MENTOR FUNDS

                                   SUPPLEMENT
                     to Y (Institutional) Shares Prospectus
                             dated January 17, 1998

     Mentor Quality Income Portfolio. The second paragraph appearing on page
nine of the Prospectus is replaced in its entirety with the following:

  The Portfolio will normally invest at least 80% of its assets in U.S.
  Government securities and in other securities rated at least A by Moody's or
  S&P, or at a comparable rating by another nationally recognized rating
  organization, or, if unrated, determined by Mentor Advisors to be of
  comparable quality. The Portfolio may invest the remaining 20% of its assets
  in lower-rated securities, including securities rated below investment grade
  (or, if unrated, determined by Mentor Advisors to be of comparable quality).
  Securities rated below investment grade are considered to be of poor standing
  and predominantly speculative. Assurance of interest and principal payments or
  of maintenance of other terms of the securities' contract over any long period
  of time may be small. The Portfolio will not invest more than 10% of its
  assets in securities rate Ca or below by Moody's or CC or below by Standard &
  Poor's. See "Other Investment Practices -- Lower-rated securities." A
  description of securities ratings is contained in the Appendix to this
  Prospectus.

     Mentor Short-Duration Income Portfolio. The fourth and fifth paragraphs
appearing on page twelve of the Prospectus are replaced in their entirety with
the following:

  The Portfolio will invest primarily in debt securities and preferred stocks of
  investment grade and, under normal market conditions, the Portfolio will seek
  to maintain a portfolio of securities with a dollar-weighted average rating of
  Baa/BBB or better. A security will be considered to be of "investment grade"
  if, at the time of investment by the Portfolio, it is rated at least Baa3 by
  Moody's or BBB- by S&P or the equivalent by another nationally recognized
  rating organization or, if unrated, determined by Mentor Advisors to be of
  comparable quality. Securities rated Baa or BBB lack outstanding investment
  characteristics and have speculative characteristics and are subject to
  greater credit and market risks than higher-rated securities.

  The Portfolio may invest up to 20% of its assets in securities rated below
  investment grade (or, if unrated, determined by Mentor Advisors to be of
  comparable quality). Securities rated below investment grade are considered to
  be of poor standing and predominantly speculative. Assurance of interest and
  principal payments or of maintenance of other terms of the securities'
  contract over any long period of time may be small. The Portfolio will not
  invest more than 10% of its assets in securities rated below Ca by Moody's or
  CC by Standard & Poor's. See "Other Investment Practices -- Lower-rated
  securities." A description of securities ratings is contained in the Appendix
  to this Prospectus.

  The Portfolio may borrow money to invest in additional securities; this
  practice involves risks. See "Other Investment Practices -- Leverage," below.
  The Portfolio may also engage in a variety of interest rate transactions,
  including swaps, caps, floors, and collars. See "Other Investment Practices --
  Interest rate transactions" below for a description of risks associated with
  these transactions.

     If you would like additional information concerning any of the Funds, call
Mentor Services Company, Inc. at 1-800-382-0016.

                                                                   July 15, 1998