<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>
THE COVENTRY GROUP
BRENTON VALUE EQUITY FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
SEPTEMBER 30, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------------------------------------------------- -----------
<C> <S> <C>
COMMON STOCKS (95.4%):
Aerospace/Defense (1.4%):
11,000 General Motors Corp.--Class H.......................... $ 727,375
-----------
Auto Parts (1.3%):
12,000 TRW, Inc............................................... 658,500
-----------
Banks (7.6%):
13,500 Banc One Corp.......................................... 753,469
16,000 BankAmerica Corp....................................... 1,173,000
15,000 Barnett Banks, Inc..................................... 1,061,250
3,500 Wells Fargo & Co....................................... 962,500
-----------
3,950,219
-----------
Beverages--Non-alcoholic (2.3%):
9,200 Coca-Cola Co........................................... 560,625
16,700 PepsiCo, Inc........................................... 677,394
-----------
1,238,019
-----------
Beverages--Brewery (1.5%):
17,400 Anheuser-Busch Cos., Inc............................... 785,175
-----------
Capital Equipment (1.9%):
20,000 Illinois Tool Works, Inc............................... 1,000,000
-----------
Chemicals--Diversified (1.0%):
8,600 Du Pont (E.I.) de Nemours & Co......................... 529,438
-----------
Chemicals--Specialty (1.3%):
21,000 Sigma-Aldrich Corp..................................... 691,687
-----------
Computers--Peripheral Equipment (1.0%):
11,000 Adaptec, Inc. (b)...................................... 514,250
-----------
Computer Software (3.0%):
21,000 Electronic Data Systems Corp........................... 745,500
23,400 Oracle Corp.(b)........................................ 852,637
-----------
1,598,137
-----------
Diversified Operations (3.7%):
18,000 General Electric Co.................................... 1,225,125
8,100 Minnesota Mining & Manufacturing Co.................... 749,250
-----------
1,974,375
-----------
Electrical Equipment (3.3%):
18,000 AMP, Inc............................................... 964,125
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------------------------------------------------- -----------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Electrical Equipment, continued:
14,000 Emerson Electric Co.................................... $ 806,750
-----------
1,770,875
-----------
Electronic Components (5.5%):
13,000 Arrow Electronics, Inc. (b)............................ 754,000
18,200 Intel Corp............................................. 1,680,087
7,000 Motorola, Inc.......................................... 503,125
-----------
2,937,212
-----------
Financial Services (3.6%):
15,000 Federal Home Loan Mortgage Corp........................ 528,750
23,800 MGIC Investment Corp................................... 1,364,038
-----------
1,892,788
-----------
Food Products & Services (3.8%):
15,600 ConAgra, Inc........................................... 1,029,600
19,300 Sara Lee Corp.......................................... 993,950
-----------
2,023,550
-----------
Food-Wholesale/Distribution (1.2%):
17,000 Sysco Corp............................................. 627,937
-----------
Health Care--Drugs (7.0%):
12,000 American Home Products Corp............................ 876,000
15,000 Bristol-Myers Squibb Co................................ 1,241,250
9,600 Merck & Co., Inc....................................... 959,400
13,200 Smithkline Beecham plc-ADR............................. 645,150
-----------
3,721,800
-----------
Health Care--General Products (1.0%):
9,100 Johnson & Johnson...................................... 524,387
-----------
Health Care--Hospitals (1.2%):
22,950 Columbia/HCA Healthcare Corp........................... 659,812
-----------
Household--General Products (1.7%):
22,500 Newell Co.............................................. 900,000
-----------
Insurance (7.5%):
7,000 Loews Corp............................................. 790,562
28,000 ReliaStar Financial Corp............................... 1,114,750
19,300 Safeco Corp............................................ 1,022,900
23,200 UNUM Corp.............................................. 1,058,500
-----------
3,986,712
-----------
</TABLE>
Continued
-10-
<PAGE>
THE COVENTRY GROUP
BRENTON VALUE EQUITY FUND
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED
SEPTEMBER 30, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------------------------------------------------- -----------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Leisure & Recreation (1.7%):
25,000 Brunswick Corp......................................... $ 881,250
-----------
Office Supplies, Automation & Equipment (2.7%):
16,500 Avery Dennison Corp.................................... 660,000
9,000 Pitney Bowes, Inc...................................... 748,688
-----------
1,408,688
-----------
Oil Companies--Integrated (4.6%):
8,800 Amoco Corp............................................. 848,100
12,800 Exxon Corp............................................. 820,000
10,600 Mobil Corp............................................. 784,400
-----------
2,452,500
-----------
Oil Field Services (2.5%):
16,000 Schlumberger Ltd....................................... 1,347,000
-----------
Paint & Related Products (1.7%):
29,800 Sherwin-Williams Co.................................... 877,238
-----------
Paper & Related Products (1.7%):
18,800 Kimberly-Clark Corp.................................... 920,025
-----------
Restaurants (1.3%):
15,000 McDonald's Corp........................................ 714,375
-----------
Retail--Convenience Stores (1.4%):
30,000 Casey's General Stores, Inc............................ 738,750
-----------
Retail--General Merchandise (2.1%):
22,000 Costco Cos., Inc.(b)................................... 827,750
7,000 Dillard's, Inc......................................... 306,688
-----------
1,134,438
-----------
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------------------------------------------------- -----------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Retail--Specialty Stores(1.0%):
10,500 Home Depot, Inc........................................ $ 547,312
-----------
Tobacco (1.6%):
20,300 Philip Morris Cos., Inc................................ 843,719
-----------
Utilities--Electric (5.3%):
15,000 AES Corp.(b)........................................... 656,250
29,000 Boston Edison Co....................................... 889,938
26,000 Houston Industries, Inc................................ 565,500
28,800 Ohio Edison Co......................................... 675,000
-----------
2,786,688
-----------
Utilities--Gas & Pipeline (1.5%):
15,300 Sonat, Inc............................................. 778,388
-----------
Utilities--Telephone (4.5%):
14,800 GTE Corp............................................... 671,550
9,900 SBC Communications, Inc................................ 607,613
32,000 WorldCom, Inc.(b)...................................... 1,132,000
-----------
2,411,163
-----------
Total Common Stocks 50,553,782
-----------
INVESTMENT COMPANIES (4.7%):
2,364,306 Goldman Federal Money Market Portfolio................. 2,364,306
137,345 Goldman Sachs Treasury Obligations MM Portfolio........ 137,345
-----------
Total Investment Companies 2,501,651
-----------
Total (Cost--$35,197,410)(a) $53,055,433
===========
</TABLE>
- ------
Percentages indicated are based on net assets of $53,006,743.
(a) Represents cost for federal income tax purposes and differs from market
value by net unrealized appreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation... $18,184,031
Unrealized depreciation... (326,008)
-----------
Net unrealized
appreciation/(depreciation). $17,858,023
===========
</TABLE>
(b) Represents non-income producing securities.
See notes to financial statements.
-11-
<PAGE>
THE COVENTRY GROUP
BRENTON MUTUAL FUNDS
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1997
(UNAUDITED)
1. ORGANIZATION:
The Coventry Group (the "Group") was organized on January 8, 1992 as a
Massachusetts business trust, and is registered under the Investment Company
Act of 1940, as amended (the "1940 Act"), as a diversified, open-end
management investment company. Between the date of organization and the date
of commencement of operations of the Brenton U.S. Government Money Market
Fund, the Brenton Intermediate U.S. Government Securities Fund, and the
Brenton Value Equity Fund, (individually, a "Fund"; collectively, the
"Funds"), each of which is a series of the Group, earned no investment
income and had no operations other than incurring organizational expenses.
The Brenton U.S. Government Money Market Fund's investment objective is to
seek current income consistent with maintaining liquidity and stability of
principal. The Fund invests exclusively in short-term U.S. Treasury bills
and notes and other short-term obligations issued or guaranteed by the U.S.
Government, its agencies or instrumentalities ("U.S. Government
Obligations"). The investment objective of the Brenton Intermediate U. S.
Government Securities Fund is to seek total return consistent with the
production of current income and the preservation of capital. The Fund
invests primarily in U.S. Government Obligations and intends to maintain a
dollar-weighted average portfolio maturity of 3 to 10 years. The investment
objective of the Brenton Value Equity Fund is long-term capital
appreciation. The Fund invests primarily in a diversified portfolio of
equity securities.
The Group is authorized to issue an unlimited number of shares which are
equal units of beneficial interest with a par value of $0.01 per share.
Sales of Fund shares may be made to the general public.
2. SIGNIFICANT ACCOUNTING PRINCIPLES:
The following is a summary of significant accounting policies followed by
the Funds in the preparation of their financial statements. The policies are
in conformity with generally accepted accounting principles. The preparation
of financial statements requires management to make estimates and
assumptions that effect the reported amounts and disclosures. Actual amounts
could differ from those estimates.
SECURITIES VALUATION:
Investments of the Brenton U.S. Government Money Market Fund are valued
at either amortized cost, which approximates market value, or at original
cost which when combined with accrued interest approximates market value.
Under the amortized cost valuation method, discount or premium is
amortized on a constant basis to the maturity of the security. In
addition, the Brenton U.S. Government Money Market Fund may not (a)
purchase any instrument with a remaining maturity greater than thirteen
months unless such investment is subject to a demand feature, or (b)
maintain a dollar-weighted-average portfolio maturity which exceeds 90
days.
Continued
-12-
<PAGE>
THE COVENTRY GROUP
BRENTON MUTUAL FUNDS
NOTES TO FINANCIAL STATEMENTS, CONTINUED
SEPTEMBER 30, 1997
(UNAUDITED)
Investments in common and preferred stocks, commercial paper, corporate
bonds, municipal bonds, U.S. Government securities and U.S. Government
agency securities of the Brenton Intermediate U.S. Government Securities
Fund and the Brenton Value Equity Fund (collectively "the variable net
asset value funds") are valued at their market values determined on the
basis of the latest available bid quotation in the principal market
(closing sales prices if the principal market is an exchange) in which
such securities are normally traded. Investments in investment companies
are valued at their respective net asset values as reported by such
companies. Securities, including restricted securities, for which market
quotations are not readily available, are valued at fair market value or
as determined in good faith by the investment adviser under the
supervision of the Group's Board of Trustees. The difference between the
cost and market values of investments held by the variable net asset
value funds is reflected as either unrealized appreciation or
depreciation.
SECURITY TRANSACTIONS AND RELATED INCOME:
Security transactions are accounted for on the date the security is
purchased or sold (trade date). Interest income is recognized on the
accrual basis and includes, where applicable, the pro rata amortization
of premium or discount. Dividend income is recorded on the ex-dividend
date. Gains or losses realized on sales of securities are determined by
comparing the identified cost of the security lot sold with the net sales
proceeds.
REPURCHASE AGREEMENTS:
The Funds may acquire repurchase agreements from financial institutions
such as banks, brokers, or dealers that the investment adviser deems
creditworthy under guidelines approved by the Group's Board of Trustees,
subject to the seller's agreement to repurchase such securities at a
mutually agreed-upon date and price. The repurchase price generally
equals the price paid by a Fund plus interest negotiated on the basis of
current short-term rates, which may be more or less than the rate on the
underlying portfolio securities. The seller, under an agreement to
repurchase, is required to maintain with the Fund's custodian, another
qualified custodian or in the Federal Reserve/Treasury book-entry system,
the value of collateral held pursuant to the agreement at not less than
the repurchase price (including accrued interest). Repurchase agreements
are considered to be loans by a Fund under the 1940 Act.
DIVIDENDS TO SHAREHOLDERS:
Dividends from net investment income are declared daily and paid monthly
for the U.S. Government Money Market Fund. Dividends from net investment
income are declared and paid monthly for the Intermediate U.S. Government
Securities Fund. Dividends from net investment income are declared and
paid quarterly for the Value Equity Fund. Distributable net realized
capital gains, if any, are declared and distributed at least annually for
each Fund.
Continued
-13-
<PAGE>
THE COVENTRY GROUP
BRENTON MUTUAL FUNDS
NOTES TO FINANCIAL STATEMENTS, CONTINUED
SEPTEMBER 30, 1997
(UNAUDITED)
Dividends from net investment income and from net realized capital gains
are determined in accordance with income tax regulations which may differ
from generally accepted accounting principles. These differences are
primarily due to differing treatments for organization costs, expiring
capital loss carry forwards and deferrals of certain losses.
FEDERAL INCOME TAXES:
It is the policy of each of the Funds to qualify as a regulated
investment company by complying with the provisions available to certain
investment companies, as defined in applicable sections of the Internal
Revenue Code, and to make distributions of net investment income and net
realized capital gains sufficient to relieve each of the Funds from all,
or substantially all, federal income taxes. For federal income tax
purposes, the Brenton U.S. Government Money Market Fund as of March 31,
1997, has capital loss carryforwards of $353 (expires in FYE 2005) which
are available to offset future capital gains.
EXPENSES:
Expenses that are directly related to one of the Funds are charged
directly to that Fund. Expenses relating to the Funds collectively are
prorated to the Funds on the basis of each Fund's relative net assets.
Other expenses for the Group are prorated to the Funds and any other
portfolios of the Group on the basis of relative net assets.
ORGANIZATION COSTS:
All expenses in connection with the Funds' organization and registration
under the 1940 Act and the Securities Act of 1933 were paid by the Funds.
Such expenses are being amortized over a period of two years commencing
with the date of the initial public offering.
3. PURCHASES AND SALES OF SECURITIES:
Purchases and sales of securities (excluding short-term securities) for the
six months ended September 30, 1997 are as follows:
<TABLE>
<CAPTION>
PURCHASES SALES
----------- -----------
<S> <C> <C>
Intermediate U.S. Government Securities Fund.......... $14,051,063 $15,711,214
Value Equity Fund..................................... 6,750,779 4,955,802
</TABLE>
Continued
-14-
<PAGE>
THE COVENTRY GROUP
BRENTON MUTUAL FUNDS
NOTES TO FINANCIAL STATEMENTS, CONTINUED
SEPTEMBER 30, 1997
(UNAUDITED)
4. RELATED PARTY TRANSACTIONS:
Investment advisory services are provided to the Group by Brenton Bank,
("Brenton Bank"). Under the terms of the investment advisory agreement,
Brenton Bank is entitled to receive fees computed daily based on a
percentage of the average net assets of each Fund. Brenton Bank also serves
as custodian to the Funds. The Northern Trust Company serves as sub-
investment adviser to the U.S. Government Money Market Fund. For such
services, the Northern Trust Company receives an annual fee of 0.08% of the
U.S. Government Money Market Fund's average daily net assets.
BISYS Fund Services Limited Partnership d/b/a BISYS Fund Services ("BISYS"),
an Ohio Limited Partnership, and BISYS Fund Services Ohio, Inc. ("BISYS
Ohio") are subsidiaries of the BISYS Group, Inc.
BISYS, with whom certain officers and trustees of the Group are affiliated,
serves the Funds as administrator. Such officers and trustees are paid no
fees directly by the Funds for serving as officers and trustees of the
Group. Under the terms of the administration agreement, BISYS's fees are
computed daily as a percentage of the average net assets of each of the
Funds.
BISYS Ohio serves as transfer agent to the Funds. Under the terms of the
transfer agency agreement, BISYS Ohio is entitled to receive fees based upon
a specified amount per shareholder with specified minimum per portfolio
amounts and surcharges, plus certain out-of-pocket expenses. BISYS Ohio also
serves as fund accountant. Under the terms of the fund accounting agreement,
BISYS Ohio receives fees monthly at an annual rate of $30,000 for the U.S.
Government Money Market Fund, the Intermediate U.S. Government Securities
Fund, and the Value Equity Fund, plus certain out-of-pocket expenses.
The Funds have adopted a Distribution and Shareholder Services Plan in
accordance with Rule 12b-1 under the Investment Company Act of 1940,
pursuant to which the Funds are authorized to pay or reimburse BISYS, as
distributor, a periodic amount, calculated at an annual rate not to exceed
.50% of the average daily net asset value of the Funds. These fees are used
by BISYS to pay banks, including Brenton Bank, brokers, dealers and other
institutions, or to reimburse BISYS or its affiliates, for administration,
distribution and shareholder services in connection with the distribution of
Fund shares.
Continued
-15-
<PAGE>
THE COVENTRY GROUP
BRENTON MUTUAL FUNDS
NOTES TO FINANCIAL STATEMENTS, CONTINUED
SEPTEMBER 30, 1997
(UNAUDITED)
Fees may be voluntarily reduced to assist the Funds in maintaining
competitive expense ratios. Information regarding these transactions is as
follows for the six months ended September 30, 1997:
<TABLE>
<CAPTION>
U.S. INTERMEDIATE
GOVERNMENT U.S.
MONEY GOVERNMENT VALUE
MARKET SECURITIES EQUITY
FUND FUND FUND
---------- ------------ --------
<S> <C> <C> <C>
INVESTMENT ADVISOR FEES:
Annual fee before voluntary fee reductions
(percentage of average net assets)........ 0.40% 0.44% 0.67%
Voluntary fee reductions................... $40,279 NA NA
ADMINISTRATION FEES:
Annual fee (percentage of average net
assets).................................... 0.20% 0.20% 0.20%
12B-1 FEES:
Annual fee before voluntary fee reductions
(percentage of average net assets)........ 0.50% 0.50% 0.50%
Voluntary fee reductions................... $72,503 $78,486 $108,096
ACCOUNTING FEES:........................... $15,224 $16,607 $ 16,139
CUSTODIAN FEES:............................ $ 6,954 $ 4,026 $ 4,602
TRANSFER AGENT FEES:....................... $20,216 $14,223 $ 23,325
</TABLE>
5. FEDERAL INCOME TAX INFORMATION (UNAUDITED):
Under current tax law, capital losses realized after October 31 may be
deferred and treated as occurring on the first day of the following fiscal
year. The U.S. Government Money Market Fund, The Intermediate U.S.
Government Securities Fund, and The Value Equity Fund had deferred losses of
$13, $7,016, and $320,367 respectively, which will be treated as arising on
the first day of the fiscal year ending March 31, 1998.
-16-
<PAGE>
THE COVENTRY GROUP
BRENTON MUTUAL FUNDS
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
U.S. GOVERNMENT MONEY
MARKET FUND
--------------------------------------------
SIX MONTHS YEAR YEAR AUGUST 9,
ENDED ENDED ENDED 1994 TO
SEPTEMBER 30, MARCH 31, MARCH 31, MARCH 31,
1997 1997 1996 1995 (A)
------------- --------- --------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF
PERIOD......................... $ 1.00 $ 1.00 $ 1.00 $ 1.00
------- ------- ------- -------
INVESTMENT ACTIVITIES
Net investment income......... 0.024 0.046 0.050 0.028
Net realized and unrealized
gains (losses) from
investments.................. -- -- -- --
------- ------- ------- -------
Total from Investment
Activities.................. 0.024 0.046 0.050 0.028
------- ------- ------- -------
DISTRIBUTIONS
Net investment income......... (0.024) (0.046) (0.050) (0.028)
Net realized gains............ -- -- -- --
------- ------- ------- -------
Total Distributions.......... (0.024) (0.046) (0.050) 0.028
------- ------- ------- -------
NET ASSET VALUE, END OF PERIOD. $ 1.00 $ 1.00 $ 1.00 $ 1.00
======= ======= ======= =======
Total Return (excludes sales
charge)..................... 2.42%(b) 4.67% 5.12% 2.84%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period
(000)........................ $35,167 $34,796 $35,436 $27,810
Ratio of expenses to average
net assets................... 0.76%(c) 0.77% 0.75% 0.97%(c)
Ratio of net investment income
to average net assets........ 4.77%(c) 4.57% 4.99% 4.37%(c)
Ratio of expenses to average
net assets*.................. 1.46%(c) 1.47% 1.46% 1.66%(c)
Ratio of net investment income
to average net assets*....... 4.07%(c) 3.87% 4.28% 3.68%(c)
</TABLE>
- --------
* During the period, certain fees were voluntarily reduced. If such
voluntary fee reductions had not occurred, the ratios would have been as
indicated.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
See notes to financial statements.
-17-
<PAGE>
THE COVENTRY GROUP
BRENTON MUTUAL FUNDS
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
INTERMEDIATE U.S. GOVERNMENT
SECURITIES FUND
--------------------------------------------
SIX MONTHS YEAR YEAR AUGUST 9,
ENDED ENDED ENDED 1994 TO
SEPTEMBER 30, MARCH 31, MARCH 31, MARCH 31,
1997 1997 1996 1995 (A)
------------- --------- --------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF
PERIOD......................... $ 9.91 $ 10.14 $ 9.99 $ 10.00
------- ------- ------- -------
INVESTMENT ACTIVITIES
Net investment income......... 0.28 0.57 0.59 0.35
Net realized and unrealized
gains (losses) from
investments.................. 0.31 (0.22) 0.15 (0.02)
------- ------- ------- -------
Total from Investment
Activities.................. 0.59 0.35 0.74 0.33
------- ------- ------- -------
DISTRIBUTIONS
Net investment income......... (0.28) (0.57) (0.59) (0.34)
Net realized gains............ -- (0.01) -- --
------- ------- ------- -------
Total Distributions.......... (0.28) (0.58) (0.59) (0.34)
------- ------- ------- -------
NET ASSET VALUE, END OF PERIOD. $ 10.22 $ 9.91 $ 10.14 $ 9.99
======= ======= ======= =======
Total Return (excludes sales
charge)..................... 6.08%(b) 3.51% 7.48% 3.42%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period
(000)........................ $35,691 $34,158 $34,390 $16,438
Ratio of expenses to average
net assets................... 0.99%(c) 1.02% 1.07% 1.53%(c)
Ratio of net investment income
to average net assets........ 5.57%(c) 5.64% 5.82% 5.71%(c)
Ratio of expenses to average
net assets*.................. 1.44%(c) 1.47% 1.55% 2.03%(c)
Ratio of net investment income
to average net assets*....... 5.12%(c) 5.19% 5.34% 5.21%(c)
Portfolio Turnover............ 43.08% 78.95% 30.85% 20.69%
</TABLE>
- --------
* During the period, certain fees were voluntarily reduced. If such
voluntary fee reductions had not occurred, the ratios would have been as
indicated.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
See notes to financial statements.
-18-
<PAGE>
THE COVENTRY GROUP
BRENTON MUTUAL FUNDS
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
VALUE EQUITY
FUND
--------------------------------------------
SIX MONTHS YEAR YEAR AUGUST 9,
ENDED ENDED ENDED 1994 TO
SEPTEMBER 30, MARCH 31, MARCH 31, MARCH 31,
1997 1997 1996 1995 (A)
------------- --------- --------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF
PERIOD......................... $ 14.80 $ 12.95 $ 10.83 $ 10.00
------- ------- ------- -------
INVESTMENT ACTIVITIES
Net investment income......... 0.05 0.13 0.10 0.09
Net realized and unrealized
gains (losses) from
investments.................. 3.07 2.11 2.70 0.83
------- ------- ------- -------
Total from Investment
Activities.................. 3.12 2.24 2.80 0.92
------- ------- ------- -------
DISTRIBUTIONS
Net investment income......... (0.05) (0.13) (0.10) (0.09)
Net realized gains............ -- (0.19) (0.58) --
In excess of net realized
gains........................ -- (0.07) -- --
------- ------- ------- -------
Total Distributions.......... (0.05) (0.39) (0.68) (0.09)
------- ------- ------- -------
NET ASSET VALUE, END OF
PERIOD......................... $ 17.87 $ 14.80 $ 12.95 $ 10.83
======= ======= ======= =======
Total Return (excludes sales
charge)..................... 21.11%(b) 17.44% 26.13% 9.25%(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period
(000)........................ $53,007 $41,727 $32,353 $15,628
Ratio of expenses to average
net assets................... 1.21%(c) 1.28% 1.45% 1.80%(c)
Ratio of net investment income
to average net assets........ 0.65%(c) 0.88% 0.83% 1.39%(c)
Ratio of expenses to average
net assets*.................. 1.66%(c) 1.73% 1.92% 2.30%(c)
Ratio of net investment income
to average net assets*....... 0.20%(c) 0.43% 0.36% 0.89%(c)
Portfolio Turnover............ 10.81% 17.15% 43.80% 18.30%
Average commission rate paid
(d).......................... $0.0760 $0.0824 -- --
</TABLE>
- ------
* During the period, certain fees were voluntarily reduced. If such
voluntary fee reductions had not occurred, the ratios would have been as
indicated.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
(d) Represents the total dollar amount of commissions paid on portfolio
transactions divided by total number of portfolio shares purchased and
sold for which commissions were charged. Disclosure is not required for
periods prior to the year ended March 31, 1997.
See notes to financial statements.
-19-
<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
