<PAGE> 1
ARMADA
SEMI-ANNUAL REPORT
FUNDS
NOVEMBER 30, 1997
INCOME
(UNAUDITED)
SERIES
ARMADA TOTAL RETURN ADVANTAGE FUND
ARMADA INTERMEDIATE BOND FUND
ARMADA ENHANCED INCOME FUND
ARMADA GNMA FUND
ARMADA BOND FUND
[ARMADA FUNDS LOGO]
Financial Power Close at Hand
<PAGE> 2
LOGO ARMADA FUNDS
INCOME SERIES
SEMI-ANNUAL REPORT - NOVEMBER 30, 1997
(UNAUDITED)
<TABLE>
<S> <C>
TABLE OF CONTENTS
Chairman's Message......................................... 1
Income Market Overview..................................... 3
FUND OVERVIEWS
Armada Total Return Advantage Fund....................... 4
Armada Intermediate Bond Fund............................ 6
Armada Enhanced Income Fund.............................. 8
Armada GNMA Fund......................................... 10
Armada Bond Fund......................................... 12
PORTFOLIO OF INVESTMENTS AND FINANCIAL HIGHLIGHTS
Armada Total Return Advantage Fund....................... 14
Armada Intermediate Bond Fund............................ 19
Armada Enhanced Income Fund.............................. 22
Armada GNMA Fund......................................... 25
Armada Bond Fund......................................... 27
FINANCIAL STATEMENTS
Statement of Assets and Liabilities...................... 30
Statement of Operations.................................. 31
Statement of Changes in Net Assets....................... 32
NOTES TO FINANCIAL STATEMENTS.............................. 34
</TABLE>
- - SHARES OF ARMADA FUNDS ARE NOT BANK DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED
OR ENDORSED OR OTHERWISE SUPPORTED BY NATIONAL CITY BANK, NATIONAL ASSET
MANAGEMENT CORPORATION, THEIR AFFILIATES OR ANY BANK.
- - SHARES OF ARMADA FUNDS ARE NOT INSURED OR GUARANTEED BY THE U.S. GOVERNMENT,
FDIC, OR ANY GOVERNMENTAL AGENCY OR STATE.
- - AN INVESTMENT IN ARMADA FUNDS INVOLVES INVESTMENT RISKS, INCLUDING THE
POSSIBLE LOSS OF PRINCIPAL.
- - PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE PERFORMANCE, AND THE INVESTMENT
RETURN WILL FLUCTUATE.
National City Bank and National Asset Management Corporation 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.
ARMADA
TOTAL RETURN
ADVANTAGE FUND
ARMADA
INTERMEDIATE
BOND FUND
ARMADA
ENHANCED INCOME
FUND
ARMADA
GNMA FUND
ARMADA
BOND FUND
<PAGE> 3
LOGO CHAIRMAN'S MESSAGE
DEAR ARMADA FUNDS SHAREHOLDER:
It is my pleasure to update you on the semi-annual
performance of the Armada Funds. As of November 30,
1997, the Funds held total assets of $6.09 billion,
an increase of 13% over the total assets of six
months ago. This growth is the direct result of
additional investments by shareholders and strong,
ongoing improvement in investment income.
INVESTMENT PERFORMANCE EARNS NATIONAL RECOGNITION
Our performance has been impressive considering
the relatively high volatility in the recent market.
Especially noteworthy has been the recognition given
to Armada Funds by industry publications as
exemplified by the following:
- The Armada Equity Growth Fund was highlighted in
Investor's Business Daily as one of the leading
mutual funds for the past three years.
- The Armada Small Cap Value Fund (formerly the
Mid Cap Regional Fund) was awarded a 5-star
rating from Morningstar on August 31, 1997.
- The Armada GNMA Fund was recognized by The Wall
Street Journal on October 14, 1997 as one of the
top GNMA funds in the country.
- In the December 1997 issue of Mutual Funds
Magazine, the entire Armada Family of Funds was
awarded 4 stars out of a possible five.
EXPANDING AND CLARIFYING OUR RANGE OF INVESTMENT
CHOICES
The range of investment opportunities for current
and potential shareholders was significantly
expanded in August with the addition of three new
equity funds. Within the Armada Equity Series, you
now can diversify across large and small market
capitalizations, and take advantage of both growth
and value styles of investing. The six funds in the
Series are:
<TABLE>
<S> <C>
Armada Core Equity Fund Armada Small Cap Growth Fund
Armada International Equity Fund Armada Equity Income Fund
Armada Equity Growth Fund Armada Small Cap Value Fund
</TABLE>
1
<PAGE> 4
LOGO CHAIRMAN'S MESSAGE
CHANGES APPROVED BY SHAREHOLDERS
Several changes were approved at our November 1997
shareholder meeting. Additionally, three funds were
renamed to more accurately reflect their investment
style and fund characteristics:
Armada Small Cap Value Fund is the new name for the
former Armada Mid Cap Regional Fund.
Armada Bond Fund is the new name for the former
Armada Intermediate Government Fund.
Armada Intermediate Bond Fund is the new name for
the former Armada Fixed Income Fund.
Other changes were made to clarify the investment
objectives and limitations for a number of funds.
Also, all of the funds elected the Board of Trustees
who are listed on the back page of this report.
If you would like more information about your
investment, or any of the Armada Funds, please call
your account representative or 1-800-622-FUND(3863).
Or you can find us on the World Wide Web at
WWW.NATIONAL-CITY.COM. Click Invest It! for Armada
Funds information. We are pleased to answer your
questions and look forward to serving your
investment needs now and in the years to come.
Best wishes for a happy, healthy and rewarding
1998.
Sincerely,
/s/ Robert D. Neary
Robert D. Neary
Chairman
Armada Funds
2
<PAGE> 5
LOGO INCOME MARKET OVERVIEW
REMARKS FROM THE ADVISERS
"IT IS DIFFICULT TO FIND ANY
SIGN OF
INFLATIONARY PRESSURES EVEN
WITH
CONTINUED STRONG ECONOMIC
GROWTH AND A RECORD LOW
UNEMPLOYMENT RATE."
After posting the fastest six month growth rate of
this entire expansion in 1997's first half, the
economy continued strong through the year's second
half. Most notably, consumer spending showed
considerable acceleration. With job gains
continuing, the unemployment rate below 5%, personal
income growth at nearly 6%, and consumer debt
problems on the decline, there is no reason to
expect a substantial slowdown in the critical
consumer sector.
Other signs of continued economic vigor include
business investment, which posted the highest
quarterly growth rate in almost a decade, strong
industrial production, and the housing sector where
low interest rates and low inventories have resulted
in cycle high levels in housing sales and starts.
It is difficult to find any sign of inflationary
pressures even with continued strong economic growth
and a record low unemployment rate. The Consumer
Price Index is currently running at a ten year low
of only a 2.1% rate, while its core rate stands at
2.3%. Producer prices once again hit deflationary
levels as the Producer Price Index currently
registered a -0.2% rate, while its core index has
risen only 0.3%. Other signs of inflation constraint
include crude oil futures which have fallen 11% in
the last month, industrial commodity indices that
are at two year lows, and gold trading at the lowest
levels in twelve years.
In the labor market, signs of wage gains are
emerging as average hourly earnings hit a cycle high
of 4.2%. However, strong productivity gains
continued to push unit labor costs down, as
manufacturing productivity hit a 27 year high.
After the seventh and fastest year of economic
growth in this cycle, we envision a more moderate
pace of economic activity in 1998. In particular,
the rate of consumer spending should decline from
this year's pace of nearly 4%, while investment
spending will also slow from its continued high
teens rate. In addition, government spending,
housing and inventories are all likely to be
neutrals at best for growth, with their risks shaded
to the downside. Finally, the problems in Southeast
Asia will undoubtedly serve to widen our trade
deficit even more from this year's record, which
will certainly decrease reported growth.
Our expectation is for moderate economic growth
next year, with the risks tilted towards the
downside. In terms of inflation, we foresee a
continuation of this year's stellar performance. We
anticipate that consumer prices could rise modestly
next year and as with growth, we think the risks to
this forecast are to the downside. In this
moderating growth/low inflation environment, we
believe the next Federal Reserve Board interest rate
move will likely be an ease, though not until later
in 1998. Finally, in such a scenario of moderating
growth, low and declining inflation, a friendly
Federal Reserve, and a growing lack of supply
(deficit reduction), long bond yields could continue
to experience downward pressures.
3
<PAGE> 6
LOGO ARMADA TOTAL RETURN
ADVANTAGE FUND OVERVIEW
COMMENTS FROM THE MANAGER
PORTFOLIO MANAGER:
INVESTMENT MANAGEMENT GROUP,
NATIONAL ASSET
MANAGEMENT CORPORATION
FUND'S DATE OF INCEPTION:
JULY 7, 1994 (INSTITUTIONAL
SHARES)
SEPTEMBER 6, 1994 (RETAIL
SHARES)
ASSETS:
$281,525,217 (INSTITUTIONAL
SHARES)
$ 2,284,124 (RETAIL SHARES)
INVESTMENT OBJECTIVE:
PROVIDE A TOTAL RATE OF
RETURN,
INCOME AND PRICE
APPRECIATION GREATER THAN
THAT OF POPULAR MARKET
INDICES WITH SIMILAR MATURITY
AND QUALITY CHARACTERISTICS.
UNDER NORMAL MARKET
CONDITIONS, THE FUND MAIN-
TAINS AN AVERAGE DOLLAR-
WEIGHTED PORTFOLIO MATURITY
OF TWO YEARS ABOVE OR
BELOW THE AVERAGE MATURITY
OF THE LEHMAN
GOVERNMENT/CORPORATE
BOND INDEX.
KEY INVESTMENT CONCEPTS
In seeking total return for shareholders of the
Armada Total Return Advantage Fund, we use three key
strategies. First, we allocate the Fund's
investments among different market sectors based on
their return potential. Next, we adjust the average
maturity direction of the Fund according to our
perceptions of intermediate and long-term trends in
interest rates. Finally, we look for individual
securities whose yields we feel are attractive in
terms of their own historical standards and versus
other securities with similar characteristics.
RECENT PERFORMANCE
In the past 6 months of the fiscal year, for the
period ended November 30, 1997, the Fund
underperformed the bond market. The Fund's
Institutional and Retail shares had total returns of
6.34% and 6.20% (before sales charges),
respectively, versus 6.99% for the Lehman
Government/Corporate Bond Index (the "Index"). The
Fund's performance during the first half of the
fiscal year was hampered by the Fund's exposure to
non-Treasury bonds, in general, and specifically
Southeast Asian Yankee Bonds.
FUND STRATEGIES
The average duration of the Fund was approximately
5.54 years or 0.20 years longer than that of the
Index. This is consistent with our belief that the
longer term trend toward lower interest rates (that
began in 1981) is intact and will continue. During
the past 6 months, rates rallied by approximately 80
basis points. It was not a smooth ride, as during
late summer/early fall the market rally was
interrupted by a 40 basis point sell out before the
rally resumed in mid September. The Southeast Asian
debacle came to a head in late October and
underperformance spread to all non-Treasury market
sectors during the following month.
FUND STRUCTURE
While the Fund's overweighting in non-Treasury
sectors was a drag on performance during the first
half of the fiscal year, we expect performance in
the upcoming 3-6 months to be enhanced markedly by
our posture. Currently, the Fund owns approximately
27.5% in Treasuries and Agencies, 29.8% in
Corporates, 12.2% in Mortgage-Backed securities, and
26.6% in Asset-Backed securities. This compares with
70% Treasuries and Agencies and 30% Corporates in
the Index.
LOOKING AHEAD
We enter the second half of the fiscal year with
the expectation of slower economic growth, continued
low inflation, and therefore lower interest rates.
4
<PAGE> 7
LOGO ARMADA TOTAL RETURN
ADVANTAGE FUND OVERVIEW
COMMENTS FROM THE MANAGER
"WE ENTER THE SECOND HALF OF
THE
FISCAL YEAR WITH THE
EXPECTATION
OF SLOWER ECONOMIC GROWTH,
CONTINUED LOW INFLATION, AND
THEREFORE LOWER INTEREST
RATES. IN
THIS ENVIRONMENT, WE BELIEVE
THAT CORPORATE, MORTGAGE, AND
ASSET-BACKED SECURITIES
SHOULD
OUTPERFORM GOVERNMENT
SECURITIES."
In this environment, we believe that corporate,
mortgage, and asset-backed securities should
outperform government securities. These sectors
performed poorly in the last month due to investor
concerns regarding the impact of the Pacific Rim
events on the U. S. economy. We expect a rebound in
these securities during the first half of 1998.
The Fund is positioned to benefit from this
rebound with heavy exposure to the corporate,
mortgage and asset-backed sectors, as well as a
slightly longer duration posture relative to the
Index. As usual, we continue to maintain high
quality portfolios based on our strategy of sector
allocation, duration management, and security
selection.
<TABLE>
<CAPTION>
====================================================================
TOTAL RETURNS as of 11/30/97
Six Months 1-Year
---------------------------
<S> <C> <C>
Armada Total Return Advantage Fund
Institutional Shares(1) 6.34% 6.61%
--------------------------------------------------------------------
Armada Total Return Advantage Fund
Retail Shares With Sales Charge(5) 2.18% 2.48%
Without Sales Charge 6.20% 6.45%
--------------------------------------------------------------------
<CAPTION>
=========================================
TOTAL RETURNS as of 11/30/97
3-Years(4)
<S> <C>
Armada Total Return Advantage Fund
Institutional Shares(1) 10.14%
-----------------------------------------
Armada Total Return Advantage Fund
Retail Shares With Sales Charge(5) 8.30%
Without Sales Charge 9.69%
-----------------------------------------
<CAPTION>
=========================================
TOTAL RETURNS as of 11/30/97
Since Inception(2,4)
Armada Total Return Advantage Fund
Institutional Shares(1) 8.92%
-----------------------------------------
Armada Total Return Advantage Fund
Retail Shares With Sales Charge(5) 7.23%
Without Sales Charge 8.51%
-----------------------------------------
</TABLE>
Past performance is not predictive of future
performance.
GROWTH OF A $10,000 INVESTMENT (3)
<TABLE>
<CAPTION>
Armada Total Return
Measurement Period Lehman Government/Corporate Advantage Fund
(Fiscal Year Covered) Bond Index (Institutional Shares )
<S> <C> <C>
Jul-1994 10000.00 10000.00
Nov-1994 10020.87 10011.37
May-1995 11186.74 11122.04
Nov-1995 11853.41 11846.19
May-1996 11645.28 11591.88
Nov-1996 12516.09 12545.75
May-1997 12565.19 12578.40
Nov-1997 13443.21 13375.35
<CAPTION>
Armada Total Return
Measurement Period Advantage Fund (Retail
(Fiscal Year Covered) Shares with sales charge
<S> <C>
Sep-1994 9625.00
Nov-1994 9496.49
May-1995 10082.17
Nov-1995 11156.65
May-1996 10892.81
Nov-1996 11775.05
May-1997 11802.44
Nov-1997 12534.75
</TABLE>
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 Total Return Advantage Fund's date of
inception was July 7, 1994 for Institutional
shares and September 6, 1994 for Retail shares.
3 The return and principal value of an investment
will fluctuate. When redeemed, shares may be worth
more or less than their original cost.
4 Annualized.
5 Performance calculated based on the maximum
front-end sales charge in effect at November 30,
1997 of 3.75%. Effective January 1, 1998, the
maximum front-end sales charge was increased to
4.75%.
5
<PAGE> 8
LOGO ARMADA INTERMEDIATE BOND FUND OVERVIEW
(FORMERLY ARMADA FIXED INCOME FUND)
COMMENTS FROM THE MANAGER
PORTFOLIO MANAGER:
FIXED INCOME TEAM,
NATIONAL CITY'S
ASSET MANAGEMENT GROUP
FUND'S DATE OF INCEPTION:
DECEMBER 20, 1989
(INSTITUTIONAL SHARES)
APRIL 15, 1991 (RETAIL
SHARES)
ASSETS:
$146,366,016 (INSTITUTIONAL
SHARES)
$ 3,528,921 (RETAIL SHARES)
INVESTMENT OBJECTIVE:
PROVIDE AS HIGH A LEVEL OF
CURRENT INCOME AS IS
CONSISTENT
WITH PRUDENT INVESTMENT RISK.
THE FUND INVESTS IN
INVESTMENT
GRADE FIXED INCOME
SECURITIES.
UNDER NORMAL MARKET
CONDITIONS,
THE FUND MAINTAINS AN AVERAGE
DOLLAR-WEIGHTED PORTFOLIO
MATURITY OF TEN YEARS OR
LESS.
THE FUND'S BENCHMARK IN TERMS
OF ITS PERFORMANCE IS THE
LEHMAN INTERMEDIATE
GOVERNMENT/CORPORATE
BOND INDEX.
KEY INVESTMENT CONCEPTS
The Armada Intermediate Bond Fund seeks to provide
a high level of income that exceeds the
proportionate level of risk taken by the Fund. The
Fund seeks to add value through actively managing
sector allocation to those sectors that offer the
best income and return potential. We seek out only
those securities that are attractive on a relative
basis and are consistent with the Fund's objectives,
while credit quality is maintained at a high level.
Performance is measured against the Lehman
Intermediate Government/Corporate Bond Index.
RECENT PERFORMANCE
For the six months ended November 30, 1997, the
Armada Intermediate Bond Fund produced a total
return of 4.83% for Institutional investors and
4.69% (before sales charges) for Retail investors.
Over the same period, our non-investable benchmark,
the Lehman Intermediate Government/Corporate Bond
Index, posted a total return of 5.02%. As of
November 30, 1997, the Fund offered SEC 30-day
yields of 5.77% and 5.29% for Institutional and
Retail shares, respectively.
FUND STRATEGIES
Over the past six months, the benchmark 30-year
treasury bond has fallen from 6.92% to 6.04% as
inflation continued to decline and investors looked
for a safe haven in bonds as economic problems in
Southeast Asia mounted. During much of this period,
the Fund's duration, or interest rate sensitivity,
was 5% longer than that of the benchmark, which was
a positive for performance.
FUND STRUCTURE
The Fund's sector allocation has featured an
overweighting of asset-backed and mortgage-backed
securities while keeping corporates market weighted.
This strategy has brought mixed results over the
last six months as mortgage-backed securities
continued to outperform treasuries, while
asset-backed securities did not.
LOOKING AHEAD
Our outlook calls for the economy to slow from the
rapid pace seen over the last six months. The
currency crisis that has developed in Southeast Asia
will most likely reduce 1998's economic growth by at
least 0.5% as exports to this area of the world
should decline. As economic growth declines and our
currency continues to strengthen, the low and
declining inflationary environment we have seen for
the last year should continue.
6
<PAGE> 9
LOGO ARMADA INTERMEDIATE BOND FUND OVERVIEW
(FORMERLY ARMADA FIXED INCOME FUND)
COMMENTS FROM THE MANAGER
"AS ECONOMIC GROWTH DECLINES
AND OUR CURRENCY CONTINUES TO
STRENGTHEN, THE LOW AND
DECLINING INFLATIONARY
ENVIRONMENT WE HAVE SEEN FOR
THE LAST YEAR SHOULD
CONTINUE." Lower inflation and economic problems in Southeast
Asia have kept the Federal Reserve Board on hold
since they last raised the federal funds rate in
March. In fact, it is beginning to look more
probable that they will decrease rates sometime in
1998 as economic growth slows.
Over the long-term, the trend toward lower
interest rates should resume and bonds at or near
current levels should offer investors solid returns
going forward.
<TABLE>
<CAPTION>
===============================================================
TOTAL RETURNS as of 11/30/97
Six Months 1-Year
---------------------------
<S> <C> <C>
Armada Intermediate Bond Fund
Institutional Shares(1) 4.83% 5.92%
---------------------------------------------------------------
Armada Intermediate Bond Fund
Retail Shares With Sales Charge(5) 0.73% 1.64%
Without Sales Charge 4.69% 5.56%
---------------------------------------------------------------
<CAPTION>
====================================
TOTAL RETURNS as of 11/30/97
3-Years(4) 5-Years(4)
<S> <C>
Armada Intermediate Bond Fund
Institutional Shares(1) 8.49% 6.31%
------------------------------------
Armada Intermediate Bond Fund
Retail Shares With Sales Charge(5) 6.83% 5.22%
Without Sales Charge 8.21% 6.03%
------------------------------------
<CAPTION>
====================================
TOTAL RETURNS as of 11/30/97
Since Inception(2,4)
Armada Intermediate Bond Fund
Institutional Shares(1) 7.75%
------------------------------------
Armada Intermediate Bond Fund
Retail Shares With Sales Charge(5) 7.00%
Without Sales Charge 7.51%
------------------------------------
</TABLE>
Past performance is not predictive of future
performance.
GROWTH OF A $10,000 INVESTMENT (3)
<TABLE>
<CAPTION>
Measurement Period
(Fiscal Year Covered) Leh. Gov/Corp Institutional Shares
<S> <C> <C>
Dec-1989 10000.00 10000.00
May-1990 10169.80 10097.90
Nov-1990 10769.40 10665.57
May-1991 11382.78 11332.27
Nov-1991 12214.86 12205.37
May-1992 12701.71 12800.90
Nov-1992 13232.68 13334.86
May-1993 14022.16 14250.16
Nov-1993 14520.53 14863.80
May-1994 14204.02 14249.53
Nov-1994 14255.81 14182.54
May-1995 15573.46 15610.05
Nov-1995 16323.94 16310.46
May-1996 16288.39 16201.78
Nov-1996 17274.91 17098.35
May-1997 17473.89 17275.90
Nov-1997 18349.83 18110.83
<CAPTION>
Measurement Period
(Fiscal Year Covered) Retail Shares
<S> <C>
Dec-1989 9625.00
May-1990 9718.88
Nov-1990 10265.24
May-1991 10904.74
Nov-1991 11728.31
May-1992 12283.23
Nov-1992 12777.02
May-1993 13638.04
Nov-1993 14204.87
May-1994 13606.53
Nov-1994 13514.93
May-1995 14866.34
Nov-1995 15512.83
May-1996 15378.31
Nov-1996 16221.82
May-1997 16355.94
Nov-1997 17123.62
</TABLE>
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 Intermediate Bond Fund's date of
inception was December 20, 1989 for Institutional
shares and April 15, 1991 for Retail shares. The
performance information 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 Annualized.
5 Performance calculated based on the maximum
front-end sales charge in effect at November 30,
1997 of 3.75%. Effective January 1, 1998, the
maximum front-end sales charge was increased to
4.75%.
7
<PAGE> 10
LOGO ARMADA ENHANCED INCOME FUND OVERVIEW
COMMENTS FROM THE MANAGER
PORTFOLIO MANAGER:
INVESTMENT MANAGEMENT GROUP,
NATIONAL ASSET
MANAGEMENT CORPORATION
FUND'S DATE OF INCEPTION:
JULY 7, 1994 (INSTITUTIONAL
SHARES)
SEPTEMBER 9, 1994 (RETAIL
SHARES)
ASSETS:
$69,941,133 (INSTITUTIONAL
SHARES)
$ 2,409,534 (RETAIL SHARES)
INVESTMENT OBJECTIVE:
SEEK A TOTAL RATE OF RETURN
GREATER THAN THAT OF THE
MERRILL
LYNCH 1-3 YEAR TREASURY
INDEX.
THE FUND WILL NORMALLY INVEST
AT
LEAST 80% OF THE VALUE OF ITS
TOTAL ASSETS IN INVESTMENT
GRADE
DEBT SECURITIES OF ALL TYPES.
HOWEVER, UP TO 20% OF THE
VALUE OF ITS TOTAL ASSETS MAY
BE
INVESTED IN PREFERRED STOCKS
AND
OTHER INVESTMENTS. UNDER
NORMAL
MARKET CONDITIONS, THE FUND
INTENDS TO MAINTAIN AN
AVERAGE
DOLLAR-WEIGHTED PORTFOLIO
MATURITY FOR ITS DEBT
SECURITIES OF
1/2 TO 4 YEARS.
KEY CONCEPTS
In seeking total return for shareholders of the
Armada Enhanced Income Fund, we use three key
strategies. First, we allocate the Fund's
investments among different market sectors based on
their return potential. Next, we adjust the average
maturity direction of the Fund according to our
perceptions of intermediate and long-term trends in
interest rates. Finally, we look for individual
securities whose yields we feel are attractive in
terms of their own historical standards and versus
other securities with similar characteristics.
RECENT PERFORMANCE
In the past 6 months of the fiscal year, for the
period ended November 30, 1997, the Fund slightly
underperformed the short-term bond market. The
Fund's Institutional and Retail shares (before sales
charges) had total returns of 3.59% and 3.54%,
respectively, versus 3.66% for the Merrill Lynch 1-3
year Treasury Index (the "Index").
FUND STRATEGIES
The average duration of the Fund is approximately
1.7 years or +0.1 years longer than that of the
Index. This is consistent with our belief that the
longer term trend toward lower rates (that began in
1981) is intact and will continue. During the past 6
months, short rates rallied approximately 46 basis
points. It was not a smooth ride, though, as during
late summer/early fall the market rally was
interrupted by a 25 basis point sell off before
resuming in mid-September.
FUND STRUCTURE
While the Fund's overweighting in non-Treasury
Sectors was a drag on performance during the first 6
months of the fiscal year, we expect performance in
the upcoming 3-6 months to be markedly enhanced by
our posture. Currently, the Fund owns approximately
41% Treasuries and Agencies, 12.5% Corporates, 3%
mortgage-backed securities, and 42% asset-backed
securities. This compares with the Index composition
of 100% Treasuries.
LOOKING AHEAD
We enter the second half of the fiscal year with
the expectation of slower economic growth, continued
low inflation, and therefore lower interest rates.
In this environment, we believe that corporate,
mortgage and asset-backed securities should
outperform government securities. The sectors
performed poorly in the last month due to investor
concerns regarding the impact of the Pacific Rim
events on the U. S. economy. We expect a rebound in
these securities during the first half of 1998.
8
<PAGE> 11
LOGO ARMADA ENHANCED INCOME FUND OVERVIEW
COMMENTS FROM THE MANAGER
"WE ENTER THE SECOND HALF OF
THE
FISCAL YEAR WITH THE
EXPECTATION
OF SLOWER ECONOMIC GROWTH,
CONTINUED LOW INFLATION, AND
THEREFORE LOWER INTEREST
RATES. IN
THIS ENVIRONMENT, WE BELIEVE
THAT CORPORATE, MORTGAGE AND
ASSET-BACKED SECURITIES
SHOULD
OUTPERFORM GOVERNMENT
SECURITIES."
The Fund is positioned to benefit from this
rebound with heavy exposure to asset-backed
securities and corporates, as well as a slightly
longer duration posture relative to the Index. As
usual, we continue to maintain a high quality
portfolio based on our strategy of sector
allocation, duration management and security
selection.
<TABLE>
<CAPTION>
====================================================================
TOTAL RETURNS as of 11/30/97
Six Months 1-Year
---------------------------
<S> <C> <C>
Armada Enhanced Income Fund
Institutional Shares(1) 3.59% 5.73%
--------------------------------------------------------------------
Armada Enhanced Income Fund
Retail Shares With Sales Charge 0.72% 2.68%
Without Sales Charge 3.54% 5.62%
--------------------------------------------------------------------
<CAPTION>
=========================================
TOTAL RETURNS as of 11/30/97
3-Years(4)
<S> <C>
Armada Enhanced Income Fund
Institutional Shares(1) 6.42%
-----------------------------------------
Armada Enhanced Income Fund
Retail Shares With Sales Charge 5.29%
Without Sales Charge 6.28%
-----------------------------------------
<CAPTION>
=========================================
TOTAL RETURNS as of 11/30/97
Since Inception(2,4)
<S> <C>
Armada Enhanced Income Fund
Institutional Shares(1) 6.14%
-----------------------------------------
Armada Enhanced Income Fund
Retail Shares With Sales Charge 5.15%
Without Sales Charge 6.07%
-----------------------------------------
</TABLE>
Past performance is not predictive of future
performance.
GROWTH OF A $10,000 INVESTMENT (3)
<TABLE>
<CAPTION>
Measurement Period Merrill Lynch 1-3 Year
(Fiscal Year Covered) Institutional Treasury Index
<S> <C> <C>
Jul-1994 10000.00 10000.00
Nov-1994 10165.40 10076.11
May-1995 10587.39 10715.05
Nov-1995 10931.51 11122.21
May-1996 11154.79 11277.13
Nov-1996 11587.36 11765.88
May-1997 11826.27 12021.94
Nov-1997 12251.09 12463.20
<CAPTION>
Measurement Period (with sales
(Fiscal Year Covered) Retail charge)
<S> <C>
Sep-1994 9725.00
Nov-1994 9795.67
May-1995 10199.53
Nov-1995 10524.71
May-1996 10723.09
Nov-1996 11133.25
May-1997 11357.24
Nov-1997 11759.32
</TABLE>
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 Enhanced Income Fund's date of
inception was July 7, 1994 for Institutional
shares and September 9, 1994 for Retail shares.
3 The return and principal value of an investment
will fluctuate. When redeemed, shares may be worth
more or less than their original cost.
4 Annualized.
9
<PAGE> 12
LOGO ARMADA GNMA 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)
SEPTEMBER 11, 1996 (RETAIL)
ASSETS:
$69,367,002 (INSTITUTIONAL
SHARES)
$ 137,440 (RETAIL SHARES)
INVESTMENT OBJECTIVE:
SEEK THE HIGHEST LEVEL OF
CURRENT
INCOME CONSISTENT WITH
PRESERVATION OF CAPITAL AND A
HIGH DEGREE OF LIQUIDITY BY
INVESTING PRIMARILY IN
MORTGAGE
PASS-THROUGH SECURITIES
GUARANTEED BY THE GOVERNMENT
NATIONAL MORTGAGE
ASSOCIATION.
THE FUND'S BENCHMARK IN TERMS
OF ITS PERFORMANCE IS THE
LEHMAN GNMA INDEX.
KEY INVESTMENT CONCEPTS
The Armada GNMA Fund seeks to maximize total
return by investing primarily in mortgage-backed
securities guaranteed by the Government National
Mortgage Association. The performance of the Fund is
measured against the Lehman GNMA Index (the
"Index"). The Fund seeks to add value by investing
in the most attractive sectors within the
mortgage-backed securities market.
RECENT PERFORMANCE
For the six months ended November 30, 1997 the
Fund produced a total return of 5.37% for
Institutional investors and 5.24% (before sales
charges) for Retail investors. For the same period,
the Index posted a total return of 5.58%. As of
November 30, 1997, the Fund had SEC 30-day yields of
5.95% and 5.48% for Institutional and Retail shares,
respectively.
FUND STRATEGY
For most of this period, the Fund's interest rate
sensitivity was 5% greater than that of the Index,
which allowed the Fund to take advantage of the
declining interest rate environment. The Fund has an
overweighted position in seasoned mortgage
securities which have lower prepayment sensitivity
than more recent vintages. In addition, the Fund
continues to look for favorable financing rates in
the mortgage market by "rolling" a portion of its
TBA product.
LOOKING AHEAD
Our outlook calls for the economy to slow from the
rapid pace seen over the last six months. The
currency crisis that has developed in Southeast Asia
will most likely reduce 1998's economic growth by at
least 0.5% as exports to this area of the world
should decline. As economic growth declines and our
currency continues to strengthen, the low and
declining inflationary environment we have seen for
the last year should continue.
Lower inflation and economic problems in Southeast
Asia have kept the Federal Reserve Board on hold
since they last raised the federal funds rate in
March. In fact, it is beginning to look more
probable that they will decrease rates sometime in
1998 as economic growth slows.
10
<PAGE> 13
LOGO ARMADA GNMA FUND OVERVIEW
COMMENTS FROM THE MANAGER
"FOR MOST OF THIS PERIOD, THE
FUND'S INTEREST RATE
SENSITIVITY
WAS 5% GREATER THAN THAT OF
THE
INDEX, WHICH ALLOWED THE FUND
TO TAKE ADVANTAGE OF THE
DECLINING INTEREST RATE
ENVIRONMENT."
<TABLE>
<CAPTION>
====================================================================
TOTAL RETURNS as of 11/30/97
Six Months 1-Year
---------------------------
<S> <C> <C>
Armada GNMA Fund
Institutional Shares(1) 5.37% 7.77%
--------------------------------------------------------------------
Armada GNMA Fund
Retail Shares With Sales Charge(5) 1.25% 3.50%
Without Sales Charge 5.24% 7.50%
--------------------------------------------------------------------
<CAPTION>
=========================================
TOTAL RETURNS as of 11/30/97
3-Years(2,4)
<S> <C>
Armada GNMA Fund
Institutional Shares(1) 9.99%
-----------------------------------------
Armada GNMA Fund
Retail Shares With Sales Charge(5) 8.49%
Without Sales Charge 9.89%
-----------------------------------------
<CAPTION>
=========================================
TOTAL RETURNS as of 11/30/97
Since Inception(2,4)
Armada GNMA Fund
Institutional Shares(1) 8.67%
-----------------------------------------
Armada GNMA Fund
Retail Shares With Sales Charge(5) 7.34%
Without Sales Charge 8.59%
-----------------------------------------
</TABLE>
Past performance is not predictive of future
performance.
GROWTH OF A $10,000 INVESTMENT (3)
<TABLE>
<CAPTION>
Measurement Period
(Fiscal Year Covered) Institutional Retail
<S> <C> <C>
Aug-1994 10000.00 9625.00
Nov-1994 9899.00 9528.36
May-1995 10963.00 10552.26
Nov-1995 11000.00 11033.40
May-1996 11466.00 11039.25
Nov-1996 12223.00 11761.92
May-1997 12501.00 12014.25
Nov-1997 13172.00 12643.75
<CAPTION>
Measurement Period Merrill Lynch 1-3 Year
(Fiscal Year Covered) Treasury Index
<S> <C>
Aug-1994 10000.00
Nov-1994 9819.59
May-1995 10930.84
Nov-1995 11473.77
May-1996 11515.77
Nov-1996 12328.11
May-1997 12608.82
Nov-1997 13311.35
</TABLE>
LOGO
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 GNMA Fund's date of inception was
August 10, 1994 for Institutional shares and
September 11, 1996 for Retail shares. The
performance information 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 Annualized.
5 Performance calculated based on the maximum
front-end sales charge in effect at November 30,
1997 of 3.75%. Effective January 1, 1998, the
maximum front-end sales charge was increased to
4.75%.
11
<PAGE> 14
LOGO ARMADA BOND FUND OVERVIEW
(FORMERLY ARMADA INTERMEDIATE
GOVERNMENT FUND)
COMMENTS FROM THE MANAGER
PORTFOLIO MANAGER:
FIXED INCOME TEAM,
NATIONAL CITY'S
ASSET MANAGEMENT GROUP
FUND'S DATE OF INCEPTION:
AUGUST 10, 1994
(INSTITUTIONAL)
SEPTEMBER 11, 1996 (RETAIL)
ASSETS:
$93,639,863 (INSTITUTIONAL
SHARES)
$ 40,751 (RETAIL SHARES)
INVESTMENT OBJECTIVE:
SEEK PRESERVATION OF CAPITAL AND
A HIGH DEGREE OF LIQUIDITY WHILE
PROVIDING CURRENT INCOME. THE
FUND INVESTS IN A BROAD ARRAY OF
FIXED INCOME SECURITIES, INCLUDING
GOVERNMENT AND CORPORATE BONDS
AND MORTGAGE AND ASSET-BACKED
SECURITIES. THE FUND'S
BENCHMARK IN TERMS OF ITS
PERFORMANCE IS THE LEHMAN
AGGREGATE BOND INDEX. KEY INVESTMENT CONCEPTS:
The Armada Bond Fund seeks preservation of capital
and a high degree of liquidity while providing
income. The Fund invests in a broad array of fixed
income securities, including government and
corporate bonds and mortgage and asset-backed
securities. The benchmark and objective of this Fund
changed as of 12/23/97 to the Armada Bond Fund. The
performance of the Fund going forward will be
measured against the Lehman Aggregate Bond Index.
The Fund seeks to add value through sector rotation
and individual security selection.
RECENT PERFORMANCE
For the six months ended November 30, 1997, the
Fund produced a total return of 4.64% for
Institutional investors and 4.52% (before sales
charges) for Retail investors. For the same period,
the Lehman Intermediate Government Bond Index posted
a total return of 4.87%. As of November 30, 1997,
the Fund had SEC 30-day yields of 5.85% and 5.38%
for Institutional and Retail shares, respectively.
FUND STRATEGY
For most of this period, the Fund's interest rate
sensitivity was 5% greater than that of the Lehman
Intermediate Government Bond Index, which allowed
the Fund to take advantage of the declining interest
rate environment. The Fund has an overweighted
position in stable mortgage-backed securities which
have low prepayment sensitivity. These securities
provide additional yield with a minimal increase in
risk.
LOOKING AHEAD
Our outlook calls for the economy to slow from the
rapid pace seen over the last six months. The
currency crisis that has developed in Southeast Asia
will most likely reduce 1998's economic growth by at
least 0.5% as exports to this area of the world
should decline. As economic growth declines and our
currency continues to strengthen, the low and
declining inflationary environment we have seen for
the last year should continue.
Lower inflation and economic problems in Southeast
Asia has kept the Federal Reserve Board on hold
since they last raised the federal funds rate in
March. In fact, it is beginning to look more
probable that they will decrease rates sometime in
1998 as economic growth slows.
12
<PAGE> 15
LOGO ARMADA BOND FUND OVERVIEW
(FORMERLY ARMADA INTERMEDIATE
GOVERNMENT FUND)
COMMENTS FROM THE MANAGER
"AS ECONOMIC GROWTH DECLINES
AND OUR CURRENCY CONTINUES TO
STRENGTHEN, THE LOW AND
DECLINING INFLATIONARY
ENVIRONMENT WE HAVE SEEN FOR
THE LAST YEAR SHOULD
CONTINUE."
<TABLE>
<CAPTION>
====================================================================
TOTAL RETURNS as of 11/30/97
Six Months 1-Year
---------------------------
<S> <C> <C>
Armada Bond Fund
Institutional Shares(1) 4.64% 6.43%
--------------------------------------------------------------------
Armada Bond Fund
Retail Shares With Sales Charge(6) 0.60% 2.18%
Without Sales Charge 4.52% 6.18%
--------------------------------------------------------------------
<CAPTION>
=========================================
TOTAL RETURNS as of 11/30/97
3-Years(2,4)
<S> <C>
Armada Bond Fund
Institutional Shares(1) 8.31%
-----------------------------------------
Armada Bond Fund
Retail Shares With Sales Charge(6) 6.83%
Without Sales Charge 8.20%
-----------------------------------------
<CAPTION>
=========================================
TOTAL RETURNS as of 11/30/97
Since Inception(2,4)
Armada Bond Fund
Institutional Shares(1) 7.18%
-----------------------------------------
Armada Bond Fund
Retail Shares With Sales Charge(6) 5.86%
Without Sales Charge 7.09%
-----------------------------------------
</TABLE>
Past performance is not predictive of future
performance.
GROWTH OF A $10,000 INVESTMENT (3)
<TABLE>
<CAPTION>
Measurement Period Lehman Brothers Government
(Fiscal Year Covered) Bond Index Institutional
<S> <C> <C>
Aug-1994 10000.00 10000.00
Nov-1994 9903.98 9904.01
May-1995 10765.47 10773.31
Nov-1995 11258.61 11251.79
May-1996 11253.49 11196.04
Nov-1996 11895.18 11823.23
May-1997 12054.04 12025.53
Nov-1997 12682.55 12583.78
<CAPTION>
Measurement Period
(Fiscal Year Covered) Retail Shares
<S> <C>
Aug-1994 9625.00
Nov-1994 9532.26
May-1995 10368.92
Nov-1995 10829.43
May-1996 10775.88
Nov-1996 11373.61
May-1997 11554.39
Nov-1997 12076.19
</TABLE>
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 Bond Fund's date of inception was
August 10, 1994 for Institutional shares and
September 11, 1996 for Retail shares. The
performance information 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 Annualized.
5 Due to a change in investment objective during the
period, the benchmark index for the Bond Fund was
changed to the Lehman Aggregate Bond Index. Prior
to this change, the Fund was measured against the
Lehman Intermediate Government Bond Index.
6 Performance calculated based on the maximum
front-end sales charge in effect at November 30,
1997 of 3.75%. Effective January 1, 1998, the
maximum front-end sales charge was increased to
4.75%.
13
<PAGE> 16
LOGO PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1997 ARMADA TOTAL RETURN ADVANTAGE FUND
(UNAUDITED)
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
-------- --------- --------------
<S> <C> <C> <C>
AGENCY OBLIGATIONS -- 1.6%
Steers Series 1993-G1
6.36%.......... 11/16/08 $ 1,350 $ 1,360,530
Tennessee Valley Authority
8.25%.......... 04/11/42 2,700 3,209,625
--------------
TOTAL AGENCY OBLIGATIONS............. 4,570,155
--------------
(Cost $4,079,845)
ASSET BACKED SECURITIES (A) -- 26.6%
AUTOS -- 6.7%
AESOP Funding II Series 1997-1, Class
A1
6.22%.......... 08/17/00 3,255 3,255,519
Chase Manhattan Auto Owner Trust
Series 1997-A, Class A5
6.50%.......... 12/27/00 1,045 1,060,632
GMAC Series 97-A, Class A
6.50%.......... 02/27/99 2,318 2,331,874
Onyx Acceptance Grantor Trust Series
1996-3, Class A
6.45%.......... 02/19/99 2,156 2,159,578
Series 1997-2 Class A
6.35%.......... 02/27/99 1,960 1,971,207
World Omni Automobile Lease
Securitization Trust
Series 1996-B, Class A2
6.20%.......... 04/12/99 1,000 1,000,223
Series 1997-A, Class A3
6.85%.......... 12/23/99 3,080 3,137,009
Series 1997-A, Class A4
6.90%.......... 05/03/00 4,000 4,078,781
--------------
18,994,823
--------------
CREDIT CARDS -- 10.3%
Citibank Credit Card Master Trust I
Series 1996-1, Class A
0.00%.......... 02/04/01 2,415 1,970,451
<CAPTION>
PAR
MATURITY (000) VALUE
-------- --------- --------------
<S> <C> <C> <C>
ASSET BACKED SECURITIES (A) -- CONTINUED
CREDIT CARDS -- CONTINUED
Citibank Credit Card Master Trust I
Series 1996-1, Class B
0.00%.......... 02/04/01 $ 880 $ 703,791
Series 1997-6, Class A
0.00%.......... 08/13/04 12,035 7,845,316
Series 1997-7, Class A
6.35%.......... 08/13/00 1,595 1,598,738
Discover Credit Card Trust
Series 1993-B
6.75%.......... 02/12/00 4,215 4,255,727
Fingerhut Master Trust Series 1996-1,
Class A
6.45%.......... 04/19/99 1,970 1,990,188
Metris Master Trust Series 1997-1,
Class A
6.87%.......... 04/19/02 5,480 5,573,117
Sears Credit Account Master Trust
Series 1996-1, Class A
6.20%.......... 03/27/01 910 909,381
Series 1996-4, Class A
6.45%.......... 10/29/01 3,980 4,033,169
--------------
28,879,878
--------------
MANUFACTURED HOUSING -- 2.5%
Green Tree Financial Corp.
Series 1995-1 Class A5
8.40%.......... 06/08/00 1,035 1,088,682
Series 1997-Class A5
6.62%.......... 09/29/04 3,375 3,366,299
Series 1997-B, Class A1
6.55%.......... 07/15/00 2,557 2,568,085
--------------
7,023,066
--------------
OTHER -- 7.1%
Capita Equipment Receivables Trust
Series 1996-1, Class A4
6.28%.......... 11/20/99 3,365 3,375,143
</TABLE>
See Accompanying Notes
14
<PAGE> 17
LOGO PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1997 ARMADA TOTAL RETURN ADVANTAGE FUND
(UNAUDITED)
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
-------- --------- --------------
<S> <C> <C> <C>
ASSET BACKED SECURITIES (A) -- CONTINUED
OTHER -- CONTINUED
Fleetwood Credit Corp. Grantor Trust
Series 1997-B, Class A
6.40%.......... 05/03/00 $ 5,066 $ 5,088,170
Franchise Funding Credit Association
Series 1997-1, Class A
7.02%.......... 07/15/02 895 913,695
Metlife Capital Equipment Loan Trust
Series 1997-A, Class A
6.85%.......... 05/18/02 835 851,965
Mid-State Trust II
9.35%.......... 02/12/98 3 2,521
PNC Student Loan Trust I Series
1997-2, Class A4
6.45%.......... 03/09/01 3,765 3,769,706
Series 1997-2, Class A6
6.57%.......... 01/21/03 2,140 2,161,066
Railcar Leasing Series 1997-1, Class
A2
7.13%.......... 02/01/10 3,800 3,956,750
--------------
20,119,016
--------------
TOTAL ASSET-BACKED SECURITIES........
75,016,783
--------------
(Cost $74,175,541)
COLLATERALIZED MORTGAGE OBLIGATIONS
(A) -- 12.0%
Collateralized Mortgage Obligation
Trust
9.00%.......... 06/16/98 66 67,118
6.25%.......... 07/08/99 72 71,630
Conseco Commercial Mortgage Trust
9.70%.......... 07/01/98 43 42,581
Federal Home Loan Mortgage Corp.
Series 1684, Class G
6.50%.......... 03/24/05 2,290 2,297,752
Series 1970, Class M
6.75%.......... 05/14/04 8,415 8,478,113
Series 1970, Class PC
6.75%.......... 07/26/03 7,630 7,662,487
<CAPTION>
PAR
MATURITY (000) VALUE
-------- --------- --------------
<S> <C> <C> <C>
COLLATERALIZED MORTGAGE OBLIGATIONS (A) -- CONTINUED
Federal National Mortgage Association
Series 1997-14, Class PJ
7.00%.......... 08/28/15 $ 1,985 $ 2,020,661
Series 1997-58, Class Pe
6.50%.......... 05/14/18 3,680 3,551,304
Series 1997-W1, Class G
7.00%.......... 09/15/02 8,032 8,012,234
Independent National Mortgage Corp.
Home Equity 1997-A A3
6.70%.......... 03/21/03 1,290 1,283,953
MDC Asset Investors Trust
9.33%.......... 03/28/98 77,902 77,666
Ryland Acceptance Corp.
9.85%.......... 01/25/98 136 137,411
--------------
TOTAL COLLATERALIZED MORTGAGE
OBLIGATIONS......................... 33,702,910
--------------
(Cost $33,118,347)
MORTGAGE PASS THROUGH OBLIGATIONS
(A) -- 0.2%
Thirty-Seventh FHA Insurance Project
7.43%.......... 11/05/02 455 465,800
--------------
(Cost $444,043)
U.S. GOVERNMENT AGENCY
OBLIGATIONS (A) -- 3.2%
FEDERAL HOME LOAN MORTGAGE CORP. -- 0.0%
7.50%.......... 12/01/00 142 146,572
8.75%.......... 01/17/02 6 5,994
--------------
152,566
--------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION -- 3.2%
6.50%.......... 11/09/99 124 123,332
6.55%.......... 11/27/05 5,785 5,685,570
6.74%.......... 08/25/07 3,116 3,173,732
--------------
8,982,634
--------------
</TABLE>
See Accompanying Notes
15
<PAGE> 18
LOGO PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1997 ARMADA TOTAL RETURN ADVANTAGE FUND
(UNAUDITED)
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
-------- --------- --------------
<S> <C> <C> <C>
U.S. GOVERNMENT AGENCY OBLIGATIONS (A) -- CONTINUED
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION -- 0.0%
10.50%......... 02/16/99 $ 20 $ 21,475
--------------
TOTAL U.S. GOVERNMENT AGENCY
OBLIGATIONS......................... 9,156,675
--------------
(Cost $9,219,734)
CORPORATE BONDS -- 29.8%
BANKING -- 1.2%
BankAmerica Corp.
7.88%.......... 11/24/02 3,300 3,502,125
--------------
EDUCATION -- 1.0%
Harvard University
8.13%.......... 04/08/07 2,400 2,718,319
--------------
EUROBONDS -- 0.7%
British Telecom, Plc.
7.00%.......... 05/14/07 1,875 1,961,719
--------------
FINANCIAL SERVICES -- 0.8%
First of America
8.12%.......... 01/25/27 2,025 2,127,789
--------------
FOREIGN -- 9.9%
Bank Austria 144A
7.25%.......... 02/08/17 2,950 3,104,875
City of Naples
7.52%.......... 07/08/06 3,420 3,549,481
Hutchison Whampoa Financial 144A
6.95%.......... 07/26/07 1,500 1,447,785
7.45%.......... 07/26/17 4,925 4,653,386
7.50%.......... 07/26/27 2,175 2,021,967
Industrial Financial Corp. of
Thailand
6.88%.......... 03/24/03 1,675 1,424,939
144A
7.38%.......... 01/07/07 1,300 998,114
Republic of Indonesia
7.75%.......... 07/26/06 3,000 2,870,550
<CAPTION>
PAR
MATURITY (000) VALUE
-------- --------- --------------
<S> <C> <C> <C>
CORPORATE BONDS -- CONTINUED
FOREIGN -- CONTINUED
Tenaga Nasional
7.50%.......... 10/25/25 $ 3,650 $ 3,149,074
Thailand Kingdom
7.75%.......... 04/15/07 2,070 1,858,798
Transgas de Occidente SA
9.79%.......... 04/26/06 2,826 2,942,155
--------------
28,021,124
--------------
INSURANCE -- 4.8%
Mutual of New York 144A(B)
0.00%.......... 08/06/24 2,400 2,874,168
Nationwide Capital Surplus Notes
9.88%.......... 02/08/25 4,000 4,700,000
Prudential Insurance
8.10%.......... 07/08/15 2,595 2,777,195
Safeco Capital Trust I Series 144A
8.07%.......... 07/08/37 2,950 3,064,313
--------------
13,415,676
--------------
LEISURE & ENTERTAINMENT -- 3.5%
News America Holdings
7.38%.......... 10/10/08 6,150 6,279,335
Time Warner Entertainment
10.15%......... 04/22/12 2,900 3,693,875
--------------
9,973,210
--------------
RETAIL STORES -- 1.1%
May Department Stores
8.30%.......... 07/08/26 2,800 3,090,500
--------------
SPECIALTY CHEMICALS -- 1.8%
Engelhard Corp.
7.00%.......... 07/26/01 5,000 5,131,250
--------------
TECHNOLOGY -- 1.8%
CSC Enterprises
6.50%.......... 11/09/01 5,165 5,177,913
--------------
</TABLE>
See Accompanying Notes
16
<PAGE> 19
LOGO PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1997 ARMADA TOTAL RETURN ADVANTAGE FUND
(UNAUDITED)
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
-------- --------- --------------
<S> <C> <C> <C>
CORPORATE BONDS -- CONTINUED
TELECOMMUNICATIONS -- 3.2%
Bellsouth Communications
6.30%.......... 08/31/08 $ 3,092 $ 3,091,977
Worldcom, Inc.
7.75%.......... 03/24/07 5,500 5,857,500
--------------
8,949,477
--------------
TOTAL CORPORATE BONDS................ 84,069,102
--------------
(Cost $82,310,600)
U.S. TREASURY OBLIGATIONS -- 25.9%
U.S. TREASURY BONDS -- 8.8%
7.25%.......... 05/14/16 3,170 3,570,307
7.50%.......... 11/12/16 1,585 1,828,329
8.13%.......... 08/13/21 15,520 19,361,510
--------------
24,760,146
--------------
U.S. TREASURY NOTES -- 15.0%
5.50%.......... 02/27/99 15,370 15,326,655
5.25%.......... 01/28/01 4,000 3,937,960
6.38%.......... 03/27/01 1,345 1,366,775
7.50%.......... 11/13/01 2,300 2,432,181
6.25%.......... 02/12/03 1,900 1,933,478
7.50%.......... 02/12/05 7,500 8,199,749
6.88%.......... 05/14/06 900 957,726
6.50%.......... 10/11/06 7,915 8,233,104
--------------
42,387,628
--------------
<CAPTION>
PAR
MATURITY (000) VALUE
-------- --------- --------------
<S> <C> <C> <C>
U.S. TREASURY OBLIGATIONS -- CONTINUED
U.S. TREASURY NOTES-STRIP -- 2.1%
0.00%.......... 11/13/01 $ 7,580 $ 6,029,434
--------------
TOTAL U.S. TREASURY OBLIGATIONS......
73,177,208
--------------
(Cost $71,933,293)
</TABLE>
<TABLE>
<CAPTION>
NUMBER OF
SHARES
----------
<S> <C> <C> <C>
INVESTMENT COMPANIES -- 0.7%
Fidelity Cash Reserve 1,860,321 1,860,321
--------------
(Cost $1,860,321)
TOTAL INVESTMENTS -- 100.0% $ 282,018,954
==============
(Cost $277,141,724)
- ---------------
* Cost for Federal income tax purposes -- $277,487,170
The gross unrealized appreciation (depreciation) for
Federal income tax purposes is as follows:
Gross appreciation..................... $ 6,476,076
Gross depreciation..................... (1,944,292)
--------------
$ 4,531,784
--------------
(A) Maturity dates represent weighted average lives of
the underlying obligations.
(B) Step-up Coupon: Coupon increases in accordance with
predetermined schedule.
</TABLE>
See Accompanying Notes
17
<PAGE> 20
LOGO FINANCIAL HIGHLIGHTS
ARMADA TOTAL RETURN ADVANTAGE FUND
FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
FOR THE FOR THE YEAR ENDED MAY 31,
SIX MONTHS ENDED --------------------------------------------------
NOVEMBER 30, 1997 FOR THE PERIOD
(UNAUDITED) 1997 1996 ENDED MAY 31, 1995
----------------------- ----------------------- ----------------------- -----------------------
INSTITUTIONAL RETAIL INSTITUTIONAL RETAIL INSTITUTIONAL RETAIL INSTITUTIONAL(3) RETAIL(3)
------------- ------ ------------- ------ ------------- ------ ------------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period.... $ 9.89 $ 9.89 $ 9.88 $ 9.87 $ 10.55 $10.54 $ 10.00 $10.16
-------- ------ -------- ------ -------- ------ --------- ------
INCOME FROM INVESTMENT
OPERATIONS
Net investment
income............... 0.33 0.32 0.67 0.64 0.70(7) 0.62(7) 0.65(7) 0.49(7)
Net gain/(loss) on
securities (realized
and unrealized)...... 0.29 0.29 0.15 0.16 (0.24) (0.22) 0.43 0.40
-------- ------ -------- ------ -------- ------ ---- ----
Total from investment
operations......... 0.62 0.61 0.82 0.80 0.46 0.40 1.08 0.89
-------- ------ -------- ------ -------- ------ ---- ----
LESS DISTRIBUTIONS
Dividends from net
investment income.... (0.33) (0.32) (0.67) (0.64) (0.70) (0.62) (0.53) (0.49)
Dividends in excess of
net investment
income............... (0.00) (0.00) (0.00) (0.00) (0.12) (0.14) (0.00) (0.02)
Dividends from net
realized capital
gains................ (0.00) (0.00) (0.00) (0.00) (0.31) (0.31) (0.00) (0.00)
Dividends in excess of
net realized capital
gains................ (0.00) (0.00) (0.14) (0.14) (0.00) (0.00) (0.00) (0.00)
-------- ------ -------- ------ -------- ------ ----- -----
Total
distributions...... (0.33) (0.32) (0.81) (0.78) (1.13) (1.07) (0.53) (0.51)
-------- ------ -------- ------ -------- ------ ----- -----
Net asset value, end of
period................. $ 10.18 $10.18 $ 9.89 $ 9.89 $ 9.88 $ 9.87 $ 10.55 $10.54
======== ====== ======== ====== ======== ====== ======= ======
TOTAL RETURN............ 13.03%(4) 12.76%(4,5) 8.51% 8.35%(5) 4.22% 3.74%(5) 12.52%(4,6) 12.65%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of
period (in 000's).... $ 281,525 $2,284 $ 259,228 $2,186 $ 280,401 $2,040 $ 261,403 $ 106
Ratio of expenses to
average net assets... 0.17%(1,4) 0.42%(2,4) 0.16%(1) 0.41%(2) 0.13%(1) 0.36%(2) 0.18%(1,4) 0.31%(2,4)
Ratio of net investment
income to average net
assets............... 6.52%(1,4) 6.27%(2,4) 6.70%(1) 6.46%(2) 6.67%(1) 6.12%(2) 7.23%(1,4) 6.92%(2,4)
Portfolio turnover
rate................. 81% 81% 169% 169% 268% 268% 166% 166%
</TABLE>
(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 November 30, 1997 and for the year ended May 31, 1997 would
have been .72% and 5.97%, and .71% and 6.15%, respectively. The operating
expense ratio and the net investment income ratio before waivers by the
Investment Adviser and Custodian for the Institutional class for the year
ended May 31, 1996 would have been .69% and 6.11%, respectively. The
operating expense ratio and the net investment income ratio before fee
waivers by the Investment Adviser, Administrator and Custodian for the
Institutional class for the period ended May 31, 1995 would have been .77%
and 6.64%, respectively.
(2) The operating expense ratio and the net investment income ratio before fee
waivers by the Investment Advisers for the Retail class for the period ended
November 30, 1997 and for the year ended May 31, 1997 would have been .97%
and 5.72%, and .96% and 5.91%, respectively. The operating expense ratio and
the net investment income ratio before waivers by the Investment Advisers
and Custodian for the Retail class for the year ended May 31, 1996 would
have been .89% and 5.59%, respectively. The operating expense ratio and the
net investment income ratio before fee waivers by the Investment Adviser,
Administrator and Custodian for the Retail class for the period ended May
31, 1995 would have been .87% and 6.36%, respectively.
(3) Institutional and Retail classes commenced operations on July 7, 1994 and
September 6, 1994, respectively.
(4) Annualized.
(5) Total return excludes sales charge.
(6) Total returns have been annualized based upon the period from each class'
commencement date through May 31, 1995. Gross total returns of the
Institutional and Retail classes for the period were 11.22% and 9.14%,
respectively.
(7) Calculated based upon average shares outstanding.
See Accompanying Notes
18
<PAGE> 21
LOGO PORTFOLIO OF INVESTMENTS
ARMADA INTERMEDIATE BOND FUND
NOVEMBER 30, 1997 (FORMERLY ARMADA FIXED INCOME FUND)
(UNAUDITED)
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
-------- --------- ------------
<S> <C> <C> <C>
ASSET-BACKED SECURITIES(A) -- 9.7%
AFG Receivables Trust
Series 1996-D, Class A
6.10%............. 01/09/99 $ 2,669 $ 2,674,190
First Plus Home Loan Trust
Series 1997-2, Class M1
7.60%............. 09/23/06 5,000 5,162,500
IMC Home Equity Loan Trust
Series 1997-2, Class A6
7.67%............. 02/19/05 2,058 2,174,874
WFS Financial Owner Trust
Series 1996-A, Class A3
6.05%............. 05/16/98 4,420 4,420,875
------------
TOTAL ASSET-BACKED SECURITIES........... 14,432,439
------------
(Cost $14,187,346)
CORPORATE BONDS -- 38.2%
AUTOMOBILES -- 6.0%
Ford Motor Credit Corp.
8.20%............. 02/10/02 3,500 3,745,000
General Motors Acceptance Corp.
7.13%............. 04/27/03 5,000 5,168,750
------------
8,913,750
------------
CHEMICALS -- 2.1%
Dow Chemical Co.
9.35%............. 03/11/02 1,000 1,063,750
E.I. DuPont de Nemours & Co.
8.65%............. 12/01/97 2,000 2,000,000
------------
3,063,750
------------
FINANCIAL SERVICES -- 6.8%
Ikon Capital Inc.
6.73%............. 06/10/01 5,000 5,062,500
Prime Property Funding Series II
144A
6.80%............. 08/17/02 5,000 5,062,500
------------
10,125,000
------------
FOREIGN -- 10.7%
Credit Foncier de France
8.00%............. 02/18/98 5,000 5,018,750
Korea Development Bank
7.13%............. 09/13/01 3,000 2,876,250
<CAPTION>
PAR
MATURITY (000) VALUE
-------- --------- ------------
<S> <C> <C> <C>
FOREIGN -- CONTINUED
Manitoba Province
6.13%............. 05/24/98 $ 4,500 $ 4,505,625
Scotland International Bank
8.85%............. 10/26/06 3,000 3,416,250
------------
15,816,875
------------
INSURANCE -- 7.2%
CNA Financial Corp.
8.88%............. 02/25/98 5,360 5,399,449
Prudential Insurance
7.65%............. 06/04/07 5,000 5,312,500
------------
10,711,949
------------
RETAIL MERCHANDISING -- 5.4%
J.C. Penney & Co.
7.60%............. 03/24/07 5,000 5,368,750
Wal-Mart Stores, Inc.
8.63%............. 03/25/01 2,500 2,681,250
------------
8,050,000
------------
TOTAL CORPORATE BONDS................... 56,681,324
------------
(Cost $56,055,452)
MORTGAGE OBLIGATIONS (A) -- 17.4%
Aames Mortgage Trust
7.32%............. 07/06/02 4,000 4,055,000
Chase Commercial Mortgage Securities Corp.
Series 1996-2
6.70%............. 01/26/01 3,450 3,478,640
Federal Home Loan Mortgage Corp.
Series 1306, Class G
7.80%............. 01/09/98 756 754,981
Federal National Mortgage Association
7.50%............. 07/16/01 2,071 2,132,333
GE Capital Mortgage Services, Inc
Series 1993-16, Class A9
5.73%............. 06/03/03 3,000 2,874,720
Housing Securities Inc
Series 1994-I, Class A15
7.50%............. 02/02/02 5,478 5,582,230
</TABLE>
See Accompanying Notes
19
<PAGE> 22
LOGO PORTFOLIO OF INVESTMENTS
ARMADA INTERMEDIATE BOND FUND
NOVEMBER 30, 1997 (FORMERLY ARMADA FIXED INCOME FUND)
(UNAUDITED)
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
-------- --------- ------------
<S> <C> <C> <C>
MORTGAGE OBLIGATIONS (A) -- CONTINUED
J. P. Morgan Series 1997,
Class CSX I/0
1.56%............. 02/09/07 $47,000 $ 4,494,375
Prudential Home Mortgage Securities
Series 1996-7, Class A4
6.75%............. 08/06/06 2,500 2,489,450
------------
TOTAL MORTGAGE OBLIGATIONS.............. 25,861,729
------------
(Cost $25,466,736)
U.S. TREASURY NOTES -- 31.9%
6.38%............. 07/15/99 11,000 11,102,410
6.25%............. 08/31/02 9,000 9,146,339
6.00%............. 02/15/03 10,300 10,336,873
6.50%............. 10/15/06 16,000 16,643,040
------------
TOTAL U.S. TREASURY NOTES............... 47,228,662
------------
(Cost $46,815,708)
</TABLE>
<TABLE>
<CAPTION>
NUMBER OF
SHARES
----------
<S> <C> <C> <C>
INVESTMENT COMPANIES -- 2.8%
Fidelity Domestic Market
Portfolio 4,113,725 4,113,725
------------
(Cost $4,113,725)
TOTAL INVESTMENTS-100% $148,317,879
============
(Cost $146,638,967*)
</TABLE>
- ---------------
* Also cost for Federal income tax purposes.
The gross unrealized appreciation (depreciation) for
Federal income tax purposes is as follows:
<TABLE>
<S> <C> <C> <C>
Gross appreciation........................ $ 1,752,879
Gross depreciation........................ (73,967)
------------
$ 1,678,912
------------
</TABLE>
(A) Maturity dates represent weighted average lives of the underlying
obligations.
I/O Interest Only Security.
See Accompanying Notes
20
<PAGE> 23
LOGO FINANCIAL HIGHLIGHTS
ARMADA INTERMEDIATE BOND FUND
(FORMERLY ARMADA FIXED INCOME FUND)
FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
FOR THE SIX FOR THE YEAR ENDED MAY 31,
MONTHS ENDED -------------------------------------------------------------------
NOVEMBER 30, 1997
(UNAUDITED) 1997 1996 1995
----------------------- --------------------- --------------------- ---------------------
INSTITUTIONAL RETAIL INSTITUTIONAL RETAIL INSTITUTIONAL RETAIL INSTITUTIONAL RETAIL
------------- ------ ------------- ------ ------------- ------ ------------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
period........................ $ 10.37 $10.42 $ 10.30 $10.35 $ 10.54 $10.60 $ 10.24 $10.30
-------- ------ -------- ------ -------- ------ -------- ------
INCOME FROM INVESTMENT
OPERATIONS
Net investment income......... 0.31 0.29 0.60 0.57 0.61 0.59 0.63 0.61
Net gain/(loss) on securities
(realized and unrealized)... 0.19 0.19 0.07 0.07 (0.22) (0.23) 0.30 0.30
-------- ------ -------- ------ -------- ------ -------- ------
Total from investment
operations................. 0.50 0.48 0.67 0.64 0.39 0.36 0.93 0.91
-------- ------ -------- ------ -------- ------ -------- ------
LESS DISTRIBUTIONS
Dividends from net investment
income...................... (0.31) (0.29) (0.60) (0.57) (0.61) (0.59) (0.63) (0.61)
Dividends in excess of net
investment income........... (0.00) (0.00) (0.00) (0.00) (0.00) (0.00) (0.00) (0.00)
Dividends from net realized
capital gains............... (0.00) (0.00) (0.00) (0.00) (0.00) (0.00) (0.00) (0.00)
Dividends in excess of net
realized capital gains...... (0.00) (0.00) (0.00) (0.00) (0.02) (0.02) (0.00) (0.00)
-------- ------ -------- ------ -------- ------ -------- ------
Total distributions......... (0.31) (0.29) (0.60) (0.57) (0.63) (0.61) (0.63) (0.61)
-------- ------ -------- ------ -------- ------ -------- ------
Net asset value, end of
period........................ $ 10.56 $10.61 $ 10.37 $10.42 $ 10.30 $10.35 $ 10.54 $10.60
======== ====== ======== ====== ======== ====== ======== ======
TOTAL RETURN................... 9.87%(4) 9.58%(3,4) 6.63% 6.36%(3) 3.79% 3.44%(3) 9.55% 9.26%(3)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in
000's)...................... $ 146,366 $3,529 $ 121,271 $3,720 $ 111,240 $6,216 $88,047 $5,527
Ratio of expenses to average
net assets.................. 0.66%(1,4) 0.92%(2,4) 0.70%(1) 0.96%(2) 0.80%(1) 1.04%(2) 0.85%(1) 1.09%(2)
Ratio of net investment income
to average net assets....... 5.83%(1,4) 5.57%(2,4) 5.76%(1) 5.52%(2) 5.78%(1) 5.50%(2) 6.24%(1) 5.95%(2)
Portfolio turnover rate....... 67% 67% 217% 217% 45% 45% 42% 42%
<CAPTION>
1994 1993
--------------------- ----------------------
INSTITUTIONAL RETAIL INSTITUTIONAL RETAIL
------------- ------ ------------- -------
<S> <C> <C> <C> <C>
Net asset value, beginning of
period........................ $ 10.93 $10.98 $ 10.60 $10.63
------- ------ ------- ------
INCOME FROM INVESTMENT
OPERATIONS
Net investment income......... 0.61 0.58 0.70 0.65
Net gain/(loss) on securities
(realized and unrealized)... (0.59) (0.58) 0.46 0.48
------- ------ ------- ------
Total from investment
operations................. 0.02 0.00 1.16 1.13
------- ------ ------- ------
LESS DISTRIBUTIONS
Dividends from net investment
income...................... (0.61) (0.58) (0.70) (0.65)
Dividends in excess of net
investment income........... (0.05) (0.05) (0.02) (0.02)
Dividends from net realized
capital gains............... (0.03) (0.03) (0.11) (0.11)
Dividends in excess of net
realized capital gains...... (0.02) (0.02) (0.00) (0.00)
------- ------ ------- ------
Total distributions......... (0.71) (0.68) (0.83) (0.78)
------- ------ ------- ------
Net asset value, end of
period........................ $ 10.24 $10.30 $ 10.93 $10.98
======= ====== ======= ======
TOTAL RETURN................... 0.00% (.233) 11.32% 11.03%(3)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in
000's)...................... $ 95,907 $5,480 $95,246 $5,208
Ratio of expenses to average
net assets.................. 0.83% 1.08% 0.32%(1) 0.57%(2)
Ratio of net investment income
to average net assets....... 5.59% 5.34% 6.46%(1) 6.21%(2)
Portfolio turnover rate....... 34% 34% 33% 33%
</TABLE>
(1) The operating expense ratio and net investment income ratio before fee
waivers by the Investment Advisers for the Institutional class for the
period ended November 30, 1997 and for the year ended May 31, 1997 would
have been .81% and 5.68%, and .79% and 5.66%, respectively. The operating
expense ratio and net investment income ratio before fee waivers by the
Custodian for the Institutional class for the years ended May 31, 1996 and
1995 would have been .82% and 5.76%, and .86% and 6.23%, respectively. The
operating expense ratio and net investment income ratio before fee waivers
by the Investment Advisers for the Institutional class for the year ended
May 31, 1993 would have been .80% and 5.98%, respectively.
(2) The operating expense ratio and net investment income ratio before fee
waivers by the Investment Advisers for the Retail class for the period ended
November 30, 1997 and for the year ended May 31, 1997 would have been 1.06%
and 5.42%, and 1.05% and 5.44%, respectively. The operating expense ratio
and net investment income ratio before fee waivers by the Custodian for the
Retail class for the years ended May 31, 1996 and 1995 would have been 1.06%
and 5.48%, and 1.10% and 5.94%, respectively. The operating expense ratio
and net investment income ratio before fee waivers by the Investment
Advisers for the Retail class for the year ended May 31, 1993 would have
been 1.05% and 5.73%, respectively.
(3) Total return excludes sales charge.
(4) Annualized.
See Accompanying Notes
21
<PAGE> 24
LOGO PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1997 ARMADA ENHANCED INCOME FUND
(UNAUDITED)
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
-------- ------- -----------
<S> <C> <C> <C>
AGENCY OBLIGATIONS (A) -- 0.8%
Federal Home Loan Mortgage Corp.
7.50%................ 12/01/00 $ 30 $ 31,052
Small Business Administration Pool
9.73%................ 09/26/00 528 575,563
-----------
TOTAL AGENCY OBLIGATIONS................. 606,615
-----------
(Cost $588,832)
ASSET-BACKED SECURITIES (A) -- 42.1%
AUTO -- 15.4%
AESOP Funding 1997-1, Class A1
6.22%................ 08/17/00 2,785 2,783,042
GMAC Series 97-A, Class A
6.50%................ 04/15/02 507 509,175
Nafco Auto Trust 3
6.50%................ 09/26/98 673 670,043
Onyx Acceptance Grantor Trust Series
1997-2, Class A
6.35%................ 02/27/99 536 537,993
World Omni Automobile Lease
Securitization Trust
Series 1996-B, Class A2
6.20%................ 04/12/99 1,500 1,500,334
Series 1996-B, Class A3
6.25%................ 09/30/99 3,010 3,011,226
Series 1997-A, Class A3
6.85%................ 12/23/99 2,035 2,072,667
-----------
11,084,480
-----------
CREDIT CARDS -- 13.9%
Citibank Credit Card Master Trust I
Series 1996-1, Class A
0.00%................ 02/04/01 2,245 1,831,745
Series 1997-7, Class A
6.35%................ 08/13/00 1,290 1,293,023
Discover Card Trust
Series 1993-B, Class A
6.75%................ 02/12/00 2,200 2,221,258
Fingerhut Master Trust
Series 1996-1, Class A
6.45%................ 04/19/99 4,620 4,667,344
-----------
10,013,370
-----------
<CAPTION>
PAR
MATURITY (000) VALUE
-------- ------- -----------
<S> <C> <C> <C>
ASSET-BACKED SECURITIES (A) -- CONTINUED
OTHER -- 12.8%
Capita Equipment Receivables Trust Series
1996-1, Class A4
6.28%................ 11/20/99 $ 2,170 $ 2,176,541
Green Tree Recreational Equipment &
Consumer Trust Series 1997-B
6.55%................ 07/15/00 1,421 1,428,452
Met Life Equity Trust
6.85%................ 05/18/02 2,985 3,045,647
Navstar B, Class-A4
6.30%................ 12/26/00 1,810 1,814,313
PNC Student Loan Trust I
Series 1997-2, Class A4
6.45%................ 03/09/01 705 709,847
-----------
9,174,800
-----------
TOTAL ASSET-BACKED SECURITIES............ 30,272,650
-----------
(Cost $30,143,662)
CORPORATE BONDS -- 12.5%
EURO BOND -- 2.6%
Hydro Quebec
5.75%................ 11/15/99 1,850 1,831,408
-----------
FOREIGN -- 3.1%
City of Naples
7.52%................ 07/15/06 859 892,041
Petroliam Nacional Berhard 144A
6.63%................ 10/18/01 1,375 1,340,625
-----------
2,232,666
-----------
INDUSTRIAL -- CHEMICAL -- 1.9%
Monsanto-ESOP
7.09%................ 06/27/99 1,320 1,337,741
-----------
INSURANCE -- 1.2%
Allstate Corp.
5.88%................ 06/15/98 875 874,024
-----------
RETAIL STORES -- 1.5%
Sears Medium Term Note
9.75%................ 03/21/00 1,000 1,073,560
-----------
</TABLE>
See Accompanying Notes
22
<PAGE> 25
LOGO PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1997 ARMADA ENHANCED INCOME FUND
(UNAUDITED)
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
-------- ------- -----------
<S> <C> <C> <C>
CORPORATE BONDS -- CONTINUED
TECHNOLOGY -- 2.2%
CSC Enterprises
6.50%................ 11/15/01 $ 1,600 $ 1,604,000
-----------
TOTAL CORPORATE BONDS.................... 8,953,399
-----------
(Cost $8,962,190)
COLLATERALIZED MORTGAGE OBLIGATIONS(A) -- 3.3%
Evans Withycombe Finance Trust
7.98%................ 07/30/01 1,015 1,069,556
Federal Home Loan Mortgage Corp.
6.75%................ 07/26/03 1,270 1,275,407
-----------
TOTAL COLLATERALIZED MORTGAGE
OBLIGATIONS............................ 2,344,963
-----------
(Cost $2,328,445)
U.S. TREASURY OBLIGATIONS -- 41.3%
GOVERNMENT TRUST CERTIFICATE -- 0.1%
8.00%................ 10/06/97 32 32,439
-----------
U.S. TREASURY NOTES -- 41.2%
5.25%................ 07/31/98 2,550 2,544,186
4.75%................ 10/31/98 6,145 6,092,705
5.88%................ 10/31/98 2,000 2,003,140
5.50%................ 02/28/99 9,045 18,991,291
-----------
29,631,322
-----------
TOTAL U.S. TREASURY OBLIGATIONS..........
29,663,761
-----------
(Cost $29,624,833)
TOTAL INVESTMENTS -- 100% $71,841,388
===========
(Cost $71,647,962*)
- ---------------
* Cost for Federal income tax purposes -- $71,670,721.
The gross unrealized appreciation (depreciation) for
Federal income tax purposes is as follows:
Gross appreciation....................... $ 245,218
Gross depreciation....................... (74,551)
-----------
$ 170,667
-----------
(A) Maturity dates represent weighted average lives of
the underlying obligations.
</TABLE>
See Accompanying Notes
23
<PAGE> 26
LOGO FINANCIAL HIGHLIGHTS
ARMADA ENHANCED INCOME FUND
FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
FOR THE FOR THE YEAR ENDED MAY 31,
SIX MONTHS ENDED -----------------------------------------------
NOVEMBER 30, 1997 FOR THE PERIOD
(UNAUDITED) 1997 1996 ENDED MAY 31, 1995
---------------------- ---------------------- ---------------------- ------------------------
INSTITUTIONAL RETAIL INSTITUTIONAL RETAIL INSTITUTIONAL RETAIL INSTITUTIONAL(3) RETAIL(3)
------------- ------ ------------- ------ ------------- ------ -------------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning
of period.................$ 9.99 $10.00 $ 10.01 $10.02 $ 10.16 $10.18 $ 10.00 $10.10
------- ------ ------- ------ ------- ------ ------- ------
INCOME FROM INVESTMENT
OPERATIONS
Net investment income..... 0.30 0.29 0.58 0.57 0.58 0.56 0.51(7) 0.43 (7)
Net gain/(loss) on
securities (realized and
unrealized)............. 0.06 0.06 0.01 0.01 (0.05) (0.05) 0.06 0.06
------- ------ ------- ------ ------- ------ ------- ------
Total from investment
operations.......... 0.36 0.35 0.59 0.58 0.53 0.51 0.57 0.49
------- ------ ------- ------ ------- ------ ------- ------
LESS DISTRIBUTIONS
Dividends from net
investment income....... (0.30) (0.29) (0.58) (0.57) (0.58) (0.56) (0.41) (0.41)
Dividends in excess of net
investment income....... (0.00) (0.00) (0.00) (0.00) (0.10) (0.11) (0.00) (0.00)
Dividend in excess of net
realized capital
gains................... (0.00) (0.00) (0.03) (0.03) (0.00) (0.00) (0.00) (0.00)
------- ------ ------- ------ ------- ------ ------- ------
Total distributions... (0.30) (0.29) (0.61) (0.60) (0.68) (0.67) (0.41) (0.41)
------- ------ ------- ------ ------- ------ ------- ------
Net asset value, end of
period....................$ 10.05 $10.06 $ 9.99 $10.00 $ 10.01 $10.02 $ 10.16 $10.18
======= ====== ======= ====== ======= ====== ======= ======
TOTAL RETURN................ 7.29%(4) 7.19%(4,5) 6.02% 5.91%(5) 5.36% 5.13%(5) 6.54%(4,6) 6.84%(4,5,6)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period
(in 000's)..............$69,941 $2,410 $61,031 $2,051 $66,918 $1,718 $ 60,467 $2,547
Ratio of expenses to
average net assets...... 0.25%(1,4) 0.35%(2,4) 0.21%(1) 0.31%(2) 0.23%(1) 0.33%(2) 0.21%(1,4) 0.32%(2,4)
Ratio of net investment
income to average net
assets.................. 5.86%(1,4) 5.76%(2,4) 5.74%(1) 5.63%(2) 5.72%(1) 5.55%(2) 5.70%(1,4) 5.89%(2,4)
Portfolio turnover rate... 48% 48% 225% 225% 98% 98% 36% 36%
</TABLE>
(1) The operating expense ratio and the net investment income ratio before fee
waivers by the Investment Adviser for the Institutional class for the period
ended November 30, 1997 and for the year ended May 31, 1997 would have been
.70% and 5.41%, and .66% and 5.29%, respectively. The operating expense
ratio and the net investment income ratio before fee waivers by the
Investment Adviser and Custodian for the Institutional class for the year
ended May 31, 1996 would have been .70% and 5.25%, respectively. The
operating expense ratio and the net investment income ratio before fee
waivers by the Investment Adviser, Administrator, and Custodian for the
Institutional class for the period ended May 31, 1995 would have been .71%
and 5.20%, respectively.
(2) The operating expense ratio and the net investment income ratio before fee
waivers by the Investment Adviser for the Retail class for the period ended
November 30, 1997 and for the year ended May 31, 1997 would have been .79%
and 5.28%, and .75% and 5.18%, respectively. The operating expense ratio and
the net investment income ratio before fee waivers by the Investment Adviser
and Custodian for the Retail class for the year ended May 31, 1996 would
have been .80% and 5.08%, respectively. The operating expense ratio and the
net investment income ratio before fee waivers by the Investment Adviser,
Administrator, and Custodian for the Retail class for the period ended May
31, 1995 would have been .79% and 5.42%, respectively.
(3) Institutional and Retail classes commenced operations on July 7, 1994 and
September 9, 1994, respectively.
(4) Annualized.
(5) Total return excludes sales charge.
(6) Total returns have been annualized based upon the period from each class'
commencement date through May 31, 1995. Gross total returns of the
Institutional and Retail classes for the period were 5.87% and 4.92%,
respectively.
(7) Calculated based upon average shares outstanding.
See Accompanying Notes
24
<PAGE> 27
LOGO PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1997 ARMADA GNMA FUND
(UNAUDITED)
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
----------------- --------- ------------
<S> <C> <C> <C>
U.S. GOVERNMENT AGENCY OBLIGATIONS(A) -- 85.1%
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION -- 81.4%
7.00%...... 11/05/02 $ 9,732 $ 9,765,368
7.25%...... 01/22/00 166 169,884
7.50%...... 04/15/03-09/27/06 23,488 24,065,964
8.00%...... 07/01/03-04/25/04 6,127 6,375,020
8.50%...... 09/04/02-06/20/03 7,385 7,806,647
8.75%...... 09/19/02 649 688,511
9.00%...... 11/25/98-11/05/03 6,566 7,088,589
10.00%...... 08/17/01-08/24/01 133 145,383
10.25%...... 11/16/01-12/12/01 204 221,783
11.25%...... 09/26/01 118 132,102
11.50%...... 03/06/01-09/04/01 281 318,956
---------
56,778,207
---------
FEDERAL HOME LOAN MORTGAGE CORP. -- 2.5%
7.00%...... 06/01/99 1,700 1,723,137
---------
FEDERAL NATIONAL MORTGAGE ASSOCIATION -- 1.2%
7.00%...... 03/31/02 817 831,531
---------
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS...
59,332,875
---------
(Cost $58,462,566)
PRIVATE LABEL MORTGAGE-BACKED SECURITIES(A) -- 7.9%
J. P. Morgan Series 1997,
Class CSX I/O
1.56%..... 03/29/03 26,000 2,409,317
Residential Funding Mortgage Securities I
Series 1995-S21, Class A6
7.50%..... 09/04/07 2,948 3,087,405
---------
TOTAL PRIVATE LABEL MORTGAGE-BACKED
SECURITIES............................. 5,496,722
---------
(Cost $5,413,122)
<CAPTION>
PAR
MATURITY (000) VALUE
----------------- --------- ------------
<S> <C> <C> <C>
U.S. TREASURY NOTES -- 2.5%
7.25%....... 08/15/22 $ 1,500 $ 1,712,190
---------
(Cost $1,634,832)
</TABLE>
<TABLE>
<CAPTION>
NUMBER OF
SHARES
----------
<S> <C> <C> <C>
INVESTMENT COMPANIES -- 4.5%
Goldman Sachs Financial
Square Government Fund 3,160,369 3,160,369
------------
(Cost $3,160,369)
TOTAL INVESTMENTS -- 100% $ 69,702,156
============
(Cost $68,670,889*)
</TABLE>
- ---------------
* Also cost for Federal income tax purposes.
The gross appreciation (depreciation) for Federal income
tax purposes is as follows:
<TABLE>
<S> <C> <C> <C>
Gross appreciation........................ $ 1,031,267
Gross depreciation...................... (0)
------------
$ 1,031,267
============
</TABLE>
(A) Maturity dates represent weighted average lives of the underlying
obligations.
I/O Interest Only Security.
See Accompanying Notes
25
<PAGE> 28
LOGO FINANCIAL HIGHLIGHTS
ARMADA GNMA FUND
FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
FOR THE
SIX MONTHS ENDED FOR THE
NOVEMBER 30, 1997 YEAR ENDED FOR THE FOR THE FOR THE
(UNAUDITED) MAY 31, 1997(4) PERIOD ENDED YEAR ENDED PERIOD ENDED
----------------------- ----------------------- MAY 31, APRIL 30, APRIL 30,
INSTITUTIONAL RETAIL INSTITUTIONAL RETAIL(5) 1996(4) 1996(4) 1995(4)
------------- ------- ------------- ------- ------------- --------------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning
of period............... $ 10.15 $ 10.15 $ 10.03 $ 10.02 $ 10.12 $ 10.16 $ 10.00
------- ------- ------- ------- ------- ------- -------
INCOME FROM INVESTMENT
OPERATIONS
Net investment income... 0.31 0.30 0.65 0.45 0.05 0.66 0.48
Net gain/(loss) on
securities (realized
and unrealized)....... 0.23 0.23 0.22 0.23 (0.09) 0.14 0.16
------- ------- ------- ------- ------- ------- -------
Total from
investment
operations........ 0.54 0.53 0.87 0.68 (0.04) 0.80 0.64
------- ------- ------- ------- ------- ------- -------
LESS DISTRIBUTIONS
Dividends from net
investment income..... (0.31) (0.30) (0.65) (0.45) (0.05) (0.66) (0.48)
Dividends from net
realized capital
gains................. (0.00) (0.00) (0.01) (0.01) (0.00) (0.18) (0.00)
Dividends in excess of
net realized capital
gains................. (0.00) (0.00) (0.09) (0.09) (0.00) (0.00) (0.00)
------- ------- ------- ------- ------- ------- -------
Total
distributions..... (0.31) (0.30) (0.75) (0.55) (0.05) (0.84) (0.48)
------- ------- ------- ------- ------- ------- -------
Net asset value, end of
period.................. $ 10.38 $ 10.38 $ 10.15 $ 10.15 $ 10.03 $ 10.12 $ 10.16
======= ======= ======= ======= ======= ======= =======
TOTAL RETURN.............. 10.99%(2) 10.72%(2,6) 9.03% 8.83%(6) (0.35)%(3,6) 7.97%(6) 6.61%(3,6)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of
period (in 000's)..... $69,367 $ 137 $64,501 $ 128 $60,532 $62,161 $42,212
Ratio of expenses to
average net assets.... 0.85%(2) 1.10%(2) 0.86%(1) 1.12%(2) 0.85%(1,2) 0.85%(1) 0.85%(1,2)
Ratio of net investment
income to average net
assets................ 5.99%(2) 5.74%(2) 6.45%(1) 6.17%(2) 6.33%(1,2) 6.30%(1) 6.68%(1,2)
Portfolio turnover
rate.................. 73% 73% 57% 57% 1% 149% 226%
</TABLE>
(1) The operating expense ratio and the net investment income ratio before fee
waivers for the Institutional class and the Predecessor Fund for the year
ended 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 1.01%
and 6.30%, 1.28% and 5.90%, 1.29% and 5.86%, and 1.40% and 6.13%,
respectively.
(2) Annualized.
(3) Not annualized.
(4) 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.
(5) Retail class commenced operations on September 11, 1996.
(6) Total return excludes sales charge.
See Accompanying Notes
26
<PAGE> 29
LOGO PORTFOLIO OF INVESTMENTS
ARMADA BOND FUND
NOVEMBER 30, 1997 (FORMERLY ARMADA INTERMEDIATE GOVERNMENT FUND)
(UNAUDITED)
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
----------------- --------- ------------
<S> <C> <C> <C>
U.S. GOVERNMENT AGENCY OBLIGATIONS (A) -- 35.1%
FEDERAL HOME LOAN MORTGAGE CORP. -- 17.6%
4.75%..... 02/28/98 $ 60 $ 60,049
4.95%..... 12/05/97 44 43,707
5.20%..... 06/17/98 500 497,494
5.25%..... 03/29/99 441 435,073
5.75%..... 09/20/99-11/21/99 5,401 5,361,425
6.25%..... 07/30/00 269 270,052
6.50%..... 08/13/02 830 831,184
7.50%..... 01/28/02-01/21/04 3,007 3,090,390
8.00%..... 12/12/03 5,000 5,272,266
8.50%..... 12/19/01-04/19/03 203 214,608
8.70%..... 09/27/98 258 263,424
9.00%..... 07/16/98 39 40,003
9.25%..... 10/19/99 105 109,804
---------
16,489,479
---------
FEDERAL NATIONAL MORTGAGE ASSOCIATION -- 3.6%
6.00%..... 12/31/99 400 397,477
6.50%..... 10/19/98 945 945,682
7.50%..... 06/12/00 217 223,273
8.25%..... 02/10/98 10 10,253
9.00%..... 08/25/07 1,823 1,822,096
---------
3,398,781
---------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION -- 13.9%
6.50%..... 02/01/03 378 372,561
7.00%..... 04/03/05 251 253,004
7.50%..... 03/06/00-3/16/05 3,807 3,907,375
8.00%..... 09/19/03-04/10/04 3,556 3,703,231
8.25%..... 07/04/03 305 318,981
8.50%..... 06/16/01-05/07/03 2,034 2,150,311
9.00%..... 04/04/01-12/26/02 1,774 1,917,646
9.50%..... 12/19/00-01/25/02 397 431,091
---------
13,054,200
---------
TOTAL U.S. GOVERNMENT AGENCY
OBLIGATIONS............................ 32,942,460
---------
(Cost $32,403,569)
<CAPTION>
PAR
MATURITY (000) VALUE
----------------- --------- ------------
<S> <C> <C> <C>
PRIVATE LABEL MORTGAGE-BACKED SECURITIES (A) -- 35.3%
Emergent 97-3
7.29% ... 12/20/14 $ 3,000 $ 3,051,563
Equicredit Series 1996-4, Class A9
6.89% ... 01/21/03 1,570 1,586,935
GE Capital Mortgage Services, Inc
Series 1993-16, Class A9
5.73% ... 12/25/23 4,000 3,832,960
GMAC Commercial Mortgage Securities,
Inc. Series 1997-C1, Class X I/O
1.63% ... 09/28/07 19,000 1,942,305
IMC Home Equity Loan Trust Series
1997-2, Class A6
7.67% ... 03/30/03 2,900 3,064,691
J. P. Morgan Series 1997, Class CSX
I/O
1.56% ... 03/29/03 21,000 2,007,774
Midland Realty Acceptance Corp.
7.02% ... 05/18/02 4,105 4,185,528
Prudential Home Mortgage Securities
Series 1996-7, Class A4
6.75% ... 06/25/11 1,500 1,493,670
Residential Asset Securitization
Trust Series 1996-A2, Class A7
7.50% ... 01/14/04 2,000 2,022,536
Series 1996-A4, Class A10
7.50% ... 10/03/01 2,000 2,020,377
Residential Funding Mortgage
Securities I Series 1995-S21, Class
A6
7.50% ... 09/04/07 4,422 4,527,896
Structured Asset Sales Inc. Series
1994-5, Class Am
7.00% ... 08/01/07 3,365 3,373,924
---------
TOTAL PRIVATE LABEL MORTGAGE-BACKED
SECURITIES........................... 33,110,159
---------
(Cost $32,425,718)
</TABLE>
See Accompanying Notes
27
<PAGE> 30
LOGO PORTFOLIO OF INVESTMENTS
ARMADA BOND FUND
NOVEMBER 30, 1997 (FORMERLY ARMADA INTERMEDIATE GOVERNMENT FUND)
(UNAUDITED)
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
----------------- --------- ------------
<S> <C> <C> <C>
U.S. TREASURY NOTES -- 28.0%
6.00%....... 08/15/99 $14,900 $ 14,953,341
6.25%....... 08/31/02 11,100 11,280,485
---------
TOTAL U.S. TREASURY NOTES.................. 26,233,826
---------
(Cost $26,121,739)
</TABLE>
<TABLE>
<CAPTION>
NUMBER OF
SHARES
----------
<S> <C> <C> <C>
INVESTMENT COMPANIES -- 1.6%
Goldman Sachs Financial
Square Government Fund 1,491,303 1,491,303
-------------
(Cost $1,491,303)
TOTAL INVESTMENTS -- 100.0% $ 93,777,748
=============
(Cost $92,442,329*)
</TABLE>
- ---------------
* Also cost for Federal income tax purposes.
The gross unrealized appreciation (depreciation) for Federal income tax
purposes is as follows:
<TABLE>
<S> <C> <C> <C>
Gross appreciation........................ $ 1,354,294
Gross depreciation...................... (18,875)
------------
$ 1,335,419
------------
</TABLE>
(A) Maturity dates represent weighted average lives of the underlying
obligations.
I/O Interest Only Security.
See Accompanying Notes
28
<PAGE> 31
LOGO FINANCIAL HIGHLIGHTS
ARMADA BOND FUND
(FORMERLY ARMADA INTERMEDIATE GOVERNMENT FUND)
FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
FOR THE
SIX MONTHS ENDED FOR THE
NOVEMBER 30, 1997 YEAR ENDED FOR THE FOR THE FOR THE
(UNAUDITED) MAY 31, 1997(4) PERIOD ENDED YEAR ENDED PERIOD ENDED
----------------------- ----------------------- MAY 31, APRIL 30, APRIL 30,
INSTITUTIONAL RETAIL INSTITUTIONAL RETAIL(5) 1996(4) 1996(4) 1995(4)
------------- ------- ------------- ------- ------------- --------------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning
of period............... $ 10.02 $ 10.02 $ 9.97 $ 9.97 $ 10.04 $ 10.02 $ 10.00
------- ------- ------- ------- ------- ------- -------
INCOME FROM INVESTMENT
OPERATIONS
Net investment income... 0.30 0.29 0.59 0.41 0.05 0.64 0.44
Net gain/(loss) on
securities (realized
and unrealized)....... 0.16 0.16 0.13 0.13 (0.07) 0.07 0.02
------- ------- ------- ------- ------- ------- -------
Total from
investment
operations........ 0.46 0.45 0.72 0.54 (0.02) 0.71 0.46
------- ------- ------- ------- ------- ------- -------
LESS DISTRIBUTIONS
Dividends from net
investment income..... (0.30) (0.29) (0.59) (0.41) (0.05) (0.64) (0.44)
Dividends from net
realized capital
gains................. (0.00) (0.00) (0.00) (0.00) (0.00) (0.05) (0.00)
Dividend in excess of
net realized capital
gains................. (0.00) (0.00) (0.08) (0.08) (0.00) (0.00) (0.00)
------- ------- ------- ------- ------- ------- -------
Total
distributions..... (0.30) (0.29) (0.67) (0.49) (0.05) (0.69) (0.44)
------- ------- ------- ------- ------- ------- -------
Net asset value, end of
period.................. $ 10.18 $ 10.18 $ 10.02 $ 10.02 $ 9.97 $ 10.04 $ 10.02
======= ======= ======= ======= ======= ======= =======
TOTAL RETURN.............. 9.47%(2) 9.21%(2,6) 7.41% 7.22%(6) (0.19)%(3,6) 7.09%(6) 4.75%(3,6)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of
period (in 000's)..... $93,640 $ 41 $91,161 $ 23 $88,829 $89,901 $53,316
Ratio of expenses to
average net assets.... 0.81%(2) 1.06%(2) 0.83%(1) 1.07%(2) 0.85%(1,2) 0.85%(1) 0.85%(1,2)
Ratio of net investment
income to average net
assets................ 5.91%(2) 5.66%(2) 5.83%(1) 5.64%(2) 5.88%(1,2) 6.20%(1) 6.17%(1,2)
Portfolio turnover
rate.................. 90% 90% 96% 96% 2% 94% 172%
</TABLE>
(1) The operating expense ratio and the net investment income ratio before fee
waivers by the Investment Advisers and other service providers for the
Institutional class and the Predecessor Fund for the periods ended May 31,
1997, May 31, 1996, April 30, 1996, and April 30, 1995 would have been .96%
and 5.71%, 1.25% and 5.48%, 1.25% and 5.80%, and 1.33% and 5.69%,
respectively.
(2) Annualized.
(3) Not annualized.
(4) 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.
(5) Retail class commenced operations on September 11, 1996.
(6) Total return excludes sales charge.
See Accompanying Notes
29
<PAGE> 32
LOGO FINANCIAL STATEMENTS
NOVEMBER 30, 1997 ARMADA FUNDS INCOME SERIES
STATEMENT OF ASSETS AND LIABILITIES
(UNAUDITED)
<TABLE>
<CAPTION>
TOTAL RETURN INTERMEDIATE ENHANCED
ADVANTAGE BOND INCOME GNMA BOND
FUND FUND FUND FUND FUND
------------ ----------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C>
ASSETS
Investments at value (Cost $277,141,724,
$146,638,967, $71,647,962, $68,670,889
and $92,442,329, respectively)......... $282,018,954 $148,317,879 $71,841,388 $69,702,156 $93,777,748
Interest and dividends receivable........ 3,447,436 2,396,195 676,042 511,838 902,990
Receivable for Fund shares sold.......... 2,862 27,048 21,470 940 572
Receivable for investments sold.......... -- -- 253,684 -- --
Prepaid expenses......................... 10,479 3,660 12,052 4,094 4,802
------------ ------------ ----------- ----------- -----------
TOTAL ASSETS............................. 285,479,731 150,744,782 72,804,636 70,219,028 94,686,112
------------ ------------ ----------- ----------- -----------
LIABILITIES
Dividends payable -- Institutional
class.................................. 1,510,798 692,815 349,124 340,775 464,505
Dividends payable -- Retail class........ 11,692 16,239 11,559 652 181
Payable for Fund shares redeemed......... 88,932 42,757 -- 322,299 442,206
Accrued expenses......................... 58,968 98,034 93,286 50,860 98,606
------------ ------------ ----------- ----------- -----------
TOTAL LIABILITIES........................ 1,670,390 849,845 453,969 714,586 1,005,498
------------ ------------ ----------- ----------- -----------
NET ASSETS............................... $283,809,341 $149,894,937 $72,350,667 $69,504,442 $93,680,614
============ ============ =========== =========== ===========
NET ASSETS CONSIST OF:
Paid-in capital.......................... $280,667,931 $149,016,026 $72,102,172 $67,766,420 $92,439,923
Undistributed net realized gain/(loss) on
investments sold....................... (1,735,820) (800,001) 55,069 706,755 (94,728)
Net unrealized appreciation on
investments............................ 4,877,230 1,678,912 193,426 1,031,267 1,335,419
------------ ------------ ----------- ----------- -----------
$283,809,341 $149,894,937 $72,350,667 $69,504,442 $93,680,614
============ ============ =========== =========== ===========
Net Assets -- Institutional class........ $281,525,217 $146,366,016 $69,941,133 $69,367,002 $93,639,863
Shares outstanding -- Institutional class 27,656,267 13,856,849 6,960,679 6,685,422 9,195,650
Net asset value, Offering and Redemption
price per share -- Institutional
class.................................. $ 10.18 $ 10.56 $ 10.05 $ 10.38 $ 10.18
============ ============ =========== =========== ===========
Net Assets -- Retail class............... $ 2,284,124 $ 3,528,921 $2,409,534 $ 137,440 $ 40,751
Shares outstanding -- Retail class....... 224,440 332,451 239,404 13,246 4,002
Net asset value and Redemption price per
share -- Retail class.................. $ 10.18 $ 10.61 $ 10.06 $ 10.38 $ 10.18
============ ============ =========== =========== ===========
Maximum sales charge -- Retail class..... 3.75% 3.75% 2.75% 3.75% 3.75%
Maximum Offering price per Retail
share.................................. $ 10.58 $ 11.02 $ 10.34 $ 10.78 $ 10.58
============ ============ =========== =========== ===========
</TABLE>
See Accompanying Notes
30
<PAGE> 33
LOGO FINANCIAL STATEMENTS
ARMADA FUNDS INCOME SERIES
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED NOVEMBER 30, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
TOTAL RETURN INTERMEDIATE ENHANCED
ADVANTAGE BOND INCOME GNMA BOND
FUND FUND FUND FUND FUND
------------ ---------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest..................................... $ 9,295,390 $4,386,985 $2,083,575 $2,325,935 $3,178,907
----------- ---------- ---------- ---------- ----------
EXPENSES:
Investment Advisory fees..................... 764,139 371,737 153,491 187,110 260,008
Administration fees.......................... 129,269 67,589 34,109 34,020 47,274
Distribution fees............................ 30,693 14,595 6,342 6,623 8,235
Custodian fees............................... 19,437 11,912 6,955 8,005 9,622
Transfer Agent fees.......................... 18,561 37,223 13,829 6,143 11,783
Miscellaneous................................ 7,648 3,901 4,885 21,449 12,698
Legal fees................................... 5,806 4,292 968 472 1,891
Audit fees................................... 5,741 4,315 4,400 548 2,051
Printing and shareholder reports............. 3,137 1,133 240 382 250
Insurance.................................... 3,118 1,446 715 548 787
Trustees' fees............................... 2,982 1,714 869 791 1,121
Registration and filing fees................. 2,827 3,918 9,015 6,830 6,436
Shareholder servicing fees- Retail class
only....................................... 2,824 4,590 1,134 163 33
Amortization of organization costs........... 2,203 -- 2,101 1,695 1,695
12b-1 fees................................... -- 27,035 -- 13,608 18,910
Fees waived by Investment Adviser............ (764,139) (101,383) (153,491) -- --
----------- ---------- ---------- ---------- ----------
Total expenses............................... 234,246 454,017 85,562 288,387 382,794
----------- ---------- ---------- ---------- ----------
NET INVESTMENT INCOME.......................... 9,061,144 3,932,968 1,998,013 2,037,548 2,796,113
----------- ---------- ---------- ---------- ----------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain on investments sold........ 1,474,478 745,915 70,482 628,060 306,983
Net change in unrealized appreciation on
investments................................ 6,192,918 1,700,554 324,440 858,868 1,231,921
----------- ---------- ---------- ---------- ----------
Net gain on investments...................... 7,667,396 2,446,469 394,922 1,486,928 1,538,904
----------- ---------- ---------- ---------- ----------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS................................. $ 16,728,540 $6,379,437 $2,392,935 $3,524,476 $4,335,017
=========== ========== ========== ========== ==========
</TABLE>
See Accompanying Notes
31
<PAGE> 34
LOGO FINANCIAL STATEMENTS
ARMADA FUNDS INCOME SERIES
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
TOTAL RETURN ADVANTAGE FUND INTERMEDIATE BOND FUND ENHANCED INCOME FUND
-------------------------------- -------------------------------- --------------------------------
FOR THE SIX FOR THE SIX FOR THE SIX
MONTHS ENDED FOR THE MONTHS ENDED FOR THE MONTHS ENDED FOR THE
NOVEMBER 30, 1997 YEAR ENDED NOVEMBER 30, 1997 YEAR ENDED NOVEMBER 30, 1997 YEAR ENDED
(UNAUDITED) MAY 31, 1997 (UNAUDITED) MAY 31, 1997 (UNAUDITED) MAY 31, 1997
----------------- ------------ ----------------- ------------ ----------------- ------------
<S> <C> <C> <C> <C> <C> <C>
INCREASE/(DECREASE) IN
NET ASSETS:
Operations:
Net investment income... $ 9,061,144 $ 18,657,422 $ 3,932,968 $ 6,988,395 $ 1,998,013 $ 3,776,582
Net realized gain/(loss)
on investments sold... 1,474,478 (2,903,899) 745,915 391,862 70,482 (14,163)
Net change in unrealized
appreciation on
investments........... 6,192,918 7,849,645 1,700,554 715,890 324,440 105,038
----------------- ------------ ----------------- ------------ ----------------- ------------
Net increase in net
assets resulting from
operations............ 16,728,540 23,603,168 6,379,437 8,096,147 2,392,935 3,867,457
----------------- ------------ ----------------- ------------ ----------------- ------------
Distributions to
shareholders from net
investment income..... (9,061,144) (18,657,422) (3,932,968) (6,988,395) (1,998,013) (3,776,582)
Distributions to
shareholders in excess
of net realized
capital gains......... -- (3,893,970) -- -- -- (184,525)
Increase/(decrease) in
net assets derived
from capital share
transactions 14,728,093 (22,078,833) 22,457,526 6,427,405 8,874,208 (5,460,735)
----------------- ------------ ----------------- ------------ ----------------- ------------
Total
increase/(decrease) in
net assets............ 22,395,489 (21,027,057) 24,903,995 7,535,157 9,269,130 (5,554,385)
----------------- ------------ ----------------- ------------ ----------------- ------------
NET ASSETS:
Beginning of period..... 261,413,852 282,440,909 124,990,942 117,455,785 63,081,537 68,635,922
----------------- ------------ ----------------- ------------ ----------------- ------------
End of period........... $ 283,809,341 $261,413,852 $ 149,894,937 $124,990,942 $72,350,667 $63,081,537
================= ============= ================= ============= ================= ============
</TABLE>
See Accompanying Notes
32
<PAGE> 35
LOGO FINANCIAL STATEMENTS
ARMADA FUNDS INCOME SERIES
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
GNMA FUND BOND FUND
-------------------------------- --------------------------------
FOR THE SIX FOR THE FOR THE SIX FOR THE
MONTHS ENDED YEAR ENDED MONTHS ENDED YEAR ENDED
NOVEMBER 30, 1997 MAY 31, NOVEMBER 30, 1997 MAY 31,
(UNAUDITED) 1997(1) (UNAUDITED) 1997(1)
----------------- ------------ ----------------- ------------
<S> <C> <C> <C> <C> <C> <C>
INCREASE/(DECREASE) IN
NET ASSETS:
Operations:
Net investment
income............... $ 2,037,548 $ 4,089,729 $ 2,796,113 $ 5,334,100
Net realized
gain/(loss) on
investments sold..... 628,060 78,695 306,983 (382,742)
Net change in
unrealized
appreciation on
investments.......... 858,868 1,305,734 1,231,921 1,587,049
----------------- ------------ ----------------- ------------
Net increase in net
assets resulting from
operations........... 3,524,476 5,474,158 4,335,017 6,538,407
----------------- ------------ ----------------- ------------
Distributions to
shareholders from net
investment income.... (2,037,548) (4,088,918) (2,796,113) (5,328,745)
Distributions to
shareholders from net
realized capital
gains................ -- (78,695) -- --
Distributions to
shareholders in
excess of net
realized capital
gains................ -- (559,059) -- (751,433)
Increase in net assets
derived from capital
share transactions 3,387,890 3,349,838 956,877 1,897,457
----------------- ------------ ----------------- ------------
Total increase in net
assets............... 4,874,818 4,097,324 2,495,781 2,355,686
----------------- ------------ ----------------- ------------
NET ASSETS:
Beginning of period.... 64,629,624 60,532,300 91,184,833 88,829,147
----------------- ------------ ----------------- ------------
End of period.......... $ 69,504,442 $64,629,624 $ 93,680,614 $91,184,833
================= ============= ================= =============
</TABLE>
(1) Activity for the year ended May 31, 1997 includes that of the Predecessor
Fund through September 6, 1996.
See Accompanying Notes
33
<PAGE> 36
LOGO NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
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-one funds each of which is authorized to issue
two classes of shares designated as Institutional and Retail 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 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 (See Note 6).
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 and Equity Index 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 and Real Return Advantage Fund.
As of the date of this report, the Equity Index, National Tax Exempt and Real
Return Advantage Funds have not commenced operations.
Effective November 19, 1997, the names of the Armada Fixed Income and
Intermediate Government Funds were changed to the Armada Intermediate Bond and
Bond Funds, respectively.
FUND REORGANIZATION: On May 3, 1996, Integra Financial Corporation ("Integra
Financial") merged into National City Corporation ("National City"). Integra
Trust Company, an affiliate of Integra Financial, served as Investment Adviser
to Inventor Funds, Inc. ("Inventor"). A new investment advisory agreement
between Inventor and affiliates of National City received shareholder approval
in May, 1996.
As part of the Reorganization, on September 9, 1996, Inventor GNMA Securities
Fund and Inventor Intermediate Government Securities Fund (the "Predecessor
Funds") transferred all of their assets and liabilities with approximate values
of $63,566,229 and $92,883,276, respectively, in exchange for shares of Armada
GNMA Fund and Armada Intermediate Government Fund, respectively. Net unrealized
depreciation on investment securities included in the above amounts were
$1,064,753 and $1,459,226 for the Inventor GNMA Securities and Inventor
Intermediate Government Securities Funds, respectively. The Reorganizations of
the Armada GNMA and Intermediate Government Funds were executed as tax-free
reorganizations in accordance with Section 368(a)(1)(F) of the Internal Revenue
Code of 1986, as amended (the "Internal Revenue Code"). The results of
operations, changes in net assets and financial highlights of the Armada GNMA
and Bond Funds for the year ended May 31, 1997 include those of the respective
Predecessor Funds.
In accordance with provisions of the Agreement, the Trust and Inventor were
each responsible for the payment of their own expenses incurred in connec-
34
<PAGE> 37
LOGO NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
tion 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
Total Return Advantage, Intermediate Bond, Enhanced Income, GNMA and Bond Funds
(the "Funds") in preparation of their financial statements.
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts and disclosures in the financial statements. Actual
results could differ from those estimates.
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. Dividends are recorded on the ex-dividend date. Expenses common to all
the Funds in the Trust are allocated among them.
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS: Dividends from the net investment
income of the Funds are declared daily and paid no later than five business days
after the end of the month. With respect to each Fund, net income for dividend
purposes consists of dividends and interest income, discount earned (including
both original issue and market discount), less amortization of any market
premium and accrued expenses. Any net realized capital gains will be distributed
at least annually.
FEDERAL INCOME TAXES: Each of the Funds is classified as a separate taxable
entity for Federal income tax purposes. Each of the Funds intends to qualify as
a separate "regulated investment company" under the Internal Revenue Code and
make the requisite distributions to its shareholders that will be sufficient to
relieve it from Federal income tax and Federal excise tax. Therefore, no Federal
tax provision is required. To the extent that distributions from net investment
income and realized net capital gains exceed amounts reported in the financial
statements, such amounts are reported separately.
ORGANIZATION COSTS: The Trust bears all costs in connection with its
organization, including the fees and expenses of registering and qualifying its
shares for distribution under Federal and state securities regulations. All
organization expenses are being amortized on a straight-line basis over a period
of five years from the date of commencement of operations.
MORTGAGE DOLLAR ROLLS: For the purpose of enhancing the Fund's yield, the GNMA
Fund may enter into mortgage dollar rolls (principally in TBA's) in which the
Fund sells mortgage securities for delivery in the current month and
simultaneously contracts to repurchase similar, but not identical, securities at
an agreed-upon price on a fixed date.
35
<PAGE> 38
LOGO NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
The Fund accounts for such dollar rolls as purchases and sales and maintains
liquid high grade securities in an amount at least equal to its commitment to
repurchase.
3. INVESTMENT ADVISERS, DISTRIBUTION FEE AND OTHER RELATED PARTY TRANSACTIONS
Fees paid by the Trust pursuant to the Advisory Agreements with National City
Bank and National Asset Management Corporation, wholly-owned subsidiaries of
National City Corporation, (collectively, the "Adviser" or "Advisers"), are
payable monthly based on an annual rate of .55%, .55%, .45%, .55% and .55% of
the average daily net assets of the Total Return Advantage, Intermediate Bond,
Enhanced Income, GNMA, and Bond Funds, respectively. The Advisers may from time
to time waive their fees payable by the Funds. For the period ended November 30,
1997, the Advisers have earned and waived fees as follows:
<TABLE>
<CAPTION>
EARNED WAIVED
-------- --------
<S> <C> <C>
Total Return Advantage
Fund.................... $764,139 $764,139
Intermediate Bond Fund.... 371,737 101,383
Enhanced Income Fund...... 153,491 153,491
GNMA Fund................. 187,110 --
Bond Fund................. 260,008 --
</TABLE>
At November 30, 1997, advisory fees accrued and unpaid amounted to:
<TABLE>
<S> <C>
Total Return Advantage Fund........... --
Intermediate Bond Fund................ $44,815
Enhanced Income Fund.................. --
GNMA Fund............................. 36,846
Bond Fund............................. 54,771
</TABLE>
The Trust maintains a Shareholder Services Plan (the "Services Plan") with
respect to the Retail shares in the Funds. Pursuant to the Services Plan, the
Trust enters into shareholder servicing 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 .25% on an annualized basis of net asset value of
Retail shares of the Total Return Advantage, Intermediate Bond, GNMA and Bond
Funds and .10% on an annualized basis of the net asset value of Retail shares of
the Enhanced Income Fund. For the period ended November 30, 1997, fees paid
under the Services Plan to NatCity Investments, Inc., a wholly-owned subsidiary
of National City Corporation, amounted to:
<TABLE>
<S> <C>
Total Return Advantage Fund............ $2,804
Intermediate Bond Fund................. 4,597
Enhanced Income Fund................... 1,094
GNMA Fund.............................. 163
Bond Fund.............................. 30
</TABLE>
National City Bank serves as the Funds' Custodian. For the period ended
November 30, 1997, National City Bank has earned Custodian fees as follows:
<TABLE>
<S> <C>
Total Return Advantage Fund........... $19,437
Intermediate Bond Fund................ 11,912
Enhanced Income Fund.................. 6,955
GNMA Fund............................. 8,005
Bond Fund............................. 9,622
</TABLE>
Pursuant to Board of Trustees' approval, SEI Investments Distribution Co., a
wholly-owned subsidiary of SEI Investments Company ("SEI" or "Distributor"),
began serving as the Trust's Distributor on March 10, 1997. Each Fund pays a fee
to the Distributor for distributing its shares. Under the Trust's Distribution
Agreement and related Distribution Plan adopted pursuant to Rule 12b-1 under the
1940 Act, the Trust compensates the Distributor for services provided and
expenses assumed in providing advertising, marketing, prospectus printing and
other distribution services up to a maximum of .10% per annum of the average net
assets of each Fund, inclusive of an annual base fee of $1,250,000, plus
36
<PAGE> 39
LOGO NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
incentive fees related to asset growth, which are allocated among the investment
funds with respect to which the Distributor is distributing shares.
440 Financial Distributors, Inc., ("440"), a wholly-owned subsidiary of The
Shareholder Services Group, Inc., and an indirect wholly-owned subsidiary of
First Data Corp., served as the Trust's distributor until March 7, 1997. Each
Fund reimbursed 440 for direct and indirect expenses incurred in performing
distribution services, up to a maximum of .10% per annum of the average net
assets of 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 GNMA and Bond Funds prior to the
Reorganization. Under a Rule 12b-1 Distribution Plan, SEI earned and waived Fees
at an annual rate of up to .25% of the average daily net assets of the
Predecessor Funds' Class A shares.
Each Trustee receives an annual fee of $7,500 plus $2,500 for each Board
Meeting attended and reimbursement of out-of-pocket expenses. The Chairman of
the Board receives an additional $2,500 per annum for services in such capacity.
Such fees are paid for services rendered to all of the Funds and are allocated
accordingly. No person who is an officer, director, trustee, or employee of the
Investment Advisers, Distributor, or of any parent or subsidiary thereof, who
serves as an officer, trustee, or employee of the Trust receives any
compensation from the Trust.
Expenses for the period ended November 30, 1997 include legal fees paid to
Drinker Biddle & Reath LLP. A partner of that firm is Secretary of the Trust.
PFPC Inc. ("PFPC") serves as Administrator and Accounting Agent to the Trust.
As compensation for services performed, each Fund pays PFPC an asset-based fee
plus reimbursement of reasonable out-of-pocket expenses. An officer of PFPC
serves as Treasurer to the Trust.
4. PURCHASES AND SALES OF SECURITIES
During the period ended November 30, 1997, purchases and sales of securities,
other than short-term investments or U.S. government obligations, aggregated:
<TABLE>
<CAPTION>
PURCHASES SALES
------------ -----------
<S> <C> <C>
Total Return
Advantage Fund.... $106,345,782 $92,486,030
Intermediate Bond
Fund.............. 73,981,823 28,611,014
Enhanced Income
Fund.............. 21,384,985 16,748,968
GNMA Fund........... 5,418,267 --
Bond Fund........... 21,087,188 10,142,266
</TABLE>
Purchases and sales of long-term U.S. government obligations were:
<TABLE>
<CAPTION>
PURCHASES SALES
------------ ------------
<S> <C> <C>
Total Return
Advantage Fund... $141,895,941 $128,961,935
Intermediate Bond
Fund............. 52,229,150 54,571,699
Enhanced Income
Fund............. 21,076,931 14,959,455
GNMA Fund.......... 93,763,517 86,327,512
Bond Fund.......... 68,939,371 72,141,781
</TABLE>
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
and to classify or reclassify any class of shares into one or more series of
shares. Transactions in capital shares are summarized on the following pages for
the Funds.
37
<PAGE> 40
LOGO NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
<TABLE>
<CAPTION>
FOR THE PERIOD ENDED NOVEMBER 30, 1997 (UNAUDITED)
----------------------------------------------------------
INSTITUTIONAL CLASS RETAIL CLASS
--------------------------- ------------------------
SHARES VALUE SHARES VALUE
---------- ------------ -------- -----------
<S> <C> <C> <C> <C>
TOTAL RETURN ADVANTAGE FUND
Shares sold................................ 3,205,987 $ 32,425,652 279 $ 2,838
Shares reinvested.......................... 334,956 3,390,354 5,836 59,079
Shares repurchased......................... (2,088,483) (21,122,231) (2,726) (27,599)
---------- ------------ -------- -----------
Net increase............................... 1,452,460 $ 14,693,775 3,389 $ 34,318
========== ============ ======== ===========
INTERMEDIATE BOND FUND
Shares sold................................ 3,622,307 $ 38,066,948 6,772 $ 71,400
Shares reinvested.......................... 63,896 671,169 7,412 78,233
Shares repurchased......................... (1,525,380) (16,021,140) (38,749) (409,084)
---------- ------------ -------- -----------
Net increase/(decrease).................... 2,160,823 $ 22,716,977 (24,565) $ (259,451)
========== ============ ======== ===========
ENHANCED INCOME FUND
Shares sold................................ 2,967,686 $ 29,810,178 143,262 $ 1,440,097
Shares reinvested.......................... 81,986 824,731 5,291 53,277
Shares repurchased......................... (2,200,724) (22,105,374) (114,174) (1,148,701)
---------- ------------ -------- -----------
Net increase............................... 848,948 $ 8,529,535 34,379 $ 344,673
========== ============ ======== ===========
GNMA FUND
Shares sold................................ 905,637 $ 9,324,408 740 $ 7,700
Shares reinvested.......................... 4,525 46,673 259 2,667
Shares repurchased......................... (579,920) (5,989,461) (397) (4,097)
---------- ------------ -------- -----------
Net increase............................... 330,242 $ 3,381,620 602 $ 6,270
========== ============ ======== ===========
BOND FUND
Shares sold................................ 919,595 $ 9,296,480 1,611 $ 16,415
Shares reinvested.......................... 3,148 31,968 56 567
Shares repurchased......................... (826,054) (8,388,553) -- --
---------- ------------ -------- -----------
Net increase............................... 96,689 $ 939,895 1,667 $ 16,982
========== ============ ======== ===========
</TABLE>
38
<PAGE> 41
LOGO NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED MAY 31, 1997
------------------------------------------------------------
INSTITUTIONAL CLASS RETAIL CLASS
----------------------------- ------------------------
SHARES VALUE SHARES VALUE
----------- ------------- -------- -----------
<S> <C> <C> <C> <C>
TOTAL RETURN ADVANTAGE FUND
Shares sold.............................. 6,547,407 $ 65,364,214 803 $ 7,984
Shares reinvested........................ 1,322,747 13,218,136 16,658 166,278
Shares repurchased....................... (10,059,828) (100,805,700) (3,023) (29,745)
---------- ------------- --------- -----------
Net increase/(decrease).................. (2,189,674) $ (22,223,350) 14,438 $ 144,517
========== ============= ========= ===========
INTERMEDIATE BOND FUND
Shares sold.............................. 7,749,485 $ 80,231,676 1,197 $ 9,558
Shares reinvested........................ 55,659 578,148 22,068 230,165
Shares repurchased....................... (6,910,866) (71,840,259) (266,960) (2,781,883)
---------- ------------- --------- -----------
Net increase/(decrease).................. 894,278 $ 8,969,565 (243,695) $(2,542,160)
========== ============= ========= ===========
ENHANCED INCOME FUND
Shares sold.............................. 5,917,556 $ 59,245,312 241,948 $ 2,429,148
Shares reinvested........................ 228,118 2,285,415 12,057 120,956
Shares repurchased....................... (6,721,831) (67,329,305) (220,372) (2,212,261)
---------- ------------- --------- -----------
Net increase/(decrease).................. (576,157) $ (5,798,578) 33,633 $ 337,843
========== ============= ========= ===========
GNMA FUND
Shares sold.............................. 1,574,235 $ 15,942,378 16,716 $ 167,900
Shares reinvested........................ 11,290 114,351 580 5,884
Shares repurchased....................... (1,263,481) (12,833,755) (4,652) (46,920)
---------- ------------- --------- -----------
Net increase............................. 322,044 $ 3,222,974 12,644 $ 126,864
========== ============= ========= ===========
BOND FUND
Shares sold.............................. 1,897,212 $ 19,050,260 4,439 $ 44,547
Shares reinvested........................ 10,541 105,888 110 1,106
Shares repurchased....................... (1,717,697) (17,281,982) (2,214) (22,362)
---------- ------------- --------- -----------
Net increase............................. 190,056 $ 1,874,166 2,335 $ 23,291
========== ============= ========= ===========
</TABLE>
39
<PAGE> 42
LOGO NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
6. SUBSEQUENT EVENTS
Effective January 1, 1998, the Intermediate Bond and Bond Funds commenced
offering B shares. B shares, like Retail shares, are subject to shareholder
servicing fees under a services plan. In addition, B shares have in place a
separate Distribution Agreement and related Distribution Plan adopted pursuant
to Rule 12b-1 under the 1940 Act under which each fund will pay up to a maximum
of .75% per annum of the average net assets of B shares. B shares are subject to
a contingent deferred sales charge, which may be reduced or waived under certain
circumstances.
Effective January 1, 1998, the maximum front-end sales charge on Retail shares
of the Total Return Advantage, Intermediate Bond, GNMA and Bond Funds increased
to 4.75% from 3.75%.
7. RESULTS OF PROXY VOTING:
A special meeting of the Shareholders of the Funds was held on November 19,
1997. Shareholders of the Total Return Advantage, Intermediate Bond, Enhanced
Income, GNMA and Bond Funds each approved the following proposals:
PROPOSAL 1.
To approve a new Investment Advisory Agreement between the Trust and National
City Bank and National Asset Management Corporation.
At least 82.41% of shareholders in each Fund voted to approve the proposal. No
more than 1.49% in each Fund voted against the proposal.
PROPOSAL 3A.
To approve changes to the fundamental investment limitation on underwriting
activities.
At least 79.31% of shareholders in each Fund voted to approve the proposal. No
more than 2.18% in each Fund voted against the proposal.
PROPOSAL 3B.
To approve changes to the fundamental investment limitation on real estate
related transactions.
At least 78.80% of shareholders in each Fund voted to approve the proposal. No
more than 2.39% in each Fund voted against the proposal.
PROPOSAL 3C.
To approve changes to the fundamental investment limitation on investment in
commodities.
At least 78.67% of shareholders in each Fund voted to approve the proposal. No
more than 2.52% in each Fund voted against the proposal.
PROPOSAL 3D.
To approve changes to the fundamental investment limitation regarding industry
concentration.
At least 79.01% of shareholders in each Fund voted to approve the proposal. No
more than 2.29% in each Fund voted against the proposal.
PROPOSAL 3E.
To approve changes to the fundamental investment limitation on loans.
At least 78.62% of shareholders in each Fund voted to approve the proposal. No
more than 2.67% in each Fund voted against the proposal.
PROPOSAL 3F.
To approve changes to the fundamental investment limitation on borrowing and
issuance of senior securities.
At least 76.68% of shareholders in each Fund voted to approve the proposal. No
more than 2.28% in each Fund voted against the proposal.
PROPOSAL 4A.
To approve a change in the fundamental investment policies related to
limitations on investment in
40
<PAGE> 43
LOGO NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
other investment companies to make such policies non-fundamental.
At least 78.54% of shareholders in each Fund voted to approve the proposal. No
more than 2.29% in each Fund voted against the proposal.
PROPOSAL 4B.
To approve a change in the fundamental investment policies related to
limitations on illiquid securities to make such policies non-fundamental.
At least 76.68% of shareholders in each Fund voted to approve the proposal. No
more than 2.51% in each Fund voted against the proposal.
PROPOSAL 4C.
To approved a change in the fundamental investment policies related to
limitations on purchasing securities on margin to make such policies non-
fundamental.
At least 76.68% of shareholders in each Fund voted to approve the proposal. No
more than 2.70% in each Fund voted against the proposal.
PROPOSAL 4D.
To approve a change in the fundamental investment policies related to
limitations on purchasing securities of companies for the purpose of exercising
control to make such policies non-fundamental.
At least 78.62% of shareholders in each Fund voted to approve the proposal. No
more than 2.67% in each Fund voted against the proposal.
PROPOSAL 4E.
To approve a change in the fundamental investment policies related to
limitations on writing or selling put options, call options, straddles, spreads,
or any combination thereof to make such policies non-fundamental.
At least 76.68% of shareholders in each Fund voted to approve the proposal. No
more than 2.70% in each Fund voted against the proposal.
PROPOSAL 4F.
To approve a change in the fundamental investment policies related to
limitations on purchasing or retaining securities of any issuer if officers or
trustees/directors of the Trust or any of its investment advisers own
beneficially more than certain percentages of that issuer's securities to make
such policies non-fundamental.
At least 78.74% of shareholders in each Fund voted to approve the proposal. No
more than 2.62% in each Fund voted against the proposal.
PROPOSAL 4G.
To approve a change in the fundamental investment policies related to
limitations on investing in securities issued by companies with less than three
years of operation to make such policies non-fundamental (GNMA and Bond Funds
only).
At least 86.55% of shareholders in each Fund voted to approve the proposal. No
shareholders voted against the proposal.
PROPOSAL 5.
To approve a change in the fundamental investment objective to make the
investment objective non-fundamental.
At least 77.25% of shareholders in each Fund voted to approve the proposal. No
more than 4.78% in each Fund voted against the proposal.
PROPOSAL 6.
Election of Trustees: For all Armada Funds, Institutional and Retail.
At least 92.53% of voting shareholders voted to elect each Trustee. No more
than 7.47% of voting shareholders withheld authority to elect a Trustee.
41
<PAGE> 44
LOGO 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:
Acromed Corporation
Kirtland Capital Corporation
Morrison Products
JOHN F. DURKOTT
President and Chief Operating Officer,
Kittle's Home Furnishing's 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:
Meridia Health System
WVIZ Educational Television
J. WILLIAM PULLEN
President and Chief Executive Officer,
Whayne Supply Company
<PAGE> 45
LOGO NOTES
<PAGE> 46
[ARMADA FUNDS LOGO] BULK RATE
U.S POSTAGE
Oaks, Pennsylvania 19456 PAID
CLEVELAND, OH
PERMIT NO. 1535
INVESTMENT ADVISERS
AFFILIATES OF
NATIONAL CITY
CORPORATION
NATIONAL ASSET MANAGEMENT
CORPORATION
101 SOUTH FIFTH STREET
LOUISVILLE, KY 40202
National City Bank
1900 East Ninth Street
Cleveland, Ohio 44114
AF-805 (1/98)
