MENTOR INSTITUTIONAL TRUST, 485APOS, 1995-09-05

MENTOR INSTITUTIONAL TRUST
485APOS, 1995-09-05

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As filed with the Securities and Exchange Commission on September 5, 1995

Registration No. 33-80784
File No. 811-8484

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549

FORM N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]

Pre-Effective Amendment No. ____

Post-Effective Amendment No. 3

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]

Amendment No. 6

(Check appropriate box or boxes)

MENTOR INSTITUTIONAL TRUST
(Exact name of registrant as specified in charter)

P.O. Box 1357
Richmond, Virginia 23286
(Address of principal executive offices)

Registrant's Telephone Number, Including Area Code: (804) 782-3647

Paul F. Costello
President
Mentor Institutional Trust
901 East Byrd Street
Richmond, Virginia 23219
(Name and address of agent for service)

Copy to

Timothy W. Diggins, Esq.
Ropes & Gray
One International Place
Boston, MA 02110

It is proposed that this filing will become effective
(check appropriate box)

[ ] immediately upon filing pursuant to paragraph (b)

[ ] on (date) pursuant to paragraph (b)

[ ] 60 days after filing pursuant to paragraph (a)(1)

[ ] on (date) pursuant to paragraph (a)(1)

[ X] 75 days after filing pursuant to paragraph (a)(2)

[ ] on (date) pursuant to paragraph (a)(2) of Rule 485

If appropriate, check the following box:

[ ] this post-effective amendment designates a new effective date for a
previously filed post-effective amendment

Pursuant to the provisions of Rule 24f-2 under the Investment Company Act of
1940, the Registrant has previously elected to register an indefinite number
of shares. The $500 registration fee has previously been paid.

The Cross Reference Sheet in respect of Part A for Mentor Institutional Trust
and its individual portfolios, and in respect of Part B for SNAP Fund, are
incorporated herein by reference from Post-Effective Amendment No. 2 to the
Registrant's Registration Statement on Form N/1A (File No. 33-80784) previously
filed on July 24, 1995.

MENTOR INSTITUTIONAL TRUST

CROSS REFERENCE SHEET

(as required by Rule 404(c))

Part A - Mentor International Portfolio

N-1A Item No. Location

1. Cover Page . . . . . . . . . . . . . . . . . Cover Page

2. Synopsis . . . . . . . . . . . . . . . . . . Cover Page; Expense
summary

3. Condensed Financial Information . . . . . . Expense summary

4. General Description of Registrant . . . . . Cover Page;
Investment
objective and
policies; Mentor
Institutional Trust;
Investment practices
and risks

5. Management of the Fund . . . . . . . . . . . Investment
objectives and
policies; Investment
practices and risks;
Management of the
Portfolio; Mentor
Institutional Trust;
How the Portfolio
values its shares;
Custodian and
transfer and
dividend agent;
Performance
information

5A. Management's Discussion
of Fund Performance . . . . . . . . . . . Not Applicable

6. Capital Stock and Other
Securities . . . . . . . . . . . . . . . . Management of the
Portfolio; Mentor
Institutional Trust;
Purchase of shares;
How distributions
are made; tax
information;
Performance
information

<PAGE>

7. Purchase of Securities Being
Offered . . . . . . . . . . . . . . . . . Management of the
Portfolio; Purchase
of shares

8. Redemption or Repurchase . . . . . . . . . . Purchase of shares;
Redemption of
shares;

9. Pending Legal Proceedings . . . . . . . . . Not Applicable

Part B -

Mentor Fixed-Income, Mentor Intermediate Duration and
Mentor International Portfolio.

N-1A Item No. Location

10. Cover Page . . . . . . . . . . . . . . . . . Cover Page

11. Table of Contents . . . . . . . . . . . . . Cover Page

12. General Information and History . . . . . . General

13. Investment Objectives and
Policies . . . . . . . . . . . . . . . . . Investment
Restrictions;
Certain Investment
Techniques

14. Management of the Fund . . . . . . . . . . . Management of the
Trust; Investment
Advisory and Other
Services; The
Distributor

15. Control Persons and Principal
Holders of Securities . . . . . . . . . . Principal Holders of
Securities

16. Investment Advisory and Other
Services . . . . . . . . . . . . . . . . . Investment Advisory
and Other Services;
Management of the
Trust; Independent
Accountants;
Experts; Custodian

17. Brokerage Allocation . . . . . . . . . . . . Brokerage

18. Capital Stock and Other

-2-

<PAGE>

Securities . . . . . . . . . . . . . . . . Determination of Net
Asset Value; Tax
Status; The
Distributor;
Shareholder
Liability

-3-

<PAGE>

19. Purchase, Redemption and Pricing
of Securities Being Offered . . . . . . . Brokerage;
Determination of Net
Asset Value; The
Distributor

20. Tax Status . . . . . . . . . . . . . . . . . Investment
Restrictions; Tax
Status

21. Underwriters . . . . . . . . . . . . . . . . The Distributor

22. Calculations of Performance Data . . . . . . Performance
Information

Part C

Information required to be included in Part C is set forth under the
appropriate Item, so numbered, in Part C of the Registration Statement.

-4-

<PAGE>

Part A of Post-Effective Amendment No. 2 to the Registration Statement
of the Registrant on Form N-1A (File No. 33-80784), which was previously
filed on July 24, 1995 (File No. 33-80784), is incorporated herein by
reference.

The following information relates to Mentor International Portfolio, a
newly created series of Mentor Institutional Trust.

-5-

PROSPECTUS November , 1995

MENTOR INTERNATIONAL PORTFOLIO

Mentor International Portfolio seeks long-term capital appreciation
by investing in a diversified portfolio of equity securities of issuers
outside the United States. Mentor Perpetual Advisors, L.L.C. is the
Portfolio's investment adviser. Shares of the Portfolio are being offered
principally to institutions and high net-worth individual investors.

This Prospectus sets forth concisely the information about the
Portfolio that a prospective investor should know before investing. Please
read this Prospectus and retain it for future reference. Investors can
find more detailed information in the November , 1995 Statement of
Additional Information, as amended from time to time. For a free copy of
the Statement, call Mentor Distributors, Inc. at 1-800-869-6042. The
Statement has been filed with the Securities and Exchange Commission and is
incorporated into this Prospectus by reference. The Portfolio's address is
P.O. Box 1357, Richmond, Virginia 23286-0109.

_________________________

MENTOR DISTRIBUTORS, INC.
Distributor

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESEN-
TATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

<PAGE>

EXPENSE SUMMARY

Expenses are one of several factors to consider when investing in
the Portfolio. The following table summarizes an investor's maximum
transaction costs from investing in the Portfolio and expenses the
Portfolio expects to incur in its first full fiscal year. The Example
shows the cumulative expenses attributable to a hypothetical $1,000
investment in the Portfolio over specified periods.

SHAREHOLDER TRANSACTION EXPENSES:
Maximum Sales Load Imposed on Purchases None
Maximum Sales Load Imposed on Reinvested
Dividends None
Deferred Sales Load None
Redemption Fees None
Exchange Fee None

Annual Portfolio Operating Expenses:
(as a percentage of average net assets)
Management Fees 0.00%
12b-1 Fees 0.00%
Other Expenses 0.30%
Total Portfolio Operating Expenses 0.30%

EXAMPLE

An investment of $1,000 in the Portfolio would incur
the following expenses, assuming 5% annual return and redemption at the end
of each period:

1 year $3
3 years $10

This information is provided to help investors
understand the expenses of investing in the Portfolio and an investor's
share of the estimated operating expenses of the Portfolio. The
information is based on the expenses the Portfolio expects to incur in its
first full fiscal year. The Example should not be considered a
representation of future performance; actual expenses may be more or less
than those shown.

<PAGE>

INVESTMENT OBJECTIVE AND POLICIES

Mentor International Portfolio's investment
objective is long-term capital appreciation. The Portfolio is designed for
institutional investors who believe that investment in a diversified
portfolio of securities of issuers located outside the U.S. offers the
potential for long-term capital appreciation.

The Portfolio invests in a diversified portfolio of
securities of issuers located outside the United States. The Portfolio's
investments will normally include common stocks, preferred stocks,
securities convertible into common stocks or preferred stocks, and warrants
to purchase common stocks or preferred stocks. The Portfolio may also
invest to a lesser extent in debt securities and other types of investments
if Mentor Perpetual believes they would help achieve the Portfolio's
objective. The Portfolio may hold a portion of its assets in cash or money
market instruments.

The Portfolio will not limit its investments to any
particular type of company. The Portfolio may invest in companies, large
or small, whose earnings are believed to be in a relatively strong growth
trend, or in companies in which significant further growth is not
anticipated but whose market value per share is thought to be undervalued.

It is likely that, at times, a substantial portion of
the Portfolio's assets will be invested in securities of issuers in
emerging markets, including under-developed and developing nations.
Investment in emerging markets are subject to the same risks applicable to
foreign investments generally, although those risks may be increased due to
conditions in such markets. For example, the securities markets and legal
systems in emerging markets may only be in a developmental stage and may
provide few, or none, of the advantages or protections of markets or legal
systems available in more developed countries. Although many of the
securities in which the Portfolio may invest are traded on securities
exchanges, they may trade in limited volume, and the exchanges may not
provide all of the conveniences or protections provided by securities
exchanges in more developed markets. The Portfolio may also invest a
substantial portion of its assets in securities traded in the over-the-
counter markets and not on any exchange, which may affect the liquidity of
the investment and expose the Portfolio to the credit risk of its
counterparties in trading those investments. See "Other investment
practices -- Foreign securities."

Fixed-income securities in which the Portfolio may
invest will be of investment grade. A security will be deemed to be of
"investment grade" if, at the time of investment by the Portfolio, the
security is rated at least Baa3 by Moody's Investors Service, Inc. or BBB-
by Standard & Poor's Corporation, or at a comparable rating by another
nationally recognized rating organization. Securities rated Baa or BBB
lack outstanding investment characteristics and have speculative
characteristics and are subject to greater credit and market risks than
higher-rated securities. The Portfolio will not be required to dispose of
a security held by it if the security's rating falls below investment
grade, although Mentor Perpetual will consider whether continued investment
in the security is consistent with the Portfolio's investment objectives.
See the Statement of Additional Information for descriptions of securities
ratings assigned by Moody's and Standard & Poor's.

Mentor Perpetual may under unusual circumstances
implement temporary "defensive" strategies in order to reduce fluctuations
in the value of the Portfolio's assets. At those times, the Portfolio may
invest any portion of its assets in cash or cash equivalents, money market
instruments, or other short-term, high-quality investments Mentor Perpetual
considers consistent with such defensive strategies.

<PAGE>

OTHER INVESTMENT PRACTICES AND RISKS

The Portfolio may engage in the other investment
practices described below. See the Statement of Additional Information for
a more detailed description of these practices and certain risks they may
involve.

INVESTMENTS IN SMALLER COMPANIES. The fund may invest
a substantial portion of its assets in securities issued by small
companies. Such companies may offer greater opportunities for capital
appreciation than larger companies, but investments in such companies may
involve certain special risks. Such companies may have limited product
lines, markets, or financial resources and may be dependent on a limited
management group. While the markets in securities of such companies have
grown rapidly in recent years, such securities may trade less frequently
and in smaller volume than more widely held securities. The values of
these securities may fluctuate more sharply than those of other securities,
and the Portfolio may experience some difficulty in establishing or closing
out positions in these securities at prevailing market prices. There may
be less publicly- available information about the issuers of these
securities or less market interest in such securities than in the case of
larger companies, and it may take a longer period of time for the prices of
such securities to reflect the full value of their issuers' underlying
earnings potential or assets.

Some securities of smaller issuers may be restricted
as to resale or may otherwise be highly illiquid. The ability of the
Portfolio to dispose of such securities may be greatly limited, and the
Portfolio may have to continue to hold such securities during periods when
Mentor Perpetual would otherwise have sold the security. It is possible
that Mentor Perpetual or its affiliates or clients may hold securities
issued by the same issuers, and may in some cases have acquired the
securities at different times, on more favorable terms, or at more
favorable prices, than the Portfolio.

FOREIGN SECURITIES. The Portfolio may invest in
securities principally traded in foreign markets. Since foreign securities
are normally denominated and traded in foreign currencies, the values of
the Portfolio's assets may be affected favorably or unfavorably by currency
exchange rates and exchange control regulations. There may be less
information publicly available about a foreign company than about a U.S.
company, and foreign companies are not generally subject to accounting,
auditing, and financial reporting standards and practices comparable to
those in the United States. The securities of some foreign companies are
less liquid and at times more volatile than securities of comparable U.S.
companies. Foreign brokerage commissions and other fees are also generally
higher than in the United States. Foreign settlement procedures and trade
regulations may involve certain risks (such as delay in payment or delivery
of securities or in the recovery of the Portfolio's assets held abroad) and
expenses not present in the settlement of domestic investments.

In addition, there may be a possibility of
nationalization or expropriation of assets, imposition of currency exchange
controls, confiscatory taxation, political or financial instability, and
diplomatic developments which could affect the value of the Portfolio's
investments in certain foreign countries. Legal remedies available to
investors in certain foreign countries may be more limited than those
available with respect to investments in the United States or in other
foreign countries. In the case of securities issued by a foreign
governmental entity, the issuer may in certain circumstances be unable or
unwilling to meet its obligations on the securities in accordance with
their terms, and the Portfolio may have limited recourse available to it in
the event of default. The laws of some foreign countries may limit the
Portfolio's ability to invest in securities of certain issuers located in
those foreign countries. Special tax considerations apply to foreign
securities. The Portfolio may buy or sell foreign currencies and options
and futures contracts on foreign currencies for hedging purposes in
connection with its foreign investments.

BORROWING AND LEVERAGE. The Portfolio may borrow
money to invest in additional portfolio securities. This practice, known
as "leverage", increases the Portfolio's market exposure and its risk.
When the Portfolio has borrowed money for leverage and its investments
increase or decrease in value, the Portfolio's net asset value will
normally increase or decrease more than if it had not borrowed money. The
interest the Portfolio must pay on borrowed money will reduce the amount of
any potential gains or increase any losses. The extent to which the
Portfolio will borrow money, and the amount it may borrow, depend on market
conditions and interest rates. Successful use of leverage depends on
Mentor Perpetual's ability to predict market movements correctly.

OPTIONS AND FUTURES. The Portfolio may buy and sell
call and put options to hedge against changes in net asset value or to
realize a greater current return. In addition, through the purchase and
sale of futures contracts and related options, the Portfolio may at times
seek to hedge against fluctuations in net asset value and, to the extent
consistent with applicable law, to increase its investment return.

<PAGE>

The Portfolio's ability to engage in options and
futures strategies will depend on the availability of liquid markets in
such instruments. It is impossible to predict the amount of trading
interest that may exist in various types of options or futures contracts.
Therefore, there is no assurance that the Portfolio will be able to utilize
these instruments effectively for the purposes stated above.
Transactions in options and futures involve certain risks which are
described below and in the Statement of Additional Information.

Transactions in options and futures contracts involve
brokerage costs and may require the Portfolio to segregate assets to cover
its outstanding positions. For more information, see the Statement of
Additional Information.

Index futures and options. The Portfolio may buy and
sell index futures contracts ("index futures") and options on index futures
and on indices for hedging purposes (or may purchase warrants whose value
is based on the value from time to time of one or more foreign securities
indices). An "index futures" is a contract to buy or sell units of a
particular bond or stock index at an agreed price on a specified future
date. Depending on the change in value of the index between the time when
the Portfolio enters into and terminates an index futures or option
transaction, the Portfolio realizes a gain or loss. The Portfolio may
also, to the extent consistent with applicable law, buy and sell index
futures and options to increase its investment return.

Risks related to options and futures strategies.
Options and futures transactions involve costs and may result in losses.
Certain risks arise because of the possibility of imperfect correlations
between movements in the prices of futures and options and movements in
the prices of the underlying security or index or of the securities held by
the Portfolio that are the subject of a hedge. The successful use by the
Portfolio of the strategies described above further depends on the ability
of Mentor Perpetual to forecast market movements correctly. Other risks
arise from the Portfolio's potential inability to close out futures or
options positions. Although the Portfolio will enter into options or
futures transactions only if Mentor Perpetual believes that a liquid
secondary market exists for such option or futures contract, there can be
no assurance that the Portfolio will be able to effect closing transactions
at any particular time or at an acceptable price. Certain provisions of
the Internal Revenue Code may limit the Portfolio's ability to engage in
options and futures transactions.

The Portfolio generally expects that its options and
futures transactions will be conducted on recognized exchanges. The
Portfolio may in certain instances purchase and sell options in the over-
the-counter markets . The Portfolio's ability to terminate options in the
over-the-counter markets may be more limited than for exchange-traded
options and may also involve the risk that securities dealers participating
in such transactions would be unable to meet their obligations to the
Portfolio. The Portfolio will, however, engage in over-the-counter
transactions only when appropriate exchange-traded transactions are
unavailable and when, in the opinion of Mentor Perpetual, the pricing
mechanism and liquidity of the over-the-counter markets are satisfactory
and the participants are responsible parties likely to meet their
obligations.

The Portfolio will not purchase futures or options on
futures or sell futures if as a result the sum of the initial margin
deposits on the Portfolio's existing futures positions and premiums paid
for outstanding options on futures contracts would exceed 5% of the
Portfolio's assets. (For options that are "in-the-money" at the time of
purchase, the amount by which the option is "in-the-money" is excluded
from this calculation.)

SECURITIES LOANS AND REPURCHASE AGREEMENTS. The
Portfolio may lend portfolio securities to broker-dealers and may enter
into repurchase agreements. These transactions must be fully
collateralized at all times, but involve some risk to the Portfolio if the
other party should default on its obligations and the Portfolio is delayed
or prevented from recovering the collateral.

PORTFOLIO TURNOVER. The length of time the Portfolio
has held a particular security is not generally a consideration in
investment decisions. The investment policies of the Portfolio may lead to
frequent changes in the Portfolio's investments, particularly in periods of
volatile market movements. A change in the securities held by the
Portfolio is known as "portfolio turnover." Portfolio turnover generally
involves some expense to the Portfolio, including brokerage commissions or
dealer mark-ups and other transaction costs on the sale of securities and
reinvestment in other securities. Such sales may result in realization of
taxable capital gains. The Portfolio's annual portfolio turnover rate is
expected to be less than 200% for the current fiscal year.

_____________

<PAGE>

As a matter of policy, the Trustees will not
materially change the Portfolio's investment objective without
shareholder approval. (Any such change could, of course, result in a
change in the nature of the securities in which the Portfolio may invest
and the risks involved in an investment in the Portfolio.)

MANAGEMENT OF THE PORTFOLIO

The Trustees of the Trust are responsible for
generally overseeing the conduct of the Trust's business. Mentor Perpetual
Advisors L.L.C., located at 901 East Byrd Street, Richmond, Virginia
23219, acts as investment adviser to the Portfolio pursuant to a Management
Contract between the Trust and Mentor Perpetual. Mentor Investment Group,
Inc. ("Mentor") serves as administrator to the Portfolio. Neither Mentor
Perpetual nor Mentor receives compensation from the Portfolio for the
performance of such services. Mentor Perpetual is a newly organized
investment advisory firm owned equally by Perpetual plc and Mentor. The
Perpetual organization currently serves as investment adviser for assets of
more than $6 billion. It clients include 28 unit investment trusts and
other public investment pools for over 150 clients, including private
individuals, charities, pension plans, and life assurance companies.
Mentor Perpetual currently serves as investment adviser to the Mentor
Perpetual Global Portfolio, an open-end mutual fund which is a series of
The Mentor Funds. Investment decisions for the Portfolio are made by a
team of investment professionals at Mentor Perpetual. Mentor is a wholly
owned subsidiary of Wheat First Butcher Singer, Inc. ("Wheat First Butcher
Singer"). Wheat First Butcher Singer, through other subsidiaries, also
engages in securities brokerage, investment banking, and related
businesses.

Mentor Perpetual makes investment decisions for the
Portfolio and places the purchase and sale orders for the Portfolio's
portfolio transactions. In selecting broker-dealers, Mentor Perpetual may
consider research and brokerage services furnished to it and its
affiliates. Subject to seeking the best overall terms available, Mentor
Perpetual may consider sales of shares of the Portfolio (and, if permitted
by law, of other funds in the Mentor family) as a factor in the selection
of broker-dealers to execute portfolio transactions for the Portfolio.

HOW THE PORTFOLIO VALUES ITS SHARES

The Portfolio calculates the net asset value of its
shares by dividing the total value of its assets, less liabilities, by the
number of its shares outstanding. Shares are valued as of the close of
regular trading on the New York Stock Exchange each day the Exchange is
open. Portfolio securities for which market quotations are readily
available are stated at market value. Short-term investments that will
mature in 60 days or less are stated at amortized cost, which has been
determined to approximate the fair market value of such investments. All
other securities and assets are valued at their fair values.

HOW DISTRIBUTIONS ARE MADE

The Portfolio distributes net investment income and
any net realized capital gains at least annually. Distributions from
capital gains are made after applying any available capital loss
carryovers. All Portfolio distributions will be invested in additional
Portfolio shares, unless the shareholder instructs the Portfolio otherwise.

TAXES

The Portfolio intends to qualify as a "regulated
investment company" for federal income tax purposes and to meet all other
requirements that are necessary for it to be relieved of federal taxes on
income and gains it distributes to shareholders. The Portfolio will
distribute substantially all of its net investment income and capital gain
net income on a current basis.

The following is intended principally for shareholders
subject to federal income taxation:

<PAGE>

All Portfolio distributions will be taxable to
shareholders as ordinary income, except that any distributions of net
capital gain will be taxed as long-term capital gain, regardless of how
long a shareholder has held the shares (although the loss on a sale of
shares held for six months or less will be treated as long-term capital
loss to the extent of any capital gain distribution received with respect
to those shares). Distributions will be taxable as described above whether
received in cash or in shares through the reinvestment of distributions.
Early in each year the Trust will notify shareholders of the amount and tax
status of distributions paid by the Portfolio for the preceding year. In
buying or selling securities for the Portfolio, Mentor Perpetual will not
normally take into account the effect any purchase or sale of securities
will have on the tax positions of the Portfolio's shareholders.

The foregoing is a summary of certain federal income
tax consequences of investing in the Portfolio. Dividends and
distributions also may be subject to state and local taxes. Shareholders
are urged to consult their tax advisers regarding specific questions as to
federal, state, or local taxes. Non-U.S. investors should consult their
tax advisers concerning the tax consequences of ownership of shares of the
Portfolio, including the possibility that distributions may be subject to a
30% United States withholding tax (or a reduced rate of withholding
provided by treaty).

PURCHASE OF SHARES

Shares of the Portfolio are sold at the net asset
value next determined after a purchase order is received by the Portfolio.
Purchase orders that are received prior to the close of trading on the New
York Stock Exchange on a particular day are priced according to the net
asset value determined on that day.

Mentor Distributors, Inc. ("Mentor Distributors"), 901
East Byrd Street, Richmond, Virginia 23219, serves as distributor of the
Portfolio's shares. Mentor Distributors is not obligated to sell any
specific amount of shares of the Portfolio.

An investor may make an initial purchase of shares of
the Portfolio by submitting a completed Trust application along with a
purchase order, and by making payment to Mentor Distributors. Investors
will be required to make minimum initial investments of $500,000 in the
Trust and minimum subsequent investments of $25,000. Investments made
through advisory accounts maintained with investment advisers registered
under the Investment Advisers Act of 1940 (including "wrap" accounts) are
not subject to these minimum investment requirements. The Portfolio
reserves the right at any time to change the initial and subsequent
investment minimums required of investors.

Shares of the Portfolio may be purchased by (i) paying
cash, (ii) exchanging securities acceptable to Mentor Perpetual, or (iii) a
combination of such securities and cash. Purchase of shares of the
Portfolio in exchange for securities is subject in each case to the
determination by Mentor Perpetual that the securities to be exchanged are
acceptable for purchase by the Portfolio. Securities accepted by Mentor
Perpetual in exchange for Portfolio shares will be valued in the same
manner as the Portfolio's assets as of the time of the Portfolio's next
determination of net asset value after such acceptance. All dividends and
subscription or other rights which are reflected in the market price of
accepted securities at the time of valuation become the property of the
Portfolio and must be delivered to the Portfolio upon receipt by the
investor from the issuer. A gain or loss for federal income tax purposes
would be realized upon the exchange by an investor that is subject to
federal income taxation, depending upon the investor's basis in the
securities tendered. A shareholder who wishes to purchase shares by
exchanging securities should obtain instructions by calling Mentor
Distributors at 1-800-869-6042.

In all cases Mentor Perpetual or Mentor Distributors
reserves the right to reject any particular investment.

<PAGE>

REDEMPTION OF SHARES

A shareholder may redeem all or any portion of its
shares in the Portfolio at any time upon request, by following the
procedures set forth below. Redemptions will be effected at the net asset
value per share of the Portfolio next determined after the receipt by the
Portfolio of redemption instructions in "good order" as described below.
Shares may be redeemed by submitting a written request for redemption to
Mentor Distributors, or to the Trust at the following address:

Mentor Institutional Trust
P.O. Box 1357
Richmond, Virginia 23286-0109

Upon receipt of a request in "good order," the Trust
will determine the amount of the net asset value of the redeemed shares,
based upon the net asset value of the Portfolio next determined after the
redemption request has been received. A check for the proceeds will
normally be mailed on the next business day.

If shares of the Portfolio to be redeemed represent an
investment made by check, the Trust reserves the right not to transmit the
redemption proceeds to the shareholder until the check has been collected,
which may take up to 15 days after the purchase date.

A redemption request will be considered to have been
made in "good order" if the following conditions are satisfied:

(1) the request is in writing, states the number of shares
to be redeemed, and identifies the shareholder's Portfolio
account number;

(2) the request is signed by each registered owner exactly
as the shares are registered; and

(3) if the shares to be redeemed were issued in certificate form, the
certificates are endorsed for transfer (or are accompanied by an
endorsed stock power) and accompany the redemption request.

The Portfolio reserves the right to require signature guarantees. A
guarantor of a signature must be an eligible guarantor institution, which
term includes most banks and trust companies, savings associations, credit
unions, and securities brokers or dealers. The purpose of a signature
guarantee is to protect Portfolio shareholders against the possibility of
fraud.

Mentor Distributors may facilitate any redemption request. There is
no extra charge for this service.

OTHER INFORMATION CONCERNING REDEMPTION. Under unusual circumstances,
the Portfolio may suspend repurchases, or postpone payment for more than
seven days, as permitted by federal securities laws. In addition, the
Portfolio reserves the right, if conditions exist which make cash payments
undesirable, to honor any request for redemption by making payment in whole
or in part by securities valued in the same way as they would be valued for
purposes of computing the Portfolio's per share net asset value. If
payment is made in securities, a shareholder may incur brokerage expenses
in converting those securities into cash.

EXCHANGE PRIVILEGE. Shareholders may exchange their shares in the
Portfolio for shares of certain other Portfolios comprising the Trust at
their respective net asset values beginning 15 days after purchase.
Contact Mentor Distributors for a prospectus of any of those Portfolios.
Shares of the Fund are not available in all states. To exchange shares,
simply complete an exchange authorization form and send it to Mentor
Distributors. Exchange authorization forms are available from the Trust
and from Mentor Distributors. The Trust reserves the right to change or
suspend the exchange privilege at any time. Shareholders would be notified
before any such change or suspension. Consult Mentor Distributors before
requesting an exchange.

<PAGE>

MENTOR INSTITUTIONAL TRUST

Mentor Institutional Trust is a Massachusetts business trust organized
on February 8, 1994 as IMG Institutional Trust. A copy of the Agreement
and Declaration of Trust, which is governed by Massachusetts law, is on
file with the Secretary of State of The Commonwealth of Massachusetts.

The Trust is an open-end, diversified, series management investment
company with an unlimited number of authorized shares of beneficial
interest. Shares of the Trust may, without shareholder approval, be
divided into two or more series of shares representing separate investment
portfolios. Any such series of shares may be further divided without
shareholder approval into two or more classes of shares having such
preferences and special or relative rights and privileges as the Trustees
determine. The Trust's shares are currently divided into five series, one
representing the Portfolio, the others representing other Portfolios with
varying investment objectives and policies. Each share has one vote, with
fractional shares voting proportionally. Shares of each class will vote
together as a single class except when required by law or determined by the
Trustees. Shares of the Portfolio are freely transferable, are entitled to
dividends as declared by the Trustees, and, if the Portfolio were
liquidated, would receive the net assets of the Portfolio. The Trust may
suspend the sale of shares at any time and may refuse any order to purchase
shares. Although the Trust is not required to hold annual meetings of its
shareholders, shareholders have the right to call a meeting to elect or
remove Trustees, or to take other actions as provided in the Agreement and
Declaration of Trust.

In the interest of economy and convenience, the Portfolio will not
issue certificates for its shares except at the shareholder's request.

CUSTODIAN AND TRANSFER AND DIVIDEND AGENT

Investors Fiduciary Trust Company, 127 West 10th Street, Kansas City,
Missouri 64105, serves as the Portfolio's custodian. The Shareholder
Services Group, Inc., P.O. Box 9653, Providence, Rhode Island 02940,
serves as the Portfolio's transfer and dividend agent.

PERFORMANCE INFORMATION

Yield and total return data may from time to time be included in
advertisements about the Portfolio. The Portfolio's "yield" is calculated
by dividing the Portfolio's annualized net investment income per share
during a recent 30-day period by its net asset value on the last day of
that period. "Total return" for the life of the Portfolio through the most
recent calendar quarter represents the actual rate of return on an
investment of $1,000 in the Portfolio over the period. The Portfolio's
performance may be compared to various indices. See the Statement of
Additional Information. Information may be presented in advertisements
about the Portfolio describing the background and professional experience
of the Portfolio's investment adviser.

All data is based on the Portfolio's past investment results and does
not predict future performance. Investment performance, which will vary,
is based on many factors, including market conditions, the composition of
the Portfolio's investments, and the Portfolio's operating expenses.
Investment performance also often reflects the risks associated with the
Portfolio's investment objectives and policies. These factors should be
considered when comparing the Portfolio's investment results to those of
other mutual funds and other investment vehicles.

<PAGE>

No person has been MENTOR
authorized to give any INTERNATIONAL
information or to make any PORTFOLIO
representations other than
those contained in this
Prospectus and, if given or
made, such other information
or representations must not be
relied upon as having been
authorized by the Portfolio.
This Prospectus does not
constitute an offer in any
State in which, or to any __________
person to whom, such offering
may not lawfully be made. PROSPECTUS
This Prospectus omits certain
information contained in the __________
Registration Statement, to
which reference is made, filed
with the Securities and
Exchange Commission. Items
which are thus omitted,
including contracts and other
documents referred to or
summarized herein, may be
obtained from the Commission
upon payment of the prescribed
fees.

Additional information
concerning the securities
offered hereby and the
Portfolio is to be found in
the Registration Statement,
including various exhibits
thereto and financial
statements included or
incorporated therein, which
may be inspected at the office
of the Commission.

Mentor Distributors, Inc.

<PAGE>

Part B of Post-Effective Amendment No. 2 to the Registration Statement
on Form N-1A, which was previously filed on July 24, 1995 (File No. 33-
80784), as it applies to the SNAP Fund's Statement of Information, is
incorporated herein by reference.

The following statement of Additional Information contains information
about Mentor International Portfolio.

<PAGE>

MENTOR INSTITUTIONAL TRUST

STATEMENT OF ADDITIONAL INFORMATION

(Mentor Cash Management Portfolio,
Mentor Intermediate Duration Portfolio,
Mentor Fixed-Income Portfolio, and Mentor International Portfolio)

November , 1995

Mentor Institutional Trust (the "Trust") is a diversified, open-end
series investment company. This Statement of Additional Information
relates to Mentor Cash Management Portfolio, Mentor Intermediate Duration
Portfolio, Mentor Fixed-Income Portfolio, and Mentor International
Portfolio. This Statement is not a prospectus and should be read in
conjunction with a prospectus of the Trust or any Portfolio of the Trust.
A separate Statement of Additional Information relates to the SNAP Fund
(the "SNAP Statement"). A copy of any prospectus or of the SNAP Statement
can be obtained upon request made to Mentor Distributors, Inc., the Trust's
distributor, at P.O. Box 1357, Richmond, Virginia 23286-0109, or calling
Mentor Distributors at 1-(800) 869-6042.

TABLE OF CONTENTS

CAPTION PAGE

GENERAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
INVESTMENT RESTRICTIONS . . . . . . . . . . . . . . . . . . . . . . . . 3
CERTAIN INVESTMENT TECHNIQUES . . . . . . . . . . . . . . . . . . . . . 5
MANAGEMENT OF THE TRUST . . . . . . . . . . . . . . . . . . . . . . . . 23
PRINCIPAL HOLDERS OF SECURITIES . . . . . . . . . . . . . . . . . . . . 26
INVESTMENT ADVISORY AND OTHER SERVICES . . . . . . . . . . . . . . . . 27
BROKERAGE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
DETERMINATION OF NET ASSET VALUE . . . . . . . . . . . . . . . . . . . 30
TAX STATUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
THE DISTRIBUTOR . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
INDEPENDENT ACCOUNTANTS . . . . . . . . . . . . . . . . . . . . . . . . 35
CUSTODIAN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
PERFORMANCE INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . 35
SHAREHOLDER LIABILITY . . . . . . . . . . . . . . . . . . . . . . . . . 40
RATINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . 44

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<PAGE>

GENERAL

Mentor Institutional Trust (the "Trust") is a diversified, open-end
investment company. The Trust is a Massachusetts business trust organized
on February 8, 1994 as IMG Institutional Trust.

Commonwealth Investment Counsel, Inc. ("Commonwealth") serves as
investment adviser to Mentor Intermediate Duration Portfolio, Mentor
Fixed-Income Portfolio, and Mentor Cash Management Portfolio; Mentor
Perpetual Advisors, L.L.C. serves as investment advisor to Mentor
International Portfolio. Mentor Investment Group, Inc. ("Mentor") serves
as administrator to each of the Portfolios.

INVESTMENT RESTRICTIONS

As fundamental investment restrictions, which may not be changed with
respect to a Portfolio without approval by the holders of a majority of the
outstanding shares of that Portfolio, a Portfolio may not:

1. Purchase any security (other than U.S. Government securities) if
as a result: (i) as to 75% of such Portfolio's total assets,
more than 5% of the Portfolio's total assets (taken at current
value) would then be invested in securities of a single issuer,
or (ii) more than 25% of the Portfolio's total assets would be
invested in a single industry; except that Mentor Cash Management
Portfolio may invest up to 100% of its assets in securities of
issuers in the banking industry.

2. Acquire more than 10% of the voting securities of any issuer.

3. Act as underwriter of securities of other issuers except to the
extent that, in connection with the disposition of portfolio
securities, it may be deemed to be an underwriter under certain
federal securities laws.

4. Issue any class of securities which is senior to the Portfolio's
shares of beneficial interest.

5. Purchase or sell securities on margin (but a Portfolio may obtain
such short-term credits as may be necessary for the clearance of
transactions). (Margin payments in connection with transactions
in futures contracts, options, and other financial instruments
are not considered to constitute the purchase of securities on
margin for this purpose.)

6. Purchase or sell real estate or interests in real estate,
including real estate mortgage loans, although it may purchase
and sell securities which are secured by real estate and
securities of companies that invest or deal in real estate or
real estate limited

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<PAGE>

partnership interests. (For purposes of this
restriction, investments by a Portfolio in mortgage-backed
securities and other securities representing interests in
mortgage pools shall not constitute the purchase or sale of real
estate or interests in real estate or real estate mortgage
loans.)

7. (All Portfolios other than Mentor International Portfolio)
Borrow money in excess of 5% of the value (taken at the lower of
cost or current value) of its total assets (not including the
amount borrowed) at the time the borrowing is made, and then only
from banks as a temporary measure to facilitate the meeting of
redemption requests (not for leverage) which might otherwise
require the untimely disposition of portfolio investments or for
extraordinary or emergency purposes.

(Mentor International Portfolio) Borrow more than 33 % of the
value of its total assets less all liabilities and indebtedness
(other than such borrowings) not represented by senior
securities.

8. (All Portfolios other than Mentor International Portfolio)
Pledge, hypothecate, mortgage, or otherwise encumber its assets
in excess of 15% of its total assets (taken at current value) and
then only to secure borrowings permitted by these investment
restrictions.

9. Purchase or sell commodities or commodity contracts, except that
a Portfolio may purchase or sell financial futures contracts,
options on futures contracts, and futures contracts, forward
contracts, and options with respect to foreign currencies, and
may enter into swap transactions.

10. Make loans, except by purchase of debt obligations in which the
Portfolio may invest consistent with its investment policies or
by entering into repurchase agreements.

In addition, it is contrary to the current policy of each of the
Portfolios, which policy may be changed without shareholder approval, to:

1. Invest in oil, gas, or other mineral leases, rights, or royalty
contracts or in real estate (although the Portfolio may invest in
securities of issuers that invest or deal in the foregoing types
of assets or securities that are secured by or represent
interests in real estate).

2. Invest in (a) securities which at the time of such investment are
not readily marketable, (b) securities restricted as to resale,
and (c) repurchase agreements maturing in more than seven days,
if, as a result, more than 15% (10% with respect to Mentor Cash
Management Portfolio) of the Portfolio's net assets (taken at
current value) would then be invested in securities described in
(a), (b), and (c).

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<PAGE>

3. Invest in securities of other registered investment companies,
except by purchases in the open market involving only customary
brokerage commissions and as a result of which not more than 5%
of its total assets (taken at current value) would be invested in
such securities, or except as part of a merger, consolidation, or
other acquisition.

4. Make short sales or purchase puts, calls, straddles, spreads, or
any combination thereof.

5. Invest in securities of any issuer if, to the knowledge of the
Portfolio, officers and Trustees of the Portfolio and officers
and directors of Commonwealth who beneficially own more than 0.5%
of the shares or securities of that issuer together own more than
5%.

All percentage limitations on investments will apply at the time of
investment and shall not be considered violated unless an excess or
deficiency occurs or exists immediately after and as a result of such
investment. Except for the investment restrictions listed above as
fundamental or to the extent designated as such in a Prospectus with
respect to a Portfolio, the other investment policies described in this
Statement or in a Prospectus are not fundamental and may be changed by
approval of the Trustees. As a matter of policy, the Trustees would not
materially change a Portfolio's investment objectives without shareholder
approval.

With respect to fundamental restriction 1, Mentor Cash Management
Portfolio currently expects to invest in certificates of deposit,
commercial paper, and banker's acceptances issued by issuers in the banking
industry.

The Investment Company Act of 1940, as amended (the "1940 Act"),
provides that a "vote of a majority of the outstanding voting securities"
of a Portfolio means the affirmative vote of the lesser of (1) more than
50% of the outstanding shares of the Portfolio, and (2) 67% or more of the
shares present at a meeting if more than 50% of the outstanding shares are
represented at the meeting in person or by proxy.

CERTAIN INVESTMENT TECHNIQUES

Set forth below is information concerning certain investment
techniques in which one or more of the Portfolios may engage, and certain
of the risks they may entail. Certain of the investment techniques may not
be available to a Portfolio. See "Investment objective(s) and policies"
in the Trust's Prospectuses for a description of the investment techniques
available to a particular Portfolio.

Forward Commitments

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<PAGE>

A Portfolio may enter into contracts to purchase securities for a
fixed price at a future date beyond customary settlement time ("forward
commitments") if the Portfolio holds, and maintains until the settlement
date in a segregated account, cash or high-grade debt obligations in an
amount sufficient to meet the purchase price, or if the Portfolio enters
into offsetting contracts for the forward sale of other securities it owns.
Forward commitments may be considered securities in themselves, and involve
a risk of loss if the value of the security to be purchased declines prior
to the settlement date, which risk is in addition to the risk of decline in
the value of the Portfolio's other assets. Where such purchases are made
through dealers, the Portfolios rely on the dealer to consummate the sale.
The dealer's failure to do so may result in the loss to the Portfolio of an
advantageous yield or price.

Although a Portfolio will generally enter into forward commitments
with the intention of acquiring securities for its portfolio or for
delivery pursuant to options contracts it has entered into, a Portfolio may
dispose of a commitment prior to settlement if its investment adviser deems
it appropriate to do so. A Portfolio may realize short-term profits or
losses upon the sale of forward commitments.

Repurchase Agreements

A Portfolio may enter into repurchase agreements. A repurchase
agreement is a contract under which the Portfolio acquires a security for a
relatively short period (usually not more than one week) subject to the
obligation of the seller to repurchase and the Portfolio to resell such
security at a fixed time and price (representing the Portfolio's cost plus
interest). It is the Trust's present intention to enter into repurchase
agreements only with member banks of the Federal Reserve System and
securities dealers meeting certain criteria as to creditworthiness and
financial condition established by the Trustees of the Trust and only with
respect to obligations of the U.S. government or its agencies or
instrumentalities or other high quality short term debt obligations.
Repurchase agreements may also be viewed as loans made by a Portfolio which
are collateralized by the securities subject to repurchase. The
investment adviser will monitor such transactions to ensure that the value
of the underlying securities will be at least equal at all times to the
total amount of the repurchase obligation, including the interest factor.
If the seller defaults, a Portfolio could realize a loss on the sale of the
underlying security to the extent that the proceeds of sale including
accrued interest are less than the resale price provided in the agreement
including interest. In addition, if the seller should be involved in
bankruptcy or insolvency proceedings, a Portfolio may incur delay and costs
in selling the underlying security or may suffer a loss of principal and
interest if a Portfolio is treated as an unsecured creditor and required to
return the underlying collateral to the seller's estate.

When-Issued Securities

A Portfolio may from time to time purchase securities on a "when-
issued" basis. Debt securities are often issued on this basis. The price
of such securities, which may be expressed in yield terms, is fixed at the
time a commitment to purchase is made, but delivery and payment for

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<PAGE>

the when-issued securities take place at a later date. Normally, the
settlement date occurs within one month of the purchase. During the period
between purchase and settlement, no payment is made by a Portfolio and no
interest accrues to the Portfolio. To the extent that assets of a
Portfolio are held in cash pending the settlement of a purchase of
securities, that Portfolio would earn no income. While a Portfolio may
sell its right to acquire when-issued securities prior to the settlement
date, a Portfolio intends actually to acquire such securities unless a sale
prior to settlement appears desirable for investment reasons. At the time
a Portfolio makes the commitment to purchase a security on a when-issued
basis, it will record the transaction and reflect the amount due and the
value of the security in determining the Portfolio's net asset value. The
market value of the when-issued securities may be more or less than the
purchase price payable at the settlement date. A Portfolio will establish
a segregated account in which it will maintain cash and U.S. Government
Securities or other high-grade debt obligations at least equal in value to
commitments for when-issued securities. Such segregated securities either
will mature or, if necessary, be sold on or before the settlement date.

Collateralized mortgage obligations; other mortgage-related securities

Collateralized mortgage obligations or "CMOs" are debt obligations or
pass-through certificates collateralized by mortgage loans or mortgage
pass-through securities. Typically, CMOs are collateralized by
certificates issued by the Government National Mortgage Association,
("GNMA"), the Federal National Mortgage Association ("FNMA"), or the
Federal Home Loan Mortgage Corporation ("FHLMC"), but they also may be
collateralized by whole loans or private pass-through certificates (such
collateral collectively hereinafter referred to as "Mortgage Assets").
CMOs may be issued by agencies or instrumentalities of the U.S. Government,
or by private originators of, or investors in, mortgage loans.

In a CMO, a series of bonds or certificates is generally issued in
multiple classes. Each class of CMOs is issued at a specific fixed or
floating rate coupon and has a stated maturity or final distribution date.
Principal prepayments on the Mortgage Assets may cause the CMOs to be
retired substantially earlier than their stated maturities or final
distribution dates. Interest is paid or accrues on most classes of the
CMOs on a monthly, quarterly, or semi-annual basis. The principal of and
interest on the Mortgage Assets may be allocated among the several classes
of a series of a CMO in innumerable ways. In a CMO, payments of principal,
including any principal prepayments, on the Mortgage Assets are applied to
the classes of the series in a pre-determined sequence.

Zero-Coupon Securities

Zero-coupon securities in which a Portfolio may invest are debt
obligations which are generally issued at a discount and payable in full at
maturity, and which do not provide for current payments of interest prior
to maturity. Zero-coupon securities usually trade at a deep discount from
their face or par value and are subject to greater market value
fluctuations from changing interest rates than debt obligations of
comparable maturities which make current distributions of

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<PAGE>

interest. As a result, the net asset value of shares of a Portfolio
investing in zero-coupon securities may fluctuate over a greater range
than shares of other mutual funds investing in securities making current
distributions of interest and having similar maturities.

Zero-coupon securities may include U.S. Treasury bills issued directly
by the U.S. Treasury or other short-term debt obligations, and longer-term
bonds or notes and their unmatured interest coupons which have been
separated by their holder, typically a custodian bank or investment
brokerage firm. A number of securities firms and banks have stripped the
interest coupons from the underlying principal (the "corpus") of U.S.
Treasury securities and resold them in custodial receipt programs with a
number of different names, including Treasury Income Growth Receipts
("TIGRS") and Certificates of Accrual on Treasuries ("CATS"). The
underlying U.S. Treasury bonds and notes themselves are held in book-entry
form at the Federal Reserve Bank or, in the case of bearer securities
(i.e., unregistered securities which are owned ostensibly by the bearer or
holder thereof), in trust on behalf of the owners thereof.

In addition, the Treasury has facilitated transfers of ownership of
zero-coupon securities by accounting separately for the beneficial
ownership of particular interest coupons and corpus payments on Treasury
securities through the Federal Reserve book-entry record-keeping system.
The Federal Reserve program as established by the Treasury Department is
known as "STRIPS" or "Separate Trading of Registered Interest and Principal
of Securities." Under the STRIPS program, a Portfolio will be able to have
its beneficial ownership of U.S. Treasury zero-coupon securities recorded
directly in the book-entry record-keeping system in lieu of having to hold
certificates or other evidences of ownership of the underlying U.S.
Treasury securities.

When debt obligations have been stripped of their unmatured interest
coupons by the holder, the stripped coupons are sold separately. The
principal or corpus is sold at a deep discount because the buyer receives
only the right to receive a future fixed payment on the security and does
not receive any rights to periodic cash interest payments. Once stripped
or separated, the corpus and coupons may be sold separately. Typically,
the coupons are sold separately or grouped with other coupons with like
maturity dates and sold in such bundled form. Purchasers of stripped
obligations acquire, in effect, discount obligations that are economically
identical to the zero-coupon securities issued directly by the obligor.

Zero-coupon securities allow an issuer to avoid the need to generate
cash to meet current interest payments. Even though zero-coupon securities
do not pay current interest in cash, a Portfolio is nonetheless required to
accrue interest income on them and to distribute the amount of that
interest at least annually to shareholders. Thus, a Portfolio could be
required at times to liquidate other investments in order to satisfy its
distribution requirement.

Options

A Portfolio may purchase and sell put and call options on its
portfolio securities to enhance investment performance and to protect
against changes in market prices.

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<PAGE>

Covered call options. A Portfolio may write covered call options on
its securities to realize a greater current return through the receipt of
premiums than it would realize on its securities alone. Such option
transactions may also be used as a limited form of hedging against a
decline in the price of securities owned by the Portfolio.

A call option gives the holder the right to purchase, and obligates
the writer to sell, a security at the exercise price at any time before the
expiration date. A call option is "covered" if the writer, at all times
while obligated as a writer, either owns the underlying securities (or
comparable securities satisfying the cover requirements of the securities
exchanges), or has the right to acquire such securities through immediate
conversion of securities.

In return for the premium received when it writes a covered call
option, a Portfolio gives up some or all of the opportunity to profit from
an increase in the market price of the securities covering the call option
during the life of the option. The Portfolio retains the risk of loss
should the price of such securities decline. If the option expires
unexercised, the Portfolio realizes a gain equal to the premium, which may
be offset by a decline in price of the underlying security. If the option
is exercised, the Portfolio realizes a gain or loss equal to the difference
between the Portfolio's cost for the underlying security and the proceeds
of sale (exercise price minus commissions) plus the amount of the premium.

A Portfolio may terminate a call option that it has written before it
expires by entering into a closing purchase transaction. A Portfolio may
enter into closing purchase transactions in order to free itself to sell
the underlying security or to write another call on the security, realize a
profit on a previously written call option, or protect a security from
being called in an unexpected market rise. Any profits from a closing
purchase transaction may be offset by a decline in the value of the
underlying security. Conversely, because increases in the market price of
a call option will generally reflect increases in the market price of the
underlying security, any loss resulting from a closing purchase transaction
is likely to be offset in whole or in part by unrealized appreciation of
the underlying security owned by the Portfolio.

Covered put options. A Portfolio may write covered put options in
order to enhance its current return. Such options transactions may also be
used as a limited form of hedging against an increase in the price of
securities that the Portfolio plans to purchase. A put option gives the
holder the right to sell, and obligates the writer to buy, a security at
the exercise price at any time before the expiration date. A put option is
"covered" if the writer segregates cash and high-grade short-term debt
obligations or other permissible collateral equal to the price to be paid
if the option is exercised.

In addition to the receipt of premiums and the potential gains from
terminating such options in closing purchase transactions, a Portfolio also
receives interest on the cash and debt securities maintained to cover the
exercise price of the option. By writing a put

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<PAGE>

option, the Portfolio assumes the risk that it may be required to purchase
the underlying security for an exercise price higher than its then current
market value, resulting in a potential capital loss unless the security later
appreciates in value.

A Portfolio may terminate a put option that it has written before it
expires by a closing purchase transaction. Any loss from this transaction
may be partially or entirely offset by the premium received on the
terminated option.

Purchasing put and call options. A Portfolio may also purchase put
options to protect portfolio holdings against a decline in market value.
This protection lasts for the life of the put option because the Portfolio,
as a holder of the option, may sell the underlying security at the exercise
price regardless of any decline in its market price. In order for a put
option to be profitable, the market price of the underlying security must
decline sufficiently below the exercise price to cover the premium and
transaction costs that the Portfolio must pay. These costs will reduce any
profit the Portfolio might have realized had it sold the underlying
security instead of buying the put option.

A Portfolio may purchase call options to hedge against an increase in
the price of securities that the Portfolio wants ultimately to buy. Such
hedge protection is provided during the life of the call option since the
Portfolio, as holder of the call option, is able to buy the underlying
security at the exercise price regardless of any increase in the underlying
security's market price. In order for a call option to be profitable, the
market price of the underlying security must rise sufficiently above the
exercise price to cover the premium and transaction costs. These costs
will reduce any profit the Portfolio might have realized had it bought the
underlying security at the time it purchased the call option.

A Portfolio may also purchase put and call options to enhance its
current return.

Options on foreign securities. The Trust may, on behalf of a
Portfolio, purchase and sell options on foreign securities if in the
opinion of its investment advisor the investment characteristics of such
options, including the risks of investing in such options, are consistent
with the Portfolio's investment objectives. It is expected that risks
related to such options will not differ materially from risks related to
options on U.S. securities. However, position limits and other rules of
foreign exchanges may differ from those in the U.S. In addition, options
markets in some countries, many of which are relatively new, may be less
liquid than comparable markets in the U.S.

Risks involved in the sale of options. Options transactions involve
certain risks, including the risks that a Portfolio's investment adviser
will not forecast interest rate or market movements correctly, that a
Portfolio may be unable at times to close out such positions, or that
hedging transactions may not accomplish their purpose because of imperfect
market correlations. The successful use of these strategies depends on the
ability of a Portfolio's investment adviser to forecast market and interest
rate movements correctly.

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<PAGE>

An exchange-listed option may be closed out only on an exchange which
provides a secondary market for an option of the same series. There is no
assurance that a liquid secondary market on an exchange will exist for any
particular option or at any particular time. If no secondary market were
to exist, it would be impossible to enter into a closing transaction to
close out an option position. As a result, a Portfolio may be forced to
continue to hold, or to purchase at a fixed price, a security on which it
has sold an option at a time when its investment adviser believes it is
inadvisable to do so.

Higher than anticipated trading activity or order flow or other
unforeseen events might cause The Options Clearing Corporation or an
exchange to institute special trading procedures or restrictions that might
restrict the Trust's use of options. The exchanges have established
limitations on the maximum number of calls and puts of each class that may
be held or written by an investor or group of investors acting in concert.
It is possible that the Trust and other clients of the Portfolios'
investment advisers may be considered such a group. These position limits
may restrict the Trust's ability to purchase or sell options on particular
securities.

Options which are not traded on national securities exchanges may be
closed out only with the other party to the option transaction. For that
reason, it may be more difficult to close out unlisted options than listed
options. Furthermore, unlisted options are not subject to the protection
afforded purchasers of listed options by The Options Clearing Corporation.

Government regulations, particularly the requirements for
qualification as a "regulated investment company" under the Internal
Revenue Code, may also restrict the Trust's use of options.

Futures Contracts

In order to hedge against the effects of adverse market changes a
Portfolio may buy and sell futures contracts. A Portfolio may also, to the
extent permitted by applicable law, buy and sell futures contracts and
options on futures contracts to increase the Portfolio's current return.
All such futures and related options will, as may be required by applicable
law, be traded on exchanges that are licensed and regulated by the
Commodity Futures Trading Commission (the "CFTC").

Index Futures Contracts and Options. A Portfolio may invest in debt
index futures contracts and stock index futures contracts, and in related
options. A debt index futures contract is a contract to buy or sell units
of a specified debt index at a specified future date at a price agreed upon
when the contract is made. A unit is the current value of the index. Debt
index futures in which the Portfolios are presently expected to invest are
not now available, although such futures contracts are expected to become
available in the future. A stock index futures contract is a contract to
buy or sell units of a stock index at a

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<PAGE>

specified future date at a price agreed upon when the contract is made.
A unit is the current value of the stock index.

The following example illustrates generally the manner in which index
futures contracts operate. The Standard & Poor's 100 Stock Index is
composed of 100 selected common stocks, most of which are listed on the New
York Stock Exchange. The S&P 100 Index assigns relative weightings to the
common stocks included in the Index, and the Index fluctuates with changes
in the market values of those common stocks. In the case of the S&P 100
Index, contracts are to buy or sell 100 units. Thus, if the value of the
S&P 100 Index were $180, one contract would be worth $18,000 (100 units x
$180). The stock index futures contract specifies that no delivery of the
actual stocks making up the index will take place. Instead, settlement in
cash must occur upon the termination of the contract, with the settlement
being the difference between the contract price and the actual level of the
stock index at the expiration of the contract. For example, if a Portfolio
enters into a futures contract to buy 100 units of the S&P 100 Index at a
specified future date at a contract price of $180 and the S&P 100 Index is
at $184 on that future date, the Portfolio will gain $400 (100 units x gain
of $4). If the Portfolio enters into a futures contract to sell 100 units
of the stock index at a specified future date at a contract price of $180
and the S&P 100 Index is at $182 on that future date, the Portfolio will
lose $200 (100 units x loss of $2).

A Portfolio may purchase or sell futures contracts with respect to any
securities indexes. Positions in index futures may be closed out only on
an exchange or board of trade which provides a secondary market for such
futures.

In order to hedge a Portfolio's investments successfully using futures
contracts and related options, a Portfolio must invest in futures contracts
with respect to indexes or sub-indexes the movements of which will, in its
judgment, have a significant correlation with movements in the prices of
the Portfolio's securities.

Options on index futures contracts are similar to options on
securities except that options on index futures contracts give the
purchaser the right, in return for the premium paid, to assume a position
in an index futures contract (a long position if the option is a call and a
short position if the option is a put) at a specified exercise price at any
time during the period of the option. Upon exercise of the option, the
holder would assume the underlying futures position and would receive a
variation margin payment of cash or securities approximating the increase
in the value of the holder's option position. If an option is exercised on
the last trading day prior to the expiration date of the option, the
settlement will be made entirely in cash based on the difference between
the exercise price of the option and the closing level of the index on
which the futures contract is based on the expiration date. Purchasers of
options who fail to exercise their options prior to the exercise date
suffer a loss of the premium paid.

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<PAGE>

As an alternative to purchasing and selling call and put options on
index futures contracts, each of the Portfolios which may purchase and sell
index futures contracts may purchase and sell call and put options on the
underlying indexes themselves to the extent that such options are traded on
national securities exchanges. Index options are similar to options on
individual securities in that the purchaser of an index option acquires the
right to buy (in the case of a call) or sell (in the case of a put), and
the writer undertakes the obligation to sell or buy (as the case may be),
units of an index at a stated exercise price during the term of the option.
Instead of giving the right to take or make actual delivery of securities,
the holder of an index option has the right to receive a cash "exercise
settlement amount". This amount is equal to the amount by which the fixed
exercise price of the option exceeds (in the case of a put) or is less than
(in the case of a call) the closing value of the underlying index on the
date of the exercise, multiplied by a fixed "index multiplier".

A Portfolio may purchase or sell options on stock indices in order to
close out its outstanding positions in options on stock indices which it
has purchased. A Portfolio may also allow such options to expire
unexercised.

Compared to the purchase or sale of futures contracts, the purchase of
call or put options on an index involves less potential risk to a Portfolio
because the maximum amount at risk is the premium paid for the options plus
transactions costs. The writing of a put or call option on an index
involves risks similar to those risks relating to the purchase or sale of
index futures contracts.

Margin Payments. When a Portfolio purchases or sells a futures
contract, it is required to deposit with its custodian an amount of cash,
U.S. Treasury bills, or other permissible collateral equal to a small
percentage of the amount of the futures contract. This amount is known as
"initial margin". The nature of initial margin is different from that of
margin in security transactions in that it does not involve borrowing money
to finance transactions. Rather, initial margin is similar to a
performance bond or good faith deposit that is returned to a Portfolio upon
termination of the contract, assuming a Portfolio satisfies its contractual
obligations.

Subsequent payments to and from the broker occur on a daily basis in a
process known as "marking to market". These payments are called "variation
margin" and are made as the value of the underlying futures contract
fluctuates. For example, when a Portfolio sells a futures contract and the
value of the underlying index rises above the delivery price, the
Portfolio's position declines in value. The Portfolio then pays the broker
a variation margin payment equal to the difference between the delivery
price of the futures contract and the value of the index underlying the
futures contract. Conversely, if the price of the underlying index falls
below the delivery price of the contract, the Portfolio's futures position
increases in value. The broker then must make a variation margin payment
equal to the difference between the delivery price of the futures contract
and the value of the index underlying the futures contract.

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<PAGE>

When a Portfolio terminates a position in a futures contract, a final
determination of variation margin is made, additional cash is paid by or to
the Portfolio, and the Portfolio realizes a loss or a gain. Such closing
transactions involve additional commission costs.

Special Risks of Transactions in Futures Contracts and Related Options

Liquidity risks. Positions in futures contracts may be closed out
only on an exchange or board of trade which provides a secondary market for
such futures. Although the Trust intends to purchase or sell futures only
on exchanges or boards of trade where there appears to be an active
secondary market, there is no assurance that a liquid secondary market on
an exchange or board of trade will exist for any particular contract or at
any particular time. If there is not a liquid secondary market at a
particular time, it may not be possible to close a futures position at such
time and, in the event of adverse price movements, a Portfolio would
continue to be required to make daily cash payments of variation margin.
However, in the event financial futures are used to hedge portfolio
securities, such securities will not generally be sold until the financial
futures can be terminated. In such circumstances, an increase in the price
of the portfolio securities, if any, may partially or completely offset
losses on the financial futures.

In addition to the risks that apply to all options transactions, there
are several special risks relating to options on futures contracts. The
ability to establish and close out positions in such options will be
subject to the development and maintenance of a liquid secondary market.
It is not certain that such a market will develop. Although a Portfolio
generally will purchase only those options for which there appears to be an
active secondary market, there is no assurance that a liquid secondary
market on an exchange will exist for any particular option or at any
particular time. In the event no such market exists for particular
options, it might not be possible to effect closing transactions in such
options with the result that a Portfolio would have to exercise the options
in order to realize any profit.

Hedging risks. There are several risks in connection with the use by
a Portfolio of futures contracts and related options as a hedging device.
One risk arises because of the imperfect correlation between movements in
the prices of the futures contracts and options and movements in the
underlying index or movements in the prices of a Portfolio's securities
which are the subject of a hedge. A Portfolio's investment adviser will,
however, attempt to reduce this risk by purchasing and selling, to the
extent possible, futures contracts and related options on securities and
indexes the movements of which will, in its judgment, correlate closely
with movements in the value of the underlying index and the Portfolio's
portfolio securities sought to be hedged.

Successful use of futures contracts and options by a Portfolio for
hedging purposes is also subject to its investment adviser's ability to
predict correctly movements in the direction of the market. It is possible
that, where a Portfolio has purchased puts on futures

-14-

<PAGE>

contracts to hedge its portfolio against a decline in the market, the index on
which the puts are purchased may increase in value and the value of securities
held in the portfolio may decline. If this occurred, the Portfolio would lose
money on the puts and also experience a decline in value in its portfolio
securities. In addition, the prices of futures, for a number of reasons,
may not correlate perfectly with movements in the underlying index due to
certain market distortions. First, all participants in the futures market
are subject to margin deposit requirements. Such requirements may cause
investors to close futures contracts through offsetting transactions which
could distort the normal relationship between the underlying index and
futures markets. Second, the margin requirements in the futures markets
are less onerous than margin requirements in the securities markets in
general, and as a result the futures markets may attract more speculators
than the securities markets do. Increased participation by speculators in
the futures markets may also cause temporary price distortions. Due to the
possibility of price distortion, even a correct forecast of general market
trends by a Portfolio's investment adviser may still not result in a
successful hedging transaction over a very short time period.

Other Risks. A Portfolio will incur brokerage fees in connection with
its futures and options transactions. In addition, while futures contracts
and options on futures will be purchased and sold to reduce certain risks,
those transactions themselves entail certain other risks. Thus, while a
Portfolio may benefit from the use of futures and related options,
unanticipated changes in interest rates or stock price movements may result
in a poorer overall performance for the Portfolio than if it had not
entered into any futures contracts or options transactions. Moreover, in
the event of an imperfect correlation between the futures position and the
portfolio position which is intended to be protected, the desired
protection may not be obtained and the Portfolio may be exposed to risk of
loss.

Forward Commitments

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<PAGE>

if its investment adviser deems it appropriate to do so. A Portfolio may
realize short-term profits or losses upon the sale of forward commitments.

Reverse Repurchase Agreements

A Portfolio may enter into reverse repurchase agreements in which the
Portfolio sells securities and agrees to repurchase them at a mutually
agreed date and price. Generally, the effect of such a transaction is that
the Portfolio can recover all or most of the cash invested in the portfolio
securities involved during the term of the reverse repurchase agreement,
while it will be able to keep the interest income associated with those
portfolio securities. Such transactions are advantageous if the interest
cost to the Portfolio of the reverse repurchase transaction is less than
the cost of otherwise obtaining the cash.

Reverse repurchase agreements involve the risk that the market value
of the securities that the Portfolio is obligated to repurchase under the
agreement may decline below the repurchase price. In the event a
Portfolio's counterparty under a reverse repurchase agreement becomes
bankrupt or insolvent, the Portfolio's use of the proceeds of the agreement
may be restricted pending a determination by the other party, or its
trustee or receiver, whether to enforce the Portfolio's obligation to
repurchase the securities.

Loans of Portfolio Securities

A Portfolio may lend its portfolio securities, provided: (1) the loan
is secured continuously by collateral consisting of U.S. Government
Securities, cash, or cash equivalents adjusted daily to have market value
at least equal to the current market value of the securities loaned; (2)
the Portfolio may at any time call the loan and regain the securities
loaned; (3) a Portfolio will receive any interest or dividends paid on the
loaned securities; and (4) the aggregate market value of securities of any
Portfolio loaned will not at any time exceed one-third (or such other limit
as the Trustee may establish) of the total assets of the Portfolio. In
addition, it is anticipated that a Portfolio may share with the borrower
some of the income received on the collateral for the loan or that it will
be paid a premium for the loan. Before a Portfolio enters into a loan, its
investment adviser considers all relevant facts and circumstances including
the creditworthiness of the borrower. The risks in lending portfolio
securities, as with other extensions of credit, consist of possible delay
in recovery of the securities or possible loss of rights in the collateral
should the borrower fail financially. Although voting rights or rights to
consent with respect to the loaned securities pass to the borrower, a
Portfolio retains the right to call the loans at any time on reasonable
notice, and it will do so in order that the securities may be voted by a
Portfolio if the holders of such securities are asked to vote upon or
consent to matters materially affecting the investment. A Portfolio will
not lend portfolio securities to borrowers affiliated with the Portfolio.

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<PAGE>

Foreign Securities

A Portfolio may invest in foreign securities and in certificates of
deposit issued by United States branches of foreign banks and foreign
branches of United States banks.

Investments in foreign securities may involve considerations different
from investments in domestic securities due to limited publicly available
information, non-uniform accounting standards, lower trading volume and
possible consequent illiquidity, greater volatility in price, the possible
imposition of withholding or confiscatory taxes, the possible adoption of
foreign governmental restrictions affecting the payment of principal and
interest, expropriation of assets, nationalization, or other adverse
political or economic developments. Foreign companies may not be subject
to auditing and financial reporting standards and requirements comparable
to those which apply to U.S. companies. Foreign brokerage commissions and
other fees are generally higher than in the United States. It may be more
difficult to obtain and enforce a judgment against a foreign issuer.

In addition, to the extent that a Portfolio's foreign investments are
not United States dollar-denominated, the Portfolio may be affected
favorably or unfavorably by changes in currency exchange rates or exchange
control regulations and may incur costs in connection with conversion
between currencies.

In determining whether to invest in securities of foreign issuers, the
investment advisor of a Portfolio seeking current income will consider the
likely impact of foreign taxes on the net yield available to the Portfolio
and its shareholders. Income received by a Portfolio from sources within
foreign countries may be reduced by withholding and other taxes imposed by
such countries. Tax conventions between certain countries and the United
States may reduce or eliminate such taxes. It is impossible to determine
the effective rate of foreign tax in advance since the amount of a
Portfolio's assets to be invested in various countries is not known, and
tax laws and their interpretations may change from time to time and may
change without advance notice. Any such taxes paid by a Portfolio will
reduce its net income available for distribution to shareholders.

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<PAGE>

Foreign Currency Transactions

A Portfolio may engage in currency exchange transactions to protect
against uncertainty in the level of future foreign currency exchange rates
and to increase current return. A Portfolio may engage in both
"transaction hedging" and "position hedging".

When it engages in transaction hedging, a Portfolio enters into
foreign currency transactions with respect to specific receivables or
payables of the Portfolio generally arising in connection with the purchase
or sale of its portfolio securities. A Portfolio will engage in
transaction hedging when it desires to "lock in" the U.S. dollar price of a
security it has agreed to purchase or sell, or the U.S. dollar equivalent
of a dividend or interest payment in a foreign currency. By transaction
hedging a Portfolio will attempt to protect against a possible loss
resulting from an adverse change in the relationship between the U.S.
dollar and the applicable foreign currency during the period between the
date on which the security is purchased or sold or on which the dividend or
interest payment is declared, and the date on which such payments are made
or received.

A Portfolio may purchase or sell a foreign currency on a spot (or
cash) basis at the prevailing spot rate in connection with transaction
hedging. A Portfolio may also enter into contracts to purchase or sell
foreign currencies at a future date ("forward contracts") and purchase and
sell foreign currency futures contracts.

For transaction hedging purposes a Portfolio may also purchase
exchange-listed and over-the-counter call and put options on foreign
currency futures contracts and on foreign currencies. A put option on a
futures contract gives a Portfolio the right to assume a short position in
the futures contract until expiration of the option. A put option on
currency gives a Portfolio the right to sell a currency at an exercise
price until the expiration of the option. A call option on a futures
contract gives a Portfolio the right to assume a long position in the
futures contract until the expiration of the option. A call option on
currency gives a Portfolio the right to purchase a currency at the exercise
price until the expiration of the option. A Portfolio will engage in over-
the-counter transactions only when appropriate exchange-traded transactions
are unavailable and when, in the opinion of its investment adviser, the
pricing mechanism and liquidity are satisfactory and the participants are
responsible parties likely to meet their contractual obligations.

When it engages in position hedging, a Portfolio enters into foreign
currency exchange transactions to protect against a decline in the values
of the foreign currencies in which securities held by the Portfolio are
denominated or are quoted in their principle trading markets or an increase
in the value of currency for securities which a Portfolio expects to
purchase. In connection with position hedging, a Portfolio may purchase
put or call options on foreign currency and foreign currency futures
contracts and buy or sell

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<PAGE>

forward contracts and foreign currency futures contracts. A Portfolio may
also purchase or sell foreign currency on a spot basis.

The precise matching of the amounts of foreign currency exchange
transactions and the value of the portfolio securities involved will not
generally be possible since the future value of such securities in foreign
currencies will change as a consequence of market movements in the values
of those securities between the dates the currency exchange transactions
are entered into and the dates they mature.

It is impossible to forecast with precision the market value of a
Portfolio's portfolio securities at the expiration or maturity of a forward
or futures contract. Accordingly, it may be necessary for a Portfolio to
purchase additional foreign currency on the spot market (and bear the
expense of such purchase) if the market value of the security or securities
being hedged is less than the amount of foreign currency a Portfolio is
obligated to deliver and if a decision is made to sell the security or
securities and make delivery of the foreign currency. Conversely, it may
be necessary to sell on the spot market some of the foreign currency
received upon the sale of the portfolio security or securities of a
Portfolio if the market value of such security or securities exceeds the
amount of foreign currency the Portfolio is obligated to deliver.

To offset some of the costs to a Portfolio of hedging against
fluctuations in currency exchange rates, the Portfolio may write covered
call options on those currencies.

Transaction and position hedging do not eliminate fluctuations in the
underlying prices of the securities which a Portfolio owns or intends to
purchase or sell. They simply establish a rate of exchange which one can
achieve at some future point in time. Additionally, although these
techniques tend to minimize the risk of loss due to a decline in the value
of the hedged currency, they tend to limit any potential gain which might
result from the increase in the value of such currency.

A Portfolio may also seek to increase its current return by purchasing
and selling foreign currency on a spot basis, and by purchasing and selling
options on foreign currencies and on foreign currency futures contracts,
and by purchasing and selling foreign currency forward contracts.

Currency Forward and Futures Contracts. A forward foreign currency
exchange contract involves an obligation to purchase or sell a specific
currency at a future date, which may be any fixed number of days from the
date of the contract as agreed by the parties, at a price set at the time
of the contract. In the case of a cancelable forward contract, the holder
has the unilateral right to cancel the contract at maturity by paying a
specified fee. The contracts are traded in the interbank market conducted
directly between currency traders (usually large commercial banks) and
their customers. A forward contract generally has no deposit requirement,
and no commissions are charged at any

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<PAGE>

stage for trades. A foreign currency futures contract is a standardized
contract for the future delivery of a specified amount of a foreign currency at
a future date at a price set at the time of the contract. Foreign currency
futures contracts traded in the United States are designed by and traded on
exchanges regulated by the CFTC, such as the New York Mercantile Exchange.

Forward foreign currency exchange contracts differ from foreign
currency futures contracts in certain respects. For example, the maturity
date of a forward contract may be any fixed number of days from the date of
the contract agreed upon by the parties, rather than a predetermined date
in a given month. Forward contracts may be in any amounts agreed upon by
the parties rather than predetermined amounts. Also, forward foreign
exchange contracts are traded directly between currency traders so that no
intermediary is required. A forward contract generally requires no margin
or other deposit.

At the maturity of a forward or futures contract, a Portfolio may
either accept or make delivery of the currency specified in the contract,
or at or prior to maturity enter into a closing transaction involving the
purchase or sale of an offsetting contract. Closing transactions with
respect to forward contracts are usually effected with the currency trader
who is a party to the original forward contract. Closing transactions with
respect to futures contracts are effected on a commodities exchange; a
clearing corporation associated with the exchange assumes responsibility
for closing out such contracts.

Positions in foreign currency futures contracts and related options
may be closed out only on an exchange or board of trade which provides a
secondary market in such contracts or options. Although a Portfolio will
normally purchase or sell foreign currency futures contracts and related
options only on exchanges or boards of trade where there appears to be an
active secondary market, there is no assurance that a secondary market on
an exchange or board of trade will exist for any particular contract or
option or at any particular time. In such event, it may not be possible to
close a futures or related option position and, in the event of adverse
price movements, a Portfolio would continue to be required to make daily
cash payments of variation margin on its futures positions.

Foreign Currency Options. Options on foreign currencies operate
similarly to options on securities, and are traded primarily in the over-
the-counter market, although options on foreign currencies have recently
been listed on several exchanges. Such options will be purchased or
written only when a Portfolio's investment adviser believes that a liquid
secondary market exists for such options. There can be no assurance that a
liquid secondary market will exist for a particular option at any specific
time. Options on foreign currencies are affected by all of those factors
which influence exchange rates and investments generally.

The value of a foreign currency option is dependent upon the value of
the foreign currency and the U.S. dollar, and may have no relationship to
the investment merits of a

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<PAGE>

foreign security. Because foreign currency transactions occurring in the
interbank market involve substantially larger amounts than those that may be
involved in the use of foreign currency options, investors may be disadvantaged
by having to deal in an odd lot market (generally consisting of transactions of
less than $1 million) for the underlying foreign currencies at prices that are
less favorable than for round lots.

There is no systematic reporting of last sale information for foreign
currencies and there is no regulatory requirement that quotations available
through dealers or other market sources be firm or revised on a timely
basis. Available quotation information is generally representative of very
large transactions in the interbank market and thus may not reflect
relatively smaller transactions (less than $1 million) where rates may be
less favorable. The interbank market in foreign currencies is a global,
around-the-clock market. To the extent that the U.S. options markets are
closed while the markets for the underlying currencies remain open,
significant price and rate movements may take place in the underlying
markets that cannot be reflected in the U.S. options markets.

Settlement Procedures. Settlement procedures relating to a
Portfolio's investments in foreign securities and to a Portfolio's foreign
currency exchange transactions may be more complex than settlements with
respect to investments in debt or equity securities of U.S. issuers, and
may involve certain risks not present in a Portfolio's domestic
investments. For example, settlement of transactions involving foreign
securities or foreign currency may occur within a foreign country, and a
Portfolio may be required to accept or make delivery of the underlying
securities or currency in conformity with any applicable U.S. or foreign
restrictions or regulations, and may be required to pay any fees, taxes or
charges associated with such delivery. Such investments may also involve
the risk that an entity involved in the settlement may not meet its
obligations.

Foreign Currency Conversion. Although foreign exchange dealers do not
charge a fee for currency conversion, they do realize a profit based on the
difference (the "spread") between prices at which they buy and sell various
currencies. Thus, a dealer may offer to sell a foreign currency to a
Portfolio at one rate, while offering a lesser rate of exchange should a
Portfolio desire to resell that currency to the dealer.

MANAGEMENT OF THE TRUST

The following table provides biographical information with respect to
each Trustee and officer of the Trust. Each Trustee who is an "interested
person" of the Trust, as defined in the 1940 Act, is indicated by an
asterisk.

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<PAGE>

<TABLE>
<CAPTION>
Position Held Principal Occupation
Name and Address with Portfolio During Past 5 Years
<S> <C> <C>
Stanley F. Pauley Trustee Chairman and Chief
Executive Officer, E.R.
Carpenter Company
Incorporated; Trustee, The
Mentor Funds; Trustee,
Cash Resource Trust.

Louis W. Moelchert, Jr. Trustee Vice President of Business
and Finance, University of
Richmond; Trustee, The
Mentor Funds; Trustee,
Cash Resource Trust.

Thomas F. Keller Trustee Dean, Fuqua School of
Business, Duke University;
Trustee, The Mentor Funds;
Trustee, Cash Resource
Trust.

Arnold H. Dreyfuss Trustee Retired. Formerly,
Chairman and Chief
Executive Officer,
Hamilton Beach/Proctor-
Silex, Inc.; Trustee, The
Mentor Funds; Trustee,
Cash Resource Trust.

*Daniel J. Ludeman Chairman; Chairman and Chief
Trustee Executive Officer since
July 1991, Mentor
Investment Group, Inc.;
Managing Director of
Wheat, First Securities,
Inc. since August 1989;
Managing Director of Wheat
First Butcher Singer since
June 1991; Director,
Mentor Income Fund, Inc.;
Chairman and Trustee, The
Mentor Funds; Chairman and
Trustee, Cash Resource
Trust.

Troy A. Peery, Jr. Trustee President, Heilig-Meyers
Company. Trustee, The
Mentor Funds; Trustee,
Cash Resource Trust.

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<PAGE>

Paul F. Costello President Managing Director, Mentor
Investment Group, Inc. and
Wheat First Butcher
Singer; President, Mentor
Income Fund, The Mentor
Funds, and Cash Resource
Trust; Senior Vice
President, Commonwealth
Advisors, Inc.; formerly,
Director, President and
Chief Executive Officer,
First Variable Life
Insurance Company;
President and Chief
Financial Officer,
Variable Investors Series
Trust; President and
Treasurer, Atlantic
Capital & Research, Inc.;
Vice President and
Treasurer, Variable Stock
Portfolio, Inc., Monarch
Investment Series Trust,
and GEICO Tax Advantage
Series Trust; Vice
President, Monarch Life
Insurance Company, GEICO
Investment Services
Company, Inc., Monarch
Investment Services
Company, Inc., and
Springfield Life Insurance
Company.

Terry L. Perkins Treasurer Vice President, Mentor
Investment Group, Inc.;
Treasurer, Cash Resource
Trust; Treasurer, Mentor
Income Fund Inc.;
formerly, Treasurer and
Comptroller, Ryland
Capital Management, Inc.

John M. Ivan Clerk Managing Director since
October 1992, Director of
Compliance since October
1992, Senior Vice
President from 1990 to
October 1992, and
Assistant General Counsel
since 1985, Wheat, First
Securities, Inc.; Clerk,
Cash Resource Trust;
Secretary, The Mentor
Funds.

The Trust pays each Trustee who is not an officer, director, or
employee of Wheat First Butcher Singer, Commonwealth, Mentor Perpetual,
Mentor, or any of their affiliates $100 per annum plus $25 per meeting
attended and reimburses each such Trustee for travel and out-of-

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<PAGE>

pocket expenses. The mailing address of each of the Trustees and officers is
901 East Byrd Street, Richmond, Virginia 23219. The principal occupations of
the Trustees and officers for the last five years have been with the employers
as shown above, although in some cases they have held different positions with
such employers.

The Agreement and Declaration of Trust of the Trust provides that the
Trust will indemnify its Trustees and officers against liabilities and
expenses incurred in connection with litigation in which they may be
involved because of their offices with the Trust, except if it is
determined in the manner specified in the Agreement and Declaration of
Trust that they have not acted in good faith in the reasonable belief that
their actions were in the best interests of the Trust or that such
indemnification would relieve any officer or Trustee of any liability to
the Trust or its Shareholders by reason of willful misfeasance, bad faith,
gross negligence, or reckless disregard of his or her duties. The Trust,
at its expense, provides liability insurance for the benefit of its
Trustees and officers.

PRINCIPAL HOLDERS OF SECURITIES

As of August 30, 1995, the officers and Trustees of the Trust owned as a
group less than one percent of the outstanding shares of each Portfolio. To the
knowledge of the Trust, no person owns more than 5% of the outstanding shares of
any Portfolio as of that date, except the following record holders:

SHAREHOLDER PERCENTAGE SHARES

CASH MANAGEMENT PORTFOLIO:

County of Augusta 10.17% 5,992,103
Stafford County 8.74% 5,151,535
Heilig Meyers 12.13% 7,147,057
Farmers Telephone Coop., Inc. 8.41% 4,952,348
Spotsylvania County 5.43% 3,196,895

INTERMEDIATE DURATION PORTFOLIO:

NationsBank C/F McQuire 77.91% 677,977
Woods & Battle Pension Plan
Longwood College Foundation, Inc. 19.62% 170,714

FIXED INCOME PORTFOLIO:

Wheat First Butcher Singer 99.08% 2,108,082

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INVESTMENT ADVISORY AND OTHER SERVICES

Each of Commonwealth and Mentor Perpetual act as investment advisers
to the respective Portfolios pursuant to Management Contracts with the
Trust. Mentor Investment Group acts as administrator to each of the
Portfolios pursuant to an Administration Agreement with the Trust. Subject
to the supervision and direction of the Trustees, each investment
adviser manages a Portfolio's portfolio in accordance with the stated
policies of that Portfolio and of the Trust. The investment advisers
make investment decisions for the Portfolios and place the purchase and
sale orders for portfolio transactions. Mentor furnishes each of the
Portfolios with certain statistical and research data, clerical help, and
certain accounting, data processing, and other services required by the
Portfolios, assists in preparation of certain reports to shareholders of
the Portfolios, tax returns, and filings with the SEC and state Blue Sky
authorities, and generally assists in all aspects of the Portfolios'
operations. Each investment adviser and Mentor bear all their expenses
in connection with the performance of their services. In addition, ^ the
investment advisers and Mentor pay the salaries of all officers and
employees who are employed by them and the Trust.

The investment advisers provide the Trust with investment officers
who are authorized to execute purchases and sales of securities.
Investment decisions for the Trust and for the other investment advisory
clients of an investment adviser and its affiliates are made with a view
to achieving their respective investment objectives. Investment decisions
are the product of many factors in addition to basic suitability for the
particular client involved. Thus, a particular security may be bought or
sold for certain clients even though it could have been bought or sold for
other clients at the same time. Likewise, a particular security may be
bought for one or more clients when one or more other clients are selling
the security. In some instances, one client may sell a particular security
to another client. It also sometimes happens that two or more clients
simultaneously purchase or sell the same security, in which event each
day's transactions in such security are, insofar as possible, averaged as
to price and allocated between such clients in a manner which in ^ the
investment adviser's opinion is equitable to each and in accordance with
the amount being purchased or sold by each. There may be circumstances
when purchases or sales of portfolio securities for one or more clients
will have an adverse effect on other clients. In the case of short-term
investments, the Treasury area of Wheat First Butcher Singer handles
purchases and sales under guidelines approved by investment officers of the
Trust. The investment advisers employ professional staffs of portfolio
managers who draw upon a variety of resources, including Wheat, First
Securities, for research information for the Trust.

The proceeds received by each Portfolio for each issue or sale of its
shares, and all income, earnings, profits, and proceeds thereof, subject
only to the rights of creditors, will be specifically allocated to such
Portfolio, and constitute the underlying assets of that Portfolio. The
underlying assets of each Portfolio will be segregated on the Trust's books
of account, and will be charged with the liabilities in respect of such
Portfolio and with a share of the general liabilities of the Trust.
Expenses with respect to any two or more Portfolios may be allocated in
proportion to

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<PAGE>

the net asset values of the respective Portfolios except
where allocations of direct expenses can otherwise be fairly made.

Expenses incurred in the operation of a Portfolio or otherwise
allocated to a Portfolio, including but not limited to taxes, interest,
brokerage fees and commissions, fees to Trustees who are not officers,
directors, stockholders, or employees of Wheat First Butcher Singer and
subsidiaries, SEC fees and related expenses, state Blue Sky qualification
fees, charges of the custodian and transfer and dividend disbursing agents,
outside auditing, accounting, and legal services, investor servicing fees
and expenses, charges for the printing of prospectuses and statements of
additional information for regulatory purposes or for distribution to
shareholders, certain shareholder report charges and charges relating to
corporate matters are borne by the Portfolio.

Each of the Management Contracts and the Administration Agreement is
subject to annual approval (commencing in 1996 for Mentor Intermediate
Duration Portfolio, Mentor Fixed-Income Portfolio, and Mentor Cash
Management Portfolio and commencing in 1997 for Mentor International
Portfolio) by (i) the Trustees or (ii) vote of a majority (as defined in
the 1940 Act) of the outstanding voting securities of the affected
Portfolio, provided that in either event the continuance is also approved
by a majority of the Trustees who are not "interested persons" (as defined
in the 1940 Act) of the Trust, the investment adviser in question, or
Mentor, by vote cast in person at a meeting called for the purpose of
voting on such approval. The Management Contracts are terminable without
penalty, on not more than sixty days' notice and not less than thirty days'
notice, by the Trustees, by vote of the holders of a majority of the
affected Portfolio's shares, or by the investment adviser. The
Administration Agreement is terminable without penalty, immediately upon
notice, by the Trustees or by vote of the holders of a majority of the
affected Portfolio's shares, and on not less than thirty days' notice by
Mentor. Each of the Agreements will terminate automatically in the event
of its assignment.

BROKERAGE

Transactions on U.S. stock exchanges, commodities markets, and futures
markets and other agency transactions involve the payment by a Portfolio of
negotiated brokerage commissions. Such commissions vary among different
brokers. A particular broker may charge different commissions according to
such factors as the difficulty and size of the transaction. Transactions
in foreign investments often involve the payment of fixed brokerage
commissions, which may be higher than those in the United States. There is
generally no stated commission in the case of securities traded in the
over-the-counter markets, but the price paid by the Trust usually includes
an undisclosed dealer commission or mark-up. In underwritten offerings,
the price paid by the Trust includes a disclosed, fixed commission or
discount retained by the underwriter or dealer. It is anticipated that
most purchases and sales of securities by Portfolios investing primarily in
certain fixed-income securities will be with the issuer or with
underwriters of or dealers in those securities, acting as principal.
Accordingly, those Portfolios would not ordinarily pay significant
brokerage commissions with respect to securities transactions.

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<PAGE>

It has for many years been a common practice in the investment
advisory business for advisers of investment companies and other
institutional investors to receive brokerage and research services (as
defined in the Securities Exchange Act of 1934, as amended (the "1934
Act")), from broker-dealers that execute portfolio transactions for the
clients of such advisers and from third parties with which such broker-
dealers have arrangements. Consistent with this practice, the investment
advisers receive brokerage and research services and other similar services
from many broker-dealers with which they place the Portfolios' portfolio
transactions and from third parties with which these broker-dealers have
arrangements. These services include such matters as general economic and
market reviews, industry and company reviews, evaluations of investments,
recommendations as to the purchase and sale of investments, newspapers,
magazines, pricing services, quotation services, news services and personal
computers utilized by the investment advisers' managers and analysts.
Where the services referred to above are not used exclusively by an
investment adviser for research purposes, the investment adviser, based
upon its own allocations of expected use, bears that portion of the cost of
these services which directly relates to its non-research use. Some of
these services are of value to an investment adviser and its affiliates
in advising various of its clients (including the Portfolios), although not
all of these services are necessarily useful and of value in managing the
Portfolios.

The investment advisers place all orders for the purchase and sale
of portfolio investments for the Portfolios and buy and sell
investments for the Portfolios through a substantial number of brokers and
dealers. The investment advisers seek the best overall terms available
for the Portfolios, except to the extent they may be permitted to pay
higher brokerage commissions as described below. In doing so, ^ an
investment adviser, having in mind a Portfolio's best interests, considers
all factors it deems relevant, including, by way of illustration, price,
the size of the transaction, the nature of the market for the security or
other investment, the amount of the commission, the timing of the
transaction taking into account market prices and trends, the reputation,
experience and financial stability of the broker-dealer involved and the
quality of service rendered by the broker-dealer in other transactions.

As permitted by Section 28(e) of the 1934 Act, and by the Management
Contracts, the investment advisers may cause the Portfolios to pay a
broker-dealer which provides "brokerage and research services" (as defined
in the 1934 Act) to them an amount of disclosed commission for effecting
securities transactions on stock exchanges and other transactions for the
Portfolio on an agency basis in excess of the commission which another
broker-dealer would have charged for effecting that transaction. The
investment advisers' authority to cause a Portfolio to pay any such greater
commissions is also subject to such policies as the Trustees may adopt from
time to time. The investment advisers do not currently intend to cause
a Portfolio to make such payments. It is the position of the staff of the
Securities and Exchange Commission that Section 28(e) does not apply to the
payment of such greater commissions in "principal" transactions.
Accordingly, the investment advisers will use their best efforts to
obtain the best overall terms available with respect to such transactions,
as described above.

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<PAGE>

Consistent with the Rules of Fair Practice of the National Association
of Securities Dealers, Inc. and subject to such other policies as the
Trustees may determine, the investment advisers may consider sales of
shares of a Portfolio (and, if permitted by law, of the other Mentor funds)
as a factor in the selection of broker-dealers to execute portfolio
transactions for a Portfolio.

DETERMINATION OF NET ASSET VALUE

The Trust determines net asset value per share of the Portfolios each
day the New York Stock Exchange (the "Exchange") is open. Currently, the
Exchange is closed Saturdays, Sundays, and the following holidays: New
Year's Day, Presidents' Day, Good Friday, Memorial Day, the Fourth of July,
Labor Day, Thanksgiving, and Christmas.

Mentor Intermediate Duration Portfolio, Mentor Fixed-Income
Portfolio and Mentor International Portfolio. In respect of Mentor
Intermediate Duration Portfolio, Mentor Fixed-Income Portfolio, and
Mentor International Portfolio, securities for which market quotations are
readily available are valued at prices which, in the opinion of the
Trustees or a Portfolio's investment adviser, most nearly represent the
market values of such securities. Currently, such prices are determined
using the last reported sale price or, if no sales are reported (as in the
case of some securities traded over-the-counter), the last reported bid
price, except that certain U.S. Government securities are stated at the
mean between the last reported bid and asked prices. Short-term
investments having remaining maturities of 60 days or less are stated at
amortized cost, which approximates market value. All other securities and
assets are valued at their fair value following procedures approved by the
Trustees. Liabilities are deducted from the total, and the resulting
amount is divided by the number of shares of the Portfolio outstanding.

Reliable market quotations are not considered to be readily available
for long-term corporate bonds and notes, certain preferred stocks, tax-
exempt securities, or certain foreign securities. These investments are
stated at fair value on the basis of valuations furnished by pricing
services approved by the Trustees, which determine valuations for normal,
institutional-size trading units of such securities using methods based on
market transactions for comparable securities and various relationships
between securities which are generally recognized by institutional traders.

If any securities held by a Portfolio are restricted as to resale,
its investment adviser determines their fair values. The fair value of
such securities is generally determined as the amount which a Portfolio
could reasonably expect to realize from an orderly disposition of such
securities over a reasonable period of time. The valuation procedures
applied in any specific instance are likely to vary from case to case.
However, consideration is generally given to the financial position of the
issuer and other fundamental analytical data relating to the investment and
to the nature of the restrictions on disposition of the securities
(including any registration expenses that might be borne by the Portfolio
in connection with such disposition). In addition, specific factors are
also generally considered, such as the cost of the investment, the market
value

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<PAGE>

of any unrestricted securities of the same class (both at the time of
purchase and at the time of valuation), the size of the holding, the prices
of any recent transactions or offers with respect to such securities and
any available analysts' reports regarding the issuer.

Generally, trading in certain securities (such as foreign securities)
is substantially completed each day at various times prior to the close of
the Exchange. The values of these securities used in determining the net
asset value of a Portfolio's shares are computed as of such times. Also,
because of the amount of time required to collect and process trading
information as to large numbers of securities issues, the values of certain
securities (such as convertible bonds, U.S. Government securities, and tax-
exempt securities) are determined based on market quotations collected
earlier in the day at the latest practicable time prior to the close of the
Exchange. Occasionally, events affecting the value of such securities may
occur between such times and the close of the Exchange which will not be
reflected in the computation of a Portfolio's net asset value. If events
materially affecting the value of such securities occur during such period,
then these securities will be valued at their fair value following
procedures approved by the Trustees.

MENTOR CASH MANAGEMENT PORTFOLIO ONLY. The valuation of Mentor Cash
Management Portfolio's portfolio securities is based upon its amortized
cost, which does not take into account unrealized securities gains or
losses. This method involves initially valuing an instrument at its cost
and thereafter assuming a constant amortization to maturity of any discount
or premium, regardless of the impact of fluctuating interest rates on the
market value of the instrument. By using amortized cost valuation, the
Portfolio seeks to maintain a constant net asset value of $1.00 per share,
despite minor shifts in the market value of its portfolio securities.
While this method provides certainty in valuation, it may result in periods
during which value, as determined by amortized cost, is higher or lower
than the price the Portfolio would receive if it sold the instrument.
During periods of declining interest rates, the quoted yield on shares of
the Portfolio may tend to be higher than a like computation made by a fund
with identical investments utilizing a method of valuation based on market
prices and estimates of market prices for all of its portfolio instruments.
Thus, if the use of amortized cost by the Portfolio resulted in a lower
aggregate portfolio value on a particular day, a prospective investor in
the Portfolio would be able to obtain a somewhat higher yield if he
purchased shares of the Portfolio on that day, than would result from
investment in a fund utilizing solely market values, and existing investors
in the Portfolio would receive less investment income. The converse would
apply on a day when the use of amortized cost by the Portfolio resulted in
a higher aggregate portfolio value. However, as a result of certain
procedures adopted by the Trust, the Trust believes any difference will
normally be minimal.

The valuation of the Portfolio's portfolio instruments at amortized
cost is permitted in accordance with Securities and Exchange Commission
Rule 2a-7 and certain procedures adopted by the Trustees. Under these
procedures, a Portfolio must maintain a dollar-weighted average portfolio
maturity of 90 days or less, purchase only instruments having remaining
maturities of 397 days or less, and invest in securities determined by the
Trustees to be of high quality with

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minimal credit risks. The Trustees have also established procedures designed to
stabilize, to the extent reasonably possible, the Portfolio's price per share as
computed for the purpose of distribution, redemption and repurchase at $1.00.
These procedures include review of the Portfolio's portfolio holdings by the
Trustees, at such intervals as they may deem appropriate, to determine whether a
Portfolio's net asset value calculated by using readily available market
quotations deviates from $1.00 per share, and, if so, whether such deviation may
result in material dilution or is otherwise unfair to existing shareholders. In
the event the Trustees determine that such a deviation may result in material
dilution or is otherwise unfair to existing shareholders, they will take such
corrective action as they regard as necessary and appropriate, including the
sale of portfolio instruments prior to maturity to realize capital gains or
losses or to shorten the average portfolio maturity; withholding dividends;
redemption of shares in kind; or establishing a net asset value per share by
using readily available market quotations.

Since the net income of the Portfolio is declared as a dividend each
time it is determined, the net asset value per share of the Portfolio
remains at $1.00 per share immediately after such determination and
dividend declaration. Any increase in the value of a shareholder's
investment in the Portfolio representing the reinvestment of dividend
income is reflected by an increase in the number of shares of the Portfolio
in the shareholder's account on the last day of each month (or, if that day
is not a business day, on the next business day). It is expected that the
Portfolio's net income will be positive each time it is determined.
However, if because of realized losses on sales of portfolio investments, a
sudden rise in interest rates, or for any other reason the net income of
the Portfolio determined at any time is a negative amount, the Portfolio
will offset such amount allocable to each then shareholder's account from
dividends accrued during the month with respect to such account. If at the
time of payment of a dividend by the Portfolio (either at the regular
monthly dividend payment date, or, in the case of a shareholder who is
withdrawing all or substantially all of the shares in an account, at the
time of withdrawal), such negative amount exceeds a shareholder's accrued
dividends, the Portfolio will reduce the number of outstanding shares by
treating the shareholder as having contributed to the capital of the
Portfolio that number of full and fractional shares which represent the
amount of the excess. Each shareholder is deemed to have agreed to such
contribution in these circumstances by its investment in the Portfolio.

Should the Portfolio incur or anticipate any unusual or unexpected
significant expense or loss which would affect disproportionately the
Portfolio's income for a particular period, the Trustees would at that time
consider whether to adhere to the dividend policy described above or to
revise it in light of the then prevailing circumstances in order to
ameliorate to the extent possible the disproportionate effect of such
expense or loss on then existing shareholders. Such expenses or losses may
nevertheless result in a shareholder's receiving no dividends for the
period during which the shares are held and receiving upon redemption a
price per share lower than that which was paid.

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TAX STATUS

Each Portfolio intends to qualify each year and elect to be taxed as a
regulated investment company under Subchapter M of the United States
Internal Revenue Code of 1986, as amended (the "Code").

As a regulated investment company qualifying to have its tax liability
determined under Subchapter M, a Portfolio will not be subject to federal
income tax on any of its net investment income or net realized capital
gains that are distributed to shareholders. As a series of Massachusetts
business trust, a Portfolio will not under present law be subject to any
excise or income taxes in Massachusetts.

In order to qualify as a "regulated investment company," a Portfolio
must, among other things, (a) derive at least 90% of its gross income from
dividends, interest, payments with respect to securities loans, gains from
the sale or other dispositions of stock, securities, or foreign currencies,
and other income (including gains from options, futures, or forward
contracts) derived with respect to its business of investing in such stock,
securities, or currencies; (b) derive less than 30% of its gross income
from the sale or other disposition of certain assets (including stock and
securities) held less than three months; (c) diversify its holdings so
that, at the close of each quarter of its taxable year, (i) at least 50% of
the value of its total assets consists of cash, cash items, U.S. Government
Securities, and other securities limited generally with respect to any one
issuer to not more than 5% of the total assets of the Portfolio and not
more than 10% of the outstanding voting securities of such issuer, and (ii)
not more than 25% of the value of its assets is invested in the securities
of any issuer (other than U.S. Government Securities). In order to receive
the favorable tax treatment accorded regulated investment companies and
their shareholders, moreover, a Portfolio must in general distribute at
least 90% of its interest, dividends, net short-term capital gain, and
certain other income each year.

An excise tax at the rate of 4% will be imposed on the excess, if any,
of each Portfolio's "required distribution" over its actual distributions
in any calendar year. Generally, the "required distribution" is 98% of the
Portfolio's ordinary income for the calendar year plus 98% of its capital
gain net income recognized during the one-year period ending on October 31
(or December 31, if the Portfolio so elects) plus undistributed amounts
from prior years. Each Portfolio intends to make distributions sufficient
to avoid imposition of the excise tax. Distributions declared by a
Portfolio during October, November, or December to shareholders of record
on a date in any such month and paid by the Portfolio during the following
January will be treated for federal tax purposes as paid by the Portfolio
and received by shareholders on December 31 of the year in which declared.

Under federal income tax law, a portion of the difference between the
purchase price of zero-coupon securities in which a Portfolio has invested
and their face value ("original issue discount") is considered to be income
to the Portfolio each year, even though the Portfolio will not receive cash
interest payments from these securities. This original issue discount
(imputed

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income) will comprise a part of the net investment income of the
Portfolio which must be distributed to shareholders in order to maintain
the qualification of the Portfolio as a regulated investment company and to
avoid federal income tax at the level of the Portfolio.

Each Portfolio is required to withhold 31% of all income dividends and
capital gain distributions, and 31% of the gross proceeds of all
redemptions of Portfolio shares, in the case of any shareholder who does
not provide a correct taxpayer identification number, about whom a
Portfolio is notified that the shareholder has under reported income in the
past, or who fails to certify to a Portfolio that the shareholder is not
subject to such withholding. Tax-exempt shareholders are not subject to
these back-up withholding rules so long as they furnish the Portfolio with
a proper certification.

Foreign currency-denominated securities and related hedging
transactions (Mentor International Portfolio only). Mentor International
Portfolio's transactions in foreign currencies, foreign currency-
denominated debt securities, and certain foreign currency options, futures
contracts, and forward contracts (and similar instruments) may give rise to
ordinary income or loss to the extent such income or loss results from
fluctuations in the value of the foreign currency concerned.

If more than 50% of the Portfolio's assets at year end consists of the
debt and equity securities of foreign corporations, the Portfolio may elect
to permit shareholders to claim a credit or deduction on their income tax
returns for their pro rata portion of qualified taxes paid by the Portfolio
to foreign countries. In such a case, shareholders will include in gross
income from foreign sources their pro rata shares of such taxes. A
shareholder's ability to claim a foreign tax credit or deduction in respect
of foreign taxes paid by the Portfolio may be subject to certain
limitations imposed by the Code, as a result of which a shareholder may not
get a full credit or deduction for the amount of such taxes. Shareholders
who do not itemize on their federal income tax returns may claim a credit
(but no deduction) for such foreign taxes.

Investment by the Portfolio in certain "passive foreign investment
companies" could subject the Portfolio to a U.S. federal income tax or
other charge on the proceeds from the sale of its investment in such a
company; however, this tax can be avoided by making an election to mark
such investments to market annually or to treat the passive foreign
investment company as a "qualified electing fund."

The foregoing is a general and abbreviated summary of the applicable
provisions of the Code and related regulations currently in effect. For
the complete provisions, reference should be made to the pertinent Code
sections and regulations. The Code and regulations are subject to change
by legislative or administrative actions. Dividends and distributions also
may be subject to state and federal taxes. Shareholders are urged to
consult their tax advisers regarding specific questions as to federal,
state or local taxes. The foregoing discussion relates solely to U.S.
federal income tax law. Non-U.S. investors should consult their tax
advisers concerning the tax

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consequences of ownership of shares of the Portfolio, including the
possibility that distributions may be subject to a 30% United States
withholding tax (or a reduced rate of withholding provided by treaty).

THE DISTRIBUTOR

Mentor Distributors, Inc. ("Mentor Distributors") is the Trust's
distributor and service agent and is a wholly-owned subsidiary of Wheat
First Butcher Singer. Mentor Distributors is acting on a best efforts
basis in the continuous offering of the Trust's shares.

INDEPENDENT ACCOUNTANTS

KPMG Peat Marwick LLP, located at 99 High Street, Boston,
Massachusetts 02108, are the Portfolio's independent auditors, providing
audit services, tax return review, and other tax consulting services and
assistance and consultation in connection with the review of various
Securities and Exchange Commission filings.

CUSTODIAN

The custodian of the Portfolios, Investors Fiduciary Trust Company, is
located at 127 West 10th Street, Richmond, Virginia 64105. A custodian's
responsibilities include generally safeguarding and controlling a
Portfolio's cash and securities, handling the receipt and delivery of
securities, and collecting interest and dividends on a Portfolio's
investments.

PERFORMANCE INFORMATION

MENTOR INTERMEDIATE DURATION PORTFOLIO, MENTOR FIXED-INCOME PORTFOLIO
AND MENTOR INTERNATIONAL PORTFOLIO. With respect to Mentor Intermediate
Duration Portfolio, Mentor Fixed Income Portfolio and Mentor International
Portfolios, total return for the life of a Portfolio through the most recent
calendar quarter is determined by calculating the actual investment return on a
$1,000 investment in the Portfolio over that period. Total return may also be
presented for other periods. Total return calculations assume reinvestment of
all Portfolio distributions at net asset value on their respective reinvestment
dates. The cumulative total return for the life of Mentor Intermediate Duration
Portfolio and Mentor Fixed-Income Portfolio through April 30, 1995 was 5.24% and
6.25%, respectively. No shares of Mentor International Portfolio were
outstanding during this period.

Each Portfolio's yield is presented for a specified thirty-day period
(the "base period"). Yield is based on the amount determined by (i)
calculating the aggregate amount of dividends and interest earned by a
Portfolio during the base period less expenses accrued for that period, and
(ii) dividing that amount by the product of (A) the average daily number of
shares of the Portfolio outstanding during the base period and entitled to
receive dividends and (B) the net asset value

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per share on the last day of the base period. The result is annualized on a
compounding basis to determine the yield. For this calculation, interest earned
on debt obligations held by a Portfolio is generally calculated using the yield
to maturity (or first expected call date) of such obligations based on their
market values (or, in the case of receivables-backed securities such as GNMA's,
based on cost). Dividends on equity securities are accrued daily at their
stated dividend rates. The yield for Mentor Intermediate Duration Portfolio for
the thirty-day period ended April 30, 1995 was 7.39%. The yield for Mentor
Fixed-Income Portfolio for the thirty-day period ended April 30, 1995 was 7.43%.
No shares of Mentor International Portfolio were outstanding during this period.

MENTOR CASH MANAGEMENT PORTFOLIO ONLY. The yield of Mentor Cash
Management Portfolio is computed by determining the percentage net change,
excluding capital changes, in the value of an investment in one share of
the Portfolio over the base period, and multiplying the net change by 365/7
(or approximately 52 weeks). The Portfolio's effective yield represents a
compounding of the yield by adding 1 to the number representing the
percentage change in value of the investment during the base period,
raising that sum to a power equal to 365/7, and subtracting 1 from the
result.

Based on the seven-day period ended April 30, 1995, Mentor Cash
Management Portfolio's yield was 6.11% and its effective yield was 6.30%.

---------------------

All data for each of the Portfolios are based on past performance and
do not predict future results.

Independent statistical agencies measure a Portfolio's investment
performance and publish comparative information showing how the Portfolio,
and other investment companies, performed in specified time periods.
Agencies whose reports are commonly used for such comparisons are set forth
below. From time to time, a Portfolio may distribute these comparisons to
its shareholders or to potential investors. THE AGENCIES LISTED BELOW
MEASURE PERFORMANCE BASED ON THE BASIS OF THEIR OWN CRITERIA RATHER THAN ON
THE BASIS OF THE STANDARDIZED PERFORMANCE MEASURES DESCRIBED ABOVE.

LIPPER ANALYTICAL SERVICES, INC. distributes mutual fund rankings
monthly. The rankings are based on total return performance
calculated by Lipper, reflecting generally changes in net asset value
adjusted for reinvestment of capital gains and income dividends. They
do not reflect deduction of any sales charges. Lipper rankings cover
a variety of performance periods, for example year-to-date, 1-year, 5-
year, and 10-year performance. Lipper classifies mutual funds by
investment objective and asset category.

MORNINGSTAR, INC. distributes mutual fund ratings twice a month. the
ratings are divided into five groups: highest, above average,
neutral, below average and lowest. They

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represent a fund's historical risk/reward ratio relative to other funds
with similar objectives. The performance factor is a weighted-average
assessment of the Portfolio's 3-year, 5-year, and 10-year total return
performance (if available) reflecting deduction of expenses and sales
charges. Performance is adjusted using quantitative techniques to reflect
the risk profile of the fund. The ratings are derived from a purely
quantitative system that does not utilize the subjective criteria
customarily employed by rating agencies such as Standard & Poor's
Corporation and Moody's Investor Service, Inc.

Weisenberger's Management Results publishes mutual fund rankings and
is distributed monthly. The rankings are based entirely on total
return calculated by Weisenberger for periods such as year-to-date, 1-
year, 3-year, 5-year and 10-year performance. Mutual funds are ranked
in general categories (e.g., international bond, international equity,
municipal bond, and maximum capital gain). Weisenberger rankings do
not reflect deduction of sales charges or fees.

Independent publications may also evaluate a Portfolio's performance.
Certain of those publications are listed below, at the request of Mentor
Distributors, which bears full responsibility for their use and the
descriptions appearing below. From time to time any or all of the
Portfolios may distribute evaluations by or excerpts from these
publications to its shareholders or to potential investors. The following
illustrates the types of information provided by these publications.

BUSINESS WEEK publishes mutual fund rankings in its Investment Figures
of the Week column. The rankings are based on 4-week and 52-week
total return reflecting changes in net asset value and the
reinvestment of all distributions. They do not reflect deduction of
any sales charges. Portfolios are not categorized; they compete in a
large universe of over 2,000 funds. The source for rankings is data
generated by Morningstar, Inc.

INVESTOR'S BUSINESS DAILY publishes mutual fund rankings on a daily
basis. The rankings are depicted as the top 25 funds in a given
category. The categories are based loosely on the type of fund, e.g.,
growth funds, balanced funds, U.S. government funds, GNMA funds,
growth and income funds, corporate bond funds, etc. Performance
periods for sector equity funds can vary from 4 weeks to 39 weeks;
performance periods for other fund groups vary from 1 year to 3 years.
Total return performance reflects changes in net asset value and
reinvestment of dividends and capital gains. The rankings are based
strictly on total return. They do not reflect deduction of any sales
charges Performance grades are conferred from A+ to E. An A+ rating
means that the fund has performed within the top 5% of a general
universe of over 2000 funds; an A rating denotes the top 10%; an A- is
given to the top 15%, etc.

BARRON'S periodically publishes mutual fund rankings. The rankings
are based on total return performance provided by Lipper Analytical
Services. The Lipper total return data reflects changes in net asset
value and reinvestment of distributions, but does not reflect

-35-

<PAGE>

deduction of any sales charges. The performance periods vary from
short-term intervals (current quarter or year-to-date, for example) to
long-term periods (five-year or ten-year performance, for example).
Barron's classifies the funds using the Lipper mutual fund categories,
such as Capital Appreciation Portfolios, Growth Portfolios, U.S.
Government Portfolios, Equity Income Portfolios, Global Portfolios,
etc. Occasionally, Barron's modifies the Lipper information by
ranking the funds in asset classes. "Large funds" may be those with
assets in excess of $25 million; "small funds" may be those with less
than $25 million in assets.

THE WALL STREET JOURNAL publishes its Mutual Portfolio Scorecard on a
daily basis. Each Scorecard is a ranking of the top-15 funds in a
given Lipper Analytical Services category. Lipper provides the
rankings based on its total return data reflecting changes in net
asset value and reinvestment of distributions and not reflecting any
sales charges. The Scorecard portrays 4-week, year-to-date, one-year
and 5-year performance; however, the ranking is based on the one-year
results. The rankings for any given category appear approximately
once per month.

FORTUNE magazine periodically publishes mutual fund rankings that have
been compiled for the magazine by Morningstar, Inc. Portfolios are
placed in stock or bond fund categories (for example, aggressive
growth stock funds, growth stock funds, small company stock funds,
junk bond funds, Treasury bond funds etc.), with the top-10 stock
funds and the top-5 bond funds appearing in the rankings. The
rankings are based on 3-year annualized total return reflecting
changes in net asset value and reinvestment of distributions and not
reflecting sales charges. Performance is adjusted using quantitative
techniques to reflect the risk profile of the fund.

MONEY magazine periodically publishes mutual fund rankings on a
database of funds tracked for performance by Lipper Analytical
Services. The funds are placed in 23 stock or bond fund categories
and analyzed for five-year risk adjusted return. Total return
reflects changes in net asset value and reinvestment of all dividends
and capital gains distributions and does not reflect deduction of any
sales charges. Grades are conferred (from A to E): the top 20% in
each category receive an A, the next 20% a B, etc. To be ranked, a
fund must be at least one year old, accept a minimum investment of
$25,000 or less and have had assets of at least $25 million as of a
given date.

FINANCIAL WORLD publishes its monthly Independent Appraisals of Mutual
Portfolios, a survey of approximately 1000 mutual funds. Portfolios
are categorized as to type, e.g., balanced funds, corporate bond
funds, global bond funds, growth and income funds, U.S. government
bond funds, etc. To compete, funds must be over one year old, have
over $1 million in assets, require a maximum of $10,000 initial
investment, and should be available in at least 10 states in the
United States. The funds receive a composite past performance rating,
which weighs the intermediate - and long-term past performance of each
fund versus its category, as well as taking into account its risk,
reward to risk, and fees. An A+

-36-

<PAGE>

rated fund is one of the best, while a D- rated fund is one of the worst.
The source for Financial World rating is Schabacker investment management
in Rockville, Maryland.

FORBES magazine periodically publishes mutual fund ratings based on
performance over at least two bull and bear market cycles. The funds
are categorized by type, including stock and balanced funds, taxable
bond funds, municipal bond funds, etc. Data sources include Lipper
Analytical Services and CDA Investment Technologies. The ratings are
based strictly on performance at net asset value over the given
cycles. Portfolios performing in the top 5% receive an A+ rating; the
top 15% receive an A rating; and so on until the bottom 5% receive an
F rating. Each fund exhibits two ratings, one for performance in "up"
markets and another for performance in "down" markets.

KIPLINGER'S PERSONAL FINANCE MAGAZINE (formerly Changing Times),
periodically publishes rankings of mutual funds based on one-, three-
and five-year total return performance reflecting changes in net asset
value and reinvestment of dividends and capital gains and not
reflecting deduction of any sales charges. Portfolios are ranked by
tenths: a rank of 1 means that a fund was among the highest 10% in
total return for the period; a rank of 10 denotes the bottom 10%.
Portfolios compete in categories of similar funds -- aggressive growth
funds, growth and income funds, sector funds, corporate bond funds,
global governmental bond funds, mortgage-backed securities funds, etc.
Kiplinger's also provides a risk-adjusted grade in both rising and
falling markets. Portfolios are graded against others with the same
objective. The average weekly total return over two years is
calculated. Performance is adjusted using quantitative techniques to
reflect the risk profile of the fund.

U.S. NEWS AND WORLD REPORT periodically publishes mutual fund rankings
based on an overall performance index (OPI) devised by Kanon Bloch
Carre & Co., a Boston research firm. Over 2000 funds are tracked and
divided into 10 equity, taxable bond and tax-free bond categories.
Portfolios compete within the 10 groups and three broad categories.
The OPI is a number from 0-100 that measures the relative performance
of funds at least three years old over the last 1, 3, 5 and 10 years
and the last six bear markets. Total return reflects changes in net
asset value and the reinvestment of any dividends and capital gains
distributions and does not reflect deduction of any sales charges.
Results for the longer periods receive the most weight.

THE 100 BEST MUTUAL PORTFOLIOS YOU CAN BUY (1992), authored by Gordon
K. Williamson. The author's list of funds is divided into 12 equity
and bond fund categories, and the 100 funds are determined by applying
four criteria. First, equity funds whose current management teams
have been in place for less than five years are eliminated. (The
standard for bond funds is three years.) Second, the author excludes
any fund that ranks in the bottom 20 percent of its category's risk
level. Risk is determined by analyzing how many months over the past
three years the fund has underperformed a bank CD or a U.S. Treasury
bill. Third, a fund must have demonstrated strong results for current
three-year

-37-

<PAGE>

and five-year performance. Fourth, the fund must either
possess, in Mr. Williamson's judgment, "excellent" risk-adjusted
return or "superior" return with low levels of risk. Each of the 100
funds is ranked in five categories: total return, risk/volatility,
management, current income and expenses. The rankings follow a five-
point system: zero designates "poor"; one point means "fair"; two
points denote "good"; three points qualify as a "very good"; four
points rank as "superior"; and five points mean "excellent."

SHAREHOLDER LIABILITY

Under Massachusetts law, shareholders could, under certain
circumstances, be held personally liable for the obligations of the Trust.
However, the Agreement and Declaration of Trust disclaims shareholder
liability for acts or obligations of the Trust and requires that notice of
such disclaimer be given in each agreement, obligation, or instrument
entered into or executed by the Trust or the Trustees. The Agreement and
Declaration of Trust provides for indemnification out of a Portfolio's
property for all loss and expense of any shareholder held personally liable
for the obligations of a Portfolio. Thus the risk of a shareholder's
incurring financial loss on account of shareholder liability is limited to
circumstances in which the Portfolio would be unable to meet its
obligations.

-38-

<PAGE>

RATINGS

The rating services' descriptions of corporate bonds are:

MOODY'S INVESTORS SERVICE, INC.:

Aaa -- Bonds which are rated Aaa are judged to be of the best quality.
They carry the smallest degree of investment risk and are generally
referred to as "gilt-edge". Interest payments are protected by a large or
by an exceptionally stable margin and principal is secure. While the
various protective elements are likely to change, such changes as can be
visualized are most unlikely to impair the fundamentally strong position of
such issues.

Aa -- Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally
known as high grade bonds. They are rated lower than the best bonds
because margins of protection may not be as large as in Aaa securities or
fluctuation of protective elements may be of greater amplitude or there may
be other elements present which make the long term risks appear somewhat
larger than in Aaa securities.

A -- Bonds which are rated A possess many favorable investment attributes
and are to be considered as upper medium grade obligations. Factors giving
security to principal and interest are considered adequate but elements may
be present which suggest a susceptibility to impairment sometime in the
future.

Baa -- Bonds which are rated Baa are considered as medium grade
obligations, i.e., they are neither highly protected nor poorly secured.
Interest payments and principal security appear adequate for the present,
but certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack outstanding
investment characteristics and in fact have speculative characteristics as
well.

STANDARD & POOR'S CORPORATION:

AAA -- Bonds rated AAA have the highest rating assigned by Standard &
Poor's. Capacity to pay interest and repay principal is extremely strong.

AA -- Bonds rated AA have a very strong capacity to pay interest and repay
principal and differ from the highest rated issues only in small degree.

A -- Bonds rated A have a strong capacity to pay interest and repay
principal although they are somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than bonds in
higher rated categories.

-39-

<PAGE>

BBB -- Bonds rated BBB are regarded as having an adequate capacity to pay
interest and repay principal. Whereas they normally exhibit adequate
protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay
interest and repay principal for bonds in this category than for bonds in
higher rated categories.

A-1 and Prime-1 Commercial Paper Ratings

The rating A-1 (including A-1+) is the highest commercial paper rating
assigned by S&P. Commercial paper rated A-1 by S&P has the following
characteristics:

(bullet) liquidity ratios are adequate to meet cash requirements;

(bullet) long-term senior debt is rated "A" or better;

(bullet) the issuer has access to at least two additional channels of
borrowing;

(bullet) basic earnings and cash flow have an upward trend with
allowance
made for unusual circumstances;

(bullet) typically, the issuer's industry is well established and the
issuer has a strong position within the industry; and

(bullet) the reliability and quality of management are unquestioned.

Relative strength or weakness of the above factors determines whether the
issuer's commercial paper is rated A-1, A-2 or A-3. Issues rated A-1 that
are determined by S&P to have overwhelming safety characteristics are
designated A-1+.

The rating Prime-1 is the highest commercial paper rating assigned by
Moody's. Among the factors considered by Moody's in assigning ratings are
the following:

(bullet) evaluation of the management of the issuer;

(bullet) economic evaluation of the issuer's industry or industries
and an appraisal of speculative-type risks which may be
inherent in certain areas;

(bullet) evaluation of the issuer's products in relation to competition
and customer acceptance;

(bullet) liquidity;

(bullet) amount and quality of long-term debt;

-40-

<PAGE>

(bullet) trend of earnings over a period of ten years;

(bullet) financial strength of parent company and the relationships
which exist with the issuer; and

(bullet) recognition by the management of obligations which may
be present or may arise as a result of public interest
questions and preparations to meet such obligations.

-41-

<PAGE>

FINANCIAL STATEMENTS

<PAGE>

Mentor Cash Management Portfolio
Portfolio of Investments
April 30, 1995 (Unaudited)

</TABLE>
<TABLE>
Percent of Principal Market
Net Asset Amount Value

<S> <C> <C> <C>
Bankers Acceptances-Domestic 12.4%
Bank of New York, 6.06%, 5/9/95 $1,000,000 $ 998,653
First Union Corporation, 6.03% - 6.09%,
5/2/95 - 10/3/95 2,000,000 1,973,612
Nationsbank Corporation, 6.10%, 8/30/95 1,000,000 979,497
Republic Bank, 5.96%, 5/22/95 1,000,000 996,523
Wachovia Corporation Bank, 6.06%, 5/1/95 1,000,000 1,000,000
Total Bankers Acceptances-Domestic 5,948,285

Bankers Acceptances-Foreign 15.9%
Bank of Tokyo, 6.05% - 6.11%,
6/5/95 - 10/16/95 2,000,000 1,965,827
Dai-ichi Kangyo Bank, 6.02% - 6.11%,
5/30/95 - 10/16/95 2,000,000 1,966,985
European American Bank, 6.07% - 6.09%,
7/10/95 - 8/28/95 1,699,481 1,672,836
Mitsubishi Bank, 6.06%, 5/16/95 1,000,000 997,475
Sanwa Bank, 6.05%, 5/8/95 1,000,000 998,823
Total Bankers Acceptances-Foreign 7,601,946

Commercial Paper 32.9%
Bellsouth Capital, 6.09%, 10/2/95 2,000,000 1,947,897
Chase Manhattan Bank, 6.12%, 8/2/95 1,000,000 984,190
CIESCO Limited Partnership, 6.02%, 5/31/95 1,000,000 994,983
CS First Boston, 6.11% - 6.13%, 7/24/95 -
8/31/95 2,000,000 1,964,991
Ford Motor Credit Company, 6.09% - 6.12%,
5/30/95 - 7/28/95 2,000,000 1,980,183
General Electric Capital Corporation, 6.02% -
6.03%, 6/1/95 - 9/18/95 2,000,000 1,971,366
Merrill Lynch & Company, Inc., 6.12% - 6.15%,
6/6/95 - 9/11/95 2,000,000 1,963,010
Minolta Corporation, 6.06%, 7/7/95 1,000,000 988,722
National Rural Utilities, 5.97%, 5/12/95 1,000,000 998,176
Rincon Securities, Inc., 6.08%, 5/8/95 1,000,000 998,818
State Street Bank &Trust Company, 6.03%, 5/2/95 1,000,000 999,833
Total Commercial Paper 15,792,169

U.S. Government Agencies 16.7%
Federal Home Loan Bank, 5.93%, 5/1/95 6,000,000 6,000,000
Student Loan Market Agency, 5.89%, 9/14/95 2,000,000 2,000,000
Total U.S. Government Agencies 8,000,000
</TABLE>

<PAGE>

Mentor Cash Management Portfolio
Portfolio of Investments
April 30, 1995 (Unaudited)

<TABLE>

Percent of Principal Market
Net Asset Amount Value

<S> <C> <C> <C>
Repurchase Agreement 22.5%
Goldman, Sachs & Company
Dated 4/28/95, 5.90%, due 5/1/95,
collateralized by $14,086,000
Federal National Mortgage Association,
7.50%, 7/1/23 $10,813,866 $10,813,866

Total Investments (cost $48,156,266) 100.4% 48,156,266

Other Assets less Liabilities (0.4%) (201,521)

Net Assets 100.0% $47,954,745

</TABLE>

See notes to financial statements.

<PAGE>

Mentor Intermediate Duration Portfolio
Portfolio of Investments
April 30, 1995 (Unaudited)

<TABLE>
Percent of Principal Market
Net Asset Amount Value

<S> <C> <C> <C>
U.S. Government Securities and Agencies 74.0%
Federal Home Loan Bank, 7.90%, 12/20/96 $ 1,000,000 $ 1,007,870
Federal Home Loan Bank, 8.18%, 12/22/97 600,000 605,436
Federal Home Loan Mortgage Corporation, 10.50%, 2/1/03 491,271 515,849
Federal Home Loan Mortgage Corporation, 7.00%, 10/15/07 500,000 471,305
Federal National Mortgage Association, 11.00%, 7/1/01 400,434 425,466
Federal National Mortgage Association, 6.00%, 3/25/09 500,000 437,675
U.S. Treasury Note, 7.50%, 1/31/97 400,000 406,056
U.S. Treasury Note, 6.50%, 8/15/97 250,000 249,233
U.S. Treasury Note, 7.38%, 11/15/97 820,000 832,677
U.S. Treasury Note, 7.13%, 2/29/00 200,000 201,832
U.S. Treasury Note, 5.50%, 4/15/00 1,000,000 942,990
U.S. Treasury Note, 7.50%, 11/15/01 1,000,000 1,028,350
U.S. Treasury Note, 7.25%, 8/15/04 500,000 505,995
U.S. Treasury Note, 7.50%, 2/15/05 250,000 257,663
U.S. Treasury Bond, 7.50%, 11/15/24 180,000 182,456
Total U.S. Government Securities and Agencies
(cost $7,980,477) 8,070,853

Corporate Bonds 17.5%
American Home Products, 7.70%, 2/15/00 400,000 405,000
Capital One, 8.63%, 1/15/97 500,000 509,375
Lehman Brothers, Inc., 8.63%, 2/26/99 525,000 533,531
Salomon Inc., 6.00%, 1/12/98 250,000 238,125
WMX Technologies, 6.38%, 12/1/03 250,000 228,750
Total Corporate Bonds (cost $ 1,895,251) 1,914,781

Short-Term Investment 9.3%
Repurchase Agreement
NationsBank Corporation
Dated 4/28/95, 5.90%, due 5/1/95, collateralized by
$1,040,000 U.S. Treasury Note, 8.00%, 10/31/96
(cost $1,016,744) 1,016,744 1,016,744

Total Investments (cost $10,892,472) 100.8% 11,002,378

Other Assets less Liabilities (0.8%) (91,870)

Net Assets 100.0% $10,910,508
</TABLE>

See notes to financial statements.

<PAGE>

Mentor Fixed-Income Portfolio
Portfolio of Investments
April 30, 1995 (Unaudited)

<TABLE>
Percent of Principal Market
Net Asset Amount Value

U.S. Government Securities and Agencies 72.8%
Federal Home Loan Bank, 8.22%, 12/22/97 $ 500,000 $ 504,655
Federal Home Loan Mortgage Corporation, 8.26%, 1/5/98 1,550,000 1,562,539
Federal Home Loan Mortgage Corporation, 10.50%, 2/1/03 491,271 515,849
Federal Home Loan Mortgage Corporation, 7.00%, 10/15/07 1,500,000 1,413,915
Federal National Mortgage Association, 11.00%, 7/1/01 576,236 612,256
Federal National Mortgage Association, 6.00%, 3/25/09 1,500,000 1,313,025
Student Loan Mortgage Association, 8.04%, 15/15/97 1,500,000 1,509,225
U.S. Treasury Note, 6.50%, 4/30/99 1,250,000 1,235,762
U.S. Treasury Note, 7.13%, 2/29/00 1,850,000 1,866,946
U.S. Treasury Note, 7.50%, 5/15/02 2,500,000 2,576,600
U.S. Treasury Note, 7.25%, 8/15/04 600,000 607,194
U.S. Treasury Note, 7.50%, 2/15/05 750,000 772,988
U.S. Treasury Bond, 7.25%, 5/15/16 250,000 244,815
U.S. Treasury Bond, 7.13%, 2/15/23 2,700,000 2,604,663
U.S. Treasury Bond, 7.50%, 11/15/24 2,260,000 2,290,849
Total U.S. Government Securities and Agencies 19,631,281
(cost $19,415,492)

Corporate Bonds 22.0%
American Home Products, 7.70%, 2/15/00 1,000,000 1,012,500
Capital One, 8.63%, 1/15/97 1,000,000 1,018,750
Commonwealth Edison, 6.50%, 7/15/97 1,000,000 986,250
Lehman Brothers, Inc., 8.63%, 2/26/99 1,475,000 1,498,969
Salomon Inc., 6.00%, 1/12/98 750,000 714,375
WMX Technologies, 6.38%, 12/1/03 750,000 686,250
Total Corporate Bonds (cost $5,866,629) 5,917,094

Short-Term Investment 6.1%
Repurchase Agreement
NationsBank Corporation
Dated 4/28/95, 5.90%, due 5/1/95, collateralized by
$1,730,000 U.S. Treasury Bill, 10/26/95 (cost $1,639,503) 1,639,503 1,639,503

Total Investments (cost $26,921,624) 100.9% 27,187,878

Other Assets less Liabilities (0.9%) (236,363)

Net Assets 100.0% $26,951,515
</TABLE>

See notes to financial statements.

<PAGE>

MENTOR INSTITUTIONAL TRUST
STATEMENTS OF ASSETS AND LIABILITIES
APRIL 30, 1995 (UNAUDITED)

[CAPTION]
<TABLE>
MENTOR MENTOR MENTOR
CASH INTERMEDIATE FIXED-
MANAGEMENT DURATION INCOME
PORTFOLIO PORTFOLIO PORTFOLIO
<S> <C> <C> <C>
ASSETS
Investments, at market value * (Note 2) $48,156,266 $11,002,378 $27,187,878
Receivables
Interest 22,598 190,455 532,874
Due from management company 21,998 6,638 12,571
Deferred expenses 95,500 42,237 68,904
Total assets 48,296,362 11,241,708 27,802,227

LIABILITIES
Payables
Investments purchased - 285,323 752,217
Fund shares redeemed - - 40,000
Dividends 238,333 - -
Accrued expenses and other liabilities 103,284 45,877 58,495
Total liabilities 341,617 331,200 850,712
NET ASSETS $47,954,745 $10,910,508 $26,951,515

Net Assets represented by:
Additional paid-in capital $47,954,745 $10,573,788 $25,916,845
Undistributed net investment income - 65,314 164,675
Undistributed realized gain on
investment transactions - 161,500 603,741
Net unrealized appreciation of investments - 109,906 266,254
Net Assets $47,954,745 $10,910,508 $26,951,515

Shares Outstanding 47,954,745 845,612 2,075,636
NET ASSET VALUE PER SHARE $ 1.00 $ 12.90 $ 12.98

</TABLE>

*Investments at cost $48,156,266, $10,892,472 and $26,921,624 respectively.

See notes to financial statements.

Mentor Institutional Trust
Statements of Operations
Period Ended April 30, 1995 (Unaudited)

<TABLE>

Mentor Mentor Mentor
Cash Intermediate Fixed-
Management Duration Income
Portfolio* Portfolio** Portfolio***
<S> <C> <C> <C>
Investment Income
Interest $740,989 $275,448 $ 778,881

Expenses
Organizational expenses 10,611 4,693 7,656
Custodian fees 5,628 1,309 3,506
Audit expense 4,899 1,143 3,051
Legal expense 3,499 816 2,179
Shareholder reports 482 110 292
Directors fees and expenses 233 54 145
Printing and postage expenses 119 8 11
Miscellaneous expenses 1,398 326 873
Total expenses 26,869 8,459 17,713
Deduct
Reimbursement of expenses by
management company 21,998 6,638 12,567
Net expenses 4,871 1,821 5,146
Net investment income 736,118 273,627 773,735

Realized and Unrealized Gain on Investments
Net realized gain on investments (Note 2) -- 161,500 603,741
Change in unrealized appreciation of investments -- 109,906 266,254
Net realized and unrealized gain
on investments -- 271,406 869,995
Net increase in net assets
resulting from operations $736,118 $545,033 $1,643,730

</TABLE>

* For the period from December 5, 1994 (commencement of operations) to
April 30, 1995.
** For the period from December 19, 1994 (commencement of operations) to
April 30, 1995.
*** For the period from December 6, 1994 (commencement of operations) to
April 30, 1995.

See notes to financial statements.

<PAGE>
MENTOR INSTITUTIONAL TRUST
STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED)

[CAPTION]
<TABLE>

MENTOR MENTOR MENTOR
CASH INTERMEDIATE FIXED-
MANAGEMENT DURATION INCOME
PERIOD ENDED APRIL 30, 1995 PORTFOLIO* PORTFOLIO** PORTFOLIO***

<S> <C> <C> <C>
INCREASE IN NET ASSETS
OPERATIONS
Net investment income $ 736,118 $ 273,627 $ 773,735
Net realized gain on investments - 161,500 603,741
Net unrealized appreciation of investments - 109,906 266,254
Increase in net assets from operations 736,118 545,033 1,643,730

DISTRIBUTIONS TO SHAREHOLDERS
Net investment income (736,118) (208,312) (609,060)

CAPITAL SHARE TRANSACTIONS (NOTE 7)
Net proceeds from sale of shares 74,118,432 10,397,006 29,173,726
Reinvested distributions 497,785 208,312 609,060
Cost of shares redeemed (26,661,472) (31,530) (3,865,941)
Change in net assets from capital
share transactions 47,954,745 10,573,788 25,916,845

Increase in net assets 47,954,745 10,910,509 26,951,515

NET ASSETS
Beginning of period - - -
End of period $ 47,954,745 $10,910,509 $26,951,515

</TABLE>

* For the period from December 5, 1994 (commencement of operations) to
April 30, 1995.

** For the period from December 19, 1994 (commencement of operations) to
April 30, 1995.

*** For the period from December 6, 1994 (commencement of operations) to
April 30, 1995.

See notes to financial statements.

MENTOR INSTITUTIONAL TRUST
FINANCIAL HIGHLIGHTS (UNAUDITED)

[CAPTION]
<TABLE>

MENTOR MENTOR MENTOR
CASH INTERMEDIATE FIXED-
MANAGEMENT DURATION INCOME
PERIOD ENDED APRIL 30, 1995 PORTFOLIO* PORTFOLIO** PORTFOLIO***

<S> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE

NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 12.50 $ 12.50
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.02 0.33 0.38
Net realized and unrealized
gain on investments - 0.32 0.40
Total from investment operations 0.02 0.65 0.78
LESS DISTRIBUTIONS
Dividends from income (0.02) (0.25) (0.30)

NET ASSET VALUE, END OF PERIOD $ 1.00 $ 12.90 $ 12.98

Total Return 2.00% 5.24% 6.25%

Ratios / Supplemental Data

Net assets, end of period (in thousands) $47,955 $10,911 $26,952

Ratio of expenses to average net assets 0.04% (a) 0.05% (a) 0.05% (a)

Ratio of net investment income
to average net assets 6.00% (a) 7.11% (a) 7.38% (a)

Portfolio turnover rate - 398% (a) 408% (a)

</TABLE>

(a) Annualized.

* For the period from December 5, 1994 (commencement of operations) to
April 30, 1995.

** For the period from December 19, 1994 (commencement of operations) to
April 30, 1995.

*** For the period from December 6, 1994 (commencement of operations) to
April 30, 1995.

See notes to financial statements.

<PAGE>
MENTOR INSTITUTIONAL TRUST
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 1995 (UNAUDITED)

NOTE 1: ORGANIZATION
Mentor Institutional Trust, formerly IMG Institutional Trust, was organized on
February 8, 1994, and is registered under the Investment Company Act of 1940, as
amended, as an open-end management investment company. On June 27, 1995, the
name of the the Trust was changed to Mentor Institutional Trust ("Trust"). The
Trust consists of three separate diversified portfolios (hereinafter each
individually referred to as a "Portfolio" or collectively as the "Portfolios")
at April 30, 1995 as follows:

Mentor Cash Management Portfolio (Cash Management)
Mentor Intermediate Duration Portfolio (Intermediate Duration)
Mentor Fixed-Income Portfolio (Fixed-Income)

The assets of each Portfolio of the Trust are segregated and a shareholder's
interest is limited to the Portfolio in which shares are held.

NOTE 2: SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Portfolio:

A. Valuation of Securities
Securities held by the Cash Management Portfolio are stated at amortized cost,
which approximates market value. In the event that a deviation of 1/2 of 1% or
more exists between the Portfolio's $1.00 per share net asset value, calculated
at amortized cost, and the net asset value calculated by reference to
market-based values, or if there is any other deviation that the Board of
Trustees believes would result in a material dilution to shareholders or
purchasers, the Board of Trustees will promptly consider what action should be
initiated.

U.S. Government obligations held by the Intermediate Duration Portfolio and the
Fixed Income Portfolio are valued at the mean between the over-the-counter bid
and asked prices as furnished by an independent pricing service. Listed
corporate bonds, other fixed income securities, mortgage backed securities,
mortgage related and other related securities are valued at the prices provided
by an independent pricing service. Security valuations not available from an
independent pricing service are provided by dealers approved by the Board of
Trustees. In determining value, the dealers use information with respect to
transactions in such securities, market transactions in comparable securities,
various relationships between securities, and yield to maturity. Any securities
for which current market quotations are not readily available are valued at
their fair value as determined in good faith under procedures established by and
under the general supervision and responsibility of the Trust's Board of
Directors.

B. Repurchase Agreements
It is the policy of the Trust to require the custodian bank to take possession,
to have legally segregated in the Federal Reserve Book entry system, or to have
segregated within the custodian bank's vault all securities held as collateral
in support of repurchase agreement investments. Additionally, procedures have
been established by the Trust to monitor, on a daily basis, the market value of
each repurchase agreement's underlying securities to ensure the existence of a
proper level of collateral.

The Trust will only enter into repurchase agreements with banks and other
recognized financial institutions such as broker/dealers which are deemed by the
Trust's adviser to be creditworthy pursuant to guidelines established by the
Trustees. Risks may arise from the potential inability of counterparties to
honor the terms of the repurchase agreement. Accordingly, the Trust could
receive less than the repurchase price on the sale of collateral securities.

C. Security Transactions and Interest Income
Security transactions for the Portfolios are accounted for on a trade date
basis. Interest income is recorded on the accrual basis and includes
amortization of premium and discount on investments. Realized and unrealized
gains and losses on investment security transactions are calculated on an
identified cost basis.

D. Expenses
Expenses arising in connection with a Portfolio are allocated to that Portfolio.
Other Trust expenses are allocated among the Portfolios in proportion to their
relative net assets.

E. Dividends
Dividends will be declared daily and paid monthly to all shareholders who
invested in the Cash Management Portfolio. Dividends are declared and paid
quarterly to shareholders invested in the Fixed-Income Portfolio and
Intermediate Duration Portfolio. Capital gains realized by each Portfolio, if
any, will be distributed at least once every 12 months.

F. Federal Taxes
No provision for federal income taxes has been made since it is each Portfolio's
intent to comply with the provisions applicable to regulated investment
companies under the Internal Revenue Code and to distribute to its shareholders
within allowable time limit substantially all taxable income and realized
capital gains.

NOTE 3: INVESTMENT MANAGEMENT AND ADMINISTRATION AGREEMENTS
Each Portfolio has entered into an Investment Management Agreement with
Commonwealth Investment Counsel, Inc. ("Commonwealth") to provide investment
advisory services to each of the Portfolio. Pursuant to this agreement,
Commonwealth receives no compensation for its services. Commonwealth is a
wholly-owned subsidiary of Mentor Investment Group, Inc. (formerly Investment
Management Group, Inc.), which is a wholly-owned subsidiary of Wheat First
Butcher Singer, Inc.

In order to limit the annual operating expenses of the Portfolios, Commonwealth
may reimburse the Portfolios for a certain amount of these expenses. A
potential expense reimbursement of $21,998, $6,638 and $12,567 respectively, for
the Cash Management Portfolio, Intermediate Duration Portfolio and Fixed Income
Portfolio was entered for the period ended April 30, 1995.

Mentor Investment Group, Inc. ("Mentor Group") provides administrative personnel
and services to each Portfolio, pursuant to an Administration Agreement. Mentor
Group receives no compensation for such services.

NOTE 4: DISTRIBUTION AGREEMENT
Under a Distribution Agreement between the Portfolios and Wheat, First
Securities, Inc. (Wheat), a wholly-owned subsidiary of Wheat First Butcher
Singer, Inc., Wheat serves as Distributor of the Portfolios.

NOTE 5: INVESTMENT TRANSACTIONS
Purchases, and sales of investments (excluding short-term investments), for the
period ended April 30, 1995, were as follows:

Portfolio Purchases Sales

Cash Management - -
Intermediate Duration $25,232,434 $15,361,337
Fixed-Income 68,094,119 42,821,911

NOTE 6: UNREALIZED APPRECIATION AND DEPRECIATION OF INVESTMENTS
The cost of investments for federal income tax purposes amounted to $48,156,266
for the Cash Management, $10,892,472 for the Intermediate Duration and
$26,921,624 for the Fixed-Income at April 30, 1995. Gross unrealized
appreciation and depreciation of investments at April 30, 1995 were as follows:

[CAPTION]
<TABLE>

Gross Gross Net
Unrealized Unrealized Unrealized
Portfolio Appreciation Depreciation Appreciation
<S> <C> <C> <C>
Cash Management - - -
Intermediate Duration $117,309 $ 7,403 $109,906
Fixed-Income 293,959 27,705 266,254

</TABLE>

NOTE 7: CAPITAL SHARE TRANSACTIONS
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest. Transactions in Portfolio
shares were as follows:

Mentor Cash Management
Portfolio
Period Ended
4/30/95*

Shares outstanding, beginning of period -
Shares sold 74,118,432
Shares issued upon reinvestment of distributions 497,785
Shares redeemed (26,661,472)
Shares outstanding, end of period 47,954,745

Mentor Intermediate
Duration Portfolio
Period Ended
4/30/95**
Shares outstanding, beginning of period -
Shares sold 831,756
Shares issued upon reinvestment of distributions 16,344
Shares redeemed (2,488)
Shares outstanding, end of period 845,612

Mentor Fixed-Income
Portfolio
Period Ended
4/30/95***
Shares outstanding, beginning of period -
Shares sold 2,331,660
Shares issued upon reinvestment of distributions 47,639
Shares redeemed (303,663)
Shares outstanding, end of period 2,075,636

* For the period from December 5, 1994 (commencement of operations) to
April 30, 1995.

** For the period from December 19, 1994 (commencement of operations) to
April 30, 1995.

*** For the period from December 6, 1994 (commencement of operations) to
April 30, 1995.

<PAGE>

INDEPENDENT AUDITORS' REPORT

The Trustees and Shareholder
IMG Institutional Trust

We have audited the accompanying statements of assets and liabilities of
Cash Management Fund, Limited Duration Fund, Intermediate Duration Fund,
and Fixed Income Fund, portfolios of IMG Institutional Trust, as of
November 7, 1994. These financial statements are the responsibility of the
Trust's management. Our responsibility is to express an opinion on these
financial statements based on our audit.

We Conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the statements of assets and
liabilities are free of material misstatement. An audit of a statement of
assets and liabilities includes examining, on a test basis, evidence
supporting the amounts and disclosures in the statement of assets and
liabilities. An audit of a statement of assets and liabilities also
includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall statement of assets
and liabilities presentation. We believe that our audits of the statements
of assets and liabilities provide a reasonable basis for our opinion.

In our opinion, the statements of assets and liabilities referred to above
present fairly, in all material respects, the financial position of Cash
Management Fund, Limited Duration Fund, Intermediate Duration Fund and
Fixed Income Fund, at November 7, 1994 in a conformity with generally
accepted accounting principles.

KPMG Peat Marwick LLP

Boston, Massachusetts
November 8, 1994

-43-

<PAGE>

IMG INSTITUTIONAL TRUST
Statements of Assets and Liabilities
November 7, 1994

Cash Limited Intermediate Fixed
Management Duration Duration Income
Fund Fund Fund Fund

ASSETS:
Cash $ 0 $ 0 $ 0 $100,000
Deferred Organization
Expenses (Note B) 73,000 36,500 18,250 54,750

Total Assets 73,000 36,500 18,250 154,750

LIABILITIES:
Accrued Organization
Expenses (Note B) 73,000 36,500 18,250 54,750

NET ASSETS: $ 0 $ 0 $ 0 $100,000

Shares Outstanding - - - 8,000

Net Asset Value Per Share
(Note E) $ 1.00 $ 12.50 $ 12.50 $ 12.50

See accompanying notes to financial statements.

-44-

<PAGE>

IMG INSTITUTIONAL TRUST
Notes to Financial Statements
November 7, 1994

(A) IMG Institutional Trust (the "Trust') was organized as a business
trust under the laws of the Commonwealth of Massachusetts on February
8, 1994. The Trust has an unlimited number of authorized shares,
which are divided into four series - Cash Management Fund, Limited
Duration Fund, Intermediate Duration Fund and Fixed Income Fund (the
Funds). The Trust has had no operations prior to November 4, 1994
other than organizational matters and activities in connection with
the purchase of 8,000 shares of the Trust by Wheat First Butcher
Singer, Inc. It is currently intended that, upon the effectiveness of
the Trust's registration statement, shares will be offered to the
public.

(B) The Trust will bear the cost of all organizational expenses including
the fees for registering and qualifying the Trust's shares for
distribution. Fees and expenses for the organization and registration
of shares of the Trust are estimated to be $182,500 and will be
amortized over the period of benefit not to exceed 60 months. In the
event any of the initial shares are redeemed by any holder thereof
during the five year amortization period or the life of a Fund,
whichever is shorter, redemption proceeds will be reduced by any
unamortized organizational expenses in the same proportion as the
number of initial shares of a Fund being redeemed bears to the number
of initial shares of a Fund outstanding at the time of the redemption.

(C) Each Fund of the Trust intends to qualify each year and elect to be
taxed as a regulated investment company under Subchapter M of the
United States Internal Revenue Code of 1986, as amended (the Code).
Thus, the Funds are relieved of any federal income tax liability by
distributing virtually all of their net investment income and capital
gains, if any, to their shareholders. The Funds intend to avoid
excise tax liability by making the required distributions under the
Code.

(D) Under the terms of the Management Contract, Commonwealth Investment
Counsel, Inc. (Commonwealth) serves as investment manager to each of
the Funds, providing investment advisory services.

(E) The net asset value per share at November 4, 1994 for the Cash
Management Fund, Limited Duration Fund and Intermediate Duration Fund
are the expected per share offering prices for the portfolios' shares
upon their initial public offering.

-45-

<PAGE>

PART C. OTHER INFORMATION

Item 24. Financial Statements and Exhibits

(a) Financial Statements (Included in Parts A and B)

(b) Exhibits

(1)
(A) - Agreement and Declaration of Trust. 1
(B) - Amendment to Agreement and Declaration of Trust. 4
(2) - Bylaws. 1
(3) - Inapplicable.
(4)
(A) - Form of certificate representing shares of beneficial
interest for each of the Portfolios. 1
(B) - Portions of Agreement and Declaration of Trust
Relating to Shareholders' Rights. 1
(C) - Portions of Bylaws Relating to Shareholders' Rights. 1
(5)

(A) - Form of Management Contract (Mentor Intermediate Duration
and Mentor Fixed-Income Portfolios). 1

(B) - Form of Management Contract (SNAP Fund). 5
(C) - Form of Management Contract (Mentor International Portfolio) 6
(5)
(B) - Form of Administration Agreement. 1
(6)(A) - Form of Distribution Agreement. 2
(6)(B) - Form of Assignment of Distribution Agreement. 5
(7) - Inapplicable.
(8)
(A) - Form of Custody Agreement. 1
(B) - Form of Custody Agreement (SNAP Fund). 5
(C) - Form of Transfer Agency and Services Agreement. 3
(D) - Form of Transfer Agency and Services Agreement (SNAP Fund). 5
(9) - Inapplicable.
(10) - Opinion of counsel, including consent. 3

(11) - Consent of Independent Accountants. 6

(12) - Inapplicable.

1 Incorporated herein by reference to the Registrant's initial
Registration Statement on Form N-1A under the Investment Company Act of
1940 filed on April 15, 1994.

2 Incorporated herein by reference to Amendment No. 1 to the Registrant's
Registration Statement on Form N-1A filed on June 28, 1994.

3 Incorporated herein by reference to Amendment No. 3 to the
Registrant's Registration Statement on Form N-1A filed on November 18,
1994.

4 Incorporated herein by reference to Amendment No. 4 to the Registrant's
Registration Statement on Form N-1A filed on July 3, 1995.

5 Incorporated herein by reference to Amendment No. 5 to the Registrant's
Registration Statement on Form N-1A filed on July 24, 1995.

6 Filed herewith.

<PAGE>

(13) - Inapplicable.
(14) - Inapplicable.
(15) - Inapplicable.

(16) - Schedule of Computation of Performance Information (Mentor
Cash Management, Intermediate Duration, and Fixed-Income
Portfolio).
(17) - Financial Data Schedules (Mentor Cash Management,
Intermediate Duration, and Fixed Income Portfolio).

Item 25. Persons Controlled by or Under Common Control with Registrant

None.

Item 26. Number of Record Holders of Securities

The following table shows the number of holders of record of shares of
beneficial interest of each series of shares of beneficial interest of
Mentor Institutional Trust as of June 30, 1995.

Number of Record
Series Holders

Mentor Cash Management Portfolio 44
SNAP Fund 1
Mentor Intermediate Duration Portfolio 3
Mentor Fixed-Income Portfolio 3

Item 27. Indemnification

The information required by this item is incorporated herein by
reference from the Registrant's initial Registration Statement on Form N-1A
under the Investment Company Act of 1940 (File No. 811-8484).

Item 28. Business and Other Connections of Investment Adviser

(a) The following is additional information with respect to the
directors and officers of Commonwealth Investment Counsel, Inc.:

<PAGE>

Other Substantial
Business, Profession,
Position with Vocation or Employment
Name Investment Adviser during the past two fiscal years

John G. Davenport President; None
Director

William F. Senior Vice None
Johnston, III President

P. Michael Jones Senior Vice None
President

R. Preston Nuttall Senior Vice Formerly, Senior Vice
President President, Capitoline
Investment Services, 919
East Main Street,
Richmond, VA 23219

Mary A. Beeghly Vice President None

John J. Kelly Vice President None

William H. West, Vice President Vice President, Mentor
Jr. Income Fund, Inc., 901
East Byrd Street,
Richmond, VA 23219;
formerly, Vice President
of Ryland Capital
Management, Inc., 11000
Broken Land Parkway,
Columbia, MD 21044;
formerly, Vice President,
RAC Income Fund, Inc.,
11000 Broken Land
Parkway, Columbia, MD
21044

Steven C. Henderson Vice President None

Stephen R. McClelland Associate Vice Formerly, Associate Vice
President President, Mentor Investment
Group, Inc., 901 East
Byrd Street, Richmond, VA
23219

Thomas Lee Souders Treasurer Managing Director and
Chief Financial Officer,
Wheat, First Securities,
Inc., 901 East Byrd
Street, Richmond, VA
23219; Trustee, Mentor
Series Trust, 901 East
Byrd Street, Richmond, VA
23219; formerly, Manager
of Internal Audit,
Heilig-Myers; formerly,
Manager, Peat Marwick &
Mitchell & Company
<PAGE>

John Michael Ivan Secretary Managing Director, Senior
Vice President and
Assistant General
Counsel, Wheat, First
Securities, Inc., 901
East Byrd Street,
Richmond, VA 23219;
Managing Director and
Assistant Secretary,
Wheat First Butcher
Singer, Inc. (formerly
WFS Financial
Corporation), 901 East
Byrd Street, Richmond, VA
23219; Clerk, Cash
Resource Trust, 901 East
Byrd Street, Richmond, VA
23219; Secretary, The
Mentor Funds, 901 East
Byrd Street, Richmond, VA
23219

(b) The following is additional information with respect to Mentor
Perpetual Advisors, L.L.C.:

Other Substantial
Business, Profession,
Position with Vocation or Employment
Name Investment Adviser during the past two fiscal years

Scott A. McGlashan President Director, Perpetual
Portfolio Management
Limited

Martyn Arbib Director Chairman, Perpetual
Portfolio Management
Limited

Roger C. Cornick Director Deputy Chairman -
Marketing, Perpetual
Portfolio Management
Limited

Paul F. Costello Director Managing Director, Mentor
Investment Group, Inc.
and Managing Director,
Wheat First Butcher
Singer, Inc.
<PAGE>

Daniel J. Ludeman Director Chairman and Chief
Executive Officer, Mentor
Investment Group;
Managing Director, Wheat
First Securities, Inc.;
Managing Director, Wheat
First Butcher Singer,
Inc.

David S. Mossop Director Director, Perpetual
Portfolio Management
Limited

Richard J. Rossi Director Managing Director, Mentor
Investment Group, Inc.

Item 29. Principal Underwriters

(a) Mentor Distributors, Inc. currently is acting as principal
underwriter for The Mentor Funds and Cash Resource Trust.

(b) The following is information concerning officers and directors of
Mentor Distributors, Inc.

NAME AND PRINCIPAL POSITION AND OFFICES POSITIONS AND
BUSINESS ADDRESS WITH UNDERWRITERS OFFICES WITH REGISTRANT

Peter J. Quinn, Jr. President and --
901 East Byrd Street Director, Mentor
Richmond, VA 23219 Distributors, Inc.

Paul F. Costello Senior Vice President, President
901 East Byrd Street Mentor Distributors,
Richmond, VA 23219 Inc.

Thomas Lee Souders Treasurer, Mentor --
901 East Byrd Street Distributors, Inc.
Richmond, VA 23219

John Mark Harris Secretary, Mentor --
901 East Byrd Street Distributors, Inc.
Richmond, VA 23219

John Michael Ivan Assistant Secretary, Secretary
901 East Byrd Street Mentor Distributors,
Richmond, VA 23219 Inc.

<PAGE>

Item 30. Location of Accounts and Records

Persons maintaining physical possession of accounts, books and
other documents required to be maintained by Section 31(a) of the
Investment Company Act of 1940 and the Rules promulgated thereunder are
Registrant's Secretary, John M. Ivan, Registrant's custodians, Investors
Fiduciary Trust Company ("IFTC") (all Portfolios other than SNAP Fund), and
Central Fidelity National Bank (SNAP Fund only), and Registrant's transfer
agents, The Shareholder Services Group, Inc. ("TSSG") (all Portfolios other
than SNAP Fund), and Central Fidelity National Bank (SNAP Fund only). The
address of the Secretary is 901 East Byrd Street, Richmond, Virginia,
23219. The address of TSSG is P.O. Box 9653, Providence, Rhode Island
02940-9653. The address of IFTC is 127 West 10th Street, Kansas City,
Missouri, 64105. The address of Central Fidelity National Bank is 1021
East Cary Street, P.O. Box 27602, Richmond, Virginia 23261.

Item 31. Management Services

None.

Item 32. Undertakings

(a) The Registrant undertakes to furnish to each person to whom a
prospectus of the Registrant is delivered a copy of the Registrant's
latest annual report to shareholders, upon request are without charge.

(b) Inapplicable.

(d) The undersigned Registrant hereby undertakes to call a meeting of
shareholders for the purpose of voting on the removal of a trustee
or trustees when requested in writing to do so by the holders of at
least 10% of the Registrant's outstanding voting securities and in
connection with such meeting to comply with the provisions of
Section 16(c) of the Investment Company Act of 1940 relating to
shareholder communications.

NOTICE

A copy of the Agreement and Declaration of Trust of Mentor
Institutional Trust is on file with the Secretary of State of The
Commonwealth of Massachusetts, and notice is hereby given that this
instrument is executed on behalf of the Registrant by an officer of the
Registrant as an officer and not individually and that the obligations of
or arising out of this instrument are not binding upon any of the Trustees,
officers, or shareholders individually but are binding only upon the assets
and property of the Registrant.

<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and
the Investment Company Act of 1940, the Registrant has duly caused this
Amendment to the Registration Statement to be signed on behalf of the
undersigned, thereunto duly authorized, in the City of Richmond, and the
Commonwealth of Virginia on this 31st day of August, 1995.

MENTOR INSTITUTIONAL TRUST

By: /s/ Paul F. Costello

Paul F. Costello
Title: President

Pursuant to the requirements of the Securities Act of 1933,
this Amendment to the Registration Statement has been signed below by the
following persons in the capacities indicated on the dates indicated.

SIGNATURE TITLE DATE

Arnold H. Dreyfuss Trustee

Trustee
Thomas F. Keller

* Trustee August 31, 1995
Daniel J. Ludeman

* Trustee August 31, 1995
Louis W. Moelchert, Jr.

<PAGE>

* Trustee Agust 31, 1995
Stanley F. Pauley

* Trustee August 31, 1995
Troy A. Peery, Jr.

/s/ Paul F. Costello President August 31, 1995
Paul F. Costello (Principal
Executive Officer)

/s/ Terry L. Perkins Treasurer August 31, 1995
Terry L. Perkins (Principal
Financial and
Accounting Officer)

*By /s/ Paul F. Costello August 31, 1995
Paul F. Costello
Attorney-in-Fact

<PAGE>

Exhibit Index

5 Form of Management Contract (Mentor International Portfolio)
11 Consent of Independent Accountants
16 Schedule of Computation of Performance Quotations.
27a Financial Data Schedule - Mentor Cash Management Portfolio.
27b Financial Data Schedule - Mentor Intermediate Duration Portfolio
27c Financial Data Schedule - Mentor Fixed-Income Portfolio

Exhibit 5

MENTOR INSTITUTIONAL TRUST

MANAGEMENT CONTRACT

This Management Contract dated as of November , 1995 between MENTOR
INSTITUTIONAL TRUST, a Massachusetts business trust (the "Trust"), on
behalf of Mentor International Portfolio (the "Fund"), a series of shares
of beneficial interest of Trust, and Mentor Perpetual Advisors L.L.C., a
Virginia corporation (the "Manager")

WITNESSETH:

That in consideration of the mutual covenants herein contained, it is
agreed as follows:

1. SERVICES TO BE RENDERED BY THE MANAGER TO FUND.

(a) The Manager, at its expense, will furnish continuously an
investment program for the Fund, will determine what investments shall be
purchased, held, sold, or exchanged by the Fund and what portion, if any,
of the assets of the Fund shall be held uninvested and shall, on behalf of
the Fund, make changes in the Fund's investments. In the performance of
its duties, the Manager will comply with the provisions of the Agreement
and Declaration of Trust and Bylaws of the Trust and the Fund's stated
investment objectives, policies, and restrictions, and will use its best
efforts to safeguard and promote the welfare of the Trust and to comply
with other policies which the Trustees may from time to time determine and
shall exercise the same care and diligence expected of the Trustees.

(b) The Manager, at its expense, will furnish (i) all necessary
investment and related management facilities, including, salaries of
personnel, required for it to execute its duties faithfully, (ii) suitable
office space for the Trust, and (iii) administrative facilities, including
bookkeeping, clerical personnel, and equipment necessary for the efficient
performance of its obligations. The Manager will pay the compensation, if
any, of certain officers of the Trust.

(c) The Manager, at its expense, shall place all orders for the
purchase and sale of portfolio investments for the Fund's account with
brokers or dealers selected by the Manager. In the selection of such
brokers or dealers and the placing of such orders, the Manager shall give
primary consideration to securing for the Fund the most favorable price and
execution available, except to the extent it may be permitted to pay higher
brokerage commissions for brokerage and research services as described
below. In doing so, the Manager, bearing in mind the Trust's best
interests at all times, shall consider all factors it deems relevant,
including, by way of illustration, price, the size of the transaction, the
nature of the market for the security, the amount of the commission, the
timing of the transaction taking into account market prices and trends, the

<PAGE>

reputation, experience, and financial stability of the broker or dealer
involved, and the quality of service rendered by the broker or dealer in
other transactions. Subject to such policies as the Trustees of the Trust
may determine, the Manager shall not be deemed to have acted unlawfully or
to have breached any duty created by this Contract or otherwise solely by
reason of its having caused the Fund to pay a broker or dealer that
provides brokerage and research services to the Manager an amount of
commission for effecting a portfolio investment transaction in excess of
the amount of commission that another broker or dealer would have charged
for effecting that transaction, if the Manager determines in good faith
that such amount of commission was reasonable in relation to the value of
the brokerage and research services provided by such broker or dealer,
viewed in terms of either that particular transaction or the Manager's
overall responsibilities with respect to the Fund and to other clients of
the Manager as to which the Manager exercises investment discretion.

(d) The Trust, on behalf of the Fund, hereby authorizes any entity or
person associated with the Manager which is a member of a national
securities exchange to effect any transaction on the exchange for the
account of the Fund which is permitted by Section 11(a) of the Securities
Exchange Act of 1934 and Rule 11a2-2(T) thereunder, and the Fund hereby
consents to the retention of compensation for such transactions in
accordance with Rule 11a2-2(T)(2)(iv).

2. OTHER AGREEMENTS, ETC.

It is understood that any of the shareholders, Trustees, officers, and
employees of the Trust may be a shareholder, director, officer, or employee
of, or be otherwise interested in, the Manager, and in any person
controlled by or under common control with the Manager, and that the
Manager and any person controlled by or under common control with the
Manager may have an interest in the Trust. It is also understood that the
Manager and any person controlled by or under common control with the
Manager have and may have advisory, management, service, or other contracts
with other organizations and persons, and may have other interests and
business.

3. ASSIGNMENT TERMINATES THIS CONTRACT; AMENDMENTS OF THIS CONTRACT.

This Contract shall automatically terminate, without the payment of
any penalty, in the event of its assignment; and this Contract shall not be
amended unless such amendment be approved at a meeting by the affirmative
vote of a majority of the outstanding shares of the Fund, and by the vote,
cast in person at a meeting called for the purpose of voting on such
approval, of a majority of the Trustees of the Trust who are not interested
persons of the Trust or of the Manager.

4. EFFECTIVE PERIOD AND TERMINATION OF THIS CONTRACT.

This Contract shall become effective upon its execution and shall
remain in full force and effect continuously thereafter until the close of
business on November , 1997 (unless terminated automatically as set forth
in Section 3), and shall continue for successive one-year periods
thereafter, if approved in accordance with Section 5, until terminated
by either party hereto at any time by not more than sixty days nor less
than thirty days written notice delivered or mailed by registered mail,
postage prepaid, to the other party. Such action by the Trust with respect
to termination may be taken either (i) by vote of a majority of its
Trustees, or (ii) by the affirmative vote of a majority of the outstanding
shares of the Fund.

Termination of this Contract pursuant to this Section 4 will be
without the payment of any penalty.

5. ANNUAL APPROVAL.

For additional terms after the initial term of this Contract, this
Contract shall be submitted for approval to the Trustees annually and shall
continue in effect only so long as specifically approved annually by vote
of a majority of the Trustees of the Trust who are not interested persons
of the Trust or of the Manager, by vote cast in person at a meeting called
for the purpose of voting on such approval.

6. CERTAIN DEFINITIONS.

For the purposes of this Contract, the "affirmative vote of a majority
of the outstanding shares" of the Fund means the affirmative vote, at a
duly called and held meeting of such shareholders, (a) of the holders of
67% or more of the shares of the Fund present (in person or by proxy) and
entitled to vote at such meeting, if the holders of more than 50% of the

<PAGE>

outstanding shares of the Fund entitled to vote at such meeting are present
in person or by proxy, or (b) of the holders of more than 50% of the
outstanding shares of the Fund entitled to vote at such meeting, whichever
is less.

For the purposes of this Contract, the terms "affiliated person",
"control", "interested person," and "assignment" shall have their
respective meanings defined in the Investment Company Act of 1940, as
amended, and the Rules and Regulations thereunder, subject, however, to
such exemptions as may be granted by the Securities and Exchange Commission
under said Act; the term "specifically approve at least annually" shall be
construed in a manner consistent with the Investment Company Act of 1940,
as amended, and the Rules and Regulations thereunder; and the term
"brokerage and research services" shall have the meaning given in the
Securities Exchange Act of 1934, as amended, and the Rules and Regulations
thereunder.

7. NON-LIABILITY OF MANAGER.

In the absence of willful misfeasance, bad faith, or gross negligence
on the part of the Manager, or reckless disregard of its obligations and
duties hereunder, the Manager shall not be subject to any liability to the
Trust or to any shareholder of the Trust for any act or omission in the
course of, or connected with, rendering services hereunder.

8. LIMITATION OF LIABILITY OF THE TRUSTEES AND SHAREHOLDERS.

A copy of the Agreement and Declaration of Trust of the Trust is on
file with the Secretary of State of The Commonwealth of Massachusetts, and
notice is hereby given that this instrument is executed on behalf of the
Trustees of the Trust as Trustees and not individually and that the
obligations of this instrument are not binding upon any of the Trustees,
officers, or shareholders of the Trust but are binding only upon the assets
and property of the Trust.

IN WITNESS WHEREOF, MENTOR INSTITUTIONAL TRUST and Mentor Perpetual
Advisors L.L.C., have each caused this instrument to be signed in duplicate
in its behalf by its President or Vice President thereunto duly authorized,
all as of the day and year

<PAGE>

first above written. This document is executed by each of the parties
hereto under seal. This Agreement shall be governed and construed in
accordance with the laws (other than conflict of laws rules) of The
Commonwealth of Massachusetts.

MENTOR INSTITUTIONAL TRUST
On behalf of Mentor International Portfolio

By:___________________________________

MENTOR PERPETUAL ADVISORS L.L.C..

By:___________________________________

CONSENT OF INDEPENDENT ACCOUNTANT

The Trustees
Mentor Institutional Trust (formerly IMG Institutional Trust)

We consent to the use of our report dated November 8, 1994, included
herein and to the reference to our firm under the caption "INDEPENDENT
ACCOUNTANTS" in the Statement of Additional Information.

/s/ KPMG Part Marwick LLP
KPMG Part Marwick LLP

August 31, 1995

MENTOR INSTITUTIONAL TRUST
CASH MANAGEMENT PORTFOLIO
YIELD COMPUTATION SCHEDULE

Account Balance (1 share @ $1.00) $1.00

Dividend Declaration

April 24, 1995 0.000166619
April 25, 1995 0.000167065
April 26, 1995 0.000168218
April 27, 1995 0.000167516
April 28, 1995 0.000167601
April 29, 1995 0.000167602
April 30, 1995 0.000167602
-----------
0.001172223

Ending Account Balance 1.001172223
Less: Beginning Account Balance 1.000000000
-----------
Difference 0.001172223

Base Period Return
(Difference/Beginning Account Balance) 0.001172223

Yield Quotation
(Base Period Return *365/7) 6.11%

Effective Yield Quotation
[(Base Period Return +1)*365/7)] 6.30%

These quotations were computed based on
the seven days ending April 30, 1995.

<PAGE>

MENTOR INSTITUTIONAL TRUST
FUND YIELD CALCULATION
(CALENDAR MONTH-END METHOD)
30 DAY BASE PERIOD ENDED APRIL 30, 1995

Fund Yield = 2 [((a-b)/cd+1)^6 - 1]

Intermediate Fixed-
Duration Income
Portfolio Portfolio
<S> <C> <C>
a = dividends and interest earned during the month 62,453.90 152,620.99
b = expenses accrued during month 417.53 1,030.91
c = average dividend shares outstanding during the month 845,510.00 2,066,373.00
d = net asset value price per share on the last day of the month 12.90 12.98

FUND YIELD 6.92% 6.88%

</TABLE>

<PAGE>

MENTOR INSTITUTIONAL TRUST
PERFORMANCE CALCULATION
FOR THE PERIOD FROM COMMENCEMENT OF OPERATIONS TO APRIL 30, 1995

Intermediate Fixed- Cash
Duration Income Management
Portfolio Portfolio Portfolio

Initial Investment $1,000.00 $1,000.00 $1,000.00
Initial NAV $12.50 $12.50 $1.00
Initial Shares 80.00 80.00 1,000.00
Shares from Distribution 1.58 1.86 23.87
End of Period NAV $12.90 $12.98 $1.00
Total Return 5.24% 6.25% 2.39%

<ARTICLE> 6
<SERIES>
<NUMBER> 01
<NAME> Mentor Cash Management Portfolio

<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-END> APR-30-1995
<INVESTMENTS-AT-COST> 48,156,266
<INVESTMENTS-AT-VALUE> 48,156,266
<RECEIVABLES> 44,596
<ASSETS-OTHER> 95,500
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 48,296,362
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 341,617
<TOTAL-LIABILITIES> 341,617
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 47,954,745
<SHARES-COMMON-STOCK> 47,954,745
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 47,954,745
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 740,989
<OTHER-INCOME> 0
<EXPENSES-NET> 4,871
<NET-INVESTMENT-INCOME> 736,118
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 736,118
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 736,118
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 74,118,432
<NUMBER-OF-SHARES-REDEEMED> (26,661,472)
<SHARES-REINVESTED> 497,785
<NET-CHANGE-IN-ASSETS> 47,954,745
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 4,871
<AVERAGE-NET-ASSETS> 30,474,711
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> 0.02
<PER-SHARE-GAIN-APPREC> 0.00
<PER-SHARE-DIVIDEND> (0.02)
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> 0.04
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<ARTICLE> 6
<SERIES>
<NUMBER> 02
<NAME> Mentor Intermediate Duration Portfolio

<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-END> APR-30-1995
<INVESTMENTS-AT-COST> 10,892,472
<INVESTMENTS-AT-VALUE> 11,002,378
<RECEIVABLES> 197,093
<ASSETS-OTHER> 42,237
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 11,241,708
<PAYABLE-FOR-SECURITIES> 285,323
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 45,877
<TOTAL-LIABILITIES> 331,200
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 10,573,788
<SHARES-COMMON-STOCK> 845,612
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 65,314
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 161,500
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 109,906
<NET-ASSETS> 10,910,508
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 275,448
<OTHER-INCOME> 0
<EXPENSES-NET> 1,821
<NET-INVESTMENT-INCOME> 273,627
<REALIZED-GAINS-CURRENT> 161,500
<APPREC-INCREASE-CURRENT> 109,906
<NET-CHANGE-FROM-OPS> 545,033
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 208,312
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 831,756
<NUMBER-OF-SHARES-REDEEMED> (2,488)
<SHARES-REINVESTED> 16,344
<NET-CHANGE-IN-ASSETS> 10,910,509
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 4,871
<AVERAGE-NET-ASSETS> 10,550,744
<PER-SHARE-NAV-BEGIN> 12.50
<PER-SHARE-NII> 0.33
<PER-SHARE-GAIN-APPREC> 0.32
<PER-SHARE-DIVIDEND> (0.25)
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 12.90
<EXPENSE-RATIO> 0.05
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<ARTICLE> 6
<SERIES>
<NUMBER> 03
<NAME> Mentor Fixed-Income Portfolio

<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-END> APR-30-1995
<INVESTMENTS-AT-COST> 26,921,624
<INVESTMENTS-AT-VALUE> 27,187,878
<RECEIVABLES> 548,445
<ASSETS-OTHER> 68,904
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 27,802,227
<PAYABLE-FOR-SECURITIES> 752,217
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 98,495
<TOTAL-LIABILITIES> 850,712
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 25,916,845
<SHARES-COMMON-STOCK> 2,075,636
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 164,675
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 603,741
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 266,254
<NET-ASSETS> 26,951,515
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 778,881
<OTHER-INCOME> 0
<EXPENSES-NET> 5,146
<NET-INVESTMENT-INCOME> 773,735
<REALIZED-GAINS-CURRENT> 603,741
<APPREC-INCREASE-CURRENT> 286,254
<NET-CHANGE-FROM-OPS> 869,995
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 609,060
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2,331,660
<NUMBER-OF-SHARES-REDEEMED> (303,663)
<SHARES-REINVESTED> 47,639
<NET-CHANGE-IN-ASSETS> 26,951,515
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 5,146
<AVERAGE-NET-ASSETS> 26,215,074
<PER-SHARE-NAV-BEGIN> 12.50
<PER-SHARE-NII> 0.38
<PER-SHARE-GAIN-APPREC> 0.40
<PER-SHARE-DIVIDEND> (0.30)
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 12.98
<EXPENSE-RATIO> 0.05
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>