Rule 497(e)
File No. 811-7862
[MENTOR INVESTMENT GROUP LOGO]
CASH RESOURCE
TRUST
Prospectus
September 23, 1996
[EVEREN SECURITIES LOGO]
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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.
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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
<S> <C>
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%*
Total Fund Operating Expenses .82% .80%* .71%*
</TABLE>
*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:
<TABLE>
<CAPTION>
1 year 3 years 5 years 10 years
<S> <C>
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.
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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.
<TABLE>
<CAPTION>
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*
<S> <C>
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
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)
Net asset value, end of
period $1.00 $1.00 $1.00 $ 1.00 $ 1.00 $1.00 $1.00 $1.00 $1.00
Total Return 4.91% 4.97% 1.83%(b) 4.74% 4.82% 1.82%(b) 2.90% 3.05% 1.16%(b)
Ratios/Supplemental Data
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)
</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.
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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:
o 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.
o 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.
o prime commercial paper: high-grade, short-term obligations issued
by banks, corporations, and other issuers.
o corporate obligations: high-grade, short-term obligations other
than prime commercial paper.
o 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.
o 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-
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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.
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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.
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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.
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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.
10
<PAGE>
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
11
<PAGE>
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
12
<PAGE>
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
13
<PAGE>
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.
14
<PAGE>
Cash Resource Trust
901 East Byrd Street
Richmond, VA 23219
<PAGE>
Rule 497(e)
File No. 811-7862
[MENTOR INVESTMENT GROUP LOGO]
CASH RESOURCE
TRUST
Prospectus
September 23, 1996
<PAGE>
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
<S> <C>
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%*
Total Fund Operating Expenses .82% .80%* .71%*
</TABLE>
*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:
<TABLE>
<CAPTION>
1 year 3 years 5 years 10 years
<S> <C>
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.
<TABLE>
<CAPTION>
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*
<S> <C>
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
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)
Net asset value, end of
period $1.00 $1.00 $1.00 $ 1.00 $ 1.00 $1.00 $1.00 $1.00 $1.00
Total Return 4.91% 4.97% 1.83%(b) 4.74% 4.82% 1.82%(b) 2.90% 3.05% 1.16%(b)
Ratios/Supplemental Data
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)
</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:
o 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.
o 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.
o prime commercial paper: high-grade, short-term obligations issued
by banks, corporations, and other issuers.
o corporate obligations: high-grade, short-term obligations other
than prime commercial paper.
o 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.
o 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.
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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.
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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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Cash Resource Trust
901 East Byrd Street
Richmond, VA 23219
<PAGE>
CASH RESOURCE
TRUST
Annual Report
July 31, 1996
[MENTOR INVESTMENT GROUP LOGO]
<PAGE>
Cash Resource Trust
Annual Report
July 31, 1996
Message from the Chairman and President
It is our privilege to send you the Cash Resource Trust Annual Report for the
year ended July 31, 1996. The Cash Resource Trust is part of a diversified
family of funds offered by Mentor Investment Group, an investment advisory firm
with more than $6 billion under management. Mentor provides investment
management in seven different styles to a broad spectrum of investors.
As you know, the CRT Money Market Funds are invested to seek as high a rate of
current income (or, in the case of the Cash Resource Tax-Exempt Money Market
Fund, as high a rate of current income exempt from federal income tax) as the
investment advisor believes is consistent with preservation of capital and
maintenance of liquidity. The Funds are managed according to a conservative
policy that places strong emphasis on credit research. We carefully review each
investment and do not sacrifice quality to attain a higher yield.
In the pages that follow you will find financial statements for the Cash
Resource Money Market Fund, the Cash Resource U.S. Government Money Market Fund,
and the Cash Resource Tax-Exempt Money Market Fund, in addition to commentary
from members of the management team regarding their investment strategy and
outlook.
We thank you for your continuing investment in our Funds. We appreciate your
confidence in our commitment to providing current income consistent with
preservation of capital and maintenance of liquidity.
Sincerely,
/s/ DANIEL J. LUDEMAN /s/ PAUL F. COSTELLO
Daniel J. Ludeman Paul F. Costello
Chairman President
The Mentor
Mission Statement
Our mission is to provide professional investment management services
through a firm that is second to none in the quality of its investment
process, the skill and training of its professionals, and the commitment,
shared by all its associates, to deliver the highest level of service and
ethical behavior to clients.
For more information and a prospectus for the Cash Resource Trust, please call
us, (800)382-0016, or contact your financial consultant. The prospectus contains
complete information regarding advisory fees, sales charges, and expenses.
Please read them carefully before investing or sending money.
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Cash Resource Trust Annual Report
Managers' Overview
July 31, 1996
The three funds of the Cash Resource Trust (CRT) are invested in accordance with
conservative standards which place primary emphasis on liquidity and safety of
principal.
* The CRT Money Market Fund is a diversified portfolio of fixed-income
securities, including commercial paper, bank obligations, and other
short-term investments.
* The CRT U.S. Government Money Market Fund is invested entirely in securities
backed by the U.S. Government or its agencies, and related repurchase
agreements.
* The CRT Tax-Exempt Money Market Fund is structured to generate income exempt
from federal income tax.
The 12-month period ended July 31, 1996 was one of mixed signals for money
managers. The period began August 1, 1995 with the Federal Reserve having just
lowered the key Fed Funds rate to 5.75%, the first reduction in two years. The
next four months witnessed a mixed pattern of economic data, with the economy
apparently poised for strong growth but frustrated by a sluggish consumer.
During this period the markets tended to vacillate within a relatively narrow
trading range based on whether the latest statistics were weak or strong. But
the preponderance of evidence indicated a soft economy, with the result that the
Fed further reduced rates, to 5.50% in December and 5.25% in January.
It now appears, however, that the data for the winter months were distorted,
first by the partial government shutdown, then by bad weather, and were not as
weak as first reported. The coming of spring brought a more positive growth
track for the economy, with the result that sentiment shifted 180 degrees, away
from further cuts by the Fed and toward a return to the pattern of higher rates
prevailing in the previous fiscal year.
The fixed-income markets sold off sharply in response to this change in
expectations, with rates rising. The money market area was no exception. The
remainder of the year appears more uncertain than usual, with the course of the
economy and Fed policy somewhat open to question, particularly with presidential
elections taking place.
Our pledge to you is to continue our emphasis on safety and liquidity through
high credit standards and conservative investment policies. We thank you for
your investment.
/s/ R. PRESTON NUTTALL
R. Preston Nuttall
Director of Cash Management
/s/ HUBERT R. WHITE
Hubert R. White
Portfolio Manager
/s/ KATHRYN T. ALLEN
Kathryn T. Allen
Portfolio Manager
2
<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>
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>
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>
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>
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>
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>
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>
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>
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>
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>
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>
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
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
Financial Highlights
<TABLE>
<CAPTION>
Money Market Fund
Year Year Period
Ended Ended Ended
7/31/96 7/31/95 7/31/94*
<S> <C> <C> <C>
Per Share Operating Performance
Net asset value, beginning of period $ 1.00 $ 1.00 $ 1.00
Income from investment operations
Net investment income 0.05 0.05** 0.02
Distributions
Net investment income (0.05) (0.05)** (0.02)
Net asset value, end of period $ 1.00 $ 1.00 $ 1.00
Total Return 4.91% 4.97% 1.83%(b)
Ratios / Supplemental Data
Net assets, end of period (in thousands) $646,500 $422,657 $192,260
Ratio of expenses to average net assets 0.82% 0.82% 0.89%(a)
Ratio of expenses to average net assets excluding waivers 0.82% 0.82% 0.93%(a)
Ratio of net investment income to average net assets 4.77% 4.96% 2.96%(a)
</TABLE>
(a) Annualized.
(b) Total Return for periods less than one year are not annualized.
* For the period from December 20, 1993 (commencement of operations) to July
31, 1994.
** Includes net realized capital gains (losses) which were under $0.01 per
share.
See notes to financial statements.
17
<PAGE>
Cash Resource Trust
Financial Highlights (continued)
<TABLE>
<CAPTION>
U.S. Government Tax-Exempt
Money Market Fund Money Market Fund
Year Year Period Year Year Period
Ended Ended Ended Ended Ended Ended
7/31/96 7/31/95 7/31/94* 7/31/96 7/31/95 7/31/94*
<S> <C>
Per Share Operating
Performance
Net asset value, beginning of
period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
Income from investment
operations
Net investment income 0.05 0.05** 0.02 0.03 0.03** 0.01
Distributions
Net investment income (0.05) (0.05) (0.02) (0.03) (0.03) (0.01)
Net asset value, end of
period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
Total Return 4.74% 4.82% 1.82%(b) 2.90% 3.05% 1.16%(b)
Ratios / Supplemental Data
Net assets, end of period (in
thousands) $1,402,397 $1,216,690 $907,819 $290,891 $266,895 $195,702
Ratio of expenses to average
net assets 0.93% 0.88% 0.80%(a) 0.76% 0.72% 0.65%(a)
Ratio of expenses to average
net assets excluding
waivers 0.93% 0.88% 0.83%(a) 0.76% 0.74% 0.74%(a)
Ratio of net investment
income to average net
assets 4.63% 4.75% 2.91%(a) 2.85% 3.01% 1.87%(a)
</TABLE>
(a) Annualized.
(b) Total Return for periods less than one year are not annualized.
* For the period from December 20, 1993 (commencement of operations) to July
31, 1994.
** Includes net realized capital gains (losses) which were under $0.01 per
share.
See notes to financial statements.
18
<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:
Adviser Sub-Adviser
Fee Fee
Earned Earned
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
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>
Shareholder Information
Trustees
Daniel J. Ludeman, Trustee & Chairman
Chairman and Chief Executive Officer
Mentor Investment Group, Inc.
Arnold H. Dreyfuss, Trustee
former Chairman and
Chief Executive Officer
Hamilton Beach/Proctor-Silex, Inc.
Thomas F. Keller, Trustee
former Dean, Fuqua School of Business
Duke University
Louis W. Moelchert, Jr., Trustee
Vice President for Business & Finance
University of Richmond
Stanley F. Pauley, Jr., Trustee
Chairman and Chief Executive Officer
Carpenter Company
Troy A. Peery, Jr., Trustee
President
Heilig-Meyers Company
Peter J. Quinn, Jr., Trustee
Managing Director
Mentor Investment Group, Inc.
Officers
Paul F. Costello, President
Managing Director
Mentor Investment Group, Inc.
Terry L. Perkins, Treasurer
Senior Vice President
Mentor Investment Group, Inc.
John M. Ivan, Secretary
Managing Director/Assistant General Counsel
Wheat First Butcher Singer, Inc.
Michael A. Wade, Assistant Treasurer
Associate Vice President
Mentor Investment Group, Inc.
This report is authorized for distribution to prospective investors only when
preceded or accompanied by a prospectus, which contains facts concerning the
objective, policies, management fees, and expenses of the Trust and further
information.
Cash Resource Trust
901 East Byrd Street
Richmond, VA 23219
