Interest and dividends receivable........... 2,767,124 1,639,335 657,437 409,991 962,255
Receivable for Fund shares sold............. 300,521 342,741 209,163 60,481 80,470
Receivable for investments sold............. 2,051,826 4,385,273 -- -- --
Prepaid expenses............................ 16,035 3,558 16,549 18,104 17,440
------------ ------------ ----------- ----------- -----------
TOTAL ASSETS................................ 284,122,501 117,406,534 61,967,884 63,289,380 91,464,710
------------ ------------ ----------- ----------- -----------
LIABILITIES
Dividends Payable -- Institutional class.... 599,446 512,543 111,917 336,674 428,687
Dividends Payable -- Retail class........... 28 17,676 9 77 --
Payable for Fund shares redeemed............ 747,694 18,719 -- 255,625 378,615
Payable for investments purchased........... 2,025,941 4,456,927 -- -- --
Accrued expenses............................ 77,089 93,292 27,090 97,078 132,783
------------ ------------ ----------- ----------- -----------
TOTAL LIABILITIES........................... 3,450,198 5,099,157 139,016 689,454 940,085
------------ ------------ ----------- ----------- -----------
NET ASSETS.................................. $280,672,303 $112,307,377 $61,828,868 $62,599,926 $90,524,625
============ ============ =========== =========== ===========
NET ASSETS CONSIST OF:
Paid-in capital............................. $273,079,003 $111,762,575 $61,227,244 $61,139,736 $88,961,757
Distributions in excess of net investment
income.................................... -- -- -- -- (5,354)
Undistributed net realized gain (loss) on
investments sold.......................... 2,268,991 (1,445,043) 322,172 537,581 639,585
Net unrealized appreciation on
investments............................... 5,324,309 1,989,845 279,452 922,609 928,637
------------ ------------ ----------- ----------- -----------
$280,672,303 $112,307,377 $61,828,868 $62,599,926 $90,524,625
============ ============ =========== =========== ===========
Net Assets -- Institutional class........... $278,482,637 $108,410,352 $59,768,104 $62,476,038 $90,501,747
Shares outstanding -- Institutional class... 26,942,528 10,261,522 5,912,978 6,037,266 8,850,031
Net asset value, Offering price and
Redemption price per share --
Institutional class....................... $ 10.34 $ 10.56 $ 10.11 $ 10.35 $ 10.23
============ ============ =========== =========== ===========
Net Assets -- Retail class.................. $ 2,189,666 $ 3,897,025 $ 2,060,764 $ 123,888 $ 22,878
Shares outstanding -- Retail class.......... 211,877 367,062 203,555 11,972 2,237
Net asset value, and Redemption price per
share -- Retail class..................... $ 10.33 $ 10.62 $ 10.12 $ 10.35 $ 10.23
============ ============ =========== =========== ===========
Maximum sales charge -- Retail class........ 3.75% 3.75% 2.75% 3.75% 3.75%
Maximum offering price per Retail share..... $ 10.73 $ 11.03 $ 10.41 $ 10.75 $ 10.63
============ ============ =========== =========== ===========
</TABLE>
See Accompanying Notes
36
<PAGE> 39
[LOGO] FINANCIAL STATEMENTS
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED NOVEMBER 30, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
TOTAL
RETURN FIXED ENHANCED INTERMEDIATE
ADVANTAGE INCOME INCOME GNMA GOVERNMENT
FUND FUND FUND FUND(1) FUND(1)
----------- ---------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest....................................... $ 9,948,937 $4,135,839 $1,974,187 $2,326,276 $3,039,082
----------- ---------- ---------- ---------- ----------
EXPENSES:
Investment Advisory fees....................... 794,715 349,115 152,603 198,728 289,918
Administration fees............................ 133,439 63,476 33,912 45,032 65,756
Custodian fees................................. 19,859 11,530 6,965 7,360 6,672
Legal fees..................................... 13,770 5,469 3,821 1,564 2,262
Registration and filing fees................... 13,350 9,534 2,550 7,114 2,027
Transfer Agent fees............................ 10,274 21,379 10,027 13,854 15,300
Distribution fees.............................. 8,459 3,531 1,993 869 1,269
Audit fees..................................... 4,717 1,788 1,127 20,647 1,033
Trustees' fees................................. 4,332 1,644 1,034 2,188 3,200
Printing and shareholder reports............... 3,518 1,238 1,239 5,399 5,677
Shareholder servicing fees -- Retail class
only......................................... 2,612 6,264 1,000 67 12
Amortization of organization costs............. 2,181 -- 2,079 1,811 1,811
Insurance...................................... 1,715 622 423 303 438
Miscellaneous.................................. 839 127 175 9,949 37,670
12b-1 fees..................................... -- 25,396 -- 48,052 70,335
Fees waived.................................... -- -- -- (42,191) (61,844)
Fees waived by Investment Adviser.............. (794,715) (31,169) (152,603) (50,450) (54,417)
----------- ---------- ---------- ---------- ---------
Total expenses................................. 219,065 469,944 66,345 270,296 387,119
----------- ---------- ---------- ---------- ---------
NET INVESTMENT INCOME............................ 9,729,872 3,665,895 1,907,842 2,055,980 2,651,963
REALIZED AND UNREALIZED GAIN/ (LOSS) ON
INVESTMENTS
Net realized gain/(loss) on investments sold... (1,318,580) 492,735 138,897 (100,173) (92,879)
Net change in unrealized appreciation on
investments.................................. 14,489,642 2,727,377 515,504 2,055,944 2,412,188
----------- ---------- ---------- ---------- ---------
Net gain on investments........................ 13,171,062 3,220,112 654,401 1,955,771 2,319,309
----------- ---------- ---------- ---------- ---------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS..................................... $22,900,934 $6,886,007 $2,562,243 $4,011,751 $4,971,272
=========== ========== ========== ========== ==========
</TABLE>
(1) Activity for the six months ended November 30, 1996 includes that of the
Predecessor Fund through September 6, 1996.
See Accompanying Notes
37
<PAGE> 40
[LOGO] FINANCIAL STATEMENTS
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
TOTAL RETURN ADVANTAGE ENHANCED
FUND FIXED INCOME FUND INCOME FUND
-------------------------- -------------------------- -------------------------
FOR THE FOR THE FOR THE
SIX MONTHS FOR THE SIX MONTHS FOR THE SIX MONTHS FOR THE
ENDED YEAR ENDED YEAR ENDED YEAR
NOVEMBER 30, ENDED NOVEMBER 30, ENDED NOVEMBER 30, ENDED
1996 MAY 31, 1996 MAY 31, 1996 MAY 31,
(UNAUDITED) 1996 (UNAUDITED) 1996 (UNAUDITED) 1996
------------ ------------ ------------ ------------ ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
INCREASE IN NET ASSETS:
Operations:
Net investment income.... $ 9,729,872 $ 18,744,051 $ 3,665,895 $ 6,163,141 $ 1,907,842 $ 3,787,166
Net realized gain/(loss)
on investments sold..... (1,318,580) 12,820,049 492,735 664,254 138,897 302,951
Net change in unrealized
appreciation on
investments............. 14,489,642 (20,509,451) 2,727,377 (3,207,398) 515,504 (648,178)
------------ ------------ ------------ ------------ ----------- -----------
Net increase/(decrease)
in net assets resulting
from operations......... 22,900,934 11,054,649 6,886,007 3,619,997 2,562,243 3,441,939
------------ ------------ ------------ ------------ ----------- -----------
Distributions to
shareholders from net
investment income....... (9,729,872) (18,744,051) (3,665,895) (6,163,141) (1,907,842) (3,787,166)
Distributions to
shareholders in excess
of net investment
income.................. -- (3,016,611) -- -- -- (589,947)
Distributions to
shareholders from net
realized capital
gains................... -- (8,344,492) -- -- -- --
Distributions to
shareholders in excess
of net realized gains... -- -- -- (253,500) -- --
Increase/(decrease) in
net assets derived from
capital share
transactions............ (14,939,668) 39,981,901 (8,638,520) 26,678,768 (7,461,455) 6,557,090
------------ ------------ ------------ ------------ ----------- -----------
Total increase/(decrease)
in net assets........... (1,768,606) 20,931,396 (5,418,408) 23,882,124 (6,807,054) 5,621,916
------------ ------------ ------------ ------------ ----------- -----------
NET ASSETS:
Beginning of period...... 282,440,909 261,509,513 117,455,785 93,573,661 68,635,922 63,014,006
------------ ------------ ------------ ------------ ----------- -----------
End of period............ $280,672,303 $282,440,909 $112,037,377 $117,455,785 $61,828,868 $68,635,922
============ ============ ============ ============ =========== ===========
<CAPTION>
INTERMEDIATE GOVERNMENT
GNMA FUND(1) FUND(1)
------------ -------------------------
FOR THE FOR THE
SIX MONTHS FOR THE SIX MONTHS
ENDED PERIOD ENDED FOR THE
NOVEMBER 30, ENDED NOVEMBER 30, PERIOD
1996 MAY 31, 1996 ENDED MAY
(UNAUDITED) 1996 (UNAUDITED) 31, 1996
------------ ----------- ------------ -----------
<S> <C> <C> <C> <C>
INCREASE IN NET ASSETS:
Operations:
Net investment income.... $ 2,055,980 $ 334,533 $ 2,651,963 $ 451,062
Net realized gain/(loss)
on investments sold..... (100,173) -- (92,879) (18,968)
Net change in unrealized
appreciation on
investments............. 2,055,944 (528,892) 2,412,188 (623,881)
----------- ----------- ----------- -----------
Net increase/(decrease)
in net assets resulting
from operations......... 4,011,751 (194,359) 4,971,272 (191,787)
----------- ----------- ----------- -----------
Distributions to
shareholders from net
investment income....... (2,055,168) (335,347) (2,651,963) (451,062)
Distributions to
shareholders in excess
of net investment
income.................. -- -- -- (5,354)
Distributions to
shareholders from net
realized capital
gains................... -- -- -- --
Distributions to
shareholders in excess
of net realized gains... -- -- -- --
Increase/(decrease) in
net assets derived from
capital share
transactions............ 111,043 (1,098,837) (623,831) (423,959)
----------- ----------- ----------- -----------
Total increase/(decrease)
in net assets........... 2,067,626 (1,628,543) 1,695,478 (1,072,162)
----------- ----------- ----------- -----------
NET ASSETS:
Beginning of period...... 60,532,300 62,160,843 88,829,147 89,901,309
----------- ----------- ----------- -----------
End of period............ $62,599,926 $60,532,300 $90,524,625 $88,829,147
=========== =========== =========== ===========
</TABLE>
(1) Activity for the six months ended November 30, 1996 includes that of the
Predecessor Fund through September 6, 1996.
See Accompanying Notes
38
<PAGE> 41
[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. The Trust was
organized as a Massachusetts business trust on January 28, 1986. The Trust is a
series fund which is authorized to issue thirty-two classes of shares of
beneficial interest, each of which evidences an interest in one of 16 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)
Total Return Advantage Fund
(Class P "Institutional" shares and Class P-Special Series 1 "Retail" shares)
Pennsylvania Tax Exempt Fund
(Class Q "Institutional" shares and Class Q-Special Series 1 "Retail" shares)
Intermediate Government Fund
(Class R "Institutional" shares and Class R-Special Series 1 "Retail" shares)
GNMA Fund
(Class S "Institutional" shares and Class S-Special Series 1 "Retail" shares)
Pennsylvania Municipal Fund
(Class T "Institutional" shares and Class T-Special Series 1 "Retail" shares)
As of the date of this report, the National Tax Exempt Fund has not commenced
operations.
FUND REORGANIZATION: On May 3, 1996, Integra Financial Corporation ("Integra
Financial") merged into National City Corporation ("National City"). Integra
Trust Company, an affiliate of Integra Financial, served as Investment Adviser
to Inventor Funds, Inc. ("Inventor"). On May 2, 1996, the execution of new
investment advisory agreements between Inventor and affiliates of National City
received shareholder approval.
On February 15 and March 18, 1996, the respective Boards of Trustees of the
Trust and Inventor each approved the Agreement and Plan of Reorganization
between Armada Funds and Inventor (the "Agreement"). Subsequently, a proxy
solicitation to approve the components of the Agreement
39
<PAGE> 42
[LOGO] NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
was executed, the results of which for each of the Inventor Funds are listed
below:
<TABLE>
<CAPTION>
SHARES VOTED
------------------------------ PERCENT
FOR AGAINST ABSTAIN VOTED
---------- ------- ------- -------
<S> <C> <C> <C> <C>
Inventor Pennsylvania
Tax-Exempt Money Market
Fund................... 36,822,578 95,225 267,862 54%
Inventor Pennsylvania
Municipal Bond Fund.... 3,386,184 -- 3,300 88%
Inventor Intermediate
Government Securities
Fund................... 8,128,329 2,217 12,189 91%
Inventor GNMA Securities
Fund................... 5,504,614 7,087 14,280 92%
Inventor Equity Growth
Fund................... 4,185,300 6,923 2,554 92%
</TABLE>
The Reorganization was executed on September 9, 1996.
As part of the Reorganization, on September 9, 1996, Inventor GNMA Securities
Fund and Inventor Intermediate Government Securities Fund (the "Predecessor
Funds") transferred all of their assets and liabilities with approximate values
of $63,566,229 and $92,883,276, respectively, in exchange for shares of Armada
GNMA Fund and Armada Intermediate Government Fund, respectively. The
Reorganizations of the Armada GNMA and Intermediate Government Funds were
executed as tax-free reorganizations in accordance with Section 368(a)(1)(F) of
the Internal Revenue Code of 1986, (the "Internal Revenue Code") as amended. The
results of operations, changes in net assets and financial highlights of the
Armada GNMA and Intermediate Government Funds for the six months ended November
30, 1996 include those of the respective Predecessor Funds.
In accordance with Agreement provisions, the Trust and Inventor were each
responsible for the payment of their own expenses incurred in connection with
the Reorganization to the extent not borne by their respective Investment
Advisers. Accordingly, the Trust absorbed approximately $200,000 in costs
connected with the Reorganization, which has been allocated among the various
Funds in the Trust.
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 following is a summary of significant accounting policies followed by the
Total Return Advantage, Fixed Income, Enhanced Income, GNMA and Intermediate
Government Funds (the "Funds") in preparation of their financial statements.
PORTFOLIO VALUATION: Securities for which market quotations are readily
available are valued at their market values determined on the basis of the mean
between their current available bid and asked prices in the principal market
(closing sales prices if the principal market is an exchange) in which such
securities are normally traded. Securities and other assets for which quotations
are not readily available are valued at their fair market value under procedures
approved by the Board of Trustees. Short-term investments having maturities of
60 days or less are generally valued on the basis of amortized cost.
SECURITY TRANSACTIONS AND INVESTMENT INCOME: Security transactions are
accounted for 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 the net investment
income of the Funds are declared daily and paid no later than five business days
after the end of the month. With respect to each Fund, net income for dividend
40
<PAGE> 43
[LOGO] NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
purposes consists of dividends and interest income, 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.
FEDERAL INCOME TAXES: Each of the Funds is classified as a separate taxable
entity for Federal income tax purposes. Each of the Funds intends to qualify as
a separate "regulated investment company" under the Internal Revenue Code and
make the requisite distributions to its shareholders that will be sufficient to
relieve it from Federal income tax and Federal excise tax. Therefore, no Federal
tax provision is required. To the extent that distributions from net investment
income and realized net capital gains exceed amounts reported in the financial
statements, such amounts are reported separately.
ORGANIZATION 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, National City Bank of Kentucky, and
National Asset Management Corporation, wholly-owned subsidiaries of National
City Corporation, (collectively, the "Adviser" or "Advisers"), are payable
monthly based on an annual rate of .55%, .55%, .45%, .55% and .55% of the
average daily net assets of the Total Return Advantage, Fixed Income, Enhanced
Income, GNMA, and Intermediate Government Funds, respectively. The Advisers may
from time to time waive their fees payable by the Funds. For the period ended
November 30, 1996, the Advisers have earned and waived fees as follows:
<TABLE>
<CAPTION>
EARNED WAIVED
---------- --------
<S> <C> <C>
Total Return Advantage Fund $ 794,715 $794,715
Fixed Income Fund 349,115 31,169
Enhanced Income Fund 152,603 152,603
GNMA Fund 198,728 50,450
Intermediate Government
Fund 289,918 54,417
</TABLE>
At November 30, 1996, advisory fees accrued and unpaid amounted to:
<TABLE>
<S> <C>
Total Return Advantage Fund $ 0
Fixed Income Fund 33,548
Enhanced Income Fund 0
GNMA Fund 37,204
Intermediate Government Fund 54,364
</TABLE>
Fees paid by the Trust, under a Shareholder Servicing Plan (the "Plan") to
NatCity Investments, Inc., a wholly-owned subsidiary 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 Total Return
Advantage, Fixed Income, GNMA and Intermediate Government Funds and .10% of the
average daily net assets of the Retail class of the Enhanced Income Fund.
NatCity Investments, Inc. was paid fees for the period ended November 30, 1996
in the following amounts:
<TABLE>
<S> <C>
Total Return Advantage Fund $ 1,020
Fixed Income Fund 1,950
Enhanced Income Fund 412
GNMA Fund 0
Intermediate Government Fund 0
</TABLE>
National City Bank, a wholly-owned subsidiary of National City Corporation,
serves as the Funds' Custodian. National City Bank commenced services
41
<PAGE> 44
[LOGO] NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
as custodian to the GNMA Fund and Intermediate Government Fund effective August
5, 1996. For the period ended November 30, 1996, National City Bank has earned
Custodian fees as follows:
<TABLE>
<S> <C>
Total Return Advantage Fund $19,859
Fixed Income Fund 11,530
Enhanced Income Fund 6,965
GNMA Fund 5,388
Intermediate Government Fund 5,404
</TABLE>
440 Financial Distributors, Inc. ("Distributor"), a wholly-owned subsidiary of
The Shareholder Services Group, Inc., and an indirect wholly-owned subsidiary of
First Data Corp., serves as the Trust's Distributor. Under the Trust's
Distribution Agreement and related Distribution Plan adopted under Rule 12b-1 of
the Investment Company Act of 1940, each Fund reimburses the Distributor 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 Funds with respect to which the Distributor is
distributing shares.
SEI Financial Services Company, a wholly-owned subsidiary of SEI Corporation
("SEI"), served as Distributor to the GNMA and Intermediate Government Funds
prior to the Reorganization. Under a Rule 12b-1 Distribution Plan, SEI earned
and waived Fees at an annual rate of up to .25% of the average daily net assets
of the Predecessor Funds' Class A shares.
Pursuant to the Board of Trustees' approval on November 15, 1996, SEI has been
appointed as the Trust's Distributor and will commence services as such in 1997.
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
Investment 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 period ended November 30, 1996 include legal fees paid to
Drinker Biddle & Reath. A partner of the firm is Secretary of the Trust.
3. PURCHASES AND SALES OF SECURITIES
During the six months ended November 30, 1996, purchases and sales of
securities, other than short-term investments or U.S. government obligations,
aggregated:
<TABLE>
<CAPTION>
PURCHASES SALES
------------ ------------
<S> <C> <C>
Total Return
Advantage Fund $183,551,938 $153,123,590
Fixed Income Fund 41,321,100 47,811,272
Enhanced Income Fund 37,454,343 26,544,747
GNMA Fund 0 0
Intermediate
Government Fund 10,238,094 0
</TABLE>
42
<PAGE> 45
[LOGO] NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
Purchases and sales of long-term U.S. government obligations were:
<TABLE>
<CAPTION>
PURCHASES SALES
------------ ------------
<S> <C> <C>
Total Return
Advantage Fund $ 37,203,340 $ 79,500,254
Fixed Income Fund 66,683,802 68,797,485
Enhanced Income Fund 47,809,688 42,981,410
GNMA Fund 21,951,863 19,484,720
Intermediate
Government Fund 23,214,278 32,225,166
</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 pages for
the Total Return Advantage, Fixed Income, Enhanced Income, GNMA and Intermediate
Government Funds.
5. CHANGE IN INVESTMENT POLICY
During the period ended November 30, 1996, shareholders of the Enhanced Income
Fund, through a proxy solicitation, approved a revision to the Fund's investment
objective. Effective September 30, 1996, the Fund's current investment objective
is to seek a total rate of return greater than that of the Merrill Lynch 1-3
year Treasury Index. The results of shareholder voting are summarized below:
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN PERCENT VOTED
- ---------- ------- ------- -------------
<S> <C> <C> <C>
5,652,415 -- -- 91%
</TABLE>
43
<PAGE> 46
[LOGO] NOTES TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
FOR THE PERIOD ENDED NOVEMBER 30, 1996
------------------------------------------------------------
INSTITUTIONAL CLASS RETAIL CLASS
----------------------------- -------------------------
SHARES VALUE SHARES VALUE
----------- ------------ -------- -----------
(UNAUDITED) (UNAUDITED)
----------------------------- -------------------------
<S> <C> <C> <C> <C>
TOTAL RETURN ADVANTAGE FUND
Shares sold................................. 2,783,403 $ 27,859,416 219 $ 2,198
Shares reinvested........................... 528,298 5,297,850 6,759 67,759
Shares repurchased.......................... (4,762,654) (48,150,050) (1,714) (16,841)
---------- ------------ --------- -----------
Net increase/(decrease)..................... (1,450,953) $(14,992,784) 5,264 $ 53,116
========== ============ ========= ===========
FIXED INCOME FUND
Shares sold................................. 5,172,250 $ 53,447,255 477 $ 5,021
Shares reinvested........................... 25,026 260,194 13,051 136,082
Shares repurchased.......................... (5,737,502) (59,639,195) (247,177) (2,577,877)
---------- ------------ --------- -----------
Net decrease................................ (540,226) $ (5,931,746) (233,649) $(2,436,774)
========== ============ ========= ===========
ENHANCED INCOME FUND
Shares sold................................. 2,413,149 $ 24,208,204 117,564 $ 1,181,044
Shares reinvested........................... 115,914 1,164,377 5,430 54,632
Shares repurchased.......................... (3,303,973) (33,155,482) (90,831) (914,230)
---------- ------------ --------- -----------
Net increase/(decrease)..................... (774,910) $ (7,782,901) 32,163 $ 321,446
========== ============ ========= ===========
GNMA FUND
Shares sold................................. 599,099 $ 6,075,555 16,415 $ 164,857
Shares reinvested........................... 4,830 48,998 154 1,577
Shares repurchased.......................... (599,799) (6,133,574) (4,597) (46,370)
---------- ------------ --------- -----------
Net increase/(decrease)..................... 4,130 $ (9,021) 11,972 $ 120,064
========== ============ ========= ===========
INTERMEDIATE GOVERNMENT FUND
Shares sold................................. 735,642 $ 7,397,586 4,423 $ 44,391
Shares reinvested........................... 4,989 50,246 27 272
Shares repurchased.......................... (799,505) (8,093,974) (2,213) (22,352)
---------- ------------ --------- -----------
Net increase/(decrease)..................... (58,874) $ (646,142) 2,237 $ 22,311
========== ============ ========= ===========
</TABLE>
44
<PAGE> 47
LOGO NOTES TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
FOR THE YEAR ENDED MAY 31, 1996
------------------------------------------------------------
INSTITUTIONAL CLASS RETAIL CLASS
----------------------------- -------------------------
SHARES VALUE SHARES VALUE
----------- ------------ -------- -----------
<S> <C> <C> <C> <C>
TOTAL RETURN ADVANTAGE FUND
Shares sold................................. 6,069,365 $ 63,120,427 198,864 $ 2,071,494
Shares reinvested........................... 1,738,749 18,107,023 5,933 60,359
Shares repurchased.......................... (4,201,350) (43,291,219) (8,252) (86,183)
---------- ------------ --------- -----------
Net increase................................ 3,606,764 $ 37,936,231 196,545 $ 2,045,670
========== ============ ========= ===========
FIXED INCOME FUND
Shares sold................................. 4,306,756 $ 45,487,815 570,360 $ 6,042,304
Shares reinvested........................... 185,623 1,959,188 42,366 449,879
Shares repurchased.......................... (2,042,322) (21,618,175) (533,517) (5,642,243)
---------- ------------ --------- -----------
Net increase................................ 2,450,057 $ 25,828,828 79,209 $ 849,940
========== ============ ========= ===========
ENHANCED INCOME FUND
Shares sold................................. 5,145,841 $ 51,804,487 507,880 $ 5,129,994
Shares reinvested........................... 285,634 2,872,860 16,044 161,694
Shares repurchased.......................... (4,696,970) (47,321,908) (602,768) (6,090,037)
---------- ------------ --------- -----------
Net increase/(decrease)..................... 734,505 $ 7,355,439 (78,844) $ (798,349)
========== ============ ========= ===========
</TABLE>
<TABLE>
<CAPTION>
FOR THE ONE MONTH PERIOD
ENDED MAY 31, 1996
-------------------------
SHARES VALUE
-------- -----------
<S> <C> <C>
GNMA FUND
Shares Sold................................................................. 51,968 $ 523,896
Shares reinvested........................................................... 857 8,594
Shares repurchased.......................................................... (162,499) (1,631,417)
Net decrease................................................................ (109,674) $(1,098,927)
INTERMEDIATE GOVERNMENT FUND
Shares Sold................................................................. 125,648 $ 1,259,862
Shares reinvested........................................................... 835 8,326
Shares repurchased.......................................................... (169,583) (1,692,146)
Net decrease................................................................ (43,100) $ (423,958)
</TABLE>
45
<PAGE> 48
LOGO ARMADA FUNDS
BOARD OF TRUSTEES Robert D. Neary
Chairman and President
Retired Co-Chairman, Ernst & Young
Director, Cold Metal Products, Inc.
Director, Zurn Industries, Inc.
Thomas R. Benua, Jr.
Chairman, EBCO Manufacturing Company
and Subsidiaries
Vice President and Executive Committee Member,
Ebtech Corp.
Leigh Carter
Retired President and Chief Operating
Officer, B.F. Goodrich Company
Director, Adams Express Company
Director, Lamson & Sessions Company
Director, Petroleum & Resources Corp.
Director, Morrison Products
John F. Durkott
President and Chief Operating Officer,
Kittle's Home Furnishings Center, Inc.
Partner, Kittle's Bloomington Property Company
Partner, KK&D
Richard W. Furst, Dean
Professor of Finance and Dean,
Carol Martin Gatton College of Business
and Economics, University of Kentucky
Director, Studio Plus Hotels, Inc.
Director, The Seed Corporation
Director, Foam Design, Inc.
J. William Pullen
President and Chief Executive Officer,
Whayne Supply Company
President and Chief Executive Officer,
American Contractors Rentals & Sales
Richard B. Tullis
Chairman Emeritus, Harris Corporation
Director, NACCO Materials Handling Group, Inc.
Director, Hamilton Beach/Proctor-Silex, Inc.
Director, Waste-Quip, Inc.
<PAGE> 49
(LOGO) ARMADA FUNDS
BULK RATE
4400 Computer Drive U.S. POSTAGE
Westborough, Massachusetts 01581 PAID
CLEVELAND, OH
PERMIT NO. 1
INVESTMENT ADVISERS
AFFILIATES OF
NATIONAL CITY
CORPORATION
National Asset Management
Corporation
101 South Fifth Street
Louisville, Kentucky 40202
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-205 (1/97)
