MENTOR INSTITUTIONAL TRUST
CASH MANAGEMENT AND FIXED-INCOME PORTFOLIOS
SEMI-ANNUAL REPORT, APRIL 30, 1997
MESSAGE FROM THE CHAIRMAN AND PRESIDENT
- --------------------------------------------------------------------------------
It is our privilege to send you the Mentor Institutional Trust Semi-Annual
Report for the six-month period ended April 30, 1997.
The Trust is part of Mentor Investment Group, a firm that provides diversified
investment management services to a broad range of investors including
corporations, foundations, endowments, municipalities, public funds, and
individual investors. Seven different investment styles are available to
investors through Mentor, in both mutual funds and separately-invested
portfolios. The report that follows represents the three fixed-income Portfolios
of the Trust.
The Board of Trustees has approved changes to the investment policy of the
MENTOR INVESTMENT GROUP
SEVEN INVESTMENT STYLES
[GRAPH]
Higher
Small/Mid-Capitalization Growth
Global/International Equity Growth
Reward
Large-Capitalization Quality Growth
Tactical Asset Allocation
Balanced Management
Active Fixed Income
Cash Management
Lower Risk Higher
1
<PAGE>
MENTOR INSTITUTIONAL TRUST
CASH MANAGEMENT AND FIXED-INCOME PORTFOLIOS
SEMI-ANNUAL REPORT, APRIL 30, 1997
MESSAGE FROM THE CHAIRMAN AND PRESIDENT (CONTINUED)
- --------------------------------------------------------------------------------
Fixed-Income Portfolio. The proposed changes are intended to give Mentor
Investment Advisors, the Portfolio's manager, greater freedom to seek to fulfill
the Portfolio's investment objectives. The Portfolio will continue to seek a
high level of long-term total return and, as a secondary objective, preservation
of capital. The changes will enable the advisor to invest in a broader range of
securities, and to use additional investment strategies to achieve the
Portfolio's objectives.
The new investment guidelines are in line with industry standards and are
similar to those of the Mentor Short-Duration Portfolio and the Mentor Quality
Income Portfolio. The changes include:
INVESTMENT IN A BROADER RANGE OF SECURITIES. The advisor will continue to invest
most of the Portfolio's assets in fixed-income securities. It will also be
permitted to invest in income-producing equity securities, including preferred
stocks, convertible securities, and dividend-paying common stocks. The Portfolio
will also be permitted to invest up to 25% of its assets in foreign securities.
In addition, the advisor will be able to invest in debt instruments that entail
investment leverage, such as residual interests. While those instruments include
the risks of leveraged investments, they may be of great value in managing the
duration and volatility of the Portfolio.
PORTFOLIO CREDIT QUALITY. In broadening the investment mandate of the Portfolio,
the Trustees of the Portfolio continue to recognize the need to maintain high
quality standards. The advisor will at all times seek to maintain a
dollar-weighted credit quality of at least A, a more stringent requirement than
now defined by investment policy.
USE OF INTEREST-RATE TRANSACTIONS. The advisor will be permitted to enter into
various types of interest-rate transactions, such as interest-rate swaps. These
transactions may provide an additional means to protect the value of the
securities held in the Portfolio from interest-rate fluctuations, and to adjust
the interest-rate sensitivity of the Portfolio overall.
INVESTMENTS IN LOWER-RATED SECURITIES. The advisor will have the ability to
invest up to 10% of its assets in securities rated below investment-grade (but
rated at least B by Moody's or Standard & Poor's), and in unrated securities
determined by the advisor to be of comparable quality. Again, the advisor will
at all times seek to maintain the more stringent requirement of a
dollar-weighted average
2
<PAGE>
MENTOR INSTITUTIONAL TRUST
CASH MANAGEMENT AND FIXED-INCOME PORTFOLIOS
SEMI-ANNUAL REPORT, APRIL 30, 1997
MESSAGE FROM THE CHAIRMAN AND PRESIDENT (CONTINUED)
- --------------------------------------------------------------------------------
credit quality of at least A. The lower-rated investments may give the advisor
the ability to increase the Portfolio's current yield and potential for total
return while not unduly increasing its credit risk.
The Semi-Annual Report that follows provides commentaries from the management
teams of the Trust's U.S. Government Cash, Intermediate Duration, and
Fixed-Income Portfolios, presenting their perspectives on the markets and their
strategies for investing your assets. Complete performance information for each
Portfolio, relative to the appropriate index, is also included.
Please review the information carefully. Should you have questions, please call
your financial consultant, or call us directly, (800)382-0016. On behalf of all
of us at Mentor Investment Group, we thank you for your investment in the
fixed-income Portfolios of Mentor Institutional Trust.
Sincerely,
/s/ Daniel J. Ludeman /s/ Paul F. Costello
- ------------------------------ -----------------------
Daniel J. Ludeman Paul F. Costello
Chairman and CEO President
[LOGO]
THE MENTOR MISSION
Our mission is to provide professional investment management services through a
firm that is second to none in the quality of its investment process, the skill
and training of its professionals, and the commitment, shared by all its
associates, to deliver the highest level of service and ethical behavior to
clients.
FOR MORE INFORMATION AND PROSPECTUSES FOR MENTOR FUNDS AND THE PORTFOLIOS OF
MENTOR INSTITUTIONAL TRUST, PLEASE CALL US, (800)382-0016, OR CONTACT YOUR
FINANCIAL CONSULTANT. THE PROSPECTUSES CONTAIN COMPLETE INFORMATION REGARDING
FEES, SALES CHARGES, AND EXPENSES. PLEASE READ THEM CAREFULLY BEFORE INVESTING
OR SENDING MONEY.
3
<PAGE>
MANAGERS' COMMENTARY
MENTOR INSTITUTIONAL TRUST
U.S. GOVERNMENT CASH MANAGEMENT PORTFOLIO
- --------------------------------------------------------------------------------
The six-month period ending April 30, 1997 was an eventful one for both the
money markets and the Mentor U.S. Government Cash Management Portfolio. It
marked the Portfolio's initial period of operation as an all-government fund. In
addition, during this period, it was designated by Standard & Poor's Corporation
as a AAAm-rated fund.
In the money markets, the Federal Reserve's neutral monetary policy came to an
end when, on March 25, short rates were raised 0.25%. It was the Fed's first
action since January, 1996, one of the longest neutral periods in recent memory,
but the period nevertheless witnessed considerable volatility, caused by
speculation over the timing of the Fed's next move.
THE ECONOMY AND THE MARKET
For most of the period, the economy maintained a remarkable pattern of moderate
growth with low inflation. We seemed to be moving ahead at just the right speed,
requiring the application of neither the accelerator nor the brake. It was
inevitable, however, that slow but persistent economic growth should sooner or
later lead to concerns about inflation. With this concern, the Fed decided to
act, choosing to make a pre-emptive strike before inflation actually surfaced.
First-quarter economic data revealed a definite pick-up in the rate of growth,
indicating that inflation trouble could be drawing near.
INVESTMENT OUTLOOK
Along with higher rates came a steeper yield curve. The spread between 90-day
and one-year bills, for example, at 0.35% as recently as January, finished April
at about 0.70%. This is a clear indication that market participants expect
further Fed increases as 1997 progresses. We think it's too early to tell, but
if the present pace of economic activity continues, we agree that such
additional moves are likely.
An active Federal Reserve policy presents an exceptional challenge to the skills
of portfolio managers. Discipline and market-timing are required to provide a
competitive return during such periods of rapidly changing rates, while our
focus must remain on maintaining Mentor's high quality standards and providing
for all client liquidity needs. Our philosophy is that the Portfolio's primary
purpose is to assure safety of principal and provide funds when needed. Our
conservative investment policies combined with our new posture as an
all-government fund should assist us in better serving our shareholders in the
period ahead.
Sincerely,
Cash Management Team
4
<PAGE>
MANAGERS' COMMENTARY
MENTOR INSTITUTIONAL TRUST
INTERMEDIATE DURATION AND FIXED-INCOME PORTFOLIOS
- --------------------------------------------------------------------------------
MARKET CONDITIONS
During the six-month period ended April 30, 1997 fixed-income interest rates
increased across the yield curve. Two-year and 10-year treasuries yielded 6.27%
and 6.71% respectively on April 30, 1997, up 0.54% and 0.37% from levels six
months earlier.
The final two months of 1996 and the early part of 1997 saw interest rates fall
modestly. During February, however, as economic statistics showed increasing
strength, market participants began to assume that the Federal Reserve would
soon intervene to slow economic growth and the prospect of inflation. The
markets reacted accordingly, with rates trending upward during the February
through April period. The Fed's decision to raise the Fed Funds rate by 0.25% to
5.50% at its late-March Open Market Committee meeting confirmed the market's
assumption that tighter monetary policy was necessary. We suspect that
additional increases in the Fed Funds rate will be required in the coming
months, but that the cumulative rate adjustment required will be moderate
relative to past standards.
PERFORMANCE
For the six-month period ended April 30, 1997, the Mentor Intermediate Duration
Portfolio returned 2.27%, 0.52% above the 1.75% of its Lehman Brothers
Intermediate Government/Corporate Bond Index benchmark.* The Mentor Fixed-Income
Portfolio returned 1.58% for the six months ending April 30, 1997, 0.29% above
the 1.29% return of its Lehman Brothers Government/Corporate Bond Index
benchmark.**
Throughout the period we continued to seek to add value through security
selection, sector allocation, and yield curve-weighting strategies.*** We chose
to make only limited duration tilts, generally maintaining a portfolio duration
approximating that of our benchmarks. Our analysis led us to believe that there
was not enough clear evidence pointing toward either a higher or lower interest
rate environment to warrant a material increase or decrease in the Portfolios'
durations, and resulting relative interest-rate sensitivity. While our overall
duration stance has been largely neutral, we have felt strongly that certain
sectors of the yield curve were more attractively valued than others. As a
result, we have
5
<PAGE>
MANAGERS' COMMENTARY
MENTOR INSTITUTIONAL TRUST
INTERMEDIATE DURATION AND FIXED-INCOME PORTFOLIOS (CONTINUED)
- --------------------------------------------------------------------------------
recently employed strategies for under-weighting the short sector of the curve,
while modestly over-weighting longer areas of the curve.
As the period came to a close and the fixed-income markets weakened in the face
of strong economic statistics and Fed intervention, we chose to move the
Portfolios to a higher weighting of treasury securities. We therefore sold part
of our position in securities which appear to be the most vulnerable to
continued Fed tightenings.
MARKET OUTLOOK
As noted previously, we believe that the recent Fed tightening is likely to be
the first of several moderate interest rate increases in the coming months. This
is likely to lead to choppy markets during the early part of the upcoming
quarter and perhaps to continued weakness in the short-term. However, we
strongly feel that the Fed's current inflation vigilance is laying the
groundwork for bullish long-term prospects for the fixed-income markets. When
compared to other asset classes, and when compared to current levels of
inflation, we believe that a 30-year bond yielding in excess of 7% represents
compelling value. We plan to remain patient as we look for opportunities to
extend duration, realizing through experience that markets often over-react in
the short-term before establishing trends in keeping with long-term market
fundamentals.
Sincerely,
Fixed-Income Management Team
* The Lehman Brothers Intermediate Government/Corporate Bond Index is commonly
used to compare performance of income-oriented portfolios and includes
treasuries, agencies, and publicly-issued, fixed-rate, non-convertible,
investment-grade, dollar-denominated debt. Investors cannot invest in the
Index.
** The Lehman Brothers Government/Corporate Bond Index is commonly used to
compare performance of income-oriented portfolios and includes treasuries,
agencies, and publicly-issued, fixed-rate, non-convertible, investment-
grade, dollar-denominated debt. Investors can not invest in the Index.
*** While the portfolio managers will endeavor to manage the portfolio in
accordance with an active fixed-income investment process, there are no
guarantees that they will be successful. Past performance does not guarantee
future comparable results. Investment return and principal value will
fluctuate so that an investor's shares, when redeemed, may be worth more or
less than their original cost. Performance figures represent change in
investment value after re-investing all distributions.
6
<PAGE>
MANAGERS' COMMENTARY
MENTOR INSTITUTIONAL TRUST
INTERMEDIATE DURATION AND FIXED-INCOME PORTFOLIOS (CONTINUED)
- --------------------------------------------------------------------------------
PERFORMANCE COMPARISONS
MENTOR INTERMEDIATE DURATION
PORTFOLIO
[GRAPH]
Mentor Intermediate Lehman Brothers
12/94 10,000 10,000
1/95 10,147 10,204
2/95 10,340 10,415
3/95 10,401 10,474
4/95 10,523 10,604
5/95 10,858 10,924
6/95 10,940 10,997
7/95 10,915 10,999
8/95 11,025 11,099
9/95 11,111 11,179
10/95 11,238 11,303
11/95 11,385 11,451
12/95 11,518 11,571
1/96 11,617 11,670
2/96 11,491 11,534
3/96 11,420 11,475
4/96 11,357 11,435
5/96 11,348 11,426
6/96 11,467 11,547
7/96 11,504 11,582
8/96 11,550 11,591
9/96 11,700 11,752
10/96 11,901 11,960
11/96 12,063 12,118
12/96 12,035 12,040
1/97 12,083 12,087
2/97 12,121 12,110
3/97 12,044 12,027
4/97 12,171 12,169
Average Annual Returns as of 4/30/97
1-Year Since Inception+
7.17% 8.66%
MENTOR FIXED-INCOME
PORTFOLIO
[GRAPH]
Mentor Fixed Lehman Brothers
Income
12/94 10,000 10,000
1/95 10,196 10,192
2/95 10,421 10,428
3/95 10,511 10,498
4/95 10,625 10,644
5/95 11,092 11,090
6/95 11,215 11,179
7/95 11,131 11,135
8/95 11,290 11,278
9/95 11,407 11,393
10/95 11,593 11,560
11/95 11,785 11,751
12/95 11,974 11,924
1/96 12,046 11,998
2/96 11,802 11,743
3/96 11,676 11,645
4/96 11,575 11,564
5/96 11,539 11,545
6/96 11,688 11,700
7/96 11,716 11,726
8/96 11,688 11,698
9/96 11,885 11,907
10/96 12,158 12,184
11/96 12,384 12,408
12/96 12,262 12,270
1/97 12,271 12,285
2/97 12,309 12,311
3/97 12,165 12,164
4/97 12,350 12,342
Average Annual Returns as of 4/30/97
1-Year Since Inception++
6.69% 9.19%
The graphs compare the investment performance of each Portfolio, from inception,
to an appropriate broad-based securities index. Each graph reflects the
performance of a $10,000 investment from the date of inception through April 30,
1997. Returns do not reflect taxes payable on distributions.
In comparing the performance of a Portfolio to an index, please recognize that
market indexes do not take into account brokerage commissions that would be
incurred if the individual securities of the index were purchased. They also do
not include taxes payable on dividends and interest payments, or operating
expenses necessary to maintain a portfolio investing in the index.
The performance data quoted in this report are historical and do not predict
future investment results. Investment return and principal value will fluctuate
so that shares, when redeemed, may be worth more or less than their original
cost.
Performance is cited as of April 30, 1997, and includes changes in share price
and reinvestment of dividends and capital gains. Because shares of the
Portfolios of the Trust can only be purchased in individually-managed accounts,
the performance return information does not reflect the investment advisory fees
charged at each account level.
+ Reflects operations of Mentor Intermediate Duration Portfolio from the date
of initial public investment on 12/19/94 through 4/30/97.
++ Reflects operations of Mentor Fixed-Income Portfolio from the date of initial
public investment on 12/6/94 through 4/30/97.
7
<PAGE>
MENTOR U.S. GOVERNMENT CASH MANAGEMENT PORTFOLIO
PORTFOLIO OF INVESTMENTS
APRIL 30, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
Percent of Principal
Net Assets Amount Value
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------
U.S. GOVERNMENT SECURITIES AND AGENCIES 71.11%
Federal Home Loan Bank,
5.20%, 5/01/97 $10,370,000 $ 10,370,000
5.29%, 9/24/97 10,000,000 9,785,461
5.00%, 12/10/97 (a) 20,000,000 19,995,288
Federal Farm Credit Bank,
5.26%, 7/29/97 10,000,000 9,869,961
5.30%, 11/17/97 6,450,000 6,260,083
5.30%, 11/24/97 10,000,000 9,695,250
Federal Home Loan Mortgage Corporation,
5.23%, 5/05/97 15,000,000 14,991,283
5.47%, 6/09/97 13,850,000 13,767,927
5.47%, 6/09/97 10,000,000 9,940,742
5.48%, 6/12/97 10,300,000 10,234,149
Federal National Mortgage Association,
5.24%, 5/02/97 15,000,000 14,997,819
5.74%, 1/15/98 (a) 15,000,000 14,994,795
Student Loan Marketing Association,
5.51%, 5/08/97 7,500,000 7,500,000
5.56%, 6/12/97 (a) 10,000,000 10,000,000
5.48%, 6/30/97 15,000,000 14,863,000
5.60%, 8/04/97 (a) 2,000,000 1,999,902
5.57%, 2/5/98 (a) 15,000,000 14,994,933
- ----------------------------------------------------------------------------------------------------------
TOTAL U.S. GOVERNMENT SECURITIES AND AGENCIES 194,260,594
- ----------------------------------------------------------------------------------------------------------
</TABLE>
8
<PAGE>
MENTOR U.S. GOVERNMENT CASH MANAGEMENT PORTFOLIO
PORTFOLIO OF INVESTMENTS
APRIL 30, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
Percent of Principal
Net Assets Amount Value
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
REPURCHASE AGREEMENTS 29.00%
Dean Witter
Dated 4/30/97, 5.51%, due 5/1/97,
collateralized by $7,847,000 U.S.
Treasury Note, 8.50%, 2/15/20,
and $1,826,000 U.S. Treasury Bond, 8.50%,
8/15/97, market value $10,200,849, (cost
$10,000,000) $10,000,000 $ 10,000,000
Goldman, Sachs & Company
Dated 4/30/97, 5.51%, due 5/1/97,
collateralized by $46,337,093
Federal National Mortgage
Association, 7.13% 10/1/97,
market value $45,089,970
(cost $44,205,852) 44,205,852 44,205,852
Lehman Brothers, Inc.
Dated 4/9/97, 5.49%, due 5/12/97,
collateralized by $26,761,935
Federal Home Loan Mortgage
Corporation, market value $25,674,731 (cost
$25,000,000) 25,000,000 25,000,000
- ----------------------------------------------------------------------------------------------------------
TOTAL REPURCHASE AGREEMENTS 79,205,852
- ----------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS (COST $273,466,446) 100.11% 273,466,446
- ----------------------------------------------------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES (0.11%) (306,620)
- ----------------------------------------------------------------------------------------------------------
NET ASSETS 100.00% $273,159,826
==========================================================================================================
</TABLE>
(a) Floating Rate Securities- The rates shown are the effective rates at April
30, 1997. Securities shown without a date are payable within five business
days and are backed by credit support agreements from banks or insurance
institutions.
SEE NOTES TO FINANCIAL STATEMENTS.
9
<PAGE>
MENTOR INTERMEDIATE DURATION PORTFOLIO
PORTFOLIO OF INVESTMENTS
APRIL 30, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
Percent of Principal Market
Net Assets Amount Value
<S> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------
ASSET-BACKED SECURITIES 6.91%
Advanta Mortgage Loan Trust 1993-3,
4.75%, 2/25/10 , CMO $ 23,972 $ 22,935
AFC Home Equity Loan 1995-5,
6.60%, 2/25/27, CMO 14,495 14,288
Union Acceptance Corporation,
6.48%, 5/10/04, CMO 20,000 19,743
- -------------------------------------------------------------------------------------------------------------
TOTAL ASSET-BACKED SECURITIES (COST $56,982) 56,966
- -------------------------------------------------------------------------------------------------------------
CORPORATE BONDS 13.30%
Capital One Bank, 7.20%, 7/19/99 15,000 15,025
Lehman Brothers, Inc., 7.50%, 8/01/26 20,000 20,244
Lockheed Martin Corporation, 7.20%, 5/01/36 15,000 15,148
Phillips Electronics, 7.20%, 6/01/26 15,000 14,816
Salomon, Inc., 7.65%, 6/27/05 15,000 15,022
Sunamerica, Inc., 7.34%, 8/30/05 15,000 14,875
United Dominion Realty, 7.07%, 11/15/06 15,000 14,576
- -------------------------------------------------------------------------------------------------------------
TOTAL CORPORATE BONDS (COST $110,494) 109,706
- -------------------------------------------------------------------------------------------------------------
U.S. GOVERNMENT SECURITIES AND AGENCIES 68.83%
Federal Home Loan Mortgage Corporation
6.50%, Series 1422, 2/15/07-REMIC, CMO 21,280 20,230
6.50%, Series 1647 B, 11/15/08-REMIC, CMO 26,585 25,165
U.S. Treasury Notes, 5.50%-7.50%,
9/30/98-7/15/06 525,000 522,337
- -------------------------------------------------------------------------------------------------------------
TOTAL U.S. GOVERNMENT SECURITIES AND AGENCIES
(COST $571,448) 567,732
- -------------------------------------------------------------------------------------------------------------
SHORT-TERM INVESTMENT 6.28%
State Street Bank,
Time Deposit, 4.25%, 5/1/97 (cost $51,826) 51,826 51,826
- -------------------------------------------------------------------------------------------------------------
</TABLE>
10
<PAGE>
MENTOR INTERMEDIATE DURATION PORTFOLIO
PORTFOLIO OF INVESTMENTS
APRIL 30, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
Percent of Market
Net Assets Value
<S> <C> <C>
- -------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS (COST $790,751) 95.32% $786,230
- -------------------------------------------------------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES 4.68% 38,620
- -------------------------------------------------------------------------------------------------------------
NET ASSETS 100.00% $824,850
=============================================================================================================
</TABLE>
CMO-Collateralized Mortgage Obligation
REMIC-Real Estate Mortgage Investment Conduit
SEE NOTES TO FINANCIAL STATEMENTS.
11
<PAGE>
MENTOR FIXED-INCOME PORTFOLIO
PORTFOLIO OF INVESTMENTS
APRIL 30, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
Percent of Principal Market
Net Assets Amount Value
<S> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------
ASSET-BACKED SECURITIES 13.91%
Advanta Home Equity Loan, 6.15%, 10/25/09 $1,281,964 $ 1,243,059
Advanta Mortgage Loan Trust 1993-3, 4.75%,
2/25/10, CMO 1,326,509 1,269,087
AFC Home Equity Loan, 6.60%, 2/25/27, CMO 985,476 971,438
AFG Receivables Trust, 6.45%-7.05%, 9/15/00-4/15/01 1,404,630 1,394,913
CS First Boston, 7.18%, 2/25/18 980,000 952,083
Union Acceptance Corporation, 6.48%, 5/10/04, CMO 1,442,000 1,423,512
- -------------------------------------------------------------------------------------------------------------
TOTAL ASSET-BACKED SECURITIES (COST $7,285,987) 7,254,092
- -------------------------------------------------------------------------------------------------------------
CORPORATE BONDS 26.70%
Capital One Bank, 7.15%-7.20%, 7/19/99-9/15/06 3,085,000 3,136,572
Lehman Brothers, Inc., 7.50%, 8/1/26 1,480,000 1,498,060
Lockheed Martin Corporation, 7.20%, 5/1/36 985,000 994,722
Merrill Lynch, 6.64%, 9/19/02 155,000 152,472
Norwest Corporation, 6.80%, 5/15/02 270,000 268,040
Phillips Electronics, 7.20%, 6/1/26 2,185,000 2,158,256
Salomon, Inc., 7.65%, 6/27/05 1,285,000 1,286,890
Service Corporation, 7.38%, 4/15/04 2,000,000 2,013,114
Sunamerica, Inc., 7.34%, 8/30/05 985,000 976,784
Travelers, Inc., 8.63%, 2/1/07 180,000 194,620
United Dominion Realty, 7.07%, 11/15/06 1,285,000 1,248,691
- -------------------------------------------------------------------------------------------------------------
TOTAL CORPORATE BONDS (COST $13,921,802) 13,928,221
- -------------------------------------------------------------------------------------------------------------
U.S. GOVERNMENT SECURITIES AND AGENCIES 43.05%
Federal Home Loan Mortgage Corporation,
6.50%, Series 1422, 2/15/07-REMIC, CMO 1,578,111 1,500,221
6.50%, Series 1647 B, 11/15/08-REMIC, CMO 1,343,321 1,271,578
5.00%, Series 1190 G, 11/15/20 1,800,263 1,727,839
Government National Mortgage Association,
5.50%, 12/20/26-2/20/27, MBS 2,056,912 2,043,878
U.S. Treasury Bonds, 5.13%-7.50%,
11/30/98-11/15/24 7,590,000 7,855,812
U.S. Treasury Notes, 5.50%-6.00%,
9/30/98-2/15/26 8,450,000 8,056,977
- -------------------------------------------------------------------------------------------------------------
</TABLE>
12
<PAGE>
MENTOR FIXED-INCOME PORTFOLIO
PORTFOLIO OF INVESTMENTS
APRIL 30, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
Percent of Principal Market
Net Assets Amount Value
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
TOTAL U.S. GOVERNMENT SECURITIES AND AGENCIES
(COST $22,458,364) $22,456,305
- -------------------------------------------------------------------------------------------------------------
SHORT-TERM INVESTMENT 14.93%
REPURCHASE AGREEMENT
Goldman Sachs & Company
Dated 4/30/97, 5.50%, due 5/1/97, collateralized by
$8,208,250 Federal National Mortgage Association,
7.00%, 5/1/26, market value $7,974,828
(cost $7,792,461) $7,792,461 7,792,461
- -------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS (COST $51,458,614) 98.59% 51,431,079
- -------------------------------------------------------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES 1.41% 733,195
- -------------------------------------------------------------------------------------------------------------
NET ASSETS 100.00% $52,164,274
=============================================================================================================
</TABLE>
CMO-Collateralized Mortgage Obligation
MBS-Mortgage Backed Securities
REMIC-Real Estate Mortgage Investment Conduit
SEE NOTES TO FINANCIAL STATEMENTS.
13
<PAGE>
MENTOR INSTITUTIONAL TRUST
STATEMENTS OF ASSETS AND LIABILITIES
APRIL 30, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
Mentor U.S.
Government
Cash Mentor Mentor
Management Intermediate Fixed-Income
Portfolio Duration Portfolio Portfolio
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------
ASSETS
Investments, at market value* (Note 2)
Investment securities $194,260,594 $786,230 $43,638,618
Repurchase agreements 79,205,852 - 7,792,461
- ------------------------------------------------------------------------------------------------------------
Total investments 273,466,446 786,230 51,431,079
- ------------------------------------------------------------------------------------------------------------
Cash 23,872 20,002 23,911
Receivables
Dividends and interest 885,162 12,050 665,839
Fund shares sold - - 130,000
Due from management company (Note 4) 36,892 12,507 11,171
Deferred expenses (Note 2) 17,870 3,503 12,147
- ------------------------------------------------------------------------------------------------------------
Total assets 274,430,242 834,292 52,274,147
- ------------------------------------------------------------------------------------------------------------
LIABILITIES
Payables
Fund shares redeemed - - 101,694
Dividends 1,235,395 - -
Accrued expenses and other liabilities 35,021 9,442 8,179
- ------------------------------------------------------------------------------------------------------------
Total liabilities 1,270,416 9,442 109,873
- ------------------------------------------------------------------------------------------------------------
NET ASSETS $273,159,826 $824,850 $52,164,274
============================================================================================================
Net Assets represented by:
Additional paid-in capital $273,159,826 $821,562 $51,880,369
Accumulated net investment income - 8,844 338,730
Accumulated net realized loss on investment
transactions - (1,036) (27,291)
Net unrealized depreciation on investments - (4,520) (27,534)
- ------------------------------------------------------------------------------------------------------------
NET ASSETS $273,159,826 $824,850 $52,164,274
- ------------------------------------------------------------------------------------------------------------
SHARES OUTSTANDING 273,159,826 66,255 4,102,077
- ------------------------------------------------------------------------------------------------------------
NET ASSET VALUE PER SHARE $ 1.00 $ 12.45 $ 12.72
============================================================================================================
</TABLE>
* Investments at cost are $273,466,446, $790,751, and $51,458,614 respectively.
SEE NOTES TO FINANCIAL STATEMENTS.
14
<PAGE>
MENTOR INSTITUTIONAL TRUST
STATEMENTS OF OPERATIONS
SIX MONTHS ENDED APRIL 30, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
Mentor U.S.
Government
Cash Mentor Mentor
Management Intermediate Fixed-Income
Portfolio Duration Portfolio Portfolio
<S> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------
INVESTMENT INCOME
Interest (Note 2) $6,775,324 $ 49,999 $1,592,013
- ---------------------------------------------------------------------------------------------------------
EXPENSES
Custodian fees 46,443 11,578 12,895
Transfer agent fees 22,792 586 8,042
Registration expenses 21,170 238 7,304
Shareholder reports and postage expenses 6,684 120 1,884
Legal fees 6,582 83 1,532
Audit fees 4,318 54 1,004
Organizational expenses (Note 2) 2,640 622 2,630
Directors' fees and expenses 439 6 102
Miscellaneous 439 6 103
- ---------------------------------------------------------------------------------------------------------
Total expenses 111,507 13,293 35,496
- ---------------------------------------------------------------------------------------------------------
Deduct
Reimbursement of expenses by management
company (Note 4) 36,892 12,507 11,171
- ---------------------------------------------------------------------------------------------------------
NET EXPENSES 74,615 786 24,325
- ---------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME 6,700,709 49,213 1,567,688
- ---------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS
Net realized gain on investments 418 19,756 17,781
Change in unrealized appreciation
(depreciation) of investments - (31,246) (811,103)
- ---------------------------------------------------------------------------------------------------------
Net realized and unrealized gain
(loss) on investments 418 (11,490) (793,322)
- ---------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from
operations $6,701,127 $ 37,723 $ 774,366
==========================================================================================================
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
15
<PAGE>
MENTOR INSTITUTIONAL TRUST
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Mentor U.S. Government
Cash Management Portfolio
------------------------------
Six Months
Ended Year
4/30/97 Ended
(Unaudited) 10/31/96
<S> <C> <C>
- -----------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS
OPERATIONS
Net investment income $ 6,700,709 $ 5,047,095
Net realized gain (loss) on investments 418 3,914
Change in unrealized appreciation (depreciation)
of investments - -
- -----------------------------------------------------------------------------------------------------------
Increase in net assets resulting from operations 6,701,127 5,051,009
- -----------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS
Net investment income (6,700,709) (5,047,095)
Net realized gain on investments (418) (3,914)
- -----------------------------------------------------------------------------------------------------------
Net decrease from distributions (6,701,127) (5,051,009)
- -----------------------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS (NOTE 7)
Net proceeds from sale of shares 337,439,045 169,019,163
Reinvested distributions 5,786,996 4,642,653
Cost of shares redeemed (158,039,443) (155,685,567)
- -----------------------------------------------------------------------------------------------------------
Change in net assets from capital share transactions 185,186,598 17,976,249
- -----------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets 185,186,598 17,976,249
NET ASSETS
Beginning of period 87,973,228 69,996,979
- -----------------------------------------------------------------------------------------------------------
End of period $273,159,826 $ 87,973,228
===========================================================================================================
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
16
<PAGE>
<TABLE>
<CAPTION>
Mentor Intermediate Mentor Fixed-
Duration Portfolio Income Portfolio
--------------------------- ---------------------------
Six Months Six Months
Ended Year Ended Year
4/30/97 Ended 4/30/97 Ended
(Unaudited) 10/31/96 (Unaudited) 10/31/96
<S> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS
OPERATIONS
Net investment income $ 49,213 $ 617,921 $ 1,567,688 $ 2,270,255
Net realized gain (loss) on investments 19,756 (22,388) 17,781 (37,346)
Change in unrealized appreciation (depreciation)
of investments (31,246) (129,285) (811,103) (263,824)
- ---------------------------------------------------------------------------------------------------------------------------------
Increase in net assets resulting from operations 37,723 466,248 774,366 1,969,085
- ---------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS
Net investment income (40,257) (668,787) (1,401,902) (2,177,204)
Net realized gain on investments - (494,719) - (1,453,358)
- ---------------------------------------------------------------------------------------------------------------------------------
Net decrease from distributions (40,257) (1,163,506) (1,401,902) (3,630,562)
- ---------------------------------------------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS (NOTE 7)
Net proceeds from sale of shares 44,846 584,296 8,756,941 22,115,938
Reinvested distributions 40,256 1,161,333 1,388,756 3,624,390
Cost of shares redeemed (2,641,229) (9,630,657) (7,315,635) (8,170,562)
- ---------------------------------------------------------------------------------------------------------------------------------
Change in net assets from capital share transactions (2,556,127) (7,885,028) 2,830,062 17,569,766
- ---------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets (2,558,661) (8,582,286) 2,202,526 15,908,289
NET ASSETS
Beginning of period 3,383,511 11,965,797 49,961,748 34,053,459
- ---------------------------------------------------------------------------------------------------------------------------------
End of period $ 824,850 $3,383,511 $52,164,274 $49,961,748
=================================================================================================================================
</TABLE>
17
<PAGE>
MENTOR INSTITUTIONAL TRUST
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
Mentor Cash Management Portfolio
-------------------------------------------
Six Months
Ended Year Period
4/30/97 Ended Ended
(Unaudited) 10/31/96 10/31/95(b)
<S> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.03 0.05 0.05
Net realized and unrealized gain (loss) on investments -* - * -
- -------------------------------------------------------------------------------------------------------------
Total from investment operations 0.03 0.05 0.05
LESS DISTRIBUTIONS
Dividends from income (0.03) (0.05) (0.05)
Distributions from capital gains -* - * -
- -------------------------------------------------------------------------------------------------------------
Total distributions (0.03) (0.05) (0.05)
- -------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00
=============================================================================================================
Total Return 2.68% 5.60% 5.06%
- -------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
- -------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 273,160 $87,973 $ 69,997
Ratio of expenses to average net assets 0.06%(a) 0.04% 0.04%(a)
Ratio of expenses to average net assets excluding waiver 0.09%(a) 0.12% 0.18%(a)
Ratio of net investment income to average net assets 5.30%(a) 5.54% 5.56%(a)
Portfolio turnover rate - - -
=============================================================================================================
</TABLE>
(a) Annualized.
(b) For the period from December 5, 1994 (commencement of operations) to October
31, 1995.
(c) For the period from December 19, 1994 (commencement of operations) to
October 31, 1995.
(d) For the period from December 6, 1994 (commencement of operations) to October
31, 1995.
* Reflects net realized gain (loss) which was under $0.01 per share.
SEE NOTES TO FINANCIAL STATEMENTS.
18
<PAGE>
<TABLE>
<CAPTION>
Mentor Intermediate Duration Portfolio Mentor Fixed-Income Portfolio
---------------------------------------- ------------------------------------------
Six Months Six Months
Ended Year Period Ended Year Period
4/30/97 Ended Ended 4/30/97 Ended Ended
(Unaudited) 10/31/96 10/31/95(c) (Unaudited) 10/31/96 10/31/95(d)
<S> <C> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE
NET ASSET VALUE, BEGINNING OF PERIOD
INCOME FROM INVESTMENT OPERATIONS $ 12.47 $13.31 $ 12.50 $ 12.89 $ 13.71 $ 12.50
Net investment income 0.43 0.96 0.77 0.41 0.77 0.81
Net realized and unrealized gain
(loss) on investments (0.15) (0.24) 0.75 (0.21) (0.16) 1.14
- -------------------------------------------------------------------------------------------------------------------------------
Total from investment operations 0.28 0.72 1.52 0.20 0.61 1.95
LESS DISTRIBUTIONS
Dividends from income (0.30) (1.01) (0.71) (0.37) (0.77) (0.74)
Distributions from capital gains - (0.55) - - (0.66) -
- -------------------------------------------------------------------------------------------------------------------------------
Total distributions (0.30) (1.56) (0.71) (0.37) (1.43) (0.74)
- -------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 12.45 $12.47 $ 13.31 $ 12.72 $ 12.89 $ 13.71
===============================================================================================================================
Total Return 2.27% 5.90% 12.38% 1.58% 4.87% 15.90%
- -------------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
- -------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 825 $3,384 $11,966 $52,164 $49,962 $ 34,053
Ratio of expenses to average net assets 0.10%(a) 0.05% 0.05%(a) 0.10%(a) 0.05% 0.05%(a)
Ratio of expenses to average net assets 1.70%(a) 0.31% 0.25%(a) 0.14%(a) 0.17% 0.22%(a)
excluding waiver
Ratio of net investment income to average 6.29%(a) 5.92% 6.52%(a) 6.39%(a) 6.22% 6.75%(a)
net assets
Portfolio turnover rate 66% 215% 307% 116% 226% 302%
================================================================================================================================
19
<PAGE>
MENTOR INSTITUTIONAL TRUST
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 1997
(UNAUDITED)
NOTE 1: ORGANIZATION
Mentor Institutional Trust was organized on February 8, 1994, and is registered
under the Investment Company Act of 1940, as amended, as an open-end management
investment company. The Trust consists of five separate diversified portfolios
(hereinafter each individually referred to as a "Portfolio" or collectively as
the "Portfolios") at April 30, 1997, as follows:
Mentor U.S. Government
Cash Management Portfolio
("Cash Management Portfolio")
Mentor Intermediate Duration Portfolio
("Intermediate Duration Portfolio")
Mentor Fixed-Income Portfolio
("Fixed-Income Portfolio")
Mentor Perpetual International Portfolio
("International Portfolio")
SNAP Fund
The assets of each Portfolio of the Trust are segregated and a shareholder's
interest is limited to the Portfolio in which shares are held.
These financial statements do not include the International Portfolio and the
SNAP Fund.
NOTE 2: SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Portfolios in the preparation of their financial statements. The
policies are in conformity with generally accepted accounting principles which
require management to make estimates and assumptions that affect amounts
reported therein. Although actual results could differ from these estimates, any
such differences are expected to be immaterial to the net assets of the
Portfolio.
A. Valuation of Securities
Securities held by the Cash Management Portfolio are stated at amortized cost,
which approximates market value. In the event that a deviation of 1/2 of 1% or
more exists between the Portfolio's $1.00 per share net asset value, calculated
at amortized cost, and the net asset value calculated by reference to
market-based values, or if there is any other deviation that the Board of
20
<PAGE>
MENTOR INSTITUTIONAL TRUST
NOTES TO FINANCIAL STATEMENTS
(CONTINUED)
Trustees believes would result in a material dilution to shareholders or
purchasers, the Board of Trustees will promptly consider what action should be
initiated.
U.S. Government obligations held by the Intermediate Duration Portfolio and the
Fixed-Income Portfolio are valued at the mean between the over-the-counter bid
and asked prices as furnished by an independent pricing service. Listed
corporate bonds, other fixed income securities, mortgage backed securities,
mortgage related and other related securities are valued at the prices provided
by an independent pricing service. Security valuations not available from an
independent pricing service are provided by dealers approved by the Board of
Trustees. In determining value, the dealers use information with respect to
transactions in such securities, market transactions in comparable securities,
various relationships between securities, and yield to maturity. Any securities
for which current market quotations are not readily available are valued at
their fair value as determined in good faith under procedures established by the
Board of Trustees.
B. Repurchase Agreements
It is the policy of the Trust to require the custodian bank to take possession,
to have legally segregated in the Federal Reserve Book entry system, or to have
segregated within the custodian bank's possession all securities held as
collateral in support of repurchase agreement investments. Additionally,
procedures have been established by the Trust to monitor, on a daily basis, the
market value of each repurchase agreement's underlying securities to ensure the
existence of a proper level of collateral.
The Trust will only enter into repurchase agreements with banks and other
recognized financial institutions such as broker/dealers which are deemed by the
Trust's adviser to be creditworthy pursuant to guidelines established by the
Trustees. Risks may arise from the potential inability of counterparties to
honor the terms of the repurchase agreement. Accordingly, the Trust could
receive less than the repurchase price on the sale of collateral securities.
21
<PAGE>
MENTOR INSTITUTIONAL TRUST
NOTES TO FINANCIAL STATEMENTS
(CONTINUED)
C. Security Transactions and Interest Income
Security transactions for the Portfolios are accounted for on a trade date
basis. Interest income is recorded on the accrual basis and includes
amortization of premium and discount on investments. Dividends are recorded on
ex-dividend date. Realized and unrealized gains and losses on investment
security transactions are calculated on an identified cost basis.
D. Expenses
Expenses arising in connection with a Portfolio are allocated to that Portfolio.
Other Trust expenses are allocated among the Portfolios in proportion to their
relative net assets.
E. Federal Taxes
No provision for federal income taxes has been made since it is each Portfolio's
intent to comply with the provisions applicable to regulated investment
companies under the Internal Revenue Code and to distribute to its shareholders
within allowable time limit substantially all taxable income and realized
capital gains.
F. When-Issued and Delayed Delivery Transactions
The Fixed-Income Portfolio and the Intermediate Duration Portfolio may engage in
when-issued or delayed delivery transactions. To the extent the Portfolios
engage in such transactions, they will do so for the purpose of acquiring
portfolio securities consistent with their investment objectives and policies
and not for the purpose of investment leverage. The Portfolios will record a
when-issued security and the related liability on the trade date. Until the
securities are received and paid for, the Portfolios will maintain security
positions such that sufficient liquid assets will be available to make payment
for the securities purchased. Securities purchased on a when-issued or delayed
delivery basis are marked to market daily and begin earning interest on the
settlement date.
G. Deferred Expenses
Costs incurred by the Portfolios in connection with their initial share
22
<PAGE>
MENTOR INSTITUTIONAL TRUST
NOTES TO FINANCIAL STATEMENTS
(CONTINUED)
registration and organization costs were deferred by the Portfolios and are
being amortized on a straight-line basis over a five-year period.
H. Distributions
Income distributions and capital gain distributions are determined in accordance
with income tax regulations which may differ from generally accepted accounting
principles. These differences are primarily due to deferral of wash sales.
NOTE 3: DIVIDENDS
Dividends will be declared daily and paid monthly by the Cash Management
Portfolio. Dividends are declared and paid quarterly by the Fixed-Income
Portfolio and Intermediate Duration Portfolio. Capital gains realized by each
Portfolio, if any, will be distributed annually.
NOTE 4: INVESTMENT MANAGEMENT AND ADMINISTRATION AGREEMENTS
The Cash Management Portfolio, Intermediate Duration Portfolio and Fixed-Income
Portfolio have entered into an Investment Management Agreement with Mentor
Investment Advisors, LLC ("Mentor Advisors") to provide investment advisory
services to each of the Portfolios. Mentor Advisors receives no compensation for
its services. Mentor Advisors is a wholly-owned subsidiary of Mentor Investment
Group, LLC, ("Mentor") which is a subsidiary of Wheat First Butcher Singer, Inc.
and EVEREN Capital Corporation which has a 20% ownership in Mentor.
In order to limit the annual operating expenses of the Portfolios, Mentor
Advisors may bear certain expenses incurred in connection with the operation of
the Portfolios. For the six months ended April 30, 1997, Mentor Advisors bore
expenses of $36,892, $12,507 and $11,171 respectively, for the Cash Management
Portfolio, Intermediate Duration Portfolio and Fixed-Income Portfolio.
Mentor provides administrative personnel and services to each Portfolio,
pursuant to an Administration Agreement. Mentor receives no compensation for
such services.
23
<PAGE>
MENTOR INSTITUTIONAL TRUST
NOTES TO FINANCIAL STATEMENTS
(CONTINUED)
NOTE 5: INVESTMENT TRANSACTIONS
Purchases and sales of investments (excluding short-term investments), for the
six months ended April 30, 1997, were as follows:
</TABLE>
<TABLE>
<CAPTION>
Portfolio Purchases Sales
<S> <C> <C>
- -----------------------------------------------------
Cash Management - -
Intermediate Duration $ 933,423 $ 3,380,591
Fixed-Income 53,035,748 54,821,710
- -----------------------------------------------------
</TABLE>
NOTE 6: UNREALIZED APPRECIATION AND DEPRECIATION OF INVESTMENTS
The cost of investments for federal income tax purposes amounted to $273,466,446
for the Cash Management Portfolio, $790,751 for the Intermediate Duration
Portfolio, and $51,458,614 for the Fixed-Income Portfolio at April 30, 1997.
Gross unrealized appreciation and depreciation of investments at April 30, 1997
were as follows:
<TABLE>
<CAPTION>
Gross Gross Net
Unrealized Unrealized Unrealized
Portfolio Appreciation Depreciation Depreciation
<S> <C> <C> <C>
- ------------------------------------------------------------------------
Cash Management - - -
Intermediate Duration $ 955 $ 5,475 $ (4,520)
Fixed-Income 351,558 379,092 (27,534)
- ------------------------------------------------------------------------
</TABLE>
24
<PAGE>
MENTOR INSTITUTIONAL TRUST
NOTES TO FINANCIAL STATEMENTS
(CONTINUED)
NOTE 7: CAPITAL SHARE TRANSACTIONS
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest. Transactions in Portfolio
shares were as follows:
<TABLE>
<CAPTION>
Mentor U.S. Government
Cash Management Portfolio
Six Months
Ended Year Ended
4/30/97 10/31/96
<S> <C> <C>
------------------------------
Shares sold 337,439,045 169,019,163
Shares issued upon reinvestment of distributions 5,786,996 4,642,653
Shares redeemed (158,039,443) (155,685,567)
------------------------------
Change in net assets from capital share transactions 185,186,598 17,976,249
==============================
</TABLE>
<TABLE>
<CAPTION>
Mentor Intermediate
Duration Portfolio
Six Months Year
Ended Ended
4/30/97 10/31/96
<S> <C> <C>
------------------------
Shares sold 3,564 45,573
Shares issued upon reinvestment of distributions 3,238 91,944
Shares redeemed (211,772) (765,033)
------------------------
Change in net assets from capital share transactions (204,970) (627,516)
=========================
</TABLE>
<TABLE>
<CAPTION>
Mentor Fixed-Income
Portfolio
Six Months
Ended Year Ended
4/30/97 10/31/96
<S> <C> <C>
-------------------------
Shares sold 681,791 1,725,003
Shares issued upon reinvestment of distributions 109,408 282,124
Shares redeemed (563,997) (616,390)
-------------------------
Change in net assets from capital share transactions 227,202 1,390,737
=========================
</TABLE>
25
<PAGE>
INVESTMENT MANAGER
CORPORATE OFFICE
Mentor Investment Advisors, LLC
Riverfront Plaza, 901 East Byrd Street
Richmond, Virginia 23219
TRUSTEES
Daniel J. Ludeman, TRUSTEE & CHAIRMAN
Chairman and Chief Executive Officer
Mentor Investment Group, LLC
Arnold H. Dreyfuss, TRUSTEE
Former Chairman and Chief Executive Officer
Hamilton Beach/Proctor-Silex, Inc.
Thomas F. Keller, TRUSTEE
Former Dean, Fuqua School of Business
Duke University
Louis W. Moelchert, Jr., TRUSTEE
Vice President for Business & Finance
University of Richmond
Stanley F. Pauley, Jr., TRUSTEE
Chairman and Chief Executive Officer
Carpenter Company
Troy A. Peery, Jr., TRUSTEE
President
Heilig-Meyers Company
OFFICERS
Paul F. Costello, PRESIDENT
Managing Director
Mentor Investment Group, LLC
Terry L. Perkins, TREASURER
Senior Vice President
Mentor Investment Group, LLC
John M. Ivan, SECRETARY
Managing Director/Assistant General Counsel
Wheat First Butcher Singer, Inc.
Michael A. Wade, ASSISTANT TREASURER
Vice President
Mentor Investment Group, LLC
MENTOR INSTITUTIONAL TRUST
---------------------------------
SEMI-ANNUAL REPORT
---------------------------------
April 30, 1997
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