<PAGE> 1
[LOGO]
ANNUAL REPORT Armada
MAY 31, 1997 Funds
Money
Market
Series
ARMADA MONEY MARKET FUND
ARMADA GOVERNMENT FUND
ARMADA TREASURY FUND
ARMADA TAX EXEMPT FUND
ARMADA PENNSYLVANIA TAX EXEMPT FUND
[ARMADA LOGO]
ARMADA
FUNDS
Financial Power Close at Hand
<PAGE> 2
LOGO ARMADA FUNDS
MONEY MARKET SERIES
ANNUAL REPORT - MAY 31, 1997
<TABLE>
<S> <C> <C>
ARMADA TABLE OF CONTENTS
MONEY MARKET FUND Chairman's Message........................................... 1
PORTFOLIOS OF INVESTMENTS AND FINANCIAL HIGHLIGHTS
ARMADA Armada Money Market Fund................................... 3
GOVERNMENT FUND Armada Government Fund..................................... 9
Armada Treasury Fund....................................... 12
ARMADA Armada Tax Exempt Fund..................................... 14
TREASURY FUND Armada Pennsylvania Tax Exempt Fund........................ 22
ARMADA FINANCIAL STATEMENTS
TAX EXEMPT FUND Statement of Assets and Liabilities........................ 28
Statement of Operations.................................... 29
ARMADA Statement of Changes in Net Assets......................... 30
PENNSYLVANIA
TAX EXEMPT FUND NOTES TO FINANCIAL STATEMENTS................................ 31
REPORT OF INDEPENDENT AUDITORS............................... 37
</TABLE>
- - SHARES OF 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 ARMADA FUNDS ARE NOT INSURED OR GUARANTEED BY THE U.S. GOVERNMENT,
FDIC, OR ANY GOVERNMENTAL AGENCY OR STATE.
- - AN INVESTMENT IN 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 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 SEI Investments Distribution Co. (SIDC), Oaks, PA 19456. SIDC is
not affiliated with National City Bank and is not a bank.
<PAGE> 3
LOGO CHAIRMAN'S MESSAGE
DEAR ARMADA FUNDS SHAREHOLDERS:
It is a pleasure to report to you that the total
assets in Armada Funds stand at $5.40 billion at May
31, 1997, an increase of 31% over the $4.12 billion
of a year ago. This growth resulted from additional
investments, sustained improvement in income, and
the transfer of the remaining Inventor Funds. The
accompanying annual report contains each fund's
audited financial statements and its specific
portfolio of investments.
INVESTMENT PERFORMANCE LEADERSHIP
In all our investment activity, we share one goal:
To seek to provide shareholders with a variety of
investment opportunities from a wide range of funds
that consistently outperform the benchmark indices
for each fund over time. Reflecting that objective,
Armada Funds is receiving recognition as a top
performer by the financial press. The funds have won
mentions in the Wall Street Journal's Mutual Fund
Scorecard on several occasions, as well as in
Investor's Business Daily. Performance for all funds
has been very competitive, reflecting the expertise
and dedication of our Armada Funds managers.
EXPANDED PRODUCT OFFERINGS
Developing new products and refining current
offerings are important functions of Armada Funds as
we strive to provide you with the highest quality
investment services. During the year, our
integration of the Inventor Funds allowed us to
offer you four new Armada portfolios: the
Intermediate Government Fund, the GNMA Fund, the
Pennsylvania Municipal Fund, and the Pennsylvania
Tax Exempt Fund (a money market fund). The Armada
Enhanced Income Fund adopted a new investment
objective which seeks increased total return
potential.
Armada Funds also serves as a mainstay for
National City's asset allocation program,
FutureQuest. For each FutureQuest investor, a
portfolio of mutual funds is created based on
individual goals, time-frame, and tolerance for
risk. That portfolio is then monitored and
rebalanced as necessary. The FutureQuest process
adds value by defining and maintaining the
investor's focus, while Armada Funds provides a
quality investment vehicle for deploying the assets.
Our communication with you, our shareholders, is a
crucial function of our business. Please call
1-800-622-FUND (3863) when you want more
1
<PAGE> 4
LOGO CHAIRMAN'S MESSAGE
information about your investment or any of the
Armada Funds. You'll find highly trained, licensed
representatives on the other end of the telephone
who stand ready to assist you.
You can also find a multitude of information about
Armada Funds on the National City World Wide Web
page at WWW.NATIONAL-CITY.COM. Click on Invest It!
and you and other prospective investors can access
performance information, view prospectuses and learn
more about the many benefits of investing with
Armada Funds.
We look forward to continuing to serve your
investment needs.
Sincerely,
/s/ Robert D. Neary
Robert D. Neary
Chairman
Armada Funds Board of Trustees
2
<PAGE> 5
LOGO PORTFOLIO OF INVESTMENTS
MAY 31, 1997 ARMADA MONEY MARKET FUND
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
-------- --------- --------------
<S> <C> <C> <C>
AGENCY OBLIGATIONS -- 8.6%
FEDERAL HOME LOAN BANK DISCOUNT
NOTES -- 1.7%
5.25%.......... 06/13/97 $20,000 $ 19,965,000
5.29%.......... 08/07/97 20,000 19,803,094
--------------
39,768,094
--------------
FEDERAL HOME LOAN MORTGAGE CORPORATION
DISCOUNT NOTES -- 1.3%
5.51%.......... 07/10/97 30,000 29,820,925
--------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION
DISCOUNT NOTES -- 5.6%
5.275%......... 06/05/97 20,000 19,988,278
5.23%.......... 06/17/97 20,000 19,953,511
5.26%.......... 07/11/97 20,000 19,883,111
5.30%.......... 09/10/97 20,000 19,702,611
5.57%.......... 09/18/97 25,000 24,578,382
5.58%.......... 10/07/97 25,000 24,504,000
--------------
128,609,893
--------------
TOTAL AGENCY OBLIGATIONS............. 198,198,912
--------------
COMMERCIAL PAPER -- 82.1%
AGRICULTURE -- 4.1%
Canadian Wheat Board (P1, A1+)
5.30%.......... 06/12/97 10,000 9,983,806
5.55%.......... 07/08/97 10,000 9,942,958
5.57%.......... 08/15/97 20,000 19,767,917
Cargill Financial Services (P1, A1+)
5.52%.......... 06/24/97 15,000 14,947,100
5.55%.......... 07/02/97 15,000 14,928,312
Cargill Inc. (P1, A1+)
5.57%.......... 08/12/97 25,000 24,721,500
--------------
94,291,593
--------------
<CAPTION>
PAR
MATURITY (000) VALUE
-------- --------- --------------
<S> <C> <C> <C>
COMMERCIAL PAPER -- CONTINUED
BUILDING & BUILDING SUPPLIES -- 1.3%
Weyerhaeuser Co. (P1, A1)
5.55%.......... 06/05/97 10,000 $ 9,993,833
5.58%.......... 07/24/97 10,000 9,917,850
5.57%.......... 07/31/97 10,000 9,907,167
--------------
29,818,850
--------------
CHEMICALS -- 5.6%
Dow Chemical Co. (P1, A1)
5.48%.......... 06/16/97 $10,000 9,977,167
5.52%.......... 06/20/97 20,000 19,941,733
E.I. DuPont de Nemours & Co. (P1,
A1+)
5.31%.......... 06/06/97 20,000 19,985,250
5.30%.......... 06/17/97 25,000 24,941,111
5.37%.......... 06/20/97 20,000 19,943,317
5.54%.......... 08/28/97 35,000 34,526,022
--------------
129,314,600
--------------
CONSUMER NON-DURABLES -- 5.1%
Colgate-Palmolive Co. (P1, A1)
5.50%.......... 06/03/97 23,000 22,992,972
Procter & Gamble Co. (P1, A1+)
5.47%.......... 06/30/97 25,000 24,889,840
5.54%.......... 07/28/97 20,000 19,824,567
Sara Lee Corp. (P1, A1+)
5.57%.......... 06/25/97 25,000 24,907,167
5.52%.......... 06/26/97 25,000 24,904,167
--------------
117,518,713
--------------
DIVERSIFIED -- 3.4%
General Electric Capital Corp. (P1,
A1+)
5.62%.......... 07/16/97 20,000 19,859,500
5.58%.......... 07/29/97 20,000 19,820,200
5.60%.......... 08/07/97 15,000 14,843,667
</TABLE>
See Accompanying Notes
3
<PAGE> 6
LOGO PORTFOLIO OF INVESTMENTS
MAY 31, 1997 ARMADA MONEY MARKET FUND
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
-------- --------- --------------
<S> <C> <C> <C>
COMMERCIAL PAPER -- CONTINUED
DIVERSIFIED -- CONTINUED
Minnesota Mining & Mfg Co. (P1, A1+)
5.54%.......... 07/22/97 $25,000 $ 24,803,792
--------------
79,327,159
--------------
DRUGS & HEALTH CARE -- 2.4%
Schering Corp. (P1, A1+)
5.54%.......... 06/17/97 9,925 9,900,562
5.57%.......... 07/01/97 15,000 14,930,375
5.55%.......... 08/26/97 30,000 29,602,250
--------------
54,433,187
--------------
ENTERTAINMENT -- 1.3%
Walt Disney Co., Inc. (P1, A1)
5.62%.......... 06/02/97 30,000 29,995,317
--------------
FINANCE-CONDUIT -- 13.2%
Ciesco, L.P. (P1, A1+)
5.33%.......... 06/19/97 20,000 19,946,700
5.60%.......... 07/07/97 20,000 19,888,000
5.57%.......... 07/17/97 20,000 19,857,656
5.55%.......... 07/18/97 20,000 19,855,083
5.57%.......... 08/29/97 20,000 19,724,594
Corporate Asset Funding Co., Inc.
(P1, A1+)
5.52%.......... 06/16/97 10,000 9,977,000
5.53%.......... 06/27/97 25,000 24,900,153
5.57%.......... 07/10/97 25,000 24,849,146
5.63%.......... 07/10/97 20,000 19,878,017
5.60%.......... 07/23/97 20,000 19,838,222
Delaware Funding Corp. (P1, A1+)
5.37%.......... 06/11/97 15,000 14,977,625
5.47%.......... 06/18/97 9,000 8,976,752
5.60%.......... 07/10/97 17,385 17,279,531
5.58%.......... 07/14/97 10,000 9,933,350
<CAPTION>
PAR
MATURITY (000) VALUE
-------- --------- --------------
<S> <C> <C> <C>
COMMERCIAL PAPER -- CONTINUED
FINANCE-CONDUIT -- CONTINUED
Preferred Receivables Funding Corp.
(P1, A1)
5.35%.......... 06/19/97 $15,000 $ 14,959,875
5.40%.......... 06/26/97 15,000 14,943,750
5.65%.......... 07/14/97 20,000 19,865,028
5.65%.......... 08/14/97 5,000 4,941,931
--------------
304,592,413
--------------
FINANCIAL SERVICES -- 6.0%
American Express Credit Corp. (P1,
A1)
5.55%.......... 07/01/97 25,000 24,884,375
5.59%.......... 08/19/97 25,000 24,693,326
Associates Corp. of North America
(P1, A1+)
5.32%.......... 06/10/97 20,000 19,973,400
5.61%.......... 08/27/97 15,000 14,796,637
Ford Motor Credit Co. (P1, A1)
5.62%.......... 07/21/97 20,000 19,843,889
Transamerica Finance Corp. (P1, A1)
5.50%.......... 06/04/97 14,000 13,993,583
5.63%.......... 06/18/97 20,000 19,946,828
--------------
138,132,038
--------------
FOOD & BEVERAGE -- 12.7%
Anheuser-Busch Co. (P1, A1)
5.54%.......... 08/29/97 25,000 24,657,597
Campbell Soup Co. (P1, A1+)
5.55%.......... 07/24/97 25,000 24,795,729
Coca-Cola Co. (P1, A1+)
5.51%.......... 07/07/97 25,000 24,862,250
5.53%.......... 07/22/97 25,000 24,804,146
H.J. Heinz Co. (P1, A1)
5.50%.......... 06/03/97 13,000 12,996,028
Hershey Foods Corp. (P1, A1+)
5.50%.......... 06/12/97 20,000 19,966,389
5.57%.......... 07/21/97 25,000 24,806,597
</TABLE>
See Accompanying Notes
4
<PAGE> 7
LOGO PORTFOLIO OF INVESTMENTS
MAY 31, 1997 ARMADA MONEY MARKET FUND
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
-------- --------- --------------
<S> <C> <C> <C>
COMMERCIAL PAPER -- CONTINUED
FOOD & BEVERAGE -- CONTINUED
Kellogg Co. (P1, A1+)
5.51%.......... 06/04/97 $13,400 $ 13,393,847
5.50%.......... 06/09/97 12,600 12,584,600
5.52%.......... 06/13/97 20,000 19,963,200
5.50%.......... 06/24/97 20,000 19,929,722
Nestle Capital Corp. (P1, A1+)
5.38%.......... 06/25/97 25,000 24,910,333
5.54%.......... 07/25/97 20,000 19,833,800
5.59%.......... 08/18/97 10,000 9,878,883
PepsiCo, Inc. (P1, A1)
5.47%.......... 06/02/97 15,000 14,997,721
--------------
292,380,842
--------------
INSURANCE -- 2.6%
Chubb Capital Corp. (P1, A1+)
5.50%.......... 06/06/97 20,000 19,984,722
5.52%.......... 06/09/97 20,000 19,975,467
Marsh & McLennan Companies (P1, A1+)
5.60%.......... 08/11/97 20,000 19,779,111
--------------
59,739,300
--------------
MACHINERY & HEAVY EQUIPMENT -- 1.5%
John Deere Capital Corp. (P1, A1)
5.58%.......... 07/16/97 20,000 19,860,500
5.60%.......... 08/12/97 15,000 14,832,000
--------------
34,692,500
--------------
OFFICE & BUSINESS EQUIPMENT -- 2.5%
Pitney Bowes Credit Corp. (P1, A1+)
5.32%.......... 06/09/97 8,800 8,789,596
5.30%.......... 06/16/97 17,850 17,810,581
Xerox Credit Corp. (P1, A1)
5.54%.......... 06/23/97 15,000 14,949,217
5.54%.......... 06/24/97 15,000 14,946,908
--------------
56,496,302
--------------
<CAPTION>
PAR
MATURITY (000) VALUE
-------- --------- --------------
<S> <C> <C> <C>
COMMERCIAL PAPER -- CONTINUED
OIL & GAS -- 3.0%
Amoco Co. (P1, A1+)
5.54%.......... 07/25/97 $25,000 $ 24,792,250
5.55%.......... 08/18/97 20,000 19,759,500
5.57%.......... 08/21/97 25,000 24,686,687
--------------
69,238,437
--------------
PRINTING & PUBLISHING -- 2.2%
Donnelley (RR) & Sons Co. (P1, A1)
5.56%.......... 06/17/97 10,000 9,975,289
Dow Jones & Co., Inc. (P1, A1)
5.53%.......... 06/20/97 10,000 9,970,814
Gannett Co., Inc. (P1, A1)
5.54%.......... 06/06/97 10,000 9,992,306
5.52%.......... 06/12/97 20,000 19,966,267
--------------
49,904,676
--------------
TECHNOLOGY -- 3.0%
IBM Credit Corp. (P1, A1)
5.56%.......... 06/30/97 25,000 24,888,028
5.60%.......... 07/15/97 25,000 24,828,889
Rockwell International Corp. (P1,
A1+)
5.63%.......... 07/16/97 20,000 19,859,250
--------------
69,576,167
--------------
TELECOMMUNICATIONS -- 3.7%
AT&T Corp. (P1, A1+)
5.57%.......... 07/29/97 25,000 24,775,653
BellSouth Telecommunications, Inc.
(P1, A1+)
5.51%.......... 06/18/97 15,000 14,960,971
5.52%.......... 06/27/97 15,000 14,940,200
Motorola Credit (P1, A1+)
5.55%.......... 07/28/97 30,000 29,736,375
--------------
84,413,199
--------------
UTILITIES-ELECTRIC -- 2.8%
Potomac Electric Power Co. (P1, A1)
5.50%.......... 06/04/97 15,000 14,993,125
</TABLE>
See Accompanying Notes
5
<PAGE> 8
LOGO PORTFOLIO OF INVESTMENTS
MAY 31, 1997 ARMADA MONEY MARKET FUND
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
-------- --------- --------------
<S> <C> <C> <C>
COMMERCIAL PAPER -- CONTINUED
UTILITIES-ELECTRIC -- CONTINUED
Southern California Edison Co. (P1, A1)
5.50%.......... 06/03/97 $15,000 $ 14,995,417
5.34%.......... 06/05/97 8,000 7,995,253
5.51%.......... 06/05/97 17,000 16,989,592
5.55%.......... 07/09/97 10,000 9,941,417
--------------
64,914,804
--------------
UTILITIES-GAS & ELECTRIC -- 2.9%
National Rural Utilities Cooperative
Finance Corp. (P1, A1)
5.52%.......... 06/16/97 10,000 9,977,000
5.54%.......... 06/23/97 25,000 24,915,361
5.61%.......... 08/19/97 10,000 9,876,892
5.64%.......... 08/28/97 10,000 9,862,133
Pacific Gas & Electric (P1, A1)
5.52%.......... 06/10/97 12,000 11,983,440
--------------
66,614,826
--------------
UTILITIES-TELEPHONE -- 2.8%
Ameritech Corp. (P1, A1+)
5.31%.......... 06/10/97 15,000 14,980,088
5.49%.......... 06/11/97 15,000 14,977,125
5.55%.......... 08/25/97 20,000 19,737,917
Southwestern Bell Capital Corp. (P1,
A1)
5.51%.......... 06/11/97 15,000 14,977,042
--------------
64,672,172
--------------
TOTAL COMMERCIAL PAPER................. 1,890,067,095
--------------
MASTER DEMAND NOTES (A) -- 2.0%
Metropolitan Life Insurance Co.
5.45%.......... 06/01/97 20,000 20,000,000
Paccar Financial Corp. (P1, A1+)
5.48%.......... 06/03/97 25,000 25,000,000
--------------
TOTAL MASTER
DEMAND NOTES........................ 45,000,000
--------------
<CAPTION>
PAR
MATURITY (000) VALUE
-------- --------- --------------
<S> <C> <C> <C>
YANKEE CD -- 0.9%
Societe Generale-Yankee CD
5.69%.......... 08/25/97 $20,000 $ 20,000,465
--------------
REPURCHASE AGREEMENTS -- 5.9%
First Boston:
5.62%.......... 06/02/97 90,000 90,000,000
(Agreement dated 05/30/97 to be
repurchased at $90,042,150 on
06/02/97; collateralized by
$121,825,000 Federal Home Loan
Mortgage Corp., 6.5% due 04/01/08.
The market value of the collateral
is $91,799,775.)
Prudential-Bache Securities:
5.59%.......... 06/02/97 45,000 45,000,000
--------------
(Agreement dated 05/30/97 to be
repurchased at $45,020,963 on
06/02/97; collateralized by
$20,000,000 Federal Home Loan
Mortgage Corp., 5.6% due 11/15/06,
$20,523,000 Federal Home Loan
Mortgage Corp., 6.5% due 11/15/07,
and by $6,375,000 Federal Home Loan
Mortgage Corp., 6.256% due
11/15/08. The market value of the
collateral is $46,400,445.)
TOTAL REPURCHASE AGREEMENTS..........
135,000,000
--------------
</TABLE>
See Accompanying Notes
6
<PAGE> 9
LOGO PORTFOLIO OF INVESTMENTS
MAY 31, 1997 ARMADA MONEY MARKET FUND
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
--------- --------------
<S> <C> <C>
TEMPORARY INVESTMENT -- 0.5%
Prime Obligations
Portfolio............... 12,192,514 $ 12,192,514
--------------
TOTAL INVESTMENTS -- 100.0% $2,300,458,986
(Cost $2,300,458,986*) ==============
- ---------------
* Also cost for Federal income tax purposes.
Credit ratings given by Moody's Investor Services,
Inc., Standard & Poor's Ratings Group and Duff &
Phelps are unaudited.
(A) Variable rate securities. Interest rates vary
periodically based on current market rates. Rates
shown represent interest rates of the security in
effect as of May 31, 1997. Dates shown represent
the latter of the demand date or the next interest
rate change date, which is considered the maturity
date for financial reporting purposes.
</TABLE>
See Accompanying Notes
7
<PAGE> 10
LOG FINANCIAL HIGHLIGHTS
ARMADA MONEY MARKET FUND
FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
FOR THE YEAR ENDED MAY 31
----------------------------------------------------------------------------------------------
1997 1996 1995 1994
------------------------ ------------------------ ------------------------ -------------
INSTITUTIONAL RETAIL INSTITUTIONAL RETAIL INSTITUTIONAL RETAIL INSTITUTIONAL
------------- -------- ------------- -------- ------------- -------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
period...................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
---------- -------- ---------- -------- ---------- -------- --------
INCOME FROM INVESTMENT
OPERATIONS
Net investment income....... 0.05 0.05 0.05 0.05 0.05 0.05 0.03
LESS DISTRIBUTIONS
Dividends from net
investment income......... (0.05) (0.05) (0.05) (0.05) (0.05) (0.05) (0.03)
---------- -------- ---------- -------- ---------- -------- --------
Net asset value, end of
period...................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========== ======== ========== ======== ========== ======== ========
TOTAL RETURN................. 5.19% 5.09% 5.45% 5.35% 5.11% 5.01% 2.91%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in
000's)...................... $ 1,943,021 $346,172 $ 1,344,414 $343,087 $ 1,083,243 $175,192 $ 743,377
Ratio of expenses to average
net assets.................. 0.37%(1) 0.47%(2) 0.37%(1) 0.47%(2) 0.37%(1) 0.47%(2) 0.43%(1)
Ratio of net investment
income to average net
assets...................... 5.07%(1) 4.97%(2) 5.30%(1) 5.18%(2) 5.07%(1) 5.12%(2) 2.94%(1)
<CAPTION>
1993
-----------------------
RETAIL INSTITUTIONAL RETAIL
------- ------------- -------
<S> <C> <C> <C>
Net asset value, beginning of
period...................... $ 1.00 $ 1.00 $ 1.00
------- -------- -------
INCOME FROM INVESTMENT
OPERATIONS
Net investment income....... 0.03 0.03 0.03
LESS DISTRIBUTIONS
Dividends from net
investment income......... (0.03) (0.03) (0.03)
------- -------- -------
Net asset value, end of
period...................... $ 1.00 $ 1.00 $ 1.00
======= ======== =======
TOTAL RETURN................. 2.81% 2.93% 2.82%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in
000's)...................... $67,229 $ 399,191 $57,710
Ratio of expenses to average
net assets.................. 0.53%(2) 0.43% 0.53%
Ratio of net investment
income to average net
assets...................... 2.78%(2) 2.89% 2.79%
</TABLE>
(1) The operating expense ratio and net investment income ratio before fee
waivers by the Investment Advisers for the Institutional class for the year
ended May 31, 1997 would have been 0.47% and 4.97%. The operating expense
ratio and net investment income ratio before fee waivers by the Investment
Advisers and Custodian for the Institutional Class for the years ended May
31, 1996 and 1995 would have been .48% and 5.19%, and .48% and 4.96%
respectively. The operating expense ratio and net investment income ratio
before fee waivers by the Investment Advisers for the Institutional class
for the year ended May 31, 1994 would have been .45% and 2.92%,
respectively.
(2) The operating expense ratio and net investment income ratio before fee
waivers by the Investment Advisers for the Retail class for the year ended
May 31, 1997 would have been .57% and 4.87%. The operating expense ratio and
net investment income ratio before fee waivers by the Investment Advisers
and Custodian for the Retail class for the years ended May 31, 1996 and 1995
would have been .58% and 5.07% and .58% and 5.01%, respectively. The
operating expense ratio and net investment income ratio before fee waivers
by the Investment Advisers for the Retail class for the year ended May 31,
1994 would have been .55% and 2.76%, respectively.
See Accompanying Notes
8
<PAGE> 11
LOGO PORTFOLIO OF INVESTMENTS
MAY 31, 1997 ARMADA GOVERNMENT FUND
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
-------- --------- ------------
<S> <C> <C> <C>
AGENCY OBLIGATIONS -- 82.6%
FEDERAL FARM CREDIT BANK DISCOUNT NOTES -- 20.9%
5.37%............. 06/02/97 $ 8,400 $ 8,398,747
5.41%............. 06/02/97 10,000 9,998,497
5.42%............. 06/02/97 13,530 13,527,963
5.38%............. 06/12/97 5,720 5,710,597
5.41%............. 06/13/97 10,000 9,981,967
5.38%............. 06/18/97 10,000 9,974,594
5.27%............. 06/26/97 17,915 17,849,436
5.48%............. 07/01/97 15,000 14,931,500
5.50%............. 07/15/97 14,000 13,905,889
5.47%............. 07/21/97 10,000 9,924,028
5.51%............. 08/12/97 6,590 6,517,378
5.46%............. 08/18/97 20,000 19,763,400
5.43%............. 08/20/97 15,000 14,819,000
5.29%............. 08/29/97 20,000 19,738,439
5.295%............ 09/03/97 10,000 9,861,742
5.32%............. 09/04/97 12,500 12,324,514
5.30%............. 09/08/97 6,735 6,636,837
------------
203,864,528
------------
FEDERAL FARM CREDIT BANK NOTE -- 2.1%
5.55%............. 08/01/97 20,000 19,992,999
------------
FEDERAL HOME LOAN BANK DISCOUNT NOTES -- 19.6%
5.30%............. 06/05/97 10,000 9,994,111
5.41%............. 06/26/97 15,000 14,943,646
5.51%............. 07/02/97 10,000 9,952,553
5.26%............. 07/08/97 10,000 9,945,939
5.475%............ 07/24/97 20,000 19,838,792
5.23%............. 07/28/97 15,000 14,875,787
5.49%............. 07/30/97 10,200 10,108,225
5.50%............. 07/31/97 15,000 14,862,500
5.50%............. 08/01/97 4,500 4,458,062
5.49%............. 08/04/97 10,000 9,902,400
5.525%............ 08/07/97 10,000 9,897,174
5.53%............. 08/07/97 20,000 19,794,161
5.55%............. 08/14/97 10,000 9,885,917
5.43%............. 08/21/97 10,000 9,877,825
<CAPTION>
PAR
MATURITY (000) VALUE
-------- --------- ------------
<S> <C> <C> <C>
AGENCY OBLIGATIONS -- CONTINUED
FEDERAL HOME LOAN BANK DISCOUNT NOTES -- CONTINUED
5.45%............. 08/21/97 $ 13,000 $ 12,840,587
5.44%............. 08/28/97 10,000 9,867,022
------------
191,044,701
------------
FEDERAL HOME LOAN MORTGAGE CORP. DISCOUNT
NOTES -- 19.0%
5.46%............. 06/12/97 10,000 9,983,317
5.44%............. 06/20/97 5,000 4,985,644
5.52%............. 06/25/97 15,000 14,944,800
5.53%............. 06/25/97 15,000 14,944,700
5.51%............. 07/09/97 20,000 19,883,678
5.52%............. 07/11/97 15,000 14,908,000
5.485%............ 07/18/97 25,000 24,820,976
5.48%............. 07/31/97 12,000 11,890,400
5.53%............. 08/01/97 10,000 9,906,297
5.53%............. 08/13/97 19,650 19,429,653
5.54%............. 08/15/97 20,000 19,769,167
5.55%............. 08/15/97 15,000 14,826,562
5.45%............. 08/19/97 5,000 4,940,201
------------
185,233,395
------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION
DISCOUNT NOTES -- 17.8%
5.28%............. 06/06/97 25,000 24,981,667
5.40%............. 06/06/97 20,000 19,985,000
5.48%............. 06/11/97 7,805 7,793,119
5.27%............. 06/13/97 14,715 14,689,151
5.32%............. 06/19/97 15,000 14,960,100
5.52%............. 06/19/97 15,000 14,958,600
5.52%............. 07/02/97 15,000 14,928,700
5.53%............. 07/10/97 10,000 9,940,092
5.48%............. 07/17/97 10,000 9,929,978
5.50%............. 07/17/97 15,000 14,894,583
5.40%............. 07/23/97 10,000 9,922,000
5.55%............. 08/04/97 7,000 6,930,933
5.56%............. 08/04/97 10,000 9,901,156
------------
173,815,079
------------
</TABLE>
See Accompanying Notes
9
<PAGE> 12
LOGO PORTFOLIO OF INVESTMENTS
MAY 31, 1997 ARMADA GOVERNMENT FUND
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
-------- --------- ------------
<S> <C> <C> <C>
AGENCY OBLIGATIONS -- CONTINUED
STUDENT LOAN MARKETING ASSOCIATION DISCOUNT
NOTES -- 3.2%
5.44%............. 06/30/97 $ 11,515 $ 11,464,539
5.51%............. 06/30/97 20,000 19,911,228
------------
31,375,767
------------
TOTAL AGENCY OBLIGATIONS.................. 805,326,469
------------
REPURCHASE AGREEMENT -- 16.3%
First Boston:
5.62%............. 06/02/97 159,000 159,000,000
------------
(Agreement dated 05/30/97 to be
repurchased at $159,074,465 on
06/02/97, collateralized by
$169,998,000 Federal Home Loan
Mortgage Corporation, 7.0% due
11/01/26. The market value of the
collateral is $164,951,269.)
</TABLE>
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
--------- --------------
<S> <C> <C>
TEMPORARY INVESTMENT -- 1.1%
Goldman Sachs Financial
Square Government Fund.. 11,017,820 $ 11,017,820
--------------
TOTAL INVESTMENTS -- 100.0% $ 975,344,289
(Cost $975,344,289*) ==============
- ---------------
* Also cost for Federal income tax purposes.
</TABLE>
See Accompanying Notes
10
<PAGE> 13
LOGO FINANCIAL HIGHLIGHTS
ARMADA GOVERNMENT FUND
FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
FOR THE YEAR ENDED MAY 31
---------------------------------------------------------------------------------------------
1997 1996 1995 1994
------------------------ ------------------------ ----------------------- -------------
INSTITUTIONAL RETAIL INSTITUTIONAL RETAIL INSTITUTIONAL RETAIL INSTITUTIONAL
------------- -------- ------------- -------- ------------- ------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
period....................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- -------- -------- ------- --------
INCOME FROM INVESTMENT
OPERATIONS
Net investment income........ 0.05 0.05 0.05 0.05 0.05 0.05 0.03
LESS DISTRIBUTIONS
Dividends from net investment
income..................... (0.05) (0.05) (0.05) (0.05) (0.05) (0.05) (0.03)
-------- -------- -------- -------- -------- ------- --------
Net asset value, end of
period....................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ======== ======= ========
TOTAL RETURN.................. 5.15% 5.04% 5.41% 5.31% 4.97% 4.87% 2.91%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in
000's)....................... $ 811,662 $159,129 $ 741,894 $131,194 $ 618,058 $19,174 $ 768,337
Ratio of expenses to average
net assets................... 0.36%(1) 0.47%(2) 0.36%(1) 0.46%(2) 0.39%(1) 0.51%(2) 0.42%(1)
Ratio of net investment income
to average net assets........ 5.03%(1) 4.93%(2) 5.27%(1) 5.13%(2) 4.83%(1) 5.01%(2) 2.92%(1)
<CAPTION>
1993
-----------------------
RETAIL INSTITUTIONAL RETAIL
------ ------------- -------
<S> <C> <C> <C>
Net asset value, beginning of
period....................... $ 1.00 $ 1.00 $ 1.00
------ -------- -------
INCOME FROM INVESTMENT
OPERATIONS
Net investment income........ 0.03 0.03 0.03
LESS DISTRIBUTIONS
Dividends from net investment
income..................... (0.03) (0.03) (0.03)
------ -------- -------
Net asset value, end of
period....................... $ 1.00 $ 1.00 $ 1.00
====== ======== =======
TOTAL RETURN.................. 2.80% 2.91% 2.81%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in
000's)....................... $6,945 $ 272,809 $11,050
Ratio of expenses to average
net assets................... 0.52%(2) 0.45%(1) 0.55%(2)
Ratio of net investment income
to average net assets........ 2.75%(2) 2.84%(1) 2.74%(2)
</TABLE>
(1) The operating expense ratio and net investment income ratio before fee
waivers by the Investment Advisers for the Institutional class for the year
ended May 31, 1997 would have been .46% and 4.93%, respectively. The
operating expense ratio and net investment income ratio before fee waivers
by the Investment Advisers and Custodian for the Institutional class for the
years ended May 31, 1996 and 1995 would have been .47% and 5.16%, and .50%
and 4.72%, respectively. The operating expense ratio and net investment
income ratio before fee waivers by the Investment Advisers for the
Institutional class for the years ended May 31, 1994, and 1993 would have
been .44% and 2.90%, and .46% and 2.82%, respectively.
(2) The operating expense ratio and net investment income ratio before fee
waivers by the Investment Advisers for the Retail class for the year ended
May 31, 1997 would have been .57% and 4.83%, respectively. The operating
expense ratio and net investment income ratio before fee waivers by the
Investment Advisers and Custodian for the Retail class for the years ended
May 31, 1996 and 1995 would have been .57% and 5.02%, and .63% and 4.90%,
respectively. The operating expense ratio and net investment income ratio
before fee waivers by the Investment Advisers for the Retail class for the
years ended May 31, 1994, and 1993 would have been .54% and 2.73%, and .56%
and 2.72%, respectively.
See Accompanying Notes
11
<PAGE> 14
LOGO PORTFOLIO OF INVESTMENTS
MAY 31, 1997 ARMADA TREASURY FUND
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
-------- --------- ------------
<S> <C> <C> <C>
U.S. TREASURY OBLIGATIONS -- 94.5%
U.S. TREASURY BILLS -- 65.9%
5.06%........... 06/05/97 $ 15,000 $ 14,991,567
5.10%........... 06/05/97 6,000 5,996,600
5.155%.......... 06/05/97 4,000 3,997,709
5.09%........... 06/12/97 20,000 19,968,894
5.10%........... 06/19/97 8,000 7,979,600
5.075%.......... 06/26/97 12,000 11,957,708
4.40%........... 07/03/97 6,000 5,976,533
4.77%........... 07/03/97 5,000 4,978,800
5.225%.......... 07/03/97 20,000 19,907,111
5.12%........... 07/10/97 5,000 4,972,267
5.145%.......... 07/17/97 10,000 9,934,258
5.17%........... 07/24/97 1,000 992,389
5.175%.......... 07/24/97 10,000 9,923,812
5.18%........... 07/24/97 5,000 4,961,869
5.12%........... 08/07/97 5,000 4,952,356
5.18%........... 08/21/97 15,000 14,825,175
5.245%.......... 09/04/97 10,000 9,861,590
5.14%........... 09/11/97 15,000 14,781,550
5.10%........... 09/18/97 15,000 14,768,375
------------
185,728,163
------------
U.S. TREASURY NOTES -- 21.6%
6.375%.......... 06/30/97 26,000 26,030,232
5.875%.......... 07/31/97 20,000 20,010,798
6.50%........... 08/15/97 10,000 10,021,558
5.50%........... 09/30/97 5,000 4,999,829
------------
61,062,417
------------
<CAPTION>
PAR
MATURITY (000) VALUE
-------- --------- ------------
<S> <C> <C> <C>
U.S. TREASURY OBLIGATIONS -- CONTINUED
U.S. TREASURY STRIP -- 7.0%
0%.............. 08/15/97 $ 20,000 $ 19,774,794
------------
TOTAL U.S. TREASURY OBLIGATIONS.........
266,565,374
------------
</TABLE>
<TABLE>
<CAPTION>
NUMBER
OF SHARES
----------
<S> <C> <C>
TEMPORARY INVESTMENTS -- 5.5%
Federated Investors U.S.
Treasury Cash
Reserves............... 4,525,974 4,525,974
Goldman Sachs Treasury
Instruments
Portfolio.............. 10,867,548 10,867,548
--------------
TOTAL TEMPORARY
INVESTMENTS......................... 15,393,522
--------------
TOTAL INVESTMENTS -- 100.0% $ 281,958,896
(Cost $281,958,896*) ==============
- ---------------
</TABLE>
*Also cost for Federal income tax purposes.
See Accompanying Notes
12
<PAGE> 15
LOGO FINANCIAL HIGHLIGHTS
ARMADA TREASURY FUND
FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
FOR THE YEAR ENDED FOR THE YEAR ENDED FOR THE PERIOD ENDED
MAY 31, 1997 MAY 31, 1996 MAY 31, 1995
----------------------- ----------------------- -------------------------
INSTITUTIONAL RETAIL INSTITUTIONAL RETAIL INSTITUTIONAL(3) RETAIL(4)
------------- ------ ------------- ------ -------------- -------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period........... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- ------ ------- ------ ------- ------
INCOME FROM INVESTMENT OPERATIONS
Net investment income........................ 0.05 0.05 0.05 0.05 0.05 0.02
LESS DISTRIBUTIONS
Dividends from net investment income......... (0.05) (0.05) (0.05) (0.05) (0.05) (0.02)
-------- ------ ------- ------ ------- ------
Net asset value, end of period................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ====== ======= ====== ======= ======
TOTAL RETURN................................... 4.89% 4.79% 5.07% 4.97% 4.86%(5) 5.41%(5)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000's)........... $ 276,327 $5,680 $ 312,255 $4,355 $142,877 $ 366
Ratio of expenses to average net assets........ 0.37%(1) 0.47%(2) 0.41%(1) 0.52%(2) 0.43%(1,5) 0.56%(2,5)
Ratio of net investment income to average net
assets....................................... 4.79%(1) 4.68%(2) 4.88%(1) 4.77%(2) 4.78%(1,5) 5.35%(2,5)
</TABLE>
(1) The operating expense ratio and net investment income ratio before fee
waivers by the Investment Advisers for the Institutional class for the year
ended May 31, 1997 would have been .42% and 4.74%, respectively. The
operating expense ratio and net investment income ratio before fee waivers
by the Investment Advisers and Custodian for the Institutional class for the
year ended May 31, 1996 and for the period ended May 31, 1995 would have
been .47% and 4.82%, and .49% and 4.72%, respectively.
(2) The operating expense ratio and net investment income ratio before fee
waivers by the Investment Advisers for the Retail class for the year ended
May 31, 1997 would have been .52% and 4.63%, respectively. The operating
expense ratio and net investment income ratio before fee waivers by the
Investment Advisers and Custodian for the Retail class for the year ended
May 31, 1996 and for the period ended May 31, 1995 would have been .58% and
4.71%, and .63% and 5.28%, respectively.
(3) Institutional class commenced operations on June 16, 1994.
(4) Retail class commenced operations on December 22, 1994.
(5) Annualized.
See Accompanying Notes
13
<PAGE> 16
LOGO PORTFOLIO OF INVESTMENTS
MAY 31, 1997 ARMADA TAX EXEMPT FUND
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
-------- --------- ------------
<S> <C> <C> <C>
MUNICIPAL BONDS -- 99.4%
ALABAMA -- 1.8%
Montgomery Pollution Control
& Solid Waste Disposal
(General Electric Company
Project) (P-1, A-1+)
3.45%............. 06/02/97 $ 4,000 $ 4,000,000
3.40%............. 07/11/97 2,350 2,350,000
3.70%............. 10/17/97 1,500 1,500,000
------------
7,850,000
------------
ALASKA -- 3.1%
Valdez Marine Terminal (Arco
Transportation Inc. Project)
(VMIG-1, A-1)
3.45%............. 06/27/97 2,000 2,000,000
Series 1994-A
(VMIG-1, A-1)
3.55%............. 06/25/97 5,000 5,000,000
3.70%............. 09/19/97 1,000 1,000,000
Series 1994-B
(VMIG-1, A-1)(A)
4.00%............. 06/07/97 6,000 6,000,000
------------
14,000,000
------------
ARIZONA -- 4.8%
Maricopa County Pollution
Control Revenue Bond
(Southern California Edison)
Series E (P-1, A-1)
3.60%............. 06/02/97 1,850 1,850,000
3.55%............. 06/16/97 2,000 2,000,000
3.45%............. 07/17/97 2,000 2,000,000
3.55%............. 07/25/97 2,500 2,500,000
3.70%............. 10/08/97 1,150 1,150,000
3.70%............. 10/09/97 2,000 2,000,000
Series F (P-1, A-1)
5.65%............. 07/10/97 3,250 3,250,000
3.70%............. 10/09/97 2,600 2,600,000
<CAPTION>
PAR
MATURITY (000) VALUE
-------- --------- ------------
<S> <C> <C> <C>
MUNICIPAL BONDS -- CONTINUED
ARIZONA -- CONTINUED
Maricopa County Samaritan
Health Systems (MBIA
Insured) (VMIG-1, NR)(A)
4.00%............. 06/01/97 $ 4,200 $ 4,200,000
------------
21,550,000
------------
COLORADO -- 1.1%
University of Colorado
Regents Enterprise System
Adjustable Tender Revenue
Bond Series 1996-A (VMIG-1,
A-1+)(A)
3.90%............. 06/07/97 5,000 5,000,000
------------
FLORIDA -- 7.3%
Gainesville Utilities System
Series C (P-1, A)
3.45%............. 07/15/97 1,000 1,000,000
3.65%............. 08/01/97 1,948 1,948,000
3.65%............. 08/11/97 3,570 3,570,000
3.85%............. 08/15/97 3,000 3,000,000
3.70%............. 10/01/97 1,628 1,628,000
Hillsborough County
Industrial Development
Authority Pollution Control
Revenue Bond (Tampa Electric
Co. Project) Series 1990
(Aa2, Aa)(A)
4.15%............. 06/01/97 6,005 6,005,000
Jacksonville Pollution
Control Revenue Bond
(Florida Power & Light Co.
Project) (VMIG-1, A-1+)
3.35%............. 06/03/97 7,700 7,700,000
3.60%............. 07/01/97 3,000 3,000,000
3.45%............. 07/07/97 3,200 3,200,000
3.45%............. 07/31/97 1,700 1,700,000
------------
32,751,000
------------
</TABLE>
See Accompanying Notes
14
<PAGE> 17
LOGO PORTFOLIO OF INVESTMENTS
MAY 31, 1997 ARMADA TAX EXEMPT FUND
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
-------- --------- ------------
<S> <C> <C> <C>
MUNICIPAL BONDS -- CONTINUED
GEORGIA -- 2.7%
Downtown Savannah Parking
Authority (VMIG-1, A-1+)(A)
3.90%............. 06/07/97 $ 2,000 $ 2,000,000
Georgia Municipal Gas
Authority Gas Revenue Bond
(Southern Portfolio-I)
Series 1994-D (LOC Wachovia
Bank) (NR, A-1+)
3.80%............. 09/10/97 2,900 2,900,000
Georgia Tech Foundation
Facility Series 1992-A (NR,
A-1+)(A)
3.85%............. 06/07/97 4,200 4,200,000
Series 1992-B (NR, A-1+)(A)
3.85%............. 06/07/97 2,900 2,900,000
------------
12,000,000
------------
ILLINOIS -- 2.7%
City of Chicago General
Obligation Tender Notes
(MIG-1, SP-1)
3.65%............. 02/05/98 4,000 4,000,000
Illinois Educational Facility
Authority Revenue Bond
(Northwestern University)
Series 1988 (VMIG-1,
A-1+)(A)
3.95%............. 06/07/97 7,836 7,836,000
------------
11,836,000
------------
INDIANA -- 9.5%
Evansville Economic
Development Bond (Ball Corp.
Project) (LOC Wachovia) (NR,
A-1+)(A)
3.90%............. 06/07/97 1,500 1,500,000
<CAPTION>
PAR
MATURITY (000) VALUE
-------- --------- ------------
<S> <C> <C> <C>
MUNICIPAL BONDS -- CONTINUED
INDIANA -- CONTINUED
Indiana Health Facility
Finance Authority Capital
Access Designated Pool,
Series 1989-A (LOC Bank One
Indianapolis) (VMIG-1,
A-1+)(A)
4.00%............. 06/07/97 $ 1,400 $ 1,400,000
Series 1989-B (LOC Bank One
Indianapolis) (VMIG-1,
A-1+)(A)
4.00%............. 06/07/97 1,900 1,900,000
Indiana Hospital Equipment
Finance Authority Revenue
Bond
Series 1985-A (MBIA Insured)
(VMIG-1, A-1+)(A)
4.00%............. 06/07/97 5,000 5,000,000
Mt Vernon Pollution Control
Solid Waste Disposal Revenue
Bonds (General Electric
Company Project) (P-1, A-1+)
4.00%............. 06/04/97 3,580 3,580,000
3.90%............. 06/07/97 7,000 7,000,000
3.50%............. 06/13/97 2,500 2,500,000
3.50%............. 06/20/97 2,900 2,900,000
3.65%............. 10/14/97 2,935 2,935,000
Sullivan National Rural
Utilities Cooperative
Finance Corporation (Hoosier
Energy Rural Electric
Cooperative) (P-1, A-1+)
3.45%............. 06/26/97 6,000 6,000,000
3.80%............. 08/15/97 2,600 2,600,000
3.70%............. 10/07/97 5,000 5,000,000
------------
42,315,000
------------
</TABLE>
See Accompanying Notes
15
<PAGE> 18
LOGO PORTFOLIO OF INVESTMENTS
MAY 31, 1997 ARMADA TAX EXEMPT FUND
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
-------- --------- ------------
<S> <C> <C> <C>
MUNICIPAL BONDS -- CONTINUED
KANSAS -- 3.1%
Kansas State Department of
Transportation Highway
Revenue Bonds Series B
(VMIG-1, A-1+)(A)
3.80%............. 06/07/97 $14,000 $ 14,000,000
------------
LOUISIANA -- 6.8%
East Baton Rouge Pollution
Control Revenue Bond (Exxon
Project) (VMIG-1, A-1+)(A)
4.00%............. 06/01/97 12,500 12,500,000
Plaquemines Port Harbor
Terminal District
Electro-Coal Transfer Series
A (P-1, A-1+)
3.55%............. 06/06/97 7,000 7,000,000
3.55%............. 06/11/97 6,000 6,000,000
3.60%............. 06/12/97 1,200 1,200,000
3.80%............. 08/27/97 2,000 2,000,000
Series C (P-1, A-1+)
3.70%............. 07/01/97 1,500 1,500,000
------------
30,200,000
------------
MINNESOTA -- 1.7%
Becker Pollution Control
Revenue (Northern States
Power) (VMIG-1, A-1+)
3.40%............. 06/16/97 2,200 2,200,000
3.40%............. 06/20/97 2,000 2,000,000
3.80%............. 09/17/97 1,400 1,400,000
3.75%............. 10/02/97 2,000 2,000,000
------------
7,600,000
------------
MISSISSIPPI -- 3.1%
Forest Industrial Development
Revenue Bond (Sara Lee Corp.
Project) Series 1992 (NR,
A-1+)(A)
3.95%............. 06/07/97 8,000 8,000,000
<CAPTION>
PAR
MATURITY (000) VALUE
-------- --------- ------------
<S> <C> <C> <C>
MUNICIPAL BONDS -- CONTINUED
MISSISSIPPI -- CONTINUED
Jackson County Pollution
Control Revenue Bond
(Chevron Project) (P-1,
NR)(A)
4.00%............. 06/01/97 $ 3,500 $ 3,500,000
Jackson County Pollution
Control Revenue Bond
(Chevron Project) (P-1, NR)
3.55%............. 08/01/97 2,200 2,200,000
------------
13,700,000
------------
MISSOURI -- 1.1%
Missouri Health & Educational
Facility Authority (Sisters
of Mercy) Series C (VMIG-1,
A-1+)(A)
3.85%............. 06/07/97 2,100 2,100,000
Series D (VMIG-1, A-1+)(A)
3.85%............. 06/07/97 2,000 2,000,000
Missouri Health & Educational
Facility Authority
(Washington University)
Series D (VMIG-1, A-1+)(A)
4.00%............. 06/01/97 1,000 1,000,000
------------
5,100,000
------------
MONTANA -- 1.5%
Forsyth Pollution Control
Revenue Bond (Portland
General Electric Project)
Series 1983-B (P-1, A-1+)(A)
3.90%............. 06/07/97 6,800 6,800,000
------------
NEVADA -- 1.5%
Clark County Airport
Improvement Revenue Bond
Series 1995-A (LOC Toronto
Dominion) (VMIG-1, A-1+)(A)
3.85%............. 06/07/97 6,900 6,900,000
------------
</TABLE>
See Accompanying Notes
16
<PAGE> 19
LOGO PORTFOLIO OF INVESTMENTS
MAY 31, 1997 ARMADA TAX EXEMPT FUND
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
-------- --------- ------------
<S> <C> <C> <C>
MUNICIPAL BONDS -- CONTINUED
NEW MEXICO -- 1.5%
Hurley Pollution Control
Revenue Bonds (Kennecott
Santa Fe Corp Project)
Series 1985 (P-1, A-1+)(A)
4.15%............. 06/01/97 $ 6,800 $ 6,800,000
------------
NORTH CAROLINA -- 2.4%
North Carolina Education
Facilities Finance Agency
(Bowman Gray School of
Medicine Project) Series
1990 (LOC Wachovia Bank)
(VMIG-1, NR)(A)
3.90%............. 06/07/97 10,600 10,600,000
------------
OHIO -- 11.4%
Cuyahoga County Hospital
Revenue Bond (Cleveland
Clinic Foundation) Series
1996-B (VMIG-1, A-1+)(A)
3.85%............. 06/07/97 6,800 6,800,000
Series 1996-A (LOC Morgan
Guaranty)
(VMIG-1, A-1+)(A)
3.85%............. 06/07/97 3,000 3,000,000
Ohio State University General
Receipts, Series 1985-B
(VMIG-1, A-1+)(A)
3.85%............. 06/07/97 270 270,000
Series 1986-B (VMIG-1,
A-1+)(A)
3.85%............. 06/07/97 15,625 15,625,000
Scioto County (VHA Central
Inc. Capital Asset Finance
Program) Series B (AMBAC
Insured) (NR, A-1+)(A)
3.85%............. 06/07/97 2,895 2,895,000
<CAPTION>
PAR
MATURITY (000) VALUE
-------- --------- ------------
<S> <C> <C> <C>
MUNICIPAL BONDS -- CONTINUED
OHIO -- CONTINUED
Series F (AMBAC Insured)
(NR, A-1+)(A)
3.85%............. 06/07/97 $ 2,100 $ 2,100,000
Series G (AMBAC Insured)
(NR, A-1+)(A)
3.85%............. 06/07/97 3,000 3,000,000
State of Ohio Higher
Education Facility Authority
(Oberlin College Project)
Series 1985 (LOC Bank of
Tokyo) (VMIG-1, A-1+)(A)
3.80%............. 06/07/97 4,450 4,450,000
Summit County Bond
Anticipation Notes Series A
(MIG-1, SP1+)+
4.50%............. 06/04/98 3,000 3,018,180
Series C (MIG-1, NR)
4.375%............ 11/20/97 1,815 1,820,787
University of Cincinnati
General Receipts Bond
Anticipation Notes
Series T (MIG-1, SP1+)
4.25%............. 08/28/97 4,200 4,204,549
Series Y (MIG-1, SP1+)
4.24%............. 03/19/98 1,250 1,252,791
Series AA (MIG-1, SP1+)
4.25%............. 03/19/98 2,300 2,310,377
------------
50,746,684
------------
PENNSYLVANIA -- 0.7%
Beaver County Industrial
Development Authority
Pollution Control Revenue
Bond (Duquesne Light Co.)
Series 1990-C (VMIG-1, A-1+)
3.55%............. 07/10/97 1,000 1,000,000
</TABLE>
See Accompanying Notes
17
<PAGE> 20
LOGO PORTFOLIO OF INVESTMENTS
MAY 31, 1997 ARMADA TAX EXEMPT FUND
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
-------- --------- ------------
<S> <C> <C> <C>
MUNICIPAL BONDS -- CONTINUED
PENNSYLVANIA -- CONTINUED
College Township Industrial
Development Authority (Ball
Corp. Project)
Series 1993 (LOC Wachovia
Bank) (NR, A-1)
3.90%............. 06/07/97 $ 2,200 $ 2,200,000
------------
3,200,000
------------
TENNESSEE -- 2.9%
Vanderbilt University Health
& Education (Nashville &
Davidson) (VMIG-1, A-1+)
3.60%............. 07/14/97 3,700 3,700,000
3.40%............. 07/15/97 1,460 1,460,000
3.65%............. 08/11/97 2,000 2,000,000
3.65%............. 09/12/97 3,000 3,000,000
3.75%............. 10/03/97 3,010 3,010,000
------------
13,170,000
------------
TEXAS -- 9.6%
Angelina & Neches River
Authority Industrial
Development Solid Waste
Disposal (Teec, Inc. Temple-
Inland)
Series B (LOC
Credit Suisse)
(VMIG-1, NR)(A)
4.00%............. 06/01/97 2,200 2,200,000
Series C (LOC Credit Suisse)
(VMIG-1, NR)
4.00%............. 06/01/97 2,100 2,100,000
<CAPTION>
PAR
MATURITY (000) VALUE
-------- --------- ------------
<S> <C> <C> <C>
MUNICIPAL BONDS -- CONTINUED
TEXAS -- CONTINUED
Angelina & Neches River
Authority Industrial
Development Solid Waste
Disposal (Teec, Inc. Temple-
Inland) -- Continued
Series D (LOC Credit Suisse)
(VMIG-1, NR)(A)
4.00%............. 06/01/97 $ 4,100 $ 4,100,000
Series E (LOC Credit Suisse)
(VMIG-1, NR)(A)
4.00%............. 06/01/97 8,000 8,000,000
Red River Authority of Texas
Pollution Control Revenue
Bond (Southwestern Public
Service Company Project)
(VMIG-1, A-1+)(A)
3.85%............. 06/07/97 16,600 16,600,000
Shelby County Tax
Anticipation Notes Series
1997 (P-1, A-1+)
3.80%............. 06/25/97 2,000 2,000,000
Texas Tax & Revenue
Anticipation Notes (MIG-1,
SP1+)
4.75%............. 08/29/97 8,000 8,016,400
------------
43,016,400
------------
UTAH -- 3.2%
Emery County Pollution
Control Revenue Bond
(Pacificorp Project)
(VMIG-1, A-1+)
3.90%............. 06/07/97 1,000 1,000,000
Intermountain Power Agency
Power Supply
Series 85F (LOC Bank of
America) (VMIG-1, A-1+)
3.45%............. 06/03/97 2,000 2,000,000
3.75%............. 08/22/97 1,000 1,000,000
3.75%............. 10/17/97 1,000 1,000,000
</TABLE>
See Accompanying Notes
18
<PAGE> 21
LOGO PORTFOLIO OF INVESTMENTS
MAY 31, 1997 ARMADA TAX EXEMPT FUND
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
-------- --------- ------------
<S> <C> <C> <C>
MUNICIPAL BONDS -- CONTINUED
UTAH -- CONTINUED
Intermountain Power Agency
Power Supply
Series F-2 (LOC Suisse Bank)
(VMIG-1, A-1+)
3.40%............. 06/20/97 $ 1,000 $ 1,000,000
3.60%............. 07/03/97 3,200 3,200,000
3.45%............. 07/15/97 5,000 5,000,000
------------
14,200,000
------------
VERMONT -- 0.9%
Vermont State General
Obligation Commercial Paper
Revenue Anticipation Notes
(NR, A-1+)
3.50%............. 06/13/97 2,000 2,000,000
3.60%............. 06/13/97 2,000 2,000,000
------------
4,000,000
------------
VIRGINIA -- 6.7%
Commonwealth of Virginia
General Obligation Bond
Anticipation Note Series
1996 (P-1, A-1+)
3.40%............. 06/13/97 2,000 2,000,000
3.45%............. 06/19/97 6,000 6,000,000
3.45%............. 06/30/97 6,000 6,000,000
Peninsula Port Authority of
Virginia (Shell Coal and
Terminal Company) Series
1987 (Aa, AAA)(A)
4.00%............. 06/01/97 15,700 15,700,000
------------
29,700,000
------------
<CAPTION>
PAR
MATURITY (000) VALUE
-------- --------- ------------
<S> <C> <C> <C>
MUNICIPAL BONDS -- CONTINUED
WASHINGTON -- 0.4%
Washington Health Care
Facility Authority (Fred
Hutchinson Cancer Research
Center) Series 1996 (LOC
Morgan Guaranty) (VMIG-1,
NR)(A)
4.10%............. 06/02/97 $ 1,640 $ 1,640,000
------------
WISCONSIN -- 3.2%
Oak Creek Pollution Control
Revenue Bond (Wisconsin
Electric Power Company
Project) (P-1, NR)(A)
4.00%............. 06/07/97 3,300 3,300,000
Wisconsin State General
Obligation Commercial Paper
Notes (P-1, A-1+)
3.70%............. 07/11/97 4,000 4,000,000
3.65%............. 10/10/97 6,889 6,889,000
------------
14,189,000
------------
WYOMING -- 4.7%
Gillette Pollution Control
Revenue Bond (Pacificorp
Project) (LOC Deutche Bank)
(P-1, A-1+)
3.55%............. 06/06/97 2,000 2,000,000
Sweetwater County Pollution
Control Revenue Bonds
(Pacificorp 84) (LOC Deutche
Bank) (P-1, NR)(A)
3.90%............. 06/02/97 15,000 15,000,000
Uinta County Pollution
Control Refunding Revenue
Bonds (Chevron USA Project)
(P-1, NR)(A)
4.00%............. 06/01/97 4,000 4,000,000
------------
21,000,000
------------
TOTAL MUNICIPAL BONDS................... 443,864,084
------------
</TABLE>
See Accompanying Notes
19
<PAGE> 22
LOGO PORTFOLIO OF INVESTMENTS
MAY 31, 1997 ARMADA TAX EXEMPT FUND
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
--------- ------------
<S> <C> <C> <C>
TEMPORARY INVESTMENTS -- 0.6%
Tax-Exempt Cash Fund.......... 701,406 $ 701,406
Financial Square Tax Exempt... 2,000,000 2,000,000
TOTAL TEMPORARY
INVESTMENTS............................ 2,701,406
TOTAL INVESTMENTS -- 100.0% $446,565,490
(Cost $446,565,490*)
</TABLE>
- ---------------
* Also cost for Federal income tax purposes.
Credit ratings given by Moody's Investor Service, Inc. and Standard & Poor's
Rating Group are unaudited.
AMBAC -- American Municipal Bond Assurance Corporation
LOC -- Letter of Credit
MBIA -- Municipal Bond Insurance Association
Interest rates presented reflect the coupon rate of the security unless
otherwise noted.
(A) Variable rate securities. Interest rates vary periodically based on current
market rates. Rates shown represent interest rates of the security in effect
as of May 31, 1997. Dates shown represent the latter of the demand date or
the next interest rate change date, which is considered the maturity date
for financial reporting purposes.
+ When-issued security
See Accompanying Notes
20
<PAGE> 23
LOGO FINANCIAL HIGHLIGHTS
ARMADA TAX EXEMPT FUND
FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
FOR THE YEAR ENDED MAY 31
-------------------------------------------------------------------------------------------------
1997 1996 1995 1994
------------------------ ------------------------ ------------------------ -------------
INSTITUTIONAL RETAIL INSTITUTIONAL RETAIL INSTITUTIONAL RETAIL INSTITUTIONAL
------------- ------- ------------- ------- ------------- ------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
period......................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- ------ ------- ------ ------- ------ -------
INCOME FROM INVESTMENT
OPERATIONS
Net investment income.......... 0.03 0.03 0.03 0.03 0.03 0.03 0.02
LESS DISTRIBUTIONS
Dividends from net investment
income....................... (0.03) (0.03) (0.03) (0.03) (0.03) (0.03) (0.02)
-------- ------ ------- ------ ------- ------ -------
Net asset value, end of
period......................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ====== ======= ====== ======= ====== =======
TOTAL RETURN.................... 3.23% 3.12% 3.40% 3.29% 3.14% 3.04% 2.06%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in
000's)......................... $ 370,679 $71,917 $ 261,808 $85,928 $ 172,643 $51,916 $ 139,015
Ratio of expenses to average net
assets......................... 0.29%(1) 0.39%(2) 0.30%(1) 0.40%(2) 0.35%(1) 0.46%(2) 0.33%(1)
Ratio of net investment income
to average net assets.......... 3.18%(1) 3.08%(2) 3.33%(1) 3.23%(2) 3.15%(1) 3.17%(2) 2.05%(1)
<CAPTION>
1993
------------------------
RETAIL INSTITUTIONAL RETAIL
------- ------------- -------
<S> <C> <C> <C>
Net asset value, beginning of
period......................... $ 1.00 $ 1.00 $ 1.00
------ ------- ------
INCOME FROM INVESTMENT
OPERATIONS
Net investment income.......... 0.02 0.02 0.02
LESS DISTRIBUTIONS
Dividends from net investment
income....................... (0.02) (0.02) (0.02)
------ ------- ------
Net asset value, end of
period......................... $ 1.00 $ 1.00 $ 1.00
====== ======= ======
TOTAL RETURN.................... 1.96% 2.18% 2.07%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in
000's)......................... $17,819 $58,928 $17,791
Ratio of expenses to average net
assets......................... 0.43%(2) 0.36%(1) 0.46%(2)
Ratio of net investment income
to average net assets.......... 1.94%(2) 2.16%(1) 2.06%(2)
</TABLE>
(1) The operating expense ratio and net investment income ratio before fee
waivers by the Investment Advisers for the Institutional class for the year
ended May 31, 1997 would have been .49% and 2.98%, respectively. The
operating expense ratio and net investment income ratio before fee waivers
by the Investment Advisers and Custodian for the Institutional class for the
years ended May 31, 1996 and 1995 would have been .51% and 3.12%, and .56%
and 2.94%, respectively. The operating expense ratio and net investment
income ratio before fee waivers by the Investment Advisers for the
Institutional class for the years ended May 31, 1994, and 1993 would have
been .53% and 1.85%, and .56% and 1.96%, respectively.
(2) The operating expense ratio and net investment income ratio before fee
waivers by the Investment Advisers for the Retail class for the year ended
May 31, 1997 would have been .59% and 2.88% respectively. The operating
expense ratio and net investment income ratio before fee waivers by the
Investment Advisers and Custodian for the Retail class for the years ended
May 31, 1996 and 1995 would have been .61% and 3.02%, and .67% and 2.96%,
respectively. The operating expense ratio and net investment income ratio
before fee waivers by the Investment Advisers for the Retail class for the
years ended May 31, 1994 and 1993 would have been .63% and 1.74%, and .66%
and 1.86%, respectively.
See Accompanying Notes
21
<PAGE> 24
LOGO PORTFOLIO OF INVESTMENTS
MAY 31, 1997 ARMADA PENNSYLVANIA TAX EXEMPT FUND
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
-------- --------- ------------
<S> <C> <C> <C>
MUNICIPAL BONDS -- 99.3%
PENNSYLVANIA -- 99.3%
Allegheny County Hospital
Development Authority
Revenue Bond (Allegheny
Hospital) Series 1988A (LOC
PNC Bank) (VMIG-1, A-1)(A)
3.90%........... 06/06/97 $ 1,100 $ 1,100,000
Allegheny County Hospital
Development Authority
Revenue Bond (Southern
Hills Health Systems
Property) (LOC PNC Bank)
(VMIG-1, NR)(A)
3.85%........... 06/04/97 400 400,000
Allegheny County Hospital
Development Authority
Revenue Bond (Children's
Hospital Project) (MBIA
Insured) (LOC PNC Bank)
(VMIG-1, A-1+)(A)
3.80%........... 06/05/97 200 200,000
Allegheny County Hospital
Development Authority
Revenue Bond Series C (LOC
PNC Bank) (VMIG-1, A-1)(A)
3.90%........... 06/04/97 420 420,000
Athens School District Tax &
Revenue Anticipation Note
(NR, NR)
4.10%........... 06/30/97 1,200 1,200,045
Beaver County Duquesne Light
& Power Series C (LOC Swiss
Bank) (VMIG-1, A-1+)
3.85%........... 06/02/97 1,000 1,000,000
3.85%........... 08/12/97 1,500 1,500,000
<CAPTION>
PAR
MATURITY (000) VALUE
-------- --------- ------------
<S> <C> <C> <C>
MUNICIPAL BONDS -- CONTINUED
PENNSYLVANIA -- CONTINUED
Berks County, Industrial
Development Authority
Industrial Project, ELF
Aquitaine (LOC Banque
Nationale de Paris) (Aa3,
NR)(A)
4.075%.......... 06/07/97 $ 400 $ 400,000
Blair County General
Obligation Bond (FGIC
Insured) (Aaa, NR)
3.80%........... 08/01/97 475 475,000
Bradford County Industrial
Development Authority
(Guthrie Inn Project)
Series 1984 (LOC Mellon
Bank) (NR, A-1)(A)
4.00%........... 06/07/97 1,800 1,800,000
Bucks County Industrial
Development Authority (USX
Corp. Project) Series 1995
MB / (LOC Wachovia
Bank)(VMIG-1, A-1+)(A)
3.45%........... 06/07/97 1,000 1,000,000
Bucks County Industrial
Development Authority
Revenue Bond (Edgecomb
Metals Project) (Aa3,
NR)(A)
3.85%........... 06/06/97 405 405,000
Bucks County Industrial
Development Authority
Revenue Bond (CPC
International Project)
Series 1985, (NR, NR)(A)
4.29%........... 06/30/97 2,000 2,000,000
</TABLE>
See Accompanying Notes
22
<PAGE> 25
LOGO PORTFOLIO OF INVESTMENTS
MAY 31, 1997 ARMADA PENNSYLVANIA TAX EXEMPT FUND
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
-------- --------- ------------
<S> <C> <C> <C>
MUNICIPAL BONDS -- CONTINUED
PENNSYLVANIA -- CONTINUED
Chester County Health &
Education Facilities Authority
(Barclay Friends Project) (LOC
Bank of Ireland) (VMIG-1, A-
1)(A)
Series A
3.90%........... 06/07/97 $ 2,400 $ 2,400,000
City of Philadelphia Tax &
Revenue Anticipation Note
Series 1996A (MIG-1, SP1)
4.50%........... 06/30/97 1,000 1,000,420
Clinton County Tax & Revenue
Anticipation Note General
Obligation (NR, NR)
3.90%........... 12/31/97 870 870,732
Cumberland Valley School
District Revenue Bond
Series B (FSA Insured)
(Aaa, AAA)
5.75%........... 09/01/97 720 723,088
Dauphin County General
Authority Hospital Revenue
Reading Hospital & Medical
Center Series A (NR,
A-1)(A)
3.85%........... 06/04/97 1,000 1,000,000
Delaware County Industrial
Development Authority (B.P.
Oil, Inc. Project) Series
1995 DN (P1, A-1+)(A)
4.05%........... 06/01/97 800 800,000
Delaware County Industrial
Development Authority Solid
Waste (Scott Paper Co.
Project) Series 1984A (LOC
Fuji Bank) (Aa2, A-1+)(A)
3.90%........... 06/07/97 1,000 1,000,000
PAR
MATURITY (000) VALUE
-------- --------- ------------
MUNICIPAL BONDS -- CONTINUED
PENNSYLVANIA -- CONTINUED
Delaware County Industrial
Development Authority
Revenue Bond (Henderson
Radnor Joint Venture
Project)(LOC CoreStates)
(Aa3, NR)(A)
4.10%........... 06/07/97 $ 1,095 $ 1,095,000
Delaware Valley Finance
Authority Pennsylvania
Local Government Revenue
Bonds (LOC Credit Suisse)
Series 1985-C (VMIG-1,
A1)(A)
3.90%........... 06/01/97 1,500 1,500,000
Delaware Valley Regional
Finance Authority Local
Government, Series D (LOC
Midland Bank) (VMIG-1,
NR)(A)
3.90%........... 06/07/97 2,200 2,200,000
Emmaus General Obligation
Bond (LOC Canadian Imperial
Bank) (NR, SP1+)(A)
3.95%........... 06/07/97 3,000 3,000,000
Erie County Hospital
Authority Revenue Bond
Union City Memorial
Hospital (LOC Mellon Bank)
(NR, NR) (A)
3.95%........... 06/05/97 1,100 1,100,000
Lancaster Higher Education
Authority Revenue Bond
(Franklin & Marshall) (LOC
CoreStates) SPA (VMIG-1,
NR)(A)
4.00%........... 06/07/97 1,450 1,450,000
</TABLE>
See Accompanying Notes
23
<PAGE> 26
LOGO PORTFOLIO OF INVESTMENTS
MAY 31, 1997 ARMADA PENNSYLVANIA TAX EXEMPT FUND
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
-------- --------- ------------
<S> <C> <C> <C>
MUNICIPAL BONDS -- CONTINUED
PENNSYLVANIA -- CONTINUED
Lehigh County Sewer Authority
Series 1985B DN (FGIC Insured)
(LOC ABN Amro) (VMIG-1, A1+)(A)
3.85%........... 06/07/97 $ 380 $ 380,000
Montgomery County Industrial
Development Authority One
Valley Square (LOC
Citibank) (NR, A-1+)(A)
3.90%........... 06/07/97 1,000 1,000,000
Montgomery County Industrial
Development Commercial
Development, (Ikea Property
Project) (LOC Morgan
Guaranty) (P1, NR)(A)
3.95%........... 06/07/97 2,100 2,100,000
Montgomery County Industrial
Development Authority
Revenue Bond Merck & Co.
Industrial Development of
Nashville (NR, A-1+)(A)
4.35%........... 06/07/97 1,000 1,000,000
Norristown Tax & Revenue
Anticipation Notes (NR, NR)
3.90%........... 12/31/97 2,000 2,000,000
Northumberland Income
Development Authority Merck
Series 1984a (Aaa, A-1+)(A)
4.10%........... 06/07/97 1,300 1,300,000
Pennsylvania General
Obligation Bond Series A
(MBIA Insured) (Aaa, AAA)
6.00%........... 11/01/97 2,000 2,018,527
Pennsylvania State 1st Series
A (A-1, AA-)
6.50%........... 06/01/98 1,200 1,229,116
Pennsylvania State
Certificate of
Participation (AMBAC
Insured) (Aaa, AAA)
4.60%........... 06/01/97 100 100,000
PAR
MATURITY (000) VALUE
-------- --------- ------------
MUNICIPAL BONDS -- CONTINUED
PENNSYLVANIA -- CONTINUED
Pennsylvania State Higher
Education (Carnegie Mellon
Project) Series 1995B (LOC
Union Bank of Switzerland)
(NR, A-1+)(A)
4.05%........... 06/02/97 $ 1,000 $ 1,000,000
Pennsylvania State Higher
Education Facility
Authority, (Thomas
Jefferson University),
Series B (VMIG-1, A-1+)(A)
3.50%........... 06/07/97 3,250 3,250,000
Pennsylvania State Higher
Education Revenue Bond
(Allegheny College Project)
(LOC Mellon Bank) (NR, A-
1+)(A)
3.90%........... 06/07/97 1,000 1,000,000
Philadelphia Development
Authority Hospital Revenue
Bond (Charter Hospital
Philadelphia Project) (LOC
Chase Bank) (Aa2, NR)(A)
3.95%........... 06/04/97 2,075 2,075,000
Philadelphia Authority for
Industrial Development
(Inglis House Project) (LOC
Chase Bank) (NR, A-1)
4.00%........... 06/04/97 2,100 2,100,000
Philadelphia Authority for
Industrial Development
(City Line Holiday Inn
Project) Series 1996 (NR,
A-1+)(A)
3.95%........... 06/07/97 3,000 3,000,000
</TABLE>
See Accompanying Notes
24
<PAGE> 27
LOGO PORTFOLIO OF INVESTMENTS
MAY 31, 1997 ARMADA PENNSYLVANIA TAX EXEMPT FUND
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
-------- --------- ------------
<S> <C> <C> <C>
MUNICIPAL BONDS -- CONTINUED
PENNSYLVANIA -- CONTINUED
Philadelphia Industrial
Development Authority Revenue
Bond, (Multi-Family Housing For
Harbor View Towers Project)
(LOC Sumitomo Bank) (NR, A-
1)(A)
4.10%........... 06/07/97 $ 2,580 $ 2,580,000
Philadelphia School District
Authority General
Obligation Tax & Revenue
Anticipation Note (MIG-1,
SP1)
4.50%........... 06/30/97 2,400 2,401,039
Philadelphia Redevelopment
Authority Revenue Bond (LOC
Marine Midland) (NR,
A-2)(A)
4.20%........... 06/07/97 900 900,000
Pittsburgh School District
Series B (FGIC Insured)
(Aaa, AAA)
5.25%........... 06/01/97 250 251,832
Sayre Health Care Facility
Authority (VHA Capital
Financing Project) Series
1985A (AMBAC Insured) (Aaa,
A-1)(A)
3.85%........... 06/07/97 100 100,000
Series 1985I (AMBAC
Insured) (LOC FNB
Chicago)(Aaa, AAA)(A)
3.85%........... 06/01/97 500 500,000
Series 1985J (Aaa, A-1)(A)
3.85%........... 06/07/97 2,000 2,000,000
PAR
MATURITY (000) VALUE
-------- --------- ------------
MUNICIPAL BONDS -- CONTINUED
PENNSYLVANIA -- CONTINUED
Schuylkill County Industrial
Development Authority
Resource Recovery
(Gilberton Power Project)
Series 1985K / (LOC Mellon
Bank) (NR, A-1)(A)
3.90%........... 06/07/97 $ 800 $ 800,000
Schuylkill County Industrial
Development Authority
Resource Recovery
(Northeastern Power Co.
Project) Series 1985 DN /
(LOC Sumitomo Bank) (NR,
A-1)(A)
4.15%........... 06/01/97 1,300 1,300,000
Scranton -- Lackawanna Health
and Welfare Authority
Revenue Bond, (University
of Scranton Project) (LOC
PNC Bank) (NR, A-1)(A)
4.00%........... 06/07/97 1,760 1,760,000
Shaler Township Tax
Anticipation Note (NR, NR)
3.95%........... 12/31/97 1,200 1,201,335
Somerset County PA Hospital
(NR, NR)(A)
4.25%........... 03/01/98 3,000 3,004,404
St. Mary Hospital Authority
(Franciscan Health System
Project) Series 1985C (LOC
Toronto Dominion) (VMIG-1,
A-1+)
3.95%........... 06/07/97 100 100,000
Stroudsburg Area School
District General Obligation
Unlimited (FSA Insured)
(Aaa, AAA)
3.75%........... 10/15/97 425 425,000
</TABLE>
See Accompanying Notes
25
<PAGE> 28
LOGO PORTFOLIO OF INVESTMENTS
MAY 31, 1997 ARMADA PENNSYLVANIA TAX EXEMPT FUND
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
-------- --------- ------------
<S> <C> <C> <C>
MUNICIPAL BONDS -- CONTINUED
PENNSYLVANIA -- CONTINUED
Temple University of the
Commonwealth System of Higher
Education (NR, SP1+)
4.75%........... 05/18/98 $ 2,250 $ 2,267,688
Union County Hospital Revenue
Authority (United Methodist
Continuing Care Project)
Series B 1997 (LOC Dauphin
Bank & Trust) (NR, A-1)(A)
4.10%........... 06/01/97 1,775 1,775,000
West York Area School
District Tax & Revenue
Anticipation Note (NR, NR)
4.375%.......... 06/30/97 800 800,198
Westmoreland County
Industrial Development
Authority Revenue Bond (LOC
Chase Bank) (P1, NR)(A)
4.15%........... 06/07/97 755 755,000
York County General Authority
Pooled Financing Revenue
Series 1996 (LOC First
Union National Bank of
North Carolina) (NR,
A-1)(A)
3.90%........... 06/07/97 3,200 3,200,000
York County IDA (Public
Service Electric and Gas
Co. Project) Series 1995-A
(MBIA Insured) (LOC Swiss
Bank) (VMIG-1, A-1+)(A)
3.70%........... 06/07/97 700 700,000
York County Industrial
Development Authority
Revenue Bond (New Edgecomb
Corp. Project) (Aa1, NR)(A)
3.85%........... 06/07/97 200 200,000
PAR
MATURITY (000) VALUE
-------- --------- ------------
MUNICIPAL BONDS -- CONTINUED
PENNSYLVANIA -- CONTINUED
Yough School District General
Obligation Bond (MBIA
Insured) (Aaa, AAA)
4.30%........... 10/01/97 $ 240 $ 240,313
------------
TOTAL MUNICIPAL BONDS..................... 80,853,737
------------
</TABLE>
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
--------- ------------
<S> <C> <C> <C>
TEMPORARY INVESTMENT -- 0.7%
Pennsylvania Municipal Cash
Trust....................... $558,040 558,040
------------
TOTAL INVESTMENTS--100.0% $ 81,411,777
(Cost $81,411,777*) ============
- ---------------
* Also cost for Federal income tax purposes.
Credit ratings given by Moody's Investor Service,
Inc. and Standard & Poor's Rating Group are unaudited.
AMBAC -- American Municipal Bond Assurance Cor-
poration
FGIC -- Federal Guaranty Insurance Corporation
FSA -- Financial Security Assurance
MBIA -- Municipal Bond Insurance Association
LOC -- Letter of Credit
(A) Variable rate securities. Interest rates vary
periodically based on current market rates. Rates
shown represent interest rates of the security in
effect as of May 31, 1997. Dates shown represent the
latter of the demand date or the next interest rate
change date, which is considered the maturity date
for financial reporting purposes.
</TABLE>
See Accompanying Notes
26
<PAGE> 29
LOGO FINANCIAL HIGHLIGHTS
ARMADA PENNSYLVANIA TAX EXEMPT
FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
FOR THE
YEAR ENDED FOR THE FOR THE FOR THE
MAY 31, 1997(5) PERIOD ENDED YEAR ENDED PERIOD ENDED
----------------------- MAY 31, APRIL 30, APRIL 30,
INSTITUTIONAL RETAIL(6) 1996(5) 1996(5) 1995(5)
------------- ------- ------------- -------------- -------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period.................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------- ------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS
Net investment income............................... 0.03 0.02 0.00 0.03 0.02
LESS DISTRIBUTIONS
Dividends from net investment income................ (0.03) (0.02) 0.00 (0.03) (0.02)
------- ------- ------- ------- -------
Net asset value, end of period........................ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======= ======= ======= ======= =======
TOTAL RETURN.......................................... 3.26% 3.18% 0.28%(4) 3.36% 2.32%(4)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000's).................. $60,876 $20,830 $68,742 $ 70,422 $ 56,668
Ratio of expenses to average net assets............... 0.41%(1) 0.46%(2,3) 0.55%(1,3) 0.55% 0.55%(1,3)
Ratio of net investment income to average net
assets.............................................. 3.20%(1) 3.27%(2,3) 3.24%(1,3) 3.29% 3.21%(1,3)
</TABLE>
(1) The operating expense ratio and net investment income ratio before fee
waivers by the Investment Advisers and other affiliates for the
Institutional class for the periods ending May 31, 1997, May 31, 1996, April
30, 1996, and April 30, 1995 would have been .74% and 2.87%, .97% and 2.82%,
.96% and 2.88%, and 1.04% and 2.72%, respectively.
(2) The operating expense ratio and net investment income ratio before fee
waivers by the Investment Advisers and other affiliates for the Retail class
for the period ended May 31, 1997 would have been .71% and 3.02%,
respectively.
(3) Annualized.
(4) Not Annualized.
(5) Activity for the period presented includes that of the Predecessor Fund
through September 6, 1996. The Predecessor Fund commenced operations on
August 10, 1994. During 1996, the Predecessor Fund changed its fiscal
year-end from April 30 to May 31.
(6) Retail class commenced operations on September 11, 1996.
See Accompanying Notes
27
<PAGE> 30
LOGO FINANCIAL STATEMENTS
MAY 31, 1997 ARMADA FUNDS MONEY MARKET SERIES
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
PENNSYLVANIA
MONEY MARKET GOVERNMENT TREASURY TAX EXEMPT TAX EXEMPT
---------------- ----------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C>
ASSETS
Investments at value (cost
$2,300,458,986, $975,344,289,
$281,958,896, $446,565,490, and
$81,411,777, respectively)............ $2,300,458,986 $975,344,289 $281,958,896 $446,565,490 $81,411,777
Interest receivable..................... 558,055 195,817 1,386,936 2,696,579 605,623
Prepaid expenses........................ 50,228 1,117 9,320 650 7,207
-------------- ------------ ------------ ------------ -----------
TOTAL ASSETS............................ 2,301,067,269 975,541,223 283,355,152 449,262,719 82,024,607
-------------- ------------ ------------ ------------ -----------
LIABILITIES
Dividends payable -- Institutional
class................................. 8,739,933 3,367,079 1,110,798 1,091,084 193,951
Dividends payable -- Retail class....... 1,501,106 676,332 21,540 206,698 57,696
Payable for investments purchased....... 0 0 0 5,118,180 0
Accrued expenses........................ 1,634,039 706,429 215,550 250,671 66,911
-------------- ------------ ------------ ------------ -----------
TOTAL LIABILITIES....................... 11,875,078 4,749,840 1,347,888 6,666,633 318,558
-------------- ------------ ------------ ------------ -----------
NET ASSETS.............................. $2,289,192,191 $970,791,383 $282,007,264 $442,596,086 $81,706,049
============== ============ ============ ============ ===========
NET ASSETS CONSIST OF:
Paid-in capital......................... $2,289,201,684 $970,793,257 $281,993,071 $442,584,405 $81,709,250
Accumulated net realized gain/(loss) on
investments sold...................... (9,493) (1,874) 14,193 11,681 (3,201)
-------------- ------------ ------------ ------------ -----------
$2,289,192,191 $970,791,383 $282,007,264 $442,596,086 $81,706,049
============== ============ ============ ============ ===========
Net Assets -- Institutional class....... $1,943,020,527 $811,662,224 $276,327,247 $370,679,153 $60,876,478
Shares outstanding -- Institutional
class................................. 1,943,026,036 811,663,715 276,313,170 370,669,841 60,879,683
Net asset value, Offering price and
Redemption price per
share -- Institutional class.......... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
============== ============ ============ ============ ===========
Net Assets -- Retail class.............. $ 346,171,664 $159,129,159 $ 5,680,017 $71,916,933 $20,829,571
Shares outstanding -- Retail class...... 346,175,648 159,129,542 5,679,901 71,914,564 20,829,567
Net asset value, Offering price and
Redemption price per share -- Retail
class................................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
============== ============ ============ ============ ===========
</TABLE>
See Accompanying Notes
28
<PAGE> 31
LOGO FINANCIAL STATEMENTS
ARMADA FUNDS MONEY MARKET SERIES
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED MAY 31, 1997
<TABLE>
<CAPTION>
PENNSYLVANIA
TAX
MONEY MARKET GOVERNMENT TREASURY TAX EXEMPT EXEMPT(1)
------------ ---------- ---------- ----------- ------------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest................................... $110,280,649 $52,097,100 $16,395,102 $13,281,324 $2,723,881
------------ ----------- ----------- ----------- ----------
EXPENSES:
Investment Advisory fees................... 7,094,438 3,381,394 953,800 1,338,233 310,147
12b-1 fees................................. 810,793 386,445 127,173 152,941 70,087
Administration fees........................ 502,464 239,708 79,005 170,489 53,119
Shareholder servicing fees - Retail class
only..................................... 341,968 153,359 5,735 68,567 8,106
Registration and filing fees............... 199,792 57,691 13,587 21,260 7,042
Distribution fees.......................... 190,764 93,023 30,912 36,444 2,995
Custodian fees............................. 188,221 102,808 37,527 48,496 13,823
Legal fees................................. 171,411 87,959 28,037 32,648 5,658
Miscellaneous.............................. 82,248 40,665 1,267 21,800 13,993
Transfer Agent fees........................ 62,333 26,118 41,351 23,140 22,942
Trustees' fees............................. 52,074 25,452 8,860 10,882 3,638
Printing and shareholder reports........... 34,884 17,577 607 2,632 10,462
Audit fees................................. 32,424 18,072 9,372 9,822 26,425
Insurance.................................. 30,584 14,664 4,708 5,909 1,094
Amortization of organization costs......... 0 0 4,132 0 3,160
Fees waived................................ 0 0 0 0 (47,649)
Fees waived by Investment Advisers......... (2,026,982) (966,112) (158,966) (764,704) (191,305)
------------ ----------- ----------- ----------- ----------
Total expenses............................. 7,767,416 3,678,823 1,187,107 1,178,559 313,737
------------ ----------- ----------- ----------- ----------
NET INVESTMENT INCOME........................ 102,513,233 48,418,277 15,207,995 12,102,765 2,410,144
------------ ----------- ----------- ----------- ----------
NET REALIZED GAIN/(LOSS) ON INVESTMENTS
SOLD....................................... (1,179) 0 16,727 13,140 26
------------ ----------- ----------- ----------- ----------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS................................. $102,512,054 $48,418,277 $15,224,722 $12,115,905 $2,410,170
============ =========== =========== =========== ==========
</TABLE>
(1) Activity for the year ended May 31, 1997 includes that of the Predecessor
Fund through September 6, 1996.
See Accompanying Notes
29
<PAGE> 32
LOGO FINANCIAL STATEMENTS
ARMADA FUNDS MONEY MARKET SERIES
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
MONEY MARKET GOVERNMENT TREASURY
--------------------------------- ----------------------------- -----------------------------
FOR THE FOR THE FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
MAY 31, 1997 MAY 31, 1996 MAY 31, 1997 MAY 31, 1996 MAY 31, 1997 MAY 31, 1996
-------------- -------------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Net increase in net assets
resulting from net
investment income and
amount of income
distributions to
shareholders............. $ 102,513,233 $ 77,770,161 $ 48,418,277 $ 34,801,218 $ 15,207,995 $ 10,303,862
============== ============== ============ ============ ============ ============
Increase/(decrease) in net
assets derived from Fund
share transactions....... 601,692,762 429,065,507 97,703,883 235,854,984 (34,605,665) 173,356,407
Net realized gain/(loss) on
investments sold......... (1,179) 0 0 603 16,727 11,704
Distributions from net
realized gains........... 0 0 0 0 (14,238) 0
NET ASSETS:
Beginning of period...... 1,687,500,608 1,258,435,101 873,087,500 637,231,913 316,610,440 143,242,329
-------------- -------------- ------------ ------------ ------------ ------------
End of period............ $2,289,192,191 $1,687,500,608 $970,791,383 $873,087,500 $282,007,264 $316,610,440
============== ============== ============ ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
PENNSYLVANIA TAX EXEMPT
TAX EXEMPT -------------------------------------------------
--------------------------------- FOR THE FOR THE FOR THE
FOR THE FOR THE YEAR ENDED PERIOD ENDED YEAR ENDED
YEAR ENDED YEAR ENDED MAY 31, MAY 31, APRIL 30,
MAY 31, 1997 MAY 31, 1996 1997(1) 1996(2) 1996(2)
-------------- -------------- ------------ ------------ ---------------
<S> <C> <C> <C> <C> <C>
Net increase in net assets
resulting from net
investment income and
amount of income
distributions to
shareholders............. $ 12,102,765 $ 9,807,133 $ 2,410,144 $ 193,868 $ 2,270,970
============ ============ =========== =========== =============
Increase/(decrease) in net
assets derived from Fund
share transactions....... 94,846,628 123,177,844 13,233,933 (1,946,457) 13,753,567
Net realized gain/(loss) on
investments sold......... 13,140 0 26 (3,610) 383
NET ASSETS:
Beginning of period...... 347,736,318 224,558,474 68,472,090 70,422,157 56,668,207
------------ ------------ ----------- ----------- ------------
End of period............ $ 442,596,086 $ 347,736,318 $ 81,706,049 $ 68,472,090 $ 70,422,157
============ ============ =========== =========== ============
</TABLE>
(1) Activity for the year ended May 31, 1997 includes that of the Predecessor
Fund through September 6, 1996.
(2) Activity for the periods ended May 31, 1996 and April 30, 1996 is that of
the Predecessor Fund.
See Accompanying Notes
30
<PAGE> 33
LOGO NOTES TO FINANCIAL STATEMENTS
1. FUND ORGANIZATION
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 Growth 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"). A new investment advisory agreement
between Inventor and affiliates of National City received shareholder approval
in May 1996.
On February 15 and March 18, 1996, the respective Boards of Trustees/Directors
of the Trust and Inventor each approved the Agreement and Plan of Reorganization
between the Trust and Inventor (the "Agreement"). Subsequently, a shareholder
meeting was held to approve the Agreement; the unaudited
31
<PAGE> 34
LOGO NOTES TO FINANCIAL STATEMENTS
results for the Inventor Pennsylvania Tax-Exempt Money Market Fund 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%
</TABLE>
The Reorganization was executed on September 9, 1996.
As part of the Reorganization, on September 9, 1996, the Inventor Pennsylvania
Tax-Exempt Money Market Fund (the "Predecessor Fund") transferred all of its
assets and liabilities with an approximate value of $74,142,677 in exchange for
shares of the Armada Pennsylvania Tax Exempt Fund. The Reorganization was
executed as a tax-free reorganization 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 Pennsylvania Tax Exempt Fund for the year ended May 31, 1997 include
those of the Predecessor Fund.
In accordance with provisions of the Agreement, 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 recognized approximately $200,000 in costs
connected with the Reorganization, which has been allocated among the various
funds in the Trust.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies followed by the
Money Market, Government, Treasury, Tax Exempt, and Pennsylvania Tax Exempt
Funds (the "Funds") in preparation of their financial statements.
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 Pennsylvania Tax Exempt Fund has invested substantially all of its assets
in the municipal obligations of that state. The Tax Exempt Fund invests in
municipal obligations of various states which may, at times, comprise
concentrations in one or several states. Economic changes affecting the states
and certain of their public bodies and municipalities may affect the ability of
issuers within each state to pay interest on, or repay principal of, municipal
obligations held by the Pennsylvania Tax Exempt and Tax Exempt Funds.
PORTFOLIO VALUATION: Investment securities in the Money Market, Government,
Treasury, and Pennsylvania Tax Exempt Funds are valued as of 1:00 P.M. and as of
4:00 P.M. and as of 12:00 noon and 4:00 P.M. for the Tax Exempt Fund on each
business day. Investment securities are valued on the basis of amortized cost
which has been determined by the Board of Trustees to represent the fair value
of the Funds' investments. Amortized cost valuation involves valuing an
instrument at its cost initially and, thereafter, assuming a constant
amortization to maturity of any applicable discount or premium.
SECURITY TRANSACTIONS AND INVESTMENT INCOME: Security transactions are
recorded on the trade date. Realized gains and losses on investments sold are
recorded on the identified cost basis. Interest income is accrued on a daily
basis.
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS: Each Fund declares dividends
daily from net investment income and pays such dividends no later than five
business days after the end of the month. Net investment income of the Money
Market, Government, and Treasury Funds consists of interest accrued and discount
earned (including both original
32
<PAGE> 35
LOGO NOTES TO FINANCIAL STATEMENTS
issue and market discount), less amortization of any market premium and accrued
expenses. Net investment income of the Tax Exempt and Pennsylvania Tax Exempt
Funds consists of interest accrued, original issue discount earned, less
amortization of any market premium and accrued expenses.
FEDERAL INCOME TAXES: Each of the Funds is classified as a separate taxable
entity for Federal income tax purposes. Each of the Funds intends to qualify as
a separate "regulated investment company" under the Internal Revenue Code and
make the requisite distributions to its shareholders that will be sufficient to
relieve it from Federal income tax and Federal excise tax. Therefore, no Federal
tax provision is required. To the extent that distributions from net investment
income and net realized capital gains exceed amounts in the financial
statements, such amounts are reported separately.
REPURCHASE AGREEMENTS: Repurchase agreements are considered loans under the
Investment Company Act of 1940, as amended. In connection therewith, the Trust's
Custodian receives and holds collateral of not less than 102% of the repurchase
price plus accrued interest. If the value of the collateral falls below this
amount, the Trust will require the seller to deposit additional collateral by
the next business day. If the request for additional collateral is not met or
the seller defaults on its repurchase obligation, the Trust maintains the right
to sell the underlying securities at market value and may claim any resulting
loss against the seller.
ORGANIZATIONAL COSTS: The Trust bears all costs in connection with its
organization, including the fees and expenses of registering and qualifying its
shares for distribution under Federal and State securities regulations. All
organization expenses are being amortized on the straight-line method over a
period of five years from the date of commencement of operations.
3. INVESTMENT ADVISERS, DISTRIBUTION FEE AND OTHER RELATED PARTY TRANSACTIONS
Fees paid by the Trust pursuant to the Advisory Agreements with National City
Bank, National City Bank of Columbus and National City Bank of Kentucky
(collectively, the "Adviser" or "Advisers"), wholly-owned subsidiaries of
National City Corporation, are payable monthly based on an annual rate of .35%
of the average daily net assets of each of the Money Market, Government and Tax
Exempt Funds, .30% of the average daily net assets of the Treasury Fund, and
.40% of the average daily net assets of the Pennsylvania Tax Exempt Fund. Prior
to the Reorganization, Integra Trust Company served as investment adviser to the
Pennsylvania Tax Exempt Fund and Weiss, Peck & Greer LLC (the "Sub-Adviser")
served as sub-adviser to Integra Trust Company. Subsequent to the
Reorganization, the Sub-Adviser continues to serve under an agreement with
National City Bank and is entitled to earn a fee pursuant to such agreement. The
Advisers may from time to time waive their fees payable by the Funds. For the
year ended May 31, 1997, the Advisers have earned and waived the following fees:
<TABLE>
<CAPTION>
EARNED WAIVED
---------- ----------
<S> <C> <C>
Money Market Fund............... $7,094,438 $2,026,982
Government Fund................. 3,381,394 966,112
Treasury Fund................... 953,800 158,966
Tax Exempt Fund................. 1,338,233 764,704
Pennsylvania Tax Exempt Fund.... 310,147 191,305
</TABLE>
At May 31, 1997, Advisory fees accrued and unpaid amounted to:
<TABLE>
<S> <C>
Money Market Fund............................ $492,813
Government Fund.............................. 197,312
Treasury Fund................................ 58,103
Tax Exempt Fund.............................. 55,545
Pennsylvania Tax Exempt Fund................. 10,329
</TABLE>
The Trust maintains a Shareholder Services Plan (the "Services Plan") with
respect to the Retail shares in the Funds. Pursuant to the Services Plan, the
Trust enters into shareholder servicing agree-
33
<PAGE> 36
LOGO NOTES TO FINANCIAL STATEMENTS
ments with certain financial institutions under which they agree to provide
shareholder administrative services to their customers who beneficially own
Retail shares in consideration for the payment of up to .10% on an annualized
basis of the net asset value of the Retail shares of the Money Market,
Government, Treasury, Tax Exempt and Pennsylvania Tax Exempt Funds. For the year
ended May 31, 1997, fees paid under the Services Plan to NatCity Investments,
Inc. and National City Bank of Columbus, wholly-owned subsidiaries of National
City Corporation, amounted to:
<TABLE>
<CAPTION>
NATIONAL CITY NATCITY
BANK OF COLUMBUS INVESTMENTS INC.
---------------- ----------------
<S> <C> <C>
Money Market Fund..... $ 75,059 $173,395
Government Fund....... 119,234 17,626
Treasury Fund......... 361 3,660
Tax Exempt Fund....... 3,194 47,551
Pennsylvania Tax
Exempt Fund......... 6,227 883
</TABLE>
National City Bank, a wholly-owned subsidiary of National City Corporation,
serves as the Funds' Custodian. National City Bank commenced services as
custodian to the Pennsylvania Tax Exempt Fund effective August 5, 1996. For the
year ended May 31, 1997, National City Bank earned custodian fees as follows:
<TABLE>
<S> <C>
Money Market Fund............................ $188,221
Government Fund.............................. 102,808
Treasury Fund................................ 37,527
Tax Exempt Fund.............................. 48,496
Pennsylvania Tax Exempt Fund................. 11,880
</TABLE>
Pursuant to Board of Trustees' approval, SEI Investments Distribution Co., a
wholly-owned subsidiary of SEI Investments Company ("SEI" or "Distributor"),
began serving as the Trust's Distributor on March 10, 1997. Each Fund pays a fee
to the Distributor for distributing its shares. Under the Trust's Distribution
Agreement and related Distribution Plan adopted pursuant to Rule 12b-1 under the
1940 Act, the Trust compensates the Distributor for services provided and
expenses assumed in providing advertising, marketing, prospectus printing and
other distribution services up to a maximum of .10% per annum of the average net
assets of each Fund, inclusive of an annual base fee of $1,250,000 plus
incentive fees related to asset growth, which are allocated among the investment
funds with respect to which the Distributor is distributing shares.
440 Financial Distributors, Inc., ("440") a wholly-owned subsidiary of The
Shareholder Services Group, Inc. and an indirect wholly-owned subsidiary of
First Data Corp., served as the Trust's Distributor until March 7, 1997. Each
Fund reimbursed 440 for direct and indirect expenses incurred in performing
distribution services, up to a maximum of .10% per annum of the average net
assets of the Fund, inclusive of an annual fee of $250,000, which was allocated
among the investment funds for which 440 was distributing shares.
SEI served as distributor to the Pennsylvania Tax Exempt Fund 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 Fund's Class A shares.
Each Trustee receives an annual fee of $7,500 plus $2,500 for each Board
meeting attended and reimbursement of out-of-pocket expenses. The Chairman of
the Board receives an additional $2,500 per annum for services in such capacity.
Such fees are paid for services rendered to all of the Funds and are allocated
accordingly. No person who is an officer, director, trustee, or employee of the
Advisers, Distributor, or of any parent or subsidiary thereof, who serves as an
officer, trustee, or employee of the Trust receives any compensation from the
Trust.
Expenses for the year ended May 31, 1997 include legal fees paid to Drinker
Biddle & Reath LLP. A partner of that firm is Secretary of the Trust.
34
<PAGE> 37
LOGO NOTES TO FINANCIAL STATEMENTS
PFPC Inc. ("PFPC") serves as Administrator and Accounting Agent to the Trust.
As compensation for services performed, each Fund pays PFPC an asset-based fee
plus reimbursement of reasonable out-of-pocket expenses. An officer of PFPC
serves as Treasurer to the Trust.
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. Since the Funds have each sold and redeemed shares only at a constant
net asset value of $1.00 per share, the number of shares represented by such
sales, reinvestments, and redemptions is the same as the amounts shown on the
following page for such transactions.
35
<PAGE> 38
LOGO NOTES TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
FOR THE YEAR ENDED FOR THE YEAR ENDED
MAY 31, 1997 MAY 31, 1996
--------------------------------- ---------------------------------
INSTITUTIONAL INSTITUTIONAL
CLASS RETAIL CLASS CLASS RETAIL CLASS
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
MONEY MARKET FUND
Shares sold.............................. $5,045,819,104 $1,653,854,681 $3,557,289,942 $1,296,339,643
Shares reinvested........................ 24,146 13,094,323 19,278 11,706,196
Shares repurchased....................... (4,447,235,733) (1,663,863,759) (3,296,137,841) (1,140,151,711)
-------------- -------------- -------------- --------------
Net increase............................. $ 598,607,517 $ 3,085,245 $ 261,171,379 $ 167,894,128
============== ============== ============== ==============
GOVERNMENT FUND
Shares sold.............................. $2,930,558,838 $ 434,038,296 $2,479,104,729 $ 196,026,437
Shares reinvested........................ 422,662 1,148,634 357,397 1,033,637
Shares repurchased....................... (2,861,212,866) (407,251,681) (2,355,628,345) (85,038,871)
-------------- -------------- -------------- --------------
Net increase............................. $ 69,768,634 $ 27,935,249 $ 123,833,781 $ 112,021,203
============== ============== ============== ==============
TREASURY FUND
Shares sold.............................. $1,140,870,083 $ 31,457,071 $ 963,946,179 $ 9,707,933
Shares reinvested........................ 774 238,543 0 59,062
Shares repurchased....................... (1,176,801,209) (30,370,927) (794,579,391) (5,777,376)
-------------- -------------- -------------- --------------
Net increase (decrease).................. $ (35,930,352) $ 1,324,687 $ 169,366,788 $ 3,989,619
============== ============== ============== ==============
TAX EXEMPT FUND
Shares sold.............................. $ 631,572,058 $ 334,988,273 $ 576,468,463 $ 241,105,254
Shares reinvested........................ 343 2,089,900 1,724 2,069,874
Shares repurchased....................... (522,712,255) (351,091,691) (487,304,635) (209,162,836)
-------------- -------------- -------------- --------------
Net increase (decrease).................. $ 108,860,146 $ (14,013,518) $ 89,165,552 $ 34,012,292
============== ============== ============== ==============
</TABLE>
<TABLE>
<CAPTION>
FOR THE YEAR ENDED
MAY 31, 1997* FOR THE YEAR
--------------------------------- FOR THE PERIOD ENDED
INSTITUTIONAL RETAIL ENDED APRIL 30,
CLASS CLASS MAY 31, 1996* 1996*
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
PENNSYLVANIA TAX EXEMPT FUND
Shares sold.............................. $ 180,573,040 $ 59,050,127 $ 6,077,845 $ 148,939,088
Shares reinvested........................ 22,806 52,288 4,537 51,230
Shares repurchased....................... (188,191,480) (38,272,848) (8,028,839) (135,236,751)
-------------- -------------- -------------- --------------
Net increase (decrease).................. $ (7,595,634) $ 20,829,567 $ (1,946,457) $ 13,753,567
============== ============== ============== ==============
</TABLE>
- ---------------
* Formerly Inventor Pennsylvania Tax-Exempt Money Market Fund.
36
<PAGE> 39
LOGO REPORT OF INDEPENDENT AUDITORS
To the Board of Trustees and
Shareholders of Armada Funds
We have audited the accompanying statements of assets and liabilities,
including the portfolios of investments, of the Armada Money Market Fund, Armada
Government Fund, Armada Treasury Fund, Armada Pennsylvania Tax Exempt Fund, and
Armada Tax Exempt Fund (the "Funds") as of May 31, 1997, and the related
statements of operations for the year then ended. We have also audited the
statements of changes in net assets and financial highlights for each of the
periods presented herein for the Armada Money Market Fund, Armada Government
Fund, Armada Treasury Fund and Armada Tax Exempt Fund and for the year ended May
31, 1997 for the Armada Pennsylvania Tax Exempt Fund. These financial statements
and financial highlights are the responsibility of the Funds' management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits. The statements of changes in net
assets for the year ended April 30, 1996 and the one month period ended May 31,
1996 and the financial highlights for the periods ended April 30, 1995 through
May 31, 1996 for the Armada Pennsylvania Tax Exempt Fund were audited by other
auditors whose report dated July 26, 1996 expressed an unqualified opinion on
those statements and financial highlights.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and financial highlights. Our procedures included verification by
examination of securities held by the custodian, as of May 31, 1997, and
confirmation of securities not held by the custodian, by correspondence with
brokers. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the 1997 financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of the Armada Money Market Fund, Armada Government Fund, Armada
Treasury Fund, Armada Pennsylvania Tax Exempt Fund and Armada Tax Exempt Fund at
May 31, 1997, the results of their operations for the year then ended, and for
the Armada Money Market Fund, Armada Government Fund, Armada Treasury Fund, and
Armada Tax Exempt Fund, the changes in their net assets and their financial
highlights for each of the periods presented herein, and for the Armada
Pennsylvania Tax Exempt Fund, the changes in their net assets and their
financial highlights for the year ended May 31, 1997, in conformity with
generally accepted accounting principles.
/s/ Ernst & Young LLP
Philadelphia, PA
July 3, 1997
37
<PAGE> 40
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
Leigh Carter
Retired President and Chief Operating
Officer, B.F. Goodrich Company
Director, Adams Express Company
Director, Acromed Corporation
Director, Petroleum & Resources Corp.
Director, Morrison Products
John F. Durkott
President and Chief Operating Officer,
Kittle's Home Furnishings Center, Inc.
Richard W. Furst, Dean
Professor of Finance and Dean,
Carol Martin Gatton College of Business
and Economics, University of Kentucky
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> 41
LOGO NOTES
<PAGE> 42
[ARMADA LOGO] --------------------
ARMADA | BULK RATE |
FUNDS | U.S. POSTAGE |
| PAID |
Oaks, Pennsylvania 19456 | CLEVELAND, OH |
| PERMIT NO. 1535 |
*Address Correction Requested --------------------
INVESTMENT ADVISERS
AFFILIATES OF
NATIONAL CITY
CORPORATION
National City Bank
1900 East Ninth Street
Cleveland, Ohio 44114
National City Bank of Columbus
155 East Broad Street
Columbus, Ohio 43251
National City Bank of Kentucky
101 South Fifth Street
Louisville, Kentucky 40202
AF-803 (7/97)
