<PAGE>
Message From The Investment Adviser Brenton Mutual Funds
- -------------------------------------------------------------------------------
Dear Shareholders:
For the last six months, financial markets have responded positively to solid
economic growth with few signs of higher inflation rates. Low levels of
unemployment have kept confidence high, and with a few notable exceptions,
earnings growth for companies has met or exceeded expectations. Six years of
economic growth has also contributed to a significant improvement in the
country's fiscal balance. It appears that the deficit for fiscal year 1997,
which ended September 30, will be in the area of $25 billion. This represents
a dramatic improvement from the $290 billion level of 1992. If current
conditions continue, we may see the first surplus in the federal budget since
1969 this fiscal year.
Although conditions appear favorable for the foreseeable future, as always,
there are possible problems below the surface. Six years of growth has led to
significant increases in the level of consumer credit outstanding. While there
is much debate about the significance of this level of outstanding debt, there
can be no argument that consumer delinquencies and bankruptcies have risen
strongly. It is possible that high consumer debt levels could slow consumer
spending going forward. In addition, recent turbulence in Far Eastern markets
could spill over to the United States as world trade is becoming an
increasingly important part of economic growth.
INTERMEDIATE U. S. GOVERNMENT SECURITIES FUND
During the last six months, long-term interest rates have drifted lower with
the yield on the 30 year Treasury Bond steady at 6.40% on September 30. Signs
of solid economic growth, which in the past has put upward pressure on
interest rates, appeared to have little impact on rates as inflation has
trended lower. With positive news on inflation, the federal budget deficit and
economic growth, we look for interest rates to move modestly lower over the
next three to six months. We believe your fund is currently structured to take
advantage of the forecast we have just described. We have adopted a portfolio
structure with a duration slightly longer than the Merrill Lynch 3 - 7 Year
Government Index. As always, we maintain excellent credit quality by limiting
our investments to U. S. Government or government agency securities.
On a longer term basis, we remain confident that we will sustain a low
inflation environment for the foreseeable future. That being the case, we feel
good about the prospect of achieving solid real or inflation adjusted returns
for shareholders. As always, our mission is to add value for our shareholders
by purchasing bonds that we believe are undervalued or underappreciated by the
market.
SHARES OF THE FUNDS ARE NOT FDIC INSURED, NOR ARE THEY INSURED BY ANY
GOVERNMENT AGENCY. FUND SHARES ARE NOT DEPOSITS OR OTHER OBLIGATIONS OF, OR
GUARANTEED OR ENDORSED BY, BRENTON BANK OR ITS AFFILIATES. AN INVESTMENT IN
THE FUNDS INVOLVES INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS OF THE
PRINCIPAL AMOUNT INVESTED.
THE BRENTON MUTUAL FUNDS ARE A FAMILY OF MUTUAL FUNDS DISTRIBUTED BY BISYS
FUND SERVICES WHICH IS INDEPENDENT OF BRENTON BANK AND ITS AFFILIATES. BRENTON
BROKERAGE IS A REGISTERED BROKER-DEALER FROM WHOM SHARES OF THE BRENTON MUTUAL
FUNDS MAY BE PURCHASED.
- -------------------------------------------------------------------------------
-1-
<PAGE>
Message From The Investment Adviser Brenton Mutual Funds
- -------------------------------------------------------------------------------
VALUE EQUITY FUND
We are generally pleased with the performance of the fund over the last six
months. Despite the fact that our return (without load) of 21.11% trailed the
26.24% recorded by the Standard & Poors 500, which is generally representative
of the performance of the stock market as a whole, we produced solid returns
while maintaining our disciplined Value Equity style.
Investors have responded very positively to the current environment of solid
economic growth, low inflation, moderate interest rates and rising earnings.
However, since the end of September, the world equity markets have become much
more volatile as the currency crisis, which started in the Far East in August,
has spread to Hong Kong. The U.S. market has not been spared in this process,
and market moves in excess of 1% are becoming a common event. We see this
volatility as an opportunity and have used it to acquire fine companies at
attractive prices. As always, we look for relative value while restricting our
purchases to good businesses.
Looking forward, we see an environment of slowing economic growth combined
with low inflation and stable to modestly lower interest rates. In such an
environment, we want to avoid cyclical companies and focus on what we believe
to be solid consistent growers who are well positioned in domestic and
international markets. Over the last six months, we purchased a number of such
companies, including Banc One, Wells Fargo, Smithkline Beecham and Federal
Home Loan Mortgage.
Looking out longer term, we continue to focus on themes related to
demographics, in particular the aging of the baby boomer generation. We are
confident that these trends will continue and be particularly positive for
financial stocks as well as drug companies and other health care related
firms.
U. S. GOVERNMENT MONEY MARKET FUND
The last six months has been a period of relative stability for short-term
interest rates as the Federal Reserve has held the fed funds rate steady at
5.50% since raising it in March. We anticipate that the fed funds rate will
remain steady for at least the next few months. That being the case, we expect
to continue to focus on maintaining high credit quality in the fund while
maintaining the average maturity near current levels.
We appreciate the opportunity to serve your investment needs and will work
hard to continue to earn your confidence and support. If you have questions,
would like a prospectus, or require any assistance, please contact your
investment representative or call 1-800-706-FUND.
Sincerely,
/s/ Douglas Brown
Douglas Brown
Vice President and
Senior Portfolio Manager
October 15, 1997
FOR MORE COMPLETE INFORMATION ON ANY OF THE BRENTON MUTUAL FUNDS, INCLUDING
FEES, EXPENSES AND SALES CHARGES, PLEASE CALL 1-800-706-FUND FOR A FREE
PROSPECTUS. PLEASE READ THE PROSPECTUS CAREFULLY BEFORE INVESTING OR SENDING
MONEY.
THE INVESTMENT RETURN AND NET ASSET VALUE (NAV) WILL FLUCTUATE SO THAT AN
INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THE ORIGINAL
COST. THE COMPOSITION OF THE FUNDS' HOLDINGS IS SUBJECT TO CHANGE.
- -------------------------------------------------------------------------------
-2-
<PAGE>
TABLE OF CONTENTS
Statements of Assets and Liabilities
Page 4
Statements of Operations
Page 5
Statements of Changes in Net Assets
Page 6
Schedules of Portfolio Investments
Page 8
Notes to Financial Statements
Page 12
Financial Highlights
Page 17
-3-
<PAGE>
THE COVENTRY GROUP
BRENTON MUTUAL FUNDS
STATEMENTS OF ASSETS AND LIABILITIES
SEPTEMBER 30, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
INTERMEDIATE
U.S. GOVERNMENT U.S. GOVERNMENT
MONEY MARKET SECURITIES VALUE EQUITY
FUND FUND FUND
--------------- --------------- ------------
<S> <C> <C> <C>
ASSETS:
Investments, at value (cost
$35,276,478; $35,216,234;
$35,197,410, respectively)...... $35,276,478 $35,385,044 $53,055,433
Interest and dividends
receivable...................... 49,370 494,652 85,911
Prepaid expenses and other
assets.......................... 911 1,557 2,934
----------- ----------- -----------
Total Assets................. 35,326,759 35,881,253 53,144,278
----------- ----------- -----------
LIABILITIES:
Dividends payable................ 133,825 154,172 75,792
Cash Overdraft................... -- -- 10,800
Accrued expenses and other
payables:
Investment advisory fees....... 4,193 12,902 28,496
Administration fees............ 774 783 1,158
Distribution and shareholder
service fees.................. 1,397 1,465 2,135
Custodian fees................. 3,018 1,434 696
Fund accounting fees........... -- 447 91
Transfer agent fees............ 711 3,253 161
Trustees' fees................. 301 120 209
Legal fees..................... 324 -- 525
Audit fees..................... 5,763 5,042 5,031
Registration and filing fees... 130 1,333 --
Printing fees.................. 9,814 9,367 12,441
----------- ----------- -----------
Total Liabilities............ 160,250 190,318 137,535
----------- ----------- -----------
NET ASSETS:
Capital.......................... 35,166,241 35,452,737 34,310,061
Undistributed (distributions in
excess of)
net investment income (loss).... 626 8,574 (2,643)
Accumulated undistributed net
realized gains (losses) from
investment transactions......... (358) 60,814 841,302
Net unrealized appreciation
(depreciation) from investments. -- 168,810 17,858,023
----------- ----------- -----------
Net Assets................... $35,166,509 $35,690,935 $53,006,743
=========== =========== ===========
Outstanding units of beneficial
interest (shares)............... 35,166,281 3,490,844 2,966,983
=========== =========== ===========
Net asset value--redemption price
per share....................... $ 1.00 $ 10.22 $ 17.87
=========== =========== ===========
Maximum Sales Charge............. 3.50% 4.50%
----------- -----------
Maximum Offering Price per share
(100%/(100%--Maximum Sales
Charge) of net asset value
adjusted to nearest cent)....... $ 1.00(a) $ 10.59 $ 18.71
=========== =========== ===========
</TABLE>
- ------
(a) Offering price and redemption price are the same for the U.S. Government
Money Market Fund.
See notes to financial statements.
-4-
<PAGE>
THE COVENTRY GROUP
BRENTON MUTUAL FUNDS
STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
INTERMEDIATE
U.S. GOVERNMENT U.S. GOVERNMENT
MONEY MARKET SECURITIES VALUE EQUITY
FUND FUND FUND
--------------- --------------- ------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest income................... $ 887,121 $1,098,006 $ --
Dividend income................... 4,288 48,048 445,475
--------- ---------- ----------
Total Income.................... 891,409 1,146,054 445,475
--------- ---------- ----------
EXPENSES:
Investment advisory fees.......... 64,447 77,393 161,676
Administration fees............... 32,223 34,883 48,043
Distribution and shareholder
services fees..................... 80,558 87,206 120,106
Custodian fees.................... 6,954 4,026 4,602
Fund accounting fees.............. 15,224 16,607 16,139
Legal fees........................ 3,435 4,065 5,241
Audit fees........................ 3,804 4,251 6,426
Trustees' fees.................... 966 1,098 1,386
Transfer agent fees............... 20,216 14,223 23,325
Registration and filing fees...... 1,725 2,633 3,714
Printing costs.................... 4,904 4,716 6,779
Other............................. 915 888 942
--------- ---------- ----------
Total Expenses.................. 235,371 251,989 398,379
Less: Fee waivers and expense
reimbursements.................... (112,782) (78,486) (108,096)
--------- ---------- ----------
Net Expenses.................... 122,589 173,503 290,283
--------- ---------- ----------
Net Investment Income............. 768,820 972,551 155,192
--------- ---------- ----------
REALIZED/UNREALIZED GAINS (LOSSES)
FROM INVESTMENTS:
Net realized gains (losses) from
investment transactions........... 8 67,830 1,161,669
Net change in unrealized
appreciation (depreciation) from
investments...................... -- 1,003,563 7,670,112
--------- ---------- ----------
Net realized/unrealized gains
(losses) from investments......... 8 1,071,393 8,831,781
--------- ---------- ----------
Change in net assets resulting
from operations................... $ 768,828 $2,043,944 $8,986,973
========= ========== ==========
</TABLE>
See notes to financial statements.
-5-
<PAGE>
THE COVENTRY GROUP
BRENTON MUTUAL FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
U.S. GOVERNMENT MONEY INTERMEDIATE U.S. GOVERNMENT
MARKET FUND SECURITIES FUND
--------------------------- -------------------------------
SIX MONTHS SIX MONTHS
ENDED YEAR ENDED ENDED YEAR ENDED
SEPTEMBER 30, MARCH 31, SEPTEMBER 30, MARCH 31,
1997 1997 1997 1997
------------- ------------ --------------- --------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
FROM INVESTMENT
ACTIVITIES:
OPERATIONS:
Net investment income.. $ 768,820 $ 1,457,429 $ 972,551 $ 1,907,327
Net realized gains
(losses) from
investment
transactions.......... 8 30 67,830 25,161
Net change in
unrealized
appreciation
(depreciation) from
investments........... -- -- 1,003,563 (814,536)
------------ ------------ -------------- --------------
Change in net assets
resulting from
operations.............. 768,828 1,457,459 2,043,944 1,117,952
------------ ------------ -------------- --------------
DISTRIBUTIONS TO
SHAREHOLDERS:
From net investment
income................ (768,820) (1,457,429) (980,867) (1,906,249)
In excess of net
investment income..... -- -- -- --
From net realized
gains................. -- -- -- (25,161)
In excess of net
realized gains........ -- -- -- (6,612)
------------ ------------ -------------- --------------
Change in net assets
from shareholder
distributions.......... (768,820) (1,457,429) (980,867) (1,938,022)
------------ ------------ -------------- --------------
CAPITAL TRANSACTIONS:
Proceeds from shares
issued................ 40,248,508 89,015,767 3,624,486 9,073,851
Dividends reinvested... 131,662 177,120 255,865 430,122
Cost of shares
redeemed.............. (40,009,302) (89,833,623) (3,410,250) (8,916,346)
------------ ------------ -------------- --------------
Change in net assets
from capital share
transactions.......... 370,868 (640,736) 470,101 587,627
------------ ------------ -------------- --------------
Change in net assets... 370,876 (640,706) 1,533,178 (232,443)
NET ASSETS:
Beginning of period.... 34,795,633 35,436,339 34,157,757 34,390,200
------------ ------------ -------------- --------------
End of period.......... $ 35,166,509 $ 34,795,633 $ 35,690,935 $ 34,157,757
============ ============ ============== ==============
SHARE TRANSACTIONS:
Issued................. 40,248,508 89,015,767 358,244 900,765
Reinvested............. 131,662 177,120 25,476 42,750
Redeemed............... (40,009,289) (89,833,639) (338,081) (888,437)
------------ ------------ -------------- --------------
Change in shares........ 370,881 (640,752) 45,639 55,078
============ ============ ============== ==============
</TABLE>
See notes to financial statements.
-6-
<PAGE>
THE COVENTRY GROUP
BRENTON MUTUAL FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
VALUE EQUITY
FUND
-------------------------
SIX MONTHS
ENDED YEAR ENDED
SEPTEMBER 30, MARCH 31,
1997 1997
------------- -----------
(UNAUDITED)
<S> <C> <C>
FROM INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income.............................. $ 155,192 $ 328,324
Net realized gains (losses) from investment
transactions...................................... 1,161,669 502,713
Net change in unrealized appreciation
(depreciation) from investments................... 7,670,112 5,121,200
----------- -----------
Change in net assets resulting from operations...... 8,986,973 5,952,237
----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income......................... (151,666) (328,324)
In excess of net investment income................. -- (6,955)
From net realized gains............................ -- (502,713)
In excess of net realized gains.................... -- (200,285)
----------- -----------
Change in net assets from shareholder distributions. (151,666) (1,038,277)
----------- -----------
CAPITAL TRANSACTIONS:
Proceeds from shares issued........................ 5,688,220 12,165,965
Dividends reinvested............................... 110,271 700,687
Cost of shares redeemed............................ (3,353,713) (8,406,836)
----------- -----------
Change in net assets from capital share
transactions...................................... 2,444,778 4,459,816
----------- -----------
Change in net assets............................... 11,280,085 9,373,776
NET ASSETS:
Beginning of period................................ 41,726,658 32,352,882
----------- -----------
End of period...................................... $53,006,743 $41,726,658
=========== ===========
SHARE TRANSACTIONS:
Issued............................................. 340,766 858,261
Reinvested......................................... 6,847 49,747
Redeemed........................................... (200,901) (586,543)
----------- -----------
Change in shares.................................... 146,712 321,465
=========== ===========
</TABLE>
See notes to financial statements.
-7-
<PAGE>
THE COVENTRY GROUP
BRENTON U. S. GOVERNMENT MONEY MARKET FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
SEPTEMBER 30, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY AMORTIZED
AMOUNT DESCRIPTION COST
----------- ------------------------------------------------------ -----------
<C> <S> <C>
U. S. GOVERNMENT AGENCIES (100.3%):
Federal Farm Credit Bank:
$ 850,000 5.75%,* 7/1/98........................................ $ 849,116
Federal Home Loan Bank:
24,614,000 6.00%, 10/1/97........................................ 24,614,000
1,000,000 5.60%, 11/13/97....................................... 993,317
3,000,000 5.41%, 11/19/97....................................... 2,977,970
1,500,000 5.42%, 12/4/97........................................ 1,485,547
900,000 5.72%, 7/21/98........................................ 899,971
Student Loan Marketing Association:
500,000 5.86%, 6/10/98........................................ 499,660
<CAPTION>
SHARES OR
PRINCIPAL SECURITY AMORTIZED
AMOUNT DESCRIPTION COST
---------- ------------------------------------------------------ -----------
<C> <S> <C>
U. S. GOVERNMENT AGENCIES, CONTINUED:
Student Loan Marketing Association, continued:
$ 640,000 5.85%, 6/10/98........................................ $ 639,395
900,000 5.79%, 9/16/98........................................ 899,397
1,400,000 5.82%, 9/16/98........................................ 1,400,796
-----------
Total U.S. Government Agencies.................................... 35,259,169
-----------
INVESTMENT COMPANIES (0.0%):
17,309 Dreyfus Treasury Prime Money Market Portfolio......... 17,309
-----------
Total Investment Companies........................................ 17,309
-----------
Total (Cost--$35,276,478)(a)...................................... $35,276,478
===========
</TABLE>
- ------
* Effective Yield at date of purchase.
Percentages indicated are based on net assets of $35,166,509.
(a) Cost and value for federal income tax and financial reporting purposes are
the same.
See notes to financial statements.
-8-
<PAGE>
THE COVENTRY GROUP
BRENTON INTERMEDIATE U. S. GOVERNMENT SECURITIES FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
SEPTEMBER 30, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
---------- ------------------------------------------------------- -----------
<C> <S> <C>
U.S. GOVERNMENT AGENCIES (75.0%):
Federal Home Loan Bank:
$1,000,000 5.97%, 11/8/99......................................... $ 999,520
2,000,000 6.50%, 6/5/02.......................................... 2,027,760
1,000,000 6.89%, 4/6/04.......................................... 1,032,000
1,000,000 7.36% 7/1/04........................................... 1,057,280
1,000,000 7.32%, 4/21/05......................................... 1,055,280
3,000,000 6.32%, 6/28/05......................................... 2,987,700
1,000,000 6.15%, 11/28/05........................................ 985,430
Federal Home Loan Mortgage Corporation:
1,500,000 6.55%, 10/2/02......................................... 1,524,885
1,000,000 6.75%, 8/1/05.......................................... 1,022,390
1,400,000 5.90%, 2/14/06......................................... 1,356,810
2,000,000 6.28%, 3/6/06.......................................... 1,984,480
1,149,691 6.50%, 7/1/08.......................................... 1,146,816
2,500,000 5.85%, 1/15/17......................................... 2,484,200
1,721,543 7.50%, 12/1/25......................................... 1,752,737
Federal National Mortgage Association:
1,500,000 6.74%, 7/9/07.......................................... 1,533,450
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
---------- ------------------------------------------------------ -----------
<C> <S> <C>
U.S. GOVERNMENT AGENCIES, CONTINUED:
$ 675,824 6.50%, 3/1/09......................................... $ 674,553
2,309,608 7.50%, 11/1/17........................................ 2,365,177
Government National Mortgage Assoc.:
788,762 7.00%, 5/1/10......................................... 797,139
-----------
Total U.S. Government Agencies.................................. 26,787,607
-----------
U.S. TREASURY NOTES (19.6%):
1,700,000 8.88%, 11/15/98....................................... 1,757,477
1,000,000 6.38%, 1/15/00........................................ 1,012,030
3,700,000 6.25%, 1/31/02........................................ 3,732,153
500,000 6.25%, 8/31/02........................................ 504,265
-----------
Total U.S. Treasury Notes....................................... 7,005,925
-----------
INVESTMENT COMPANIES (4.5%):
1,591,512 Goldman Federal Portfolio Money Market Portfolio...... 1,591,512
-----------
Total Investment Companies...................................... 1,591,512
-----------
Total (Cost--$35,216,234)(a).................................... $35,385,044
===========
</TABLE>
- ------
Percentages indicated are based on net assets of $35,690,935.
(a) Represents cost for federal income tax purposes and differs from market
value by net unrealized depreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation........ $ 270,512
Unrealized depreciation........ (101,702)
--------
Net unrealized
appreciation/(depreciation).... $ 168,810
========
</TABLE>
See notes to financial statements.
-9-
<PAGE>
INVESTMENT ADVISER
Brenton Bank
2840 Ingersoll
Des Moines, Iowa 50312
ADMINISTRATOR AND DISTRIBUTOR
BISYS Fund Services
3435 Stelzer Road
Columbus, Ohio 43219
LEGAL COUNSEL
Dechert Price & Rhoads
1500 K Street, N.W.
Washington, D.C. 20005
AUDITORS
Ernst & Young LLP
10 West Broad Street
Suite 2300
Columbus, Ohio 43215
11/97
[LOGO OF BRENTON
MUTUAL FUNDS APPEARS HERE]
BRENTONBank
Investment Advisor
SEMI-ANNUAL REPORT
TO
SHAREHOLDERS
SEPTEMBER 30, 1997
