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ARMADA FUNDS
ANNUAL REPORT -- MAY 31, 1999
ARMADA INTERNATIONAL EQUITY FUND
ARMADA SMALL CAP VALUE FUND
ARMADA SMALL CAP GROWTH FUND
ARMADA EQUITY GROWTH FUND
ARMADA TAX MANAGED EQUITY FUND
ARMADA CORE EQUITY FUND
ARMADA EQUITY INDEX FUND
ARMADA EQUITY INCOME FUND
ARMADA BALANCED ALLOCATION FUND
ARMADA TOTAL RETURN
ADVANTAGE FUND
ARMADA BOND FUND
ARMADA INTERMEDIATE BOND FUND
ARMADA GNMA FUND
ARMADA ENHANCED INCOME FUND
ARMADA OHIO TAX EXEMPT FUND
ARMADA PENNSYLVANIA MUNICIPAL FUND
ARMADA NATIONAL TAX EXEMPT FUND
ARMADA OHIO MUNICIPAL
MONEY MARKET FUND
ARMADA PENNSYLVANIA TAX
EXEMPT MONEY MARKET FUND
ARMADA TAX EXEMPT
MONEY MARKET FUND
ARMADA MONEY MARKET FUND
ARMADA GOVERNMENT
MONEY MARKET FUND
ARMADA TREASURY MONEY
MARKET FUND
TABLE OF CONTENTS
Chairman's Message ..................................................... 1
Economic Overview ...................................................... 2
Fund Overview .......................................................... 4
Report of Independent Auditors ......................................... 22
Notice to Shareholders ................................................. 24
FINANCIAL STATEMENTS
Statement of Net Assets and Financial Highlights .................... 26
Statement of Assets and Liabilities ................................. 135
Statements of Operations ............................................ 136
Statements of Changes in Net Assets ................................. 140
NOTES TO FINANCIAL STATEMENTS .......................................... 148
[BOUNDING BOX]
[SECONDARY BOUNDING BOX]
NOT FDIC INSURED NOT BANK GUARANTEED MAY LOSE VALUE
[END SECONDARY BOUNDING BOX]
AN INVESTMENT IN MONEY MARKET FUNDS IS NOT INSURED OR GUARANTEED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENT AGENCY.
ALTHOUGH THE MONEY MARKET FUND(S) SEEKS TO PRESERVE THE VALUE OF YOUR
INVESTMENT AT $1.00 PER SHARE, IT IS POSSIBLE TO LOSE MONEY BY INVESTING IN
THE FUND(S).
National City Investment Management Company serves as investment adviser to
Armada Funds for which it receives 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.
[END BOUNDING BOX]
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ARMADA FUNDS
BOARD OF TRUSTEES
ROBERT D. NEARY
CHAIRMAN
Retired Co-Chairman, Ernst & Young LLP
Director:
Cold Metal Products, Inc.
Strategic Distribution, Inc.
HERBERT R. MARTENS, JR.
PRESIDENT
Executive Vice President,
National City Corporation
Chairman, President and Chief Executive
Officer, NatCity Investments, Inc.
LEIGH CARTER
Retired President and Chief Operating
Officer, B.F. Goodrich Company
Director:
Kirtland Capital Corporation
Morrison Products
TruSeal Technologies
JOHN F. DURKOTT
President and Chief Operating Officer,
Kittle's Home Furnishings Center, Inc.
ROBERT J. FARLING
Retired Chairman, President and Chief
Executive Officer, Centerior Energy
RICHARD W. FURST, DEAN
Garvice D. Kincaid Professor of Finance
and Dean, Carol Martin Gatton College
of Business and Economics, University
of Kentucky
Director:
Foam Design, Inc.
The Seed Corporation
GERALD L. GHERLEIN
Executive Vice President and General
Counsel, Eaton Corporation
Trustee:
WVIZ Educational Television
J. WILLIAM PULLEN
President and Chief Executive Officer,
Whayne Supply Company
The Armada Trustees also serve as the Trustees of the Parkstone Mutual Funds.
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CHAIRMAN'S MESSAGE
DEAR SHAREHOLDERS:
It is a pleasure to report to you that total assets in Armada Funds increased
58% to $11.7 billion as of May 31, 1999, from the $7.4 billion on May 31, 1998.
This growth resulted from additional investments, market appreciation, strong
sales, and the transfer of assets from accounts of the Parkstone Mutual Funds
and the pooled trust funds.
INVESTMENT PERFORMANCE LEADERSHIP
Given the volatility of all capital markets, we are pleased that our
performance has been very satisfactory. Especially noteworthy has been the
recognition given to the following Armada Funds by industry rating services:
[bullet] ARMADA EQUITY GROWTH FUND CLASS I and CLASS A were awarded an OVERALL
FOUR STAR rating by MORNINGSTAR for the a period ended May 31, 1999.
Additionally, Equity Growth Class I received a FIVE STAR rating for the
three-year period ended May 31, 1999.
[bullet] ARMADA ENHANCED INCOME FUND and EQUITY INCOME FUND (CLASS I and
CLASS A) were awarded an OVERALL FOUR STAR rating by MORNINGSTAR for
the period ended May 31, 1999.
[bullet] ARMADA GNMA FUND and OHIO TAX EXEMPT FUND (CLASS I) were awarded an
OVERALL FOUR STAR rating by MORNINGSTAR for the period ended May 31,
1999.
[bullet] ARMADA TOTAL RETURN ADVANTAGE FUND CLASS I was listed as a top 15
performer in the WALL STREET JOURNAL'S Mutual Fund Scorecard on
April 16, 1999.
[bullet] Both the ARMADA INTERNATIONAL EQUITY FUND and the SMALL CAP GROWTH FUND
demonstrated strong performance in particularly turbulent international
and small cap markets by ranking in the top quartile of similarly
managed funds in the Lipper database.
WWW.ARMADAFUNDS.COM
Continuing to improve our service to you, our shareholders, is a crucial
commitment of our business. To provide you with easy and timely access to
information about your investments we introduced our web site in February of
1999. I hope you find our website useful and encourage you to send us your
comments at [email protected].
For those of you who haven't visited the site - try it at
www.armadafunds.com! We believe it will answer most of your questions and
provide clear, concise and timely information on your investment in Armada
Funds.
IN CLOSING . . .
The accompanying report contains each Fund's audited financial statements,
its specific portfolio of investments, and a detailed discussion of its
performance during the fiscal year ended May 31, 1999. Also, you will find a
commentary from our investment adviser, National City Investment Management
Company, which includes an economic outlook for the coming months and a
discussion of why it believes they will be strong for the financial markets.
As always, if you have questions please contact your account representative
or our Investor Services line at 1-800-622-FUND (3863) which is available from
8:00 a.m. to 8:00 p.m. Eastern Standard Time for your convenience.
Finally, I would like to thank you for your continued confidence in us. We
look forward to providing you with consistent management and service to meet
your investment needs now and in the future.
Sincerely,
/s/ Signature omitted
Robert D. Neary
Chairman
Armada Funds
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1
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ECONOMIC OVERVIEW
DEAR SHAREHOLDER:
As the past fiscal year came to a close, the U.S. economy continued to act as
if it were in the early stages of an economic recovery rather than completing
the 98th consecutive month of an expansion. After posting a 4.3 percent gain for
calendar year 1998, the highest rate since 1984, gross domestic product (GDP)
grew by another 4.3 percent (annualized) in the first quarter of 1999.
Encouraged by low unemployment and large gains in real wages, consumer spending
was brisk throughout the past 12 months, with housing and auto sales
particularly strong. By the end of May, even the moribund manufacturing sector
reversed its decline, as increasing demand, coupled with a relative lack of
inventory, pushed manufacturing output to its fastest growth in over two years.
Large cap growth stocks continued to enjoy tremendous gains throughout the
year. Their march was interrupted only briefly though dramatically -- during the
third quarter of 1998 by global economic woes that took their toll on all but
the Treasury markets.
The rest of the equity markets did not fare nearly as well. The quest for
liquidity and predictable earnings growth led investors to treat smaller
domestic stocks, as well as international equities, with caution. How wide was
the disparity in returns? The S&P 500 Composite Index, a leading large cap
indicator, returned a total of 21.05 percent over the past 12 months. Meanwhile,
the Russell 2000 Index of small cap stocks lost 2.69 percent of its value. Even
within the large cap segment of the market, gains were heavily concentrated in
the technology-heavy growth sector. The S&P 500/BARRA Growth Index returned
28.15 percent, more than double the S&P 500/BARRA Value Index.
These inequalities began to reverse themselves only near the end of the
reporting period, as attractive valuations and signs of a genuine recovery in
Asia and Latin America led to renewed interest in small cap and value stocks.
Huge price gains, especially in energy, basic materials, and other cyclical
sectors, helped the BARRA Value Index easily outperform BARRA Growth Index
during April and May. In April alone, BARRA Value Index returned 8.62 percent
versus (0.19) percent for BARRA Growth Index. The broadening of the market
helped the Russell 2000 Index leap 12.28 percent for the three months ended
May 31.
International stocks posted less than stellar gains in U.S. dollars over the
past 12 months, although results could have been much worse given the economic
and monetary problems that plagued many Asian and Latin American countries. The
Morgan Stanley EAFE (Europe, Australasia, Far East) Equity Index, a leading
international benchmark, returned 4.36 percent for the period. The European
markets as a whole posted a gain of 2.5 percent in local currencies, but the
strong showing of the dollar versus the euro sent returns after conversion into
negative territory. Asia performed better, with the Morgan Stanley Asia-Pacific
All-Country Index up 13.45 percent in local currencies. That return translated
to 26.73 percent in dollars, thanks largely to the recovery of the Japanese yen.
The fixed income markets faced a difficult 12 months. The Lehman Aggregate
Bond Index returned a disappointing 4.34 percent, yet this figure belied a
period of extreme volatility. During the third quarter of 1998, the global
"flight to quality" sent Treasury prices soaring and yields (which move in the
opposite direction) plummeting. At the same time, the "spread" sectors of the
bond market -- corporate bonds, asset-backed securities, and mortgage-backed
securities -- suffered a liquidity crisis. This situation continued into the
fourth quarter. Long Treasury yields reached their lows of a generation, with
10-year notes yielding 4.15 percent and 30-year bonds at 4.70 percent.
As we entered 1999, the scenario began to reverse itself. The spread sectors
staged a dramatic recovery, due in no small part to an unexpectedly rapid easing
of Brazil's economic crisis. Brazil's recovery is, in many respects, the arch
example of how the developing markets have rebounded so quickly. Recognizing an
attractive risk/return tradeoff, private capital swiftly returned to these
countries, stabilizing their markets and contributing to liquidity. These
events, in turn, led to falling interest rates and a subsequent improvement in
their economies.
Continued evidence of extremely strong domestic growth and the consequent
rekindling of inflation fears sent Treasury yields rising throughout the first
five months of 1999, firmly establishing a bear market for bonds. Interest rates
rose across the yield curve, hitting shorter-term maturities the hardest.
2
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ECONOMIC OVERVIEW
Looking ahead, our outlook for U.S. economic growth remains sanguine.
Consumer demand will likely continue to provide a solid, though lesser, boost to
economic activity. However, future GDP growth may be closer to 3 percent rather
than the 4 percent to which we've become accustomed. Incremental gains in
manufacturing rely largely on a continuing global recovery, but we are confident
that many recent trouble spots in Asia and Latin America are taking the painful,
but necessary, steps to enhance their economic prospects.
The major issues facing Asia today are the sustainability of exports and the
viability of Japan's economy after its upcoming national election. Asia is still
relying on exports to build economic momentum and adequate reserve balances.
Japan is making a lot of the right promises but needs to make painful job cuts
to follow through on them. We are mindful of these risks but remain constructive
on Asia. Likewise, Latin America has made great progress in the wake of Brazil's
flotation of their currency, the Real, and the recovery in commodity prices. In
sum, global recovery is on more solid footing today, propelled by emerging
market recoveries after two difficult years.
At home, higher than expected growth data will likely translate into a
tightening of short-term interest rates by the Fed, but we believe that a series
of successive rate hikes is still highly unlikely and that the federal funds
rate won't increase by more than a total of 50 basis points. The combination of
strong growth, higher headline inflation, and a less friendly Fed likely means
that Treasury yields will continue to rise in the short-term. However, assuming
growth, and especially inflation, do not accelerate greatly, we still believe
that yields above 6 1/4 percent on 30-Year Treasury Bonds offer investors
long-term value. On the margin, we're more convinced than the Fed is that the
current pace of growth is non-inflationary. Rather, it is the result of
tremendous leaps in productivity, thanks to technology enhancements and
Corporate America's strict cost-control measures.
As for the equity markets, the resurgence in small cap and large cap value
stocks is likely to continue. Valuations remain attractive, and investors
finally appear ready to let growth-stock earnings catch up a bit with their
current prices. As long as we see a continuation of global growth, and the
markets indicate that we will, earnings in the cyclical sectors are likely to
follow suit.
Sincerely,
/s/ signature omitted
Donald L. Ross
Chief Investment Officer
National City Investment Management Co.
3
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ARMADA INTERNATIONAL EQUITY FUND OVERVIEW
COMMENTS FROM THE INTERNATIONAL EQUITY TEAM
Our portfolio benefited from our country allocation decisions and
risk-control disciplines, although our bias toward companies with strong and
stable competitive advantages was not rewarded as we had hoped. For the fiscal
year ended May 31, 1999, the Armada International Equity Fund produced a total
return of 0.84 percent (before sales charges) for Class A investors, 0.10
percent (before sales charges) for Class B investors and 0.95 percent for Class
I investors. Over the same period, the Fund's benchmark, the Morgan Stanley EAFE
Index, produced a total return of 4.36 percent.
As the world economy began showing signs of recovery, investors balked at
paying a premium for high-quality stocks. We believe that investors will return
in increasing numbers to the best-managed, most profitable companies as the year
progresses. For example, we're optimistic about the portfolio's weighting in
systems integration companies. Our holdings in this sector include Tieto in
Finland, Nihon Unisys in Japan, and Logica in the United Kingdom. All are
well-run companies, and they stand to benefit from the growing trend in their
respective countries toward retooling information technology to improve
corporate productivity.
We find the Hong Kong and Singapore markets attractively valued even after
impressive returns year to date. Economic conditions are improving as current
account balances have turned positive. These surpluses have allowed central
banks to ease interest rates without causing currency devaluations and permitted
governments to finance fiscal stimulus programs. We believe that the improvement
in economic conditions needs to be followed up by reforms for wealth creation to
continue, and we are cautiously optimistic that such reforms will take place.
Likewise, certain European markets are attractive. The accession rates for
adopting the euro have left some countries with a competitive advantage over
others. Likewise, some countries are simply more sound fiscally. We believe that
these imbalances will have a persistent effect on the differences in economic
growth rates within the region. In particular, we believe that markets such as
France and Ireland are poised to enjoy stronger growth while Germany and Italy
are likely to suffer.
Japan is in the early stages of structural reform. However, the pace and
timing of reform may lead to episodes of disappointment as earnings struggle to
emerge from the doldrums. Therefore, we limited our holdings in Japan as of May
31 to 16.2 percent of the portfolio, a weighting 6.9 percent below the
benchmark's.
GROWTH OF A $10,000 INVESTMENT3
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PLOT POINTS ARE AS FOLLOWS:
CLASS I CLASS A CLASS B MSCI EAFE
8/1/97 10,000 9,450 10,000 10,000
May 98 10,875 10,232 10,839 10,361
May 99 10,978 10,318 10,349 10,813
Armada International Equity Fund (Class I Shares)1
Armada International Equity Fund (Class A Shares with sales charge)4
Armada International Equity Fund (Class B Shares) 5,6
Morgan Stanley EAFE Index
ARMADA INTERNATIONAL EQUITY FUND
- ------------------------------------
Aggregate Total Return as of 5/31/99
Annualized Cumulative
Since Since
1 Year Inception2 Inception2
Class I Shares1 0.95% 5.24% 9.80%
Class A Shares 0.84% 4.92% 9.19%
Class A Shares,
with Sales Charge4 (4.70)% 1.74% 3.21%
Class B Shares 0.10% 11.60% 16.57%
Class B Shares,
with Sales Charge5 (4.90)% 8.15% 11.57%
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
1 CLASS I 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 INTERNATIONAL EQUITY FUND'S DATE OF INCEPTION WAS AUGUST 1, 1997
FOR BOTH CLASS I SHARES AND CLASS A SHARES AND JANUARY 6, 1998 FOR CLASS B
SHARES.
3 THE RETURN AND PRINCIPAL VALUE OF AN INVESTMENT WILL FLUCTUATE. WHEN REDEEMED,
SHARES MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST.
4 PERFORMANCE CALCULATED BASED ON THE MAXIMUM FRONT-END SALES CHARGE IN EFFECT
AT MAY 31, 1999, OF 5.50%.
5 PERFORMANCE CALCULATED BASED ON THE MAXIMUM DEFERRED SALES CHARGE IN EFFECT AT
MAY 31, 1999, OF 5.00%. THIS CHARGE DECLINES FROM 5.00% IN THE FIRST YEAR TO
0.00% AFTER FIVE YEARS, AS OUTLINED IN THE PROSPECTUS.
6 THE PERFORMANCE CHART FOR THE CLASS B SHARES INCLUDES PERFORMANCE OF THE
CLASS A SHARES FROM DATE OF INCEPTION.
4
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ARMADA SMALL CAP VALUE FUND OVERVIEW
COMMENTS FROM THE EQUITY VALUE TEAM
The past year proved to be a difficult period in both the small cap and value
segments of the market. Still, in an environment that favored large cap growth
and Internet stocks, our results lagged the Russell 2000 Index only slightly.
For the fiscal year ended May 31, 1999, the Armada Small Cap Value Fund produced
a total return of (4.38) percent (before sales charges) for Class A investors,
(5.13) percent (before sales charges) for Class B investors and (3.67) percent
for Class I investors. During the same period, the Russell 2000 Index returned
(2.69) percent while the Russell 2000 Value Index returned (9.53) percent. The
management team adopted the latter benchmark at the end of the reporting period
to reflect the Fund's value-oriented investing style.
Specifically, we benefited from well-timed purchases of technology companies
as well as a large overweighting in basic materials. Such technology holdings as
Autodesk and Adobe Systems -- purchased when Asia's economic woes had trimmed
their valuations -- subsequently proved to be strong performers. In basic
materials, Ryerson Tull and Geon are just two companies that posted excellent
results as this and other undervalued sectors rallied in April and May.
We believe that the continuing recovery of the world economy and renewed
investor confidence should translate into solid performance for value investors
and the small cap segment of the market. At year-end we took some profits in
basic materials and scaled its weighting back to a still healthy 19 percent of
the portfolio. We invested some of that money in Real Estate Investment Trusts
(REITs), which are attractively priced and showing signs of improving investor
sentiment -- two of our key purchase criteria. In addition, dividends and
earnings are increasing, and REITs no longer appear to be diluting shareholders
by relying too heavily on the equity markets. New holdings in this sector
include Developers Diversified and Arden Realty.
The management team also likes the prospects for the utilities sector, where
we are evaluating a variety of potential purchases. Valuations in the group seem
reasonable, and several smaller players appear likely acquisition candidates.
GROWTH OF A $10,000 INVESTMENT3
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PLOT POINTS ARE AS FOLLOWS:
CLASS I CLASS A CLASS B RUSSELL RUSSELL
VALUE INDEX
7/26/94 10,000 10,000 10,000 10,000 10,000
8/15/94 10,000 9,450 10,000 10,000 10,000
May 95 11,464 10,535 11,149 11,415 11,084
May 96 14,059 12,883 13,632 15,512 14,049
May 97 17,378 15,879 16,803 16,594 16,946
May 98 20,823 18,977 20,016 20,118 21,465
May 99 20,058 18,146 18,789 19,577 19,420
Armada Small Cap Value Fund (Class I Shares)1
Armada Small Cap Value Fund (Class A Shares with sales charge)4
Armada Small Cap Value Fund (Class B Shares) 5,6
Russell 2000 Value Index
Russell 2000 Index
ARMADA SMALL CAP VALUE FUND
- ------------------------------------
Aggregate Total Return as of 5/31/99
Annualized Cumulative
Annualized Since Since
1 Year 3 Year Inception2 Inception2
Class I Shares1 (3.67)% 12.58% 15.43% 100.58%
Class A Shares (4.38)% 12.10% 14.57% 92.00%
Class A Shares,
with Sales Charge4 (9.64)% 10.01% 13.23% 81.47%
Class B Shares (5.13)% 11.68% (3.06)% (4.26)%
Class B Shares,
with Sales Charge5 (9.40)% 10.60% (6.21)% (8.57)%
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
1 CLASS I 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 SMALL CAP VALUE FUND'S DATE OF INCEPTION WAS JULY 26, 1994 FOR
CLASS I SHARES, AUGUST 15, 1994 FOR CLASS A SHARES AND JANUARY 6, 1998 FOR
CLASS B SHARES. THE ANNUALIZED 3-YEAR RETURN OF THE CLASS B SHARES INCLUDES
INFORMATION FROM COMMENCEMENT OF OPERATIONS OF THE CLASS A SHARES, RATHER THAN
THE DATE CLASS B SHARES WERE INTRODUCED.
3 THE RETURN AND PRINCIPAL VALUE OF AN INVESTMENT WILL FLUCTUATE. WHEN REDEEMED,
SHARES MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST.
4 PERFORMANCE CALCULATED BASED ON THE MAXIMUM FRONT-END SALES CHARGE IN EFFECT
AT MAY 31, 1999, OF 5.50%.
5 PERFORMANCE CALCULATED BASED ON THE MAXIMUM DEFERRED SALES CHARGE IN EFFECT AT
MAY 31, 1999, OF 5.00%. THIS CHARGE DECLINES FROM 5.00% IN THE FIRST YEAR TO
0.00% AFTER FIVE YEARS, AS OUTLINED IN THE PROSPECTUS.
6 THE PERFORMANCE CHART FOR THE CLASS B SHARES INCLUDES PERFORMANCE OF THE
CLASS A SHARES FROM DATE OF INCEPTION.
5
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ARMADA SMALL CAP GROWTH FUND OVERVIEW
COMMENTS FROM THE EQUITY GROWTH TEAM
The past year proved to be a difficult one for the Fund and for small cap
investors in general. For the fiscal year ended May 31, 1999, the Armada Small
Cap Growth Fund produced a total return of (12.54) percent (before sales
charges) for Class A investors, (13.26) percent (before sales charges) for Class
B investors, and (12.36) for Class I investors. During the same period, the
Russell 2000 Index returned (2.69) percent and the Russell 2000 Growth Index
returned 3.93 percent. The Fund assumed the latter benchmark on January 1 to
reflect the portfolio's bias toward growth stocks.
The discrepancy between large cap and small cap performance was the widest we
had seen in some time, with the S&P 500 outperforming the Russell 2000 Index by
23.74 percentage points. The economic crisis that rippled through Asia and other
emerging markets from late 1997 through 1998 sent investors fleeing from small
cap and mid cap stocks to the highly liquid large cap and U.S. Treasury markets.
Internet-related companies, led by names like CMGI, E-Trade, and DoubleClick,
accounted for what good news the small cap sector offered. Unfortunately, our
purchasing criteria -- limiting us to stocks with market caps not exceeding $750
million -- effectively prohibited us from including these companies in the
portfolio for most of the year. Given the tremendous expansion of market values
in every sector of the market, our ceiling left us at the low end of the small
cap market where stocks were hit hardest.
We remedied this situation in January by raising the Fund's market cap
ceiling to $3 billion. The Fund can own stocks with even greater market caps as
long as they remain in the benchmark. After assuming the Fund's management from
former sub-advisor Wellington Management in August 1998, we instituted some
other changes. For example, in keeping with National City's overall investment
philosophy, we added some additional risk controls that should reduce the
portfolio's overall volatility. We've set new minimum and maximum sector
weightings, and by May 31 had more than doubled the number of stocks in the
portfolio year-over-year.
With the easing of the global financial crisis, we believe that the Fund and
the small cap market in general are poised for a rebound. Indeed, the market
already showed signs of broadening during April and May. Investors seemed
willing to assume some additional risk rather than continue paying a premium for
a handful of large cap stocks. Small cap prices should also benefit from
improved earnings-per-share growth expectations for the asset class as a whole.
GROWTH OF A $10,000 INVESTMENT3
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PLOT POINTS ARE AS FOLLOWS:
GROWTH
CLASS I CLASS A CLASS B INDEX INDEX
8/1/97 10,000 9,450 10,000 10,000 10,000
May 98 11,735 11,073 11,697 11,108 10,659
May 99 10,285 9,685 9,655 10,809 11,078
Armada Small Cap Growth Fund (Class I Shares)1
Armada Small Cap Growth Fund (Class A Shares with sales charge)4
Armada Small Cap Growth Fund (Class B Shares)5,6
Russell Growth Index
Russell 200 Index
ARMADA SMALL CAP GROWTH FUND
- ----------------------------
Aggregate Total Return as of 5/31/99
Annualized Cumulative
Since Since
1 Year Inception2 Inception2
Class I Shares1 (12.36)% 1.54% 2.85%
Class A Shares (12.54)% 1.35% 2.48%
Class A Shares, with Sales Charge4 (17.36)% (1.73)% (3.14)%
Class B Shares (13.26)% (3.56)% (4.94)%
Class B Shares, with Sales Charge5 (17.55)% (7.00)% (9.64)%
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
1 CLASS I 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 SMALL CAP GROWTH FUND'S DATE OF INCEPTION WAS AUGUST 1, 1997 FOR
BOTH CLASS I SHARES AND CLASS A SHARES AND JANUARY 6, 1998 FOR CLASS B
SHARES.
3 THE RETURN AND PRINCIPAL VALUE OF AN INVESTMENT WILL FLUCTUATE. WHEN REDEEMED,
SHARES MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST.
4 PERFORMANCE CALCULATED BASED ON THE MAXIMUM FRONT-END SALES CHARGE IN EFFECT
AT MAY 31, 1999, OF 5.50%.
5 PERFORMANCE CALCULATED BASED ON THE MAXIMUM DEFERRED SALES CHARGE IN EFFECT
AT MAY 31, 1999, OF 5.00%. THIS CHARGE DECLINES FROM 5.00% IN THE FIRST YEAR
TO 0.00% AFTER FIVE YEARS, AS OUTLINED IN THE PROSPECTUS.
6 THE PERFORMANCE CHART FOR THE CLASS B SHARES INCLUDES PERFORMANCE OF THE
CLASS A SHARES FROM DATE OF INCEPTION.
6
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ARMADA EQUITY GROWTH FUND OVERVIEW
COMMENTS FROM THE EQUITY GROWTH TEAM
For the fiscal year ended May 31, 1999, the Armada Equity Growth Fund
produced a total return of 19.88 percent (before sales charges) for Class A
investors, 19.22 percent (before sales charges) for Class B investors, and 20.16
percent for Class I investors. During the same period, the S&P 500/ Barra Growth
Index returned 28.15 percent and the S&P 500 Composite Index returned 21.05
percent. We adopted the latter benchmark in May to reflect more accurately the
Fund's investment objectives. Given that we made this change late in the fiscal
year, all benchmark comparisons below relate to the Barra Growth Index.
Large cap stocks again reaped most of the stock market's gains over the past
12 months, and the Fund performed strongly over this period. In particular, we
profited from an overweighting in the consumer cyclical and consumer services
sectors and from our near benchmark weighting in technology, the portfolio's
largest sector holding. Such stocks as AirTouch, Cisco Systems, and EMC Corp.
more than doubled in value, while The Gap, IBM, Lexmark, MCI/WorldCom, Tandy,
Time-Warner, and Wal-Mart posted excellent returns.
An underweighting in basic materials served us well for most of the year, but
we gave back some gains when that sector rebounded in April. A similar story
unfolded in the energy sector, where we were underweighted or market neutral
through April. We increased our energy exposure in May.
Our underperformance relative to the Barra Growth Index can be attributed to
the outstanding performance of a handful of companies at the high end of its
market cap range. The market-weighted nature of the benchmark means that such
companies had the most impact on its returns. Microsoft and General Electric by
themselves account for a combined 13 percent of Barra Growth's market cap. The
Fund owns both stocks, but we held our percentage weighting in these companies
to less than the benchmark's due, in part, to our commitment to managing risk.
As long as inflation remains in check, we believe that the Fund will continue
to benefit from the strong earnings growth of our holdings. For example, Cisco,
as well as Lucent Technologies, another holding, should thrive as the Internet's
infrastructure demands increase. In addition, improving supply and demand
balances in paper and energy are likely to translate into improved earnings.
That belief prompted us to overweight the portfolio in these sectors at
year-end, adding such companies as Burlington Resources, Chevron, Exxon,
International Paper, and Schlumberger. Relative to the Fund's benchmark change,
shareholders can expect to see a slight reduction in our technology and
healthcare holdings as well as an increase in the portfolio's financial
weighting.
GROWTH OF A $10,000 INVESTMENT3
[Graphic Omitted]
Plot points are as follows:
COMPOSITE GROWTH
CLASS I CLASS A CLASS B INDEX INDEX
12/20/89 10,000 9,450 10,000 10,000 10,000
5/90 10,847 10,250 10,845 10,629 10,852
5/91 12,805 12,101 12,808 11,879 12,377
5/92 13,943 13,124 13,895 13,052 13,708
5/93 14,942 14,040 14,867 14,565 14,660
5/94 15,154 14,199 15,034 15,181 14,813
5/95 16,765 15,670 16,590 18,240 18,252
5/96 20,893 19,484 20,628 23,424 23,821
5/97 27,071 25,181 26,659 30,310 31,754
5/98 34,827 32,313 34,097 39,607 42,007
5/99 41,848 38,736 40,651 47,944 53,832
Armada Equity Growth Fund (Class I Shares)1
Armada Equity Growth Fund (Class A Shares with sales charge)4, 6
Armada Equity Growth Fund (Class B Shares)5, 6
S&P 500 Composite Index
S&P 500/BARRA Growth Index
ARMADA EQUITY GROWTH FUND
- ------------------------------------
Aggregate Total Return as of 5/31/99
Annualized Cumulative
Annualized Annualized Since Since
1 Year 3 Year 5 Year Inception2 Inception2
Class I Shares1 20.16% 26.05% 22.53% 16.36% 318.50%
Class A Shares 19.88% 25.74% 22.23% 15.78% 228.06%
Class A Shares,
with Sales Charge4 13.30% 23.39% 20.85% 14.97% 210.04%
Class B Shares 19.22% 25.37% 22.01% 20.99% 30.51%
Class B Shares,
with Sales Charge5 14.22% 24.52% 21.83% 17.66% 25.51%
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
1 CLASS I 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 EQUITY GROWTH FUND'S DATE OF INCEPTION WAS DECEMBER 20, 1989, FOR
CLASS I SHARES, APRIL 15, 1991 FOR CLASS A SHARES AND JANUARY 6, 1998 FOR
CLASS B SHARES. THE ANNUALIZED 3-YEAR AND ANNUALIZED 5-YEAR RETURNS OF THE
CLASS B SHARES INCLUDE INFORMATION FROM COMMENCEMENT OF OPERATIONS OF THE
CLASS I SHARES, RATHER THAN THE DATE CLASS B SHARES WERE INTRODUCED.
3 THE RETURN AND PRINCIPAL VALUE OF AN INVESTMENT WILL FLUCTUATE. WHEN REDEEMED,
SHARES MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST.
4 PERFORMANCE CALCULATED BASED ON THE MAXIMUM FRONT-END SALES CHARGE IN EFFECT
AT MAY 31, 1999, OF 5.50%.
5 PERFORMANCE CALCULATED BASED ON THE MAXIMUM DEFERRED SALES CHARGE IN EFFECT
AT MAY 31, 1999, OF 5.00%. THIS CHARGE DECLINES FROM 5.00% IN THE FIRST
YEAR TO 0.00% AFTER FIVE YEARS, AS OUTLINED IN THE PROSPECTUS.
6 THE PERFORMANCE CHART FOR THE CLASS A AND CLASS B SHARES INCLUDES PERFORMANCE
OF THE CLASS I SHARES FROM DATE OF INCEPTION.
7
<PAGE>
[ARROW GRAPHIC OMITTED]
ARMADA TAX MANAGED EQUITY FUND OVERVIEW
COMMENTS FROM THE EQUITY GROWTH TEAM
For the fiscal year ended May 31, 1999, the Armada Tax-Managed Equity Fund
produced a total return of 23.03 percent (before sales charges) for Class A
investors, 22.31 percent (before sales changes) for Class B investors, and 22.82
percent for Class I investors. During the same period, the S&P 500 Composite
Index returned 21.05 percent.
Measured on an after-tax basis, the Fund's performance was even more
impressive. Although it is too early to comment on the calendar year ended 1999,
investors received a modest penny per share in December for capital gains
incurred from the Fund's inception (April 1998 for institutional shareholders
and May 1998 for retail investors) through November. We accomplished this feat
through our strategy of favoring capital appreciation (with its lower tax rate)
over dividends, selling depreciated securities to offset some of our gains, and
keeping portfolio turnover under 25 percent. The Fund's emphasis on low turnover
orients the portfolio toward stocks that offer consistent, long-term growth.
In the Fund's first full year, a benchmark weighting in the technology
sector, a large exposure to health care stocks, and a modest overweighting in
capital goods were most responsible for our excellent results. America Online,
Cisco Systems, Sun Microsystems, Texas Instruments, Microsoft, MCI/WorldCom, and
Vodafone all posted outstanding returns. Our health care holdings -- led by
Medtronic and Johnson & Johnson -- contributed throughout most of the reporting
period, although we gave back some gains in this sector when the market rotated
to value stocks in April and May.
In total, the Fund's assets grew in value by 60 percent year-over-year to
approximately 254 million. This increase can be attributed to a combination of
capital appreciation and the addition of assets in October resulting from a
merger with two other National City common funds.
Looking ahead, we intend to maintain a large exposure to healthcare -- 12.5
percent of assets at year-end -because we believe in the sector's long-term
potential for growth. Moreover, in keeping with our shareholders' sensitivity to
taxes, we expect to hold a large portion of the portfolio for the next three to
five years.
GROWTH OF A $10,000 INVESTMENT3
[Graphic Omitted]
Plot points are as follows:
COMPOSITE
CLASS I CLASS A CLASS B INDEX
5/31/89 10,000 9,450 10,000 10,000
May 90 11,540 10,905 11,540 11,712
May 91 13,262 12,532 13,262 13,089
May 92 14,459 13,664 14,459 14,383
May 93 15,681 14,819 15,681 16,049
May 94 15,890 15,016 15,890 16,728
May 95 17,798 16,819 17,798 20,099
May 96 22,402 21,170 22,402 25,811
May 97 28,825 27,240 28,825 33,400
May 98 38,603 36,479 38,603 43,644
May 99 47,412 44,881 47,215 52,831
Armada Tax Managed Equity Fund (Class Shares)1,6
Armada Tax Managed Equity Fund (Class Shares with sales charge)1,6
Armada Tax Managed Equity Fund (Class Shares)5,6
S&P 500 Composite Index
ARMADA TAX MANAGED EQUITY FUND
- ------------------------------------
Aggregate Total Return as of 5/31/99
Annualized Cumulative
Annualized Annualized Annualized Since Since
1 Year 3 Year 5 Year 10 Year Inception2 Inception2
Class I Shares1 22.82% 28.39% 24.44% 16.84% 17.65% 1031.70%
Class A Shares 23.03% 28.46% 24.48% 16.86% 17.66% 1033.58%
Class A Shares,
with Sales
Charge4 16.24% 26.03% 23.06% 16.18% 17.22% 971.75%
Class B Shares 19.12% 19.12% 19.12% 19.12% 17.62% 1027.03%
Class B Shares,
with Sales
Charge5 14.12% 14.12% 14.12% 14.12% 17.62% 1027.03%
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
1 CLASS I SHARES IS 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 TAX MANAGED EQUITY FUND'S DATE OF INCEPTION WAS APRIL 9, 1998,
FOR CLASS I SHARES, MAY 11 1998, FOR CLASS A SHARES AND MAY 4, 1998, FOR
CLASS B SHARES. THE ANNUALIZED 3, 5 AND 10-YEAR PERFORMANCE OF CLASS I SHARES,
CLASS A SHARES AND CLASS B SHARES INCLUDES PERFORMANCE OF A PREDECESSOR
COMMON TRUST FUND WHICH COMMENCED OPERATIONS ON JUNE 30, 1984.
3 THE RETURN AND PRINCIPAL VALUE OF AN INVESTMENT WILL FLUCTUATE. WHEN REDEEMED,
SHARES MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST.
4 PERFORMANCE CALCULATED BASED ON THE MAXIMUM FRONT-END SALES CHARGE IN EFFECT
AT MAY 31, 1999, OF 5.50%.
5 PERFORMANCE CALCULATED BASED ON THE MAXIMUM DEFERRED SALES CHARGE IN EFFECT
AT MAY 31, 1999, OF 5.00%. THIS CHARGE DECLINES FROM 5.00% IN THE FIRST YEAR
TO 0.00% AFTER FIVE YEARS, AS OUTLINED IN THE PROSPECTUS.
6 THE PERFORMANCE CHART FOR ALL CLASSES INCLUDES PERFORMANCE OF A PREDECESSOR
COMMON TRUST FUND.
8
<PAGE>
[ARROW GRAPHIC OMITTED]
ARMADA CORE EQUITY FUND OVERVIEW
COMMENTS FROM THE NATIONAL ASSET MANAGEMENT CORPORATION
For the fiscal year ended May 31, 1999, the Armada Core Equity Fund produced
a total return of 25.78 percent (before sales charges) for Class A investors,
25.17 percent (before sales charges) for Class B investors and 26.08 percent for
Class I investors. Over the same period, the S&P 500 Composite Index returned a
total of 21.05 percent.
Our decision to increase the portfolio's technology overweighting during the
third quarter of 1998 accounted for much of the Fund's outperformance versus the
benchmark. As Asia's economic woes took their toll on U.S. equity markets, we
were able to take advantage of some excellent valuation opportunities within
this sector. In particular, we filled out our positions in such companies as
Applied Materials and Teradyne while adding chip manufacturer Xilinx to the
portfolio. This move paid off during the fourth quarter of 1998 and the first
quarter of 1999 as technology stocks rallied. Other technology holdings --
Microsoft, Cisco Systems, and IBM among them -- performed strongly during this
period as well.
After technology's huge fourth-quarter run, we began to pare its
overweighting in January while increasing our holdings in the value-oriented
financial and basic materials sectors. Our position in the latter served us well
when cyclical stocks staged a major turnaround in April and May. Holdings in
paper companies Champion, Georgia-Pacific, and Willamette, in particular,
boosted results.
In sum, the Fund's growth and value allocations served shareholders well
throughout the reporting period. Furthermore, we anticipate maintaining the
portfolio's year-end growth and value parity for the foreseeable future. Given
the lack of clear direction in the economy, we believe that neither group is
likely to dominate the other over the near-term. A cloudy market environment
also means that we will continue to maintain some exposure to high-quality
stocks such as Merck, Schering-Plough, and Home Depot, which tend to stand up
better in volatile markets.
GROWTH OF A $10,000 INVESTMENT3
[Graphic omitted]
Plot points are as follows:
CLASS I CLASS A CLASS B INDEX
8/1/97 10,000 9,450 10,000 10,000
MAY 98 11,404 10,758 11,364 11,585
MAY 99 14,378 13,532 13,724 14,024
Armada Core Equity Fund (Class I Shares)1
Armada Core Equity Fund (Class A Shares with sales charge)4
Armada Core Equity Fund (Class B Shares)5,6
S&P 500 Composite Index
ARMADA CORE EQUITY FUND
- ------------------------------------
Aggregate Total Return as of 5/31/99
Annualized Cumulative
Since Since
1 Year Inception2 Inception2
Class I Shares1 26.08% 21.94% 43.77%
Class A Shares 25.78% 21.68% 43.20%
Class A Shares,
with Sales Charge4 18.86% 17.98% 35.35%
Class B Shares 25.17% 26.16% 38.36%
Class B Shares,
with Sales Charge5 20.17% 22.88% 33.36%
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
1 CLASS I 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 CORE EQUITY FUND'S DATE OF INCEPTION WAS AUGUST 1, 1997 FOR BOTH
CLASS I SHARES AND CLASS A SHARES AND JANUARY 6, 1998 FOR CLASS B SHARES.
3 THE RETURN AND PRINCIPAL VALUE OF AN INVESTMENT WILL FLUCTUATE. WHEN REDEEMED,
SHARES MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST.
4 PERFORMANCE CALCULATED BASED ON THE MAXIMUM FRONT-END SALES CHARGE IN EFFECT
AT MAY 31, 1999 OF 5.50%.
5 PERFORMANCE CALCULATED BASED ON THE MAXIMUM DEFERRED SALES CHARGE IN
EFFECT AT MAY 31, 1999 OF 5.00%. THIS CHARGE DECLINES FROM 5.00% IN THE FIRST
YEAR TO 0.00% AFTER FIVE YEARS, AS OUTLINED IN THE PROSPECTUS.
6 THE PERFORMANCE CHART FOR THE CLASS B SHARES INCLUDES PERFORMANCE OF THE
CLASS A SHARES FROM DATE OF INCEPTION.
9
<PAGE>
[ARROW GRAPHIC OMITTED]
ARMADA EQUITY INDEX FUND OVERVIEW
COMMENTS FROM THE EQUITY TEAM
From its inception for Class A investors on October 15, 1998, through May 31,
1999, the Armada Equity Index Fund produced a total return of 24.83 percent
(before sales charges). By comparison, the S&P 500 Composite Index returned
19.43 percent from October 15, 1998, through May 31, 1999. From its inception
for Class I investors on July 10, 1998, the Fund's return totaled 14.16 percent.
By comparison, the S&P 500 Composite Index produced a total return of 17.58
percent from July 10, 1998, through May 31, 1999.
By owning all 500 component companies in their exact proportions, we were
able to track the performance of this leading large cap stock index very closely
since the Fund opened to investors. The portfolio benefited from the strong
showing by large cap stocks -- a handful of technology stocks in particular --
which again held sway over all other segments of the equity markets. Although
the Index suffered a temporary setback in August through October due to global
uncertainty, it had fully recovered by the end of 1998.
Looking ahead, large cap stocks are likely to continue posting solid earnings
results. However, given the rich valuations of many Index components and the
year-end improvement in other areas of the market, investors may not see another
consecutive year of 20-plus percent returns.
[Graphic omitted]
Plot points are as follows:
GROWTH OF $10,000 INVESTMENT3
CLASS I CLASS A INDEX
7/10/98 10,000
10/15/98 10,000 9,625 10,000
May 99 11,414 12,013 11,632
Armada Equity Index Fund (Class I Shares)1
Armada Equity Index Fund (Class A Shares with sales charge)4
S&P 500 Composite Index
ARMADA EQUITY INDEX FUND
- ------------------------------------
Aggregate Total Return as of 5/31/99
Annualized Cumulative
Inception to Since
Date2 Inception2
Class I Shares1 15.90% 14.16%
Class A Shares 39.74% 24.83%
Class A Shares,
with Sales Charge4 38.27% 20.20%
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
1 CLASS I 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 EQUITY INDEX FUND'S DATE OF INCEPTION WAS JULY 10, 1998 FOR CLASS
I SHARES AND OCTOBER 15, 1998 FOR CLASS A SHARES.
3 THE RETURN AND PRINCIPAL VALUE OF AN INVESTMENT WILL FLUCTUATE. WHEN REDEEMED,
SHARES MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST.
4 PERFORMANCE CALCULATED BASED ON THE MAXIMUM FRONT-END SALES CHARGE IN EFFECT
AT MAY 31, 1999 OF 3.75%.
10
<PAGE>
[ARROW GRAPHIC OMITTED]
ARMADA EQUITY INCOME FUND OVERVIEW
COMMENTS FROM THE EQUITY VALUE TEAM
During the latter half of 1998 and the first three months of 1999, the market
continued to reward large cap growth managers far more richly than their value
counterparts. In fact, the S&P/Barra Growth Index outperformed the S&P/Barra
Value Index by 15.06 percentage points for the entire fiscal year. Despite this
somewhat hostile environment, the management team remained true to the Fund's
value discipline. As a result, we were eventually rewarded for our patience. The
easing of the global economic crisis led to a broadening of the market in April,
and the Fund was strategically positioned to benefit as investors began moving
money into such undervalued sectors as industrial, energy, and basic materials.
For the fiscal year ended May 31, 1999, the Armada Equity Income Fund
produced a total return of 10.40 percent (before sales charges) for Class A
investors, 9.14 percent (before sales charges) for Class B investors, and 10.62
percent for Class I investors. Over the same period, the S&P 500/Barra Value
Index returned 13.09 percent.
We were pleased with the Fund's performance, which trailed its benchmark's
slightly. Superior stock selection served us well as many long-time holdings
showed substantial gains. Strong performers included Alcoa, Caterpillar, Enron,
Frontier Corp., General Dynamics, General Mills, Intimate Brands, and United
Technologies. From a sector standpoint, our underweighting in financials versus
the benchmark helped us the most as did our overweighting in healthcare. In
turn, our underweighting in technology and overweighting in consumer cyclicals
detracted. Given the large cap market's strong performance, our low risk profile
(i.e., low beta) also contributed to the Fund's slight underperformance.
Looking ahead, we believe that the continuing recovery of the world economy
bodes well for value investors in general and for our portfolio in particular.
For example, our overweighting in the U.S. industrial and basic commodities
sector should prove advantageous if a reduction in pricing pressure leads to
profit margin improvements. In addition, the Fund has significant holdings in
utilities and telecommunications, two traditional value sectors that still
appear overlooked by the market. In sum, we believe that the Fund is
well-positioned if the market takes a more defensive posture and shifts its
focus to undervalued stocks with cyclical earnings.
GROWTH OF A $10,000 INVESTMENT3
[Graphic Omitted]
Plot points are as follows:
VALUE
CLASS I CLASS A CLASS B INDEX INDEX
7/1/94 10,000
8/22/94 9,450 10,000
May 95 11,309 10,403 11,008 12,316 12,041
May 96 13,540 12,417 13,140 15,816 15,213
May 97 16,872 15,438 16,337 20,466 19,087
May 98 21,206 19,361 20,516 26,744 24,607
May 99 23,458 21,374 22,191 32,373 27,828
Armada Equity Income Fund (Class I Shares)1
Armada Equity Income Fund (Class A Shares with sales charge)4
Armada Equity Income Fund (Class B Shares)5, 6
S&P 500/BARRA Value Index
ARMADA EQUITY INCOME FUND
- ------------------------------------
Aggregate Total Return as of 5/31/99
Annualized Cumulative
Annualized Since Since
1 Year 3 Year Inception2 Inception2
Class I Shares1 10.62% 20.11% 18.93% 134.59%
Class A Shares 10.40% 19.85% 18.64% 126.18%
Class A Shares,
with Sales
Charge4 4.32% 17.60% 17.24% 113.69%
Class B Shares 9.14% 19.44% 13.52% 19.39%
Class B Shares,
with Sales
Charge5 4.14% 18.50% 10.10% 14.39%
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
1 CLASS I 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 EQUITY INCOME FUND'S DATE OF INCEPTION WAS JULY 1, 1994 FOR CLASS I
SHARES, AUGUST 22, 1994 FOR CLASS A SHARES AND JANUARY 6, 1998 FOR CLASS B
SHARES. THE ANNUALIZED 3-YEAR RETURN OF THE CLASS B SHARES INCLUDES
INFORMATION FROM COMMENCEMENT OF OPERATIONS OF THE CLASS A SHARES, RATHER
THAN THE DATE CLASS B SHARES WERE INTRODUCED.
3 THE RETURN AND PRINCIPAL VALUE OF AN INVESTMENT WILL FLUCTUATE. WHEN REDEEMED,
SHARES MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST.
4 PERFORMANCE CALCULATED BASED ON THE MAXIMUM FRONT-END SALES CHARGE IN EFFECT
AT MAY 31, 1999, OF 5.50%.
5 PERFORMANCE CALCULATED BASED ON THE MAXIMUM DEFERRED SALES CHARGE IN EFFECT
AT MAY 31, 1999, OF 5.00%. THIS CHARGE DECLINES FROM 5.00% IN THE FIRST YEAR
TO 0.00% AFTER FIVE YEARS, AS OUTLINED IN THE PROSPECTUS.
6 THE PERFORMANCE CHART FOR CLASS B SHARES INCLUDES PERFORMANCE OF THE CLASS A
SHARES FROM DATE OF INCEPTION.
11
<PAGE>
[ARROW GRAPHIC OMITTED]
ARMADA BALANCED ALLOCATION FUND OVERVIEW
COMMENTS FROM EQUITY AND FIXED INCOME TEAMS
From its inception for Class I investors on July 10, 1998, through May 31,
1999, the Armada Balanced Allocation Fund produced a total return of 4.57
percent. Since the Fund was opened to Class A investors on July 31, 1998, the
Fund returned a total of 7.26 percent (before sales charges). Since the Fund was
opened to Class B investors on November 11, 1998, the Fund returned a total of
6.07 percent (before sales charges). By comparison, the Balanced Allocation
Hybrid Benchmark returned 11.20 percent, the S&P 500 Composite Index returned
12.61 percent, and the Lehman Aggregate Bond Index returned (0.77) percent from
November 30, 1998 to May 31, 1999. By comparison, the S&P 500 Composite Index
returned 17.58 percent from July 31, 1998, through May 31, 1999, while the
Lehman Aggregate Bond Index returned 3.24 percent over the same period. During
the same period the Balanced Allocation Hybrid Benchmark returned 11.65 percent.
This benchmark reflects a blending of the S&P 500 Composite Index and the Lehman
Aggregate Bond Index.
The management team's decision to keep the portfolio's equity holdings near
the low end of their permitted allocation range initially served us well as
global economic woes sent stock prices tumbling during the third quarter of
1998. However, better-than-expected corporate earnings and the beginnings of a
turnaround in Asia during the fourth quarter helped the market rebound faster
than we had anticipated. As these events unfolded, the Fund's underexposure to
equities was mitigated somewhat by our exposure to exclusively large cap growth
holdings. These stocks again easily outperformed every other segment of the
equity market over the past 12 months.
In fixed income, the portfolio's heavy weighting in Treasuries benefited the
Fund during the "flight to quality" that occurred in late 1998. Although we
began adding back high-quality spread (non-Treasury) securities incrementally in
January, this sector staged a rapid comeback that cost us some of our earlier
gains. By February, we had tilted our fixed-income allocation firmly toward
spread sectors, which we are convinced offer the best risk/return profile for
our investors.
At fiscal year-end, approximately 60 percent of the Fund was invested in
large cap stocks, placing our equity holdings near the high end of their
allocation range. In particular, we increased our exposure to traditional value
sectors such as basic materials, energy, and consumer cyclicals. These sectors
began to perform strongly in April and May, and we believe that their attractive
valuations and a bright earnings outlook bode well for the future. Bonds --
heavily weighted to mortgage-backed securities -- accounted for the remaining
40 percent of holdings.
GROWTH OF A $10,000 INVESTMENT3
[Graphic omitted]
Plot points are as follows:
CLASS I CLASS A CLASS B BENCHMARK
7/10/98 10,000 10,100
7/31/98 10,100 9,525 10,200
11/11/98 10,200 10,100 10,000 10,400
May 99 10,457 10,214 10,107 11,165
ARMADA BALANCED ALLOCATION FUND
- ------------------------------------
Aggregate Total Return as of 5/31/99
Annualized Cumulative
Inception to Since
Date Inception2
Class I Shares1 5.13% 4.57%
Class A Shares 8.71% 7.26%
Class A Shares, with Sales Charge4 8.30% 2.12%
Class B Shares 11.02% 6.07%
Class B Shares, with Sales Charge5 1.94% 1.07%
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
1 CLASS I 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 BALANCED ALLOCATION FUND'S DATE OF INCEPTION WAS JULY 10, 1998
FOR CLASS I SHARES, JULY 31, 1998 FOR CLASS A SHARES AND NOVEMBER 11, 1998
FOR CLASS B SHARES.
3 THE RETURN AND PRINCIPAL VALUE OF AN INVESTMENT WILL FLUCTUATE. WHEN REDEEMED,
SHARES MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST.
4 PERFORMANCE CALCULATED BASED ON THE MAXIMUM FRONT-END SALES CHARGE IN EFFECT
AT MAY 31, 1999 OF 4.75%.
5 PERFORMANCE CALCULATED BASED ON THE MAXIMUM DEFERRED SALES CHARGE IN EFFECT
AT MAY 31, 1999 OF 5.00%. THIS CHARGE DECLINES FROM 5.00% IN THE FIRST YEAR
TO 0.00% AFTER FIVE YEARS, AS OUTLINED IN THE PROSPECTUS.
6 THE PERFORMANCE CHART FOR CLASS B SHARES INCLUDES PERFORMANCE OF THE CLASS A
SHARES FROM DATE OF INCEPTION.
12
<PAGE>
[ARROW GRAPHIC OMITTED]
ARMADA TOTAL RETURN ADVANTAGE FUND OVERVIEW
COMMENTS FROM NATIONAL ASSET MANAGEMENT CORPORATION
Given the unusual volatility in the bond markets over the past 12 months, the
management team was modestly pleased with the Fund's performance. For the fiscal
year ended May 31, 1999, the Armada Total Return Advantage Fund produced a total
return of 3.18 percent (before sales charges) for Class A investors and 3.54
percent for Class I investors. During the same period, the Lehman
Government/Corporate Bond Index returned 4.06 percent.
During the first half of the reporting period, our portfolio's longer
duration proved beneficial to performance. Unfortunately, any gains were offset
by an overweighting in non-Treasury sectors (corporate, mortgage-backed, and
asset-backed securities). As Treasury prices soared during the flight to
quality, the remainder of the bond market suffered a liquidity crisis.
We increased our holdings in non-Treasury sectors throughout the first
quarter of 1999, a strategy that contributed to the Fund's results as these
sectors rebounded to outperform Treasuries through April. However, our gains
were slightly outweighed by our longer duration and the Fed's bias toward
tightening short-term interest rates.
At year-end, 42 percent of the Fund's net assets were invested in corporate
bonds, 26 percent in asset-backed securities, 22 percent in Treasuries and
agency securities, 9 percent in mortgage-backed securities, and 1 percent in
cash. As of the same date, the weighted average maturity of the portfolio's
holdings was 9.77 years, with an average credit quality of double-A. We
anticipate maintaining our current posture for the next three to six months
because we believe that it offers our shareholders the best combination of risk
versus reward.
GROWTH OF A $10,000 INVESTMENT3
[Graphic Omitted]
Plot points are as follows:
CLASS A CLASS I INDEX
7/7/94 10,000 10,000
9/6/94 10,000 9,525 10,000
May 95 11,113 10,396 11,187
May 96 11,579 10,782 11,645
May 97 12,564 11,682 12,565
May 98 13,864 12,859 14,008
May 99 14,355 13,268 14,577
Armada Total Return Advantage Fund (Class I Shares)1
Armada Total Return Advantage Fund (Class A Shares with sales charge)4
Lehman Government/Corporate Bond Index
ARMADA TOTAL RETURN ADVANTAGE FUND
- ------------------------------------
Aggregate Total Return as of 5/31/99
Annualized Cumulative
Annualized Since Since
1 Year 3 Year Inception2 Inception2
Class I Shares1 3.54% 7.42% 7.65% 43.53%
Class A Shares 3.18% 7.16% 7.25% 39.29%
Class A Shares,
with Sales
Charge4 (1.71)% 5.44% 6.15% 32.63%
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
1 CLASS I 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 CLASS I SHARES AND SEPTEMBER 6, 1994 FOR CLASS A SHARES.
3 THE RETURN AND PRINCIPAL VALUE OF AN INVESTMENT WILL FLUCTUATE. WHEN REDEEMED,
SHARES MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST.
4 PERFORMANCE CALCULATED BASED ON THE MAXIMUM FRONT-END SALES CHARGE IN EFFECT
AT MAY 31, 1999 OF 4.75%.
13
<PAGE>
[ARROW GRAPHIC OMITTED]
ARMADA BOND FUND OVERVIEW
COMMENTS FROM THE TAXABLE FIXED INCOME TEAM
The past 12 months were a period of extreme volatility in the fixed income
markets. Overall, the management team was pleased with the performance of the
Fund through the end of 1998 although our results for the first five months of
1999 were less than expected.
For the fiscal year ended May 31, 1999, the Armada Bond Fund produced a total
return of 3.77 percent (before sales charges) for Class A investors, 3.06
percent (before sales charges) for Class B investors, and 3.82 percent for Class
I investors. During the same period, the Lehman Aggregate Bond Index returned
4.34 percent and the Lehman Intermediate Government Bond Index returned 4.98
percent. Going forward, performance of the Fund will be measured against the
Lehman Aggregate Bond Index instead of the Lehman Intermediate Government Bond
Index. We adopted the Lehman Aggregate Bond Index to reflect more accurately the
Fund's investment objectives
Our strategy was correct in anticipating that we would benefit from an
overweight in Treasuries going into the third quarter of 1998. A long duration
position also contributed to our strong performance, at least through the end of
October.
The management team began increasing holdings in corporate and mortgage-
backed issues in January, but we approached these moves cautiously. With Brazil
facing economic difficulties and Asia and Russia fresh in our minds, we did not
anticipate that the markets would take the latest crisis in stride. We continued
to increase holdings in these sectors through February, a position the Fund
retained to the end of the reporting period.
The Fund currently remains overweighted in spread sectors, slightly favoring
mortgages to corporate bonds. Yields in the corporate market are attractive, but
we prefer to remain defensive in this sector given the current fever for mergers
and acquisitions. AT&T's recent bid to acquire MediaOne, and the amount of debt
it was willing to assume to clinch the deal, points to the event risk that is
part of today's corporate debt market.
As of May 31, 1999, 17 percent of the fund's net assets were invested in U.S.
Treasury and Agency securities, 46 percent in mortgage-backed securities, 25
percent in corporate bonds, and 12 percent in asset-backed securities. As of the
same date, the average maturity of the portfolio's holdings was 9.05 years, with
an average credit quality of triple-A.
GROWTH OF A $10,000 INVESTMENT3
[Graphic Omitted]
Plot points are as follows:
AGGREGATE
GOV'T BOND
CLASS I CLASS A CLASS B INDEX INDEX
8/10/94 10,000 9,525 10,000 10,000 10,000
MAY 95 10,772 10,260 10,775 10,765 10,955
MAY 96 11,194 10,662 11,198 11,253 11,435
MAY 97 12,022 11,432 12,009 12,053 12,387
MAY 98 13,050 12,380 13,026 13,087 13,739
MAY 99 13,549 12,846 13,226 13,739 14,336
Armada Bond Fund (Class I Shares)1
Armada Bond Fund (Class A Shares with sales charge)4,6
Armada Bond Fund (Class B Shares)5,6
Lehman Intermediate Government Bond Index
Lehman Aggregate Bond Index
Armada Bond Fund
Aggregate Total Return as of 5/31/99
Annualized Cumulative
Annualized Since Since
1 Year 3 Year Inception2 Inception2
Class I Shares1 3.82% 6.57% 6.52% 35.50%
Class A Shares 3.77% 6.41% 6.45% 18.53%
Class A Shares,
with Sales
Charge4 (1.14)% 4.69% 4.55% 12.87%
Class B Shares 3.06% 6.23% 3.28% 4.61%
Class B Shares,
with Sales
Charge5 (1.80)% 5.04% (0.15)% (0.20)%
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
1 CLASS I 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 ACTIVITY FOR THE PERIOD PRESENTED INCLUDES THAT OF A PREDECESSOR FUND THROUGH
SEPTEMBER 6, 1996. THE ARMADA BOND FUND'S DATE OF INCEPTION FOR PERFORMANCE
WAS AUGUST 10, 1994 FOR CLASS I SHARES, SEPTEMBER 11, 1996 FOR CLASS A SHARES
AND JANUARY 6, 1998 FOR CLASS B SHARES. THE ANNUALIZED 3-YEAR RETURN OF THE
CLASS A AND CLASS B SHARES INCLUDES INFORMATION FROM THE COMMENCEMENT OF
OPERATIONS OF THE CLASS I SHARES, RATHER THAN THE DATE CLASS A SHARES OR
CLASS B SHARES WERE INTRODUCED. THE PERFORMANCE OF THE CLASS A SHARES OR
CLASS B SHARES PRIOR TO THEIR INTRODUCTION DATE DOES NOT REFLECT SHAREHOLDER
SERVICING FEES, WHICH, IF REFLECTED, WOULD REDUCE THE PERFORMANCE QUOTED
FOR SUCH PERIODS.
3 THE RETURN AND PRINCIPAL VALUE OF AN INVESTMENT WILL FLUCTUATE. WHEN REDEEMED,
SHARES MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST.
4 PERFORMANCE CALCULATED BASED ON THE MAXIMUM FRONT-END SALES CHARGE IN EFFECT
AT MAY 31, 1999 OF 4.75%.
5 PERFORMANCE CALCULATED BASED ON THE MAXIMUM DEFERRED SALES CHARGE IN EFFECT AT
MAY 31, 1999 OF 5.00%. THIS CHARGE DECLINES FROM 5.00% IN THE FIRST YEAR TO
0.00% AFTER FIVE YEARS, AS OUTLINED IN THE PROSPECTUS.
6 THE PERFORMANCE CHART FOR THE CLASS A AND CLASS B SHARES INCLUDES PERFORMANCE
OF THE CLASS I SHARES FROM DATE OF INCEPTION.
14
<PAGE>
[ARROW GRAPHIC OMITTED]
ARMADA INTERMEDIATE BOND FUND OVERVIEW
COMMENTS FROM THE TAXABLE FIXED INCOME TEAM
During the second half of 1998, the economic meltdown in Asia and Russia led
investors to flee domestic and international equity markets for the safety of
U.S. Treasuries. This flight to quality caused U.S. Treasury prices to
skyrocket, but it led to a lack of liquidity in virtually every other sector of
the bond market.
The Fund initially benefited from this environment due to its heavy weighting
in Treasuries. The shorter maturities of its holdings also subjected the Fund to
less of the credit curve. Our portfolio was still overweighted in Treasuries as
the global crisis eased in early 1999, erasing some of our gains as Treasury
prices began their descent from stratospheric heights. At the same time,
liquidity returned to the spread sectors. Year-over-year, the portfolio produced
an acceptable return that belied one of the most difficult fixed income markets
of the past 20 years.
For the fiscal year ended May 31, 1999, the Armada Intermediate Bond Fund
produced a total return of 3.54 percent (before sales charges) for Class A
investors, 2.83 percent (before sales charges) for Class B investors, and 3.98
percent for Class I investors. During the same period, the Lehman Intermediate
Government/Corporate Bond Index returned
4.78 percent.
Looking ahead, the management team faces an environment of strong domestic
growth and tight labor markets characterized by the Fed's decision to change its
policy bias toward tightening interest rates. We still believe that long bond
yields will stay in a range between 5.5 and 6.5 percent and have moved the
portfolio to a neutral duration position.
As of May 31, 1999, 25 percent of the Fund's net assets were invested in U.S.
Treasury and Agency securities, 14 percent in mortgage-backed securities, 39
percent in corporate bonds, and 18 percent in asset-backed securities. As of the
same date, the average maturity of the portfolio's holdings was 4.63 years, with
an average credit quality of double-A.
[Graphic omitted]
Plot points are as follows:
GROWTH OF A $10,000 INVESTMENT3
CLASS I CLASS A CLASS B LEHMAN
12/20/89 10,000 9,525 10,000 10,000
May 90 10,098 9,619 10,097 10,197
May 91 11,332 10,791 11,329 11,414
May 92 12,761 12,154 12,760 12,737
May 93 14,205 13,425 14,166 14,061
May 94 14,205 13,396 14,134 14,442
May 95 15,561 14,636 15,442 15,617
May 96 16,151 15,140 15,974 16,334
May 97 17,222 16,103 16,989 17,539
May 98 18,615 17,344 18,243 19,086
May 99 19,356 17,958 18,760 19,999
Armada Intermediate Bond Fund (Class I Shares)1
Armada Intermediate Bond Fund (Class A Shares with sales charge)4, 6
Armada Intermediate Bond Fund (Class B Shares)5, 6
Lehman Intermediate Government/Corporate Bond Index
ARMADA INTERMEDIATE BOND FUND
- ------------------------------------
Aggregate Total Return as of 5/31/99
Annualized Cumulative
Annualized Annualized Since Since
1 Year 3 Year 5 Year Inception2 Inception2
Class I Shares1 3.98% 6.22% 6.38% 7.24% 93.55%
Class A Shares 3.54% 5.85% 6.04% 6.59% 67.83%
Class A Shares,
with Sales
Charge4 (1.38)% 4.14% 5.02% 5.95% 59.79%
Class B Shares 2.83% 5.51% 5.83% 2.92% 4.10%
Class B Shares,
with Sales
Charge5 (2.07)% 4.29% 5.51% (0.55)% (0.76)%
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
1 CLASS I 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 CLASS I SHARES, APRIL 15, 1991 FOR CLASS A SHARES AND JANUARY 6, 1998
FOR CLASS B SHARES. THE 3-YEAR AND 5-YEAR RETURNS OF THE CLASS B SHARES
INCLUDE INFORMATION FROM THE COMMENCEMENT OF OPERATIONS OF THE CLASS I
SHARES, RATHER THAN THE DATE CLASS B SHARES WERE INTRODUCED. THE PERFORMANCE
OF THE CLASS B SHARES PRIOR TO THEIR INTRODUCTION DATE DOES NOT REFLECT
SHAREHOLDER SERVICING FEES, WHICH, IF REFLECTED, WOULD REDUCE THE PERFORMANCE
QUOTED FOR SUCH PERIODS.
3 THE RETURN AND PRINCIPAL VALUE OF AN INVESTMENT WILL FLUCTUATE. WHEN REDEEMED,
SHARES MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST.
4 PERFORMANCE CALCULATED BASED ON THE MAXIMUM FRONT-END SALES CHARGE IN EFFECT
AT MAY 31, 1999 OF 4.75%.
5 PERFORMANCE CALCULATED BASED ON THE MAXIMUM DEFERRED SALES CHARGE IN EFFECT
AT MAY 31, 1999 OF 5.00%. THIS CHARGE DECLINES FROM 5.00% IN THE FIRST
YEAR TO 0.00% AFTER FIVE YEARS, AS OUTLINED IN THE PROSPECTUS.
6 THE PERFORMANCE CHART FOR THE CLASS A AND CLASS B SHARES INCLUDES PERFORMANCE
OF THE CLASS I SHARES FROM DATE OF INCEPTION.
15
<PAGE>
[ARROW GRAPHIC OMITTED]
ARMADA GNMA FUND OVERVIEW
COMMENTS FROM THE TAXABLE FIXED INCOME TEAM
Going into the third quarter of 1998, the Fund's overweighting in U.S.
Treasury securities helped performance when every other sector of the bond
market was hurt by the global flight to quality. At the time, Treasuries
accounted for approximately 25 percent of the Fund's allocation. We were slow to
scale back our Treasury holdings due to our ongoing concerns about economic
problems in Asia, Russia, and, in particular, Brazil. This decision diminished
some of our first half gains as a flood of private capital stabilized Brazil
more quickly than we had anticipated, triggering a rebound in the spread
sectors. On balance, though, we gained more from the Fund's underweighting in
Ginnie Maes versus the benchmark than we lost by delaying our entry back into
that market.
For the fiscal year ended May 31, 1999, the Armada GNMA Fund produced a total
return of 3.77 percent (before sales charges) for Class A investors and 4.02
percent for Class I investors. During the same period, the Lehman GNMA Index
returned 4.91 percent.
With no liquidity issues on the horizon, the Fund currently retains only a
moderate exposure to Treasuries. In addition, we anticipate keeping the
portfolio's duration neutral relative to its benchmark, based on our belief that
long bond yields are unlikely to exceed 6.5 percent.
As of May 31, 1999, 80 percent of the Fund's net assets were invested in U.S.
Agency securities, 4 percent in Treasuries, 5 percent in mortgage-backed
securities and 7 percent in asset-backed securities. As of the same date, the
average maturity of the portfolio's holdings was 7.16 years.
GROWTH OF A $10,000 INVESTMENT3
[Graphic omitted]
Plot points are as follows:
CLASS I CLASS A LEHMAN
8/10/94 10,000 9,525 10,000
MAY 95 10,961 10,440 10,960
MAY 96 11,466 10,922 11,547
MAY 97 12,513 11,898 12,643
MAY 98 13,661 12,957 13,857
MAY 99 14,210 13,446 14,538
Armada GNMA Fund (Class I Shares)1
Armada GNMA Fund (Class A Shares with sales charge)4,5
Lehman GNMA Index
ARMADA GNMA FUND
- ------------------------------------
Aggregate Total Return as of 5/31/99
Annualized Cumulative
Annualized Since Since
1 Year 3 Year Inception2 Inception2
Class I Shares1 4.02% 7.41% 7.58% 42.12%
Class A Shares 3.77% 7.17% 7.25% 20.96%
Class A Shares,
with Sales
Charge4 (1.19)% 5.45% 5.35% 15.21%
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
1 CLASS I 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 CLASS I
SHARES AND SEPTEMBER 11, 1996 FOR CLASS A SHARES. THE ANNUALIZED 3-YEAR
RETURN OF THE CLASS A SHARES INCLUDES INFORMATION FROM THE COMMENCEMENT OF
OPERATIONS OF THE CLASS I SHARES, RATHER THAN THE DATE CLASS A SHARES WERE
INTRODUCED. THE PERFORMANCE OF THE CLASS A SHARES PRIOR TO THEIR INTRODUCTION
DATE DOES NOT REFLECT SHAREHOLDER SERVICING FEES, WHICH, IF REFLECTED, WOULD
REDUCE THE PERFORMANCE QUOTED FOR SUCH PERIODS.
3 THE RETURN AND PRINCIPAL VALUE OF AN INVESTMENT WILL FLUCTUATE. WHEN REDEEMED,
SHARES MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST.
4 PERFORMANCE CALCULATED BASED ON THE MAXIMUM FRONT-END SALES CHARGE IN EFFECT
AT MAY 31, 1999 OF 4.75%.
5 THE PERFORMANCE CHART FOR CLASS A SHARES INCLUDES PERFORMANCE OF THE CLASS I
SHARES FROM DATE OF INCEPTION.
16
<PAGE>
[ARROW GRAPHIC OMITTED]
ARMADA ENHANCED INCOME FUND OVERVIEW
COMMENTS FROM THE TAXABLE FIXED INCOME TEAM
Despite a difficult first half, the past fiscal year proved to be one of
strong performance for the Fund. For the fiscal year ended May 31, 1999, the
Armada Enhanced Income Fund produced a total return of 4.94 percent (before
sales charges) for Class A investors and 5.14 percent for Class I investors.
During the same period, the Merrill Lynch 1-3 Year Treasury Index returned 5.3
percent.
In late 1998, a global economic crisis triggered the "flight to quality" that
sent Treasury prices soaring and led to a lack of liquidity in every other
sector of the bond market. The subsequent collapse of some highly leveraged
global hedge funds, most notably Long Term Capital Management, only exacerbated
the situation. As a result, the prices of corporate bonds and other "spread"
products, which normally trade somewhat in tandem with the Treasury market,
moved in the opposite direction. Despite this chain of events, the management
team remained committed to the Fund's traditionally aggressive overweighting in
spread sectors throughout the reporting period. The portfolio was dominated, in
particular, by corporate bonds and asset-backed securities.
Inevitable underperformance during the latter half of 1998 was short-lived
and, as expected, never approached the lows that characterized the intermediate
segment of the spread market. During this period, the Fund's short duration also
helped cushion the blows felt by the corporate and asset-backed sectors. We
continued to increase the portfolio's weighting in spread sectors, pushing it up
to approximately 90 percent by early January. As a result, investors were
rewarded when the Fund benefited from the subsequent rally in these markets.
As of May 31, 1999, 33 percent of the Fund's net assets were invested in
asset-backed securities, 34 percent in corporate bonds, 23 percent in
mortgage-backed securities, and 9 percent in U.S. Treasury securities. As of the
same date, the average maturity of the portfolio's holdings was 2.06 years with
an average credit quality of double-A.
GROWTH OF A $10,000 INVESTMENT3
[Graphic omitted]
Plot points are as follows:
CLASS I CLASS A MERRILL
7/7/94 10,000 10,000
9/9/94 10,000 9,725 10,000
MAY 95 10,577 10,205 10,714
MAY 96 11,142 10,727 11,276
MAY 97 11,812 11,361 12,020
MAY 98 12,601 12,120 12,859
MAY 99 13,248 12,719 13,541
Armada Enhanced Income Fund (Class I Shares)1
Armada Enhanced Income Fund (Class A Shares with sales charge)4
Merrill Lynch 1-3 Year Treasury Index
ARMADA ENHANCED INCOME FUND
- ------------------------------------
Aggregate Total Return as of 5/31/99
Annualized Cumulative
Annualized Since Since
1 Year 3 Year Inception2 Inception2
Class I Shares1 5.14% 5.94% 5.91% 32.48%
Class A Shares 4.94% 5.84% 5.84% 30.77%
Class A Shares,
with Sales
Charge4 2.01% 4.87% 5.21% 27.12%
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
1 CLASS I 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
CLASS I SHARES AND SEPTEMBER 9, 1994 FOR CLASS A SHARES.
3 THE RETURN AND PRINCIPAL VALUE OF AN INVESTMENT WILL FLUCTUATE. WHEN REDEEMED,
SHARES MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST.
4 PERFORMANCE CALCULATED BASED ON THE MAXIMUM FRONT-END SALES CHARGE IN EFFECT
AT MAY 31, 1999 OF 2.75%.
17
<PAGE>
[ARROW GRAPHIC OMITTED]
ARMADA OHIO TAX EXEMPT FUND OVERVIEW
COMMENTS FROM THE TAX EXEMPT FIXED INCOME TEAM
For the fiscal year ended May 31, 1999, the Armada Ohio Tax Exempt Fund
returned 3.93 percent (before sales charges) to Class A investors and 3.94
percent to Class I investors. Over the same period, the Lehman 7 Year Municipal
Bond Index returned 4.73 percent.
In measuring our results, keep in mind that the benchmark tracks municipal
bonds of varying degrees of quality. Throughout the year, at least 95 percent of
the Fund was invested in high-quality, triple-A or double-A issues. The small
spread between credit grades that characterized the past 12 months did not
warrant adding any additional risk to the portfolio.
At year-end, 57.5 percent of the Armada Ohio Tax Exempt Fund was invested in
general obligation, pre-refunded, and escrowed-to-maturity securities. Of the
Fund's revenue bond holdings, agencies accounted for 21 percent, hospitals 9
percent, and utilities 13 percent. No more than 5 percent of assets were
invested in any single issue. The average maturity of the securities in the Fund
was 7.33 years as of May 31, 1999.
The ongoing litigation brought against the state on behalf of more than 80
percent of its school districts provided the dominant theme in the Ohio
municipal market throughout the year. In brief, the courts maintain that the
state has not done enough to close the funding gap between its poorest and most
affluent districts. The case is heading to the State Supreme Court for a second
time, and a decision is expected to be handed down during the fall.
This issue caused uncertainty in the Ohio municipal market last year --
primarily among out-of-state buyers -sending bond prices down. We remain
convinced that the schools can only benefit from the outcome of the lawsuit and
have positioned the Fund accordingly. Taking advantage of their excellent value,
we increased our weighting in school district general obligation securities to
20 percent of the portfolio.
The state may or may not be weakened by the Supreme Court's decision. If it
loses, the legislature may simply raise taxes, a move most lawmakers wouldn't
have considered during last year's elections. Following our historical emphasis
on caution, we lowered our holdings in state-issued debt from 15 percent down to
only 4.6 percent of the portfolio.
GROWTH OF A $10,000 INVESTMENT3
[Graphic omitted]
Plot points are as follows:
CLASS I CLASS A LEHMAN
1/5/90 10,000 9,700 10,000
MAY 90 10,054 9,752 10,188
MAY 91 10,795 10,430 11,207
MAY 92 11,463 11,080 12,215
MAY 93 12,604 12,217 13,495
MAY 94 12,892 12,496 13,939
MAY 95 13,744 13,326 15,076
MAY 96 14,343 13,906 15,776
MAY 97 15,257 14,793 16,857
MAY 98 16,390 15,886 18,217
MAY 99 17,036 16,510 19,079
Armada Ohio Tax Exempt Fund (Class I Shares)1
Armada Ohio Tax Exempt Fund (Class A Shares with sales charge)4, 5
Lehman 7 Year Municipal Bond Index
ARMADA OHIO TAX EXEMPT FUND6
- ------------------------------------
Aggregate Total Return as of 5/31/99
Annualized Cumulative
Annualized Annualized Since Since
1 Year 3 Year 5 Year Inception2 Inception2
Class I Shares1 3.94% 5.90% 5.73% 5.83% 70.37%
Class A Shares 3.93% 5.89% 5.73% 5.90% 59.21%
Class A Shares,
with Sales
Charge4 0.84% 4.82% 5.08% 5.51% 54.48%
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
1 CLASS I SHARES ARE SOLD PRIMARILY TO BANKS AND TRUST COMPANIES WHICH ARE
AFFILIATED WITH NATIONAL CITY CORPORATION AND CLIENTS OF NATIONAL ASSET
MANAGEMENT CORPORATION ("NAM"). CERTAIN ACCOUNT LEVEL CHARGES MAY APPLY.
2 THE ARMADA OHIO TAX EXEMPT FUND'S DATE OF INCEPTION WAS JANUARY 5, 1990 FOR
CLASS I SHARES AND APRIL 15, 1991 FOR CLASS A SHARES.
3 THE RETURN AND PRINCIPAL VALUE OF AN INVESTMENT WILL FLUCTUATE. WHEN REDEEMED,
SHARES MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST.
4 PERFORMANCE CALCULATED BASED ON THE MAXIMUM FRONT-END SALES CHARGE IN EFFECT
AT MAY 31, 1999 OF 3.00%.
5 THE PERFORMANCE CHART FOR CLASS A SHARES INCLUDES PERFORMANCE OF THE
CLASS I SHARES FROM DATE OF INCEPTION.
6 THIS FUND IS NOT MANAGED FOR TOTAL RETURN. ITS INVESTMENT OBJECTIVE IS TO
PROVIDE AS HIGH A LEVEL OF INTEREST INCOME EXEMPT FROM FEDERAL INCOME TAX AND,
TO THE EXTENT POSSIBLE, FROM OHIO PERSONAL INCOME TAX, AS IS CONSISTENT WITH
CONSERVATION OF CAPITAL.
18
<PAGE>
[ARROW GRAPHIC OMITTED]
ARMADA PENNSYLVANIA MUNICIPAL FUND OVERVIEW
COMMENTS FROM THE TAX EXEMPT FIXED INCOME TEAM
For the fiscal year ended May 31, 1999, the Armada Pennsylvania Municipal
Fund returned 4.21 percent (before sales charges) to Class A investors and 4.21
percent to Class I investors. Over the same period, the Lehman 7 Year Municipal
Bond Index returned 4.73 percent.
At year-end, 52 percent of the Armada Pennsylvania Municipal Fund was
invested in general obligation, pre-refunded, and escrowed-to-maturity
securities. Of the Fund's revenue bond holdings, agencies accounted for 36
percent and utilities 11 percent. No more than 5 percent of assets were invested
in any single issue. The average maturity of the securities in the Fund was 6.84
years as of May 31, 1999.
The Fund's emphasis on high-quality securities largely insulated us this past
year from the effects of the Allegheny Health Education & Research Foundation
(AHERF) bond default. Our decision to avoid any AHERF paper was correct. At the
time, we felt that the slightly higher yield it offered didn't warrant the
additional risk we would have been forced to assume.
Unfortunately, all Pennsylvania hospital issues, even those of the highest
quality, felt the AHERF backlash in the marketplace. Out-of-state buyers simply
chose to avoid these bonds rather than sort through them for the hospitals that
remain on solid ground. Consequently, we made the decision not to include any
new hospital bonds in the portfolio until spreads between credit grades widen
substantially.
GROWTH OF A $10,000 INVESTMENT3
[Graphic omitted]
Plot points are as follows:
CLASS I CLASS A LEHMAN
8/10/94 10,000 9,700 10,000
MAY 95 10,518 10,203 10,685
MAY 96 10,858 10,532 11,181
MAY 97 11,532 11,178 11,946
MAY 98 12,334 11,942 12,910
MAY 99 12,853 12,445 13,521
Armada Pennsylvania Municipal Fund (Class I Shares)1
Armada Pennsylvania Municipal Fund (Class A Shares with sales charge)4,5
Lehman 7-Year Municipal Bond Index
ARMADA PENNSYLVANIA MUNICIPAL FUND6
- ------------------------------------
Aggregate Total Return as of 5/31/99
Annualized Cumulative
Annualized Since Since
1 Year 3 Year Inception2 Inception2
Class I Shares1 4.21% 5.78% 5.36% 28.52%
Class A Shares 4.21% 5.72% 5.70% 16.26%
Class A Shares,
with Sales
Charge4 1.11% 4.66% 4.53% 12.80%
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
1 CLASS I 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 ACTIVITY FOR THE PERIOD PRESENTED INCLUDES THAT OF A PREDECESSOR FUND THROUGH
SEPTEMBER 6, 1996. THE ARMADA PENNSYLVANIA MUNICIPAL FUND'S DATE OF INCEPTION
FOR PERFORMANCE WAS AUGUST 10, 1994 FOR CLASS I SHARES AND SEPTEMBER 11, 1996
FOR CLASS A SHARES. THE ANNUALIZED 3-YEAR RETURN OF THE CLASS A SHARES
INCLUDES INFORMATION FROM THE COMMENCEMENT OF OPERATIONS OF THE CLASS I
SHARES, RATHER THAN THE DATE CLASS A SHARES WERE INTRODUCED. THE PERFORMANCE
OF THE CLASS A SHARES PRIOR TO THEIR INTRODUCTION DATE DOES NOT REFLECT
SHAREHOLDER SERVICING FEES, WHICH, IF REFLECTED, WOULD REDUCE THE PERFORMANCE
QUOTED FOR SUCH PERIODS.
3 THE RETURN AND PRINCIPAL VALUE OF AN INVESTMENT WILL FLUCTUATE. WHEN REDEEMED,
SHARES MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST.
4 PERFORMANCE CALCULATED BASED ON THE MAXIMUM FRONT-END SALES CHARGE IN EFFECT
AT MAY 31, 1999 OF 3.00%.
5 THE PERFORMANCE OF CLASS A SHARES INCLUDES THE PERFORMANCE OF CLASS
I SHARES FROM DATE OF INCEPTION.
6 THIS FUND IS NOT MANAGED FOR TOTAL RETURN. ITS INVESTMENT OBJECTIVE IS TO
PROVIDE CURRENT INCOME EXEMPT FROM BOTH REGULAR
FEDERAL INCOME AND PENNSYLVANIA PERSONAL INCOME TAX, AS IS CONSISTENT WITH
CONSERVATION OF CAPITAL.
19
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ARMADA NATIONAL TAX EXEMPT FUND OVERVIEW
COMMENTS FROM THE TAX EXEMPT FIXED INCOME TEAM
For the fiscal year ended May 31, 1999, the Armada National Tax Exempt Fund
returned 4.04 percent (before sales charges) to Class A investors and 4.07
percent to Class I investors. Over the same period, the Lehman 10 Year Municipal
Bond Index returned 4.62 percent.
In measuring our results, it is important to keep in mind that both
benchmarks track municipal bonds of varying degrees of quality. Throughout the
year, at least 95 percent of the Fund was invested in high-quality, triple-A or
double-A issues. Frankly, we didn't feel that the small spread between credit
grades that characterized the past 12 months warranted adding any extra risk to
the portfolio.
At year-end, 50 percent of the Fund was invested in general obligation,
pre-refunded, and escrowed-to-maturity securities, with the remainder in revenue
issues. The Fund retained its historic emphasis on diversification, with
holdings in 25 states. At the same time, we limited our exposure to New York,
California, and other states of lesser credit quality to less than 5 percent of
the portfolio. We do have an unusually high weighting in Indiana and Illinois,
approximately 19 percent combined, due to the addition of assets from the Fort
Wayne National Common Trust Fund conversion earlier in the year. The average
maturity of the securities in the Fund was 7.38 years as of May 31, 1999.
Because of our concerns about the potential effect of deregulation on
electric utility companies, the Fund holds only a handful of these issues. All
are from dominant players in strong markets. Looking ahead, we do expect to see
some upward movement in interest rates during the coming year, but the portfolio
is well-positioned to withstand any negative impact this may have. For example,
near record highs in supply over the past 12 months allowed us to negotiate
advantageous terms with a number of underwriters, increasing our holdings in
premium coupon and non-callable bonds. These will help stabilize the portfolio
in adverse market conditions, as will our high concentration of triple-A
securities.
We continue to keep a close watch on the political environment as well.
Robust state and local balance sheets have prompted a wave of proposed
election-year tax breaks. Since the economy is unlikely to get much stronger
than it is now, we are wary of the long-term effects such tax breaks might have
on municipal revenues.
GROWTH OF A $10,000 INVESTMENT3
[Graphic omitted]
Plot points are as follows:
CLASS I CLASS A CLASS B LEHMAN
5/31/89 10,000 9,525 10,000 10,000
May 90 10,506 10,007 10,506 10,735
May 91 11,183 10,651 11,183 11,850
May 92 12,140 11,563 12,140 12,951
May 93 13,830 13,173 13,830 14,546
May 94 13,960 13,297 13,960 15,042
May 95 15,099 14,382 15,099 16,392
May 96 15,029 14,315 15,029 17,168
May 97 15,838 15,086 15,838 18,570
May 98 17,059 16,246 17,056 20,292
May 99 17,753 16,902 17,712 21,229
Armada National Tax Exempt Fund (Class I Shares)1,6
Armada National Tax Exempt Fund (Class A Shares with sales charge)4,6
Armada National Tax Exempt Fund (Class B Shares)5,6
Lehman 10 Year Municipal Bond Index
ARMADA NATIONAL TAX EXEMPT FUND7
- ------------------------------------
Aggregate Total Return as of 5/31/99
Annualized Cumulative
Annualized Annualized Annualized Since Since
1 Year 3 Year 5 Year 10 Year Inception2 Inception2
Class I Shares1 4.07% 5.71% 4.92% 5.91% 7.05% 174.82%
Class A Shares 4.04% 5.69% 4.92% 5.90% 7.05% 174.72%
Class A Shares,
with Sales
Charge4 (0.90)% 4.01% 3.90% 5.39% 6.70% 161.72%
Class B Shares 3.85% 5.63% 4.88% 5.88% 7.03% 174.23%
Class B Shares,
with Sales
Charge5 (1.11)% 4.42% 4.56% 5.88% 7.03% 174.23%
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
1 CLASS I SHARES ARE SOLD PRIMARILY TO BANKS AND TRUST COMPANIES WHICH ARE
AFFILIATED WITH NATIONAL CITY CORPORATION AND CLIENTS OF NATIONAL ASSET
MANAGEMENT CORPORATION ("NAM"). CERTAIN ACCOUNT LEVEL CHARGES MAY APPLY.
2 THE ARMADA NATIONAL TAX EXEMPT FUND'S DATE OF INCEPTION WAS APRIL 9, 1998 FOR
CLASS I SHARES, JUNE 22, 1998 FOR CLASS A SHARES, AND JANUARY 28, 1999 FOR
CLASS B SHARES. THE PERFORMANCE OF THE CLASS I SHARES, CLASS A SHARES, AND
CLASS B SHARES INCLUDES PERFORMANCE OF A PREDECESSOR COMMON TRUST FUND WHICH
COMMENCED OPERATIONS ON JULY 31, 1984.
3 THE RETURN AND PRINCIPAL VALUE OF AN INVESTMENT WILL FLUCTUATE. WHEN REDEEMED,
SHARES MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST.
4 PERFORMANCE CALCULATED BASED ON THE MAXIMUM FRONT-END SALES CHARGE IN EFFECT
AT MAY 31, 1999 OF 4.75%.
5 PERFORMANCE CALCULATED BASED ON THE MAXIMUM DEFERRED SALES CHARGE IN EFFECT
AT MAY 31, 1999 OF 5.00%. THIS CHARGE DECLINES FROM 5.00% IN THE FIRST YEAR
TO 0.00% AFTER FIVE YEARS, AS OUTLINED IN THE PROSPECTUS.
6 THE PERFORMANCE CHART FOR ALL CLASSES INCLUDES PERFORMANCE OF A PREDECESSOR
COMMON TRUST FUND.
7 THIS FUND IS NOT MANAGED FOR TOTAL RETURN. ITS INVESTMENT OBJECTIVE IS TO
PROVIDE AS HIGH A LEVEL OF CURRENT INTEREST INCOME EXEMPT FROM FEDERAL INCOME
TAX, AS IS CONSISTENT WITH CONSERVATION OF CAPITAL.
20
<PAGE>
[ARRROW GRAPHIC OMITTED]
ARMADA MONEY MARKET OUTLOOK
MONEY MARKET OVERVIEW
The Armada money market funds posted solid results during the year while
offering investors a high degree of safety and liquidity. Fund management does
not predict interest rates. Instead, we continually make purchases throughout
the yield curve, which is positively sloped most of the time, while maintaining
necessary liquidity.
For the fiscal year ended May 31, 1999, the Armada Money Market Fund produced
a total return of 4.82 percent for Class A investors and 4.96 percent for Class
I investors. At year-end, 84 percent of the Fund was allocated to commercial
paper, 8 percent to repurchase agreements, 4 percent to floating rate notes, 3
percent to certificates of deposit, and 1 percent to agencies. The average
weighted maturity of the Fund was 65 days.
For the fiscal year ended May 31, 1999, the Armada Government Money Market
Fund produced a total return of 4.70 percent for Class A investors and 4.86
percent for Class I investors. At year-end, 74 percent of the Fund was allocated
to discount notes, 19 percent to repurchase agreements, 6 percent to floating
rate notes, and 1 percent to medium term notes. The average weighted maturity of
the Fund was 49 days.
For the fiscal year ended May 31, 1999, the Armada Treasury Money Market Fund
produced a total return of 4.23 percent for Class A investors and 4.39 percent
for Class I investors. At year-end, 75 percent of the Fund was allocated to
Treasury bills, 17 percent to Treasury notes, and 8 percent to other money
market funds. The average weighted maturity of the Fund was 45 days.
Over the past year, the tax-exempt money markets were characterized by two
factors: a sharp decrease in the supply of new issues, and unprecedented inflows
of cash (i.e., not much supply and a lot of demand). In this difficult
environment, all of the Armada Tax Exempt Money Market Funds performed well
against their peers. Despite the dearth of new issues in the Ohio and
Pennsylvania markets, both state-specific Funds succeeded in remaining 100
percent invested in in-state paper. This meant that investors were able to reap
the full potential of the Funds' federal and state tax savings benefits.
For the fiscal year ended May 31, 1999, the Armada Tax Exempt Money Market
Fund produced a total return of 2.85 percent for Class A investors and 3.00
percent for Class I investors. At year-end, the average maturity of the Fund's
holdings was 47 days.
For the fiscal year ended May 31, 1999, the Armada Pennsylvania Tax Exempt
Money Market Fund produced a total return of 2.76 percent for Class A investors
and 2.92 percent for Class I investors. At year-end, the average maturity of the
Fund's holdings was 44 days.
Due to the fact that the Armada Ohio Municipal Money Market Fund was
introduced in September 1998, no full-year performance figures are available.
However, since the Fund's inception, it has produced a return of 1.50 percent
for Class A investors and 2.01 percent for Class I investors. At year-end, the
average maturity of the Fund's holdings was 57 days. Since its introduction, the
Fund's assets nearly tripled to $129 million.
21
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REPORT OF INDEPENDENT AUDITORS
To the Shareholders and Board of Trustees
Armada Funds
We have audited the accompanying statements of net assets of the Armada
International Equity Fund, Armada Small Cap Value Fund, Armada Small Cap Growth
Fund, Armada Equity Growth Fund, Armada Tax Managed Equity Fund, Armada Core
Equity Fund, Armada Equity Index Fund, Armada Equity Income Fund, Armada Total
Return Advantage Fund, Armada Bond Fund, Armada Intermediate Bond Fund, Armada
GNMA Fund, Armada Enhanced Income Fund, Armada Ohio Tax Exempt Fund, Armada
Pennsylvania Municipal Fund, Armada National Tax Exempt Fund, Armada Ohio
Municipal Money Market Fund, Armada Pennsylvania Tax Exempt Money Market Fund,
Armada Tax Exempt Money Market Fund, Armada Money Market Fund, Armada Government
Money Market Fund, and Armada Treasury Money Market Fund, and the statement of
assets and liabilities, including the portfolio of investments, of the Armada
Balanced Allocation Fund (the "Funds") as of May 31, 1999, and the related
statements of operations and statements of changes in net assets for each of the
periods indicated therein. We have also audited the financial highlights for
each of the periods indicated therein for the Armada International Equity Fund,
Armada Small Cap Value Fund, Armada Small Cap Growth Fund, Armada Equity Growth
Fund, Armada Tax Managed Equity Fund, Armada Core Equity Fund, Armada Equity
Index Fund, Armada Equity Income Fund, Armada Balanced Allocation Fund, Armada
Total Return Advantage Fund, Armada Intermediate Bond Fund, Armada Enhanced
Income Fund, Armada Ohio Tax Exempt Fund, Armada National Tax Exempt Fund,
Armada Ohio Municipal Money Market Fund, Armada Tax Exempt Money Market Fund,
Armada Money Market Fund, Armada Government Money Market Fund, and Armada
Treasury Money Market Fund and for the three years in the period ended May 31,
1999 for the Armada Bond Fund, Armada GNMA Fund, Armada Pennsylvania Municipal
Fund, and Armada Pennsylvania Tax Exempt Money Market Fund. These financial
statements and financial highlights are the responsibility of the Funds'
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits. The financial
highlights for the periods presented through May 31, 1996 for the Armada Bond
Fund, Armada GNMA Fund, Armada Pennsylvania Municipal Fund, and Armada
Pennsylvania Tax Exempt Money Market Fund were audited by other auditors whose
report dated July 26, 1996 expressed an unqualified opinion on those financial
highlights.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and financial highlights. Our procedures included confirmation of
securities owned as of May 31, 1999, by correspondence with the Funds' custodian
and brokers. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
22
<PAGE>
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REPORT OF INDEPENDENT AUDITORS
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of each
of the respective Funds at May 31, 1999, and the results of their operations and
changes in their nets assets for the periods indicated therein, and for the
Armada International Equity Fund, Armada Small Cap Value Fund, Armada Small Cap
Growth Fund, Armada Equity Growth Fund, Armada Tax Managed Equity Fund, Armada
Core Equity Fund, Armada Equity Index Fund, Armada Equity Income Fund, Armada
Balanced Allocation Fund, Armada Total Return Advantage Fund, Armada
Intermediate Bond Fund, Armada Enhanced Income Fund, Armada Ohio Tax Exempt
Fund, Armada National Tax Exempt Fund, Armada Ohio Municipal Money Market Fund,
Armada Tax Exempt Money Market Fund, Armada Money Market Fund, Armada Government
Money Market Fund, and Armada Treasury Money Market Fund, the financial
highlights for each of the periods presented therein, and for the Armada Bond
Fund, Armada GNMA Fund, Armada Pennsylvania Municipal Fund, and Armada
Pennsylvania Tax Exempt Money Market Fund, the financial highlights for the
three years in the period ended May 31, 1999, in conformity with generally
accepted accounting principles.
/s/ signature omitted
Philadelphia, Pennsylvania
July 9, 1999
23
<PAGE>
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NOTICE TO SHAREHOLDERS (UNAUDITED)
MAY 31, 1999
The information set forth below is for each Fund's fiscal year as required
by federal laws. Shareholders, however, must report distributions on a
calendar year basis for income tax purposes, which may include
distributions for portions of two fiscal years of a Fund. Accordingly, the
information needed by shareholders for income tax purposes will be sent to
them in early 2000. Please consult your tax advisor for proper treatment
of this information.
Dear Armada Shareholders:
For the fiscal year ended May 31, 1999, each Fund designated long term capital
gains and exempt income with regard to distributions paid during the year as
follows:
<TABLE>
<CAPTION>
(A) (B) (C) (D) (E)
Long Term Ordinary Tax
Capital Gains Income Exempt Total Qualifying
Distributions Distributions Distributions Distribution Dividends
Fund (Tax Basis) (Tax Basis) (Tax Basis) (Tax Basis) (1)
------------- ------------- ------------- ------------ -----------
<S> <C> <C> <C> <C> <C>
International Equity (2) 0.00% 100.00% 0.00% 100.00% 0.00%
Small Cap Value 55.62% 44.38% 0.00% 100.00% 100.00%
Small Cap Growth 0.00% 100.00% 0.00% 100.00% 0.00%
Equity Growth 45.58% 54.42% 0.00% 100.00% 0.00%
Tax Managed Equity 16.84% 83.16% 0.00% 100.00% 100.00%
Core Equity 0.00% 100.00% 0.00% 100.00% 0.00%
Equity Index 0.00% 100.00% 0.00% 100.00% 73.88%
Equity Income 37.80% 62.20% 0.00% 100.00% 100.00%
Balanced Allocation 0.00% 100.00% 0.00% 100.00% 21.30%
Total Return Advantage 1.90% 98.10% 0.00% 100.00% 0.00%
Bond 3.23% 96.77% 0.00% 100.00% 0.00%
Intermediate Bond 3.54% 96.46% 0.00% 100.00% 0.00%
GNMA 1.65% 98.35% 0.00% 100.00% 0.00%
Enhanced Income 1.53% 98.47% 0.00% 100.00% 0.00%
Ohio Tax Exempt 1.22% 0.29% 98.49% 100.00% 0.00%
Pennsylvania Municipal 1.43% 0.88% 97.69% 100.00% 0.00%
National Tax Exempt 5.81% 0.02% 94.17% 100.00% 0.00%
Ohio Municipal Money Market 0.00% 0.00% 100.00% 100.00% 0.00%
Pennsylvania Tax Exempt Money Market 0.00% 0.00% 100.00% 100.00% 0.00%
Tax Exempt Money Market 0.00% 0.00% 100.00% 100.00% 0.00%
Money Market 0.00% 100.00% 0.00% 100.00% 0.00%
Government Money Market 0.00% 100.00% 0.00% 100.00% 0.00%
Treasury Money Market 0.00% 100.00% 0.00% 100.00% 0.00%
</TABLE>
Items (A), (B), (C) and (D) are based on a percentage of the fund's total
distribution.
Item (E) is based on a percentage of ordinary income distributions
of the fund.
(1) Qualifying dividends represent dividends which qualify for the corporate
dividends received deduction.
(2) Ordinary income distributions consisted of 22.1% of qualified foreign tax
credit.
<PAGE>
[LOGO OMITTED]
Financial Statements
FOR THE PERIOD ENDED MAY 31, 1999
25
<PAGE>
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STATEMENT OF NET ASSETS
ARMADA INTERNATIONAL EQUITY FUND
MAY 31, 1999
NUMBER VALUE
OF SHARES (000)
--------- --------
COMMON STOCK -- 97.0%
AUSTRALIA -- 1.2%
National Australia Bank ............ 6,803 $ 110
National Australia Bank ADR ........ 27,700 2,237
--------
2,347
--------
AUSTRIA -- 0.7%
Mayr Melnhof Karton ................ 27,900 1,308
--------
BELGIUM -- 2.1%
Colruyt ............................ 2,454 1,596
Fortis, Series B ................... 82,000 2,630
--------
4,226
--------
BRAZIL -- 0.0%
Telebras ADR* ...................... 11,800 1
--------
FINLAND -- 3.9%
Nokia ADR .......................... 29,400 2,087
Nokia Oyj .......................... 35,200 2,504
Tieto, Cl B ........................ 67,420 2,356
UPM-Kymmene ........................ 32,650 957
--------
7,904
--------
FRANCE -- 10.3%
Altran Technologies ................ 8,271 1,873
Axa ................................ 23,545 2,714
Compagnie de Saint Gobain .......... 6,305 990
France Telecom ..................... 21,087 1,617
L'Oreal ............................ 4,490 2,705
Lyonnaise des Eaux ................. 13,600 2,254
Rhone Poulenc ADR .................. 15,000 703
Sidel .............................. 23,646 3,281
Total ADR .......................... 24,100 1,466
Total, Cl B* ....................... 12,377 1,504
Vivendi ............................ 20,242 1,499
Vivendi Rights* .................... 19,200 20
--------
20,626
--------
GERMANY -- 7.1%
Allianz ............................ 6,757 1,847
BHF Bank ........................... 41,481 1,346
DaimlerChrysler .................... 6,030 521
DaimlerChrysler ADR ................ 7,482 654
Mannesmann ......................... 41,469 5,667
Siemens ............................ 30,405 2,046
Veba ............................... 36,300 2,071
--------
14,152
--------
NUMBER VALUE
OF SHARES (000)
--------- --------
COMMON STOCK -- CONTINUED
HONG KONG -- 4.0%
Hong Kong & China Gas .............. 830,818 $ 1,173
HSBC Holdings ...................... 69,200 2,267
Hutchison Whampoa Limited .......... 167,800 1,401
Johnson Electric Holdings .......... 516,180 1,904
Li & Fung .......................... 530,000 1,251
--------
7,996
--------
IRELAND -- 0.7%
Bank of Ireland .................... 71,363 1,323
--------
ITALY -- 3.4%
Assicurazioni Generali ............. 58,000 2,063
Bulgari* ........................... 115,381 697
Telecom Italia ..................... 30,000 309
Telecom Italia ADR ................. 27,600 2,841
Telecom Italia Mobile* ............. 160,318 943
--------
6,853
--------
JAPAN -- 16.2%
Advantest .......................... 27,400 2,161
Bank of Tokyo-Mitsubishi ........... 147,000 1,959
Canon .............................. 98,285 2,465
Fanuc .............................. 61,535 2,637
Fuji Heavy Industries .............. 200,000 1,299
Fuji Photo Film .................... 47,098 1,673
Ito Yokado ......................... 22,000 1,305
Kao ................................ 77,000 2,102
Nihon Unisys ....................... 141,000 2,609
Nippon Telegraph & Telephone ....... 200 1,941
Nomura Securities .................. 96,500 957
Seven-Eleven ....................... 14,000 1,208
SMC ................................ 11,600 1,051
Softbank ........................... 2,000 229
Sony ............................... 25,354 2,369
Takeda Chemical Industries ......... 104,800 4,628
TDK Corporation .................... 1,049 90
Yahoo Japan ........................ 9 1,836
--------
32,519
--------
MEXICO -- 1.7%
Coca Cola Femsa ADR ................ 53,000 957
Grupo Televisa GDR* ................ 30,000 1,254
Telefonos de Mexico ADR ............ 14,600 1,167
--------
3,378
--------
NETHERLANDS -- 7.8%
Aegon .............................. 584 47
Aegon ADR .......................... 15,400 1,249
ING Groep .......................... 19,575 1,047
Koninklijke Ahold .................. 3,076 107
Koninklijke Ahold ADR .............. 59,700 2,097
See Accompanying Notes
26
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STATEMENT OF NET ASSETS
ARMADA INTERNATIONAL EQUITY FUND
MAY 31, 1999
NUMBER VALUE
OF SHARES (000)
--------- --------
COMMON STOCK -- CONTINUED
NETHERLANDS -- CONTINUED
Nutreco Holdings ................... 42,900 $ 1,589
Royal Dutch Petroleum .............. 65,370 3,642
Royal Dutch Petroleum,
NY Shares ......................... 24,400 1,380
Unilever ........................... 1,040 69
Unilever ADR ....................... 13,571 886
Wolters Kluwer ..................... 85,200 3,426
--------
15,539
--------
PORTUGAL -- 0.9%
Portugal Telecom ADR ............... 40,745 1,844
--------
SINGAPORE -- 3.9%
City Developments .................. 306,000 1,827
Development Bank of Singapore `F' .. 208,000 2,146
Natsteel Electronics ............... 389,000 1,296
Singapore International Airlines `F' 276,000 2,463
--------
7,732
--------
SOUTH KOREA -- 0.9%
Pohang Iron & Steel ADR ............ 73,600 1,863
--------
SPAIN -- 2.7%
Banco Bilbao Vizcaya ADR ........... 31,700 462
Endesa ............................. 3,541 75
Endesa ADR ......................... 87,100 1,878
Telefonica ......................... 14,825 711
Telefonica ADR ..................... 16,014 2,310
--------
5,436
--------
SWEDEN -- 1.5%
Assa Abloy, Series B ............... 836 37
Pharmacia & Upjohn ................. 35,839 1,987
Svenska Cellulosa, Series A ........ 27,400 644
Svenska Cellulosa, Series B ........ 13,000 303
--------
2,971
--------
SWITZERLAND -- 6.7%
Credit Suisse Group ................ 11,800 2,048
Nestle ............................. 876 1,575
Novartis ........................... 1,275 1,850
Roche Holding ...................... 352 3,725
Swiss Re ........................... 1,311 2,487
UBS, Registered .................... 6,300 1,823
--------
13,508
--------
UNITED KINGDOM -- 20.2%
Abbey National ..................... 135,573 2,805
Allied Zurich ...................... 145,440 1,857
NUMBER VALUE
OF SHARES (000)
--------- --------
COMMON STOCK -- CONTINUED
UNITED KINGDOM -- CONTINUED
Bass ............................... 146,500 $ 2,164
BOC Group .......................... 96,852 1,659
BP Amoco ........................... 50,017 896
BP Amoco ADR ....................... 25,357 2,716
British Aerospace .................. 209,305 1,382
Cable & Wireless ................... 88,456 1,092
Compass Group ...................... 96,761 981
General Electric ................... 211,000 2,003
Glaxo Wellcome ..................... 27,636 776
Glaxo Wellcome ADR ................. 41,100 2,312
Granada Group ...................... 100,000 2,049
Imperial Chemical .................. 193,700 2,137
Invensys ........................... 447,999 2,044
Logica ............................. 115,532 1,073
National Grid Holdings ............. 303,586 2,064
Pearson ............................ 144,037 2,749
SmithKline Beecham ADR ............. 33,100 2,172
Standard Chartered ................. 164,500 2,492
Tesco .............................. 504,400 1,470
Vodafone Group ..................... 87,685 1,672
--------
40,565
--------
UNITED STATES -- 1.1%
Airtouch Communications* ........... 12,450 1,251
Frontier ........................... 20,000 1,053
--------
2,304
--------
TOTAL COMMON STOCK
(Cost $176,300) 194,395
--------
PREFERRED STOCK -- 0.8%
BRAZIL -- 0.5%
Telebras ADR ....................... 11,800 985
--------
GERMANY -- 0.3%
SAP ................................ 1,324 530
--------
TOTAL PREFERRED STOCK
(Cost $1,455) 1,515
--------
CASH EQUIVALENT -- 1.8%
Goldman Sachs Financial Square .....
Premium Money Market Fund ........ 3,555,000 3,555
--------
TOTAL CASH EQUIVALENT
(Cost $3,555) 3,555
--------
TOTAL INVESTMENTS -- 99.6%
(Cost $181,310) $199,465
========
See Accompanying Notes
27
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STATEMENT OF NET ASSETS
ARMADA INTERNATIONAL EQUITY FUND
MAY 31, 1999
VALUE
(000)
--------
OTHER ASSETS AND LIABILITIES,
NET -- 0.4% $ 909
--------
NET ASSETS:
Portfolio shares of Class I
(unlimited authorization -- no par value)
based on 18,257,270 outstanding
shares of beneficial interest ................. 187,170
Porfolio shares of Class A
(unlimited authorization --
no par value) based on 103,716
outstanding shares of beneficial interest ..... 1,096
Portfolio shares of Class B (unlimited
authorization -- no par value) based on
3,837 outstanding shares of
beneficial interest ........................... 41
Accumulated net realized loss
on investments ................................ (6,733)
Net unrealized appreciation on investments ..... 18,155
Net unrealized appreciation of foreign
currency and translation of other assets
and liabilities in foreign
currency investments .......................... 610
Undistributed net investment income ............ 35
--------
TOTAL NET ASSETS -- 100.0% $200,374
========
NET ASSET VALUE, OFFERING
AND REDEMPTION PRICE PER
SHARE -- CLASS I ............................ $10.91
========
NET ASSET VALUE AND
REDEMPTION PRICE
PER SHARE -- CLASS A ......................... $10.87
========
MAXIMUM OFFERING PRICE PER
SHARE -- CLASS A
($10.87 / 94.5%) ............................ $11.50
========
NET ASSET VALUE AND OFFERING
PRICE PER SHARE -- CLASS B ................... $10.83
========
- ------------
* NON-INCOME PRODUCING SECURITY.
ADR -- AMERICAN DEPOSITORY RECEIPT
CL -- CLASS
F -- FOREIGN SHARES
GDR -- GLOBAL DEPOSITORY RECEIPT
At May 31, 1999, sector diversification of the
Portfolio was as follows:
SECTOR DIVERSIFICATION % OF
COMMON STOCK NET ASSETS VALUE
---------- --------
Banking 8.0% 16,065
Telecommunications 7.3% 14,644
Communications 6.6% 13,234
Pharmaceuticals 6.4% 12,822
Oil and Gas 6.4% 12,777
Consumer Goods 6.3% 12,673
Insurance 6.1% 12,180
Industrial Manufacturing 5.2% 10,453
Business Services 4.9% 9,825
Financial Services 4.8% 9,668
Electronic Equipment 4.6% 9,223
Food Product Retailer 4.4% 8,743
Electrical Services 3.0% 6,028
Computers 2.8% 5,518
Chemicals 2.7% 5,332
Automotive 2.2% 4,378
Publishing 1.7% 3,426
Real Estate 1.6% 3,228
Beverages 1.6% 3,121
News Media 1.4% 2,749
Machinery 1.3% 2,637
Transportation 1.2% 2,463
Communication Services 1.0% 2,049
Engineering Services 0.9% 1,873
Steel 0.9% 1,863
Agricultural 0.8% 1,589
Multi-Industry 0.8% 1,519
Aerospace 0.7% 1,382
Manufacturing 0.5% 1,051
Forestry 0.5% 957
Jewelry 0.3% 696
Computer Software 0.1% 229
----- --------
TOTAL COMMON STOCK 97.0% 194,395
TOTAL PREFERRED STOCK 0.8% 1,515
CASH EQUIVALENT 1.8% 3,555
----- --------
TOTAL INVESTMENTS 99.6% 199,465
OTHER ASSETS AND
LIABILITIES, NET 0.4% 909
----- --------
NET ASSETS 100.0% 200,374
===== ========
See Accompanying Notes
28
<PAGE>
[ARROW GRAPHIC OMITTED]
FINANCIAL HIGHLIGHTS
ARMADA INTERNATIONAL EQUITY FUND
FOR A PORTFOLIO SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
FOR THE YEAR FOR THE PERIOD
ENDED MAY 31, 1999 ENDED MAY 31, 1998
-----------------------------------------------------------------
CLASS I CLASS A CLASS B CLASS I2 CLASS A2 CLASS B3
-------- ------- ------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 10.86 $10.82 $10.83 $ 10.00 $10.00 $ 9.30
-------- ------ ------ -------- ------ ------
INCOME FROM INVESTMENT OPERATIONS
Net investment income/(loss) ................ (0.01) (0.01) (0.07) 0.08 0.04 0.05
Net gain on securities
(realized and unrealized) .................. 0.11 0.10 0.08 0.79 0.79 1.48
-------- ------ ------ -------- ------ ------
Total from investment operations ......... 0.10 0.09 0.01 0.87 0.83 1.53
-------- ------ ------ -------- ------ ------
LESS DISTRIBUTIONS
Dividends from net investment income ........ (0.05) (0.04) (0.01) (0.01) (0.01) (0.00)
-------- ------ ------ -------- ------ ------
Total distributions ...................... (0.05) (0.04) (0.01) (0.01) (0.01) (0.00)
-------- ------ ------ -------- ------ ------
Net asset value, end of period ................ $ 10.91 $10.87 $10.83 $ 10.86 $10.82 $10.83
======== ====== ====== ======== ====== ======
TOTAL RETURN .................................. 0.95% 0.84%1 0.10%1 8.76%4 8.28%1,4 16.45%1,4
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000's) ........ $199,205 $1,127 $ 42 $135,942 $ 276 $ 1
Ratio of expenses to average net assets ..... 1.43% 1.68% 2.43% 1.09%5 1.39%5 2.08%5
Ratio of net investment income/(loss) to
average net assets ......................... 0.12% (0.04)% (0.80)% 1.19%5 1.49%5 0.59%5
Ratio of expenses to average net assets
before fee waivers ......................... 1.43% 1.68% 2.43% 1.24%5 1.47%5 2.14%5
Ratio of net investment income/(loss) to
average net assets before fee waivers ...... 0.12% (0.04)% (0.80)% 1.04%5 1.41%5 0.53%5
Portfolio turnover rate ..................... 78% 78% 78% 28% 28% 28%
</TABLE>
1 TOTAL RETURN EXCLUDES SALES CHARGE.
2 CLASS I AND CLASS A BOTH COMMENCED OPERATIONS ON AUGUST 1, 1997.
3 CLASS B COMMENCED OPERATIONS ON JANUARY 6, 1998.
4 RETURNS ARE FOR THE PERIOD INDICATED AND HAVE NOT BEEN ANNUALIZED.
5 ANNUALIZED.
See Accompanying Notes
29
<PAGE>
[ARROW GRAPHIC OMITTED]
STATEMENT OF NET ASSETS
ARMADA SMALL CAP VALUE FUND
MAY 31, 1999
NUMBER VALUE
OF SHARES (000)
--------- ---------
COMMON STOCK -- 95.8%
AUTOMOTIVE PARTS & EQUIPMENT -- 3.7%
Amcast Industrial ................. 100,800 $ 1,695
Simpson Industries ................ 170,000 1,711
Standard Products ................. 169,000 3,771
TBC* .............................. 267,500 1,898
Transpro .......................... 251,400 1,336
-------
10,411
-------
BANKS -- 5.6%
First Virginia# ................... 92,500 4,596
Pacific Century ................... 110,000 2,200
Susquehanna Bancshares ............ 125,000 2,273
UnionBanCal ....................... 186,100 6,880
-------
15,949
-------
BROADCASTING -- 0.7%
Liberty Corporation ............... 39,000 2,016
-------
BUILDING & BUILDING SUPPLIES -- 1.0%
Insteel Industries ................ 125,000 1,078
Patrick Industries ................ 125,000 1,625
-------
2,703
-------
BUSINESS SERVICES -- 2.9%
BancTec* .......................... 310,000 4,999
Wang Labs* ........................ 110,000 3,176
-------
8,175
-------
CHEMICALS -- 1.6%
Geon .............................. 115,000 3,464
High Plains* ...................... 324,600 680
Terra Industries .................. 83,000 327
-------
4,471
-------
COMPUTER SOFTWARE -- 1.2%
Structural Dynamics Research* ..... 75,000 1,331
Wall Data* ........................ 186,700 1,884
-------
3,215
-------
COMPUTERS -- 0.3%
Exabyte* .......................... 150,000 830
-------
CONTAINERS & PACKAGING -- 1.2%
Crown Cork & Seal ................. 105,000 3,294
-------
DRUGS & HEALTH CARE -- 2.8%
Bindley Western ................... 140,000 4,217
West Pharmaceutical Services ...... 110,651 3,797
-------
8,014
-------
ELECTRONICS -- 5.7%
Arrow Electronics*# ............... 220,000 3,822
Avnet Electronics ................. 150,000 6,534
Bell Industries* .................. 332,800 3,411
NUMBER VALUE
OF SHARES (000)
--------- ---------
COMMON STOCK -- CONTINUED
ELECTRONICS -- CONTINUED
Bell Micro Products* .............. 324,100 $ 2,294
-------
16,061
-------
FINANCIAL SERVICES -- 5.0%
ARM Financial, Cl A ............... 310,000 4,650
Liberty Financial ................. 190,150 4,968
Phoenix Investment Partners# ...... 450,800 4,423
-------
14,041
-------
FOOD & BEVERAGE -- 0.1%
John B. Sanfilippo* ............... 114,000 395
-------
HUMAN RESOURCES -- 0.5%
Kelly Services, Cl A .............. 50,000 1,450
-------
INSURANCE -- 4.5%
PMI Group# ........................ 190,000 11,115
State Auto Financial .............. 120,000 1,470
-------
12,585
-------
INSURANCE - LIFE -- 0.6%
Kansas City Life .................. 20,200 1,656
-------
INSURANCE - PROPERTY AND CASUALTY -- 6.5%
Commerce Group .................... 78,900 1,829
Farm Family Holdings* ............. 51,000 1,760
Harleysville Group ................ 203,900 3,951
Horace Mann Educators ............. 280,000 7,245
PXRE .............................. 94,700 1,764
Selective Insurance Group ......... 100,000 1,875
-------
18,424
-------
LEISURE & RECREATIONAL PRODUCTS -- 2.2%
Arctic Cat ........................ 175,500 1,470
Brunswick ......................... 200,000 4,800
-------
6,270
-------
MANUFACTURED HOUSING -- 3.1%
Cavalier Homes .................... 422,000 3,824
Fleetwood Enterprises# ............ 129,300 3,289
Southern Energy Homes* ............ 370,700 1,714
-------
8,827
-------
MARINE TRANSPORTATION -- 1.5%
Alexander & Baldwin ............... 185,000 4,186
-------
MEASURING DEVICES -- 1.5%
Watts Industries .................. 185,000 3,133
X-Rite ............................ 172,500 1,213
-------
4,346
-------
See Accompanying Notes
30
<PAGE>
[ARROW GRAPHIC OMITTED]
STATEMENT OF NET ASSETS
ARMADA SMALL CAP VALUE FUND
MAY 31, 1999
NUMBER VALUE
OF SHARES (000)
--------- ---------
COMMON STOCK -- CONTINUED
MEDICAL & MEDICAL SERVICES -- 0.4%
Maxicare Health Plans* ............ 200,000 $ 994
-------
METALS & MINING -- 3.3%
Cleveland Cliffs .................. 152,900 5,657
Nord Resources* ................... 113,200 46
Southern Peru Copper# ............. 291,500 3,607
-------
9,310
-------
MISCELLANEOUS CONSUMER SERVICES -- 0.3%
Unifirst .......................... 50,000 900
-------
OIL & GAS -- 1.2%
Helmerich & Payne ................. 80,000 1,865
Miller Exploration* ............... 100,000 211
Ocean Energy* ..................... 135,000 1,333
-------
3,409
-------
PAPER & FOREST PRODUCTS -- 3.8%
Caraustar Industries .............. 32,500 857
Rayonier .......................... 50,000 2,331
Rock Tennessee .................... 266,600 4,032
Westvaco .......................... 125,000 3,570
-------
10,790
-------
REAL ESTATE INVESTMENT TRUST -- 4.2%
Arden Realty ...................... 40,000 1,022
Capstead Mortgage ................. 320,000 1,860
Developers Diversified Realty ..... 52,000 858
Great Lakes ....................... 207,500 3,294
Mack-Cali Realty .................. 26,000 842
Thornburg Mortgage Asset# ......... 375,000 3,891
-------
11,767
-------
RESTAURANTS -- 2.2%
Buffets*# ......................... 201,500 2,116
Lone Star Steakhouse & Saloon* .... 57,500 579
Piccadilly Cafeterias ............. 145,000 1,541
Rare Hospitality* ................. 90,000 2,059
-------
6,295
-------
RETAIL -- 4.8%
Bon-Ton Stores* ................... 245,000 1,562
Dillards, Cl A .................... 310,000 10,889
Elder-Berman* ..................... 110,000 963
-------
13,414
-------
RUBBER & PLASTIC -- 1.4%
Cooper Tire and Rubber ............ 160,000 3,800
-------
SAVINGS & LOAN ASSOCIATIONS -- 1.2%
Washington Federal ................ 156,000 3,510
-------
NUMBER VALUE
OF SHARES (000)
--------- ---------
COMMON STOCK -- CONTINUED
SEMI-CONDUCTORS/CAPITAL EQUIPMENT -- 3.3%
Cypress Semiconductor* ............ 100,000 $ 1,113
Electroglas* ...................... 155,000 2,209
LTX* .............................. 225,000 2,011
Silicon Valley Group* ............. 295,000 4,075
--------
9,408
--------
SEMI-CONDUCTORS/INSTRUMENTS -- 0.8%
Opti* ............................. 334,800 2,124
--------
SPECIALTY CHEMICALS -- 1.3%
Amcol International ............... 4,500 64
Schulman .......................... 220,000 3,671
--------
3,735
--------
STEEL -- 7.0%
Armco* ............................ 520,000 3,348
Material Sciences* ................ 115,000 1,279
Novamerican* ...................... 190,200 2,068
Olympic* .......................... 427,500 3,286
Ryerson Tull ...................... 324,822 7,471
Steel Technologies ................ 268,800 2,411
--------
19,863
--------
TECHNOLOGY -- 0.9%
Mapinfo* .......................... 137,000 2,586
--------
TRUCKING -- 7.5%
Air Express International# ........ 106,200 2,668
Amerco* ........................... 160,000 3,960
Hunt Transport Services ........... 160,000 2,700
Pittston Bax Group ................ 213,100 2,304
Wabash National# .................. 280,700 5,351
Yellow* ........................... 250,000 4,250
--------
21,233
--------
TOTAL COMMON STOCK
(Cost $256,291) .................. 270,457
--------
PREFERRED STOCK -- 0.7%
REAL ESTATE INVESTMENT TRUST -- 0.7%
Thornburg Mortgage Asset .......... 85,000 2,056
--------
TOTAL PREFERRED STOCK
(Cost $2,243) .................... 2,056
--------
CASH EQUIVALENT -- 3.5%
Fidelity Domestic Money
Market Fund ..................... 9,836,000 9,836
--------
TOTAL CASH EQUIVALENT
(Cost $9,836) .................... 9,836
--------
See Accompanying Notes
31
<PAGE>
[ARROW GRAPHIC OMITTED]
STATEMENT OF NET ASSETS
ARMADA SMALL CAP VALUE FUND
MAY 31, 1999
VALUE
(000)
----------
Total Investments -- 100.0%
(Cost $268,370) .................. $282,349
========
Other Assets and Liabilities,
Net -- 0.0% 90
--------
NET ASSETS:
Portfolio Shares of Class I (unlimited
authorization -- no par value) based
on 19,812,331 outstanding shares
of beneficial interest ........... 264,286
Portfolio Shares of Class A (unlimited
authorization -- no par value) based on
866,968 outstanding shares of
beneficial interest .............. 11,568
Portfolio Shares of Class B (unlimited
authorization -- no par value) based on
39,083 outstanding shares of
beneficial interest .............. 502
Accumulated net realized loss
on investments and futures ....... (9,192)
Net unrealized appreciation
on investments ................... 13,979
Undistributed net investment income 1,296
--------
TOTAL NET ASSETS -- 100.0% .......... $282,439
========
NET ASSET VALUE, OFFERING
AND REDEMPTION PRICE
PER SHARE -- CLASS I .............. $13.65
========
NET ASSET VALUE AND REDEMPTION
PRICE PER SHARE -- CLASS A ......... $13.31
========
MAXIMUM OFFERING PRICE PER
SHARE -- CLASS A ($13.31 / 94.5%) . $14.08
========
NET ASSET VALUE AND OFFERING
PRICE PER SHARE -- CLASS B ........ $13.19
========
- ------------
* NON-INCOME PRODUCING SECURITY.
# SECURITY FULLY OR PARTIALLY ON LOAN.
CL -- CLASS
See Accompanying Notes
32
<PAGE>
[ARROW GRAPHIC OMITTED]
FINANCIAL HIGHLIGHTS
ARMADA SMALL CAP VALUE FUND
FOR A PORTFOLIO SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
FOR THE YEAR ENDED MAY 31,
--------------------------------------------------------------
1999 1998
--------------------------------------------------------------
CLASS I CLASS A CLASS B CLASS I CLASS A CLASS B4
-------- ------- ------- -------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning
of period ......................... $ 15.72 $ 15.47 $ 15.42 $ 15.15 $ 14.95 $ 15.28
-------- ------- ------- -------- ------- -------
INCOME FROM INVESTMENT OPERATIONS
Net investment income .............. 0.09 0.06 (0.03) 0.06 0.01 0.00
Net gain/(loss) on securities
(realized and unrealized) ......... (0.78) (0.85) (0.87) 2.87 2.84 0.14
-------- ------- ------- -------- ------- -------
Total from investment
operations ................... (0.69) (0.79) (0.90) 2.93 2.85 0.14
-------- ------- ------- -------- ------- -------
LESS DISTRIBUTIONS
Dividends from net
investment income ................. (0.05) (0.04) (0.00) (0.07) (0.04) (0.00)
Dividends in excess of net
investment income ................. (0.00) (0.00) (0.00) (0.00) (0.00) (0.00)
Distributions from net realized
capital gains ..................... (1.33) (1.33) (1.33) (2.29) (2.29) (0.00)
-------- ------- ------- -------- ------- -------
Total distributions ............. (1.38) (1.37) (1.33) (2.36) (2.33) (0.00)
-------- ------- ------- -------- ------- -------
Net asset value, end of period ....... $ 13.65 $ 13.31 $ 13.19 $ 15.72 $ 15.47 $ 15.42
======== ======= ======= ======== ======= =======
TOTAL RETURN ......................... (3.67)% (4.38)%3 (5.13)%3 19.82% 19.51%3 19.12%2,3
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000's) $270,382 $11,542 $ 515 $284,295 $10,634 $ 61
Ratio of expenses to
average net assets ................ 1.12% 1.38% 2.08% 0.98% 1.23% 1.92%2
Ratio of net investment
income to average
net assets ........................ 0.70% 0.44% (0.26)% 0.43% 0.19% (0.48)%2
Ratio of expenses to
average net assets
before fee waivers ................ 1.12% 1.38% 2.08% 0.98% 1.23% 1.92%2
Ratio of net investment income
to average net assets
before fee waivers ................ 0.70% 0.44% (0.26)% 0.43% 0.19% (0.48)%2
Portfolio turnover rate ............ 79% 79% 79% 89% 89% 89%
</TABLE>
<TABLE>
<CAPTION>
FOR THE PERIOD
ENDED MAY 31,
1997 1996 1995
------------------------------------------------------------
CLASS I CLASS A CLASS I CLASS A CLASS I1 CLASS A1
------- ------- ------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning
of period ......................... $ 13.10 $ 12.94 $ 11.38 $ 11.26 $ 10.00 $ 10.16
-------- ------- ------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS
Net investment income .............. 0.09 0.08 0.08 0.06 0.10 0.07
Net gain/(loss) on securities
(realized and unrealized) ......... 2.90 2.83 2.41 2.37 1.36 1.11
-------- ------- ------- ------- ------- -------
Total from investment
operations ................... 2.99 2.91 2.49 2.43 1.46 1.18
-------- ------- ------- ------- ------- -------
LESS DISTRIBUTIONS
Dividends from net
investment income ................. (0.09) (0.05) (0.08) (0.06) (0.04) (0.04)
Dividends in excess of net
investment income ................. (0.00) (0.05) (0.02) (0.02) (0.00) (0.00)
Distributions from net realized
capital gains ..................... (0.85) (0.85) (0.67) (0.67) (0.04) (0.04)
-------- ------- ------- ------ ------- -------
Total distributions ............. (0.94) (0.90) (0.77) (0.75) (0.08) (0.08)
-------- ------- ------- ------ ------- -------
Net asset value, end of period ....... $ 15.15 $ 14.95 $ 13.10 $12.94 $ 11.38 $ 11.26
======== ======= ======= ====== ======= =======
TOTAL RETURN ......................... 23.61% 23.26%3 22.64% 22.28%3 17.42%2 14.80%3,5
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000's) $199,311 $ 4,929 $99,294 $4,702 $50,993 $ 3,567
Ratio of expenses to
average net assets ................ 0.97% 1.22% 1.05% 1.30% 1.01%2 1.34%2
Ratio of net investment
income to average
net assets ........................ 0.83% 0.57% 0.83% 0.58% 1.31%2 1.09%2
Ratio of expenses to
average net assets
before fee waivers ................ 0.97% 1.22% 1.06% 1.32% 1.15%2 1.38%2
Ratio of net investment income
to average net assets
before fee waivers ................ 0.83% 0.51% 0.82% 0.56% 1.17%2 1.05%2
Portfolio turnover rate ............ 64% 64% 106% 106% 69% 69%
</TABLE>
1 CLASS I AND CLASS A COMMENCED OPERATIONS ON JULY 26, 1994
AND AUGUST 15, 1994, RESPECTIVELY.
2 ANNUALIZED.
3 TOTAL RETURN EXCLUDES SALES CHARGE.
4 CLASS B COMMENCED OPERATIONS ON JANUARY 6, 1998.
5 RETURNS ARE FOR THE PERIOD INDICATED AND HAVE NOT BEEN ANNUALIZED.
See Accompanying Notes
33
<PAGE>
[ARROW GRAPHIC OMITTED]
STATEMENT OF NET ASSETS
ARMADA SMALL CAP VALUE FUND
MAY 31, 1999
NUMBER VALUE
OF SHARES (000)
--------- ---------
COMMON STOCK -- 83.8%
AEROSPACE & DEFENSE -- 0.8%
Aeroflex* ......................... 47,100 $ 686
-------
AIR TRANSPORTATION -- 1.2%
Atlas Air* ........................ 25,100 675
Expeditors International
of Washington .................... 5,200 289
-------
964
-------
APPAREL/TEXTILES -- 0.4%
Tarrant Apparel*# ................. 10,500 318
-------
AUTOMOTIVE -- 0.9%
Monaco Coach* ..................... 25,000 750
-------
BANKS -- 1.6%
Cullen/Frost Bankers .............. 8,700 489
Republic Security Financial ....... 99,900 837
-------
1,326
-------
BROADCASTING, NEWSPAPERS &
ADVERTISING -- 1.6%
Citadel Communications* ........... 29,500 824
Doubleclick*# ..................... 4,750 463
-------
1,287
-------
BUILDING & CONSTRUCTION -- 0.5%
Standard-Pacific .................. 32,600 428
-------
BUSINESS SERVICES -- 2.2%
Barnett* .......................... 36,500 333
FYI* .............................. 23,900 662
Iron Mountain* .................... 13,400 370
Nova*# ............................ 19,000 423
-------
1,788
-------
CHEMICALS -- 1.2%
MacDermid ......................... 23,500 946
-------
COMMUNICATIONS EQUIPMENT -- 3.9%
Dii Group* ........................ 31,400 1,034
Mercury Computer Systems* ......... 33,800 669
Microwave Power Devices* .......... 33,300 508
Sawtek* ........................... 24,000 951
-------
3,162
-------
COMPUTER SERVICES -- 7.7%
Ardent Software* .................. 24,300 486
Checkfree Holdings* ............... 11,800 555
Electronics for Imaging* .......... 23,000 1,128
Inspire Insurance Solutions* ...... 42,800 746
Intervu* .......................... 11,600 402
Mercury Interactive* .............. 9,000 296
Micromuse* ........................ 14,800 590
NUMBER VALUE
OF SHARES (000)
--------- ---------
COMMON STOCK -- CONTINUED
COMPUTER SERVICES -- CONTINUED
National Computer Systems ......... 17,300 $ 541
Platinum technology
International* ................... 15,500 451
Sykes Enterprises* ................ 22,600 703
Unigraphics Solutions* ............ 22,200 354
-------
6,252
-------
CONSUMER PRODUCTS -- 1.3%
Jakks Pacific* .................... 26,300 728
K-Swiss, Cl A ..................... 6,200 356
-------
1,084
-------
DATA PROCESSING/MANAGEMENT -- 1.5%
National Data ..................... 26 1,233
-------
DRUGS & HEALTH CARE -- 0.9%
Alpharma, Cl A# ................... 13,300 355
Geltex Pharmaceuticals*# .......... 23,200 394
-------
749
-------
ELECTRICAL SERVICES -- 1.1%
Calpine* .......................... 16,000 867
-------
ELECTRICAL TECHNOLOGY -- 0.5%
Smart Modular ..................... 27,800 419
-------
ELECTRONICS -- 3.0%
CTS ............................... 21,400 1,198
Gentex* ........................... 42,300 1,270
-------
2,468
-------
ENTERTAINMENT -- 2.4%
Macrovision* ...................... 19,800 898
Premier Parks* .................... 28,800 1,026
-------
1,924
-------
FINANCIAL SERVICES -- 4.4%
Affiliated Managers* .............. 25,000 731
Amresco* .......................... 50,300 346
E*trade*# ......................... 22,000 979
Metris ............................ 21,400 1,248
Prism Financial* .................. 12,700 281
-------
3,585
-------
HAZARDOUS WASTE MANAGEMENT -- 0.6%
Casella Waste Systems, Cl A*# ..... 25,200 497
-------
HOME FURNISHINGS & HOUSEWARES -- 1.0%
Ethan Allen Interiors ............. 25,950 827
-------
See Accompanying Notes
34
<PAGE>
[ARROW GRAPHIC OMITTED]
STATEMENT OF NET ASSETS
ARMADA SMALL CAP VALUE FUND
MAY 31, 1999
NUMBER VALUE
OF SHARES (000)
--------- ---------
COMMON STOCK -- CONTINUED
HOTELS & LODGING -- 0.4%
Pegasus Systems* .................. 9,300 $ 324
-------
INFORMATION RETRIEVAL SERVICES -- 3.2%
CMG Information Services* ......... 8,400 871
Infospace.com* .................... 12,000 564
Onesource Information
Services* ........................ 22,400 211
QRS* .............................. 12,800 950
-------
2,596
-------
INSURANCE -- 2.1%
Annuity & Life .................... 46,400 1,198
Scottish Annuity & Life* .......... 54,000 527
-------
1,725
-------
MACHINERY -- 0.8%
Applied Power, Cl A ............... 2,400 58
Astec Industries* ................. 16,000 598
-------
656
-------
MEDICAL & MEDICAL SERVICES -- 9.5%
ABR Information Services* ......... 31,700 801
American Retirement*# ............. 38,600 654
Biomatrix*# ....................... 25,800 790
Gliatech* ......................... 18,000 461
Hooper Holmes ..................... 56,200 1,019
Laser Vision Centers* ............. 21,800 1,243
Life Technologies ................. 4,300 160
Medquist* ......................... 22,500 823
Minimed* .......................... 3,500 207
Priority Healthcare, Cl B* ........ 34,900 1,191
VISX* 7,300 379
-------
7,728
-------
METALS & MINING -- 0.7%
Stillwater Mining* ................ 18,450 589
-------
OFFICE SUPPLIES -- 0.5%
School Specialty* ................. 25,000 372
-------
PETROLEUM & FUEL PRODUCTS -- 0.5%
Cal Dive International* ........... 15,400 377
-------
PHARMACEUTICAL -- 1.1%
King Pharmaceuticals* ............. 39,300 935
-------
PRINTING & PUBLISHING -- 1.0%
Valassis Communications* .......... 22,350 778
-------
COMMON STOCK -- CONTINUED
PROFESSIONAL SERVICES -- 1.3%
Corporate Executive Board* ........ 5,908 $ 173
Diamond Technology Partners*# ..... 22,600 542
Safeguard Scientifics* ............ 5,100 373
-------
1,088
-------
RAILROADS -- 0.9%
Motivepower Industries* ........... 45,150 765
-------
RETAIL -- 4.9%
Ames Department Stores* ........... 15,200 623
BJ's Wholesale Club* .............. 21,600 562
Cheap Tickets* .................... 14,300 451
Foodmaker* ........................ 28,600 772
Men's Wearhouse*# ................. 27,000 689
The Children's Place
Retail Stores* ................... 22,600 880
-------
3,977
-------
RUBBER & PLASTIC -- 0.6%
Trex* ............................. 20,800 456
-------
SEMI-CONDUCTORS/INSTRUMENTS -- 8.6%
Applied Micro Circuits* ........... 11,500 680
Atmi* ............................. 19,400 426
Burr-Brown* ....................... 18,600 595
Credence Systems* ................. 22,900 678
Cymer*# ........................... 32,300 592
Optical Coating Laboratory ........ 8,780 570
Photronics Labs*# ................. 11,600 229
PMC-Sierra* ....................... 28,000 1,360
PRI Automation, Cl A*# ............ 21,200 519
SDL* .............................. 14,300 1,329
-------
6,978
-------
TELEPHONE & TELECOMMUNICATION -- 7.8%
Antec*# ........................... 26,100 765
Commscope* ........................ 38,900 1,021
Dycom* ............................ 31,200 1,505
Gilat Satellite Networks* ......... 11,350 599
Intermedia*# ...................... 22,500 570
Mastec* ........................... 22,700 551
SkyTel* ........................... 36,600 743
Worldgate Communications* ......... 16,000 592
-------
6,346
-------
TRUCKING -- 0.7%
Wabash National# .................. 30,800 587
-------
See Accompanying Notes
35
<PAGE>
[ARROW GRAPHIC OMITTED]
STATEMENT OF NET ASSETS
ARMADA SMALL CAP GROWTH FUND
VALUE
SHARES/PAR (000)
---------- ---------
COMMON STOCK -- CONTINUED
WHOLESALE -- 0.5%
Wesco International* ............ 20,300 $ 402
-------
Total Common Stock
(Cost $61,921) 68,239
-------
REPURCHASE AGREEMENT -- 12.8%
Prudential
4.780% (dated 05/28/99, matures
06/01/99, repurchase price
$10,405,524; collateralized by
FHLMC obligation: market
value $10,703,130) ............. $10,400,000 10,400
-------
Total Repurchase Agreement
(Cost $10,400) 10,400
-------
CASH EQUIVALENT -- 4.0%
Goldman Sachs Financial Square
Premium Money Market Fund .... 3,258,000 3,258
-------
Total Cash Equivalent
(Cost $3,258) ................. 3,258
-------
Total Investments -- 100.6%
(Cost $75,579) ................ $81,897
=======
Other Assets and Liabilities,
Net -- (0.6%) ................. (524)
-------
NET ASSETS:
Portfolio Shares of Class I
(unlimited authorization --
no par value) based on
7,902,867 outstanding shares of
beneficial interest .......... 83,235
Portfolio Shares of Class A (unlimited
authorization -- no par value) based
on 107,770 outstanding shares of
beneficial interest ........... 1,149
Portfolio Shares of Class B (unlimited
authorization -- no par value) based
on 13,896 outstanding shares of
beneficial interest ........... 135
Accumulated net realized loss
on investments and futures .... (10,437)
Net unrealized appreciation
on investments ................ 6,318
Net unrealized appreciation on futures 973
-------
TOTAL NET ASSETS -- 100.0% $81,373
=======
VALUE
-----
NET ASSET VALUE, OFFERING
AND REDEMPTION PRICE PER
SHARE -- CLASS I ............................ $10.14
=======
NET ASSET VALUE AND REDEMPTION
PRICE PER SHARE -- CLASS A $10.11
............................................... =======
MAXIMUM OFFERING PRICE PER
SHARE -- CLASS A ($10.11 / 94.5%) ............ $10.70
=======
NET ASSET VALUE AND OFFERING
PRICE PER SHARE -- CLASS B .................... $10.01
=======
- ------------
* NON-INCOME PRODUCING SECURITY.
# SECURITY FULLY OR PARTIALLY ON LOAN.
CL -- CLASS
FHLMC -- FEDERAL HOME LOAN MORTGAGE CORPORATION
See Accompanying Notes
36
<PAGE>
[ARROW GRAPHIC OMITTED]
FINANCIAL HIGHLIGHTS
ARMADA SMALL CAP GROWTH FUND
FOR A PORTFOLIO SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
FOR THE YEAR FOR THE PERIOD
ENDED MAY 31, 1999 ENDED MAY 31, 1998
------------------------------ ------------------------------
CLASS I CLASS A CLASS B CLASS I3 CLASS A3 CLASS B4
------- ------- ------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ................. $ 11.69 $11.68 $11.66 $ 10.00 $10.00 $10.64
------- ------ ------ ------- ------ ------
INCOME FROM INVESTMENT OPERATIONS
Net investment income/(loss) ....................... (0.03)6 (0.05)6 (0.10)6 0.01 0.01 (0.01)
Net gain/(loss) on securities
(realized and unrealized) ......................... (1.41) (1.41) (1.44) 1.72 1.71 1.03
------- ------ ------ ------- ------ ------
Total from investment operations ................ (1.44) (1.46) (1.54) 1.73 1.72 1.02
------- ------ ------ ------- ------ ------
LESS DISTRIBUTIONS
Dividends from net investment income ............... (0.00) (0.00) (0.00) (0.01) (0.01) (0.00)
Distributions from net realized capital gains ...... (0.11) (0.11) (0.11) (0.03) (0.03) (0.00)
------- ------ ------ ------- ------ ------
Total distributions ............................. (0.11) (0.11) (0.11) (0.04) (0.04) (0.00)
------- ------ ------ ------- ------ ------
Net asset value, end of period ....................... $ 10.14 $10.11 $10.01 $ 11.69 $11.68 $11.66
======= ====== ====== ======= ====== ======
TOTAL RETURN ......................................... (12.36)% (12.54)%1 (13.26)%1 17.35%2 17.18%1,2 9.59%1,2
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000's) ............... $80,145 $1,089 $ 139 $54,476 $ 331 $ 1
Ratio of expenses to average net assets ............ 1.27% 1.51% 2.23% 0.98%5 1.23%5 1.92%5
Ratio of net investment income/(loss) to
average net assets ............................... (0.27)% (0.51)% (1.23)% 0.14%5 (0.32)%5 (0.87)%5
Ratio of expenses to average net assets
before fee waivers ................................ 1.27% 1.51% 2.23% 1.09%5 1.34%5 3.06%5
Ratio of net investment income/(loss) to
average net assets before fee waivers ............. (0.27)% (0.51)% (1.23)% 0.03%5 (0.43)%5 (2.01)%5
Portfolio turnover rate ............................ 159% 159% 159% 31% 31% 31%
</TABLE>
1 TOTAL RETURN EXCLUDES SALES CHARGE.
2 RETURNS ARE FOR THE PERIOD INDICATED AND HAVE NOT BEEN ANNUALIZED.
3 CLASS I AND CLASS A BOTH COMMENCED OPERATIONS ON AUGUST 1, 1997.
4 CLASS B COMMENCED OPERATIONS ON JANUARY 6, 1998.
5 ANNUALIZED.
6 CALCULATED BASED UPON AVERAGE SHARES OUTSTANDING.
See Accompanying Notes
37
<PAGE>
[ARROW GRAPHIC OMITTED]
STATEMENT OF NET ASSETS
ARMADA EQUITY GROWTH FUND
MAY 31, 1999
NUMBER VALUE
OF SHARES (000)
--------- ----------
COMMON STOCK -- 97.4%
AIRCRAFT -- 0.4%
United Technologies# ........... 95,600 $ 5,933
--------
BANKS -- 2.8%
Comerica ....................... 80,950 4,892
MBNA ........................... 537,500 14,848
Northern Trust ................. 62,200 5,629
State Street ................... 183,600 13,999
--------
39,368
--------
BROADCASTING, NEWSPAPERS & ADVERTISING -- 1.0%
Omnicom Group# ................. 211,000 14,770
--------
BUSINESS SERVICES -- 1.0%
Automatic Data Processing ...... 357,200 14,712
--------
CABLE TELEVISION -- 1.3%
Comcast, Cl A Special .......... 484,800 18,695
--------
CHEMICALS -- 0.5%
Monsanto# ...................... 175,000 7,263
--------
COMMUNICATIONS EQUIPMENT -- 3.7%
Lucent Technologies# ........... 685,000 38,959
Nortel Networks ................ 185,000 13,875
--------
52,834
--------
COMPUTER HARDWARE -- 9.8%
Cisco Systems* ................. 388,000 42,280
Dell Computer* ................. 280,200 9,641
EMC* ........................... 247,900 24,697
Hewlett Packard ................ 146,700 13,836
International Business Machines# 339,200 39,453
Sun Microsystems* .............. 160,000 9,560
--------
139,467
--------
COMPUTER SERVICES -- 1.2%
Ceridian* ...................... 293,200 9,676
Oracle*# ....................... 316,500 7,853
--------
17,529
--------
COMPUTER SOFTWARE -- 3.6%
Microsoft* ..................... 632,000 51,014
--------
DRUGS & HEALTH CARE -- 11.4%
Abbott Laboratories ............ 214,720 9,703
American Home Products ......... 165,000 9,508
Bristol-Myers Squibb ........... 445,200 30,552
Johnson & Johnson .............. 199,300 18,460
Lilly (Eli) .................... 149,000 10,644
Merck .......................... 307,000 20,723
Pfizer ......................... 242,900 25,990
Schering-Plough ................ 517,000 23,297
Warner-Lambert ................. 203,000 12,586
--------
161,463
--------
ENTERTAINMENT -- 0.7%
AT&T-Liberty Media, Cl A*# ..... 158,200 10,510
--------
NUMBER VALUE
OF SHARES (000)
--------- --------
COMMON STOCK -- CONTINUED
ENVIRONMENTAL SERVICES -- 1.3%
Waste Management ............... 348,000 $ 18,401
--------
FINANCIAL SERVICES -- 5.7%
American Express ............... 155,000 18,784
Associates First Capital, Cl A . 133,600 5,478
Citigroup ...................... 210,000 13,913
DLJ Direct* .................... 15,000 619
Fannie Mae ..................... 163,000 11,084
Freddie Mac .................... 280,700 16,368
J.P. Morgan .................... 104,000 14,488
--------
80,734
--------
FOOD & BEVERAGE -- 1.5%
Coca Cola ...................... 209,000 14,277
PepsiCo ........................ 195,000 6,983
--------
21,260
--------
HOUSEHOLD PRODUCTS -- 3.2%
Colgate Palmolive .............. 152,500 15,231
Procter & Gamble ............... 316,000 29,507
--------
44,738
--------
INSURANCE -- 2.6%
American International Group ... 325,260 37,181
--------
MEDICAL & MEDICAL SERVICES -- 1.1%
Medtronic ...................... 210,800 14,967
--------
MISCELLANEOUS MANUFACTURING -- 2.4%
Tyco International ............. 395,800 34,583
--------
MOTORCYCLE & MOTOR SCOOTER -- 0.9%
Harley-Davidson ................ 256,300 13,087
--------
OFFICE & BUSINESS EQUIPMENT -- 2.9%
Lexmark International, Cl A* ... 125,000 17,016
Pitney Bowes ................... 207,000 13,196
Xerox .......................... 204,000 11,462
--------
41,674
--------
OIL MACHINERY & EQUIPMENT -- 0.5%
Schlumberger ................... 120,000 7,223
--------
PAPER & FOREST PRODUCTS -- 1.0%
International Paper ............ 275,000 13,750
--------
PERSONAL CARE -- 0.5%
Gillette ....................... 141,400 7,211
--------
PETROLEUM & FUEL PRODUCTS -- 0.5%
Burlington Resources ........... 165,000 7,085
--------
PETROLEUM REFINING -- 2.0%
Chevron ........................ 147,000 13,625
Exxon .......................... 177,000 14,138
--------
27,763
--------
See Accompanying Notes
38
<PAGE>
[ARROW GRAPHIC OMITTED]
STATEMENT OF NET ASSETS
ARMADA EQUITY GROWTH FUND
MAY 31, 1999
NUMBER VALUE
OF SHARES (000)
--------- --------
COMMON STOCK -- CONTINUED
PRINTING & PUBLISHING -- 2.1%
Time Warner# ................... 440,000 $ 29,947
----------
RETAIL DRUG STORES -- 1.6%
CVS ............................ 302,000 13,892
Walgreen ....................... 354,000 8,231
----------
22,123
----------
RETAIL FOOD CHAINS -- 3.4%
Costco* ........................ 290,600 21,078
Kroger*# ....................... 209,100 12,245
Safeway* ....................... 327,000 15,206
----------
48,529
----------
RETAIL STORES -- 11.1%
Dayton Hudson .................. 435,500 27,437
Gap ............................ 230,000 14,389
Home Depot# .................... 495,698 28,193
Lowe's ......................... 208,000 10,803
Staples* ....................... 460,000 13,225
Tandy .......................... 260,000 21,450
TJX Companies .................. 445,000 13,350
Wal-Mart ....................... 687,000 29,283
----------
158,130
----------
SEMI-CONDUCTORS/INSTRUMENTS -- 2.5%
Intel .......................... 395,000 21,404
Texas Instruments .............. 134,000 14,656
----------
36,060
----------
SPECIALTY MACHINERY -- 3.2%
General Electric ............... 439,800 44,722
----------
TELEPHONE & TELECOMMUNICATION -- 7.7%
Airtouch Communications* ....... 158,000 15,879
Alltel ......................... 281,000 20,144
Ameritech ...................... 150,000 9,872
BellSouth ...................... 244,000 11,514
MCI WorldCom* .................. 426,500 36,826
SBC Communications ............. 288,000 14,724
----------
108,959
----------
TRAVEL -- 1.0%
Carnival, Cl A ................. 329,900 13,526
----------
WHOLESALE -- 1.3%
Cardinal Health ................ 165,000 9,962
Sysco .......................... 264,700 7,858
----------
17,820
----------
TOTAL COMMON STOCK
(Cost $1,040,745) ........................... 1,383,031
----------
NUMBER OF VALUE
SHARES(000) (000)
--------- ----------
CASH EQUIVALENT -- 2.7%
Fidelity Domestic Money
Market Fund .................. 38,800 $ 38,800
----------
TOTAL CASH EQUIVALENT
(Cost $38,800) .............................. 38,800
----------
TOTAL INVESTMENTS -- 100.1%
(Cost $1,079,545) ........................... $1,421,831
==========
OTHER ASSETS AND LIABILITIES,
NET -- (0.1%) ............................... (1,921)
----------
Portfolio Shares of Class I
(unlimited authorization -- no par value)
based on 51,286,720 outstanding shares
of beneficial interest ..................... 943,499
Portfolio Shares of Class A
(unlimited authorization -- no par value)
based on 6,369,718 outstanding shares
of beneficial interest ..................... 134,137
Portfolio Shares of Class B (unlimited
authorization -- no par value) based on
57,531 outstanding shares of beneficial interest 1,375
Accumulated net realized loss on investments
and futures ................................ (1,387)
Net unrealized appreciation on investments .. 342,286
----------
TOTAL NET ASSETS -- 100.0% .................... $1,419,910
==========
NET ASSET VALUE, OFFERING
AND REDEMPTION PRICE
PER SHARE -- CLASS I ........................ $24.61
==========
NET ASSET VALUE AND REDEMPTION
PRICE PER SHARE -- CLASS A ................... $24.55
==========
MAXIMUM OFFERING PRICE
PER SHARE -- CLASS A ($24.55 / 94.5%) ........ $25.98
==========
NET ASSET VALUE AND OFFERING
PRICE PER SHARE -- CLASS B ................... $24.33
==========
- ------------
* NON-INCOME PRODUCING SECURITY.
# SECURITY FULLY OR PARTIALLY ON LOAN.
CL -- CLASS
See Accompanying Notes
39
<PAGE>
[ARROW GRAPHIC OMITTED]
FINANCIAL HIGHLIGHTS
ARMADA EQUITY GROWTH FUND
MAY 31, 1999
FOR A PORTFOLIO SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
FOR THE YEAR ENDED MAY 31,
---------------------------------------------------------------------------
1999 1998 1997
---------------------------------------------------------------------------
CLASS I CLASS A CLASS B CLASS I CLASS A CLASS B3 CLASS I
---------- -------- ------- ------- ------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning
of period ................ $ 21.35 $ 21.35 $21.28 $ 18.63 $ 18.67 $19.44 $ 18.02
---------- -------- ------ -------- ------- ------ --------
INCOME FROM INVESTMENT
OPERATIONS
Net investment
income/(loss) ........... (0.03)4 (0.09)4 (0.27)4 (0.00) (0.04) (0.24) 0.09
Net gain on securities
(realized and unrealized) 4.28 4.28 4.31 5.00 4.99 2.08 4.66
---------- -------- ------ -------- ------- ------ --------
Total from investment
operations ......... 4.25 4.19 4.04 5.00 4.95 1.84 4.75
---------- -------- ------ -------- ------- ------ --------
LESS DISTRIBUTIONS
Dividends from net
investment income ....... (0.00) (0.00) (0.00) (0.01) (0.00) (0.00) (0.09)
Dividends in excess of net
investment income ....... (0.00) (0.00) (0.00) (0.00) (0.00) (0.00) (0.02)
Distributions from net realized
capital gains ........... (0.99) (0.99) (0.99) (2.27) (2.27) (0.00) (4.03)
Distributions in excess of net
realized capital gains .. (0.00) (0.00) (0.00) (0.00) (0.00) (0.00) (0.00)
---------- -------- ------ -------- ------- ------ --------
Total distributions ... (0.99) (0.99) (0.99) (2.28) (2.27) (0.00) (4.14)
---------- -------- ------ -------- ------- ------ --------
Net asset value, end of period $ 24.61 $ 24.55 $24.33 $ 21.35 $ 21.35 $21.28 $ 18.63
========== ======== ====== ======== ======= ====== ========
TOTAL RETURN ............... 20.16% 19.88%1 19.22%1 28.65% 28.32%1 27.90%1,2 29.57%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period
(in 000's) ............... $1,262,154 $156,356 $1,400 $352,413 $12,380 $ 24 $255,594
Ratio of expenses to
average net assets ...... 0.92% 1.17% 1.88% 0.98% 1.23% 1.92%2 0.97%
Ratio of net investment
income/(loss) to average
net assets .............. (0.11)% (0.36)% (1.07)% (0.01)% (0.26)% (0.92)%2 0.49%
Ratio of expenses to average
net assets before
fee waivers ............. 0.92% 1.17% 1.88% 0.98% 1.23% 1.92%2 0.97%
Ratio of net investment
income/(loss) to average
net assets before
fee waivers ............. (0.11)% (0.36)% (1.07)% (0.01)% (0.26)% (0.92)%2 0.49%
Portfolio turnover rate 57% 57% 57% 260% 260% 260% 197%
</TABLE>
<TABLE>
<CAPTION>
FOR THE YEAR ENDED MAY 31,
------------------------------------------------
1996 1995
------------------------------------------------
CLASS A CLASS I CLASS A CLASS I CLASS A
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning
of period ................ $18.05 $ 14.77 $14.79 $ 13.66 $13.68
------ -------- ------ -------- ------
INCOME FROM INVESTMENT
OPERATIONS
Net investment
income/(loss) ........... 0.05 0.14 0.10 0.21 0.18
Net gain on securities
(realized and unrealized) 4.66 3.46 3.47 1.21 1.21
------ -------- ------ -------- ------
Total from investment
operations ......... 4.71 3.60 3.57 1.42 1.39
------ -------- ------ -------- ------
LESS DISTRIBUTIONS
Dividends from net
investment income ....... (0.05) (0.14) (0.10) (0.20) (0.17)
Dividends in excess of net
investment income ....... (0.01) (0.02) (0.02) (0.00) (0.00)
Distributions from net realized
capital gains ........... (4.03) (0.19) (0.19) (0.00) (0.00)
Distributions in excess of net
realized capital gains .. (0.00) (0.00) (0.00) (0.11) (0.11)
------ -------- ------ -------- ------
Total distributions ... (4.09) (0.35) (0.31) (0.31) (0.28)
------ -------- ------ -------- ------
Net asset value, end of period $18.67 $ 18.02 $18.05 $ 14.77 $14.79
------ -------- ------ -------- ------
TOTAL RETURN ............... 29.24%1 24.61% 24.34%1 10.62% 10.35%1
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period
(in 000's) ............... $6,931 $166,671 $6,013 $119,634 $5,974
Ratio of expenses to
average net assets ...... 1.22% 1.01% 1.26% 1.01% 1.27%
Ratio of net investment
income/(loss) to average
net assets .............. 0.25% 0.85% 0.60% 1.53% 1.23%
Ratio of expenses to average
net assets before
fee waivers ............. 1.22% 1.03% 1.28% 1.02% 1.28%
Ratio of net investment
income/(loss) to average
net assets before
fee waivers ............. 0.25% 0.83% 0.58% 1.51% 1.22%
Portfolio turnover rate .. 197% 74% 74% 17% 17%
</TABLE>
1 TOTAL RETURN EXCLUDES SALES CHARGE.
2 ANNUALIZED.
3 CLASS B COMMENCED OPERATIONS ON JANUARY 6, 1998.
4 CALCULATED BASED UPON AVERAGE SHARES OUTSTANDING.
See Accompanying Notes
40
<PAGE>
[ARROW GRAPHIC OMITTED]
STATEMENT OF NET ASSETS
ARMADA TAX MANAGED EQUITY FUND
NUMBER VALUE
OF SHARES (000)
--------- ---------
COMMON STOCK -- 96.6%
AIR TRANSPORTATION -- 0.2%
Southwest Airlines ....... 12,000 $ 385
-------
BANKS -- 7.6%
Bank of America .......... 6,000 388
First Union .............. 20,000 921
Northern Trust ........... 16,000 1,446
State Street ............. 89,000 6,786
SunTrust ................. 10,000 675
Wachovia ................. 35,600 3,142
Wells Fargo .............. 148,000 5,920
-------
19,278
-------
BROADCASTING, NEWSPAPERS & ADVERTISING -- 1.1%
Omnicom Group# ........... 39,000 2,730
-------
BUSINESS SERVICES -- 3.0%
Automatic Data Processing 188,000 7,743
-------
CHEMICALS -- 0.9%
Air Products & Chemicals . 56,000 2,296
-------
COMMUNICATIONS EQUIPMENT -- 1.8%
Lucent Technologies# ..... 60,000 3,412
Nortel Networks .......... 16,500 1,237
-------
4,649
-------
COMPUTER HARDWARE -- 5.4%
Cisco Systems* ........... 36,475 3,976
Compaq Computer# ......... 20,000 474
Dell Computer* ........... 20,000 689
Hewlett Packard .......... 74,400 7,017
Sun Microsystems* ........ 28,000 1,673
-------
13,829
-------
COMPUTER SOFTWARE -- 1.9%
Microsoft* ............... 60,600 4,892
-------
DRUGS & HEALTH CARE -- 19.0%
Abbott Laboratories ...... 192,000 8,676
American Home Products ... 10,000 576
Bristol-Myers Squibb ..... 154,880 10,629
Johnson & Johnson ........ 17,500 1,621
Lilly (Eli) .............. 13,000 929
Merck .................... 96,000 6,480
Pfizer ................... 93,000 9,951
Schering-Plough .......... 212,400 9,571
-------
48,433
-------
ENTERTAINMENT -- 1.5%
Walt Disney .............. 132,000 3,844
-------
NUMBER VALUE
OF SHARES (000)
--------- ---------
COMMON STOCK -- CONTINUED
FINANCIAL SERVICES -- 0.4%
Fannie Mae ............... 13,500 $ 918
-------
FOOD & BEVERAGE -- 4.6%
Anheuser Busch ........... 5,000 365
Coca Cola ................ 48,800 3,334
PepsiCo .................. 224,500 8,040
-------
11,739
-------
HOLDING COMPANIES -- 1.4%
Berkshire Hathaway, Cl A* 49 3,528
-------
HOUSEHOLD PRODUCTS -- 1.8%
Procter & Gamble ......... 48,000 4,482
-------
INFORMATION RETRIEVAL SERVICES -- 1.3%
America Online* .......... 27,000 3,223
-------
INSURANCE -- 5.4%
American International Group 102,431 11,709
Chubb .................... 30,000 2,102
-------
13,811
-------
MEDICAL & MEDICAL SERVICES -- 0.2%
Medtronic ................ 7,200 511
-------
MISCELLANEOUS MANUFACTURING -- 1.0%
Illinois Tool Works ...... 12,000 921
Minnesota Mining &
Manufacturing ........... 17,600 1,509
-------
2,430
-------
MOTORCYCLE & MOTOR SCOOTER -- 2.4%
Harley-Davidson .......... 117,600 6,005
-------
OFFICE & BUSINESS EQUIPMENT -- 5.0%
Pitney Bowes ............. 153,000 9,754
Xerox .................... 52,000 2,922
-------
12,676
-------
OIL MACHINERY & EQUIPTMENT -- 1.2%
Schlumberger ............. 52,500 3,160
-------
PERSONAL CARE -- 0.1%
Gillette ................. 5,000 255
-------
PETROLEUM REFINING -- 5.0%
BP Amoco, ADR# ........... 43,934 4,706
Exxon .................... 52,000 4,153
Mobil .................... 10,000 1,012
Royal Dutch Petroleum .... 52,400 2,964
-------
12,835
-------
See Accompanying Notes
41
<PAGE>
[ARROW GRAPHIC OMITTED]
STATEMENT OF NET ASSETS
ARMADA TAX MANAGED EQUITY FUND
MAY 31, 1999
NUMBER VALUE
OF SHARES (000)
--------- -------
COMMON STOCK -- CONTINUED
RESTAURANTS -- 1.0%
McDonald's ............... 64,000 $ 2,464
--------
RETAIL -- 6.9%
Dayton Hudson ............ 13,300 838
Home Depot ............... 192,000 10,920
Nordstrom ................ 22,000 781
Staples* ................. 45,000 1,294
Wal-Mart ................. 89,000 3,794
--------
17,627
--------
SEMI-CONDUCTORS/INSTRUMENTS -- 4.4%
Intel# ................... 172,000 9,320
Texas Instruments ........ 16,000 1,750
--------
11,070
--------
SPECIALTY MACHINERY -- 5.7%
Emerson Electric# ........ 70,200 4,484
General Electric ......... 97,900 9,955
--------
14,439
--------
TELEPHONE & TELECOMMUNICATION -- 6.4%
Ameritech ................ 27,200 1,790
BellSouth ................ 89,000 4,200
GTE ...................... 5,500 347
MCI WorldCom* ............ 46,750 4,038
Motorola ................. 30,000 2,484
SBC Communications ....... 24,000 1,227
US West .................. 24,800 1,341
Vodafone Group# .......... 4,000 766
--------
16,193
--------
TOTAL COMMON STOCK
(Cost $59,112) ............................. 245,445
--------
CASH EQUIVALENT -- 3.3%
Fidelity Domestic
Money Market Fund ............ 8,464,000 8,464
--------
TOTAL CASH EQUIVALENT
(Cost $8,464) .............................. 8,464
--------
TOTAL INVESTMENTS -- 99.9%
(Cost $67,576) ............................. $253,909
========
VALUE
(000)
-------
OTHER ASSETS AND LIABILITIES,
NET -- 0.1% ................................. $ 322
--------
NET ASSETS:
Portfolio Shares of Class I
(unlimited authorization -- no par value)
based on 19,901,687 outstanding shares of
beneficial interest ........................ 55,196
Portfolio Shares of Class A
(unlimited authorization -- no par value)
based on 604,299 outstanding shares of
beneficial interest ........................ 7,046
Portfolio Shares of Class B
(unlimited authorization -- no par value)
based on 443,687 outstanding shares of
beneficial interest ........................ 5,305
Accumulated net realized gain
on investments ............................. 143
Net unrealized appreciation on investments .. 186,333
Undistributed net investment income ......... 208
--------
TOTAL NET ASSETS -- 100.0% ..................... $254,231
========
NET ASSET VALUE, OFFERING
AND REDEMPTION PRICE PER
SHARE -- CLASS I ............................ $12.13
========
NET ASSET VALUE AND REDEMPTION
PRICE PER SHARE -- CLASS A ................... $12.16
========
MAXIMUM OFFERING PRICE PER
SHARE -- CLASS A ($12.16 / 94.5%) ............ $12.87
========
NET ASSET VALUE AND OFFERING
PRICE PER SHARE -- CLASS B ................... $12.12
========
- ------------
* NON-INCOME PRODUCING SECURITY.
# SECURITY FULLY OR PARTIALLY ON LOAN.
ADR--AMERICAN DEPSITORY RECEIPT
CL--CLASS
See Accompanying Notes
42
<PAGE>
[ARROW GRAPHIC OMITTED]
FINANCIAL HIGHLIGHTS
ARMADA TAX MANAGED EQUITY FUND
FOR A PORTFOLIO SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
FOR THE YEAR FOR THE PERIOD
ENDED MAY 31, 1999 ENDED MAY 31, 1998
-----------------------------------------------------------------
CLASS I CLASS A CLASS B CLASS I2 CLASS A3 CLASS B4
------- ------- ------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period .......... $ 9.93 $ 9.93 $ 9.93 $ 10.00 $10.10 $10.21
-------- ------- ------- -------- ------ ------
INCOME FROM INVESTMENT OPERATIONS
Net investment income ....................... 0.05 0.04 (0.02) 0.00 0.00 0.00
Net gain/(loss) loss on securities
(realized and unrealized) .................. 2.21 2.24 2.23 (0.07) (0.17) (0.28)
-------- ------- ------- -------- ------ ------
Total from investment operations ......... 2.26 2.28 2.21 (0.07) (0.17) (0.28)
-------- ------- ------- -------- ------ ------
LESS DISTRIBUTIONS
Dividends from net investment income ..... (0.05) (0.04) (0.01) (0.00) (0.00) (0.00)
Distributions from net realized capital gains (0.01) (0.01) (0.01) (0.00) (0.00) (0.00)
-------- ------- ------- -------- ------ ------
Total distributions ...................... (0.06) (0.05) (0.02) (0.00) (0.00) (0.00)
-------- ------- ------- -------- ------ ------
Net asset value, end of period ................ $ 12.13 $12.16 $12.12 $ 9.93 $ 9.93 $ 9.93
======== ======= ======= ======== ====== ======
TOTAL RETURN .................................. 22.82% 23.03%1 22.31%1 (4.81%)5 (23.63%)1,5 (32.24%)1,5
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000's) ........ $241,501 $7,353 $5,377 $158,867 $ 10 $ 85
Ratio of expenses to average net assets ..... 0.83% 1.09% 1.79% 0.29%5 0.54%5 1.23%5
Ratio of net investment income/(loss) to
average net assets ........................ 0.37% 0.11% (0.59%) 0.91%5 0.63%5 0.43%5
Ratio of expenses to average net assets
before fee waivers ........................ 1.01% 1.27% 1.97% 1.02%5 1.24%5 1.98%5
Ratio of net investment income/(loss) to average
net assets before fee waivers .............. 0.19% (0.07%) (0.77%) 0.18%5 (0.07%)5 1.18%5
Portfolio turnover rate ..................... 5% 5% 5% 0% 0% 0%
</TABLE>
1 TOTAL RETURN EXCLUDES SALES CHARGE.
2 CLASS I COMMENCED OPERATIONS ON APRIL 9, 1998.
3 CLASS A COMMENCED OPERATIONS ON MAY 11, 1998.
4 CLASS B COMMENCED OPERATIONS ON MAY 4, 1998.
5 ANNUALIZED.
See Accompanying Notes
43
<PAGE>
[ARROW GRAPHIC OMITTED]
STATEMENT OF NET ASSETS
ARMADA CORE EQUITY FUND
MAY 31, 1999
NUMBER VALUE
OF SHARES (000)
--------- --------
COMMON STOCK -- 98.9%
BANKS -- 5.4%
Bank One# ...................... 51,310 $ 2,902
Chase Manhattan ................ 25,660 1,860
Comerica ....................... 29,580 1,788
Commerce Bancshares ............ 36,400 1,499
-------
8,049
-------
BROADCASTING, NEWSPAPERS & ADVERTISING -- 0.4%
Interpublic Group of Companies . 7,150 542
-------
BUILDING & BUILDING SUPPLIES -- 1.1%
Sherwin Williams ............... 53,080 1,635
-------
BUSINESS SERVICES -- 6.7%
Automatic Data Processing ...... 98,920 4,074
Cintas ......................... 27,120 1,720
Computer Sciences* ............. 38,100 2,465
Fiserv* ........................ 46,550 1,746
-------
10,005
-------
CHEMICALS -- 2.5%
E.I. duPont de Nemours ......... 28,470 1,863
Praxair ........................ 36,940 1,803
-------
3,666
-------
COMPUTER HARDWARE -- 6.8%
Cisco Systems* ................. 25,612 2,791
Hewlett Packard ................ 24,720 2,331
International Business Machines# 42,100 4,897
-------
10,019
-------
COMPUTER SERVICES -- 1.3%
Ceridian*# ..................... 57,320 1,892
-------
COMPUTER SOFTWARE -- 3.2%
Microsoft* ..................... 59,200 4,779
-------
DRUGS & HEALTH CARE -- 8.3%
Bristol-Myers Squibb ........... 55,200 3,788
Lilly (Eli) .................... 35,570 2,541
Merck .......................... 54,460 3,676
Schering-Plough ................ 51,800 2,334
-------
12,339
-------
FINANCIAL SERVICES -- 5.2%
Associates First Capital, Cl A . 48,550 1,991
Citigroup ...................... 31,750 2,103
Fannie Mae ..................... 48,510 3,299
Goldman Sachs Group* ........... 3,500 238
-------
7,631
-------
NUMBER VALUE
OF SHARES (000)
--------- --------
COMMON STOCK -- CONTINUED
FOOD & BEVERAGE -- 1.6%
Coca Cola ...................... $33,950 $ 2,319
-------
INSURANCE -- 7.7%
American General ............... 26,850 1,940
American International Group ... 37,075 4,238
CMAC Investment# ............... 52,620 2,661
MGIC Investment ................ 30,810 1,483
PMI Group ...................... 19,410 1,135
-------
11,457
-------
MACHINERY -- 3.2%
Applied Materials* ............. 35,690 1,964
Ingersoll Rand ................. 43,930 2,798
-------
4,762
-------
MEDICAL & MEDICAL SERVICES -- 3.6%
Guidant ........................ 45,500 2,275
Medtronic ...................... 33,278 2,363
Steris* ........................ 45,240 749
-------
5,387
-------
METALS & MINING -- 1.6%
Alcoa .......................... 42,220 2,322
-------
OFFICE & BUSINESS EQUIPMENT -- 1.5%
Pitney Bowes ................... 35,000 2,231
-------
OIL MACHINERY &EQUIPMENT -- 1.5%
Schlumberger ................... 36,890 2,220
-------
PAPER & FOREST PRODUCTS -- 3.5%
Champion International ......... 31,370 1,608
Georgia Pacific# ............... 19,220 1,661
Willamette Industries .......... 46,530 1,972
-------
5,241
-------
PETROLEUM REFINING -- 6.4%
Exxon .......................... 42,760 3,415
Mobil .......................... 38,120 3,860
Texaco ......................... 34,620 2,268
-------
9,543
-------
RETAIL -- 8.6%
CVS ............................ 58,530 2,692
Dayton Hudson .................. 39,700 2,501
Home Depot ..................... 54,480 3,099
Safeway* ....................... 42,270 1,966
Wal-Mart ....................... 58,960 2,513
-------
12,771
-------
See Accompanying Notes
44
<PAGE>
[ARROW GRAPHIC OMITTED]
STATEMENT OF NET ASSETS
ARMADA CORE EQUITY FUND
MAY 31, 1999
NUMBER VALUE
OF SHARES (000)
--------- --------
COMMON STOCK -- CONTINUED
SEMI-CONDUCTORS/INSTRUMENTS -- 3.5%
Intel .......................... 48,480 $ 2,627
Xilinx* ........................ 56,000 2,487
--------
5,114
--------
SPECIALTY CHEMICALS -- 1.3%
Sigma Aldrich .................. 62,190 1,988
--------
SPECIALTY MACHINERY -- 5.1%
Emerson Electric ............... 37,122 2,371
Hubbell ........................ 38,876 1,628
General Electric ............... 35,030 3,562
--------
7,561
--------
TECHNOLOGY -- 6.0%
Altera* ........................ 64,460 2,242
Linear Technology .............. 45,120 2,390
Maxim Integrated Products* ..... 40,810 2,176
Teradyne*# ..................... 39,580 2,090
--------
8,898
--------
TELEPHONE & TELECOMMUNICATION -- 1.9%
BellSouth ...................... 60,420 2,851
--------
TOBACCO -- 1.0%
Philip Morris .................. 39,780 1,534
--------
TOTAL COMMON STOCK
(Cost $113,088) 146,756
--------
CASH EQUIVALENT -- 1.3%
Goldman Sachs Financial Square
Premium Money Market Fund .... 1,892,000 1,892
--------
TOTAL CASH EQUIVALENT
(Cost $1,892) 1,892
--------
TOTAL INVESTMENTS -- 100.2%
(Cost $114,980) ............................. $148,648
========
OTHER ASSETS AND LIABILITIES,
NET -- (0.2%) ................................ (208)
--------
VALUE
(000)
-------
NET ASSETS:
Portfolio Shares of Class I
(unlimited authorization -- no par value)
based on 10,588,638 outstanding shares
of beneficial interest ..................... $107,647
Portfolio Shares of Class A
(unlimited authorization -- no par value)
based on 126,332 outstanding shares of
beneficial interest ........................ 1,584
Portfolio Shares of Class B (unlimited
authorization -- no par value) based on
81,197 outstanding shares of
beneficial interest ........................ 1,051
Accumulated net realized gain on investments 4,490
Net unrealized appreciation on investments .. 33,668
--------
TOTAL NET ASSETS -- 100.0% ..................... $148,440
========
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER
SHARE -- CLASS I ............................ $13.75
========
NET ASSET VALUE AND REDEMPTION
PRICE PER SHARE -- CLASS A ................... $13.71
========
MAXIMUM OFFERING PRICE PER
SHARE -- CLASS A ($13.71 / 94.5%) ............ $14.51
========
NET ASSET VALUE AND OFFERING
PRICE PER SHARE -- CLASS B ................... $13.63
========
- ------------
* NON-INCOME PRODUCING SECURITY.
# SECURITY FULLY OR PARTIALLY ON LOAN.
CL--CLASS
See Accompanying Notes
45
<PAGE>
[ARROW GRAPHIC OMITTED]
FINANCIAL HIGHLIGHTS
ARMADA CORE EQUITY FUND
FOR A PORTFOLIO SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
FOR THE YEAR FOR THE PERIOD
ENDED MAY 31, 1999 ENDED MAY 31, 1998
--------------------------------------------------------------------
CLASS I CLASS A CLASS B CLASS I3 CLASS A3 CLASS B4
------- ------- ------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ................ $ 11.35 $11.34 $11.33 $ 10.00 $10.00 $10.25
-------- ------ ------ -------- ------ ------
INCOME FROM INVESTMENT OPERATIONS
Net investment income/(loss) ...................... (0.02)6 (0.05)6 (0.16)6 0.05 0.04 0.00
Net gain on securities (realized and unrealized) .. 2.94 2.93 2.97 1.35 1.34 1.08
-------- ------ ------ -------- ------ ------
Total from investment operations ............... 2.92 2.88 2.81 1.40 1.38 1.08
-------- ------ ------ -------- ------ ------
LESS DISTRIBUTIONS
Dividends from net investment income .............. (0.01) (0.00) (0.00) (0.05) (0.04) (0.00)
Distributions from net realized capital gains ..... (0.51) (0.51) (0.51) (0.00) (0.00) (0.00)
-------- ------ ------ -------- ------ ------
Total distributions ............................ (0.52) (0.51) (0.51) (0.05) (0.04) (0.00)
-------- ------ ------ -------- ------ ------
Net asset value, end of period ...................... $ 13.75 $13.71 $13.63 $ 11.35 $11.34 $11.33
======== ====== ====== ======== ====== ======
TOTAL RETURN ........................................ 26.08% 25.78%1 25.17%1 14.03%2 13.85%1,2 10.54%1,2
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000's) .............. $145,603 $1,731 $1,106 $110,504 $ 408 $ 2
Ratio of expenses to average net assets ........... 0.98% 1.23% 1.94% 0.89%5 1.14%5 1.83%5
Ratio of net investment income/(loss) to
average net assets ............................... (0.15)% (0.40)% (1.11%) 0.61%5 0.14%5 (0.51)%5
Ratio of expenses to average net assets
before fee waivers ............................... 0.98% 1.23% 1.94% 1.06%5 1.30%5 2.00%5
Ratio of net investment income/(loss) to
average net assets before fee waivers ............ (0.15)% (0.40)% (1.11%) 0.44%5 0.04%5 (0.50)%5
Portfolio turnover rate ............................. 43% 43% 43% 60% 60% 60%
</TABLE>
1 TOTAL RETURN EXCLUDES SALES CHARGE.
2 RETURNS ARE FOR THE PERIOD INDICATED AND HAVE NOT BEEN ANNUALIZED.
3 CLASS I AND CLASS A BOTH COMMENCED OPERATIONS ON AUGUST 1, 1997.
4 CLASS B COMMENCED OPERATIONS ON JANUARY 6, 1998.
5 ANNUALIZED.
6 CALCULATED BASED UPON AVERAGE SHARES OUTSTANDING.
See Accompanying Notes
46
<PAGE>
[ARROW GRAPHIC OMITTED]
STATEMENT OF NET ASSETS
ARMADA EQUITY INDEX FUND
MAY 31, 1999
NUMBER VALUE
OF SHARES (000)
--------- -------
COMMON STOCK -- 95.6%
AEROSPACE & DEFENSE -- 0.5%
General Dynamics# .............. 2,932 $ 193
Lockheed Martin ................ 9,082 367
Northrop Grumman ............... 1,553 105
Raytheon , Cl B ................ 7,797 531
-------
1,196
-------
AGRICULTURE -- 0.1%
Pioneer Hi Bred International .. 5,541 208
-------
AIRCRAFT -- 0.9%
Allied-Signal .................. 12,891 748
Boeing ......................... 21,703 917
United Technologies# ........... 10,451 649
-------
2,314
-------
AIR TRANSPORTATION -- 0.5%
AMR* ........................... 4,219 274
Delta Air Lines ................ 3,278 188
FDX* ........................... 6,847 377
Southwest Airlines ............. 7,783 250
US Airways* .................... 1,972 96
-------
1,185
-------
APPAREL/TEXTILES -- 0.1%
Fruit of the Loom, Cl A* ....... 1,627 17
Liz Claiborne .................. 1,457 52
Russell ........................ 816 19
Springs Industries, Cl A ....... 404 16
Vanity Fair .................... 2,775 128
-------
232
-------
AUTOMOTIVE -- 1.4%
Dana ........................... 3,841 198
Delphi* ........................ 10,585 208
Eaton .......................... 1,652 144
Ford ........................... 27,998 1,598
General Motors ................. 15,144 1,045
Genuine Parts .................. 4,162 140
Navistar International* ........ 1,510 75
Paccar ......................... 1,763 100
TRW ............................ 2,771 139
-------
3,647
-------
BANKS -- 6.8%
Amsouth ........................ 4,179 119
Bank of America ................ 40,045 2,590
Bank of New York ............... 17,601 629
Bank One# ...................... 27,207 1,539
BankBoston ..................... 6,860 325
Bankers Trust .................. 2,205 204
BB&T ........................... 7,192 262
NUMBER VALUE
OF SHARES (000)
--------- -------
COMMON STOCK -- CONTINUED
BANKS -- CONTINUED
Chase Manhattan ................ 19,570 $ 1,419
Comerica ....................... 3,599 217
Fifth Third Bancorp ............ 6,155 420
First Union .................... 22,925 1,056
Firstar# ....................... 15,966 460
Fleet Financial ................ 13,150 541
Golden West Financial .......... 1,317 125
Huntington Bancshares .......... 4,876 169
Keycorp ........................ 10,533 366
MBNA ........................... 18,552 512
Mellon ......................... 12,085 431
Mercantile Bancorporation ...... 3,641 213
National City .................. 7,551 500
Northern Trust ................. 2,569 232
PNC ............................ 6,962 399
Regions ........................ 5,117 194
Republic New York .............. 2,482 169
Southtrust ..................... 3,824 149
State Street ................... 3,714 283
Summit Bancorp ................. 4,017 164
SunTrust ....................... 7,416 501
Synovus ........................ 6,185 124
U.S. Bancorp ................... 16,862 548
Union Planters ................. 3,181 131
Wachovia ....................... 4,691 414
Washington Mutual .............. 13,727 524
Wells Fargo .................... 38,040 1,522
................................. -------
17,451
-------
BEAUTY PRODUCTS -- 0.7%
Avon ........................... 6,074 300
Gillette ....................... 25,668 1,309
International Flavors & Fragrances 2,395 98
-------
1,707
-------
BROADCASTING, NEWSPAPERS & ADVERTISING -- 1.1%
CBS* ........................... 16,338 682
Clear Channel Communications* .. 7,481 494
Interpublic Group of Companies# 3,216 244
Mediaone Group*# ............... 14,043 1,037
Omnicom Group .................. 3,903 273
-------
2,730
-------
BUILDING & BUILDING SUPPLIES -- 0.2%
Armstrong World Industries ..... 904 53
Masco .......................... 7,849 224
McDermott International ........ 1,332 34
Owens Corning .................. 1,224 48
Sherwin Williams ............... 3,978 123
-------
482
-------
See Accompanying Notes
47
<PAGE>
[ARROW GRAPHIC OMITTED]
STATEMENT OF NET ASSETS
ARMADA EQUITY INDEX FUND
MAY 31, 1999
NUMBER VALUE
OF SHARES (000)
--------- -------
COMMON STOCK -- CONTINUED
BUILDING & CONSTRUCTION -- 0.0%
Centex ......................... 1,341 $ 50
Fluor .......................... 1,709 64
-------
114
-------
BUSINESS SERVICES -- 5.6%
Adobe Systems .................. 1,467 109
Autodesk ....................... 1,371 38
Automatic Data Processing ...... 14,254 587
BMC Software* .................. 5,456 270
Cabletron Systems* ............. 3,984 59
Cendant* ....................... 17,772 328
Computer Associates International 12,466 590
Computer Sciences* ............. 3,675 238
Compuware* ..................... 8,504 264
Deluxe ......................... 1,815 65
Ecolab ......................... 2,994 127
Electronic Data Systems ........ 11,402 641
First Data ..................... 10,242 460
Microsoft* ..................... 116,778 9,426
Novell* ........................ 7,898 185
Parametric Technology* ......... 6,127 85
Peoplesoft* .................... 5,259 85
Shared Medical Systems ......... 600 39
Sun Microsystems* .............. 17,829 1,065
-------
14,661
-------
CABLE TELEVISION -- 0.3%
Comcast, Cl A Special .......... 17,112 660
-------
CANNED SPECIALTIES -- 0.2%
Campbell Soup .................. 10,287 454
-------
CHEMICAL PREPARATIONS -- 0.0%
Morton International ........... 2,736 107
-------
CHEMICALS -- 1.7%
Air Products & Chemicals ....... 5,306 218
Avery Dennison ................. 2,690 161
Dow ............................ 5,121 622
E.I. duPont de Nemours ......... 26,051 1,705
Eastman Chemical ............... 1,788 91
FMC* ........................... 746 49
Great Lakes Chemical ........... 1,334 60
Hercules ....................... 2,270 79
Monsanto ....................... 14,496 602
Nalco Chemical ................. 1,478 49
PPG Industries ................. 4,072 247
Praxair ........................ 3,650 178
Rohm & Haas .................... 3,878 156
Union Carbide .................. 3,075 158
W.R. Grace & Company* .......... 1,659 30
-------
4,405
-------
COMBINATION UTILITIES -- 0.2%
Entergy ........................ 5,706 185
PG&E ........................... 8,851 299
-------
484
-------
NUMBER VALUE
OF SHARES (000)
--------- -------
COMMON STOCK -- CONTINUED
COMMUNICATIONS EQUIPMENT -- 2.3%
Andrew* ........................ 1,932 $ 30
Ascend Communications*# ........ 5,019 465
General Instrument* ............ 3,873 150
ITT Industries ................. 2,108 80
Lucent Technologies# ........... 61,162 3,479
Nortel Networks ................ 15,355 1,152
Scientific-Atlanta ............. 1,692 60
Tellabs* ....................... 8,989 526
-------
5,942
-------
COMPUTER COMMUNICATIONS EQUIPMENT -- 0.1%
3Com* .......................... 8,301 227
-------
COMPUTER HARDWARE & EQUIPMENT -- 6.3%
Apple Computer* ................ 3,156 139
Cisco Systems* ................. 36,537 3,981
Compaq Computer ................ 39,035 925
Data General* .................. 1,119 15
Dell Computer* ................. 58,876 2,026
EMC* ........................... 11,612 1,157
Gateway 2000* .................. 3,616 220
Hewlett Packard ................ 23,486 2,215
International Business Machines# 42,706 4,967
Seagate Technology* ............ 5,642 170
Silicon Graphics* .............. 4,229 52
Unisys* ........................ 6,031 229
-------
16,096
-------
COMPUTER SERIVCES -- 0.4%
Ceridian* ...................... 3,229 107
Oracle*# ....................... 33,309 825
-------
932
-------
CONTAINERS & PACKAGING -- 0.2%
Ball ........................... 695 34
Crown Cork & Seal .............. 2,760 87
Newell Rubbermaid .............. 6,499 263
Owens-Illinois* ................ 3,506 107
-------
491
-------
DRUGS & HEALTH CARE -- 8.7%
Abbott Laboratories ............ 35,115 1,587
Alza* .......................... 2,311 82
American Home Products ......... 30,497 1,757
Amgen* ......................... 11,778 745
Bristol-Myers Squibb ........... 45,979 3,155
Johnson & Johnson .............. 31,114 2,882
Lilly (Eli) .................... 25,445 1,818
Merck .......................... 55,119 3,721
Millipore ...................... 993 33
Pfizer ......................... 30,029 3,213
Pharmacia & Upjohn ............. 11,756 652
Schering-Plough ................ 34,005 1,532
Warner-Lambert ................. 19,006 1,178
Watson Pharmaceuticals* ........ 2,201 84
-------
22,439
-------
See Accompanying Notes
48
<PAGE>
[ARROW GRAPHIC OMITTED]
STATEMENT OF NET ASSETS
ARMADA EQUITY INDEX FUND
MAY 31, 1999
NUMBER VALUE
OF SHARES (000)
--------- -------
COMMON STOCK -- CONTINUED
ELECTRICAL SERVICES -- 2.0%
AES* ........................... 4,404 $ 219
Ameren ......................... 3,175 130
American Electric Power ........ 4,428 192
Carolina Power & Light ......... 3,502 153
Central & South West ........... 4,919 127
Cinergy ........................ 3,579 122
CMS Energy ..................... 2,714 126
Consolidated Edison ............ 5,396 262
Constellation Energy Group ..... 3,368 105
Dominion Resources ............. 4,520 195
DTE Energy ..................... 3,356 146
Duke Energy .................... 8,376 505
Edison International ........... 8,161 224
First Energy ................... 5,485 174
FPL Group ...................... 4,185 243
GPU ............................ 2,961 129
New Century Energies ........... 2,579 104
Niagara Mohawk Holdings* ....... 4,228 63
Northern States Power .......... 3,444 90
PacifiCorp ..................... 6,709 122
PP & L Resources ............... 3,413 102
Public Service Enterprise ...... 5,134 215
Reliant Energy ................. 6,582 201
Sempra Energy .................. 5,416 116
Southern ....................... 16,133 458
Texas Utilities ................ 6,533 294
Unicom ......................... 5,025 213
-------
5,030
-------
ENTERTAINMENT -- 0.6%
King World Productions* ........ 1,646 55
Mirage Resorts* ................ 4,549 93
Walt Disney .................... 47,568 1,385
-------
1,533
-------
ENVIRONMENTAL SERVICES -- 0.4%
Browning-Ferris Industries ..... 3,659 152
Laidlaw ........................ 7,442 52
Waste Management ............... 13,849 732
-------
936
-------
FINANCIAL SERVICES -- 5.1%
American Express ............... 10,472 1,269
Associates First Capital, Cl A . 16,845 691
Bear Stearns ................... 2,646 117
Capital One .................... 1,518 229
Charles Schwab ................. 9,277 982
Citigroup ...................... 52,246 3,461
Countrywide Credit ............. 2,605 107
Equifax ........................ 3,412 123
Fannie Mae ..................... 23,992 1,631
Franklin Resources ............. 5,846 254
Freddie Mac .................... 15,702 916
NUMBER VALUE
OF SHARES (000)
--------- -------
COMMON STOCK -- CONTINUED
FINANCIAL SERVICES -- CONTINUED
Household International ........ 11,171 $ 485
J.P. Morgan .................... 4,045 563
Lehman Brothers ................ 2,610 143
Merrill Lynch .................. 8,207 689
Morgan Stanley, Dean Witter, Discover 13,366 1,290
SLM Holding .................... 3,834 159
-------
13,109
-------
FOOD & BEVERAGE -- 4.3%
Adolph Coors, Cl B ............. 826 39
Anheuser Busch ................. 11,058 808
Archer-Daniels-Midland ......... 13,700 205
Bestfoods ...................... 6,612 331
Brown-Forman, Cl B ............. 1,549 103
Coca Cola ...................... 57,039 3,896
Coca-Cola Enterprises .......... 9,821 356
Conagra ........................ 11,322 295
General Mills .................. 3,548 285
Hershey Foods .................. 3,312 180
H.J. Heinz ..................... 8,372 404
Kellogg# ....................... 9,378 325
PepsiCo ........................ 33,949 1,216
Quaker Oats .................... 3,153 208
Ralston Purina ................. 7,598 207
RJR Nabisco .................... 7,516 233
Sara Lee ....................... 21,103 506
Seagram ........................ 9,233 480
Unilever NV .................... 13,225 864
Wm. Wrigley, Jr. ............... 2,687 234
-------
11,175
-------
FURNITURE/HOME APPLIANCE -- 0.0%
National Service Industries .... 935 34
-------
GAMES, TOYS, CHILDREN'S VEHICLES -- 0.1%
Hasbro ......................... 4,540 130
Mattel ......................... 9,640 255
-------
385
-------
GAS & NATURAL GAS -- 0.6%
Columbia Gas Systems ........... 1,883 101
Consolidated Natural Gas ....... 2,217 132
Eastern Enterprises ............ 508 18
Enron .......................... 8,123 580
Nicor .......................... 1,075 40
ONEOK .......................... 711 21
Peoples Energy ................. 799 31
Sonat .......................... 2,482 88
Williams ....................... 9,898 513
-------
1,524
-------
See Accompanying Notes
49
<PAGE>
[ARROW GRAPHIC OMITTED]
STATEMENT OF NET ASSETS
ARMADA EQUITY INDEX FUND
MAY 31, 1999
NUMBER VALUE
OF SHARES (000)
--------- -------
COMMON STOCK -- CONTINUED
GENERAL UTILITIES -- 0.1%
PECO Energy .................... 5,184 $ 254
-------
GLASS PRODUCTS -- 0.1%
Corning Glass .................. 5,368 293
-------
GOLD MINING -- 0.0%
Newmont Mining ................. 3,773 67
-------
HANDTOOLS & GENERAL HARDWARE -- 0.1%
Fortune Brands ................. 3,957 162
Snap-On Tools .................. 1,518 55
Stanley Works .................. 2,003 65
-------
282
-------
HEAVY CONSTRUCTION -- 0.0%
Foster Wheeler ................. 918 13
-------
HOTELS & LODGING -- 0.1%
Harrah's Entertainment* ........ 2,849 62
Hilton Hotels .................. 5,884 81
Marriott International, Cl A ... 5,621 214
-------
357
-------
HOUSEHOLD PRODUCTS -- 1.8%
Clorox ......................... 2,711 274
Colgate Palmolive .............. 6,775 677
Danaher ........................ 3,095 187
Maytag ......................... 2,082 147
Procter & Gamble ............... 30,722 2,869
Raychem ........................ 1,780 62
Solectron* ..................... 5,820 319
Whirlpool ...................... 1,716 111
-------
4,646
-------
INFORMATION RETRIEVAL SERVICES -- 1.1%
America Online*# ............... 23,772 2,838
-------
INSURANCE -- 3.7%
Aetna .......................... 3,308 300
Allstate ....................... 18,985 692
American General ............... 5,832 421
American International Group ... 28,413 3,248
Aon ............................ 5,903 254
Chubb# ......................... 3,770 264
Cigna .......................... 4,778 446
Cincinnati Financial ........... 3,863 159
Conseco ........................ 7,412 227
Hartford Financial ............. 5,402 342
Humana* ........................ 3,778 47
Jefferson-Pilot ................ 2,452 166
Lincoln National ............... 2,338 238
Loews .......................... 2,631 214
Marsh & McLennan ............... 5,954 433
MBIA ........................... 2,299 157
NUMBER VALUE
OF SHARES (000)
--------- -------
COMMON STOCK -- CONTINUED
INSURANCE -- CONTINUED
MGIC Investment ................ 2,472 $ 119
Progressive .................... 1,677 235
Provident ...................... 3,129 122
Providian Financial ............ 3,277 314
Safeco ......................... 3,153 139
St. Paul ....................... 5,455 194
Torchmark ...................... 3,165 106
Transamerica ................... 2,886 212
United Healthcare# ............. 4,309 251
UNUM ........................... 3,202 172
-------
9,472
-------
LEASING & RENTING -- 0.0%
Ryder System ................... 1,618 39
-------
LEISURE & RECREATIONAL PRODUCTS -- 0.0%
Brunswick ...................... 2,153 52
-------
MACHINERY -- 1.0%
Applied Materials* ............. 8,538 470
Baker Hughes ................... 7,565 235
Black & Decker ................. 1,983 113
Briggs & Stratton .............. 525 33
Case ........................... 1,712 80
Caterpillar .................... 8,299 455
Crane .......................... 1,548 47
Cummins Engine ................. 945 48
Deere .......................... 5,519 210
Dover .......................... 5,163 195
Harnischfeger Industries ....... 1,076 8
Harris ......................... 1,802 68
Ingersoll Rand ................. 3,805 242
Milacron ....................... 867 18
NACCO Industries, Cl A ......... 184 14
Pall ........................... 2,798 56
Parker-Hannifin ................ 2,456 107
Tenneco ........................ 3,840 90
Timken ......................... 1,402 29
-------
2,518
-------
MANUFACTURED HOUSING -- 0.0%
Fleetwood Enterprises .......... 783 20
-------
MEASURING DEVICES -- 0.2%
Honeywell ...................... 2,914 276
KLA-Tencor* .................... 1,973 90
Mallinckrodt ................... 1,610 56
PE - Celera Genomics* .......... 562 10
PE - PE Biosystems ............. 1,124 126
Tektronix ...................... 1,066 25
Thermo Electron* ............... 3,584 69
-------
652
-------
See Accompanying Notes
50
<PAGE>
[ARROW GRAPHIC OMITTED]
STATEMENT OF NET ASSETS
ARMADA EQUITY INDEX FUND
MAY 31, 1999
NUMBER VALUE
OF SHARES (000)
--------- -----
COMMON STOCK -- CONTINUED
MEDICAL & MEDICAL SERVICES -- 1.4%
Allergan ....................... 1,527 $ 142
Bausch & Lomb .................. 1,265 97
Baxter International ........... 6,617 427
Becton Dickinson ............... 5,762 223
Biomet ......................... 2,532 101
Boston Scientific* ............. 9,092 345
C.R. Bard ...................... 1,209 55
Columbia/HCA Healthcare ........ 14,936 352
Guidant ........................ 6,971 349
HCR Manor Care* ................ 2,501 67
Healthsouth* ................... 9,789 131
Lifepoint Hospitals* ........... 766 8
Medtronic ...................... 13,517 960
St. Jude Medical * ............. 1,899 64
Tenet Healthcare* .............. 7,176 176
Triad Hospitals* ............... 766 8
-------
3,505
-------
METAL/FABRICATE HARDWARE -- 0.0%
Reynolds Metals ................ 1,454 77
-------
METALS & MINING -- 0.3%
Alcan Aluminum ................. 5,267 147
Alcoa .......................... 8,495 467
Asarco ......................... 895 14
Cyprus AMAX Minerals ........... 2,052 26
Freeport-McMoRan Copper &
Gold, Cl B .................... 3,736 53
Phelps Dodge ................... 1,307 68
USX-U.S. Steel Group ........... 1,993 54
-------
829
-------
MISCELLANEOUS CONSUMER SERVICES -- 0.0%
Service International .......... 6,168 118
-------
MISCELLANEOUS MANUFACTURING -- 1.3%
Illinois Tool Works ............ 5,786 444
Jostens ........................ 798 17
Minnesota Mining &
Manufacturing ................. 9,302 798
Textron ........................ 3,666 326
Tyco International ............. 18,889 1,650
-------
3,235
-------
OFFICE & BUSINESS EQUIPMENT -- 0.5%
Pitney Bowes ................... 6,308 402
Xerox .......................... 15,175 853
-------
1,255
-------
OFFICE FURNITURE & FIXTURES -- 0.1%
Ikon Office Solutions .......... 3,417 48
Johnson Controls ............... 1,964 124
-------
172
-------
NUMBER VALUE
OF SHARES (000)
--------- -----
COMMON STOCK -- CONTINUED
OIL & GAS EXTRACTION -- 0.1%
Helmerich & Payne .............. 1,133 $ 26
USX Marathon ................... 7,117 213
-------
239
-------
PAPER & FOREST PRODUCTS -- 1.0%
Bemis .......................... 1,181 45
Boise Cascade .................. 1,272 50
Champion International ......... 2,157 111
Fort James ..................... 5,101 187
Georgia Pacific ................ 2,036 176
International Paper ............ 9,488 474
Kimberly-Clark ................. 12,538 736
Louisiana-Pacific .............. 2,452 50
Mead ........................... 2,315 87
Potlatch ....................... 654 26
Temple-Inland .................. 1,255 84
Westvaco ....................... 2,281 65
Weyerhaeuser ................... 4,604 286
Willamette Industries .......... 2,504 106
-------
2,483
-------
PETROLEUM & FUEL PRODUCTS -- 0.7%
Amerada Hess ................... 2,091 125
Anadarko Petroleum ............. 2,929 110
Apache ......................... 2,563 92
Burlington Resources ........... 4,104 176
Kerr-McGee ..................... 1,949 91
Occidental Petroleum ........... 8,004 169
Phillips Petroleum ............. 5,892 309
Rowan Companies* ............... 1,891 32
Schlumberger ................... 12,631 760
Union Pacific Resources ........ 5,664 79
-------
1,943
-------
PETROLEUM REFINING -- 4.9%
Ashland ........................ 1,720 70
Atlantic Richfield ............. 7,543 631
Chevron ........................ 15,097 1,399
Coastal ........................ 4,921 190
Exxon .......................... 56,255 4,493
Mobil .......................... 18,044 1,827
Pennzenergy .................... 716 11
Royal Dutch Petroleum# ......... 49,616 2,806
Sunoco ......................... 2,111 64
Texaco ......................... 12,368 810
Unocal ......................... 5,585 222
-------
12,523
-------
PHOTOGRAPHIC EQUIPMENT & SUPPLIES -- 0.2%
Eastman Kodak .................. 7,496 507
Polaroid ....................... 989 21
-------
528
-------
See Accompanying Notes
51
<PAGE>
[ARROW GRAPHIC OMITTED]
STATEMENT OF NET ASSETS
ARMADA EQUITY INDEX FUND
MAY 31, 1999
NUMBER VALUE
OF SHARES (000)
--------- -----
COMMON STOCK -- CONTINUED
PRECIOUS METALS -- 0.1%
Barrick Gold# .................. 8,631 $ 149
Battle Mountain Gold ........... 5,186 13
Homestake Mining ............... 6,016 47
Placer Dome .................... 5,642 63
-------
272
-------
PRINTING & PUBLISHING -- 1.6%
American Greetings, Cl A ....... 1,595 46
Dow Jones ...................... 2,118 111
Gannett ........................ 6,516 471
Knight-Ridder .................. 1,771 93
McGraw-Hill .................... 4,554 236
Meredith ....................... 1,179 41
Moore .......................... 1,996 18
New York Times, Cl A ........... 4,220 144
R.R. Donnelley & Sons .......... 3,060 111
Time Warner .................... 28,390 1,932
Times Mirror, Cl A ............. 1,772 104
Tribune ........................ 2,748 217
Viacom, Cl B* .................. 16,097 620
-------
4,144
-------
PROFESSIONAL SERVICES -- 0.4%
Dun & Bradstreet ............... 3,765 132
EG & G ......................... 1,008 30
H & R Block .................... 2,259 109
Halliburton .................... 10,173 421
IMS Health ..................... 7,375 182
Paychex ........................ 5,631 167
-------
1,041
-------
RAILROADS -- 0.4%
Burlington Northern Santa Fe ... 10,854 336
Kansas City Southern ........... 2,535 143
Norfolk Southern ............... 8,774 287
Union Pacific .................. 5,724 327
-------
1,093
-------
REAL ESTATE -- 0.0%
Kaufman & Broad Home ........... 1,079 26
-------
RESTAURANTS -- 0.6%
Darden Restaurants ............. 3,131 67
McDonald's ..................... 31,309 1,205
Tricon Global Restaurants* ..... 3,529 206
Wendy's International .......... 2,808 77
-------
1,555
-------
NUMBER VALUE
OF SHARES (000)
--------- -----
COMMON STOCK -- CONTINUED
RETAIL -- 6.0%
Alberto-Culver, Cl B ........... 1,250 $ 33
Albertson's# ................... 5,683 304
American Stores ................ 6,362 210
Autozone* ...................... 3,437 99
Circuit City ................... 2,324 167
Consolidated* .................. 2,471 85
Costco* ........................ 5,051 366
CVS ............................ 9,023 415
Dayton Hudson .................. 10,200 643
Dillards, Cl A ................. 2,411 85
Dollar General ................. 5,180 138
Federated Department Stores*# .. 4,852 264
Gap ............................ 13,190 825
Great Atlantic & Pacific Tea ... 863 28
Harcourt General ............... 1,602 79
Home Depot ..................... 34,110 1,940
J.C. Penney .................... 6,098 315
Kmart* ......................... 11,406 175
Kohls* ......................... 3,662 250
Kroger* ........................ 9,519 557
Limited# ....................... 5,236 256
Longs Drug Stores .............. 878 31
Lowe's ......................... 8,592 446
May Department Stores .......... 8,108 351
Nike ........................... 6,538 398
Nordstrom ...................... 3,338 119
Pep Boys ....................... 1,186 22
Reebok* ........................ 1,274 25
Rite Aid ....................... 5,987 150
Safeway* ....................... 11,250 523
Sears Roebuck .................. 8,864 424
Staples* ....................... 10,666 307
Tandy .......................... 2,290 189
TJX Companies .................. 7,478 224
Toys "R" Us* ................... 5,863 135
Wal-Mart ....................... 102,895 4,386
Walgreen ....................... 23,100 537
Winn Dixie Stores .............. 3,353 120
-------
15,621
-------
RUBBER & PLASTIC -- 0.2%
B.F. Goodrich .................. 1,678 68
Cooper ......................... 1,710 41
Goodyear ....................... 3,607 215
Sealed Air* .................... 1,930 120
Tupperware ..................... 1,300 29
-------
473
-------
See Accompanying Notes
52
<PAGE>
[ARROW GRAPHIC OMITTED]
STATEMENT OF NET ASSETS
ARMADA EQUITY INDEX FUND
MAY 31, 1999
NUMBER VALUE
OF SHARES (000)
--------- -----
COMMON STOCK -- CONTINUED
SEMI-CONDUCTORS/INSTRUMENTS -- 2.2%
Advanced Micro Devices* ........ 3,267 $ 60
Intel .......................... 77,144 4,180
LSI Logic* ..................... 3,272 121
Micron Technology*# ............ 5,730 217
National Semiconductor* ........ 3,752 73
Texas Instruments .............. 9,024 987
--------
5,638
--------
SINGLE FAMILY HOUSING CONSTRUCTION -- 0.0%
Pulte .......................... 974 23
--------
SPECIALTY CHEMICALS -- 0.0%
Sigma Aldrich .................. 2,271 73
--------
SPECIALTY MACHINERY -- 3.4%
Cooper Industries .............. 2,183 108
Emerson Electric ............... 10,120 646
General Electric ............... 75,821 7,710
Rockwell ....................... 4,391 242
Thomas & Betts ................. 1,280 55
--------
8,761
--------
STEEL & STEEL WORKS -- 0.1%
Allegheny Teledyne ............. 4,426 90
Bethlehem Steel* ............... 2,933 24
Engelhard ...................... 2,898 59
Inco ........................... 4,189 60
Nucor .......................... 1,975 99
Worthington Industries ......... 2,086 27
--------
359
--------
TELEPHONE & TELECOMMUNICATION -- 8.9%
Airtouch Communications* ....... 13,237 1,330
Alltel ......................... 6,363 456
Ameritech ...................... 25,429 1,674
AT&T ........................... 72,817 4,041
Bell Atlantic .................. 35,917 1,966
BellSouth ...................... 45,120 2,129
Centurytel ..................... 3,148 121
Frontier ....................... 3,971 209
GTE ............................ 22,331 1,408
MCI WorldCom* .................. 42,423 3,663
Motorola ....................... 13,887 1,150
Nextel, Cl A* .................. 6,652 245
SBC Communications ............. 45,259 2,314
Sprint ......................... 10,339 1,166
Sprint (PCS )* ................. 10,176 458
US West ........................ 11,643 629
--------
22,959
--------
NUMBER VALUE
OF SHARES (000)
--------- -----
COMMON STOCK -- CONTINUED
TOBACCO -- 0.9%
Philip Morris .................. 56,335 $ 2,172
UST ............................ 4,303 131
--------
2,303
--------
TRANSPORTATION SERVICES -- 0.1%
CSX ............................ 5,022 236
--------
TRAVEL -- 0.2%
Carnival, Cl A ................. 14,182 581
--------
WHOLESALE -- 0.4%
Cardinal Health ................ 6,295 380
McKesson ....................... 6,411 218
Supervalu ...................... 2,717 66
Sysco .......................... 7,703 229
W.W. Grainger .................. 2,142 114
--------
1,007
--------
TOTAL COMMON STOCK
(Cost $227,848) ............... 246,465
--------
REGISTERED INVESTMENT
COMPANIES -- 0.5%
S&P Depository Receipt ......... 9,000 1,172
--------
TOTAL REGISTERED INVESTMENT COMPANIES
(Cost $953) ................... 1,172
--------
CASH EQUIVALENT -- 3.4%
Goldman Sachs Financial Square
Premium Money Market Fund .... 8,714,000 8,714
--------
TOTAL CASH EQUIVALENT
(Cost $8,714) .............................. 8,714
--------
TOTAL INVESTMENTS -- 99.5%
(Cost $237,515) ............................ $256,351
========
OTHER ASSETS AND LIABILITIES,
NET -- 0.5% ................................. 1,395
--------
See Accompanying Notes
53
<PAGE>
[ARROW GRAPHIC OMITTED]
STATEMENT OF NET ASSETS
ARMADA EQUITY INDEX FUND
MAY 31, 1999
VALUE
(000)
-----
NET ASSETS:
Portfolio Shares of Class I
(unlimited authorization -- no par
value) based on 22,430,310
outstanding shares
of beneficial interest ..................... $233,585
Portfolio Shares of Class A
(unlimited authorization -- no par
value) based on 344,718 outstanding
shares of beneficial interest .............. 3,701
Accumulated net realized gain
on investments and futures ................. 1,051
Net unrealized appreciation on investments .. 18,836
Net unrealized depreciation on futures ...... (104)
Undistributed net investment income ......... 677
--------
TOTAL NET ASSETS -- 100.0% $257,746
========
NET ASSET VALUE, OFFERING
AND REDEMPTION PRICE PER
SHARE -- CLASS I ........................... $11.32
========
NET ASSET VALUE AND REDEMPTION
PRICE PER SHARE -- CLASS A .................. $11.29
========
MAXIMUM OFFERING PRICE PER
SHARE -- CLASS A ($11.29 / 96.25%) .......... $11.73
========
- -----------
*NON-INCOME PRODUCING SECURITY.
# SECURITY FULLY OR PARTIALLY ON LOAN.
CL--CLASS
See Accompanying Notes
54
<PAGE>
[ARROW GRAPHIC OMITTED]
FINANCIAL HIGHLIGHTS
ARMADA EQUITY INDEX FUND
FOR A PORTFOLIO SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
FOR THE PERIOD
ENDED MAY 31, 1999
----------------------------
CLASS I1 CLASS A1
--------- --------
<S> <C> <C>
Net asset value, beginning of period .................................... $ 10.00 $ 9.09
-------- ------
INCOME FROM INVESTMENT OPERATIONS
Net investment income ................................................. 0.11 0.07
Net gain on securities
(realized and unrealized) ............................................ 1.29 2.18
-------- ------
Total from investment operations ................................... 1.40 2.25
-------- ------
LESS DISTRIBUTIONS
Dividends from net investment income .................................. (0.08) (0.05)
-------- ------
Total distributions ................................................ (0.08) (0.05)
-------- ------
Net asset value, end of period .......................................... $ 11.32 $11.29
======== ======
TOTAL RETURN ............................................................ 14.16%3 24.83%2,3
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000's) .................................. $253,854 $3,892
Ratio of expenses to average net assets ............................... 0.20%4 0.36%4
Ratio of net investment income to average net assets .................. 1.38%4 1.22%4
Ratio of expenses to average net assets before fee waivers ............ 0.55%4 0.71%4
Ratio of net investment income to average net assets before fee waivers 1.03%4 0.87%4
Portfolio turnover rate ............................................... 9% 9%
</TABLE>
1 CLASS I AND CLASS A COMMENCED OPERATIONS ON JULY 10, 1998 AND OCTOBER 15,
1998, RESPECTIVELY.
2 TOTAL RETURN EXCLUDES SALES CHARGE.
3 RETURNS ARE FOR THE PERIOD INDICATED AND HAVE NOT BEEN ANNUALIZED.
4 ANNUALIZED.
See Accompanying Notes
55
<PAGE>
[ARROW GRAPHIC OMITTED]
STATEMENT OF NET ASSETS
ARMADA EQUITY INCOME FUND
MAY 31, 1999
NUMBER VALUE
OF SHARES (000)
--------- -----
COMMON STOCK -- 95.1%
AEROSPACE -- 2.9%
General Dynamics# .............. 127,100 $ 8,357
Northrop Grumman ............... 55,653 3,757
United Technologies# ........... 70,200 4,357
-------
16,471
-------
AUTOMOTIVE -- 3.4%
Delphi* ........................ 64,371 1,263
Ford ........................... 120,500 6,876
General Motors ................. 92,100 6,355
Genuine Parts# ................. 135,000 4,548
-------
19,042
-------
BANKS -- 8.0%
Bank of America# ............... 193,939 12,545
Bank One# ...................... 33,330 1,885
First Tennessee National# ...... 145,100 5,976
First Union# ................... 101,300 4,666
Fleet Financial ................ 129,600 5,330
PNC# ........................... 170,000 9,732
Washington Mutual .............. 115,500 4,411
-------
44,545
-------
BUILDING & BUILDING SUPPLIES -- 2.5%
Armstrong World Industries ..... 97,200 5,662
Masco .......................... 289,500 8,269
-------
13,931
-------
CHEMICALS -- 3.4%
Dow ............................ 62,984 7,653
E.I. duPont de Nemours ......... 75,700 4,954
RPM ............................ 470,550 6,529
-------
19,136
-------
DIVERSIFIED MANUFACTURING -- 1.7%
Minnesota Mining &
Manufacturing ................. 65,900 5,651
Textron ........................ 40,700 3,625
-------
9,276
-------
DRUGS & HEALTH CARE -- 2.7%
American Home Products ......... 112,200 6,466
Bristol-Myers Squibb ........... 129,200 8,866
-------
15,332
-------
NUMBER VALUE
OF SHARES (000)
--------- -----
COMMON STOCK -- CONTINUED
ELECTRICAL SERVICES -- 7.2%
Consolidated Edison ............ 178,000 $ 8,644
Dominion Resources# ............ 140,500 6,068
Duke Energy .................... 63,400 3,824
Florida Progress ............... 75,300 3,158
FPL Group ...................... 75,700 4,405
GPU ............................ 141,200 6,151
LG&E Energy .................... 145,400 3,317
Wisconsin Energy# .............. 172,600 4,790
-------
40,357
-------
ENVIRONMENTAL SERVICES -- 0.8%
Browning-Ferris Industries ..... 109,600 4,548
-------
FINANCIAL SERVICES -- 3.3%
Fannie Mae ..................... 136,700 9,296
J.P. Morgan .................... 65,300 9,097
-------
18,393
-------
FOOD & BEVERAGE -- 2.4%
Flowers Industries ............. 224,100 4,986
General Mills .................. 106,300 8,544
-------
13,530
-------
GAS & NATURAL GAS -- 3.5%
Consolidated Natural Gas ....... 154,725 9,196
Enron .......................... 146,400 10,449
-------
19,645
-------
HANDTOOLS & GENERAL HARDWARE -- 2.2%
Fortune Brands ................. 191,700 7,836
Snap-On Tools .................. 123,000 4,451
-------
12,287
-------
HOUSEHOLD PRODUCTS -- 1.0%
Maytag ......................... 82,900 5,850
-------
INSURANCE -- 3.9%
Allstate ....................... 56,500 2,059
Chubb# ......................... 78,661 5,511
Cigna .......................... 57,600 5,371
Marsh & McLennan ............... 120,250 8,748
-------
21,689
-------
MACHINERY -- 0.3%
Caterpillar .................... 35,200 1,932
-------
See Accompanying Notes
56
<PAGE>
[ARROW GRAPHIC OMITTED]
STATEMENT OF NET ASSETS
ARMADA EQUITY INCOME FUND
MAY 31, 1999
NUMBER VALUE
OF SHARES (000)
--------- -----
COMMON STOCK -- CONTINUED
MEDICAL & MEDICAL SERVICES -- 0.7%
Baxter International ........... 62,400 $ 4,029
-------
METALS & MINING -- 2.7%
Alcoa .......................... 231,600 12,738
USX-U.S. Steel Group ........... 93,400 2,516
-------
15,254
-------
OFFICE & BUSINESS EQUIPMENT -- 2.7%
Pitney Bowes ................... 149,300 9,518
Xerox .......................... 95,000 5,338
-------
14,856
-------
PAPER & FOREST PRODUCTS -- 1.1%
Kimberly-Clark ................. 40,000 2,347
Weyerhaeuser ................... 64,200 3,984
-------
6,331
-------
PETROLEUM REFINING -- 13.1%
Atlantic Richfield ............. 124,500 10,419
Chevron ........................ 130,100 12,059
Exxon .......................... 110,000 8,786
Mobil .......................... 118,800 12,028
Royal Dutch Petroleum# ......... 195,000 11,030
Texaco ......................... 211,100 13,827
Ultramar Diamond Shamrock ...... 230,300 5,067
-------
73,216
-------
PROFESSIONAL SERVICES -- 1.5%
Dun & Bradstreet ............... 234,400 8,204
-------
REAL ESTATE INVESTMENT TRUST -- 3.1%
Arden Realty ................... 205,200 5,245
Duke Realty# ................... 324,800 7,511
Kimco Realty ................... 65,000 2,596
Mack-Cali Realty ............... 70,400 2,279
-------
17,631
-------
RETAIL -- 5.9%
Intimate Brands# ............... 193,900 10,046
J.C. Penney# ................... 106,000 5,479
May Department Stores .......... 247,900 10,737
Sears Roebuck# ................. 144,000 6,885
-------
33,147
-------
NUMBER VALUE
OF SHARES (000)
--------- -----
COMMON STOCK -- CONTINUED
SPECIALTY MACHINERY -- 4.3%
Cooper Industries .............. 82,700 $ 4,099
Emerson Electric ............... 111,200 7,103
Hubbell ........................ 95,700 4,007
Rockwell International ......... 84,600 4,669
Thomas & Betts# ................ 104,000 4,452
--------
24,330
--------
TELEPHONE & TELECOMMUNICATION -- 9.0%
Ameritech ...................... 158,600 10,438
AT&T ........................... 270,150 14,993
Bell Atlantic .................. 82,540 4,519
BellSouth ...................... 80,800 3,813
Frontier ....................... 115,800 6,094
GTE ............................ 170,800 10,771
--------
50,628
--------
TOBACCO -- 1.1%
UST ............................ 196,000 5,978
--------
UTILITIES -- 0.7%
American Water Works ........... 118,500 3,674
--------
TOTAL COMMON STOCK
(Cost $396,954) ............................ 533,242
--------
PREFERRED STOCK -- 1.8%
FINANCIAL -- 1.1%
American General Delaware,
CV to 1.2288 Shares .......... 69,695 6,281
--------
PAPER & FOREST PRODUCTS -- 0.7%
International Paper, CV
to .9259 Shares ............... 70,386 3,660
--------
TOTAL PREFERRED STOCK
(Cost $8,099) ............................... 9,941
--------
CASH EQUIVALENT -- 2.8%
Fidelity Domestic Money Market
Fund 15,555,000 15,555
--------
TOTAL CASH EQUIVALENT
(Cost $15,555) .............................. 15,555
--------
TOTAL INVESTMENTS -- 99.7%
(Cost $420,608) ............................. $558,738
========
OTHER ASSETS AND LIABILITIES,
NET -- 0.3% .................................. 1,695
--------
See Accompanying Notes
57
<PAGE>
[ARROW GRAPHIC OMITTED]
STATEMENT OF NET ASSETS
ARMADA EQUITY INCOME FUND
MAY 31, 1999
VALUE
(000)
-----
NET ASSETS:
Portfolio Shares of Class I
(unlimited authorization -- no par
value) based on 29,162,186
outstanding shares of beneficial interest .... $393,634
Portfolio Shares of Class A (unlimited
authorization-- no par value) based
on 589,557 outstanding shares of
beneficial interest .......................... 9,698
Portfolio Shares of Class B (unlimited
authorization-- no par value) based
on 53,355 outstanding shares of
beneficial interest .......................... 897
Accumulated net realized gain on investments . 15,621
Net unrealized appreciation on investments ... 138,130
Undistributed net investment income .......... 2,453
--------
TOTAL NET ASSETS -- 100.0% ..................... $560,433
========
NET ASSET VALUE, OFFERING
AND REDEMPTION PRICE
PER SHARE -- CLASS I ........................ $18.80
========
NET ASSET VALUE AND REDEMPTION
PRICE PER SHARE -- CLASS A ................... $18.79
========
MAXIMUM OFFERING PRICE PER
SHARE -- CLASS A ($18.79 / 94.5%) ............ $19.88
========
Net Asset Value and offering
Price Per Share -- Class B ................... $18.69
========
- ------------
* NON-INCOME PRODUCING SECURITY.
# SECURITY FULLY OR PARTIALLY ON LOAN.
CV--CONVERTIBLE
See Accompanying Notes
58
<PAGE>
[ARROW GRAPHIC OMITTED]
FINANCIAL HIGHLIGHTS
ARMADA EQUITY INCOME FUND
FOR A PORTFOLIO SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
FOR THE YEAR ENDED MAY 31,
1999 1998
--------------------------------------------------------------
CLASS I CLASS A CLASS B CLASS I CLASS A CLASS B4
-------- ------- ------- -------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning
of period ......................... $ 17.53 $ 17.51 $ 17.54 $ 14.87 $ 14.86 $ 16.28
-------- ------- ------- -------- ------- -------
INCOME FROM INVESTMENT OPERATIONS
Net investment income .............. 0.30 0.21 0.17 0.27 0.26 0.46
Net gain on securities
(realized and unrealized) ......... 1.50 1.55 1.39 3.44 3.41 0.86
-------- ------- ------- -------- ------- -------
Total from investment
operations ................... 1.80 1.76 1.56 3.71 3.67 1.32
-------- ------- ------- -------- ------- -------
LESS DISTRIBUTIONS
Dividends from net
investment income ................. (0.28) (0.23) (0.16) (0.32) (0.29) (0.06)
Distributions from net realized
capital gains ..................... (0.25) (0.25) (0.25) (0.73) (0.73) (0.00)
-------- ------- ------- -------- ------- -------
Total distributions ............. (0.53) (0.48) (0.41) (1.05) (1.02) (0.06)
-------- ------- ------- -------- ------- -------
Net asset value, end of period ....... $ 18.80 $ 18.79 $ 18.69 $ 17.53 $ 17.51 $ 17.54
======== ======= ======= ======== ======= =======
TOTAL RETURN ......................... 10.62% 10.40%3 9.14%3 25.69% 25.41%3 25.58%2,3
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000's) $548,361 $11,075 $ 997 $193,923 $2,151 $ 3
Ratio of expenses to
average net assets ................ 0.93% 1.18% 1.89% 0.92% 1.17% 1.86%2
Ratio of net investment
income to average
net assets ........................ 2.07% 1.82% 1.11% 1.80% 1.62% 0.68%2
Ratio of expenses to
average net assets
before fee waivers ................ 0.93% 1.18% 1.89% 0.92% 1.17% 1.86%2
Ratio of net investment income
to average net assets
before fee waivers ................ 2.07% 1.82% 1.11% 1.80% 1.62% 0.68%2
Portfolio turnover rate ............ 19% 19% 19% 18% 18% 18%
</TABLE>
<TABLE>
<CAPTION>
FOR THE PERIOD
ENDED MAY 31,
1997 1996 1995
-----------------------------------------------------------
CLASS I CLASS A CLASS I CLASS A CLASS I1 CLASS A1
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning
of period ......................... $ 12.66 $ 12.65 $ 11.01 $ 11.01 $ 10.00 $ 10.26
-------- ------- ------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS
Net investment income .............. 0.30 0.31 0.34 0.33 0.34 0.26
Net gain on securities
(realized and unrealized) ......... 2.73 2.68 1.79 1.77 0.94 0.75
-------- ------- ------- ------- ------- -------
Total from investment
operations ................... 3.03 2.99 2.13 2.10 1.28 1.01
-------- ------- -------- ------- ------- -------
LESS DISTRIBUTIONS
Dividends from net
investment income ................. (0.31) (0.27) (0.34) (0.32) (0.27) (0.26)
Distributions from net realized
capital gains ..................... (0.51) (0.51) (0.14) (0.14) (0.00) (0.00)
-------- ------- -------- ------ ------ ------
Total distributions ............. (0.82) (0.78) (0.48) (0.46) (0.27) (0.26)
-------- ------- ------- ------ ------ ------
Net asset value, end of period ....... $ 14.87 $ 14.86 $ 12.66 $12.65 $11.01 $11.01
======== ======= ======= ====== ======= =======
TOTAL RETURN ......................... 24.62% 24.33%3 19.72% 19.37%3 14.34%2 13.18%2,3
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000's) $127,130 $ 410 $61,978 $ 263 $36,194 $ 125
Ratio of expenses to
average net assets ................ 1.01% 1.26% 1.06% 1.31% 0.99%2 1.41%2
Ratio of net investment
income to average
net assets ........................ 2.44% 2.17% 3.02% 2.75% 3.87%2 3.45%2
Ratio of expenses to
average net assets
before fee waivers ................ 1.01% 1.26% 1.08% 1.32% 1.21%2 1.45%2
Ratio of net investment income
to average net assets
before fee waivers ................ 2.44% 2.17% 3.00% 2.74% 3.66%2 3.40%2
Portfolio turnover rate ............ 35% 35% 53% 53% 12% 12%
</TABLE>
1 CLASS I AND CLASS A COMMENCED OPERATIONS ON JULY 1, 1994
AND AUGUST 22, 1994, RESPECTIVELY.
2 ANNUALIZED.
3 TOTAL RETURN EXCLUDES SALES CHARGE.
4 CLASS B COMMENCED OPERATIONS ON JANUARY 6, 1998.
See Accompanying Notes
59
<PAGE>
[ARROW GRAPHIC OMITTED]
STATEMENT OF NET ASSETS
ARMADA BALANCED ALLOCATION FUND
MAY 31, 1999
NUMBER VALUE
OF SHARES (000)
--------- -----
COMMON STOCK -- 53.5%
AIRCRAFT -- 0.6%
United Technologies# ........... 7,900 $ 490
-------
BANKS -- 1.6%
Comerica ....................... 6,200 375
Golden West Financial .......... 4,000 379
State Street ................... 8,400 640
-------
1,394
-------
BROADCASTING, NEWSPAPERS & ADVERTISING -- 0.6%
Omnicom Group .................. 7,200 504
-------
BUSINESS SERVICES -- 0.6%
Automatic Data Processing ...... 12,000 494
-------
CABLE TELEVISION -- 1.1%
Comcast, Cl A Special .......... 25,400 978
-------
CHEMICALS -- 1.1%
E.I. duPont de Nemours ......... 5,900 386
Monsanto# ...................... 12,900 535
-------
921
-------
COMMUNICATIONS EQUIPMENT -- 0.8%
Lucent Technologies# ........... 11,800 671
-------
COMPUTER HARDWARE -- 4.2%
Cisco Systems* ................. 13,350 1,455
Compaq Computer ................ 10,100 239
EMC* ........................... 4,800 478
Hewlett Packard ................ 5,500 519
International Business Machines 8,600 1,000
-------
3,691
-------
COMPUTER SERVICES -- 0.5%
Ceridian*# ..................... 14,600 482
-------
COMPUTER SOFTWARE -- 1.8%
Microsoft* ..................... 19,900 1,606
-------
DRUGS & HEALTH CARE -- 4.9%
Abbott Laboratories ............ 8,400 380
Johnson & Johnson .............. 7,100 658
Lilly (Eli) .................... 5,200 371
Merck .......................... 12,300 830
Pfizer ......................... 8,600 920
Schering-Plough ................ 11,600 523
Warner-Lambert ................. 8,800 546
-------
4,228
-------
ELECTRICAL SERVICES -- 0.8%
Texas Utilities ................ 14,600 657
-------
NUMBER VALUE
OF SHARES (000)
--------- -----
COMMON STOCK -- CONTINUED
ENTERTAINMENT -- 0.4%
Walt Disney .................... 11,200 $ 326
-------
ENVIRONMENTAL SERVICES -- 0.5%
Waste Management ............... 7,400 391
-------
FINANCIAL SERVICES -- 3.0%
Fannie Mae ..................... 17,200 1,170
Freddie Mac .................... 15,400 898
J.P. Morgan .................... 4,100 571
-------
2,639
-------
FOOD & BEVERAGE -- 0.8%
Coca-Cola ...................... 10,000 683
-------
HOUSEHOLD PRODUCTS -- 1.1%
Procter & Gamble ............... 10,600 990
-------
INSURANCE -- 1.4%
American International Group ... 10,455 1,195
-------
MEDICAL & MEDICAL SERVICES -- 0.6%
Medtronic ...................... 7,600 540
-------
MISCELLANEOUS MANUFACTURING -- 1.7%
Tyco International ............. 16,800 1,468
-------
MOTORCYCLE & MOTOR SCOOTER -- 0.7%
Harley-Davidson ................ 12,500 638
-------
OFFICE & BUSINESS EQUIPMENT -- 1.4%
Lexmark International, Cl A* ... 4,100 558
Xerox .......................... 12,400 697
-------
1,255
-------
PAPER & FOREST PRODUCTS -- 0.5%
International Paper ............ 8,900 445
-------
PERSONAL CARE -- 0.8%
Gillette ....................... 13,100 668
-------
PETROLEUM & FUEL PRODUCTS -- 0.6%
Schlumberger ................... 8,300 500
-------
PETROLEUM REFINING -- 2.5%
Chevron ........................ 9,100 843
Exxon .......................... 1,700 1,358
-------
2,201
-------
PRINTING & PUBLISHING -- 1.2%
Time Warner .................... 15,900 1,082
-------
RETAIL -- 9.6%
Albertson's# ................... 10,800 578
See Accompanying Notes
60
<PAGE>
[ARROW GRAPHIC OMITTED]
STATEMENT OF NET ASSETS
ARMADA BALANCED ALLOCATION FUND
MAY 31, 1999
NUMBER OF VALUE
MATURITY SHARES/PAR (000) (000)
-------- ---------------- -----
COMMON STOCK -- CONTINUED
RETAIL -- CONTINUED
Costco* ........................ 10,300 $ 747
CVS ............................ 10,600 488
Dayton Hudson .................. 14,400 907
Gap ............................ 16,000 1,001
Home Depot ..................... 22,800 1,297
Safeway* ....................... 16,900 786
Tandy .......................... 8,400 693
TJX Companies .................. 16,000 480
Wal-Mart ....................... 22,000 938
Walgreen ....................... 20,100 467
-------
8,382
-------
SEMI-CONDUCTORS/INSTRUMENTS -- 1.4%
Intel .......................... 14,400 780
Texas Instruments .............. 3,800 416
-------
1,196
-------
SPECIALTY MACHINERY -- 2.0%
Emerson Electric ............... 10,100 645
General Electric ............... 10,600 1,078
-------
1,723
-------
TELEPHONE & TELECOMMUNICATION -- 4.1%
Alltel ......................... 7,700 552
Ameritech ...................... 9,400 619
GTE ............................ 13,300 839
MCI WorldCom* .................. 12,600 1,088
SBC Communications ............. 8,800 450
-------
3,548
-------
WHOLESALE -- 0.6%
Cardinal Health ................ 8,900 537
-------
TOTAL COMMON STOCK
(Cost $43,430)................. 46,523
-------
CORPORATE BONDS -- 10.5%
BANKS -- 1.2%
Citicorp
7.125% ........... 09/01/05 75 76
6.375% ........... 11/15/08 300 294
First Maryland Bancorp
7.200% ........... 07/01/07 300 309
Security Cap
7.800% ........... 01/12/05 350 345
-------
1,024
-------
PAR VALUE
MATURITY (000) (000)
-------- ----- -------
CORPORATE BONDS -- CONTINUED
BUILDING & CONSTRUCTION -- 0.2%
Halliburton
5.625% ........... 12/01/08 $ 175 $ 165
-------
CHEMICALS -- 0.6%
Lubrizol
5.875% ........... 12/01/08 250 232
Monsanto (A)
5.375% ........... 12/01/01 300 294
-------
526
-------
COMMUNICATIONS EQUIPMENT -- 0.4%
Motorola
7.500% ........... 05/15/25 300 313
-------
COMPUTER SOFTWARE -- 0.7%
Computer Associates
6.250% ........... 04/15/03 645 626
-------
ENTERTAINMENT -- 0.2%
Time Warner
9.625% ........... 05/01/02 150 163
-------
FINANCIAL SERVICES -- 0.4%
Associates
5.750% ........... 11/01/03 100 97
6.250% ........... 11/01/08 300 291
-------
388
-------
FOOD & BEVERAGE -- 0.6%
Archer Daniels Midland
7.500% ........... 03/15/27 100 105
Dean Foods
6.625% ........... 05/15/09 400 397
-------
502
-------
FOREIGN -- 0.6%
Saskatchewan
8.000% ........... 07/15/04 500 537
-------
GAS & NATURAL GAS -- 0.2%
Williams Companies
6.200% ........... 08/01/02 200 198
-------
LEISURE & RECREATIONAL PRODUCTS -- 0.3%
Brunswick
6.750% ........... 12/15/06 300 290
-------
See Accompanying Notes
61
<PAGE>
[ARROW GRAPHIC OMITTED]
STATEMENT OF NET ASSETS
ARMADA BALANCED ALLOCATION FUND
MAY 31, 1999
PAR VALUE
MATURITY (000) (000)
-------- ----- -----
CORPORATE BONDS -- CONTINUED
MACHINERY -- 0.2%
Cummins Engine
6.450% ........... 03/01/05 $ 200 $ 192
-------
MISCELLANEOUS FINANCIAL SERVICES -- 0.4%
Erac USA Finance
6.350% ........... 01/15/01 300 300
-------
MISCELLANEOUS PERSONAL CREDIT -- 0.7%
CSX
5.850% ........... 12/01/03 250 242
Ford Motor Credit
6.000% ........... 01/14/03 350 346
General Motors Acceptance
9.000% ........... 10/15/02 50 54
-------
642
-------
MORTGAGE BANKERS & CORRESPONDENTS -- 0.6%
Countrywide Home Loan
6.840% ........... 10/22/04 500 498
-------
PETROLEUM REFINING -- 0.1%
Amoco Canada
6.750% ........... 02/15/05 50 51
-------
PRINTING & PUBLISHING -- 0.6%
American Greetings
6.100% ........... 08/01/28 500 479
Times Mirror
6.610% ........... 09/15/27 50 50
-------
529
-------
REAL ESTATE INVESTMENT TRUSTS -- 1.0%
AvalonBay Communities
6.580% ........... 02/15/04 75 73
EOP Operating
6.500% ........... 06/15/04 250 243
6.625% ........... 02/15/05 250 243
Simon Property Group
6.750% ........... 02/09/04 30 29
Simon Property Group (A)
6.625% ........... 06/15/03 300 286
-------
874
-------
STEEL REFINING -- 0.5%
Worthington Industries
6.700% ........... 12/01/09 430 414
-------
TELEPHONE & TELECOMMUNICATION -- 1.0%
AT&T
6.500% ........... 03/15/29 385 359
Cable & Wireless Communications
6.750% ........... 12/01/08 300 293
Sprint Capital
6.875% ........... 11/15/28 265 249
-------
901
-------
PAR VALUE
MATURITY (000) (000)
-------- ----- -----
TOTAL CORPORATE BONDS
(Cost $9,492) ............................... $ 9,133
-------
ASSET BACKED SECURITIES -- 4.0%
Advanta Mortgage Loan Trust,
Series 1999-2, Cl A4
6.890% ............ 05/25/29 $ 295 294
Discover Card Master Trust I,
Series 1996-3, Cl A
6.050% ............ 08/18/08 500 493
First Security Auto Owner Trust,
Series 1999-1, Cl A4
5.740% ............ 06/15/04 400 395
GE Capital Mortgage,
Series 1997-2, HE4, Cl A4
6.765% ............ 04/25/15 350 353
Series 1998-2, Cl A3
6.180% ............ 06/25/15 500 500
Series 1999-1, Cl A1
6.500% ............ 01/25/29 159 153
Series 1999-HE1, Cl A4
6.185% ............ 01/25/23 290 288
IMC Home Equity Loan Trust,
Series 1997-7, Cl A5
6.760% ............ 10/20/20 560 564
Newcourt Receivables Asset Trust,
Series 1997-1, Cl A4
6.193% ............ 05/20/05 410 408
-------
TOTAL ASSET BACKED SECURITIES
(Cost $3,492) ........ 3,448
-------
COLLATERALIZED MORTGAGE
OBLIGATIONS -- 3.7%
Credit Suisse First Boston Mortgage
Securities, Series 1997-C1, Cl A1C
7.240% ............ 01/01/29 410 416
First Union-Chase Commercial Mortgage,
Series 1999-C2, Cl A2
6.645% ............ 04/14/09 200 198
Heller Financial Commercial Mortgage,
Series 1999-PH1, Cl A1
6.500% ............ 05/15/31 295 294
Morgan Stanley Capital I, Series
1999-FNV1, Cl A2
6.530% ............ 03/15/32 550 543
Morgan Stanley Capital I, Series 1999-
RM1, Cl A2
6.710% ............ 12/15/31 390 390
See Accompanying Notes
62
<PAGE>
[ARROW GRAPHIC OMITTED]
STATEMENT OF NET ASSETS
ARMADA BALANCED ALLOCATION FUND
MAY 31, 1999
NUMBER OF VALUE
MATURITY SHARES/PAR (000) (000)
-------- ---------------- -----
COLLATERALIZED MORTGAGE
OBLIGATIONS -- CONTINUED
PNC Trust, Series 1998-7, Cl A5
6.750% ............ 09/25/28 $ 229 $ 224
Prudential Securities Secured Financing,
Series 1999-NRF1, Cl A1
6.074% ............ 01/15/08 356 350
Residential Accredit Loans,
Series 1999-QS3, Cl A8
6.500% ............ 03/25/29 529 507
Residential Funding Mortgage
Securities I, Series 1998-S13, Cl A21
6.750% ............ 06/25/28 270 263
-------
TOTAL COLLATERALIZED MORTGAGE
OBLIGATIONS
(Cost $3,268) ............................... 3,185
-------
U.S. GOVERNMENT AGENCY OBLIGATIONS -- 12.1%
FEDERAL NATIONAL MORTGAGE ASSOCIATION -- 8.8%
Pool # 376750
7.000% ............ 09/01/27 868 871
Pool # 417392
6.500% ............ 02/01/28 180 176
Pool # 433330
6.500% ............ 08/01/28 198 194
Pool # 440148
6.500% ............ 08/01/28 2,227 2,181
Pool # 437810
6.000% ............ 08/01/28 850 810
Pool # 437972
6.000% ............ 08/01/28 198 189
Pool # 437979
6.000% ............ 08/01/28 490 466
Pool # 453931
6.500% ............ 11/01/28 560 548
Pool # 484693
6.000% ............ 02/01/29 1,361 1,295
Pool # TBA
7.000% ............ 04/01/29 300 302
Pool # 494724
6.500% ............ 05/01/29 650 636
-------
7,668
-------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION -- 3.3%
Pool # 780213
7.500% ............ 08/15/25 440 452
Pool # 439229
7.500% ............ 07/15/27 379 388
Pool # 451490
7.500% ............ 09/15/27 579 594
PAR/SHARES VALUE
MATURITY (000) (000)
-------- ---------- -----
U.S. GOVERNMENT AGENCY
OBLIGATIONS -- CONTINUED
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION -- CONTINUED
Pool # TBA
6.500% ............ 03/01/29 $ 240 $ 234
Pool # 498651
6.500% ............ 04/01/29 1,198 1,171
-------
2,839
-------
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS
(Cost $10,703) .............................. 10,507
-------
U.S. TREASURY OBLIGATIONS -- 6.7%
U.S. TREASURY NOTES -- 6.7%
5.750%# ........... 11/15/00 2,175 2,188
5.750%# ........... 08/15/03 1,425 1,428
6.125%# ........... 08/15/07 1,310 1,336
6.250%# ........... 08/15/23 855 872
-------
5,824
-------
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $5,967) ............................... 5,824
-------
CASH EQUIVALENT -- 0.1%
Goldman Sachs Financial Square Premium
Money Market Fund ............. 61 61
-------
TOTAL CASH EQUIVALENT
(Cost $61) .................................. 61
-------
TOTAL INVESTMENTS -- 90.6%
(Cost $76,413) .............................. $78,681
=======
OTHER ASSETS AND LIABILITIES,
NET -- 9.4% ................................. 8,197
-------
TOTAL NET ASSETS -- 100.0% ..................... $86,878
=======
- ------------
* NON-INCOME PRODUCING SECURITY.
# SECURITY FULLY OR PARTIALLY ON LOAN.
(A) PRIVATE PLACEMENT SECURITY
CL--CLASS
TBA--TO BE ANNOUNCED
See Accompanying Notes
63
<PAGE>
[ARROW GRAPHIC OMITTED]
FINANCIAL HIGHLIGHTS
ARMADA BALANCED ALLOCATION FUND
FOR A PORTFOLIO SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
FOR THE PERIOD
ENDED MAY 31, 1999
---------------------------------------------
CLASS I3 CLASS A3 CLASS B4
----------- ----------- -----------
<S> <C> <C> <C>
Net asset value, beginning of period ........................................... $ 10.00 $ 9.74 $ 9.82
------- ------- -------
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.18 0.14 0.10
Net gain on securities (realized and unrealized) ............................. 0.28 0.57 0.51
------- ------- -------
Total from investment operations .......................................... 0.46 0.71 0.61
------- ------- -------
LESS DISTRIBUTIONS
Dividends from net investment income ......................................... (0.15) (0.14) (0.10)
------- ------- -------
Total distributions ....................................................... (0.15) (0.14) (0.10)
------- ------- -------
Net asset value, end of period ................................................. $ 10.31 $10.31 $ 10.33
======= ======= =======
TOTAL RETURN ................................................................... 4.57%2 7.26%1,2 6.07%1,2
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000's) ......................................... $85,027 $1,466 $ 385
Ratio of expenses to average net assets ...................................... 1.06%5 1.31%5 2.02%5
Ratio of net investment income to average net assets ......................... 2.25%5 2.50%5 1.29%5
Ratio of expenses to average net assets before fee waivers ................... 1.06%5 1.31%5 2.02%5
Ratio of investment income to average net assets before fee waivers .......... 2.25%5 2.50%5 1.29%5
Portfolio turnover rate ...................................................... 116% 116% 116%
</TABLE>
1 TOTAL RETURN EXCLUDES SALES CHARGE.
2 RETURNS ARE FOR THE PERIOD INDICATED AND HAVE NOT BEEN ANNUALIZED.
3 CLASS I AND CLASS A COMMENCED OPERATIONS ON JULY 10, 1998 AND
JULY 31, 1998, RESPECTIVELY.
4 CLASS B COMMENCED OPERATIONS ON NOVEMBER 11, 1998.
5 ANNUALIZED.
See Accompanying Notes
64
<PAGE>
[ARROW GRAPHIC OMITTED]
STATEMENT OF NET ASSETS
ARMADA TOTAL RETURN ADVANTAGE FUND
MAY 31, 1999
PAR VALUE
MATURITY (000) (000)
-------- ----- -----
CORPORATE BONDS -- 39.9%
AGRICULTURE -- 0.9%
Cargill (B)
6.150% ............ 02/25/08 $3,100 $ 2,946
-------
AUTO -- 2.7%
Chrysler Financial
5.150% ............ 01/22/01 3,525 3,490
Ford Motor
6.375% ............ 02/01/29 6,125 5,505
-------
8,995
-------
BANKS -- 4.9%
Bank of America
7.875% ............ 12/01/02 3,600 3,775
Citicorp
7.125% ............ 09/01/05 4,000 4,075
First Union
7.125% ............ 10/15/06 4,400 4,515
Fleet Financial
6.500% ............ 03/15/08 2,775 2,710
6.375% ............ 05/15/08 1,175 1,137
-------
16,212
-------
BROKERAGE -- 1.1%
Lehman Brothers
6.625% ............ 04/01/04 3,800 3,743
-------
CABLE & MEDIA -- 3.0%
News America Holdings
7.375% ............ 10/17/08 6,150 6,302
Time Warner Entertainment
10.150% ............ 05/01/12 2,900 3,678
-------
9,980
-------
CONSULTING SERVICES -- 1.0%
CSC Enterprises
6.500% ............ 11/15/01 3,365 3,383
-------
DEFENSE -- 0.7%
Raytheon
5.950% ............ 03/15/01 2,500 2,494
-------
EDUCATION -- 0.8%
Harvard University
8.125% ............ 04/15/07 2,400 2,658
-------
FINANCIAL SERVICES -- 0.9%
Household Finance
5.875% ............ 02/01/09 3,400 3,166
-------
PAR VALUE
MATURITY (000) (000)
-------- ----- -----
CORPORATE BONDS -- CONTINUED
FOOD & BEVERAGE -- 1.0%
Philip Morris Global
7.000% ............ 07/15/05 $3,300 $ 3,311
-------
INSURANCE -- 3.1%
Metropolitan Life
7.000% ............ 11/01/05 5,900 5,957
Nationwide
9.875% ............ 02/15/25 4,000 4,373
-------
10,330
-------
OIL & GAS -- 1.4%
Atlantic Richfield
9.875% ............ 03/01/16 1,900 2,449
Conoco
6.950% ............ 04/15/29 2,150 2,067
-------
4,516
-------
REAL ESTATE INVESTMENT TRUST -- 0.5%
Mack-Cali Realty
7.000% ............ 03/15/04 1,650 1,629
-------
RETAIL -- 0.9%
Dayton Hudson
6.650% ............ 08/01/28 3,000 2,839
-------
SPECIALTY CHEMICALS -- 2.6%
Engelhard
7.000% ............ 08/01/01 5,600 5,719
Monsanto (B)
6.600% ............ 12/01/28 3,150 2,898
-------
8,617
-------
TECHNOLOGY -- 1.0%
Applied Material
7.125% ............ 10/15/17 3,475 3,417
-------
TELEPHONE & TELECOMMUNICATION -- 6.7%
AT&T
6.500% ............ 03/15/29 4,100 3,818
BellSouth Communications
6.300% ............ 12/15/15 2,952 2,831
GTE Northwest
5.550% ............ 10/15/08 2,600 2,411
Sprint Capital
6.875% ............ 11/15/28 5,300 4,989
Telephone & Data Systems
7.000% ............ 08/01/06 5,500 5,390
Worldcom
6.400% ............ 08/15/05 3,100 3,042
-------
22,481
-------
See Accompanying Notes
65
<PAGE>
[ARROW GRAPHIC OMITTED]
STATEMENT OF NET ASSETS
ARMADA TOTAL RETURN ADVANTAGE FUND
MAY 31, 1999
PAR VALUE
MATURITY (000) (000)
-------- ----- -----
CORPORATE BONDS -- CONTINUED
UTILITIES-ELECTRIC -- 2.5%
Consolidated Edison#
6.450% ............ 12/01/07 $3,250 $ 3,234
Pennsylvania Power & Light
6.125% ............ 05/01/01 3,550 3,554
Puget Sound Energy
6.740% ............ 06/15/18 1,525 1,462
--------
8,250
--------
UTILITIES-GAS DISTRIBUTION -- 0.9%
KN Energy
6.450% ............ 03/01/03 3,100 3,073
--------
YANKEE -- 3.3%
Ahold Financial
6.250% ............ 05/01/09 2,200 2,106
City of Naples
7.520% ............ 07/15/06 4,350 4,482
Quebec Province
8.625% ............ 01/19/05 3,875 4,261
--------
10,849
--------
TOTAL CORPORATE BONDS
(Cost $134,746) 132,889
--------
ASSET BACKED SECURITIES -- 17.1%
AUTO -- 1.7%
World Omni Automobile Lease Securitization
Trust, Series 1997, Cl A3 (B)
5.962% ............ 08/14/01 5,644 5,632
--------
CREDIT CARDS -- 5.6%
First USA Credit Card Master Trust,
Series 1999-1, Cl C (B)
6.420% ............ 10/19/06 3,895 3,784
Series 1999-2, Cl C (B)
6.650% ............ 10/19/08 3,235 3,132
MBNA Credit Card Master Trust,
Series 1998-F, Cl C (B)
6.450% ............ 02/15/08 4,985 4,836
Series 1999-B, Cl C (B)
6.650% ............ 08/15/11 2,780 2,671
Metris Master Trust, Series 1997-1,
Cl A
6.870% ............ 10/20/05 4,040 4,095
--------
18,518
--------
PAR VALUE
MATURITY (000) (000)
-------- ----- -----
ASSET BACKED SECURITIES -- CONTINUED
FINANCIAL SERVICES -- 7.3%
Aesop (B)
6.140% ............ 05/20/06 $4,750 $ 4,695
Series 1997-A, Cl A2 (B)
6.400% 10/20/03 3,495 3,504
Copelco Capital Funding, Series 1997-A,
Cl A4
6.470% ............ 04/20/05 3,735 3,765
Green Tree Financial, Series 1997-5,
Cl A5
6.620% ............ 05/15/29 2,535 2,528
Metlife Capital Equipment Loan Trust,
Series 1997-A, Cl A
6.850% ............ 05/20/08 3,025 3,078
PNC Student Loan Trust I,
Series 1997-2, Cl A4
6.446% ............ 01/25/02 3,840 3,866
Series 1997-2, Cl A6
6.572% ............ 01/25/04 2,870 2,864
-------
24,300
-------
MISCELLANEOUS -- 2.5%
Comed Trust Financial, Series 1998-1,
Cl A6
5.630% ............ 06/25/09 3,270 3,109
Franchise Funding Credit Association,
Series 97-1 Cl A (B)
7.020% ............ 12/18/06 1,678 1,678
Railcar Leasing, Series 1997-1,
Cl A2 (B)
7.125% ............ 01/15/13 3,610 3,686
-------
8,473
-------
TOTAL ASSET BACKED SECURITIES
(Cost $57,584) ....... 56,923
-------
COLLATERALIZED MORTGAGE
OBLIGATIONS -- 11.3%
Collateralized Mortgage Obligation Trusts,
Series 13, Cl A (A)
5.425% ............ 01/20/03 34 34
Commercial Mortgage Acceptance,
Series 1997-ML1, Cl A-4
6.735% ............ 08/15/07 5,323 5,307
Federal Home Loan Mortgage
Corporation, Series 2095, Cl Pe
6.000% ............ 11/15/28 6,189 5,646
See Accompanying Notes
66
<PAGE>
[ARROW GRAPHIC OMITTED]
STATEMENT OF NET ASSETS
ARMADA TOTAL RETURN ADVANTAGE FUND
MAY 31, 1999
PAR VALUE
MATURITY (000) (000)
-------- ----- -----
COLLATERALIZED MORTGAGE
OBLIGATIONS -- CONTINUEd
Federal Home Loan Mortgage Corporation
Series 2101, Cl Pd
6.000% ............ 11/15/28 $2,245 $ 2,055
Series 2104, Cl Pg
6.000% ............ 12/15/28 2,131 1,957
First Union Lehman Brothers Trust,
Series 1997, Cl A3
7.380% ............ 04/18/07 4,425 4,560
Series 1998, Cl A2
6.560% ............ 11/18/08 4,745 4,698
Merrill Lynch Mortgage Investors,
Series 1998-GN1, Cl A1
7.110% ............ 08/25/27 3,486 3,481
Series 1996-C2, Cl A2
6.820% ............ 11/21/28 3,195 3,235
Morgan Stanley Capital, Series
1999-WF1, Cl A2
6.210% ............ 09/15/08 6,835 6,600
-------
TOTAL COLLATERALIZED MORTGAGE
OBLIGATIONS
(Cost $38,715) ....... 37,573
-------
U.S. GOVERNMENT AGENCY
OBLIGATIONS -- 5.8%
FEDERAL HOME LOAN MORTGAGE CORPORATION -- 0.0%
Pool # 16-0045
8.750% ............ 05/01/08 3 4
Pool # 18-1063
7.500% ............ 12/01/10 84 88
-------
92
-------
FEDERAL NATIONAL MORTGAGE ASSOCIATION -- 5.6%
Pool # 323538
6.500% ............ 01/01/29 9,677 9,472
Pool # 323434
7.500% ............ 04/01/29 9,084 9,283
-------
18,755
-------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION -- 0.2%
Pool # 132781
10.500% ............ 11/15/00 6 7
Pool # 780919
9.500% ............ 10/15/18 463 500
-------
507
-------
PAR/SHARES VALUE
MATURITY (000) (000)
-------- ----- -----
U.S. GOVERNMENT AGENCY
OBLIGATIONS -- CONTINUED
Total U.S. Government Agency
Obligations
(Cost $19,684) .............................. $ 19,354
--------
MORTGAGE PASS THROUGH
OBLIGATIONS -- 0.1%
Thirty-Seventh FHA Insurance Project
7.430% ............ 05/01/22 $ 442 442
--------
Total Mortgage Pass Through
Obligations
(Cost $442) 442
--------
U.S. TREASURY OBLIGATIONS -- 22.0%
U.S. TREASURY BONDS -- 10.4%
7.500%# ........... 11/15/16 16,985 19,457
8.125%# ........... 08/15/21 12,100 15,023
--------
34,480
--------
U.S. TREASURY NOTES -- 11.6%
6.125%# ........... 07/31/00 21,865 22,091
5.875%# ........... 11/30/01 4,150 4,187
5.375%# ........... 06/30/03 4,555 4,508
7.250%# ........... 05/15/04 150 160
6.500% ............ 10/15/06 3,025 3,147
6.125%# ........... 08/15/07 4,500 4,591
--------
38,684
--------
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $74,705) .............................. 73,164
--------
CASH EQUIVALENT -- 2.8%
Fidelity Domestic Money Market
Fund .......................... 9,441 9,441
--------
TOTAL CASH EQUIVALENT
(Cost $9,441) .................. 9,441
--------
TOTAL INVESTMENTS -- 99.0%
(Cost $335,317) ............................. $329,786
========
OTHER ASSETS AND LIABILITIES,
NET -- 1.0% .................................. 3,317
--------
See Accompanying Notes
67
<PAGE>
STATEMENT OF NET ASSETS
ARMADA TOTAL RETURN ADVANTAGE FUND
MAY 31, 1999
VALUE
(000)
-----
NET ASSETS:
Portfolio Shares of Class I
(unlimited authorizat -- no par
value) based on 32,874,699
outstanding shares of
beneficial interest ......................... $332,005
Portfolio Shares of Class A (unlimited
authorization -- no par value) based on
469,625 outstanding shares of
beneficial interest ......................... 4,784
Undistributed net investment income .......... 3
Accumulated net realized gain on investments . 1,842
Net unrealized depreciation on investments ... (5,531)
--------
Total Net Assets -- 100.0% ...................... 333,103
========
Net Asset Value, Offering
and Redemption Price Per
Share -- Class I ............................ $9.99
========
Net Asset Value and Redemption
Price Per Share -- Class A ................... $9.98
========
Maximum Offering Price Per
Share -- Class A ($9.98 / 95.25%) ............ $10.48
========
- -----------------
# SECURITY FULLY OR PARTIALLY ON LOAN.
(A) VARIABLE RATE SECURITY -- THE RATE REFLECTED ONE STATEMENT OF NET ASSETS
IS THE RATE IN EFFECT ON MAY 31, 1999.
(B) PRIVATE CEMENT SECURITY
CL -- CLASS
See Accompanying Notes
68
<PAGE>
FINANCIAL HIGHLIGHTS
ARMADA TOTAL RETURN ADVANTAGE FUND
FOR A PORTFOLIO SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
FOR THE YEAR ENDED MAY 31,
------------------------------------------------------------------------------
1999 1998 1997 1996
------------------ ------------------ ------------------ ------------------
CLASS I CLASS A CLASS I CLASS A CLASS I CLASS A CLASS I CLASS A
-------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ..... $ 10.25 $ 10.25 $ 9.89 $ 9.89 $ 9.88 $ 9.87 $ 10.55 $ 10.54
-------- -------- -------- -------- -------- -------- -------- --------
INCOME FROM INVESTMENT OPERATIONS
Net investment income .................. 0.58 0.56 0.64 0.61 0.67 0.64 0.705 0.625
Net gain/ (loss) on securities
(realized and unrealized) ............ (0.22) (0.23) 0.36 0.36 0.15 0.16 (0.24) (0.22)
-------- -------- -------- -------- -------- -------- -------- --------
Total from investment operations ..... 0.36 0.33 1.00 0.97 0.82 0.80 0.46 0.40
-------- -------- -------- -------- -------- -------- -------- --------
LESS DISTRIBUTIONS
Dividends from net investment income ... (0.58) (0.56) (0.64) (0.61) (0.67) (0.64) (0.70) (0.62)
Dividends in excess of net
investment income .................... (0.00) (0.00) (0.00) (0.00) (0.00) (0.00) (0.12) (0.14)
Distributions from net realized
capital gains ........................ (0.04) (0.04) (0.00) (0.00) (0.00) (0.00) (0.31) (0.31)
Distributions in excess of net
realized capital gains ............... (0.00) (0.00) (0.00) (0.00) (0.14) (0.14) (0.00) (0.00)
-------- -------- -------- -------- -------- -------- -------- --------
Total distributions .................. (0.62) (0.60) (0.64) (0.61) (0.81) (0.78) (1.13) (1.07)
-------- -------- -------- -------- -------- -------- -------- --------
Net asset value, end of period ........... $ 9.99 $ 9.98 $ 10.25 $ 10.25 $ 9.89 $ 9.89 $ 9.88 $ 9.87
======== ======== ======== ======== ======== ======== ======== ========
TOTAL RETURN ............................. 3.54% 3.18%3 10.35% 10.08%3 8.51% 8.35%3 4.22% 3.74%3
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000's) ... $328,417 $ 4,686 $296,075 $ 640 $259,228 $ 2,186 $280,401 $ 2,040
Ratio of expenses to average net assets 0.45% 0.69% 0.31% 0.54% 0.16% 0.41% 0.13% 0.36%
Ratio of net investment income to
average net assets ................... 5.72% 5.48% 6.29% 6.14% 6.70% 6.46% 6.67% 6.12%
Ratio of expenses to average net assets
before fee waivers ................... 0.65% 0.89% 0.72% 0.97% 0.71% 0.96% 0.69% 0.89%
Ratio of net investment income to
average net assets before fee waivers 5.52% 5.28% 5.88% 5.71% 6.15% 5.91% 6.11% 5.59%
Portfolio turnover rate ................ 142% 1.42% 170% 170% 169% 169% 268% 268%
</TABLE>
<TABLE>
<CAPTION>
FOR THE PERIOD
ENDED MAY 31, 1995
------------------
CLASS I1 CLASS A1
-------- --------
<S> <C> <C>
Net asset value, beginning of period ..... $ 10.00 $ 10.16
-------- --------
INCOME FROM INVESTMENT OPERATIONS
Net investment income .................. 0.655 0.495
Net gain/ (loss) on securities
(realized and unrealized) ............ 0.43 0.40
-------- --------
Total from investment operations ..... 1.08 0.89
-------- --------
LESS DISTRIBUTIONS
Dividends from net investment income ... (0.53) (0.49)
Dividends in excess of net
investment income .................... (0.00) (0.02)
Distributions from net realized
capital gains ........................ (0.00) (0.00)
Distributions in excess of net
realized capital gains ............... (0.00) (0.00)
-------- --------
Total distributions .................. (0.53) (0.51)
-------- --------
Net asset value, end of period ........... $ 10.55 $ 10.54
======== ========
TOTAL RETURN ............................. 12.52%4 12.65%3,4
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000's) ... $261,403 $ 106
Ratio of expenses to average net assets 0.18%2 0.31%2
Ratio of net investment income to
average net assets ................... 7.23%2 6.92%2
Ratio of expenses to average net assets
before fee waivers ................... 0.77%2 0.87%2
Ratio of net investment income to
average net assets before fee waivers 6.64%2 6.36%2
Portfolio turnover rate ................ 166% 166%
</TABLE>
1 CLASS I AND CLASS A COMMENCED OPERATIONS ON JULY 7, 1994 AND
SEPTEMBER 6, 1994, RESPECTIVELY.
2 ANNUALIZED.
3 TOTAL RETURN EXCLUDES SALES CHARGE.
4 TOTAL RETURNS HAVE BEEN ANNUALIZED BASED UPON THE PERIOD FROM EACH CLASS'
COMMENCEMENT DATE THROUGH MAY 31, 1995. GROSS TOTAL RETURNS OF CLASS I
AND CLASS A FOR THE PERIOD WERE 11.22% AND 9.14%, RESPECTIVELY.
5 CALCULATED BASED UPON AVERAGE SHARES OUTSTANDING.
See Accompanying Notes
69
<PAGE>
[ARROW GRAPHIC OMITTED]
STATEMENT OF NET ASSETS
ARMADA BOND FUND
MAY 31, 1999
PAR VALUE
MATURITY (000) (000)
-------- ----- -------
CORPORATE BONDS -- 25.2%
BANKS -- 1.8%
Citicorp
6.375% ............ 11/15/08 $ 8,000 $ 7,830
First Maryland Bancorp
7.200% ............ 07/01/07 5,000 5,144
International Bank For
Reconstruction & Development
8.500% ............ 07/19/99 900 904
-------
13,878
-------
BUILDING & CONSTRUCTION -- 0.3%
Halliburton
5.625% ............ 12/01/08 2,000 1,880
-------
CHEMICALS -- 1.8%
Dow Chemical
9.200% ............ 06/01/10 1,000 1,169
Lubrizol
5.875% ............ 12/01/08 7,300 6,780
Monsanto
8.130% ............ 12/15/06 2,000 2,145
Monsanto (B)
5.375% ............ 12/01/01 3,580 3,506
-------
13,600
-------
COMMUNICATIONS EQUIPMENT -- 0.6%
Motorola
7.500% ............ 05/15/25 4,680 4,879
-------
COMPUTER SOFTWARE -- 1.9%
Computer Associates
6.250% ............ 04/15/03 15,000 14,550
-------
ELECTRICAL SERVICES -- 0.5%
Central Power & Light
6.625% ............ 07/01/05 920 914
Eastern Energy
6.750% ............ 12/01/06 3,000 2,957
-------
3,871
-------
FINANCIAL SERVICES -- 3.7%
Associates
5.800% ............ 04/20/04 3,000 2,925
6.250% ............ 11/01/08 5,000 4,850
Ford Motor Credit
6.000% ............ 01/14/03 10,000 9,887
Prime Property Funding, Series II (B)
6.800% ............ 08/15/02 10,000 9,985
Sallie Mae
7.300% ............ 08/01/09 500 537
-------
28,184
-------
PAR VALUE
MATURITY (000) (000)
-------- ----- -------
CORPORATE BONDS -- CONTINUED
FOOD & BEVERAGE -- 1.9%
Archer Daniels Midland
7.500% ............ 03/15/27 $ 6,900 $ 7,271
Dean Foods
6.625% ............ 05/15/09 5,970 5,922
Kraft
8.500% ............ 02/15/17 1,313 1,354
-------
14,547
-------
GAS & NATURAL GAS -- 1.3%
Williams Companies
6.200% ............ 08/01/02 10,000 9,912
-------
INSURANCE -- 0.8%
Cigna
7.400% ............ 05/15/07 3,000 3,120
Lincoln National
6.500% ............ 03/15/08 2,895 2,833
-------
5,953
-------
LEASING & RENTING -- 0.7%
Trans Ocean Container, Callable 07/01/99
@ 106.15
12.250% ............ 07/01/04 5,000 5,450
-------
LEISURE & RECREATIONAL PRODUCTS -- 1.7%
Brunswick
6.750% ............ 12/15/06 8,170 7,904
First American Cap
8.500% ............ 04/15/12 5,000 5,262
-------
13,166
-------
MACHINERY -- 0.6%
Cummins Engine
6.450% ............ 03/01/05 4,800 4,608
-------
PRINTING & PUBLISHING -- 1.5%
American Greetings
6.100% ............ 08/01/28 10,390 9,961
Knight-Ridder
8.500% ............ 09/01/01 1,555 1,598
-------
11,559
-------
RAILROADS -- 0.3%
CSX Transportation
7.540% ............ 03/15/03 2,000 2,056
-------
REAL ESTATE INVESTMENT TRUSTS -- 2.6%
AvalonBay Communities
6.580% ............ 02/15/04 2,200 2,148
EOP Operating
6.625% ............ 02/15/05 10,400 10,088
Simon Property Group (B)
6.625% ............ 06/15/03 4,600 4,516
See Accompanying Notes
70
<PAGE>
[ARROW GRAPHIC OMITTED]
STATEMENT OF NET ASSETS
ARMADA BOND FUND
MAY 31, 1999
PAR VALUE
MATURITY (000) (000)
-------- ----- -----
CORPORATE BONDS -- CONTINUED
REAL ESTATE INVESTMENT TRUSTS -- CONTINUED
Simon Property Group
6.750% ............ 02/09/04 $ 2,960 $ 2,875
--------
19,627
--------
TELEPHONE & TELECOMMUNICATION -- 3.2%
AT&T
6.500% ............ 03/15/29 8,400 7,822
Cable & Wireless Communications
6.750% ............ 12/01/08 7,000 6,825
Sprint Capital
6.875% ............ 11/15/28 10,000 9,413
--------
24,060
--------
TOTAL CORPORATE BONDS
(Cost $197,671) ............................. 191,780
--------
ASSET BACKED SECURITIES -- 12.1%
Advanta Home Equity Loan Trust,
Series 1991-2, Cl A
8.800% ............ 06/25/06 1,207 1,211
Advanta Mortgage Loan Trust,
Series 1999-2, Cl A4
6.890% ............ 05/25/29 7,225 7,207
Amresco Securitized Net Interest
Margin, Series 1999-1A, Cl A
9.100% ............ 09/27/29 9,945 9,821
Export Funding Trust, Series 1995-A,
Cl A
8.210% ............ 12/29/06 2,364 2,546
First Security Auto Owner Trust,
Series 1999-1, Cl A4
5.740% ............ 06/15/04 9,970 9,856
GE Capital Mortgage, Series
1999-HE1, Cl A4
6.185% ............ 01/25/23 9,760 9,705
Series 1999-1, Cl A1
6.500% ............ 01/25/29 6,976 6,683
IMC Home Equity Loan Trust, Series
1997-7, Cl A5
6.760% ............ 10/20/20 12,810 12,905
Newcourt Receivables Asset Trust,
Series 1997-1, Cl A4
6.193% ............ 05/20/05 13,360 13,312
Pegasus Aviation Lease Securitization,
Series 1999-1, Cl A1 (B)
6.300% ............ 03/25/29 7,804 7,685
PAR VALUE
MATURITY (000) (000)
-------- ----- -----
ASSET BACKED SECURITIES -- CONTINUED
Residential Asset Securities, Series
1998-KS3, Cl AI3
5.910% ............ 08/25/22 $ 8,500 $ 8,397
The Money Store Home Equity Trust,
Series 1998-A, Cl AV (A)
5.100% ............ 06/15/29 2,699 2,696
Turkey Trust, Series T-3
9.625% ............ 05/15/02 405 417
-------
TOTAL ASSET BACKED SECURITIES
(Cost $93,234) .............................. 92,441
-------
COLLATERALIZED MORTGAGE
OBLIGATIONS -- 19.2%
Chase Commercial Mortgage Securities,
Series 1996-2, Cl A1
6.700% ............ 07/19/03 1,402 1,414
Credit Suisse First Boston Mortgage
Securities, Series 1997-C1, Cl A1C
7.240% ............ 01/01/29 7,500 7,601
Federal Home Loan Mortgage Corporation,
Series C-78
9.400% ............ 09/15/08 26 27
Federal National Mortgage Association,
Series 1-C
9.250% ............ 11/15/01 939 959
First Union-Chase Commercial Mortgage,
Series 1999-C2, Cl A2
6.645% ............ 04/14/09 4,700 4,663
GMAC Commercial Mortgage Securities,
Series 1997-C1, Cl X
1.565% ............ 07/15/27 18,129 1,516
Heller Financial Commercial Mortgage,
Series 1999-PH1, Cl A1
6.500% ............ 05/15/31 7,225 7,198
Housing Securities, Series 1993-G,
Cl G9
7.500% ............ 01/25/09 4,984 5,059
J.P. Morgan Commercial Mortgage
Finance,
Series 1997-C4, Cl X, (A)(C)
1.379% 12/26/28 116,567 6,967
Series 1997-C5, (A)(C)
1.550% ............ 09/15/29 20,400 1,538
Midland Realty Acceptance, Series
1996-C2, Cl A1
7.020% ............ 01/25/29 1 1
See Accompanying Notes
71
<PAGE>
[ARROW GRAPHIC OMITTED]
STATEMENT OF NET ASSETS
ARMADA BOND FUND
MAY 31, 1999
PAR VALUE
MATURITY (000) (000)
-------- ----- -----
COLLATERALIZED MORTGAGE
OBLIGATIONS -- CONTINUED
Morgan Stanley Capital I,
Series 1999-RM1, Cl A2
6.710% ............ 12/15/31 $ 9,530 $ 9,523
Series 1999-FNV1, Cl A2
6.530% ............ 03/15/32 13,000 12,824
PNC Trust, Series 1998-7, Cl A5
6.750% ............ 09/25/28 2,997 2,916
Prudential Home Mortgage Securities,
Series 1996-7, Cl A4
6.750% ............ 06/25/11 1,500 1,473
Prudential Securities Secured Financing,
Series 1999-NRF1, Cl A1
6.074% ............ 01/15/08 12,560 12,314
Residential Accredit Loans,
Series 1998-QS7, Cl NB4
6.750% ............ 07/25/28 13,684 13,350
Series 1999-QS3, Cl A8
6.500% ............ 03/25/29 16,845 16,129
Residential Asset Securitization Trust,
Series 1997-A5, Cl A13
7.750% ............ 07/25/27 10,786 10,975
Residential Funding Mortgage
Securities I, Series 1998-S13,
Cl A21
6.750% ............ 06/25/28 6,170 6,010
Residential Funding, Series 1993-S44,
Cl A3 (A)
5.490% ............ 11/25/23 2,342 2,359
Structured Asset Sales, Series 1994-5,
Cl A
7.000% ............ 07/25/24 22,019 21,876
--------
TOTAL COLLATERALIZED MORTGAGE
OBLIGATIONS
(Cost $148,867) ............................. 146,692
--------
U.S. GOVERNMENT AGENCY OBLIGATIONS -- 25.2%
FEDERAL HOME LOAN MORTGAGE CORPORATION -- 1.5%
Pool # 219329
9.250% ............ 12/01/02 52 55
Pool # E31059
8.500% ............ 05/01/06 66 69
Pool # E00164
6.500% ............ 10/01/07 347 348
Pool # 252804
8.500% ............ 07/01/08 62 67
Pool # E50893
6.500% ............ 09/01/08 828 831
Pool # E60894
7.500% ............ 07/01/10 29 31
PAR VALUE
MATURITY (000) (000)
-------- ----- -----
U.S. GOVERNMENT AGENCY
OBLIGATIONS -- CONTINUED
FEDERAL HOME LOAN MORTGAGE CORPORATION -- CONTINUED
Pool # E61277
7.500% ............ 09/01/10 $ 121 $ 125
Pool # E20206
7.500% ............ 11/01/10 163 169
Pool # E61976
7.000% ............ 11/01/10 4,189 4,272
Pool # E20204
6.500% ............ 11/01/10 566 568
Pool # E64179
7.500% ............ 05/01/11 422 435
Pool # E64198
7.500% ............ 05/01/11 165 171
Pool # E64229
7.500% ............ 05/01/11 10 11
Pool # E64248
7.500% ............ 05/01/11 697 719
Pool # 280417
8.500% ............ 09/01/16 6 7
Pool # 141138
7.500% ............ 05/01/17 426 444
Pool # 294315
8.500% ............ 06/01/17 14 16
Pool # 450074
8.500% ............ 06/01/17 171 184
Pool # 80322
8.000% ............ 07/01/25 2,468 2,574
-------
11,096
-------
FEDERAL NATIONAL MORTGAGE ASSOCIATION -- 16.9%
Pool # 77831
7.500% ............ 12/01/07 127 131
Pool # 31592
7.500% ............ 03/01/08 109 113
Pool # 190506
6.500% ............ 12/01/08 1,003 1,005
Pool # 1125
9.000% ............ 07/01/09 41 44
Pool # 35366
8.500% ............ 11/01/09 73 78
Pool # 316357
7.000% ............ 07/01/10 1,237 1,260
Pool # 210452
9.500% ............ 05/01/18 119 128
Pool # 250060
7.500% ............ 06/01/24 4,689 4,817
Pool # 322344
7.500% ............ 09/01/25 2,772 2,843
Pool # 250433
7.500% ............ 01/01/26 4,831 4,954
See Accompanying Notes
72
<PAGE>
[ARROW GRAPHIC OMITTED]
STATEMENT OF NET ASSETS
ARMADA BOND FUND
MAY 31, 1999
PAR VALUE
MATURITY (000) (000)
-------- ----- -----
U.S. GOVERNMENT AGENCY
OBLIGATIONS -- CONTINUEd
FEDERAL NATIONAL MORTGAGE ASSOCIATION -- CONTINUED
Pool # 346316
7.500% ............ 05/01/26 $ 2,739 $ 2,810
Pool # 407603
7.500% ............ 12/01/27 1,101 1,127
Pool # 413863
7.500% ............ 12/01/27 5,708 5,835
Pool # 420621
7.500% ............ 12/01/27 4,330 4,426
Pool # 417392
6.500% ............ 02/01/28 4,300 4,213
Pool # 435082
6.000% ............ 07/01/28 1,241 1,181
Pool # 440148
6.500% ............ 08/01/28 3,364 3,293
Pool # 446109
7.500% ............ 10/01/28 1,190 1,218
Pool # 452026
6.500% ............ 11/01/28 7,295 7,140
Pool # 448509
6.000% ............ 11/01/28 4,948 4,749
Pool # 252162
6.500% ............ 12/01/28 9,707 9,502
Pool # C00690
6.000% ............ 12/01/28 7,412 7,064
Pool # C18901
6.000% ............ 12/01/28 1,982 1,889
Pool # 252212
6.500% ............ 01/01/29 3,621 3,542
Pool # 484693
6.000% ............ 02/01/29 13,322 12,682
Pool # 484699
6.000% ............ 02/01/29 17,957 17,088
Pool # TBA
7.000% ............ 04/01/29 8,150 8,203
Pool # 494724
6.500% ............ 05/01/29 4,650 4,551
Pool # 492335
6.000% ............ 05/01/29 11,000 10,469
Pool # 441542
7.500% ............ 10/01/29 2,383 2,436
--------
128,791
--------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION -- 6.8%
Pool # 22374
8.000% ............ 03/15/08 85 90
Pool # 9244
8.250% ............ 04/20/17 51 54
Pool # 9279
8.250% ............ 07/20/17 132 139
PAR VALUE
MATURITY (000) (000)
-------- ----- -----
U.S. GOVERNMENT AGENCY
OBLIGATIONS -- CONTINUED
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION -- CONTINUED
Pool # 1136
9.000% ............ 02/20/19 $ 126 $ 135
Pool # 164775
9.500% ............ 06/15/19 148 162
Pool # 308571
8.500% ............ 05/15/21 80 86
Pool # 310780
8.500% ............ 09/15/21 26 28
Pool # 303442
8.500% ............ 11/15/21 11 13
Pool # 306473
8.500% ............ 11/15/21 100 107
Pool # 314586
8.500% ............ 11/15/21 216 231
Pool # 315728
8.500% ............ 11/15/21 202 216
Pool # 319999
8.500% ............ 07/15/22 129 138
Pool # 321786
8.500% ............ 07/15/22 145 155
Pool # 332285
8.500% ............ 07/15/22 142 151
Pool # 321563
8.500% ............ 08/15/22 38 41
Pool # 325399
7.500% ............ 08/15/22 11 12
Pool # 304732
7.500% ............ 12/15/22 760 784
Pool # 337049
7.500% ............ 04/15/23 397 410
Pool # 348665
7.500% ............ 04/15/23 260 269
Pool # 337062
7.500% ............ 05/15/23 267 276
Pool # 331869
7.500% ............ 06/15/23 300 309
Pool # 371437
7.000% ............ 11/15/23 190 192
Pool # 451459
7.500% ............ 09/15/27 10,458 10,714
Pool # 483453
6.500% ............ 09/15/28 5,879 5,742
Pool # 483469
6.500% ............ 09/15/28 5,861 5,724
Pool # 486516
6.500% ............ 09/15/28 8,892 8,684
Pool # 482829
6.500% ............ 11/15/28 8,886 8,679
See Accompanying Notes
73
<PAGE>
[ARROW GRAPHIC OMITTED]
STATEMENT OF NET ASSETS
ARMADA BOND FUND
MAY 31, 1999
PAR VALUE
MATURITY (000) (000)
-------- ----- -----
U.S. GOVERNMENT AGENCY
OBLIGATIONS -- CONTINUED
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION -- CONTINUED
Pool # TBA
6.500% ............ 03/01/29 $ 5,480 $ 5,352
Pool # 498652
6.500% ............ 04/15/29 3,606 3,522
--------
52,415
--------
Total U.S. Government Agency
Obligations
(Cost $197,510) ............................. 192,302
--------
U.S. TREASURY OBLIGATIONS -- 17.1%
U.S. TREASURY NOTES -- 17.1%
U.S. Treasury Notes
5.750%# ........... 11/15/00 39,235 39,466
5.750%# ........... 08/15/03 20,925 20,969
6.125%# ........... 08/15/07 1,035 1,056
6.250%# ........... 08/15/23 49,090 50,072
U.S. Treasury Note TIPS
3.625%# 04/15/28 19,373 18,508
--------
130,071
--------
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $132,312) 130,071
--------
CASH EQUIVALENT -- 0.7%
Goldman Sachs Financial Square Premium
Money Market Fund 5,219 5,219
--------
TOTAL CASH EQUIVALENT
(Cost $5,219) ............................... 5,219
--------
TOTAL INVESTMENTS -- 99.5%
(Cost $772,841) ............................. 758,505
========
OTHER ASSETS AND LIABILITIES,
NET -- 0.5% ................................. 3,737
--------
VALUE
(000)
-----
NET ASSETS:
Portfolio Shares of Class I
(unlimited authorization -- no par value)
based on 76,192,200 outstanding shares of
beneficial interest ......................... $776,499
Portfolio Shares of Class A
(unlimited authorization -- no par value)
based on 280,950 outstanding shares of
beneficial interest ......................... 2,897
Portfolio Shares of Class B
(unlimited authorization -- no par value)
based on 72,734 outstanding shares of
beneficial interest ......................... 757
Accumulated net realized loss on investments . (3,526)
Net unrealized depreciation on investments ... (14,336)
Distributions in excess of net investment income (49)
--------
TOTAL NET ASSETS -- 100.0% ..................... $762,242
========
NET ASSET VALUE, OFFERING
AND REDEMPTION PRICE PER
SHARE -- CLASS I ............................ $9.96
========
NET ASSET VALUE AND REDEMPTION
PRICE PER SHARE -- CLASS A .................. $9.98
========
MAXIMUM OFFERING PRICE PER
SHARE -- CLASS A ($9.98 / 95.25%) ........... $10.48
========
NET ASSET VALUE AND OFFERING
PRICE PER SHARE -- CLASS B .................. $9.97
========
- ----------
# SECURITY FULLY OR PARTIALLY ON LOAN.
(A) VARIABLE RATE SECURITY -- THE RATE REFLECTED ON THE STATEMENT OF NET
ASSETS IS THE RATE IN EFFECT ON MAY 31, 1999.
(B) PRIVATE PLAENT SECURITY
(C) INTEREST ONLY SECURITY
CL -- CLASS
TBA -- TO BE ANNOUNCED
TIPS -- TREASURY INFLATION PROTECTED SECURITY
See Accompanying Notes
74
<PAGE>
[ARROW GRAPHIC OMITTED]
FINANCIAL HIGHLIGHTS
ARMADA BOND FUND
FOR A PORTFOLIO SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
FOR THE YEAR ENDED MAY 31,
----------------------------------------------------------------------------------
1999 1998 1997
---------------------------- ---------------------------- ------------------
CLASS I CLASS A CLASS B CLASS I CLASS A CLASS B CLASS I CLASS A
-------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ..... $ 10.27 $ 10.27 $ 10.26 $ 10.02 $ 10.02 $ 10.35 $ 9.97 $ 9.97
-------- -------- -------- -------- -------- -------- -------- --------
INCOME FROM INVESTMENT OPERATIONS
Net investment income .................. 0.56 0.54 0.47 0.59 0.56 0.47 0.59 0.41
Net gain/(loss) on securities
(realized and unrealized) ............. (0.17) (0.15) (0.15) 0.25 0.25 (0.09) 0.13 0.13
-------- -------- -------- -------- -------- -------- -------- --------
Total from investment operations ...... 0.39 0.39 0.32 0.84 0.81 0.38 0.72 0.54
-------- -------- -------- -------- -------- -------- -------- --------
LESS DISTRIBUTIONS
Dividends from net
investment income ..................... (0.56) (0.54) (0.47) (0.59) (0.56) (0.47) (0.59) (0.41)
Distributions from net realized
capital gains ......................... (0.14) (0.14) (0.14) (0.00) (0.00) (0.00) (0.00) (0.00)
Distributions in excess of
net realized capital gains ............ (0.00) (0.00) (0.00) (0.00) (0.00) (0.00) (0.08) (0.08)
-------- -------- -------- -------- -------- -------- -------- --------
Total distributions ................... (0.70) (0.68) (0.61) (0.59) (0.56) (0.47) (0.67) (0.49)
-------- -------- -------- -------- -------- -------- -------- --------
Net asset value, end of period ........... $ 9.96 $ 9.98 $ 9.97 $ 10.27 $ 10.27 $ 10.26 $ 10.02 $ 10.02
======== ======== ======== ======== ======== ======== ======== ========
TOTAL RETURN ............................. 3.82% 3.77%5 3.06%5 8.55% 8.29%5 8.36%1,5 7.41% 7.22%1,5
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000's) ... $758,713 $ 2,804 $ 725 $132,620 $ 161 $ 1 $ 91,161 $ 23
Ratio of expenses to average
net assets ............................ 0.70% 0.96% 1.66% 0.80% 1.05% 1.74%1 0.83% 1.07%1
Ratio of net investment income
to average net assets ................. 5.44% 5.18% 4.48% 5.72% 5.52% 2.71%1 5.83% 5.64%1
Ratio of expenses to average
net assets before fee waivers ......... 0.70% 0.96% 1.66% 0.80% 1.05% 1.74%1 0.96% 1.07%1
Ratio of net investment income
to average net
assets before fee waivers ............. 5.44% 5.18% 4.48% 5.72% 5.52% 2.71%1 5.71% 5.64%1
Portfolio turnover rate ................ 270% 270% 270% 220% 220% 220% 96% 96%
</TABLE>
<TABLE>
<CAPTION>
FOR THE FOR THE FOR THE
PERIOD ENDED YEAR ENDED PERIOD ENDED
MAY 31, 19963 APRIL 30, 19963 APRIL 30, 19953
------------ -------------- --------------
<S> <C> <C> <C>
Net asset value, beginning of period ..... $ 10.04 $ 10.02 $ 10.00
-------- -------- --------
INCOME FROM INVESTMENT OPERATIONS
Net investment income .................. 0.05 0.64 0.44
Net gain/(loss) on securities
(realized and unrealized) ............. (0.07) 0.07 0.02
-------- -------- --------
Total from investment operations ...... (0.02) 0.71 0.46
-------- -------- --------
LESS DISTRIBUTIONS
Dividends from net
investment income ..................... (0.05) (0.64) (0.44)
Distributions from net realized
capital gains ......................... (0.00) (0.05) (0.00)
Distributions in excess of
net realized capital gains ............ (0.00) (0.00) (0.00)
-------- -------- --------
Total distributions ................... (0.05) (0.69) (0.44)
-------- -------- --------
Net asset value, end of period ........... $ 9.97 $ 10.04 $ 10.02
======== ======== ========
TOTAL RETURN ............................. (0.19)%2,5 7.09%5 4.75%2,5
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000's) ... $ 88,829 $ 89,901 $53,316
Ratio of expenses to average
net assets ............................ 0.85%1 0.85% 0.85%1
Ratio of net investment income
to average net assets ................. 5.88%1 6.20% 6.17%1
Ratio of expenses to average
net assets before fee waivers ......... 1.25%1 1.25% 1.33%1
Ratio of net investment income
to average net
assets before fee waivers ............. 5.48%1 5.80% 5.69%1
Portfolio turnover rate ................ 2% 94% 172%
</TABLE>
1 ANNUALIZED.
2 RETURNS ARE FOR THE PERIOD INDICATED AND HAVE NOT BEEN ANNUALIZED.
3 ACTIVITY FOR THE PERIOD PRESENTED INCLUDES THAT OF A 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.
4 CLASS A COMMENCED OPERATIONS ON SEPTEMBER 11, 1996.
5 TOTAL RETURN EXCLUDES SALES CHARGE.
6 CLASS B SHARES COMMENCED OPERATIONS JANNUARY 6, 1998.
See Accompanying Notes
75
<PAGE>
[ARROW GRAPHIC OMITTED]
STATEMENT OF NET ASSETS
ARMADA INTERMEDIATE BOND FUND
MAY 31, 1999
PAR VALUE
MATURITY (000) (000)
-------- ----- -----
CORPORATE BONDS -- 40.0%
BANKS -- 1.3%
First Maryland Bancorp
7.200% ............ 07/01/07 $2,500 $ 2,572
Huntington National
7.625% ............ 01/15/03 500 516
Northern Trust
7.300% ............ 09/15/06 500 507
Society National
7.250% ............ 06/01/05 500 512
-------
4,107
-------
BUILDING & CONSTRUCTION -- 0.3%
Halliburton
5.625% ............ 12/01/08 1,000 940
-------
CHEMICALS -- 2.9%
Dow
9.350% ............ 03/15/02 1,000 1,022
Lubrizol
5.875% ............ 12/01/08 4,000 3,715
Monsanto (B)
5.375% ............ 12/01/01 4,500 4,408
-------
9,145
-------
COMPUTER SOFTWARE -- 2.6%
Computer Associates
6.250% ............ 04/15/03 6,300 6,111
6.375% ............ 04/15/05 2,220 2,123
-------
8,234
-------
DRUGS & HEALTH CARE -- 0.2%
Amgen
6.210% ............ 08/27/03 500 477
-------
FINANCIAL SERVICES -- 10.2%
Associates
7.250% ............ 09/01/99 500 503
5.750% ............ 11/01/03 2,435 2,371
7.700% ............ 06/10/04 500 524
Chrysler
5.690% ............ 11/15/01 3,200 3,176
Commercial Credit
6.500% ............ 06/01/05 500 489
Ford Motor Credit
6.000% ............ 01/14/03 4,550 4,499
GMAC
7.125% ............ 05/01/03 5,000 5,119
Goldman Sachs
7.250% ............ 10/01/05 500 509
6.650% ............ 05/15/09 5,120 5,056
Ikon Capital
6.730% ............ 06/15/01 5,000 4,944
PAR VALUE
MATURITY (000) (000)
-------- ----- -----
CORPORATE BONDS -- CONTINUED
FINANCIAL SERVICES -- CONTINUED
Prime Property Funding, Series II (B)
6.800% 08/15/02 $5,000 $ 4,993
US Leasing Capital
6.625% ............ 05/15/03 300 302
-------
32,485
-------
FOOD & BEVERAGE -- 1.0%
Dean Foods
6.625% ............ 05/15/09 3,325 3,298
-------
GAS & NATURAL GAS -- 1.3%
Northern Illinois
6.450% ............ 08/01/01 1,500 1,511
Williams Companies
6.200% ............ 08/01/02 2,800 2,776
-------
4,287
-------
INSURANCE -- 1.0%
Aetna Services
6.750% ............ 08/15/01 500 504
Lincoln National
7.625% ............ 07/15/02 300 309
6.500% ............ 03/15/08 2,150 2,104
Saint Paul
6.170% ............ 01/15/01 300 300
-------
3,217
-------
LEASING & RENTING -- 1.0%
Comdisco
6.000% ............ 01/30/02 3,200 3,168
-------
LEISURE & RECREATIONAL PRODUCTS -- 1.0%
Brunswick
6.750% ............ 12/15/06 3,150 3,048
-------
MACHINERY -- 0.6%
Cummins Engine
6.450% ............ 03/01/05 2,100 2,016
-------
MEDICAL & MEDICAL SERVICES -- 0.9%
Guidant
6.150% ............ 02/15/06 3,125 2,980
-------
MISCELLANEOUS CONSUMER SERVICES -- 1.6%
Service Corporate, International
6.375% ............ 10/01/00 5,245 5,225
-------
PRINTING & PUBLISHING -- 1.1%
Scholastic
7.000% ............ 12/15/03 3,600 3,659
-------
See Accompanying Notes
76
<PAGE>
[ARROW GRAPHIC OMITTED]
STATEMENT OF NET ASSETS
ARMADA INTERMEDIATE BOND FUND
MAY 31, 1999
PAR VALUE
MATURITY (000) (000)
-------- ----- -----
CORPORATE BONDS -- CONTINUED
REAL ESTATE INVESTMENT TRUSTS -- 5.6%
AvalonBay Communities
6.580% ............ 02/15/04 $3,200 $ 3,124
EOP Operating
6.625% ............ 02/15/05 3,190 3,094
Mack-Cali Realty
7.000% ............ 03/15/04 5,150 5,086
New Plan Excel Realty Trust
6.875% ............ 10/15/04 3,670 3,647
Simon Property Group
6.750% ............ 02/09/04 1,200 1,166
Simon Property Group (B)
6.625% ............ 06/15/03 1,825 1,792
--------
17,909
--------
RENTAL SERVICES -- 1.5%
Hertz
7.000% ............ 05/01/02 1,000 1,015
Ryder System
6.600% ............ 11/15/05 4,000 3,900
--------
4,915
--------
TAXABLE MUNICIPAL OBLIGATION -- 0.1%
Westview School (C)
6.400% ............ 09/01/05 200 196
--------
TELEPHONE & TELECOMMUNICATION -- 4.8%
AT&T
5.625% ............ 03/15/04 4,085 3,983
Cable & Wireless Communication
6.625% ............ 03/06/05 4,000 3,935
Sprint Capital
5.700% ............ 11/15/03 7,600 7,344
--------
15,262
--------
TRUCKING -- 1.0%
JB Hunt
6.000% ............ 12/12/00 3,200 3,172
--------
TOTAL CORPORATE BONDS
(Cost $130,083) ............................. 127,740
--------
ASSET BACKED SECURITIES -- 18.0%
Amresco Securitized Net Interest Margin,
Series 1999-1A, Cl A
9.100% 09/27/29 4,192 4,140
Arcardia Automobile Receivables Trust,
Series 1997-C, Cl A4
6.375% 01/15/03 7,310 7,400
Case Equipment Loan Trust, Series
1998-C, Cl A4
5.610% 04/15/05 7,950 7,858
PAR VALUE
MATURITY (000) (000)
-------- ----- -----
ASSET BACKED SECURITIES -- CONTINUED
Contimortgage Home Equity Loan Trust,
Series 1998-2, Cl A6
6.360% ............ 11/15/19 $ 3,575 $ 3,540
GE Capital Mortgage,
Series 1997-HE4, Cl A4
6.765% ............ 04/25/15 5,290 5,334
Series 1999-1, Cl A1
6.500% ............ 01/25/29 3,049 2,921
IMC Home Equity Loan Trust, Series
1997-7, Cl A5
6.760% ............ 10/20/20 4,220 4,251
Oakwood Mortgage Investors, Series
1997-D, Cl A3
6.500% ............ 02/15/28 5,000 5,032
Pegasus Aviation Lease Securitization,
Series 1999-1, Cl A1 (B)
6.300% ............ 03/25/29 2,536 2,498
Residential Funding Mortgage Services,
Series 1999-HI1, Cl A3
6.310% ............ 08/25/13 7,800 7,783
The Money Store Home Equity Trust,
Series 1993-C, Cl A3
5.750% ............ 10/15/22 3,980 3,902
UCFC Manufactured Housing Contract,
Series 1997-3, Cl A2
6.360% ............ 02/15/11 2,940 2,974
--------
TOTAL ASSET BACKED SECURITIES
(Cost $57,942) .............................. 57,633
--------
COLLATERALIZED MORTGAGE
OBLIGATIONS -- 9.8%
Chase Commercial Mortgage Securities,
Series 1996-2, Cl A1
6.700% ............ 07/19/03 2,788 2,812
Credit Suisse First Boston Mortgage
Securities, Series 1997-C1, Cl A1C
7.240% ............ 01/01/29 3,000 3,040
FHLMC Series T-8, Cl A5
7.000% ............ 06/15/15 2,970 2,988
Housing Securities, Series 1994-I,
Cl A15
7.500% ............ 03/25/09 3,556 3,619
J.P. Morgan Commercial Mortgage
Finance, Series 1997-C5 (A) (D)
1.550% ............ 09/15/29 45,657 3,442
Merrill Lynch Mortgage Investors,
Series 1996-C1, Cl A1
7.150% ............ 04/25/28 3,803 3,843
Norwest Asset Securities, Series
1998-18, Cl A4
6.250% ............ 08/25/28 6,380 5,955
See Accompanying Notes
77
<PAGE>
[ARROW GRAPHIC OMITTED]
STATEMENT OF NET ASSETS
ARMADA INTERMEDIATE BOND FUND
MAY 31, 1999
PAR VALUE
MATURITY (000) (000)
-------- ----- -----
COLLATERALIZED MORTGAGE
OBLIGATIONS -- CONTINUED
Prudential Home Mortgage Securities,
Series 1996-7, Cl A4
6.750% ............ 06/25/11 $2,500 $ 2,455
Residential Funding Mortgage
Security I Series 1999-S12, Cl A11
6.500% ............ 05/25/29 3,210 3,126
-------
TOTAL COLLATERALIZED MORTGAGE
OBLIGATIONS
(Cost $32,071) .............................. 31,280
-------
U.S. GOVERNMENT AGENCY OBLIGATIONS -- 4.0%
FEDERAL HOME LOAN BANK -- 0.5%
5.860% ............ 08/03/01 95 95
6.565% ............ 01/10/03 500 503
6.135% ............ 12/23/04 1,000 1,002
-------
1,600
-------
FEDERAL HOME LOAN MORTGAGE CORPORATION -- 0.0%
Pool # 16-0015
8.250% ............ 06/01/06 19 21
-------
FEDERAL NATIONAL MORTGAGE ASSOCIATION -- 3.5%
MTN, Callable 04/14/00 @ 100
7.060% ............ 04/24/02 2,000 2,020
7.340% ............ 04/14/04 1,000 1,008
Pool # 412232
6.500% ............ 01/01/28 4,056 3,974
Pool # 437764
6.500% ............ 08/01/28 3,755 3,673
Pool # 453931
6.500% ............ 11/01/28 589 577
-------
11,252
-------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION -- 0.0%
Pool #154047
9.000% ............ 05/15/16 36 40
-------
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS
(Cost $13,069) 12,913
-------
U.S. TREASURY OBLIGATIONS -- 25.1%
U.S. Treasury Notes
5.750%# ........... 11/15/00 14,590 14,676
6.250% ............ 02/15/03 3,000 3,058
5.750%# ........... 08/15/03 34,760 34,833
6.125%# ........... 08/15/07 21,050 21,476
U.S. Treasury Note TIPS
3.625% ............ 01/15/08 5,104 5,011
U.S. Treasury Bond
3.625%# ........... 04/15/28 1,019 974
-------
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $82,156) .............................. 80,028
-------
NUMBER OF VALUE
SHARES (000) (000)
------------ -----
CASH EQUIVALENT -- 2.1%
Fidelity Domestic Money Market
Fund ................ 6,530 $ 6,530
--------
TOTAL CASH EQUIVALENT
(Cost $6,530) ............................... 6,530
--------
TOTAL INVESTMENTS -- 99.0%
(Cost $321,851) ............................. 316,124
========
OTHER ASSETS AND LIABILITIES,
NET -- 1.0% ................................. 3,082
--------
NET ASSETS:
Portfolio Shares of Class I
(unlimited authorization -- no par value)
based on 30,149,270 outstanding shares
of beneficial interest ...................... 318,591
Portfolio Shares of Class A
(unlimited authorization -- no par value)
based on 492,519 outstanding shares
of beneficial interest ...................... 5,457
Portfolio Shares of Class B
(unlimited authorization -- no par value)
based on 68,038 outstanding shares of
beneficial interest ......................... 726
Accumulated net realized gain on investments . 108
Net unrealized depreciation on investments ... (5,727)
Undistributed net investment income .......... 51
--------
TOTAL NET ASSETS -- 100.0% ..................... 319,206
========
NET ASSET VALUE, OFFERING
AND REDEMPTION PRICE PER
SHARE -- CLASS I ............................ $10.39
========
NET ASSET VALUE AND REDEMPTION
PRICE PER SHARE -- CLASS A .................. $10.41
========
MAXIMUM OFFERING PRICE PER
SHARE -- CLASS A ($10.41 / 95.25%) .......... $10.93
========
NET ASSET VALUE AND OFFERING
PRICE PER SHARE -- CLASS B .................. $10.41
========
- -------------------------
# SECURITY FULLY OR PARTIALLY ON LOAN.
(A) VARIABLE RATE SECURITY -- THE RATE REFLECTED ONE STATEMENT OF NET
ASSETS IS THE RATE IN EFFECT ON MAY 31, 1999.
(B) PRIVATE PLACEMENT SECURITY
(C) CERTIFICATE OF PARTICIPATION
(D) INTEREST ONLY SECURITY
CL -- CLASS
FHLMC -- FEDERAL HOME LOAN MORTGAGE CORPORATION
MTN -- MEDIUM TERM NOTE
TIPS -- TREASURY INFLATED PROTECTED SECURITY
See Accompanying Notes
78
<PAGE>
[ARROW GRAPHIC OMITTED]
FINANCIAL HIGHLIGHTS
ARMADA INTERMEDIATE BOND FUND
FOR A PORTFOLIO SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
FOR THE YEAR ENDED MAY 31,
----------------------------------------------------------
1999 1998
---------------------------- ----------------------------
CLASS I CLASS A CLASS B CLASS I CLASS A CLASS B3
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning
of period .............................. $ 10.59 $ 10.63 $ 10.63 $ 10.37 $ 10.42 $ 10.70
-------- -------- -------- -------- -------- --------
INCOME FROM INVESTMENT
OPERATIONS
Net investment income .................. 0.56 0.54 0.45 0.60 0.58 0.20
Net gain/ (loss) on securities
(realized and unrealized) ............. (0.14) (0.16) (0.15) 0.22 0.21 (0.07)
-------- -------- -------- -------- -------- --------
Total from investment
operations .......................... 0.42 0.38 0.30 0.82 0.79 0.13
-------- -------- -------- -------- -------- --------
LESS DISTRIBUTIONS
Dividends from net
investment income ..................... (0.56) (0.54) (0.46) (0.60) (0.58) (0.20)
Distributions from net realized
capital gains ......................... (0.06) (0.06) (0.06) (0.00) (0.00) (0.00)
Distributions in excess of
net realized capital gains ............ (0.00) (0.00) (0.00) (0.00) (0.00) (0.00)
-------- -------- -------- -------- -------- --------
Total distributions .................. (0.62) (0.60) (0.52) (0.60) (0.58) (0.20)
-------- -------- -------- -------- -------- --------
Net asset value, end of period ......... $ 10.39 $ 10.41 $ 10.41 $ 10.59 $ 10.63 $ 10.63
======== ======== ======== ======== ======== ========
TOTAL RETURN 3.98% 3.54%1 2.83% 8.09% 7.71%1 7.39%1,2
RATIOS/SUPPLEMENTAL DATA
Net assets, end of
period (in 000's) ..................... $313,368 $ 5,129 $ 709 $166,710 $ 3,288 $ 2
Ratio of expenses to average
net assets ............................ 0.61% 0.86% 1.57% 0.65% 0.91% 1.60%2
Ratio of net investment income
to average net assets ................. 5.21% 4.96% 4.25% 5.71% 5.48% 3.38%2
Ratio of expenses to average
net assets before
fee waivers ........................... 0.75% 1.00% 1.71% 0.80% 1.06% 1.49%2
Ratio of net investment income
to average net assets
before fee waivers .................... 5.07% 4.82% 4.11% 5.56% 5.33% 3.49%2
Portfolio turnover rate ................ 256% 256% 256% 160% 160% 160%
</TABLE>
<TABLE>
<CAPTION>
FOR THE YEAR ENDED MAY 31,
---------------------------------------------------------------
1997 1996 1995
------------------ ------------------- -------------------
CLASS I CLASS A CLASS I CLASS A CLASS I CLASS A
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning
of period .............................. $ 10.30 $ 10.35 $ 10.54 $ 10.60 $ 10.24 $ 10.30
-------- -------- -------- -------- -------- --------
INCOME FROM INVESTMENT
OPERATIONS
Net investment income .................. 0.60 0.57 0.61 0.59 0.63 0.61
Net gain/ (loss) on securities
(realized and unrealized) ............. 0.07 0.07 (0.22) (0.23) 0.30 0.30
-------- -------- -------- -------- -------- --------
Total from investment
operations .......................... 0.67 0.64 0.39 0.36 0.93 0.91
-------- -------- -------- -------- -------- --------
LESS DISTRIBUTIONS
Dividends from net
investment income ..................... (0.60) (0.57) (0.61) (0.59) (0.63) (0.61)
Distributions from net realized
capital gains ......................... (0.00) (0.00) (0.00) (0.00) (0.00) (0.00)
Distributions in excess of
net realized capital gains ............ (0.00) (0.00) (0.02) (0.02) (0.00) (0.00)
-------- -------- -------- -------- -------- --------
Total distributions .................. (0.60) (0.57) (0.63) (0.61) (0.63) (0.61)
-------- -------- -------- -------- -------- --------
Net asset value, end of period ......... $ 10.37 $ 10.42 $ 10.30 $ 10.35 $ 10.54 $ 10.60
======== ======== ======== ======== ======== ========
TOTAL RETURN 6.63% 6.36%1 3.79% 3.44%1 9.55% 9.26%1
RATIOS/SUPPLEMENTAL DATA
Net assets, end of
period (in 000's) ..................... $121,271 $ 3,720 $111,240 $ 6,216 $ 88,047 $ 5,527
Ratio of expenses to average
net assets ............................ 0.70% 0.96% 0.80% 1.04% 0.85% 1.09%
Ratio of net investment income
to average net assets ................. 5.76% 5.52% 5.78% 5.50% 6.24% 5.95%
Ratio of expenses to average
net assets before
fee waivers ........................... 0.79% 1.05% 0.82% 1.06% 0.86% 1.10%
Ratio of net investment income
to average net assets
before fee waivers .................... 5.66% 5.44% 5.76% 5.48% 6.23% 5.94%
Portfolio turnover rate ................ 217% 217% 45% 45% 42% 42%
</TABLE>
1 TOTAL RETURN EXCLUDES SALES CHARGE.
2 ANNUALIZED.
3 CLASS B SHARES COMMENCED OPERATIONS JANUARY 6, 1998.
See Accompanying Notes
79
<PAGE>
[ARROW GRAPHIC OMITTED]
STATEMENT OF NET ASSET
ARMADA GNMA FUND
MAY 31, 1999
PAR VALUE
MATURITY (000) (000)
-------- ----- -----
U.S. GOVERNMENT AGENCY OBLIGATIONS -- 80.1%
FEDERAL NATIONAL MORTGAGE ASSOCIATION -- 2.7%
Pool # 397814
6.500% ............ 12/01/12 $1,535 $ 1,531
Pool # 408074
6.500% ............ 12/01/12 139 139
Pool # 417392
6.500% ............ 02/01/28 950 931
-------
2,601
-------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION -- 77.4%
Pool # 5147
7.250% ............ 11/15/04 109 112
Pool # 90069
9.000% ............ 05/15/09 53 57
Pool # 90223
9.000% ............ 05/15/09 62 66
Pool # 90250
9.000% ............ 05/15/09 67 72
Pool # 90332
9.000% ............ 05/15/09 31 33
Pool # 90626
9.000% ............ 05/15/09 53 57
Pool # 90923
9.000% ............ 05/15/09 97 104
Pool # 90337
9.000% ............ 06/15/09 46 50
Pool # 419305
7.000% ............ 12/15/10 1,225 1,255
Pool # 780807
7.000% ............ 06/15/11 1,971 2,021
Pool # 162246
9.000% ............ 06/15/16 27 30
Pool # 608
9.000% ............ 08/20/16 867 925
Pool # 200669
8.500% ............ 01/15/17 115 123
Pool # 183426
8.500% ............ 02/15/17 67 72
Pool # 206979
8.500% ............ 02/15/17 46 50
Pool # 203154
8.500% ............ 03/15/17 63 67
Pool # 212306
8.500% ............ 03/15/17 61 65
Pool # 210565
8.000% ............ 03/15/17 12 13
Pool # 202955
8.500% ............ 04/15/17 81 87
Pool # 228869
8.500% ............ 04/15/17 808 861
Pool # 208540
8.000% ............ 04/15/17 56 59
PAR VALUE
MATURITY (000) (000)
-------- ----- -----
U.S. GOVERNMENT AGENCY
OBLIGATIONS -- CONTINUED
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION -- CONTINUED
Pool # 209632
9.000% ............ 05/15/17 $ 49 $ 54
Pool # 216632
8.500% ............ 05/15/17 40 43
Pool # 199649
8.000% ............ 05/15/17 27 29
Pool # 202671
8.000% ............ 05/15/17 18 19
Pool # 220950
9.000% ............ 06/15/17 292 315
Pool # 213458
8.000% ............ 07/15/17 39 42
Pool # 231935
9.000% ............ 08/15/17 118 128
Pool # 780048
8.500% ............ 11/15/17 263 278
Pool # 289354
9.000% ............ 07/15/20 158 170
Pool # 301286
8.500% ............ 04/15/21 160 171
Pool # 302597
8.500% ............ 05/15/21 18 19
Pool # 300698
9.000% ............ 06/15/21 243 262
Pool # 248132
8.500% ............ 06/15/21 112 120
Pool # 312919
8.500% ............ 11/15/21 333 355
Pool # 314292
8.500% ............ 11/15/21 134 143
Pool # 316989
8.500% ............ 12/15/21 82 88
Pool # 303772
8.500% ............ 02/15/22 119 128
Pool # 327085
7.500% ............ 05/15/22 21 22
Pool # 333977
7.500% ............ 09/15/22 43 45
Pool # 334116
7.500% ............ 10/15/22 197 204
Pool # 336541
7.500% ............ 10/15/22 38 40
Pool # 320229
7.500% ............ 12/15/22 171 177
Pool # 340419
8.500% ............ 02/15/23 2,032 2,162
Pool # 340307
7.500% ............ 02/15/23 181 188
Pool # 329620
7.500% ............ 04/15/23 2,351 2,423
See Accompanying Notes
80
<PAGE>
[ARROW GRAPHIC OMITTED]
STATEMENT OF NET ASSET
ARMADA GNMA FUND
MAY 31, 1999
PAR VALUE
MATURITY (000) (000)
-------- ----- -----
U.S. GOVERNMENT AGENCY
OBLIGATIONS -- CONTINUED
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION -- CONTINUED
Pool # 348778
7.500% ............ 04/15/23 $ 245 $ 253
Pool # 352189
7.500% ............ 04/15/23 14 15
Pool # 352217
7.500% ............ 04/15/23 3,998 4,122
Pool # 340792
7.500% ............ 05/15/23 19 20
Pool # 354106
7.500% ............ 05/15/23 31 32
Pool # 338766
7.500% ............ 06/15/23 242 250
Pool # 266878
7.500% ............ 07/15/23 340 350
Pool # 352143
7.500% ............ 07/15/23 18 19
Pool # 352144
7.500% ............ 07/15/23 227 234
Pool # 353185
7.500% ............ 07/15/23 2,941 3,011
Pool # 359600
7.500% ............ 07/15/23 61 63
Pool # 364258
7.500% ............ 07/15/23 107 111
Pool # 352724
7.500% ............ 08/15/23 120 124
Pool # 357235
7.500% ............ 10/15/23 461 475
Pool # 358845
7.500% ............ 10/15/23 147 152
Pool # 362619
7.500% ............ 10/15/23 313 322
Pool # 370019
7.500% ............ 10/15/23 100 103
Pool # 358308
7.500% ............ 01/15/24 243 251
Pool # 374876
7.500% ............ 01/15/24 215 221
Pool # 369696
7.500% ............ 02/15/24 155 160
Pool # 384077
8.000% ............ 04/15/24 498 521
Pool # 385654
8.000% ............ 04/15/24 584 611
Pool # 388741
7.500% ............ 04/15/24 171 177
Pool # 353023
7.500% ............ 06/15/24 207 213
Pool # 371816
7.500% ............ 06/15/24 92 95
PAR VALUE
MATURITY (000) (000)
-------- ----- -----
U.S. GOVERNMENT AGENCY
OBLIGATIONS -- CONTINUED
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION -- CONTINUED
Pool # 780029
9.000% ............ 11/15/24 $1,639 $ 1,771
Pool # 412760
8.750% ............ 06/15/25 229 245
Pool # 428443
7.500% ............ 05/15/26 2,071 2,127
Pool # 412663
8.000% ............ 09/15/26 2,576 2,688
Pool # 780618
8.000% ............ 08/15/27 1,468 1,528
Pool # 451898
7.500% ............ 10/15/27 2,542 2,608
Pool # 427794
7.000% ............ 01/15/28 5,459 5,476
Pool # 478016
6.500% ............ 06/15/28 1,457 1,424
Pool # 433881
6.500% ............ 07/15/28 315 308
Pool # 450934
6.500% ............ 07/15/28 626 612
Pool # 466002
6.500% ............ 07/15/28 689 673
Pool # 476113
6.500% ............ 07/15/28 2,028 1,981
Pool # 480411
6.500% ............ 07/15/28 636 621
Pool # 480412
6.500% ............ 07/15/28 568 555
Pool # 480451
6.500% ............ 07/15/28 2,263 2,210
Pool # 462641
6.000% ............ 07/15/28 2,951 2,801
Pool # 486468
7.000% ............ 08/15/28 3,685 3,696
Pool # 465549
6.500% ............ 08/15/28 1,573 1,537
Pool # 446699
6.000% ............ 08/15/28 1,487 1,411
Pool # 2673
6.500% ............ 11/20/28 3,504 3,407
Pool # 469795
7.000% ............ 12/15/28 2,947 2,954
Pool # 495838
7.000% ............ 01/15/29 2,987 2,994
Pool # 483887
6.000% ............ 01/15/29 2,013 1,911
Pool # 501561
6.500% ............ 03/15/29 2,497 2,439
Pool # 472946
6.500% ............ 05/15/29 2,500 2,441
-------
76,127
-------
See Accompanying Notes
81
<PAGE>
[ARROW GRAPHIC OMITTED]
STATEMENT OF NET ASSET
ARMADA GNMA FUND
MAY 31, 1999
PAR VALUE
MATURITY (000) (000)
-------- ----- -----
U.S. GOVERNMENT AGENCY
OBLIGATIONS -- CONTINUED
TOTAL U.S. GOVERNMENT AGENCY
OBLIGATIONS
(Cost $78,871) .............................. $78,728
-------
ASSET BACKED SECURITIES -- 7.0%
BA Mortgage Securities, Series 1997-2,
Cl A6
7.250% ............ 10/25/27 $ 2,148 2,166
GE Capital Mortgage, Series 1999-1,
Cl A1
6.500% ............ 01/25/29 996 955
Residential Funding Mortgage Securities
I, Series 1992-S31, Cl A5
7.500% ............ 09/25/07 2,390 2,426
The Money Store Home Equity Trust,
Series 1998-A, Cl AV (A)
5.100% ............ 06/15/29 1,349 1,348
-------
TOTAL ASSET BACKED SECURITIES
(Cost $6,961) ............................... 6,895
-------
COLLATERALIZED MORTGAGE
OBLIGATIONS -- 4.8%
Credit Suisse First Boston Mortgage
Securities, Series 1997-C1, Cl A1C
7.240% ............ 01/01/29 1,100 1,115
J.P. Morgan Commercial Mortgage
Finance, Series 1997-C5 (A) (B)
1.550% ............ 09/15/29 25,257 1,904
Morgan Stanley Capital I, Series
1999-RM1, Cl A2
6.710% ............ 12/15/31 1,000 999
Residential Funding Mortgage
Securities I, Series 1998-S13,
Cl A21
6.750% ............ 06/25/28 730 711
-------
TOTAL COLLATERALIZED MORTGAGE
OBLIGATIONS
(Cost $5,246) ............................... 4,729
-------
U.S. TREASURY OBLIGATION -- 4.1%
U.S. Treasury Note
5.750% ............ 08/15/03 4,000 4,008
-------
TOTAL U.S. TREASURY OBLIGATION
(Cost $4,048) ............................... 4,008
-------
[ARROW GRAPHIC OMITTED]
STATEMENT OF NET ASSETS
ARMADA GNMA FUND
MAY 31, 1999
PAR VALUE
MATURITY (000) (000)
-------- ----- -----
CASH EQUIVALENT -- 3.5%
Goldman Sachs Financial Square
Government Money Market Fund 3,472 $ 3,472
-------
TOTAL CASH EQUIVALENT
(Cost $3,472) ............................... 3,472
-------
TOTAL INVESTMENTS -- 99.5%
(Cost $98,598) .............................. $97,832
=======
OTHER ASSETS AND LIABILITIES,
NET -- 0.5% ................................. 473
-------
NET ASSETS:
Portfolio Shares of Class I (unlimited
authorization -- no par value) based
on 9,585,582 outstanding shares of
beneficial interest ........................ 97,537
Portfolio Shares of Class A (unlimited
authorization -- no par value) based
on 148,223 outstanding shares of
beneficial interest ........................ 1,530
Accumulated net realized loss on investments . (5)
Net unrealized depreciation on investments ... (766)
Undistributed net investment income .......... 9
-------
TOTAL NET ASSETS -- 100.0% ..................... $98,305
=======
NET ASSET VALUE, OFFERING
AND REDEMPTION PRICE PER
SHARE -- CLASS I ............................ $10.10
=======
NET ASSET VALUE AND REDEMPTION
PRICE PER SHARE -- CLASS A .................. $10.10
=======
MAXIMUM OFFERING PRICE PER
SHARE -- CLASS A ($10.10 / 95.25%) .......... $10.60
=======
- --------
CL -- CLASS
(A) VARIABLE RATE SECURITY -- THE RATE REFLECTED ON THE STATEMENT OF NET
ASSETS IS THE RATE IN EFFECT ON MAY 31, 1999.
(B) INTEREST ONLY SECURITY
See Accompanying Notes
82
<PAGE>
[ARROW GRAPHIC OMITTED]
FINANCIAL HIGHLIGHTS
ARMADA GNMA FUND
FOR A PORTFOLIO SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
FOR THE YEAR ENDED MAY 31,
----------------------------------------------------------
1999 1998 1997
----------------------------------------------------------
CLASS I CLASS A CLASS I CLASS A CLASS I3 CLASS A4
------------------ -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ......... $ 10.36 $ 10.36 $ 10.15 $ 10.15 $ 10.03 $ 10.02
-------- -------- -------- -------- -------- --------
INCOME FROM INVESTMENT OPERATIONS
Net investment income ...................... 0.61 0.59 0.61 0.58 0.65 0.45
Net gain/(loss) on securities
(realized and unrealized) ................. (0.20) (0.20) 0.31 0.31 0.22 0.23
-------- -------- -------- -------- -------- --------
Total from investment operations .......... 0.41 0.39 0.92 0.89 0.87 0.68
-------- -------- -------- -------- -------- --------
LESS DISTRIBUTIONS
Dividends from net investment income ....... (0.60) (0.58) (0.61) (0.58) (0.65) (0.45)
Dividends from net realized capital gains .. (0.07) (0.07) (0.10) (0.10) (0.01) (0.01)
Distributions in excess of net
realized capital gains .................... (0.00) (0.00) (0.00) (0.00) (0.09) (0.09)
-------- -------- -------- -------- -------- --------
Total distributions ....................... (0.67) (0.65) (0.71) (0.68) (0.75) (0.55)
-------- -------- -------- -------- -------- --------
Net asset value, end of period ............... $ 10.10 $ 10.10 $ 10.36 $10.36 $ 10.15 $10.15
======== ======== ======== ======== ======== ========
TOTAL RETURN ................................. 4.02% 3.75%5 9.17% 8.90%5 9.03% 8.83%1,5
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000's) ....... $ 96,808 $ 1,497 $83,624 $ 549 $64,501 $ 128
Ratio of expenses to average net assets .... 0.78% 1.03% 0.84% 1.09% 0.86% 1.12%1
Ratio of net investment income to average
net assets ................................ 5.92% 5.67% 5.83% 5.54% 6.45% 6.17%1
Ratio of expenses to average net assets
before fee waivers ........................ 0.78% 1.03% 0.84% 1.09% 1.01% 1.12%1
Ratio of net investment income to average
net assets before fee waivers ............. 5.9% 5.67% 5.83% 5.54% 6.30% 6.17%1
Portfolio turnover rate .................... 85% 85% 291% 291% 57% 57%
</TABLE>
<TABLE>
<CAPTION>
FOR THE FOR THE FOR THE
PERIOD ENDED YEAR ENDED PERIOD ENDED
MAY 31, 19963 APRIL 30, 19963 APRIL 30, 19953
------------ -------------- --------------
<S> <C> <C> <C>
Net asset value, beginning of period ......... $ 10.12 $ 10.16 $ 10.00
-------- -------- --------
INCOME FROM INVESTMENT OPERATIONS
Net investment income ...................... 0.05 0.66 0.48
Net gain/(loss) on securities
(realized and unrealized) ................. (0.09) 0.14 0.16
-------- -------- --------
Total from investment operations .......... (0.04) 0.80 0.64
-------- -------- --------
LESS DISTRIBUTIONS
Dividends from net investment income ....... (0.05) (0.66) (0.48)
Dividends from net realized capital gains .. (0.00) (0.18) (0.00)
Distributions in excess of net
realized capital gains .................... (0.00) (0.00) (0.00)
-------- -------- --------
Total distributions ....................... (0.05) (0.84) (0.48)
-------- -------- --------
Net asset value, end of period ............... $ 10.03 $ 10.12 $ 10.16
======== ======== ========
TOTAL RETURN ................................. (0.35)%2,5 7.97%5 6.61%2,5
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000's) ....... $ 60,532 $ 62,161 $ 42,212
Ratio of expenses to average net assets .... 0.85%1 0.85% 0.85%1
Ratio of net investment income to average
net assets ................................ 6.33%1 6.30% 6.68%1
Ratio of expenses to average net assets
before fee waivers ........................ 1.28%1 1.29% 1.40%1
Ratio of net investment income to average
net assets before fee waivers ............. 5.90%1 5.86% 6.13%1
Portfolio turnover rate .................... 1% 149% 226%
</TABLE>
1 ANNUALIZED.
2 RETURNS ARE FOR THE PERIOD INDICATED AND HAVE NOT BEEN ANNUALIZED.
3 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.
4 CLASS A COMMENCED OPERATIONS ON SEPTEMBER 11, 1996.
5 TOTAL RETURN EXCLUDES SALES CHARGE.
See Accompanying Notes
83
<PAGE>
[ARROW GRAPHIC OMITTED]
STATEMENT OF NET ASSETS
ARMADA ENHANCED INCOME FUND
MAY 31, 1999
PAR VALUE
MATURITY (000) (000)
-------- ----- -----
CORPORATE BONDS -- 34.1%
BANKS -- 2.0%
First Union
8.125% ............ 06/24/02 $1,400 $ 1,467
-------
BEAUTY PRODUCTS -- 2.4%
Dial del Note
6.625% ............ 06/15/03 1,800 1,782
-------
COMPUTER SOFTWARE -- 1.4%
Computer Associates
6.250% ............ 04/15/03 1,025 994
-------
CONSULTING SERVICES -- 1.5%
CSC Enterprises
6.500% ............ 11/15/01 1,100 1,104
-------
DEFENSE -- 1.5%
Raytheon
5.950% ............ 03/15/01 1,100 1,097
-------
ENVIRONMENTAL SERVICES -- 2.3%
Browning Ferris
6.080% ............ 01/18/00 1,700 1,685
-------
EURO BOND -- 2.5%
Hydro Quebec (A)
5.375% ............ 07/31/02 1,850 1,850
-------
FINANCIAL SERVICES -- 4.1%
Case Credit
6.120% ............ 08/01/01 1,000 996
Ford Motor Credit
6.550% ............ 09/10/02 1,000 1,008
Prime Property Funding, Series II (B)
6.800% ............ 08/15/02 1,000 969
-------
2,973
-------
GAS & NATURAL GAS -- 1.6%
Enserch
7.000% ............ 08/15/99 1,150 1,153
-------
INDUSTRIAL -- 1.1%
Monsanto-Esop
7.090% ............ 12/15/00 780 788
-------
LEASING & RENTING -- 4.2%
Comdisco
6.000% ............ 01/30/02 2,000 1,978
Trans Ocean Container,
Callable 07/1/99 @ 106.15
12.250% ............ 07/01/04 1,000 1,090
-------
3,068
-------
PAPER & PAPER PRODUCTS -- 2.2%
Champion International
9.700% ............ 05/01/01 1,500 1,583
-------
REAL ESTATE -- 1.4%
Weingarten Realty
6.000% ............ 08/10/01 1,000 996
-------
PAR VALUE
MATURITY (000) (000)
-------- ----- -----
CORPORATE BONDS --CONTINUED
RETAIL STORES -- 1.4%
Sears, MTN
9.750% ............ 03/21/00 $1,000 $ 1,031
-------
TELEPHONE & TELECOMMUNICATION -- 2.1%
Cable & Wireless
6.375% ............ 03/06/03 1,575 1,555
-------
TRUCKING -- 2.4%
JB Hunt
6.000% ............ 12/12/00 1,750 1,735
-------
TOTAL CORPORATE BONDS
(Cost $25,066) .............................. 24,861
-------
ASSET BACKED SECURITIES -- 33.1%
AESOP Funding, Series 1997-1, Cl A1
6.220% ............ 10/20/01 915 916
Capital Equipment, Series 1997-1,
Cl A4
6.190% ............ 02/15/02 2,855 2,871
Citibank Credit Card Master Trust,
Series 1996-1, Cl A
6.300% ............ 02/07/03 1,260 1,144
Copelco Capital Funding, Series
1997-A, Cl A4
6.470% ............ 04/20/05 2,490 2,503
Discover Card, Series 1998-4A, Cl A
5.750% ............ 10/16/03 1,060 1,045
Empire Funding, Series 1999-1, Cl A3
6.440% 04/25/13 1,500 1,494
GE Capital Mortgage, Series 1997-HE4,
Cl A4
6.765% ............ 04/25/15 1,240 1,250
Metlife Capital Equipment Loan Trust,
Series 1997-A, Cl A
6.850% ............ 05/20/08 910 924
Navistar Series 1997-B, Cl A
6.300% ............ 08/15/04 4,060 4,086
Pegasus Aviation Lease Securitization,
Series 1999-1, Cl A1 (B)
6.300% ............ 03/25/29 1,463 1,441
PNC Student Loan Trust I, Series
1997-2, Cl A4
6.446% ............ 01/25/02 915 921
Sears Credit Account Master Trust, Series
1996-4, Cl A
6.450% ............ 10/16/06 790 788
Westo, Series 1999-A, Cl A4
5.700% ............ 11/20/03 2,750 2,741
World Omni Automobile Lease Securitization
Trust, Series 1997-A, Cl A3
6.850% ............ 06/25/03 594 604
See Accompanying Notes
84
<PAGE>
[ARROW GRAPHIC OMITTED]
STATEMENT OF NET ASSETS
ARMADA ENHANCED INCOME FUND
MAY 31, 1999
PAR VALUE
MATURITY (000) (000)
-------- ----- -----
ASSET BACKED SECURITIES -- CONTINUED
World Omni Automobile Lease Securitization Trust,
Series 1997, Cl A3 (B)
5.962% ............ 08/14/01 $1,410 $ 1,405
-------
TOTAL ASSET BACKED SECURITIES
(Cost $24,156) .............................. 24,133
-------
COLLATERALIZED MORTGAGE OBLIGATIONS -- 9.5%
Evans Withycombe, Series 1, Cl A
7.980% ............ 08/01/01 1,395 1,457
Federal National Mortgage Association
Series 1997-26, Cl E
5.000% ............ 11/18/20 1,696 1,678
Series 1999-W4, Cl A
6.250% ............ 10/25/08 2,494 2,485
Merrill Lynch Mortgage Investors,
Series 1996-C1, Cl A1
7.150% ............ 04/25/28 1,288 1,302
Series 1998-GN1, Cl A1
7.110% ............ 08/25/27 23 24
-------
TOTAL COLLATERALIZED MORTGAGE
OBLIGATIONS
(Cost $6,951) ............................... 6,946
-------
MORTGAGE-BACKED SECURITIES -- 10.0%
Champion Home Equity Loan, Series 1998-1,
Cl A2
8.120% ............ 09/25/01 6,000 1,000
Countrywide Home Loans, Series 1997-8,
Cl A2
6.750% ............ 01/25/28 2,910 2,912
Oakwood Mortgage,Series 1997-B,
Cl B
6.950% ............ 08/15/27 2,000 2,013
Residential Asset Securitization Trust,
Series 1997-A1, Cl A1
7.000% ............ 03/25/27 1,339 1,341
-------
TOTAL MORTGAGE-BACKED SECURITIES
(Cost $7,366) ............................... 7,266
-------
U.S. GOVERNMENT AGENCY OBLIGATIONS -- 2.7%
Federal National Mortgage Association
Pool #426798 7.500% ..... 07/01/08 1,643 1,692
Small Business Administration
Pool #503115 8.975% ..... 04/25/09 272 289
-------
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS
(Cost $1,983) ............................... 1,981
-------
PAR VALUE
MATURITY (000) (000)
-------- ----- -----
U.S. TREASURY OBLIGATIONS -- 9.1%
U.S. TREASURY NOTES -- 9.1%
5.750%# 11/15/00 $2,560 $ 2,575
5.750%# 08/15/03 4,000 4,009
-------
6,584
-------
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $6,715) ............................... 6,584
-------
CASH EQUIVALENT -- 2.1%
Fidelity Domestic Money Market
Fund ................ 1,519 1,519
-------
TOTAL CASH EQUIVALENT
(Cost $1,519) ............................... 1,519
-------
TOTAL INVESTMENTS -- 100.6%
(Cost $73,756) .............................. $73,290
=======
OTHER ASSETS AND LIABILITIES,
NET -- (0.6%) ............................... (449)
-------
NET ASSETS:
Portfolio Shares of Class I
(unlimited authorization no par value)
based on 7,261,308 outstanding shares
of beneficial interest 72,877
Portfolio Shares of Class A
(unlimited authorization no par value)
based on 55,120 outstanding shares of
beneficial interest 563
Accumulated net realized loss on investments (118)
Net unrealized depreciation on investments (466)
Distributions in excess of net investment income (15)
-------
TOTAL NET ASSETS -- 100.0% ..................... $72,841
=======
NET ASSET VALUE, OFFERING
AND REDEMPTION PRICE PER
SHARE -- CLASS I ............................ $9.96
=======
NET ASSET VALUE AND REDEMPTION
PRICE PER SHARE -- CLASS A .................. $9.99
=======
MAXIMUM OFFERING PRICE PER
SHARE -- CLASS A ($9.99 / 97.25%) ........... $10.27
=======
- ----------
# SECURITY FULLY OR PARTIALLY ON LOAN.
(A) VARIABLE RATE SECURITY -- THE RATE REFLECTED ON THE STATEMENT OF NET
ASSETS IS THE RATE IN EFFECT ON MAY 31, 1999.
(B) PRIVATE PLACEMENT SECURITY
CL -- CLASS
MTN -- MEDIUM TERM NOTE
See Accompanying Notes
85
<PAGE>
[ARROW GRAPHIC OMITTED]
FINANCIAL HIGHLIGHTS
ARMADA ENHANCED INCOME FUND
FOR A PORTFOLIO SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
FOR THE YEAR ENDED MAY 31,
------------------------------------------------------------------------------
1999 1998 1997 1996
------------------ ------------------ ------------------ ------------------
CLASS I CLASS A CLASS I CLASS A CLASS I CLASS A CLASS I CLASS A
-------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ..... $ 10.06 $ 10.08 $ 9.99 $ 10.00 $ 10.01 $ 10.02 $ 10.16 $ 10.18
-------- -------- -------- -------- -------- -------- -------- --------
INCOME FROM INVESTMENT OPERATIONS
Net investment income .................. 0.56 0.56 0.57 0.57 0.58 0.57 0.58 0.56
Net gain/ (loss) on securities
(realized and unrealized) ............ (0.05) (0.05) 0.08 0.09 0.01 0.01 (0.05) (0.05)
-------- -------- -------- -------- -------- -------- -------- --------
Total from investment operations ..... 0.51 0.51 0.65 0.66 0.59 0.58 0.53 0.51
-------- -------- -------- -------- -------- -------- -------- --------
LESS DISTRIBUTIONS
Dividends from net investment income ... (0.56) (0.55) (0.57) (0.57) (0.58) (0.57) (0.58) (0.56)
Dividends in excess of net
investment income .................... 0.00 0.00 (0.00) (0.00) (0.00) (0.00) (0.10) (0.11)
Distributions from net realized
capital gains ........................ (0.05) (0.05) (0.01) (0.01) (0.03) (0.03) (0.00) (0.00)
-------- -------- -------- -------- -------- -------- -------- --------
Total distributions .................. (0.61) (0.60) (0.58) (0.58) (0.61) (0.60) (0.68) (0.67)
-------- -------- -------- -------- -------- -------- -------- --------
Net asset value, end of period ........... $ 9.96 $ 9.99 $ 10.06 $ 10.08 $ 9.99 $ 10.00 $ 10.01 $ 10.02
======== ======== ======== ======== ======== ======== ======== ========
TOTAL RETURN ............................. 5.14% 4.94%3 6.68% 6.68%3 6.02% 5.91%3 5.36% 5.13%3
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000's) ... $ 72,291 $ 550 $ 71,888 $ 559 $ 61,031 $ 2,051 $ 66,918 $ 1,718
Ratio of expenses to average net assets 0.43% 0.53% 0.33% 0.41% 0.21% 0.31% 0.23% 0.33%
Ratio of net investment income to
average net assets ................... 5.49% 5.39% 5.69% 5.65% 5.74% 5.63% 5.72% 5.55%
Ratio of expenses to average net assets
before fee waivers ................... 0.65% 0.75% 0.69% 0.80% 0.66% 0.75% 0.70% 0.80%
Ratio of net investment income to
average net assets before fee waivers 5.27% 5.17% 5.33% 5.26% 5.29% 5.18% 5.25% 5.08%
Portfolio turnover rate ................ 190% 190% 135% 135% 225% 225% 98% 98%
</TABLE>
<TABLE>
<CAPTION>
FOR THE PERIOD
ENDED MAY 31, 1995
---------------------
CLASS I1 CLASS A1
-------- --------
<S> <C> <C>
Net asset value, beginning of period ..... $ 10.00 $ 10.10
-------- --------
INCOME FROM INVESTMENT OPERATIONS
Net investment income .................. 0.515 0.435
Net gain/ (loss) on securities
(realized and unrealized) ............ 0.06 0.06
-------- --------
Total from investment operations ..... 0.57 0.49
-------- --------
LESS DISTRIBUTIONS
Dividends from net investment income ... (0.41) (0.41)
Dividends in excess of net
investment income .................... (0.00) (0.00)
Distributions from net realized
capital gains ........................ (0.00) (0.00)
-------- --------
Total distributions .................. (0.41) (0.41)
-------- --------
Net asset value, end of period ........... $ 10.16 $ 10.18
======== ========
TOTAL RETURN ............................. 6.54%2,4 6.84%2,3,4
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000's) ... $ 60,467 $ 2,547
Ratio of expenses to average net assets 0.21%2 0.32%2
Ratio of net investment income to
average net assets ................... 5.70%2 5.89%2
Ratio of expenses to average net assets
before fee waivers ................... 0.71%2 0.79%2
Ratio of net investment income to
average net assets before fee waivers 5.20%2 5.42%2
Portfolio turnover rate ................ 36% 36%
</TABLE>
1 CLASS I AND CLASS A COMMENCED OPERATIONS ON JULY 7, 1994 AND
SEPTEMBER 9, 1994, RESPECTIVELY.
2 ANNUALIZED.
3 TOTAL RETURN EXCLUDES SALES CHARGE.
4 TOTAL RETURNS HAVE BEEN ANNUALIZED BASED UPON THE PERIOD FROM EACH CLASS'
COMMENCEMENT DATE THROUGH MAY 31, 1995. GROSS TOTAL RETURNS OF THE CLASS I
AND CLASS A FOR THE PERIOD WERE 5.87% AND 4.92%, RESPECTIVELY.
5 CALCULATION BASED UPON AVERAGE SHARES OUTSTANDING.
See Accompanying Notes
86
<PAGE>
[ARROW GRAPHIC OMITTED]
STATEMENT OF NET ASSETS
ARMADA OHIO TAX EXEMPT FUND
MAY 31, 1999
PAR VALUE
MATURITY (000) (000)
-------- ----- -----
MUNICIPAL BONDS -- 97.9%
OHIO -- 97.5%
Akron (GO)
10.500% ............ 12/01/99 $ 100 $ 104
6.000% ............ 12/01/12 1,000 1,101
Akron, Economic Development
(RB) (MBIA)
5.750% ............ 12/01/09 1,680 1,835
6.000% ............ 12/01/12 935 1,045
Akron, Sewer System (RB)
(MBIA)
5.650% ............ 12/01/08 560 605
(FGIC)
5.500% ............ 12/01/11 1,035 1,106
Akron Waterworks (RB)
(FGIC)
5.150% ............ 03/01/01 500 512
(MBIA)
4.900% ............ 03/01/08 1,500 1,541
Allen County (GO) (AMBAC)
4.950% ............ 12/01/04 500 520
Ashland City School District (GO)
4.950% ............ 12/01/07 345 358
(AMBAC)
5.000% ............ 12/01/08 250 260
5.100% ............ 12/01/09 245 254
Avon Local School District (GO)
(AMBAC)
5.800% ............ 12/01/12 1,000 1,077
Bay Village City School District,
Prerefunded 12/01/00 @ 102 (GO)
7.350% ............ 12/01/11 200 215
Beavercreek Local School District
(GO) (FGIA)
5.250% ............ 12/01/07 1,130 1,195
Berea (GO)
7.000% ............ 12/01/99 400 408
Big Walnut Local School District
(AMBAC)
6.900% ............ 06/01/00 235 243
7.000% ............ 06/01/01 220 234
Bowling Green City School District,
Prerefunded 12/01/99 @ 102 (GO)
7.000% ............ 12/01/02 260 270
Brown County (GO) (AMBAC)
5.200% ............ 12/01/04 455 479
Butler County, Sewer System (RB)
(AMBAC) Pre-Refunded 12/01/02 @101
6.000% ............ 12/01/04 500 539
PAR VALUE
MATURITY (000) (000)
-------- ----- -----
MUNICIPAL BONDS -- CONTINUED
Butler County, Sewer System (RB) (AMBAC)
4.600% ............ 12/01/09 $1,540 $1,542
4.600% ............ 12/01/10 1,520 1,507
Butler County, Transportation (RB) (FSA)
5.500% ............ 04/01/09 1,150 1,225
Celina City School District (GO) (FGIC)
5.250% ............ 12/01/20 1,750 1,750
Centerville (GO) (MBIA)
5.650% ............ 12/01/18 500 528
Centerville City School District
(GO) (FGIC)
5.500% ............ 12/01/07 500 537
Cincinnati (GO)
5.375% ............ 12/01/99 250 253
Clermont County, Hospital Facility,
Mercy Healthcare, Prerefunded
09/01/99 @ 102 (RB) (AMBAC)
7.500% ............ 09/01/19 770 793
Clermont County, Waterworks (RB)
(AMBAC)
5.300% ............ 12/01/05 500 531
Cleveland Heights (GO)
5.400% ............ 12/01/00 900 926
Cleveland Ohio, Cap Appreciation (RB) (B)
0.000% ............ 12/01/07 810 554
0.000% ............ 12/01/09 825 505
0.000% ............ 12/01/10 815 470
0.000% ............ 12/01/13 815 358
0.000% ............ 12/01/18 820 269
0.000% ............ 12/01/19 815 253
Cleveland, Regional Sewer District Water,
Prerefunded 05/15/04 @ 100 (RB)
6.750% ............ 04/01/07 600 670
Cleveland, Waterworks, Prerefunded
01/01/02 @ 102 (RB) (AMBAC) Cl A
6.500% ............ 01/01/21 1,000 1,082
(MBIA)
5.400% ............ 01/01/06 500 531
Columbus (GO)
5.250% ............ 05/01/02 1,000 1,040
5.300% ............ 05/01/03 1,000 1,050
5.250% ............ 05/15/08 1,000 1,061
Columbus City, School District,
Prerefunded 12/01/99 @ 102 (GO)
(AMBAC)
6.950% ............ 12/01/02 100 104
7.050% ............ 12/01/08 500 519
See Accompanying Notes
87
<PAGE>
[ARROW GRAPHIC OMITTED]
STATEMENT OF NET ASSETS
ARMADA OHIO TAX EXEMPT FUND
MAY 31, 1999
PAR VALUE
MATURITY (000) (000)
-------- ----- -----
MUNICIPAL BONDS -- CONTINUED
Columbus City, School District,
Prerefunded 12/01/00 @ 102 (GO)
(FGIC)
7.000% ............ 12/01/11 $ 100 $ 107
Prerefunded 12/01/02 @ 102 (GO)
(FGIC)
6.650% ............ 12/01/12 900 998
Columbus, Sewer (RB)
6.200% ............ 06/01/04 1,500 1,620
Columbus, Water System (RB)
6.000% ............ 11/01/02 330 353
Columbus, Water System (GO)
5.800% ............ 02/15/01 500 517
Cuyahoga County (GO)
5.650% ............ 05/15/18 600 637
Cuyahoga County, Hospital, Cleveland
Clinic Foundation (RB)
6.000% ............ 11/15/03 890 961
6.125% ............ 11/15/04 840 906
Cuyahoga County, Prerefunded
10/01/99 @ 102 (GO)
6.900% ............ 10/01/03 600 619
10/01/01 @ 102 (GO)
7.000% ............ 10/01/13 100 109
Cuyahoga County, University Hospital
System Health Project (RB) Series B
6.000% ............ 01/15/03 400 427
(MBIA) Series A
6.000% ............ 01/15/06 1,000 1,091
5.250% ............ 01/15/08 2,000 2,102
Cuyahoga Falls, Callable 12/01/07
@ 102 (GO)
5.250% ............ 12/01/17 2,500 2,528
Dayton, Airport (RB) (AMBAC)
5.400% ............ 12/01/06 1,000 1,067
5.150% ............ 12/01/07 1,000 1,052
Delaware City School District (GO) (FGIC)
5.250% ............ 12/01/06 770 815
Delaware County (GO)
5.250% ............ 12/01/06 500 529
5.450% ............ 12/01/08 250 266
Delaware (GO)
6.125% ............ 04/01/00 500 512
Delphos, Sewer System Management,
Prerefunded 09/01/00 @ 102 (RB) (FSA)
7.200% ............ 09/01/10 200 213
Euclid, Prerefunded 12/01/99 @ 102 (GO)
7.375% ............ 12/01/09 450 468
PAR VALUE
MATURITY (000) (000)
-------- ----- -----
MUNICIPAL BONDS -- CONTINUED
Forest Hills Local School District (GO)
(MBIA)
6.000% ............ 12/01/08 $1,210 $1,349
6.000% ............ 12/01/09 830 925
Franklin County (GO)
6.500% ............ 09/01/99 100 101
5.050% ............ 12/01/05 2,000 2,102
5.450% ............ 12/01/09 1,000 1,059
Franklin County, Prerefunded 12/01/01
@ 102 (GO)
6.000% ............ 12/01/03 500 535
6.300% ............ 12/01/09 250 269
Franklin County, Convention Facilities
Authority Tax & Lease (BAN) (MBIA)
6.700% ............ 12/01/99 500 509
Franklin County, Hospital,
Children's Hospital (RB)
6.000% ............ 11/01/06 1,035 1,136
Doctors Healthcare (RB)
4.750% ............ 12/01/03 2,175 2,148
Holy Cross Health System (RB)
5.875% ............ 06/01/21 2,000 2,125
Riverside United Hospital Project,
Prerefunded 05/15/00 @ 102 (MBIA)
7.125% ............ 05/15/05 1,000 1,056
7.600% ............ 05/15/20 1,500 1,589
US Health Group (RB) (A) (C)
4.500% ............ 12/01/20 1,000 1,008
Granville Exempted Village School
District (ETM) (GO) (AMBAC)
4.650% ............ 12/01/05 500 512
Greater Cleveland Regional
Transportation Authority (RB) (FGIC)
4.750% ............ 12/01/16 2,850 2,732
Greene County, Water Works Systems
(RB) (AMBAC)
5.300% ............ 12/01/05 500 531
Hamilton County (GO)
5.750% ............ 12/01/01 250 262
5.500% ............ 12/01/07 240 259
5.000% ............ 12/01/08 675 692
5.125% ............ 12/01/08 1,000 1,050
5.100% ............ 12/01/11 1,025 1,043
5.000% ............ 12/01/20 2,060 2,008
Hamilton County, Childrens Hospital
Facility (RB) (MBIA)
5.375% 05/15/13 1,100 1,147
See Accompanying Notes
88
<PAGE>
[ARROW GRAPHIC OMITTED]
STATEMENT OF NET ASSETS
ARMADA OHIO TAX EXEMPT FUND
MAY 31, 1999
PAR VALUE
MATURITY (000) (000)
-------- ----- -----
MUNICIPAL BONDS -- CONTINUED
Hamilton County, Sewer System (RB)
6.200% ............ 12/01/00 $1,000 $1,039
6.300% ............ 12/01/01 65 69
(FGIC)
5.300% ............ 12/01/06 1,000 1,061
5.400% ............ 12/01/08 1,000 1,069
5.500% ............ 12/01/10 1,240 1,331
5.000% ............ 12/01/17 1,000 986
(ETM)
6.300% ............ 12/01/01 35 37
Hamilton (GO) (FSA)
5.050% ............ 11/01/21 1,630 1,579
Hancock County (GO)
5.750% ............ 12/01/16 500 541
Hilliard City School District (GO)
5.300% ............ 12/01/99 250 252
Prerefunded
12/01/01 @ 102 (GO)
5.900% ............ 12/01/04 1,000 1,067
(FGIC)
6.150% ............ 12/01/01 625 660
Hudson Local School District (GO)
(FGIC)
5.000% ............ 12/15/02 500 518
Kenston Local School District (GO)
5.550% ............ 12/01/03 500 531
Kent (GO)
5.200% ............ 12/01/18 500 501
Kent State University (RB) (AMBAC)
6.150% 05/01/04 250 270
Kettering, Prerefunded 12/01/00
@ 102 (GO)
7.200% ............ 12/01/02 480 515
Kettering (GO)
5.150% ............ 12/01/05 550 579
Lakewood, Prerefunded 12/01/02
@ 102 (GO)
6.500% ............ 12/01/12 1,500 1,652
Lakewood (GO)
5.000% ............ 12/01/08 1,055 1,096
4.900% ............ 12/01/11 1,070 1,078
Lakota Local School District,
Prerefunded 12/01/00 @ 101 (GO)
7.000% ............ 12/01/03 200 212
(AMBAC)
5.700% ............ 12/01/05 250 271
(FGIC)
5.000% ............ 12/01/12 1,000 1,019
PAR VALUE
MATURITY (000) (000)
-------- ----- -----
MUNICIPAL BONDS -- CONTINUED
Licking County (GO) (FGIC)
7.000% ............ 12/01/02 $ 100 $ 110
5.750% ............ 12/01/15 550 600
5.750% ............ 12/01/16 400 434
Loveland City School District (GO)
6.000% ............ 12/01/00 250 259
Lucas County, Hospital, Mercy Hospital
(ETM) (RB)
6.000% ............ 09/01/04 170 178
Marysville Exempted Village School
District (GO) (AMBAC)
5.100% ............ 12/01/04 500 524
Mason City School District (GO) (FGIC)
5.200% ............ 12/01/08 865 899
Massillon City School District,
Prerefunded 12/01/00 @ 102 (GO)
(AMBAC)
6.950% ............ 12/01/03 300 321
7.000% ............ 12/01/04 150 161
Medina City School District (GO) (FGIC)
5.000% ............ 12/01/12 1,000 1,008
Miami University General Receipts (RB)
5.400% ............ 12/01/05 1,000 1,058
Miamisburg, Sewer System (RB) (AMBAC)
5.000% ............ 11/15/08 500 516
Montgomery County,
Catholic Health Initiatives (RB)
5.000% ............ 12/01/08 1,000 1,031
5.000% ............ 12/01/09 1,000 1,020
Sisters of Charity Health Care (RB)
(MBIA)
6.500% ............ 05/15/08 300 321
Solid Waste (RB) (MBIA)
5.300% ............ 11/01/07 1,000 1,060
5.125% ............ 11/01/08 500 520
5.350% ............ 11/01/10 900 942
Water (RB) (AMBAC)
5.250% ............ 11/15/06 500 529
Newark (GO) (AMBAC)
5.450% ............ 12/01/02 1,000 1,051
North Canton City School District (GO)
(AMBAC)
5.000% ............ 12/01/12 1,000 1,009
5.250% ............ 12/01/01 500 518
5.750% ............ 12/01/06 250 271
See Accompanying Notes
89
<PAGE>
[ARROW GRAPHIC OMITTED]
STATEMENT OF NET ASSETS
ARMADA OHIO TAX EXEMPT FUND
MAY 31, 1999
PAR VALUE
MATURITY (000) (000)
-------- ----- -----
MUNICIPAL BONDS -- CONTINUED
Northeast Ohio Regional Sewer District
Wastewater, Prerefunded 11/15/01
@ 101 (RB) (AMBAC)
6.400% ............ 11/15/03 $ 250 $ 268
Wastewater, Prerefunded 11/01/01
@ 101 (RB) (AMBAC)
6.500% ............ 11/15/08 250 268
Wastewater, Prerefunded 11/15/01
@ 101 (RB) (AMBAC)
6.500% ............ 11/15/16 500 537
Northwest Local School District (GO)
(FGIC)
5.400% ............ 12/01/09 520 554
Oak Hills Local School District (GO)
5.650% ............ 12/01/07 350 380
5.125% ............ 12/01/25 1,250 1,234
Ohio State (GO)
5.000% ............ 08/01/00 500 509
5.150% ............ 09/01/01 500 516
4.700% ............ 08/01/03 1,000 1,030
6.600% ............ 09/01/03 150 165
5.200% ............ 08/01/08 1,000 1,041
Series A
5.400% ............ 10/01/07 1,370 1,439
Series C
4.700% ............ 04/01/04 1,000 1,030
Prerefunded 08/01/05 @ 102 (GO)
6.200% ............ 08/01/12 860 962
Ohio State, Air Quality Development
Authority,
Power Company Project (RB) (AMBAC)
7.400% 08/01/09 190 195
Buckeye Power Project (RB)
5.250% ............ 08/01/07 400 414
Ohio State, Building Authority Facilities,
Adult Correctional Building Fund,
(RB) Series A
6.125% ............ 10/01/09 1,300 1,415
Correctional Facilities Project,
Prerefunded 08/01/99 @ 102 (RB)
Series A
7.350% ............ 08/01/04 600 616
(RB)
5.200% ............ 10/01/04 500 526
Highway Safety Building (RB) (MBIA)
5.400% ............ 10/01/02 250 262
James Rhodes Project, (RB) Series A
5.900% ............ 06/01/00 500 513
PAR VALUE
MATURITY (000) (000)
-------- ----- -----
MUNICIPAL BONDS -- CONTINUED
Ohio State, Building Authority Facilities,
Juvenile Correctional Building (RB)
5.800% ............ 10/01/02 $ 250 $ 265
Ohio State, Department of Administrative
Services (RB) (AMBAC)
5.000% ............ 12/15/12 1,210 1,222
Ohio State, Higher Educational Facility,
Case Western Reserve University Project,
Prerefunded 10/01/00 @ 102 (RB)
Series B
7.125% ............ 10/01/14 60 64
(RB) (AMBAC) Series B
5.875% ............ 12/01/01 500 525
5.000% ............ 10/01/10 905 924
Denison University Project (RB)
5.250% ............ 11/01/09 1,000 1,041
5.000% ............ 07/01/18 600 584
John Carroll University Project (RB)
5.750% ............ 04/01/19 1,000 1,028
University of Dayton (RB)
5.875% ............ 12/01/04 250 265
Ohio State, Highways (GO)
4.750% ............ 05/15/02 1,000 1,026
Ohio State, Housing Financial Agency,
Single Family Mortgage (RB)
7.400% ............ 03/01/05 40 42
7.400% ............ 09/01/05 40 42
7.600% ............ 09/01/16 120 125
6.375% ............ 04/01/17 85 87
Ohio State, Infrastructure
Improvement (GO)
5.250% ............ 08/01/03 1,265 1,330
Ohio State, Public Facilities,
Higher Education (RB)
Series II-A
5.500% ............ 12/01/00 500 515
(AMBAC) Series II-A
5.200% ............ 05/01/06 500 523
5.200% ............ 05/01/07 1,000 1,041
4.250% ............ 12/01/07 1,000 990
(AMBAC) Series II-B
5.700% ............ 11/01/03 1,000 1,069
Mental Health (RB)
(MBIA)
6.800% ............ 12/01/02 2,000 2,069
(FSA)
5.000% ............ 12/01/02 1,500 1,553
Ohio State, School District, School
Bus Project (GO) (AMBAC)
5.250% ............ 04/15/00 440 447
See Accompanying Notes
90
<PAGE>
[ARROW GRAPHIC OMITTED]
STATEMENT OF NET ASSETS
ARMADA OHIO TAX EXEMPT FUND
MAY 31, 1999
PAR VALUE
MATURITY (000) (000)
-------- ----- -----
MUNICIPAL BONDS -- CONTINUED
Ohio State, Special Obligation
Elementary & Secondary Education
(RB) (AMBAC)
5.000% ............ 06/01/07 $5,000 $ 5,200
Ohio State, Turnpike Commission (RB)
(FGIC)
Series A
5.500% ............ 02/15/17 1,805 1,911
Series AA
5.500% ............ 02/15/18 1,000 1,056
Ohio State, University General Receipts
5.150% ............ 12/01/00 250 256
5.400% ............ 12/01/02 1,500 1,573
Ohio State, Unlimited Tax (GO)
5.000% ............ 05/01/06 1,000 1,045
Ohio State, Water Control Loan Fund,
Water Quality, (RB) (MBIA)
5.000% ............ 06/01/09 1,000 1,029
Ohio State, Water Development Authority,
Revenue Refunding & Improvement,
Pure Water (RB) (MBIA)
5.500% ............ 06/01/01 200 207
5.500% ............ 12/01/01 1,000 1,041
5.550% ............ 06/01/04 1,000 1,065
5.750% ............ 12/01/05 500 534
(AMBAC)
5.600% ............ 06/01/07 1,500 1,613
Fresh Water (RB) (AMBAC)
5.400% ............ 12/01/04 510 543
7.250% ............ 12/01/08 500 573
(RB)
8.000% ............ 12/01/99 150 154
Pollution Control Facilities (RB)
5.900% ............ 06/01/00 500 513
5.900% ............ 12/01/02 320 341
Olentangy Local School District (GO)
Series 97 (C)
5.050% ............ 12/01/09 700 728
Ontario Local School District (GO) (FSA)
4.800% ............ 12/01/11 790 788
4.900% ............ 12/01/12 630 630
Orrville Electric System (RB) (AMBAC)
5.500% ............ 12/01/08 1,220 1,313
Ottawa County (GO) (MBIA)
5.500% ............ 09/01/10 500 533
5.400% ............ 09/01/11 500 524
PAR VALUE
MATURITY (000) (000)
-------- ----- -----
MUNICIPAL BONDS -- CONTINUED
Parma City School District (AN)
4.600% ............ 12/01/03 $1,360 $ 1,370
4.600% ............ 12/01/04 1,360 1,367
Perrysburg Village School District (GO)
(FSA) Series B
5.750% ............ 12/01/12 1,225 1,337
Portage County (GO)
6.000% ............ 12/01/03 915 989
5.100% ............ 12/01/12 2,500 2,541
Portage County, Hospital Facility,
Robinson Memorial (RB) (MBIA)
5.625% ............ 11/15/07 1,000 1,075
Richland County (GO) (AMBAC)
5.200% ............ 12/01/08 515 540
Rocky River City School District (GO)
5.100% ............ 12/01/07 625 656
Sandusky County, Hospital Facility (RB)
4.900% ............ 01/01/05 500 498
Springfield Local School District (GO)
6.100% ............ 12/01/03 250 272
Strongsville (GO)
5.900% ............ 12/01/15 1,575 1,736
Strongsville City School District (GO)
(MBIA)
4.900% ............ 12/01/05 550 571
5.150% ............ 12/01/08 1,000 1,050
5.200% ............ 12/01/09 670 704
Summit County (GO) (FGIC)
5.000% ............ 12/01/04 500 521
Sycamore City School District (GO)
5.500% ............ 12/01/12 390 414
5.500% ............ 12/01/13 410 435
5.500% ............ 12/01/14 435 461
Toledo (GO)
7.375% ............ 12/01/99 500 510
7.375% ............ 12/01/01 100 108
University of Cincinnati,
General Receipts (RB)
5.350% ............ 06/01/08 1,000 1,039
5.500% ............ 06/01/10 525 557
5.500% ............ 06/01/11 555 584
7.000% ............ 06/01/11 500 536
Prerefunded 06/01/99 @ 102 (RB)
Series I1
7.000% ............ 06/01/01 400 408
7.100% ............ 06/01/10 200 204
Series W
5.700% ............ 06/01/12 1,240 1,294
See Accompanying Notes
91
<PAGE>
[ARROW GRAPHIC OMITTED]
STATEMENT OF NET ASSETS
ARMADA OHIO TAX EXEMPT FUND
MAY 31, 1999
PAR VALUE
MATURITY (000) (000)
-------- ----- -----
MUNICIPAL BONDS -- CONTINUED
University of Toledo General Receipts
(RB) (FGIC)
5.300% ............ 06/01/01 $ 175 $ 180
Upper Arlington (GO)
6.200% ............ 12/01/01 270 285
Upper Arlington, City School District
(GO) (MBIA)
6.000% ............ 12/01/05 1,170 1,287
(GO)
5.125% ............ 12/01/19 1,000 995
Vandalia (GO)
5.350% ............ 12/01/09 505 535
Washington County, Hospital, Marietta
Area Healthcare (RB) (FSA)
5.375% ............ 09/01/18 1,500 1,532
West Clermont Local School District
(GO) (AMBAC)
5.650% ............ 12/01/08 1,030 1,115
West Geauga Local School District
(GO) (AMBAC)
5.650% ............ 11/01/06 1,000 1,079
Westerville (GO)
5.250% ............ 12/01/09 1,885 1,998
5.250% ............ 12/01/10 1,990 2,090
5.250% ............ 12/01/12 1,755 1,816
5.250% ............ 12/01/13 1,850 1,906
Westlake (GO)
5.300% ............ 12/01/03 500 528
Westlake City School District (GO)
Series A
6.200% ............ 12/01/06 1,635 1,825
Wilmington City School District (GO)
(FGIC)
5.350% ............ 12/01/00 225 231
Worthington City School District (GO)
(FGIC)
5.800% ............ 12/01/01 1,200 1,257
5.850% ............ 12/01/02 500 532
Wright State University General Receipts
(RB) (AMBAC)
4.900% ............ 05/01/05 500 518
Wyoming City School District (GO)
(FGIC)
5.750% ............ 12/01/13 135 147
5.750% ............ 12/01/14 690 750
5.750% ............ 12/01/17 400 433
--------
204,913
--------
PAR/SHARES VALUE
(000) (000)
---------- -----
MUNICIPAL BONDS -- CONTINUED
PUERTO RICO -- 0.4%
Commonwealth of Puerto Rico,
Prerefunded 07/01/00 @ 102 (GO)
(FGIC)
7.200% ............ 07/01/03 $ 500 $ 531
Housing Financial Corporation (RB)
(A) (C)
7.300% ............ 10/01/06 190 197
7.400% ............ 04/01/07 210 218
--------
946
--------
TOTAL MUNICIPAL BONDS
(Cost $201,801) ............................. 205,859
--------
CASH EQUIVALENT -- 1.5%
Federated Ohio Municipal Cash Trust 3,058 3,058
--------
TOTAL CASH EQUIVALENT
(Cost $3,058) ............................... 3,058
--------
TOTAL INVESTMENTS -- 99.4%
(Cost $204,859) ............................. $208,917
========
OTHER ASSETS AND LIABILITIES,
NET -- 0.6% ................................. 1,256
--------
See Accompanying Notes
92
<PAGE>
[ARROW GRAPHIC OMITTED]
STATEMENT OF NET ASSETS
ARMADA OHIO TAX EXEMPT FUND
MAY 31, 1999
VALUE
(000)
-----
NET ASSETS:
Portfolio Shares of Class I
(unlimited authorization -- no par value)
based on 18,612,428 outstanding shares of
beneficial interest ......................... $201,328
Portfolio Shares of Class A
(unlimited authorization -- no par value)
based on 437,155 outstanding shares of
beneficial interest ......................... 4,582
Accumulated net realized gain on investments . 143
Net unrealized appreciation on investments ... 4,058
Undistributed net investment income .......... 62
--------
TOTAL NET ASSETS -- 100.0% ..................... $210,173
========
NET ASSET VALUE, OFFERING
AND REDEMPTION PRICE PER
SHARE -- CLASS I ............................ $11.03
========
NET ASSET VALUE AND REDEMPTION
PRICE PER SHARE -- CLASS A .................. $11.00
========
MAXIMUM OFFERING PRICE PER
SHARE -- CLASS A ($11.00 / 97.00%) .......... $11.34
========
- ------------
(A) VARIABLE RATE SECURITY -- THE RATE REFLECTED IN THE NET ASSETS IS THE RATE
IN EFFECT ON MAY 31, 1999
(B) ZERO COUPON
(C) SECURITY IS BACKED BY A LETTER OF CREDIT BACKED BY A MAJOR FINANCIAL
INSTITUTION.
AMBAC -- AMERICAN MUNICIPAL BOND ASSURANCE CORPORATION
AN -- ANTICIPATION NOTE
BAN -- BONANTICIPATION NOTE
ETM -- ESCROWED TO MATURITY
FGIA -- FEDERAL GUARANTY INSANCE AGENCY
FGIC -- FEDERAL GUARANTY INSURANCE COMPANY
FSA -- FEDERAL SECURITY ASSANCE
GO -- GENERAL OBLIGATION
MBIA -- MUNICIPAL BOND INSURANCE ASSOCIATION
RB -- REVENUE BOND
See Accompanying Notes
93
<PAGE>
[ARROW GRAPHIC OMITTED]
FINANCIAL HIGHLIGHTS
ARMADA OHIO TAX EXEMPT FUND
FOR A PORTFOLIO SHARE OUTSTANDING THROUGHOUT EACH YEAR
<TABLE>
<CAPTION>
FOR THE YEAR ENDED MAY 31,
--------------------------------------------------------------------------------------------------
1999 1998 1997 1996 1995
------------------ ------------------ ------------------ ------------------ ------------------
CLASS I CLASS A CLASS I CLASS A CLASS I CLASS A CLASS I CLASS A CLASS I CLASS A
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning
of period .................. $ 11.13 $ 11.09 $ 10.86 $ 10.82 $ 10.70 $ 10.66 $ 10.74 $ 10.70 $ 10.57 $ 10.53
-------- -------- -------- -------- -------- -------- -------- -------- ------- --------
INCOME FROM INVESTMENT
OPERATIONS
Net investment income ...... 0.53 0.52 0.51 0.51 0.51 0.51 0.50 0.50 0.50 0.50
Net gain/(loss) on
securities (realized and
unrealized) ............... (0.09) (0.08) 0.28 0.28 0.16 0.16 (0.04) (0.04) 0.17 0.17
-------- -------- -------- -------- -------- -------- -------- -------- ------- --------
Total from investment
operations ........... 0.44 0.44 0.79 0.79 0.67 0.67 0.46 0.46 0.67 0.67
-------- -------- -------- -------- -------- -------- -------- -------- ------- --------
LESS DISTRIBUTIONS
Dividends from net
investment income ......... (0.53) (0.52) (0.51) (0.51) (0.51) (0.51) (0.50) (0.50) (0.50) (0.50)
Distributions from net
realized capital gains .... (0.01) (0.01) (0.01) (0.01) (0.00) (0.00) (0.00) (0.00) (0.00) (0.00)
-------- -------- -------- -------- -------- -------- -------- -------- ------- --------
Total distributions .... (0.54) (0.53) (0.52) (0.52) (0.51) (0.51) (0.50) (0.50) (0.50) (0.50)
-------- -------- -------- -------- -------- -------- -------- -------- ------- --------
Net asset value, end of
period ..................... $ 11.03 $ 11.00 $ 11.13 $ 11.09 $ 10.86 $ 10.82 $ 10.70 $ 10.66 $ 10.74 $ 10.70
======== ======== ======== ======== ======== ======== ======== ======== ======= ========
TOTAL RETURN ................. 3.94% 3.93%1 7.43% 7.39%1 6.37% 6.38%1 4.36% 4.35%1 6.61% 6.64%1
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period
(in 000's) ................ $205,365 $ 4,808 $165,395 $ 4,037 $ 91,366 $ 3,535 $82,886 $2,869 $71,996 $3,168
Ratio of expenses to
average net assets ........ 0.28% 0.38% 0.25% 0.25% 0.24% 0.24% 0.26% 0.26% 0.24% 0.24%
Ratio of net investment
income to average
net assets ................ 4.77% 4.67% 4.67% 4.59% 4.71% 4.71% 4.68% 4.68% 4.82% 4.82%
Ratio of expenses to
average net assets
before fee waivers ........ 0.78% 0.88% 0.80% 0.80% 0.79% 0.79% 0.83% 0.83% 0.80% 0.78%
Ratio of net investment
income to average net
assets before fee waivers . 4.27% 4.17% 4.12% 4.04% 4.16% 4.16% 4.11% 4.11% 4.26% 4.27%
Portfolio turnover rate .... 19% 19% 15% 15% 23% 23% 10% 10% 3% 3%
</TABLE>
1 TOTAL RETURN EXCLUDES SALES CHARGE.
See Accompanying Notes
94
<PAGE>
[ARROW GRAPHIC OMITTED]
STATEMENT OF NET ASSETS
ARMADA PENNSYLVANIA MUNICIPAL FUND
MAY 31, 1999
PAR VALUE
MATURITY (000) (000)
-------- ----- -----
MUNICIPAL BONDS -- 94.9%
PENNSYLVANIA -- 94.2%
Allegheny County, Higher Education
Building Authority, Duquesne
University Project (RB) (AMBAC)
6.500% ............ 03/01/10 $ 380 $ 439
Allegheny County, Hospital Development
Authority, Magee Woman's Hospital
Project (RB) (ETM) Series O
10.125% ............ 10/01/02 105 117
Allegheny County, Industrial
Development Authority (RB)
5.250% ............ 12/01/14 650 661
Allegheny County, Sanitation Authority
Sewer (RB) (FGIC) (A)
0.000% ............ 12/01/08 2,750 1,784
Ambridge Area School District (GO)
(FGIC)
4.750% ............ 11/01/08 500 509
Bradford County, School District,
Prerefunded 10/01/05 @ 100 (GO)
(FGIC)
5.250% ............ 10/01/05 1,000 1,045
Bucks County, Community College
Authority, College Building (RB)
5.300% ............ 06/15/10 100 103
Butler County, Sewer Authority,
Prerefunded 01/01/04 @ 100 (RB)
7.250% ............ 01/01/04 110 122
Cumberland County, Messiah College
Project (RB) (AMBAC)
5.000% ............ 10/01/07 1,000 1,034
Dauphin County, General Authority,
Mandatory Put 12/01/05 @100 (RB)
(AMBAC)
5.400% ............ 06/01/26 800 853
Delaware County (GO)
5.000% ............ 11/15/07 1,000 1,044
Delaware County, Villanova University
(RB) (MBIA)
4.700% ............ 12/01/08 365 370
Delaware River Port Authority,
Pennsylvania & New Jersey Bridges
Project (RB) (AMBAC) (ETM)
6.000% ............ 01/15/10 570 606
Downingtown School District (GO)
5.500% ............ 02/01/10 1,000 1,070
Erie County, Prison Authority Lease,
Prerefunded 11/01/01 @ 100 (RB)
(MBIA)
6.600% ............ 11/01/02 1,000 1,065
PAR VALUE
MATURITY (000) (000)
-------- ----- -----
MUNICIPAL BONDS -- CONTINUED
PENNSYLVANIA -- CONTINUED
Gettysburg College (RB) (MBIA)
5.375% ............ 08/15/13 $1,000 $1,059
Lower Providence Township (GO)
(MBIA)
5.000% ............ 05/01/07 215 222
Middletown Township, Bucks County,
Special Obligation (RB) (ETM)
6.100% ............ 10/01/00 175 178
Monroeville County, Hospital Authority,
East Suburban Health Center Project,
Prerefunded 07/01/04 @ 100 (RB)
7.600% ............ 07/01/08 920 1,009
Montgomery County (GO)
5.000% ............ 10/15/06 500 525
Montgomery County, Hospital Authority,
Suburban General Hospital Project
(RB) (ETM)
7.750% ............ 05/01/02 85 90
Moon Area School District (GO) ( FGIC)
(A) Series A
0.000% ............ 11/15/11 1,520 826
Parkland School District (GO) (FGIC)
5.375% ............ 09/01/14 1,000 1,047
Penn Hills Township (GO) (AMBAC)
5.500% ............ 12/01/04 1,000 1,066
Pennsylvania State (GO) (AMBAC) Series 1
5.125% ............ 03/15/12 1,475 1,508
Pennsylvania State Higher Education
Assistance Authority (RB) (FGIC)
Series A
6.800% ............ 12/01/00 685 716
Pennsylvania State Higher Education
Facilities Authority
University of Pennsylvania Project (RB)
6.500% ............ 09/01/04 250 279
Series A
5.550% ............ 09/01/09 1,300 1,376
Pennsylvania State Housing Finance
Agency, Single Family Mortgage (RB)
Series Z
7.000% ............ 10/01/02 50 52
Pennsylvania State Industrial Economic
Development Authority (RB) (AMBAC)
Series 94
5.800% ............ 07/01/09 700 764
Pennsylvania State Infrastructure
Investment Authority, Penvest (RB)
Series A
5.000% ............ 09/01/08 250 261
Series B
6.450% ............ 09/01/04 1,500 1,637
See Accompanying Notes
95
<PAGE>
[ARROW GRAPHIC OMITTED]
STATEMENT OF NET ASSETS
ARMADA PENNSYLVANIA MUNICIPAL FUND
MAY 31, 1999
PAR VALUE
MATURITY (000) (000)
-------- ----- -----
MUNICIPAL BONDS -- CONTINUED
PENNSYLVANIA -- CONTINUED
Pennsylvania State Intergovernmental
Cooperative Authority,
City of Philadelphia Funding Program,
Prerefunded 06/15/02 @ 100 (RB)
6.800% ............ 06/15/22 $ 500 $ 542
(RB) (FGIC)
5.000% ............ 06/15/09 500 514
Pennsylvania State Public School
Building Authority, Montgomery
County Community College (RB)
4.600% ............ 05/01/12 160 156
Pennsylvania State Turnpike Commission
(RB) (FGIC) Series O
5.250% ............ 12/01/01 1,010 1,045
Philadelphia Gas Works,
Prerefunded 06/15/01 @ 102
(RB) Series 13
7.700% ............ 06/15/11 460 504
(RB) (FSA) Series 14
6.250% ............ 07/01/08 300 329
Philadelphia, Hospital & Higher
Educational Facilities Authority,
Children's Hospital Project, Prerefunded
02/15/02 @ 102 (RB) Series A
6.500% ............ 02/15/21 200 217
Graduate Hospital Project
(RB) (ETM)
7.000% ............ 07/01/10 385 431
Thomas Jefferson University
Hospital (RB) (ETM)
7.000% ............ 07/01/08 205 227
Philadelphia, Water & Waste Authority
(RB) (MBIA)
5.500% ............ 06/15/07 1,500 1,607
6.250% ............ 08/01/11 200 227
Series 95
6.750% ............ 08/01/03 200 221
Pittsburgh & Allegheny County,
Auditorium Authority (RB) (AMBAC)
6.400% ............ 12/01/01 620 621
PAR VALUE
MATURITY (000) (000)
-------- ----- -----
MUNICIPAL BONDS -- CONTINUED
PENNSYLVANIA -- CONTINUED
Pittsburgh (GO) (MBIA) Series A
5.500% ............ 09/01/06 $ 955 $ 1,017
Pleasant Valley School District (RB)
(FGIC)
5.000% ............ 09/01/10 500 521
Scranton, Lackawanna Health & Welfare,
Moses Taylor Hospital (ETM)
6.625% ............ 07/01/09 495 548
Seneca Valley, School District,
Prerefunded 07/01/02 @ 100 (GO)
(FGIC) Series A
5.700% ............ 07/01/06 1,000 1,054
Somerset County (GO) (AMBAC)
5.000% ............ 10/01/14 550 549
Swarthmore College Authority (RB)
5.250% ............ 09/15/10 410 434
Callable 09/15/02 @102 (RB)
6.000% ............ 09/15/06 700 752
Tyrone School District (GO) (MBIA)
5.700% ............ 09/15/08 1,000 1,043
Union City, Higher Educational
Facilities Financing Authority,
Bucknell University Project (RB)
(MBIA)
6.200% ............ 04/01/06 1,000 1,063
West Mifflin, Sewer Authority (RB)
(MBIA)
5.000% ............ 08/01/14 250 250
Westmoreland County, Municipal
Authority (RB) (FGIC) (ETM)
2.000% ............ 07/01/07 500 414
(A)
0.000% ............ 07/01/08 500 330
-------
38,053
-------
PUERTO RICO -- 0.7%
Commonwealth of Puerto Rico, Public
Finance Corporation (RB) (AMBAC)
Series A
5.375% ............ 06/01/10 250 266
-------
TOTAL MUNICIPAL BONDS
(Cost $37,066) .............................. 38,319
-------
See Accompanying Notes
96
<PAGE>
[ARROW GRAPHIC OMITTED]
STATEMENT OF NET ASSETS
ARMADA PENNSYLVANIA MUNICIPAL FUND
MAY 31, 1999
NUMBER
OF SHARES VALUE
(000) (000)
--------- -----
CASH EQUIVALENT -- 4.0
Federated Pennsylvania
Cash Trust 1,610 $ 1,610
-------
TOTAL CASH EQUIVALENT
(Cost $1,610) ................................ 1,610
-------
TOTAL INVESTMENTS -- 98.9%
(Cost $38,676) ............................... $39,929
=======
OTHER ASSETS AND LIABILITIES,
NET -- 1.1% .................................. 460
-------
NET ASSETS:
Portfolio Shares of Class I
(unlimited authorization -- no par value)
based on 3,867,921 outstanding shares of
beneficial interest .......................... 38,770
Portfolio Shares of Class A
(unlimited authorization -- no par value)
based on 20,958 outstanding shares of
beneficial interest .......................... 217
Accumulated net realized gain on investments .. 73
Net unrealized appreciation on investments .... 1,253
Undistributed net investment income ........... 76
-------
TOTAL NET ASSETS -- 100.0% ...................... $40,389
=======
NET ASSET VALUE, OFFERING
AND REDEMPTION PRICE PER
SHARE -- CLASS I ............................. $10.39
=======
NET ASSET VALUE AND REDEMPTION
PRICE PER SHARE -- CLASS A ................... $10.40
=======
MAXIMUM OFFERING PRICE PER
SHARE -- CLASS A ($10.40 / 97%) .............. $10.72
=======
- --------
(A) ZERO COUPON BOND
AMBAC -- AMERICAN MUNICIPAL BOND ASSURANCE CORPORATION
ETM -- ESCROW TO MATURITY
FGIC -- FEDERAL GUARANTY INSURANCE CORPORATION
FSA -- FINANCIAL SECURITY ASSURANCE
GO -- GENERAL OBLIGATION
MBIA -- MUNICIPAL BOND INSURANCE ASSOCIATION
RB -- REVENUE BOND
See Accompanying Notes
97
<PAGE>
[ARROW GRAPHIC OMITTED]
FINANCIAL HIGHLIGHTS
ARMADA PENNSYLVANIA MUNICIPAL FUND
FOR A PORTFOLIO SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
FOR THE YEAR ENDED MAY 31,
----------------------------------------------------------
1999 1998 1997
----------------------------------------------------------
CLASS I CLASS A CLASS I CLASS A CLASS I3 CLASS A4
------------------ -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ......... $ 10.45 $ 10.45 $ 10.22 $ 10.22 $ 10.08 $ 10.13
-------- -------- -------- -------- -------- --------
INCOME FROM INVESTMENT OPERATIONS
Net investment income ...................... 0.51 0.48 0.46 0.45 0.44 0.31
Net gain/(loss) on securities
(realized and unrealized) ................. (0.07) (0.04) 0.24 0.24 0.17 0.12
-------- -------- -------- -------- -------- --------
Total from investment operations .......... 0.44 0.44 0.70 0.69 0.61 0.43
-------- -------- -------- -------- -------- --------
LESS DISTRIBUTIONS
Dividends from net investment income ....... (0.49) (0.48) (0.46) (0.45) (0.44) (0.31)
Dividends from net realized capital gains .. (0.01) (0.01) (0.00) (0.00) (0.02) (0.02)
Distributions in excess of net
realized capital gains .................... (0.00) (0.00) (0.01) (0.01) (0.01) (0.01)
-------- -------- -------- -------- -------- --------
Total distributions ....................... (0.50) (0.49) (0.47) (0.46) (0.47) (0.34)
-------- -------- -------- -------- -------- --------
Net asset value, end of period ............... $ 10.39 $ 10.40 $ 10.45 $10.45 $ 10.22 $10.22
======== ======== ======== ======== ======== ========
TOTAL RETURN ................................. 4.21% 4.21%5 6.95% 6.84%5 6.21% 6.13%1,5
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000's) ....... $ 40,171 $ 218 $ 38,753 $ 125 $ 36,769 $ 81
Ratio of expenses to average net assets .... 0.48% 0.58% 0.69% 0.77% 0.87% 0.99%1
Ratio of net investment income to average
net assets ................................ 4.80% 4.70% 4.40% 4.32% 4.35% 4.26%1
Ratio of expenses to average net assets
before fee waivers ........................ 0.83% 0.93% 0.84% 0.94% 1.02% 1.00%1
Ratio of net investment income to average
net assets before fee waivers ............. 4.45% 4.35% 4.25% 4.15% 4.20% 4.25%1
Portfolio turnover rate .................... 15% 15% 20% 20% 42% 42%
</TABLE>
<TABLE>
<CAPTION>
FOR THE FOR THE FOR THE
PERIOD ENDED YEAR ENDED PERIOD ENDED
MAY 31, 19963 APRIL 30, 19963 APRIL 30, 19953
------------ -------------- --------------
<S> <C> <C> <C>
Net asset value, beginning of period ......... $ 10.12 $ 10.04 $ 10.00
-------- -------- --------
INCOME FROM INVESTMENT OPERATIONS
Net investment income ...................... 0.04 0.43 0.29
Net gain/(loss) on securities
(realized and unrealized) ................. (0.04) 0.08 0.04
-------- -------- --------
Total from investment operations .......... (0.00) 0.51 0.33
-------- -------- --------
LESS DISTRIBUTIONS
Dividends from net investment income ....... (0.04) (0.43) (0.29)
Dividends from net realized capital gains .. (0.00) (0.00) (0.00)
Distributions in excess of net
realized capital gains .................... (0.00) (0.00) (0.00)
-------- -------- --------
Total distributions ....................... (0.04) (0.43) (0.29)
-------- -------- --------
Net asset value, end of period ............... $ 10.08 $ 10.12 $ 10.04
======== ======== ========
TOTAL RETURN ................................. (0.03)%1,5 5.06%5 3.38%2,5
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000's) ....... $ 38,733 $ 38,809 $ 34,638
Ratio of expenses to average net assets .... 0.85%1 0.85% 0.85%1
Ratio of net investment income to average
net assets ................................ 4.32%1 4.16% 4.05%1
Ratio of expenses to average net assets
before fee waivers ........................ 1.31%1 1.24% 1.36%1
Ratio of net investment income to average
net assets before fee waivers ............. 3.86%1 3.77% 3.54%1
Portfolio turnover rate .................... 0% 22% 4%
</TABLE>
1 ANNUALIZED.
2 RETURNS ARE FOR THE PERIOD INDICATED AND HAVE NOT BEEN ANNUALIZED.
3 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.
4 CLASS A COMMENCED OPERATIONS ON SEPTEMBER 11, 1996.
5 TOTAL RETURN EXCLUDES SALES CHARGE.
See Accompanying Notes
98
<PAGE>
[ARROW GRAPHIC OMITTED]
STATEMENT OF NET ASSETS
ARMADA NATIONAL TAX EXEMPT FUND
MAY 31, 1999
PAR VALUE
MATURITY (000) (000)
-------- ----- -----
MUNICIPAL BONDS -- 96.4%
ALASKA -- 1.2%
Alaska State, Housing Finance
Corporation Mortgage (RB) (MBIA)
4.950% ............ 06/01/02 $ 80 $ 81
5.050% ............ 12/01/03 75 77
Anchorage (GO) (MBIA)
5.000% ............ 07/01/14 1,100 1,104
------
1,262
------
ARIZONA -- 3.6%
Glendale (GO)
4.500% ............ 07/01/02 250 255
Maricopa County, Industrial Development
Authority, Madera Pointe Apartments
Project (RB) (FSA)
5.300% ............ 06/01/06 1,000 1,031
Salt River Project (RB)
5.125% ............ 01/01/10 2,415 2,484
------
3,770
------
ARKANSAS -- 0.4%
Arkansas State, Development Finance
Authority, Correction Facility (RB)
(MBIA)
4.800% ............ 11/15/06 200 205
Pulaski County, Health Facilities Board,
Catholic Health Initiatives (RB)
4.150% ............ 12/01/00 250 252
------
457
------
CALIFORNIA -- 1.0%
San Francisco, City & County (GO)
(FGIC) (A) Series 1
5.000% ............ 06/15/10 1,000 1,032
San Jose Unified School District
(GO)
4.500% ............ 08/01/06 15 15
------
1,047
------
CONNECTICUT -- 1.0%
Connecticut State, (GO) Series B
5.500% ............ 03/15/11 1,000 1,074
------
GEORGIA -- 3.2%
Fulton County, Housing Authority,
Single Family (RB) (GNMA)
5.100% ............ 03/01/03 40 41
5.300% ............ 03/01/05 45 47
Georgia State (GO)
6.250% ............ 08/01/06 2,000 2,242
Private Colleges & Universities
Authority, Emory University Project (RB)
5.375% ............ 11/01/05 1,000 1,070
------
3,400
------
PAR VALUE
MATURITY (000) (000)
-------- ----- -----
MUNICIPAL BONDS -- CONTINUED
ILLINOIS -- 7.9%
Chicago, Sales Tax (RB) (FGIC)
5.000% ............ 01/01/10 $ 500 $ 511
Glenview (BAN)
5.550% ............ 12/01/99 175 176
Illinois State, Development Financial
Authority Revenue School District
Number 189 (RB)
5.000% ............ 01/01/04 400 414
Illinois State, Educational Facility
Authority, Robert Morris College
(RB) (MBIA)
4.700% ............ 06/01/04 200 205
Sales Tax (RB)
6.000% ............ 06/15/12 1,000 1,106
Sales Tax (A)
5.100% ............ 06/15/18 2,200 2,167
Toll Road Authority
(RB) (FSA)
5.500% ............ 01/01/13 2,500 2,659
Lake County, First Preservation
District (GO)
5.500% ............ 02/01/09 1,000 1,074
------
8,312
------
INDIANA -- 10.3%
East Chicago, Elementary School
Building Corp (RB) (A)
6.250% ............ 01/05/16 1,750 1,953
Fort Wayne, Redevelopment
District (FSA)
4.550% ............ 02/01/08 500 501
Fort Wayne, South Side School Building
Corp (RB) (A)
4.700% ............ 07/15/10 750 747
Fort Wayne, First Mortgage (RB)
4.750% ............ 07/15/11 500 496
Hamilton, School Building Corp, First
Mortgage (RB)
4.400% ............ 07/15/01 100 101
4.500% ............ 07/05/03 365 372
4.550% ............ 07/05/04 300 306
Hammond, Multi-School Building
Corp (RB)
6.000% ............ 01/15/18 1,250 1,364
Indiana State, Prerefunded 07/15/04 @ 102
(RB)
6.150% ............ 01/15/16 1,200 1,329
Indiana State, Bond Bank (RB)
5.000% ............ 02/01/10 1,000 1,024
See Accompanying Notes
99
<PAGE>
[ARROW GRAPHIC OMITTED]
STATEMENT OF NET ASSETS
ARMADA NATIONAL TAX EXEMPT FUND
MAY 31, 1999
PAR VALUE
MATURITY (000) (000)
-------- ----- -----
MUNICIPAL BONDS -- CONTINUED
INDIANA -- CONTINUED
Indiana State, Office Building (RB) (A)
4.150% ............ 07/01/04 $ 400 $ 399
Indiana State, Vinton - Tecumseh School
Building Corp (RB) (A)
4.450% ............ 01/05/05 300 301
Lagrange County, Jail Building
Corporation, First Mortgage (RB)
5.300% ............ 10/01/10 300 306
Marion County, Convention &
Recreational Facilities Authority (RB)
(MBIA)
4.500% ............ 06/01/05 300 303
North West Hendricks, School Building,
First Mortgage (RB) (AMBAC)
4.450% ............ 07/15/99 100 100
Purdue University, Certificate
Participation (RB)
4.250% ............ 07/01/99 200 200
South Bend, Waterworks (RB) (FSA)
4.350% ............ 01/01/03 215 217
Southeast Dubois County, School
Building Corp, First Mortgage (RB)
(FSA)
4.150% ............ 07/01/99 100 100
Steuben County, School Building
Corp, First Mortgage (RB)
4.250% ............ 03/01/02 245 247
Vinton-Tecumseh, School Building, First
Mortgage (RB) (A)
4.350% ............ 01/05/04 495 498
-------
10,864
-------
KANSAS -- 0.3%
Johnson County, Water District Number
001 (RB)
4.300% ............ 06/01/01 300 303
-------
KENTUCKY -- 0.4%
Elizabethtown, Public Properties Holding
Revenue (RB) (MBIA)
4.875% ............ 04/01/04 375 388
-------
MARYLAND -- 3.3%
Montgomery County (GO)
5.000% ............ 05/01/03 1,000 1,040
Prince Georges County (GO) (MBIA)
6.000% ............ 03/15/06 1,000 1,104
University of Maryland, Tuition Revenue
(RB)
4.350% ............ 10/01/03 235 239
PAR VALUE
MATURITY (000) (000)
-------- ----- -----
MUNICIPAL BONDS -- CONTINUED
MARYLAND -- CONTINUED
Washington, Suburban Sanitation District,
Prerefunded 11/01/01 @ 102 (RB)
6.500% ............ 11/01/05 $1,000 $ 1,081
-------
3,464
-------
MASSACHUSETTS -- 4.6%
Brockton (GO) (MBIA)
4.500% ............ 04/01/03 500 511
Massachusetts State, Bay Transportation
Authority, General Transportation System,
Prerefunded 03/01/05 @ 102 (RB) (A)
Series A
5.800% ............ 03/01/11 1,000 1,090
5.750% ............ 03/01/18 3,040 3,291
-------
4,892
-------
MICHIGAN -- 5.8%
Birmingham School District (GO)
5.000% ............ 11/01/18 25 24
Grand Rapids Community College (GO)
(MBIA) (A)
5.900% ............ 05/01/22 2,000 2,163
Michigan State, Municipal Bond Authority
(RB)
6.000% ............ 10/01/07 2,000 2,210
Redford School District (GO) (AMBAC)
5.500% ............ 05/01/06 1,315 1,405
Troy, City School District, (RB) (A)
4.400% ............ 05/01/03 300 305
-------
6,107
-------
MINNESOTA -- 1.5%
Minnesota State, Housing Finance
Agency, Residential Housing (RB)
4.750% ............ 07/01/01 200 202
Minnesota State, Public Facilities
Authority, Prerefunded 03/01/00
@ 102 (RB)
7.100% ............ 03/01/12 1,300 1,362
-------
1,564
-------
MISSOURI -- 2.3%
Columbia, Water & Electric (RB)
5.600% ............ 10/01/04 2,245 2,402
-------
NEBRASKA -- 1.2%
Douglas County, Hospital Authority,
Immanuel Medical Center (RB) (AMBAC)
4.450% ............ 09/01/02 300 305
See Accompanying Notes
100
<PAGE>
[ARROW GRAPHIC OMITTED]
STATEMENT OF NET ASSETS
ARMADA NATIONAL TAX EXEMPT FUND
MAY 31, 1999
PAR VALUE
MATURITY (000) (000)
-------- ----- -----
MUNICIPAL BONDS -- CONTINUED
NEBRASKA -- CONTINUED
Nebraska State, American Public Energy
Agency, Gas Refunding (RB)
(AMBAC)
4.200% ............ 09/01/10 $1,000 $ 951
-------
1,256
-------
NEVADA -- 2.1%
Henderson (GO) (MBIA)
6.500% ............ 06/01/07 1,000 1,138
Nevada State, (ETM) (GO)
6.300% ............ 07/01/04 1,000 1,078
-------
2,216
-------
NEW JERSEY -- 2.1%
New Jersey State, Transportation Fund
(RB) (AMBAC) Series B
6.000% ............ 06/15/05 2,000 2,190
-------
NEW MEXICO -- 0.7%
New Mexico State, Severance Tax (RB)
Series B
4.750% ............ 07/01/06 750 761
-------
NEW YORK -- 3.3%
New York State, Power Authority,
Prerefunded 01/01/10 @ 100 (RB)
7.000% ............ 01/01/10 1,000 1,181
Orange County (GO)
5.000% ............ 07/15/11 2,225 2,289
-------
3,470
-------
OHIO -- 9.2%
Butler County, Transportation
Improvement (RB) (FSA)
6.000% ............ 04/01/10 1,000 1,105
Cleveland, Public Power System (RB)
(MBIA)
6.000% ............ 11/15/10 995 1,112
Cleveland, Water Works (RB) (MBIA)
5.500% ............ 01/01/09 1,500 1,599
Hudson, Local School District (GO)
(FGIC) (B)
0.000% ............ 12/15/10 1,000 575
Ohio State, Higher Educational Facility,
John Carroll University Project (RB)
5.750% ............ 04/01/19 1,250 1,284
Ohio State, Housing Finance Agency
Mortgage (RB) (GNMA)
5.350% ............ 09/01/04 200 207
Ohio State, Turnpike Commission (RB)
(FGIC) Series A
5.500% ............ 02/15/17 2,000 2,118
PAR VALUE
MATURITY (000) (000)
-------- ----- -----
MUNICIPAL BONDS -- CONTINUED
OHIO -- CONTINUED
Wyoming City School District (GO)
(FGIC)
5.750% ............ 12/01/15 $ 740 $ 807
5.750% ............ 12/01/16 800 868
-------
9,675
-------
PENNSYLVANIA -- 0.1%
Pennsylvania State, Higher Educational
Facility Authority, Philadelphia College
Osteopathic (RB) (CONNLEE)
4.450% ............ 12/01/01 100 102
-------
RHODE ISLAND -- 1.3%
Convention Center Authority, Prerefunded
05/15/01 @ 102 (RB) (MBIA) Series A
6.700% ............ 05/15/01 1,310 1,407
-------
SOUTH CAROLINA -- 4.1%
South Carolina State, Public Service
Authority (RB) (FGIC)
5.875% ............ 01/01/23 4,000 4,270
-------
TENNESSE -- 2.4%
Jackson (GO) (MBIA)
4.500% ............ 03/01/02 300 305
Memphis (GO)
4.700% ............ 08/01/03 300 309
Nashville & Davidson County,
Metropolitan Government (GO)
6.000% ............ 12/01/10 1,500 1,678
Water & Sewer Revenue (FGIC)
4.700% ............ 01/01/02 200 204
-------
2,496
-------
TEXAS -- 7.2%
Dallas County (GO) (MBIA)
5.000% ............ 02/15/09 600 609
Leander, School District (GO) (A)
4.750% ............ 08/15/11 500 499
Plano, Independent School District
(GO) (A)
6.000% ............ 02/15/06 1,000 1,096
5.900% ............ 02/15/10 1,000 1,064
Texas State, Public Finance Authority,
Prerefunded 10/01/00 @ 100 (RB)
6.375% ............ 10/01/00 4,100 4,254
-------
7,522
-------
See Accompanying Notes
101
<PAGE>
[ARROW GRAPHIC OMITTED]
STATEMENT OF NET ASSETS
ARMADA NATIONAL TAX EXEMPT FUND
MAY 31, 1999
PAR VALUE
MATURITY (000) (000)
-------- ----- -----
MUNICIPAL BONDS -- CONTINUED
UTAH -- 2.5%
Utah State, Intermountain Power Agency,
(RB) (FSA) Series E
6.250% ............ 07/01/09 $2,000 $ 2,270
Weber County, Municipal Building
Authority (RB) (MBIA)
4.900% ............ 12/15/05 300 311
--------
2,581
--------
VERMONT -- 0.5%
Vermont State (GO) Series A
4.500% ............ 01/15/03 500 510
--------
VIRGINIA -- 1.0%
Richmond, Public Improvement,
Prerefunded 01/15/01 @ 102 (GO)
6.250% ............ 01/15/21 1,000 1,059
--------
WASHINGTON -- 4.8%
Washington State (GO)
6.500% ............ 09/01/01 1,900 2,012
Washington State, Public Power Supply
Systems, Nuclear Project No. 2,
Prerefunded 01/01/01 @ 102 (RB)
Series C
7.625% ............ 07/01/10 2,500 2,694
Yakima County (GO) (MBIA)
4.600% ............ 11/01/03 295 302
--------
5,008
--------
WEST VIRGINIA -- 0.3%
West Virginia State, School Building
Authority, Capital Improvement
Revenue (RB) (FSA)
4.500% ............ 07/01/03 300 306
--------
WISCONSIN -- 6.8%
Cottage Grove (GO) (FSA)
4.700% ............ 08/01/07 260 263
Milwaukee (GO)
5.000% ............ 06/15/05 300 313
Wisconsin State, Prerefunded 05/01/02
@ 100 (GO) Series A
6.300% ............ 05/01/02 3,275 3,492
Clean Water (RB)
5.000% ............ 06/01/06 3,000 3,109
--------
7,177
--------
TOTAL MUNICIPAL BONDS
(Cost $99,583) .............................. 101,312
--------
PAR/SHARES VALUE
(000) (000)
----- -----
MISCELLANEOUS -- 0.1%
Greystone Tax-Exempt Assets Trust
Series 1998-1 Cl A (B) (D)
4.300% ............ 06/20/00 $ 74 $ 75
--------
TOTAL MISCELLANEOUS
(Cost $75) .................................. 75
--------
CASH EQUIVALENT -- 2.0%
Federated Tax-Free
Money Market Fund ... 2,125 2,125
--------
TOTAL CASH EQUIVALENTS
(Cost $2,125) ............................... 2,125
--------
TOTAL INVESTMENTS -- 98.5%
(Cost $101,783) ............................. $103,512
========
OTHER ASSETS AND LIABILITIES,
NET -- 1.5% .................................. 1,606
--------
NET ASSETS:
Portfolio Shares of Class I
(unlimited authorization -- no par value)
based on 10,099,999 outstanding shares of
beneficial interest ......................... 98,699
Portfolio Shares of Class A
(unlimited authorization -- no par value)
based on 421,712 outstanding shares of
beneficial interest ......................... 4,300
Portfolio Shares of Class B
(unlimited authorization -- no par value)
based on 27,561 outstanding shares of
beneficial interest ......................... 279
Accumulated net realized gain on investments . 154
Net unrealized appreciation on investments ... 1,729
Distributions in excess of net investment income (43)
--------
TOTAL NET ASSETS -- 100.0% ...................... $105,118
========
See Accompanying Notes
102
<PAGE>
[ARROW GRAPHIC OMITTED]
STATEMENT OF NET ASSETS
ARMADA NATIONAL TAX EXEMPT FUND
MAY 31, 1999
VALUE
(000)
-----
NET ASSET VALUE, OFFERING
AND REDEMPTION PRICE PER
SHARE -- CLASS I ............................ $9.96
========
NET ASSET VALUE AND REDEMPTION
PRICE PER SHARE -- CLASS A ................... $9.97
========
MAXIMUM OFFERING PRICE PER
SHARE -- CLASS A ($9.97 / 95.25%) ........... $10.47
========
NET ASSET VALUE AND OFFERING
PRICE PER SHARE -- CLASS B .................. $9.96
========
- ------------
(A) SECURITY IS BACKED BY A LETTER OF CREDIT BACKEY A MAJOR FINANCIAL
INSTITUTION.
(B) VARIABLE RATE SECURITY -- THE RATEFLECTED ON THE STATEMENT OF NET
ASSETS IS THE RATE IN EFFECT ON MAY 31, 1999
(C) ZERO COUPON BOND
(D) PRIVATE PLACEMENT SECURITY
AMBAC -- AMERICAN MUNICIPAL BOND ASSURANCE CORPORATION
BAN -- BOND ANTICIPATION NOTE
CONNLEE -- CONNIE LEE
ETM -- ESCROW TO MATURITY
FGIC -- FEDERAL GUARANTY INSURANCE COMPANY
FSA -- FEDERAL SECURITY ASSURANCE
GNMA -- GOVERNMENT NATIONAL MORTGAGE ASSOCIATION
GO -- GENERAL OBLIGATION
MBIA -- MUNICIPAL BOND INSURANCE ASSOCIATION
RB -- REVENUE BOND
See Accompanying Notes
103
<PAGE>
[ARROW GRAPHIC OMITTED]
FINANCIAL HIGHLIGHTS
ARMADA NATIONAL TAX EXEMPT FUND
FOR A PORTFOLIO SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
FOR THE YEAR FOR THE PERIOD
ENDED MAY 31, 1999 ENDED MAY 31, 1998
---------------------------- ---------------------------
CLASS I CLASS A3 CLASS B6 CLASS I1
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net asset value, beginning of period ............................ $ 10.03 $ 10.04 $ 10.23 $ 10.00
-------- ------- -------- --------
INCOME FROM INVESTMENT OPERATIONS
Net investment income ......................................... 0.45 0.41 0.13
0.07
Net gain/(loss) on securities (realized and unrealized) ....... (0.04) (0.04) (0.26) 0.03
-------- ------- -------- --------
Total from investment operations ........................... 0.41 0.37 (0.13) 0.10
-------- ------- -------- --------
LESS DISTRIBUTIONS
Dividends from net investment income .......................... (0.45) (0.41) (0.14) (0.07)
Distribution from net realized capital gains .................. (0.03) (0.03) (0.00) (0.00)
-------- ------- -------- --------
Total distributions ........................................ (0.48) (0.44) (0.14) (0.07)
-------- ------- -------- --------
Net asset value, end of period .................................. $ 9.96 $ 9.97 $ 9.96 $ 10.03
======== ======= ======== ========
TOTAL RETURN .................................................... 4.07% 3.67%4,5 (1.22)%4,5 7.03%2
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000's) .......................... $100,638 $4,205 $ 275 $ 80,259
Ratio of expenses to average net assets ....................... 0.36% 0.46%2 1.17%2 0.33%2
Ratio of net investment income to average
net assets .................................................. 4.39% 4.29%2 3.58%2 4.62%2
Ratio of expenses to average net assets before
fee waivers ................................................. 0.87% 0.97%2 1.68%2 0.87%2
Ratio of net investment income to average net
assets before fee waivers ................................... 3.88% 3.78%2 3.07%2 4.08%2
Portfolio turnover rate ....................................... 23% 23% 23% 0%
</TABLE>
1 CLASS I COMMENCED OPERATIONS ON APRIL 9, 1998.
2 ANNUALIZED
3 CLASS A COMMENCED OPERATIONS ON JUNE 19, 1998.
4 TOTAL RETURN EXCLUDES SALES CHARGE.
5 RETURNS ARE FOR THE PERIOD INDICATED AND HAVE NOT
BEEN ANNUALIZED.
6 CLASS B COMMENCED OPERATIONS ON JANUARY 29, 1999.
See Accompanying Notes
104
<PAGE>
[ARROW GRAPHIC OMITTED]
STATEMENT OF NET ASSETS
ARMADA OHIO MUNICIPAL MONEY MARKET FUND
MAY 31, 1999
PAR VALUE
MATURITY (000) (000)
-------- ----- -----
MUNICIPAL BONDS -- 100.5%
OHIO -- 100.5%
Allen County Health Care Facilities
Mennonite Memorial Home
Project (RB) (A)
3.300% ............ 02/01/18 $1,740 $1,740
City of Ashland (GO)
3.950% ............ 07/15/99 500 500
Bay Village (BAN)
3.790% ............ 07/09/99 500 500
Canton, Pension (GO) (AMBAC)
3.150% ............ 12/01/99 230 230
Columbus (GO) (A) Series 1995-1
3.100% ............ 06/01/16 1,200 1,200
3.100% ............ 12/01/17 2,000 2,000
Cuyahoga County (GO) (BAN)
3.220% ............ 09/15/99 1,365 1,365
Cuyahoga County,
Hospital Facilities Authority, Cleveland
Clinic Foundation (RB) (AMBAC) (A)
Series B
3.300% ............ 01/01/16 680 680
(RB) (A) Series A
3.300% ............ 01/01/24 500 500
(RB) (A) Series 1997-D
3.400% ............ 01/01/26 3,500 3,500
(RB) (A) Series 1996-A
3.250% ............ 01/01/26 2,000 2,000
Cuyahoga County, Industrial
Development Authority,
Allen Group Project (A)
3.200% ............ 12/01/15 1,600 1,600
Dayton, Ohio (GO) (BAN)
3.400% ............ 03/03/00 1,000 1,001
Euclid County School District
(GO) (BAN)
3.990% ............ 06/17/99 1,242 1,242
Evandale, Industrial Development
Authority (RB) (A)
3.350% ............ 09/01/15 3,900 3,900
Fairview Park (GO) (BAN)
4.000% ............ 08/12/99 1,030 1,031
Franklin County, Hospital Authority,
Holy Cross Health System (RB) (A)
3.300% ............ 06/01/16 5,000 5,000
Hillard (GO) Series B
5.150% ............ 12/01/99 280 283
Hudson City (BAN)
3.350% ............ 09/09/99 440 440
PAR VALUE
MATURITY (000) (000)
-------- ----- -----
MUNICIPAL BONDS -- CONTINUED
OHIO -- CONTINUED
Lake County (GO) (BAN)
3.625% ............ 10/07/99 $2,020 $2,024
Lancaster (GO) (BAN)
3.600% ............ 04/27/00 1,400 1,404
Lebanon (GO) (BAN)
3.230% ............ 09/02/99 600 600
Lima Memorial Hospital (RB)
(A) Series 1996
3.350% ............ 12/01/10 4,000 4,000
Lorain County, Industrial Development
Revenue, Elyria Regional Medical
Center (RB) (A)
3.350% ............ 05/01/22 1,675 1,675
Louisville (GO) (BAN)
4.000% ............ 05/03/00 1,200 1,205
Lucas County, Facility Improvement,
Toledo Zoological Society (A)
3.250% ............ 10/01/05 1,000 1,000
Marysville (GO) (BAN)
3.460% ............ 09/15/99 1,000 1,001
3.460% ............ 04/13/00 900 902
Masillion, Ohio (GO) (BAN)
3.980% ............ 01/14/00 550 552
Mason City School District (GO) (BAN)
3.680% ............ 01/27/00 415 416
Mayfield School District (GO) (BAN)
3.450% ............ 04/20/00 540 541
Medina County, Notes (GO)
3.940% ............ 06/17/99 1,000 1,000
Miamisburg (GO) (BAN)
3.520% ............ 10/14/99 560 561
New Albany (GO) (MBIA)
3.100% ............ 12/01/99 135 135
Ohio State,
Air Quality Development Authority, (GO)
4.000% ............ 08/01/99 500 501
Air Quality Development Authority, (RB)
3.100% ............ 06/17/99 1,000 1,000
Air Quality Development Authority,
Cincinnati Gas & Electric (RB) (A)
3.350% ............ 09/01/30 7,000 7,000
Series 1985-A
3.450% ............ 12/01/15 2,400 2,400
See Accompanying Notes
105
<PAGE>
[ARROW GRAPHIC OMITTED]
STATEMENT OF NET ASSETS
ARMADA OHIO MUNICIPAL MONEY MARKET FUND
MAY 31, 1999
PAR VALUE
MATURITY (000) (000)
-------- ----- -----
MUNICIPAL BONDS -- CONTINUED
OHIO -- CONTINUED
Ohio State,
Air Quality Development Authority, (RB)
3.000% ............ 06/01/99 $1,000 $ 1,000
Air Quality Development Authority,
Duquesne Light (RB)
3.150% ............ 07/08/99 1,955 1,955
Air Quality Development Authority,
Timken Project (RB) (A)
3.250% ............ 07/01/03 2,000 2,000
Ohio State, Arts Facilities Building Fund
(RB) Series A
4.750% ............ 10/01/99 1,200 1,207
Ohio State, Building Authority (RB)
4.000% ............ 09/01/99 80 80
Ohio State, Coal Development Unlimited
Tax (GO) Series B
5.000% ............ 08/01/99 300 301
Ohio State, Environmental Improvement,
US Steel (A)
3.900% ............ 12/01/01 1,000 1,000
Ohio State, Higher Educational Facilities,
(RB) Series A-1
4.500% ............ 12/01/99 1,250 1,260
Case Western Reserve University (RB)
5.000% 10/01/99 1,000 1,006
Kenyon College (RB) (A)
3.300% ............ 08/01/03 2,000 2,000
Mount Vernon College (RB) (A)
3.250% ............ 09/01/20 820 820
Ohio State, Pollution Control (RB) (A)
3.400% ............ 05/01/22 1,600 1,600
Ohio State, Highland Heights (BAN)
3.250% ............ 11/18/99 1,200 1,201
Ohio State, Public Facilities Commission
(RB) Series II-A
5.625% ............ 12/01/99 500 506
4.250% ............ 06/01/99 1,000 1,000
4.500% ............ 11/01/99 800 804
Ohio State University, General
Receipts (RB) (A)
3.150% ............ 12/01/01 155 155
3.200% ............ 12/01/07 1,250 1,250
3.200% ............ 12/01/27 3,890 3,890
PAR VALUE
MATURITY (000) (000)
-------- ----- -----
MUNICIPAL BONDS -- CONTINUED
OHIO -- CONTINUED
Ohio State University, General
Receipts (RB) (A)
Series 1986-B
3.150% ............ 12/01/06 $1,550 $1,550
Ohio State, Water Development
Authority (RB) (A)
4.200% ............ 09/01/18 1,000 1,001
3.400% ............ 05/01/22 900 900
Water Development Authority,
Cleveland Electric (RB) (A) Series B
3.250% ............ 08/01/20 4,000 4,000
Water Development Authority,
Timken Project (RB) (A)
3.400% ............ 07/01/32 200 200
Orange City School District
(GO) (BAN)
3.440% ............ 08/18/99 500 500
Ross County, Hospital Facilities Authority,
Adena Health System (RB) (A)
Series 1998
3.250% ............ 12/01/23 1,000 1,000
Medical Center Hospital Project
(RB) (A)
3.250% ............ 12/01/20 460 460
Rossford, Special Obligation Note,
Exempted Village (AN)
4.000% ............ 12/01/99 270 271
Saint Clairsville (GO) (BAN)
3.510% ............ 05/04/00 370 371
Saint Mary School District (BAN)
3.840% ............ 02/23/00 709 712
Sandusky City, (GO) (BAN)
3.875% ............ 09/16/99 1,000 1,001
Scioto County, Volunteer Hospital
Administration, Central Capital Asset
Financing Program (RB) (AMBAC) (A)
Series 1985-C
3.350% ............ 12/01/25 815 815
Series B
3.350% ............ 12/01/25 2,725 2,725
Series F
3.350% ............ 12/01/25 2,030 2,030
See Accompanying Notes
106
<PAGE>
[ARROW GRAPHIC OMITTED]
STATEMENT OF NET ASSETS
ARMADA OHIO MUNICIPAL MONEY MARKET FUND
MAY 31, 1999
PAR VALUE
MATURITY (000) (000)
-------- ----- -----
MUNICIPAL BONDS -- CONTINUED
OHIO -- CONTINUED
Seven Hills (GO) (BAN)
3.410% ............ 10/28/99 $1,000 $ 1,001
Southwestern City School District
(GO) (AMBAC)
3.000% ............ 12/01/99 1,260 1,260
Summit County (GO) (BAN)
Series B
3.630% ............ 11/18/99 2,000 2,007
Toledo, Services Special
Assessment Note (A)
3.250% ............ 06/01/00 2,000 2,000
Toledo, Sewer System (RB)
3.200% ............ 11/15/99 755 755
University of Cincinnati, General
Receipts (BAN)
3.260% ............ 08/18/99 1,000 1,001
University of Toledo, General
Receipts (RB)
3.600% ............ 06/01/99 285 285
Warren County (RB) (A)
3.300% ............ 07/01/23 2,000 2,000
Willowick (GO) (BAN)
3.625% ............ 04/27/00 800 802
Wooster, Industrial Development
Authority, Allen Group Project
(RB) (A)
3.500% ............ 12/01/10 2,100 2,100
Wooster, Waterworks System
Improvement (GO) (BAN)
3.300% ............ 10/14/99 500 500
--------
110,911
--------
TOTAL MUNICIPAL BONDS
(Cost $110,911) ............................. 110,911
--------
PAR VALUE
MATURITY (000) (000)
-------- ----- -----
CASH EQUIVALENTS -- 0.6%
Blackrock Funds Ohio Municipal
Money Market Portfolio 100 $ 100
Federated Ohio Cash Trust 520 520
--------
TOTAL CASH EQUIVALENTS
(Cost $620) ................................. 620
--------
TOTAL INVESTMENTS -- 101.1%
(Cost $111,531)* ............................ $111,531
========
OTHER ASSETS AND LIABILITIES,
NET -- (1.1%) ................................ (1,170)
--------
NET ASSETS:
Portfolio Shares of Class I
(unlimited authorization -- no par value)
based on 99,361,718 outstanding
shares of beneficial interest ............... 99,362
Portfolio Shares of Class A
(unlimited authorization -- no par value)
based on 11,019,559 outstanding shares of
beneficial interest ......................... 11,019
Distributions in excess of net investment income (20)
--------
TOTAL NET ASSETS -- 100.0% ...................... $110,361
========
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER SHARE -- CLASS I ........ $1.00
========
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER SHARE -- CLASS A ........ $1.00
========
- -------------
(A) VARIABLE RATE SECURITY -- THE RATE REFLECTED OHE STATEMENT OF NET
ASSETS IS THE RATE IN EFFECT ON MAY 31, 1999. THE MATURITY DATE SHOWN
IS THE LONGER OF THE NEXT RESET DATE OR THE DATE IN WHICH THE PRINCIPAL
AMOUNT CAN BE RECOVERED THROUGH DEMAND.
* ALSO COST FOR FEDERAL INCOME TAX PURPOSES.
AMBAC -- AMERICAN MUNICIPAL BOND ASSURANCE CORPORATION
AN -- ANTICIPATION NOTE
BAN -- BOND ANTICIPATION NOTE
GO -- GENERAL OBLIGATION
MBIA -- MUNIAL BOND INSURANCE ASSOCIATION
RB -- REVENUE BOND
See Accompanying Notes
107
<PAGE>
[ARROW GRAPHIC OMITTED]
FINANCIAL HIGHLIGHTS
ARMADA OHIO MUNICIPAL MONEY MARKET FUND
MAY 31, 1999
FOR A PORTFOLIO SHARE OUTSTANDING THROUGHOUT EACH PERIOD
FOR THE PERIOD
ENDED MAY 31, 1999
-----------------------
CLASS I1 CLASS A1
-------- --------
Net asset value, beginning of period ............. $ 1.00 $ 1.00
------- -------
INCOME FROM INVESTMENT OPERATIONS
Net investment income .......................... 0.02 0.02
------- -------
LESS DISTRIBUTIONS
Dividends from net investment income ........... (0.02) (0.02)
------- -------
Net asset value, end of period ................... $ 1.00 $ 1.00
======= =======
TOTAL RETURN ..................................... 2.01%2 1.50%2
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000's) ........... $99,342 $11,019
Ratio of expenses to average net assets 0.35%3 0.50%3
Ratio of net investment income to
average net assets ........................... 2.77%3 2.62%3
Ratio of expenses to average net assets
before fee waivers ........................... 0.55%3 0.70%3
Ratio of net investment income to average net
assets before fee waivers .................... 2.57%3 2.42%3
1 CLASS I AND CLASS A COMMENCED OPERATIONS ON SEPTEMBER 15, 1998
AND NOVEMBER 2, 1998, RESPECTIVELY.
2 RETURNS ARE FOR THE PERIOD INDICATED AND HAVE NOT BEEN ANNUALIZED.
3 ANNUALIZED.
See Accompanying Notes
108
<PAGE>
[ARROW GRAPHIC OMITTED]
STATEMENT OF NET ASSETS
ARMADA PENNSYLVANIA TAX EXEMPT MONEY MARKET FUND
MAY 31, 1999
PAR VALUE
MATURITY (000) (000)
-------- ----- -----
MUNICIPAL BONDS -- 98.9%
PENNSYLVANIA -- 98.9%
Allegheny County, Higher Education
Building Authority, University of
Pittsburgh Project (RB) (B)
Series 1985 B
3.150% ............ 07/01/15 $1,180 $1,180
Allegheny County, Hospital
Development Authority,
Presbyterian University Hospital
Project, (RB) (A) (B) Series B-3
3.300% ............ 03/01/18 935 935
Allegheny County, Industrial
Development Authority,
Environmental-Improvement
(RB) (A) (B)
3.150% ............ 12/01/32 1,000 1,000
Longwood at Oakmont Project (RB) (A) (B)
3.300% ............ 07/01/29 2,500 2,500
Allentown, Water Improvement
(RB) (AMBAC) (ETM)
4.500% ............ 07/15/99 150 150
Altoona, Area School District (GO)
4.900% ............ 01/15/00 2,000 2,024
Armstrong County (GO)
3.750% ............ 06/01/99 110 110
Beaver County, Industrial Development
Authority, Duquesne Light
(TECP) (B)
3.350% ............ 06/09/99 2,000 2,000
3.350% ............ 06/17/99 1,500 1,500
3.200% ............ 07/06/99 2,000 2,000
3.100% ............ 07/09/99 2,000 2,000
Belle Vernon Area School District
(GO) (FGIC)
4.000% ............ 10/01/99 500 502
Bethel Park School District (GO)
5.250% ............ 08/01/99 500 501
(FSA) Series B
4.000% ............ 08/01/99 1,000 1,001
Boyertown Area School District (GO)
3.800% ............ 03/01/00 290 291
Bucks County, Industrial Development
Authority, USX Corporation Project,
(RB) (A) Series 1995
3.100% ............ 11/04/99 2,250 2,250
Bucks County, Water & Sewer
Authority, Neshaminy Interceptor
Sewer System (RB)
5.000% ............ 12/01/99 175 176
PAR VALUE
MATURITY (000) (000)
-------- ----- -----
MUNICIPAL BONDS -- CONTINUED
PENNSYLVANIA -- CONTINUED
Cheltenham Township School
District (GO)
3.050% ............ 11/15/99 $ 220 $ 220
Chester County (GO)
4.550% ............ 12/15/99 400 403
4.200% ............ 11/15/99 100 100
College Township, Industrial
Development Authority,
Ball Corporation Project
(RB) (A) (B) Series 1993
3.250% ............ 11/01/11 3,200 3,200
Conewago Valley School District (GO)
3.050% ............ 09/01/99 465 465
Cumberland County, Municipal College
Authority, Dickinson College
(RB) Series-A
2.950% ............ 11/01/99 1,000 1,000
Delaware County,
Industrial Development Authority,
BP Oil Project (RB) (A) (B)
Series 1995
3.400% ............ 12/01/09 1,500 1,500
3.400% ............ 10/01/19 1,750 1,750
General Electric Project
(RB) (B) Series 1997-G
3.200% ............ 12/01/31 5,200 5,200
PECO Energy (TECP)
2.850% ............ 07/06/99 2,000 2,000
2.800% ............ 07/26/99 1,100 1,100
Scott Paper Project (RB)
(A) (B) Series 1984-A
3.350% ............ 12/01/18 4,500 4,500
United Parcel Service Project
(RB) (B) Series 1985
3.200% ............ 12/01/15 2,200 2,200
Delaware County, Villanova
University (RB)
3.100% ............ 12/01/99 770 770
East Norriton (GO)
3.100% ............ 08/15/99 285 285
Emmaus, General Authority
(RB) (A) (B)
3.450% ............ 03/01/24 2,800 2,800
Erie, Higher Educational Building
Authority, Mercyhurst College
Project (RB) (B)
7.850% ............ 09/15/19 1,500 1,520
See Accompanying Notes
109
<PAGE>
[ARROW GRAPHIC OMITTED]
STATEMENT OF NET ASSETS
ARMADA PENNSYLVANIA TAX EXEMPT MONEY MARKET FUND
MAY 31, 1999
PAR VALUE
MATURITY (000) (000)
-------- ----- -----
MUNICIPAL BONDS -- CONTINUED
PENNSYLVANIA -- CONTINUED
Franklin Regional School District
(GO) Series A
3.000% ............ 08/15/99 $ 290 $ 290
Lancaster County, Donegal
School District (GO)
3.000% ............ 10/01/99 200 200
Lancaster, Higher Education Authority,
Franklin & Marshall College Project,
(RB) (A) (B) Series 1997
3.370% ............ 04/15/27 3,995 3,995
Lebanon, Water Authority (RB)
3.100% ............ 12/15/99 415 415
Lehigh County General Purpose Authority
Lehigh Valley Hospital, (RB) (B) Series A
3.250% ............ 07/01/28 100 100
Lehigh County, Prerefunded 10/15/99
@ 100 (AMBAC) Series A
6.000% ............ 10/15/11 200 202
Lower Merion Township (GO)
3.000% ............ 09/01/99 185 185
Mercersburg, General Purpose Authority,
Mercersburg College Project
(RB) (A) (B) Series 1997
3.350% ............ 11/01/27 1,000 1,000
Montgomery County (GO) Series 1999
2.950% ............ 07/15/99 1,000 1,000
Montgomery County, Prerefunded
@ 100 07/15/99 (GO) Series A
6.400% ............ 07/15/03 300 301
6.500% ............ 07/15/04 500 502
Montgomery County, Industrial
Development Authority,
Peco Energy (TECP)
3.400% ............ 06/08/99 1,000 1,000
Montgomery County, Pollution
Control Revenue, PECO Energy
(TECP) Series 1994-A
2.850% ............ 07/21/99 5,200 5,200
2.950% ............ 06/10/99 2,000 2,000
3.100% ............ 09/08/99 2,500 2,500
Northampton County,
Higher Education Authority,
Lehigh University (RB)
4.450% ............ 08/15/99 300 301
Lafayette College
(RB) (A) (B) Series B
3.300% ............ 11/01/28 1,500 1,500
Northeastern Pennsylvania, Hospital
Authority, Hospital Center Services
Capital Asset Project (TECP)
3.050% ............ 07/30/99 1,000 1,000
PAR VALUE
MATURITY (000) (000)
-------- ----- -----
MUNICIPAL BONDS -- CONTINUED
PENNSYLVANIA -- CONTINUED
Pennsylvania State (GO)
4.750% ............ 06/15/99 $ 250 $ 250
5.300% ............ 07/01/99 500 501
5.600% ............ 11/15/99 125 126
5.250% ............ 11/15/99 100 101
4.625% ............ 05/01/00 1,000 1,013
Pennsylvania State (TECP)
3.200% ............ 07/07/99 2,000 2,000
4.000% ............ 11/01/99 1,000 1,000
(B)
4.000% ............ 11/01/99 1,300 1,309
Pennsylvania State, Delaware River
Joint Toll Bridge Commission
(RB) (FGIC)
5.650% ............ 07/01/99 500 501
Pennsylvania State, Higher
Education Authority,
Carnegie Mellon University
Project (RB) (B) Series 1995-C
3.350% ............ 11/01/25 500 500
Carnegie Mellon University
Project (RB) (A) (B) Series 1995-B
3.350% ............ 11/01/27 4,400 4,400
University of Pennsylvania
Health Services Project (RB) (A) (B)
Series C
3.450% ............ 01/01/26 2,000 2,000
Pennsylvania State, Highway
Improvement (RB)
4.000% ............ 06/01/99 1,040 1,040
Pennsylvania State, Infrastructure
Authority (RB)
5.000% ............ 09/01/99 1,000 1,004
Pennsylvania State, Intergovernmental
Cooperative Authority,
Philadelphia Funding Program,
Special Tax (RB) (FGIC)
5.750% ............ 06/15/99 2,000 2,002
3.200% ............ 06/15/99 315 315
Pennsylvania State, Public School
Building Authority, Allegheny County
Project (RB) Series E
3.750% ............ 11/01/99 200 201
Pennsylvania State, Turnpike
Commission (RB)
Series K
7.500% ............ 12/01/99 200 206
Series P
5.100% ............ 12/01/99 150 151
Series Q (B)
3.350% ............ 06/01/28 2,800 2,800
See Accompanying Notes
110
<PAGE>
[ARROW GRAPHIC OMITTED]
STATEMENT OF NET ASSETS
ARMADA PENNSYLVANIA TAX EXEMPT MONEY MARKET FUND
MAY 31, 1999
PAR VALUE
MATURITY (000) (000)
-------- ----- -----
MUNICIPAL BONDS -- CONTINUED
PENNSYLVANIA -- CONTINUED
Philadelphia, Hospital & Higher
Educational Facility Authority,
Children's Hospital Project
(RB) Series 1992B
4.750% ............ 02/15/00 $ 375 $ 379
(B)
3.350% ............ 03/01/27 4,300 4,300
(RB) (A) (B) Series 1996-A
3.350% ............ 03/01/27 1,000 1,000
Philadelphia, Industrial Development
Authority,
Fox Chase Cancer Center
Project (RB) (A) (B) Series 1997
3.400% ............ 07/01/25 5,000 5,000
Chemical Heritage Foundation
Project (RB) (B)
3.250% ............ 07/01/27 1,000 1,000
Pittsburgh, Urban Redevelopment
Authority, Mortgage Revenue,
Series D
3.150% ............ 12/01/99 1,170 1,170
Pocono Mountain School District
(GO) Series AA
4.000% 09/01/99 380 381
Quakertown, General Authority
(RB) (A) (B) Series A
3.450% ............ 07/01/26 3,850 3,850
3.450% ............ 06/01/28 700 700
Reading, Public Development
Improvement (GO)
5.000% ............ 11/15/99 275 278
Reynolds School District (GO) (A)
3.600% ............ 10/01/99 105 105
Sayre, Healthcare Facility Authority,
Capital Asset Finance Group
(RB) (AMBAC) (B)
3.300% ............ 12/01/20 3,700 3,700
Schuylkill County, Redevelopment
Authority (FGIC) (A)
6.450% ............ 06/01/99 150 150
Scranton-Lackawanna, Health & Welfare
Authority, University of Scranton,
(RB) (A)
3.250% ............ 11/01/99 1,665 1,665
Shaler Area School District
(GO) Series B
3.700% ............ 09/01/99 720 720
PAR VALUE
MATURITY (000) (000)
-------- ----- -----
MUNICIPAL BONDS -- CONTINUED
PENNSYLVANIA -- CONTINUED
South Butler County School District (GO)
4.250% ............ 10/01/99 $ 300 $ 301
Spring Cove School District (GO)
2.998% ............ 10/01/99 290 290
Temple University, Funding Obligations,
Callable @100 10/01/99 Series 1999
3.150% 05/12/00 1,000 1,000
Upper State Clair Township (GO)
3.600% ............ 10/15/99 405 405
Venango, Pollution Control Revenue
(RB) (A) (B)
3.750% ............ 12/01/12 895 895
Washington County, Authority Lease
(RB) (A) (B) Series 1985
3.250% ............ 11/01/05 4,560 4,560
West Allegheny School District
(GO) Series B
3.050% ............ 08/15/99 265 265
West Chester School District (GO)
3.050% ............ 11/15/99 185 185
West Perry School District (GO)
3.000% ............ 10/01/99 185 185
West View, Municipal Water
Authority (RB)
4.150% ............ 11/15/99 1,000 1,006
West York Area School District
(GO) (FSA)
3.600% ............ 09/01/99 200 200
York County, General Authority Pooled
Financing, School District of
Harrisburg (RB) (AMBAC) (A) (B)
Sub Series 96-b
3.400% ............ 09/01/26 2,000 2,000
York County, Industrial Development
Authority,
PECO Energy Project (RB) (A) (B)
Series A
3.300% ............ 08/01/16 1,000 1,000
Public Service Electric &
Gas Project (RB) (MBIA) (B)
Series 1995-A
3.300% 09/01/20 600 600
--------
129,534
--------
TOTAL MUNICIPAL BONDS
(Cost $129,534) ............................. 129,534
--------
See Accompanying Notes
111
<PAGE>
[ARROW GRAPHIC OMITTED]
STATEMENT OF NET ASSETS
ARMADA PENNSYLVANIA TAX EXEMPT MONEY MARKET FUND
MAY 31, 1999
NUMBER
OF SHARES VALUE
(000) (000)
----- -----
CASH EQUIVALENTS -- 0.2%
Blackrock Pennsylvania Municipal
Money Market Fund ... 100 $ 100
Federated Pennsylvania Cash Trust Fund 219 219
--------
TOTAL CASH EQUIVALENTS
(Cost $319) ................................. 319
--------
TOTAL INVESTMENTS -- 99.1%
(Cost $129,853)* ............................ $129,853
========
OTHER ASSETS AND LIABILITIES,
NET -- 0.9% ................................. 1,183
--------
NET ASSETS:
Portfolio Shares of Class I
(unlimited authorization -- no
par value) based on 77,207,813
outstanding shares of beneficial interest ... 77,208
Portfolio Shares of Class A (unlimited
authorization -- no par value) based on
53,824,158 outstanding shares of
beneficial interest ......................... 53,824
Undistributed net investment income .......... 17
Accumulated net realized loss on investments . (13)
--------
TOTAL NET ASSETS -- 100.0% ..................... $131,036
========
NET ASSET VALUE, OFFERING
AND REDEMPTION PRICE PER
SHARE -- CLASS I ............................. $1.00
========
NET ASSET VALUE, OFFERING
AND REDEMPTION PRICE
PER SHARE -- CLASS A ........................ $1.00
========
- --------
* ALSO COST FOR FEDERAL INCOME TAX PURPOSES.
(A) SECURITIES ARE BACKED BY A LETTER OF CREDIT BACKED BY A MAJOR FINANCIAL
INSTITUTION. THE MATURITY DATE SHOWN IS THE LONGER THE NEXT RESET DATE
OR THE DATE IN WHICH THE PRINCIPAL AMOUNT CAN BE RECOVERED THROUGH
DEMAND.
(B) VARIABLE RATE SECURITY -- THE RATE REFLECTED ON THE STATEMENT OF NET
ASSETS IS THE RATE IN EFFECT ON MAY 31, 1999.
AMBAC -- AMERICAN MUNICIPBOND ASSURANCE CORPORATION
ETM -- ESCROWED TO MATURITY
FGIC -- FEDERALARANTY INSURANCE COMPANY
FSA -- FINANCIAL SECURITY ASSURANCE
GO -- GENERAL OBLIION
MBIA -- MUNICIPAL BOND INSURANCE ASSOCIATION
RB -- REVENUE BOND
TECP -- TAX EXEMPT COMMERCIAL PAPER
See Accompanying Notes
112
<PAGE>
[ARROW GRAPHIC OMITTED
FINANCIAL HIGHLIGHTS
ARMADA PENNSYLVANIA TAX EXEMPT MONEY MARKET FUND
FOR A PORTFOLIO SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
FOR THE YEAR ENDED MAY 31,
----------------------------------------------------------
1999 1998 1997
----------------------------------------------------------
CLASS I CLASS A CLASS I CLASS A CLASS I3 CLASS A4
------------------ -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ......... $ 1.00 $ 1.00 $ 1.00 1.00 1.00 $ 1.00
-------- -------- -------- -------- -------- --------
INCOME FROM INVESTMENT OPERATIONS
Net investment income ...................... 0.03 0.03 0.03 0.03 0.03 0.02
LESS DISTRIBUTIONS
Dividends from net investment income ....... (0.03) (0.03) (0.03) (0.03) (0.03) (0.02)
-------- -------- -------- -------- -------- --------
Net asset value, end of period ............... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ======== ========
TOTAL RETURN ................................. 2.92% 2.76%5 3.41% 3.29%5 3.26% 3.18%1
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000's) ....... $ 77,214 $ 53,822 $73,264 $ 33,375 $60,876 $ 20,830
Ratio of expenses to average net assets .... 0.34% 0.49% 0.34% 0.46% 0.41% 0.46%1
Ratio of net investment income to average
net assets ................................ 2.82% 2.67% 3.35% 3.23% 3.20% 3.27%1
Ratio of expenses to average net assets
before fee waivers ........................ 0.59% 0.74% 0.58% 0.71% 0.74% 0.71%1
Ratio of net investment income to average
net assets before fee waivers ............. 2.57% 2.42% 3.11% 2.98% 2.87% 3.02%1
</TABLE>
<TABLE>
<CAPTION>
FOR THE FOR THE FOR THE
PERIOD ENDED YEAR ENDED PERIOD ENDED
MAY 31, 19963 APRIL 30, 19963 APRIL 30, 19953
------------ -------------- --------------
<S> <C> <C> <C>
Net asset value, beginning of period ......... $ 1.00 $ 1.00 $ 1.00
-------- -------- --------
INCOME FROM INVESTMENT OPERATIONS
Net investment income ...................... 0.00 0.03 0.02
LESS DISTRIBUTIONS
Dividends from net investment income ....... (0.00) (0.03) (0.02)
-------- -------- --------
Net asset value, end of period ............... $ 1.00 $ 1.00 $ 1.00
======== ======== ========
TOTAL RETURN ................................. 0.28%2 3.36% 2.32%2
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000's) ....... $ 68,742 $ 70,422 $ 56,668
Ratio of expenses to average net assets .... 0.55%1 0.55% 0.55%1
Ratio of net investment income to average
net assets ................................ 3.24%1 3.29% 3.21%1
Ratio of expenses to average net assets
before fee waivers ........................ 0.97%1 0.96% 1.04%1
Ratio of net investment income to average
net assets before fee waivers ............. 2.82%1 2.88% 2.72%1
</TABLE>
1 ANNUALIZED.
2 RETURNS ARE FOR THE PERIOD INDICATED AND HAVE NOT BEEN ANNUALIZED.
3 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.
4 CLASS A COMMENCED OPERATIONS ON SEPTEMBER 11, 1996.
See Accompanying Notes
113
<PAGE>
[ARROW GRAPHIC OMITTED]
STATEMENT OF NET ASSETS
ARMADA TAX EXEMPT MONEY MARKET FUND
MAY 31, 1999
PAR VALUE
MATURITY (000) (000)
-------- ----- -----
MUNICIPAL BONDS -- 101.2%
ALASKA -- 1.5%
Valdez, Marine Terminal,
Arco Transportation Project
(RB) (A) (B) Series 1994-B
3.300% ............ 05/01/31 $ 6,000 $ 6,000
(RB) (A) Series 1994-A
2.800% ............ 06/10/99 3,300 3,300
-------
9,300
-------
ARIZONA -- 4.6%
Arizona State, School District (TRAN)
4.100% 07/30/99 1,500 1,501
Maricopa County, Pollution Control
Revenue, Southern California Edison
Project (TECP)
2.850% ............ 06/16/99 1,000 1,000
2.850% ............ 06/17/99 1,150 1,150
3.050% ............ 07/29/99 2,000 2,000
3.050% ............ 08/12/99 2,600 2,600
Series D
2.950% ............ 06/10/99 1,000 1,000
Series E
2.800% ............ 06/11/99 2,000 2,000
Series F
3.050% ............ 07/23/99 3,250 3,250
Arizona State, Agricultural
Improvement & Power District,
Salt River Project (TECP)
2.700% ............ 06/15/99 4,000 4,000
3.050% ............ 08/11/99 1,370 1,370
3.150% ............ 09/13/99 3,000 3,000
Series B
3.150% ............ 07/15/99 6,000 6,000
-------
28,871
-------
COLORADO -- 2.1%
Colorado Springs, Utility (RB)
6.100% 11/15/99 820 831
Colorado State, Health Facilities Authority,
Catholic Health Initiatives
(RB) (A) (B) Series B
3.300% ............ 12/01/25 7,700 7,700
North Colorado Medical Center
(RB) (A) (B)
3.200% ............ 05/15/20 4,300 4,300
-------
12,831
-------
CONNECTICUT -- 0.6%
Connecticut State (GO) Series C
3.500% ............ 10/15/99 4,000 4,010
-------
PAR VALUE
MATURITY (000) (000)
-------- ----- -----
MUNICIPAL BONDS -- CONTINUED
FLORIDA -- 2.9%
Gainesville, Utilities System (TECP)
3.100% 06/22/99 $3,251 $ 3,251
Jacksonville, Pollution Control Revenue,
Florida Power & Light (TECP)
2.750% ............ 06/15/99 5,810 5,810
3.450% ............ 06/17/99 5,000 5,000
2.850% ............ 06/17/99 2,450 2,450
3.050% ............. 08/11/99 1,700 1,700
-------
18,211
-------
GEORGIA -- 3.8%
Burke County, Pollution Control
Revenue, Oglethorne Power Plant,
Vogtle Project (A) (B) Series 1995
3.400% ............ 04/01/25 5,000 5,000
Georgia State, Municipal
Electric Authority
3.400% 06/08/99 5,435 5,435
Georgia State, ........
Agency Project (RB) (A) (B) Series C
3.300% ............ 11/01/07 7,800 7,800
Municipal Gas Authority Southern
Portfolio Project (RB) (A)
3.100% ............ 09/08/99 3,585 3,585
Savannah, Development Authority,
Downtown Parking Authority
(RB) (A) (B)
3.200% ............ 09/01/05 2,000 2,000
-------
23,820
-------
ILLINOIS -- 3.2%
Illinois State, Educational Facilities
Authority, Northwestern University
(RB) (A) (B)
3.300% ............ 03/01/28 8,736 8,736
Illinois State, Fox Valley Park (GO)
3.375% ............ 12/15/99 2,975 2,979
Illinois State, Health Facilities Authority,
Advocate Healthcare Network
(RB) (A) (B) Series B
3.300% ............ 08/15/22 4,965 4,965
Illinois State, Health Facilities Authority,
Evanston Northwestern (RB)
3.700% ............ 06/01/99 2,000 2,000
Illinois State, Hospital Development
Finance Authority, Palos Community
Hospital (RB) (A) (B) Series 1994-2
3.300% ............ 11/15/11 1,500 1,500
-------
20,180
-------
See Accompanying Notes
114
<PAGE>
[ARROW GRAPHIC OMITTED]
STATEMENT OF NET ASSETS
ARMADA TAX EXEMPT MONEY MARKET FUND
MAY 31, 1999
PAR VALUE
MATURITY (000) (000)
-------- ----- -----
MUNICIPAL BONDS -- CONTINUED
INDIANA -- 8.9%
Evansville, Economic Development
Authority, Ball Corporation Project
(RB) (A) (B)
3.250% ............ 12/01/08 $1,500 $ 1,500
Indiana State, Bond Bank Advance
Funding Program Notes, Series A2
3.500% ............ 01/19/00 2,550 2,558
Indiana State, Health Facilities Finance
Authority (RB) (A) (B)
3.300% ............ 12/01/02 1,000 1,000
3.300% ............ 08/01/06 3,400 3,400
Indiana State, Hospital Equipment
Finance Authority (RB) (A) (B)
3.300% ............ 12/01/15 11,200 11,200
Purdue University, Indiana Universities
Trustees Student Fee (RB) (A) (B)
Series E
3.250% ............ 07/01/11 5,465 5,465
Series H
3.250% ............ 07/01/17 4,965 4,965
Series L
3.250% ............ 07/01/20 905 905
Series O
3.250% ............ 07/01/19 5,850 5,850
Sullivan, Hoosier Energy (TECP)
Series F
2.950% ............ 06/10/99 1,500 1,500
3.050% ............ 08/13/99 4,545 4,545
Series L2
3.050% ............ 07/30/99 4,000 4,000
Series L4
2.800% ............ 06/11/99 4,295 4,295
Sullivan, National Rural Utilities (RB)
3.100% ............ 06/21/99 4,500 4,500
-------
55,683
-------
KENTUCKY -- 1.4%
Jefferson County, Louisville
Gas & Electric (TECP)
Series1996-A
3.250% ............ 06/16/99 4,000 4,000
3.000% ............ 06/24/99 2,000 2,000
Kentucky State, Economic Development,
Turnpike Authority (RB)
7.250% ............ 05/15/00 1,000 1,053
Lexington-Fayette, Urban County
Public Facility (RB)
3.500% ............ 05/01/00 1,550 1,554
-------
8,607
-------
PAR VALUE
MATURITY (000) (000)
-------- ----- -----
MUNICIPAL BONDS -- CONTINUED
LOUISIANA -- 0.3%
Louisiana State, Parrish of Saint James,
Pollution Control Revenue,
Texaco Project, Series 1988 A
3.250% ............ 07/29/99 $ 2,000 $ 2,000
-------
MAINE -- 0.4%
Maine State, Health & Higher
Education Facilities Authority
(RB) (A) (B) Series C
3.350% ............ 12/01/25 2,600 2,600
-------
MARYLAND -- 0.8%
Montgomery County (TECP)
3.350% ............ 06/25/99 3,000 3,000
Washington Suburban Station,
Sanitation Authority (BAN) (A) (B)
3.250% ............ 08/01/04 2,000 2,000
-------
5,000
-------
MASSACHUSETTS -- 0.1%
Massachusetts State (GO) (FGIC)
7.250% ............ 03/01/09 725 761
-------
MICHIGAN -- 2.4%
Michigan State, Building Authority
(TECP) Series 1
3.150% ............ 08/05/99 2,000 2,000
Michigan State, Housing Development
Authority, Pine Ridge (RB) (A) (B)
3.250% ............ 10/01/17 3,900 3,900
Michigan State, Municipal Bond
Authority (RB)
Series 1998-D1
3.580% ............ 08/27/99 2,000 2,003
3.500% ............ 12/01/99 2,000 2,006
Series 1998-B2
4.500% ............ 07/02/99 2,000 2,002
Michigan State, Truck Line
(FGIC) (RB) Series B
4.700% ............ 11/15/99 1,780 1,794
Michigan Technological University,
Board of Control (RB) (A) (B)
Series A
3.300% ............ 10/01/18 1,000 1,000
-------
14,705
-------
MINNESOTA -- 8.4%
Becker, Pollution Control Revenue,
Northern States Power (TECP)
2.950% ............ 06/09/99 2,200 2,200
2.850% ............ 06/16/99 2,000 2,000
3.100% ............ 06/23/99 5,000 5,000
3.050% ............ 07/30/99 4,000 4,000
3.150% ............ 08/25/99 2,000 2,000
See Accompanying Notes
115
<PAGE>
[ARROW GRAPHIC OMITTED]
STATEMENT OF NET ASSETS
ARMADA TAX EXEMPT MONEY MARKET FUND
MAY 31, 1999
PAR VALUE
MATURITY (000) (000)
-------- ----- -----
MUNICIPAL BONDS -- CONTINUED
MINNESOTA -- CONTINUED
Hennepin County (GO) (A) (B) Series C
3.150% ............ 12/01/04 $ 6,100 $ 6,100
3.150% ............ 12/01/10 4,000 4,000
Minneapolis (GO) (A) (B) Series 1997-B
3.150% ............ 12/01/07 5,850 5,850
Minneapolis, University Gateway Project
(GO) (A) (B) Series B
3.200% ............ 12/01/27 6,350 6,350
Minnesota State (GO)
6.400% ............ 08/01/99 3,000 3,018
Minnesota State, School Districts
Tax & Aid Anticipation Borrowing
Certificate,
Series A 3.000% 02/03/00 2,000 2,000
Series B ............
2.950% ............ 02/24/00 2,000 2,000
Olmsted County, Human Services
Campus Infrastructure (RB) (A) (B)
3.200% ............ 08/01/05 3,755 3,755
Rochester, Healthcare Facilities,
Mayo Foundation, (TECP) Series E
3.150% ............ 07/14/99 4,100 4,100
-------
52,373
-------
MISSISSIPPI -- 1.8%
Forest, Industrial Development
(RB) (A) (B)
3.300% ............ 10/01/12 8,000 8,000
Jackson County, Water System (GO)
2.900% ............ 08/02/99 2,200 2,200
Mississippi State (GO) Series E
5.000% ............ 09/01/99 1,000 1,005
-------
11,205
-------
MISSOURI -- 0.8%
Missouri State, Health & Educational
Facility Authority,
School District Advance Funding Note
4.250% ............ 09/13/99 2,000 2,003
Sisters of Mercy (RB) (A) (B) Series C
3.200% ............ 06/01/19 2,100 2,100
(RB) (A) (B) Series D
3.200% ............ 06/01/19 1,000 1,000
-------
5,103
-------
NEBRASKA -- 0.3%
Nebraska State, Public Power
District (RB)
5.000% ............ 07/01/99 2,000 2,003
-------
PAR VALUE
MATURITY (000) (000)
-------- ----- -----
MUNICIPAL BONDS -- CONTINUED
NEVADA -- 1.2%
Clarke County, Flood Control
District (GO)
4.500% ............ 11/01/99 $ 4,640 $ 4,664
Henderson, Water & Sewer (GO)
5.000% ............ 09/01/99 2,860 2,872
-------
7,536
-------
NEW HAMPSHIRE -- 0.3%
New Hampshire State, Higher Education
& Health Facilities (RB) (A) (B)
Series E
3.350% ............ 12/01/25 1,000 1,000
New Hampshire State (GO)
5.000% ............ 02/01/00 1,000 1,012
-------
2,012
-------
NEW YORK -- 0.2%
New York State, Public Improvements
(GO) (A) (B) Series A-9
3.200% ............ 08/01/18 1,415 1,415
-------
NORTH CAROLINA -- 3.3%
North Carolina State, Educational
Facilities,
Bowman Gray School of Medicine
Project (RB) (A) (B)
3.250% ............ 09/01/20 10,600 10,600
Guilford College
(RB) (MBIA) (A) (B)
3.300% ............ 05/01/24 2,000 2,000
Winston-Salem, Municipal Leasing
(RB) (A) (B)
3.250% ............ 07/01/03 7,800 7,800
-------
20,400
-------
OHIO -- 19.8%
Cleveland (GO) (MBIA)
4.000% ............ 08/01/99 100 100
Columbus (GO) (B) Series 1
3.100% ............ 12/01/17 400 400
Columbus (TRAN) (B) Series 1995-1
3.100% ............ 06/01/16 4,750 4,750
Cuyahoga County, Hospital Facilities
Authority, Cleveland Clinic Foundation
(RB) (A) (B) Series 1996-B
3.300% ............ 01/01/26 5,800 5,800
(RB) (AMBAC) (B) Series 1997-A
3.300% ............ 01/01/16 860 860
Refunding (RB) (AMBAC) (B)
Series B
3.300% ............ 01/01/16 280 280
See Accompanying Notes
116
<PAGE>
[ARROW GRAPHIC OMITTED]
STATEMENT OF NET ASSETS
ARMADA TAX EXEMPT MONEY MARKET FUND
MAY 31, 1999
PAR VALUE
MATURITY (000) (000)
-------- ----- -----
MUNICIPAL BONDS -- CONTINUED
OHIO -- CONTINUED
Cuyahoga County, Hospital Facilities
Authority, Cleveland Clinic Foundation
(RB) (A) (B) Series 1997-D
3.400% ............ 01/01/26 $ 7,250 7,250
Dublin County, City School District
(GO) (MBIA)
4.000% ............ 12/01/99 155 156
Ohio State, Water Improvement (BAN)
4.200% ............ 12/02/99 1,500 1,502
Erie County (BAN)
4.250% ............ 06/01/99 2,000 2,000
Franklin County, Hospital Authority,
Holy Cross Health System
(RB) (A) (B)
3.300% ............ 06/01/16 3,800 3,800
Greater Cleveland, Regional
Transportation Authority (GO) (FGIC)
4.450% ............ 12/01/99 100 101
Lake County (GO) (BAN)
3.375% ............ 10/07/99 1,807 1,809
Lima Memorial Hospital (RB) (B)
Series 1996
3.350% ............ 12/01/10 310 310
Lucas County (GO) (FGIC)
5.000% ............ 12/01/99 600 606
4.100% ............ 12/01/99 100 101
Mahoning County (RB) (MBIA) (B)
3.250% ............ 12/01/28 11,600 11,600
Masillon (GO) (BAN)
3.730% ............ 01/14/00 1,800 1,805
Mason County, City School District
(GO) (BAN) Series 1999
3.380% ............ 02/17/00 750 752
Milford (GO) (BAN)
3.300% ............ 03/01/00 1,160 1,162
Monroe, Unlimited Notes (GO)
3.350% ............ 10/07/99 2,400 2,401
Muskingum County (GO) (BAN)
3.750% ............ 06/01/00 2,650 2,658
Northeast Ohio, Regional Sewer District
(RB) (AMBAC)
4.200% ............ 11/15/99 1,000 1,005
Northwest Ohio School District
(GO) (FGIC)
3.900% ............ 12/01/99 100 100
Ohio State, Air Quality Development
Authority, Cincinnati Gas & Electric
(RB) (B) Series 1985-A
3.450% ............ 12/01/15 2,300 2,300
(RB) (A) (B)
3.450% ............ 12/01/15 1,050 1,050
PAR VALUE
MATURITY (000) (000)
-------- ----- -----
MUNICIPAL BONDS -- CONTINUED
OHIO -- CONTINUED
Ohio State, Air Quality Development
Authority, Cleveland Electric
Illuminating Co. (TECP)
3.100% ............ 06/16/99 $ 2,500 2,500
Ohio Edison Project (RB) (A) (B) Series A
2.950% ............ 02/01/15 3,000 3,000
USX Corp. (RB)
3.000% ............ 06/01/99 1,115 1,115
Ohio State, Higher Education Authority,
Lake Erie Project (RB) (A) (B)
3.320% ............ 12/01/16 4,780 4,780
Ohio State, Infrastructure Development
Authority (RB)
4.250% ............ 12/15/99 1,685 1,696
Ohio State, Public Facilities, Higher
Education Commission (RB) Series II-B
4.250% ............ 06/01/99 250 250
Ohio State, School District Tax
Anticipation Certificate, Series B
4.050% ............ 06/30/99 1,000 1,000
Ohio State University, General Receipts
(RB) (B) Series 1986-B
3.150% ............ 12/01/06 10,310 10,310
Ohio State Water Development
Authority (RB)
6.500% ............ 09/01/99 1,615 1,629
Orange City, State School District
3.460% ............ 08/18/99 2,000 2,001
(GO) (BAN)
3.440% ............ 08/18/99 4,500 4,504
Orrville, Electric System
(RB) (AMBAC)
4.100% ............ 12/01/99 200 201
Pike Delta, York School (BAN)
3.480% ............ 03/02/00 1,850 1,855
Ross County, Hospital Facilities
Authority, Medical Center Hospital
Project (RB) (B)
3.250% ............ 12/01/20 150 150
Adena Health System
(RB) (B) Series 1998
3.250% ............ 12/01/23 1,800 1,800
Scioto County, Volunteer Hospital
Administration, Central Capital Asset
Financing Program
(RB) (AMBAC) (A) (B) Series D
3.350% ............ 12/01/25 600 600
(RB) (A) (B) Series E
3.350% ............ 12/01/25 590 590
(RB) (A) (B) Series G
3.350% ............ 12/01/25 800 800
See Accompanying Notes
117
<PAGE>
[ARROW GRAPHIC OMITTED]
STATEMENT OF NET ASSETS
ARMADA TAX EXEMPT MONEY MARKET FUND
MAY 31, 1999
PAR VALUE
MATURITY (000) (000)
-------- ----- -----
MUNICIPAL BONDS -- CONTINUED
OHIO -- CONTINUED
Southwest Licking, School District
(AN)
3.750% ............ 06/15/99 $ 1,000 $ 1,000
Series B
3.730% ............ 07/20/99 1,500 1,501
Summit County (TRAN)
4.250% ............ 06/03/99 8,000 8,000
Summit County (GO) (BAN)
3.800% ............ 06/01/00 8,000 8,046
Sycamore, Community School
District (AN)
3.850% ............ 07/28/99 1,000 1,001
Toledo, Services Special Assessment
Notes (A) (B) Series B
3.250% ............ 06/01/00 4,220 4,220
Twinsburg, Ohio Local School
District (GO)
5.750% ............ 12/01/99 200 203
University of Cincinnati, General Receipts
(BAN)
3.260% ............ 12/21/99 1,375 1,377
(RB)
4.150% ............ 06/01/99 235 235
Warren County, (GO)
4.150% ............ 12/01/99 115 116
Warren County, Health Facilities/
Otterbein Homes (RB) (A) (B)
3.300% ............ 07/01/23 1,900 1,900
Washington Water System Improvement
(BAN)
3.250% ............ 11/18/99 1,550 1,552
Whitehall (GO) (AMBAC)
4.100% ............ 12/01/99 100 101
Wooster, Industrial Development
Authority, Allen Group Project (RB) (B)
3.500% ............ 12/01/10 700 700
--------
123,391
--------
PENNSYLVANIA -- 10.7%
Allegheny County, Higher Educational
Carnegie Mellon University Building
Authority (RB) (A) (B)
3.350% ............ 12/01/03 2,000 2,000
Allegheny County, Industrial
Development Authority,
Environmental Improvement, USX
(RB) (A) (B)
3.150% ............ 12/01/32 10,000 10,000
PAR VALUE
MATURITY (000) (000)
-------- ----- -----
MUNICIPAL BONDS -- CONTINUED
PENNSYLVANIA --CONTINUED
Beaver County, Pollution Control
Revenue,
Atlantic Richfield Project (RB) (A) (B)
3.400% ............ 12/01/20 $ 1,000 $ 1,000
Duquesne Light
Project (TECP)
3.100% ............ 07/09/99 2,500 2,500
Delaware County, Industrial
Development Authority,
PECO Energy (TECP)
2.850% ............ 07/06/99 2,000 2,000
Delaware County, Pollution Control
Revenue, PECO Energy
(TECP) (FGIC)
3.100% ............ 07/30/99 2,000 2,000
Delaware Valley, Finance Authority,
Local Government (RB) (A) (B)
Series D
3.200% ............ 08/01/16 2,700 2,700
Emmaus, General Authority
(RB) (A) (B)
3.250% ............ 12/01/28 3,000 3,000
(RB) (A) (B) Series G-9
3.450% ............ 03/01/24 1,000 1,000
(RB) (A) (B) Series E-11
3.450% ............ 03/01/24 100 100
3.450% ............ 03/01/24 1,600 1,600
Lehigh County, Lehigh Valley Hospital
(RB) (Mbia) (A) (B) Series B
3.250% ............ 07/01/29 4,900 4,900
Northampton County, Higher Education
Authority, Lafayette College
(RB) (A) (B) Series B
3.300% ............ 11/01/28 2,000 2,000
Pennsylvania State (TECP)
3.200% ............ 07/07/99 3,000 3,000
Pennsylvania State, Economic
Development Authority (RB) (AMBAC)
5.000% ............ 01/01/00 2,000 2,022
Pennsylvania State, Higher Education
Facility,
Carnegie Mellon University Project,
(RB) (A) (B) Series C
3.350% ............ 11/01/29 2,400 2,400
University of Pennsylvania
Health Services Project (RB) (A) (B)
Series C
3.450% ............ 01/01/26 6,000 6,000
See Accompanying Notes
118
<PAGE>
[ARROW GRAPHIC OMITTED]
STATEMENT OF NET ASSETS
ARMADA TAX EXEMPT MONEY MARKET FUND
MAY 31, 1999
PAR VALUE
MATURITY (000) (000)
-------- ----- -----
MUNICIPAL BONDS -- CONTINUED
PENNSYLVANIA -- CONTINUED
Pennsylvania State, Turnpike
Commission (RB) Series P
5.100% ............ 12/01/99 $ 1,150 $ 1,161
Philadelphia, Industrial Development
Authority, Fox Chase Cancer Center
Project (RB) (A) (B) Series 1997
3.400% ............ 07/01/25 6,200 6,200
Quakertown, Hospital Facilities Authority
(RB) (A) (B)
3.450% ............ 07/01/05 4,700 4,700
Sayre, Healthcare Center Facility
Authority (RB) (AMBAC) (B)
3.300% ............ 12/01/20 3,000 3,000
University of Pennsylvania (GO) (A) (B)
3.450% 01/01/24 100 100
Washington County, Authority Lease
(RB) (A) (B) Series 1985
3.250% ............ 11/01/05 3,730 3,730
-------
67,113
-------
SOUTH CAROLINA -- 1.0%
Lexington, Water & Sewer System (AN)
3.500% ............ 10/15/99 1,000 1,002
Oconee County School District (GO)
6.100% ............ 03/01/00 1,505 1,538
South Carolina State, Public Service,
Santee Cooper Project (TECP)
3.150% ............ 07/22/99 1,500 1,500
York County, Pollution Control Revenue,
North Carolina Electric Cooperative
(RB) (A) (B) Series N3
3.000% ............ 09/15/14 2,000 2,000
-------
6,040
-------
TENNESSEE -- 2.9%
Sevier County, Public Building Authority
(RB) (AMBAC) (B)
3.250% ............ 06/01/17 3,105 3,105
3.250% ............ 06/01/27 2,500 2,500
Tennessee State (A) (B) (GO), Puttable
Trust Receipts @ 108 Series
3.370% ............ 05/01/14 2,000 2,000
Tennessee State, School Bond
Authority (TECP)
3.100% ............ 06/16/99 1,000 1,000
3.150% ............ 07/29/99 5,800 5,800
2.950% ............ 08/18/99 3,400 3,400
-------
17,805
-------
PAR VALUE
MATURITY (000) (000)
-------- ----- -----
MUNICIPAL BONDS -- CONTINUED
TEXAS -- 4.2%
Austin, Combined Utility System (TECP)
3.200% ............ 06/24/99 $3,600 $ 3,600
Gulf Coast, Industrial Development
Authority, Amoco Oil Project
(RB) (A) (B)
3.000% ............ 06/01/25 2,500 2,500
Red River Authority, Pollution Control
Revenue, Southwestern Public
Service Company Project
(RB) (A) (B)
3.450% ............ 07/01/11 10,000 10,000
San Antonio (GO)
5.000% ............ 08/01/99 1,355 1,358
Stephen F. Austin, University of Texas
(RB) (MBIA) Series A
6.250% ............ 10/15/99 600 607
Texas State (TECP)
2.950% ............ 08/23/99 3,000 3,000
University of Texas,
Permanent University Fund (RB)
3.150% ............ 09/15/99 2,000 2,000
Revenue Financing System (RB)
Series A
5.400% ............ 08/15/99 1,320 1,327
Series B
5.000% ............ 08/15/99 1,550 1,557
-------
25,949
-------
UTAH -- 2.8%
Emery County, Pollution Control
Revenue, Pacificorp Project
(RB) (A) (B)
3.250% ............ 07/01/15 2,700 2,700
Intermountain Power (TECP)
Series 1997-B
2.950% ............ 06/08/99 2,000 2,000
3.050% ............ 08/13/99 1,000 1,000
Series 1985-F
3.100% ............ 08/12/99 1,500 1,500
Utah State Highway (GO)
3.150% ............ 08/16/99 2,000 2,000
3.150% ............ 08/16/99 3,000 3,000
Utah University, Auxiliary & Campus
Facilities (RB) (A) (B) Series 1997-A
3.300% ............ 04/01/27 5,050 5,050
-------
17,250
-------
See Accompanying Notes
119
<PAGE>
[ARROW GRAPHIC OMITTED]
STATEMENT OF NET ASSETS
ARMADA TAX EXEMPT MONEY MARKET FUND
MAY 31, 1999
PAR VALUE
MATURITY (000) (000)
-------- ----- -----
MUNICIPAL BONDS -- CONTINUED
VERMONT -- 0.4%
Vermont State (GO)
6.800% ............ 02/01/00 $ 1,300 $ 1,331
Series A
4.250% ............ 01/15/00 1,215 1,224
--------
2,555
--------
VIRGINIA -- 3.3%
Hampton, Hospital Facilities Authority,
Sentara Health System (RB) Series B
3.050% ............ 08/12/99 2,300 2,300
Roanoke, Industrial Development
Authority, Roanoke Memorial Hospital
(RB) (A) (B) Series A
3.400% ............ 07/01/19 5,000 5,000
3.400% ............ 07/01/27 6,200 6,200
Virginia State, Peninsula Ports Authority,
Coal Terminal, Dominion Project (RB)
Series PJ-B
3.000% ............ 06/04/99 2,835 2,835
Virginia State, Public School Authority
(RB)
5.000% ............ 08/01/99 3,105 3,116
4.000% ............ 08/01/99 1,185 1,187
--------
20,638
--------
WASHINGTON -- 1.5%
Chelan County, Chelan Homes
(RB) (A) (B)
3.250% ............ 06/01/15 4,260 4,260
Washington State, Healthcare Facility
Authority, Fred Hutchinson Cancer
Research Center (RB) (A) (B)
Series 1991-A
3.500% ............ 01/01/18 200 200
(RB) (B)
3.500% ............ 01/01/23 5,000 5,000
--------
9,460
--------
WISCONSIN -- 4.2%
Kenosha (TRAN)
3.380% ............ 09/28/99 2,000 2,000
Oak Creek, Pollution Control Revenue,
Wisconsin Electric Power Company
Project (RB) (A) (B)
3.400% ............ 08/01/16 3,300 3,300
Wisconsin State (GO)
4.800% ............ 11/01/99 1,250 1,259
Wisconsin State (TECP)
3.150% ............ 09/13/99 3,154 3,154
3.150% ............ 09/14/99 4,040 4,040
PAR/SHARES VALUE
MATURITY (000) (000)
-------- ----- -----
MUNICIPAL BONDS -- CONTINUED
WISCONSIN -- CONTINUED
Wisconsin State (TECP)
2.800% ............ 06/14/99 $ 3,916 $ 3,916
2.750% ............ 06/14/99 2,301 2,301
Series A
2.700% ............ 06/11/99 4,188 4,188
Series B
2.650% ............ 06/14/99 2,386 2,386
--------
26,544
--------
WYOMING -- 1.1%
Lincoln County, Pollution Control
Revenue, Pacificorp (TECP)
3.200% ............ 07/13/99 2,000 2,000
Sweetwater, Pollution Control Revenue,
Pacificorp (TECP)
3.400% ............ 06/17/99 3,500 3,500
3.150% ............ 06/17/99 1,400 1,400
--------
6,900
--------
TOTAL MUNICIPAL BONDS
(Cost $632,271) ............................. 632,271
--------
CASH EQUIVALENTS -- 0.1%
Federated Tax-Free Money
Market Fund ......... 100 100
Goldman Sachs Financial Square Tax-
Exempt Money Market Fund 308 308
--------
TOTAL CASH EQUIVALENTS
(Cost $408) ................................. 408
--------
TOTAL INVESTMENTS -- 101.3%
(Cost $632,679)* ............................ $632,679
========
OTHER ASSETS AND LIABILITIES,
NET -- (1.3%) .............................. (8,032)
--------
See Accompanying Notes
120
<PAGE>
[ARROW GRAPHIC OMITTED]
STATEMENT OF NET ASSETS
ARMADA TAX EXEMPT MONEY MARKET FUND
MAY 31, 1999
VALUE
(000)
-----
NET ASSETS:
Portfolio Shares of Class I
(unlimited authorization -- no par value)
based on 434,455,683 outstanding shares of
beneficial interest ......................... $434,456
Portfolio Shares of Class A
(unlimited authorization -- no par value)
based on 190,481,642 outstanding shares of
beneficial interest ......................... 190,482
Accumulated net realized loss on investments . (25)
Distributions in excess of net investment income (266)
--------
TOTAL NET ASSETS -- 100.0% ..................... $624,647
========
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER
SHARE -- CLASS I ............................ $1.00
========
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER
SHARE -- CLASS A ........................... $1.00
========
----------
* ALSO COST FOR FEDERAL INCOME TAX PURPOSES.
(A) SECURITIES ARE BACKED BY A LETTER OF CREDIT BY A MAJOR FINANCIAL
INSTITUTION.
(B) VARIABLE RATE SECURITIES -- THE RATE REFLECTED ON THE STATEMENT OF NET
ASSETS IS THE RATE IN EFFECT ON MAY 31, 1999. THE MATURITY DATE SHOWN
IS THE LONGER OF THE NEXT RESET DATE OR THE DATE IN WHICH THE PRINCIPAL
AMOUNT CAN BE RECOVERED THROUGH DEMAND.
AMBAC -- AMERICAN MUNICIPAL BOND ASSURANCE CORPORATION
AN -- ANTICIPATION NOTE
BAN -- BOND ANTICIPATION NOTE
FGIC -- FEDERAL GUARANTY INSURANCE CORPORATION
GO -- GENERAL OBLIGATION
MBIA -- PRINICIPAL BOND INSURANCE ASSOCIATION
RB -- REVENUE BOND
TECP -- TAX EXEMPT COMMERCIAL PAPER
TRAN -- TAX AND REVENUE ANTICIPATION NOTE
See Accompanying Notes
121
<PAGE>
[ARROW GRAPHIC OMITTED]
FINANCIAL HIGHLIGHTS
ARMADA TAX EXEMPT MONEY MARKET FUND
FOR A PORTFOLIO SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
FOR THE YEAR ENDED MAY 31,
-----------------------------------------------------------------------------------------------------------
1999 1998 1997 1996 1995
-----------------------------------------------------------------------------------------------------------
CLASS I CLASS A CLASS I CLASS A CLASS I CLASS A CLASS I CLASS A CLASS I CLASS A
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning
of period .......... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
INCOME FROM INVESTMENT
OPERATIONS
Net investment
income ........... 0.03 0.03 0.03 0.03 0.03 0.03 0.03 0.03 0.03 0.03
LESS DISTRIBUTIONS
Dividends from net
investment income . (0.03) (0.03) (0.03) (0.03) (0.03) (0.03) (0.03) (0.03) (0.03) (0.03)
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Net asset value,
end of period ..... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ======== ======== ======== ======== ======== ========
TOTAL RETURN 3.00% 2.85% 3.40% 3.27% 3.23% 3.12% 3.40% 3.29% 3.14% 3.04%
RATIOS/SUPPLEMENTAL DATA
Net assets,
end of period
(in 000's) ........ $434,178 $190,469 $418,953 $132,548 $370,679 $ 71,917 $261,808 $ 85,928 $172,643 $51,916
Ratio of expenses
to average
net assets ....... 0.30% 0.44% 0.30% 0.42% 0.29% 0.39% 0.30% 0.40% 0.35% 0.46%
Ratio of net
investment income
to average
net assets ........ 2.92% 2.78% 3.32% 3.20% 3.18% 3.08% 3.33% 3.23% 3.15% 3.17%
Ratio of expenses to
average net assets
before fee waivers 0.50% 0.64% 0.50% 0.62% 0.49% 0.59% 0.51% 0.61% 0.56% 0.67%
Ratio of net
investment
income to
average net
assets before
fee waivers ...... 2.72% 2.58% 3.12% 3.00% 2.98% 2.88% 3.12% 3.02% 2.94% 2.96%
</TABLE>
See Accompanying Notes
122
<PAGE>
[ARROW GRAPHIC OMITTED]
STATEMENT OF NET ASSET
ARMADA MONEY MARKET FUND
MAY 31, 1999
PAR VALUE
MATURITY (000) (000)
-------- ----- -----
COMMERCIAL PAPER+-- 83.7%
AGRICULTURE -- 1.0%
Canadian Wheat Board
4.770% ............ 07/16/99 $ 12,290 $ 12,217
4.820% ............ 09/27/99 7,500 7,381
4.760% ............ 10/08/99 15,000 14,744
--------
34,342
--------
AUTOMOTIVE -- 2.8%
Daimler Chrysler
4.860% ............ 06/16/99 10,000 9,980
4.820% ............ 07/07/99 15,000 14,928
4.790% ............ 08/04/99 15,000 14,872
4.810% ............ 08/05/99 15,000 14,870
4.810% ............ 08/06/99 15,000 14,868
4.810% ............ 08/25/99 15,000 14,830
4.810% ............ 09/08/99 15,000 14,802
--------
99,150
--------
CHEMICALS & ALLIED PRODUCTS -- 13.7%
Air Products & Chemicals
4.770% ............ 07/22/99 15,000 14,899
Akzo Nobel
4.810% ............ 06/02/99 5,000 4,999
4.860% ............ 06/03/99 10,000 9,997
4.840% ............ 07/29/99 15,000 14,883
4.810% ............ 08/18/99 15,000 14,844
4.800% ............ 08/24/99 10,000 9,888
4.870% ............ 09/17/99 15,000 14,781
Bayer
4.780% ............ 07/27/99 15,000 14,888
Clorox
4.810% ............ 06/24/99 5,000 4,985
4.810% ............ 06/25/99 13,720 13,676
E.I. duPont de Nemours
4.810% ............ 06/07/99 15,000 14,988
4.840% ............ 06/16/99 15,000 14,970
4.810% ............ 06/23/99 15,000 14,956
4.810% ............ 07/14/99 15,000 14,914
4.810% ............ 07/19/99 15,000 14,904
4.800% ............ 11/10/99 15,000 14,676
Great Lakes Chemical
4.820% ............ 06/09/99 11,000 10,988
4.780% ............ 06/14/99 5,000 4,991
4.780% ............ 06/22/99 10,000 9,972
4.800% ............ 06/23/99 10,000 9,971
4.820% ............ 07/01/99 10,000 9,960
4.790% ............ 07/22/99 10,000 9,932
4.820% ............ 08/11/99 10,000 9,905
4.850% ............ 08/19/99 4,440 4,393
4.800% ............ 08/25/99 10,000 9,887
Henkel
4.800% ............ 06/07/99 15,000 14,988
4.820% ............ 06/23/99 10,000 9,970
4.800% ............ 08/02/99 10,000 9,917
4.810% ............ 08/18/99 8,000 7,917
4.800% ............ 09/01/99 14,000 13,828
4.800% ............ 10/05/99 11,000 10,815
4.790% ............ 10/06/99 12,000 11,797
PAR VALUE
MATURITY (000) (000)
-------- ----- -----
COMMERCIAL PAPER -- CONTINUED
CHEMICALS & ALLIED PRODUCTS -- CONTINUED
Monsanto
4.850% ............ 06/02/99 $ 10,000 $ 9,999
4.780% ............ 06/09/99 15,000 14,984
4.820% ............ 06/22/99 15,781 15,737
4.820% ............ 07/06/99 5,000 4,977
4.770% ............ 07/28/99 14,000 13,894
4.810% ............ 09/28/99 7,015 6,903
Procter & Gamble
4.800% ............ 06/02/99 15,000 14,998
4.810% ............ 06/16/99 15,000 14,970
4.800% ............ 06/29/99 15,000 14,944
--------
477,885
--------
COMMUNICATIONS -- 2.1%
Ameritech
4.900% ............ 06/03/99 20,000 19,995
AT & T
4.820% ............ 06/02/99 15,000 14,998
4.820% ............ 06/08/99 15,000 14,986
Bell South
4.900% ............ 06/02/99 25,000 24,997
--------
74,976
--------
COMPUTER & OFFICE EQUIPMENT -- 0.4%
Xerox
4.830% ............ 06/02/99 15,000 14,998
--------
DIVERSIFIED -- 4.7%
General Electric Capital
4.820% ............ 06/02/99 10,000 9,999
4.820% ............ 06/16/99 15,000 14,970
4.880% ............ 08/18/99 15,000 14,841
4.810% ............ 09/08/99 5,000 4,934
4.820% ............ 09/14/99 15,000 14,789
4.910% ............ 01/31/00 15,000 14,501
4.950% ............ 02/03/00 10,000 9,660
5.080% ............ 02/16/00 15,000 14,450
Koch
4.920% ............ 06/01/99 50,000 50,000
Minnesota Mining & Manufacturing
4.800% ............ 07/19/99 15,000 14,904
--------
163,048
--------
ELECTRIC UTILITIES -- 0.3%
South California Edison
4.810% ............ 06/10/99 10,000 9,988
--------
ELECTRONICS & OTHER ELECTRICAL EQUIPMENT -- 4.2%
Avnet
4.860% ............ 06/03/99 10,000 9,997
4.800% ............ 06/07/99 5,000 4,996
4.800% ............ 06/11/99 10,000 9,987
4.820% ............ 06/14/99 5,000 4,991
4.820% ............ 06/23/99 5,000 4,985
4.800% ............ 07/16/99 5,000 4,970
See Accompanying Notes
123
<PAGE>
[ARROW GRAPHIC OMITTED]
STATEMENT OF NET ASSET
ARMADA MONEY MARKET FUND
MAY 31, 1999
PAR VALUE
MATURITY (000) (000)
-------- ----- -----
COMMERCIAL PAPER -- CONTINUED
ELECTRONICS & OTHER ELECTRICAL EQUIPMENT -- CONTINUED
Eaton
4.870% ............ 08/17/99 $ 15,000 $ 14,844
4.840% ............ 09/01/99 15,000 14,814
4.950% ............ 01/31/00 15,000 14,497
Lucent Technologies
4.980% ............ 01/26/00 15,000 14,504
4.910% ............ 02/02/00 10,000 9,664
5.100% ............ 02/22/00 10,000 9,623
Motorola
4.810% ............ 07/01/99 15,000 14,940
4.790% ............ 07/29/99 15,000 14,884
--------
147,696
--------
ENTERTAINMENT -- 0.3%
Walt Disney
4.810% ............ 06/17/99 10,000 9,979
--------
FABRICATED METAL PRODUCTS -- 0.7%
Stanley Works
4.810% ............ 06/02/99 15,000 14,998
4.830% ............ 06/17/99 8,000 7,983
--------
22,981
--------
FINANCIAL CONDUIT -- 9.2%
Ciesco
4.800% ............ 06/08/99 15,000 14,986
4.830% ............ 06/16/99 15,000 14,970
4.780% ............ 06/16/99 15,000 14,970
4.780% ............ 06/18/99 9,035 9,015
4.780% ............ 07/19/99 15,000 14,904
Corporate Asset Funding
4.810% ............ 06/01/99 15,000 15,000
4.800% ............ 06/16/99 15,000 14,970
4.810% ............ 06/24/99 15,000 14,954
4.800% ............ 07/16/99 10,000 9,940
4.800% ............ 07/28/99 15,000 14,886
4.820% ............ 08/23/99 15,000 14,833
4.820% ............ 11/10/99 15,000 14,675
Delaware Funding
4.820% ............ 06/07/99 10,000 9,992
4.800% ............ 06/17/99 15,000 14,968
4.800% ............ 07/20/99 10,000 9,935
4.800% ............ 07/21/99 10,000 9,933
4.870% ............ 08/17/99 8,561 8,472
4.900% ............ 08/20/99 10,000 9,891
4.900% ............ 08/23/99 15,000 14,832
Preferred Receivables
4.810% ............ 06/21/99 15,000 14,960
4.810% ............ 07/12/99 15,000 14,918
4.870% ............ 08/20/99 30,000 29,675
4.880% ............ 08/25/99 15,000 14,827
--------
320,506
--------
PAR VALUE
MATURITY (000) (000)
-------- ----- -----
COMMERCIAL PAPER -- CONTINUED
FINANCIAL SERVICES -- 20.4%
ABB Treasury
4.930% 06/01/99 $ 25,000 $ 25,000
Abbey National
4.820% ............ 07/08/99 15,000 14,926
4.810% ............ 07/15/99 5,000 4,971
4.810% ............ 07/22/99 10,000 9,932
4.800% ............ 08/09/99 15,000 14,862
4.895% ............ 11/23/99 15,000 14,643
4.970% ............ 12/01/99 15,000 14,621
American Express
4.810% ............ 07/07/99 15,000 14,928
4.800% ............ 08/18/99 25,000 24,740
4.800% ............ 08/25/99 15,000 14,830
4.780% ............ 10/20/99 15,000 14,719
4.790% ............ 10/27/99 15,000 14,705
Associates First Capital
4.840% ............ 06/09/99 10,000 9,989
4.830% ............ 06/10/99 10,000 9,988
4.800% ............ 06/16/99 15,000 14,970
4.860% ............ 08/18/99 15,000 14,842
4.800% ............ 08/25/99 15,000 14,830
Ford Motor Credit
4.810% ............ 06/22/99 10,000 9,972
4.810% ............ 07/14/99 15,000 14,914
4.790% ............ 07/14/99 15,000 14,914
4.790% ............ 07/21/99 15,000 14,900
4.750% ............ 08/04/99 45,000 44,618
GMAC
4.790% ............ 07/21/99 15,000 14,900
4.810% ............ 07/28/99 15,000 14,886
4.870% ............ 08/18/99 15,000 14,842
Household Finance
4.860% ............ 08/25/99 15,000 14,828
National Rural Utilities Cooperative
4.820% ............ 06/09/99 10,000 9,989
4.820% ............ 06/23/99 30,000 29,912
4.780% ............ 07/09/99 10,000 9,950
4.790% ............ 07/12/99 15,000 14,918
4.820% ............ 07/21/99 15,000 14,900
New Center Asset Trust
4.800% ............ 06/23/99 10,000 9,971
4.790% ............ 07/21/99 15,000 14,900
4.800% ............ 08/11/99 15,000 14,858
4.860% ............ 08/25/99 15,000 14,828
New York Life Capital
4.820% ............ 06/02/99 15,000 14,998
4.800% ............ 06/09/99 10,000 9,989
4.820% ............ 06/17/99 15,000 14,968
4.810% ............ 07/21/99 15,000 14,900
4.800% ............ 08/11/99 10,000 9,905
4.800% ............ 08/26/99 15,000 14,828
4.800% ............ 09/15/99 15,000 14,788
See Accompanying Notes
124
<PAGE>
[ARROW GRAPHIC OMITTED]
STATEMENT OF NET ASSET
ARMADA MONEY MARKET FUND
MAY 31, 1999
PAR VALUE
MATURITY (000) (000)
-------- ----- -----
COMMERCIAL PAPER -- CONTINUED
FINANCIAL SERVICES -- CONTINUED
Paccar Financial
4.810% ............ 06/03/99 $ 6,000 $ 5,998
4.810% ............ 06/10/99 5,030 5,024
4.810% ............ 06/22/99 9,000 8,975
4.800% ............ 06/24/99 15,000 14,954
Transamerica
4.810% ............ 07/08/99 15,000 14,926
4.830% ............ 07/19/99 15,000 14,903
4.920% ............ 09/01/99 15,000 14,811
--------
714,463
--------
FOOD & KINDRED PRODUCTS -- 6.2%
Archer Daniels Midland
4.800% ............ 08/12/99 15,000 14,856
4.850% ............ 09/09/99 15,000 14,798
Campbell Soup
4.820% ............ 06/09/99 30,000 29,968
4.810% ............ 06/14/99 15,000 14,974
4.780% ............ 09/13/99 10,000 9,862
4.800% ............ 09/15/99 15,000 14,788
4.800% ............ 12/01/99 15,000 14,634
Diageo
4.850% ............ 06/09/99 15,000 14,984
4.820% ............ 08/02/99 15,000 14,875
4.860% ............ 08/06/99 15,000 14,868
4.850% ............ 08/11/99 11,000 10,895
4.800% ............ 09/07/99 15,000 14,804
4.860% ............ 09/22/99 15,000 14,771
Golden Peanut
4.820% ............ 07/09/99 2,000 1,990
4.820% ............ 07/20/99 8,000 7,947
4.820% ............ 07/27/99 8,000 7,940
--------
216,954
--------
GLASS PRODUCTS -- 0.1%
Guardian Industries
4.810% ............ 07/14/99 5,000 4,971
--------
INSURANCE CARRIERS -- 3.5%
American General
4.860% ............ 06/01/99 15,000 15,000
4.820% ............ 08/11/99 15,000 14,857
John Hancock Capital
4.820% ............ 06/29/99 13,000 12,951
4.780% ............ 07/13/99 15,000 14,916
Prudential Funding
4.820% ............ 06/09/99 10,000 9,989
4.810% ............ 06/16/99 10,000 9,980
4.790% ............ 08/11/99 10,000 9,905
4.800% ............ 09/22/99 15,000 14,774
4.810% ............ 10/06/99 10,000 9,830
4.890% ............ 10/20/99 10,000 9,808
--------
122,010
--------
PAR VALUE
MATURITY (000) (000)
-------- ----- -----
COMMERCIAL PAPER -- CONTINUED
MACHINERY & EQUIPMENT -- 4.1%
Caterpillar Financial
4.780% ............ 07/07/99 $15,000 $ 14,928
4.790% ............ 08/02/99 20,600 20,430
4.780% ............ 08/04/99 15,000 14,872
4.850% ............ 08/10/99 9,750 9,658
4.860% ............ 08/30/99 15,000 14,818
4.900% ............ 10/04/99 15,000 14,745
John Deere Capital
4.810% ............ 06/02/99 15,000 14,998
4.800% ............ 07/07/99 15,000 14,928
4.820% ............ 08/04/99 15,000 14,871
4.800% ............ 08/11/99 10,000 9,905
--------
144,153
--------
MISCELLANEOUS MANUFACTURING -- 1.4%
Hasbro
4.800% ............ 08/06/99 10,000 9,912
4.800% ............ 08/10/99 9,446 9,358
4.880% ............ 09/13/99 15,000 14,788
5.030% ............ 01/19/00 15,000 14,514
--------
48,572
--------
OIL & GAS -- 1.6%
Baker Hughes
4.830% ............ 06/23/99 15,000 14,956
4.800% ............ 08/09/99 10,000 9,908
BP America
4.790% ............ 07/12/99 15,000 14,918
BP Amoco
4.860% ............ 01/24/00 15,000 14,520
--------
54,302
--------
PHARMACEUTICALS -- 4.1%
American Home Products
4.800% ............ 06/10/99 10,000 9,988
4.850% ............ 06/16/99 15,000 14,970
4.790% ............ 07/28/99 25,000 24,810
4.800% ............ 08/17/99 9,000 8,908
4.800% ............ 08/26/99 15,000 14,828
Glaxo Wellcome
4.820% ............ 06/11/99 15,000 14,980
4.810% ............ 06/23/99 15,000 14,956
4.800% ............ 07/06/99 13,499 13,436
4.800% ............ 08/10/99 13,000 12,879
4.850% ............ 08/18/99 15,000 14,842
--------
144,597
--------
PHOTOGRAPHY -- 2.3%
Eastman Kodak
4.820% ............ 06/01/99 15,000 15,000
4.810% ............ 06/03/99 15,000 14,996
4.810% ............ 07/12/99 10,000 9,945
4.810% ............ 07/14/99 5,000 4,971
4.800% ............ 07/15/99 15,000 14,912
4.790% ............ 08/04/99 10,000 9,915
4.860% ............ 09/22/99 10,000 9,847
--------
79,586
--------
See Accompanying Notes
125
<PAGE>
[ARROW GRAPHIC OMITTED]
STATEMENT OF NET ASSET
ARMADA MONEY MARKET FUND
MAY 31, 1999
PAR VALUE
MATURITY (000) (000)
-------- ----- -----
COMMERCIAL PAPER -- CONTINUED
PRIMARY METAL INDUSTRIES -- 0.6%
Aluminum Company of America
4.810% ............ 06/15/99 $ 5,000 $ 4,991
4.810% ............ 06/23/99 15,000 14,956
----------
19,947
----------
TOTAL COMMERCIAL PAPER
(Cost $2,925,104) ........................... 2,925,104
----------
YANKEE CERTIFICATES OF DEPOSIT -- 3.1%
Abbey National Treasury
5.130% ............ 05/04/00 15,000 14,991
ABN Amro, Chicago
4.935% ............ 11/17/99 15,000 14,994
Bank of Montreal, Chicago
5.160% ............ 05/03/00 15,000 14,995
Deutsche Bank, New York
5.050% ............ 02/09/00 15,000 14,994
5.150% ............ 04/25/00 25,000 24,993
Rabobank, New York
5.130% ............ 04/27/00 25,000 24,989
----------
TOTAL YANKEE CERTIFICATES OF
DEPOSIT
(Cost $109,956) ............................. 109,956
----------
FLOATING RATE NOTES (A) -- 3.9%
Allstate Funding
5.050% ............ 08/31/99 10,000 10,000
4.953% ............ 12/01/99 10,000 10,000
5.080% ............ 03/31/00 10,000 10,000
Federal Home Loan Bank
5.071% ............ 03/24/00 25,000 25,000
John Hancock Mutual Life
5.020% 15,000 15,000
J.P. Morgan Guarantee Trust
4.968% ............ 11/29/99 15,000 15,000
Key Bank, NA
4.975% ............ 09/23/99 25,000 24,996
Travelers Funding
5.030% ............ 08/17/99 10,000 10,000
5.060% ............ 03/31/00 15,000 15,000
----------
TOTAL FLOATING RATE NOTES
(Cost $134,996) ............................. 134,996
----------
U.S. GOVERNMENT AGENCY
OBLIGATIONS -- 0.7%
Student Loan Marketing Association,
Callable 08/11/99 @ 100, MTN
5.050% ............ 02/11/00 24,000 24,000
----------
TOTAL U.S. GOVERNMENT AGENCY
OBLIGATIONS
(Cost $24,000) .............................. 24,000
----------
PAR/SHARES VALUE
MATURITY (000) (000)
-------- ---------- -----
REPURCHASE AGREEMENTS -- 8.6%
Credit Suisse First Boston
4.920% ............ 06/01/99 $125,000 $ 125,000
(dated 05/28/99, matures
06/01/99, repurchase price
$125,068,333; collateralized
by U.S. Treasury Bills
total market value $129,132,191)
Lehman
4.850% ............ 06/01/99 42,111 42,111
(dated 05/28/99, matures
06/01/99, repurchase price
$42,133,693; collateralized
by various FHLMC obligations:
total market value $42,956,074)
Prudential
4.930% ............ 06/01/99 85,000 85,000
(dated 05/28/99, matures
06/01/99, repurchase price
$85,046,561; collateralized
by various FHLB, FHLMC, FNMA
and U.S. Treasury obligations:
total market value $86,700,604)
Salomon Smith Barney
4.900% ............ 06/01/99 50,000 50,000
(dated 05/28/99, matures
06/01/99, repurchase price
$50,027,222; collateralized
by various FHLMC and FNMA
obligations: total market value $51,055,849)
TOTAL REPURCHASE AGREEMENTS
(Cost $302,111) ............................. 302,111
----------
CASH EQUIVALENT -- 0.4%
Goldman Sachs Financial Square
Premium Money Market Fund 12,936 12,936
----------
TOTAL CASH EQUIVALENT
(Cost $12,936) .............................. 12,936
----------
TOTAL INVESTMENTS -- 100.4%
(Cost $3,509,103)* .......................... $3,509,103
==========
OTHER ASSETS AND LIABILITIES,
NET -- (0.4%) ............................... (14,593)
----------
See Accompanying Notes
126
<PAGE>
[ARROW GRAPHIC OMITTED]
STATEMENT OF NET ASSET
ARMADA MONEY MARKET FUND
MAY 31, 1999
PAR VALUE
MATURITY (000) (000)
-------- ----- -----
NET ASSETS:
Portfolio Shares of Class I
(unlimited authorization --
no par value) based on
2,134,096,737 outstanding shares
of beneficial interest ...................... $2,134,090
Portfolio Shares of Class A
(unlimited authorizan -- no
par value) based on
1,360,656,724 outstanding shares
of beneficial interest ...................... 1,360,657
Portfolio Shares of Class B
(unlimited authorizan -- no
par value) based on
26,540 outstanding shares of
beneficial interest ......................... 27
Accumulated net realized loss on investments . (11)
Distributions in excess of net
investment income ........................... (253)
----------
TOTAL NET ASSETS -- 100.0% ..................... $3,494,510
==========
NET ASSET VALUE, OFFERING
AND REDEMPTION PRICE PER
SHARE -- CLASS I ............................ $1.00
==========
NET ASSET VALUE, OFFERING
AND REDEMPTION PRICE PER
SHARE -- CLASS A ............................ $1.00
==========
NET ASSET VALUE AND OFFERING
PRICE PER SHARE-- CLASS B ................... $1.00
==========
- -----------
* ALSO COST FOR FEDERAL INCOME TAX PURPOSES.
+ EFFECTIVE YIELD
(A) VARIABLE RATE SECURITIES -- THE RATE REFLECTED ON THE STATEMENT OF NET
ASSETS IS THE RATE IN EFFECT ON MAY 31, 1999. THE MATURITY DATE SHOWN
IS THE LONGER OF THE NEXT RESET DATE OR THE DATE IN WHICH THE PRINCIPAL
AMOUNT CAN BE RECOVERED THROUGH DEMAND.
FHLB -- FEDERAL HOME LOAN BANK
FHLMC -- FEDERAL HOME LOAN MORTGAGE CORPORATION
FNMA -- FEDERAL NATIONAL MORTGAGE ASSOCIATION
MTN -- MEDIUM TERM NOTE
See Accompanying Notes
127
<PAGE>
[ARROW GRAPHIC OMITTED]
FINANCIAL HIGHLIGHTS
ARMADA MONEY MARKET FUND
FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
FOR THE YEAR ENDED MAY 31,
------------------------------------------------------------------------------
1999 1998
------------------------------------------------------------------------------
CLASS I CLASS A CLASS B CLASS I CLASS A CLASS B1
-------- -------- -------- -------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning
of period .......... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
---------- ---------- --------- ---------- -------- ---------
INCOME FROM
INVESTMENT
OPERATIONS
Net investment
income ............. 0.05 0.05 0.04 0.05 0.05 0.05
LESS DISTRIBUTIONS
Dividends from
net investment
income ............ (0.05) (0.05) (0.04) (0.05) (0.05) (0.05)
---------- --------- --------- ---------- -------- ---------
Net asset value,
end of period ...... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========== ========== ========= ========== ======== =========
TOTAL RETURN ......... 4.96% 4.82% 4.21% 5.39% 5.26% 5.04%2
RATIOS/SUPPLEMENTAL
DATA
Net assets, end
of period
(in 000's) ........ $2,133,839 $1,360,644 $ 27 $1,911,689 $696,893 $ 5
Ratio of
expenses to
average
net assets ........ 0.42% 0.56% 1.27% 0.38% 0.51% 1.22%2
Ratio of net
investment
income
to average
net assets ........ 4.82% 4.68% 3.97% 5.27% 5.14% 4.39%2
Ratio of
expenses to
average net
assets before
fee waivers ....... 0.52% 0.66% 1.37% 0.48% 0.61% 1.27%2
Ratio of
net investment
income to average
net assets before
fee waivers ....... 4.72% 4.58% 3.87% 5.17% 5.08% 4.31%2
</TABLE>
<TABLE>
<CAPTION>
FOR THE YEAR ENDED MAY 31,
--------------------------------------------------------------------------
1997 1996 1995
--------------------------------------------------------------------------
CLASS I CLASS A CLASS I CLASS A CLASS I CLASS A
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning
of period .......... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
---------- -------- ---------- -------- ---------- --------
INCOME FROM
INVESTMENT
OPERATIONS
Net investment
income ............. 0.05 0.05 0.05 0.05 0.05 0.05
LESS DISTRIBUTIONS
Dividends from
net investment
income ............ (0.05) (0.05) (0.05) (0.05) (0.05) (0.05)
---------- -------- ---------- -------- ---------- --------
Net asset value,
end of period ...... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========== ======== ========== ======== ========== ========
TOTAL RETURN ......... 5.19% 5.09% 5.45% 5.35% 5.11% 5.01%
RATIOS/SUPPLEMENTAL
DATA
Net assets, end
of period
(in 000's) ........ $1,943,021 $346,172 $1,344,414 $343,087 $1,083,243 $175,192
Ratio of
expenses to
average
net assets ........ 0.37% 0.47% 0.37% 0.47% 0.37% 0.47%
Ratio of net
investment
income
to average
net assets ........ 5.07% 4.97% 5.30% 5.18% 5.07% 5.12%
Ratio of
expenses to
average net
assets before
fee waivers ....... 0.47% 0.57% 0.48% 0.58% 0.48% 0.58%
Ratio of
net investment
income to average
net assets before
fee waivers ....... 4.97% 4.87% 5.19% 5.07% 4.96% 5.01%
</TABLE>
1 THE MONEY MARKET FUND CLASS B COMMENCED OPERATIONS JANUARY 5, 1998.
2 ANNUALIZED.
See Accompanying Notes
128
<PAGE>
[ARROW GRAPHIC OMITTED]
STATEMENT OF NET ASSETS
ARMADA GOVERNMENT MONEY MARKET FUND
MAY 31, 1999
PAR VALUE
MATURITY (000) (000)
-------- ----- -----
U.S. GOVERNMENT AGENCY OBLIGATIONS -- 81.1%
FEDERAL FARM CREDIT BANK -- 10.5%
Discount Notes+
4.660% .......... 06/02/99 $ 8,980 $ 8,979
4.710% ........... 06/03/99 15,000 14,996
4.710% ........... 06/07/99 14,000 13,989
4.674% ........... 06/15/99 32,173 32,114
4.730% ........... 06/23/99 8,000 7,977
4.750% ........... 07/07/99 15,000 14,929
4.740% ........... 07/09/99 11,975 11,915
4.730% ........... 07/28/99 10,000 9,925
4.750% ........... 08/04/99 8,000 7,932
4.760% ........... 08/05/99 15,000 14,871
4.750% ........... 08/09/99 15,000 14,865
4.700% ........... 09/20/99 6,000 5,913
4.830% ........... 11/24/99 10,000 9,764
Notes (A)
5.500% ........... 08/03/99 5,950 5,955
--------
174,124
--------
FEDERAL HOME LOAN BANK -- 21.8%
Discount Notes+
4.785% ........... 06/02/99 10,000 9,999
4.770% ........... 06/02/99 10,105 10,104
4.775% ........... 06/04/99 10,000 9,996
4.760% ........... 06/09/99 13,575 13,561
4.670% ........... 06/11/99 10,000 9,987
4.728% ........... 06/16/99 30,000 29,941
4.750% ........... 06/30/99 10,000 9,962
4.730% ........... 06/30/99 10,000 9,962
4.660% ........... 06/30/99 15,000 14,944
4.710% ........... 07/02/99 10,000 9,959
4.710% ........... 07/06/99 12,245 12,189
4.714% ........... 07/07/99 10,000 9,953
4.690% ........... 07/09/99 10,000 9,951
4.699% ........... 07/14/99 15,000 14,916
4.710% ........... 07/21/99 20,000 19,868
4.690% ........... 07/23/99 10,000 9,932
4.725% ........... 08/01/99 10,000 9,910
4.730% ........... 08/04/99 10,000 9,916
4.720% ........... 08/04/99 10,000 9,916
4.720% ........... 08/04/99 5,839 5,790
4.660% ........... 08/04/99 10,000 9,917
4.703% ........... 08/13/99 10,000 9,905
PAR VALUE
MATURITY (000) (000)
-------- ----- -----
U.S. GOVERNMENT AGENCY
OBLIGATIONS -- CONTINUED
FEDERAL HOME LOAN BANK -- CONTINUED
Discount Notes+
4.771% ........... 08/16/99 $ 7,016 $ 6,945
4.730% ........... 10/13/99 10,000 9,825
4.740% ........... 11/05/99 20,000 19,586
4.740% ........... 11/10/99 10,000 9,787
4.782% ........... 11/17/99 10,000 9,776
Notes (A)
4.870% ........... 11/10/99 15,000 14,996
5.071% ........... 03/24/00 15,000 15,000
4.915% ........... 04/14/00 15,000 14,994
--------
361,487
--------
FEDERAL HOME LOAN MORTGAGE CORPORATION+ -- 17.8%
4.790% ........... 06/01/99 15,000 15,000
4.800% ........... 06/03/99 10,000 9,997
4.790% ........... 06/03/99 10,000 9,997
4.770% ........... 06/15/99 10,000 9,981
4.778% ........... 06/18/99 7,491 7,474
4.760% ........... 06/22/99 10,000 9,972
4.790% ........... 06/25/99 10,000 9,968
4.760% ........... 06/25/99 10,000 9,968
4.780% ........... 06/28/99 10,157 10,121
4.740% ........... 06/30/99 10,000 9,962
4.800% ........... 07/09/99 10,000 9,949
4.730% ........... 07/12/99 10,000 9,946
4.713% ........... 07/13/99 15,000 14,918
4.710% ........... 07/14/99 15,000 14,916
4.700% ........... 08/05/99 20,000 19,829
4.720% ........... 08/06/99 15,000 14,870
4.700% ........... 08/20/99 10,000 9,896
4.690% ........... 08/25/99 10,000 9,889
4.770% ........... 08/27/99 10,000 9,885
4.750% ........... 09/03/99 10,000 9,876
4.740% ........... 09/03/99 10,000 9,876
4.770% ........... 09/09/99 10,000 9,869
4.705% ........... 09/13/99 10,000 9,864
4.745% ........... 09/24/99 10,000 9,848
4.740% ........... 09/24/99 10,000 9,849
4.700% ........... 10/08/99 10,000 9,832
4.700% ........... 10/12/99 10,000 9,826
--------
295,378
--------
See Accompanying Notes
129
<PAGE>
[ARROW GRAPHIC OMITTED]
STATEMENT OF NET ASSETS
ARMADA GOVERNMENT MONEY MARKET FUND
MAY 31, 1999
PAR VALUE
MATURITY (000) (000)
-------- ----- -----
U.S. GOVERNMENT AGENCY
OBLIGATIONS -- CONTINUED
FEDERAL NATIONAL MORTGAGE ASSOCIATION+ -- 25.9%
4.790% ........... 06/08/99 $10,000 $ 9,991
4.620% ........... 06/08/99 10,000 9,991
4.781% ........... 06/10/99 15,000 14,982
4.680% ........... 06/10/99 10,000 9,988
4.680% ........... 06/16/99 10,486 10,466
4.755% ........... 07/01/99 10,000 9,960
4.740% ........... 07/07/99 10,000 9,953
4.720% ........... 07/09/99 25,000 24,875
4.700% ........... 07/15/99 10,000 9,943
4.700% ........... 07/16/99 10,000 9,941
4.690% ........... 07/21/99 10,000 9,935
4.700% ........... 07/23/99 10,000 9,932
4.700% ........... 07/26/99 10,000 9,928
4.710% ........... 08/05/99 10,000 9,915
4.680% ........... 08/06/99 10,000 9,914
4.730% ........... 08/10/99 10,000 9,908
4.690% ........... 08/10/99 10,000 9,909
4.740% ........... 08/11/99 11,730 11,620
4.680% ........... 08/11/99 10,000 9,908
4.730% ........... 08/12/99 20,000 19,811
4.780% ........... 08/17/99 8,000 7,918
4.790% ........... 08/18/99 20,000 19,792
4.795% ........... 08/19/99 10,000 9,895
4.790% ........... 08/23/99 20,000 19,778
4.800% ........... 08/26/99 10,000 9,885
4.760% ........... 09/07/99 25,000 24,678
4.750% ........... 09/13/99 10,000 9,863
4.760% ........... 09/15/99 15,000 14,790
4.760% ........... 09/17/99 15,000 14,786
4.735% ........... 09/22/99 10,000 9,851
4.830% ........... 09/24/99 10,675 10,510
4.720% ........... 11/04/99 18,000 17,631
4.820% ........... 11/12/99 10,000 9,780
4.800% ........... 11/18/99 10,000 9,773
4.833% ........... 11/19/99 10,000 9,770
---------
429,570
---------
PAR VALUE
MATURITY (000) (000)
-------- ----- -----
U.S. GOVERNMENT AGENCY
OBLIGATIONS -- CONTINUED
STUDENT LOAN MARKETING ASSOCIATION -- 5.1%
Discount Notes+
4.670% ........... 06/30/99 $15,000 $ 14,944
Notes (A)
5.371% ........... 11/12/99 15,000 15,000
5.291% ........... 11/24/99 15,000 14,999
5.271% ........... 12/16/99 15,000 14,998
5.271% ........... 01/12/00 15,000 14,996
Callable 08/11/99 @ 100
5.050% ........... 02/11/00 10,000 10,000
---------
84,937
---------
TOTAL U.S. GOVERNMENT AGENCY
OBLIGATIONS
(Cost $1,345,496).............................. 1,345,496
----------
REPURCHASE AGREEMENTS -- 18.7%
Credit Suisse First Boston
4.920% ........... 06/01/99 125,000 125,000
(dated 05/28/99, matures
06/01/99, repurchase price
$125,068,333; collateralized
by various FNMA and U.S. Treasury
obligations: total market
value $128,008,272)
Lehman Brothers
4.850% ........... 06/01/99 50,919 50,919
(dated 05/28/99, matures
06/01/99, repurchase price
$50,946,440; collateralized
by various FHLMC and GNMA
obligations: total market
value $51,940,085)
Prudential
4.930% ........... 06/01/99 85,000 85,000
(dated 05/28/99, matures
06/01/99, repurchase price
$85,046,561; collateralized
by various FHLMC, FNMA and
U.S. Treasury obligations:
total market value $86,700,175)
See Accompanying Notes
130
<PAGE>
[ARROW GRAPHIC OMITTED]
STATEMENT OF NET ASSETS
ARMADA GOVERNMENT MONEY MARKET FUND
MAY 31, 1999
PAR/SHARES VALUE
(000) (000)
----- -----
REPURCHASE AGREEMENTS -- CONTINUED
Salomon Smith Barney
4.900% ........... 06/01/99 $50,000 $ 50,000
(dated 05/28/99, matures
06/01/99, repurchase price
$50,027,222; collateralized
by various FHLMC and FNMA
obligations: total market
value $51,055,849)
TOTAL REPURCHASE AGREEMENTS
(Cost $310,919) ............................. 310,919
----------
CASH EQUIVALENT -- 0.6%
Goldman Sachs Financial Square
Government Money Market Fund ....... 10,294 10,294
----------
TOTAL CASH EQUIVALENT
(Cost $10,294) .............................. 10,294
----------
TOTAL INVESTMENTS -- 100.4%
(Cost $1,666,709)* .......................... $1,666,709
==========
OTHER ASSETS AND LIABILITIES,
NET -- (0.4%) ............................... (6,635)
----------
VALUE
(000)
-----
NET ASSETS:
Portfolio Shares of Class I
(unlimited authorization -- no par value)
based on 1,094,944,418 outstanding shares
of beneficial interest ...................... $1,094,945
Portfolio Shares of Class A
(unlimited authorization -- no par value)
based on 565,078,823 outstanding shares of
beneficial interest ......................... 565,079
Undistributed net investment income .......... 53
Accumulated net realized loss on investments . (3)
----------
TOTAL NET ASSETS-- 100.0% ...................... $1,660,074
==========
NET ASSET VALUE, OFFERING
AND REDEMPTION PRICE
PER SHARE -- CLASS I ........................ $1.00
==========
NET ASSET VALUE, OFFERING
AND REDEMPTION PRICE
PER SHARE -- CLASS A ........................ $1.00
==========
- -----------
* ALSO COST FOR FEDERAL INCOME TAX PURPOSES.
+ EFFECTIVE YIELD
(A) VARIABLE RATE SECURITIES -- THE RATE REFLECTED ON THE STATEMENT OF NET
ASSETS IS THE RATE IN EFFECT ON MAY 31, 1999. THE MATURITY DATE SHOWN IS THE
LONGER OF THE NEXT RESET DATE OR THE DATE IN WHICH THE PRINCIPAL AMOUNT CAN
BE RECOVERED THROUGH DEMAND.
FHLMC -- FEDERAL HOME LOAN MORTGAGE CORPORATION
FNMA -- FEDERAL NATIONAL MORTGAGE ASSOCIATION
GNMA -- GOVERNMENT NATIONAL MORTGAGE ASSOCIATION
See Accompanying Notes
131
<PAGE>
[ARROW GRAPHIC OMITTED]
FINANCIAL HIGHLIGHTS
ARMADA GOVERNMENT MONEY MARKET FUND
FOR A PORTFOLIO SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
FOR THE YEAR ENDED MAY 31,
----------------------------------------------------------------------
1999 1998 1997
----------------------------------------------------------------------
CLASS I CLASS A CLASS I CLASS A CLASS I CLASS A
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning
of period .......... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
---------- -------- ---------- -------- -------- --------
INCOME FROM INVESTMENT
OPERATIONS
Net investment
income ........... 0.05 0.05 0.05 0.05 0.05 0.05
LESS DISTRIBUTIONS
Dividends from net
investment income . (0.05) (0.05) (0.05) (0.05) (0.05) (0.05)
---------- -------- ---------- -------- -------- --------
Net asset value,
end of period ..... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========== ======== ========== ======== ======== ========
TOTAL RETURN 4.86% 4.70% 5.30% 5.17% 5.15% 5.04%
RATIOS/SUPPLEMENTAL DATA
Net assets,
end of period
(in 000's) ........ $1,094,979 $565,095 $1,137,078 $247,281 $811,662 $159,129
Ratio of expenses
to average
net assets ....... 0.42% 0.57% 0.40% 0.52% 0.36% 0.47%
Ratio of net
investment income
to average
net assets ........ 4.76% 4.61% 5.17% 5.05% 5.03% 4.93%
Ratio of expenses to
average net assets
before fee waivers 0.52% 0.67% 0.50% 0.62% 0.46% 0.57%
Ratio of net
investment
income to
average net
assets before
fee waivers ...... 4.66% 4.51% 5.07% 4.95% 4.93% 4.83%
</TABLE>
<TABLE>
<CAPTION>
FOR THE YEAR ENDED MAY 31,
------------------------------------------
1996 1995
------------------------------------------
CLASS I CLASS A CLASS I CLASS A
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net asset value,
beginning
of period .......... $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- --------
INCOME FROM INVESTMENT
OPERATIONS
Net investment
income ........... 0.05 0.05 0.05 0.05
LESS DISTRIBUTIONS
Dividends from net
investment income . (0.05) (0.05) (0.05) (0.05)
-------- -------- -------- --------
Net asset value,
end of period ..... $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ========
TOTAL RETURN 5.41% 5.31% 4.97% 4.87%
RATIOS/SUPPLEMENTAL DATA
Net assets,
end of period
(in 000's) ........ $741,894 $131,194 $618,058 $19,174
Ratio of expenses
to average
net assets ....... 0.36% 0.46% 0.39% 0.51%
Ratio of net
investment income
to average
net assets ........ 5.27% 5.13% 4.83% 5.01%
Ratio of expenses to
average net assets
before fee waivers 0.47% 0.57% 0.50% 0.63%
Ratio of net
investment
income to
average net
assets before
fee waivers ...... 5.16% 5.02% 4.72% 4.90%
</TABLE>
See Accompanying Notes
132
<PAGE>
[ARROW GRAPHIC OMITTED]
STATEMENT OF NET ASSETS
ARMADA TREASURY MONEY MARKET FUND
MAY 31, 1999
PAR/SHARES VALUE
MATURITY (000) (000)
-------- ---------- -----
U.S. TREASURY OBLIGATIONS -- 92.4%
U.S. TREASURY BILLS + -- 75.6%
4.190% ........... 06/03/99 $51,000 $ 50,989
4.420% ........... 06/10/99 33,000 32,965
4.390% ........... 06/17/99 25,000 24,952
4.495% ........... 06/24/99 30,000 29,915
4.230% ........... 07/01/99 40,000 39,855
4.350% ........... 07/08/99 15,000 14,932
4.435% ........... 07/15/99 15,000 14,919
4.455% ........... 07/22/99 15,000 14,907
4.380% ........... 07/29/99 15,000 14,893
4.420% ........... 08/05/99 25,000 24,799
4.450% ........... 08/12/99 10,000 9,911
4.480% ........... 08/19/99 10,000 9,902
4.490% ........... 09/09/99 5,000 4,938
4.395% ........... 09/16/99 15,000 14,804
4.360% ........... 10/07/99 15,000 14,767
4.340% ........... 10/14/99 7,000 6,886
--------
324,334
--------
U.S. TREASURY NOTES -- 16.8%
6.000% ........... 06/30/99 38,000 38,043
5.875% ........... 08/31/99 34,000 34,094
--------
72,137
--------
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $396,471) 396,471
--------
CASH EQUIVALENTS -- 7.6%
Federated U.S. Treasury Cash Reserve
Money Market Fund ............ 16,426 16,426
Goldman Sachs Financial Square
Treasury Money Market Fund ... 16,311 16,311
--------
TOTAL CASH EQUIVALENTS
(Cost $32,737) .............................. 32,737
--------
TOTAL INVESTMENTS -- 100.0%
(Cost $429,208)* ............................ $429,208
========
OTHER ASSETS AND LIABILITIES,
NET -- (0.0%) ............................... (96)
--------
VALUE
(000)
-----
NET ASSETS:
Portfolio Shares of Class I
(unlimited authorization -- no par value)
based on 346,023,547 outstanding shares
of beneficial interest ...................... $346,024
Portfolio Shares of Class A
(unlimited authorization -- no par value)
based on 83,014,927 outstanding shares of
beneficial interest ......................... 83,015
Undistributed net investment income .......... 73
--------
TOTAL NET ASSETS -- 100.0% ..................... $429,112
========
NET ASSET VALUE, OFFERING
AND REDEMPTION PRICE PER
SHARE -- CLASS I ............................ $1.00
========
NET ASSET VALUE, OFFERING
AND REDEMPTION PRICE PER
SHARE --- CLASS A ........................... $1.00
========
- -----------
* ALSO COST FOR FEDERAL INCOME TAX PURPOSES.
+ EFFECTIVE YIELD
See Accompanying Notes
133
<PAGE>
[ARROW GRAPHIC OMITTED]
FINANCIAL HIGHLIGHTS
ARMADA TREASURY MONEY MARKET FUND
FOR A PORTFOLIO SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
FOR THE YEAR ENDED MAY 31,
----------------------------------------------------------------------
1999 1998 1997
----------------------------------------------------------------------
CLASS I CLASS A CLASS I CLASS A CLASS I CLASS A
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning
of period .......... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- ------- -------- ------ -------- ------
INCOME FROM INVESTMENT
OPERATIONS
Net investment
income ........... 0.04 0.04 0.05 0.05 0.05 0.05
LESS DISTRIBUTIONS
Dividends from net
investment income . (0.04) (0.04) (0.05) (0.05) (0.05) (0.05)
-------- ------- -------- ------ -------- ------
Net asset value,
end of period ..... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======= ======== ====== ======== ======
TOTAL RETURN 4.39% 4.23% 4.95% 4.82% 4.89% 4.79%
RATIOS/SUPPLEMENTAL DATA
Net assets,
end of period
(in 000's) ........ $346,092 $83,020 $359,605 $7,222 $276,327 $5,680
Ratio of expenses
to average
net assets ....... 0.41% 0.55% 0.39% 0.51% 0.37% 0.47%
Ratio of net
investment income
to average
net assets ........ 4.35% 4.21% 4.84% 4.71% 4.79% 4.68%
Ratio of expenses to
average net assets
before fee waivers 0.46% 0.60% 0.44% 0.56% 0.42% 0.52%
Ratio of net
investment
income to
average net
assets before
fee waivers ...... 4.30% 4.16% 4.79% 4.66% 4.74% 4.63%
</TABLE>
<TABLE>
<CAPTION>
FOR THE YEAR ENDED MAY 31,
------------------------------------------
1996 1995
------------------------------------------
CLASS I CLASS A CLASS I CLASS A
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net asset value,
beginning
of period .......... $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- ------ -------- --------
INCOME FROM INVESTMENT
OPERATIONS
Net investment
income ........... 0.05 0.05 0.05 0.02
LESS DISTRIBUTIONS
Dividends from net
investment income . (0.05) (0.05) (0.05) (0.02)
-------- ------ -------- --------
Net asset value,
end of period ..... $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ====== ======== ========
TOTAL RETURN 5.07% 4.97% 4.86% 5.41%3
RATIOS/SUPPLEMENTAL DATA
Net assets,
end of period
(in 000's) ........ $312,255 $4,355 $142,877 $ 366
Ratio of expenses
to average
net assets ....... 0.41% 0.52% 0.43%3 0.56%3
Ratio of net
investment income
to average
net assets ........ 4.88% 4.77% 4.78%3 5.35%3
Ratio of expenses to
average net assets
before fee waivers 0.47% 0.58% 0.49%3 0.63%3
Ratio of net
investment
income to
average net
assets before
fee waivers ...... 4.82% 4.71% 4.72%3 5.28%3
</TABLE>
1 CLASS I COMMENCED OPERATIONS ON JUNE 16, 1994.
2 CLASS A COMMENCED OPERATIONS ON DECEMBER 22, 1994.
3 ANNUALIZED.
See Accompanying Notes
134
<PAGE>
[ARROW GRAPHIC OMITTED]
FINANCIAL STATEMENTS
ARMADA FUNDS
MAY 31, 1999
STATEMENT OF ASSETS AND LIABILITIES (000)
BALANCED
ALLOCATION
FUND
----------
ASSETS
Investments at value (Cost $76,413) ............................... $78,681
Interest and dividends receivable ................................. 395
Receivable for investments sold ................................... 840
Capital shares sold ............................................... 7,913
Prepaid expenses .................................................. 16
-------
TOTAL ASSETS ...................................................... 87,845
-------
LIABILITIES
Payable for investments purchased ................................. 831
Accrued expenses .................................................. 120
Other ............................................................. 16
-------
TOTAL LIABILITIES ................................................. 967
-------
NET ASSETS ........................................................ $86,878
=======
NET ASSETS:
Portfolio Shares of Class I
(unlimited authorization -- no par value)
based on 8,247,427 outstanding shares of
beneficial interest .......................................... $84,130
Portfolio Shares of Class A
(unlimited authorization-- no par value)
based on 142,171 outstanding shares of
beneficial interest ........................................... 1,473
Portfolio Shares of Class B (unlimited
authorization -- no par value)
based on 37,215 outstanding shares of
beneficial interest ........................................... 385
Accumulated net realized loss
on investments ................................................ (1,688)
Net unrealized appreciation on investments ...................... 2,268
Undistributed net investment income ............................. 310
-------
Total Net Assets -- 100.0% ........................................ $86,878
=======
Net Asset Value, Offering and Redemption
Price Per Share -- Class I ....................................... $10.31
=======
Net Asset Value and Redemption Price Per Share -- Class A .......... $10.31
=======
Maximum Offering Price Per Share -- Class A ($10.31 / 95.25%) ...... $10.82
=======
Net Asset Value and Offering Price Per Share -- Class B ............ $10.33
=======
See Accompanying Notes
135
<PAGE>
[ARROW GRAPHIC OMITTED]
FINANCIAL STATEMENTS
ARMADA FUNDS
STATEMENTS OF OPERATIONS (000)
FOR THE PERIOD ENDED MAY 31, 1999
<TABLE>
<CAPTION>
INTERNATIONAL SMALL CAP SMALL CAP EQUITY TAX MANAGED
EQUITY FUND VALUE FUND GROWTH FUND GROWTH FUND EQUITY FUND
------------- ---------- ----------- ----------- -----------
INVESTMENT INCOME:
<S> <C> <C> <C> <C> <C>
Dividends .................................... $2,525 $ 4,372 $ 135 $ 7,882 $ 2,275
Interest ..................................... 301 308 522 1,707 308
Less: foreign taxes withheld ................. (260) -- -- -- (12)
------ -------- -------- -------- -------
Total investment income ...................... 2,566 4,680 657 9,589 2,571
------ -------- -------- -------- -------
EXPENSES:
Investment Advisory fees ..................... 1,723 2,360 612 8,840 1,612
Less: Fees waived by Investment Adviser ...... -- -- -- -- (384)
Administration fees .......................... 117 180 46 828 150
12b-1 fees ................................... 75 108 27 483 98
Transfer Agent fees .......................... 72 71 64 137 67
Custodian fees ............................... 303 52 13 165 46
Professional fees ............................ 30 27 21 89 46
Printing and shareholder reports ............. 7 20 12 79 22
Registration and filing fees ................. 39 26 33 222 79
Trustees' fees ............................... 3 8 1 21 7
Miscellaneous ................................ 4 28 7 74 43
Amortization of deferred organizational costs -- 6 -- -- 5
Shareholder servicing fees --
Class A and B Shares ...................... 2 26 1 283 7
------ -------- -------- -------- -------
Total expenses ............................... 2,375 2,912 837 11,221 1,798
------ -------- -------- -------- -------
NET INVESTMENT INCOME/(LOSS) .................... 191 1,768 (180) (1,632) 773
------ -------- -------- -------- -------
REALIZED AND UNREALIZED GAIN/(LOSS)
ON INVESTMENTS:
Net realized gain/(loss) on investments sold . (2,790) (8,366) (10,502) (1,094) 312
Net realized loss on foreign
currency transactions ..................... (121) -- -- (6) --
Net realized gain/(loss) on futures .......... -- -- 63 -- --
Net change in unrealized appreciation/
depreciation on futures ................... -- -- 973 -- --
Net change in unrealized appreciation/
depreciation on foreign currency
and translation of other assets
and liabilities in foreign currencies ..... 632 -- -- -- --
Net change in unrealized appreciation/
depreciation on investments ............... 4,774 (5,622) 2,153 287,003 58,031
------ -------- -------- -------- -------
Net gain/(loss) on investments ............... 2,495 (13,988) (7,313) 285,903 58,343
------ -------- -------- -------- -------
NET INCREASE/(DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS .................... $2,686 $(12,220) $ (7,493) $284,271 $59,116
====== ======== ======== ======== =======
</TABLE>
See Accompanying Notes
136
<PAGE>
[ARROW GRAPHIC OMITTED]
FINANCIAL STATEMENTS
ARMADA FUNDS
STATEMENTS OF OPERATIONS (000)
FOR THE PERIOD ENDED MAY 31, 1999
<TABLE>
<CAPTION>
BALANCED TOTAL RETURN
CORE EQUITY EQUITY ALLOCATION ADVANTAGE
EQUITY FUND INDEX FUND1 INCOME FUND FUND1 FUND
----------- ---------- ----------- ---------- ------------
INVESTMENT INCOME:
<S> <C> <C> <C> <C> <C>
Dividends .................................... $ 1,447 $ 1,999 $ 12,073 $ 284 $ --
Interest ..................................... (364) 288 652 1,584 19,644
Less: foreign taxes withheld ................. -- (11) (43) -- --
------- ------- -------- ------- -------
Total investment income ...................... 1,083 2,276 12,682 1,868 19,644
------- ------- -------- ------- -------
EXPENSES:
Investment Advisory fees ..................... 954 505 3,168 422 1,753
Less: Fees waived by Investment Adviser ...... -- (505) -- -- (637)
Administration fees .......................... 89 101 296 41 222
12b-1 fees ................................... 55 -- 175 23 --
Transfer Agent fees .......................... 68 17 85 22 36
Custodian fees ............................... 25 29 85 13 63
Professional fees ............................ 26 17 32 17 27
Printing and shareholder reports ............. 2 22 32 3 13
Registration and filing fees ................. 25 66 59 50 4
Trustees' fees ............................... 2 3 9 2 8
Miscellaneous ................................ 2 23 20 7 36
Amortization of deferred organizational costs -- -- 5 -- 4
Shareholder servicing fees --
Class A and B Shares ...................... 2 3 13 1 9
------- ------- -------- ------- -------
Total expenses 1,250 281 3,979 601 1,538
------- ------- -------- ------- -------
NET INVESTMENT INCOME/(LOSS) (167) 1,995 8,703 1,267 18,106
------- ------- -------- ------- -------
REALIZED AND UNREALIZED GAIN/(LOSS)
ON INVESTMENTS:
Net realized gain/(loss) on investments sold . 4,677 23 19,671 (1,688) 3,724
Net realized loss on foreign
currency transactions ..................... -- -- -- -- --
Net realized gain/(loss) on futures .......... -- 1,028 -- -- --
Net change in unrealized appreciation/
depreciation on futures ................... -- (104) -- -- --
Net change in unrealized appreciation/
depreciation on foreign currency
and translation of other assets
and liabilities in foreign currencies ..... -- -- -- -- --
Net change in unrealized appreciation/
depreciation on investments ............... 25,111 18,836 91,321 2,268 (11,244)
------- ------- -------- ------- -------
Net gain/(loss) on investments ............... 29,788 19,783 110,992 580 (7,520)
------- ------- -------- ------- -------
NET INCREASE/(DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS .................... $29,621 $21,778 $119,695 $ 1,847 $10,586
======= ======= ======== ======= =======
</TABLE>
STATEMENTS OF OPERATIONS (000)
FOR THE PERIOD ENDED MAY 31, 1999
<TABLE>
<CAPTION>
INTERMEDIATE ENHANCED
BOND FUND BOND FUND GNMA FUND INCOME FUND
--------- ------------ --------- -----------
INVESTMENT INCOME:
<S> <C> <C> <C> <C>
Dividends .................................... $ -- $ -- $ -- $ --
Interest ..................................... 40,081 15,382 5,991 4,596
Less: foreign taxes withheld ................. -- -- -- --
------- ------- ------ ------
Total investment income ...................... 40,081 15,382 5,991 4,596
------- ------- ------ ------
EXPENSES:
Investment Advisory fees ..................... 3,583 1,450 489 349
Less: Fees waived by Investment Adviser ...... -- (395) -- (175)
Administration fees .......................... 456 184 62 54
12b-1 fees ................................... 265 110 37 --
Transfer Agent fees .......................... 54 47 38 39
Custodian fees ............................... 131 53 18 16
Professional fees ............................ 40 11 17 13
Printing and shareholder reports ............. 7 85 3 5
Registration and filing fees ................. 35 39 10 13
Trustees' fees ............................... 4 3 1 3
Miscellaneous ................................ 5 16 19 10
Amortization of deferred organizational costs 3 -- 3 4
Shareholder servicing fees --
Class A and B Shares ...................... 3 10 3 1
------- ------- ------ ------
Total expenses ............................... 4,586 1,613 700 332
------- ------- ------ ------
NET INVESTMENT INCOME/(LOSS) .................... 35,495 13,769 5,291 4,264
------- ------- ------ ------
REALIZED AND UNREALIZED GAIN/(LOSS)
ON INVESTMENTS:
Net realized gain/(loss) on investments sold . 6,607 2,105 234 236
Net realized loss on foreign
currency transactions ..................... -- -- -- --
Net realized gain/(loss) on futures .......... -- -- -- --
Net change in unrealized appreciation/
depreciation on futures ................... -- -- -- --
Net change in unrealized appreciation/
depreciation on foreign currency
and translation of other assets
and liabilities in foreign currencies ..... -- -- -- --
Net change in unrealized appreciation/
depreciation on investments ............... (15,918) (7,084) (2,090) (746)
------- ------- ------ ------
Net gain/(loss) on investments ............... (9,311) (4,979) (1,856) (510)
------- ------- ------ ------
NET INCREASE/(DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS .................... $26,184 $ 8,790 $3,435 $3,754
======= ======= ====== ======
</TABLE>
1 FUND COMMENCED OPERATIONS ON JULY 10, 1998.
See Accompanying Notes
137
<PAGE>
[ARROW GRAPHIC OMITTED]
FINANCIAL STATEMENTS
ARMADA FUNDS
STATEMENTS OF OPERATIONS (000)
FOR THE PERIOD ENDED MAY 31, 1999
<TABLE>
<CAPTION>
OHIO TAX PENNSYLVANIA NATIONAL
EXEMPT FUND MUNICIPAL FUND TAX EXEMPT FUND
----------- -------------- ---------------
INVESTMENT INCOME:
<S> <C> <C> <C>
Interest ....................................................... $10,400 $2,078 $4,569
------- ------ ------
EXPENSES:
Investment Advisory fees ....................................... 1,132 217 524
Less: Fees waived by Investment Adviser ........................ (1,027) (138) (489)
Administration fees ............................................ 143 28 67
12b-1 fees ..................................................... 84 -- 37
Transfer Agent fees ............................................ 24 38 67
Custodian fees ................................................. 53 8 19
Professional fees .............................................. 14 16 28
Printing and shareholder reports ............................... 10 9 4
Registration and filing fees ................................... 73 2 76
Trustees' fees ................................................. 2 1 3
Miscellaneous .................................................. 74 3 14
Amortization of deferred organizational costs .................. -- 3 --
Shareholder servicing fees-- Class A and B Shares .............. 5 -- 2
------- ------ ------
Total expenses ................................................. 587 187 352
------- ------ ------
NET INVESTMENT INCOME ............................................. 9,813 1,891 4,217
------- ------ ------
REALIZED AND UNREALIZED GAIN/(LOSS)
ON INVESTMENTS:
Net realized gain/(loss) on investments sold ................... 180 116 412
Net change in unrealized appreciation/
depreciation on investments .................................. (2,191) (433) (581)
------- ------ ------
Net gain/(loss) on investments ................................. (2,011) (317) (169)
------- ------ ------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS ...................................... $ 7,802 $1,574 $4,048
======= ====== ======
</TABLE>
See Accompanying Notes
138
<PAGE>
[ARROW GRAPHIC OMITTED]
<TABLE>
<CAPTION>
OHIO MUNICIPAL TAX EXEMPT TAX EXEMPT
MARKET FUND1 MONEY MARKET FUND MONEY MARKET FUND
------------ ----------------- -----------------
INVESTMENT INCOME:
<S> <C> <C> <C>
Interest ....................................................... $2,328 $4,281 $19,855
------ ------ -------
EXPENSES:
Investment Advisory fees ....................................... 261 542 2,160
Less: Fees waived by Investment Adviser ........................ (157) (339) (1,234)
Administration fees ............................................ 75 95 432
12b-1 fees ..................................................... 30 55 254
Transfer Agent fees ............................................ 3 33 8
Custodian fees ................................................. 15 27 123
Professional fees .............................................. 27 13 28
Printing and shareholder reports ............................... -- 6 11
Registration and filing fees ................................... -- 15 3
Trustees' fees ................................................. 2 4 6
Miscellaneous .................................................. 3 5 35
Amortization of deferred organizational costs .................. -- 3 --
Shareholder servicing fees-- Class A and B Shares .............. 7 62 297
------ ------ -------
Total expenses ................................................. 266 521 2,123
------ ------ -------
NET INVESTMENT INCOME ............................................. 2,062 3,760 17,732
------ ------ -------
REALIZED AND UNREALIZED GAIN/(LOSS)
ON INVESTMENTS:
Net realized gain/(loss) on investments sold ................... -- -- (36)
Net change in unrealized appreciation/
depreciation on investments .................................. -- -- --
------ ------ -------
Net gain/(loss) on investments ................................. -- -- (36)
------ ------ -------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS ...................................... $2,062 $3,760 $17,696
====== ====== =======
</TABLE>
1 FUND COMMENCED OPERATIONS ON SEPTEMBER 15, 1998.
<TABLE>
<CAPTION>
GOVERNMENT TREASURY
MONEY MARKET FUND MONEY MARKET FUND MONEY MARKET FUND
----------------- ----------------- -----------------
INVESTMENT INCOME:
<S> <C> <C> <C>
Interest ....................................................... $167,720 $76,373 $18,465
-------- ------- -------
EXPENSES:
Investment Advisory fees ....................................... 11,223 5,183 1,177
Less: Fees waived by Investment Adviser ........................ (3,207) (1,481) (196)
Administration fees ............................................ 2,262 1,037 275
12b-1 fees ..................................................... 1,307 592 161
Transfer Agent fees ............................................ 52 79 17
Custodian fees ................................................. 641 163 78
Professional fees .............................................. 550 231 21
Printing and shareholder reports ............................... 283 161 15
Registration and filing fees ................................... 130 130 5
Trustees' fees ................................................. 125 21 4
Miscellaneous .................................................. 69 147 27
Amortization of deferred organizational costs .................. -- -- 14
Shareholder servicing fees-- Class A and B Shares .............. 1,650 685 80
-------- ------- -------
Total expenses ................................................. 15,085 6,948 1,678
-------- ------- -------
NET INVESTMENT INCOME ............................................. 152,635 69,425 16,787
-------- ------- -------
REALIZED AND UNREALIZED GAIN/(LOSS)
ON INVESTMENTS:
Net realized gain/(loss) on investments sold ................... (1) -- 85
Net change in unrealized appreciation/
depreciation on investments .................................. -- -- --
-------- ------- -------
Net gain/(loss) on investments ................................. (1) -- 85
-------- ------- -------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS ...................................... $152,634 $69,425 $16,872
======== ======= =======
</TABLE>
See Accompanying Notes
139
<PAGE>
[ARROW GRAPHIC OMITTED]
FINANCIAL STATEMENTS
ARMADA FUNDS
STATEMENTS OF CHANGES IN NET ASSETS (000)
<TABLE>
<CAPTION>
INTERNATIONAL EQUITY FUND SMALL CAP VALUE FUND
------------ ------------ ---------------------------
FOR THE FOR THE FOR THE FOR THE
YEAR ENDED PERIOD ENDED YEAR ENDED YEAR ENDED
MAY 31, 1999 MAY 31, 19981 MAY 31, 1999 MAY 31, 1998
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITIES:
Net investment income/(loss) ....................... $ 191 $ 982 $ 1,768 $ 1,073
Net realized gain/(loss) on
investments sold, futures and
foreign currency transactions ................... (2,911) (3,995) (8,366) 49,934
Net unrealized appreciation/
depreciation on investments,
futures and foreign currency
transactions .................................... 5,406 13,359 (5,622) (9,363)
-------- -------- -------- --------
Net increase/(decrease) in net assets
resulting from operations ....................... 2,686 10,346 (12,220) 41,644
-------- -------- -------- --------
DISTRIBUTIONS TO SHAREHOLDERS:
Dividends from net investment income:
Class I ......................................... (830) (133) (867) (1,145)
Class A ......................................... (2) -- (28) (19)
Class B ......................................... -- -- -- --
Dividends from realized capital gains:
Class I ......................................... -- -- (23,595) (34,475)
Class A ......................................... -- -- (1,101) (1,000)
Class B ......................................... -- -- (31) --
-------- -------- -------- --------
Total distributions ................................ (832) (133) (25,622) (36,639)
-------- -------- -------- --------
SHARE TRANSACTIONS:
Class I
Proceeds from shares issued ..................... 71,205 127,644 73,379 108,947
Proceeds from Common Fund Conversion (note 6) ... -- -- -- --
Reinvestment of cash distributions .............. 42 3 13,812 15,365
Cost of shares redeemed ......................... (9,818) (1,906) (64,606) (44,464)
-------- -------- -------- --------
Net Class I share transactions ................ 61,429 125,741 22,585 79,848
-------- -------- -------- --------
Class A
Proceeds from shares issued ..................... 2,079 308 11,093 6,063
Reinvestment of cash distributions .............. 2 -- 1,030 915
Cost of shares redeemed ......................... (1,249) (44) (9,865) (1,135)
-------- -------- -------- --------
Net Class A share transactions ................ 832 264 2,258 5,843
-------- -------- -------- --------
Class B
Proceeds from shares issued ..................... 44 2 463 544
Reinvestment of cash distributions .............. -- -- 30 --
Cost of shares redeemed ......................... (4) (1) (45) (490)
-------- -------- -------- --------
Net Class B share transactions ................ 40 1 448 54
-------- -------- -------- --------
Increase in net assets from share transactions ..... 62,301 126,006 25,291 85,745
-------- -------- -------- --------
Contribution of capital from
affiliate (note 3) ......................... -- -- -- --
-------- -------- -------- --------
Total increase/(decrease) in net assets ............ 64,155 136,219 (12,551) 90,750
-------- -------- -------- --------
NET ASSETS:
Beginning of period ................................ 136,219 -- 294,990 204,240
-------- -------- -------- --------
End of period ...................................... $200,374 $136,219 $282,439 $294,990
======== ======== ======== ========
</TABLE>
See Accompanying Notes
140
<PAGE>
[ARROW GRAPHIC OMITTED]
<TABLE>
<CAPTION>
SMALL CAP GROWTH FUND EQUITY GROWTH FUND
------------ ------------ ---------------------------
FOR THE FOR THE FOR THE FOR THE
YEAR ENDED PERIOD ENDED YEAR ENDED YEAR ENDED
MAY 31, 1999 MAY 31, 19981 MAY 31, 1999 MAY 31, 1998
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITIES:
Net investment income/(loss) ....................... $ (180) $ 40 $ (1,632) $ (112)
Net realized gain/(loss) on
investments sold, futures and
foreign currency transactions ................... (10,439) 833 (1,100) 71,625
Net unrealized appreciation/
depreciation on investments,
futures and foreign currency
transactions .................................... 3,126 4,165 287,003 4,112
------- ------- ---------- --------
Net increase/(decrease) in net assets
resulting from operations ....................... (7,493) 5,038 284,271 75,625
------- ------- ---------- --------
DISTRIBUTIONS TO SHAREHOLDERS:
Dividends from net investment income:
Class I ......................................... (2) (44) -- (77)
Class A ......................................... -- -- -- --
Class B ......................................... -- -- -- --
Dividends from realized capital gains:
Class I ......................................... (733) (93) (51,288) (32,643)
Class A ......................................... (5) -- (4,297) (875)
Class B ......................................... -- -- (16) --
------- ------- ---------- --------
Total distributions ................................ (740) (137) (55,601) (33,595)
------- ------- ---------- --------
SHARE TRANSACTIONS:
Class I
Proceeds from shares issued ..................... 48,064 51,438 654,266 112,234
Proceeds from Common Fund Conversion (note 6) ... -- -- 257,675 --
Reinvestment of cash distributions .............. 382 79 44,257 15,580
Cost of shares redeemed ......................... (14,596) (1,949) (256,697) (72,440)
------- ------- ---------- --------
Net Class I share transactions ................ 33,850 49,568 699,501 55,374
------- ------- ---------- --------
Class A
Proceeds from shares issued ..................... 956 364 148,499 4,854
Reinvestment of cash distributions .............. 5 -- 4,243 816
Cost of shares redeemed ......................... (147) (26) (27,176) (1,269)
------- ------- ---------- --------
Net Class A share transactions ................ 814 338 125,566 4,401
------- ------- ---------- --------
Class B
Proceeds from shares issued ..................... 807 22 1,448 308
Reinvestment of cash distributions .............. -- -- 16 --
Cost of shares redeemed ......................... (673) (21) (108) (287)
------- ------- ---------- --------
Net Class B share transactions ................ 134 1 1,356 21
------- ------- ---------- --------
Increase in net assets from share transactions ..... 34,798 49,907 826,423 59,796
------- ------- ---------- --------
Contribution of capital from
affiliate (note 3) ......................... -- -- -- 466
------- ------- ---------- --------
Total increase/(decrease) in net assets ............ 26,565 54,808 1,055,093 102,292
------- ------- ---------- --------
NET ASSETS:
Beginning of period ................................ 54,808 -- 364,817 262,525
------- ------- ---------- --------
End of period ...................................... $81,373 $54,808 $1,419,910 $364,817
======= ======= ========== ========
</TABLE>
<TABLE>
<CAPTION>
TAX MANAGED EQUITY FUND CORE EQUITY FUND
----------------------------- ---------------------------
FOR THE FOR THE FOR THE FOR THE
YEAR ENDED PERIOD ENDED YEAR ENDED YEAR ENDED
MAY 31, 1999 MAY 31, 19982 MAY 31, 1999 MAY 31, 19981
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITIES:
Net investment income/(loss) ....................... $ 773 $ 214 $ (167) $ 531
Net realized gain/(loss) on
investments sold, futures and
foreign currency transactions ................... 312 55 4,677 4,906
Net unrealized appreciation/
depreciation on investments,
futures and foreign currency
transactions .................................... 58,031 (1,407) 25,111 8,557
-------- -------- -------- --------
Net increase/(decrease) in net assets
resulting from operations ....................... 59,116 (1,138) 29,621 13,994
-------- -------- -------- --------
DISTRIBUTIONS TO SHAREHOLDERS:
Dividends from net investment income:
Class I ......................................... (776) -- (47) (505)
Class A ......................................... (3) -- -- --
Class B ......................................... -- -- -- --
Dividends from realized capital gains:
Class I ......................................... (221) -- (5,032) --
Class A ......................................... (2) -- (25) --
Class B ......................................... (1) -- (15) --
-------- -------- -------- --------
Total distributions ................................ (1,003) -- (5,119) (505)
-------- -------- -------- --------
SHARE TRANSACTIONS:
Class I
Proceeds from shares issued ..................... 4,526 1,477 6,590 106,584
Proceeds from Common Fund Conversion (note 6) ... 46,522 163,615 -- --
Reinvestment of cash distributions .............. 111 -- 4,989 503
Cost of shares redeemed ......................... (26,256) (5,090) (794) (10,061)
-------- -------- -------- --------
Net Class I share transactions ................ 24,903 160,002 10,785 97,026
-------- -------- -------- --------
Class A
Proceeds from shares issued ..................... 7,809 10 2,524 399
Reinvestment of cash distributions .............. 3 -- 25 --
Cost of shares redeemed ......................... (776) -- (1,360) (2)
-------- -------- -------- --------
Net Class A share transactions ................ 7,036 10 1,189 397
-------- -------- -------- --------
Class B
Proceeds from shares issued ..................... 5,341 88 1,071 2
Reinvestment of cash distributions .............. 1 -- 15 --
Cost of shares redeemed ......................... (125) -- (36) --
-------- -------- -------- --------
Net Class B share transactions ................ 5,217 88 1,050 2
-------- -------- -------- --------
Increase in net assets from share transactions ..... 37,156 160,100 13,024 97,425
-------- -------- -------- --------
Contribution of capital from
affiliate (note 3) ......................... -- -- -- --
-------- -------- -------- --------
Total increase/(decrease) in net assets ............ 95,269 158,962 37,526 110,914
-------- -------- -------- --------
NET ASSETS:
Beginning of period ................................ 158,962 -- 110,914 --
-------- -------- -------- --------
End of period ...................................... $254,231 $158,962 $148,440 $110,914
======== ======== ======== ========
</TABLE>
1 FUND COMMENCED OPERATIONS ON AUGUST 1, 1997.
2 FUND COMMENCED OPERATIONS ON APRIL 9, 1998.
See Accompanying Notes
141
<PAGE>
[ARROW GRAPHIC OMITTED]
FINANCIAL STATEMENTS
ARMADA FUNDS
STATEMENTS OF CHANGES IN NET ASSETS (000)
<TABLE>
<CAPTION>
EQUITY INDEX FUND EQUITY INCOME FUND
----------------- -----------------------------
FOR THE FOR THE FOR THE
PERIOD ENDED YEAR ENDED YEAR ENDED
MAY 31, 19991 MAY 31, 1999 MAY 31, 1998
------------ ------------ ------------
INVESTMENT ACTIVITIES:
<S> <C> <C> <C>
Net investment income ........................... $ 1,995 $ 8,703 $ 3,301
Net realized gain/(loss) on investments
sold and futures ............................. 1,051 19,671 6,437
Net unrealized appreciation/depreciation
on investments and futures ................... 18,732 91,321 25,959
-------- -------- --------
Net increase in net assets resulting
from operations .............................. 21,778 119,695 35,697
-------- -------- --------
DISTRIBUTIONS TO SHAREHOLDERS:
Dividends from net investment income:
Class I ...................................... (1,309) (6,836) (3,144)
Class A ...................................... (9) (73) (14)
Class B ...................................... -- (5) --
Dividends from realized capital gains:
Class I ...................................... -- (6,668) (7,211)
Class A ...................................... -- (70) (34)
Class B ...................................... -- (8) --
-------- -------- --------
Total distributions ............................. (1,318) (13,660) (10,403)
-------- -------- --------
SHARE TRANSACTIONS:
Class I
Proceeds from shares issued .................. 269,038 98,187 70,486
Proceeds from Common Fund Conversion (note 6) -- 212,347 --
Reinvestment of cash distributions ........... 1,150 7,529 5,680
Cost of shares redeemed ...................... (36,603) (68,381) (34,560)
-------- -------- --------
Net Class I share transactions ............. 233,585 249,682 41,606
-------- -------- --------
Class A
Proceeds from shares issued .................. 4,339 11,058 1,955
Reinvestment of cash distributions ........... 9 114 34
Cost of shares redeemed ...................... (647) (3,429) (353)
-------- -------- --------
Net Class A share transactions ............. 3,701 7,743 1,636
-------- -------- --------
Class B
Proceeds from shares issued .................. -- 1,036 45
Reinvestment of cash distributions ........... -- 12 --
Cost of shares redeemed ...................... -- (152) (44)
-------- -------- --------
Net Class B share transactions ............. -- 896 1
-------- -------- --------
Increase in net assets from share transactions .. 237,286 258,321 43,243
-------- -------- --------
Total increase in net assets .................... 257,746 364,356 68,537
-------- -------- --------
NET ASSETS:
Beginning of period ............................. -- 196,077 127,540
-------- -------- --------
End of period ................................... $257,746 $560,433 $196,077
======== ======== ========
</TABLE>
1 FUND COMMENCED OPERATIONS ON JULY 10, 1998.
See Accompanying Notes
142
<PAGE>
[ARROW GRAPHIC OMITTED]
<TABLE>
<CAPTION>
BALANCED ALLOCATION FUND TOTAL RETURN ADVANTAGE FUND
------------------------ ------------------------------
FOR THE FOR THE FOR THE
PERIOD ENDED YEAR ENDED YEAR ENDED
MAY 31, 19991 MAY 31, 1999 MAY 31, 1998
------------ ------------ ------------
INVESTMENT ACTIVITIES:
<S> <C> <C> <C>
Net investment income ........................... $ 1,267 $ 18,106 $ 17,772
Net realized gain/(loss) on investments
sold and futures ............................. (1,688) 3,724 2,672
Net unrealized appreciation/depreciation
on investments and futures ................... 2,268 (11,244) 7,028
-------- -------- --------
Net increase in net assets resulting
from operations .............................. 1,847 10,586 27,472
-------- -------- --------
DISTRIBUTIONS TO SHAREHOLDERS:
Dividends from net investment income:
Class I ...................................... (948) (17,916) (17,637)
Class A ...................................... (7) (197) (125)
Class B ...................................... (2) -- --
Dvidends from realized capital gains:
Class I ...................................... -- (1,326) --
Class A ...................................... -- (17) --
Class B ...................................... -- -- --
-------- -------- --------
Total distributions ............................. (957) (19,456) (17,762)
-------- -------- --------
SHARE TRANSACTIONS:
Class I
Proceeds from shares issued .................. 109,461 74,950 83,718
Proceeds from Common Fund Conversion (note 6) -- -- --
Reinvestment of cash distributions ........... 929 12,191 9,472
Cost of shares redeemed ...................... (26,260) (46,083) (65,987)
-------- -------- --------
Net Class I share transactions ............. 84,130 41,058 27,203
-------- -------- --------
Class A
Proceeds from shares issued .................. 1,810 4,953 651
Reinvestment of cash distributions ........... 6 197 111
Cost of shares redeemed ...................... (343) (950) (2,374)
-------- -------- --------
Net Class A share transactions ............. 1,473 4,200 (1,612)
-------- -------- --------
Class B
Proceeds from shares issued .................. 390 -- --
Reinvestment of cash distributions ........... 2 -- --
Cost of shares redeemed ...................... (7) -- --
-------- -------- --------
Net Class B share transactions ............. 385 -- --
-------- -------- --------
Increase in net assets from share transactions . 85,988 45,258 25,591
-------- -------- --------
Total increase in net assets .................... 86,878 36,388 35,301
-------- -------- --------
NET ASSETS:
Beginning of period ............................. -- 296,715 261,414
-------- -------- --------
End of period ................................... $ 86,878 $333,103 $296,715
======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
BOND FUND INTERMEDIATE BOND FUND
----------------------------- ---------------------------
FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
MAY 31, 1999 MAY 31, 1998 MAY 31, 1999 MAY 31, 1998
------------ ------------ ---------------------------
INVESTMENT ACTIVITIES:
<S> <C> <C> <C> <C>
Net investment income ........................... $ 35,495 $ 5,994 $ 13,769 $ 8,477
Net realized gain/(loss) on investments
sold and futures ............................. 6,607 901 2,105 1,330
Net unrealized appreciation/depreciation
on investments and futures ................... (15,918) 1,479 (7,084) 1,379
-------- -------- -------- --------
Net increase in net assets resulting
from operations .............................. 26,184 8,374 8,790 11,186
-------- -------- -------- --------
DISTRIBUTIONS TO SHAREHOLDERS:
Dividends from net investment income:
Class I ...................................... (35,439) (6,010) (13,608) (8,255)
Class A ...................................... (67) (3) (205) (198)
Class B ...................................... (18) -- (13) --
Dvidends from realized capital gains:
Class I ...................................... (10,610) -- (1,679) --
Class A ...................................... (25) -- (20) --
Class B ...................................... (7) -- (2) --
-------- -------- -------- --------
Total distributions ............................. (46,166) (6,013) (15,527) (8,453)
-------- -------- -------- --------
SHARE TRANSACTIONS:
Class I
Proceeds from shares issued .................. 334,224 54,481 168,983 111,103
Proceeds from Common Fund Conversion (note 6) 444,085 -- 71,602 --
Reinvestment of cash distributions ........... 11,803 86 5,353 1,878
Cost of shares redeemed ...................... (144,163) (15,500) (92,671) (70,201)
-------- -------- -------- --------
Net Class I share transactions ............. 645,949 39,067 153,267 42,780
-------- -------- -------- --------
Class A
Proceeds from shares issued .................. 4,207 274 3,889 1,204
Reinvestment of cash distributions ........... 56 1 190 173
Cost of shares redeemed ...................... (1,526) (107) (2,127) (1,883)
-------- -------- -------- --------
Net Class A share transactions ............. 2,737 168 1,952 (506)
-------- -------- -------- --------
Class B
Proceeds from shares issued .................. 845 39 742 79
Reinvestment of cash distributions ........... 24 -- 12 --
Cost of shares redeemed ...................... (113) (38) (30) (77)
-------- -------- -------- --------
Net Class B share transactions ............. 756 1 724 2
-------- -------- -------- --------
Increase in net assets from share transactions . 649,442 39,236 155,943 42,276
-------- -------- -------- --------
Total increase in net assets .................... 629,460 41,597 149,206 45,009
-------- -------- -------- --------
NET ASSETS:
Beginning of period ............................. 132,782 91,185 170,000 124,991
-------- -------- -------- --------
End of period ................................... $762,242 $132,782 $319,206 $170,000
======== ======== ======== ========
</TABLE>
See Accompanying Notes
143
<PAGE>
[ARROW GRAPHIC OMITTED]
FINANCIAL STATEMENTS
ARMADA FUNDS
STATEMENTS OF CHANGES IN NET ASSETS (000)
<TABLE>
<CAPTION>
GNMA FUND ENHANCED INCOME FUND
------------------------------- -------------------------------
FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
MAY 31, 1999 MAY 31, 1998 MAY 31, 1999 MAY 31, 1998
------------ ------------ ------------ ------------
INVESTMENT ACTIVITIES:
<S> <C> <C> <C> <C>
Net investment income .......................... $ 5,291 $ 4,195 $ 4,264 $ 4,180
Net realized gain/(loss) on investments sold ... 234 922 236 143
Net unrealized appreciation/depreciation
on investments ............................... (2,090) 1,152 (746) 411
------- ------- ------- -------
Net increase in net assets
resulting from operations .................... 3,435 6,269 3,754 4,734
------- ------- ------- -------
DISTRIBUTIONS TO SHAREHOLDERS:
Dividends from net investment income:
Class I ................................... (5,162) (4,242) (4,259) (4,063)
Class A ................................... (61) (12) (23) (114)
Class B ................................... -- -- -- --
Dividends from realized capital gains:
Class I ................................... (581) (650) (405) (73)
Class A ................................... (8) (1) (2) (2)
Class B ................................... -- -- -- --
------- ------- ------- -------
Total distributions ............................ (5,812) (4,905) (4,689) (4,252)
------- ------- ------- -------
SHARE TRANSACTIONS:
Class I
Proceeds from shares issued ............... 28,666 28,426 58,938 61,441
Proceeds from Common Fund Conversion (note 6) -- -- -- --
Reinvestment of cash distributions ........ 470 148 2,437 2,282
Cost of shares redeemed ................... (13,612) (10,811) (60,044) (53,330)
------- ------- ------- -------
Net Class I share transactions .......... 15,524 17,763 1,331 10,393
------- ------- ------- -------
Class A
Proceeds from shares issued ............... 1,510 526 351 1,961
Reinvestment of cash distributions ........ 60 9 23 108
Cost of shares redeemed ................... (585) (119) (376) (3,579)
------- ------- ------- -------
Net Class A share transactions .......... 985 416 (2) (1,510)
------- ------- ------- -------
Class B
Proceeds from shares issued ............... -- -- -- --
Reinvestment of cash distributions ........ -- -- -- --
Cost of shares redeemed ................... -- -- -- --
------- ------- ------- -------
Net Class B share transactions .......... -- -- -- --
------- ------- ------- -------
Increase in net assets from share transactions . 16,509 18,179 1,329 8,883
------- ------- ------- -------
Total increase in net assets ................... 14,132 19,543 394 9,365
------- ------- ------- -------
NET ASSETS:
Beginning of period ............................ 84,173 64,630 72,447 63,082
------- ------- ------- -------
End of period .................................. $98,305 $84,173 $72,841 $72,447
======= ======= ======= =======
</TABLE>
1 FUND COMMENCED OPERATIONS ON APRIL 9, 1998.
See Accompanying Notes
144
<PAGE>
[ARROW GRAPHIC OMITTED]
FINANCIAL STATEMENTS
ARMADA FUNDS
STATEMENTS OF CHANGES IN NET ASSETS (000)
<TABLE>
<CAPTION>
OHIO TAX EXEMPT FUND PENNSYLVANIA MUNICIPAL FUND
------------------------------- -------------------------------
FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
MAY 31, 1999 MAY 31, 1998 MAY 31, 1999 MAY 31, 1998
------------ ------------ ------------ ------------
INVESTMENT ACTIVITIES:
<S> <C> <C> <C> <C>
Net investment income .......................... $ 9,813 $ 5,512 $ 1,891 $ 1,658
Net realized gain/(loss) on investments sold ... 180 196 116 (1)
Net unrealized appreciation/depreciation
on investments ............................... (2,191) 2,886 (433) 895
--------- -------- ------- -------
Net increase in net assets
resulting from operations .................... 7,802 8,594 1,574 2,552
--------- -------- ------- -------
DISTRIBUTIONS TO SHAREHOLDERS:
Dividends from net investment income:
Class I ................................... (9,541) (5,330) (1,807) (1,653)
Class A ................................... (212) (180) (8) (5)
Class B ................................... -- -- -- --
Dividends from realized capital gains:
Class I ................................... (136) (90) (41) (39)
Class A ................................... (3) (4) -- --
Class B ................................... -- -- -- --
--------- -------- ------- -------
Total distributions ............................ (9,892) (5,604) (1,856) (1,697)
--------- -------- ------- -------
SHARE TRANSACTIONS:
Class I
Proceeds from shares issued ............... 81,139 36,338 6,378 6,749
Proceeds from Common Fund Conversion (note 6) -- 51,852 -- --
Reinvestment of cash distributions ........ 278 147 38 22
Cost of shares redeemed ................... (39,407) (17,109) (4,718) (5,640)
--------- -------- ------- -------
Net Class I share transactions .......... 42,010 71,228 1,698 1,131
--------- -------- ------- -------
Class A
Proceeds from shares issued ............... 1,246 940 114 66
Reinvestment of cash distributions ........ 120 125 1 1
Cost of shares redeemed ................... (545) (752) (20) (25)
--------- -------- ------- -------
Net Class A share transactions .......... 821 313 95 42
--------- -------- ------- -------
Class B
Proceeds from shares issued ............... -- -- -- --
Reinvestment of cash distributions ........ -- -- -- --
Cost of shares redeemed ................... -- -- -- --
--------- -------- ------- -------
Net Class B share transactions .......... -- -- -- --
--------- -------- ------- -------
Increase in net assets from share transactions . 42,831 71,541 1,793 1,173
--------- -------- ------- -------
Total increase in net assets ................... 40,741 74,531 1,511 2,028
--------- -------- ------- -------
NET ASSETS:
Beginning of period ............................ 169,432 94,901 38,878 36,850
--------- -------- ------- -------
End of period .................................. $ 210,173 $169,432 $40,389 $38,878
========= ======== ======= =======
</TABLE>
<TABLE>
<CAPTION>
OHIO TAX EXEMPT FUND
-------------------------------
FOR THE FOR THE
YEAR ENDED YEAR ENDED
MAY 31, 1999 MAY 31, 1998
------------ ------------
INVESTMENT ACTIVITIES:
<S> <C> <C>
Net investment income .......................... $ 4,217 $ 532
Net realized gain/(loss) on investments sold ... 412 --
Net unrealized appreciation/depreciation
on investments ............................... (581) 591
-------- -------
Net increase in net assets
resulting from operations .................... 4,048 1,123
-------- -------
DISTRIBUTIONS TO SHAREHOLDERS:
Dividends from net investment income:
Class I ................................... (4,193) (530)
Class A ................................... (67) --
Class B ................................... (2) --
Dividends from realized capital gains:
Class I ................................... (257) --
Class A ................................... (1) --
Class B ................................... -- --
-------- -------
Total distributions ............................ (4,520) (530)
-------- -------
SHARE TRANSACTIONS:
Class I
Proceeds from shares issued ............... 20,912 1,962
Proceeds from Common Fund Conversion (note 6) 22,085 78,943
Reinvestment of cash distributions ........ 67 --
Cost of shares redeemed ................... (22,312) (1,239)
-------- -------
Net Class I share transactions .......... 20,752 79,666
-------- -------
Class A
Proceeds from shares issued ............... 8,788 --
Reinvestment of cash distributions ........ 63 --
Cost of shares redeemed ................... (4,551) --
-------- -------
Net Class A share transactions .......... 4,300 --
-------- -------
Class B
Proceeds from shares issued ............... 277 --
Reinvestment of cash distributions ........ 2 --
Cost of shares redeemed ................... -- --
-------- -------
Net Class B share transactions .......... 279 --
-------- -------
Increase in net assets from share transactions . 25,331 79,666
-------- -------
Total increase in net assets ................... 24,859 80,259
-------- -------
NET ASSETS:
Beginning of period ............................ 80,259 --
-------- -------
End of period .................................. $105,118 $80,259
======== =======
</TABLE>
1 FUND COMMENCED OPERATIONS ON APRIL 9, 1998.
See Accompanying Notes
145
<PAGE>
[ARROW GRAPHIC OMITTED]
FINANCIAL STATEMENTS
ARMADA FUNDS
STATEMENTS OF CHANGES IN NET ASSETS (000)
<TABLE>
<CAPTION>
OHIO MUNICIPAL PENNSYLVANIA TAX EXEMPT TAX EXEMPT
MONEY MARKET FUND MONEY MARKET FUND MONEY MARKET FUND
----------------- ------------------------------ ---------------------------
FOR THE FOR THE FOR THE FOR THE FOR THE
PERIOD ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
MAY 31, 19991 MAY 31, 1999 MAY 31, 1998 MAY 31, 1999 MAY 31, 1998
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
INVESTMENT ACTIVITIES:
Net investment income ................. $ 2,062 $ 3,760 $ 3,188 $ 17,732 $ 16,326
Net realized gain/(loss)
on investments sold ................ -- -- (10) (36) 10
-------- -------- -------- -------- --------
Net increase in net assets resulting
from operations ....................... 2,062 3,760 3,178 17,696 16,336
-------- -------- -------- -------- --------
DISTRIBUTIONS TO SHAREHOLDERS:
Dividends from net investment income:
Class I ............................. (1,958) (2,667) (2,280) (12,418) (13,748)
Class A ............................. (124) (1,112) (872) (5,503) (2,665)
Class B ............................. -- -- -- -- --
Dividends from realized capital gains:
Class I ............................. -- -- -- -- --
Class A ............................. -- -- -- -- --
Class B ............................. -- -- -- -- --
-------- -------- -------- -------- --------
Total distributions ...................... (2,082) (3,779) (3,152) (17,921) (16,413)
-------- -------- -------- -------- --------
SHARE TRANSACTIONS:
Class I
Proceeds from shares issued ......... 273,577 176,111 171,384 760,407 881,569
Reinvestment of cash distributions .. 27 -- -- 98 1
Cost of shares redeemed ............. (174,242) (172,152) (159,015) (745,079) (833,210)
-------- -------- -------- -------- --------
Net Class I share transactions ... 99,362 3,959 12,369 15,426 48,360
-------- -------- -------- -------- --------
Class A
Proceeds from shares issued ......... 30,799 161,332 127,747 654,175 381,022
Reinvestment of cash distributions .. 98 490 295 5,196 2,404
Cost of shares redeemed ............. (19,878) (141,365) (115,504) (601,426) (322,804)
-------- -------- -------- -------- --------
Net Class A share transactions ... 11,019 20,457 12,538 57,945 60,622
-------- -------- -------- -------- --------
Class B
Proceeds from shares issued ......... -- -- -- -- --
Reinvestment of cash distributions .. -- -- -- -- --
Cost of shares redeemed ............. -- -- -- -- --
-------- -------- -------- -------- --------
Net Class B share transactions ... -- -- -- -- --
-------- -------- -------- -------- --------
Increase in net assets from
share transactions .................... 110,381 24,416 24,907 73,371 108,982
-------- -------- -------- -------- --------
Total increase in net assets ............. 110,361 24,397 24,933 73,146 108,905
-------- -------- -------- -------- --------
NET ASSETS:
Beginning of period ................... -- 106,639 81,706 551,501 442,596
-------- -------- -------- -------- --------
End of period ......................... $110,361 $131,036 $106,639 $624,647 $551,501
======== ======== ======== ======== ========
</TABLE>
1 FUND COMMENCED OPERATIONS ON SEPTEMBER 15, 1998.
See Accompanying Notes
146
<PAGE>
<TABLE>
<CAPTION>
MONEY MARKET FUND GOVERNMENT MONEY MARKET FUND
---------------------------------------- ----------------------------------------
FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
MAY 31, 1999 MAY 31, 1998 MAY 31, 1999 MAY 31, 1998
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITIES:
Net investment income ................. $ 152,635 $ 128,512 $ 69,425 $ 58,026
Net realized gain/(loss)
on investments sold ................ (1) (4) -- (1)
---------- ---------- ---------- ----------
Net increase in net assets resulting
from operations ....................... 152,634 128,508 69,425 58,025
---------- ---------- ---------- ----------
DISTRIBUTIONS TO SHAREHOLDERS:
Dividends from net investment income:
Class I ............................. (101,961) (103,139) (48,773) (47,874)
Class A ............................. (51,163) (25,134) (20,599) (10,152)
Class B ............................. (3) -- -- --
Dividends from realized capital gains:
Class I ............................. -- -- -- --
Class A ............................. -- -- -- --
Class B ............................. -- -- -- --
---------- ---------- ---------- ----------
Total distributions ...................... (153,127) (128,273) (69,372) (58,026)
---------- ---------- ---------- ----------
SHARE TRANSACTIONS:
Class I
Proceeds from shares issued ......... 6,186,234 5,718,525 3,760,181 3,557,896
Reinvestment of cash distributions .. 405 1,914 873 176
Cost of shares redeemed ............. (5,964,073) (5,751,937) (3,802,485) (3,233,359)
---------- ---------- ---------- ----------
Net Class I share transactions ... 222,566 (31,498) (41,431) 324,713
---------- ---------- ---------- ----------
Class A
Proceeds from shares issued ......... 3,828,467 2,079,077 1,375,632 614,377
Reinvestment of cash distributions .. 32,692 14,552 3,639 1,400
Cost of shares redeemed ............. (3,197,331) (1,742,976) (1,062,178) (526,921)
---------- ---------- ---------- ----------
Net Class A share transactions ... 663,828 350,653 317,093 88,856
---------- ---------- ---------- ----------
Class B
Proceeds from shares issued ......... 162 6 -- --
Reinvestment of cash distributions .. 2 -- -- --
Cost of shares redeemed ............. (142) (1) -- --
---------- ---------- ---------- ----------
Net Class B share transactions ... 22 5 -- --
---------- ---------- ---------- ----------
Increase in net assets from
share transactions .................... 886,416 319,160 275,662 413,569
---------- ---------- ---------- ----------
Total increase in net assets ............. 885,923 319,395 275,715 413,568
---------- ---------- ---------- ----------
NET ASSETS:
Beginning of period ................... 2,608,587 2,289,192 1,384,359 970,791
---------- ---------- ---------- ----------
End of period ......................... $3,494,510 $2,608,587 $1,660,074 $1,384,359
========== ========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
TREASURY MONEY MARKET FUND
----------------------------------------
FOR THE FOR THE
YEAR ENDED YEAR ENDED
MAY 31, 1999 MAY 31, 1998
------------ ------------
<S> <C> <C>
INVESTMENT ACTIVITIES:
Net investment income ................. $ 16,787 $ 14,828
Net realized gain/(loss)
on investments sold ................ 85 8
---------- ----------
Net increase in net assets resulting
from operations ....................... 16,872 14,836
---------- ----------
DISTRIBUTIONS TO SHAREHOLDERS:
Dividends from net investment income:
Class I ............................. (14,683) (14,531)
Class A ............................. (2,138) (297)
Class B ............................. -- --
Dividends from realized capital gains:
Class I ............................. -- --
Class A ............................. -- --
Class B ............................. -- --
---------- ----------
Total distributions ...................... (16,821) (14,828)
---------- ----------
SHARE TRANSACTIONS:
Class I
Proceeds from shares issued ......... 1,602,785 1,565,848
Reinvestment of cash distributions .. 26 10
Cost of shares redeemed ............. (1,616,371) (1,482,587)
---------- ----------
Net Class I share transactions ... (13,560) 83,271
---------- ----------
Class A
Proceeds from shares issued ......... 647,257 14,124
Reinvestment of cash distributions .. 447 271
Cost of shares redeemed ............. (571,910) (12,854)
---------- ----------
Net Class A share transactions ... 75,794 1,541
---------- ----------
Class B
Proceeds from shares issued ......... -- --
Reinvestment of cash distributions .. -- --
Cost of shares redeemed ............. -- --
---------- ----------
Net Class B share transactions ... -- --
---------- ----------
Increase in net assets from
share transactions .................... 62,234 84,812
---------- ----------
Total increase in net assets ............. 62,285 84,820
---------- ----------
NET ASSETS:
Beginning of period ................... 366,827 282,007
---------- ----------
End of period ......................... $ 429,112 $ 366,827
========== ==========
</TABLE>
See Accompanying Notes
147
<PAGE>
[ARROW GRAPHIC OMITTED]
NOTES TO FINANCIAL STATEMENTS
1. FUND ORGANIZATION
Armada Funds (the "Trust") is registered under the Investment Company Act of
1940, as amended (the "1940 Act"), as an open-end investment management company.
The Trust was organized as a Massachusetts business trust on January 28, 1986.
The Trust is comprised of twenty four funds each of which is authorized to issue
two classes of shares designated as Class I and Class A shares. Effective
January 1, 1998, all funds except, Ohio Municipal Money Market, Pennsylvania
Tax-Exempt Money Market, Tax-Exempt MoneyMarket, Government Money Market and
Treasury Money Market were authorized to offer a third class of shares
designated as Class B shares. Each share class represents an interest in the
same portfolio of investments of the respective Fund and is substantially the
same in all respects, except that the classes are subject to different
distribution and/or shareholder service fees and investment minimums. Class A
shares are sold subject to a front-end sales charge and Class B shares are sold
with a contingent deferred sales charge, both of which may be reduced or waived
under certain circumstances.
The Trust currently has five Series that consist of the following Funds
(each referred to as a "Fund" or collectively as the "Funds"):
EQUITY SERIES
International Equity Fund, Small Cap Value Fund, Small Cap Growth Fund, Equity
Growth Fund, Tax Managed Equity Fund, Core Equity Fund, Equity Index Fund, and
Equity Income Fund;
ALLOCATION SERIES
Balanced Allocation Fund;
INCOME SERIES
Total Return Advantage Fund, Bond Fund, Intermediate Bond Fund, GNMA Fund,
Enhanced Income Fund, and Real Return Advantage Fund;
TAX EXEMPT SERIES
Ohio Tax Exempt Fund, Pennsylvania Municipal Fund, and National Tax Exempt Fund;
MONEY MARKET SERIES
Ohio Municipal Money Market Fund, Pennsylvania Tax Exempt Money Market Fund, Tax
Exempt Money Market Fund, Money Market Fund, Government Money Market Fund, and
Treasury Money Market Fund.
As of the date of this report, the Real Return Advantage Fund had not
commenced operations.
2. SIGNIFICANT ACCOUNTING POLICIES
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts and disclosures in the financial statements. Actual
results could differ from those estimates.
The following is a summary of significant accounting policies followed by the
Funds.
SECURITY VALUATION: Securities listed on an exchange are valued at the last
quoted sales price as of the close of the New York Stock Exchange on the
valuation date. Securities not traded or securities not listed on an exchange
are valued at the mean of the last quoted bid and asked prices. Securities
listed on a foreign exchange are valued at the last quoted sales price before
the Fund is valued. Long-term debt securities are valued by an independent
pricing service and such prices are believed to reflect the fair value of such
securities. Short-term instruments having less than 60 days to maturity are
valued at amortized cost which approximates market value, which has been
determined by the Board of Trustees to represent a fair value of each Fund's
investments. Other securities and assets for which market quotations are not
readily available are valued at fair value as determined in good faith by or
under the direction of the Fund's Board of Trustees.
SECURITY TRANSACTIONS AND INVESTMENT INCOME: Security transactions are
recorded on 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 of
the Funds in the Trust are allocated among the Funds on the basis of average net
assets. Original issue discounts and market premiums are amortized to interest
income over the lives of the respective securities.
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS: Dividends from the net
investment income of the Equity Growth, Tax Managed Equity, Core Equity, Equity
Index, Equity Income and Balanced Allocation Funds are declared and paid
quarterly; dividends from net investment income of the International
148
<PAGE>
[ARROW GRAPHIC OMITTED]
NOTES TO FINANCIAL STATEMENTS
Equity, Small Cap Value and Small Cap Growth Funds are declared and paid
annually. With respect to the International Equity, Small Cap Value, Small Cap
Growth, Equity Growth, Tax Managed Equity, Core Equity, Equity Index, Equity
Income and Balanced Allocation Funds, net investment income for dividend
purposes consists of dividends, interest income, and discounts earned (including
both original issue and market discount), less amortization of any market
premiums and accrued expenses. Dividends from the net investment income of the
Total Return Advantage, Bond, Intermediate Bond, GNMA, Enhanced Income, Ohio Tax
Exempt, Pennsylvania Municipal, National Tax Exempt, Ohio Municipal Money
Market, Pennsylvania Tax Exempt Money Market, Tax Exempt Money Market, Money
Market, Government Money Market, and Treasury Money Market Funds are declared
daily and paid no later than five business days after the end of the month. Net
investment income of the Total Return Advantage, Bond, Intermediate Bond, GNMA,
Enhanced Income, Money Market, Government Money Market, and Treasury Money
Market Funds consists of dividend and interest income, discount earned
(including both original issue and market discount), less amortization of any
market premiums and accrued expenses. Net investment income of the Ohio Tax
Exempt, Pennsylvania Municipal, National Tax Exempt, Ohio Municipal Money
Market, Pennsylvania Tax Exempt Money Market, and Tax Exempt Money Market Funds
consists of interest accrued, original issue discount earned, less amortization
of any market premium and accrued expenses. Any net realized capital gains will
be distributed at least annually for all the Funds.
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 or
continue to qualify as a separate "regulated investment company" under the
Internal Revenue Code and make the requisite distributions to shareholders that
will be sufficient to relieve it from Federal income tax and Federal excise tax.
Therefore, no Federal tax provision is required. To the extent that
distributions from net investment income and net realized capital gains exceed
amounts reported in the financial statements, such amounts are reported
separately.
The amounts of distributions from net investment income and net realized
capital gains are determined in accordance with Federal income tax regulations,
which may differ from those amounts determined under generally accepted
accounting principles. These book/tax differences are either temporary or
permanent in nature. These differences are primarily due to wash sales, foreign
currency gains and losses and the "mark to market" of certain Passive Foreign
Investment Companies (PFICs) for tax purposes. The character of distributions
made during the year from net investment income or net realized gains, and the
timing of distributions where the fiscal year in which the amounts are
distributed may differ from the year that the income or realized gains (losses)
were recorded by the Fund. To the extent these differences are permanent,
adjustments are made to the appropriate equity accounts in the period that the
differences arise. On the Statement of Net Assets the following adjustments were
made:
ACCUMULATED UNDISTRIBUTED
NET REALIZED NET INVESTMENT PAID-IN-
GAIN (LOSS) INCOME CAPITAL
FUND (000) (000) (000)
- ---- ------------ -------------- ---------
Small Cap Growth $-- $ 182 $ (182)
Equity Growth (163) 1,693 (1,530)
Core Equity (22) 189 (167)
Bond 10 (1) (9)
Intermediate Bond (80) 84 (4)
Tax Exempt Money
Market (11) (77) 88
Money Market 3 -- (3)
Treasury Money
Market (107) 107 --
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 incurred through June 30, 1998, are being amortized on a
straight-line basis over a period of five years from the date of commencement of
operations.
FOREIGN CURRENCY TRANSLATION: The books and records of the International
Equity Fund are maintained in U.S. dollars as follows: (1) the foreign currency
market values of investment securities and other assets and liabilities stated
in foreign currencies are translated at the exchange rates prevailing at the end
of the period; and (2) purchases, sales and income are translated at the rates
of exchange prevailing on the respective dates of such transactions. The
resulting exchange gains and losses are included in the Statement of Operations.
The Fund does not isolate the portion of gains and losses on investments which
is due to fluctuations in foreign exchange rates from that which is due to
fluctuations in the market prices of investments.
FORWARD FOREIGN CURRENCY CONTRACTS: The International Equity Fund enters into
forward foreign currency contracts as hedges against either specific
transactions or portfolio positions. All commitments are "marked-to-market"
daily at the applicable foreign exchange rate and any resulting unrealized
149
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NOTES TO FINANCIAL STATEMENTS
gains or losses are recorded currently. The Fund realizes gains or losses at the
time the forward contracts are extinguished. At May 31, 1999 forward foreign
currency contracts outstanding were as follows:
CONTRACTS TO UNREALIZED
(DELIVER)/ IN EXCHANGE APPRECIATION
RECEIVE FOR SETTLEMENT (DEPRECIATION)
(000) (000) DATE (000)
----------- ----------- ----------- -------------
JP (2,000,000) $(17,495) 04/03/00 $616
JP--Japanese Yen
FUTURES CONTRACTS: Certain of the Funds may engage in futures contracts for
the purpose of hedging against the value of the portfolio securities held and in
the value of the securities a Fund intends to purchase, in order to maintain
liquidity. Upon entering into a futures contract, a Fund is required to deposit
with the broker an amount of cash or cash equivalents equal to a certain
percentage of the contract amount. This is known as the "initial margin".
Subsequent payments ("variation margin") are made or received by a Fund each
day, depending on the daily fluctuation of the value of the contract. The daily
changes in the contract are recorded as unrealized gain or loss. The Fund
recognizes a realized gain or loss when the contact is closed. The net
unrealized appreciation/(depreciation), if any, is shown in the financial
statements.
There are several risks in connection with the use of futures contracts as a
hedging device. The change in value of futures contracts primarily corresponds
with the value of their underlying instruments, which may not correlate with the
change in value of the hedged investments. In addition, there is the risk that
the Fund may not be able to enter into a closing transaction because of an
illiquid secondary market.
Financial futures contracts open at May 31, 1999 were as follows:
NUMBER NOTIONAL UNREALIZED
OF COST AMOUNT EXPIRATION GAIN/(LOSS)
FUND CONTRACTS (000) DATE (000)
- ----------- --------- ----------- ----------- -----------
Small Cap Growth -
Russell 2000
Futures 56 $11,371 Jun-99 $973
Equity Index -
S&P 500
Futures 28 918 Jun-99 (104)
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. 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.
REPURCHASE AGREEMENTS: Repurchase Agreements are considered loans under the
1940 Act. In connection therewith, the Trust's custodian receives and holds
collateral of not less than 102% of the repurchase price plus accrued interest.
If the value of the collateral falls below this amount, the Trust will require
the seller to deposit additional collateral by the next business day. If the
request for additional collateral is not met or the seller defaults on its
repurchase obligation, the Trust maintains the right to sell the underlying
securities at market value and any remaining loss may be subject to legal
proceedings.
3. INVESTMENT ADVISER, DISTRIBUTION FEES AND OTHER RELATED PARTY TRANSACTIONS
Fees paid by the Trust pursuant to the Advisory Agreements with National City
Investment Management Company (the "Adviser"), an indirect wholly owned
subsidiary of National City Corporation, are payable monthly based on an annual
rate, listed in the table below, based on each Fund's average daily net assets.
The Adviser may from time to time waive its fees payable by the Funds. At May
31, 1999, advisory fees accrued and unpaid amounted to:
ANNUAL
RATE (000)
---------- ----------
International Equity Fund............... 1.15% $208
Small Cap Value Fund.................... 1.00% 246
Small Cap Growth Fund................... 1.00% 70
Equity Growth Fund...................... 0.75% 926
Tax Managed Equity Fund................. 0.75% 83
Core Equity Fund........................ 0.75% 254
Equity Index Fund....................... 0.35% --
Equity Income Fund...................... 0.75% 358
Balanced Allocation Fund................ 0.75% 53
Total Return Advantage Fund............. 0.55% 69
Bond Fund............................... 0.55% 373
Intermediate Bond Fund.................. 0.55% 113
GNMA Fund............................... 0.55% 44
Enhanced Income Fund.................... 0.45% 22
Ohio Tax Exempt Fund.................... 0.55% 64
Pennsylvania Municipal Fund............. 0.55% 7
National Tax Exempt Fund................ 0.55% 19
Ohio Municipal Money Market Fund........ 0.35% 15
Pennsylvania Tax Exempt Money
Market Fund.......................... 0.40% 17
Tax Exempt Money Market Fund............ 0.35% 81
Money Market Fund....................... 0.35% 772
Government Money Market Fund............ 0.35% 354
Treasury Money Market Fund.............. 0.30% 87
150
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NOTES TO FINANCIAL STATEMENTS
During the fiscal year ended May 31, 1998, the Adviser contributed $466,000
to the Equity Growth Fund to offset the Fund's realized loss incurred on the
sale of a Standard & Poor's Depository Receipt.
National Asset Management Corporation serves as investment sub-adviser (the
"Sub Adviser") to the Core Equity and Total Return Advantage Funds. No fees are
paid to the Sub-Adviser directly from the Trust.
Wellington Management Company, LLP served, prior to August 1, 1998, as the
investment sub-adviser to the Small Cap Growth Fund. No fees were paid to the
sub-adviser directly from the Trust.
The Trust maintains a Shareholder Services Plan (the "Services Plan") with
respect to the Class A and B 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 Class A or B shares in
consideration for payment, listed in the table below, on an annual basis of the
net asset value of the Class A or B shares.
ANNUAL
RATE
----------
International Equity Fund....................... 0.25%
Small Cap Value Fund............................ 0.25%
Small Cap Growth Fund........................... 0.25%
Equity Growth Fund.............................. 0.25%
Tax Managed Equity Fund......................... 0.25%
Core Equity Fund................................ 0.25%
Equity Index Fund............................... 0.25%
Equity Income Fund.............................. 0.25%
Balanced Allocation Fund........................ 0.25%
Total Return Advantage Fund..................... 0.25%
Bond Fund....................................... 0.25%
Intermediate Bond Fund.......................... 0.25%
GNMA Fund....................................... 0.25%
Enhanced Income Fund............................ 0.10%
Ohio Tax Exempt Fund............................ 0.10%
Pennsylvania Municipal Fund..................... 0.10%
National Tax Exempt Fund........................ 0.10%
Ohio Municipal Money Market Fund................ 0.15%
Pennsylvania Tax Exempt Money Market Fund....... 0.15%
Tax Exempt Money Market Fund.................... 0.15%
Money Market Fund............................... 0.15%
Government Money Market Fund.................... 0.15%
Treasury Money Market Fund...................... 0.15%
National City Bank serves as the Fund's Custodian.
The Trust and SEI Investments Distribution Co., a wholly-owned subsidiary of
SEI Investments Company ("SEI" or the "Distributor") are parties to a
distribution agreement dated May 1, 1998. The Distributor receives no fees for
its distribution services under this agreement. The Trust reimburses the
Distributor for direct and indirect costs and expenses incurred in connection
with advertising, marketing and other distribution services. The Class I and
Class A shares are subject to a fee not to exceed .10% per annum of the average
net assets of its Class I and Class A shares. Currently the funds pay a fee
equal to .04% per annum, except Equity Index, Total Return Advantage, Enhanced
Income and Pennsylvania Municipal Fund, which are currently waiving their full
fee. The Class B shares of the Trust pays the Distributor up to .75% per annum
of the average net assets for the same services provided to the Class I and
Class A shares.
Each Trustee receives an annual fee of $15,000 plus $3,000 for each Board
meeting attended and reimbursement of out-of-pocket expenses. The Chairman of
the Board receives an additional $5,000 per annum for services in such capacity.
Such fees are paid for services rendered to all of the Funds and are allocated
accordingly. No person who is an officer, director, trustee, or employee of the
Investment Adviser, Distributor, or any parent or subsidiary thereof, who serves
as an officer, trustee, or employee of the Trust receives any compensation from
the Trust.
Expenses paid for the period ended May 31, 1999, include legal fees of
$687,000 paid to Drinker, Biddle & Reath LLP. A partner of that firm is
Secretary of the Trust.
The Trust and SEI Investments Mutual Funds Services (the "Administrator") are
parties to an Administration Agreement dated May 1, 1998, under which the
Administrator provides administrative services for an annual fee of 0.07% of the
aggregate average daily net assets of the Funds up to the first eighteen billion
and 0.06% of the aggregate average daily net assets of the Funds over eighteen
billion.
4. INVESTMENTS
During the year ended May 31, 1999, purchases and sales of securities, other
than short-term investments or U.S. government obligations, aggregated:
PURCHASES (000) SALES (000)
-------------- -------------
International Equity Fund..... $ 189,374 $ 126,989
Small Cap Value Fund.......... 199,967 201,002
Small Cap Growth Fund......... 117,391 89,069
Equity Growth Fund............ 1,228,343 636,089
Tax Managed Equity Fund....... 14,142 11,674
Core Equity Fund.............. 60,792 53,687
Equity Index Fund............. 243,329 14,551
Equity Income Fund............ 165,339 77,374
Balanced Allocation Fund...... 88,798 27,315
151
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NOTES TO FINANCIAL STATEMENTS
PURCHASES (000) SALES (000)
-------------- -----------
Total Return Advantage Fund... $175,553 $119,909
Bond Fund..................... 258,785 589,003
Intermediate Bond Fund........ 362,936 270,186
GNMA Fund..................... 17,333 11,795
Enhanced Income Fund.......... 69,945 45,558
Ohio Tax Exempt Fund.......... 79,668 35,878
Pennsylvania Municipal Fund... 7,126 5,505
National Tax Exempt Fund...... 24,649 21,401
Purchases and sales of long-term U.S. government obligations were:
PURCHASES (000) SALES (000)
-------------- ----------
Balanced Allocation Fund...... $ 59,799 $ 43,163
Total Return Advantage Fund... 306,755 316,698
Bond Fund..................... 1,600,245 1,060,096
Intermediate Bond Fund........ 372,008 373,621
GNMA Fund..................... 73,969 59,304
Enhanced Income Fund.......... 59,693 79,246
As of May 31, 1999, the following funds have capital loss carryforwards:
AMOUNT EXPIRATION
FUND (000) DATE
---------- -------------
International Equity.......... $6,578 2006-2007
Small Cap Value............... 3,560 2007
Small Cap Growth.............. 4,342 2007
Equity Growth................. 1,032 2007
Balanced Allocation........... 821 2007
Pennsylvania Tax Exempt
Money Market................ 13 2003-2007
Tax Exempt Money Market....... 26 2006-2007
Money Market.................. 11 2001-2007
Government Money Market....... 2 2002-2006
The Small Cap Value, Small Cap Growth, Balanced Allocation, Bond, GNMA and
Enhanced Income Funds incurred losses in the amount of $5,454,834, $4,883,790,
$754,303, $1,545,272, $3,893 and $90,861 from November 1, 1998 to May 31, 1999.
As permitted by tax regulations, the funds intend to elect to defer and treat
these losses as arising in the fiscal year ending May 31, 2000.
At May 31, 1999 the total cost of securities for Federal income tax purposes
was not materially different from amounts reported for financial reporting
purposes. The aggregate gross unrealized appreciation and depreciation for
securities held by the Funds at May 31, 1999, is as follows:
AGGREGATE AGGREGATE
GROSS GROSS
APPRECIATION DEPRECIATION NET
(000) (000) (000)
-------------- ------------ ------------
International Equity Fund ..... $ 23,999 $ (5,844) $ 18,155
Small Cap Value Fund .......... 37,384 (23,405) 13,979
Small Cap Growth Fund ......... 10,325 (4,007) 6,318
Equity Growth Fund ............ 360,805 (18,519) 342,286
Tax Managed Equity Fund ....... 186,627 (294) 186,333
Core Equity Fund .............. 35,084 (1,416) 33,668
Equity Index Fund ............. 26,559 (7,723) 18,836
Equity Income Fund ............ 147,422 (9,292) 138,130
Balanced Allocation Fund ...... 4,475 (2,207) 2,268
Total Return Advantage Fund ... 1,521 (7,052) (5,531)
Bond Fund ..................... 1,796 (16,132) (14,336)
Intermediate Bond Fund ........ 375 (6,102) (5,727)
GNMA Fund ..................... 759 (1,525) (766)
Enhanced Income Fund .......... 142 (608) (466)
Ohio Tax Exempt Fund .......... 5,237 (1,179) 4,058
Pennsylvania Municipal Fund ... 1,382 (129) 1,253
National Tax Exempt Fund ...... 2,265 (536) 1,729
152
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NOTES TO FINANCIAL STATEMENTS
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.
<TABLE>
<CAPTION>
(000)
-----------------------------------------------------------------------
CLASS I CLASS A CLASS B
--------------------- ------------------- ------------------
YEAR PERIOD YEAR PERIOD YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED
5/31/99 5/31/98 5/31/99 5/31/98 5/31/99 5/31/98
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
INTERNATIONAL EQUITY FUND*
Shares sold ........................................... 6,630 12,708 189 30 4 --
Shares reinvested ..................................... 4 -- -- -- -- --
Shares repurchased .................................... (901) (185) (110) (4) -- --
------- ------- ------ ------ ------ ------
Net increase .......................................... 5,733 12,523 79 26 4 --
======= ======= ====== ======= ====== ======
SMALL CAP VALUE FUND
Shares sold ........................................... 5,565 6,633 853 367 36 35
Shares reinvested ..................................... 1,099 1,006 84 61 3 --
Shares repurchased .................................... (4,939) (2,710) (757) (71) (4) (31)
------- ------- ------ ------ ------ ------
Net increase .......................................... 1,725 4,929 180 357 35 4
======= ======= ====== ======= ====== ======
SMALL CAP GROWTH FUND*
Shares sold ........................................... 4,616 4,822 93 30 75 2
Shares reinvested ..................................... 36 8 1 -- -- --
Shares repurchased .................................... (1,409) (170) (14) (2) (61) (2)
------- ------- ------ ------ ------ ------
Net increase .......................................... 3,243 4,660 80 28 14 --
======= ======= ====== ======= ====== ======
EQUITY GROWTH FUND
Shares sold ........................................... 55,653 5,311 6,417 225 59 14
Shares sold from common fund .......................... 11,713 -- -- -- -- --
Shares reinvested ..................................... 1,893 839 182 44 -- --
Shares repurchased .................................... (34,479) (3,367) (809) (60) (3) (13)
------- ------- ------ ------ ------ ------
Net increase .......................................... 34,780 2,783 5,790 209 56 1
======= ======= ====== ======= ====== ======
TAX MANAGED EQUITY FUND**
Shares sold ........................................... 1,245 145 663 1 444 9
Shares sold from common fund .......................... 4,949 16,361 -- -- -- --
Shares reinvested ..................................... 10 -- -- -- -- --
Shares repurchased .................................... (2,301) (507) (60) -- (9) --
------- ------- ------ ------ ------ ------
Net increase .......................................... 3,903 15,999 603 1 435 9
======= ======= ====== ======= ====== ======
CORE EQUITY FUND*
Shares sold ........................................... 521 10,639 190 36 83 2
Shares reinvested ..................................... 396 49 2 -- 1 --
Shares repurchased .................................... (64) (952) (102) -- (3) --
------- ------- ------ ------ ------ ------
Net increase .......................................... 853 9,736 90 36 81 2
======= ======= ====== ======= ====== ======
</TABLE>
*Fund commenced operations on August 1, 1997.
**Fund commenced operations on April 9, 1998.
153
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NOTES TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
(000)
-----------------------------------------------------------------------
CLASS I CLASS A CLASS B
--------------------- ------------------- ------------------
PERIOD YEAR PERIOD YEAR PERIOD YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
5/31/99 5/31/98 5/31/99 5/31/98 5/31/99 5/31/98
------- ------- ------- ------- ------- -------
EQUITY INDEX FUND*
<S> <C> <C> <C> <C> <C> <C>
Shares sold 25,795 -- 400 -- -- --
Shares reinvested 113 -- 1 -- -- --
Shares repurchased (3,478) -- (56) -- -- --
------- ------- ------ ------ ------ ------
Net increase 22,430 -- 345 -- -- --
======= ======= ====== ======= ====== ======
EQUITY INCOME FUND
Shares sold 8,741 4,192 634 114 60 3
Shares sold from common fund 12,893 -- -- -- -- --
Shares reinvested 443 353 7 2 1 --
Shares repurchased (3,977) (2,031) (174) (21) (8) (3)
------- ------- ------ ------ ------ ------
Net increase 18,100 2,514 467 95 53 --
======= ======= ====== ======= ====== ======
BALANCED ALLOCATION FUND*
Shares sold 10,709 -- 173 -- 38 --
Shares reinvested 90 -- 1 -- -- --
Shares repurchased (2,552) -- (32) -- (1) --
------- ------- ------ ------ ------ ------
Net increase 8,247 -- 142 -- 37 --
======= ======= ====== ======= ====== ======
TOTAL RETURN ADVANTAGE FUND
Shares sold 7,279 8,225 478 63 -- --
Shares reinvested 1,179 930 19 12 -- --
Shares repurchased (4,461) (6,481) (90) (232) -- --
------- ------- ------ ------ ------ ------
Net increase/(decrease) 3,997 2,674 407 (157) -- --
======= ======= ====== ======= ====== ======
BOND FUND
Shares sold 54,213 5,321 407 24 81 4
Shares sold from common fund 42,948 -- -- -- -- --
Shares reinvested 1,144 11 5 -- 3 --
Shares repurchased (35,024) (1,520) (147) (10) (11) (4)
------- ------- ------ ------ ------ ------
Net increase 63,281 3,812 265 14 73 --
======= ======= ====== ======= ====== ======
INTERMEDIATE BOND FUND
Shares sold 15,932 10,533 363 113 69 7
Shares sold from common fund 6,642 -- -- -- -- --
Shares reinvested 503 178 18 17 1 --
Shares repurchased (8,677) (6,658) (197) (178) (2) (7)
------- ------- ------ ------ ------ ------
Net increase/(decrease) 14,400 4,053 184 (48) 68 --
======= ======= ====== ======= ====== ======
GNMA FUND
Shares sold 2,788 2,751 146 51 -- --
Shares reinvested 46 15 6 1 -- --
Shares repurchased (1,323) (1,046) (57) (12) -- --
------- ------- ------ ------ ------ ------
Net increase 1,511 1,720 95 40 -- --
======= ======= ====== ======= ====== ======
</TABLE>
- --------------
*FUND COMMENCED OPERATIONS ON JULY 10, 1998.
154
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NOTES TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
(000)
-----------------------------------------------------------------------
CLASS I CLASS A CLASS B
--------------------- ------------------- ------------------
YEAR PERIOD YEAR PERIOD YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED
5/31/99 5/31/98 5/31/99 5/31/98 5/31/99 5/31/98
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
ENHANCED INCOME FUND
Shares sold 5,834 6,108 35 195 -- --
Shares reinvested 241 227 2 12 -- --
Shares repurchased (5,959) (5,302) (37) (356) -- --
------ ------- ----- ------ ------ ------
Net increase/(decrease) 116 1,033 -- (149) -- --
====== ======= ===== ====== ====== ======
OHIO TAX EXEMPT FUND
Shares sold 7,248 3,295 111 94 -- --
Shares sold from common fund -- 4,684 -- -- -- --
Shares reinvested 24 13 11 11 -- --
Shares repurchased (3,518) (1,545) (49) (68) -- --
------ ------- ----- ------ ------ ------
Net increase 3,754 6,447 73 37 -- --
====== ======= ===== ====== ====== ======
PENNSYLVANIA MUNICIPAL FUND
Shares sold 605 649 11 6 -- --
Shares reinvested 4 2 -- -- -- --
Shares repurchased (449) (542) (2) (2) -- --
------ ------- ----- ------ ------ ------
Net increase 160 109 9 4 -- --
====== ======= ===== ====== ====== ======
NATIONAL TAX EXEMPT FUND*
Shares sold 2,135 234 863 -- 28 --
Shares sold from common fund 2,165 7,894 -- -- -- --
Shares reinvested 6 -- 6 -- -- --
Shares repurchased (2,210) (124) (447) -- -- --
------ ------- ----- ------ ------ ------
Net increase 2,096 8,004 422 -- 28 --
====== ======= ===== ====== ====== ======
</TABLE>
*FUND COMMENCED OPERATIONS ON APRIL 9, 1998.
Since Ohio Municipal Money Market, Pennsylvania Tax Exempt Money Market, Tax
Exempt Money Market, Money Market, Government Money Market, and Treasury Money
Market Funds have each sold and redeemed shares only at a constant net asset
value of $1.00 per share, the number of shares represented by such sales,
reinvestments, and redemptions is the same as the amounts shown in the Statement
of Changes in Net Assets.
- --------------------------------------------------------------------------------
6. COMMON TRUST FUND CONVERSIONS
On October 9, 1998, the Fort Wayne Large Cap Equity Fund, Fort Wayne Equity
Fund, Fort Wayne Income Fund, and Fort Wayne Tax Free Fund of National City Bank
of Indiana (formerly, Fort Wayne National Bank) were converted into the Armada
Tax Managed Equity Fund, Armada Tax Managed Equity Fund, Armada Intermediate
Bond Fund and Armada National Tax Exempt Fund, respectively. The assets, which
consisted of securities and related receivables, were converted on a tax-free
basis at the respective Armada Fund's current day net asset value. At the time
of the conversion, 3,582,852 of Class I shares of the Armada Tax Managed Equity
Fund, 1,366,366 of Class I shares of the Armada Tax Managed Equity Fund,
6,642,146 of Class I shares of the Armada Intermediate Bond Fund and 2,165,202
of Class I shares of the Armada National Tax Exempt Fund were issued. The net
assets of the Fort Wayne Large Cap Equity Fund, Fort Wayne Equity Fund, Fort
Wayne Income Fund, and Fort Wayne Tax Free Fund immediately before the
conversion were $33,678,806, $12,843,563, $71,602,332 and $22,085,062,
respectively, which included unrealized appreciation of $3,966,820, $5,917,249,
$1,094,445 and $588,915, respectively.
On August 14, 1998, the National City Fixed Income Fund for Personal Trusts
of National City Bank was converted into the Armada Bond Fund. The assets which
consisted of securities and related receivables, were converted on a tax-free
basis at the respective Armada Fund's current day net asset value. At the time
of this conversion, 42,948,272 of Class I shares of the Armada Bond Fund were
issued. The net assets of the National City Fixed Income Fund for Personal
Trusts immediately before the conversion were $444,085,137 which included
unrealized appreciation of $7,241,615.
On August 7, 1998, the National City Equity Fund for Personal Trusts #1 and
the National City Income Equity Fund for Personal Trusts #1 of National City
Bank were converted into the Armada Equity Growth and Armada Equity Income
Funds, respectively. The assets, which consisted of securities and related
receivables, were converted on a tax-free basis at the respective Armada Fund's
current day net asset value. At the time of the conversion, 11,712,500 of Class
I shares of the Armada Equity Growth Fund and 12,892,934 of Class I shares of
the Armada Equity Income Fund were issued. The net assets of the National City
155
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NOTES TO FINANCIAL STATEMENTS
Equity Fund for Personal Trusts #1 and National City Income Equity Fund for
Personal Trusts #1 immediately before the conversion were $257,675,010 and
$212,346,617, respectively, which included unrealized appreciation of
$102,201,766 and $51,916,108, respectively.
On April 9, 1998, the National City Personal Trust Tax Exempt Fund of
National City Bank was converted into the Armada National Tax Exempt Fund. The
assets, which consisted of securities and related receivables, were converted on
a tax-free basis at the respective Armada Fund's current day net asset value. At
the time of the conversion, 7,894,277 of Class I shares of the Armada National
Tax Exempt Fund were issued. The net assets of the National City Personal Trust
Tax Exempt Fund immediately before the conversion were $78,942,768, which
included unrealized appreciation of $1,718,900.
On April 9, 1998, the National City Personal Trust Equity Fund #2 of National
City Bank was converted into the Armada Tax Managed Equity Fund. The assets
which consisted of securities and related receivables, were converted on a
tax-free basis at the respective Armada Fund's current day net asset value. At
the time of the conversion, 16,361,494 of Class I shares of the Armada Tax
Managed Equity Fund were issued. The net assets of the National City Personal
Trust Equity Fund #2 immediately before the conversion were $163,614,941 which
included unrealized appreciation of $129,709,103.
On March 6, 1998, the National City Ohio Tax Exempt Fund of National City
Bank was converted into the Armada Ohio Tax Exempt Fund. The assets, which
consisted of securities and related receivables, were converted on a tax free
basis at the respective Armada Fund's current day net asset value. At the time
of the conversion, 4,684,047 of Class I shares of the Armada Ohio Tax Exempt
Fund were issued. The net assets of the National City Ohio Tax Exempt Fund
immediately before the conversion were $51,852,399, which included unrealized
appreciation of $2,009,105.
7. MARKET AND CREDIT RISK
Some countries in which the International Equity Fund may invest require
government approval for the repatriation of investment income, capital or the
proceeds of sales of securities by foreign investors. In addition, if there is a
deterioration in a country's balance of payments or for other reasons, a country
may impose temporary restrictions on foreign capital remittances abroad.
The securities exchanges of certain foreign markets are substantially
smaller, less liquid and more volatile than the major securities in the United
States. Consequently, acquisition and disposition of securities by the Fund may
be inhibited. In addition, a significant proportion of the aggregate market
value of equity securities listed on the major securities exchanges in emerging
markets are held by a smaller number of investors. This may limit the number of
shares available for acquisition or disposition of the Fund.
The Balanced Allocation, Total Return Advantage, Bond, Intermediate Bond,
GNMA, and Enhanced Income Funds may invest in securities whose value is derived
from an underlying pool of mortgages or consumer loans. Prepayment of these
loans may shorten the stated maturity of these respective obligations and may
result in a loss of premium, if any has been paid.
Each Fund, other than Ohio Municipal Money Market, Pennsylvania Tax Exempt
Money Market, Tax Exempt Money Market, Money Market, Government Money Market,
and Treasury Money Market Funds may invest up to 15% of its total assets in
illiquid securities which may include securities with contractual restrictions
on resale, securities exempt from registration under Rule 144A of the Securities
Act of 1933, as amended, and other securities which may not be readily
marketable. The Ohio Municipal Money Market, Pennsylvania Tax Exempt Money
Market, Tax Exempt Money Market, Money Market, Government Money Market, and
Treasury Money Market Funds may each invest up to 10% of total assets in
illiquid securities. The relative illiquidity of some of these securities may
adversely affect the Fund's ability to dispose of such securities in a timely
manner and at a fair price when it is necessary to liquidate such securities.
The Ohio Tax Exempt, Pennsylvania Municipal, Ohio Municipal Money Market and
the Pennsylvania Tax Exempt Money Market Funds follow an investment policy of
investing primarily in municipal obligations of one state. The National Tax
Exempt and the Tax Exempt Money Market Funds follow an investment policy of
investing in municipal obligations of various states which may, at times,
comprise concentrations in one or several states. Economic changes affecting
each state and related public bodies and municipalities may affect the ability
of issuers within the state to pay interest on, or repay principal of, municipal
obligations held by the Ohio Tax Exempt, Pennsylvania Municipal, National Tax
Exempt, Ohio Municipal Money Market, Pennsylvania Tax Exempt Money Market, and
the Tax Exempt Money Market Funds.
156
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NOTES TO FINANCIAL STATEMENTS
Many municipalities insure repayment for their obligations. Although bond
insurance reduces the risk of loss due to default by an issuer, such bonds
remain subject to the risk that the market may fluctuate for other reasons and
there is no assurance that the insurance company will meet its obligations.
Insured securities have been identified in the Statement of Net Assets.
The Funds invest in securities that include revenue bonds, tax and revenue
anticipation notes, and general obligation bonds. At May 31, 1999, the
percentage of portfolio investments by each revenue source were as follows:
OHIO NATIONAL
TAX PENNSYLVANIA TAX
EXEMPT MUNICIPAL EXEMPT
Revenue Bonds: ------ ------------ --------
Education ............... 9% 20% 9%
Hospital/Nursing Homes .. 11 7 1
Housing ................. 1 -- 1
Industrial Development .. 1 4 2
Pollution Control ....... 1 -- 4
Public Facilities ....... 6 2 6
Transportation .......... 3 4 12
Utilities ............... 13 20 18
Other ................... 2 9 9
General Obligations: ....... 51 34 38
Anticipation Notes: ........ 2 -- --
------ ------------ --------
100% 100% 100%
The rating of long-term debt as a percentage of total value of investments at
May 31, 1999, is as follows:
OHIO NATIONAL
STANDARD & POOR'S/ TAX PENNSYLVANIA TAX
MOODY'S RATINGS EXEMPT MUNICIPAL EXEMPT
--------------- ------ ------------ --------
AAA/Aaa 60% 78% 52%
AA/Aa 30 21 38
A/A 7 -- 10
BBB/Baa 1 -- --
NR 2 1 --
------ ------------ --------
100% 100% 100%
Securities rated by only one agency are shown in that category. Securities
rated by both agencies are shown with their lowest rating.
8. SECURITIES LENDING
The Funds may participate in a Securities Lending Agreement ("Lending
Agreement"). Security loans made pursuant to the Lending Agreement are required
at all times to be secured by U.S. Treasury Obligations and/or cash collateral
at least equal to 100% of the market value of securities issued in the U.S. and
105% of the market value of securities issued outside of the U.S. cash
collateral received is invested in fixed-income securities, with a weighted
average maturity not to exceed 90 days, rated in one of the top two tiers by
Standard & Poor's ratings group or Moody's Investors Service, Inc. or repurchase
agreements collateralized by such securities. However, in the event of default
or bankruptcy by the lending agent, realization and/or retention of the
collateral may be subject to legal proceedings. In the event that the borrower
fails to return loaned securities and the collateral received is insufficient to
cover the value of the loaned securities and provided such collateral is not the
result of investment losses, the lending agent has agreed to pay the amount of
the shortfall to the funds, or at the discretion of the lending agent, replace
the loaned securities. The market value of the securities on loan, and related
collateral received at May 31, 1999, and income generated for the period ended
May 31, 1999 were as follows:
MARKET VALUE MARKET
OF SECURITIES VALUE OF
ON LOAN COLLATERAL INCOME
FUND (000) (000) (000)
------- ------------- ---------- ------
Small Cap Growth Fund $ 7,939 $ 7,939 $ 3
Small Cap Value Fund 23,406 23,406 4
Equity Growth Fund 75,999 75,999 15
Tax Managed Equity Fund 13,241 13,241 3
Core Equity Fund 13,459 13,459 1
Equity Index Fund 15,856 15,856 2
Equity Income Fund 70,819 70,819 30
Balanced Allocation Fund 9,313 9,313 1
Total Return Advantage Fund 71,854 71,854 5
Bond Fund 137,190 137,190 13
Intermediate Bond Fund 74,717 74,717 9
Enhanced Income Fund 6,785 6,785 590
157
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