[PHOTO OF HUDSON TOWN HALL OMITTED]
ARMADA FUNDS TAX EXEMPT SERIES
ANNUAL REPORT
MAY 31, 1998
ARMADA OHIO TAX EXEMPT FUND
ARMADA PENNSYLVANIA MUNICIPAL FUND
ARMADA NATIONAL TAX EXEMPT FUND
[ARMADA FUNDS LOGO OMITTED]
FINANCIAL POWER CLOSE AT HAND
<PAGE>
ARMADA FUNDS
TAX EXEMPT SERIES
ANNUAL REPORT -- MAY 31, 1998
ARMADA OHIO TAX EXEMPT FUND
ARMADA PENNSYLVANIA MUNICIPAL FUND
ARMADA NATIONAL TAX EXEMPT FUND
TABLE OF CONTENTS
Chairman's Message ........................................................ 1
Tax Exempt Market Overview ................................................ 3
FUND OVERVIEWS
Armada Ohio Tax Exempt Fund ............................................ 4
Armada Pennsylvania Municipal Fund ..................................... 6
Armada National Tax Exempt Fund ........................................ 8
STATEMENT OF NET ASSETS AND FINANCIAL HIGHLIGHTS
Armada Ohio Tax Exempt Fund ............................................ 11
Armada Pennsylvania Municipal Fund ..................................... 22
Armada National Tax Exempt Fund ........................................ 26
FINANCIAL STATEMENTS
Statement of Operations ................................................ 30
Statement of Changes in Net Assets ..................................... 31
NOTES TO FINANCIAL STATEMENTS ............................................. 32
REPORT OF INDEPENDENT AUDITORS ............................................ 38
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[BULLET] SHARES OF ARMADA FUNDS ARE NOT BANK DEPOSITS OR OBLIGATIONS OF, OR
GUARANTEED OR ENDORSED OR OTHERWISE SUPPORTED BY NATIONAL CITY BANK,
THEIR AFFILIATES OR ANY BANK.
[BULLET] SHARES OF ARMADA FUNDS ARE NOT INSURED OR GUARANTEED BY THE U.S.
GOVERNMENT, FDIC, OR ANY GOVERNMENTAL AGENCY OR STATE.
[BULLET] AN INVESTMENT IN ARMADA FUNDS INVOLVES INVESTMENT RISKS, INCLUDING THE
POSSIBLE LOSS OF PRINCIPAL.
[BULLET] 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.
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<PAGE>
CHAIRMAN'S MESSAGE
DEAR ARMADA FUNDS SHAREHOLDER:
We are pleased to report that the year ended May 31, 1998, was a good
one for both the economy and financial markets as well as for Armada Funds. With
our economy's solid growth and low inflationary pressures, stocks posted
dramatic increases and the fixed income markets gained ground as well. Despite
volatility in the financial markets, enthusiasm for investing continued
unabated. Many investors chose to invest in Armada Funds with the result that
our assets rose by 37%, increasing from $5.4 billion at the start of the year,
to $7.4 billion on May 31, 1998.
On March 31, 1998, the merger of National City Corporation and First of
America Bank Corporation was successfully completed. As a direct result of the
merger our funds will be advised and managed by a larger team of investment
professionals. The depth and breadth of expertise and experience this team
brings to our funds will enhance our ability to meet our clients' objectives.
NEW PRODUCT OFFERINGS
In the Spring we added two new funds -- the Armada National Tax Exempt Fund
and the Armada Tax Managed Equity Fund. These new funds, plus three additional
equity funds added during the first half of the year, further enhance the range
of investment opportunities within the Armada Family of Funds.
We also have launched the Armada Plus 401(k) program--a comprehensive plan
designed to provide employees of smaller companies with the complete range of
benefits traditionally only enjoyed by the larger tax deferred 401(k) plan
sponsors. The program is a turnkey package--offering employers a solid plan that
combines Armada Funds with comprehensive, affordable plan administration and
recordkeeping.
1
<PAGE>
CHAIRMAN'S MESSAGE
If you would like more information about our newest offerings, the Armada
National Tax Exempt and Tax Managed Equity funds or the Armada Plus 401(k)
program, or a prospectus for any of the Armada Funds, please call your account
representative or 1-800-622-FUND (3863). You also can find us on the WorldWide
Web at WWW.NATIONAL-city.com. Click INVEST IT! for Armada Funds information.
Finally, we would like to thank you for your continued confidence in us.
We look forward to providing you with superior investment management and service
to meet your investment needs now and in the future.
Sincerely,
/S/ SIGNATURE
Robert D. Neary
Chairman
Armada Funds
2
<PAGE>
TAX EXEMPT MARKET OVERVIEW
REMARKS FROM THE ADVISERS
"GENERALLY, MUNICIPAL BALANCE SHEETS ARE THE STRONGEST THEY'VE BEEN IN SOME
25 YEARS."
Unlike other sectors of the fixed income markets, the municipal markets were
fairly active over the course of the year ended May 31, 1998. Throughout the
period, anticipation of interest rate hikes by the Fed, fears regarding
inflation and rumors circulating concerning the situation in Asia kept investors
on edge. Nonetheless, the year was a good one for municipal investors as
throughout the period, municipals were cheap relative to U.S. Treasuries and
attractive opportunities were plentiful.
Moreover, due to the strength of the economy, municipal balance sheets across
the country strengthened -- and at the end of the period, the vast majority were
in the best shape they've been in for more than 25 years. Given the
overwhelmingly positive news on this front, however, credit spreads narrowed
throughout the period. Consequently, while in the short-term, lower quality
securities offered some opportunity to enhance yield, longer term, the premiums
paid for the assumption of additional risk grew less and less attractive as the
year went on.
Clearly, however, the environment was and continues to be about as good as it
can ever get: our economy is growing steadily, inflation is benign, a balanced
budget is in sight, and municipal balance sheets are very strong. In short,
nothing lasts forever -- and while there seems to be little to worry about,
there are reasons for caution. If the GM strike were to continue indefinitely,
eventually numerous municipalities could be effected. Eventually, too, our
government, corporations and markets will experience some fallout from the
situation in Asia. Even more specifically, deregulation of the electric utility
industry -- while out of the headlines now -- will happen and will effect muni
markets nationwide.
That said, however, we are very positive in our outlook for municipal
securities in the months and years ahead, particularly for higher quality
issues. While the direction of rates in the very near-term is unclear, longer
term we do believe they will eventually move lower. Even if rates do not drop
dramatically, much as the equity markets benefited as the baby boomers have
sought to amass wealth, the municipal markets should benefit in the years ahead
as this generation seeks to preserve wealth.
3
<PAGE>
ARMADA OHIO TAX EXEMPT FUND OVERVIEW
COMMENTS FROM THE MANAGER
PORTFOLIO MANAGER:
FIXED INCOME TEAM,
NATIONAL CITY'S
ASSET MANAGEMENT GROUP
FUND'S DATE OF INCEPTION:
JANUARY 5, 1990 (INSTITUTIONAL SHARES)
APRIL 15, 1991 (RETAIL SHARES)
ASSETS:
$165,395,438 (INSTITUTIONAL SHARES)
$4,037,305 (RETAIL SHARES)
INVESTMENT OBJECTIVE:
PROVIDE AS HIGH A LEVEL OF INTEREST INCOME EXEMPT FROM FEDERAL INCOME TAX AND,
TO THE EXTENT POSSIBLE, FROM OHIO PERSONAL INCOME TAX, AS IS CONSISTENT WITH
CONSERVATION OF CAPITAL.
RECENT PERFORMANCE
For the year ended May 31, 1998, the Armada Ohio Tax-Exempt Fund returned
7.43% to Institutional shareholders and 7.39% to Retail shareholders (before
sales charges). By comparison, in the same period, the Lehman Brothers
Seven-Year Municipal Bond Index returned 8.06%.
Throughout the period, as interest rates dropped, many investors sought to
enhance yield by pursuing lower quality securities. As a result, stronger
credits, like those from Ohio, lagged the overall market. Yet, as noted earlier,
as the year moved along, credit spreads narrowed -- e.g. the premiums paid by
lower quality securities decreased throughout the year. The risk levels,
however, remained the same. Consequently, because the Fund's quality standards
are strictly maintained, performance was impacted in the short-term.
FUND STRUCTURE
The Armada Ohio Tax Exempt Fund has an average maturity of approximately 6.75
years and an effective duration of 5.6 years. The average credit quality of the
portfolio's holdings is AA1. As of May 31, 1998, approximately 45% of the
portfolio's assets were invested in general obligation securities, with the
remainder held in revenue issues such as higher education, sewer and water
issues.
LOOKING AHEAD
We expect the months ahead to be good ones for the Ohio municipal market.
While nothing has been resolved on the school funding situation, nothing is
likely to happen prior to November elections. Moreover, the same situation has
been confronted and dealt with in other states like Michigan in the last two or
three years. Ultimately, there -- and we expect, eventually, here -- the matter
must be settled. And, when it is, it will be resolved with less turmoil than
originally anticipated by governments, tax-payers and investors.
As a result, we're optimistic about the Fund's prospects in both the
short-term and long-term. As of May 31, 1998, the Fund was widely diversified,
with holdings in municipalities across the state. No more than 5% of the
portfolio's assets were invested in any one issue.
4
<PAGE>
ARMADA OHIO TAX EXEMPT FUND OVERVIEW
COMMENTS FROM THE MANAGER
"WHILE NOTHING HAS BEEN RESOLVED ON THE SCHOOL FUNDING SITUATION, NOTHING IS
LIKELY TO HAPPEN PRIOR TO NOVEMBER ELECTIONS."
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------
TOTAL RETURNS as of 05/31/98
- -------------------------------------------------------------------------------------------
One Annualized Annualized Annualized Cumulative
Year 3-Year 5-Year Inception to Inception to
Return Return Return Date2 Date2
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Armada Ohio Tax Exempt Fund
Institutional Shares1 7.43% 6.05% 5.39% 6.06% 63.90%
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Armada Ohio Tax Exempt Fund
Retail Shares With Sales Charge4 4.21% 4.97% 4.76% 5.72% 48.63%
Without Sales Charge 7.39% 6.03% 5.39% 6.17% 53.19%
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</TABLE>
Past performance is not predictive of future performance.
GROWTH OF A $10,000 INVESTMENT3
[LINE GRAPH OMITTED]
Armada Ohio Tax Armada Ohio Tax Lehman Brothers
Exempt Fund Exempt Fund Seven-Year
Institutional (Retail Shares Municipal
Shares) with sales charge) Bond Index
12/31/89 $10,000
1/5/90 $10,000 $9,700 10,000
May-1990 10,054 9,752 10,188
May-1991 10,795 10,430 11,207
May-1992 11,463 11,080 12,215
May-1993 12,604 12,216 13,495
May-1994 12,892 12,496 13,939
May-1995 13,744 13,326 15,076
May-1996 14,343 13,905 15,776
May-1997 15,257 14,793 16,857
May-1998 16,390 15,886 18,217
1 INSTITUTIONAL SHARES ARE SOLD PRIMARILY TO BANKS AND TRUST COMPANIES WHICH
ARE AFFILIATED WITH NATIONAL CITY CORPORATION AND CLIENTS OF NATIONAL ASSET
MANAGEMENT CORPORATION ("NAM"). CERTAIN ACCOUNT LEVEL CHARGES MAY APPLY.
2 THE ARMADA OHIO TAX EXEMPT FUND'S DATE OF INCEPTION WAS JANUARY 5, 1990 FOR
INSTITUTIONAL SHARES AND APRIL 15, 1991 FOR RETAIL SHARES.
3 THE RETURN AND PRINCIPAL VALUE OF AN INVESTMENT WILL FLUCTUATE. WHEN
REDEEMED, SHARES MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST.
4 PERFORMANCE CALCULATED BASED ON THE MAXIMUM FRONT-END SALES CHARGE IN EFFECT
AT MAY 31, 1998 OF 3.0%.
5
<PAGE>
ARMADA PENNSYLVANIA MUNICIPAL FUND OVERVIEW
COMMENTS FROM THE MANAGER
PORTFOLIO MANAGER:
FIXED INCOME TEAM,
NATIONAL CITY'S
ASSET MANAGEMENT GROUP
FUND'S DATE OF INCEPTION:
AUGUST 10, 1994 (INSTITUTIONAL SHARES)
SEPTEMBER 11, 1996 (RETAIL SHARES)
ASSETS:
$38,753,138 (INSTITUTIONAL SHARES)
$124,897 (RETAIL SHARES)
INVESTMENT OBJECTIVE:
PROVIDE CURRENT INCOME EXEMPT FROM BOTH REGULAR FEDERAL INCOME AND PENNSYLVANIA
PERSONAL INCOME TAXES WHILE PRESERVING CAPITAL.
PERFORMANCE
For the year ended May 31, 1998, the Armada Pennsylvania Tax-Exempt Fund
returned 6.95% to Institutional shareholders and 6.84% to Retail shareholders
(before sales charges). By comparison, on the same period, the Lehman Brothers
Seven-Year Municipal Bond Index returned 8.06%.
Benefiting from a strong economy, the balance sheets of municipalities across
the state strengthened over the course of the year. As happened across the
country, however, quality spreads narrowed in Pennsylvania. As a result, while
lower quality securities did offer some yield enhancement opportunity, the
premiums were not high enough to warrant loosening credit quality standards.
Consequently, because the portfolio's high quality standards were maintained,
performance lagged the industry average.
FUND STRUCTURE
Over the course of the year ended May 31, 1998, the Fund's average duration
was lengthened slightly, moving out from 5.0 years at the start of the period to
approximately 5.6 years at the period's end. This was achieved without
compromising the portfolio's quality standards. As of May 31, 1998,
approximately 75% of the issues held in the portfolio were rated AAA by one or
more of the major rating agencies.
LOOKING AHEAD
While some of the effects of the Devon Capital situation are still rippling
through the marketplace, the Fund was not adversely impacted like others of its
kind -- due primarily to solid security selection in the past year. In the year
ahead, while we are optimistic about the prospects for the Pennsylvania muni
market, we expect to remain vigilant.
With strong balance sheets, municipalities will find their issues attractive
to a wide range of investors. No matter how enthusiastic the marketplace,
however, we will continue to seek out and capitalize on only the most attractive
opportunities, e.g., high quality issues with solid structures and non-callable
or beneficial call features.
6
<PAGE>
ARMADA PENNSYLVANIA MUNICIPAL FUND OVERVIEW
COMMENTS FROM THE MANAGER
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TOTAL RETURNS as of 05/31/98
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One Annualized Annualized Cumulative
Year 3-Year Inception to Inception to
Return Return2 Date2 Date2
- --------------------------------------------------------------------------------
Armada Pennsylvania Municipal Fund
Institutional Shares1 6.95% 5.45% 5.67% 23.33%
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Armada Pennsylvania Municipal Fund
Retail Shares With Sales Charge4 3.60% 4.34% 4.73% 8.26%
Without Sales Charge 6.84% 5.39% 6.59% 11.58%
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Past performance is not predictive of future performance.
GROWTH OF A $10,000 INVESTMENT3
[LINE GRAPH OMITTED]
Armada Pennsylvania Armada Pennsylvania Lehman Brothers
Municipal Fund) Municipal Fund (Retail Seven-Year
(Institutional Shares) Shares with charge) Municipal Index
7/31/94 $10,000
8/10/94 $10,000 $9,700 10,000
May-1995 10,518 10,203 10,685
May-1996 10,858 10,532 11,181
May-1997 11,532 11,178 11,946
May-1998 12,334 11,942 12,910
1 INSTITUTIONAL SHARES ARE SOLD PRIMARILY TO BANKS AND TRUST COMPANIES WHICH
ARE AFFILIATED WITH NATIONAL CITY CORPORATION AND CLIENTS OF NATIONAL ASSET
MANAGEMENT CORPORATION ("NAM"). CERTAIN ACCOUNT LEVEL CHARGES MAY APPLY.
2 THE ARMADA PENNSYLVANIA MUNICIPAL FUND'S DATE OF INCEPTION WAS AUGUST 10,
1994 FOR INSTITUTIONAL SHARES AND SEPTEMBER 11, 1996 FOR RETAIL SHARES. THE
ANNUALIZED 3-YEAR RETURN OF THE RETAIL SHARES INCLUDES INFORMATION FROM THE
COMMENCEMENT OF OPERATIONS OF THE INSTITUTIONAL SHARES, RATHER THAN THE DATE
RETAIL SHARES WERE INTRODUCED. THE PERFORMANCE OF THE RETAIL SHARES PRIOR TO
THEIR INTRODUCTION DATE DOES NOT REFLECT SHAREHOLDER SERVICING FEES, WHICH,
IF REFLECTED, WOULD REDUCE THE PERFORMANCE QUOTED FOR SUCH PERIODS.
3 THE RETURN AND PRINCIPAL VALUE OF AN INVESTMENT WILL FLUCTUATE. WHEN
REDEEMED, SHARES MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST.
4 PERFORMANCE CALCULATED BASED ON THE MAXIMUM FRONT-END SALES CHARGE IN EFFECT
AT MAY 31, 1998 OF 3.0%.
7
<PAGE>
ARMADA NATIONAL TAX EXEMPT FUND OVERVIEW
COMMENTS FROM THE MANAGER
PORTFOLIO MANAGER:
FIXED INCOME TEAM,
NATIONAL CITY'S
ASSET MANAGEMENT GROUP
FUND'S DATE OF INCEPTION:
APRIL 9, 1998 (INSTITUTIONAL SHARES)
ASSETS:
$80,259,000 (INSTITUTIONAL SHARES)
INVESTMENT OBJECTIVE:
PROVIDE AS HIGH A LEVEL OF CURRENT INTEREST INCOME EXEMPT FROM FEDERAL INCOME
TAX AS IS CONSISTENT WITH RELATIVE STABILITY OF PRINCIPAL.
FUND'S OBJECTIVE
Opened to investors on April 9, 1998, the Fund seeks to provide its investors
with as high level of current interest income exempt from regular federal income
tax as is consistent with relative stability of principal. To this end, the Fund
invests at least 80% of its assets in municipal bonds and anticipates that these
securities will normally be in the intermediate range, with average remaining
maturities of 20 years or less. For more information or a prospectus, please
call us at 1-800-622-FUND(3863).
RECENT PERFORMANCE
Prior to April 9,1998, the Fund was in operation and known as the National
City Personal Trust Tax Exempt Fund. Over the course of the year ended May 31,
1998, it produced a total return of 7.69%, versus its benchmark, the Lehman
Ten-Year Municipal Index which posted a return of 9.27% over the same period.
During the seven weeks between its opening to investors, and May 31, 1998, the
Fund advanced 1.6%.
FUND STRATEGY
The year past was an interesting one in the municipal markets. As the economy
continued to grow and interest rates dropped, municipal balances sheets
nationwide strengthened -- in fact, many saw their first surpluses in decades.
As a result, lower quality securities with higher coupons experienced new-found
popularity as many investors sought to enhance yield by pursuing lower quality
securities. Stronger credits lagged the market overall. But, by the period's
end, credit spreads between high and low quality securities were extremely
narrow. Consequently, because the Fund's credit quality standards are high --
and were strictly maintained over the course of the year -- performance was
affected, but only slightly and over the short-term.
FUND STRUCTURE
Currently, the Armada National Tax Exempt Fund has an average duration some
5% longer than the industry benchmark. The average credit quality of the
portfolio's holdings is AAA. As of May 31, 1998, approximately 59% of the
portfolio's assets were invested in general obligation securities, with the
remainder held in state agency and hospital-related issues. Widely diversified,
the portfolio has holdings in over 20 states. No more than 5% of the Fund's
assets are invested in any one issue.
8
<PAGE>
ARMADA NATIONAL TAX EXEMPT FUND OVERVIEW
COMMENTS FROM THE MANAGER
LOOKING AHEAD
Currently, municipal balance sheets are in their best shape in decades. In
short, the environment is about as positive as it could be, and more
importantly, as it ever gets -- and nothing lasts forever. That said, however,
we are optimistic about the municipal markets in the months and years ahead,
particularly for higher quality issues. Long-term, interest rates are expected
to trend lower. Moreover, as the baby boomer generation ages, the demand for
municipal securities is expected to increase.
9
<PAGE>
ARMADA NATIONAL TAX EXEMPT FUND OVERVIEW
COMMENTS FROM THE MANAGER
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------
TOTAL RETURNS as of 05/31/98
- -------------------------------------------------------------------------------------------------
One Annualized Annualized Annualized Annualized Cumulative
Year 3-Year 5-Year 10-Year Inception to Inception to
Return Return Return Return Date2 Date2
- -------------------------------------------------------------------------------------------------
Armada National Tax Exempt Fund
<S> <C> <C> <C> <C> <C> <C>
Institutional Shares1 7.69% 4.15% 4.28% 6.55% 7.27% 164.04%
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</TABLE>
Past performance is not predictive of future performance.
GROWTH OF A $10,000 INVESTMENT3
[LINE GRAPH OMITTED]
Armada National Armada National Lehman Ten-Year
Tax Exempt Fund Tax Exempt Fund (Retail Municipal
(Institutional Shares) Shares with sales charge) Index
May-1988 $10,000 $9,525 $10,000
May-1989 11,055 10,530 10,982
May-1990 11,614 11,063 11,789
May-1991 12,362 11,775 13,014
May-1992 13,421 12,783 14,223
May-1993 15,289 14,563 15,974
May-1994 15,432 14,700 16,519
May-1995 16,692 15,899 18,002
May-1996 16,615 15,826 18,854
May-1997 17,509 16,677 20,394
May-1998 18,855 17,960 22,284
1 INSTITUTIONAL SHARES ARE SOLD PRIMARILY TO BANKS AND TRUST COMPANIES WHICH
ARE AFFILIATED WITH NATIONAL CITY CORPORATION AND CLIENTS OF NATIONAL ASSET
MANAGEMENT CORPORATION ("NAM"). CERTAIN ACCOUNT LEVEL CHARGES MAY APPLY.
2 THE ARMADA NATIONAL TAX EXEMPT FUND'S DATE OF INCEPTION WAS APRIL 9, 1998 FOR
INSTITUTIONAL SHARES. THE PERFORMANCE OF THE INSTITUTIONAL SHARES INCLUDES
PERFORMANCE OF A PREDECESSOR COMMON FUND.
3 THE RETURN AND PRINCIPAL VALUE OF AN INVESTMENT WILL FLUCTUATE. WHEN
REDEEMED, SHARES MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST.
10
<PAGE>
STATEMENT OF NET ASSETS
ARMADA OHIO TAX EXEMPT FUND
MAY 31, 1998
PAR VALUE
MATURITY (000) (000)
-------- ----- -----
MUNICIPAL BONDS -- 98.4%
OHIO -- 97.8%
Akron Economic Development
Revenue Bond
5.75% ..............12/01/09 $1,680 $ 1,858
6.00% ..............12/01/12 935 1,057
Akron GO
10.50% ..............12/01/99 100 110
6.00% ..............12/01/12 1,000 1,120
Akron Sewer System Revenue Bond
5.65% ..............12/01/08 560 610
5.50% ..............12/01/11 1,035 1,119
Akron Waterworks GO
5.15% ..............03/01/01 500 514
4.90% ..............03/01/08 1,500 1,545
Allen County GO
4.95% ..............12/01/04 500 519
Archbold Area School District GO,
Prerefunded 12/01/98
@ 102 (MBIA)
7.38% ..............12/01/98 100 104
Ashland City School District GO
4.95% ..............12/01/07 345 359
5.00% ..............12/01/08 250 260
5.10% ..............12/01/09 245 258
Avon Local School
District GO
5.80% ..............12/01/12 1,000 1,077
Bay Village City School District
GO, Prerefunded 12/01/00 @ 102
7.35% ..............12/01/00 200 219
Beavercreek Local
School District GO
5.25% ..............12/01/07 1,130 1,198
Berea GO
7.00% ..............12/01/99 400 418
PAR VALUE
MATURITY (000) (000)
-------- ----- -----
MUNICIPAL BONDS -- CONTINUED
OHIO -- CONTINUED
Big Walnut Local School District, ETM
6.90% ..............06/01/00 $235 $ 248
7.00% ..............06/01/01 220 238
Bowling Green School District GO,
Prerefunded 12/01/99 @ 102
7.00% ..............12/01/99 260 277
Brown County GO
5.20% ..............12/01/04 455 479
Butler County, Sewer System
Revenue Bond
6.00% ..............12/01/04 500 540
Canton City School District GO
5.00% ..............12/01/12 1,000 1,012
Celina City School District GO
5.25% ..............12/01/20 1,750 1,765
Centerville Capital Facilities
Revenue Bond
5.65% ..............12/01/18 500 522
Centerville City School District GO
5.50% ..............12/01/07 500 539
Cincinnati City School District GO
7.10% ..............12/01/98 100 102
Cincinnati GO
5.25% ..............12/01/98 250 252
5.38% ..............12/01/99 250 256
Cincinnati Waterworks Revenue Bond
7.00% ..............12/01/98 100 102
Clermont County, Hospital
Facility Revenue Bond, Mercy
Healthcare, Prerefunded 09/01/99
@ 102 (AMBAC)
7.50% ..............09/01/99 770 819
See Accompanying Notes
11
<PAGE>
STATEMENT OF NET ASSETS
ARMADA OHIO TAX EXEMPT FUND
MAY 31, 1998
PAR VALUE
MATURITY (000) (000)
-------- ----- -----
MUNICIPAL BONDS -- CONTINUED
OHIO -- CONTINUED
Clermont County, Waterworks
Revenue Bond
5.30% ..............12/01/05 $ 500 $ 532
Cleveland Heights GO
5.40% ..............12/01/00 900 931
Cleveland Sewer District Water
Revenue Bond, Prerefunded
05/15/04 @ 100
6.75% ..............05/15/04 600 679
Cleveland Waterworks
Revenue Bond
5.40% ..............01/01/06 500 534
Cleveland Waterworks Revenue
Bond, Prerefunded 01/01/02
@ 102 (AMBAC)
6.50% ..............01/01/02 1,000 1,096
Columbus City School District GO,
Prerefunded 12/01/00
@ 102 (FGIC)
7.00% ..............12/01/00 100 109
Columbus City School District GO,
Prerefunded 12/01/02
@ 102 (FGIC)
6.65% ..............12/01/02 900 1,008
Columbus City School District GO,
Prerefunded 12/01/99
@ 102 (AMBAC)
6.95% ..............12/01/99 100 106
7.05% ..............12/01/99 500 532
Columbus GO
5.25% ..............05/01/02 1,000 1,042
5.30% ..............05/01/03 1,000 1,052
PAR VALUE
MATURITY (000) (000)
-------- ----- -----
MUNICIPAL BONDS -- CONTINUED
OHIO -- CONTINUED
Columbus Sewer GO
5.05% ..............09/15/03 $ 250 $ 261
5.20% ..............07/01/07 250 262
Columbus Sewer Revenue Bond
6.20% ..............06/01/04 1,500 1,635
5.05% ..............06/15/05 1,000 1,049
Columbus Water System
Revenue Bond
5.80% ..............02/15/01 500 523
6.00% ..............11/01/02 330 354
Cuyahoga County GO
6.65% ..............10/01/98 100 101
Cuyahoga County GO, Prerefunded
10/01/99 @ 102
6.90% ..............10/01/99 600 634
Cuyahoga County Jail Facility GO,
Prerefunded 10/01/01 @ 102
7.00% ..............10/01/01 100 111
Cuyahoga County Justice Center
Revenue Bond, Series A
6.15% ..............10/01/98 250 252
Cuyahoga County, Hospital
Revenue Bond, Cleveland
Clinic Foundation
6.00% ..............11/15/03 890 963
6.13% ..............11/15/04 840 913
Cuyahoga County, Hospital
Revenue Bond, University
Hospital System Health
Project, Series A
6.00% ..............01/15/06 1,000 1,100
5.25% ..............01/15/08 2,000 2,102
See Accompanying Notes
12
<PAGE>
STATEMENT OF NET ASSETS
ARMADA OHIO TAX EXEMPT FUND
MAY 31, 1998
PAR VALUE
MATURITY (000) (000)
-------- ----- -----
MUNICIPAL BONDS -- CONTINUED
OHIO -- CONTINUED
Cuyahoga County, Hospital
Revenue Bond, University
Hospital System Health
Project, Series B
6.00% ..............01/15/03 $ 400 $ 426
Dayton Airport Revenue Bond
5.40% ..............12/01/06 1,000 1,075
Dayton Water & Sewer
Revenue Bond
6.60% ..............12/01/02 100 102
Delaware City School District GO
5.25% ..............12/01/06 770 815
Delaware County GO
5.25% ..............12/01/06 500 532
Delaware County Sewer
Revenue Bond
5.45% ..............12/01/08 250 266
Delaware State GO
6.13% ..............04/01/00 500 520
Delphos Sewer System Management
Revenue Bond, Prerefunded
09/01/00 @ 102 (FSA)
7.20% ..............09/01/00 200 217
Dublin City School District GO
0.00% ..............12/01/10 2,455 1,359
Euclid GO, Prerefunded
12/01/99 @ 102
7.38% ..............12/01/99 450 481
Forest Hills Local School
District GO
6.00% ..............12/01/08 1,210 1,355
6.00% ..............12/01/09 830 926
PAR VALUE
MATURITY (000) (000)
-------- ----- -----
MUNICIPAL BONDS -- CONTINUED
OHIO -- CONTINUED
Franklin County Convention
Facilities Authority Tax and
Lease Anticipation Bond
6.70% ..............12/01/99 $ 500 $ 522
5.85% ..............12/01/19 1,000 1,045
Franklin County GO
5.05% ..............12/01/05 2,000 2,105
5.45% ..............12/01/09 1,000 1,060
Franklin County GO, Prerefunded
12/01/01 @ 102
6.00% ..............12/01/01 500 540
6.30% ..............12/01/01 250 272
6.38% ..............12/01/01 500 546
Franklin County Hospital
Revenue Bond
4.50% ..............12/01/20 1,000 1,014
Franklin County Hospital Revenue
Bond, Children's Hospital
6.00% ..............11/01/06 1,035 1,138
Franklin County Hospital
Revenue Bond, Riverside
United Hospital Project,
Prerefunded 05/15/00 @ 102
7.60% ..............05/15/00 1,500 1,629
Franklin County Hospital
Revenue Bond, Riverside
United Hospital Project,
Prerefunded 05/15/00
@ 102 (MBIA)
7.125% .............05/15/00 1,000 1,079
Franklin County GO
6.50% ..............09/01/99 100 103
See Accompanying Notes
13
<PAGE>
STATEMENT OF NET ASSETS
ARMADA OHIO TAX EXEMPT FUND
MAY 31, 1998
PAR VALUE
MATURITY (000) (000)
-------- ----- -----
MUNICIPAL BONDS -- CONTINUED
OHIO -- CONTINUED
Franklin County, Hospital Revenue
Bond, Holy Cross Health System
5.88% ..............06/01/21 $2,000 $ 2,130
Gahanna-Jefferson City School
District GO
5.40% ..............12/01/04 280 295
Granville Local School District GO
4.65% ..............12/01/05 500 509
Greene County Water Works
Systems Revenue Bond
5.30% ..............12/01/05 500 529
Hamilton County GO
5.75% ..............12/01/01 250 264
5.00% ..............12/01/08 675 694
5.125% .............12/01/08 1,000 1,058
5.10% ..............12/01/11 1,025 1,056
Hamilton County Sewer System
Revenue Bond
6.20% ..............12/01/00 1,000 1,056
6.30% ..............12/01/01 65 70
5.30% ..............12/01/06 1,000 1,069
5.40% ..............12/01/08 1,000 1,081
5.50% ..............12/01/10 1,240 1,341
5.00% ..............12/01/17 1,000 995
Hamilton County Sewer System
Revenue Bond, Prerefunded
06/01/01 @ 102
6.30% ..............06/01/01 35 38
Hamilton County Water Revenue
Phase 1A
5.50% ..............12/01/07 240 259
Hancock County GO
5.75% ..............12/01/16 500 530
PAR VALUE
MATURITY (000) (000)
-------- ----- -----
MUNICIPAL BONDS -- CONTINUED
OHIO -- CONTINUED
Hilliard City Schools GO
5.30% ..............12/01/99 $ 250 $ 255
6.15% ..............12/01/01 625 668
Hilliard Ohio School District GO,
Prerefunded 12/01/01 @ 102
5.90% ..............12/01/01 1,000 1,078
Hudson Local School District GO
5.00% ..............12/15/02 500 518
Kenston Local School District GO
5.55% ..............12/01/03 500 526
Kent State University GO
6.15% ..............05/01/04 250 272
5.20% ..............12/01/18 500 506
Kettering GO
5.15% ..............12/01/05 550 575
Kettering GO, Prerefunded
12/01/00 @ 102
7.20% ..............12/01/00 480 525
Lake County GO
5.30% ..............12/01/98 250 252
Lakewood GO
5.00% ..............12/01/08 1,055 1,101
4.90% ..............12/01/11 1,070 1,089
Lakewood GO, Prerefunded
12/01/02 @ 102
6.50% ..............12/01/02 1,500 1,669
Lakota Local Area School
District GO
7.10% ..............12/01/98 200 203
5.70% ..............12/01/05 250 271
Lakota Local Area School District
GO (FGIC)
5.00% ..............06/01/12 1,000 1,011
See Accompanying Notes
14
<PAGE>
STATEMENT OF NET ASSETS
ARMADA OHIO TAX EXEMPT FUND
MAY 31, 1998
PAR VALUE
MATURITY (000) (000)
-------- ----- -----
MUNICIPAL BONDS -- CONTINUED
OHIO -- CONTINUED
Lakota Local School District
GO, Prerefunded 12/01/00 @ 101
7.00% ..............12/01/00 $ 200 $ 216
Licking County GO
7.00% ..............12/01/02 100 112
Loveland City School District GO
6.00% ..............12/01/00 250 261
Lucas County GO
8.00% ..............12/01/98 100 102
Lucas County, Mercy Hospital
Revenue Bond
6.00% ..............09/01/04 175 185
Mahoning County, St. Elizabeth
Hospital Revenue Bond
6.80% ..............12/01/98 100 102
Marysville Local School District GO
5.10% ..............12/01/04 500 523
Mason City School District GO
5.20% ..............12/01/08 865 902
Massillon City School District GO,
Prerefunded 12/01/00
@ 102 (AMBAC)
6.95% ..............12/01/00 300 327
7.00% ..............12/01/00 150 164
Miami University General Receipts
5.40% ..............12/01/05 1,000 1,060
Miamisburg Sewer System
Revenue Bond
5.00% ..............11/15/08 500 518
Middleburg Heights, Hospital
Improvement Revenue Bond,
Southwest General Hospital
Project, Prerefunded
08/15/01 @ 102
6.75% ..............08/15/01 2,760 3,033
PAR VALUE
MATURITY (000) (000)
-------- ----- -----
MUNICIPAL BONDS -- CONTINUED
OHIO -- CONTINUED
Montgomery County, Catholic
Health Initiatives Revenue Bond
5.00% ..............12/01/08 $1,000 $ 1,025
Montgomery County, Sisters of
Charity Health Care
Revenue Bond
6.50% ..............05/15/08 300 326
Montgomery County, Solid Waste
Revenue Bond
5.30% ..............11/01/07 1,000 1,065
5.13% ..............11/01/08 500 524
5.00% ..............12/01/09 1,000 1,019
5.35% ..............11/01/10 900 952
Montgomery County, Water
Revenue Bonds
5.25% ..............11/15/06 500 530
Newark GO
5.45% ..............12/01/02 1,000 1,054
North Canton City School
District GO
5.25% ..............12/01/01 500 520
5.75% ..............12/01/06 250 273
Northeast Regional Sewer District
Wastewater Revenue Bond,
Prerefunded 11/15/01
@ 101 (AMBAC)
6.50% ..............11/15/01 250 273
Northeast Regional Sewer District
Wastewater Revenue Bond,
Prerefunded 11/15/01
@ 101 (AMBAC)
6.40% ..............11/15/01 250 272
6.50% ..............11/15/01 500 546
Northwest Local School District
GO (FGIC)
5.40% ..............12/01/09 520 560
See Accompanying Notes
15
<PAGE>
STATEMENT OF NET ASSETS
ARMADA OHIO TAX EXEMPT FUND
MAY 31, 1998
PAR VALUE
MATURITY (000) (000)
-------- ----- -----
MUNICIPAL BONDS -- CONTINUED
OHIO -- CONTINUED
Oak Hills School District School
Facility Construction and
Improvement Revenue Bond
5.65% ..............12/01/07 $350 $ 382
Ohio Air Quality Development
Authority Revenue Bond,
Buckeye Power Project
5.25% ..............08/01/07 400 418
Ohio Air Quality Development
Authority Revenue Bond, Ohio
Power Company Project
7.40% ..............08/01/09 190 201
Ohio Capital Facilities Corporation
For Housing Multi-Family
Revenue Bond
7.30% ..............11/01/98 45 46
Ohio Housing Financial Agency,
Single Family Mortgage
Revenue Bond
7.40% ..............03/01/05 55 58
7.40% ..............09/01/05 60 63
7.60% ..............09/01/16 140 148
6.38% ..............04/01/17 110 113
Ohio School District GO,
School Bus Project
5.25% ..............04/15/00 440 451
Ohio State Building Authority
Revenue Bond
5.20% ..............10/01/04 500 526
Ohio State Building Authority
Revenue Bond, Columbus State
Office Building Project, Series A,
Prerefunded 10/01/98
7.60% ..............10/01/98 600 620
PAR VALUE
MATURITY (000) (000)
-------- ----- -----
MUNICIPAL BONDS -- CONTINUED
OHIO -- CONTINUED
Ohio State Building Authority
Revenue Bond, Correctional
Facilities Project, Series A,
Prerefunded 08/01/99 @ 102
7.35% ..............08/01/99 $ 600 $ 635
Ohio State Building Authority
Revenue Bond, James Rhodes
Project, Series A
5.90% ..............06/01/00 500 519
Ohio State Building Authority
State Facilities Revenue Bond,
Administration Building Fund
Project Series A
5.40% ..............10/01/04 250 266
Ohio State Building Authority
State Facilities Revenue Bond,
Adult Correctional Building
Fund, Series A
6.13% ..............10/01/09 1,300 1,430
Ohio State Building Authority
State Facilities Revenue Bond,
Highway Safety Building
5.40% ..............10/01/02 250 263
Ohio State Building Authority
State Facilities Revenue Bond,
Juvenile Correctional Building
5.80% ..............10/01/02 250 268
Ohio State Capital Facilities GO
5.40% ..............10/01/07 1,370 1,445
Ohio State Coal Development
Revenue Bond, Series B
5.00% ..............08/01/98 250 250
See Accompanying Notes
16
<PAGE>
STATEMENT OF NET ASSETS
ARMADA OHIO TAX EXEMPT FUND
MAY 31, 1998
PAR VALUE
MATURITY (000) (000)
-------- ----- -----
MUNICIPAL BONDS -- CONTINUED
OHIO -- CONTINUED
Ohio State Department of
Administrative Services
Revenue Bond
5.00% ..............12/15/12 $1,210 $1,230
Ohio State GO
6.60% ..............09/01/03 150 168
Ohio State GO, Prerefunded
08/01/05 @ 102
6.20% ..............08/01/05 860 973
Ohio State Higher Education
Facility Community
Revenue Bond
5.00% ..............07/01/18 600 593
Ohio State Higher Education
Facility Revenue Bond,
University of Dayton
5.88% ..............12/01/04 250 268
Ohio State Higher Educational
Facilities Revenue Bond, Series B
5.88% ..............12/01/01 500 529
Ohio State Higher Educational
Facility Revenue Bond, Case
Western Reserve University
Project, Series B, Prerefunded
10/01/00 @ 102
7.13% ..............10/01/00 60 65
Ohio State Higher Educational
Facility Revenue Bond, Case
Western University
5.00% ..............10/01/10 905 929
Ohio State Higher Educational
Facility Revenue Bond,
Denison University Project
5.25% ..............11/01/09 1,000 1,045
PAR VALUE
MATURITY (000) (000)
-------- ----- -----
MUNICIPAL BONDS -- CONTINUED
OHIO -- CONTINUED
Ohio State Higher Educational
Facility Revenue Bond,
John Carroll University Project
5.75% ..............04/01/19 $1,000 $ 1,041
Ohio State Public Facilities Higher
Education Revenue Bond,
Series II-A
5.50% ..............12/01/00 500 519
5.20% ..............05/01/06 500 524
5.20% ..............05/01/07 1,000 1,045
4.25% ..............12/01/07 1,000 985
4.50% ..............11/01/08 1,000 1,000
Ohio State Public Facilities Higher
Education Revenue Bond,
Series II-B
5.70% ..............11/01/03 1,000 1,073
Ohio State Public Facilities Mental
Health Revenue Bond
5.00% ..............12/01/02 1,500 1,547
6.80% ..............12/01/02 2,000 2,115
Ohio State Public Facilities
Revenue Bond Higher Education
Facilities Project, Series A,
Prerefunded 05/01/99 @ 102
7.25% ..............05/01/99 500 525
Ohio State University
General Receipts
5.15% ..............12/01/00 250 258
5.40% ..............12/01/02 1,500 1,577
Ohio State Water Development
Authority Pollution Control
Facilities Revenue Bond
5.90% ..............06/01/00 500 519
5.90% ..............12/01/02 320 345
5.00% ..............12/01/07 1,000 1,041
See Accompanying Notes
17
<PAGE>
STATEMENT OF NET ASSETS
ARMADA OHIO TAX EXEMPT FUND
MAY 31, 1998
PAR VALUE
MATURITY (000) (000)
-------- ----- -----
MUNICIPAL BONDS -- CONTINUED
OHIO -- CONTINUED
Ohio State Water Development
Authority Pure Water
Revenue Bond
5.50% ..............12/01/01 $1,000 $1,046
5.55% ..............06/01/04 1,000 1,069
5.40% ..............12/01/04 510 543
5.75% ..............12/01/05 500 537
5.60% ..............06/01/07 1,500 1,626
Ohio State Water Development
Authority Revenue Bond
8.00% ..............12/01/99 150 159
7.25% ..............12/01/08 500 584
Ohio State Water Development
Authority Revenue Bond Pure
Water Project, Series I,
Prerefunded 06/01/98 @ 102 (MBIA)
7.10% ..............06/01/98 265 270
7.20% ..............06/01/98 500 510
7.50% ..............06/01/98 500 510
Ohio State Water Development
Authority Revenue Refunding
and Improvement Pure Water
Revenue Bond
5.50% ..............06/01/01 200 208
Olentangy Local School
District GO
5.05% ..............12/01/09 700 728
Orrville Electric System
Revenue Bond
5.50% ..............12/01/08 1,220 1,322
PAR VALUE
MATURITY (000) (000)
-------- ----- -----
MUNICIPAL BONDS -- CONTINUED
OHIO -- CONTINUED
Portage County GO
6.00% ..............12/01/03 $ 915 $ 990
5.10% ..............12/01/12 2,500 2,550
Portage County, Hospital
Revenue Bond
5.625% .............11/15/07 1,000 1,075
Richland County GO
4.85% ..............12/01/04 200 207
5.25% ..............12/01/05 165 174
5.20% ..............12/01/08 515 542
Rocky River City School
District
5.10% ..............12/01/07 625 657
Sandusky County, Hospital
Facility Revenue Bond
4.20% ..............01/01/99 500 501
4.90% ..............01/01/05 500 496
Solon GO
5.50% ..............12/01/04 220 233
Springfield Local
School District GO
6.10% ..............12/01/03 250 272
State of Ohio GO
5.00% ..............08/01/00 500 513
5.15% ..............09/01/01 500 519
4.70% ..............08/01/03 1,000 1,029
5.20% ..............08/01/08 1,000 1,046
State of Ohio Highways &
Transportation Revenue Bond
4.75% ..............05/15/02 1,000 1,026
See Accompanying Notes
18
<PAGE>
STATEMENT OF NET ASSETS
ARMADA OHIO TAX EXEMPT FUND
MAY 31, 1998
PAR VALUE
MATURITY (000) (000)
-------- ----- -----
MUNICIPAL BONDS -- CONTINUED
OHIO -- CONTINUED
Strongsville City School
District GO
4.90% ..............12/01/05 $ 550 $ 569
5.15% ..............12/01/08 1,000 1,053
5.20% ..............12/01/09 670 710
5.90% ..............12/01/15 1,575 1,719
Toledo GO
7.38% ..............12/01/99 500 523
7.38% ..............12/01/01 100 110
University of Cincinnati General
Receipts Revenue Bond
5.35% ..............06/01/08 1,000 1,045
5.50% ..............06/01/10 525 560
5.50% ..............06/01/11 555 588
7.00% ..............06/01/11 500 547
University of Cincinnati General
Receipts Revenue Bond, Series W
5.70% ..............06/01/12 1,240 1,316
University of Cincinnati, Ohio
General Receipts Revenue
Bond, Series II, Prerefunded
06/01/99 @ 102
7.00% ..............06/01/99 400 420
7.10% ..............06/01/99 200 210
University of Toledo General
Receipts Revenue Bond
7.00% ..............06/01/98 150 150
5.30% ..............06/01/01 175 181
Upper Arlington City School
District GO
6.00% ..............12/01/05 1,170 1,291
Upper Arlington GO
6.20% ..............12/01/01 270 289
PAR VALUE
MATURITY (000) (000)
-------- ----- -----
MUNICIPAL BONDS -- CONTINUED
OHIO -- CONTINUED
Vandalia County GO
5.35% ..............12/01/09 $ 505 $ 539
West Clermont Local School
District GO
5.65% ..............12/01/08 1,030 1,118
West Geauga Local School
District Revenue Bond
5.65% ..............11/01/06 1,000 1,083
Westlake City School
District GO
6.20% ..............12/01/06 625 706
Westlake GO
5.30% ..............12/01/03 500 528
Wilmington City School
District GO
5.35% ..............12/01/00 225 233
Worthington City School
District GO
5.80% ..............12/01/01 1,200 1,269
5.85% ..............12/01/02 500 535
Wright State University General
Receipts Revenue Bond
4.90% ..............05/01/05 500 516
Youngstown City School
District RAN
5.40% ..............06/15/98 1,500 1,500
5.35% ..............06/15/99 1,000 1,017
----------
165,724
----------
PUERTO RICO -- 0.6%
Puerto Rico Commonwealth GO,
Prerefunded 07/01/00
@ 102 (FGIC)
7.20% ..............07/01/00 500 542
See Accompanying Notes
19
<PAGE>
STATEMENT OF NET ASSETS
ARMADA OHIO TAX EXEMPT FUND
MAY 31, 1998
PAR/SHARES VALUE
MATURITY (000) (000)
-------- ----- -----
MUNICIPAL BONDS -- CONTINUED
PUERTO RICO -- CONTINUED
Puerto Rico Housing Financial
Corporation Revenue Bond
7.30% ..............10/01/06 $ 190 $ 201
7.40% ..............04/01/07 210 222
--------
965
--------
TOTAL MUNICIPAL BONDS
(Cost $160,440) ..................... 166,689
--------
CASH EQUIVALENT -- 0.9%
Federated Ohio Municipal
Cash Trust .....................1,459 1,459
--------
TOTAL INVESTMENTS -- 99.3%
(Cost $161,899) ..................... $168,148
========
OTHER ASSETS AND LIABILITIES,
NET-- 0.7% .......................... 1,284
--------
NET ASSETS:
Portfolio Shares of Institutional Class
(unlimited authorization -- no par
value) based on 14,858,667 outstanding
shares of beneficial interest ....... 159,318
Portfolio Shares of Retail Class (unlimited
authorization -- no par value) based on
363,904 outstanding shares of
beneficial interest ................. 3,761
Undistributed net investment income .. 2
Accumulated net realized gain
on investments ...................... 102
Net unrealized appreciation
on investments ...................... 6,249
--------
TOTAL NET ASSETS-- 100.0% ............ $169,432
========
VALUE
-----
Net Asset Value, Offering and
Redemption Price Per Share --
Institutional Class ................. $11.13
========
Net Asset Value and
Redemption Price
Per Share -- Retail Class ........... $11.09
========
Maximum Offering Price
Per Share -- Retail Class
($11.09 / 97%) ...................... $11.43
========
- ------------------------------------
THE GROSS UNREALIZED APPRECIATION (DEPRECIATION) FOR
FEDERAL INCOME TAX PURPOSES IS AS FOLLOWS:
(000)
----------
GROSS APPRECIATION $ 6,317
GROSS DEPRECIATION (68)
----------
$ 6,249
==========
AMBAC--AMERICAN MUNICIPAL BOND ASSURANCE CORPORATION
ETM--ESCROWED TO MATURITY
FGIC--FEDERAL GUARANTY INSURANCE CORPORATION
FSA--FEDERAL SECURITY ASSURANCE
GO--GENERAL OBLIGATION
MBIA--MUNICIPAL BOND INSURANCE ASSOCIATION
RAN--REVENUE ANTICIPATION NOTE
See Accompanying Notes
20
<PAGE>
FINANCIAL HIGHLIGHTS
ARMADA OHIO TAX EXEMPT FUND
FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH YEAR
<TABLE>
<CAPTION>
FOR THE YEAR ENDED MAY 31,
------------------------------------------------------------------------------------------------------------
1998 1997 1996 1995 1994
------------------------------------------------------------------------------------------------------------
INSTITUTIONAL RETAIL INSTITUTIONAL RETAIL INSTITUTIONAL RETAIL INSTITUTIONAL RETAIL INSTITUTIONAL RETAIL
------------- ------ ------------- ------ ------------- ----- ------------- ------ ------------- ------
Net asset value, beginning
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
of period .......... $10.86 $10.82 $10.70 $10.66 $10.74 $10.70 $10.57 $10.53 $10.84 $10.80
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
INCOME FROM INVESTMENT
OPERATIONS
Net investment income 0.51 0.51 0.51 0.51 0.50 0.50 0.50 0.50 0.52 0.52
Net gain/(loss) on
securities (realized and
unrealized) ....... 0.28 0.28 0.16 0.16 (0.04) (0.04) 0.17 0.17 (0.26) (0.26)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total from investment
operations ... 0.79 0.79 0.67 0.67 0.46 0.46 0.67 0.67 0.26 0.26
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS
Dividends from net
investment income . (0.51) (0.51) (0.51) (0.51) (0.50) (0.50) (0.50) (0.50) (0.52) (0.52)
Distributions from net realized
capital gains ..... (0.01) (0.01) (0.00) (0.00) (0.00) (0.00) (0.00) (0.00) (0.00) (0.00)
Distributions in excess of net
realized capital gains (0.00) (0.00) (0.00) (0.00) (0.00) (0.00) (0.00) (0.00) (0.01) (0.01)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total distributions (0.52) (0.52) (0.51) (0.51) (0.50) (0.50) (0.50) (0.50) (0.53) (0.53)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Net asset value, end of
period ............. $11.13 $11.09 $10.86 $10.82 $10.70 $10.66 $10.74 $10.70 $10.57 $10.53
====== ====== ====== ====== ====== ====== ====== ====== ====== ======
TOTAL RETURN ......... 7.43% 7.39%3 6.37% 6.38%3 4.36% 4.35%3 6.61% 6.64%3 2.28% 2.29%3
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period
(in 000's) ........ $165,395 $4,037 $91,366 $3,535 $82,886 $2,869 $71,996 $3,168 $63,133 $2,725
Ratio of expenses to
average net assets 0.25%1 0.25%2 0.24%1 0.24%2 0.26%1 0.26%2 0.24%1 0.24%2 0.33%1 0.33%2
Ratio of net investment
income to average
net assets ........ 4.67%1 4.59%2 4.71%1 4.71%2 4.68%1 4.68%2 4.82%1 4.82%2 4.54%1 4.54%2
Portfolio turnover rate 15% 15% 23% 23% 10% 10% 3% 3% 2% 2%
<FN>
1 THE OPERATING EXPENSE RATIO AND THE NET INVESTMENT INCOME RATIO BEFORE FEE
WAIVERS BY THE INVESTMENT ADVISERS FOR THE INSTITUTIONAL CLASS FOR THE YEARS
ENDED MAY 31, 1998 AND 1997 WOULD HAVE BEEN 0.80%, AND 4.12%, AND .79% AND
4.16%, RESPECTIVELY. THE OPERATING EXPENSE RATIO AND THE NET INVESTMENT
INCOME RATIO BEFORE FEE WAIVERS BY THE INVESTMENT ADVISERS AND CUSTODIAN FOR
THE INSTITUTIONAL CLASS FOR THE YEARS ENDED MAY 31, 1996 AND 1995 WOULD HAVE
BEEN .83% AND 4.11%, AND .80% AND 4.26%, RESPECTIVELY. THE OPERATING EXPENSE
RATIO AND THE NET INVESTMENT INCOME RATIO BEFORE FEE WAIVERS BY THE
INVESTMENT ADVISERS FOR THE INSTITUTIONAL CLASS FOR THE YEAR ENDED MAY 31,
1994 WOULD HAVE BEEN .88% AND 3.99%.
2 THE OPERATING EXPENSE RATIO AND THE NET INVESTMENT INCOME RATIO BEFORE FEE
WAIVERS BY THE INVESTMENT ADVISERS FOR THE RETAIL CLASS FOR THE YEARS ENDED
MAY 31, 1998 AND 1997 WOULD HAVE BEEN 0.80% AND 4.04%, AND .79% AND 4.16%,
RESPECTIVELY. THE OPERATING EXPENSE RATIO FOR THE 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 .83% AND
4.11%, AND .78% AND 4.27%, RESPECTIVELY. THE OPERATING EXPENSE RATIO AND THE
NET INVESTMENT INCOME RATIO BEFORE FEE WAIVERS BY THE INVESTMENT ADVISERS FOR
THE RETAIL CLASS FOR THE YEAR ENDED MAY 31, 1994 WOULD HAVE BEEN .88% AND
3.99%.
3 TOTAL RETURN EXCLUDES SALES CHARGE.
</FN>
</TABLE>
See Accompanying Notes
21
<PAGE>
STATEMENT OF NET ASSETS
ARMADA PENNSYLVANIA MUNICIPAL FUND
MAY 31, 1998
PAR VALUE
MATURITY (000) (000)
-------- ----- -----
MUNICIPAL BONDS -- 97.2%
PENNSYLVANIA -- 97.2%
Allegheny County, Higher
Education Building Authority
Revenue Bond, Duquesne
University Project (AMBAC)
6.50% ..............03/01/10 $ 380 $ 444
Allegheny County, Hospital
Development Authority
Revenue Bond, Magee Woman's
Hospital Project, Series O, ETM
10.13% ..............10/01/02 125 142
Allegheny County, Industrial
Development Authority
Revenue Bond (A)
5.25% ..............12/01/14 660 676
Allegheny, Sanitation
Authority Sewer Revenue
Bond (FGIC)
0.00% ..............12/01/08 2,750 1,695
Ambridge, Area School
District GO (FGIC)
4.75% ..............11/01/08 500 502
Bradford County, Area School
District GO, Prerefunded 10/01/05
@ 100 (FGIC)
5.25% ..............10/01/05 1,000 1,055
Bucks County, Community
College Authority College
Building Revenue Bond
5.30% ..............06/15/10 100 104
Butler County, Sewer Authority
Revenue Bond, Prerefunded
01/01/04 @ 100
7.25% ..............01/01/04 115 128
Cumberland County Revenue
Bond, Messiah College
Project (AMBAC)
5.00% ..............10/01/07 1,000 1,035
Dauphin County, General
Authority Revenue Bond,
Mandatory Put 12/01/05 @ 100
5.40% ..............06/01/26 800 846
PAR VALUE
MATURITY (000) (000)
-------- ----- -----
MUNICIPAL BONDS -- CONTINUED
PENNSYLVANIA -- CONTINUED
Delaware County, GO
5.00% ..............11/15/07 $1,000 $ 1,044
Delaware River Port Authority
Revenue Bond, Pennsylvania &
New Jersey Bridges Project
(AMBAC)
7.38% ..............01/01/07 500 520
6.00% ..............01/15/10 600 648
East Pennsboro,
Area School District
GO (FGIC)
0.00% ..............09/01/05 100 61
Erie County, Prison Authority
Lease Revenue Bond, Prerefunded
11/01/99 @ 100 (MBIA)
6.60% ..............11/01/01 1,000 1,080
Lower Providence Township
GO (MBIA)
5.00% ..............05/01/07 215 222
Middletown Township, Bucks
County Special Obligation
Revenue Bond, ETM
6.10% ..............10/01/00 250 256
Monroeville, Hospital
Authority Revenue Bond,
East Suburban Health Center
Project, Prerefunded 07/01/02 @ 100
7.60% ..............07/01/04 970 1,089
Montgomery County, Hospital
Authority Revenue Bond, Suburban
General Hospital Project, ETM
7.75% ..............05/01/02 110 118
Moon Area School District,
GO, Series A
0.00% ..............11/15/11 1,520 794
Northampton County, Higher
Education Authority Revenue
Bond, Moravian College
Project (AMBAC)
5.50% ..............07/01/07 900 967
See Accompanying Notes
22
<PAGE>
STATEMENT OF NET ASSETS
ARMADA PENNSYLVANIA MUNICIPAL FUND
MAY 31, 1998
PAR VALUE
MATURITY (000) (000)
-------- ----- -----
MUNICIPAL BONDS -- CONTINUED
PENNSYLVANIA -- CONTINUED
Penn Hills Township GO (AMBAC)
5.50% ..............12/01/04 $1,000 $ 1,080
Pennsylvania State GO, Series 1
6.20% ..............09/15/04 900 972
5.13% ..............03/15/12 1,475 1,508
Pennsylvania State Higher
Education Assistance Authority
Revenue Bond, SLMA,
Series A (FGIC)
6.80% ..............12/01/00 685 728
Pennsylvania State Higher
Education Facilities Authority
Revenue Bond, University of
Pennsylvania Project
6.50% ..............09/01/04 250 280
5.25% ..............01/01/07 100 105
Pennsylvania State Higher
Education Facilities Authority
Revenue Bond, University of
Pennsylvania Project, Series A
5.55% ..............09/01/09 1,300 1,380
Pennsylvania State Housing Finance
Agency Revenue Bond, Single
Family Mortgage, Series Z
7.00% ..............10/01/02 50 53
Pennsylvania State Industrial
Development Authority Revenue
Economic Development Bond,
Series 94 (AMBAC)
5.80% ..............07/01/09 450 498
Pennsylvania State Infrastructure
Investment Authority Revenue
Bond (Penvest), Subseries B
6.45% ..............09/01/01 1,500 1,661
Pennsylvania State Intergovernmental
Cooperative Authority Special
Tax Revenue Bond, City of
Philadelphia Funding Program,
Prerefunded 06/15/02 @ 100
6.80% ..............06/15/22 500 549
PAR VALUE
MATURITY (000) (000)
-------- ----- -----
MUNICIPAL BONDS -- CONTINUED
PENNSYLVANIA -- CONTINUED
Pennsylvania State Turnpike
Commission Revenue Bond,
Series O (FGIC)
5.25% ..............12/01/01 $1,010 $ 1,049
Pennsylvania State University
Revenue Bond
4.90% ..............08/15/10 1,500 1,519
Philadelphia Gas Works
Revenue Bond, Series 13,
Prerefunded 06/15/00 @ 102
7.70% ..............06/15/01 460 516
Philadelphia Gas Works Revenue
Bond, Series 14 (FSA)
6.25% ..............07/01/08 300 329
Philadelphia Hospital Revenue Bond,
Graduate Hospital Project
7.00% ..............07/01/10 395 450
Philadelphia Children's Hospital
& Higher Educational Facilities
Authority Revenue Bond,
Children's Hospital Project,
Series A, Prerefunded 02/15/02 @ 102
6.50% ..............02/15/02 200 219
Philadelphia School District GO,
Series A (MBIA)
5.80% ..............07/01/08 465 502
Philadelphia Thomas Jefferson
University Hospital
Revenue Bond, ETM
7.00% ..............07/01/08 205 231
Philadelphia Water & Waste
Authority Revenue Bond (MBIA)
5.50% ..............06/15/07 1,500 1,611
Philadelphia Water & Waste Water Authority
Revenue Bond, Series 95
6.75% ..............08/01/03 200 223
Pittsburgh & Allegheny County
Auditorium Authority
Revenue Bond (AMBAC)
6.40% ..............12/01/01 800 801
Pittsburgh GO, Series A (MBIA)
5.50% ..............09/01/06 955 1,008
See Accompanying Notes
23
<PAGE>
STATEMENT OF NET ASSETS
ARMADA PENNSYLVANIA MUNICIPAL FUND
MAY 31, 1998
PAR/SHARES VALUE
MATURITY (000) (000)
-------- ----- -----
MUNICIPAL BONDS -- CONTINUED
PENNSYLVANIA -- CONTINUED
Pleasant Valley School District
Revenue Bond
5.00% ..............09/01/10 $ 500 $ 512
Scranton-Lackawanna Health &
Welfare Authority Revenue Bond, ETM
6.63% ..............07/01/09 520 582
Seneca Valley, Pennsylvania School
District GO, Series A, Prerefunded
07/01/02 @ 100 (FGIC)
5.70% ..............07/01/02 1,000 1,057
Swarthmore Borough College
Authority Revenue Bond
6.00% ..............09/15/06 855 926
Tyrone School District GO (MBIA)
5.70% ..............09/15/08 1,250 1,294
Union County Higher Educational
Facilities Financing Authority
Revenue Bond, Bucknell University
Project (MBIA)
6.20% ..............04/01/00 1,000 1,075
Washington County Authority
Lease Revenue Bond,
Series 85 (A)
3.95% ..............11/01/05 900 900
Westmoreland County Municipal
Authority Revenue Bond
0.00% ..............07/01/07 500 408
Westmoreland County Municipal
Authority Revenue Bond (FGIC), ETM
5.50% ..............07/01/08 500 317
TOTAL MUNICIPAL BONDS
(Cost $36,082,648) .................. 37,769
--------
CASH EQUIVALENT -- 1.5%
Federated Investors Pennsylvania
Municipal Cash Trust
(Cost $587,898) .............. 588 588
--------
TOTAL INVESTMENTS -- 98.7%
(Cost $36,671) ...................... $ 38,357
========
OTHER ASSETS AND LIABILITIES,
NET -- 1.3% .......................... 521
--------
VALUE
(000)
-----
NET ASSETS:
Portfolio Shares of Institutional Class
(unlimited authorization -- no par
value) based on 3,707,884 outstanding
shares of beneficial interest ....... $37,072
Portfolio Shares of Retail Class (unlimited
authorization -- no par value)
based on 11,951 outstanding shares
of beneficial interest .............. 122
Accumulated net realized loss
on investments ...................... (2)
Net unrealized appreciation
on investments ...................... 1,686
--------
TOTAL NET ASSETS -- 100.0% .............. $ 38,878
========
Net Asset Value, Offering and
Redemption Price Per Share --
Institutional Class ................. $10.45
========
Net Asset Value and Redemption
Price Per Share --
Retail Class ........................ $10.45
========
Maximum Offering Price
Per Share -- Retail Class
($10.45 / 97%) ...................... $10.77
========
- ---------------------------------------
THE GROSS UNREALIZED APPRECIATION (DEPRECIATION) FOR FEDERAL
INCOME TAX PURPOSES IS AS FOLLOWS:
(000)
----------
GROSS APPRECIATION ................. $ 1,719
GROSS DEPRECIATION ................. (33)
----------
$ 1,686
==========
(A) SECURITIES BACKED BY A LETTER OF CREDIT BACKED BY A MAJOR FINANCIAL
INSTITUTION.
AMBAC--AMERICAN MUNICIPAL BOND ASSURANCE CORPORATION
ETM--ESCROWED TO MATURITY
FGIC--FEDERAL GUARANTY INSURANCE CORPORATION
FSA--FEDERAL SECURITY ASSURANCE
MBIA--MUNICIPAL BOND INSURANCE ASSOCIATION
SLMA--STUDENT LOAN MARKETING ASSOCIATION
See Accompanying Notes
24
<PAGE>
FINANCIAL HIGHLIGHTS
ARMADA PENNSYLVANIA MUNICIPAL FUND
FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
FOR THE YEAR ENDED MAY 31,
---------------------------------------------
1998 1997 FOR THE FOR THE FOR THE
-------------------- ----------------------- PERIOD ENDED YEAR ENDED PERIOD ENDED
INSTITUTIONAL RETAIL INSTITUTIONAL5 RETAIL5,6 MAY 31, 19965 APRIL 30, 19965 APRIL 30, 19955
------------- ------ -------------- --------- ------------- --------------- ---------------
Net asset value, beginning
<S> <C> <C> <C> <C> <C> <C> <C>
of period ............... $10.22 $10.22 $10.08 $10.13 $10.12 $10.04 $10.00
------ ------ ------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS
Net investment income .... 0.46 0.45 0.44 0.31 0.04 0.43 0.29
Net gain/(loss) on securities
(realized and unrealized) 0.24 0.24 0.17 0.12 (0.04) 0.08 0.04
------ ------ ------ ------ ------ ------ ------
Total from investment
operations ......... 0.70 0.69 0.61 0.43 0.00 0.51 0.33
------ ------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS
Dividends from net
investment income ....... (0.46) (0.45) (0.44) (0.31) (0.04) (0.43) (0.29)
Distributions from net realized
capital gains ......... (0.00) (0.00) (0.02) (0.02) (0.00) (0.00) (0.00)
Distributions in excess of net
realized capital gains .. (0.01) (0.01) (0.01) (0.01) (0.00) (0.00) (0.00)
------ ------ ------ ------ ------ ------ ------
Total distributions ... (0.47) (0.46) (0.47) (0.34) (0.04) (0.43) (0.29)
------ ------ ------ ------ ------ ------ ------
Net asset value, end of period $10.45 $10.45 $10.22 $10.22 $10.08 $10.12 $10.04
====== ====== ====== ====== ====== ====== ======
TOTAL RETURN ............... 6.95% 6.84%7 6.21% 6.13%7 (0.03)%4,7 5.06%7 3.38%4,7
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period
(in 000's) .............. $38,753 $125 $36,769 $ 81 $38,733 $38,809 $34,638
Ratio of expenses to
average net assets ...... 0.69%1 0.77%2 0.87%1 0.99%2,3 0.85%1,3 0.85%1 0.85%1,3
Ratio of net investment
income to average
net assets .............. 4.40%1 4.32%2 4.35%1 4.26%2,3 4.32%1,3 4.16%1 4.05%1,3
Portfolio turnover rate .. 20% 20% 42% 42% 0% 22% 4%
<FN>
1 THE OPERATING EXPENSE RATIO AND THE NET INVESTMENT INCOME RATIO BEFORE FEE
WAIVERS BY THE INVESTMENT ADVISERS AND OTHER SERVICE PROVIDERS FOR THE
INSTITUTIONAL CLASS FOR THE YEARS ENDED MAY 31, 1998 AND MAY 31, 1997, FOR
THE PERIOD ENDED MAY 31, 1996, FOR THE YEAR ENDED APRIL 30, 1996 AND FOR THE
PERIOD ENDED APRIL 30, 1995 WOULD HAVE BEEN 0.84% AND 4.25%, 1.02% AND 4.20%,
1.31% AND 3.86%, 1.24% AND 3.77%, AND 1.36% AND 3.54%, RESPECTIVELY.
2 THE OPERATING EXPENSE RATIO AND THE NET INVESTMENT INCOME RATIO BEFORE FEE
WAIVERS BY THE INVESTMENT ADVISERS FOR THE RETAIL CLASS FOR THE YEARS ENDED
MAY 31, 1998 AND MAY 31, 1997 WOULD HAVE BEEN 0.94% AND 4.15%, AND 1.00% AND
4.25%, 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.
7 TOTAL RETURN EXCLUDES SALES CHARGE.
</FN>
</TABLE>
See Accompanying Notes
25
<PAGE>
STATEMENT OF NET ASSETS
ARMADA NATIONAL TAX EXEMPT FUND
MAY 31, 1998
PAR VALUE
MATURITY (000) (000)
-------- ----- -----
MUNICIPAL BONDS -- 96.2%
ARIZONA -- 4.4%
Salt River Project, AZ, Series A (A)
5.13% ..............01/01/10 $2,415 $ 2,518
Maricopa County, Arizona Industrial
Development Authority Revenue
Bond, Madera Pointe Apartments
Project, Series A (FSA)
5.30% ..............06/01/06 1,000 1,038
--------
3,556
--------
CALIFORNIA -- 1.3%
San Francisco, City & County
GO, Series 1 (FGIC) (A)
5.00% ..............06/15/10 1,000 1,035
--------
FLORIDA -- 1.3%
Florida State, Department of
General Services Division
Facilities Management Revenue
Bonds, Series A (FSA) (A)
5.50% ..............09/01/26 1,000 1,040
--------
GEORGIA -- 4.2%
Georgia State GO
6.25% ..............08/01/06 3,000 3,390
--------
ILLINOIS -- 6.7%
Illinois State, Educational
Facilities Authority Revenue
Bond, Art Institute of Chicago (A)
5.80% ..............03/01/27 1,000 1,031
Illinois State, Sales Tax
Revenue Bond (A)
5.10% ..............06/15/18 2,200 2,184
ILLINOIS -- CONTINUED
Illinois State, Sales Tax Revenue
Bonds, Series Q
6.00% ..............06/15/12 1,000 1,119
Lake County, Illinois First
Preservation District GO
5.50% ..............02/01/09 1,000 1,079
--------
5,413
--------
PAR VALUE
MATURITY (000) (000)
-------- ----- -----
MUNICIPAL BONDS -- CONTINUED
INDIANA -- 5.9%
East Chicago, Indiana Elementary
School Building Revenue Bond
6.25% ..............01/05/16 $1,750 $ 2,032
Hammond, Indiana, Multi-School
Building Revenue Bond,
Series B (A)
6.00% ..............01/15/18 1,250 1,386
IPS School Building Corp,
Indiana First Mortgage,
Prerefunded 07/15/04 @ 102
6.15% ..............07/15/04 1,200 1,339
--------
4,757
--------
MARYLAND -- 2.8%
Prince Georges County, Maryland
Public Improvement GO,
Series A (MBIA)
6.00% ..............03/15/06 1,000 1,110
Washington, DC, Suburban
Sanitation District Revenue
Bond Water Supply Project,
Prerefunded 11/01/01 @ 102
6.50% ..............11/01/01 1,000 1,096
--------
2,206
--------
MASSACHUSETTS -- 4.0%
Massachusetts Bay Transportation
Authority General Transportation
Systems Revenue Bond,
Prerefunded 03/01/05
@ 102, Series A
5.75% ..............03/01/05 3,040 3,196
--------
MICHIGAN -- 7.3%
Grand Rapids, Michigan
Community College GO
(MBIA) (A)
5.90% ..............05/01/22 2,000 2,177
Michigan State, Municipal Bond
Authority Revenue Bond
6.00% ..............10/01/07 2,000 2,257
See Accompanying Notes
26
<PAGE>
STATEMENT OF NET ASSETS
ARMADA NATIONAL TAX EXEMPT FUND
MAY 31, 1998
PAR VALUE
MATURITY (000) (000)
-------- ----- -----
MUNICIPAL BONDS -- CONTINUED
MICHIGAN -- CONTINUED
Redford, Michigan, School
District GO (AMBAC)
5.50% ..............05/01/06 $1,315 $ 1,412
--------
5,846
--------
MINNESOTA -- 1.7%
Minnesota State, Public Facilities
Authority Water Pollution Control
Revenue Bond, Prerefunded
03/01/00 @ 102, Series A
7.10% ..............03/01/00 1,300 1,394
--------
NEVADA -- 2.8%
Henderson, Nevada, GO (MBIA)
6.50% ..............06/01/07 1,000 1,149
Nevada State, GO
6.30% ..............07/01/04 1,000 1,086
--------
2,235
--------
NEW JERSEY -- 2.7%
New Jersey State, Transportation
Fund Revenue Bond,
Series B (AMBAC)
6.00% ..............06/15/05 2,000 2,202
--------
NEW YORK -- 1.5%
New York State, Power Authority
General Purpose Revenue Bond,
Prerefunded 01/01/10 @ 100
7.00% ..............01/01/10 1,000 1,210
--------
OHIO -- 10.2%
Butler County, Ohio, Transportation
Improvement Revenue Bond,
Series A (FSA) (A)
6.00% ..............04/01/10 1,000 1,120
Cleveland, Ohio, Public Power
System Revenue Bond,
Series 1 (MBIA)
6.00% ..............11/15/10 995 1,118
Cleveland, Ohio, Water Works
Revenue Bond, Series G (MBIA)
5.50% ..............01/01/09 1,500 1,614
PAR VALUE
MATURITY (000) (000)
-------- ----- -----
MUNICIPAL BONDS -- CONTINUED
OHIO -- CONTINUED
Franklin County, Ohio, GO,
Prerefunded 12/01/01 @ 102
6.38% ..............12/01/01 $1,300 $ 1,420
Hudson, Ohio, Local School
District GO (FGIC)
0.00% ..............12/15/10 1,000 552
Ohio State, Building Authority
Revenue Bond, Correctional
Facilities Project, Series A,
Prerefunded 03/01/99 @ 102
7.35% ..............03/01/99 1,000 1,048
Ohio State, Higher Educational
Facility Revenue Bond,
John Carroll University
Project (A)
5.75% ..............04/01/19 1,250 1,302
--------
8,174
--------
RHODE ISLAND -- 1.8%
Rhode Island State, Convention
Center Authority Revenue Bond,
Series A, Prerefunded 05/15/01
@ 102 (MBIA)
6.70% ..............05/15/01 1,310 1,430
--------
SOUTH CAROLINA -- 5.3%
South Carolina State, Public
Service Authority Revenue Bond,
Series B (FGIC)
5.88% ..............01/01/23 4,000 4,270
--------
TENNESSEE -- 2.2%
Nashville and Davidson County,
Tennessee Metropolitan
Government GO
6.00% ..............12/01/10 1,500 1,716
--------
TEXAS -- 8.2%
Plano, Texas, Independent
School District GO
6.00% ..............02/15/06 1,000 1,101
5.90% ..............02/15/10 1,000 1,070
See Accompanying Notes
27
<PAGE>
STATEMENT OF NET ASSETS
ARMADA NATIONAL TAX EXEMPT FUND
MAY 31, 1998
PAR VALUE
MATURITY (000) (000)
-------- ----- -----
MUNICIPAL BONDS -- CONTINUED
TEXAS -- CONTINUED
Texas State, Public Finance
Authority GO, Prerefunded
10/01/00 @ 100
6.38% ..............10/01/00 $4,100 $ 4,310
--------
6,481
--------
UTAH -- 2.9%
Intermountain Power Agency
Power Supply Revenue Bond,
Series E (FSA)
6.25% ..............07/01/09 2,000 2,292
--------
VIRGINIA -- 6.6%
Fairfax County, Virginia Industrial
Development Authority Revenue
Bond Inova Health Systems
Project (A)
5.88% ..............08/15/16 1,000 1,062
6.00% ..............08/15/26 3,000 3,191
Richmond, Virginia, Public
Improvement GO, Series A,
Prerefunded 01/15/01 @ 102
6.25% ..............01/15/01 1,000 1,074
--------
5,327
--------
WASHINGTON -- 8.0%
Washington State, Motor Vehicle
Fuel Tax GO Series 95-D
6.50% ..............09/01/01 1,900 2,040
Washington Public Power
Supply Systems Revenue Bond
Nuclear Project No. 2, Series C,
Prerefunded 01/01/01 @ 102
7.63% ..............01/01/01 4,000 4,420
--------
6,460
--------
WISCONSIN -- 4.4%
Wisconsin State GO, Series A,
Prerefunded 05/01/02 @ 100
6.30% ..............05/01/02 3,275 3,525
--------
TOTAL MUNICIPAL BONDS
(Cost $74,377) ............... 77,155
--------
PAR VALUE
MATURITY (000) (000)
-------- ----- -----
CASH EQUIVALENT -- 1.9%
Federated Tax-Free Money
Market Fund ................. $1,559 $ 1,559
--------
CORPORATE BOND -- 0.6%
Greystone Tax-Exempt Assets Trust
144-A Series 1998-1 Class A
4.30% ..............06/20/00 500 499
--------
TOTAL INVESTMENTS -- 98.7%
(Cost $76,903) .............. $ 79,213
========
OTHER ASSETS AND LIABILITIES,
NET-- 1.3% ................. 1,046
--------
NET ASSETS:
Portfolio Shares of Institutional Class
(unlimited authorization -- no par
value) based on 8,003,584 outstanding
shares of beneficial interest 77,947
Undistributed net investment income 2
Net unrealized appreciation
on investments .............. 2,310
--------
TOTAL NET ASSETS-- 100.0% ...... $ 80,259
========
Net Asset Value, Offering and
Redemption Price Per Share --
Institutional Class ......... $10.03
========
- --------------------
THE GROSS UNREALIZED APPRECIATION (DEPRECIATION) FOR
FEDERAL INCOME TAX PURPOSES IS AS FOLLOWS:
(000)
--------
GROSS APPRECIATION .......... $ 2,311
GROSS DEPRECIATION .......... (1)
--------
$ 2,310
========
(A) SECURITIES IS BACKED BY A LETTER OF CREDIT BACKED BY A MAJOR FINANCIAL
INSTITUTION.
AMBAC--AMERICAN MUNICIPAL BOND ASSURANCE CORPORATION
FGIC -- FEDERAL GUARANTY INSURANCE CORPORATION
FSA--FEDERAL SECURITY ASSURANCE
GO--GENERAL OBLIGATION
MBIA--MUNICIPAL BOND INSURANCE CORPORATION
See Accompanying Notes
28
<PAGE>
FINANCIAL HIGHLIGHTS
ARMADA NATIONAL TAX EXEMPT FUND
FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH PERIOD
FOR THE PERIOD
ENDED MAY 31, 1998
--------------------
INSTITUTIONAL2
--------------------
Net asset value, beginning of period ..................... $ 10.00
----------
INCOME FROM INVESTMENT OPERATIONS
Net investment income .................................. 0.07
Net gain on securities (realized and unrealized) ....... 0.03
----------
Total from investment operations .................... 0.10
----------
LESS DISTRIBUTIONS
Dividends from net investment income ................... (0.07)
----------
Total distributions ................................. (0.07)
----------
Net asset value, end of period ........................... $ 10.03
==========
TOTAL RETURN ............................................. 7.03%3
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000's) ................... $80,259
Ratio of expenses to average net assets ................ 0.33%1
Ratio of net investment income to average net assets ... 4.62%1
Portfolio turnover rate ................................ 0%
1 THE OPERATING EXPENSE RATIO AND THE NET INVESTMENT INCOME RATIO BEFORE FEE
WAIVERS BY THE INVESTMENT ADVISERS FOR THE INSTITUTIONAL CLASS FOR THE PERIOD
ENDED MAY 31, 1998 WOULD HAVE BEEN 0.87% AND 4.08%, RESPECTIVELY.
2 INSTITUTIONAL CLASS COMMENCED OPERATIONS ON APRIL 9, 1998.
3 ANNUALIZED
See Accompanying Notes
29
<PAGE>
FINANCIAL STATEMENTS
ARMADA FUNDS TAX EXEMPT SERIES
STATEMENT OF OPERATIONS (000)
FOR THE YEAR ENDED MAY 31, 1998
<TABLE>
<CAPTION>
OHIO PENNSYLVANIA NATIONAL TAX
TAX EXEMPT FUND MUNICIPAL FUND EXEMPT FUND1
--------------- --------------- ---------------
INVESTMENT INCOME:
<S> <C> <C> <C>
Interest ................................................... $5,807 $1,918 $ 571
------ ------ ------
EXPENSES:
Investment Advisory fees ................................... 650 206 62
Administration fees ........................................ 114 37 8
Transfer Agent fees ........................................ 24 31 8
Distribution fees .......................................... 20 6 5
12b-1 fees ................................................. 49 1 2
Custodian fees ............................................. 24 8 2
Professional fees .......................................... 14 8 2
Printing and shareholder reports ........................... 10 2 --
Registration and filing fees ............................... 20 3 10
Trustees' fees ............................................. 2 1 --
Amortization organizational costs .......................... -- 3 --
Miscellaneous .............................................. 17 10 2
Shareholder servicing fees-- Retail class only ............. 1 -- --
Fees waived by Investment Adviser .......................... (650) (56) (62)
------ ------ ------
Total expenses .......................................... 295 260 39
------ ------ ------
NET INVESTMENT INCOME ......................................... 5,512 1,658 532
------ ------ ------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain/(loss) on investments sold ............... 196 (1) --
Net change in unrealized appreciation on investments ....... 2,886 895 591
------ ------ ------
Net gain on investments .................................... 3,082 894 591
------ ------ ------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS ............................................ $8,594 $2,552 $1,123
====== ====== ======
<FN>
1 THE NATIONAL TAX EXEMPT FUND COMMENCED OPERATIONS ON APRIL 9, 1998.
</FN>
</TABLE>
See Accompanying Notes
30
<PAGE>
FINANCIAL STATEMENTS
ARMADA FUNDS TAX EXEMPT SERIES
STATEMENT OF CHANGES IN NET ASSETS (000)
<TABLE>
<CAPTION>
OHIO TAX PENNSYLVANIA NATIONAL TAX
EXEMPT FUND MUNICIPAL FUND EXEMPT FUND
-------------------------- -------------------------- ---------------
FOR THE YEAR FOR THE YEAR FOR THE PERIOD
ENDED MAY 31, ENDED MAY 31, ENDED MAY 31,2
-------------------------- -------------------------- ---------------
1998 1997 1998 19971 1998
---------- ---------- ---------- ---------- ----------
INCREASE/(DECREASE) IN NET ASSETS:
Operations:
<S> <C> <C> <C> <C> <C>
Net investment income ...................... $ 5,512 $ 4,198 $ 1,658 $ 1,622 $ 532
Net realized gain/(loss) on investments sold 196 8 (1) 68 --
Net change in unrealized appreciation of
investments .............................. 2,886 1,308 895 568 591
-------- ------- ------- ------- -------
Net increase in net assets resulting
from operations ............................ 8,594 5,514 2,552 2,258 1,123
-------- ------- ------- ------- -------
Distributions to shareholders:
Net investment income:
Institutional ............................ (5,330) (3,984) (1,653) (1,620) (530)
Retail ................................... (180) (214) (5) (3) --
Realized capital gains:
Institutional ............................ (90) -- (39) (112) --
Retail ................................... (4) -- -- -- --
-------- ------- ------- ------- -------
Total distributions ........................... (5,604) (4,198) (1,697) (1,735) (530)
-------- ------- ------- ------- -------
Share transactions:
Institutional
Proceeds from shares issued .............. 36,338 22,999 6,749 5,097 1,962
Proceeds from Common Fund (note 6) ....... 51,852 -- -- -- 78,943
Reinvestment of cash distributions ....... 147 111 22 4 --
Cost of shares redeemed .................. (17,109) (15,840) (5,640) (7,588) (1,239)
-------- ------- ------- ------- -------
Net Institutional share transactions .. 71,228 7,270 1,131 (2,487) 79,666
-------- ------- ------- ------- -------
Retail
Proceeds from shares issued .............. 940 3,163 66 93 --
Reinvestment of cash distributions ....... 125 137 1 1 --
Cost of shares redeemed .................. (752) (2,740) (25) (13) --
-------- ------- ------- ------- -------
Net Retail share transactions ......... 313 560 42 81 --
-------- ------- ------- ------- -------
Increase/(decrease) in net assets from
share transactions ........................ 71,541 7,830 1,173 (2,406) 79,666
-------- ------- ------- ------- -------
Total increase/(decrease) in net assets ....... 74,531 9,146 2,028 (1,883) 80,259
-------- ------- ------- ------- -------
NET ASSETS:
Beginning of period ........................ 94,901 85,755 36,850 38,733 --
-------- ------- ------- ------- -------
End of period .............................. $169,432 $94,901 $38,878 $36,850 $80,259
======== ======= ======= ======= =======
<FN>
1 ACTIVITY FOR THE YEAR ENDED MAY 31, 1997 INCLUDES THAT OF THE PREDECESSOR
FUND THROUGH SEPTEMBER 6, 1996.
2 NATIONAL TAX EXEMPT FUND COMMENCED OPERATIONS ON APRIL 9, 1998.
</FN>
</TABLE>
See Accompanying Notes
31
<PAGE>
NOTES TO FINANCIAL STATEMENTS
1. FUND ORGANIZATION
Armada Funds (the "Trust") is registered under the Investment Company Act of
1940, as amended (the "1940 Act"), 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 of twenty-three funds each of which is authorized to issue
two classes of shares designated as Institutional and Retail Shares. Effective
January 1, 1998 the Equity Growth, Equity Income, SmallCap Value, Small Cap
Growth, Core Equity, International Equity, Intermediate Bond, Bond and Money
Market Funds additionally began offering a third class of shares designated as B
shares. Each share class represents an interest in the same portfolio of
investments of the respective Fund and is substantially the same in all
respects, except that the classes are subject to different distribution and/or
shareholder service fees and investment minimums. In addition, Retail shares are
subject to a front-end sales charge, which may be reduced or waived under
certain circumstances. B shares are sold with a contingent deferred sales charge
which may be reduced or waived under certain circumstances.
The Trust currently has four Series that consist of the following Funds:
Money Market Series
Money Market Fund, Government Money Market Fund, Treasury Money Market Fund, Tax
Exempt Money Market Fund and Pennsylvania Tax Exempt Money Market Fund;
Equity Series
International Equity Fund, Small Cap Growth Fund, Small Cap Value Fund, Equity
Growth Fund, Core Equity Fund, Equity Income Fund, Equity Index Fund and Tax
Managed Equity Fund;
Tax Exempt Series
Ohio Tax Exempt Fund, Pennsylvania Municipal Fund, and National Tax Exempt Fund;
Income Series
Total Return Advantage Fund, Intermediate Bond Fund, Enhanced Income Fund, GNMA
Fund, Bond Fund, Balanced Allocation Fund and Real Return Advantage Fund.
As of the date of this report, the Equity Index, Balanced Allocation and Real
Return Advantage Funds have 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").
As part of the Reorganization, on September 9, 1996, the Inventor
Pennsylvania Municipal Bond Fund (the "Predecessor Fund") transferred all of its
assets and liabilities with an approximate value of $36,673,181, including net
unrealized appreciation on investment securities of $344,245, in exchange for
shares of Armada Pennsylvania Municipal 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, as amended (the "Internal Revenue Code").
In accordance with provisions of the Reorganization 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
Ohio Tax Exempt, Pennsylvania Municipal and National Tax Exempt Funds (the
"Funds") in preparation of their financial statements.
32
<PAGE>
NOTES TO 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 Ohio Tax Exempt and the Pennsylvania Municipal Funds each follow an
investment policy of investing primarily in municipal obligations of one state.
The National Tax Exempt Fund follows an investment policy of investing in
municipal obligations of various states. Economic changes affecting each state
and related public bodies and municipalities may affect the ability of issuers
within the state to pay interest on, or repay principal of, municipal
obligations held by the Funds.
Many municipalities insure repayment for their obligations. Although bond
insurance reduces the risk of loss due to default by an issuer, such bonds
remain subject to the risk that the market may fluctuate for other reasons and
there is no assurance that the insurance company will meet its obligations.
These securities have been identified in the Statements of Net Assets.
PORTFOLIO VALUATION: With respect to each Fund, investment securities are
valued at their closing sales price if the principal market is an exchange.
Other securities, and temporary cash investments acquired more than 60 days from
maturity, are valued at the mean between quoted bid and asked prices. Such
valuations are provided by one or more independent pricing services when such
valuations are believed to reflect fair market value. When valuing securities,
pricing services consider institutional size trading in similar groups of
securities and any developments related to specific issues, among other things.
Short-term investments with maturities of 60 days or less are generally valued
on the basis of amortized cost, unless the Trust's Board of Trustees determines
that this does not represent fair value.
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. Expenses common to all of the Funds in the Trust are allocated among
them.
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS: It is the policy of the Funds to
declare dividends daily from net investment income and to pay such dividends no
later than five business days after the end of the month. Net investment income
of the Funds consists of interest accrued and original issue discount earned,
less amortization of any market premium and accrued expenses. Any net realized
capital gains will be distributed at least annually.
FEDERAL INCOME TAXES: Each of the Funds is classified as a separate taxable
entity for Federal income tax purposes. Each of the Funds intends to qualify as
a separate "regulated investment company" under the Internal Revenue Code and
make the requisite distributions to shareholders that will be sufficient to
relieve it from Federal income tax and Federal excise tax. Therefore, no Federal
tax provision is required. To the extent that distributions from net investment
income and realized net capital gains exceed amounts reported in the financial
statements, such amounts are reported separately.
At May 31, 1998, the total cost of securities and the net realized gains or
losses on securities sold for Federal income tax purposes was not materially
different from amounts reported for financial reporting purposes. For the fiscal
year ended May 31, 1998, distributions were: Ohio Tax Exempt Fund 98.25% tax
exempt income; Pennsylvania Municipal Fund 97.68% tax exempt income,; National
Tax Exempt Fund 100% tax exempt income.
33
<PAGE>
NOTES TO FINANCIAL STATEMENTS
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 incurred through June 30, 1998 are being amortized on a
straight-line basis over a period of five years from the date of commencement of
operations. In accordance with AICPA Statement of Position 98-5, Reporting on
the Costs of Start-up Activities, any organizational expenses incurred
subsequent to June 30, 1998, will be expensed as incurred.
3. INVESTMENT ADVISER, DISTRIBUTION FEES AND OTHER RELATED PARTY TRANSACTIONS
Fees paid by the Trust pursuant to the Advisory Agreements with National City
Bank, (the "Adviser"), a wholly-owned subsidiary of National City Corporation,
are payable monthly based on an annual rate of .55% of each Fund's average daily
net assets. Prior to the Reorganization, Integra Trust Company served as
investment adviser to the Pennsylvania Municipal Fund and Weiss, Peck & Greer
LLC (the "Sub-Adviser") served as sub-adviser to Integra Trust Company.
Subsequent to the Reorganization, the Sub-Adviser continued to serve under an
agreement with National City Bank and was entitled to earn a fee pursuant to
such agreement. Effective October 1, 1997, the agreement with the Sub-Adviser
terminated and the Adviser assumed full investment management responsibilities.
The Adviser may from time to time waive its fees payable by the Funds. For the
year ended May 31, 1998, the Adviser has earned and waived the following fees:
EARNED WAIVED
(000) (000)
---------- -------
Ohio Tax Exempt Fund............. $650 $650
Pennsylvania Municipal Fund...... 206 56
National Tax Exempt Fund......... 62 62
The Trust maintains a Shareholder Services Plan (the "Services Plan") with
respect to the Retail shares in the Pennsylvania Municipal and Ohio Tax Exempt
Funds, and in the future may implement the Services Plan with respect to the
Retail shares of the National Tax Exempt Fund. Pursuant to the Services Plan,
the Trust enters into shareholder servicing agreements 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 Funds. For the year ended May 31, 1998, fees paid by
the Pennsylvania Municipal and Ohio Tax Exempt Funds under the Services Plan to
NatCity Investments, Inc., a wholly-owned subsidiary of National City
Corporation, amounted to $86 and $1,299, respectively.
National City Bank also serves as the Funds' Custodian. For the year ended
May 31, 1998, National City Bank earned custodian fees totaling $24,000, $8,000
and $2,000 for the Ohio Tax Exempt, Pennsylvania Municipal, and National Tax
Exempt Funds, respectively.
The Trust and SEI Investments Distribution Co., a wholly-owned subsidiary of
SEI Investments Company ("SEI" or "Distributor") are parties to a distribution
agreement dated May 1, 1998. The Distributor receives no fees for its
distribution services under this agreement.
34
<PAGE>
NOTES TO FINANCIAL STATEMENTS
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 each 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 Municipal 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 $15,000 plus $3,000 for each Board
Meeting attended and reimbursement of out-of-pocket expenses. The Chairman of
the Board receives an annual fee of $20,000 and an additional $5,000 per annum
for services in such capacity. Such fees are paid for services rendered to all
of the investment funds and are allocated accordingly. No person who is an
officer, director, trustee, or employee of the Investment Advisers, 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, 1998, include legal fees paid to Drinker
Biddle & Reath LLP. A partner of that firm is Secretary of the Trust.
The Trust and SEI Fund Resources (the "Administrator") are parties to an
Administration Agreement dated May 1, 1998, under which the Administrator
provides administrative services for an annual fee of .07% of the aggregate
average daily net assets of the Portfolios up to the first eighteen billion and
.06% of the aggregate average daily net assets of the Portfolios over eighteen
billion. Prior to May 2, 1998, PFPC Inc. ("PFPC") served as Administrator and
Accounting Agent to the Trust. As compensation for services performed, each Fund
paid PFPC an asset-based fee plus reimbursement of reasonable out-of-pocket
expenses.
4. PURCHASES AND SALES OF SECURITIES
During the year ended May 31, 1998, purchases and sales of securities, other
than short-term investments or U.S. government obligations, aggregated:
PURCHASES SALES
---------- -------
Ohio Tax Exempt Fund....... $41,096,127 $17,030,073
Pennsylvania
Municipal Fund.......... 7,832,286 7,494,545
National Tax
Exempt Fund............. 0 0
There were no purchases or sales of U.S. government securities during the
period for any of the Funds.
5. 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
or series of shares. Transactions in capital shares are summarized below for the
Funds.
35
<PAGE>
NOTES TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
FOR THE YEAR OR PERIOD ENDED MAY 31, 1998 (000)
------------------------------------------------------------------
INSTITUTIONAL CLASS RETAIL CLASS
------------------------------- -------------------------------
SHARES VALUE SHARES VALUE
-------------- -------------- -------------- --------------
OHIO TAX EXEMPT FUND
<S> <C> <C> <C> <C>
Shares sold ................................... 3,295 $ 36,338 94 $ 940
Shares sold from Common Fund (note 6) ......... 4,684 51,852 -- --
Shares reinvested ............................. 13 147 11 125
Shares repurchased ............................ (1,545) (17,109) (68) (752)
------ -------- ----- -------
Net increase .................................. 6,447 $ 71,228 37 $ 313
====== ======== ===== =======
PENNSYLVANIA MUNICIPAL FUND
Shares sold ................................... 649 $ 6,749 6 $ 66
Shares reinvested ............................. 2 22 -- 1
Shares repurchased ............................ (542) (5,640) (2) (25)
------ -------- ----- -------
Net increase .................................. 109 $ 1,131 4 $ 42
====== ======== ===== =======
NATIONAL TAX EXEMPT FUND*
Shares sold ................................... 234 $ 1,962 -- --
Shares sold from Common Fund (note 6) ......... 7,894 78,943 -- --
Shares reinvested ............................. -- -- -- --
Shares repurchased ............................ (124) (1,239) -- --
------ -------- ----- -------
Net increase .................................. 8,004 $ 79,666 -- --
====== ======== ===== =======
<FN>
- -----------------
*THE NATIONAL TAX EXEMPT FUND COMMENCED OPERATIONS ON APRIL 9, 1998.
</FN>
</TABLE>
<TABLE>
<CAPTION>
FOR THE YEAR ENDED MAY 31, 1997 (000)
------------------------------------------------------------------
INSTITUTIONAL CLASS RETAIL CLASS
------------------------------- --------------------------------
SHARES VALUE SHARES VALUE
-------------- -------------- -------------- --------------
OHIO TAX EXEMPT FUND
<S> <C> <C> <C> <C>
Shares sold ................................... 2,121 $ 22,999 298 $ 3,163
Shares reinvested ............................. 10 111 13 137
Shares repurchased ............................ (1,469) (15,840) (254) (2,740)
------- --------- ------- ----------
Net increase .................................. 662 $ 7,270 57 $ 560
======= ========= ======= ==========
PENNSYLVANIA MUNICIPAL FUND
Shares sold ................................... 501 $ 5,097 9 $ 93
Shares reinvested ............................. -- 4 -- 1
Shares repurchased ............................ (745) (7,588) (1) (13)
------- --------- ------- ----------
Net decrease/(decrease) ....................... (244) $ (2,487) 8 $ 81
======= ========= ======= ==========
</TABLE>
36
<PAGE>
NOTES TO FINANCIAL STATEMENTS
6. COMMON TRUST FUND CONVERSION
On March 6, 1998, the National City Ohio Tax Exempt Fund of the Adviser was
converted into the Ohio Tax Exempt Fund. The assets which consisted of
securities and related receivables, were converted on a tax-free basis. At the
time of conversion, 4,684,047 of Institutional Class shares of the Ohio Tax
Exempt Fund were issued. The net assets of the Common Fund immediately before
the conversion were $51,852,399 which included unrealized appreciation of
$2,009,105.
On April 9, 1998, the National City Personal Trust Tax Exempt Fund of the
Adviser was converted into the National Tax Exempt Fund. The assets, which
consisted of securities and related receivables, were converted on a tax-free
basis. At the time of conversion, 7,894,277 of Institutional Class shares of the
National Tax Exempt Fund were issued. The net assets of the Common Fund
immediately before the conversion were $78,942,768 which included unrealized
appreciation of $1,718,900.
37
<PAGE>
REPORT OF INDEPENDENT AUDITORS
To the Board of Trustees and
Shareholders of Armada Funds
We have audited the accompanying statements of net assets of the Armada Ohio
Tax Exempt Fund, Armada Pennsylvania Municipal Fund, and Armada National Tax
Exempt Fund (the "Funds") as of May 31, 1998, and the related statements of
operations and statements of changes in net assets for the periods presented
therein. We have also audited the financial highlights for each of the periods
presented herein for the Armada Ohio Tax Exempt Fund and the Armada National Tax
Exempt Fund, and for the years ended May 31, 1998 and May 31, 1997, presented
herein for the Armada Pennsylvania Municipal 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 financial highlights for the
periods ended April 30, 1995 through May 31, 1996 for the Armada Pennsylvania
Municipal Fund were audited by other auditors whose report dated July 26, 1996
expressed an unqualified opinion on those 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, 1998, 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 1998 financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of each of the respective Funds at May 31, 1998, and the results of
their operations and changes in their net assets for the periods presented
herein and for the Armada Ohio Tax Exempt Fund and Armada National Tax Exempt
Fund, the financial highlights for each of the periods presented herein, and for
the Armada Pennsylvania Municipal Fund, the financial highlights for the years
ended May 31, 1998 and May 31, 1997, presented herein, in conformity with
generally accepted accounting principles.
/S/ SIGNATURE
ERNST & YOUNG LLP
Philadelphia, Pennsylvania
July 20, 1998
38
<PAGE>
NOTES
39
<PAGE>
NOTES
40
<PAGE>
ARMADA FUNDS
BOARD OF TRUSTEES
ROBERT D. NEARY
CHAIRMAN
Retired Co-Chairman, Ernst & Young
Director:
Cold Metal Products, Inc.
Zurn Industries, Inc.
HERBERT R. MARTENS, JR.
PRESIDENT
Executive Vice President, National City Corporation
Chairman, President and Chief Executive
Officer, NatCity Investments,Inc.
LEIGH CARTER
Retired President and Chief Operating
Officer, B.F. Goodrich Company
Director:
Kirtland Capital Corporation
Morrison Products
JOHN F. DURKOTT
President and Chief Operating Officer,
Kittle's Home Furnishings Center, Inc.
ROBERT J. FARLING
Retired Chairman, President and
Chief Executive Officer, Centerior Energy
Director:
Republic Engineered Steels
RICHARD W. FURST, DEAN
Professor of Finance and Dean
Carol Martin Gatton College of Business
and Economics, University of Kentucky
Director:
Foam Design, Inc.
The Seed Corporation
GERALD L. GHERLEIN
Executive Vice President and General
Counsel, Eaton Corporation
Trustee:
WVIZ Educational Television
J. WILLIAM PULLEN
President and Chief Executive Officer,
Whayne Supply Company
<PAGE>
[ARMADA FUNDS LOGO OMITTED]
Oaks, Pennsylvania 19456
INVESTMENT ADVISER
AFFILIATE OF
NATIONAL CITY
CORPORATION
National City Bank
1900 East Ninth Street
Cleveland, Ohio 44114
AF-802 (7/98)
---------------
BULK RATE
U.S. POSTAGE
PAID
CLEVELAND, OH
PERMIT NO. 1535
---------------
