<PAGE> 1
WILLAMETTE ASSET MANAGERS
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WILLAMETTE VALUE FUND
220 NW 2(nd) Avenue, Suite 950
Portland, Oregon 97209
October 1, 1998
Dear Valued Shareholders:
The Willamette Value Fund, since its successful launch on May 26, 1998, has
received wide acceptance among investors. In keeping with our goal to provide
long-term investment services, we believe it is important to keep our
shareholders informed regarding a number of significant achievements during the
first four months of operation.
The Fund now has over 1,000 shareholders. In reaching this important milestone
it has been assigned the ticker symbol WILVX. Shareholders may now track the
performance of the Fund's daily closing prices in many major publications
including the Wall Street Journal, USA Today and the Oregonian.
In line with projections, the net assets of the Fund grew substantially. As of
September 30, 1998, total net assets of the Fund were $10.5 million. This is
important because the estimated expense ratios stated in the prospectus are
based on a $10 million average asset base. As total assets under management
continue to increase, the average expense ratio should decline accordingly.
Finally, our Fund's since inception performance, down 8.5% at NAV (-12.6 at
offer) as of September 30, 1998, has tracked very close to the Dow Jones
Industrial Average, which was down 13.95% for the same period. Our fund has
performed admirably in a difficult market.
We thank you for your continued support of the Willamette Value Fund.
Sincerely,
/s/ James T. Smith
James T. Smith
Portfolio Manager
Willamette Value Fund
For more complete information including charges and expenses, please call
877-945-3863 to receive a prospectus. Read the prospectus carefully before
investing or sending money.
Past performance is no guarantee of future results. Investment return and net
asset value will fluctuate so that an investor's shares, when redeemed may be
worth more or less than the original cost.
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<PAGE> 2
TABLE OF CONTENTS
Statement of Assets and Liabilities
PAGE 3
Statement of Operations
PAGE 4
Statement of Changes in Net Assets
PAGE 5
Schedule of Portfolio Investments
PAGE 6
Notes to Financial Statements
PAGE 7
Financial Highlights
PAGE 10
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<PAGE> 3
THE COVENTRY GROUP
WILLAMETTE VALUE FUND
STATEMENT OF ASSETS AND LIABILITIES
SEPTEMBER 30, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
VALUE
FUND
-----------
<S> <C>
ASSETS:
Investments, at value (cost $11,218,583).................... $10,585,069
Interest and dividends receivable........................... 29,987
Receivable for capital shares sold.......................... 161,315
Unamortized organizational costs............................ 30,918
Prepaid expenses:
Registration and filing................................... 8,198
Other..................................................... 4,725
-----------
Total Assets........................................... 10,820,212
-----------
LIABILITIES:
Payable for securities purchased............................ 501,322
Payable for capital shares redeemed......................... 14,416
Accrued expenses and other payables:
Investment advisory fees.................................. 7,040
Administration fees....................................... 170
Distribution and shareholder service fees................. 3,520
-----------
Total Liabilities...................................... 526,468
-----------
NET ASSETS:
Capital..................................................... 10,933,996
Undistributed (distribution in excess of) net investment
income/(loss)............................................. (6,738)
Net unrealized appreciation/(depreciation) from
investments............................................... (633,514)
Accumulated undistributed net realized gains/(losses) from
investment transactions................................... --
-----------
Net Assets............................................. $10,293,744
===========
Outstanding units of beneficial interest (shares)........... 1,124,832
===========
Net asset value -- redemption price per share............... $ 9.15
===========
Maximum Sales Charge........................................ 4.50%
===========
Maximum Offering Price per share (100%/(100%-Maximum Sales
Charge) of net asset value adjusted to nearest cent)...... $ 9.58
===========
</TABLE>
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<PAGE> 4
THE COVENTRY GROUP
WILLAMETTE VALUE FUND
STATEMENT OF OPERATIONS
FOR THE PERIOD ENDED SEPTEMBER 30, 1998 (A)
(UNAUDITED)
<TABLE>
<CAPTION>
VALUE
FUND
----------
<S> <C>
INVESTMENT INCOME:
Dividend income........................................... $ 76,745
----------
Total income........................................... 76,745
----------
EXPENSES:
Investment advisory fees.................................. 23,541
Administration fees....................................... 4,708
Distribution and shareholder service fees................. 11,770
Custodian fees............................................ 889
Fund accounting fees...................................... 12,742
Transfer agent fees....................................... 12,675
Legal and audit fees...................................... 5,216
Printing fees............................................. 6,763
Registration and filing fees.............................. 1,998
Other..................................................... 3,181
----------
Net expenses........................................... 83,483
----------
Net investment income/(loss)................................ (6,738)
----------
REALIZED/UNREALIZED GAINS (LOSSES) FROM INVESTMENTS:
Net realized gains/(losses) from investment transactions.... --
Net change in unrealized appreciation/(depreciation) from
investments............................................... (633,514)
----------
Net realized/unrealized gains/(losses) from investments..... (633,514)
----------
Change in net assets resulting from operations.............. ($ 640,252)
==========
</TABLE>
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(a) For the period from May 26, 1998 (commencement of operations) to September
30, 1998.
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<PAGE> 5
THE COVENTRY GROUP
WILLAMETTE VALUE FUND
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
VALUE
FUND
-------------
MAY 26,
1998 TO
SEPTEMBER 30,
1998 (a)
-------------
(UNAUDITED)
<S> <C>
FROM INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income/(loss).............................. $ (6,738)
Net realized gains/(losses) from investment
transactions........................................... --
Net change in unrealized appreciation/(depreciation) from
investments............................................ (633,514)
-----------
Change in net assets resulting from operations.............. (640,252)
-----------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income................................ --
Dividends to shareholders from net realized gains from
investment transactions................................ --
-----------
Change in net assets from shareholder distributions......... --
-----------
CAPITAL TRANSACTIONS:
Proceeds from shares issued............................... 11,363,967
Dividends reinvested...................................... --
Cost of shares redeemed................................... (429,971)
-----------
Change in net assets from capital share transactions...... 10,933,996
-----------
Change in net assets...................................... 10,293,744
NET ASSETS:
Beginning of period....................................... --
-----------
End of period............................................. $10,293,744
===========
SHARE TRANSACTIONS:
Issued.................................................... 1,169,097
Reinvested................................................ --
Redeemed.................................................. (44,265)
-----------
Change in shares............................................ 1,124,832
===========
</TABLE>
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(a) For the period from May 26, 1998 (commencement of operations) to September
30, 1998.
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<PAGE> 6
THE COVENTRY GROUP
WILLAMETTE VALUE FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
SEPTEMBER 30, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
- ---------- ------------------------------ -----------
<C> <S> <C>
COMMON STOCKS (98.1%):
Airlines (1.5%):
2,510..... British Airways PLC-ADR....... $ 154,365
-----------
Automotive (4.1%):
7,688 General Motors Corp........... 420,438
-----------
Automotive Parts (3.7%):
6,928 Genuine Parts Co.............. 208,273
5,659 LucasVarity PLC-ADR........... 176,844
-----------
385,117
-----------
Banking & Financial Services (9.1%):
2,364 Bankers Trust Corp............ 139,476
4,503 J.P. Morgan & Co.............. 381,066
4,399 PNC Financial Corp............ 197,955
4,277 Union Planters Corp........... 214,919
-----------
933,416
-----------
Cosmetics & Toiletries (1.8%):
5,493 International Flavors &
Fragrance................... 181,269
-----------
Diversified Operation (6.5%):
6,357 Minnesota Mining &
Manufacturing Co............ 468,431
6,170 Tenneco, Inc.................. 202,839
-----------
671,270
-----------
Electronic Components/Instruments (4.6%):
6,208 AMP, Inc...................... 221,936
3,628 Florida Power & Light, Inc.... 252,826
-----------
474,762
-----------
Food Products & Services (2.3%):
3,351 General Mills, Inc............ 234,570
-----------
Metals (4.8%):
6,986 Aluminum Co. Of America....... 496,006
-----------
Office Supplies & Equipment (2.1%):
8,645 Equity Office Properties
Trust....................... 211,803
-----------
Oil -- Integrated Companies (20.6%):
2,648 British Petroleum Co., PLC 231,038
6,173 Chevron Corp.................. 518,917
7,082 Exxon Corp.................... 497,067
3,012 Mobil Corp.................... 228,724
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
- ---------- ------------------------------ -----------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
4,374 Royal Dutch Petroleum Co., NY
Shares...................... $ 208,312
5,706 Shell Transport & Trading Co.-
ADR......................... 207,912
3,886 Texaco, Inc................... 243,604
-----------
2,135,574
-----------
Paper Products (6.7%):
10,324 International Paper Co........ 481,357
4,934 Weyerhaeuser Co............... 208,153
-----------
689,510
-----------
Photo Equipment & Supplies (4.9%):
6,584 Eastman Kodak Co.............. 509,026
-----------
Publishing (2.1%):
6,288 Reed International PLC-ADR.... 211,434
-----------
Retail Stores/Catalog (1.6%):
3,700 J.C. Penney Co., Inc.......... 166,269
-----------
Telecommunications (16.1%):
5,423 Alltel Corp................... 256,914
8,383 AT&T Corp..................... 489,881
5,016 Bell Atlantic Corp............ 242,963
7,521 Frontier Corp................. 205,887
4,162 GTE Corp...................... 228,910
4,824 Tele Danmark A/S - ADR........ 232,155
-----------
1,656,710
-----------
Tobacco (5.5%):
12,394 Phillip Morris Companies, Inc. 570,899
-----------
Total Common Stocks (Cost
$10,735,952)................ 10,102,438
-----------
SHORT-TERM INVESTMENTS (4.7%):
Cash Sweep Account (4.7%):
482,631 UBOC Sweep Account Willamette
Asset Management............ 482,631
-----------
Total Short-Term Investments
(Cost $482,631)............. 482,631
-----------
Total Investments-102.8% (Cost
$11,218,583) (a)............ $10,585,069
===========
</TABLE>
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Percentages indicated are based on net assets of $10,293,744
(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......................... $ 298,263
Unrealized depreciation......................... (931,777)
----------
Net unrealized depreciation..................... ($ 633,514)
==========
</TABLE>
ADR -- American Depository Receipt
See notes to financial statements.
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<PAGE> 7
THE COVENTRY GROUP
WILLAMETTE VALUE FUND
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1998
(UNAUDITED)
1. ORGANIZATION:
The Coventry Group (the "Group") was organized as a Massachusetts business
trust on January 8, 1992 and is registered under the Investment Company Act
of 1940, as amended (the "1940 Act"), as an open-end management investment
company. The accompanying financial statements and financial highlights are
those of The Willamette Value Fund, (the "Fund"). The Fund offers one
managed investment portfolio, as a series of the Group, and is authorized
to issue an unlimited number of shares. The Fund offers one class of shares
of beneficial interest ("shares").
The Fund's investment objective is as follows:
<TABLE>
<CAPTION>
FUND OBJECTIVE
- ---- ---------
<S> <C>
Value Fund Provide above average total return through a
combination of capital appreciation and dividend
income by investing in primarily equity securities.
</TABLE>
2. SIGNIFICANT ACCOUNTING PRINCIPLES:
The following is a summary of significant accounting policies followed by
the Fund in the preparation of its 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 affect the reported amounts of assets and liabilities
at the date of the financial statements and the reported amounts of income
and expenses for the period. Actual results could differ from those
estimates.
SECURITIES VALUATION:
Equity securities held by a Fund are valued at the last reported sales
price on the securities exchange or in the principal over-the-counter
market in which such securities are traded, as of the close of business on
the day the securities are being valued. Listed securities for which last
sales prices are not available are valued at the last bid price.
SECURITIES 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 Fund may purchase instruments from financial institutions, such as
banks and registered broker-dealers, subject to the seller's agreement to
repurchase them at an agreed upon time and price ("repurchase agreements").
The repurchase price generally equals the price paid by the Fund plus
interest negotiated on
Continued
-7-
<PAGE> 8
THE COVENTRY GROUP
WILLAMETTE VALUE FUND
NOTES TO FINANCIAL STATEMENTS, CONTINUED
SEPTEMBER 30, 1998
(UNAUDITED)
the basis of current short-term rates, which may be more or less than the
rate on the underlying portfolio securities. The seller, under a repurchase
agreement, is required to maintain the value of the securities subject to
the agreement at not less than the repurchase price (including accrued
interest). Default by the seller would, however, expose the relevant Fund
to possible loss because of adverse market action or delay in connection
with the disposition of the underlying obligations. Risks may arise from
the potential inability of counterparties to honor the terms of the
repurchase agreements. Accordingly, the Fund could receive less than the
carrying value upon the sale of the underlying collateral securities.
DIVIDENDS TO SHAREHOLDERS:
The Fund intends to declare its net investment income quarterly as a
dividend to Shareholders at the close of business on the day of
declaration, and generally will, if any, pay such dividends quarterly. The
Fund also intends to distribute its capital gains, if any, at least
annually, normally in December of each year. A Shareholder will
automatically receive all income dividends and capital gains distributions
in additional full and fractional Shares of the Fund at net asset value as
of the ex-dividend date, unless the Shareholder elects to receive dividends
or distributions in cash.
FEDERAL INCOME TAXES:
The Fund intends to qualify annually and elect to be treated as a regulated
investment company under the Internal Revenue Code of 1986, as amended (the
"Code"). To qualify, the Fund must meet certain income, distribution and
diversification requirements. In any year in which the Fund qualifies as a
regulated investment company and distributes substantially all of its
income, the Fund generally will not pay any U.S. federal income or excise
tax.
3. RELATED PARTY TRANSACTIONS:
Investment advisory services are provided by the Willamette Asset Managers,
Inc. The advisor is an affiliate of Phillips & Company Securities, Inc.
("Phillips"), a registered broker-dealer. Under the terms of the investment
advisory agreement, the Advisor is entitled to receive fees, computed daily
and paid monthly, at the annual rate of 1.00% of the fund's average daily
net assets.
BISYS Fund Services (the "Administrator"), an indirect, wholly-owned
subsidiary of The BISYS Group, Inc. ("BISYS") serves as the administrator
and distributor to the Fund. Certain officers of the Fund are affiliated
with BISYS. Such officers receive no direct payments or fees from the Fund
for serving as officers.
Under the terms of the administration agreement, the Administrator receives
a fee computed daily and paid periodically, at an annual rate of 0.20% of
the Fund's average daily net assets.
Pursuant to a 12b-1 Plan, the Distributor may receive fees computed at the
annual rate of 0.50% of the average daily net assets of the Fund.
BISYS Fund Services Ohio, Inc. (the "Company"), serves the Fund as Transfer
Agent and Fund Accountant. Under the terms of the Transfer Agent Agreement,
the Company's fees are based upon a
Continued
-8-
<PAGE> 9
THE COVENTRY GROUP
WILLAMETTE VALUE FUND
NOTES TO FINANCIAL STATEMENTS, CONTINUED
SEPTEMBER 30, 1998
(UNAUDITED)
specified amount per shareholder with specified minimum per portfolio
amounts and surcharges, plus certain out-of-pocket expenses. Under the
terms of the Fund Accounting Agreement the fees are computed daily and paid
periodically at an annual rate of 0.03% of the Fund's average daily net
assets, plus certain out-of-pocket expenses.
Fees may be voluntarily reduced to assist the Fund in maintaining
competitive expense ratios. Information regarding these transactions is as
follows for the period ended September 30, 1998 (a):
<TABLE>
<S> <C>
INVESTMENT ADVISORY FEES:................................... $23,541
Annual fee (percentage of average net assets)............... 1.00%
ADMINISTRATION FEES:........................................ $ 4,708
Annual fee (percentage of average net assets)............... .20%
12B-1 FEES:................................................. $11,770
Annual fee (percentage of average net assets)............... .50%
ACCOUNTING FEES:............................................ $12,742
TRANSFER AGENT FEES:........................................ $12,675
</TABLE>
4. PURCHASES AND SALES OF SECURITIES:
Purchases and sales of securities (excluding short-term securities) for the
six months ended September 30, 1998 are as follows:
<TABLE>
<CAPTION>
PURCHASES SALES
----------- -----
<S> <C> <C>
Value Fund................................................ $10,735,952 --
</TABLE>
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(a) For the period from May 26, 1998 (commencement of operations) to September
30, 1998.
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<PAGE> 10
THE COVENTRY GROUP
WILLAMETTE VALUE FUND
Selected data for a share of beneficial interest outstanding throughout the
period indicated:
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
VALUE FUND
-------------
MAY 26,
1998 TO
SEPTEMBER 30,
1998 (a)
-------------
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD........................ $ 10.00
-------
INVESTMENT ACTIVITIES
Net investment income (loss).............................. (0.01)
Net realized and unrealized gains (losses) from
investments............................................ (0.84)
-------
Total from Investment Activities....................... (0.85)
-------
DISTRIBUTIONS
Net investment income..................................... --
Net realized gains from investments....................... --
-------
Total Distributions.................................... --
-------
NET ASSET VALUE, END OF PERIOD.............................. $ 9.15
=======
Total return (excludes sales charge)........................ (8.50%)(b)
RATIOS/SUPPLEMENTARY DATA:
Net Assets, End of Period (000)........................... $10,294
Ratio of expenses to average net assets................... 3.50% (c)
Ratio of net investment income to average net assets...... (0.28%)(c)
Portfolio Turnover........................................ --
</TABLE>
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(a) For the period from May 26, 1998 (commencement of operations) to September
30, 1998.
(b) Not annualized.
(c) Annualized.
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[This Page Intentionally Left Blank]
<PAGE> 12
INVESTMENT ADVISER
Willamette Asset Managers, Inc.
230 NW 2nd Avenue, Suite 950
Portland, Oregon 97209
ADMINISTRATOR AND DISTRIBUTOR
BISYS Fund Services
3435 Stelzer Road
Columbus, Ohio 43219
LEGAL COUNSEL
Dechert Price & Rhoads
1775 Eye Street, N.W.
Washington, D.C. 20006
INDEPENDENT AUDITORS
Ernst & Young LLP
10 West Broad Street
Suite 2300
Columbus, Ohio 43215
CUSTODIAN
Union Bank of California
475 Sansome Street, 15th Floor
San Francisco, California 94111
11/98
WILLAMETTE
VALUE
FUND
WILLAMETTE VALUE FUND
Investment Adviser
SEMI-ANNUAL REPORT
SEPTEMBER 30, 1998
