CAMBRIDGE SERIES TRUST, N14EL24, 1995-06-08

CAMBRIDGE SERIES TRUST
N14EL24, 1995-06-08

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As filed with the Securities and Exchange Commission on
June 5, 1995
Registration No.

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM N-14

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 (x)

Pre-Effective Amendment No. ( )

Post-Effective Amendment No. ( )

(Check appropriate box or boxes)

THE MENTOR FUNDS
(Exact Name of Registrant as Specified in Charter)

901 East Byrd Street, Richmond, VA 23219
(Address of Principal Executive Offices)

(804) 782-3648
(Area Code and Telephone Number)

PAUL F. COSTELLO, President
THE MENTOR FUNDS
901 East Byrd Street, Richmond, VA 23219
(Name and address of Agent for Service)

Copy to:
TIMOTHY W. DIGGINS, Esquire
ROPES & GRAY
One International Place
Boston, Massachusetts 02110

Approximate Date of Proposed Public Offering: As soon as practicable
after this Registration Statement becomes effective.

It is proposed that the filing become effective on July 10, 1995
pursuant to Rule 488.

An indefinite amount of the Registrant's securities has been registered
under the Securities Act of 1933 pursuant to Rule 24f-2 under the
Investment Company Act of 1940. In reliance upon such Rule, no filing fee
is being paid at this time. A Rule 24f-2 notice for the Registrant was
filed on November 28, 1994.

<PAGE>

THE MENTOR FUNDS
CROSS-REFERENCE SHEET
(as required by Rule 481(a))
Form N-14 Item No.
Part A Caption in Prospectus/Proxy Statement of
Mentor/Cambridge Growth Portfolio
1. Cross-Reference Sheet; Front Cover
2. Front Cover
3. Synopsis; Risk factors
4. Introduction; Proposal regarding approval or
disapproval of Agreement and Plan of Reorganization;
Background and reasons for the proposed reorganization;
Information about the reorganization
5. Front Cover -- Incorporated by reference to specified
documents
6. Front Cover -- Incorporated by reference to specified
documents
7. Introduction; Proposal regarding approval or
disapproval of Agreement and Plan of Reorganization;
Information about the reorganization; Voting
information
8. Not Applicable
9. Not Applicable

Part B Caption in Statement of Additional Information

10. Cover Page
11. Cover Page
12. Cover Page -- Incorporated by reference to specified
documents
13. Cover Page -- Incorporated by reference to specified
documents
14. Independent Accountants and Financial Statements

<PAGE>

Part C

The information required to be included in Part C is set forth under the
appropriate Item, so numbered, in Part C to this Registration Statement.

<PAGE>

Table of Contents
A Message from the President . . . . . . . . . . . . . . . . .
Notice of Shareholder meeting. . . . . . . . . . . . . . . . .
Combined Prospectus/Proxy Statement. . . . . . . . . . . . . .
Proxy card enclosed

<PAGE>

THE MENTOR FUNDS
[logo]

A Message from the President

Dear Shareholder:

Enclosed you will find several documents relating to the special meeting of
shareholders of the Mentor/Cambridge Growth Portfolio (the "Growth Portfolio")
to be held August , 1995 at 901 East Byrd Street, Richmond, Virginia. I hope
this material will receive your immediate attention and that, if you cannot
attend the meeting in person, you will vote your proxy promptly.

The Trustees of The Mentor Funds are recommending that shareholders approve
a merger of the Growth Portfolio into the Mentor Capital Growth Portfolio (the
"Capital Growth Portfolio"), another series of The Mentor Funds. The merger
would result in your Growth Portfolio shares being exchanged at net asset value
and on a tax-free basis for shares of the Capital Growth Portfolio.

Your Trustees believe that the merger of the Growth Portfolio with the
Capital Growth Portfolio will offer shareholders of the Growth Portfolio an
opportunity to pursue a substantially similar investment program with the
potential for lower Portfolio operating expenses in the future.

Under the proposed merger, the Growth Portfolio will transfer all of its
assets to the Capital Growth Portfolio in return for shares of the Capital
Growth Portfolio and the assumption by the Capital Growth Portfolio of all of
the liabilities of the Growth Portfolio. After the transfer, Class A shares of
the Capital Growth Portfolio will be distributed to holders of the Growth
Portfolio's Class A shares and Class B shares of the Capital Growth Portfolio
will be distributed to holders of the Growth Portfolio's Class B shares, thereby
liquidating the Growth Portfolio. Both portfolios are series of The Mentor Funds
and are managed by Commonwealth Advisors, Inc.

YOUR TRUSTEES BELIEVE THAT THE PROPOSED MERGER WITH THE CAPITAL GROWTH
PORTFOLIO IS IN THE BEST INTERESTS OF SHAREHOLDERS AND RECOMMEND THAT YOU VOTE
IN FAVOR OF IT.

A Notice of Special Meeting of Shareholders, Prospectus/Proxy Statement,
and form of proxy are enclosed. Please read them carefully. If you are unable to
attend the meeting in person, we urge you to sign, date and return the proxy
card so that your shares may be voted in accordance with your instructions.

<PAGE>

I URGE YOU TO GIVE THE ENCLOSED MATERIAL YOUR PROMPT ATTENTION SO THAT YOUR
PORTFOLIO WILL NOT HAVE TO INCUR THE EXPENSE OF ADDITIONAL MAILINGS.

Your vote is important to us. We appreciate the time and consideration I am
sure you will give this important matter. If you have questions about the
proposal, please call 1-800-382-0016.

Sincerely yours,

(signature of Paul F. Costello)
Paul F. Costello, President
<PAGE>

Mentor/Cambridge Growth Portfolio,
a series of The Mentor Funds

Notice of a Special Meeting of Shareholders

To the Shareholders of the Mentor/Cambridge Growth Portfolio:

NOTICE IS HEREBY GIVEN that a Special Meeting of Shareholders of the
Mentor/Cambridge Growth Portfolio (the "Growth Portfolio") will be
held Wednesday, August 9, 1995 at 9:00 a.m. at the Riverfront Plaza Conference
Suite, Riverfront Plaza -- West Tower, 20th Floor, 901 East Byrd Street,
Richmond, Virginia, to consider the following:

1. To approve an Agreement and Plan of Reorganization providing for the transfer
of all of the assets of the Growth Portfolio to the Mentor Capital Growth
Portfolio (the "Capital Growth Portfolio") in exchange for shares
of the Capital Growth Portfolio and the assumption by the Capital Growth
Portfolio of all of the liabilities of the Growth Portfolio, and the
distribution of such shares to the shareholders of the Growth Portfolio in
liquidation of the Growth Portfolio.

2. To transact such other business as may properly come before the
meeting.

The Trustees have fixed the close of business on June , 1995 as the record
date for determination of shareholders entitled to notice of, and to vote at,
the Special Meeting.

By order of the Trustees

Paul F. Costello, President

WE URGE YOU TO MARK, SIGN, DATE, AND MAIL THE ENCLOSED PROXY IN THE
POSTAGE-PAID ENVELOPE PROVIDED SO THAT YOU WILL BE REPRESENTED AT THE
SPECIAL MEETING.

July , 1995

<PAGE>

Prospectus/Proxy Statement June , 1995

Acquisition of the assets of

Mentor/Cambridge Growth Portfolio
901 East Byrd Street
Richmond, Virginia 23219
1-800-382-0016

By and in exchange for shares of

Mentor Capital Growth Portfolio
901 East Byrd Street
Richmond, Virginia 23219
1-800-382-0016

Table of Contents

Synopsis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Risk factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Introduction
Proposal regarding approval or disapproval of
Agreement and Plan of Reorganization . . . . . . . . . . . . . . . . . .
Background and reasons for the proposed reorganization . . . . . . . . . .
Information about the reorganization . . . . . . . . . . . . . . . . . . .
Other information . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Voting information . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Agreement and Plan of Reorganization . . . . . . . . . . . . . . Exhibit A

This document will give you the information you need to vote on the
proposed merger. Much of the information is required under rules of the
Securities and Exchange Commission ("SEC"); some of it is technical. If there is
anything you don't understand, please contact us at our special toll-free
number, 1-800-382-0016, or call your financial advisor.

This Prospectus/Proxy Statement relates to the proposed merger of the
Mentor/Cambridge Growth Portfolio (the "Growth Portfolio") into the Mentor
Capital Growth Portfolio (the "Capital Growth Portfolio") through the transfer
of all assets of the Growth Portfolio to the Capital Growth Portfolio in
exchange for Class A and Class B shares of beneficial interest of the Capital
Growth Portfolio (the "Merger Shares") and the assumption by the Capital Growth
Portfolio of all of the liabilities of the Growth Portfolio in liquidation of
the Growth Portfolio. As a result of the proposed transaction, each shareholder
of the Growth Portfolio will receive a number of full and fractional Class A or
Class B Merger Shares, equal in value at the date of the exchange to the
aggregate value of the shareholder's Class A or Class B Growth Portfolio shares,
as the case may be.

<PAGE>

This Prospectus/Proxy Statement explains concisely what you should know
before investing in the Capital Growth Portfolio. Please read it and keep it for
future reference. This Prospectus/Proxy Statement is accompanied by (i) the
Prospectus, dated May 30, 1995 (the "Prospectus"), of The Mentor Funds (the
"Trust") and (ii) the Report of Independent Accountants and financial statements
in respect of the Portfolios included in the Trust's Annual Report to
Shareholders for the fiscal year ended September 30, 1994 (the "Annual Report").
Each of the Prospectus and the Annual Report contains information about the
Portfolios and is incorporated into this Prospectus/Proxy Statement by
reference.

The following documents have been filed with the Securities and Exchange
Commission and are also incorporated into this Prospectus/Proxy Statement by
reference: (i) the current Statement of Additional Information of the Trust,
dated May 30, 1995 (the "Trust Statement of Additional Information"); (ii) the
financial statements in respect of the Portfolios included in the Trust's
Semi-Annual Report to Shareholders for the six months ended March 31, 1995 (the
"Semi-Annual Report"); and (iii) a Statement of Additional Information dated May
30, 1995, relating to the transactions described in this Prospectus/Proxy
Statement.

For a free copy of any or all of the Prospectuses or Statements of
Additional Information, please contact us as at 1-800-382-0016.

Proxy materials, information statements and other information filed by
the Capital Growth Portfolio can be inspected and copied at the Public Reference
Facilities maintained by the Securities and Exchange Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549. Copies of such material can also be
obtained from the Public Reference Branch, Office of Consumer Affairs and
Information Services, Securities and Exchange Commission, Washington, D.C. 20549
at prescribed rates.

THE SECURITIES OFFERED BY THE ACCOMPANYING PROSPECTUS/PROXY STATEMENT
HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION
OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF SUCH PROSPECTUS/PROXY STATEMENT. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.

SHARES OF THE CAPITAL GROWTH PORTFOLIO ARE NOT DEPOSITS OR OBLIGATIONS
OF, OR GUARANTEED OR ENDORSED BY, ANY FINANCIAL INSTITUTION, ARE NOT INSURED BY
THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY
OTHER AGENCY, AND INVOLVE RISK, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.

<PAGE>

SYNOPSIS
PROPOSED TRANSACTION

The Growth Portfolio and the Capital Growth Portfolio are each a series of
The Mentor Funds (the "Trust"), an open-end, series investment company. The
Trustees of the Trust have approved the merger of the Growth Portfolio into the
Capital Growth Portfolio. The merger is proposed to be accomplished pursuant to
an Agreement and Plan of Reorganization providing for the transfer of all of the
assets of the Growth Portfolio to the Capital Growth Portfolio in exchange for
the assumption by the Capital Growth Portfolio of all of the liabilities of the
Growth Portfolio and for shares of the Capital Growth Portfolio. The completion
of these transactions will result in the liquidation of the Growth Portfolio.

As a result of the proposed transaction, the Growth Portfolio will receive
a number of Class A and Class B Shares of the Capital Growth Portfolio (the
"Merger Shares") equal in value to the value of the net assets of the
Growth Portfolio being transferred that are attributable to the Class A and
Class B shares, respectively, of the Growth Portfolio. Following the transfer,
each Class A and Class B shareholder of the Growth Portfolio will receive, on a
tax-free basis, a number of full and fractional Class A and Class B Merger
Shares, respectively, of the Capital Growth Portfolio equal in value at the date
of the exchange to the aggregate value of the shareholder's Growth Portfolio
shares.

The Trustees of the Trust recommend that shareholders of the Growth
Portfolio approve the merger because it offers shareholders the opportunity
to pursue a substantially similar investment program with the potential for
lower Portfolio operating expenses. See "Background and Reasons for the
Proposed Reorganization."

CERTAIN TAX CONSEQUENCES OF THE REORGANIZATION

The closing of the proposed reorganization is subject to the receipt
of an opinion of Ropes & Gray, legal counsel to both the Growth Portfolio
and Capital Growth Portfolio, to the effect that for federal income tax
purposes (i) no gain or loss will be recognized by the Growth Portfolio or
the Growth Portfolio's shareholders as a result of the reorganization, (ii)
the tax basis of the Merger Shares received by each Growth Portfolio
shareholder will be the same as the tax basis of the shareholder's Growth
Portfolio shares, and (iii) the tax basis of the assets of the Growth
Portfolio held by the Capital Growth Portfolio as a result of the
reorganization will be the same as the tax basis of such assets in the

<PAGE>

hands of the Growth Portfolio prior to the reorganization. See
"Information about the Reorganization -- Federal Income Tax Consequences."

INVESTMENT OBJECTIVES, POLICIES AND RESTRICTIONS

The investment objective of the Growth Portfolio is growth of capital
through professional management and diversification of investments in
securities its investment advisor believes to have potential of capital
appreciation. The Growth Portfolio invests primarily in common stocks, but
can invest in any securities with potential for capital growth. While the
Portfolio may normally be expected to invest primarily in common stocks of
companies with above-average growth projects, its investments may also
include to a limited degree other common stocks and convertible securities,
such as bonds and preferred stocks. The Portfolio may trade securities for
short-term profit.

The investment objective of the Capital Growth Portfolio is to provide
long-term appreciation of capital. The Capital Growth Portfolio invests
primarily in common stocks of companies believed by its investment adviser
to have appreciation potential, although it may invest any amount or
proportion of its assets in any class or type of security believed by its
advisor to offer the potential for capital appreciation over both the
intermediate and long term. These may include, for example, preferred
stocks, investment grade bonds, convertible preferred stocks, and
convertible debentures.

The Growth Portfolio may invest up to 10% of its assets in foreign
securities; the Capital Growth Portfolio may invest up to 15% of its assets
in such securities.

Both Portfolios may also hold a portion of their assets in cash or
money market instruments, and the Capital Growth Portfolio may invest in
fixed-income securities, for temporary defensive purposes. Both Portfolios
may engage in foreign currency, stock index futures and options strategies
for hedging purposes and may also engage in options transactions. Unlike
the Growth Portfolio, the Capital Growth Portfolio may engage in options
transactions to earn additional income or increase its current return.
Both Portfolios may enter into securities loans, repurchase agreements, and
forward commitments.

DISTRIBUTIONS, PURCHASE, REDEMPTION, AND EXCHANGE PROCEDURES

The Growth Portfolio declares and pays any net investment income to
shareholders annually, while the Capital Growth Portfolio declares and pays net
investment income to shareholders semi-annually. Each of the Portfolios
distributes any net realized capital gains at least annually.

<PAGE>

The procedures for redeeming shares of the Growth Portfolio and shares of
the Capital Growth Portfolio, and for exchanging such shares of each Portfolio
for shares of other Mentor funds, are identical. Reinvestments of distributions
by the Portfolios are made at net asset value for all classes of shares.

Shares of both Portfolios may be redeemed any day the New York Stock
Exchange is open at their net asset value next determined either directly to a
Portfolio or through an investment dealer. Shares of both Portfolios may be
exchanged after a fifteen-day holding period for shares of the same class of
certain other Mentor funds.

Shares of the Growth Portfolio are not currently being offered for sale,
except through reinvestment of distributions paid by the Portfolio.

EXPENSE SUMMARY

As shown in the tables below, the Funds have identical management fees,
while the Capital Growth Portfolio currently incurs lower operating expenses.

The following tables summarize expenses (i) that the Growth Portfolio has
incurred in its past fiscal year, (ii) that the Capital Growth Portfolio has
incurred in its past fiscal year, and (iii) that the Capital Growth Portfolio
expects to incur after giving effect to the proposed merger on a pro forma
combined basis as if the merger had occurred as of March 31, 1995. "Shareholder
Transaction Expenses" are identical for the Capital Growth Portfolio prior to
and after giving effect to the merger. The Examples show the estimated
cumulative expenses attributable to a hypothetical $1,000 investment over
specified periods.

Growth Portfolio
Class A Class B
Shares Shares

Shareholder Transaction Expenses

Maximum Sales Charge Imposed
on Purchases (as a percentage Not Not
of offering price) applicable applicable

<PAGE>

Maximum Deferred Sales Charge
(as a percentage of the lower
of original purchase price or
redemption proceeds,
as applicable) 1.00%(2) 4.0% in first year,
declining to 1.0%
in fifth year, and
eliminated
thereafter(3)

Annual Portfolio Operating Expenses
(as a percentage of average net assets)

Investment Advisory Fee 0.80% 0.80%
12b-1 Fees None 0.75%
Other Expenses 1.06% 1.06%

Total Portfolio Operating Expenses 1.86% 2.61%

<PAGE>

Capital Growth Portfolio

Class A Class B
Shares Shares
Shareholder Transaction Expenses

Maximum Sales Charge Imposed
on Purchases (as a 5.75% None(1)
percentage of offering price) (Not applicable
to Merger Shares)
Maximum Deferred Sales Charge 1.00%(2) 4.0% in
(as a percentage of the lower of first year,
the original purchase price or declining
redemption proceeds, as applicable) to 1.0% in
fifth year,
and
eliminated
thereafter(3)

Annual Portfolio Operating Expenses
(as a percentage of average
net assets)

Investment Advisory Fee 0.80% 0.80%
12b-1 Fees None 0.75%
Other Expenses 1.05% 1.05%

Total Portfolio Operating Expenses 1.85% 2.60%

Annual Portfolio Operating Expenses
(Pro forma)
(as a percentage of average
net assets)

Investment Advisory Fee 0.80% 0.80%
12b-1 Fees None 0.75%
Other Expenses 1.04% 1.04%
Total Portfolio Operating Expenses 1.84% 2.59%

The tables are provided to help you understand an investor's share of the
operating expenses which each Portfolio incurs.

EXAMPLES

An investment of $1,000 would incur the following expenses, assuming (1) 5%
annual return and (2) no redemption at the end of each period:

<PAGE>

1 3 5 10
year years years years
Growth Portfolio
Class A $73 $109 $148 $257
Class B $26 $ 80 $136 $290

Capital Growth Portfolio
Class A $71 $101 $132 $221
Class B $22 $ 69 $118 $253

Capital Growth Portfolio
(Pro forma combined)
Class A $71 $101 $132 $221
Class B $22 $ 69 $118 $253

An investment of $1,000 would incur the following expenses, assuming (1) 5%
annual return and (2) redemption at the end of each time period:

1 3 5 10
year years years years
Growth Portfolio
Class A $73 $109 $148 $257
Class B $26 $ 80 $136 $290

Capital Growth Portfolio
Class A $71 $101 $132 $221
Class B $62 $ 99 $128 $253

Capital Growth Portfolio
(Pro forma combined)
Class A $71 $101 $132 $221
Class B $62 $ 99 $128 $253

The Examples do not represent past or future expense levels. Actual expenses may
be greater or less than those shown. Federal regulations require the Examples to
assume a 5% annual return, but actual annual return will vary.

(1) Class B shares are sold without a front-end sales charge, but their higher
12b-1 fees may cause long-term shareholders to pay more than the economic
equivalent of the maximum permitted front-end sales charge.

(2) A contingent deferred sales charge ("CDSC") of 1.00% is assessed on Class A
shares that were purchased without an initial sales charge as part of an
investment of $1 million or more that are redeemed within one year of
purchase.

(3) See "Description of the Merger Shares" on page ___ for how the CDSC will be
determined for Class B Merger Shares.

<PAGE>

RISK FACTORS

Because the Portfolios share similar investment objectives and policies,
the risks of an investment in the Capital Growth Portfolio as described below
are similar to the risks of an investment in the Growth Portfolio, except for
the risks of investing in fixed-income securities. A more detailed description
of certain of the risks associated with an investment in the Capital Growth
Portfolio is contained in the Prospectus.

Investments in fixed-income securities. The Capital Growth Portfolio may
invest a portion of its assets in fixed-income securities. The values of
fixed-income securities fluctuate in response to changes in interest rates.
Thus, a decrease in interest rates will generally result in an increase in the
value of such securities. Conversely, during periods of rising interest rates,
the value of the Portfolio's assets will generally decline. As of March 31,
1995, approximately 9.75% of the Capital Growth Portfolio's assets were invested
in fixed-income securities.

Foreign investments. The Capital Growth Portfolio may invest a higher
portion of its assets in foreign securities than may the Capital Growth
Portfolio. Investments in foreign securities involve certain risks. Some of
these risks include, for example, the negative effect of currency exchange
rates, lack of public information about foreign companies, liquidity risks, and
risks of adverse political and diplomatic developments. A complete description
of the risks associated with foreign securities is included in the Prospectus.

Options and futures transactions and other investment practices. The
Capital Growth Portfolio's use of options and futures transactions involves
certain risks, including the risks that the Capital Growth Portfolio will be
unable at times to close out such positions, that such transactions may not
accomplish their purpose because of imperfect market correlations, or that
Commonwealth Advisors may not forecast market movements correctly.

Also, to the extent that the Capital Growth Portfolio exercises its ability
to engage in certain investment practices, such as repurchase agreements and
securities lending, it may be delayed in recovering or unable to recover its
collateral in the event of default by the other party. In the case of securities
purchased for future delivery, the Portfolio runs the risk of a decline in the
value of such securities before the settlement date and the risk that the other
party should default on its obligation.

<PAGE>

INTRODUCTION

This Prospectus/Proxy Statement is furnished in connection with the
proposed reorganization of the Growth Portfolio by the transfer of all of its
assets and liabilities to the Capital Growth Portfolio and the solicitation of
proxies by and on behalf of the Trustees of the Growth Portfolio for use at the
Special Meeting of Shareholders (the "Meeting"). The Meeting is to be held on
August 9, 1995 at 9:00 a.m. at the Riverfront Plaza Conference Suite, Riverfront
Plaza -- West Tower, 20th Floor, 901 East Byrd Street, Richmond, Virginia. This
Prospectus/Proxy Statement and the enclosed form of proxy are being mailed to
shareholders on or about June __, 1995.

Any shareholder giving a proxy has the power to revoke it by mail
(addressed to the Trust's Clerk at the principal office of the Trust, 901 East
Byrd Street, Richmond, VA 23219) or in person at the Meeting, by executing a
superseding proxy, or by submitting a notice of revocation to the Growth
Portfolio. All properly executed proxies received in time for the Meeting will
be voted as specified in the proxy, or, if no specification is made, FOR the
proposal (set forth in Proposal 1 of the Notice of Meeting) to implement the
reorganization of the Growth Portfolio by the transfer of all of its assets to
the Capital Growth Portfolio in exchange for the Merger Shares and the
assumption by the Capital Growth Portfolio of all of the liabilities of the
Growth Portfolio.

At May 31, 1995, there were outstanding _____ shares of beneficial interest
of the Growth Portfolio. Only shareholders of record on _______, 1995 will be
entitled to notice of and to vote at the Meeting. Each share is entitled to one
vote, with fractional shares voting proportionally.

The Trustees of the Trust know of no matters other than those set forth
herein to be brought before the Meeting. If, however, any other matters properly
come before the Meeting, it is the Trustees' intention that proxies will be
voted on such matters in accordance with the judgment of the persons named in
the enclosed form of proxy.

PROPOSAL REGARDING APPROVAL OR DISAPPROVAL OF AGREEMENT AND PLAN OF
REORGANIZATION

The shareholders of the Growth Portfolio are being asked to approve or
disapprove a merger between the Capital Growth Portfolio and the Growth
Portfolio pursuant to an Agreement and Plan of Reorganization between the Funds,
dated as of June 1, 1995 (the "Agreement"), a copy of which is attached to this
Prospectus/Proxy Statement as Exhibit A.

<PAGE>

The Agreement provides, among other things, for the transfer of all of the
assets of the Growth Portfolio to the Capital Growth Portfolio in exchange for
the assumption by the Capital Growth Portfolio of all of the liabilities of the
Growth Portfolio and for the Class A and Class B Merger Shares, the number of
which will be calculated based on the value of the net assets attributable to
the Class A and Class B shares of the Growth Portfolio acquired by the Capital
Growth Portfolio and the net asset value per Class A and Class B share of the
Capital Growth Portfolio, all as more fully described below under "Information
about the reorganization."

After receipt of the Merger Shares, the Growth Portfolio will cause the
Class A Merger Shares to be distributed to its Class A shareholders and the
Class B Merger Shares to be distributed to its Class B shareholders, in complete
liquidation of the Growth Portfolio. Each shareholder of the Growth Portfolio
will receive a number of full and fractional Class A or Class B Merger Shares
equal in value at the date of the exchange to the aggregate value of the
shareholder's Growth Portfolio shares. In addition, the Trust will file an
application for deregistration on behalf of the Growth Portfolio under Section
8(f) of the Investment Company Act of 1940.

Prior to the date of the transfer (the "Exchange Date"), the Growth
Portfolio will declare a distribution to shareholders which, together with all
previous distributions, will have the effect of distributing to shareholders all
of its investment company taxable income (computed without regard to the
deduction for dividends paid) and net realized capital gains, if any, through
the Exchange Date.

The Trustees of the Growth Portfolio have voted unanimously to approve the
proposed transaction and to recommend that shareholders also approve the
transaction. The affirmative vote of a majority of the outstanding shares of
beneficial interest of the Growth Portfolio that are entitled to be voted at the
Meeting is necessary for the consummation of the proposed transaction.

A shareholder of the Growth Portfolio objecting to the proposed transaction
is not entitled under either Massachusetts law or the Declaration of Trust to
demand payment for and an appraisal of his or her Growth Portfolio shares if the
transaction is consummated over his or her objection. If the merger is
consummated, however, shareholders will be free at any time to redeem their
Merger Shares, for cash at net asset value at the time of such redemption, or,
exchange their Merger Shares for shares of certain other portfolios offered by
the Trust, at net asset value at the time of such exchange.

<PAGE>

In the event that this proposal is not approved by the shareholders of the
Growth Portfolio, the Growth Portfolio will continue to be managed as a separate
Portfolio in accordance with its current investment objective and policies, and
the Trustees may consider such alternatives as may be in the best interests of
the shareholders.

BACKGROUND AND REASONS FOR THE PROPOSED REORGANIZATION

The Trustees of the Trust, including all Trustees who are not "interested
persons" of the Trust, have determined that the reorganization would be in the
best interests of each Portfolio's shareholders, and that the interests of
existing shareholders of each of the Portfolios would not be diluted as a result
of effecting the reorganization. The Trustees have unanimously approved the
proposed reorganization and have recommended its approval by shareholders.

The principal reasons why the Trustees are recommending the reorganization
are:

(i) Likely reduction in size of Growth Portfolio and increase in expense
ratio. The Growth Portfolio is an open-end investment company, and shareholders
are able to redeem their shares at any time at net asset value. Shares of the
Growth Portfolio are not currently being offered to the public. Cambridge
Advisors believes that, as a result of the lack of new investment in the Growth
Portfolio and likely redemptions in the future, the amount of the Portfolio's
assets will not likely increase in coming years and may decline. Any such
decline in the Portfolio's assets would likely result in an increase in the
Portfolio's expense ratio, as the Portfolio's operating expenses are spread over
a smaller asset base. The Trustees have therefore determined that it is in the
best interests of the Portfolio's shareholders to combine the Portfolio with
another mutual fund whose shares are being publicly offered, in order to
increase the asset base over which those expenses will be spread.

(ii) Continued investment in a mutual fund without recognition of gain or
loss for federal income tax purposes. The proposed reorganization will permit
Growth Portfolio shareholders to keep their investment in an open-end fund,
without recognition of gain or loss for federal income tax purposes. If the
Growth Portfolio were to liquidate and shareholders were to receive the net
asset value of their shares in liquidating distributions, gain or loss would be
recognized for federal income tax purposes.

(iii) Appropriate investment objectives, etc. The investment objective,
policies, and restrictions of the Capital Growth Portfolio are substantial
similar to the Growth Portfolio's, and the Trustees believe that an investment

12
<PAGE>

in shares of the Capital Growth Portfolio will provide shareholders an
investment opportunity comparable to that afforded by the Growth Portfolio.

(iv) Favorable expense ratio. The Trustees believe that the
combination of the Growth Portfolio with the Capital Growth Portfolio has the
potential to provide savings in operating expenses for Growth Portfolio
shareholders over time since such costs will be absorbed over a larger asset
base (including any assets attributable to the sale of shares to the public by
the Capital Growth Fund in the future). Information on the Portfolios' operating
expenses is set out above under "Expense Summary".

INFORMATION ABOUT THE REORGANIZATION

Agreement and Plan of Reorganization. The proposed Agreement and Plan of
Reorganization provides that the Capital Growth Portfolio will acquire all of
the assets of the Growth Portfolio in exchange for the assumption by the Capital
Growth Portfolio of all of the liabilities of the Growth Portfolio and for the
issuance of Class A and Class B Merger Shares all as of the Exchange Date
(defined in the Agreement to be the next full business day following the
Valuation Time, defined in the Agreement as 4:00 p.m. Richmond time on ________,
1995 or such other date as may be agreed upon by the parties). The following
discussion of the Agreement is qualified in its entirety by the full text of the
Agreement, which is attached as Exhibit A to this Prospectus/Proxy Statement.

The Growth Portfolio will sell all of its assets to the Capital Growth
Portfolio, and in exchange, the Capital Growth Portfolio will assume all of the
liabilities of the Growth Portfolio and deliver to the Growth Portfolio (i) a
number of full and fractional Class A Merger Shares having an aggregate net
asset value equal to the value of assets of the Growth Portfolio attributable to
its Class A shares, less the value of the liabilities of the Growth Portfolio
assumed by the Capital Growth Portfolio attributable to the Class A Merger
Shares, and (ii) a number of full and fractional Class B Merger Shares having a
net asset value equal to the value of assets of the Growth Portfolio
attributable to its Class B shares, less the value of the liabilities of the
Growth Portfolio assumed by the Capital Growth Portfolio attributable to the
Class B Merger Shares.

Immediately following the Exchange Date, the Growth Portfolio will
distribute pro rata to its shareholders of record as of the close of business on
the Exchange Date the full and fractional Merger Shares received by the Growth
Portfolio, with Class A Merger Shares being distributed to holders of Class A
shares of the Growth Portfolio and Class B Merger Shares being distributed to
holders of Class B shares of the Growth Portfolio. As a result of the proposed

<PAGE>

transaction, each holder of Class A and Class B shares of the Growth Portfolio
will receive a number of Class A and Class B Merger Shares equal in aggregate
value at the Exchange Date to the value of the Class A and Class B shares,
respectively, of the Growth Portfolio held by the shareholder. This distribution
will be accomplished by the establishment of accounts on the share records of
the Capital Growth Portfolio in the name of such Growth Portfolio shareholders,
each account representing the respective number of full and fractional Class A
or Class B Merger Shares due such shareholder. New certificates for Merger
Shares will be issued only upon written request.

The consummation of the reorganization is subject to the conditions set
forth in the Agreement. The Agreement may be terminated and the reorganization
abandoned at any time, before or after approval by the shareholders, prior to
the Exchange Date by mutual consent of the Capital Growth Portfolio and the
Growth Portfolios or, if any condition set forth in the Agreement has not been
fulfilled and has not been waived by the party entitled to its benefits, by such
party.

The Capital Growth Portfolio will not permit any Growth Portfolio
shareholder holding certificates for Growth Portfolio shares at the time of the
merger to receive cash dividends or other distributions, receive certificates
for Merger Shares, exchange Merger Shares for shares of the Trust other
investment companies affiliated with the Trust, or pledge or redeem Merger
Shares until those certificates for Growth Portfolio shares have been
surrendered, or, in the case of lost certificates, an adequate surety bond has
been posted.

If a shareholder is not for that reason permitted to receive cash dividends
or other distributions on Merger Shares, the Capital Growth Portfolio will pay
all such dividends and distributions in additional shares, notwithstanding any
election the shareholder may have made previously to receive dividends and
distributions on Growth Portfolio shares in cash.

All fees and expenses, including legal and accounting expenses, portfolio
transfer taxes (if any) or other similar expenses incurred in connection with
the consummation of the transactions contemplated by the Agreement will be
allocated ratably between the two Portfolios in proportion to their net assets
as of the day of the transfer, except that the costs of proxy materials and
proxy solicitations will be borne by the Growth Portfolio. The estimated fees
and expenses for the transaction are $________. However, to the extent that any
payment by the Capital Growth Portfolio of such fees or expenses would result in
the disqualification of the Capital Growth Portfolio or the Growth Portfolio as

<PAGE>

a "regulated investment company" within the meaning of Section 851 of the
Internal Revenue Code of 1986, as amended (the "Code"), such fees and expenses
will be paid directly by the party incurring them.

Description of the Merger Shares. Full and fractional Merger Shares will be
issued to the Growth Portfolio's shareholders in accordance with the procedure
under the Agreement as described above. The Merger Shares are Class A and Class
B shares of the Capital Growth Portfolio. Investors purchasing Class A shares
pay a sales charge at the time of purchase, but Growth Portfolio shareholders
receiving Class A Merger Shares in the merger will not pay a sales charge on
such shares. Class A shares of the Capital Growth Portfolio are generally not
subject to redemption fees or 12b-1 fees. Class B shares of the Capital Growth
Portfolio are sold without a sales charge, but are subject to a CDSC of up to
4.0% if redeemed within five years of original purchase. Class B shares are also
subject to a 12b-1 fee at the annual rate of 0.75% of the Fund's average daily
net assets attributable to Class B shares. For purposes of determining the CDSC
payable on redemption of Class B Merger Shares received by holders of Class B
shares of the Growth Portfolio, as well as the conversion date of such shares,
such shares will be treated as having been acquired as of the dates such
shareholders originally acquired their Class B shares of the Growth Portfolio.

In connection with the sale of Class B shares, the Trust pays commissions
to broker-dealers from its own assets that it expects to recover over time
through the receipt of distribution fees in connection with its Class B shares
and the receipt of CDSC on Class B shares. The total amount of such commissions
paid by Mentor Distributors with respect to the Growth Portfolio before the
consummation of the proposed reorganization will likely exceed the amounts
recovered by Mentor Distributors by that time. Such unrecovered amounts do not
represent a liability of the Growth Portfolio and, consequently, the Capital
Growth Portfolio will not assume any such liability in connection with the
consummation of the reorganization. However, to the extent Mentor Distributors
has not fully recovered such commissions before the consummation of the proposed
reorganization, it is anticipated that the Trustees will consider such
unrecovered amounts, among other factors, in determining whether to continue
payments of distribution fees in the future with respect to Class B shares of
the Capital Growth Portfolio.

Each of the Merger Shares will be fully paid and nonassessable when issued,
will be transferable without restriction, and will have no preemptive or
conversion rights, except that Class B Merger Shares will have the conversion
rights specified above. The Agreement and Declaration of Trust of the Trust
permits the Trust to divide its shares, without shareholder approval, into two
or more series of shares representing separate investment portfolios and to

<PAGE>

further divide any such series, without shareholder approval, into two or more
classes of shares having such preferences and special or relative rights and
privileges as the Trustees may determine. Like the Growth Portfolio's shares,
the Capital Growth Portfolio's shares are currently divided into two classes,
Class A and Class B.

Under Massachusetts law, shareholders could, under certain circumstances,
be held personally liable for the obligations of the Trust and/or the Capital
Growth Portfolio. However, the Agreement and Declaration of Trust disclaims
shareholder liability for acts or obligations of the Trust and/or the Capital
Growth Portfolio and requires that notice of such disclaimer be given in each
agreement, obligation, or instrument entered into or executed by the Trust, the
Capital Growth Portfolio or the Trustees. The Agreement and Declaration of Trust
provides for indemnification out of Trust or Portfolio property for all loss and
expense of any shareholder held personally liable for the obligations of the
Trust or the Capital Growth Portfolio. Thus, the risk of a shareholder incurring
financial loss from shareholder liability is limited to circumstances in which
the Trust or the Capital Growth Portfolio would be unable to meet its
obligations. The likelihood of such a circumstance is remote. The shareholders
of the Growth Portfolio are currently subject to this same risk of shareholder
liability.

FEDERAL INCOME TAX CONSEQUENCES. As a condition to the Growth Portfolio's
obligation to consummate the reorganization, the Growth Portfolio will receive
an opinion from Ropes & Gray, counsel to the Portfolios, to the effect that, on
the basis of the existing provisions of the Internal Revenue Code of 1986, as
amended (the "Code"), current administrative rules and court decisions, for
federal income tax purposes: (i) under Section 361 of the Code, no gain or loss
will be recognized by the Growth Portfolio as a result of the reorganization;
(ii) under Section 354 of the Code, no gain or loss will be recognized by
shareholders of the Growth Portfolio on the distribution of Merger Shares to
them in exchange for their shares of the Growth Portfolio; (iii) under Section
358 of the Code, the tax basis of the Merger Shares that the Growth Portfolio's
shareholders receive in place of their Growth Portfolio shares will be the same
as the basis of the Growth Portfolio shares exchanged; and (iv) under Section
1223(1) of the Code, a shareholder's holding period for the Merger Shares
received pursuant to the Agreement will be determined by including the holding
period for the Growth Portfolio shares exchanged for the Merger Shares, provided
that the shareholder held the Growth Portfolio shares as a capital asset.

CAPITALIZATION. The following tables show the capitalization of the Capital
Growth Portfolio and the Growth Portfolio as of March 31, 1995 and on a pro

<PAGE>

forma basis as of that date, giving effect to the proposed acquisition of assets
at net asset value:

(UNAUDITED)

Capital Growth Pro Forma
Growth Portfolio Portfolio Combined*

Net assets
(000's omitted)
Class A 19,804 13,129 32,933
Class B 38,736 24,278 63,014

Shares outstanding
(000's omitted)
Class A 1,267 839 2,394
Class B 2,503 1,574 3,783

Net asset value
per share ($)
Class A 15.63 15.64 15.63
Class B 15.47 15.42 15.47

* Pro Forma net assets reflect legal and accounting merger-related costs.

Unaudited pro forma financial statements of the Portfolios as of and for
the six months ended March 31, 1995 are included in the Statement of Additional
Information. Because the Agreement provides that the Capital Growth Portfolio
will be the surviving Portfolio following the reorganization and because the
Capital Growth Portfolio's investment objectives and policies will remain
unchanged, the pro forma financial statements reflect the transfer of the assets
and liabilities of the Growth Portfolio to the Capital Growth Portfolio as
contemplated by the Agreement.

OTHER INFORMATION

Other information relating to the Growth Portfolio, including information
in respect of its investment objectives and policies and financial history, is
incorporated by reference to the Trust Statement of Additional Information and
the Semi-Annual Report.

THE TRUSTEES OF THE TRUST, INCLUDING THE INDEPENDENT TRUSTEES, UNANIMOUSLY
RECOMMEND APPROVAL OF THE AGREEMENT.

17
<PAGE>

VOTING INFORMATION

Required vote. Proxies are being solicited from the Growth Portfolio's
shareholders by its Trustees for the Meeting to be held on August 9, 1995 at
9:00 a.m., at Riverfront Plaza Conference Suite, Riverfront Plaza -- West Tower,
20th Floor 901 East Byrd Street, Richmond, Virginia, or at such later time made
necessary by adjournment. Unless revoked, all valid proxies will be voted in
accordance with the specification thereon or, in the absence of specifications,
FOR approval of the Agreement and Plan of Reorganization. The transactions
contemplated by the Agreement and Plan of Reorganization will be consummated
only if approved by the affirmative vote of the holders of at least a majority
of the outstanding shares of the Growth Portfolio that are entitled to vote
thereon at the Meeting.

Record date, quorum and method of tabulation. Shareholders of record of the
Growth Portfolio at the close of business on _______, 1995 (the "Record Date")
will be entitled to vote at the Meeting or any adjournment thereof. The holders
of 50% of the shares of the Growth Portfolio outstanding at the close of
business on the record date present in person or represented by proxy will
constitute a quorum for the Meeting; however, as noted above, the affirmative
vote of at a majority of the shares outstanding at the close of business on the
record date is necessary to approve the reorganization. Shareholders are
entitled to one vote for each share held, with fractional shares voting
proportionally.

Votes cast by proxy or in person at the meeting will be counted by persons
appointed by the Growth Portfolio as tellers for the meeting. The tellers will
count the total number of votes cast "for" approval of the proposal for purposes
of determining whether sufficient affirmative votes have been cast. The tellers
will count shares represented by proxies that reflect abstentions and "broker
non-votes" (i.e., shares held by brokers or nominees as to which (i)
instructions have not been received from the beneficial owners or the persons
entitled to vote and (ii) the broker or nominee does not have the discretionary
voting power on a particular matter) as shares that are present and entitled to
vote on the matter for purposes of determining the presence of a quorum.
Abstentions and broker non-votes have the effect of a negative vote on the
proposal.

As of May 31, 1995 as shown on the books of the Growth Portfolio, there
were issued and outstanding ______ shares of beneficial interest of the Growth
Portfolio. As of May 31, 1995, the officers and Trustees of the Growth Portfolio
as a group beneficially owned less than 1% of the outstanding shares of the

<PAGE>

Growth Portfolio. At May 31, 1995, to the best of the knowledge of the Growth
Portfolio, no person owned beneficially 5% or more of the outstanding shares of
the Growth Portfolio.

The votes of the shareholders of the Capital Growth Portfolio are not being
solicited, since their approval or consent is not necessary for this
transaction. As of April 30, 1995, the officers and Trustees of the Capital
Growth Portfolio as a group beneficially owned less than 1% of the outstanding
shares of the Capital Growth Portfolio. At May 31, 1995, to the best of the
knowledge of the Capital Growth Portfolio, no person beneficially owned 5% or
more of the outstanding shares of the Capital Growth Portfolio.

Solicitation of proxies. Solicitation of proxies by personal interview,
mail, telephone, and telegraph may be made by officers and Trustees of the Trust
and employees of Wheat First Butcher Singer, Inc. and its affiliates. In
addition, the firm of Management Information Systems has been retained to assist
in the solicitation of proxies, at a cost to the Portfolio which is not expected
to exceed $_______, plus reimbursement of the firm's out-of-pocket expenses.

Revocation of proxies. Proxies, including proxies given by telephone, may
be revoked at any time before they are voted by a written revocation received by
the Secretary of the Trust, by properly executing a later-dated proxy or by
attending the Meeting and voting in person.

Adjournment. If sufficient votes in favor of the proposal are not received
by the time scheduled for the Meeting, the persons named as proxies may propose
one or more adjournments of the Meeting for a period or periods of not more than
60 days in the aggregate to permit further solicitation of proxies. Any
adjournment will require the affirmative vote of a majority of the votes cast on
the question in person or by proxy at the session of the Meeting to be
adjourned. The persons named as proxies will vote in favor of such adjournment
those proxies which they are entitled to vote in favor of the proposal. They
will vote against any such adjournment those proxies required to be voted
against the proposal. The Growth Portfolio pays the costs of any additional
solicitation and of any adjourned session.

<PAGE>

Exhibit A

AGREEMENT AND PLAN OF REORGANIZATION

This Agreement and Plan of Reorganization (the "Agreement") is made as of
June __, 1995 in Richmond, Virginia, by and between the Mentor Funds (the
"Trust"), on behalf of the Mentor/Cambridge Growth Portfolio (the "Growth
Portfolio"), and the Trust, on behalf of the Mentor Capital Growth Portfolio
(the "Capital Growth Portfolio"), each of which Portfolios is a series of shares
of the Trust.

PLAN OF REORGANIZATION

(a) The Growth Portfolio will sell, assign, convey, transfer and deliver
to the Capital Growth Portfolio on the Exchange Date (as defined in Section 6)
all of its properties and assets existing at the Valuation Time (as defined in
Section 3(c) hereof). In consideration therefor, the Capital Growth Portfolio
shall, on the Exchange Date, assume all of the liabilities of the Growth
Portfolio existing at the Valuation Time and deliver to the Growth Portfolio (i)
a number of full and fractional Class A shares of beneficial interest of the
Capital Growth Portfolio (the "Class A Merger Shares") having an aggregate net
asset value equal to the value of the assets of the Growth Portfolio
attributable to Class A shares of the Growth Portfolio transferred to the
Capital Growth Portfolio on such date less the value of the liabilities of the
Growth Portfolio attributable to Class A shares of the Growth Portfolio assumed
by the Capital Growth Portfolio on that date, and (ii) a number of full and
fractional Class B shares of beneficial interest of the Capital Growth Portfolio
(the "Class B Merger Shares") having an aggregate net asset value equal to the
value of the assets of the Growth Portfolio attributable to Class B shares of
the Growth Portfolio transferred to the Capital Growth Portfolio on such date
less the value of the liabilities of the Growth Portfolio attributable to Class
B shares of the Growth Portfolio assumed by the Capital Growth Portfolio on that
date. (The Class A Merger Shares and the Class B Merger Shares shall be referred
to collectively as the "Merger Shares.") It is intended that the reorganization
described in this Plan shall be a reorganization within the meaning of Section
368(a)(1)(C) of the Internal Revenue Code of 1986, as amended (the "Code").

(b) Upon consummation of the transactions described in paragraph (a) of
this Agreement, the Growth Portfolio shall distribute in complete liquidation to
its Class A and Class B shareholders of record as of the Exchange Date Class A
and Class B Merger Shares, each shareholder being entitled to receive that
proportion of such Class A and Class B Merger Shares which the number of Class A
or Class B shares of beneficial interest of the Growth Portfolio held by such

<PAGE>

shareholder bears to the number such Class A and Class B shares of the Growth
Portfolio outstanding on such date. Certificates representing the Merger Shares
will be issued only if the shareholder so requests.

(c) As promptly as practicable after the liquidation of the Growth
Portfolio as aforesaid, the Growth Portfolio shall be dissolved pursuant to the
provisions of its Agreement and Declaration of Trust, as amended, and applicable
law, and its legal existence terminated.

AGREEMENT

The Capital Growth Portfolio and the Growth Portfolio agree as follows:

1. Representations and Warranties of the Capital Growth Portfolio. The
Capital Growth Portfolio represents and warrants to and agrees with the Growth
Portfolio that:

(a) The Capital Growth Portfolio is a series of shares of the Trust, a
Massachusetts business trust duly established and validly existing under the
laws of The Commonwealth of Massachusetts, and has power to own all of its
properties and assets and to carry out its obligations under this Agreement. The
Trust is not required to qualify as a foreign association in any jurisdiction.
Each of the Trust and the Capital Growth Portfolio has all necessary federal,
state and local authorizations to carry on its business as now being conducted
and to carry out this Agreement.

(b) The Trust is registered under the Investment Company Act of 1940, as
amended (the "1940 Act"), as an open-end management investment company, and such
registration has not been revoked or rescinded and is in full force and effect.

(c) A statement of assets and liabilities, statements of operations, and
statements of changes in net assets and schedules of investments (indicating
their market values) of the Capital Growth Portfolio for the six months ended
March 31, 1995 have been furnished to the Growth Portfolio. Such statements of
assets and liabilities and schedules fairly present the financial position of
the Capital Growth Portfolio as of their dates and said statements of operations
and changes in net assets fairly reflect the results of its operations and
changes in net assets for the periods covered thereby in conformity with
generally accepted accounting principles.

(d) The prospectus and statement of additional information dated May 30,
1995 (the "Prospectus"), previously furnished to the Growth Portfolio, did not
as of such date and does not contain, with respect to the Trust or the Growth

<PAGE>

Portfolio, any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading.

(e) There are no material legal, administrative or other proceedings
pending or, to the knowledge of the Trust or the Capital Growth Portfolio,
threatened against the Trust or the Capital Growth Portfolio, which assert
liability on the part of the Trust or the Capital Growth Portfolio.

(f) Neither the Trust nor the Capital Growth Portfolio has any known
liabilities of a material nature, contingent or otherwise, other than those
shown as belonging to it on its statement of assets and liabilities as of March
31, 1995 and those incurred in the ordinary course of its business as an
investment company since March 31, 1995.

(g) No consent, approval, authorization or order of any court or
governmental authority is required for the consummation by the Capital Growth
Portfolio of the transactions contemplated by this Agreement, except such as may
be required under the 1933 Act, the Securities Exchange Act of 1934, as amended
(the "1934 Act"), the 1940 Act, state securities or blue sky laws (which term as
used herein shall include the laws of the District of Columbia and of Puerto
Rico) or the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the "H-S-R
Act").

(h) The registration statement (the "Registration Statement") filed with
the Securities and Exchange Commission (the "Commission") by the Trust on Form
N-14 on behalf of the Capital Growth Portfolio and relating to the Merger Shares
issuable hereunder, and the proxy statement of the Growth Portfolio included
therein (the "Proxy Statement"), on the effective date of the Registration
Statement (i) will comply in all material respects with the provisions of the
1933 Act, the 1934 Act and the 1940 Act and the rules and regulations thereunder
and (ii) will not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading; and at the time of the shareholders' meeting
referred to in Section 7(a) and at the Exchange Date, the prospectus, which is
contained in the Registration Statement of which the Proxy Statement is a part,
as amended or supplemented by any amendments or supplements filed with the
Commission by the Trust, insofar as it does not relate to the Growth Portfolio,
will not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading; provided, however, that none of the representations and
warranties in this subsection shall apply to statements in or omissions from the

<PAGE>

Registration Statement, the Prospectus or the Proxy Statement made in reliance
upon and in conformity with information furnished by the Growth Portfolio for
use in the Registration Statement, the Prospectus or the Proxy Statement.

(i) There are no material contracts outstanding to which the Capital
Growth Portfolio is a party, other than as will be disclosed in the Registration
Statement, the Prospectus, or the Proxy Statement.

(j) All of the issued and outstanding shares of beneficial interest of the
Capital Growth Portfolio have been offered for sale and sold in conformity with
all applicable federal securities laws.

(k) The Trust is and will at all times through the Exchange Date qualify
for taxation as a "regulated investment company" under Sections 851 and 852 of
the Code.

(l) The issuance of the Merger Shares pursuant to this Agreement will be
in compliance with all applicable federal securities laws.

(m) The Merger Shares to be issued to the Growth Portfolio have been duly
authorized and, when issued and delivered pursuant to this Agreement, will be
legally and validly issued and will be fully paid and nonassessable by the
Capital Growth Portfolio, and no shareholder of the Capital Growth Portfolio
will have any preemptive right of subscription or purchase in respect thereof.

2. Representations and Warranties of the Growth Portfolio. The Growth
Portfolio represents and warrants to and agrees with the Capital Growth
Portfolio that:

(a) The Growth Portfolio is a series of shares of beneficial interest of
the Trust, a Massachusetts business trust duly established and validly existing
under the laws of The Commonwealth of Massachusetts, and has power to carry on
its business as it is now being conducted and to carry out this Agreement. The
Trust is not required to qualify as a foreign association in any jurisdiction.
The Trust and the Growth Portfolio has all necessary federal, state and local
authorizations to own all of its properties and assets and to carry on its
business as now being conducted and to carry out this Agreement.

(b)The Trust is registered under the 1940 Act as an open-end management
investment company and such registration has not been revoked or rescinded and
is in full force and effect.

<PAGE>

(c) A statement of assets and liabilities, statements of operations, and
statements of changes in net assets and schedules of investments (indicating
their market values) of the Growth Portfolio for the six months ended March 31,
1995 will be furnished to the Capital Growth Portfolio. Such statements of
assets and liabilities and schedules fairly present the financial position of
the Growth Portfolio as of their dates, and said statements of operations and
changes in net assets fairly reflect the results of its operations and changes
in financial position for the periods covered thereby in conformity with
generally accepted accounting principles.

(d) The Prospectus which has been previously furnished to the Growth
Portfolio, did not contain as of its date, with respect to the Trust and the
Growth Portfolio, contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading.

(e) There are no material legal, administrative or other proceedings
pending or, to the knowledge of the Trust or the Growth Portfolio, threatened
against the Trust or the Growth Portfolio which assert liability or may, if
successfully prosecuted to their conclusion, result in liability on the part of
the Trust or the Growth Portfolio, other than as have been disclosed in the
Prospectus.

(f) There are no material contracts outstanding to which the Growth
Portfolio is a party, other than as will be disclosed in the Registration
Statement, the Prospectus, or Proxy Statement.

(g) Neither the Trust nor the Growth Portfolio has any known liabilities
of a material nature, contingent or otherwise, other than those shown on the
Trust's or the Growth Portfolio's statement of assets and liabilities as of
March 31, 1995 referred to above and those incurred in the ordinary course of
its business as an investment company since such date. Prior to the Exchange
Date, the Growth Portfolio will advise the Capital Growth Portfolio of all
material liabilities, contingent or otherwise, incurred by it subsequent to
March 31, 1995, whether or not incurred in the ordinary course of business.

(h) As used in this Agreement, the term "Investments" shall mean the
Growth Portfolio's investments shown on the schedule of its investments as of
March 31, 1995 referred to in Section 2(c) hereof, as supplemented with such
changes as the Growth Portfolio shall make, and changes resulting from stock
dividends, stock split-ups, mergers and similar corporate actions.

(i) The Growth Portfolio has filed or will file all federal and state tax
returns which, to the knowledge of the Trust's officers, are required to be

<PAGE>

filed by the Growth Portfolio and has paid or will pay all federal and state
taxes shown to be due on said returns or on any assessments received by the
Growth Portfolio. All tax liabilities of the Growth Portfolio have been
adequately provided for on its books, and no tax deficiency or liability of the
Growth Portfolio has been asserted, and no question with respect thereto has
been raised, by the Internal Revenue Service or by any state or local tax
authority for taxes in excess of those already paid.

(j) At both the Valuation Time (as defined in Section 3(c)) and the
Exchange Date, the Trust, on behalf of the Growth Portfolio, will have full
right, power and authority to sell, assign, transfer and deliver the Investments
and any other assets and liabilities of the Growth Portfolio to be transferred
to the Capital Growth Portfolio pursuant to this Agreement. At the Exchange
Date, subject only to the delivery of the Investments and any such other assets
and liabilities as contemplated by this Agreement, the Capital Growth Portfolio
will acquire the Investments and any such other assets and liabilities subject
to no encumbrances, liens or security interests whatsoever and without any
restrictions upon the transfer thereof.

(k) No registration under the 1933 Act of any of the Investments would be
required if they were, as of the time of such transfer, the subject of a public
distribution by either of the Capital Growth Portfolio or the Growth Portfolio,
except as previously disclosed to the Capital Growth Portfolio by the Growth
Portfolio.

(l) No consent, approval, authorization or order of any court or
governmental authority is required for the consummation by the Growth Portfolio
of the transactions contemplated by this Agreement, except such as may be
required under the 1933 Act, the 1934 Act, the 1940 Act, state securities or
blue sky laws or the H-S-R Act.

(m) The Registration Statement, the Prospectus and the Proxy Statement, on
the Effective Date of the Registration Statement and insofar as they do not
relate to the Capital Growth Portfolio (i) will comply in all material respects
with the provisions of the 1933 Act, the 1934 Act and the 1940 Act and the rules
and regulations thereunder and (ii) will not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading; and at the time of the
shareholders' meeting referred to in Section 7(a) below and on the Exchange
Date, the Prospectus, as amended or supplemented by any amendments or
supplements filed with the Commission by the Trust, will not contain any untrue
statement of a material fact or omit to state a material fact required to be

<PAGE>

stated therein or necessary to make the statements therein not misleading;
provided, however, that the representations and warranties in this subsection
shall apply only to statements of fact relating to the Trust or the Growth
Portfolio contained in the Registration Statement, the Prospectus or the Proxy
Statement, or omissions to state in any thereof a material fact relating to the
Trust or the Growth Portfolio, as such Registration Statement, Prospectus and
Proxy Statement shall be furnished to the Capital Growth Portfolio in definitive
form as soon as practicable following effectiveness of the Registration
Statement and before any public distribution of the Prospectus or Proxy
Statement.

(n) The Trust is and will at all times through the Exchange Date qualify
for taxation as a "regulated investment company" under Sections 851 and 852 of
the Code.

(o) At the Exchange Date, the Growth Portfolio will have sold such of its
assets, if any, as are necessary to assure that, after giving effect to the
acquisition of the assets of the Growth Portfolio pursuant to this Agreement,
the Capital Growth Portfolio will remain a "diversified company" within the
meaning of Section 5(b)(1) of the 1940 Act and in compliance with such other
mandatory investment restrictions as are set forth in the prospectus and
statement of additional information of the Trust dated April 13, 1994.

3. Reorganization. (a) Subject to the requisite approval of the
shareholders of the Growth Portfolio and to the other terms and conditions
contained herein (including the Growth Portfolio's obligation to distribute to
its shareholders all of its investment company taxable income and net capital
gain as described in Section 8(m) hereof), the Growth Portfolio agrees to sell,
assign, convey, transfer and deliver to the Capital Growth Portfolio, and the
Capital Growth Portfolio agrees to acquire from the Growth Portfolio, on the
Exchange Date all of the Investments and all of the cash and other properties
and assets of the Growth Portfolio, whether accrued or contingent (including
cash received by the Growth Portfolio upon the liquidation by the Growth
Portfolio of any investments purchased by the Growth Portfolio after March 31,
1995 and designated by the Capital Growth Portfolio as being unsuitable for it
to acquire), in exchange for that number of shares of beneficial interest of the
Capital Growth Portfolio provided for in Section 4 and the assumption by the
Capital Growth Portfolio of all of the liabilities of the Growth Portfolio,

<PAGE>

whether accrued or contingent, existing at the Valuation Time. Pursuant to this
Agreement, the Growth Portfolio will, as soon as practicable after the Exchange
Date, distribute all of the Merger Shares received by it to the shareholders of
the Growth Portfolio in exchange for their Class A and Class B shares of the
Growth Portfolio.

(b) The Growth Portfolio will pay or cause to be paid to the Capital
Growth Portfolio any interest, cash or such dividends, rights and other payments
received by it on or after the Exchange Date with respect to the Investments and
other properties and assets of the Growth Portfolio, whether accrued or
contingent, received by it on or after the Exchange Date. Any such distribution
shall be deemed included in the assets transferred to the Capital Growth
Portfolio at the Exchange Date and shall not be separately valued unless the
securities in respect of which such distribution is made shall have gone "ex"
such distribution prior to the Valuation Time, in which case any such
distribution which remains unpaid at the Exchange Date shall be included in the
determination of the value of the assets of the Growth Portfolio acquired by the
Capital Growth Portfolio.

(c) The Valuation Time shall be 4:00 p.m. Richmond time on ___________,
1995 or such earlier or later day as may be mutually agreed upon in writing by
the parties hereto (the "Valuation Time").

4. Exchange Date; Valuation Time. On the Exchange Date, the Capital Growth
Portfolio will deliver to the Growth Portfolio (i) a number of full and
fractional Class A Merger Shares" having an aggregate net asset value equal to
the value of the assets of the Growth Portfolio attributable to Class A shares
of the Growth Portfolio transferred to the Capital Growth Portfolio on such date
less the value of the liabilities of the Growth Portfolio attributable to Class
A shares of the Growth Portfolio assumed by the Capital Growth Portfolio on that
date and (ii) a number of full and fractional Class B Merger Shares" having an
aggregate net asset value equal to the value of the assets of the Growth
Portfolio attributable to Class B shares of the Growth Portfolio transferred to
the Capital Growth Portfolio on such date less the value of the liabilities of
the Growth Portfolio attributable to Class B shares of the Growth Portfolio
assumed by the Capital Growth Portfolio on that date, determined as hereinafter
provided in this Section 4.

(a) The net asset value of the Merger Shares to be delivered to the Growth
Portfolio, the value of the assets attributable to the Class A and Class B
shares of the Growth Portfolio, and the value of the liabilities attributable to
the Class A and Class B shares of the Growth Portfolio to be assumed by the
Capital Growth Portfolio, shall in each case be determined as of the Valuation
Time.

<PAGE>

(b) The net asset value of the Class A and Class B Merger Shares shall be
computed in the manner set forth in the Prospectus. The value of the assets and
liabilities of the Class A and Class B shares of the Growth Portfolio shall be
determined by the Capital Growth Portfolio, in cooperation with the Growth
Portfolio, pursuant to procedures which the Capital Growth Portfolio would use
in determining the fair market value of the Capital Growth Portfolio's assets
and liabilities.

(c) No adjustment shall be made in the net asset value of either the
Growth Portfolio or the Capital Growth Portfolio to take into account
differences in realized and unrealized gains and losses.

(d) The Capital Growth Portfolio shall issue the Merger Shares to the
Growth Portfolio in two certificates registered in the name of the Growth
Portfolio, one representing Class A Merger Shares and one representing Class B
Merger Shares. The Growth Portfolio shall distribute the Class A Merger Shares
to the Class A shareholders of the Growth Portfolio by redelivering such
certificate to the Capital Growth Portfolio's transfer agent which will as soon
as practicable set up open accounts for each Class A Growth Portfolio
shareholder in accordance with written instructions furnished by the Growth
Portfolio. The Growth Portfolio shall distribute the Class B Merger Shares to
the Class B shareholders of the Growth Portfolio by redelivering such
certificates to the Capital Growth Portfolio's transfer agent which will as soon
as practicable set up open accounts for each Class B Growth Portfolio
shareholder in accordance with written instructions furnished by the Growth
Portfolio. With respect to any Growth Portfolio shareholder holding share
certificates as of the Exchange Date, the Capital Growth Portfolio will not
permit such shareholder to receive dividends and other distributions on the
Merger Shares (although such dividends and other distributions shall be credited
to the account of such shareholder), receive certificates representing the
Merger Shares, exchange the Merger Shares credited to such shareholder's account
for shares of other portfolios in the Trust or the Cash Resource U.S. Government
Money Market Fund, or pledge or redeem such the Merger Shares until notified by
the Growth Portfolio or the shareholder's agent that such shareholder has
surrendered his or her outstanding Growth Portfolio certificates or, in the
event of lost, stolen, or destroyed certificates, posted adequate bond. In the
event that a shareholder shall not be permitted to receive dividends and other
distributions on the Merger Shares as provided in the preceding sentence, the
Capital Growth Portfolio shall pay any such dividends or distributions in
additional Merger Shares, notwithstanding any election such shareholder shall
have made previously with respect to the payment, in cash or otherwise, of
dividends and distributions on shares of the Growth Portfolio. The Growth

<PAGE>

Portfolio will, at its expense, request the shareholders of the Growth Portfolio
to surrender their outstanding Growth Portfolio certificates, or post adequate
bond, as the case may be.

(e) The Capital Growth Portfolio shall assume all liabilities of the
Growth Portfolio, whether accrued or contingent, in connection with the
acquisition of assets and subsequent dissolution of the Growth Portfolio or
otherwise.

5. Expenses, Fees, etc. (a) All fees and expenses, including legal and
accounting expenses, portfolio transfer taxes (if any) or other similar expenses
incurred in connection with the consummation by the Growth Portfolio and the
Capital Growth Portfolio of the transactions contemplated by this Agreement will
be allocated ratably between the Capital Growth Portfolio and the Growth
Portfolio in proportion to their net assets as of the Valuation Time, except
that the costs of proxy materials and proxy solicitation will be borne by the
Growth Portfolio; provided, however, that such expenses will in any event be
paid by the party directly incurring such expenses if and to the extent that the
payment by the other party of such expenses would result in the disqualification
of the Trust as a "regulated investment company" within the meaning of Section
851 of the Code.

(b) In the event the transactions contemplated by this Agreement are not
consummated by reason of the Capital Growth Portfolio's being either unwilling
or unable to go forward other than by reason of the nonfulfillment or failure of
any condition to the Capital Growth Portfolio's obligations referred to in
Section 7(a) or Section 8, the Capital Growth Portfolio shall pay directly all
reasonable fees and expenses incurred by the Growth Portfolio in connection with
such transactions, including, without limitation, legal, accounting and filing
fees.

(c) In the event the transactions contemplated by this Agreement are not
consummated by reason of the Growth Portfolio's being either unwilling or unable
to go forward other than by reason of the nonfulfillment or failure of any
condition to the Growth Portfolio's obligations referred to in Section 9, the
Growth Portfolio shall pay directly all reasonable fees and expenses incurred by
the Capital Growth Portfolio in connection with such transactions, including,
without limitation, legal, accounting and filing fees.

(d) In the event the transactions contemplated by this Agreement are not
consummated for any reason other than (i) the Capital Growth Portfolio's or the
Growth Portfolio's being either unwilling or unable to go forward or (ii) the
nonfulfillment or failure of any condition to the Capital Growth Portfolio's or
the Growth Portfolio's obligations referred to in Section 7(a), Section 8 or

<PAGE>

Section 9 of this Agreement, then each of the Capital Growth Portfolio and the
Growth Portfolio shall bear all of its own expenses incurred in connection with
such transactions.

(e) Notwithstanding any other provisions of this Agreement, if for any
reason the transactions contemplated by this Agreement are not consummated, no
party shall be liable to the other party for any damages resulting therefrom,
including, without limitation, consequential damages, except as specifically set
forth above.

6. Exchange Date. Delivery of the assets of the Growth Portfolio to be
transferred, assumption of the liabilities of the Growth Portfolio to be assumed
and the delivery of the Merger Shares to be issued shall be made at 901 East
Byrd Street, Richmond Virginia, at 10:00 A.M. on the next full business day
following the Valuation Time, or at such other time and date agreed to by the
Capital Growth Portfolio and the Growth Portfolio, the date and time upon which
such delivery is to take place being referred to herein as the "Exchange Date."

7. Meeting of Shareholders; Dissolution. (a) The Mentor Funds agree to
call a meeting of the Growth Portfolio's shareholders as soon as is practicable
after the effective date of the Registration Statement for the purpose of
considering the sale of all of its assets to and the assumption of all of its
liabilities by the Capital Growth Portfolio as herein provided, adopting this
Agreement, and authorizing the liquidation and dissolution of the Growth
Portfolio.

(b) The Growth Portfolio agrees that the liquidation and dissolution of
the Growth Portfolio will be effected in the manner provided in the Trust's
Agreement and Declaration of Trust in accordance with applicable law and that on
and after the Exchange Date, the Growth Portfolio shall not conduct any business
except in connection with its liquidation and dissolution.

(c) The Capital Growth Portfolio has, after the preparation and delivery
to the Capital Growth Portfolio by the Growth Portfolio of a preliminary version
of the Proxy Statement which was satisfactory to the Capital Growth Portfolio
and to Ropes & Gray for inclusion in the Registration Statement, filed the
Registration Statement with the Commission. Each of the Growth Portfolio and the
Capital Growth Portfolio will cooperate with the other, and each will furnish to
the other the information relating to itself required by the 1933 Act, the 1934
Act and the 1940 Act and the rules and regulations thereunder to be set forth in
the Registration Statement, including the Prospectus and the Proxy Statement.

<PAGE>

8. Conditions to the Capital Growth Portfolio's Obligations. The
obligations of the Capital Growth Portfolio hereunder shall be subject to the
following conditions:

(a) That this Agreement shall have been adopted and the transactions
contemplated hereby shall have been approved by the affirmative vote of the
holders of at least a majority of each of the outstanding Class A and Class B
shares of beneficial interest of the Growth Portfolio entitled to vote.

(b) That the Growth Portfolio shall have furnished to the Capital Growth
Portfolio a statement of the Growth Portfolio's assets and liabilities, with
values determined as provided in Section 4 of this Agreement, together with a
list of Investments with their respective tax costs, all as of the Valuation
Time, certified on the Growth Portfolio's behalf by the Trust's President (or
any Vice President) and Treasurer, and a certificate of both such officers,
dated the Exchange Date, that there has been no material adverse change in the
financial position of the Growth Portfolio since March 31, 1995 other than
changes in the Investments and other assets and properties since that date or
changes in the market value of the Investments and other assets of the Growth
Portfolio, or changes due to dividends paid or losses from operations.

(c) That the Growth Portfolio shall have furnished to the Capital Growth
Portfolio a statement, dated the Exchange Date, signed by the Trust's President
(or any Vice President) and Treasurer certifying that as of the Valuation Time
and as of the Exchange Date all representations and warranties of the Growth
Portfolio made in this Agreement are true and correct in all material respects
as if made at and as of such dates and the Growth Portfolio has complied with
all the agreements and satisfied all the conditions on its part to be performed
or satisfied at or prior to such dates.

(d) That the Growth Portfolio shall have delivered to the Capital Growth
Portfolio a letter from KPMG Peat Marwick LLP dated the Exchange Date stating
that such firm has employed certain procedures whereby it has obtained schedules
of the tax provisions and qualifying tests for regulated investment companies as
prepared for the fiscal year ended September 30, 1994 and the period October 1,
1994 to the Exchange Date (the latter period being based on unaudited data) and
that, in the course of such procedures, nothing came to their attention which
caused them to believe that the Trust would not qualify as a regulated
investment company for federal, state, or local income tax purposes or for
federal excise tax purposes under Section 4982 of the Code, for the tax year
ended September 30, 1994, and for the period from October 1, 1994 to the
Exchange Date.

<PAGE>

(e) That there shall not be any material litigation pending with respect
to the matters contemplated by this Agreement.

(f) That the Capital Growth Portfolio shall have received an opinion of
Ropes & Gray, in form satisfactory to the Capital Growth Portfolio and dated the
Exchange Date, to the effect that (i) the Trust is a business trust duly
established and validly existing under the laws of The Commonwealth of
Massachusetts, and the Trust is not, to the knowledge of such counsel, required
to qualify to do business as a foreign association in any jurisdiction, (ii)
this Agreement has been duly authorized, executed, and delivered by the Trust on
behalf of the Growth Portfolio and, assuming that the Registration Statement,
the Prospectus and the Proxy Statement comply with the 1933 Act, the 1934 Act
and the 1940 Act and assuming due authorization, execution and delivery of this
Agreement by the Trust on behalf of the Capital Growth Portfolio, is a valid and
binding obligation of the Trust and the Growth Portfolio, (iii) the Trust, on
behalf of the Growth Portfolio, has power to sell, assign, convey, transfer and
deliver the assets contemplated hereby and, upon consummation of the
transactions contemplated hereby in accordance with the terms of this Agreement,
the Growth Portfolio will have duly sold, assigned, conveyed, transferred and
delivered such assets to the Capital Growth Portfolio, (iv) the execution and
delivery of this Agreement did not, and the consummation of the transactions
contemplated hereby will not, violate the Trust's Agreement and Declaration of
Trust, as amended, or any provision of any agreement known to such counsel to
which the Trust or the Growth Portfolio is a party or by which it is bound, and
(v) no consent, approval, authorization or order of any court or governmental
authority is required for the consummation by the Trust on behalf of the Growth
Portfolio of the transactions contemplated hereby, except such as have been
obtained under the 1933 Act, the 1934 Act and the 1940 Act and such as may be
required under state securities or blue sky laws and the H-S-R Act, it being
understood that with respect to investment restrictions as contained in the
Trust's Agreement and Declaration of Trust, Bylaws or then-current Registration
Statement, such counsel may rely upon a certificate of an officer of the Trust
whose responsibility it is to advise the Trust and the Growth Portfolio with
respect to such matters.

(g) That the Capital Growth Portfolio shall have received an opinion of
Ropes & Gray, in form satisfactory to the Capital Growth Portfolio, with respect
to the matters specified in Section 9(f) of this Agreement, and such other
matters as the Capital Growth Portfolio may reasonably deem necessary or
desirable.

(h) That the Capital Growth Portfolio shall have received an opinion of
Ropes & Gray dated the Exchange Date (which opinion would be based upon certain

<PAGE>

factual representations and subject to certain qualifications), to the effect
that, on the basis of the existing provisions of the Code, current
administrative rules, and court decisions, for federal income tax purposes (i)
no gain or loss will be recognized by the Capital Growth Portfolio upon receipt
of the Investments transferred to the Capital Growth Portfolio pursuant to this
Agreement in exchange for the Merger Shares, (ii) the basis to the Capital
Growth Portfolio of the Investments will be the same as the basis of the
Investments in the hands of the Growth Portfolio immediately prior to such
exchange, and (iii) the Capital Growth Portfolio s holding periods with respect
to the Investments will include the respective periods for which the Investments
were held by the Growth Portfolio.

(i) That the assets of the Growth Portfolio to be acquired by the Capital
Growth Portfolio will include no assets which the Capital Growth Portfolio, by
reason of charter limitations or of investment restrictions disclosed in the
Capital Growth Portfolio Prospectus in effect on the Exchange Date, may not
properly acquire.

(j) That the Registration Statement shall have become effective under the
1933 Act, and no stop order suspending such effectiveness shall have been
instituted or, to the knowledge of the Trust or the Capital Growth Portfolio,
threatened by the Commission.

(k) That the Trust shall have received from the Commission, any relevant
state securities administrator, the Federal Trade Commission (the "FTC") and the
Department of Justice (the "Department") such order or orders as Ropes & Gray
deems reasonably necessary or desirable under the 1933 Act, the 1934 Act, the
1940 Act, any applicable state securities or blue sky laws and the H-S-R Act in
connection with the transactions contemplated hereby, and that all such orders
shall be in full force and effect.

(l) That all actions taken by the Trust on behalf of the Growth Portfolio
in connection with the transactions contemplated by this Agreement and all
documents incidental thereto shall be satisfactory in form and substance to the
Capital Growth Portfolio and Ropes & Gray.

(m) That, prior to the Exchange Date, the Growth Portfolio shall have
declared a dividend or dividends which, together with all previous such
dividends, shall have the effect of distributing to the shareholders of the
Growth Portfolio all of the Growth Portfolio's investment company taxable income
for its taxable years ending on or after September 30, 1994 and on or prior to

<PAGE>

the Exchange Date (computed without regard to any deduction for dividends paid),
and all of its net capital gain realized in each of its taxable years ending on
or after September 30, 1994 and on or prior to the Exchange Date.

(n) That the Growth Portfolio shall have furnished to the Capital Growth
Portfolio a certificate, signed by the President (or any Vice President) and the
Treasurer of the Trust, as to the tax cost to the Growth Portfolio of the
securities delivered to the Capital Growth Portfolio pursuant to this Agreement,
together with any such other evidence as to such tax cost as the Capital Growth
Portfolio may reasonably request.

(o) That the Growth Portfolio's custodian shall have delivered to the
Capital Growth Portfolio a certificate identifying all of the assets of the
Growth Portfolio held by such custodian as of the Valuation Time.

(p) That the Growth Portfolio's transfer agent shall have provided to the
Capital Growth Portfolio (i) the originals or true copies of all of the records
of the Growth Portfolio in the possession of such transfer agent as of the
Exchange Date, (ii) a certificate setting forth the number of shares of the
Growth Portfolio outstanding as of the Valuation Time, and (iii) the name and
address of each holder of record of any such shares and the number of shares
held of record by each such shareholder.

(q) That all of the issued and outstanding shares of beneficial interest
of the Growth Portfolio shall have been offered for sale and sold in conformity
with all applicable state securities or blue sky laws and, to the extent that
any audit of the records of the Growth Portfolio or its transfer agent by the
Capital Growth Portfolio or its agents shall have revealed otherwise, either (i)
the Growth Portfolio shall have taken all actions that in the opinion of the
Capital Growth Portfolio or its counsel are necessary to remedy any prior
failure on the part of the Growth Portfolio to have offered for sale and sold
such shares in conformity with such laws or (ii) the Growth Portfolio shall have
furnished (or caused to be furnished) surety, or deposited (or caused to be
deposited) assets in escrow, for the benefit of the Capital Growth Portfolio in
amounts sufficient and upon terms satisfactory, in the opinion of the Capital
Growth Portfolio or its counsel, to indemnify the Capital Growth Portfolio
against any expense, loss, claim, damage or liability whatsoever that may be
asserted or threatened by reason of such failure on the part of the Growth
Portfolio to have offered and sold such shares in conformity with such laws.

(r) That the Capital Growth Portfolio shall have received from KPMG Peat
Marwick LLP a letter addressed to the Capital Growth Portfolio dated as of the
Exchange Date satisfactory in form and substance to the Capital Growth Portfolio
to the effect that, on the basis of limited procedures agreed upon by the

<PAGE>

Capital Growth Portfolio and described in such letter (but not an examination in
accordance with generally accepted auditing standards), as of the Valuation Time
the value of the assets of the Growth Portfolio to be exchanged for the Merger
Shares has been determined in accordance with the provisions of the Trust's
Agreement and Declaration of Trust, pursuant to the procedures customarily
utilized by the Capital Growth Portfolio in valuing its assets and issuing its
shares.

9. Conditions to the Growth Portfolio's Obligations. The obligations of
the Growth Portfolio hereunder shall be subject to the following conditions:

(a) That this Agreement shall have been adopted and the transactions
contemplated hereby shall have been approved by the affirmative vote of the
holders of a majority of the outstanding Class A and Class B shares of
beneficial interest of the Growth Portfolio entitled to vote.

(b) That the Capital Growth Portfolio shall have furnished to the Growth
Portfolio a statement of the Capital Growth Portfolio's net assets, together
with a list of portfolio holdings with values determined as provided in Section
4, all as of the Valuation Time, certified on the Capital Growth Portfolio's
behalf by the Trust's President (or any Vice President) and Treasurer (or any
Assistant Treasurer), and a certificate of both such officers, dated the
Exchange Date, to the effect that as of the Valuation Time and as of the
Exchange Date there has been no material adverse change in the financial
position of the Capital Growth Portfolio since March 31, 1995, other than
changes in its portfolio securities since that date, changes in the market value
of its portfolio securities, changes due to net redemptions, dividends paid or
losses from operations.

(c) That the Trust, on behalf of the Capital Growth Portfolio, shall have
executed and delivered to the Growth Portfolio an Assumption of Liabilities
dated as of the Exchange Date pursuant to which the Capital Growth Portfolio
will assume all of the liabilities of the Growth Portfolio existing at the
Valuation Time in connection with the transactions contemplated by this
Agreement.

(d) That the Capital Growth Portfolio shall have furnished to the Growth
Portfolio a statement, dated the Exchange Date, signed by the Trust's President
(or any Vice President) and Treasurer (or any Assistant Treasurer) certifying
that as of the Valuation Time and as of the Exchange Date all representations
and warranties of the Capital Growth Portfolio made in this Agreement are true
and correct in all material respects as if made at and as of such dates, and

<PAGE>

that the Capital Growth Portfolio has complied with all of the agreements and
satisfied all of the conditions on its part to be performed or satisfied at or
prior to each of such dates.

(e) That there shall not be any material litigation pending or threatened
with respect to the matters contemplated by this Agreement.

(f) That the Growth Portfolio shall have received an opinion of Ropes &
Gray, in form satisfactory to the Growth Portfolio and dated the Exchange Date,
to the effect that (i) the Trust is a business trust duly established and
validly existing in conformity with the laws of The Commonwealth of
Massachusetts, and, to the knowledge of such counsel, is not required to qualify
to do business as a foreign association in any jurisdiction except as may be
required by state securities or blue sky laws, (ii) the Merger Shares to be
delivered to the Growth Portfolio as provided for by this Agreement are duly
authorized and upon such delivery will be validly issued and will be fully paid
and nonassessable by the Trust and the Capital Growth Portfolio and no
shareholder of the Capital Growth Portfolio has any preemptive right to
subscription or purchase in respect thereof, (iii) this Agreement has been duly
authorized, executed and delivered by the Trust on behalf of the Capital Growth
Portfolio and, assuming that the Prospectus, the Registration Statement and the
Proxy Statement comply with the 1933 Act, the 1934 Act and the 1940 Act and
assuming due authorization, execution and delivery of this Agreement by the
Trust on behalf of the Growth Portfolio, is a valid and binding obligation of
the Trust and the Capital Growth Portfolio, (iv) the execution and delivery of
this Agreement did not, and the consummation of the transactions contemplated
hereby will not, violate the Trust's Agreement and Declaration of Trust, as
amended, or By-laws, or any provision of any agreement known to such counsel to
which the Trust or the Capital Growth Portfolio is a party or by which it is
bound, it being understood that with respect to investment restrictions as
contained in the Trust's Agreement and Declaration of Trust, as amended, By-Laws
or then-current prospectus or statement of additional information, such counsel
may rely upon a certificate of an officer of the Trust whose responsibility it
is to advise the Trust and the Capital Growth Portfolio with respect to such
matters, (v) no consent, approval, authorization or order of any court or
governmental authority is required for the consummation by the Trust on behalf
of the Capital Growth Portfolio of the transactions contemplated herein, except
such as have been obtained under the 1933 Act, the 1934 Act and the 1940 Act and
such as may be required under state securities or blue sky laws, and (vi) the
Registration Statement has become effective under the 1933 Act, and to the best

<PAGE>

of the knowledge of such counsel, no stop order suspending the effectiveness of
the Registration Statement has been issued and no proceedings for that purpose
have been instituted or are pending or contemplated under the 1933 Act.

(g) That the Growth Portfolio shall have received an opinion of Ropes &
Gray dated the Exchange Date (which opinion would be based upon certain factual
representations and subject to certain qualifications), to the effect that, on
the basis of the existing provisions of the Code, current administrative rules,
and court decisions, for federal income tax purposes (i) no gain or loss will be
recognized by the Growth Portfolio upon the transfer of the Investments to the
Capital Growth Portfolio and the assumption by the Capital Growth Portfolio of
the liabilities of the Growth Portfolio, or upon the distribution of the Merger
Shares by the Growth Portfolio to its shareholders pursuant to this Agreement in
exchange for the Merger Shares, (ii) the basis of the Merger Shares a Growth
Portfolio shareholder receives in connection with the transaction will be the
same as the basis of his or her Growth Portfolio shares exchanged thereof, and
(iii) a Growth Portfolio shareholder's holding period for his or her Merger
Shares will be determined by including the period for which he or she held the
Growth Portfolio shares exchanged therefor.

(h) That all actions taken by the Trust on behalf of the Capital Growth
Portfolio in connection with the transactions contemplated by this Agreement and
all documents incidental thereto shall be satisfactory in form and substance to
the Growth Portfolio and Ropes & Gray.

(i) That the Registration Statement shall have become effective under the
1933 Act, and no stop order suspending such effectiveness shall have been
instituted or, to the knowledge of the Trust or the Capital Growth Portfolio,
threatened by the Commission.

(j) That the Trust shall have received from the Commission, any relevant
state securities administrator, the FTC and the Department such order or orders
as Ropes & Gray deems reasonably necessary or desirable under the 1933 Act, the
1934 Act, the 1940 Act, any applicable state securities or blue sky laws and the
H-S-R Act in connection with the transactions contemplated hereby, and that all
such orders shall be in full force and effect.

10. Indemnification. (a) The Growth Portfolio will indemnify and hold
harmless, out of the assets of the Growth Portfolio but no other assets, the
Capital Growth Portfolio and the Trust (and its trustees and its officers) (for
purposes of this subparagraph, the "Indemnified Parties") against any and all

<PAGE>

expenses, losses, claims, damages and liabilities at any time imposed upon or
reasonably incurred by any one or more of the Indemnified Parties in connection
with, arising out of, or resulting from any claim, action, suit or proceeding in
which any one or more of the Indemnified Parties may be involved or with which
any one or more of the Indemnified Parties may be threatened by reason of any
untrue statement or alleged untrue statement of a material fact relating to the
Trust or the Growth Portfolio contained in the Registration Statement, the
Prospectus or the Proxy Statement or any amendment or supplement to any of the
foregoing, or arising out of or based upon the omission or alleged omission to
state in any of the foregoing a material fact relating to the Trust or the
Growth Portfolio required to be stated therein or necessary to make the
statements relating to the Trust or the Growth Portfolio therein not misleading,
including, without limitation, any amounts paid by any one or more of the
Indemnified Parties in a reasonable compromise or settlement of any such claim,
action, suit or proceeding, or threatened claim, action, suit or proceeding made
with the consent of the Trust or the Growth Portfolio. The Indemnified Parties
will notify the Trust and the Growth Portfolio in writing within ten days after
the receipt by any one or more of the Indemnified Parties of any notice of legal
process or any suit brought against or claim made against such Indemnified Party
as to any matters covered by this Section 10(a). The Trust and the Growth
Portfolio shall be entitled to participate at its own expense in the defense of
any claim, action, suit or proceeding covered by this Section 10(a), or, if it
so elects, to assume at its expense by counsel satisfactory to the Indemnified
Parties the defense of any such claim, action, suit or proceeding, and if the
Trust or the Growth Portfolio elects to assume such defense, the Indemnified
Parties shall be entitled to participate in the defense of any such claim,
action, suit or proceeding at their expense. The Growth Portfolio's obligation
under this Section 10(a) to indemnify and hold harmless the Indemnified Parties
shall constitute a guarantee of payment so that the Growth Portfolio will pay in
the first instance any expenses, losses, claims, damages and liabilities
required to be paid by it under this Section 10(a) without the necessity of the
Indemnified Parties' first paying the same.

(b) The Capital Growth Portfolio will indemnify and hold harmless, out of
the assets of the Capital Growth Portfolio but no other assets, the Growth
Portfolio and the Trust (and its trustees and its officers) (for purposes of
this subparagraph, the "Indemnified Parties") against any and all expenses,
losses, claims, damages and liabilities at any time imposed upon or reasonably
incurred by any one or more of the Indemnified Parties in connection with,
arising out of, or resulting from any claim, action, suit or proceeding in which
any one or more of the Indemnified Parties may be involved or with which any one

<PAGE>

or more of the Indemnified Parties may be threatened by reason of any untrue
statement or alleged untrue statement of a material fact relating to the Capital
Growth Portfolio contained in the Registration Statement, the Prospectus or the
Proxy Statement, or any amendment or supplement to any thereof, or arising out
of, or based upon, the omission or alleged omission to state in any of the
foregoing a material fact relating to the Trust or the Capital Growth Portfolio
required to be stated therein or necessary to make the statements relating to
the Trust or the Capital Growth Portfolio therein not misleading, including
without limitation any amounts paid by any one or more of the Indemnified
Parties in a reasonable compromise or settlement of any such claim, action, suit
or proceeding, or threatened claim, action, suit or proceeding made with the
consent of the Trust or the Capital Growth Portfolio. The Indemnified Parties
will notify the Trust and the Capital Growth Portfolio in writing within ten
days after the receipt by any one or more of the Indemnified Parties of any
notice of legal process or any suit brought against or claim made against such
Indemnified Party as to any matters covered by this Section 10(b). The Trust and
the Capital Growth Portfolio shall be entitled to participate at its own expense
in the defense of any claim, action, suit or proceeding covered by this Section
10(b), or, if it so elects, to assume at its expense by counsel satisfactory to
the Indemnified Parties the defense of any such claim, action, suit or
proceeding, and, if the Trust or the Capital Growth Portfolio elects to assume
such defense, the Indemnified Parties shall be entitled to participate in the
defense of any such claim, action, suit or proceeding at their own expense. The
Capital Growth Portfolio's obligation under this Section 10(b) to indemnify and
hold harmless the Indemnified Parties shall constitute a guarantee of payment so
that the Capital Growth Portfolio will pay in the first instance any expenses,
losses, claims, damages and liabilities required to be paid by it under this
Section 10(b) without the necessity of the Indemnified Parties' first paying the
same.

11. No Broker, etc. Each of the Growth Portfolio and the Capital Growth
Portfolio represents that there is no person who has dealt with it or the Trust
who by reason of such dealings is entitled to any broker's or finder's or other
similar fee or commission arising out of the transactions contemplated by this
Agreement.

12. Termination. The Growth Portfolio and the Capital Growth Portfolio
may, by mutual consent of their respective trustees, terminate this Agreement,
and the Growth Portfolio or the Capital Growth Portfolio, after consultation
with counsel and by consent of their respective trustees or an officer
authorized by such trustees, may waive any condition to their respective

<PAGE>

obligations hereunder. If the transactions contemplated by this Agreement have
not been substantially completed by ________ __, 1995, this Agreement shall
automatically terminate on that date unless a later date is agreed to by the
Growth Portfolio and the Capital Growth Portfolio.

13. Rule 145. Pursuant to Rule 145 under the 1933 Act, the Capital Growth
Portfolio will, in connection with the issuance of any Merger Shares to any
person who at the time of the transaction contemplated hereby is deemed to be an
affiliate of a party to the transaction pursuant to Rule 145(c), cause to be
affixed upon the certificates issued to such person (if any) a legend as
follows:

"THESE SHARES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED EXCEPT TO THE
MENTOR CAPITAL GROWTH PORTFOLIO OR ITS PRINCIPAL UNDERWRITER UNLESS (i)
A REGISTRATION STATEMENT WITH RESPECT THERETO IS EFFECTIVE UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR (ii) IN THE OPINION OF COUNSEL
REASONABLY SATISFACTORY TO THE MENTOR/CAMBRIDGE GROWTH PORTFOLIO SUCH
REGISTRATION IS NOT REQUIRED."

and, further, the Capital Growth Portfolio will issue stop transfer instructions
to the Capital Growth Portfolio's transfer agent with respect to such shares.
The Growth Portfolio will provide the Capital Growth Portfolio on the Exchange
Date with the name of any Growth Portfolio shareholder who is to the knowledge
of the Growth Portfolio an affiliate of the Growth Portfolio on such date.

14. Covenants, etc. Deemed Material. All covenants, agreements,
representations and warranties made under this Agreement and any certificates
delivered pursuant to this Agreement shall be deemed to have been material and
relied upon by each of the parties, notwithstanding any investigation made by
them or on their behalf.

15. Sole Agreement; Amendments. This Agreement supersedes all previous
correspondence and oral communications between the parties regarding the subject
matter hereof, constitutes the only understanding with respect to such subject
matter, may not be changed except by a letter of agreement signed by each party
hereto, and shall be construed in accordance with and governed by the laws of
The Commonwealth of Massachusetts.

16. Agreement and Declaration of Trust. A copy of the Agreement and
Declaration of Trust of the Trust is on file with the Secretary of State of The
Commonwealth of Massachusetts, and notice is hereby given that this instrument
is executed on behalf of the trustees of the Trust on behalf of the Portfolios,

<PAGE>

as trustees and not individually and that the obligations of this instrument are
not binding upon any of the trustees, officers or shareholders of the Trust
individually but are binding only upon the assets and property of the Growth
Portfolio and the Capital Growth Portfolio, respectively.

This Agreement may be executed in any number of counterparts, each of
which, when executed and delivered, shall be deemed to be an original.

The MENTOR FUNDS, on behalf of
MENTOR CAPITAL GROWTH PORTFOLIO

By:___________________________
President

The MENTOR FUNDS, on behalf of
MENTOR/CAMBRIDGE GROWTH PORTFOLIO

By:____________________________
President

<PAGE>

MENTOR/CAMBRIDGE GROWTH PORTFOLIO PROXY SOLICITED BY THE TRUSTEES
A SERIES OF THE MENTOR FUNDS

PROXY FOR SPECIAL MEETING OF SHAREHOLDERS -- AUGUST 9, 1995

The undersigned hereby appoints Peter J. Quinn, Jr., Daniel J. Ludeman, and Paul
F. Costello, and each of them, proxies, with power of substitution to each, and
hereby authorizes them to represent and to vote, as designated below, at the
Special Meeting of Shareholders of the Mentor/Cambridge Growth Portfolio (the
"Portfolio"), a series of The Mentor Funds, on Wednesday, August 9, 1995 at 9:00
a.m. Eastern time, and at any adjournments thereof, all of the shares of the
Portfolio which the undersigned would be entitled to vote if personally present.

NOTE: Please sign exactly as your name appears on this
card. All joint owners should sign. When signing as
executor, administrator, attorney, trustee or guardian
or as custodian for a minor, please give full title as
such. If a corporation, please sign in full corporate
name and indicate the signer's office. If a partner,
sign in the partnership name.

Signature(s)______________________________________

__________________________________________________

Date______________________________________________

<PAGE>

THIS PROXY PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE
UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR
PROPOSAL.

IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER
BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING. THE TRUSTEES RECOMMEND A
VOTE FOR THE PROPOSAL BELOW.

1. To approve the Agreement and [ ] FOR [ ] AGAINST [ ] ABSTAIN
Plan of Reorganization providing for
the transfer of all of the assets
of the Mentor/Cambridge Growth
Portfolio (the "Growth Portfolio")
to the Mentor Capital Growth Portfolio
(the "Capital Growth Portfolio") in
exchange for shares of the Capital
Growth Portfolio and the assumption
by the Capital Growth Portfolio of
all of the liabilities of the Growth
Portfolio, and the distribution of
such shares to the shareholders of
the Growth Portfolio in liquidation
of the Growth Portfolio.

PLEASE SIGN ON OTHER SIDE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE

<PAGE>

MENTOR CAPITAL GROWTH PORTFOLIO

FORM N-14
PART B

STATEMENT OF ADDITIONAL INFORMATION
July __, 1995

This Statement of Additional Information contains material which may be of
interest to investors but which is not included in the Prospectus/Proxy
Statement (the "Prospectus") of the Mentor Capital Growth Portfolio (the
"Capital Growth Portfolio") dated July __, 1995 relating to the sale of all or
substantially all of the assets of the Mentor/Cambridge Growth Portfolio (the
"Growth Portfolio") to the Capital Growth Portfolio. The Statement of Additional
Information of The Mentor Funds (the "Trust") dated May 30, 1995, has been filed
with the Securities and Exchange Commission and is incorporated herein by
reference. This Statement is not a prospectus and is authorized for distribution
only when it accompanies or follows delivery of a prospectus, and should be read
in conjunction with the Prospectus. Investors may obtain a free copy of the
Prospectus or the Statement of Additional Information by writing the Trust, 901
East Byrd Street, Richmond, Virginia, or by calling 1-800-382-0016.

INDEPENDENT ACCOUNTANTS AND FINANCIAL STATEMENTS

KPMG Peat Marwick LLP are the independent accountants for the Growth
Portfolio and the Capital Growth Portfolio, providing audit services, tax return
preparation and review and other tax consulting services and assistance and
consultation in connection with the review of various Securities and Exchange
Commission filings for the Portfolios. The (i) Report of Independent Accountants
and financial statements relating to the Growth Portfolio and the Capital Growth
Portfolio included in the Trust's Annual Report for the fiscal year ended
September 30, 1994 (the "Annual Report"), filed electronically on December 1,
1994, and the (ii) unaudited financial statements relating to the Growth
Portfolio and the Capital Growth Portfolio included in the Trust's Semi-Annual
Report for the six months ended March 31, 1995, filed electronically on June 1,
1995, are incorporated by reference into this Statement of Additional
Information. The financial statements included in the Annual Report and
incorporated by reference into the Prospectus/Proxy Statement and this Statement
of Additional Information have been so included and incorporated in reliance
upon the reports of KPMG Peat Marwick LLP, given on their authority as experts
in auditing and accounting.

<PAGE>

Table of Contents

Unaudited Pro Forma combined Financial Statements
of the Capital Growth Portfolio and the Growth
Portfolio as of September 30, 1994 . . . . . . . . . . . . . . . . . .

Unaudited Pro Forma combined Financial Statements
of the Capital Growth Portfolio and the Growth
Portfolio as of March 31, 1995 . . . . . . . . . . . . . . . . . . . .

<PAGE>

MENTOR CAPITAL GROWTH PORTFOLIO
AND
MENTOR/CAMBRIDGE GROWTH PORTFOLIO

PRO FORMA COMBINING FINANCIAL STATEMENTS (UNAUDITED)

The accompanying unaudited pro forma combining investment portfolio and
statement of assets and liabilities of the Capital Growth and Growth Portfolios
assumes that the exchange described in the next paragraph occurred on September
30, 1994 and on March 31, 1995 and the unaudited pro forma combining statement
of operations of the Mentor Capital Growth Portfolio (the "Capital Growth
Portfolio") as if the combination with the Mentor/Cambridge Growth Portfolio
(the "Growth Portfolio") had been consummated on September 30, 1994 and on March
31, 1995. These financial statements are not indicative of future operations or
actual results that would have occurred had the combination been consummated at
the beginning of the fiscal period presented. These statements have been derived
from the September 30, 1994 audited financial statements and the March 31, 1995
unaudited financial statements of the Capital Growth Portfolio and the Growth
Portfolio, respectively, each of which is incorporated by reference into this
Statement of Additional Information.

The pro forma statements give effect to the proposed transfer of all the
assets of the Growth Portfolio to the Capital Growth Portfolio in exchange for
the assumption by the Capital Growth Portfolio of all of the liabilities of the
Growth Portfolio and for a number of Merger Shares equal in value to the value
of the net assets of the Growth Portfolio transferred to the Capital Growth
Portfolio. Under generally accepted accounting principles, the historical cost
of the investment securities will be carried forward to the surviving entity
(the Capital Growth Portfolio) and the results of operations of the Capital
Growth Portfolio for pre-combined periods will not be restated. The pro forma
statements do not reflect the expenses of either Portfolio in carrying out its
obligations under the Agreement and Plan of Reorganization.

The unaudited pro forma combining statements should be read in conjunction
with the separate financial statements of the Portfolios.

<PAGE>

PRO FORMA COMBINING
STATEMENTS OF ASSETS AND LIABILITIES
SEPTEMBER 30, 1994

<TABLE>
<CAPTION>
MENTOR/ MENTOR
CAMBRIDGE CAPITAL PRO FORMA
GROWTH GROWTH COMBINED
PORTFOLIO PORTFOLIO (UNAUDITED)
<S> <C> <C> <C>
ASSETS
Investments, at market value (combined cost $100,315,891)........ $41,999,246 $63,102,296 $105,101,542
Cash............................................................. 859,416 - 859,416
Receivables...................................................... -
Investments sold.............................................. 832,966 741,914 1,574,880
Fund shares sold.............................................. 11,126 42,470 53,596
Dividends and interest........................................ 95,051 139,759 234,810
Deferred expenses................................................ 9,039 11,351 20,390
Other assets..................................................... - 5,101 5,101
Total assets................................................ 43,806,844 64,042,891 107,849,735
LIABILITIES
Payables
Investments purchased......................................... 141,000 1,342,854 1,483,854
Fund shares redeemed.......................................... 250,951 218,520 469,471
Accrued administration expenses............................... 5,285 7,531 12,816
Accrued distribution expenses................................. 21,847 53,090 74,937
Accrued expenses and other liabilities........................... 131,075 133,983 265,058
Total liabilities........................................... 550,158 1,755,978 2,306,136
NET ASSETS.................................................. $43,256,686 $62,286,913 $105,543,599
Net Assets represented by:
Additional paid-in capital....................................... $43,860,672 $59,512,213 $103,372,885
Undistributed net investment loss................................ (962,826) - (962,826)
Accumulated distributions in excess of net investment income..... - (28,051) (28,051)
Undistributed realized gain (loss) on investment transactions.... (2,801,823) 1,177,205 (1,624,618)
Net unrealized appreciation of investments....................... 3,160,663 1,625,546 4,786,209
Net Assets.................................................... $43,256,686 $62,286,913 $105,543,599
NET ASSET VALUE PER SHARE
Class A Shares................................................... $ 14.68 $ 14.88 $ 14.88
Class B Shares................................................... $ 14.53 $ 14.80 $ 14.80
OFFERING PRICE PER SHARE
Class A Shares (a)............................................... $ 15.53 $ 15.75 $ 15.75
Class B Shares................................................... $ 14.53 $ 14.80 $ 14.80
REDEMPTION PROCEEDS PER SHARE
Class A Shares................................................... $ 14.68 $ 14.88 $ 14.88
Class B Shares (b)............................................... $ 14.38 $ 14.65 $ 14.65
SHARES OUTSTANDING
Class A Shares................................................... 993,054 1,423,010 2,907,035
Class B Shares................................................... 1,974,036 2,778,026 4,208,575
Total Shares Outstanding.................................... 2,967,090 4,201,036 7,115,610
</TABLE>

(a) Computation of offering price: 100/94.5 of net asset value.
(b) Computation of redemption proceeds: 99/100 of net asset value.

<PAGE>
PRO FORMA COMBINING
STATEMENTS OF OPERATIONS
YEAR ENDED SEPTEMBER 30, 1994

<TABLE>
<CAPTION>
MENTOR/ MENTOR
CAMBRIDGE CAPITAL PRO FORMA
GROWTH GROWTH PRO FORMA COMBINED
PORTFOLIO PORTFOLIO ADJUSTMENTS (UNAUDITED)
<S> <C> <C> <C> <C>
INVESTMENT INCOME
Interest............................................. $ 72,373 $ 498,408 $ 0 $ 570,781
Dividends (Net of withholding taxes)*................ 525,699 1,152,741 0 1,678,440
Total investment income........................... 598,072 1,651,149 0 2,249,221
EXPENSES
Management fee....................................... 410,955 590,693 1,001,648
Distribution fees.................................... 253,834 360,712 614,546
Transfer agent fee................................... 163,583 213,354 376,937
Shareholder services fees............................ 128,423 184,588 313,011
Administration fee................................... 64,195 92,278 156,473
Custodian fee........................................ 71,513 67,014 138,527
Registration expenses................................ 30,000 27,000 (27,000) 30,000
Shareholder reports and postage expenses............. 25,338 36,777 62,115
Organizational expenses.............................. 12,275 12,195 24,470
Professional fees.................................... 11,008 15,782 (11,008) 15,782
Directors' fees and expenses......................... 7,180 7,180 (7,180) 7,180
Miscellaneous........................................ 13,472 13,705 (13,472) 13,705
Total expenses.................................. 1,191,776 1,621,278 (58,660) 2,754,394
Deduct
Waiver of administration fee........................... 6,569 0 6,569
Net Expenses........................................... 1,185,207 1,621,278 (58,660) 2,747,825
Net investment income (loss)........................... (587,135) 29,871 58,660 (498,604)
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain (loss) on investments.............. (514,259) 1,128,751 0 614,492
Change in unrealized depreciation.................... (5,796,253) (2,465,351) 0 (8,261,604)
Net realized and unrealized loss on
investments.................................. (6,310,512) (1,336,600) 0 (7,647,112)
Net increase (decrease) in net assets resulting from
operations........................................... $(6,897,647) $(1,306,729) $ 58,660 $(8,145,716)
</TABLE>

* Withholding taxes for Capital Growth Portfolio was $1,534.

<PAGE>

THE PRO FORMA COMBINING INVESTMENT PORTFOLIO
OF MENTOR/CAMBRIDGE GROWTH PORTFOLIO AND MENTOR CAPITAL GROWTH PORTFOLIO
SEPTEMBER 30, 1994

<TABLE>
<CAPTION>
MENTOR/CAMBRIDGE MENTOR CAPITAL GROWTH PRO FORMA COMBINED
GROWTH PORTFOLIO PORTFOLIO (UNAUDITED)
SHARES VALUE SHARES VALUE SHARES VALUE
<S> <C> <C> <C> <C> <C> <C> <C>
COMMON STOCKS..................87.85% **
BASIC MATERIALS...................... 6.15%
Air Products & Chemicals, Inc...... 8,000 $ 374,000 8,000 $ 374,000
Akzo Nobel......................... 5,000 $ 586,663 5,000 586,663
British Steel ORD.................. 200,000 544,784 200,000 544,784
Du Pont EI De Nemours &
Company.......................... 17,000 986,000 17,000 986,000
Dutch State Mines.................. 7,500 635,958 7,500 635,958
Alco Standard Corporation.......... 8,000 497,000 8,000 497,000
Consolidated Papers, Inc........... 1,000 51,750 1,000 51,750
Kimberly Clark Corporation......... 8,000 470,000 8,000 470,000
Minerals Technologies, Inc......... 10,500 311,063 10,500 311,063
Monsanto Company................... 5,000 401,875 5,000 401,875
Morton International, Inc.......... 7,500 206,250 7,500 206,250
Newell Company..................... 28,000 623,000 28,000 623,000
Nucor Corporation.................. 11,500 805,000 11,500 805,000
3,739,938 2,753,405 6,493,343
CAPITAL GOODS & CONSTRUCTION......... 7.19%
Automotive Industries*............. 14,400 349,200 14,400 349,200
Brown Boveri & Cie................. 800 689,709 800 689,709
Browning Ferris Industries, Inc.... 30,000 952,500 30,000 952,500
Flour Corporation.................. 12,000 597,000 12,000 597,000
PPG Industries, Inc................ 25,000 990,625 25,000 990,625
Raytheon Company................... 17,000 1,090,125 17,000 1,090,125
United Technologies Corporation.... 15,000 939,375 15,000 939,375
Emerson Electric Company*.......... 8,900 530,663 8,900 530,663
General Electric Company........... 14,100 678,562 14,100 678,562
Grainger, Inc...................... 3,500 207,375 3,500 207,375
Magna International, Inc........... 13,600 501,500 13,600 501,500
Trimas Corporation................. 2,500 56,875 2,500 56,875
2,324,175 5,259,334 7,583,509
CONSUMER CYCLICAL.................... 18.09%
Ann Taylor Stores, Inc.*........... 5,700 205,200 5,700 205,200
Capital Cities/ABC................. 11,000 902,000 11,000 902,000
Carnival Corporation............... 25,000 1,096,875 25,000 1,096,875
Dayton-Hudson Corporation.......... 12,500 956,250 12,500 956,250
Harcourt General, Inc.............. 6,000 206,250 22,500 773,438 28,500 979,688
Marriott International, Inc........ 31,500 909,562 31,500 909,562
May Department Stores Company...... 30,000 1,181,250 30,000 1,181,250
Mirage Resorts, Inc................ 48,000 1,032,000 48,000 1,032,000
Price Costco, Inc.*................ 50,000 803,125 50,000 803,125
Toys R Us, Inc.*................... 38,000 1,353,750 38,000 1,353,750
Whirlpool Corporation.............. 15,000 770,625 15,000 770,625
Brinker International, Inc.*....... 21,300 511,200 21,300 511,200
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
MENTOR/CAMBRIDGE MENTOR CAPITAL GROWTH PRO FORMA COMBINED
GROWTH PORTFOLIO PORTFOLIO (UNAUDITED)
SHARES VALUE SHARES VALUE SHARES VALUE
CONSUMER CYCLICAL (CONTINUED)
<S> <C> <C> <C> <C> <C> <C> <C>
CUC International, Inc............. 6,900 $ 227,700 6,900 $ 227,700
Duracell International, Inc........ 3,500 159,688 3,500 159,688
Franklin Quest Company*............ 13,500 506,250 13,500 506,250
General Nutrition
Companies, Inc.*................. 12,900 287,025 12,900 287,025
Heilig-Meyers Company.............. 11,600 304,500 11,600 304,500
Home Depot, Inc.................... 19,300 810,600 30,000 1,260,000 49,300 2,070,600
International Game Technology...... 7,400 152,625 7,400 152,625
Kohl's Corporation*................ 3,000 145,500 3,000 145,500
Lone Star Steakhouse
& Saloon, Inc.*.................. 2,000 50,750 2,000 50,750
Manpower, Inc...................... 26,500 725,438 26,500 725,438
McDonald's Corporation............. 14,000 367,500 14,000 367,500
Office Depot, Inc.*................ 10,800 280,800 10,800 280,800
Promus Companies, Inc.............. 21,000 706,125 21,000 706,125
Shaw Industries, Inc............... 20,900 300,438 20,900 300,438
Starbucks Corporation*............. 9,000 207,562 9,000 207,562
Station Casinos, Inc.*............. 7,900 106,650 7,900 106,650
The Bombay Company, Inc............ 4,900 64,925 4,900 64,925
The Walt Disney Company............ 6,000 233,250 6,000 233,250
Tribune Company.................... 4,400 237,600 4,400 237,600
Viacom, Inc. -- Class A*........... 384 15,696 384 15,696
Viacom, Inc. -- Class B*........... 2,909 115,633 2,909 115,633
Viacom, Inc. -- Rights*............ 4,800 6,300 4,800 6,300
Viking Office Products, Inc.*...... 18,800 568,700 18,800 568,700
Wal-Mart Stores, Inc............... 23,600 551,650 23,600 551,650
8,055,555 11,038,875 19,094,430
CONSUMER STAPLES..................... 11.05%
Abbott Laboratories................ 4,100 128,638 40,000 1,255,000 44,100 1,383,638
Amgen, Inc.*....................... 15,000 798,750 15,000 798,750
Astra AB........................... 37,500 898,590 37,500 898,590
Columbia/HCA Healthcare
Corporation...................... 25,000 1,087,500 25,000 1,087,500
Merck & Company, Inc............... 40,000 1,420,000 40,000 1,420,000
Schering-Plough Corporation........ 15,000 1,065,000 15,000 1,065,000
Campbell Soup Company.............. 10,800 426,600 10,800 426,600
Coca Cola Company.................. 15,000 729,375 15,000 729,375
Conagra, Inc....................... 12,600 396,900 12,600 396,900
CPC International, Inc............. 11,000 556,875 11,000 556,875
Gillette Company................... 7,000 495,250 7,000 495,250
Philip Morris Companies, Inc....... 9,900 605,138 14,000 855,750 23,900 1,460,888
Procter & Gamble Company........... 11,000 655,875 11,000 655,875
UST, Inc........................... 10,000 286,250 10,000 286,250
4,280,901 7,380,590 11,661,491
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
MENTOR/CAMBRIDGE MENTOR CAPITAL GROWTH PRO FORMA COMBINED
GROWTH PORTFOLIO PORTFOLIO (UNAUDITED)
SHARES VALUE SHARES VALUE SHARES VALUE

<S> <C> <C> <C> <C> <C> <C> <C>
ENERGY............................... 6.41%
Enron Corporation.................. 16,900 $ 511,225 25,000 $ 756,250 41,900 $1,267,475
British Petroleum PLC, ADS......... 13,000 984,750 13,000 984,750
Chevron Corporation................ 25,000 1,040,625 25,000 1,040,625
Dresser Industries, Inc............ 50,000 1,012,500 50,000 1,012,500
Royal Dutch Petroleum Company...... 8,500 912,688 8,500 912,688
Tidewater, Inc..................... 15,000 322,500 15,000 322,500
Mobil Corporation.................. 3,000 237,375 12,000 949,500 15,000 1,186,875
Repsol SA.......................... 1,200 36,579 1,200 36,579
785,179 5,978,813 6,763,992
FINANCIAL............................ 6.57%
Bankers Life Holding Corporation... 7,200 169,200 7,200 169,200
American International Group,
Inc.............................. 15,000 1,333,125 15,000 1,333,125
Boatmen's Bancshares, Inc.......... 14,000 434,875 14,000 434,875
Conseco, Inc....................... 6,500 291,688 6,500 291,688
Equity Residential Properties
Trust............................ 7,500 238,125 7,500 238,125
Federal National Mortgage
Association...................... 4,000 315,000 20,000 1,575,000 24,000 1,890,000
First USA, Inc..................... 12,100 425,012 12,100 425,012
General RE Corporation............. 3,400 359,975 3,400 359,975
MBNA Corporation................... 23,500 543,438 23,500 543,438
MGIC Investment Corporation........ 19,900 599,488 19,900 599,488
Nationsbank Corporation............ 10,000 490,000 10,000 490,000
Western National Corporation....... 12,000 162,000 12,000 162,000
4,028,801 2,908,125 6,936,926
HEALTH............................... 6.90%
American Medical Holdings, Inc.*... 4,000 89,500 4,000 89,500
Columbia HCA Healthcare
Corporation...................... 12,500 543,750 12,500 543,750
Cordis Corporation*................ 7,600 400,900 7,600 400,900
Forest Laboratories, Inc.*......... 8,000 394,000 8,000 394,000
Foundation Health Corporation*..... 1,900 66,975 1,900 66,975
Idexx Laboratories, Inc.*.......... 8,400 247,800 8,400 247,800
Integrated Health
Services, Inc.*.................. 16,000 568,000 16,000 568,000
Johnson & Johnson.................. 6,000 309,750 6,000 309,750
Medtronic, Inc..................... 10,600 560,475 10,600 560,475
Mid Atlantic Medical
Services, Inc.*.................. 9,400 282,000 9,400 282,000
Pfizer, Inc........................ 4,000 276,500 4,000 276,500
Schering Plough Corporation........ 11,800 837,800 11,800 837,800
United Healthcare Corporation...... 7,500 397,500 7,500 397,500
US Healthcare, Inc................. 6,500 302,656 17,500 814,844 24,000 1,117,500
Value Health, Inc.*................ 14,500 696,000 14,500 696,000
Warner Lambert Company............. 6,100 489,525 6,100 489,525
6,463,131 814,844 7,277,975
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
MENTOR/CAMBRIDGE MENTOR CAPITAL GROWTH PRO FORMA COMBINED
GROWTH PORTFOLIO PORTFOLIO (UNAUDITED)
SHARES VALUE SHARES VALUE SHARES VALUE
<S> <C> <C> <C> <C> <C> <C> <C>
TECHNOLOGY........................... 16.74%
3COM Corporation*.................. 7,200 $ 269,100 7,200 $ 269,100
Cirrus Logic, Inc.*................ 35,000 $ 980,000 35,000 980,000
Computer Associates International,
Inc.............................. 30,000 1,335,000 30,000 1,335,000
Ericsson Telecommunication
Company.......................... 15,000 806,250 15,000 806,250
Hewlett Packard Company............ 15,000 1,310,625 15,000 1,310,625
International Business Machines
Corporation...................... 9,000 625,500 9,000 625,500
Perkin-Elmer Corporation........... 15,000 470,625 15,000 470,625
Philips Electronics Holdings
Company.......................... 35,000 1,063,125 35,000 1,063,125
Xerox Corporation.................. 10,000 1,067,500 10,000 1,067,500
ADC Telecommunications, Inc.*...... 7,400 296,925 7,400 296,925
Applied Materials, Inc.*........... 10,400 486,200 10,400 486,200
AT&T Corporation................... 7,900 426,600 7,900 426,600
Cisco Systems, Inc.*............... 6,000 164,250 6,000 164,250
Compaq Computer Corporation*....... 12,100 394,763 12,100 394,763
Compuware Corporation*............. 8,000 376,500 8,000 376,500
EMC Corporation.................... 20,000 402,500 20,000 402,500
First Data Corporation............. 7,600 381,900 7,600 381,900
General Motors Corporation
-- Class E...................... 10,400 395,200 23,000 874,000 33,400 1,269,200
Intel Corporation.................. 5,000 307,500 5,000 307,500
Linear Technology Corporation...... 8,000 354,500 8,000 354,500
Loral Corporation.................. 3,000 118,125 3,000 118,125
Maxim Integrated
Products, Inc.*.................. 1,300 79,625 1,300 79,625
Microchip Technology, Inc.*........ 1,500 58,875 1,500 58,875
Microsoft Corporation*............. 8,000 449,000 8,000 449,000
Motorola, Inc...................... 10,800 569,700 10,800 569,700
Oracle Systems Corporation*........ 14,100 606,300 14,100 606,300
Parametric Technology
Corporation*..................... 14,000 465,500 28,300 940,975 42,300 1,406,475
Reynolds & Reynolds Company........ 10,000 251,250 10,000 251,250
Scientific Atlanta, Inc............ 5,700 232,988 5,700 232,988
Silicon Graphics, Inc.*............ 23,000 592,250 23,000 592,250
Solectron Corporation*............. 3,500 92,313 3,500 92,313
Tellabs, Inc.*..................... 10,000 425,000 10,000 425,000
8,196,864 9,473,600 17,670,464
TRANSPORTATION & SERVICES............ 3.05%
Conrail, Inc....................... 7,600 376,200 7,600 376,200
CSX Corporation.................... 10,000 685,000 10,000 685,000
Kansas City Southern Industries,
Inc.............................. 5,800 205,175 5,800 205,175
Southwest Airlines Company......... 11,000 247,500 11,000 247,500
Union Pacific Corporation.......... 6,700 359,288 17,500 938,438 24,200 1,297,726
Wisconsin Central Transport*....... 9,900 405,900 9,900 405,900
1,594,063 1,623,438 3,217,501
</TABLE>

9
<PAGE>

<TABLE>
<CAPTION>
MENTOR/CAMBRIDGE MENTOR CAPITAL GROWTH PRO FORMA COMBINED
GROWTH PORTFOLIO PORTFOLIO (UNAUDITED)
SHARES VALUE SHARES VALUE SHARES VALUE

<S> <C> <C> <C> <C> <C> <C> <C>
UTILITIES............................ 2.31%
Ameritech Corporation.............. 20,000 $ 805,000 20,000 $ 805,000
Royal PTT Nederland................ 22,500 677,781 22,500 677,781
Sprint Corporation................. 25,000 953,125 25,000 953,125
2,435,906 2,435,906
MISCELLANEOUS........................ 1.16%
Eastman Kodak Company.............. 7,500 388,125 7,500 388,125
ITT Corporation.................... 10,000 833,750 10,000 833,750
1,221,875 1,221,875
FOREIGN SECURITIES................... 2.24%
AAlberts Industries................ 400 18,626 400 18,626
Amway Japan, Ltd................... 2,100 33,338 2,100 33,338
Atlas Copco AB..................... 4,500 56,469 4,500 56,469
BBC Brown Boveri................... 40 34,485 40 34,485
BMW Bayerische Motoren............. 50 24,125 50 24,125
BPB Industries..................... 5,500 26,191 5,500 26,191
British Petroleum Company.......... 3,500 22,048 3,500 22,048
Broken Hill Proprietary............ 1,400 20,347 1,400 20,347
Carter Holt Harvey................. 8,600 19,524 8,600 19,524
Cementos De Mexico ACP............. 1,400 12,575 1,400 12,575
Comercial Del Plata................ 3,000 10,446 3,000 10,446
Creative Technology, Ltd........... 500 8,833 500 8,833
CRH PLC............................ 10,000 54,644 10,000 54,644
DDI Corporation.................... 10 87,229 10 87,229
Ericsson........................... 2,000 106,262 2,000 106,262
Grupo Carso ADR+................... 500 11,500 500 11,500
Hagemeyer NV....................... 200 16,085 200 16,085
Honda Motors Company............... 4,000 66,633 4,000 66,633
Keiyo Company...................... 3,000 58,152 3,000 58,152
Keppel Corporation................. 5,000 40,459 5,000 40,459
Koninklijke Van Ommeren............ 1,300 34,378 1,300 34,378
Kyocera Corporation................ 1,000 71,479 1,000 71,479
Maderas Y Sinteticos Sociedad...... 800 22,800 800 22,800
Malaysian Helicopter............... 2,760 8,558 2,760 8,558
Matsushita Electric................ 4,000 63,806 4,000 63,806
Metsa Serla "B'.................... 400 19,241 400 19,241
Nokia AB........................... 500 58,073 500 58,073
Noranda, Inc....................... 1,100 22,237 1,100 22,237
Philips Electronics................ 1,900 57,999 1,900 57,999
Polygram NV........................ 400 17,315 400 17,315
Road Bulder Holdings............... 3,000 19,541 3,000 19,541
Sanyo Shinpan Finance Company...... 600 63,604 600 63,604
Sharp Corporation.................. 3,000 53,306 3,000 53,306
SIAM City Bank, Ltd................ 20,200 25,710 20,200 25,710
Siebe PLC.......................... 7,000 59,603 7,000 59,603
Siemens AG......................... 100 40,939 100 40,939
Stet Societa Finanz................ 13,600 42,078 13,600 42,078
Technology Resources Industries.... 6,900 28,259 6,900 28,259
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
MENTOR/CAMBRIDGE MENTOR CAPITAL GROWTH PRO FORMA COMBINED
GROWTH PORTFOLIO PORTFOLIO (UNAUDITED)
SHARES OR SHARES OR SHARES OR
PRINCIPAL PRINCIPAL PRINCIPAL
AMOUNT VALUE AMOUNT VALUE AMOUNT VALUE
<S> <C> <C> <C> <C> <C> <C> <C>
FOREIGN SECURITIES (CONTINUED)
Telecom Argentina................. 3,300 $ 22,121 3,300 $ 22,121
Telefonos De Mexico............... 700 43,750 700 43,750
TNT Limited....................... 10,300 18,217 10,300 18,217
Tokio Marine & Fire Insurance..... 5,000 59,566 5,000 59,566
Tokyo Electron, Ltd............... 2,000 63,806 2,000 63,806
Universal Robina Corporation...... 11,000 10,329 11,000 10,329
Veba AG........................... 200 66,288 200 66,288
Vodagone Group PLC................ 19,800 61,660 19,800 61,660
Wai Kee Holdings.................. 58,000 16,663 58,000 16,663
Wai Kee Holdings-Warrants*........ 10,600 178 10,600 178
Western Mining Corporation........ 3,700 21,548 3,700 21,548
Wilson & Horton, Ltd.............. 4,000 18,307 4,000 18,307
WMX Technologies, Inc............. 18,000 519,750 18,000 519,750
Woolworths, Ltd................... 3,862 8,059 3,862 8,059
2,367,139 2,367,139
TOTAL COMMON STOCKS................. 41,835,746 $50,888,805 92,724,551
PREFERRED STOCKS.................... 0.28%**
Nokia AB.......................... 2,500 290,363 2,500 290,363
LONG-TERM INVESTMENTS............... 2.01%**
CORPORATE BOND...................... 0.15%
Argosy Gaming Corporation, 12.00%,
6/1/01.......................... $150,000 163,500 $ 150,000 163,500
GOVERNMENT BONDS.................... 1.86%
U.S. Treasury Note, 6.00%,
6/30/96......................... 1,975,000 1,958,726 1,975,000 1,958,726
TOTAL LONG-TERM INVESTMENTS......... 163,500 1,958,726 2,122,226
SHORT-TERM INVESTMENTS.............. 9.44%**
COMMERCIAL PAPER.................... 7.89%
General Electric Company, 4.87%,
10/24/94........................ 1,500,000 1,495,333 1,500,000 1,495,333
Johnson & Johnson, 4.90%,
10/24/94........................ 745,000 742,668 745,000 742,668
Proctor & Gamble Corporation,
4.83%, 10/21/94................. 1,350,000 1,346,377 1,350,000 1,346,377
Exxon Imperial U.S., Inc., 4.82%,
10/24/94........................ 1,630,000 1,628,691 1,630,000 1,628,691
Private Export Funding
Corporation, 4.73%, 10/14/94.... 1,245,000 1,242,873 1,245,000 1,242,873
Private Export Funding
Corporation, 4.72%, 10/20/94.... 225,000 224,439 225,000 224,439
Bellsouth Telecommunications,
Inc., 4.79%, 10/20/94........... 1,650,000 1,645,829 1,650,000 1,645,829
TOTAL COMMERCIAL PAPER.............. 8,326,210 8,326,210

</TABLE>

<PAGE>
[CAPTION]

<TABLE>
MENTOR/CAMBRIDGE MENTOR CAPITAL GROWTH PRO FORMA COMBINED
GROWTH PORTFOLIO PORTFOLIO (UNAUDITED)
SHARES OR SHARES OR SHARES OR
PRINCIPAL PRINCIPAL PRINCIPAL
AMOUNT VALUE AMOUNT VALUE AMOUNT VALUE

<S> <C> <C> <C> <C> <C> <C> <C>
U.S. GOVERNMENT AGENCIES............ 1.55%
Federal Home Loan Mortgage
Corporation, 4.70%, 10/4/94..... $1,240,000 $ 1,239,514 $1,240,000 $1,239,514
Federal National Mortgage
Association, 4.76%, 10/26/94 400,000 398,678 400,000 398,678
TOTAL U.S. GOVERNMENT AGENCIES...... 1,638,192 1,638,192
TOTAL SHORT-TERM INVESTMENTS........ 0 9,964,402 9,964,402
TOTAL COMBINED INVESTMENTS.......... 99.58%
(combined cost $100,315,891)
Growth Portfolio $$38,863,630 and
Capital Growth Portfolio
$61,477,308)...................... $41,999,246 $63,102,296 $105,101,542
</TABLE>

* Non-income producing.
** Percentages are based on Proforma combined net assets of $105,543,599,
which correspond to a proforma combined net asset value per share of
$14.83.
+ American Depository Receipt.

<PAGE>
PRO FORMA COMBINING
STATEMENTS OF ASSETS AND LIABILITIES
MARCH 31, 1995 (UNAUDITED)
<TABLE>
<CAPTION>
MENTOR/ MENTOR
CAMBRIDGE CAPITAL
GROWTH GROWTH PRO FORMA
PORTFOLIO PORTFOLIO COMBINED
<S> <C> <C> <C>
ASSETS
Investments, at market value (combined cost $85,543,356).......... $37,342,934 $59,226,871 $96,569,805
Receivables....................................................... -
Investments sold............................................... 1,161,932 520,740 1,682,672
Fund shares sold............................................... 47,646 47,829 95,475
Dividends and interest......................................... 65,262 118,920 184,182
Forward currency contracts held................................ 12,453 159,712 172,165
Total assets................................................. 38,630,227 60,074,072 98,704,299
LIABILITIES
Payables
Investments purchased.......................................... 131,050 905,575 1,036,625
Fund shares redeemed........................................... 302,733 491,102 793,835
Accrued expenses and other liabilities............................ 789,534 137,851 927,385
Total liabilities............................................ 1,223,317 1,534,528 2,757,845
NET ASSETS................................................... $37,406,910 $58,539,544 $95,946,454
Net Assets represented by:
Additional paid-in capital........................................ $34,767,770 $53,051,601 $87,819,371
Undistributed net investment loss................................. (172,160) - (172,160)
Accumulated distributions in excess of net investment income...... - (96,678) (96,678)
Undistributed realized loss on investment transactions............ (2,199,365) (431,421) (2,630,786)
Net unrealized appreciation of investments and foreign currency
related transactions........................................... 5,010,665 6,016,042 11,026,707
Net Assets................................................... $37,406,910 $58,539,544 $95,946,454
NET ASSET VALUE PER SHARE
Class A Shares.................................................... $ 15.64 $ 15.63 $ 15.63
Class B Shares.................................................... $ 15.42 $ 15.47 $ 15.47
OFFERING PRICE PER SHARE
Class A Shares (a)................................................ $ 16.55 $ 16.54 $ 16.54
Class B shares.................................................... $ 15.42 $ 15.47 $ 15.47
REDEMPTION PROCEEDS PER SHARE
Class A Shares.................................................... $ 15.64 $ 15.63 $ 15.63
Class B Shares (b)................................................ $ 15.27 $ 15.32 $ 15.32
SHARES OUTSTANDING
Class A Shares.................................................... 839,258 1,267,361 2,393,878
Class B Shares.................................................... 1,574,382 2,503,373 3,783,239
Shares Outstanding........................................... 2,413,640 3,770,734 6,177,117
</TABLE>

(a) Computation of offering price: 100/94.5 of net asset value.
(b) Computation of redemption proceeds: 99/100 of net asset value.

<PAGE>
PRO FORMA COMBINING
STATEMENTS OF OPERATIONS
SIX MONTHS ENDED MARCH 31, 1995 (UNAUDITED)
<TABLE>
<CAPTION>
MENTOR/ MENTOR
CAMBRIDGE CAPITAL
GROWTH GROWTH PRO FORMA PRO FORMA
PORTFOLIO PORTFOLIO ADJUSTMENTS COMBINED
<S> <C> <C> <C> <C>
INVESTMENT INCOME
Interest................................................ $ 16,288 $ 249,731 $ 0 $ 266,019
Dividends (Net of withholding taxes)*................... 283,444 458,103 0 741,547
Total investment income............................ 299,732 707,834 0 1,007,566
EXPENSES
Management fee.......................................... 161,118 240,136 401,254
Distribution fees....................................... 99,537 148,326 247,863
Transfer agent fee...................................... 71,972 113,539 185,511
Shareholder services fees............................... 50,350 75,042 125,392
Administration fee...................................... 25,175 37,521 62,696
Custodian fee........................................... 13,441 15,792 29,233
Registration expenses................................... 24,492 33,746 (24,492) 33,746
Shareholder reports and postage expenses................ 4,651 9,181 13,832
Organizational expenses................................. 7,722 4,835 12,557
Legal and Audit fees.................................... 8,681 14,033 (8,681) 14,033
Directors' fees and expenses............................ 2,002 3,670 (2,002) 3,670
Miscellaneous........................................... 2,751 5,605 (2,751) 5,605
Total expenses..................................... 471,892 701,426 (37,926) 1,135,392
Net Expenses.............................................. 471,892 701,426 (37,926) 1,135,392
Net investment income (loss).............................. (172,160) 6,408 37,926 (127,826)
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain (loss) on investments................. 620,251 (373,054) 0 247,197
Change in unrealized appreciation of investments........ 1,850,002 4,390,496 0 6,240,498
Net realized and unrealized gain on investments.... 2,470,253 4,017,442 0 6,487,695
Net increase in net assets resulting from operations...... $2,298,093 $4,023,850 $37,926 $6,359,869
</TABLE>

* Withholding taxes were $1,446 and $7,078, for the Mentor/Cambridge Growth
Portfolio and Mentor Capital Growth Portfolio respectively.

<PAGE>
THE PRO FORMA COMBINING INVESTMENT PORTFOLIO
OF MENTOR/CAMBRIDGE GROWTH PORTFOLIO AND MENTOR CAPITAL GROWTH PORTFOLIO
MARCH 31, 1995 (UNAUDITED)

<TABLE>
<CAPTION>
MENTOR/CAMBRIDGE MENTOR CAPITAL
GROWTH PORTFOLIO GROWTH PORTFOLIO PRO FORMA COMBINED
SHARES VALUE SHARES VALUE SHARES VALUE
<S> <C> <C> <C> <C> <C> <C> <C>
COMMON STOCKS.................94.32%**
BASIC MATERIALS....................... 2.66%
Air Products & Chemicals, Inc....... 8,000 $ 417,000 8,000 $ 417,000
Alco Standard Corporation........... 9,000 652,500 9,000 652,500
Monsanto Company.................... 6,500 521,625 6,500 521,625
Newell Company...................... 26,000 663,000 26,000 663,000
Nucor Corporation................... 3,000 166,500 3,000 166,500
Scott Paper Company*................ 1,500 134,063 1,500 134,063
2,554,688 2,554,688
CAPITAL GOODS & CONSTRUCTION.......... 7.70%
Boeing Company*..................... 2,500 134,688 17,000 915,875 19,500 1,050,563
Brown Boveri & Cie.................. 800 760,424 800 760,424
Browning Ferris Industries, Inc..... 30,000 1,020,000 30,000 1,020,000
General Electric Company............ 15,500 838,938 15,500 838,938
Grainger, Inc....................... 4,500 283,500 4,500 283,500
McDonnell Douglas Company*.......... 10,000 557,500 10,000 557,500
PPG Industries, Inc................. 20,000 755,000 20,000 755,000
Raytheon Company.................... 17,000 1,238,875 17,000 1,238,875
United Technologies Corporation..... 10,000 691,250 10,000 691,250
WMX Technologies, Inc............... 7,000 192,500 7,000 192,500
1,449,626 5,938,924 7,388,550
CONSUMER CYCLICAL..................... 16.16%
Ann Taylor Stores, Inc.*............ 7,700 286,825 7,700 286,825
Capital Cities/ABC.................. 11,000 970,750 11,000 970,750
Carnival Corporation................ 50,000 1,168,750 50,000 1,168,750
CUC International, Inc.*............ 6,900 268,238 6,900 268,238
Duracell International, Inc......... 3,500 156,625 3,500 156,625
Franklin Quest Company*............. 11,500 362,250 11,500 362,250
Harcourt General, Inc............... 20,000 780,000 20,000 780,000
Home Depot, Inc..................... 17,300 765,525 25,000 1,106,250 42,300 1,871,775
LVMH Moet Hennessy.................. 4,000 786,816 4,000 786,816
Manpower, Inc....................... 19,500 626,437 19,500 626,437
Marriott International, Inc......... 31,500 1,094,625 31,500 1,094,625
McDonald's Corporation.............. 10,000 341,250 10,000 341,250
Nike Incorporated / B*.............. 11,500 858,187 11,500 858,187
Office Depot, Inc.*................. 10,800 268,650 10,800 268,650
Promus Companies, Inc............... 9,500 356,250 9,500 356,250
Staples, Inc.*...................... 14,000 369,250 14,000 369,250
Starbucks Corporation*.............. 14,000 336,000 20,000 480,000 34,000 816,000
The Walt Disney Company............. 10,000 533,750 20,000 1,067,500 30,000 1,601,250
Viacom, Inc. -- Class B*............ 7,909 353,928 23,000 1,029,250 30,909 1,383,178
Viking Office Products, Inc.*....... 9,000 279,000 9,000 279,000
Wal-Mart Stores, Inc................ 33,600 856,800 33,600 856,800
5,791,528 9,711,378 15,502,906
</TABLE>

<PAGE>

MENTOR/CAMBRIDGE MENTOR CAPITAL
GROWTH PORTFOLIO GROWTH PORTFOLIO PRO FORMA COMBINED
SHARES VALUE SHARES VALUE SHARES VALUE

<S> <C> <C> <C> <C> <C> <C> <C>
CONSUMER STAPLES...................... 12.34%
Abbott Laboratories................. 22,100 $ 787,312 30,000 $ 1,068,750 52,100 $ 1,856,062
Astra AB............................ 25,000 663,997 25,000 663,997
Campbell Soup Company............... 8,800 425,700 8,800 425,700
Coca Cola Company................... 14,000 791,000 14,000 791,000
Colgate Palmolive Company........... 6,100 402,600 6,100 402,600
Conagra, Inc........................ 11,000 364,375 11,000 364,375
CPC International, Inc.............. 5,000 270,625 15,000 811,875 20,000 1,082,500
Gillette Company.................... 5,000 408,125 10,000 816,250 15,000 1,224,375
Merck & Company, Inc................ 28,000 1,193,500 28,000 1,193,500
Pepsico, Incorporated*.............. 4,000 156,000 4,000 156,000
Philip Morris Companies, Inc........ 9,900 645,975 20,500 1,337,625 30,400 1,983,600
Procter & Gamble Company............ 12,000 795,000 12,000 795,000
Sara Lee Corporation*............... 16,100 420,613 16,100 420,613
Seagram Company, Limited*........... 6,000 190,500 6,000 190,500
UST, Inc............................ 9,000 285,750 9,000 285,750
5,943,575 5,891,997 11,835,572
ENERGY................................ 8.18%
Enron Corporation................... 16,900 557,700 25,000 825,000 41,900 1,382,700
Amoco Corporation*.................. 20,000 1,272,500 20,000 1,272,500
British Petroleum PLC, ADS+......... 9,000 754,875 9,000 754,875
Chevron Corporation................. 12,500 600,000 12,500 600,000
Dresser Industries, Inc............. 50,000 1,062,500 50,000 1,062,500
Royal Dutch Petroleum Company....... 10,000 1,200,000 10,000 1,200,000
Mobil Corporation................... 3,000 277,875 14,000 1,296,750 17,000 1,574,625
835,575 7,011,625 7,847,200
FINANCIAL............................. 5.46%
American International Group,
Inc.*............................. 3,700 385,725 3,700 385,725
Boatmen's Bancshares, Inc........... 13,000 393,250 13,000 393,250
Conseco, Inc........................ 3,300 131,588 3,300 131,588
First Financial Management
Corporation....................... 10,000 722,500 12,000 867,000 22,000 1,589,500
First USA, Inc...................... 12,100 508,200 12,100 508,200
General RE Corporation.............. 3,400 448,800 3,400 448,800
MBNA Corporation.................... 23,500 681,500 23,500 681,500
MGIC Investment Corporation......... 15,900 647,925 15,900 647,925
Nationsbank Corporation............. 9,000 456,750 9,000 456,750
4,376,238 867,000 5,243,238
HEALTH................................ 12.86%
American International*............. 10,000 1,042,500 10,000 1,042,500
CIGNA Corporation*.................. 17,500 1,308,125 17,500 1,308,125
Columbia HCA Healthcare
Corporation....................... 10,000 430,000 29,000 1,247,000 39,000 1,677,000
Coram Healthcare Corporation........ 10,000 253,750 10,000 253,750
Humana Incorporated................. 37,500 960,938 37,500 960,938
Idexx Laboratories, Inc.*........... 5,000 207,500 5,000 207,500
Integrated Health Services, Inc.*... 8,500 321,937 8,500 321,937
Johnson & Johnson................... 15,000 892,500 15,000 892,500
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
MENTOR/CAMBRIDGE MENTOR CAPITAL
GROWTH PORTFOLIO GROWTH PORTFOLIO PRO FORMA COMBINED
SHARES VALUE SHARES VALUE SHARES VALUE
<S> <C> <C> <C> <C> <C> <C> <C>
HEALTH (CONTINUED)
Lilly (Eli) & Company*.............. 3,000 $ 219,375 3,000 $ 219,375
Medtronic, Inc...................... 9,600 666,000 9,600 666,000
Merck & Company, Inc.*.............. 20,000 852,500 20,000 852,500
Pfizer, Inc......................... 4,000 343,000 4,000 343,000
R.P. Scherer Corporation............ 4,800 241,200 4,800 241,200
Schering Plough Corporation......... 6,600 490,875 6,600 490,875
United Healthcare Corporation*...... 7,500 350,625 15,000 $ 701,250 22,500 1,051,875
US Healthcare, Inc.................. 6,500 287,625 6,500 287,625
Value Health, Inc.*................. 6,500 248,625 25,000 956,250 31,500 1,204,875
Warner Lambert Company.............. 4,100 320,825 4,100 320,825
5,872,587 6,469,813 12,342,400
TECHNOLOGY............................ 20.60%
3COM Corporation*................... 7,200 407,700 10,000 566,250 17,200 973,950
Adobe Systems, Inc.*................ 3,000 148,500 3,000 148,500
AMP Incorporated*................... 11,000 396,000 11,000 396,000
Archer Daniels Company*............. 33,750 628,594 33,750 628,594
AT&T Corporation.................... 10,400 538,200 10,400 538,200
Bay Network, Inc.................... 21,500 792,812 21,500 792,812
Cisco Systems, Inc.*................ 3,000 114,375 22,500 857,813 25,500 972,188
Computer Associates International,
Inc............................... 15,000 890,625 15,000 890,625
Compuware Corporation*.............. 10,000 370,000 17,500 647,500 27,500 1,017,500
Emerson Electric Company*........... 8,900 591,850 15,000 997,500 23,900 1,589,350
Ericsson Telecommunication
Company........................... 10,000 618,125 10,000 618,125
First Data Corporation.............. 7,600 394,250 7,600 394,250
General Motors Corporation --
Class E........................... 10,400 404,300 22,000 1,190,750 32,400 1,595,050
Hewlett Packard Company............. 4,000 481,500 6,500 782,438 10,500 1,263,938
Informix Corporation*............... 10,000 343,750 10,000 343,750
Intel Corporation................... 2,500 212,188 7,500 636,563 10,000 848,751
LDDS Communications, Inc............ 6,000 140,250 6,000 140,250
Linear Technology Corporation....... 7,000 392,000 7,000 392,000
Loral Corporation................... 6,000 255,000 6,000 255,000
Microsoft Corporation*.............. 5,000 355,625 5,000 355,625
Motorola Inc.*...................... 6,000 327,750 14,000 764,750 20,000 1,092,500
Parametric Technology
Corporation*...................... 10,000 400,000 10,000 400,000
Perkin-Elmer Corporation............ 15,000 436,875 15,000 436,875
Philips Electronics Holdings
Company........................... 20,000 682,500 20,000 682,500
Reynolds & Reynolds Company......... 10,000 275,000 10,000 275,000
Silicon Graphics, Inc.*............. 15,000 532,500 15,000 532,500
Sun Microsystems, Inc............... 22,500 781,875 22,500 781,875
Tellabs, Inc.*...................... 8,000 466,000 8,000 466,000
Xerox Corporation................... 8,000 939,000 8,000 939,000
7,146,738 12,613,970 19,760,708
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
MENTOR/CAMBRIDGE MENTOR CAPITAL
GROWTH PORTFOLIO GROWTH PORTFOLIO PRO FORMA COMBINED
SHARES VALUE SHARES VALUE SHARES VALUE

<S> <C> <C> <C> <C> <C> <C> <C>
TRANSPORTATION & SERVICES............. 0.64%
Kansas City Southern
Industries, Inc................... 5,800 $ 235,625 5,800 $ 235,625
Wisconsin Central Transport*........ 7,900 376,238 7,900 376,238
611,863 611,863
UTILITIES............................. 2.01%
Ameritech Corporation............... 27,500 $ 1,134,375 27,500 1,134,375
Royal PTT Nederland................. 22,500 798,246 22,500 798,246
1,932,621 1,932,621
MISCELLANEOUS......................... 3.94%
Corning Incorporated*............... 12,000 432,000 12,000 432,000
Flour Corporation*.................. 5,000 241,250 5,000 241,250
ITT Corporation..................... 10,000 1,026,250 10,000 1,026,250
Nabisco Holdings Corporation........ 25,000 715,625 25,000 715,625
Service Corporation
International*.................... 14,000 392,000 14,000 392,000
Smithkline Beecham -- A*............ 26,000 975,000 26,000 975,000
1,065,250 2,716,875 3,782,125
FOREIGN SECURITIES.................... 1.77%
AAlberts Industries................. 400 21,053 400 21,053
Amada Company, Limited.............. 5,000 53,053 5,000 53,053
Astra AB A-F........................ 1,500 39,840 1,500 39,840
Atlas Copco AB...................... 2,800 33,769 2,800 33,769
British Petroleum Company........... 8,440 58,801 8,440 58,801
Carrefour Supermarch................ 60 30,325 60 30,325
DBS Land............................ 4,000 10,655 4,000 10,655
DDI Corporation..................... 6 51,843 6 51,843
Ericsson............................ 1,295 80,460 1,295 80,460
Gambro AB........................... 1,600 18,646 1,600 18,646
Genting Berhad...................... 2,000 18,029 2,000 18,029
Glaxo PLC........................... 3,000 34,396 3,000 34,396
Greencore Group PLC................. 3,000 20,541 3,000 20,541
Hagemeyer NV........................ 300 25,146 300 25,146
Honda Motors Company................ 3,000 51,152 3,000 51,152
Keiyo Company....................... 2,000 22,926 2,000 22,926
Keppel Corporation.................. 5,000 40,383 5,000 40,383
Koninklijke Van Ommeren............. 600 20,741 600 20,741
Kyocera Corporation................. 1,000 74,424 1,000 74,424
Lloyds Bank PLC..................... 2,400 24,009 2,400 24,009
Manweb PLC.......................... 2,500 26,187 2,500 26,187
Matsushita Electric................. 3,000 48,387 3,000 48,387
Marui Company, Ltd.................. 2,000 31,567 2,000 31,567
Nestle.............................. 30 29,284 30 29,284
Nokia AB............................ 433 63,109 433 63,109
Omron Corporation................... 2,000 39,401 2,000 39,401
Polygram NV......................... 600 33,294 600 33,294
Reed International PLC.............. 3,500 44,051 3,500 44,051
Repsol SA........................... 1,400 39,747 1,400 39,747
Road Builder Holdings............... 2,200 7,089 2,200 7,089
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
MENTOR/CAMBRIDGE GROWTH MENTOR CAPITAL
PORTFOLIO GROWTH PORTFOLIO PRO FORMA COMBINED
SHARES OR SHARES OR SHARES OR
PRINCIPAL PRINCIPAL PRINCIPAL
AMOUNT VALUE AMOUNT VALUE AMOUNT VALUE
<S> <C> <C> <C> <C> <C> <C> <C>
FOREIGN SECURITIES (CONTINUED)
Roche Holding AG-GEN............... 10 $ 57,774 10 $ 57,774
Sandvik AB B-F..................... 645 10,226 645 10,226
Sanyo Shinpan Finance Company...... 600 47,143 600 47,143
Sharp Corporation.................. 3,000 48,733 3,000 48,733
Singapore Press Holdings........... 1,000 16,932 1,000 16,932
Sumitomo Bank...................... 2,000 42,627 2,000 42,627
Sumitomo Corporation............... 3,000 27,304 3,000 27,304
Tabcorp Holdings, Ltd.............. 7,900 16,026 7,900 16,026
Technology Resources Industries.... 4,900 14,046 4,900 14,046
Telewest Communications............ 1,000 2,777 1,000 2,777
Tesco PLC.......................... 5,000 21,680 5,000 21,680
TNT Limited........................ 12,300 16,092 12,300 16,092
Tokyo Electron, Ltd................ 3,000 91,244 3,000 91,244
Unilever NV........................ 160 20,980 160 20,980
Veba AG............................ 200 72,555 200 72,555
Vodafone Group PLC................. 16,462 53,068 16,462 53,068
Wai Kee Holdings*.................. 52,000 8,339 52,000 8,339
Waterford Wedgewood................ 21,000 18,058 21,000 18,058
Wolter Kluwer...................... 225 17,354 225 17,354
1,695,266 1,695,266
TOTAL COMMON STOCKS.................. 37,342,934 $53,154,203 90,497,137
PREFERRED STOCKS..............0.38%**
Nokia AB............................. 2,500 364,372 2,500 364,372
SHORT-TERM INVESTMENTS........5.95%**
COMMERCIAL PAPER..................... 4.52%
Abbott Labs, 5.96%, 5/3/95......... 243,000 241,793 243,000 241,793
McDonald's, 6.00%, 4/10/95......... 1,500,000 1,498,250 1,500,000 1,498,250
Wal-Mart Discount Stores, 6.10%,
4/13/95.......................... 1,295,000 1,292,806 1,295,000 1,292,806
Warner Lambert, 5.98%, 4/24/95..... 1,305,000 1,300,447 1,305,000 1,300,447
TOTAL COMMERCIAL PAPER............... 4,333,296 4,333,296
U.S. GOVERNMENT AGENCY............... 1.43%
Federal National Mortgage
Association, 6.00%, 4/3/95......... 1,375,000 1,375,000 1,375,000 1,375,000
TOTAL SHORT-TERM INVESTMENTS......... 5,708,296 5,708,296
TOTAL COMBINED INVESTMENTS........... 100.65%
(combined cost $85,543,356 Growth
Portfolio $32,332,447 and Capital
Growth Portfolio $53,210,909)...... $37,342,934 $59,226,871 $96,569,805
</TABLE>

* Non-income producing.
** Percentages are based on Proforma combined net assets of $95,946,454, which
correspond to a proforma combined net asset value per share of $15.52.
+ American Depository Receipts.

<PAGE>

MENTOR CAPITAL GROWTH PORTFOLIO

FORM N-14
PART C

OTHER INFORMATION

Item 15. Indemnification

The information required by this item is incorporated herein by reference to the
Registrant's Initial Registration Statement on Form N-1A under the Securities
Act of 1933 (File No. 33-45315) and the Investment Company Act of 1940 (File No.
811-6550).

Item 16. Exhibits

1a. Agreement and Declaration of Trust dated January 20, 1992, with
Amendments No. 1 and 2. -- Incorporated by reference to the
Registrant's Post-Effective Amendment No. 3 on Form N-1A filed
May 14, 1993.

1b. Conformed copy of Amendment dated April 12, 1995 to the
Registrant's Agreement and Declaration of Trust -- Exhibit 1.

2. By-Laws -- Incorporated by reference to the Registrant's
Pre-Effective Amendment No. 1 on Form N1-A filed April 14, 1992.

3a. Copy of Class A specimen share certificate -- Incorporated by
reference to the Registrant's Post-Effective Amendment No. 9 on
Form N-1A filed March 15, 1995.

3b. Copy of Class B specimen share certificate -- Incorporated by
reference to the Registrant's Post-Effective Amendment No. 9 on
Form N-1A filed March 15, 1995.

4. Agreement and Plan of Reorganization -- constitutes Exhibit A
included in Part A hereof.

5a. Portions of Agreement and Declaration of Trust Relating to
Shareholders' Rights -- Incorporated by reference to the
Registrant's Post-Effective Amendment No. 3 on Form N-1A filed
May 14, 1993.

<PAGE>

5b. Portions of By-Laws Relating to Shareholders' Rights --
Incorporated by reference to the Registrant's Pre-Effective
Amendment No. 1 on Form N1-A filed April 14, 1992.

6a. Conformed copy of Management Agreement -- Incorporated by
reference to the Registrant's Post-Effective Amendment No. 3 on
Form N-1A filed May 14, 1993.

7a. Copy of Distributor's Contract of the Registrant with
Distributors, Inc., through and including Exhibit I --
Incorporated by reference to the Registrant's Post-Effective
Amendment No. 5 on Form N-1A filed November 26, 1993.

7b. Form of New Exhibit J to the Distributor's Contract in respect
of the Class A and B shares of the Growth Portfolio --
Incorporated by reference to the Registrant's Post-Effective
Amendment No. 9 on Form N-1A filed March 15, 1995.

8. Not applicable.

9. Copy of Custodian Agreement of the Registrant with Investors
Fiduciary Trust Company -- Incorporated by reference to
Registrant's Post-Effective Amendment No. 3 on Form N-1A.

10a. Conformed copy of Distribution Plan -- Incorporated by reference
to Pre-Effective Amendment No. 1 to the Registrant's
Registration Statement on Form N-1A.

10b. Copy of 12b-1 Agreement (Sales Agreement) with Mentor
Distributors, Inc. -- Incorporated by reference to Registrant's
Post-Effective Amendment No. 3 on Form N-1A filed on May 14,
1993.

11. Opinion of Counsel including consent -- Incorporated by
reference to the opinion of counsel filed as an exhibit to
the Registrant's Registration Statement on Form N-1A prior
to the original effective date of such Registration Statement.

12. Opinion of Ropes & Gray as to Tax Matters -- See Section 9(f) of
Exhibit A included in Part A of the Registration Statement.

13. Copy of Investor Servicing Agreement with Investors Fiduciary
Trust Company -- Incorporated by reference to Pre- Effective
Amendment No. 1 to the Registrant's Initial Registration
Statement on Form N-1A.

14a. Consent of Independent Accountants -- Exhibit 2.

14b. Consent of Ropes & Gray -- Exhibit 3.

15. Not applicable.

<PAGE>

16. Power of Attorney -- Exhibit 4.

17. Copy of Registrant's Declaration under Rule 24f-2 --
Incorporated by reference to the Registrant's Initial
Registration Statement on Form N-1A.

Item 17. Undertakings

(a) The undersigned Registrant agrees that prior to any public reoffering of
the securities registered through the use of a prospectus which is a part
of this Registration Statement by any person or party who is deemed to be
an underwriter within the meaning of Rule 145(c) under the Act, the
reoffering prospectus will contain the information called for by the
applicable registration form for reofferings by persons who may be deemed
underwriters, in addition to the information called for by the other items
of the applicable form.

(b) The undersigned Registrant agrees that every prospectus that is filed under
paragraph (a) above will be filed as a part of an amendment to this
Registration Statement and will not be used until the amendment is
effective, and that, in determining any liability under the Act, each
post-effective amendment shall be deemed to be a new Registration Statement
for the securities offered therein, and the offering of the securities at
that time shall be deemed to be the initial bona fide offering of them.

NOTICE

A copy of the Agreement and Declaration of Trust, as amended, of the Trust is on
file with the Secretary of State of The Commonwealth of Massachusetts, and
notice is hereby given that this Registration Statement has been executed on
behalf of the Registrant by an officer of the Registrant as an officer and not
individually, and the obligations of or arising out of this Registration
Statement are not binding upon any of the Trustees, officers, or shareholders of
the Registrant individually, but are binding only upon the assets and property
of the Registrant.

<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant has
duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Richmond and The
Commonwealth of Virginia on the 5th day of June, 1995.

MENTOR CAPITAL GROWTH PORTFOLIO

By: Paul F. Costello, President

Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below by the following persons in the capacities and
on the date indicated.

Signature Title

Daniel J. Ludeman* Chairman and Trustee
(Chief Executive Officer)

Peter J. Quinn, Jr.* Trustee

Arnold H. Dreyfuss* Trustee

Thomas F. Keller Trustee

Louis W. Moelchert, Jr.* Trustee

Troy A. Peery, Jr.* Trustee

Paul F. Costello* President

Terry L. Perkins* Treasurer
(Principal Financial and
Accounting Officer)

*By: Paul F. Costello, as
Attorney-in-Fact
June 5, 1995

<PAGE>
Exhibit Index

1a. Conformed Copy of Amendment dated April 12, 1995 to Agreement and
Declaration of Trust -- Exhibit 1.

14a. Consent of Independent Accountants -- Exhibit 2.

14b. Consent of Ropes & Gray -- Exhibit 3.

15. Power of Attorney -- Exhibit 4.

<PAGE>

Exhibit 1

CAMBRIDGE SERIES TRUST
Amendment No. 2
to
Declaration of Trust
April 12, 1995

This Declaration of Trust is amended as follows:

17. Section 1 is amended to read in its entirety as follows:

"Section 1. Name

This Trust shall be known as The Mentor Funds".

18. The following series of shares of beneficial interest of the Trust as
hereby established and designated as follows:

Mentor Growth Portfolio
Mentor Strategy Portfolio
Mentor Short-Duration Income Portfolio
Mentor Balanced Portfolio

and there are hereby established and created two classes of shares of each such
Portfolio, the classes so established to be designated as the Class A and Class
B shares of each such Portfolio. The relative rights and preferences of such
series and classes shall be as set forth in the Declaration of Trust as it may
be amended from time to time.

19. The designations of the existing Portfolios of the Trust are hereby
changed as follows:

a. The designation of Cambridge Growth Portfolio is changed to
"Mentor/Cambridge Growth Portfolio";

b. The designation of Cambridge Capital Growth Portfolio is changed
to "Mentor Capital Growth Portfolio";

c. The designation of Cambridge Government Income Portfolio is
changed to "Mentor Quality Income Portfolio";

d. The designation of Cambridge Municipal Income Portfolio is
changed to "Mentor Municipal Income Portfolio";

<PAGE>

e. The designation of Cambridge Income and Growth Portfolio is
changed to "Mentor Income and Growth Portfolio";

f. The designation of Cambridge Global Portfolio is changed to
"Mentor Perpetual Global Portfolio".

IN WITNESS WHEREOF, the undersigned, being at least a majority of the Trustees
in office at the date hereof, have signed this instrument as of the date first
above written.

/s/ Daniel J. Ludeman /s/ Peter J. Quinn, Jr.
Daniel J. Ludeman Peter J. Quinn, Jr.

/s/ Arnold H. Dreyfuss
Arnold H. Dreyfuss Thomas F. Keller

/s/ Louis W. Moelchert, Jr. /s/ Stanley F. Pauley
Louis W. Moelchert, Jr. Stanley F. Pauley

/s/ Troy A. Peery, Jr.
Troy A. Peery, Jr.

Exhibit 2

CONSENT OF INDEPENDENT ACCOUNTANTS

The Board of Trustees of
The Mentor Funds

We consent to the use of our report dated November 11, 1994 on the financial
statements of the Growth Portfolio and the Capital Growth Portfolio, portfolios
of the Mentor Funds, which is incorporated herein by reference, and to the
reference to our firm under the heading "Independent Accountants and Financial
Statements" in the Statement of Additional Information.

KPMG Peat Marwick LLP

June 1, 1995

Exhibit 3

Ropes & Gray
One International Place
Boston, Massachusetts 02110-2624

June 2, 1995

The Mentor Funds
901 East Byrd Street
Richmond, Virginia 23219

Ladies and Gentlemen:

We consent to the reference to our firm in the prospectus/proxy statement
constituting Part A of the Registration Statement of The Mentor Funds on Form
N-14 under the caption "Information about the Reorganization -- Federal Income
Tax Consequences."

Very truly yours,

/s/ Ropes & Gray

Ropes & Gray

Exhibit 4

POWER OF ATTORNEY

We, the undersigned Officers and Trustees of THE MENTOR FUNDS, hereby
severally constitute and appoint Daniel J. Ludeman, Paul F. Costello, and Peter
J. Quinn, Jr. and each of them singly, our true and lawful attorneys, with full
power to them and each of them, to sign for us, and in our names and in the
capacities indicated below, the Registration Statement on Form N-14 of the
Mentor Capital Growth Portfolio and any and all amendments (including
post-effective amendments) to said Registration Statement and to file the same
with all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto our said attorneys, and each
of them acting alone, full power and authority to do and perform each and every
act and thing requisite or necessary to be done in the premises, as fully to all
intents and purposes as he or she might or could do in person, and hereby ratify
and confirm all that said attorneys or any of them may lawfully do or cause to
be done by virtue thereof.

WITNESS our hands and common seal on the date set forth below.

SIGNATURE TITLE DATE

/s/ Daniel J. Ludeman Chairman; Trustee April 12, 1995
Daniel J. Ludeman

/s/ Paul F. Costello President; April 12, 1995
Paul F. Costello Principal
Executive Officer

/s/ Terry L. Perkins Treasurer; April 12, 1995
Terry L. Perkins Principal Financial
and Accounting
Officer

<PAGE>

/s/ Peter J. Quinn, Jr. Trustee April 12, 1995
Peter J. Quinn, Jr.

/s/ Arnold H. Dreyfuss Trustee April 12, 1995
Arnold H. Dreyfuss

Trustee April 12, 1995
Thomas F. Keller

/s/ Louis W. Moelchert, Jr. Trustee April 12, 1995
Louis W. Moelchert, Jr.

/s/ Troy A. Peery, Jr. Trustee April 12, 1995
Troy A. Peery, Jr.