MENTOR INSTITUTIONAL TRUST
MENTOR U.S. GOVERNMENT CASH MANAGEMENT PORTFOLIO
MENTOR FIXED-INCOME PORTFOLIO
MESSAGE FROM THE CHAIRMAN AND PRESIDENT
APRIL 30, 1999
- --------------------------------------------------------------------------------
TO OUR SHAREHOLDERS:
On behalf of all the associates at Mentor Investment Group, we would like to
take this opportunity to thank you for your investment in the Mentor Family of
Funds. This Semi-Annual Report reaffirms our commitment to our shareholders and
details the financial performance of these investments for the period ended
April 30, 1999.
Founded in 1970, Mentor Investment Group is an investment advisory firm with
more than $16 billion under management. We pride ourselves on a strong heritage
of providing quality service and a variety of investment choices that help meet
our shareholders' financial objectives by offering mutual funds and
separately-invested portfolios.
In the commentary that follows, Mentor's investment team presents an insightful
perspective on the markets and strategies that shaped their investment decisions
for the past semi-annual period. Our investment teams operate with these
priorities:
FOCUS -- In most money management companies, each investment manager has
multiple responsibilities. At Mentor, our investment managers are singularly
focused on enhancing the value of the portfolios. This means that you can be
assured of a consistent, proven approach to developing a winning financial
strategy.
OPPORTUNITIES -- By offering multiple management styles, portfolio
diversification is simplified. Mentor gives investors the tools for long-term
investment success through diversification and accommodation of changing
investment needs.
SERVICE -- To help serve our shareholders, Mentor has a fully dedicated
Investor Relations Center. Our Relationship Coordinators are professionally
trained and licensed to serve clients' needs.
TECHNOLOGY -- Abreast of the most advanced technology and using the latest
analytical tools, our investment managers have the ability to survey the
financial markets and make informed decisions about where the best place is to
invest.
We at Mentor appreciate the opportunity to be a partner in the management of
your financial assets. Mentor Investment Group provides diversified investment
styles and services to over one million shareholders. We serve individuals,
corporations, endowments, foundations, public funds, and municipalities. To
learn more about Mentor, please contact your consultant or us at (800) 382-0016.
1
<PAGE>
MENTOR INSTITUTIONAL TRUST
MENTOR U.S. GOVERNMENT CASH MANAGEMENT PORTFOLIO
MENTOR FIXED-INCOME PORTFOLIO
MESSAGE FROM THE CHAIRMAN AND PRESIDENT
APRIL 30, 1999 (CONTINUED)
- --------------------------------------------------------------------------------
We look forward to making the Mentor formula work for you, and to a mutually
beneficial relationship.
Sincerely,
/s/ Daniel J. Ludeman /s/ Paul F. Costello
- ---------------------- ---------------------------
Daniel J. Ludeman Paul F. Costello
CHAIRMAN PRESIDENT
[Mentor Investment Group Logo]
THE MENTOR MISSION
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 A PROSPECTUS FOR THE FUNDS, PLEASE CALL US,
(800)382-0016, OR CONTACT YOUR CONSULTANT. THE PROSPECTUS CONTAINS COMPLETE
INFORMATION ABOUT FEES, SALES CHARGES, AND EXPENSES. PLEASE READ IT CAREFULLY
BEFORE INVESTING OR SENDING MONEY.
2
<PAGE>
MENTOR U.S. GOVERNMENT CASH MANAGEMENT PORTFOLIO
MANAGERS' COMMENTARY: THE CASH MANAGEMENT TEAM
APRIL 30, 1999
- --------------------------------------------------------------------------------
MARKET OVERVIEW
Over the past year, an unusually large number of negative influences have come
to bear on the U.S. economy and financial markets. Foremost was the emergence of
substantial economic problems in the Far East. Rather than being contained
locally they quickly spread like the "Asian flu" to other areas of the world
such as Russia and Brazil. We also experienced a major political scandal in this
country that culminated in the impeachment of our President. Finally, we have
witnessed major military confrontations, first between the U.S. and Iraq, and
more recently between U.S.-led NATO forces and the former Yugoslavia.
Despite these negative factors and a sustained expansion that was already
setting longevity records, our economy has remained on a remarkably even keel
throughout the six-month period ended April 30, 1999. Activity continues to
forge ahead at a pace adequate to keep employment and capacity utilization at
very high levels, yet not so rapid as to give rise to inflation.
With the threat from weak overseas economies growing as 1998 progressed, the
Federal Reserve shifted from a neutral position to one of ease. During the fall
months the Fed lowered rates three times by 0.25% for a total of 0.75%. The
medicine seemed to work perfectly, for the economy pulled out of a mini-slump
and posted very solid fourth quarter GDP growth of 6.0%. In fact, early in the
first quarter, concerns began to surface that this unexpected strength could
cause the Fed to reverse course and raise rates again. However, the latest data
indicates that the economy may be once again losing some steam. While sectors
tied to the consumer continue strong, others are mixed, notably manufacturing
where imports seem to be sapping demand. Given these mixed indicators, the Fed
remains in a basically neutral posture, as it has since November.
The net result of all these shifts was that the money markets registered modest
rate increases during the six-month period, with 3-month rates up 0.14% and
6-month rates up 0.11%.
MANAGEMENT STRATEGY
It is our normal policy to manage our money market funds to an average maturity
range of between 30 and 60 days. For most of 1998, we adopted a strategy of
managing the funds to an average maturity of 55-60 days, the outer end of our
normal range. This was in
3
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MENTOR U.S. GOVERNMENT CASH MANAGEMENT PORTFOLIO
MANAGERS' COMMENTARY: THE CASH MANAGEMENT TEAM
APRIL 30, 1999 (CONTINUED)
- --------------------------------------------------------------------------------
recognition that the Fed was unlikely to raise rates given what was then
occurring around the world. This strategy proved advantageous when the Fed
reduced rates late in the year. In the fourth quarter and early first quarter,
with the economy showing unexpected strength, we began to shorten maturities to
a range of 45-50 days.
PERFORMANCE REVIEW
Our correct call on the direction of rates in late 1998 aided overall
performance for the semi-annual period ended April 30. For the period the Mentor
U.S. Government Cash Management Portfolio returned 2.45%. Our performance
objective remains to provide a competitive return while maintaining
above-average quality and safety standards.
MARKET OUTLOOK
Entering 1999, we felt that the economy was at a crossroads. While all seemed
well on the surface, the question remained whether the general weakness
worldwide would eventually have an impact domestically. It was as if the U.S.
were the last engine running on a four-engine plane. How long could we withstand
the strain without losing some altitude? While we are still at a crossroads, we
think the odds favor relatively stable rates between now and year-end 1999.
4
<PAGE>
MENTOR FIXED-INCOME PORTFOLIO
MANAGERS' COMMENTARY: THE ACTIVE FIXED-INCOME MANAGEMENT TEAM
APRIL 30, 1999
- --------------------------------------------------------------------------------
MARKET REVIEW
The six-month period ended April 30, 1999 was not kind to the bond market.
Treasury rates increased sharply, with the 2-year note climbing 95 basis points
to 5.06% and the 30-year bond rising 51 basis points to 5.66%. The market sold
off in reaction to much stronger than anticipated economic growth during both
the final quarter of 1998 and the first quarter of 1999.
Early in the fourth quarter of 1998, the stock market was weak, world markets
were in turmoil and fears of global deflation were rampant. The crisis in world
financial markets was prompted by Russia's default on its debt obligations, and
was exacerbated by the bankruptcy of the highly leveraged investment firm Long
Term Capital Management. Over the ensuing three-month period the Federal Reserve
lowered the Federal Funds rate 0.75% in response to these alarming market
conditions.
Economists expected U.S. economic growth in 1999 to be significantly depressed
by the severe shock that financial markets experienced during September and
October. These forecasts for slower growth garnered support in early January
when the Brazilian government was forced to devalue its currency, the real. The
sudden drop in the value of the real implied that Brazil would suffer a fairly
deep recession in 1999. In addition, the lower currency value has made American
exports too expensive for Brazilian markets.
Despite turmoil in financial markets and in Brazil, the much-anticipated
slowdown in U.S. economic growth has yet to materialize. Indeed, economic growth
in the final quarter of 1998 surged more than 6.0% on an annualized basis.
Economic indicators for the first quarter of 1999 suggest that the economy has
continued its robust growth into 1999. Some market observers are beginning to
question the aggressiveness with which the Federal Reserve reacted to the market
crisis in late 1998. These economists have gone so far as to suggest that the
Fed should reverse course and raise rates in response to a potentially
overheating American economy. The fear that the Federal Reserve may move to
increase short-term borrowing rates prompted the bond
5
<PAGE>
MENTOR FIXED-INCOME PORTFOLIO
MANAGERS' COMMENTARY: THE ACTIVE FIXED-INCOME MANAGEMENT TEAM
APRIL 30, 1999 (CONTINUED)
- --------------------------------------------------------------------------------
market's severe price declines and interest rate increases during the first
quarter of 1999.
MANAGEMENT STRATEGY
Portfolio durations were 5% to 10% longer than their benchmark indices at the
beginning of 1999. This long duration tilt led to strong relative performance
early in January as the bond market responded to the Brazilian devaluation.
However, as economic data painted an ever-clearer picture of a robust U.S.
economy, portfolio durations were cut back to approximately neutral levels.
Sector allocations were heavily tilted toward spread product. Mortgage-backed
securities were particularly emphasized given their high yield and strong
performance potential in a stable to rising rate environment. The stronger
economic growth prompted an increased allocation to lower-rated corporate bonds,
including high yield securities. Portfolio weightings in high yield were
increased from roughly 2% to 3%.
PERFORMANCE REVIEW
Portfolio performance during the six-month period ended April 30, 1999 was
superior to index objectives. Our mortgage overweight and our lower-rated
corporate bond investments allowed our portfolios to outpace indices comprised
largely of treasury obligations. For the period the Mentor Fixed-Income
Portfolio returned 0.93% compared to 0.61% for its Lipper Intermediate
Investment Grade Debt peer group and 0.69% for its Lehman Brothers Aggregate
Bond Index benchmark.
MARKET OUTLOOK
Our long-term market outlook is for continued declines in inflation and
therefore continued lower interest rates. This optimism is fueled by structural
economic changes such as the Internet that offer the potential to substantially
increase economic efficiency and reduce costs. In addition, the increasing
productivity of the U.S. labor force suggests that the economy can grow faster
than previously thought without generating inflationary pressures. However,
short-term prospects for the bond market are less clear.
The long-term picture for bonds has continued to improve in recent months.
Brazil's currency devaluation has made their products extremely price
competitive with U.S. made products. Since Brazil is
6
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MENTOR FIXED-INCOME PORTFOLIO
MANAGERS' COMMENTARY: THE ACTIVE FIXED-INCOME MANAGEMENT TEAM
APRIL 30, 1999 (CONTINUED)
- --------------------------------------------------------------------------------
the dominant economy in Latin America, their devaluation implies falling growth
rates for every economy within the region. Lower growth in Latin America has
coincided with slow growth in Europe. The introduction of a single currency
across much of Europe, the euro, has yet to ignite economic growth in the
region. Indeed, the newly created European central bank has repeatedly revised
down its growth estimates for 1999, and is currently forecasting growth of
little more than 2% for the year.
Despite the good news for bonds overseas, domestic U.S. conditions continue to
put upward pressure on interest rates. The U.S. economy has repeatedly defied
predictions of an imminent slowdown. With unemployment as of March hitting 4.2%,
inflation fears are mounting. Despite these fears, most broad measures of
inflation have continued to trend downward. This combination of robust economic
growth and benign inflation is almost unprecedented. As a result, the Federal
Reserve is examining whether old models of the growth and inflation trade-off
accurately describe the new American economy.
Although the Federal Reserve is considering whether or not the U.S. has entered
a new economic era, market participants are understandably reluctant to gamble
on such theoretical notions. Without some evidence of slowing economic growth,
the bond market is likely to either trade within a fairly narrow range around
current interest rate levels or continue to decline somewhat. Given that no
signs of a slacking in economic activity are yet apparent, we are anticipating a
range-bound market in the weeks and months ahead. In such an environment our
overweight position in mortgage-backed securities and lower-rated corporate
bonds should continue to perform well.
As the summer wears on, we expect that stumbling growth in Europe and Latin
America will exert pressure on the U.S. economy. This pressure on domestic
economic growth and global inflation should allow the rally in bond prices to
continue. We anticipate significantly reducing our exposure to mortgages and
corporate bonds at that time and extending portfolio durations.
7
<PAGE>
MENTOR FIXED-INCOME PORTFOLIO
APRIL 30, 1999
- --------------------------------------------------------------------------------
PERFORMANCE COMPARISONS
Comparison of change in value of a hypothetical $10,000 investment in Mentor
Fixed-Income Portfolio and the Lehman Brothers Aggregate Bond Index.*
[GRAPH]
Fixed-Income Lehman Brothers
12/6/94 $10,000 $10,069
4/30/95 10,625 10,725
10/31/95 11,593 11,591
4/30/96 11,575 11,651
10/31/96 12,158 12,267
4/30/97 12,350 12,475
10/31/97 13,178 13,357
4/30/98 13,497 13,836
10/31/98 14,129 14,604
4/30/99 14,259 14,705
Average Annual Returns as of 4/30/99
1-Year Since Inception**
5.65% 8.40%
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, 1999 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.
* The Lehman Brothers Aggregate Bond Index is commonly used to compare
performance of income-oriented portfolios and is made up of the
Government/Corporate Index, the Mortgage-Backed Securities Index, and the
Asset-Backed Securities Index. Please note that effective January 1, 1998,
the Lehman Brothers Aggregate Bond Index became the benchmark for the
Fixed-Income Portfolio. Given its mortgage pass-through and asset-backed
components, which are not contained in the Lehman Brothers
Government/Corporate Index, it is more reflective of the Investment
mandate of the Fixed-Income Portfolio and therefore the appropriate
benchmark.
** Reflects operations of Fixed-Income Portfolio from the date of
commencement of operations on 12/6/94 through 4/30/99.
8
<PAGE>
MENTOR U.S. GOVERNMENT CASH MANAGEMENT PORTFOLIO
PORTFOLIO OF INVESTMENTS
APRIL 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
Principal
Percent of Net Assets Amount Value
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
U.S. GOVERNMENT AGENCIES 84.98%
Federal Home Loan Bank, 4.90% - 5.10%,
2/04/00 - 3/29/00 $ 6,000,000 $ 5,996,634
Federal Home Loan Mortgage Corporation,
4.71% - 4.81%, 5/06/99 - 7/23/99 22,000,000 21,859,729
4.73%, 3/20/00 (a) 5,000,000 4,996,469
Federal National Mortgage Association,
4.85%, 5/28/99 (a) 4,500,000 4,499,740
4.70% - 4.80%, 5/13/99 - 9/10/99 25,414,000 25,202,331
- ------------------------------------------------------------------------------------------------------
TOTAL U.S. GOVERNMENT AGENCIES 62,554,903
- ------------------------------------------------------------------------------------------------------
REPURCHASE AGREEMENT 15.35%
Goldman, Sachs & Company Dated 4/30/99,
4.90%, due 5/03/99, collateralized by
$11,823,983 (total original face value)
Federal Home Loan Mortgage
Corporation, 6.00%, 1/01/29
market value $11,520,615 11,294,721 11,294,721
- ------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS (COST $73,849,624) 100.33% 73,849,624
- ------------------------------------------------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES (0.33%) (240,886)
- ------------------------------------------------------------------------------------------------------
NET ASSETS 100.00% $ 73,608,738
======================================================================================================
</TABLE>
(a) Floating Rate Securities - The rates shown are the effective rates at April
30, 1999.
SEE NOTES TO FINANCIAL STATEMENTS.
9
<PAGE>
MENTOR FIXED-INCOME PORTFOLIO
PORTFOLIO OF INVESTMENTS
APRIL 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
Principal
Percent of Net Assets Amount Market Value
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
LONG-TERM INVESTMENTS 95.44%
- --------------------------------------------------------------------------------------------------------
ASSET-BACKED SECURITIES 11.07%
Advanta Home Equity Loan, 6.15%, 10/25/09 $ 620,661 $ 618,991
Advanta Mortgage Loan Trust Series 1993-3,
Class A3, 4.75%, 2/25/10 394,979 391,001
Advanta Mortgage Loan Trust Series 1996-2,
Class A2, 7.03%, 3/25/11 60,679 60,526
AFC Home Equity Loan Trust, 6.60%, 2/25/27 815,020 813,938
AFG Receivables Trust, 6.35% - 7.05%,
9/15/00 - 2/15/03 1,905,617 1,912,535
BA Mortgage Securities, 6.50%, 7/25/13 250,245 246,787
Capital One Master Trust 1998-4, 5.43%,
1/15/07 1,000,000 981,948
CS First Boston Series 1996-2, Class A6, 7.18%,
2/25/18 980,000 983,398
Key Auto Finance Trust 1999-1, 5.63%, 7/15/03 500,000 499,818
Union Acceptance Corporation Auto Trust
Series 1997 A, 6.48%, 5/10/04 1,462,000 1,477,180
Union Acceptance Corporation Series 1998-D A3,
5.75%, 6/9/03 1,500,000 1,499,018
- ----------------------------------------------------------------------------------------------------
TOTAL ASSET-BACKED SECURITIES (COST $9,413,498) 9,485,140
- ----------------------------------------------------------------------------------------------------
COLLATERALIZED MORTGAGE OBLIGATIONS 4.95%
Equifax Credit Corporation Series 1998-2,
6.16%, 4/15/08 711,000 710,721
Equifax Credit Corporation Series 1998-A,
6.33%, 1/15/22 700,000 702,859
J. C. Penney Master Credit Card Trust
Series 1998-E, 5.50%, 6/15/07 1,800,000 1,764,825
Prudential Homes Series 1996-3 M, 6.75%,
3/25/11 1,074,272 1,074,574
- ----------------------------------------------------------------------------------------------------
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS
(COST $4,288,964) 4,252,979
- ----------------------------------------------------------------------------------------------------
</TABLE>
10
<PAGE>
MENTOR FIXED-INCOME PORTFOLIO
PORTFOLIO OF INVESTMENTS
APRIL 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
Principal
Percent of Net Assets Amount Market Value
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
LONG-TERM INVESTMENTS (CONTINUED)
- ----------------------------------------------------------------------------------------------------------
CORPORATE BONDS 35.98%
Associates Corporation, 6.25%, 11/01/08 $1,480,000 $1,464,224
Atlantic Richfield, 5.90%, 4/15/09 900,000 880,776
Cable & Wireless Communications, 6.63%,
3/06/05 1,000,000 1,010,026
Capital One Bank, 7.20%, 7/19/99 1,000,000 1,004,702
Capital One Bank, 7.15%, 9/15/06 2,100,000 2,129,061
Century Communications, 9.50%, 8/15/00 500,000 513,750
Chancellor Media Corporation, 9.00%, 10/01/08 200,000 214,500
CitiGroup, Inc., 5.91%, 11/23/05 2,100,000 2,053,031
CMS Energy Corporation, 6.75%, 1/15/04 200,000 197,100
Dayton Hudson Company, 6.65%, 8/01/28 1,175,000 1,137,701
Discover Series 1998-7, 5.60%, 5/15/06 1,000,000 986,582
Enron Corporation, 6.73%, 11/17/08 2,000,000 2,002,902
Ford Motor Credit Company, 5.80%, 1/12/09 750,000 714,616
GTE California, 5.50%, 1/15/09 1,000,000 947,066
GTE North, Inc., 5.65%, 11/15/08 1,500,000 1,434,733
Household Finance Company, 5.88%, 2/01/09 800,000 762,233
IBM Corporation, 5.10%, 11/10/03 1,525,000 1,471,981
McLeodusa, Inc., 9.25%, 7/15/07 500,000 523,750
Merrill Lynch & Company, 6.00%, 2/17/09 550,000 530,849
Metromedia Fiber, 10.00%, 11/15/08 300,000 324,000
National Rural Utilities, 5.50%, 1/15/05 800,000 780,469
Nextel Communications, zero coupon, 9/15/07 (a) 250,000 196,250
Norwest Corporation, 6.80%, 5/15/02 270,000 276,238
Pepsi Bottling Holdings, Inc., 5.63%, 2/17/09 2,000,000 1,902,948
Public Service Electric & Gas, 6.50%, 6/01/00 900,000 908,592
PSI Energy, Inc., 6.00%, 12/14/01 (a) 2,000,000 1,971,767
Randall's Food Marketings, 9.38%, 7/01/07 210,000 228,113
Rothmans Nederlands Holdings, 6.88%, 5/06/08 1,000,000 993,357
Safeway, Inc., 5.75%, 11/15/00 880,000 875,873
Safeway, Inc., 6.50%, 11/15/08 1,000,000 1,002,771
Sprint Capital Corporation, 6.90%, 5/01/19 1,400,000 1,395,814
- -------------------------------------------------------------------------------------------------------
TOTAL CORPORATE BONDS (COST $31,287,423) 30,835,775
- -------------------------------------------------------------------------------------------------------
</TABLE>
11
<PAGE>
MENTOR FIXED-INCOME PORTFOLIO
PORTFOLIO OF INVESTMENTS
APRIL 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
Principal
Percent of Net Assets Amount Market Value
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
LONG-TERM INVESTMENTS (CONTINUED)
- -----------------------------------------------------------------------------------------------------------
U.S. GOVERNMENT SECURITIES AND AGENCIES 43.44%
Federal Home Loan Bank, 4.97%, 2/01/01 $2,000,000 $ 1,992,211
Federal National Mortgage Association, 5.25% -
6.50%, 1/15/09 - 2/01/14 ARM 3,746,836 3,712,899
Government National Mortgage Association,
6.50%, 1/01/00 4,000,000 3,993,750
6.00%, 6/15/28 ARM 1,699,585 1,655,502
Government National Mortgage Association I,
6.50%, 5/15/09 29,259 29,703
6.00% - 7.00%, 3/15/28 - 3/15/29 ARM 17,868,208 17,779,461
U.S. Treasury Bonds, 7.13% - 7.50%, 2/15/23 -
11/15/24 5,700,000 6,626,637
U.S. Treasury Notes, 4.25%, 11/15/03 1,500,000 1,439,790
- -----------------------------------------------------------------------------------------------------------
TOTAL U.S. GOVERNMENT SECURITIES AND AGENCIES
(COST $37,647,511) 37,229,953
- -----------------------------------------------------------------------------------------------------------
TOTAL LONG-TERM INVESTMENTS (COST $82,637,396) 81,803,847
- -----------------------------------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS 7.78%
- -----------------------------------------------------------------------------------------------------------
REPURCHASE AGREEMENT
Goldman Sachs & Company Dated 4/30/99, 4.89%,
due 5/03/99, collateralized by
$7,021,000 (total original face value)
Federal National Mortgage
Association, 6.00%, 3/01/29, market value
$6,972,371 (cost $6,666,507) 6,666,507 6,666,507
- -----------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS (COST $89,303,903) 103.22% 88,470,354
- -----------------------------------------------------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES (3.22%) (2,756,817)
- -----------------------------------------------------------------------------------------------------------
NET ASSETS 100.00% $85,713,537
===========================================================================================================
</TABLE>
12
<PAGE>
MENTOR FIXED-INCOME PORTFOLIO
PORTFOLIO OF INVESTMENTS
APRIL 30, 1999 (UNAUDITED)
- --------------------------------------------------------------------------------
ARM -- Adjustable Rate Mortgage
(a) These are securities that may be resold to "qualified institutional buyers"
under Rule 144A or securities offered pursuant to section 4(2) of the
Securites Act of 1933, as amended. These securities have been determined to
be liquid under guidelines established by the Board of Trustees.
INVESTMENT TRANSACTIONS
Cost of purchases and proceeds from sales of securities, other than short-term
securities, aggregated $98,507,004 and $81,997,411, respectively.
INCOME TAX INFORMATION
At April 30, 1999, the aggregated cost of investment securities for federal
income tax purposes was $89,303,903. Net unrealized depreciation aggregated
$833,549, of which $172,099 related to appreciated investment securities and
$1,005,648 related to depreciated investment securities.
SEE NOTES TO FINANCIAL STATEMENTS.
13
<PAGE>
MENTOR INSTITUTIONAL TRUST
STATEMENTS OF ASSETS AND LIABILITIES
APRIL 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
U.S. Government
Cash Management Fixed-Income
Portfolio Portfolio
- --------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Investments, at market value (a) (Note 2)
Investment securities $ 62,554,903 $ 81,803,846
Repurchase agreements 11,294,721 6,666,507
- --------------------------------------------------------------------------------------
Total investments 73,849,624 88,470,353
- --------------------------------------------------------------------------------------
Collateral for securities loaned (Note 2) - 3,350,450
Receivables
Dividends and interest 97,542 1,275,298
Investments sold - 1,407,873
Deferred expenses (Note 2) 4,730 4,287
Other assets - 15,722
- --------------------------------------------------------------------------------------
Total assets 73,951,896 94,523,983
- --------------------------------------------------------------------------------------
LIABILITIES
Securities loaned (Note 2) - 3,350,450
Investments purchased - 5,412,425
Dividends payable 340,616 -
Accrued expenses and other liabilities 2,542 47,571
- --------------------------------------------------------------------------------------
Total liabilities 343,158 8,810,446
- --------------------------------------------------------------------------------------
NET ASSETS $ 73,608,738 $ 85,713,537
======================================================================================
Net Assets represented by:
Additional paid-in capital $ 73,608,738 $ 85,593,978
Accumulated undistributed net investment income - 344,870
Accumulated net realized gain on investment
transactions - 608,239
Net unrealized depreciation on investments - (833,550)
- --------------------------------------------------------------------------------------
NET ASSETS $ 73,608,738 $ 85,713,537
- --------------------------------------------------------------------------------------
NET ASSET VALUE PER SHARE $ 1.00 $ 12.80
- --------------------------------------------------------------------------------------
SHARES OUTSTANDING 73,608,738 6,695,473
======================================================================================
</TABLE>
(a) Investments at cost are $73,849,624 and $89,303,903, respectively.
SEE NOTES TO FINANCIAL STATEMENTS.
14
<PAGE>
MENTOR INSTITUTIONAL TRUST
STATEMENTS OF OPERATIONS
SIX MONTHS ENDED APRIL 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
U.S. Government
Cash Management Fixed-Income
Portfolio Portfolio
- ------------------------------------------------------------------------------------------
<S> <C> <C>
INVESTMENT INCOME
Interest (Note 2) $ 1,975,530 $ 2,556,841
- ------------------------------------------------------------------------------------------
EXPENSES
Registration expenses 47,444 8,327
Custodian and accounting fees 25,221 10,494
Transfer agent fee 7,679 11,156
Shareholder reports and postage expenses 7,275 3,296
Legal fees 5,636 2,434
Organizational expenses 3,258 3,258
Audit fees 2,868 1,172
Directors' fees and expenses 2,675 874
Miscellaneous 7,197 1,010
- ------------------------------------------------------------------------------------------
Total expenses 109,253 42,021
- ------------------------------------------------------------------------------------------
Deduct
Reimbursement of expenses by management company
(Note 4) (85,482) -
- ------------------------------------------------------------------------------------------
NET INVESTMENT INCOME 1,951,759 2,514,820
- ------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED LOSS ON INVESTMENTS
Net realized gain on investments - 653,741
Change in unrealized appreciation (depreciation) of
investments - (2,272,448)
- ------------------------------------------------------------------------------------------
Net realized and unrealized loss on investments - (1,618,707)
- ------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations $ 1,951,759 $ 896,113
==========================================================================================
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
15
<PAGE>
MENTOR INSTITUTIONAL TRUST
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
U.S. Government
Cash Management Fixed-Income
Portfolio Portfolio
------------------------------------- ----------------------------------
Six Months Six Months
Ended 4/30/99 Year Ended Ended 4/30/99 Year Ended
(Unaudited) 10/31/98 (Unaudited) 10/31/98
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NET INCREASE (DECREASE) IN NET ASSETS
OPERATIONS
Net investment income $ 1,951,759 $ 10,717,355 $ 2,514,820 $ 4,321,183
Net realized gain on investments - 625 653,741 774,135
Change in unrealized appreciation
(depreciation) - - (2,272,448) (60,111)
- -------------------------------------------------------------------------------------------------------------------
Increase in net assets resulting from
operations 1,951,759 10,717,980 896,113 5,035,207
- -------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM
Net investment income (1,951,759) (10,717,355) (2,380,430) (4,374,722)
Net realized gain on investments - (625) (798,581) (285,172)
- -------------------------------------------------------------------------------------------------------------------
Total distributions to shareholders (1,951,759) (10,717,980) (3,179,011) (4,659,894)
- -------------------------------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS (NOTE 5)
Proceeds from sale of shares 277,851,335 331,400,035 9,647,347 23,755,754
Reinvested distributions 1,880,352 11,463,709 2,972,273 4,307,983
Shares redeemed (270,950,365) (537,986,552) (7,995,517) (6,804,702)
- -------------------------------------------------------------------------------------------------------------------
Change in net assets resulting from
capital share transactions 8,781,322 (195,122,808) 4,624,103 21,259,035
- -------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets 8,781,322 (195,122,808) 2,341,205 21,634,348
NET ASSETS
Beginning of period 64,827,416 259,950,224 83,372,332 61,737,984
- -------------------------------------------------------------------------------------------------------------------
End of period (including
undistributed net investment
income of $344,870 and
$210,480, respectively for
Fixed-Income Portfolio) $ 73,608,738 $ 64,827,416 $ 85,713,537 $ 83,372,332
===================================================================================================================
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
16
<PAGE>
MENTOR INSTITUTIONAL TRUST
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
U.S. Government
Cash Management Portfolio
-------------------------------------------------------------------------------------
Six Months
Ended
4/30/99 Year Ended Year Ended Year Ended Period Ended
(Unaudited) 10/31/98 10/31/97 10/31/96 10/31/95(b)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ------------------------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.02 0.05 0.05 0.05 0.05
Net realized gain (loss) on
investments - -* - * - * -
- ------------------------------------------------------------------------------------------------------------------------------
Total from investment operations 0.02 0.05 0.05 0.05 0.05
- ------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS FROM
Net investment income (0.02) (0.05) (0.05) (0.05) (0.05)
Capital gains - - * - * - * -
- ------------------------------------------------------------------------------------------------------------------------------
Total distributions (0.02) (0.05) (0.05) (0.05) (0.05)
- ------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
==============================================================================================================================
Total Return (d) 2.46% 5.63% 5.56% 5.60% 5.06%
==============================================================================================================================
RATIOS / SUPPLEMENTAL DATA
Net assets, end of period (in
thousands) $ 73,609 $ 64,827 $ 259,950 $ 87,973 $ 69,997
Ratio of expenses to average net
assets 0.06% (a) 0.06% 0.06% 0.04% 0.04% (a)
Ratio of expenses to average net
assets excluding waiver 0.27% (a) 0.12% 0.09% 0.12% 0.18% (a)
Ratio of net investment income to
average net assets 4.90% (a) 5.48% 5.45% 5.54% 5.56% (a)
==============================================================================================================================
</TABLE>
(a) Annualized.
(b) For the period from December 5, 1994 (commencement of operations) to October
31, 1995.
(d) Total return does not reflect sales commission and is not
annualized.
* Reflects net realized gain (loss) which was less than $0.005 per share.
SEE NOTES TO FINANCIAL STATEMENTS.
17
<PAGE>
MENTOR INSTITUTIONAL TRUST
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
Fixed-Income Portfolio
--------------------------------------------------------------------------------------
Six Months
Ended
4/30/99 Year Ended Year Ended Year Ended Period Ended
(Unaudited) 10/31/98 10/31/97 10/31/96 10/31/95 (c)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING
PERFORMANCE
NET ASSET VALUE, BEGINNING OF
PERIOD $ 13.15 $ 13.11 $ 12.89 $ 13.71 $ 12.50
- -------------------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT
OPERATIONS
Net investment income 0.38 0.79 0.83 0.77 0.81
Net realized and unrealized
gain (loss) on investments (0.25) 0.13 0.21 (0.16) 1.14
- -------------------------------------------------------------------------------------------------------------------------
Total from investment
operations 0.13 0.92 1.04 0.61 1.95
- -------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS FROM
Net investment income (0.36) (0.82) (0.82) (0.77) (0.74)
Capital gains (0.12) (0.06) - (0.66) -
- -------------------------------------------------------------------------------------------------------------------------
Total distributions (0.48) (0.88) (0.82) (1.43) (0.74)
- -------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 12.80 $ 13.15 $ 13.11 $ 12.89 $ 13.71
=========================================================================================================================
Total Return (d) 0.92% 7.21% 8.39% 4.87% 15.90%
=========================================================================================================================
RATIOS / SUPPLEMENTAL DATA
Net assets, end of period (in
thousands) $ 85,714 $ 83,372 $ 61,738 $ 49,962 $ 34,053
Ratio of expenses to average
net assets 0.10% (a) 0.10% 0.10% 0.05% 0.05% (a)
Ratio of expenses to average
net assets excluding waiver 0.10% (a) 0.10% 0.15% 0.17% 0.22% (a)
Ratio of net investment
income to average net assets 6.01% (a) 6.08% 6.52% 6.22% 6.75% (a)
Portfolio turnover rate 102% 137% 194% 226% 302%
=========================================================================================================================
</TABLE>
(a) Annualized.
(c) For the period from December 6, 1994 (commencement of operations) to October
31, 1995.
(d) Total return does not reflect sales commission and is not annualized.
* Reflects net realized gain (loss) which was less than $0.005 per share.
SEE NOTES TO FINANCIAL STATEMENTS.
18
<PAGE>
MENTOR INSTITUTIONAL TRUST
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 1999 (UNAUDITED)
NOTE 1: ORGANIZATION
Mentor Institutional Trust ("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 four separate diversified
portfolios (hereinafter each individually referred to as a "Portfolio" or
collectively as the "Portfolios") at April 30, 1999, as follows:
Mentor U.S. Government Cash Management Portfolio
("Cash Management 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
Portfolios.
(a) Valuation of Securities
Securities held by the Cash Management Portfolio are stated at amortized cost,
which approximates market value as permitted by Rule 2a-7 of the Investment
Company Act of 1940. In the event that a deviation of 1/2 of 1% or more exists
between the Portfolio's $1.00 per share net asset value, calculated at amortized
cost, and the net asset value calculated by reference to market-based values, or
if there is any other deviation that the Board of Trustees believes would result
in a
19
<PAGE>
MENTOR INSTITUTIONAL TRUST
NOTES TO FINANCIAL STATEMENTS
(CONTINUED)
material dilution to shareholders or purchasers, the Board of Trustees will
promptly consider what action should be initiated. Net asset value per share is
determined each business day for the Cash Management Portfolio and Fixed-Income
Portfolio by dividing net asset value by the number of shares outstanding at the
end of each business day.
U.S. Government obligations held by 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, asset-backed 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 Portfolio's Board of Trustees. In
determining value, the pricing services 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 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 advisor to be creditworthy pursuant to guidelines established by the
Board of Trustees. Risks may arise from the potential inability of
counterparties to honor the terms of the repurchase agreement. Accordingly, the
Trust could
20
<PAGE>
MENTOR INSTITUTIONAL TRUST
NOTES TO FINANCIAL STATEMENTS
(CONTINUED)
receive less than the repurchase price on the sale of collateral securities.
(c) Portfolio Securities Loaned
The Fixed-Income Portfolio is authorized by the Board of Trustees to participate
in securities lending transactions.
The Portfolio may receive fees for participating in securities lending
transactions. During the period that a security is out on loan, the Portfolio
continues to receive interest or dividends on the securities loaned. The
Portfolio receives collateral in an amount at least equal to, at all times, the
fair value of the securities loaned plus interest. When cash is received as
collateral, the Portfolio records an asset and obligation for the market value
of that collateral. Cash received as collateral may be reinvested, in which case
that security is recorded as an asset of the Portfolio. Variations in the market
value of the securities loaned occurring during the term of the loan are
reflected in the value of the Portfolio.
At April 30, 1999, the Fixed-Income Portfolio had loaned securities to brokers
which were collateralized by cash and securities. Cash collateral at April 30,
1999 was reinvested in U.S. Treasury and high quality money market instruments.
Income from securities lending activities amounted to $25,466 for the six months
ended April 30, 1999. The risks to the Portfolio from securities lending are
that the borrower may not provide additional collateral when required or return
the securities when due. At April 30, 1999, the value of the securities on loan
and the value of the related collateral were as follows:
Securities Cash Tri-Party
Portfolio On Loan Collateral Collateral
- -------------- -------------- -------------- -----------
Fixed-Income $ 3,244,403 $ 3,350,450 $ --
(d) 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.
21
<PAGE>
MENTOR INSTITUTIONAL TRUST
NOTES TO FINANCIAL STATEMENTS
(CONTINUED)
(e) 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.
(f) Federal Taxes
No provision for federal income taxes has been made since it is each Portfolio's
intent to comply with the provisions applicable to regulated investment
companies under the Internal Revenue Code and to distribute to its shareholders
within the allowable time limit substantially all taxable income and realized
capital gains.
(g) When-Issued and Delayed Delivery Transactions
Fixed-Income Portfolio may engage in when-issued or delayed delivery
transactions. To the extent the Portfolio engages in such transactions, they
will do so for the purpose of acquiring portfolio securities consistent with its
investment objectives and policies and not for the purpose of investment
leverage. The Portfolio will record a when-issued security and the related
liability on the trade date. Until the securities are received and paid for, the
Portfolio 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.
(h) Deferred Expenses
Costs incurred by the Portfolios in connection with their initial share
registration and organization costs were deferred by the Portfolios and are
being amortized on a straight-line basis over a five-year period.
(i) 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 the deferral of wash sales.
22
<PAGE>
MENTOR INSTITUTIONAL TRUST
NOTES TO FINANCIAL STATEMENTS
(CONTINUED)
(j) Residual Interests
A derivative security is any investment that derives its value from an
underlying security, asset, or market index. Fixed-Income Portfolio invests in
mortgage security residual interests ("residuals") which are considered
derivative securities. The Portfolio's investment in residuals have been
primarily in securities issued by proprietary mortgage trusts. While these
entities have been highly leveraged, often having indebtedness of up to 95% of
their total value, the Portfolio has not incurred any indebtedness in the course
of making these residual investments; nor has the Portfolio's assets been
pledged to secure the indebtedness of the issuing structure or the Portfolio's
investment in the residuals. In consideration of the risk associated with
investment in residual securities, it is the Portfolio's policy to limit its
exposure at the time of purchase to no more than 20% of its total assets.
(k) Interest-Rate Swaps
An interest-rate swap is a contract between two parties on a specified principal
amount (referred to as the notional principal) for a specified period. In the
most common instance, a swap involves the exchange of streams of variable and
fixed-rate interest payments. During the term of the swap, changes in the value
of the swap are recognized as unrealized gains or losses by marking-to-market to
reflect the market value of the swap. When the swap is terminated, the Portfolio
will record a realized gain or loss. As of April 30, 1999, there were no
outstanding interest rate swap agreements.
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. Capital gains realized by each Portfolio, if any, will be distributed
annually.
NOTE 4: INVESTMENT MANAGEMENT AND ADMINISTRATION AGREEMENTS
Mentor Investment Advisors, LLC ("Mentor Advisors"), the Portfolios' investment
advisor, receives no compensation for its services. Mentor Advisors is a wholly
owned subsidiary of Mentor Investment Group, LLC ("Mentor") and its affiliates.
Mentor is a
23
<PAGE>
MENTOR INSTITUTIONAL TRUST
NOTES TO FINANCIAL STATEMENTS
(CONTINUED)
subsidiary of Wheat First Butcher Singer, Inc., which in turn is a wholly owned
subsidiary of First Union Corporation ("First Union"). First Union is a leading
financial services company; First Union has announced plans to acquire EVEREN
Capital Corporation, which currently has a minority ownership interest 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, 1999, Mentor Advisors bore
expenses of $85,482 for the Cash Management Portfolio, and none for the
Fixed-Income Portfolio.
Mentor provides administrative personnel and services to each Portfolio,
pursuant to an Administration Agreement. Mentor receives no compensation for
such services.
24
<PAGE>
MENTOR INSTITUTIONAL TRUST
NOTES TO FINANCIAL STATEMENTS
(CONTINUED)
NOTE 5: 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 capital
shares were as follows:
<TABLE>
<CAPTION>
Cash Management Portfolio
Six Months Year Ended
Ended 4/30/99 10/31/98
-------------------------------------
<S> <C> <C>
Shares sold 277,851,335 331,400,035
Shares issued upon reinvestment of distributions 1,880,352 11,463,709
Shares redeemed (270,950,365) (537,986,552)
-------------------------------------
Change in net assets from capital share transactions 8,781,322 (195,122,808)
=====================================
</TABLE>
<TABLE>
<CAPTION>
Fixed-Income Portfolio
Six Months Year Ended
Ended 4/30/99 10/31/98
-------------------------------------
<S> <C> <C>
Shares sold 740,934 1,822,466
Shares issued upon reinvestment of distributions 231,210 332,359
Shares redeemed (619,040) (520,775)
-------------------------------------
Change in net assets from capital share transactions 353,104 1,634,050
=====================================
</TABLE>
ADDITIONAL INFORMATION
YEAR 2000 (UNAUDITED)
The Portfolios receive services from a number of providers which rely on the
effective functioning of their respective systems and the systems of others to
perform those services. It is generally recognized that certain systems in use
today may not be able to perform their intended functions adequately after 1999
because of the inability of computer software to distinguish the year 2000 from
the year 1900. Mentor Advisors is taking steps that it believes are reasonably
designed to address this potential "Year 2000" problem and to obtain
satisfactory assurances that comparable steps are being taken by each of the
Portfolios' other major service providers. There can be no assurance, however,
that these steps will be sufficient to avoid any adverse impact on the
Portfolios from this problem.
25
<PAGE>
(This Page Intentionally Left Blank)
<PAGE>
TRUSTEES
Daniel J. Ludeman, TRUSTEE & CHAIRMAN
Chairman and Chief Executive Officer
Mentor Investment Group, LLC
Arch T. Allen III, TRUSTEE
Attorney at Law
Allen & Moore, LLP
Jerry R. Barrentine, TRUSTEE
President
J.R. Barrentine & Associates
Arnold H. Dreyfuss, TRUSTEE
Former Chairman and Chief Executive Officer
Hamilton Beach/Proctor-Silex, Inc.
Weston E. Edwards, TRUSTEE
President
Weston Edwards & Associates
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
J. Garnett Nelson, TRUSTEE
Consultant
Mid-Atlantic Holdings, LLC
Troy A. Peery, Jr., TRUSTEE
Former President
Heilig-Meyers Company
Peter J. Quinn, Jr., TRUSTEE
Managing Director
Mentor Investment Group, LLC
OFFICERS
Paul F. Costello, PRESIDENT
Managing Director
Mentor Investment Group, LLC
Terry L. Perkins, TREASURER AND SECRETARY
Senior Vice President and Treasurer
Mentor Investment Group, LLC
Michael A. Wade, ASSISTANT TREASURER
Vice President and Controller
Mentor Investment Group, LLC
MK#1310
Mentor Institutional Trust
o U.S. Government Cash
Management Portfolio
o Fixed-Income Portfolio
-------------------------------------
SEMI-ANNUAL REPORT
-------------------------------------
April 30, 1999
[MENTOR INVESTMENT GROUP LOGO]
