As filed with the Securities and Exchange Commission on May 28, 1996
Registration No. 33-80784
File No. 811-8484
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [ X ]
Pre-Effective Amendment No. ____ [ ]
Post-Effective Amendment No. 6 [ X ]
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [ X ]
Amendment No. 9 [ X ]
(Check appropriate box or boxes)
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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
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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
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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)
[ X ] 60 days after filing pursuant to paragraph (a)(1)
[ ] on (date) pursuant to paragraph (a)(1)
[ ] 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
The Registrant has registered an indefinite number or amount of securities under
the Securities Act of 1933 pursuant to Rule 24f-2. A Rule 24f-2 notice for the
fiscal year ended October 31, 1995 has been filed with the Securities and
Exchange Commission on December 28, 1995.
The Cross Reference Sheet in respect of Mentor Institutional Trust and its
Portfolios, the prospectus of Mentor Institutional Trust, and the prospectus of
the SNAP Portfolio contained in Amendment No. 5 to the Registrant's Registration
Statement on Form N-1A (File No. 80784) filed on March 11, 1996 are incorporated
herein by reference.
MENTOR INSTITUTIONAL TRUST
Supplement Dated May 23, 1996
to
Prospectus Dated March 11, 1996
The information set out under "Annual Portfolio Operating Expenses" on page
2 of the Prospectus regarding Mentor Perpetual International Portfolio (referred
to as the "Mentor International Portfolio" in the Prospectus) is replaced in its
entirety with the following:
Management Fees 1.00%
12-b1 Fees 0.00%
Other Expenses* 0.10%
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Total Portfolio Operating Expenses* 1.10%
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*Other Expenses and Total Portfolio Operating Expenses reflect a
voluntary expense limitation. In the absence of this expense limitation, Other
Expenses are expected to be 0.35% for the International Portfolio and Total
Portfolio Operating Expenses are expected to be 1.35% for that Portfolio.
EXAMPLE
An investment of $1,000 in the International Portfolio would incur the
following expenses, assuming 5% annual return and redemption at the end of each
period:
1 year $12
3 year $35
The following paragraph is added to page 14 of the Prospectus at the end of the
section "Purchase of shares":
Mentor Distributors, Commonwealth, Mentor Perpetual, or affiliates
thereof, at their own expense and out of their own assets, may provide
compensation to dealers in connection with sales of shares of a 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. Dealers may not use sales of a
Portfolio's 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.
PROSPECTUS May 23, 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. 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
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, 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.
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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.
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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 1.00%
12b-1 Fees 0.00%
Other Expenses* 0.10%
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Total Portfolio Operating Expenses* 1.10%
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*Other Expenses and Total Portfolio Operating Expenses reflect a voluntary
expense limitation currently in effect. In the absence of this expense
limitation, Other Expenses are expected to be 0.35% and Total Portfolio
Operating Expenses are expected to be 1.35%.
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 $12
3 years $35
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.
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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 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, 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 higherrated 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.
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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. Investments in foreign securities entail
certain risks. 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
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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.
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 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 AND 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 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
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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.
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.
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. Mentor does not receive compensation from
the Portfolio for the performance of such services. Mentor Perpetual is an
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 pols 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. Mentor Perpetual may at times cause the Portfolio to pay
commissions to broker-dealers affiliated with Mentor Perpetual.
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.
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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.
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:
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).
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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.
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.
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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.
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 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
-9-
<PAGE>
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 Portfolio and the
Trust are 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. 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 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 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, 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.
-10-
<PAGE>
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 secu rities 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
----------
PROSPECTUS
----------
Mentor Distributors, Inc.
<PAGE>
Part B to Amendment No. 5 to the Registrant's Registration Statement on Form
N-1A (File No. 33-80784) filed on March 11, 1996, which includes the Statement
of Additional Information of Mentor Institutional Trust and the SNAP Portfolio
and various financial information in respect thereof, is incorporated herein by
reference.
MENTOR INSTITUTIONAL TRUST
Supplement Dated May 23, 1996
to
Statement of Additional Information Dated March 11, 1996
The Statement of Additional Information of Mentor Institutional Trust
dated March 11, 1996 in respect of the Mentor Cash Management Portfolio, Mentor
Fixed-Income Portfolio, Mentor Intermediate Duration Portfolio, and Mentor
Perpetual International Portfolio (referred to as the "Mentor International
Portfolio" in the Statement of Additional Information) is amended by adding the
following as the third paragraph of Page 27:
"Under its Management Contract dated May 15, 1996, Mentor Perpetual
International Portfolio pays a quarterly fee to Mentor Perpetual Advisors,
L.L.C. based on the average net assets of that Portfolio, as determined at the
close of each business day during the quarter at the annual rate of 1.00% of
average net assets."
The following paragraph is added to page 26 as the last paragraph in
the section "Investment Advisory and Other Services":
Rod Smyth, Managing Director of Mentor Perpetual, is responsible for
overseeing the investments and day-to-day operations of the Mentor Perpetual
joint venture. From his office in Richmond, Virginia he is the primary contact
for marketing and client service for the joint venture. Mr. Smyth has 12 years
of investment experience, including positions as market strategist (two years),
portfolio manager (five years) and institutional salesperson (five years). His
previous employers include Baring Securities, Ulster Bank Investment Managers,
Citicorp Scrimgeour Vickers, and Nomura International. He holds an M.A. in
economics, with honors, from Dundee University.
PART C. OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements and Supporting Schedules (Included in Parts A
and B)(7)
(1) Mentor Cash Management Portfolio, Mentor Fixed-Income Portfolio, and
Mentor Intermediate Duration Portfolio:
Statement of Assets and Liabilities -- October 31, 1995.
Statement of Operations -- period ended October 31, 1995.
Statement of Changes in Net Assets -- period ended October 31,
1995.
Financial Highlights.
Notes to Financial Statements.
Portfolio of Investments -- October 31, 1995.
Independent Auditors Report
(2) SNAP FUND (unaudited):
Statement of Assets of Liabilities -- December 31, 1995.
Statement of Operations -- six months ended December 31, 1995.
Statement of Changes in Net Assets -- six months ended December
31, 1995.
Financial Highlights.
Notes to Financial Statements.
Portfolio of Investments -- December 31, 1995.
(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.1 (B) - Form of Management Contract
(SNAP Fund).5
(C) - Form of Management Contract (Mentor Perpetual International
Portfolio).8
(D) - Form of Administration Agreement.1
(6) (A) - Form of Distribution Agreement.2
-1-
<PAGE>
(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.8
(12) - Inapplicable.
(13) - Inapplicable.
(14) - Inapplicable.
(15) - Inapplicable.
(16) - Schedules for Computation of Performance.7
(27)(a) Financial Data Schedule -- Mentor Cash Management Portfolio 8
(b) Financial Data Schedule -- Mentor Intermediate Duration
Portfolio 8
(c) Financial Data Schedule -- Mentor Fixed-Income Portfolio 8
(d) Financial Data Schedule -- SNAP Fund 8
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 Registrant's initial Registration
Statement on Form N-1A under the Securities Act of 1933 on Form N-1A
filed on June 28, 1994.
3 Incorporated herein by reference to Pre-Effective Amendment No. 2 to
the Registrant's Registration Statement on Form N-1A filed on November
18, 1994.
4 Incorporated herein by reference to Amendment No. 1 to the Registrant's
Registration Statement on Form N-1A filed on July 3, 1995.
5 Incorporated herein by reference to Amendment No. 2 to the Registrant's
Registration Statement on Form N-1A filed on July 24, 1995.
6 Incorporated herein by reference to Amendment No. 3 to the Registrant's
Registration Statement on Form N-1A filed on September 5, 1995.
7 Incorporated herein by reference to Amendment No. 5 to the Registrant's
Registration Statement on Form N-1A filed on March 11, 1996.
8 Filed herewith. 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 May 15, 1996.
-2-
<PAGE>
Number of Record
Series Holders
Mentor Cash Management Portfolio 68
SNAP Fund 453
Mentor Intermediate Duration Portfolio 10
Mentor Fixed-Income Portfolio 195
Mentor Perpetual International Portfolio 1
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) Commonwealth Investment Counsel, Inc., the investment adviser of
the Mentor Cash Management, Fixed-Income, and Intermediate Duration Portfolios
and the SNAP Fund, serves as investment adviser to Cash Resource Trust, Mentor
Balanced Portfolio, Mentor Quality Income Portfolio, and Mentor Short-Duration
Portfolio, each of which is an open-end investment company, and Mentor Income
Fund, Inc., a closed-end investment company.
The following is additional information with respect to the directors
and officers of Commonwealth Investment Counsel, Inc.:
<TABLE>
<CAPTION>
OTHER SUBSTANTIAL
BUSINESS, PROFESSION,
VOCATION OR EMPLOYMENT
POSITION WITH THE DURING THE PAST TWO
NAME INVESTMENT ADVISER FISCAL YEARS
<S> <C> <C>
John G. Davenport President; Director None
William F. Johnston, III Senior Vice President None
P. Michael Jones Senior Vice President None
-3-
<PAGE>
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
R. Preston Nuttall Senior Vice President Formerly, Senior Vice
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, Jr. Vice President Vice President, Mentor
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 President Formerly, Associate Vice
President, Mentor
Investment Group, Inc.,
901 East Byrd Street,
Richmond, VA 23219
</TABLE>
-4-
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
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
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
</TABLE>
-5-
<PAGE>
(b) The following is additional information with respect to Mentor
Perpetual Advisors, L.L.C., the investment adviser to the Mentor Perpetual
International Portfolio:
<TABLE>
<CAPTION>
POSITION WITH VOCATION OR EMPLOYMENT
NAME INVESTMENT ADVISER DURING THE PAST TWO FISCAL YEARS
<S> <C> <C>
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.
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.
</TABLE>
-6-
<PAGE>
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.:
<TABLE>
<CAPTION>
NAME AND PRINCIPAL POSITION AND OFFICES POSITIONS AND OFFICES
BUSINESS ADDRESS WITH UNDERWRITERS WITH REGISTRANT
<S> <C> <C>
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.
</TABLE>
(c) Registrant has no principal underwriter who is not an affiliate of
the Registrant.
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, State
Street Bank and Trust Company (through Boston Financial Data Services, Inc.
("BFDS")) (all Portfolios other than SNAP Fund), and Central Fidelity National
-7-
<PAGE>
Bank (SNAP Fund only). The address of the Secretary is 901 East Byrd Street,
Richmond, Virginia, 23219. The address of BFDS is 2 Heritage Drive, North
Quincy, Massachusetts 02171. 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 change.
(b) Inapplicable.
(c) 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.
-8-
<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 23rd day of May, 1996.
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.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
<S> <C> <C>
- -------------------------------- Trustee
Arnold H. Dreyfuss
- -------------------------------- Trustee
Thomas F. Keller
* Trustee May 23, 1996
- --------------------------------
Daniel J. Ludeman
* Trustee May 23, 1996
- --------------------------------
Louis W. Moelchert, Jr.
</TABLE>
-9-
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
* Trustee May 23, 1996
- --------------------------------
Stanley F. Pauley
* Trustee May 23, 1996
- ---------------------------------
Troy A. Peery, Jr.
/s/ PAUL F. COSTELLO President May 23, 1996
- ---------------------------
Paul F. Costello (Principal Executive Officer)
/s/ TERRY L. PERKINS Treasurer May 23, 1996
- --------------------------
Terry L. Perkins (Principal Financial and
Accounting Officer)
*By /s/ PAUL F. COSTELLO May 23, 1996
----------------------
Paul F. Costello
Attorney-in-Fact
</TABLE>
-10-
<PAGE>
EXHIBIT INDEX
Exhibit Page
(5) Form of Management contract
(Mentor Perpetual International Portfolio)
(11) Consent of Independent
Accountants
(27)(a) Financial Data Schedule --
Mentor Cash Management
Portfolio
(27)(b) Financial Data Schedule --
Mentor Intermediate
Duration Portfolio
(27)(c) Financial Data Schedule --
Mentor Fixed-Income
Portfolio
(27)(d) Financial Data Schedule --
SNAP Fund
-11-
Exhibit 5
MENTOR INSTITUTIONAL TRUST
MANAGEMENT CONTRACT
This Management Contract dated as of May , 1996 between MENTOR
INSTITUTIONAL TRUST, a Massachusetts business trust (the "Trust"), on behalf of
Mentor Perpetual 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. COMPENSATION TO BE PAID BY THE PORTFOLIO TO THE MANAGER.
As compensation for the services performed and the facilities furnished and
expenses assumed by the Manager, including the services of any consultants
retained by the Manager, the Portfolio shall pay the Manager, as promptly as
possible after the last day of each month, a fee, calculated daily, of 1.00%
annually of the Portfolio's average daily net assets. The first payment of the
fee shall be made as promptly as possible at the end of the month next
succeeding the effective date of this Agreement, and shall constitute a full
payment of the fee due the Manager for all services prior to that date. If this
Agreement is terminated as of any date that is not the last day of a month, such
fee shall be paid as promptly as possible after such date of termination, shall
be based on the average daily net assets of the Portfolio in that period from
the beginning of such month to such date of termination, and shall be that
proportion of such average daily net assets as the number of business days in
such period bears to the number of business days in such month. The average
daily net assets of the Portfolio shall in all cases be based only on business
days and be computed as of the time of the regular close of business of the New
York Stock Exchange, or such other time as may be determined by the Trustees.
Each such payment shall be accompanied by a report of the Trust prepared either
by the Trust or by a reputable firm of independent accountants which shall show
the amount properly payable to the Manager under this Agreement and the detailed
computation thereof.
4. 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.
5. 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
May , 1998 (unless terminated automatically as set forth in Section 4), and
shall continue for successive one-year periods thereafter, if approved in
accordance with Section 6, 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 5 will be
without the payment of any penalty.
6. 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.
7. 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.
8. 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.
9. 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 Perpetual International Portfolio
By:___________________________________
MENTOR PERPETUAL ADVISORS L.L.C..
By:___________________________________
CONSENT OF INDEPENDENT ACCOUNTANTS
The Trustees and Shareholders
Mentor Institutional Trust
We consent to the use of our report dated December 8, 1995, incorporated by
reference herein, and to the reference to our firm under the captions "FINANCIAL
HIGHLIGHTS" in the prospectus for the Mentor Cash Management Portfolio, Mentor
Intermediate Duration Portfolio, Mentor Fixed-Income Portfolio and Mentor
International Portfolio, and "INDEPENDENT ACCOUNTANTS" in the Statements of
Additional Information for the Mentor Cash Management Portfolio, Mentor
Intermediate Duration Portfolio, Mentor Fixed-Income Portfolio, Mentor Perpetual
International Portfolio and SNAP Fund.
/s/ KPMG PEAT MARWICK, LLP
KPMG Peat Marwick, LLP
Boston, Massachusetts
May 21, 1996
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 01
<NAME> CASH MANAGEMENT
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-END> OCT-31-1995
<INVESTMENTS-AT-COST> 69,852,773
<INVESTMENTS-AT-VALUE> 69,852,773
<RECEIVABLES> 158,110
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 27,367
<TOTAL-ASSETS> 70,038,250
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 41,271
<TOTAL-LIABILITIES> 41,271
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 69,996,979
<SHARES-COMMON-STOCK> 69,996,979
<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> 69,996,979
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 2,439,036
<OTHER-INCOME> 0
<EXPENSES-NET> (16,235)
<NET-INVESTMENT-INCOME> 2,422,801
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 2,442,801
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 2,442,801
<DISTRIBUTIONS-OF-GAINS> 0
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<NUMBER-OF-SHARES-SOLD> 137,216,173
<NUMBER-OF-SHARES-REDEEMED> (69,627,001)
<SHARES-REINVESTED> 2,407,807
<NET-CHANGE-IN-ASSETS> 69,996,979
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<GROSS-EXPENSE> 79,842
<AVERAGE-NET-ASSETS> 47,481,607
<PER-SHARE-NAV-BEGIN> 1.00
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<PER-SHARE-DIVIDEND> 0.05
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</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 02
<NAME> INTERMEDIATE DURATION
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-END> OCT-31-1995
<INVESTMENTS-AT-COST> 11,970,839
<INVESTMENTS-AT-VALUE> 12,126,849
<RECEIVABLES> 378,327
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 5,362
<TOTAL-ASSETS> 12,510,538
<PAYABLE-FOR-SECURITIES> 536,418
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 8,323
<TOTAL-LIABILITIES> 544,741
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 11,278,113
<SHARES-COMMON-STOCK> 898,741
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 54,440
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 477,234
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 156,010
<NET-ASSETS> 11,965,797
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 668,347
<OTHER-INCOME> 0
<EXPENSES-NET> (4,702)
<NET-INVESTMENT-INCOME> 663,645
<REALIZED-GAINS-CURRENT> 468,099
<APPREC-INCREASE-CURRENT> 156,010
<NET-CHANGE-FROM-OPS> 1,287,754
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 600,070
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 855,389
<NUMBER-OF-SHARES-REDEEMED> (2,488)
<SHARES-REINVESTED> 45,840
<NET-CHANGE-IN-ASSETS> 11,965,797
<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> 25,405
<AVERAGE-NET-ASSETS> 11,111,285
<PER-SHARE-NAV-BEGIN> 12.50
<PER-SHARE-NII> 0.78
<PER-SHARE-GAIN-APPREC> 0.74
<PER-SHARE-DIVIDEND> 0.71
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 13.31
<EXPENSE-RATIO> 0.05
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 03
<NAME> FIXED-INCOME
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-END> OCT-31-1995
<INVESTMENTS-AT-COST> 34,145,405
<INVESTMENTS-AT-VALUE> 35,192,798
<RECEIVABLES> 651,931
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 27,048
<TOTAL-ASSETS> 35,871,777
<PAYABLE-FOR-SECURITIES> 1,609,254
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 209,064
<TOTAL-LIABILITIES> 1,818,318
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 31,480,542
<SHARES-COMMON-STOCK> 2,484,138
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 172,353
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 1,353,171
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1,047,393
<NET-ASSETS> 34,053,459
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 1,797,962
<OTHER-INCOME> 0
<EXPENSES-NET> (12,658)
<NET-INVESTMENT-INCOME> 1,785,304
<REALIZED-GAINS-CURRENT> 1,341,178
<APPREC-INCREASE-CURRENT> 1,047,393
<NET-CHANGE-FROM-OPS> 4,173,875
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 1,600,958
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2,759,545
<NUMBER-OF-SHARES-REDEEMED> (396,079)
<SHARES-REINVESTED> 120,672
<NET-CHANGE-IN-ASSETS> 34,053,459
<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> 58,654
<AVERAGE-NET-ASSETS> 28,843,062
<PER-SHARE-NAV-BEGIN> 12.50
<PER-SHARE-NII> 0.81
<PER-SHARE-GAIN-APPREC> 1.14
<PER-SHARE-DIVIDEND> 0.74
<PER-SHARE-DISTRIBUTIONS> 0
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<PER-SHARE-NAV-END> 13.71
<EXPENSE-RATIO> 0.05
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 03
<NAME> SNAP
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 896,192,940
<INVESTMENTS-AT-VALUE> 896,192,940
<RECEIVABLES> 1,507,855
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<OTHER-ITEMS-ASSETS> 318,486
<TOTAL-ASSETS> 898,019,281
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<TOTAL-LIABILITIES> 327,908
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<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 18,653,166
<OTHER-INCOME> 0
<EXPENSES-NET> (385,865)
<NET-INVESTMENT-INCOME> 18,267,301
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<NUMBER-OF-SHARES-SOLD> 1,406,368,293
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<PER-SHARE-NAV-BEGIN> 1.0
<PER-SHARE-NII> 0.02
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</TABLE>
