As filed with the Securities and Exchange Commission on September 20, 1996
Registration No. 33-65818
File No. 811-7862
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 / X/
Pre-Effective Amendment No. / /
Post-Effective Amendment No. 4 / X/
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY / X/
ACT OF 1940
Amendment No. 6 / X/
(Check appropriate box or boxes)
CASH RESOURCE TRUST
(Exact name of registrant as specified in charter)
901 East Byrd Street
Richmond, Virginia 23219
(Address of principal executive offices)
Registrant's Telephone Number, including Area Code (804) 782-3647
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PAUL F. COSTELLO, President
Cash Resource Trust
901 East Byrd Street
Richmond, Virginia 23219
(Name and address of agent for service)
-----------------
Copy to:
TIMOTHY W. DIGGINS, Esquire
ROPES & GRAY
One International Place
Boston, Massachusetts 02110
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It is proposed that this filing will become effective (check appropriate box):
___ immediately upon filing pursuant to paragraph (b)
X on September 23, 1996 pursuant to paragraph (b)
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___ 60 days after filing pursuant to paragraph (a)
___ on (date) pursuant to paragraph (a)(1)
___ 75 days after filing pursuant to paragraph (a)(2)
___ on (date) pursuant to paragraph (a)(2) of Rule 485
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<PAGE>
If appropriate, check the following box:
/ / This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
Cash Resource Trust registered an indefinite amount of securities under
the Securities Act of 1933 pursuant to Rule 24f-2 of the Investment Company Act
of 1940. A Rule 24f-2 notice in respect of the Trust will be filed on or before
September 29, 1996.
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<PAGE>
CASH RESOURCE TRUST
CROSS REFERENCE SHEET
(as required by Rule 404(c))
Part A
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N-1A Item No.
Location
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1. Cover Page..................................................... Cover Page
2. Synopsis....................................................... Cover Page; Expense summary
3. Condensed Financial Information................................ Expense summary
4. General Description of Registrant.............................. Cover Page; Investment objectives; Selection of
investments; Risk factors; Other investment
practices; How a fund's performance is calculated;
General information
5. Management of the Fund......................................... Investment objectives; Management; Distribution
services; General information
5A. Management's Discussion
of Fund Performance.......................................... Not Applicable
6. Capital Stock and Other
Securities................................................... Buying and selling of shares of the Funds;
Dividends; Certain tax matters; General information
7. Purchase of Securities Being
Offered...................................................... Buying and selling of shares of the
Funds; How to exchange shares
8. Redemption or Repurchase....................................... Buying and selling of shares of
Funds; How to exchange shares;
Financial Institutions
9. Pending Legal Proceedings...................................... Not Applicable
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<PAGE>
Part B
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N-1A Item No. Location
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10. Cover Page.................................................... Cover Page
11. Table of Contents............................................. Cover Page
12. General Information and History............................... Not Applicable
13. Investment Objectives and
Policies.................................................... Investment Objectives and Policies
of the Trust; Investment
Restrictions; Portfolio Turnover
14. Management of the Fund........................................ Management of the Trust
15. Control Persons and Principal
Holders of Securities....................................... Management of the Trust
16. Investment Advisory and Other
Services.................................................... Management of the Trust;
Principal Underwriter; Custodian;
Independent Auditors; Experts
17. Brokerage Allocation.......................................... Management of the Trust
(Brokerage and Research Services;
Brokerage Commissions)
18. Capital Stock and Other
Securities.................................................. Determination of Net Asset Value;
Taxes; Dividends and
Distributions; Distribution;
Organization and Capitalization
19. Purchase, Redemption and Pricing
of Securities Being Offered................................. Management of the Trust;
Determination of Net Asset Value;
Distribution
20. Tax Status.................................................... Investment Objectives and Policies
of the Trust; Taxes; Dividends and
Distributions
21. Underwriters.................................................. Management of the Trust;
Principle Underwriter
22. Calculations of Yield Quotations
of Money Market Funds....................................... Performance Information
23. Financial Statements.......................................... Financial Statements
</TABLE>
Part C
Information required to be included in Part C is set forth under the
appropriate Item, so numbered, in Part C of the Registration Statement.
The Cross Reference Sheet in respect of Part A and Part B for (i) the
Cash Resource New York and California Tax-Exempt Money Market Funds, and (ii)
the Prospectus in respect of the
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<PAGE>
above-named Funds, which are contained in Post-Effective Amendment No. 3 to Cash
Resource Trust's Registration Statement on Form N-1A (File No. 33-65818) filed
on August 12, 1996, are incorporated herein by reference.
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P R O S P E C T U S September 23, 1996
Cash Resource Trust
CASH RESOURCE MONEY MARKET FUND
CASH RESOURCE U.S. GOVERNMENT MONEY MARKET FUND
CASH RESOURCE TAX-EXEMPT MONEY MARKET FUND
Cash Resource Money Market Fund, Cash Resource U.S. Government Money Market
Fund, and Cash Resource Tax-Exempt Money Market Fund are designed for investors
who seek current income consistent with preservation of capital and maintenance
of liquidity. The Funds are diversified investment portfolios of Cash Resource
Trust (the "Trust").
AN INVESTMENT IN THE TRUST IS NEITHER INSURED NOR GUARANTEED BY THE U.S.
GOVERNMENT. THERE CAN BE NO ASSURANCE THAT A FUND WILL BE ABLE TO MAINTAIN A
STABLE NET ASSET VALUE OF $1.00 PER SHARE.
This Prospectus explains concisely what you should know before investing in
a Fund. Please read it carefully and keep it for future reference. YOU CAN FIND
MORE DETAILED INFORMATION ABOUT THE FUNDS IN THE SEPTEMBER 23, 1996 STATEMENT OF
ADDITIONAL INFORMATION, AS AMENDED FROM TIME TO TIME. FOR A FREE COPY OF THE
STATEMENT, CALL 1-800-382-0016. The Statement has been filed with the Securities
and Exchange Commission and is incorporated into this Prospectus by reference.
SHARES OF THE FUNDS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY FINANCIAL INSTITUTION AND ARE NOT INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD, OR ANY OTHER AGENCY.
THESE SECURITIES 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 THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
EXPENSE SUMMARY
Expenses are one of several factors to consider when investing in a Fund.
The following table summarizes your maximum transaction costs from an investment
in each of the Funds and expenses incurred by each Fund based on its most recent
fiscal year. The Examples show the cumulative expenses attributable to a
hypothetical $1,000 investment in each Fund over specified periods. The
information presented below does not reflect any fees or charges imposed by
Financial Institutions through which you may invest in the Funds.
<TABLE>
<CAPTION>
CASH
CASH CASH RESOURCE RESOURCE
RESOURCE U.S. GOVERNMENT TAX-EXEMPT
MONEY MARKET MONEY MARKET MONEY MARKET
FUND FUND FUND
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SHAREHOLDER TRANSACTION EXPENSES None None None
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)
Management Fees .22% .19% .22%
12b-1 Fees .38% .38% .33%
Other Expenses .22% .23%* .16%*
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Total Fund Operating Expenses .82% .80%* .71%*
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*reflecting expense limitation
EXAMPLES
Your investment of $1,000 in a Fund would incur the following expenses,
assuming 5% annual return and redemption at the end of each period:
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1 YEAR 3 YEARS 5 YEARS 10 YEARS
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Cash Resource Money Market Fund $8 $26 $46 $101
Cash Resource U.S. Government Money
Market Fund $8 $26 $44 $ 99
Cash Resource Tax-Exempt Money Market
Fund $7 $23 $40 $ 88
</TABLE>
The table is provided to help you understand the expenses of investing in
each of the Funds and your share of the operating expenses which each of the
Funds incurs. Expenses shown for the U.S. Government Money Market Fund and the
Tax-Exempt Money Market Fund reflect an expense limitation. In the absence of
this limitation, Other Expenses and Total Fund Operating Expenses would be .36%
and .93%, respectively, for the U.S. Government Money Market Fund and .21% and
.76%, respectively, for the Tax-Exempt Money Market Fund. The Examples do not
represent past or future expense levels. Actual returns and 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. Because of the
12b-1 fees payable by the Funds, long-term shareholders may pay more in
aggregate sales charges than the maximum initial sales charge permitted by the
National Association of Securities Dealers, Inc.
2
<PAGE>
FINANCIAL HIGHLIGHTS
The financial highlights presented below for the Funds have been audited by
KPMG Peat Marwick LLP, independent auditors. The report of KPMG Peat Marwick LLP
is contained in the Statement of Additional Information, which may be obtained
in the manner described on the cover page of this Prospectus. Each of the Funds
began operations on December 20, 1993. See "Financial Statements" in the Funds'
Statement of Additional Information.
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MONEY MARKET U.S. GOVERNMENT TAX-EXEMPT
FUND MONEY MARKET FUND MONEY MARKET FUND
-------------------------- ------------------------------ --------------------------------
YEAR ENDED JULY 31, 1996 1995 1994* 1996 1995 1994* 1996 1995 1994*
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PER SHARE OPERATING
PERFORMANCE
Net asset value, beginning
of period $1.00 $1.00 $1.00 $ 1.00 $ 1.00 $1.00 $1.00 $1.00 $1.00
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Income from investment
operations
Net investment income 0.05 0.05** 0.02 0.05 0.05** 0.02 0.03 0.03** 0.01
Distributions
Net investment income (0.05) (0.05)** (0.02) (0.05) (0.05) (0.02) (0.03) (0.03) (0.01)
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NET ASSET VALUE, END OF
PERIOD $1.00 $1.00 $1.00 $ 1.00 $ 1.00 $1.00 $1.00 $1.00 $1.00
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TOTAL RETURN 4.91% 4.97% 1.83%(b) 4.74% 4.82% 1.82%(b) 2.90% 3.05% 1.16%(b)
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RATIOS/SUPPLEMENTAL DATA
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</TABLE>
<TABLE>
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Net assets, end of period
(in thousands) $646,500 $422,657 $192,260 $1,402,397 $1,216,690 $907,819 $290,891 $266,895 $195,702
Ratio of expenses to
average net assets 0.82% 0.82% 0.89%(a) 0.93% 0.88% 0.80%(a) 0.76% 0.72% 0.65%(a)
Ratio of expenses to
average net assets
excluding waivers 0.82% 0.82% 0.93%(a) 0.93% 0.88% 0.83%(a) 0.76% 0.74% 0.74%(a)
Ratio of net investment
income to average net
assets 4.77% 4.96% 2.96%(a) 4.63% 4.75% 2.91%(a) 2.85% 3.01% 1.87%(a)
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</TABLE>
* For the period from December 20, 1993 (commencement of operations) to
July 31, 1994.
** Includes net realized capital gain (loss) which were under $0.01 per
share.
(a) Annualized.
(b) Total return for periods less than one year are not annualized.
3
<PAGE>
INVESTMENT OBJECTIVES AND POLICIES
The investment objective of each Fund is to seek as high a rate of current
income (or, in the case of Cash Resource Tax-Exempt Money Market Fund, as high a
rate of current income exempt from federal income tax) as its investment adviser
believes is consistent with preservation of capital and maintenance of
liquidity. The Funds seek their objectives through the investment policies
described below. Because each of the Funds is a money market fund, it will only
invest in the types of investments described below under "Selection of
Investments".
The investment objective and policies of each Fund may, unless otherwise
specifically stated, be changed by the Trustees without a vote of the
shareholders. As a matter of policy, the Trustees would not materially change
the investment objective of a Fund without shareholder approval. None of the
Funds is intended to be a complete investment program, and there is no assurance
the Funds will achieve their objectives.
Commonwealth Advisors, Inc. ("Commonwealth Advisors") serves as the
investment adviser to each of the Funds. Commonwealth Investment Counsel, Inc.
("Commonwealth Investment Counsel"), an affiliate of Commonwealth Advisors,
serves as sub-adviser to the Funds, implementing a continuing investment program
for each of the Funds. It is expected that in the fall of 1996, Commonwealth
Investment Counsel will be reorganized as Mentor Investment Advisors, L.L.C.,
which will become the investment adviser to the Funds at that time in place of
Commonwealth Advisors. References in this prospectus to the "Adviser" are to
Commonwealth Investment Counsel during the period prior to the reorganization
and to Mentor Investment Advisors for any period thereafter. See "Management"
below.
CASH RESOURCE MONEY MARKET FUND
The Money Market Fund invests in a portfolio of high-quality money market
instruments consisting exclusively of:
(Bullet) BANK CERTIFICATES OF DEPOSIT (CD'S): negotiable certificates issued
against funds deposited in a commercial bank for a definite period
of time and earning a specified return.
(Bullet) BANKERS' ACCEPTANCES: negotiable drafts or bills of exchange, which
have been "accepted" by a bank, meaning, in effect, that the bank
has unconditionally agreed to pay the face value of the instrument
on maturity.
(Bullet) PRIME COMMERCIAL PAPER: high-grade, short-term obligations issued
by banks, corporations, and other issuers.
(Bullet) CORPORATE OBLIGATIONS: high-grade, short-term obligations other
than prime commercial paper.
(Bullet) U.S. GOVERNMENT SECURITIES: marketable securities issued or
guaranteed as to principal or interest by the U.S. Government or by
its agencies or instrumentalities.
(Bullet) REPURCHASE AGREEMENTS: with respect to U.S. Treasury or U.S.
Government securities.
CASH RESOURCE U.S. GOVERNMENT MONEY MARKET FUND
The U.S. Government Money Market Fund invests exclusively in U.S. Treasury
bills, notes, and bonds, and other obligations issued or guaranteed as to
principal or interest by the U.S. Government, its agencies, or
instrumentalities, and in repurchase agreements with respect to such
obligations. Certain of these obligations, including U.S. Treasury bills, notes,
and bonds, mortgage participation certificates issued or guaranteed by the
Government National Mortgage Association, and Federal Housing Administration
debentures, are supported by the full faith and credit of the United States.
Other U.S. Government securities issued by federal agencies or government-
4
<PAGE>
sponsored enterprises are not supported by the full faith and credit of the
United States. These securities include obligations supported by the right of
the issuer to borrow from the U.S. Treasury, such as obligations of Federal Home
Loan Banks, and obligations supported only by the credit of an instrumentality,
such as Federal National Mortgage Association bonds.
Short-term U.S. Government obligations generally are considered among the
safest short-term investments. Because of their added safety, the yields
available from U.S. Government obligations are generally lower than the yields
available from comparable corporate debt securities. The U.S. Government
guarantee of securities owned by the Fund does not guarantee the net asset value
of the Fund's shares, which the Fund seeks to maintain at $1.00 per share.
CASH RESOURCE TAX-EXEMPT MONEY MARKET FUND
The Tax-Exempt Money Market Fund invests, as a fundamental policy, at least
80% of its net assets in Tax-Exempt Securities (as described below). The Fund
may invest the remainder of its assets in investments of any kind in which
either of the other Funds may invest.
The Fund will invest in only the following types of Tax-Exempt Securities:
(i) municipal notes; (ii) municipal bonds; (iii) municipal securities backed by
the U.S. Government or any of its agencies or instrumentalities; (iv) short-term
discount notes (tax-exempt commercial paper); (v) participation interests in any
of the foregoing; and (vi) unrated securities or new types of tax-exempt
instruments which become available in the future if the Adviser determines they
meet the quality standards discussed below (collectively, "Tax-Exempt
Securities"). (In the case of any such new types of tax-exempt instruments, this
Prospectus would be revised as may be appropriate to describe such instruments.)
In connection with the purchase of Tax-Exempt Securities, the Fund may acquire
stand-by commitments, which give the Fund the right to resell the security to
the dealer at a specified price. Stand-by commitments may provide additional
liquidity for the Fund but are subject to the risk that the dealer may fail to
meet its obligations. The Fund does not generally expect to pay additional
consideration for stand-by commitments or to assign any value to them.
TAX-EXEMPT SECURITIES are debt obligations issued by a state (including the
District of Columbia), a U.S. territory or possession, or any of their political
subdivisions, the interest from which is, in the opinion of bond counsel, exempt
from federal income tax. These securities are issued to obtain funds for various
public purposes, such as the construction of public facilities, the payment of
general operating expenses, or the refunding of outstanding debts. They may also
be issued to finance various private activities, including the lending of funds
to public or private institutions for the construction of housing, educational,
or medical facilities and may also include certain types of private activity and
industrial development bonds issued by public authorities to finance privately
owned or operated facilities. Short-term Tax-Exempt Securities are generally
issued as interim financing in anticipation of tax collections, revenue
receipts, or bond sales to finance various public purposes.
The two principal classifications of Tax-Exempt Securities are general
obligation and special obligation (or revenue) securities. GENERAL OBLIGATION
securities involve the credit of an issuer possessing taxing power and are
payable from the issuer's general unrestricted revenues. Their payment may
depend on an appropriation by the issuer's legislative body. The characteristics
and methods of enforcement of general obligation securities vary according to
the law applicable to the particular issuer. SPECIAL OBLIGATION securities are
payable only from the revenues derived from a particular facility or class of
facilities, or a specific revenue source, and generally are not payable from the
unrestricted revenues of the issuer. Industrial development and private activity
bonds are in most cases special obligation securities, the credit quality of
which is directly related to the private user of a facility.
5
<PAGE>
For purposes of the Fund's policy to invest at least 80% of its net assets
in Tax-Exempt Securities, the Fund will not treat obligations as Tax-Exempt
Securities for purposes of measuring compliance with such policy if they would
give rise to interest income subject to federal alternative minimum tax for
individuals. To the extent that the Fund invests in these securities, individual
shareholders of the Fund, depending on their own tax status, may be subject to
federal alternative minimum tax on the part of the Fund's distributions derived
from these securities. In addition, an investment in the Fund may cause
corporate shareholders to be subject to (or result in an increased liability
under) the alternative minimum tax because tax-exempt income is generally
included in the alternative minimum taxable income of corporations.
The Fund may invest without limit in high quality taxable money market
instruments of any type in which the other Funds may invest at any time when the
Adviser believes that market conditions make pursuing the Fund's basic
investment strategy inconsistent with the best interests of shareholders. It is
impossible to predict when, or for how long, the Fund will use these alternative
defensive strategies.
SELECTION OF INVESTMENTS
Each Fund will invest only in U.S. dollar-denominated high-quality
securities and other U.S. dollar-denominated money market instruments meeting
credit criteria which the Trustees believe present minimal credit risk.
"High-quality securities" are (i) commercial paper or other short-term
obligations rated in one of the two highest short-term rating categories by at
least two nationally recognized rating services (or, if only one rating service
has rated the security, by that service), (ii) obligations rated at least AA by
Standard & Poor's or Aa by Moody's Investors Services, Inc. at the time of
investment, and (iii) unrated securities determined by the Adviser to be of
comparable quality. Each Fund will maintain a dollar-weighted average maturity
of 90 days or less and will not invest in securities with remaining maturities
of more than 397 days. A Fund may invest in variable or floating-rate securities
which bear interest at rates subject to periodic adjustment or which provide for
periodic recovery of principal on demand. Under certain conditions, these
securities may be deemed to have remaining maturities equal to the time
remaining until the next interest adjustment date or the date on which principal
can be recovered on demand. Each of the Funds follows investment and valuation
policies designed to maintain a stable net asset value of $1.00 per share,
although there is no assurance that these policies will be successful.
Considerations of liquidity and preservation of capital mean that a Fund may
not necessarily invest in money market instruments paying the highest available
yield at a particular time. Consistent with its investment objective, a Fund
will attempt to maximize yields by portfolio trading and by buying and selling
portfolio investments in anticipation of or in response to changing economic and
money market conditions and trends. Each Fund may also invest to take advantage
of what the Adviser believes to be temporary disparities in the yields of
different segments of the high-quality money market or among particular
instruments within the same segment of the market. These policies, as well as
the relatively short maturity of obligations purchased by the Funds, may result
in frequent changes in the Funds' portfolios. The Funds will not usually pay
brokerage commissions in connection with the purchase or sale of portfolio
securities.
The portfolio of a Fund will be affected by general changes in interest
rates resulting in increases or decreases in the values of the obligations held
by the Fund. The values of the obligations in a Fund's portfolio can be expected
to vary inversely to changes in prevailing interest rates. Although the Funds'
investment policies are designed to minimize these changes and to maintain a net
asset value of $1.00 per share, there is no assurance that these policies will
be successful. Withdrawals by shareholders could require the sale of portfolio
investments at a time when such a sale might not otherwise be desirable.
6
<PAGE>
DIVERSIFICATION AND CONCENTRATION POLICIES
Each Fund is a "diversified" investment company under the Investment Company
Act of 1940. This means that each Fund may invest up to 25% of its total assets
in the securities of one or more issuers, and is limited with respect to the
remaining portion of its assets to investing 5% or less of its total assets in
the securities of any one issuer (other than the U.S. government). However,
under the current rules governing money market funds, the Funds generally may
not invest more than 5% of their assets in any one issuer (other than the U.S.
government).
The Money Market Fund may invest without limit in obligations of domestic
branches of U.S. banks and U.S. branches of foreign banks (if it can be
demonstrated that they are subject to the same regulations as U.S. banks). At
times when the Fund has concentrated its investments in bank obligations, the
values of its portfolio securities may be especially affected by factors
pertaining to the issuers of such obligations.
The Tax-Exempt Money Market Fund will not invest more than 25% of its total
assets in any one industry. Governmental issuers of Tax-Exempt Securities are
not considered part of any "industry." However, Tax-Exempt Securities backed
only by the assets and revenues of nongovernmental users may for this purpose be
deemed to be issued by such nongovernmental users, and the 25% limitation would
apply to such obligations.
It is nonetheless possible that the Tax-Exempt Money Market Fund may invest
more than 25% of its assets in a broader segment of the Tax-Exempt Securities
market, such as revenue obligations of hospitals and other health care
facilities, housing agency revenue obligations, or airport revenue obligations.
This would be the case only if the Adviser determined that the yields available
from obligations in a particular segment of the market justified the additional
risks associated with such concentration. Although such obligations could be
supported by the credit of governmental users or by the credit of
nongovernmental users engaged in a number of industries, economic, business,
political, and other developments generally affecting the revenues of such users
(for example, proposed legislation or pending court decisions affecting the
financing of such projects and market factors affecting the demand for their
services or products) may have a general adverse effect on all Tax-Exempt
Securities in such a market segment.The Fund reserves the right to invest more
than 25% of its assets in industrial development bonds and private activity
bonds or notes.
The Fund also reserves the right to invest more than 25% of its assets in
securities relating to any one or more states (including the District of
Columbia), U.S. territories or possessions, or any of their political
subdivisions. As a result of such an investment, the performance of the Fund may
be especially affected by factors pertaining to the economy of the relevant
state and other factors specifically affecting the ability of issuers of such
securities to meet their obligations. As a result, the value of the Fund's
shares may fluctuate more widely than the value of shares of a fund investing in
securities relating to a greater number of different states.
The ability of governmental issuers to meet their obligations will depend
primarily on the availability of tax and other revenues to those governments and
on their fiscal conditions generally. The amounts of tax and other revenues
available to governmental issuers may be affected from time to time by economic,
political, and demographic conditions affecting a particular state. In addition,
constitutional or statutory restrictions may limit a government's power to raise
revenues or increase taxes. The availability of federal, state, and local aid to
issuers of such securities may also affect their ability to meet their
obligations. Payments of principal and interest on special obligation securities
will depend on the economic condition of the facility or specific revenue source
from whose revenues the payments will be made, which in turn could be affected
by economic, political, and demographic conditions affecting a particular state.
Any reduction in the actual or perceived ability of an issuer of Tax-Exempt
Securities in a particular state to meet its obligations (including a reduction
in the rating of its outstanding securities) would likely affect adversely the
market value and marketability of its obligations and could adversely affect the
values of Tax-Exempt Securities issued by others in that state as well.
7
<PAGE>
OTHER INVESTMENT PRACTICES
A FUND MAY ALSO ENGAGE TO A LIMITED EXTENT IN THE FOLLOWING INVESTMENT
PRACTICES, EACH OF WHICH INVOLVES CERTAIN SPECIAL RISKS. THE STATEMENT OF
ADDITIONAL INFORMATION CONTAINS MORE DETAILED INFORMATION ABOUT THESE PRACTICES.
FOREIGN INVESTMENTS. The Money Market Fund may invest in obligations of
foreign issuers and in bank certificates of deposit and bankers' acceptances
payable in U.S. dollars and issued by foreign banks (including U.S. branches of
foreign banks) or by foreign branches of U.S. banks. These investments subject
the Fund to investment risks different from those associated with domestic
investments. Such risks include adverse political and economic developments in
foreign countries, the imposition of withholding taxes on interest income,
seizure or nationalization of foreign deposits, or the adoption of other
governmental restrictions which may adversely affect the payment of principal
and interest on such obligations. Legal remedies available to investors in
certain foreign countries may be more limited than those available with respect
to investments in the U.S. or in other foreign countries. Foreign settlement
procedures and trade regulations may involve certain risks (such as delay in
payment or delivery of securities or in the recovery of the Fund's assets held
abroad) and expenses not present in the settlement of domestic investments. In
addition, foreign securities may be less liquid than U.S. securities, and
foreign accounting and disclosure standards may differ from U.S. standards.
Special tax considerations apply to foreign investments.
REPURCHASE AGREEMENTS. Under a repurchase agreement, a Fund purchases a debt
instrument for a relatively short period (usually not more than one week), which
the seller agrees to repurchase at a fixed time and price, representing the
Fund's cost plus interest. A Fund will enter into repurchase agreements only
with commercial banks and with registered broker-dealers who are members of a
national securities exchange or market makers in government securities, and only
if the debt instrument subject to the repurchase agreement is a U.S. Government
security. Although the Adviser will monitor repurchase agreement transactions to
ensure that they will be fully collateralized at all times, a Fund bears a risk
of loss if the other party defaults on its obligation and the Fund is delayed or
prevented from exercising its rights to dispose of the collateral. If the other
party should become involved in bankruptcy or insolvency proceedings, it is
possible that a Fund may be treated as an unsecured creditor and required to
return the collateral to the other party's estate.
SECURITIES LENDING. A Fund may lend portfolio securities to broker-dealers.
These transactions must be fully collateralized at all times with cash or
short-term debt obligations, but involve some risk to a Fund if the other party
should default on its obligation and the Fund is delayed or prevented from
exercising its right in respect of the collateral. Any investment of collateral
by a Fund would be made in accordance with the Fund's investment objective and
policies described above.
DIVIDENDS
THE TRUST DETERMINES THE NET INCOME OF EACH FUND AS OF THE CLOSE OF REGULAR
TRADING ON THE NEW YORK STOCK EXCHANGE (THE "EXCHANGE") EACH DAY THE EXCHANGE IS
OPEN. Each determination of a Fund's net income includes (i) all accrued
interest on the Fund's investments, (ii) plus or minus all realized and
unrealized gains and losses on the Fund's investments, (iii) less all accrued
expenses of the Fund. Each Fund's investments are valued at amortized cost
according to Securities and Exchange Commission Rule 2a-7. A Fund will not
normally have unrealized gains or losses so long as it values its investments by
the amortized cost method.
DAILY DIVIDENDS. Each Fund declares all of its net income as a distribution
on each day it is open for business, as a dividend to shareholders of record
immediately prior to the close of regular trading on the Exchange. Shareholders
whose purchase of shares of a Fund is accepted at or before 12:00 noon on any
day will receive the
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dividend declared by the Fund for that day; shareholders who purchase shares
after 12:00 noon will begin earning dividends on the next business day after the
Fund accepts their order. A Fund's net income for Saturdays, Sundays, and
holidays is declared as a dividend on the preceding business day. Dividends for
the immediately preceding calendar month will be paid on the fifteenth day of
each calendar month (or, if that day is not a business day, on the next business
day), except that a Fund's schedule for payment of dividends during the month of
December may be adjusted to assist in tax reporting and distribution
requirements. A shareholder who withdraws the entire balance of an account at
any time during a month will be paid all dividends declared through the time of
the withdrawal. Since the net income of each Fund is declared as a dividend each
time it is determined, the net asset value per share of each Fund normally
remains at $1 per share immediately after each determination and dividend
declaration.
YOU CAN CHOOSE FROM TWO DISTRIBUTION OPTIONS: (1) automatically reinvest all
distributions from a Fund in additional shares of that Fund; or (2) receive all
distributions in cash. If you wish to change your distribution option, you
should contact your Financial Institution (as defined below), who will be
responsible for forwarding the necessary instructions to the Trust's transfer
agent, Investors Fiduciary Trust Company ("IFTC"). If you do not select an
option when you open your account, all distributions will be reinvested. You
will receive a statement confirming reinvestment of distributions in additional
shares of a Fund promptly following the month in which the reinvestment occurs.
TAX INFORMATION. Each Fund intends to qualify as a "regulated investment
company" for federal income tax purposes and to meet all other requirements that
are necessary for it to be relieved of federal income taxes on income (and
gains, if any) it distributes to shareholders. Each Fund will distribute
substantially all of its ordinary income (and net capital gains, if any) on a
current basis.
Dividends paid by the Tax-Exempt Money Market Fund that are derived from
exempt-interest income (known as "exempt-interest dividends") and that are
designated as such may be treated by the Fund's shareholders as items of
interest excludable from their federal gross income. (Shareholders should
consult their own tax adviser with respect to whether exempt-interest dividends
would be excludable from gross income if the shareholder were treated as a
"substantial user" of facilities financed by an obligation held by the
Tax-Exempt Money Market Fund or a "related person" to such a user under the
Internal Revenue Code.) If a shareholder receives an exempt-interest dividend
with respect to any share held for six months or less, any loss on the sale or
exchange of that share will be disallowed to the extent of the amount of the
exempt-interest dividend. To the extent dividends paid to shareholders are
derived from taxable income (for example, from interest on certificates of
deposit) or from gains, such dividends will be subject to federal income tax,
whether they are paid in the form of cash or additional shares.
If the Tax-Exempt Money Market Fund holds certain "private activity bonds"
("industrial development bonds" under prior law), dividends derived from
interest on such obligations will be classified as an item of tax preference
which could subject certain shareholders to alternative minimum tax liability.
Corporate shareholders must also take all exempt-interest dividends into account
in determining "adjusted current earnings" for purposes of calculating their
alternative minimum tax liability.
Shareholders receiving Social Security benefits or Railroad Retirement Act
benefits should note that all exempt-interest dividends will be taken into
account in determining the taxability of such benefits. Early in each year your
Fund will notify you of the amount and tax status of distributions paid to you
by the Fund for the preceding year.
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The foregoing is a summary of certain federal income tax consequences of
investing in the Funds. You should consult your tax adviser to determine the
precise effect of an investment in each Fund on your particular tax situation.
BUYING AND SELLING SHARES OF THE FUNDS
HOW TO BUY SHARES. The Trust offers shares of the Funds continuously at a
price of $1.00 per share. The Trust determines net asset value twice each day,
as of 12:00 noon and as of the close of regular trading on the Exchange. The
shares of each Fund are sold at net asset value through a number of selected
financial institutions, such as investment dealers and banks (each, a "Financial
Institution"). Your Financial Institution is responsible for forwarding any
necessary documentation to IFTC. There is no sales charge on sales of shares,
nor is any minimum investment required for any of the Funds.
Because each Fund seeks to be fully invested at all times, investments must
be in Same Day Funds to be accepted. Investments which are accepted at or before
12:00 noon will be invested at the net asset value determined at that time;
investments accepted after 12:00 noon will receive the net asset value
determined at the close of regular trading on the Exchange. "Same Day Funds" are
funds credited by the applicable regional Federal Reserve Bank to the account of
the Trust at its designated bank. When payment in Same Day Funds is available to
the Trust, the Trust will accept the order to purchase shares at the net asset
value next determined.
If you are considering redeeming shares or transferring shares to another
person shortly after purchase, you should pay for those shares with wired Same
Day Funds or a certified check to avoid any delay in redemption or transfer.
Otherwise, the Trust may delay payment for shares until the purchase price of
those shares has been collected which may be up to 15 calendar days after the
purchase date.
For more information on how to purchase shares of the Funds, contact your
Financial Institution or Mentor Distributors, Inc. ("Mentor Distributors"), 901
East Byrd Street, Richmond, Virginia 23219, the principal underwriter of the
Trust's shares. Mentor Distributors' telephone number is 1-800-382-0016.
HOW TO SELL SHARES. You can redeem your Fund shares through your Financial
Institution any day the Exchange is open, or you may redeem your shares by check
or by mail. Redemption will be effected at the net asset value per share of the
Fund next determined after receipt of the redemption request in good order. The
Trust must receive your properly completed purchase documentation before you may
sell shares.
SELLING SHARES THROUGH YOUR FINANCIAL INSTITUTION. You may redeem your
shares through your Financial Institution. Your Financial Institution is
responsible for delivering your redemption request and all necessary
documentation to the Trust, and may charge you for its services (including, for
example, charges relating to the wiring of funds). Your Financial Institution
may accept your redemption instructions by telephone. Consult your Financial
Institution.
SELLING SHARES BY CHECK. If you would like the ability to write checks
against your investment in a Fund, you should provide the necessary
documentation to your Financial Institution and complete the signature card
which you may obtain by calling your Financial Institution or your Fund. When a
Fund receives your properly completed documentation and card, you will receive
checks drawn on your Fund account and payable through the Fund's designated
bank. These checks may be made payable to the order of any person. You will
continue to earn dividends until the check clears. When a check is presented for
payment, a sufficient number of full and fractional shares of the Fund in your
account will be redeemed to cover the amount of the check. Your Financial
Institution may limit the availability of the check-writing privilege or assess
certain fees in connection with the checkwriting privilege.
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Shareholders using Trust checks are subject to the Trust's designated bank's
rules governing checking accounts. There is currently no charge to the
shareholder for the use of checks, although one may be imposed in the future.
Shareholders would be notified in advance of the imposition of any such charge.
(In addition, if you deplete your original check supply, there may be a charge
to order additional checks.) You should make sure that there are sufficient
shares in your account to cover the amount of the check drawn. If there is an
insufficient number of shares in the account, the check will be dishonored and
returned, and no shares will be redeemed. Because dividends declared on shares
held in your account and prior withdrawals may cause the value of your account
to change, it is impossible to determine in advance your account's total value.
Accordingly, you should not write a check for the entire value of your account
or close your account by writing a check. A shareholder may revoke check-writing
authorization by written notice to IFTC.
SELLING SHARES BY MAIL. You may also sell shares of a Fund by sending a
written withdrawal request to IFTC. You must sign the withdrawal request and
include a stock power with signature(s) guaranteed by a bank, broker/dealer, or
certain other financial institutions.
IFTC may require additional documentation from shareholders which are
corporations, partnerships, agents, fiduciaries or surviving joint owners.
Corporations, partnerships, agents, trusts, and fiduciary accounts must submit a
completed resolution in proper form before selling shares. Resolution forms are
available from IFTC and Mentor Distributors.
A FUND GENERALLY SENDS YOU PAYMENT FOR YOUR SHARES THE BUSINESS DAY AFTER
YOUR REQUEST IS RECEIVED IN GOOD ORDER. Under unusual circumstances, a Fund may
suspend repurchases, or postpone payment for more than seven days, as permitted
by federal securities law.
HOW TO EXCHANGE SHARES
You can exchange your shares in any Fund for shares of any other Fund in the
Trust at net asset value, except as described below. If you request an exchange
through your Financial Institution, your Financial Institution will be
responsible for forwarding the necessary documentation to IFTC. Exchange
Authorization Forms are available from your Financial Institution or Mentor
Distributors. For federal income tax purposes, an exchange is treated as a sale
of shares and generally results in a capital gain or loss. The Trust reserves
the right to change or suspend the exchange privilege at any time. Shareholders
would be notified of any change or suspension. Consult your Financial
Institution or Mentor Distributors before requesting an exchange.
FINANCIAL INSTITUTIONS
Financial Institutions provide varying arrangements for their clients with
respect to the purchase and redemption of Trust shares and the confirmation
thereof and may arrange with their clients for other investment or
administrative services. When you effect transactions with a Fund (including
among other things the purchase, redemption, or exchange of Fund shares) through
a Financial Institution, the Financial Institution, and not the Fund, will be
responsible for taking all steps, and furnishing all necessary documentation, to
effect such transactions. Financial Institutions have the responsibility to
deliver purchase and redemption requests to a Fund promptly. Some Financial
Institutions may establish minimum investment requirements with respect to a
Fund. They may also establish and charge fees and other amounts to their client
for their services. Certain privileges, such as the check writing privilege or
reinvestment options, may not be available through certain Financial
Institutions or they may be available only under certain conditions. If your
Financial Institution holds your investment in a Fund in its own name, then your
Financial Institution will be the shareholder of record in respect of that
investment; your ability to take advantage of any investment options or services
of the Fund will depend on
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whether, and to what extent, your Financial Institution is willing to take
advantage of them on your behalf. FINANCIAL INSTITUTIONS, INCLUDING WHEAT, FIRST
SECURITIES, INC., A SUBSIDIARY OF WHEAT FIRST BUTCHER SINGER, INC., AND EVEREN
SECURITIES, INC. ("EVEREN"), MAY CHARGE FEES TO OR IMPOSE RESTRICTIONS ON YOUR
SHAREHOLDER ACCOUNT. CONSULT YOUR FINANCIAL INSTITUTION FOR INFORMATION ABOUT
ANY FEES OR RESTRICTIONS OR FOR FURTHER INFORMATION CONCERNING ITS SERVICES.
MANAGEMENT
The Trustees are responsible for generally overseeing the conduct of the
Trust's business. Subject to such policies as the Trustees may determine, the
Adviser furnishes a continuing investment program for the Funds and makes
investment decisions on their behalf.
COMMONWEALTH ADVISORS, INC. serves as investment adviser to each of the
Funds, providing investment advisory services and advising and assisting the
officers of the Trust in taking such steps as are necessary or appropriate to
carry out the decisions of the Trustees. COMMONWEALTH INVESTMENT COUNSEL, INC.,
an affiliate of Commonwealth Advisors, serves as sub-adviser to each of the
Funds pursuant to a sub-advisory agreement among Commonwealth Advisors,
Commonwealth Investment Counsel, and the Trust. Commonwealth Advisors and
Commonwealth Investment Counsel are wholly owned subsidiaries of Mentor
Investment Group, Inc., which is in turn a subsidiary of Wheat First Butcher
Singer, Inc., a diversified financial services holding company. Commonwealth
Advisors serves as investment adviser to four separate investment portfolios (in
addition to the Funds) in the Mentor Family of Funds and Commonwealth Investment
Counsel serves as investment adviser to six separate investment portfolios in
the Mentor Family of Funds. For a copy of the prospectus relating to certain of
these other portfolios, call Mentor Distributors at 1-800-382-0016. The address
of Commonwealth Advisors and Commonwealth Investment Counsel is 901 East Byrd
Street, Richmond, Virginia 23219.
It is expected that in the fall of 1996, Commonwealth Investment Counsel
will be reorganized as MENTOR INVESTMENT ADVISORS, L.L.C., which will become
investment adviser to the Funds in place of Commonwealth Advisors. Immediately
after the reorganization, Mentor Investment Advisors will be a wholly owned
subsidiary of Mentor Investment Group and its corporate affiliates. The address
of Mentor Investment Advisors will be 901 East Byrd Street, Richmond, Virginia
23219.
In addition, it is expected that promptly after that reorganization, EVEREN
Securities, Inc. will acquire 20% of the outstanding shares of Mentor Investment
Group. EVEREN may thereafter acquire additional shares in Mentor Investment
Group (not to exceed an additional 30% of Mentor Investment Group's outstanding
shares) depending principally on the amount of assets in investment companies
sponsored by Mentor Investment Group or its affiliates (including the Funds)
attributable to shares held by clients of EVEREN.
Each Fund pays management fees to Commonwealth Advisors monthly at the
following annual rates (based on the assets of the Fund): 0.22% of the first
$500 million of the Fund's average net assets; 0.20% of the next $500 million;
0.175% of the next $1 billion; 0.16% of the next $1 billion; and 0.15% of any
amounts over $3 billion. Commonwealth Advisors in turn pays fees from its own
assets to Commonwealth Investment Counsel monthly at the following annual rates
(based on the assets of each Fund taken separately): 0.17% of the first $500
million of a Fund's average net assets; 0.15% of the next $500 million; 0.125%
of the next $1 billion; 0.11% of the next $1 billion; and 0.10% of any amounts
over $3 billion. When Mentor Investment Advisors becomes investment adviser to
the Funds, the Funds will pay management fees to Mentor Investment Advisors at
the same rate as currently paid to Commonwealth Advisors.
The Funds pay all expenses not assumed by the Adviser, including Trustees'
fees, auditing, legal, custodial, investor servicing, and shareholder reporting
expenses, and payments under its Distribution Plans. General
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expenses of the Trust will be charged to the assets of each Fund on a basis that
the Trustees deem fair and equitable, which may be based on the relative assets
of each Fund or the nature of the services performed and relative applicability
to each Fund. Expenses directly charged or attributable to a Fund will be paid
from the assets of that Fund.
The Adviser places all orders for purchases and sales of the investments of
each Fund. In selecting broker-dealers, the Adviser may consider research and
brokerage services furnished to it and its affiliates. Subject to seeking the
most favorable price and execution available, the Adviser may consider sales of
shares of the Funds (and, if permitted by law, of the other funds in the Mentor
family) as a factor in the selection of broker-dealers.
DISTRIBUTION SERVICES
Each Fund has adopted a Distribution Plan (each, a "Plan") pursuant to Rule
12b-1 under the Investment Company Act of 1940. The purpose of the Plans is to
permit each of the Funds to compensate Mentor Distributors for services provided
and expenses incurred by it in promoting the sale of shares of the Fund,
reducing redemptions, or maintaining or improving services provided to
shareholders. The Plans provide for monthly payments by the Funds to Mentor
Distributors, subject to the authority of the Trustees to reduce the amount of
payments or to suspend the Plans for such periods as they may determine. Any
material increase in amounts payable under a Plan would require shareholder
approval.
In order to compensate Financial Institutions for services provided in
connection with sales of Fund shares and the maintenance of shareholder accounts
(or, in the case of certain Financial Institutions which are banking
institutions, for certain administrative and shareholder services), Mentor
Distributors may make periodic payments (from any amounts received by it under
the Plans or from its other resources) to any qualifying Financial Institution
based on the average net asset value of shares for which the Financial
Institution is designated as the financial institution of record. Mentor
Distributors makes such payments at the annual rate of between 0.15% and 0.40%
in the case of the Money Market Fund and the U.S. Government Money Market Fund,
and between 0.15% and 0.33% in the case of the Tax-Exempt Money Market Fund.
Mentor Distributors may suspend or modify these payments at any time, and
payments are subject to the continuation of each Fund's Plan and of applicable
agreements between Mentor Distributors and the applicable Financial Institution.
Financial Institutions receiving payments from Mentor Distributors include
Wheat, First Securities, Inc., and EVEREN.
HOW A FUND'S PERFORMANCE IS CALCULATED
YIELD AND EFFECTIVE YIELD DATA MAY FROM TIME TO TIME BE INCLUDED IN
ADVERTISEMENTS ABOUT THE FUNDS. "Yield" is calculated by dividing a Fund's
annualized net investment income per share during a recent seven-day period by
the net asset value per share on the last day of that period. "Effective yield"
compounds that yield for a year and is, for that reason, greater than a Fund's
yield. "Tax-equivalent" yield shows the effect on performance of the tax-exempt
status of distributions received from the Tax-Exempt Money Market Fund. It
reflects the approximate yield that a taxable investment must earn for
shareholders at stated income levels to produce an after-tax yield equivalent to
the Fund's tax-exempt yield. Quotations of yield for any period when an expense
limitation was in effect will be greater than if the limitation had not been in
effect. A Fund's performance may be compared to various indices. See the
Statement of Additional Information.
ALL DATA IS BASED ON A FUND'S PAST INVESTMENT RESULTS AND DOES NOT PREDICT
FUTURE PERFORMANCE. Investment performance, which will vary, is based on many
factors, including market conditions, the composition of a
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Fund's portfolio, and a Fund's operating expenses. Investment performance also
often reflects the risks associated with a Fund's investment objective and
policies. These factors should be considered when comparing a Fund's investment
results to those of other mutual funds and other investment vehicles.
GENERAL INFORMATION
Cash Resource Trust is a Massachusetts business trust organized on June 14,
1993. A copy of the Agreement and Declaration of Trust, which is governed by
Massachusetts law, is on file with the Secretary of State of The Commonwealth of
Massachusetts.
The Trust is an open-end, diversified management investment company with an
unlimited number of authorized shares of beneficial interest. Shares of the
Trust may, without shareholder approval, be divided into two or more series of
shares representing separate investment portfolios, and are currently divided
into three series of shares, one representing each Fund. Under the Agreement and
Declaration of Trust, a Fund's shares may be further divided, without
shareholder approval, into two or more classes of shares having such preferences
or special or relative rights and privileges as the Trustees may determine. Each
share has one vote, with fractional shares voting proportionally. Shares of each
Fund are freely transferable, are entitled to dividends as declared by the
Trustees, and, if a Fund were liquidated, would receive the net assets of the
Fund. The Trust may suspend the sale of shares of any Fund at any time and may
refuse any order to purchase shares. Although the Trust is not required to hold
annual meetings of its shareholders, shareholders have the right to call a
meeting to elect or remove Trustees, or to take other actions as provided in the
Agreement and Declaration of Trust.
INVESTORS FIDUCIARY TRUST COMPANY, located at 127 West 10th Street, Kansas
City, Missouri 64105, is the transfer agent and dividend-paying agent for the
Trust. IFTC engages at its own expense certain Financial Institutions, including
Wheat, First Securities, Inc. and EVEREN, to perform bookkeeping, data
processing, and administrative services pertaining to the maintenance of
shareholder accounts.
If you own fewer shares of a Fund than a minimum amount set by the Trustees
(presently 500 shares), the Trust may choose to redeem your shares and pay you
for them. You will receive at least 30 days written notice before the Trust
redeems your shares, and you may purchase additional shares at any time to avoid
a redemption. The Trust may also redeem shares if you own shares of any Fund or
of the Trust above any maximum amount set by the Trustees. There is presently no
maximum, but the Trustees may establish one at any time, which could apply to
both present and future shareholders.
The Trust may send a single copy of shareholder reports and communications
to an address where there is more than one registered shareholder with the same
last name, unless a shareholder at that address requests, by calling or writing
his Financial Institution or Mentor Distributors that the Trust do otherwise.
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[MENTOR LOGO]
CASH RESOURCE TRUST
901 East Byrd Street
Richmond, VA 23219
CASH RESOURCE
TRUST
PROSPECTUS
SEPTEMBER 23, 1996
[EVEREN SECURITIES LOGO]
<PAGE>
The Statement of Additional Information in respect of the Cash Resource
New York and California Tax-Exempt Money Market Funds, which is contained in
Part B to Post- Effective Amendment No. 3 to Cash Resource Trust's Registration
Statement on Form N-1A (File No. 33-65818) filed with the Commission on August
12, 1996, is incorporated herein by reference.
CASH RESOURCE TRUST
FORM N-1A
PART B
STATEMENT OF ADDITIONAL INFORMATION
September 23, 1996
This Statement of Additional Information contains information which may
be of interest to investors but which is not included in the Prospectus dated
September 23, 1996 (the "Prospectus") of Cash Resource Money Market Fund, Cash
Resource U.S. Government Money Market Fund, and Cash Resource Tax-Exempt Money
Market Fund (each a "Fund" and collectively the "Funds"), each of which is a
series of shares of Cash Resource Trust (the "Trust"). This Statement is not a
prospectus and is only authorized for distribution when accompanied or preceded
by the Prospectus of the Funds dated September 23, 1996. This Statement should
be read together with the Prospectus, as amended from time to time. Investors
may obtain a free copy of the Prospectus by calling Mentor Distributors, Inc.
("Mentor Distributors"), the Trust's distributor, at (800) 382-0016.
Table of Contents
Part I Page
INVESTMENT OBJECTIVES AND POLICIES OF THE TRUST......2
INVESTMENT RESTRICTIONS..............................4
MANAGEMENT OF THE TRUST..............................6
PRINCIPAL HOLDERS OF SECURITIES.....................10
INVESTMENT ADVISORY AND OTHER SERVICES..............10
DETERMINATION OF NET ASSET VALUE....................14
TAXES ...........................................16
DISTRIBUTION........................................19
ORGANIZATION........................................21
PORTFOLIO TURNOVER..................................21
CUSTODIAN...........................................21
INDEPENDENT AUDITORS................................22
PERFORMANCE INFORMATION.............................22
SHAREHOLDER LIABILITY...............................27
FINANCIAL STATEMENTS................................28
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INVESTMENT OBJECTIVES AND POLICIES OF THE TRUST
The investment objectives and policies of each of the Funds are
described in the Prospectus. This Statement contains additional information
concerning certain investment practices and investment restrictions of the
Funds.
Except as described below under "Investment Restrictions," the
investment objectives and policies described in the Prospectus and in this
Statement are not fundamental, and the Trustees may change the investment
objectives and policies of a Fund without a vote of shareholders.
Except as otherwise noted below, the following descriptions of certain
investment policies and techniques are applicable to all of the Funds. All
references to the Adviser refer to the investment adviser or sub-adviser, if
any, of the Funds.
Repurchase Agreements
Each Fund may enter into repurchase agreements. A repurchase agreement
is a contract under which a Fund acquires a security for a relatively short
period (usually not more than one week) subject to the obligation of the seller
to repurchase and the Fund to resell such security at a fixed time and price
(representing a Fund's cost plus interest). It is each Fund's present intention
to enter into repurchase agreements only with member banks of the Federal
Reserve System and securities dealers meeting certain criteria as to
creditworthiness and financial condition established by the Trustees of a Fund
and only with respect to obligations of the U.S. Government or its agencies or
instrumentalities or other high quality short term debt obligations. Repurchase
agreements may also be viewed as loans made by a Fund which are collateralized
by the securities subject to repurchase. The Adviser will monitor such
transactions to ensure that the value of the underlying securities will be at
least equal at all times to the total amount of the repurchase obligation,
including the interest factor. If the seller defaults, a Fund could realize a
loss on the sale of the underlying security to the extent that the proceeds of
the sale including accrued interest are less than the resale price provided in
the agreement including interest. In addition, if the seller should be involved
in bankruptcy or insolvency proceedings, a Fund may incur delay and costs in
selling the underlying security or may suffer a loss of principal and interest
if the Fund is treated as an unsecured creditor and required to return the
underlying collateral to the seller's estate.
Securities Loans
A Fund may lend its portfolio securities provided: (1) the loan is
secured continuously by collateral consisting of U.S. Government securities,
cash, or cash equivalents adjusted daily to have market value at least equal to
the current market value of the securities loaned; (2) the Fund may at any time
call the loan and regain the securities loaned; (3) the Fund will receive any
interest or dividends paid on the loaned securities; and (4) the aggregate
market value of the securities loaned will not at any time exceed one-third of
the total assets of such Fund. In
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addition, it is anticipated that a Fund may share with the borrower some of the
income received on the collateral for the loan or that it will be paid a premium
for the loan. Before a Fund enters into a loan, the Adviser considers all
relevant facts and circumstances including the creditworthiness of the borrower.
The risks in lending portfolio securities, as with other extensions of credit,
consist of possible delay in recovery of the securities or possible loss of
rights in the collateral should the borrower fail financially. Although voting
rights, or rights to consent, with respect to the loaned securities pass to the
borrower, a Fund retains the right to call the loans at any time on reasonable
notice, and it will do so in order that the securities may be voted by the Fund
if the holders of such securities are asked to vote upon or consent to matters
materially affecting the investment. A Fund will not lend portfolio securities
to borrowers affiliated with the Trust.
Foreign Securities
Cash Resource Money Market Fund may invest in U.S. dollar denominated
foreign securities which meet the criteria applicable to the Fund's domestic
investments, and in certificates of deposit issued by U.S. branches of foreign
banks and foreign branches of U.S. banks. Investment by the Fund in foreign
securities is subject to the limitations set forth in the Prospectus.
Investments in foreign securities may involve considerations different
from investments in domestic securities due to limited publicly available
information, non-uniform accounting standards, lower trading volume and possible
consequent illiquidity, greater volatility in price, the possible imposition of
withholding or confiscatory taxes, the possible adoption of foreign governmental
restrictions affecting the payment of principal and interest, expropriation of
assets, nationalization, or other adverse political or economic developments.
Foreign companies may not be subject to auditing and financial reporting
standards and requirements comparable to those which apply to U.S. companies.
Foreign brokerage commissions and other fees are generally higher than in the
United States. It may be more difficult to obtain and enforce a judgment against
a foreign issuer.
In determining whether to invest in securities of foreign issuers, the
Adviser will consider the likely impact of foreign taxes on the net yield
available to the Fund and its shareholders. Income received by the Fund from
sources within foreign countries may be reduced by withholding and other taxes
imposed by such countries. Tax conventions between certain countries and the
United States may reduce or eliminate such taxes. It is impossible to determine
the effective rate of foreign tax in advance since the amount of the Fund's
assets to be invested in various countries is not known, and tax laws and their
interpretations may change from time to time and may change without advance
notice. Any such taxes paid by the Fund will reduce its net income available for
distribution to shareholders.
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INVESTMENT RESTRICTIONS
The Trust has adopted the following restrictions applicable to all of
the Funds, which may not be changed without the affirmative vote of a "majority
of the outstanding voting securities" of a Fund, which is defined in the 1940
Act to mean the affirmative vote of the lesser of (1) more than 50% of the
outstanding shares of the Fund and (2) 67% or more of the shares present at a
meeting if more than 50% of the outstanding shares are represented at the
meeting in person or by proxy. A Fund may not:
1. Borrow money in excess of 10% of the value (taken at the lower of
cost or current value) of its total assets (not including the amount borrowed)
at the time the borrowing is made, and then only from banks as a temporary
measure (not for leverage) in situations which might otherwise require the
untimely disposition of portfolio investments or for extraordinary or emergency
purposes. Such borrowings will be repaid before any additional investments are
purchased.
2. Pledge, hypothecate, mortgage, or otherwise encumber its assets in
excess of 15% of its total assets (taken at the lower of cost and current value)
and then only in connection with borrowings permitted by restriction 1 above.
3. Purchase securities on margin, expect such short-term credits
as may be necessary for the clearance of purchase and sales of securities.
4. Make short sales of securities or maintain a short position for the
account of a Fund unless at all times when a short position is open it owns an
equal amount of such securities or owns securities which, without payment of any
further consideration, are convertible into or exchangeable for securities of
the same issue as, and in equal amount to, the securities sold short.
5. Underwrite securities issued by other persons except to the extent
that, in connection with the disposition of its portfolio investments, it may be
deemed to be an underwriter under the federal securities laws.
6. Purchase or sell real estate, although it may purchase securities of
issuers which deal in real estate, securities which are secured by interests in
real estate, and securities representing interests in real estate, and it may
acquire and dispose of real estate or interests in real estate acquired through
the exercise of its rights as a holder of debt obligations secured by real
estate or interests therein.
7. Purchase or sell commodities or commodity contracts.
8. Make loans, except by purchase of debt obligations in which a Fund
may invest consistent with its investment policies and by entering into
repurchase agreements and securities loans.
-4-
<PAGE>
9. Invest in securities of any issuer, if, to the knowledge of a Fund,
officers and Trustees of the Trust and officers and directors of the Adviser who
beneficially own more than 0.5% of the securities of that issuer together own
more than 5% of such securities.
10. As to 75% of its assets, invest in securities of any issuer if,
immediately after such investment, more than 5% of the total assets of the Fund
(taken at current value) would be invested in the securities of such issuer;
provided that this limitation does not apply to securities issued or guaranteed
as to principal or interest by the U.S. Government or its agencies or
instrumentalities.
11. Acquire more than 10% of the voting securities of any issuer.
12. Invest more than 25% of its assets in any one industry, except
that Cash Resource Money Market Fund may invest without limit in obligations of
domestic branches of U.S. banks and U.S. branches of foreign banks (if it can be
demonstrated that they are subject to the same regulation as U.S. banks).
13. Make investments for the purpose of gaining control of a
company's management.
14. Issue any class of securities which is senior to a Fund's shares of
beneficial interest, except as consistent with or permitted by the Investment
Company Act of 1940 or as permitted by rule or order of the Securities and
Exchange Commission.
In addition, it is contrary to the current policy of the Trust, which
may be changed without shareholder approval, to invest in the securities of
other registered open-end investment companies.
All percentage limitations on investments will apply at the time of
investment and shall not be considered violated unless an excess or deficiency
occurs or exists immediately after and as a result of such investment. Except
for the investment restrictions listed above and those designated in the
Prospectus as fundamental, the other investment policies described in the
Prospectus and this Statement are not fundamental and may be changed by approval
of the Trustees. As a matter of policy, the Trustees would not materially change
a Fund's investment objective without shareholder approval.
-5-
<PAGE>
MANAGEMENT OF THE TRUST
<TABLE>
<CAPTION>
Principal Occupation
Position Held With During Past
Name and Address A Fund Five Years
<S> <C>
Daniel J. Ludeman* Chairman and Chairman and Chief Executive
901 E. Byrd Street Trustee Officer since July 1991,
Richmond, VA 23219 Mentor Investment Group,
Inc.; Managing Director of
Wheat, First Securities, Inc.
since August 1989; Managing
Director of Wheat First
Butcher Singer, Inc. since
June 1991; Director, Wheat,
First Securities, Inc., Mentor
Income Fund, Inc. and
America's Utility Fund, Inc.;
Chairman and Trustee, Cash
Resource Trust and Mentor
Institutional Trust.
Arnold H. Dreyfuss Trustee Trustee, The Mentor Funds
P.O. Box 18156 and Mentor Institutional Trust;
Richmond, Virginia 23226 formerly, Chairman and Chief
Executive Officer, Hamilton
Beach/Proctor-Silex, Inc.
Thomas F. Keller Trustee Dean, Fuqua School of
Fuqua School of Business Business, Duke University;
Duke University Trustee, The Mentor Funds
Durham, NC 27706 and Mentor Institutional
Trust.
Louis W. Moelchert, Jr. Trustee Vice President of Business
University of Richmond and Finance, University of
Richmond, VA 23173 Richmond; Trustee, The
Mentor Funds and Mentor
Institutional Trust; Director,
America's Utility Fund, Inc.
</TABLE>
-6-
<PAGE>
<TABLE>
<S> <C>
Stanley F. Pauley Trustee Chairman and Chief
E.R. Carpenter Executive Officer, E.R.
Company, Incorporated Carpenter Company
5016 Monument Avenue Incorporated; Trustee,
Richmond, Virginia 23261 The Mentor Funds and Mentor
and Mentor Institutional Trust.
Troy A. Peery, Jr. Trustee President, Heilig-
Heilig-Meyers Company Meyers Company;
2235 Staples Mill Road Trustee, The Mentor Funds
Richmond, Virginia 23230 and Mentor Institutional Trust.
Peter J. Quinn, Jr.* Trustee President, Mentor
901 E. Byrd Street Distributors, Inc.; Managing
Richmond, VA 23219 Director, Mentor Investment
Group, Inc. and Wheat First
Butcher Singer, Inc.;
formerly, Senior Vice
President/Director of Mutual
Funds, Wheat First Butcher
Singer, Inc.
</TABLE>
-7-
<PAGE>
<TABLE>
<S> <C>
Paul F. Costello President Managing Director, Wheat First
Butcher Singer, Inc. and Mentor
Investment Group, Inc.; President,
The Mentor Funds, Mentor Income
Fund, Inc., and Mentor Institutional
Trust; Executive Vice President and
Chief Administrative Officer, America's
Utility Fund, Inc.; Director, Mentor
Perpetual Advisors, Inc. and Mentor
Trust Company; formerly, President,
Mentor Series Trust; Director, President
and Chief Executive Officer, First
Variable Life Insurance Company;
President and Chief Financial Officer,
Variable Investors Series Trust;
President and Treasurer, Atlantic Capital
& Research, Inc.; Vice President and
Treasurer, Variable Stock Fund, Inc.,
Monarch Investment Series Trust, and GEICO
Tax Advantage Series Trust; Vice President,
Monarch Life Insurance Company, GEICO
Investment Services Company, Inc., Monarch
Investment Services Company, Inc., and
Springfield Life Insurance Company.
</TABLE>
-8-
<PAGE>
<TABLE>
<S> <C>
Terry L. Perkins Treasurer Vice President,
901 E. Byrd Street Mentor Investment
Richmond, VA 23219 Group, Inc.; Treasurer,
Mentor Institutional Trust,
The Mentor Funds, and
America's Utility Fund, Inc.;
Trustee, Mentor Income Fund,
Inc.; formerly, Treasurer and
Comptroller, Ryland Capital
Management, Inc.
John M. Ivan Secretary Managing Director and
10700 North Park Drive Director of Compliance
Glen Allen, VA 23060 since October 1992, and
Assistant General Counsel,
Wheat, First Securities, Inc.;
Managing Director and
Assistant Secretary, Wheat
First Butcher Singer Inc.
(formerly WFS Financial
Corporation); Clerk, Mentor
Institutional Trust; Secretary,
Mentor Income Fund, Inc. and
The Mentor Funds
</TABLE>
* This Trustee is deemed to be an "interested person" of a Fund
as defined in the 1940 Act.
Except as stated above, the principal occupations of the
officers and Trustees for the last five years have been with the
employers as shown above, although in some cases they have held
different positions with such employers.
The table below shows the fees paid to each Trustee by the
Trust for the 1995 fiscal year and the fees paid to each Trustee by all
funds in the Mentor Family (including the Trust) during the 1995
calendar year.
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<PAGE>
Total compensation
Aggregate compensation from all
Trustees from the Trust complex funds
Daniel J. Ludeman -- --
Arnold H. Dreyfuss $6,000 $12,200
Thomas F. Keller $6,000 $12,200
Louis W. Moelchert, Jr. $6,000 $12,200
Stanley F. Pauley $6,000 $12,200
Troy A. Peery, Jr. $6,000 $12,200
Peter J. Quinn, Jr. -- --
The Trustees do not receive pension or retirement benefits from the
Trust.
The Agreement and Declaration of Trust of the Trust provides
that the Trust will indemnify its Trustees and officers against
liabilities and expenses incurred in connection with litigation in which
they may be involved because of their offices with the Trust, except if
it is determined in the manner specified in the Agreement and
Declaration of Trust that they have not acted in good faith in the
reasonable belief that their actions were in the best interests of the
Trust or that such indemnification would relieve any officer or Trustee
of any liability to the Trust or its shareholders by reason of willful
misfeasance, bad faith, gross negligence, or reckless disregard of his
duties. The Trust, at its expense, may provide liability insurance for
the benefit of its Trustees and officers.
PRINCIPAL HOLDERS OF SECURITIES
As of September 1, 1996, the officers and Trustees of the Trust
owned as a group less than one percent of the outstanding shares of each
Fund. To the knowledge of the Trust, no person owned of record or
beneficially more than 5% of the outstanding shares of any Fund as of
that date.
INVESTMENT ADVISORY AND OTHER SERVICES
Under a Management Contract between the Trust and Commonwealth
Advisors, Inc. (the "Management Contract"), Commonwealth Advisors, at
its expense, provides the Funds with investment advisory services and
advises and assists the officers of the Trust in taking such steps as
are necessary or appropriate to carry out the decisions of its Trustees
regarding the conduct of business of the Trust and each Fund.
Commonwealth Advisors is a wholly-owned subsidiary of Mentor Investment
Group, Inc., which in turn is a subsidiary of Wheat First Butcher Singer
Inc., a diversified financial services holding company.
-10-
<PAGE>
The table below shows amounts paid to Commonwealth Advisors by each
Fund under the Management Contract for the periods indicated:
<TABLE>
<CAPTION>
December 20, 1993 Fiscal year Fiscal Year
(Commencement of operations) ended ended
to July 31, 1994 July 31, 1995 July 31, 1996
------------------------------------ ------------- -------------
<S> <C>
Cash Resource Money Market Fund $ 229,508 $ 616,369 $1,172,603
Cash Resource U.S. Government
Money Market Fund $ 1,121,385 $2,097,838 $2,660,041
Cash Resource Tax-Exempt Money
Market Fund $ 164,663 $ 486,638 $ 632,135
</TABLE>
The amounts paid under the Management Contract to Commonwealth
Advisors reflect expense reductions as follows, which are due to an
expense limitation:
<TABLE>
<CAPTION>
December 20, 1993 Fiscal year Fiscal year
(Commencement of operations) ended ended
to July 31, 1994 July 31, 1995 July 31, 1996
------------------------------------ ------------- -------------
<S> <C>
Cash Resource Money Market Fund $ 44,729 $ 0 $ 0
Cash Resource U.S. Government
Money Market Fund $ 161,394 $ 0 $ 0
Cash Resource Tax-Exempt
Money Market Fund $ 122,485 $48,886 $ 0
</TABLE>
Under a Subadviser Contract (the "Subadviser Contract") between
Commonwealth Investment Counsel, Inc. ("Commonwealth") and Commonwealth
Advisors, Commonwealth regularly provides the Funds with investment
research, advice, and supervision and furnishes continuously investment
programs consistent with the investment objectives and policies of the
various Funds, and determines, for the various Funds, what securities
shall be purchased, what securities shall be held or sold, and what
portion of a Fund's assets shall be held uninvested, subject always to
the provisions of the Agreement and Declaration of Trust and By-laws,
and of the 1940 Act, and to a Fund's investment objectives, policies,
and restrictions, and subject further to such policies and instructions
as the Trustees may from time to time establish.
Commonwealth Advisors and Commonwealth make available to the
Trust, without expense to the Trust, the services of such of their
directors, officers, and employees as may duly be elected Trustees or
officers of the Trust, subject to their individual consent to serve and
to any limitations imposed by law. Commonwealth Advisors pays the
compensation and expenses of officers and executive employees of the
Trust. Commonwealth Advisors also provides investment advisory research
and statistical facilities and all clerical services relating
-11-
<PAGE>
to such research, statistical, and investment work. Commonwealth
Advisors pays the Trust's office rent.
Under the Management Contract, the Trust is responsible for all
of its other expenses, including clerical salaries not related to
investment activities; fees and expenses incurred in connection with
membership in investment company organizations; brokers' commissions;
payment for portfolio pricing services to a pricing agent, if any; legal
expenses; auditing expenses; accounting expenses; taxes and governmental
fees; fees and expenses of the transfer agent and investor servicing
agents of the Trust; the cost of preparing share certificates or any
other expenses, including clerical expenses, incurred in connection with
the issue, sale, underwriting, redemption, or repurchase of shares; the
expenses of and fees for registering or qualifying securities for sale;
the fees and expenses of the Trustees of the Trust who are not
affiliated with Commonwealth Advisors; the cost of preparing and
distributing reports and notices to shareholders; public and investor
relations expenses; and fees and disbursements of custodians of a Fund's
assets. The Trust is also responsible for its expenses incurred in
connection with litigation, proceedings, and claims and the legal
obligation it may have to indemnify its officers and Trustees with
respect thereto.
Commonwealth Advisors has agreed that, if in any year the
aggregate expenses of any Fund (including fees pursuant to the
Management Contract but excluding interest, taxes, brokerage and
distribution fees and, with the prior written consent of the necessary
state securities commissions, extraordinary expenses) exceed the expense
limitation of any state having jurisdiction over the Trust, Commonwealth
Advisors will reimburse the Trust for such excess expense. This expense
reimbursement obligation is not limited to the amount of Commonwealth
Advisors' fees. Such expense reimbursement, if any, will be estimated,
reconciled and paid on a monthly basis. The most stringent state expense
limitation applicable to the Trust presently requires reimbursement of
expenses in any year that such expenses exceed the sum of 2.5% of the
first $30 million of the average daily net assets, 2.0% of the next $70
million of the average daily net assets, and 1.5% of the average daily
net assets over $100 million.
Each of the Management Contract and the Subadviser Contract
provide that Commonwealth Advisors or Commonwealth, respectively, shall
not be subject to any liability to a Fund or to any shareholder for any
act or omission in the course of, or connected with, its rendering
services under the relevant contract in the absence of willful
misfeasance, bad faith, gross negligence, or reckless disregard of its
duties.
Each of the Management Contract and the Subadviser Contract may
be terminated without penalty by vote of the Trustees as to any Fund or
by the shareholders of that Fund, or by Commonwealth Advisors (or
Commonwealth) on 30 days written notice. Each of the Management Contract
and the Subadviser Contract also terminates without payment of any
penalty in the event of its assignment. In addition, each of the
Management Contract and the Subadviser Contract may be amended only by a
vote of the shareholders of the affected Fund(s), and provides that it
will continue in effect from year to year only so long as such
-12-
<PAGE>
continuance is approved at least annually with respect to each Fund by
vote of either the Trustees or the shareholders of a Fund, and, in
either case, by a majority of the Trustees who are not "interested
persons" of Commonwealth Advisors (or Commonwealth). In such a case, the
vote of the shareholders is the affirmative vote of a "majority of the
outstanding voting securities" as defined in the Investment Company Act
of 1940, as amended (the "1940 Act").
Commonwealth Advisors and Commonwealth may place portfolio
transactions with broker-dealers which furnish, without cost, certain
research, statistical, and quotation services of value to them and their
affiliates in advising the Funds and other clients, provided that they
will always seek best price and execution with respect to transactions.
Certain investments may be appropriate for a Fund and for other clients
advised by Commonwealth Advisors and Commonwealth. Investment decisions
for a Fund and other clients are made with a view to achieving their
respective investment objectives and after consideration of such factors
as their current holdings, availability of cash for investment, and the
size of their investments generally. Frequently, a particular security
may be bought or sold for only one client or in different amounts and at
different times for more than one but less than all clients. Likewise, a
particular security may be bought for one or more clients when one or
more other clients are selling the security. In addition, purchases or
sales of the same security may be made for two or more clients of
Commonwealth Advisors or Commonwealth on the same day. In such event,
such transactions will be allocated among the clients in a manner
believed by Commonwealth Advisors or Commonwealth to be equitable to
each. In some cases, this procedure could have an adverse effect on the
price or amount of the securities purchased or sold by a Fund. Purchase
and sale orders for a Fund may be combined with those of other clients
of Commonwealth Advisors or Commonwealth, as the case may be, in the
interest of achieving the most favorable net results for the Fund.
Brokerage and Research Services. Transactions on U.S. stock
exchanges and other agency transactions involve the payment by a Fund of
negotiated brokerage commissions. Such commissions vary among different
brokers. Also, a particular broker may charge different commissions
according to such factors as the difficulty and size of the transaction.
Transactions in foreign securities often involve the payment of fixed
brokerage commissions, which are generally higher than those in the
United States. There is generally no stated commission in the case of
securities traded in the over-the-counter markets, but the price paid by
a Fund usually includes an undisclosed dealer commission or mark-up. In
underwritten offerings, the price paid by a Fund includes a disclosed,
fixed commission or discount retained by the underwriter or dealer.
Commonwealth Advisors and/or Commonwealth place all orders for
the purchase and sale of portfolio securities for the Funds and buy and
sell securities for the Funds through a substantial number of brokers
and dealers. In so doing, they use their best efforts to obtain for the
Funds the best price and execution available. In seeking the best price
and execution, Commonwealth Advisors and/or Commonwealth, having in mind
the Funds' best interests, consider all factors they deems relevant,
including, by way of illustration, price, the size of the transaction,
the nature of the market for the security, the amount of the commission,
the
-13-
<PAGE>
timing of the transaction taking into account market prices and trends,
the reputation, experience, and financial stability of the broker-dealer
involved, and the quality of service rendered by the broker-dealer in
other transactions.
It has for many years been a common practice in the investment
advisory business for advisers of investment companies and other
institutional investors to receive research, statistical, and quotation
services from broker-dealers which execute portfolio transactions for
the clients of such advisers. Consistent with this practice,
Commonwealth Advisors and Commonwealth may receive research,
statistical, and quotation services from many broker-dealers with which
they place a Fund's portfolio transactions. These services, which in
some cases may also be purchased for cash, include such matters as
general economic and security market reviews, industry and company
reviews, evaluations of securities, and recommendations as to the
purchase and sale of securities. Some of these services are of value to
Commonwealth Advisors, Commonwealth, and their affiliates in advising
various of their clients (including the Funds), although not all of
these services are necessarily useful and of value in managing the
Funds. The management fees paid by the Funds are not reduced because
Commonwealth Advisors, Commonwealth, and their affiliates receive such
services.
As permitted by Section 28(e) of the Securities Exchange Act of
1934, and by the Management Contract and the Subadviser Contract,
Commonwealth Advisors or Commonwealth, respectively, may cause a Fund to
pay a broker-dealer which provides brokerage and research services to
Commonwealth Advisors or Commonwealth an amount of disclosed commission
for effecting a securities transaction for that Fund in excess of the
commission which another broker-dealer would have charged for effecting
that transaction. Commonwealth Advisors' or Commonwealth's authority to
cause a Fund to pay any such greater commissions in also subject to such
policies as the Trustees may adopt from time to time.
Brokerage Commissions. It is anticipated that most purchases
and sales of portfolio investments will be with the issuer or with major
dealers in money market instruments acting as principal. Accordingly, it
is not anticipated that the Funds will pay significant brokerage
commissions. In underwritten offerings, the price paid by a Fund
includes a disclosed, fixed commission or discount retained by the
underwriter. There is generally no stated commission in the case of
securities purchased from or sold to dealers, but the prices of such
securities usually include an undisclosed dealer's mark-up or mark-down.
None of the Funds incurred brokerage or underwriting commissions in the
1994 fiscal period or the 1995 or 1996 fiscal years.
DETERMINATION OF NET ASSET VALUE
The net asset value per share of each Fund is determined twice
each day as of 12:00 noon and as of the close of regular trading
(generally 4:00 p.m. New York time) on each day the New York Stock
Exchange is open for trading. The New York Stock Exchange is normally
closed on the following national holidays: New Year's Day, President's
Day, Good
-14-
<PAGE>
Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving, and
Christmas.
The valuation of each Fund's portfolio securities is based upon
its amortized cost, which does not take into account unrealized
securities gains or losses. This method involves initially valuing an
instrument at its cost and thereafter assuming a constant amortization
to maturity of any discount or premium, regardless of the impact of
fluctuating interest rates on the market value of the instrument. By
using amortized cost valuation, each Fund seeks to maintain a constant
net asset value of $1.00 per share, despite minor shifts in the market
value of its portfolio securities. While this method provides certainty
in valuation, it may result in periods during which value, as determined
by amortized cost, is higher or lower than the price a Fund would
receive if it sold the instrument. During periods of declining interest
rates, the quoted yield on shares of a Fund may tend to be higher than a
like computation made by a fund with identical investments utilizing a
method of valuation based on market prices and estimates of market
prices for all of its portfolio instruments. Thus, if the use of
amortized cost by a Fund resulted in a lower aggregate portfolio value
on a particular day, a prospective investor in that Fund would be able
to obtain a somewhat higher yield if he purchased shares of the Fund on
that day, than would result from investment in a fund utilizing solely
market values, and existing investors in a Fund would receive less
investment income. The converse would apply on a day when the use of
amortized cost by a Fund resulted in a higher aggregate portfolio value.
However, as a result of certain procedures adopted by the Trust, the
Trust believes any difference will normally be minimal.
The valuation of a Fund's portfolio instruments at amortized
cost is permitted by Securities and Exchange Commission Rule 2a-7 and
certain procedures adopted by the Trustees. Under these procedures, a
Fund must maintain a dollar-weighted average portfolio maturity of 90
days or less, purchase only instruments having remaining maturities of
397 days or less, and invest in securities determined by the Trustees to
be of high quality with minimal credit risks. The Trustees have also
established procedures designed to stabilize, to the extent reasonably
possible, a Fund's price per share as computed for the purpose of
distribution, redemption and repurchase at $1.00. In the event
Commonwealth Advisors or Commonwealth determines that a deviation in net
asset value from $1.00 per share may result in material dilution or is
otherwise unfair to existing shareholders, it will take such corrective
action as it believes necessary and appropriate, including informing the
President of the Trust; the sale of portfolio instruments prior to
maturity to realize capital gains or losses or to shorten the average
portfolio maturity; withholding dividends; redemption of shares in kind;
or establishing a net asset value per share by using readily available
market quotations.
Since the net income of a Fund is declared as a dividend each
time it is determined, the net asset value per share of a Fund remains
at $1.00 per share immediately after such determination and dividend
declaration. Any increase in the value of a shareholder's investment in
a Fund representing the reinvestment of dividend income is reflected by
an increase in the number of shares of a Fund in the shareholder's
account on the last day of each month (or, if that day is not a business
day, on the next business day). It is expected that a Fund's net income
will be positive each time it is determined. However, if because of
realized
-15-
<PAGE>
losses on sales of portfolio investments, a sudden rise in interest
rates, or for any other reason the net income of a Fund determined at
any time is a negative amount, a Fund will offset such amount allocable
to each then shareholder's account from dividends accrued during the
month with respect to such account. If at the time of payment of a
dividend by a Fund (either at the regular monthly dividend payment date,
or, in the case of a shareholder who is withdrawing all or substantially
all of the shares in an account, at the time of withdrawal), such
negative amount exceeds a shareholder's accrued dividends, the Fund will
reduce the number of outstanding shares by treating the shareholder as
having contributed to the capital of the Fund that number of full and
fractional shares which represent the amount of the excess. Each
shareholder is deemed to have agreed to such contribution in these
circumstances by his or her investment in a Fund.
Should a Fund incur or anticipate, with respect to its
respective portfolio, any unusual or unexpected significant expense or
loss which would affect disproportionately the Fund's income for a
particular period, the Trustees would at that time consider whether to
adhere to the dividend policy described above or to revise it in light
of the then prevailing circumstances in order to ameliorate to the
extent possible the disproportionate effect of such expense or loss on
then existing shareholders. Such expenses or losses may nevertheless
result in a shareholder's receiving no dividends for the period during
which the shares are held and receiving upon redemption a price per
share lower than that which was paid.
The proceeds received by each Fund for each issue or sale of
its shares, and all income, earnings, profits, and proceeds thereof,
subject only to the rights of creditors, will be specifically allocated
to such Fund, and constitute the underlying assets of that Fund. The
underlying assets of each Fund will be segregated on the Trust's books
of account, and will be charged with the liabilities in respect of such
Fund and with a share of the general liabilities of the Trust. Expenses
with respect to any two or more Funds may be allocated in proportion to
the net asset values of the respective Funds except where allocations of
direct expenses can otherwise be fairly made.
TAXES
Each Fund of the Trust intends to qualify each year and elect
to be taxed as a regulated investment company under Subchapter M of the
United States Internal Revenue Code of 1986, as amended (the "Code").
As a regulated investment company qualifying to have its tax
liability determined under Subchapter M, a Fund will not be subject to
federal income tax on any of its net investment income or net realized
capital gains that are distributed to its shareholders. As series of
Massachusetts business trust, the Funds under present law will not be
subject to any excise or income taxes in Massachusetts.
Other than dividends from Cash Resource Tax-Exempt Money Market
Fund that are excludable from income, distributions from a Fund will be
taxable to a shareholder whether
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<PAGE>
received in cash or additional shares. Such distributions that are
designated as capital gains distributions will be taxable as such,
regardless of how long Fund shares are held, while other taxable
distributions will be taxed as ordinary income. Loss on the sale of Fund
shares held for less than six months will be treated as a long term
capital loss to the extent of any capital gain distribution received
with respect to such shares (and will be disallowed to the extent of
exempt-interest dividends received with respect to such shares). Also
interest on indebtedness incurred to purchase shares of Cash Resource
Tax-Exempt Money Market Fund may be nondeductible.
In order to qualify as a "regulated investment company," a Fund
must, among other things, (a) derive at least 90% of its gross income
from dividends, interest, payments with respect to securities loans,
gains from the sale or other dispositions of stock, securities, or
foreign currencies, and other income (including gains from options,
futures, or forward contracts) derived with respect to its business of
investing in such stock, securities, or currencies; (b) derive less than
30% of its gross income from the sale or other disposition of certain
assets (including stock and securities) held less than three months; (c)
diversify its holdings so that, at the close of each quarter of its
taxable year, (i) at least 50% of the value of its total assets consists
of cash, cash items, U.S. Government Securities, and other securities
limited generally with respect to any one issuer to not more than 5% of
the total assets of a Fund and not more than 10% of the outstanding
voting securities of such issuer, and (ii) not more than 25% of the
value of its assets is invested in the securities of any issuer (other
than U.S. Government Securities). In order to receive the favorable tax
treatment accorded regulated investment companies and their
shareholders, moreover, a Fund must in general distribute at least 90%
of its interest, dividends, net short-term capital gain, and certain
other income each year. To satisfy these requirements, a Fund may engage
in investment techniques that affect the amount, timing and character of
its income and distributions.
An excise tax at the rate of 4% will be imposed on the excess,
if any, of each Fund's "required distribution" over its actual
distributions in any calendar year. Generally, the "required
distribution" is 98% of the Fund's ordinary income for the calendar year
plus 98% of its capital gain net income recognized during the one-year
period ending on October 31 (or December 31, if the Fund so elects) plus
undistributed amounts from prior years. Each Fund intends to make
distributions sufficient to avoid imposition of the excise tax.
Distributions declared by a Fund during October, November or December to
shareholders of record on a date in any such month and paid by the Fund
during the following January will be treated for federal tax purposes as
paid by the Fund and received by shareholders on December 31 of the year
in which declared.
Each Fund is required to withhold 31% of all income dividends
and capital gain distributions, and 31% of the gross proceeds of all
redemptions of Fund shares, in the case of any shareholder who does not
provide a correct taxpayer identification number, about whom a Fund is
notified that the shareholder has underreported income in the past, or
who fails to certify to a Fund that the shareholder is not subject to
such withholding. Tax-exempt shareholders are not subject to these
back-up withholding rules so long as they furnish the
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<PAGE>
Fund with a proper certification.
Exempt-interest dividends. A Fund will be qualified to pay
exempt-interest dividends to its shareholders only if, at the close of
each quarter of the Fund's taxable year, at least 50% of the total value
of the Fund's assets consists of obligations the interest on which is
exempt from federal income tax. Distributions that a Fund properly
designates as exempt-interest dividends are treated as interest
excludable from shareholders' gross income for federal income tax
purposes but may be taxable for federal alternative minimum tax purposes
and for state and local purposes. If a Fund intends to be qualified to
pay exempt-interest dividends, the Fund may be limited in its ability to
enter into taxable transactions involving forward commitments,
repurchase agreements, financial futures and options contracts on
financial futures, tax-exempt bond indices and other assets.
Part or all of the interest on indebtedness, if any, incurred
or continued by a shareholder to purchase or carry shares of a Fund
paying exempt-interest dividends is not deductible. The portion of
interest that is not deductible is equal to the total interest paid or
accrued on the indebtedness, multiplied by the percentage of a Fund's
total distributions (not including distributions from net long-term
capital gains) paid to the shareholder that are exempt-interest
dividends. Under rules used by the Internal Revenue Service for
determining when borrowed funds are considered used for the purpose of
purchasing or carrying particular assets, the purchase of shares may be
considered to have been made with borrowed funds even though such funds
are not directly traceable to the purchase of shares.
In general, exempt-interest dividends, if any, attributable to
interest received on certain private activity obligations and certain
industrial development bonds will not be tax-exempt to any shareholders
who are "substantial users" of the facilities financed by such
obligations or bonds or who are "related persons" of such substantial
users.
A Fund which is qualified to pay exempt-interest dividends will
inform investors within 60 days of the Fund's fiscal year-end of the
percentage of its income distributions designated as tax-exempt. The
percentage is applied uniformly to all distributions made during the
year. The percentage of income designated as tax-exempt for any
particular distribution may be substantially different from the
percentage of a Fund's income that was tax-exempt during the period
covered by the distribution.
Securities issued or purchased at a discount. A Fund's
investment in securities issued at a discount and certain other
obligations will (and investments in securities purchased at a discount
may) require the Fund to accrue and distribute income not yet received.
In order to generate sufficient cash to make the requisite
distributions, a Fund may be required to sell securities in its
portfolio that it otherwise would have continued to hold.
The foregoing is a general and abbreviated summary of the
applicable provisions of the Code and related regulations currently in
effect. For the complete provisions, reference should be made to the
pertinent Code sections and regulations. The Code and regulations are
-18-
<PAGE>
subject to change by legislative or administrative actions. Dividends
and distributions also may be subject to state and federal taxes.
Shareholders are urged to consult their tax advisers regarding specific
questions as to federal, state or local taxes. The foregoing discussion
relates solely to U.S. federal income tax law. Non-U.S. investors should
consult their tax advisers concerning the tax consequences of ownership
of shares of the Fund, including the possibility that distributions may
be subject to a 30% United States withholding tax (or a reduced rate of
withholding provided by treaty).
DISTRIBUTION
Mentor Distributors, Inc. is the principal underwriter of the
continually offered shares of each of the Funds pursuant to a
Distribution Agreement with the Trust. Mentor Distributors is not
obligated to sell any specific amount of shares of any Fund and will
purchase shares of a Fund for resale only against orders for shares.
The Trust, on behalf of each Fund, has adopted a Distribution
Plan and Agreement pursuant to Rule 12b-1 under the 1940 Act (each, a
"Plan"). The purpose of each Plan is to permit a Fund to compensate
Mentor Distributors for services provided and expenses incurred by it in
promoting the sale of shares of the Funds, reducing redemptions, or
maintaining or improving services provided to shareholders. Each Plan
provides for payments by each Fund to Mentor Distributors at the annual
rate of up to 0.38% of the Fund's average net assets (0.33% in the case
of Cash Resource Tax-Exempt Money Market Fund), subject to the authority
of the Trustees to reduce the amount of payments or to suspend the Plans
as to any Fund for such periods as they may determine. Subject to these
limitations, the amount of such payments and the specific purposes for
which they are made shall be determined by the Trustees.
For the periods indicated, each Fund paid the following amounts to
Mentor Distributors under its respective Plan:
<TABLE>
<CAPTION>
December 20, 1993 Fiscal year Fiscal year
(Commencement of operations) ended ended
to July 31, 1994 July 31, 1995 July 31, 1996
------------------------------------ ------------- -------------
<S> <C>
Cash Resource Money Market Fund $ 457,505 $1,060,999 $2,042,872
Cash Resource U.S. Government
Money Market Fund $2,212,290 $3,764,477 $5,015,877
Cash Resource Tax-Exempt Money
Market Fund $ 420,006 $ 729,833 $ 948,202
</TABLE>
-19-
<PAGE>
Mentor Distributors paid distribution expenses to Financial
Institutions (including affiliates of Mentor Distributors qualifying as
Financial Institutions) in respect of the Funds as follows:
<TABLE>
<CAPTION>
December 20, 1993 Fiscal year Fiscal year
(Commencement of operations) ended ended
to July 31, 1994 July 31, 1995 July 31, 1996
------------------------------------ ------------- -------------
<S> <C>
Cash Resource Money Market Fund $ 474,834 $1,060,999 $2,042,872
Cash Resource U.S. Government
Money Market Fund $ 2,326,017 $3,764,477 $5,015,877
Cash Resource Tax-Exempt Money
Market Fund $ 431,813 $ 729,833 $ 948,202
</TABLE>
Continuance of a Plan is subject to annual approval by a vote
of the Trustees, including a majority of the Trustees who are not
interested persons of the Trust, and have no direct or indirect
financial interest in the operation of the Plan and related agreements
(the "Qualified Trustees"), cast in person at a meeting called for that
purpose. All material amendments to a Plan must be likewise approved by
the Trustees and the Qualified Trustees.
A Plan may not be amended in order to increase materially the
costs which a Fund may bear for distribution pursuant to the Plan
without also being approved by a majority of the outstanding voting
securities of that Fund. Each Plan terminates automatically in the event
of its assignment and may be terminated as to any Fund without penalty,
at any time, by a vote of a majority of the outstanding voting
securities of the Fund or by a vote of a majority of the Qualified
Trustees.
In order to compensate selected financial institutions, such as
investment dealers and banks through which shares of each Fund are sold
("Financial Institutions") for services provided in connection with
sales of shares of each Fund and/or for administrative services and the
maintenance of shareholder accounts, Mentor Distributors may make
periodic payments to qualifying Financial Institutions based on the
average net asset value of shares of a Fund which are attributable to
shareholders for whom the Financial Institutions are designated as the
dealer of record. Mentor Distributors may make such payments at the
annual rate of up to 0.40% of the average net asset value of such shares
(0.33% in the case of Cash Resource Tax-Exempt Money Market Fund). For
this purpose, "average net assets" attributable to a shareholder account
means the product of (i) the average daily share balance of the Fund
account times (ii) the Fund's average daily net asset value per share.
For administrative reasons, Mentor Distributors may enter into
agreements with certain Financial Institutions providing for the
calculation of "average net assets" on the basis of assets of the
accounts of the Financial Institutions' customers on an established day
in this period. Mentor Distributors may suspend or modify these payments
at any time, and payments are subject to the continuation of the Fund's
Distribution Plan described above and the terms of related agreements
between Financial Institutions and Mentor Distributors.
-20-
<PAGE>
ORGANIZATION
The Trust is an open-end investment company established under
the laws of The Commonwealth of Massachusetts by Agreement and
Declaration of Trust dated June 14, 1993.
Shares entitle their holders to one vote per share, with
fractional shares voting proportionally; however, separate votes will be
taken by each Fund on matters affecting an individual Fund.
Additionally, approval of the Management Contract is a matter to be
determined separately by each Fund. Shares have noncumulative voting
rights. Although a Fund is not required to hold annual meetings of its
shareholders, shareholders have the right to call a meeting to elect or
remove Trustees or to take other actions as provided in the Declaration
of Trust. Shares have no preemptive or subscription rights, and are
transferable. Shares are entitled to dividends as declared by the
Trustees, and if a Fund were liquidated, the shares of that Fund would
receive the net assets of that Fund. The Trust may suspend the sale of
shares at any time and may refuse any order to purchase shares.
Additional Funds may be created from time to time with
different investment objectives. Any additional Funds may be managed by
investment advisers or sub-advisers other than Commonwealth Advisors or
Commonwealth. In addition, the Trustees have the right, subject to any
necessary regulatory approvals, to create more than one class of shares
in a Fund, with the classes being subject to different charges and
expenses and having such other different rights as the Trustees may
prescribe and to terminate any Fund of the Trust.
PORTFOLIO TURNOVER
The portfolio turnover rate of a Fund is defined by the
Securities and Exchange Commission as the ratio of the lesser of annual
sales or purchases to the monthly average value of the portfolio,
excluding from both the numerator and the denominator securities with
maturities at the time of acquisition of one year or less. Under that
definition, the Funds will have no portfolio turnover. Portfolio
turnover generally involves some expense to a Fund, including brokerage
commissions or dealer mark-ups and other transaction costs on the sale
of securities and reinvestment in other securities.
CUSTODIAN
Investors Fiduciary Trust Company, 127 West 10th Street, Kansas
City, Missouri 64105, is the custodian of the Trust's assets. The
custodian's responsibilities include safeguarding and controlling the
Trust's cash and securities, handling the receipt and delivery of
securities, and collecting interest and dividends on the Trust's
investments. The custodian does not determine the investment policies of
the Trust or decide which securities the Trust will buy or sell.
-21-
<PAGE>
INDEPENDENT AUDITORS
KPMG Peat Marwick LLP, located at 99 High Street, Boston,
Massachusetts 02110, are the Trust's independent auditors, providing
audit services, tax return preparation, and other tax consulting
services and assistance and consultation in connection with the review
of various Securities and Exchange Commission filings.
PERFORMANCE INFORMATION
Based on the seven-day period ended July 31, 1996, Cash
Resource Money Market Fund's yield was 4.66% and its effective yield was
4.77%. Based on the seven-day period ended July 31, 1996, Cash Resource
U.S. Government Money Market Fund's yield was 4.47% and its effective
yield was 4.57%. See below for information on how these Funds' yields
and effective yields are calculated.
Based on the seven-day period ended July 31, 1996, Cash
Resource Tax-Exempt Money Market Fund's tax-exempt yield was 2.79%, and
its tax-exempt effective yield was 2.83%. A shareholder in a 31.00%
federal tax bracket would have to earn 4.04% from a taxable investment
to produce an after-tax yield equal to the Fund's tax-exempt yield of
2.79% and an effective yield of 4.10% from a taxable investment to
produce an after-tax yield equal to the Fund's tax-exempt effective
yield of 2.83%. See below for information on how the Fund's tax-exempt
yield and tax-exempt effective yield are calculated.
The yield of each Fund is computed by determining the
percentage net change, excluding capital changes, in the value of an
investment in one share of such Fund over the base period, and
multiplying the net change by 365/7 (or approximately 52 weeks). A
Fund's effective yield represents a compounding of the yield by adding 1
to the number representing the percentage change in value of the
investment during the base period, raising that sum to a power equal to
365/7, and subtracting 1 from the result.
In the case of Cash Resource Tax-Exempt Money Market Fund, the
Fund's tax- equivalent yield during the base period may be presented for
shareholders in one or more stated tax brackets. Tax-equivalent yield is
calculated by adjusting the Fund's tax-exempt yield by a factor designed
to show the approximate yield that a taxable investment would have to
earn to produce an after-tax yield equal, for that shareholder, to the
Fund's tax-exempt yield. The Fund's tax-equivalent yield will differ for
shareholders in other tax brackets.
-22-
<PAGE>
EQUIVALENT YIELDS: TAX-EXEMPT VERSUS TAXABLE SECURITIES FOR THE CASH
RESOURCE TAX-EXEMPT MONEY MARKET FUND
The table below shows the effect of the tax status of Tax-Exempt
Securities on the effective yield received by their individual holders
under the federal income tax laws currently in effect for 1996. It gives
the approximate yield a taxable security must earn at various income
levels to produce after-tax yields equivalent to those of Tax-Exempt
Securities yielding from 2.0% to 10.0%.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
Marginal
Taxable Income* federal Tax-exempt yield
______________ income ____________________________________________________________________
tax**
Joint Single Rate 2% 3% 4% 5% 6% 7% 8% 9% 10%
- ------------------------------------------------------------------------------------------------------------
Equivalent taxable yield
<S> <C>
$0- 40,100 $0- 24,000 15.00% 2.35% 3.53% 4.71% 5.88% 7.06% 8.24% 9.41% 10.59% 11.76%
40,101- 96,900 24,001- 58,150 28.00% 2.78% 4.17% 5.56% 6.94% 8.33% 9.72% 11.11% 12.50% 13.89%
96,901-147,700 58,151-121,300 31.00% 2.90% 4.35% 5.80% 7.25% 8.70% 10.14% 11.59% 13.04% 14.49%
147,701-263,750 121,301-263,750 36.00% 3.13% 4.69% 6.25% 7.81% 9.38% 10.94% 12.50% 14.06% 15.63%
over 263,750 over 263,750 39.60% 3.31% 4.97% 6.62% 8.28% 9.93% 11.59% 13.25% 14.90% 16.56%
</TABLE>
- ------------------
* This amount represents taxable income as defined in the
Internal Revenue Code of 1986, as amended (the "Code"), after
any deduction for personal exemptions and the greater of the
standard deduction or itemized deductions.
** These rates are the marginal federal income tax rates on
taxable income currently in effect for 1996 under the Code.
Of course, there is no assurance that the Tax-Exempt Money
Market Fund will achieve any specific tax-exempt yield. While
it is expected that the Tax-Exempt Money Market Fund will
invest principally in obligations which pay interest exempt
from federal income tax, other income received by the
Tax-Exempt Money Market Fund may be taxable. The table does not
take into account any state or local taxes payable on
Tax-Exempt Money Market Fund distributions.
-23-
<PAGE>
From time to time, the Adviser may reduce its compensation or
assume expenses of a Fund in order to reduce a Fund's expenses, as
described in the Trust's current prospectus. Any such waiver or
assumption would increase that Fund's yield during the period of the
waiver or assumption.
Independent statistical agencies measure a Fund's investment
performance and publish comparative information showing how the Fund,
and other investment companies, performed in specified time periods.
Three agencies whose reports are commonly used for such comparisons are
set forth below. From time to time, a Fund may distribute these
comparisons to its shareholders or to potential investors. The agencies
listed below measure performance based on their own criteria rather than
on the standardized performance measures described in the preceding
section.
Lipper Analytical Services, Inc. distributes mutual fund
rankings monthly. The rankings are based on total return performance
calculated by Lipper, reflecting generally changes in net asset value
adjusted for reinvestment of capital gains and income dividends. They do
not reflect deduction of any sales charges. Lipper rankings cover a
variety of performance periods, for example year-to-date, 1-year,
5-year, and 10-year performance. Lipper classifies mutual funds by
investment objective and asset category.
Morningstar, Inc. distributes mutual fund ratings twice a
month. the ratings are divided into five groups: highest, above average,
neutral, below average and lowest. They represent a fund's historical
risk/reward ratio relative to other funds with similar objectives. The
performance factor is a weighted-average assessment of the Fund's
3-year, 5-year, and 10-year total return performance (if available)
reflecting deduction of expenses and sales charges. Performance is
adjusted using quantitative techniques to reflect the risk profile of
the fund. The ratings are derived from a purely quantitative system that
does not utilize the subjective criteria customarily employed by rating
agencies such as Standard & Poor's Corporation and Moody's Investor
Service, Inc.
Weisenberger's Management Results publishes mutual fund
rankings and is distributed monthly. The rankings are based entirely on
total return calculated by Weisenberger for periods such as
year-to-date, 1-year, 3-year, 5-year and 10-year performance. Mutual
funds are ranked in general categories (e.g., international bond,
international equity, municipal bond, and maximum capital gain).
Weisenberger rankings do not reflect deduction of sales charges or fees.
Independent publications may also evaluate a Fund's
performance. Certain of those publications are listed below, at the
request of Mentor Distributors, which bears full responsibility for
their use and the descriptions appearing below. From time to time any or
all of the Funds may distribute evaluations by or excerpts from these
publications to its shareholders or to potential investors. The
following illustrates the types of information provided by these
publications.
-24-
<PAGE>
Business Week publishes mutual fund rankings in its Investment
Figures of the Week column. The rankings are based on 4-week and 52-week
total return reflecting changes in net asset value and the reinvestment
of all distributions. They do not reflect deduction of any sales
charges. Funds are not categorized; they compete in a large universe of
over 2,000 funds. The source for rankings is data generated by
Morningstar, Inc.
Investor's Business Daily publishes mutual fund rankings on a
daily basis. The rankings are depicted as the top 25 funds in a given
category. The categories are based loosely on the type of fund, e.g.,
growth funds, balanced funds, U.S. government funds, GNMA funds, growth
and income funds, corporate bond funds, etc. Performance periods for
sector equity funds can vary from 4 weeks to 39 weeks; performance
periods for other fund groups vary from 1 year to 3 years. Total return
performance reflects changes in net asset value and reinvestment of
dividends and capital gains. The rankings are based strictly on total
return. They do not reflect deduction of any sales charges Performance
grades are conferred from A+ to E. An A+ rating means that the fund has
performed within the top 5% of a general universe of over 2000 funds; an
A rating denotes the top 10%; an A- is given to the top 15%, etc.
Barron's periodically publishes mutual fund rankings. The
rankings are based on total return performance provided by Lipper
Analytical Services. The Lipper total return data reflects changes in
net asset value and reinvestment of distributions, but does not reflect
deduction of any sales charges. The performance periods vary from
short-term intervals (current quarter or year-to-date, for example) to
long-term periods (five-year or ten-year performance, for example).
Barron's classifies the funds using the Lipper mutual fund categories,
such as Capital Appreciation Funds, Growth Funds, U.S. Government Funds,
Equity Income Funds, Global Funds, etc. Occasionally, Barron's modifies
the Lipper information by ranking the funds in asset classes. "Large
funds" may be those with assets in excess of $25 million; "small funds"
may be those with less than $25 million in assets.
The Wall Street Journal publishes its Mutual Fund Scorecard on
a daily basis. Each Scorecard is a ranking of the top-15 funds in a
given Lipper Analytical Services category. Lipper provides the rankings
based on its total return data reflecting changes in net asset value and
reinvestment of distributions and not reflecting any sales charges. The
Scorecard portrays 4-week, year-to-date, one-year and 5-year
performance; however, the ranking is based on the one-year results. The
rankings for any given category appear approximately once per month.
Fortune magazine periodically publishes mutual fund rankings
that have been compiled for the magazine by Morningstar, Inc. Funds are
placed in stock or bond fund categories (for example, aggressive growth
stock funds, growth stock funds, small company stock funds, junk bond
funds, Treasury bond funds etc.), with the top-10 stock funds and the
top-5 bond funds appearing in the rankings. The rankings are based on
3-year annualized total return reflecting changes in net asset value and
reinvestment of distributions and not
-25-
<PAGE>
reflecting sales charges. Performance is adjusted using quantitative
techniques to reflect the risk profile of the fund.
Money magazine periodically publishes mutual fund rankings on a
database of funds tracked for performance by Lipper Analytical Services.
The funds are placed in 23 stock or bond fund categories and analyzed
for five-year risk adjusted return. Total return reflects changes in net
asset value and reinvestment of all dividends and capital gains
distributions and does not reflect deduction of any sales charges.
Grades are conferred (from A to E): the top 20% in each category receive
an A, the next 20% a B, etc. To be ranked, a fund must be at least one
year old, accept a minimum investment of $25,000 or less and have had
assets of at least $25 million as of a given date.
Financial World publishes its monthly Independent Appraisals of
Mutual Funds, a survey of approximately 1000 mutual funds. Funds are
categorized as to type, e.g., balanced funds, corporate bond funds,
global bond funds, growth and income funds, U.S. government bond funds,
etc. To compete, funds must be over one year old, have over $1 million
in assets, require a maximum of $10,000 initial investment, and should
be available in at least 10 states in the United States. The funds
receive a composite past performance rating, which weighs the
intermediate - and long-term past performance of each fund versus its
category, as well as taking into account its risk, reward to risk, and
fees. An A+ rated fund is one of the best, while a D- rated fund is one
of the worst. The source for Financial World rating is Schabacker
investment management in Rockville, Maryland.
Forbes magazine periodically publishes mutual fund ratings
based on performance over at least two bull and bear market cycles. The
funds are categorized by type, including stock and balanced funds,
taxable bond funds, municipal bond funds, etc. Data sources include
Lipper Analytical Services and CDA Investment Technologies. The ratings
are based strictly on performance at net asset value over the given
cycles. Funds performing in the top 5% receive an A+ rating; the top 15%
receive an A rating; and so on until the bottom 5% receive an F rating.
Each fund exhibits two ratings, one for performance in "up" markets and
another for performance in "down" markets.
Kiplinger's Personal Finance Magazine (formerly Changing
Times), periodically publishes rankings of mutual funds based on one-,
three- and five-year total return performance reflecting changes in net
asset value and reinvestment of dividends and capital gains and not
reflecting deduction of any sales charges. Funds are ranked by tenths: a
rank of 1 means that a fund was among the highest 10% in total return
for the period; a rank of 10 denotes the bottom 10%. Funds compete in
categories of similar funds -- aggressive growth funds, growth and
income funds, sector funds, corporate bond funds, global governmental
bond funds, mortgage-backed securities funds, etc. Kiplinger's also
provides a risk-adjusted grade in both rising and falling markets. Funds
are graded against others with the same objective. The average weekly
total return over two years is calculated. Performance is adjusted using
quantitative techniques to reflect the risk profile of the fund.
-26-
<PAGE>
U.S. News and World Report periodically publishes mutual fund
rankings based on an overall performance index (OPI) devised by Kanon
Bloch Carre & Co., a Boston research firm. Over 2000 funds are tracked
and divided into 10 equity, taxable bond and tax-free bond categories.
Funds compete within the 10 groups and three broad categories. The OPI
is a number from 0-100 that measures the relative performance of funds
at least three years old over the last 1, 3, 5 and 10 years and the last
six bear markets. Total return reflects changes in net asset value and
the reinvestment of any dividends and capital gains distributions and
does not reflect deduction of any sales charges. Results for the longer
periods receive the most weight.
The 100 Best Mutual Funds You Can Buy (1992), authored by
Gordon K. Williamson. The author's list of funds is divided into 12
equity and bond fund categories, and the 100 funds are determined by
applying four criteria. First, equity funds whose current management
teams have been in place for less than five years are eliminated. (The
standard for bond funds is three years.) Second, the author excludes any
fund that ranks in the bottom 20 percent of its category's risk level.
Risk is determined by analyzing how many months over the past three
years the fund has underperformed a bank CD or a U.S. Treasury bill.
Third, a fund must have demonstrated strong results for current
three-year and five-year performance. Fourth, the fund must either
possess, in Mr. Williamson's judgment, "excellent" risk-adjusted return
or "superior" return with low levels of risk. Each of the 100 funds is
ranked in five categories: total return, risk/volatility, management,
current income and expenses. The rankings follow a five-point system:
zero designates "poor"; one point means "fair"; two points denote
"good"; three points qualify as a "very good"; four points rank as
"superior"; and five points mean "excellent.
SHAREHOLDER LIABILITY
Under Massachusetts law, shareholders could, under certain
circumstances, be held personally liable for the obligations of the
Trust. However, the Agreement and Declaration of Trust disclaims
shareholder liability for acts or obligations of the Trust and requires
that notice of such disclaimer be given in each agreement, obligation,
or instrument entered into or executed by the Trust or the Trustee. The
Agreement and Declaration of Trust provides for indemnification out of a
Fund's property for all loss and expense of any shareholder held
personally liable for the obligations of a Fund. Thus the risk of a
shareholder's incurring financial loss on account of shareholder
liability is limited to circumstances in which a Fund would be unable to
meet its obligations.
-27-
<PAGE>
FINANCIAL STATEMENTS
[Insert financials from Cash Resource Trust annual report here]
-28-
<PAGE>
CASH RESOURCE TRUST
STATEMENTS OF ASSETS AND LIABILITIES
JULY 31, 1996
(IN THOUSANDS)
<TABLE>
<CAPTION>
U.S.
MONEY GOVERNMENT TAX-EXEMPT
MARKET MONEY MARKET MONEY MARKET
FUND FUND FUND
- ------------------------------------------------------------------------------------------------------------
<S> <C>
ASSETS
Investments, at amortized cost (Note 2)
Investment securities $590,078 $ 836,547 $291,860
Repurchase agreements 64,345 568,721 -
- ------------------------------------------------------------------------------------------------------------
Total investments 654,423 1,405,268 291,860
Receivables
Interest receivable 1,147 1,994 1,797
Shares of the portfolio sold 201 191 26
Investments sold - - 1,003
Deferred expenses (Note 2) 65 301 66
Other 371 - 74
- ------------------------------------------------------------------------------------------------------------
Total assets 656,207 1,407,754 294,826
- ------------------------------------------------------------------------------------------------------------
LIABILITIES
Payables
Dividends 1,346 2,766 355
Investments purchased - - 3,012
Shares of the portfolio redeemed 8,181 2,014 514
Accrued distribution fee (Note 3) 45 117 16
Accrued expenses and other liabilities 135 460 38
- ------------------------------------------------------------------------------------------------------------
Total liabilities 9,707 5,357 3,935
- ------------------------------------------------------------------------------------------------------------
NET ASSETS $646,500 $ 1,402,397 $290,891
- ------------------------------------------------------------------------------------------------------------
Shares outstanding 646,500 1,402,450 290,894
Net asset value per share $ 1.00 $ 1.00 $ 1.00
- ------------------------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
14
<PAGE>
CASH RESOURCE TRUST
STATEMENTS OF OPERATIONS
YEAR ENDED JULY 31, 1996
(IN THOUSANDS)
<TABLE>
<CAPTION>
MONEY U.S. GOVERNMENT TAX-EXEMPT
MARKET MONEY MARKET MONEY MARKET
FUND FUND FUND
- ------------------------------------------------------------------------------------------------------------
<S> <C>
INVESTMENT INCOME
Interest $30,098 $73,399 $ 10,373
- ------------------------------------------------------------------------------------------------------------
EXPENSES
Distribution fee (Note 3) 2,043 5,016 948
Management fee (Note 3) 1,173 2,660 632
Transfer agent fee (Note 3) 758 2,943 304
Custodian and accounting fees (Note 3) 198 735 140
Shareholder reports 84 344 29
Registration fees 73 274 85
Professional fees 40 137 22
Organizational expenses 10 66 12
Directors' fees 6 22 5
Other 36 122 12
- ------------------------------------------------------------------------------------------------------------
Total expenses 4,421 12,319 2,189
- ------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME 25,677 61,080 8,184
- ------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations $25,677 $61,080 $ 8,184
- ------------------------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
15
<PAGE>
CASH RESOURCE TRUST
STATEMENTS OF CHANGES IN NET ASSETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
MONEY U.S. GOVERNMENT TAX-EXEMPT
MARKET MONEY MARKET MONEY MARKET
FUND FUND FUND
------------------------- ------------------------- ----------------------
Year Ended July 31, 1996 1995 1996 1995 1996 1995
- ------------------------------------------------------------------------------------------------------------
<S> <C>
INCREASE IN NET ASSETS
OPERATIONS
Net investment income $ 25,677 $ 13,949 $ 61,080 $ 47,780 $ 8,184 $ 6,665
Net realized gain (loss)
on investments sold - 4 - (53) - (3)
- ------------------------------------------------------------------------------------------------------------
Increase in net
assets from
operations 25,677 13,953 61,080 47,727 8,184 6,662
DISTRIBUTIONS TO
SHAREHOLDERS
Net investment income (25,677) (13,949) (61,080) (47,780) (8,184) (6,665)
Net realized gain on
investments - (4) - - - -
- ------------------------------------------------------------------------------------------------------------
Net decrease from
distributions (25,677) (13,953) (61,080) (47,780) (8,184) (6,665)
- ------------------------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS
(AT $1.00 PER SHARE)
Net proceeds from sale of
shares 3,001,684 1,715,060 5,769,658 4,322,307 1,194,000 1,029,842
Reinvestment of dividends 25,161 13,420 60,634 46,908 8,146 6,528
Cost of shares redeemed (2,803,002) (1,498,083) (5,644,585) (4,060,291) (1,178,150) (965,174)
- ------------------------------------------------------------------------------------------------------------
Change in net assets
from capital share
transactions 223,843 230,397 185,707 308,924 23,996 71,196
- ------------------------------------------------------------------------------------------------------------
Net increase in net assets 223,843 230,397 185,707 308,871 23,996 71,193
NET ASSETS
Beginning of year 422,657 192,260 1,216,690 907,819 266,895 195,702
- ------------------------------------------------------------------------------------------------------------
End of year $ 646,500 $ 422,657 $ 1,402,397 $ 1,216,690 $ 290,891 $ 266,895
- ------------------------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
16
<PAGE>
CASH RESOURCE TRUST
MONEY MARKET FUND
PORTFOLIO OF INVESTMENTS
JULY 31, 1996
(IN THOUSANDS)
<TABLE>
<CAPTION>
PERCENT OF PRINCIPAL VALUE
NET ASSETS AMOUNT (NOTE 2)
<S> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------
BANKERS ACCEPTANCES 5.98%
Nationsbank Corporation, 5.39%, 8/07/96 $14,000 $ 13,987
Nationsbank of Texas, 5.31%, 11/15/96 5,000 4,922
Wachovia Bank, 5.42%, 10/29/96 20,000 19,732
- -------------------------------------------------------------------------------------------------------------
TOTAL BANKERS ACCEPTANCES 38,641
- -------------------------------------------------------------------------------------------------------------
BANK NOTES 6.18%
Bank of America, 5.54%, 10/15/96 20,000 20,000
First of America, 4.98%, 12/19/96 20,000 19,956
- -------------------------------------------------------------------------------------------------------------
TOTAL BANK NOTES 39,956
- -------------------------------------------------------------------------------------------------------------
CERTIFICATES OF DEPOSIT 3.09%
First Alabama Bank, 5.37%, 8/05/96 5,000 5,000
First Alabama Bank, 5.47%, 9/09/96 15,000 15,000
- -------------------------------------------------------------------------------------------------------------
TOTAL CERTIFICATES OF DEPOSIT 20,000
- -------------------------------------------------------------------------------------------------------------
COMMERCIAL PAPER 65.96%
APPAREL & ACCESSORY STORES 3.08%
J.C. Penney Funding Corporation, 5.29%, 9/06/96 20,000 19,894
- -------------------------------------------------------------------------------------------------------------
ASSET BACKED SECURITIES 6.17%
CIESCO Limited Partnership, 5.36%, 8/07/96 15,000 14,987
Greenwich Funding Corporation, 5.37%, 8/20/96 (a) 25,000 24,929
- -------------------------------------------------------------------------------------------------------------
Total Asset Backed Securities 39,916
- -------------------------------------------------------------------------------------------------------------
COMMERCIAL BANKS 17.62%
ABN-Amro North America Finance, Inc., 5.32%, 11/08/96 10,000 9,854
ABN-Amro North America Finance, Inc., 5.30%, 11/12/96 10,000 9,848
Abbey National North America, 5.29%, 11/20/96 20,000 19,674
Bank of New York, 5.42%, 9/24/96 20,000 19,837
Mellon Financial Company, 5.36%, 8/15/96 20,000 19,958
Nationsbank Corporation, 5.26%, 8/15/96 10,000 9,980
Svenska Handelsbanken, 5.50%, 10/09/96 25,000 24,736
- -------------------------------------------------------------------------------------------------------------
Total Commercial Banks 113,887
- -------------------------------------------------------------------------------------------------------------
</TABLE>
3
<PAGE>
CASH RESOURCE TRUST
MONEY MARKET FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
JULY 31, 1996
(IN THOUSANDS)
<TABLE>
<CAPTION>
PERCENT OF PRINCIPAL VALUE
NET ASSETS AMOUNT (NOTE 2)
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
COMMERCIAL PAPER (CONTINUED)
ELECTRIC SERVICES 4.97%
National Rural Utilities, 5.37%, 8/19/96 $20,000 $ 19,946
Rincon Securities, Inc., 5.37%, 8/28/96 1,250 1,245
Rincon Securities, Inc., 5.35%, 9/06/96 5,000 4,973
Rincon Securities, Inc., 5.38%, 9/09/96 6,000 5,965
- ----------------------------------------------------------------------------------------------------------------
Total Electric Services 32,129
- ----------------------------------------------------------------------------------------------------------------
INSURANCE AGENTS, BROKERS & SERVICE 3.06%
International Nederlanden, 5.42%, 10/21/96 10,000 9,878
International Nederlanden U.S. Insurance Holdings, Inc.,
5.41%, 9/17/96 10,000 9,929
- ----------------------------------------------------------------------------------------------------------------
Total Insurance Agents, Brokers & Service 19,807
- ----------------------------------------------------------------------------------------------------------------
METAL MINING 3.86%
North Financial, 5.40%, 8/13/96 25,000 24,955
- ----------------------------------------------------------------------------------------------------------------
OIL AND GAS FIELD EXPLORATION SERVICES 1.54%
Statoil, 5.30%, 8/28/96 10,000 9,960
- ----------------------------------------------------------------------------------------------------------------
PERSONAL CREDIT INSTITUTIONS 7.69%
American Express, 5.30%, 8/21/96 20,000 19,941
Ford Motor Credit Company, 5.43%, 9/06/96 20,000 19,892
Ford Motor Credit Company, 5.42%, 10/17/96 10,000 9,884
- ----------------------------------------------------------------------------------------------------------------
Total Personal Credit Institutions 49,717
- ----------------------------------------------------------------------------------------------------------------
RENTAL & LEASING 3.04%
General Electric Capital, 5.24%, 8/30/96 7,000 6,970
General Electric Capital, 5.35%, 1/21/97 13,000 12,666
- ----------------------------------------------------------------------------------------------------------------
Total Rental & Leasing 19,636
- ----------------------------------------------------------------------------------------------------------------
SECURITY BROKERS & DEALERS 11.85%
Bear Stearns Company, 5.40%, 9/13/96 20,000 19,871
CS First Boston, Inc., 5.33%, 8/27/96 17,000 16,935
CS First Boston, Inc., 5.40%, 9/11/96 10,000 9,939
Merrill Lynch & Company, Inc., 5.45%, 9/06/96 30,000 29,837
- ----------------------------------------------------------------------------------------------------------------
Total Security Brokers & Dealers 76,582
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
4
<PAGE>
CASH RESOURCE TRUST
MONEY MARKET FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
JULY 31, 1996
(IN THOUSANDS)
<TABLE>
<CAPTION>
PERCENT OF PRINCIPAL VALUE
NET ASSETS AMOUNT (NOTE 2)
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
COMMERCIAL PAPER (CONTINUED)
TOBACCO PRODUCTS 3.08%
Philip Morris, 5.38%, 9/09/96 $20,000 $ 19,884
- ----------------------------------------------------------------------------------------------------------------
TOTAL COMMERCIAL PAPER 426,367
- ----------------------------------------------------------------------------------------------------------------
CORPORATE OBLIGATIONS 2.32%
Dupont E I De Nemours, 5.80%, 12/12/96 9,000 9,007
Walker & Associates, 5.54%, 07/01/11 (b) 6,000 6,000
- ----------------------------------------------------------------------------------------------------------------
TOTAL CORPORATE OBLIGATIONS 15,007
- ----------------------------------------------------------------------------------------------------------------
U.S. GOVERNMENT SECURITIES AND AGENCIES 7.75%
U.S. Treasury Note, 7.50%, 01/31/97 10,000 10,109
Federal Home Loan Bank, 5.31%-5.67%, 12/23/96-2/14/97 (b) 15,000 15,000
Student Loan Marketing Association, 5.51%-5.54%,
11/24/97-2/22/99 (b) 25,000 24,998
- ----------------------------------------------------------------------------------------------------------------
TOTAL U.S. GOVERNMENT SECURITIES AND AGENCIES 50,107
- ----------------------------------------------------------------------------------------------------------------
REPURCHASE AGREEMENT 9.95%
Goldman, Sachs & Company
Dated 7/31/96, 5.65%, due 8/01/96, collateralized by
$66,828 Federal National Mortgage Association, 7.50%,
3/01/26 64,345 64,345
- ----------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS (COST $654,423) (D) 101.23% 654,423
- ----------------------------------------------------------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES (1.23%) (7,923)
- ----------------------------------------------------------------------------------------------------------------
NET ASSETS 100.00% $646,500
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO PORTFOLIOS OF INVESTMENTS.
5
<PAGE>
CASH RESOURCE TRUST
U.S. GOVERNMENT MONEY MARKET FUND
PORTFOLIO OF INVESTMENTS
JULY 31, 1996
(IN THOUSANDS)
<TABLE>
<CAPTION>
PERCENT OF PRINCIPAL VALUE
NET ASSETS AMOUNT (NOTE 2)
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
U.S. GOVERNMENT SECURITIES AND AGENCIES 59.65%
Federal Home Loan Bank
5.22%-5.36%, 10/16/96-2/19/97 $ 133,340 $ 130,837
5.31%-5.54%, 2/14/97-2/16/99 (b) 42,000 42,000
Federal Home Loan Mortgage Corporation
5.25%-5.36%, 8/05/96-10/23/96 225,459 224,838
Federal National Mortgage Association
5.17%-5.37%, 8/09/96-10/24/96 234,700 232,912
Student Loan Marketing Association
5.51%-5.55%, 10/14/97-2/08/99 (b) 105,000 104,998
U.S. Treasury Notes
6.50%-7.50%, 11/30/96-1/31/97 100,000 100,962
- ----------------------------------------------------------------------------------------------------------------
TOTAL U.S. GOVERNMENT SECURITIES AND AGENCIES 836,547
- ----------------------------------------------------------------------------------------------------------------
REPURCHASE AGREEMENTS 40.55%
Chase Securities, Inc.
Dated 7/31/96, 5.65%, due 8/01/96, collateralized by
$61,596 Federal National Mortgage Association,
7.00%-9.00%, 3/01/25-6/01/26 60,000 60,000
First Union Corporation
Dated 7/31/96, 5.66%, due 8/01/96, collateralized by
$34,444 U.S. Treasury Notes, 11.25%, 2/15/15 50,000 50,000
Goldman, Sachs & Company
Dated 7/31/96, 5.65%, due 8/01/96, collateralized by
$185,618 Federal National Mortgage Association, 7.50%,
3/01/26 178,721 178,721
Lehman Brothers, Inc.
Dated 7/31/96, 5.68%, due 8/01/96, collateralized by
$57,716 Federal National Mortgage Association,
9.00%-9.50%, 5/01/22-3/01/25 60,000 60,000
Merrill Lynch, Pierce, Fenner & Smith, Inc.
Dated 7/31/96, 5.69%, due 8/01/96, collateralized by
$35,748 Federal Home Loan Mortgage Corporation 7.00%,
11/01/25 and $27,504 Federal National Mortgage Association
7.50%, 12/01/25 60,000 60,000
</TABLE>
6
<PAGE>
CASH RESOURCE TRUST
U.S. GOVERNMENT MONEY MARKET FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
JULY 31, 1996
(IN THOUSANDS)
<TABLE>
<CAPTION>
PERCENT OF PRINCIPAL VALUE
NET ASSETS AMOUNT (NOTE 2)
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
REPURCHASE AGREEMENTS (CONTINUED)
Paine Webber, Inc.
Dated 7/31/96, 5.68%, due 8/01/96, collateralized by
$43,420 Federal National Mortgage Association, 7.00%,
6/01/23 and $20,638 Government National Mortgage
Association, 7.00%, 7/15/25 $ 60,000 $ 60,000
United Bank of Switzerland
Dated 7/31/96, 5.68%, due 8/01/96, collateralized by
$61,267 Federal Home Loan Mortgage Corporation,
6.50%-7.00%, 1/01/24-2/01/24 and $45,330 Federal National
Mortgage Association-Strips, 6.50%-7.00%, 12/01/10-2/01/26 100,000 100,000
- ----------------------------------------------------------------------------------------------------------------
TOTAL REPURCHASE AGREEMENTS 568,721
- ----------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS (COST $1,405,268) (D) 100.20% 1,405,268
- ----------------------------------------------------------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES (0.20%) (2,871)
- ----------------------------------------------------------------------------------------------------------------
NET ASSETS 100.00% $1,402,397
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO PORTFOLIOS OF INVESTMENTS.
7
<PAGE>
CASH RESOURCE TRUST
TAX-EXEMPT MONEY MARKET FUND
PORTFOLIO OF INVESTMENTS
JULY 31, 1996
(IN THOUSANDS)
<TABLE>
<CAPTION>
PERCENT OF PRINCIPAL VALUE
NET ASSETS AMOUNT (NOTE 2)
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
VARIABLE RATE TAX-EXEMPT
DEMAND SECURITIES (B) 43.53%
ALABAMA 2.20%
University of Alabama Board of Trustees,
3.60%, 10/01/13 $ 6,400 $ 6,400
- ----------------------------------------------------------------------------------------------------------------
ARIZONA 6.46%
Apache County IDA Tucson Electric Power
Company Project, 3.65%, 6/15/20 10,000 10,000
Coconino City Tuscon Gas & Electric
Service PCR Series A, 3.70%, 5/01/31 8,800 8,800
- ----------------------------------------------------------------------------------------------------------------
18,800
- ----------------------------------------------------------------------------------------------------------------
COLORADO 2.54%
Colorado Housing Finance Authority
Series 1985, 3.60%, 5/01/97 7,400 7,400
- ----------------------------------------------------------------------------------------------------------------
ILLINOIS 4.51%
Chicago O'Hare International Airport American
Airlines Series 1983C, 3.70%, 1/01/18 2,000 2,000
Illinois DFA Grayhill, Inc. Project
IDR, 3.75%, 2/01/05 3,150 3,150
Illinois DFA Flinn Scientific Project, 3.75%, 10/01/15 4,760 4,760
Illinois HFA West Suburban Hospital, 3.65%, 7/01/05 3,200 3,200
- ----------------------------------------------------------------------------------------------------------------
13,110
- ----------------------------------------------------------------------------------------------------------------
MARYLAND 4.44%
Anne Arundel County Oakland Hills Project,
3.65%, 5/15/15 2,052 2,052
Howard County Revenue Bond, Harmony Hall, Inc. Project,
3.65%, 10/01/10 2,868 2,868
Maryland State Health & Higher Education,
Series B, 3.65%, 4/01/35 8,000 8,000
- ----------------------------------------------------------------------------------------------------------------
12,920
- ----------------------------------------------------------------------------------------------------------------
MICHIGAN 0.69%
Michigan State Strategic Fund, 3.75%, 2/01/09 2,000 2,000
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
8
<PAGE>
CASH RESOURCE TRUST
TAX-EXEMPT MONEY MARKET FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
JULY 31, 1996
(IN THOUSANDS)
<TABLE>
<CAPTION>
PERCENT OF PRINCIPAL VALUE
NET ASSETS AMOUNT (NOTE 2)
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
VARIABLE RATE TAX-EXEMPT
DEMAND SECURITIES (B) (CONTINUED)
NORTH CAROLINA 5.16%
Durham County Water & Sewer, 3.65%, 12/01/15 $ 4,800 $ 4,800
Lincoln County Industrial Facility PCR
Series 1994, 3.80%, 8/01/09 6,000 6,000
North Carolina Educational Facilities
Bowman Grey School, 3.55%, 9/01/20 4,200 4,200
- ----------------------------------------------------------------------------------------------------------------
15,000
- ----------------------------------------------------------------------------------------------------------------
NEW MEXICO 0.70%
Albuquerque Greater Receipts Tax,
3.65%, 7/01/22 2,050 2,050
- ----------------------------------------------------------------------------------------------------------------
TENNESSEE 0.77%
Nashville and Davidson County Health
and Education Facility, 3.65%, 5/01/20 2,224 2,224
- ----------------------------------------------------------------------------------------------------------------
TEXAS 2.13%
North Texas Higher Education Student Loan
Revenue Refund, Series 1991F, 3.65%, 4/01/20 4,000 4,000
Panhandle Plains Student Loan Revenue
Series A, 3.65%, 6/01/21 1,300 1,300
Texas Education Authority Series 1985B,
3.60%, 12/01/25 885 885
- ----------------------------------------------------------------------------------------------------------------
6,185
- ----------------------------------------------------------------------------------------------------------------
VIRGINIA 11.39%
Arlington County Ballston Public
Parking, 3.60%, 8/01/17 3,650 3,650
Botetourt County IDR Emkay Holdings
Project, 3.60%, 10/01/05 2,700 2,700
Capital Regional Airport Series 1995C,
3.70%, 7/01/23 4,000 4,000
Chesterfield County IDR Midlothian Hotel
Partnership, 3.65%, 12/01/14 6,344 6,344
Hampton Roads Regional Jail Series 1996B,
3.60%, 7/01/16 4,000 4,000
Hanover County IDR Carter Machinery,
3.65%, 11/01/98 500 500
</TABLE>
9
<PAGE>
CASH RESOURCE TRUST
TAX-EXEMPT MONEY MARKET FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
JULY 31, 1996
(IN THOUSANDS)
<TABLE>
<CAPTION>
PERCENT OF PRINCIPAL VALUE
NET ASSETS AMOUNT (NOTE 2)
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
VARIABLE RATE TAX-EXEMPT
DEMAND SECURITIES (B) (CONTINUED)
VIRGINIA (CONTINUED)
Henrico County IDA Hermitage Project,
3.60% -- 3.65%, 5/01/24 $ 3,700 $ 3,700
Lynchburg IDA Mid-Atlantic Series G,
3.55%, 12/01/25 500 500
Richmond IDB Commonwealth Park,
3.70%, 11/01/07 1,364 1,364
Roanoke IDR Quibell Corporate Project,
3.65%, 9/01/15 292 292
Spotsylvania City IDA Residential Care
Facilities, 3.65%, 10/01/20 4,684 4,684
Tazewell County IDR, 4.00%, 1/01/03 1,000 1,000
Virginia Beach Revenue Bond, 3.65%, 9/01/09 410 410
- ----------------------------------------------------------------------------------------------------------------
33,144
- ----------------------------------------------------------------------------------------------------------------
WISCONSIN 0.65%
Village of Pleasant Prairie Muskie Enterprise
Project, Series 1995, 3.75%, 5/01/15 1,900 1,900
- ----------------------------------------------------------------------------------------------------------------
WYOMING 1.89%
Lincoln County Exxon Series B,
3.65%, 11/01/14 1,500 1,500
Sweetwater County PCR Pacific Corporation
Project Series A, 3.50%, 7/01/15 4,000 4,000
- ----------------------------------------------------------------------------------------------------------------
5,500
- ----------------------------------------------------------------------------------------------------------------
TOTAL VARIABLE RATE TAX-EXEMPT DEMAND SECURITIES 126,633
- ----------------------------------------------------------------------------------------------------------------
OTHER TAX-EXEMPT SECURITIES 56.80%
ALABAMA 0.95%
IDB of Fairfield USX Corporation Project,
Series 1995, 3.55%, 10/01/96 2,775 2,775
- ----------------------------------------------------------------------------------------------------------------
ARIZONA 0.17%
Scottsdale IDA Memorial Hospital Series A,
3.70%, 9/01/96 485 485
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
10
<PAGE>
CASH RESOURCE TRUST
TAX-EXEMPT MONEY MARKET FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
JULY 31, 1996
(IN THOUSANDS)
<TABLE>
<CAPTION>
PERCENT OF PRINCIPAL VALUE
NET ASSETS AMOUNT (NOTE 2)
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
OTHER TAX-EXEMPT SECURITIES (CONTINUED)
COLORADO 1.04%
State of Colorado General Fund TRANS Series A,
4.50%, 6/27/97 $ 3,000 $ 3,017
- ----------------------------------------------------------------------------------------------------------------
FLORIDA 3.61%
City of Jacksonville Series A, 3.40%, 9/10/96 5,000 5,000
Putnam County Development Authority
Seminole Electric Series 1984, 3.50%, 12/15/96 3,000 3,000
Sunshine State Government Finance Commission
Series 1986 Revenue Bond, 3.60%, 10/17/96 2,500 2,500
- ----------------------------------------------------------------------------------------------------------------
10,500
- ----------------------------------------------------------------------------------------------------------------
GEORGIA 1.72%
Dekalb County TRANS, 3.75%, 12/31/96 5,000 5,012
- ----------------------------------------------------------------------------------------------------------------
ILLINOIS 2.99%
Chicago Illinois GO Tender Note, 3.10%, 2/04/97 2,300 2,300
City of Chicago GO Tender Notes Series 1995A, 3.65%,
10/31/96 6,400 6,400
- ----------------------------------------------------------------------------------------------------------------
8,700
- ----------------------------------------------------------------------------------------------------------------
KENTUCKY 0.86%
Pulaski County Solid Waste Project,
Series B, 3.20%, 8/15/96 2,500 2,500
- ----------------------------------------------------------------------------------------------------------------
LOUISIANA 2.23%
Plaquemines Port Harbor Series C, 3.70%, 10/22/96 6,500 6,500
- ----------------------------------------------------------------------------------------------------------------
MARYLAND 0.69%
Baltimore City Public Improvement, 3.40%, 8/15/96 2,000 2,000
- ----------------------------------------------------------------------------------------------------------------
MICHIGAN 2.75%
State of Michigan GO Note RANS, 4.00%, 9/30/96 3,000 3,004
Michigan State, Underground Storage Tank
Financial Assurance Series I, 3.45%, 8/15/96 5,000 5,000
- ----------------------------------------------------------------------------------------------------------------
8,004
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
11
<PAGE>
CASH RESOURCE TRUST
TAX-EXEMPT MONEY MARKET FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
JULY 31, 1996
(IN THOUSANDS)
<TABLE>
<CAPTION>
PERCENT OF PRINCIPAL VALUE
NET ASSETS AMOUNT (NOTE 2)
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
OTHER TAX-EXEMPT SECURITIES (CONTINUED)
MINNESOTA 1.43%
Rochester Health Care Series C, 3.60%, 8/15/96 $ 3,010 $ 3,010
University of Minnesota Revenue Bond,
3.25%, 8/01/96 1,150 1,150
- ----------------------------------------------------------------------------------------------------------------
4,160
- ----------------------------------------------------------------------------------------------------------------
MISSISSIPPI 0.79%
Claiborne County PCR, 3.50%, 9/24/96 2,300 2,300
- ----------------------------------------------------------------------------------------------------------------
NORTH CAROLINA 7.87%
North Carolina Power Agency Series B,
3.10%, 8/13/96 10,000 10,000
Wake County Industrial Facility Series 1990A,
3.70%-3.80%, 8/12/96-8/20/96 12,900 12,900
- ----------------------------------------------------------------------------------------------------------------
22,900
- ----------------------------------------------------------------------------------------------------------------
NEW YORK 1.04%
New York City TRANS Series A,
4.50%, 2/12/97 3,000 3,012
- ----------------------------------------------------------------------------------------------------------------
SOUTH CAROLINA 4.47%
York County PCR Series 1984N-3, 3.25%, 9/15/96 8,000 8,000
Beaufort County School District BANS Series 1995, 4.13%,
8/15/96 5,000 5,001
- ----------------------------------------------------------------------------------------------------------------
13,001
- ----------------------------------------------------------------------------------------------------------------
TEXAS 13.97%
Brazos Harbor Industrial Development
Series 1986, 3.65%, 8/22/96 3,700 3,700
Harris City Health Care, 3.40%, 9/09/96 5,000 5,000
Houston TRANS, 4.50%, 6/30/97 5,000 5,032
Houston Water & Sewer Series A, 3.40%, 8/28/96 8,000 8,000
San Antonio Electric & Gas Series A,
3.60%-3.70%, 8/14/96-8/23/96 10,900 10,900
State of Texas TRANS Series A,
4.75%, 8/30/96 8,000 8,004
- ----------------------------------------------------------------------------------------------------------------
40,636
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
12
<PAGE>
CASH RESOURCE TRUST
TAX-EXEMPT MONEY MARKET FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
JULY 31, 1996
(IN THOUSANDS)
<TABLE>
<CAPTION>
PERCENT OF PRINCIPAL VALUE
NET ASSETS AMOUNT (NOTE 2)
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
OTHER TAX-EXEMPT SECURITIES (CONTINUED)
VIRGINIA 4.45%
Chesterfield County GO Bond
5.25%, 8/01/96 $ 800 $ 800
Chesterfield County IDR Series 1987B
3.60%, 10/24/96 1,000 1,000
Peninsula Port Authority, 3.55%, 8/13/96 3,135 3,135
York County IDA PCR, 3.55%-3.65%
8/08/96-9/10/96 8,000 8,000
- ----------------------------------------------------------------------------------------------------------------
12,935
- ----------------------------------------------------------------------------------------------------------------
WEST VIRGINIA 3.44%
West Virginia HDA, 3.55%, 8/15/96 10,000 10,000
- ----------------------------------------------------------------------------------------------------------------
OTHER 2.33%
PNC Municash, 3.46%, 8/01/96 6,790 6,790
- ----------------------------------------------------------------------------------------------------------------
TOTAL OTHER TAX-EXEMPT SECURITIES 165,227
- ----------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS (COST $291,860) (D) 100.33% 291,860
- ----------------------------------------------------------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES (0.33%) (969)
- ----------------------------------------------------------------------------------------------------------------
NET ASSETS 100.00% $290,891
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
INVESTMENT ABBREVIATIONS
BANS - Bond Anticipation Notes
DFA - Development Finance Authority
GO - General Obligation
HDA - Housing Development Authority
HFA - Housing Finance Authority
IDA - Industrial Development Authority
IDB - Industrial Development Board
IDR - Industrial Development Revenue
PCR - Pollution Control Revenue
RANS - Revenue Anticipation Notes
TRANS - Tax and Revenue Anticipation Notes
NOTES TO PORTFOLIOS OF INVESTMENTS
(a) These are securities that may be resold to qualified institutional buyers
under Rule 144A or securities offered pursuant to section 4 (2) of the
Securities Act of 1933, as amended. These securities have been determined to
be liquid under guidelines that have been established by the Board of
Trustees.
(b) Floating Rate Securities -- The rates shown are the effective rates at July
31, 1996.
(c) Interest rates represent annualized yield to date of maturity, except for
variable rate securities described in (a).
(d) For each security, cost (for financial reporting and federal income tax
purposes) and carrying value are the same.
SEE NOTES TO FINANCIAL STATEMENTS.
13
<PAGE>
CASH RESOURCE TRUST
NOTES TO FINANCIAL STATEMENTS
JULY 31, 1996
NOTE 1: ORGANIZATION
Cash Resource Trust ("Trust") was organized on June 14, 1993 and is registered
under the Investment Company Act of 1940, as amended, as an open-end management
investment company. The Trust consists of three separate diversified funds
(hereinafter each individually referred to as a "Fund" or collectively as the
"Funds") at July 31, 1996 as follows:
Cash Resource Money Market Fund
("Money Market Fund")
Cash Resource U.S. Government Money Market Fund
("U.S. Government Fund")
Cash Resource Tax-Exempt Money Market Fund
("Tax-Exempt Fund")
The investment objective of each Fund is to seek current income consistent with
preservation of capital and maintenance of liquidity.
The assets of each Fund of the Trust are segregated and a shareholder's interest
is limited to the Fund in which shares are held.
NOTE 2: SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Funds in the preparation of their financial statements. The
policies are in conformity with generally accepted accounting principles which
require management to make estimates and assumptions that affect amounts
reported herein. Although actual results could differ from these estimates, any
such differences are expected to be immaterial to the net assets of the Funds.
A. Valuation of Securities
Investments are stated at amortized cost, which approximates market value. In
the event that a deviation of 1/2 of 1% or more exists between a Fund's $1.00
per share net asset value, calculated at amortized cost, and the net asset value
calculated by reference to market-based values, or if there is any other
deviation that the Board of Trustees believes would result in a material
dilution to shareholders or purchasers, the Board of Trustees will promptly
consider what action should be initiated.
B. Repurchase Agreements
It is the policy of the Trust to require the custodian bank to take possession,
to have legally segregated in the Federal Reserve Book entry system, or to have
segregated within the custodian bank's vault all securities held as collateral
in support of repurchase agreement investments. Additionally, procedures have
been established by the Trust to monitor, on a daily basis, the market value of
each repurchase agreement's underlying securities to ensure the existence of a
proper level of collateral.
19
<PAGE>
CASH RESOURCE TRUST
NOTES TO FINANCIAL STATEMENTS
(CONTINUED)
The Trust will only enter into repurchase agreements with banks and other
recognized financial institutions such as broker/dealers which are deemed by the
Trust's adviser to be creditworthy pursuant to guidelines established by the
Board of Trustees. Risks may arise from the potential inability of
counterparties to honor the terms of the repurchase agreement. Accordingly, the
Trust could receive less than the repurchase price on the sale of collateral
securities.
C. Security Transactions and Interest Income
Security transactions for the Funds are accounted for on a trade date basis.
Interest income is recorded on the accrual basis and includes amortization of
premium and discount on investments.
D. Expenses
Expenses arising in connection with a Fund are allocated to that Fund. Other
Trust expenses are allocated among the Funds in proportion to their relative net
assets.
E. Fund Share Valuation and Dividends to Shareholders
Fund shares are sold and redeemed on a continual basis at net asset value. The
net asset value per share (NAV) of each Fund is determined daily as of 4:00 p.m.
on each day that the New York Stock Exchange is open for trading. Each Fund
determines its NAV by dividing the total value of the Fund's investments and
other assets, less liabilities, by the number of Fund shares outstanding. Each
Fund declares a daily dividend, equal to its net investment income for that day
and payable at month end. Distributions from net realized capital gains, if any,
are paid annually.
F. Federal Income Taxes
No provision for federal income taxes has been made since it is each Fund's
policy to comply with the provisions applicable to regulated investment
companies under the Internal Revenue Code and to distribute to its shareholders
within the allowable time limit substantially all taxable income and realized
capital gains.
At July 31, 1996, U.S. Government Fund for federal tax purposes, had a capital
loss carryforward of approximately $54,000. Pursuant to the Code, such capital
loss carryforwards expire as follows: $1,000 in 2002 and $53,000 in 2003.
G. Deferred Expenses
Costs incurred by the Trust in connection with its initial share registration
and organization costs were deferred by the Funds and are being amortized on a
straight-line basis over a five year period through December 1998.
20
<PAGE>
CASH RESOURCE TRUST
NOTES TO FINANCIAL STATEMENTS
(CONTINUED)
NOTE 3: INVESTMENT MANAGEMENT AGREEMENTS AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT MANAGEMENT AGREEMENT
Commonwealth Advisors, Inc. (formerly Cambridge Investment Advisors, Inc.) the
Funds' investment adviser ("Investment Adviser")provides investment advisory
services to each of the Funds. Commonwealth Investment Counsel, Inc.
("Commonwealth"), an affiliate of the Investment Adviser, serves as sub-adviser
to each of the Funds, pursuant to a sub-advisory agreement among the Investment
Adviser, Commonwealth and the Trust. Commonwealth furnishes a continuing
investment program for each of the Funds and makes investment decisions on their
behalf. The Investment Adviser and Commonwealth are wholly-owned subsidiaries of
Mentor Investment Group, Inc. ("Mentor") (formerly Investment Management Group,
Inc.), which is in turn a wholly-owned subsidiary of Wheat First Butcher Singer,
Inc. ("Wheat").
Each Fund pays management fees to the Investment Adviser monthly at the
following annual rates, expressed as a percentage of average daily net assets:
0.22% of the first $500 million of each Fund's average net assets; 0.20% of the
next $500 million; 0.175% of the next $1 billion; 0.16% of the next $1 billion;
and 0.15% of any amounts over $3 billion. The Investment Adviser in turn pays
fees from its own assets to Commonwealth monthly at the following annual rates
(based on the assets of each Fund taken separately): 0.17% of the first $500
million of a Fund's average net assets; 0.15% of the next $500 million; 0.125%
of the next $1 billion; 0.11% of the next $1 billion; and 0.10% of any amounts
over $3 billion. The Investment Adviser may from time to time voluntarily waive
some or all of its investment advisory fee and may terminate any such voluntary
waiver at any time at its sole discretion. For the year ended July 31, 1996, the
Investment Adviser and sub-adviser earned the following advisory fees:
<TABLE>
<CAPTION>
Adviser Sub-Adviser
Fee Fee
Earned Earned
- -----------------------------------------------------------------------------------------
<S> <C>
Money Market Fund $1,172,603 $ 900,553
U.S. Government Fund 2,660,041 1,995,031
Tax-Exempt Fund 632,135 488,468
- -----------------------------------------------------------------------------------------
</TABLE>
21
<PAGE>
CASH RESOURCE TRUST
NOTES TO FINANCIAL STATEMENTS
(CONTINUED)
In addition, the Funds provide direct reimbursement to Mentor for certain
accounting and operations related costs not covered under the Investment
Management Agreement. For the year ended July 31, 1996, the Money Market Fund,
U.S. Government Fund and Tax-Exempt Fund paid $12,482, $30,947 and $6,767,
respectively to Mentor for these direct reimbursements.
DISTRIBUTION AGREEMENT
Under a Distribution Agreement, Mentor Distributors, Inc. ("Mentor
Distributors") (formerly, Cambridge Distributors, Inc.) a wholly-owned
subsidiary of Mentor, was appointed Distributor for each Fund. To compensate
Mentor Distributors for the services it provides and for the expenses it incurs
under the Distribution Agreement, the Funds have adopted a Plan of Distribution
pursuant to Rule 12b-1 under the Investment Company Act of 1940, under which
they pay a distribution fee, which is accrued daily and paid monthly at the
annual rate of 0.38% of the Fund's average daily net assets for the Money Market
Fund and U.S. Government Fund and 0.33% of the Fund's average daily net assets
for the Tax-Exempt Fund.
In order to compensate selected financial institutions, such as investment
dealers and banks through which shares of each Fund are sold ("Financial
Institutions") for services provided in connection with sales of shares of each
Fund and/or for administrative services and the maintenance of shareholder
accounts, Mentor Distributors may make periodic payments to qualifying Financial
Institutions based on the average net asset value of shares of a Fund which are
attributable to shareholders for whom the Financial Institutions are designated
as the Financial Institution of record. Mentor Distributors may make such
payments at the annual rate of up to 0.40% of the average net asset value of
such shares (0.33% in the case of Cash Resource Tax-Exempt Money Market Fund).
TRANSFER AGENT AGREEMENT
Under a Transfer Agency Agreement, Investors Fiduciary Trust Company ("IFTC")
serves as Transfer Agent and Dividend Disbursing Agent for each Fund. IFTC in
turn compensates Wheat (from IFTC's own assets) for related services provided by
Wheat directly to its clients. For the year ended July 31, 1996, Wheat earned
fees of $757,964, $2,942,606 and $304,012, respectively, from the Money Market
Fund, U.S. Government Fund and Tax-Exempt Fund.
22
<PAGE>
INDEPENDENT AUDITORS' REPORT
THE TRUSTEES
CASH RESOURCE TRUST
We have audited the accompanying statements of assets and liabilities, including
the portfolios of investments, of the Money Market Fund, U.S. Government Money
Market Fund and Tax-Exempt Money Market Fund, (portfolios of Cash Resource
Trust) as of July 31, 1996 and the related statements of operations for the year
then ended, and the statements of changes in net assets for each of the years in
the two year period then ended, and financial highlights for each of the years
in the two year period then ended and for the period from December 20, 1993
(commencement of operations) to July 31, 1994. These financial statements and
financial highlights are the responsibility of the Funds' management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit also includes examining,
on a test basis, evidence supporting the amounts and disclosures in the
financial statements and financial highlights. Our procedures included
confirmation of securities owned as of July 31, 1996 by correspondence with the
custodian and brokers. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Money Market Fund, U.S. Government Money Market Fund and Tax-Exempt Money Market
Fund as of July 31, 1996, the results of their operations for the year then
ended and the changes in their net assets for each of the years in the two year
period then ended and their financial highlights for the periods indicated in
the first paragraph above, in conformity with generally accepted accounting
principles.
/s/ KPMG PEAT MARWICK LLP
Boston, Massachusetts
September 6, 1996
23
<PAGE>
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements:
(1) Statements of Assets and Liabilities - July 31, 1996
- Included in Part B. Statements of Operations - year
ended July 31, 1996 - Included in Part B.
Statements of Changes in net assets -- years ended
July 31, 1996 and 1995 - Included in Part B.
Financial Highlights -Included in Part A.
Notes to Financial Statements - Included in Part B.
Independent Auditors Report - Included in Part B.
(2) Supporting Schedules:
Schedule I - Portfolio of Investments at
July 31, 1996
Schedules II through IX omitted because the required
matter is not present.
Included in Part C: None.
(b) Exhibits
(1) (A) Agreement and Declaration of Trust(1)
(B) Amendments to Agreement and Declaration of
Trust(2)(3)
(2) Bylaws(1)
(3) Inapplicable
(4) (A) Forms of certificate representing shares of
beneficial interest(1)
(B) Portions of Agreement and Declaration of Trust
Relating to Shareholders' Rights(1)
(C) Portions of Bylaws Relating to Shareholders'
Rights(1)
(5) (A) Management Contract dated December 17, 1993(4)
(B) Subadviser Contract dated December 17, 1993(4)
(6) Distribution Agreement dated December 17, 1993(4)
(7) Inapplicable
(8) Custody Agreement dated December 20, 1993(4)
(9) (A) Agency Agreement dated December 20, 1993(4)
(B) Draft Processing Agency Agreement dated December 20,
1993(4)
(10) Opinion and Consent of Ropes & Gray(2)
(11) Consent of Independent Auditors(7)
(12) Inapplicable
(13) Initial Capital Agreement dated December 17, 1993(4)
(14) Inapplicable
(15)(A) Distribution Plan and Agreement on behalf of Cash
Resource Money Market Fund dated December 17, 1993(4)
-1-
<PAGE>
(B) Distribution Plan and Agreement on behalf of Cash
Resource U.S. Government Money Market Fund dated
December 17, 1993(4)
(C) Distribution Plan and Agreement on behalf of Cash
Resource Tax- Exempt Money Market Fund dated December
17, 1993(4)
(D) Form of Distribution Plan and Agreement on behalf of
Cash Resource New York Tax-Exempt Money Market Fund
(6)
(E) Form of Distribution Plan and Agreement on behalf of
Cash Resource California Tax-Exempt Money Market Fund
(6)
(16) Schedule of Computation of Performance(7)
(17) Financial Data Schedules(7)
(A) Cash Resource Money Market Fund
(B) Cash Resource U.S. Government Money Market Fund
(C) Cash Resource Tax-Exempt Money Market Fund
(1) Incorporated by reference from the Registrant's Registration Statement
on Form N-1A under the Securities Act of 1993, as amended, filed on
July 7, 1993.
(2) Incorporated by reference from Pre-Effective Amendment No. 1 to the
Registrant's Registration Statement on Form N-1A under the Securities
Act of 1993, as amended, filed on October 15, 1993 (File No. 33-65818).
(3) Incorporated by reference to Pre-Effective Amendment No. 2 to the
Registrant's Registration Statement on Form N-1A under the Securities
Act of 1933, as amended, filed on November 5, 1993 (File No. 33-65818).
(4) Incorporated by reference to Post-Effective Amendment No. 1 to the
Registrant's Registration Statement on Form N-1A under the Securities
Act of 1933, as amended, filed on October 3, 1994 (File No. 33- 65818).
(5) Incorporated by reference to Post-Effective Amendment No. 2 to the
Registrant's Registration Statement on Form N-1A under the Securities
Act of 1933, as amended, filed on September 29, 1995 (File No. 33-
65818).
(6) Incorporated by reference to Post-Effective Amendment No. 3 to the
Registrant's Registration Statement on Form N-1A under the Securities
Act of 1933, as amended, filed on August 12, 1996 (File No. 33- 65818).
(7) Filed herewith.
Item 25. Persons Controlled by or Under Common Control with Registrant
None.
Item 26. Number of Record Holders of Securities
The following table shows the number of holders of record of shares of
beneficial interest of the Funds as of September 1, 1996. No shares of Cash
Resource New York Tax-Exempt
-2-
<PAGE>
Money Market Fund or Cash Resource California Tax-Exempt Money Market Fund were
outstanding as of that date.
Series Number of Record
Holders
Cash Resource Money Market Fund 79,447
Cash Resource U.S. Government
Money Market Fund 194,213
Cash Resource Tax-Exempt Money
Market Fund 15,324
Item 27. Indemnification
The information required by this item is incorporated herein by
reference from the Registrant's Registration Statement on Form N-1A under the
Securities Act of 1933, as amended (File No. 33-65818).
Item 28. Business and Other Connections of Investment Adviser
(a) Commonwealth Advisors, Inc. ("Commonwealth Advisors"), located at
901 East Byrd Street, Richmond, Virginia 23219, serves as the Registrant's
investment adviser. It is a wholly owned subsidiary of Mentor Investment Group,
Inc. ("Mentor"), which is a subsidiary of Wheat First Butcher Singer, Inc.
("Wheat First Butcher Singer"), a diversified financial services holding
company.
The business and other connections of each director, officer, or partner
of Commonwealth Advisors in which such director, officer, or partner is or has
been, at any time during the past two fiscal years, engaged for his own account
or in the capacity of director, officer, employee, partner, or trustee are set
forth in the following table.
The business and other connections of each director, officer, or
partner of Commonwealth Advisors in which such director, officer, or partner is
or has been, at any time during the past two fiscal years, engaged for his own
account or in the capacity of director, officer, employee, partner, or trustee
are set forth in the following table.
Other Substantial
Position with the Business, Profession,
Name Investment Adviser Vocation or Employment*
Peter J. Quinn, Jr. President Managing Director,
Wheat First Butcher
Singer, Inc. and Mentor
Investment Group, Inc.;
President, Mentor
Distributors, Inc.
-3-
<PAGE>
Paul F. Costello Senior Vice President Managing Director,
Wheat First Butcher
Singer, Inc.
and Mentor Investment
Group, Inc.; President,
Cash Resource Trust
Thomas L. Souders Treasurer Managing Director and
Chief Financial
Officer, Wheat, First
Securities, Inc.;
formerly, Manager of
Internal Audit, Heilig-
Myers; formerly,
Manager, Peat Marwick
& Mitchell & Company
Robert P. Wilson Assistant Treasurer Treasurer, Wheat, First
Securities, Inc.
John M. Ivan Secretary Managing Director,
Senior Vice President
and Assistant General
Counsel, Wheat, First
Securities, Inc.;
Managing Director
and Assistant
Secretary,
Wheat First Butcher
Singer, Inc.; Clerk,
Cash Resource Trust
Howard T. Macrae, Jr. Assistant Secretary Assistant General
Counsel, Wheat, First
Securities, Inc.
(b) Commonwealth Investment Counsel, Inc. ("Commonwealth"), located at
901 East Byrd Street, Richmond, Virginia 23219, serves as subadviser to the
Trust. It is a wholly owned subsidiary of Mentor, which in turn is a wholly
owned subsidiary of Wheat First Butcher Singer. Commonwealth was incorporated
under the laws of Virginia in 1970.
The business and other connections of each director, officer, or
partner of Commonwealth in which such director, officer, or partner is or has
been, at any time during the past two fiscal years, engaged for his own account
or in the capacity of director, officer, employee, partner, or trustee are set
forth in the following table.
-4-
<PAGE>
Other Substantial
Position with the Business, Profession,
Name Investment Adviser Vocation or Employment*
John G. Davenport President None
William F. Johnston, III Managing Director None
P. Michael Jones Managing Director None
R. Preston Nuttall Managing Director Formerly, Senior Vice
President, Capitoline
Investment Services,
919 East Main Street,
Richmond, VA 23219
P. Barton Peters Senior Vice President None
Kathryn T. Allen Vice President None
Richard L. Rice Vice President None
Steven C. Henderson Vice President None
Richard H. Skeppstrom, III Vice President None
Stephen R. McClelland Vice President Formerly, Associate
Vice President,
Investment
Management Group, Inc.
Hubert R. White, III Vice President None
Thomas L. Souders Treasurer Managing Director and
Chief Financial
Officer, Wheat, First
Securities, Inc.;
Trustee, Mentor
Series Trust; formerly,
Manager of Internal
Audit, Heilig-Myers;
formerly, Manager,
Peat Marwick &
Mitchell & Company
Robert P. Wilson Assistant Treasurer Assistant Treasurer,
Mentor Distributors,
Inc. and Commonwealth
Advisors
John M. Ivan Secretary Managing Director,
Senior Vice President
and
-5-
<PAGE>
Assistant General
Counsel, Wheat, First
Securities, Inc.;
Managing Director
and Assistant
Secretary, Wheat First
Butcher Singer, Inc.
Jonathan M. Harris Assistant Secretary General Counsel, Wheat
First Securities, Inc.
Howard T. Macrae, Jr. Assistant Secretary Assistant Secretary,
Commonwealth Advisors,
Inc. and Mentor
Distributors, Inc.
* The address of Mentor Investment Group, Inc., Wheat, First Securities, Inc.,
Wheat First Butcher Singer, Inc., The Mentor Funds, and Mentor Income Fund,
Inc., is 901 East Byrd Street, Richmond, VA 23219. The address of Ryland
Capital Management, Inc. and RAC Income Fund, Inc. is 11000 Broken Land Parkway,
Columbia, MD 21044.
Item 29. Principal Underwriters
(a) Mentor Distributors, Inc. acts as the principal underwriter for the
Trust.
(b)
Name and Principal Positions and Offices Positions and Offices
Business Address with Underwriter with Registrant
- ------------------ --------------------- ---------------------
Peter J. Quinn, Jr. President and Director Trustee
901 East Byrd Street
Richmond, VA 23219
Paul F. Costello Senior Vice President President
901 East Byrd Street
Richmond, VA 23219
Thomas L. Souders Treasurer Trustee
901 East Byrd Street
Richmond, VA 23219
John M. Ivan Secretary Clerk
901 East Byrd Street
Richmond, VA 23219
-6-
<PAGE>
Howard T. Macrae, Jr. Assistant Secretary None
901 East Byrd Street
Richmond, VA 23219
Robert P. Wilson Assistant Treasurer None
901 East Byrd Street
Richmond, VA 23219
(c) Inapplicable
Item 30. Location of Accounts and Records
Persons maintaining physical possession of accounts, books and other
documents required to be maintained by Section 31(a) of the Investment Company
Act of 1940 and the Rules promulgated thereunder are Registrant's Clerk, John M.
Ivan; Registrant's investment adviser, Commonwealth Advisors, Registrant's
sub-adviser, Commonwealth Investment Counsel, and Registrant's transfer agent
and custodian, Investors Fiduciary Trust Company. The address of the Clerk and
Mentor Advisors is 901 East Byrd Street, Richmond, Virginia 23219. The address
of the transfer agent and custodian is 127 West 10th Street, Kansas City,
Missouri 64105-1716.
Item 31. Management Services
None.
Item 32. Undertakings
(a) The Registrant undertakes to file a post-effective amendment
within four to six months from the effective date of this
Registration Statement for the purpose of providing unaudited
financial statements in respect of the Cash Resource
California Tax-Exempt Money Market Fund and the Cash Resource
New York Tax-Exempt Money Market Fund.
(b) The Registrant undertakes, if requested to do so by the
holders of at least 10% of the Registrant's outstanding shares
of beneficial interest, to call a meeting of shareholders for
the purpose of voting upon the question of removal of a
Trustee or Trustees and to assist in communications with other
shareholders as required by Section 16(c) of the Investment
Company Act of 1940.
(c) The Registrant undertakes to furnish to each person to whom a
prospectus of the Registrant is delivered a copy of the
Registrant's latest annual report to shareholders, upon
request and without charge.
-7-
<PAGE>
NOTICE
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
Registrant by an officer of the Registrant as an officer and not individually
and that the obligations of or arising out of this instrument are not binding
upon any of the Trustees, officers, or shareholders individually but are binding
only upon the assets and property of the Registrant.
-8-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all of
the requirements for effectiveness of this Amendment to its Registration
Statement pursuant to Rule 485(b) under the Securities Act of 1933 and has duly
caused this Amendment to be signed on behalf of the undersigned, thereunto duly
authorized, in the City of Richmond, and the Commonwealth of Virginia on this
20th day of September, 1996.
CASH RESOURCE TRUST
By:/s/ Paul F. Costello
--------------------
Name: Paul F. Costello
Title: 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 indicated on the 20th day of September, 1996.
Signature Title
--------- -----
* Chairman; Trustee
- -----------------
Daniel J. Ludeman
* Trustee
- ------------------
Arnold H. Dreyfuss
Trustee
- ----------------
Thomas F. Keller
* Trustee
- -----------------------
Louis W. Moelchert, Jr.
Trustee
- -----------------
Stanley F. Pauley
* Trustee
- ------------------
Troy A. Peery, Jr.
<PAGE>
Trustee
- -------------------
Peter J. Quinn, Jr.
/s/ Paul F. Costello President; Principal
- -------------------- Executive Officer
Paul F. Costello
/s/ Terry L. Perkins Treasurer; Principal Financial
- -------------------- Officer; Principal Accounting
Terry L. Perkins Officer
*By:/s/ Paul F. Costello
- ------------------------
Paul F. Costello
Attorney-in-Fact
<PAGE>
EXHIBIT INDEX
Exhibit No. Exhibit Page No.
- ----------- ------- --------
(11) Consent of Independent Auditors 76
(16) Schedule of Computation of Performance 77
(17) Financial Data Schedules
(A) Cash Resource Money Market
Fund 78
(B) Cash Resource U.S. Government
Money Market Fund 79
(C) Cash Resource Tax-Exempt
Money Market Fund 80
EXHIBIT 11
CONSENT OF INDEPENDENT AUDITORS
The Trustees and Shareholders
Cash Resource Trust
We consent to the use of our report dated September 6, 1996 incorporated
herein and to the references to our firm under the captions "FINANCIAL
HIGHLIGHTS" in the prospectus and "INDEPENDENT AUDITORS" in the statement of
additional information.
KPMG Peat Marwick LLP
Boston, Massachusetts
September 16, 1996
EXHIBIT 16
Schedule of Computation of Performance
Fiscal Year End 7/31/96
FYE 7/31/96
Money Market US Govt Tax-Exempt
Fund Fund Fund
------------ -------- -----------
Initial Investment 1,000.00 1,000.00 1,000.00
Initial NAV 1.00 1.00 1.00
Initial Shares 1,000.00 1,000.00 1,000.00
Shares from Distribution 49.10 47.40 29.00
End of Period NAV 1.00 1.00 1.00
Total Return 4.91% 4.74% 2.90%
<PAGE>
Money Market US Govt Tax-Exempt
Fund Fund Fund
------------ ---------- ----------
Account Balance (1 share @ $1.00) 1.00000000 1.00000000 1.00000000
Dividend Declaration
July 25, 1996 0.00012742 0.00012156 0.00007673
July 26, 1996 0.00012718 0.00012173 0.00007675
July 27, 1996 0.00012718 0.00012173 0.00007675
July 28, 1996 0.00012718 0.00012174 0.00007676
July 29, 1996 0.00012767 0.00012242 0.00007643
July 30, 1996 0.00012802 0.00012185 0.00007576
July 31, 1996 0.00012866 0.00012650 0.00007638
---------- ---------- ----------
Ending Account Balance 1.00089331 1.00085753 1.00053556
Less: Beginning Account Balance 1.00000000 1.00000000 1.00000000
---------- ---------- ----------
Difference 0.00089331 0.00085753 0.00053556
Basic Period Return
(Difference/Beginning Account Balance) 0.00089331 0.00085753 0.00053556
Yield Quotation
(Base Period Return *365/7) 4.66% 4.47% 2.79%
Effective Yield Quotation
[(Base Period Return +1)^(365/7)-1] 4.77% 4.57% 2.83%
These quotations were computed based on the seven days ending July 31, 1996
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 01
<NAME> MONEY MARKET FUND
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUL-31-1996
<PERIOD-END> JUL-31-1996
<INVESTMENTS-AT-COST> 654,423,021
<INVESTMENTS-AT-VALUE> 654,423,021
<RECEIVABLES> 1,347,817
<ASSETS-OTHER> 371,326
<OTHER-ITEMS-ASSETS> 64,571
<TOTAL-ASSETS> 656,206,735
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 9,706,676
<TOTAL-LIABILITIES> 9,706,676
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 646,500,059
<SHARES-COMMON-STOCK> 223,619,262
<SHARES-COMMON-PRIOR> 422,880,796
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 646,500,059
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 30,098,118
<OTHER-INCOME> 0
<EXPENSES-NET> (4,420,794)
<NET-INVESTMENT-INCOME> 25,677,324
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 25,677,324
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 25,677,324
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 3,001,683,797
<NUMBER-OF-SHARES-REDEEMED> (2,803,002,001)
<SHARES-REINVESTED> 25,161,310
<NET-CHANGE-IN-ASSETS> 223,843,106
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,172,603
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 4,420,794
<AVERAGE-NET-ASSETS> 538,389,233
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> 0.05
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0.05
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> 0.82
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 02
<NAME> U.S. GOVERNMENT MONEY MARKET FUND
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUL-31-1996
<PERIOD-END> JUL-31-1996
<INVESTMENTS-AT-COST> 1,405,267,827
<INVESTMENTS-AT-VALUE> 1,405,267,827
<RECEIVABLES> 2,184,986
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 301,247
<TOTAL-ASSETS> 1,407,754,060
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 5,356,785
<TOTAL-LIABILITIES> 5,356,785
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1,402,397,275
<SHARES-COMMON-STOCK> 185,521,173
<SHARES-COMMON-PRIOR> 1,216,928,802
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (52,700)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 1,402,397,275
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 73,398,969
<OTHER-INCOME> 0
<EXPENSES-NET> (12,318,736)
<NET-INVESTMENT-INCOME> 61,080,233
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 61,080,233
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 61,080,233
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 5,769,657,222
<NUMBER-OF-SHARES-REDEEMED> (5,644,584,610)
<SHARES-REINVESTED> 60,634,269
<NET-CHANGE-IN-ASSETS> 185,706,881
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
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<NAME> TAX-EXEMPT MONEY MARKET FUND
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