Registration No. 33-80784
File No. 811-8484
P R O S P E C T U S
Class E shares November 1, 1996
Mentor Perpetual International Portfolio
Mentor Perpetual International Portfolio seeks long-term capital
appreciation by investing in a diversified portfolio of equity securities of
issuers outside the United States. The Portfolio is a diversified investment
portfolio of Mentor Institutional Trust. Mentor Perpetual Advisors, LLC is the
Portfolio's investment adviser. An investment in shares of the Portfolio offered
by this Prospectus is designed for institutional and high net-worth individual
investors who invest or maintain their accounts in the Portfolio with the
assistance of a broker-dealer, financial consultant, or similar service
provider. THE PORTFOLIO MAY USE LEVERAGE -- THAT IS, IT MAY BORROW MONEY TO
PURCHASE ADDITIONAL PORTFOLIO SECURITIES, WHICH INVOLVES SPECIAL RISKS.
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 March 11, 1996 Statement of Additional Information, as
amended from time to time. For a free copy of the Statement, call Mentor
Distributors, LLC 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
23218-1357.
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Mentor Distributors, LLC
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 REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
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EXPENSE SUMMARY
Expenses are one of several factors to consider when investing in the
Portfolio. Expenses shown reflect the 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 Fee None
Exchange Fee None
ANNUAL PORTFOLIO OPERATING EXPENSES:
(as a percentage of average net assets)
Management Fees 1.00%
12b-1 Fees 0.00%
Shareholder Service Fee 0.25%
Other Expenses (after expense limitation) 0.10%*
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Total Portfolio Operating Expenses (after
expense limitation) 1.35%*
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* Other Expenses and Total Portfolio Operating Expenses reflect a voluntary
expense limitation. In the absence of the expense limitation, Other Expenses are
expected to be 0.35% and Total Portfolio Operating Expenses are expected to be
1.60%.
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 YEARS
- ------ -------
$ 14 $44
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 Example should not be considered a representation
of future performance; actual expenses may be more or less than those shown.
An investment in shares of the Institutional Class (Class D shares) of the
Portfolio is not subject to a shareholder service fee; these shares are sold to
institutional and high net-worth individual investors who do not invest or
maintain their accounts in the Portfolio through or with the assistance of a
broker-dealer, financial consultant, or similar service provider, or who
otherwise do not wish to take advantage of any benefits available to them as a
result of payments made under the Portfolio's Shareholder Servicing Plan. See
"Purchase of Shares -- Shareholder Servicing Plan; financial intermediaries".
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INVESTMENT OBJECTIVE AND POLICIES
Mentor Perpetual 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 Advisors, LLC, the Portfolio's
investment adviser ("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. Investments 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.
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, 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 objective. 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. At such times, the Portfolio may invest without limit
in securities of issuers located in the United States. It is impossible to
predict when, or for how long, the Portfolio will use these defensive
strategies.
INVESTMENTS IN SMALLER COMPANIES. The Portfolio 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 also involve certain special risks. Such
companies may have
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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. Investments in foreign securities entail certain risks.
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.
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
certain of these practices and risks they may involve.
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
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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.
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.
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 future"
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 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
and futures transactions only if Mentor Perpetual believes that a liquid
secondary market exists for such options 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 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.)
REPURCHASE AGREEMENTS; SECURITIES LOANS. The Portfolio may enter into
repurchase agreements and securities loans. Under a repurchase agreement, the
Portfolio purchases a debt instrument for a relatively short period (usually not
more than one week), which the seller agrees to repurchase at a fixed time and
price, representing the
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Portfolio's cost plus interest. Under a securities loan, the Portfolio lends
portfolio securities. The Portfolio will enter into repurchase agreements and
securities loans only with commercial banks and with registered broker-dealers
who are members of a national securities exchange or market makers in government
securities, and in the case of repurchase agreements, only if the debt
instrument subject to the repurchase agreement is a U.S. Government security.
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. If the
other party should become involved in bankruptcy or insolvency proceedings, it
is possible that the Portfolio may be treated as an unsecured creditor and be
required to return the underlying collateral to the other party's estate.
Except for investment policies designated in this Prospectus or the
Statement of Additional as fundamental, the investment objective and policies
described herein are not fundamental and may be changed by the Trustees without
shareholder approval. 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
The Trustees of Mentor Institutional Trust (the "Trust") are responsible
for generally overseeing the conduct of the Portfolio's business. Mentor
Perpetual Advisors, LLC ("Mentor Perpetual"), located at 901 East Byrd Street,
Richmond, Virginia 23219, acts as investment adviser to the Portfolio. Mentor
Investment Group, LLC ("Mentor Investment Group") serves as administrator to the
Portfolio. Mentor Investment Group receives no compensation from the Portfolio
for the performance of such services. Mentor Investment Group has agreed to bear
certain expenses of the Portfolio pursuant to a voluntary expense limitation
currently in effect. This limitation may be terminated at any time.
Mentor Perpetual is an investment advisory firm owned equally by Perpetual
plc and Mentor Investment Advisors, LLC, an affiliate of Mentor Investment
Group. The Perpetual organization currently serves as investment adviser for
assets of more than $6 billion. Its 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 Investment Group is a subsidiary of Wheat First Butcher Singer, Inc.
("Wheat First Butcher Singer"), a diversified financial services holding
company. Wheat First Butcher Singer, through other subsidiaries, also engages in
securities brokerage, investment banking, and related businesses. EVEREN Capital
Corporation has a 20% ownership in Mentor Investment Group and may acquire
additional ownership based principally on the amount of Mentor Investment
Group's revenues derived from assets attributable to clients of EVEREN
Securities, Inc. and its affiliates.
Subject to the general oversight of the Trustees of the Trust, Mentor
Perpetual manages the Portfolio in accordance with the stated policies of the
Portfolio. 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. Mentor Perpetual may at times cause the Portfolio to pay
commissions to broker-dealers affiliated with Mentor Perpetual.
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Expenses incurred in the operation of the Portfolio or otherwise allocated
to the 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 its 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, certain 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.
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.
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.
Securities quoted in foreign currencies are translated into U.S. dollars at
the current exchange rates or at such other rates as the Trustees may determine
in computing net asset value. As a result, fluctuations in the values of such
currencies in relation to the U.S. dollar will affect the net asset value of
Portfolio shares even though there has not been any change in the values of such
securities as quoted in such foreign currencies.
PURCHASE OF SHARES
Class E shares of the Portfolio are available to shareholders who invest or
maintain a Portfolio account with the assistance of a broker-dealer, financial
consultant, or similar service provider (a "financial intermediary").
Shares are sold at a price based on the Portfolio's net asset value next
determined after a purchase order is received by the Portfolio. In most cases,
in order to receive that day's public offering price, your order must be
received by the Trust or Mentor Distributors, LLC ("Mentor Distributors") before
the close of regular trading on the New York Stock Exchange.
Mentor Distributors, LLC, located at 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 in the Portfolio by
submitting completed application materials along with a purchase order, and by
making payment to Mentor Distributors or the Trust, or through a financial
intermediary. If you purchase shares through your financial intermediary, your
financial intermediary will be responsible for forwarding any necessary
documentation and payments to Mentor Distributors.
Investors will be required to make minimum initial investments of $500,000
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
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investment requirements. The Portfolio reserves the right at any time to change
the initial and subsequent investment minimums required of investors.
If you buy shares through a financial intermediary, the financial
intermediary must ensure that Mentor Distributors receives your order before the
close of regular trading on the New York Stock Exchange for you to receive that
day's public offering price.
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.
Mentor Distributors, Mentor Perpetual, and affiliates thereof, at their own
expense and out of their own assets, may provide compensation to dealers in
connection with sales of shares of the Portfolio. Such compensation may include,
but is not limited to, financial assistance to dealers in connection with
conferences, sales, or training programs for their employees, seminars for the
public, advertising or sales campaigns, or other dealer-sponsored special
events. In some instances, this compensation may be made available only to
certain dealers whose representatives have sold or are expected to sell
significant amounts of shares. In addition, if an investor purchases shares of
the Portfolio through EVEREN Securities, Inc. with the redemption proceeds
received by the investor within the preceding 90 days from the sale of shares of
any non-Mentor open-end mutual fund, EVEREN Securities, Inc. may compensate the
investor's investment consultant in connection with that purchase. Dealers may
not use sales of Portfolio shares to qualify for this compensation to the extent
such may be prohibited by the laws of any state or any self-regulatory agency,
such as the National Association of Securities Dealers, Inc.
In all cases Mentor Perpetual or Mentor Distributors reserves the right to
reject any particular investment.
SHAREHOLDER SERVICING PLAN; FINANCIAL INTERMEDIARIES. The Portfolio has
adopted a Shareholder Servicing Plan (the "Plan") with respect to its Class E
shares. Under the Plan, financial intermediaries may enter into shareholder
service agreements with Mentor Distributors to provide administrative support to
their customers who hold Class E shares of the Portfolio. In return for
providing these support services, a financial intermediary may receive payments
from Mentor Distributors at a rate not exceeding 0.25% of the average daily net
assets of the Portfolio attributable to the Class E shares held by its
customers. These support services may include, but are not limited to, the
following: providing office space, equipment, telephone facilities, and various
personnel, including clerical, supervisory, and computer personnel, as necessary
or beneficial to establish and maintain shareholder accounts and records;
processing purchase and redemption transactions and automatic investments of
client account cash balances; answering routine client inquiries regarding the
Portfolio; assisting clients in changing dividend options, account designations,
and addresses; and providing such other services as Mentor Distributors
reasonably requests.
In addition to receiving payments under the Plan, financial intermediaries
may be compensated by Mentor Perpetual and/or Mentor Investment Group, or
affiliates thereof, for providing administrative support services to
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holders of Class E shares of the Portfolio. These payments will be made directly
by Mentor Perpetual and/or Mentor Investment Group and will not be made from the
assets of the Portfolio.
When you effect transactions with the Portfolio (including, for example,
purchases, sales, or redemptions of shares) through a financial intermediary,
your financial intermediary, and not the Portfolio, will be responsible for
taking all steps, and furnishing all necessary documentation, to effect the
transactions. Your financial intermediary may charge for these services. Certain
financial intermediaries may not effect transactions with the Portfolio for
their clients.
REDEMPTION OF SHARES
You can sell your shares to the Portfolio any day the New York Stock
Exchange is open, either directly to the Portfolio or through your financial
intermediary.
SELLING SHARES DIRECTLY TO THE PORTFOLIO. A shareholder may redeem all or
any portion of its shares in the Portfolio any day the New York Stock Exchange
is open by sending a signed letter of instruction and stock power form, along
with any certificates that represent shares the shareholder wants to sell, to
the Portfolio c/o: Mentor Institutional Trust, P.O. Box 1357, Richmond, Virginia
23218-1357 or to Mentor Distributors. 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. In
order to receive that day's net asset value, your request must be received
before the close of regular trading on the New York Stock Exchange. The
Portfolio will only redeem shares for which it has received payment. A check for
the proceeds will normally be mailed on the next business day after a request in
good order is received.
SELLING SHARES THROUGH YOUR FINANCIAL INTERMEDIARY. Your financial
intermediary must receive your request before the close of regular trading on
the New York Stock Exchange to receive that day's net asset value. If you redeem
your shares through a financial intermediary, your financial intermediary will
be responsible for delivering your redemption request and all necessary
documentation to the Portfolio and may charge you for its services.
GENERAL. 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.
If shares 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.
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 shareholders against the possibility of fraud. Mentor Distributors
usually requires additional documentation for the sale of shares by a
corporation, partnership, agent, fiduciary, or surviving joint owner. Contact
Mentor Distributors for details.
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 redemptions, or postpone payment for more than seven days,
as permitted by federal securities law. In addition,
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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 in 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.
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.
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.
Shareholders of the Portfolio who are U.S. citizens or residents may be
able to claim a foreign tax credit or deduction on their U.S. income tax returns
with respect to foreign taxes paid by the Portfolio. If, at the end of the
fiscal year of the Portfolio, more than 50% of the Portfolio's total assets are
represented by securities of foreign corporations, the Portfolio intends to make
an election permitted by the Internal Revenue Code to treat any foreign taxes it
paid as paid by its shareholders. In that case, shareholders who are U.S.
citizens, U.S. corporations, and, in some cases, U.S. residents will be required
to include in U.S. taxable income their pro rata share of such taxes, but may
then be entitled to claim a foreign tax credit or deduction (but not both) for
their share of such taxes.
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).
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 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
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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. The Portfolio's
shares are currently divided into four classes. Only shares of the Portfolio's
Class E shares are being offered by this Prospectus. The Portfolio also offers
other classes of shares with different sales charges and expenses. Because of
these different sales charges and expenses, the investment performance of the
classes will vary. FOR MORE INFORMATION, INCLUDING YOUR ELIGIBILITY TO PURCHASE
ANY OTHER CLASS OF SHARES, CONTACT MENTOR DISTRIBUTORS.
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 neither the Portfolio nor the Trust is required to
hold annual meetings of 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.
Investors Fiduciary Trust Company, 127 West 10th Street, Kansas City,
Missouri 64105, serves as the Portfolio's custodian. State Street Bank and Trust
Company, c/o Boston Financial Data Services, Inc., 2 Heritage Drive, North
Quincy, Massachusetts 02171, 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 Class E shares of the Portfolio. The Portfolio's
"yield" for each class of shares 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 Class E shares of the Portfolio through the most recent calendar quarter
represents the average annual compounded rate of return on an investment of
$1,000 in the shares over the period. Total return may also be presented for
other periods or based on investment at reduced sales charge levels or at net
asset value. Investment performance for different classes of shares of the
Portfolio will differ. Quotations of yield and total return for a period when an
expense limitation was in effect will be greater than if the limitation had not
been in effect. 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 or its investment personnel.
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, the Portfolio's operating expenses and the class of shares
purchased. Investment performance also often reflects the risks associated with
the Portfolio's investment objective and policies. These factors should be
considered when comparing the Portfolio's investment results to those of other
mutual funds and other investment vehicles.
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NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
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. 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
Perpetual
International
Portfolio
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PROSPECTUS
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