As filed with the Securities and Exchange Commission on September 30, 1997
Registration No. 33-65818
File No. 811-7862
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
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REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 /X/
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/ / Pre-Effective Amendment No.
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Post-Effective Amendment No. 6 /X/
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REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY /X/
ACT OF 1940 ---
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Amendment No. 8 /X/
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(Check appropriate box or boxes)
CASH RESOURCE TRUST
(Exact name of registrant as specified in charter)
901 East Byrd Street
Richmond, Virginia 23219
(Address of principal executive offices)
Registrant's Telephone Number, including Area Code (804) 782-3647
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PAUL F. COSTELLO, President
901 East Byrd Street
Richmond, Virginia 23219
(Name and address of agent for service)
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Copy to:
TIMOTHY W. DIGGINS, Esquire
ROPES & GRAY
One International Place
Boston, Massachusetts 02110
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It is proposed that this filing will become effective (check appropriate box):
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/X/ immediately upon filing pursuant to paragraph (b)
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on [date] pursuant to paragraph (b)
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60 days after filing pursuant to paragraph (a)
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on (date) pursuant to paragraph (a)(1)
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75 days after filing pursuant to paragraph (a)(2)
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on (date) pursuant to paragraph (a)(2) of Rule 485
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<PAGE>
If appropriate, check the following box:
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This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
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Cash Resource Trust registered an indefinite amount of securities under
the Securities Act of 1933 pursuant to Rule 24f-2 of the Investment Company Act
of 1940. A Rule 24f-2 notice in respect of the Trust's fiscal year ended July
31, 1997 was filed on September 23, 1997.
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<PAGE>
CASH RESOURCE TRUST
CROSS REFERENCE SHEET
(as required by Rule 404(c))
Part A
<TABLE>
<CAPTION>
N-1A Item No. Location
<S> <C>
1. Cover Page..................................................... Cover Page
2. Synopsis....................................................... Cover Page; Expense summary
3. Condensed Financial Information................................ Financial highlights
4. General Description of Registrant.............................. Selection of Investments; Other
investment practices; How a
Fund's performance is calculated;
General Information
5. Management of the Fund......................................... Management; Distribution
Services; General Information
5A. Management's Discussion
of Fund Performance.......................................... Not Applicable
6. Capital Stock and Other
Securities................................................... Buying and Selling Shares of the
Funds; Tax Information;
Dividends; General Information
7. Purchase of Securities Being
Offered...................................................... Buying and Selling Shares of the
Funds; How to Exchange Shares
8. Redemption or Repurchase....................................... Buying and Selling Shares of the
Funds; How to Exchange Shares;
Financial Institutions
9. Pending Legal Proceedings...................................... Not Applicable
</TABLE>
-3-
<PAGE>
Part B
<TABLE>
<CAPTION>
N-1A Item No. Location
<S> <C>
10. Cover Page.................................................... Cover Page
11. Table of Contents............................................. Cover Page
12. General Information and History............................... Not Applicable
13. Investment Objectives and
Policies.................................................... Investment Objective and Policies
of the Trust; Investment
Restrictions; Portfolio Turnover
14. Management of the Fund........................................ Management of the Trust
15. Control Persons and Principal
Holders of Securities....................................... Management of the Trust;
Principal Holders of Securities
16. Investment Advisory and Other
Services.................................................... Management of the Trust;
Investment Advisory and other
Securities; Custodian; Independent
Auditors
17. Brokerage Allocation.......................................... Management of the Trust
18. Capital Stock and Other
Securities.................................................. Determination of Net Asset Value;
Taxes; Distribution; Organization
19. Purchase, Redemption and Pricing
of Securities Being Offered................................. Management of the Trust;
Determination of Net Asset Value;
Distribution
20. Tax Status.................................................... Taxes
21. Underwriters.................................................. Not applicable
22. Calculations of Yield Quotations
of Money Market Funds....................................... Performance Information
23. Financial Statements.......................................... Financial Statements
</TABLE>
Part C
Information required to be included in Part C is set forth under the
appropriate Item, so numbered, in Part C of the Registration Statement.
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<PAGE>
P R O S P E C T U S September 30, 1997
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 California Tax-Exempt Money Market Fund
Cash Resource New York Tax-Exempt Money Market Fund
The Cash Resource Funds 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. Federal law permits Cash Resource
California Tax-Exempt Money Market Fund and Cash Resource New York Tax-Exempt
Money Market Fund to invest more of their assets in the securities of a single
issuer than other money market funds; as a result, an investment in those Funds
may involve greater risks than an investment in other types of money market
funds.
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 30, 1997 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 (or, in the case of the California and New York Tax-Exempt Funds,
based on estimates for the Funds' current 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
Cash Cash Resource Resource California New York
Resource U.S. Government Tax-Exempt Tax-Exempt Tax-Exempt
Money Market Money Market Money Market Money Market Money Market
Fund Fund Fund Fund Fund
------------ --------------- ------------ ------------ ------------
<S> <C>
Shareholder Transaction Expenses None None None None None
Annual Fund Operating Expenses
(as a percentage of average net
assets)
Management Fees .19% .19% .22% .22% .10%*
12b-1 Fees .38% .38% .33% .33% .38%*
Other Expenses .29% .24% .16% .20% .32%
Total Fund Operating Expenses .86% .81% .71% .75% .80%*
</TABLE>
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*reflecting expense limitation
Examples
Your investment of $1,000 in a Fund would incur the following expenses,
assuming 5% annual return and redemption at the end of each period:
<TABLE>
<CAPTION>
1 year 3 years 5 years 10 years
------ ------- ------- --------
<S> <C>
Cash Resource Money Market Fund $9 $27 $48 $106
Cash Resource U.S. Government Money
Market Fund $8 $26 $45 $100
Cash Resource Tax-Exempt Money Market
Fund $7 $23 $40 $ 88
Cash Resource California Tax-Exempt Money
Market Fund $8 $24 -- --
Cash Resource New York Tax-Exempt Money
Market Fund $8 $26 -- --
</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 New York Tax-Exempt Money Market Fund
reflect expense limitations currently in effect. In the absence of the
limitations, Management Fees, 12b-1 Fees, and Total Fund Operating Expenses
would be .22%, .50%, and 1.04%, respectively, for the New York 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 incorporated by reference into the Statement of Additional Information, which
may be obtained in the manner described on the cover page of this Prospectus.
Each of the Money Market, U.S. Government Money Market, and Tax-Exempt Money
Market Funds began operations on December 20, 1993; each of the California and
New York Tax-Exempt Money Market Funds commenced operations on December 9, 1996.
See "Financial Statements" in the Funds' Statement of Additional Information.
<TABLE>
<CAPTION>
Money Market U.S. Government
Fund Money Market Fund
Year or Period ------------------------------------------- -------------------------------------------------
Ended July 31, 1997 1996 1995 1994* 1997 1996 1995 1994*
<S> <C>
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Per Share
Operating
Performance
Net asset value,
beginning of
period $1.000 $1.000 $1.000 $1.000 $1.000 $1.000 $1.000 $1.000
- --------------------------------------------------------------------------------------------------------------------------
Income from
investment
operations
Net investment
income 0.047(a) 0.050 0.050(a) 0.020 0.046(a) 0.050 0.050(a) 0.020
Distributions
Net investment
income (0.047) (0.050) (0.050)(a) (0.020) (0.046)(a) (0.050) (0.050) (0.020)
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Net asset value,
end of period $1.000 $1.000 $1.000 $1.000 $1.000 $1.000 $1.000 $1.000
- --------------------------------------------------------------------------------------------------------------------------
Total Return 4.77% 4.91% 4.97% 1.83%(c) 4.72% 4.74% 4.82% 1.82%(c)
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Ratios/Supplemental Data
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Net assets, end of
period (in
thousands) $2,941,605 $646,500 $422,657 $192,260 $2,918,711 $1,402,397 $1,216,690 $907,819
Ratio of expenses
to average net
assets 0.86% 0.82% 0.82% 0.89%(b) 0.81% 0.93% 0.88% 0.80%(b)
Ratio of expenses
to average net
assets excluding
waivers 0.86% 0.82% 0.82% 0.93%(b) 0.81% 0.93% 0.88% 0.83%(b)
Ratio of net
investment income
to average net
assets 4.67% 4.77% 4.96% 2.96%(b) 4.63% 4.63% 4.75% 2.91%(b)
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<CAPTION>
California New York
Money Money
Tax-Exempt Market Market
Money Market Fund Fund Fund
Year or Period ------------------------------------------- ---------- ----------
Ended July 31, 1997 1996 1995 1994* 1997** 1997**
<S> <C>
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Per Share
Operating
Performance
Net asset value,
beginning of
period $1.000 $1.000 $1.000 $1.000 $1.000 $1.000
- ----------------------------------------------------------------------------------------------
Income from
investment
operations
Net investment
income 0.029 0.030 0.030(a) 0.010 0.017 0.018
Distributions
Net investment
income (0.029) (0.030) (0.030) (0.010) (0.017) (0.018)
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Net asset value,
end of period $1.000 $1.000 $1.000 $1.000 $1.000 $1.000
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Total Return 2.91% 2.90% 3.05% 1.16%(c) 1.76%(c) 1.77%(c)
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Ratios/Supplemental Data
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Net assets, end of
period (in
thousands) $743,614 $290,891 $266,895 $195,702 $89,432 $12,071
Ratio of expenses
to average net
assets 0.71% 0.76% 0.72% 0.65%(b) 0.75%(b) 0.80%(b)
Ratio of expenses
to average net
assets excluding
waivers 0.71% 0.76% 0.74% 0.74%(b) 0.75%(b) 1.04%(b)
Ratio of net
investment income
to average net
assets 2.88% 2.85% 3.01% 1.87%(b) 2.70%(b) 2.77%(b)
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</TABLE>
* For the period from December 20, 1993 (commencement of operations) to July
31, 1994.
** For the period from December 9, 1996 (commencement of operations) to July
31, 1997.
(a) Includes net realized capital gain (loss) which were under $0.001 per
share.
(b) Annualized.
(c) Total return for periods less than one year are not annualized.
3
<PAGE>
INVESTMENT OBJECTIVES AND POLICIES
The investment objective of the Money Market Fund and the U.S. Government
Money Market Fund is to seek as high a rate of current income as Mentor
Investment Advisors, LLC, the Funds' investment advisor ("Mentor Advisors")
believes is consistent with preservation of capital and maintenance of
liquidity. The investment objective of each of the other Funds is to seek as
high a rate of current income exempt from federal income tax (and, in the case
of the California Tax-Exempt Money Market Fund, California personal income tax,
or, in the case of the New York Tax-Exempt Money Market Fund, New York State and
City personal income taxes) as Mentor Advisors 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.
Cash Resource Money Market Fund
The Money Market Fund invests in a portfolio of high-quality money market
instruments consisting exclusively of:
(Bullet) bank certificates of deposit (CD's): negotiable certificates issued
against funds deposited in a commercial bank for a definite period
of time and earning a specified return.
(Bullet) bankers' acceptances: negotiable drafts or bills of exchange, which
have been "accepted" by a bank, meaning, in effect, that the bank
has unconditionally agreed to pay the face value of the instrument
on maturity.
(Bullet) prime commercial paper: high-grade, short-term obligations issued by
banks, corporations, and other issuers.
(Bullet) corporate obligations: high-grade, short-term obligations other than
prime commercial paper.
(Bullet) U.S. Government securities: marketable securities issued or
guaranteed as to principal or interest by the U.S. Government or by
its agencies or instrumentalities.
(Bullet) repurchase agreements: with respect to U.S. Treasury or U.S.
Government securities.
Cash Resource U.S. Government Money Market Fund
The U.S. Government Money Market Fund invests exclusively in U.S. Treasury
bills, notes, and bonds, and other obligations issued or guaranteed as to
principal or interest by the U.S. Government, its agencies, or
instrumentalities, and in repurchase agreements with respect to such
obligations. Certain of these obligations, including U.S. Treasury bills, notes,
and bonds, mortgage participation certificates issued or guaranteed by the
Government National Mortgage Association, and Federal Housing Administration
debentures, are supported by the full faith and credit of the United States.
Other U.S. Government securities issued by federal agencies or government-
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.
4
<PAGE>
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 any
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) 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 Mentor Advisors 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.
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
5
<PAGE>
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 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.
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
Mentor Advisors 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.
California Tax-Exempt Money Market Fund
The California Tax-Exempt Money Market Fund will normally invest at least 80%
of its assets in California Tax-Exempt Securities, which are debt obligations
issued by the State of California, or any of its political subdivisions, or its
agencies, instrumentalities, or other governmental units, the interest from
which is, in the opinion of bond counsel, exempt from federal income tax and
California personal income tax. (This 80% requirement is a fundamental policy of
the Fund.) The Fund may invest the remainder of its assets in investments of any
kind described under "Selection of Investments" below.
California Tax-Exempt 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 California 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 California 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
6
<PAGE>
bonds are in most cases special obligation securities, the credit quality of
which is directly related to the private user of the facilities.
The Fund will invest in the following types of California 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) 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 Mentor Advisors determines
they meet the quality standards discussed below. (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
California 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.
The Fund will normally invest at least 80% of its assets in debt
obligations the interest from which is, in the opinion of bond counsel, exempt
from federal income tax and that will not give rise to interest income subject
to federal alternative minimum tax for individuals. To the extent 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.
Since the Fund invests primarily in California Tax-Exempt Securities, the
value of the Fund's shares may be especially affected by factors pertaining to
the economy of California and other factors specifically affecting the ability
of issuers of California Tax-Exempt Securities to meet their obligations; an
investment in the Fund may as a result involve greater risk than an investment
in other types of money market funds.
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 the State of
California. Any reduction in the actual or perceived ability of an issuer of
California Tax-Exempt Securities to meet its obligations (including a reduction
in the rating of its outstanding securities) would likely adversely affect the
market value and marketability of its obligations and could adversely affect the
values of California Tax-Exempt Securities issued by others as well.
The Fund may invest in high quality taxable money market instruments at any
time when Mentor Advisors believes that market conditions make pursuing the
Fund's basic investment strategy inconsistent with the best interest of
shareholders. These instruments may include: bank certificates of deposit,
banker's acceptances, prime commercial paper, high quality short-term corporate
obligations, short-term U.S. government securities or repurchase agreements, or
any other securities Mentor Advisors considers consistent with such defensive
strategies.
7
<PAGE>
New York Tax-Exempt Money Market Fund
The New York Tax-Exempt Money Market Fund will normally invest at least 80%
of its assets in New York Tax-Exempt Securities, which are debt obligations
issued by the State of New York, or any of its political subdivisions, or its
agencies, instrumentalities, or other governmental units (or of other
governmental issuers, such as U.S. territories), the interest from which is, in
the opinion of bond counsel, exempt from federal income tax and New York State
and City personal income taxes. (This 80% requirement is a fundamental policy of
the Fund.) The Fund may invest the remainder of its assets in investments of any
kind described under "Selection of Investments" below.
New York Tax-Exempt 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 New York 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 New York 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 the
facilities.
The Fund will invest in the following types of New York 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) 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 Mentor Advisors determines
they meet the quality standards discussed below. (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
New York 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.
The Fund will normally invest at least 80% of its assets in debt
obligations the interest from which is, in the opinion of bond counsel, exempt
from federal income tax and that will not give rise to interest income subject
to federal alternative minimum tax for individuals. To the extent 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.
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Since the Fund invests primarily in New York Tax-Exempt Securities, the
value of the Fund's shares may be especially affected by factors pertaining to
the economy of New York and other factors specifically affecting the ability of
issuers of New York Tax-Exempt Securities to meet their obligations; an
investment in the Fund may as a result involve greater risk than an investment
in other types of money market funds.
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 the State or City of New York.
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 New York Tax-Exempt Securities to meet its obligations (including a reduction
in the rating of its outstanding securities) would likely adversely affect the
market value and marketability of its obligations and could adversely affect the
values of New York Tax-Exempt Securities issued by others as well.
The Fund may invest in high quality taxable money market instruments at any
time when Mentor Advisors believes that market conditions make pursuing the
Fund's basic investment strategy inconsistent with the best interest of
shareholders. These instruments may include: bank certificates of deposit,
banker's acceptances, prime commercial paper, high quality short-term corporate
obligations, short-term U.S. government securities or repurchase agreements, or
any other securities Mentor Advisors considers consistent with such 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 Service, Inc. at the time of
investment, and (iii) unrated securities determined by Mentor Advisors 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 Mentor Advisors 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
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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.
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 (other than the
Tax-Exempt Money Market and the California and New York Tax-Exempt Money Market
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.
Because of the relatively small number of issuers of California Tax-Exempt
Securities and New York Tax-Exempt Securities, the California and New York
Tax-Exempt Funds are more likely to invest a higher percentage of their assets
in the securities of a single issuer than investment companies that invest in a
broader range of securities. This practice involves an increased risk of loss to
a Fund if an issuer were unable to make interest or principal payments or if the
market value of these securities were to decline.
Neither the Tax-Exempt Money Market Fund, the California Tax-Exempt Money
Market Fund, nor the New York Tax-Exempt Money Market Fund (each, a "Tax-Exempt
Fund" and collectively, the "Tax-Exempt Funds") will invest more than 25% of its
total assets in any one industry. Governmental issuers of Tax-Exempt Securities,
California Tax-Exempt Securities, or New York Tax-Exempt Securities are not
considered part of any "industry." However, 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 a Tax-Exempt Fund may invest more than 25%
of its assets in a broader segment of the Tax-Exempt Securities market (or the
California Tax-Exempt or New York Tax-Exempt Securities Markets, as the case may
be), 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 Mentor Advisors 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
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segment. Each of the Tax-Exempt Funds reserves the right to invest more than 25%
of its assets in industrial development bonds and private activity bonds or
notes.
The Tax-Exempt Money Market 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 that 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.
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 Mentor Advisors 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 rights 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.
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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 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
Federal taxes. 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 a Tax-Exempt 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 a Tax-Exempt 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.
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If a Tax-Exempt 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.
State taxes (California Tax-Exempt Money Market Fund). To the extent
exempt-interest dividends are derived from interest on California Tax-Exempt
Securities, such distributions will be exempt from California personal income
tax (but not from California franchise and corporate income tax). For California
tax purposes, distributions derived from investments in other than (i)
California Tax-Exempt Securities and (ii) obligations of the United States (or
other obligations) which pay interest exempt from California personal income
taxation when held by an individual will be taxable as ordinary income or as
long-term capital gain, whether paid in cash or reinvested in additional shares.
Interest derived from California Tax-Exempt Securities is not subject to the
California alternative minimum tax on individuals, and California personal
income tax does not apply to any portion of Social Security or railroad
retirement benefits. Interest on indebtedness incurred or continued to purchase
or carry the Fund's shares generally will not be deductible for California
personal income tax purposes. An investment in the Fund may result in liability
for state and/or local taxes for shareholders subject to tax by states other
than California.
State taxes (New York Tax-Exempt Money Market Fund). To the extent
exempt-interest dividends are derived from interest on New York Tax-Exempt
Securities, such distributions will be exempt from New York State and New York
City personal income taxes. However, an investment in the Fund may result in
liability for state and/or local taxes for individual shareholders subject to
taxation by states other than New York State or cities other than New York City,
because the exemption from New York State and New York City personal income
taxes does not prevent such other jurisdictions from taxing individual
shareholders on dividends received from the Fund. In addition, distributions
derived from interest on tax-exempt securities other than New York Tax Exempt
Securities will be treated as taxable ordinary income for purposes of the New
York State and New York City personal income taxes.
Exempt-interest dividends, including those derived from New York Tax-Exempt
Securities, are included in a corporation's net investment income for purposes
of calculating such corporation's New York State corporate franchise tax and New
York City general corporation tax and will be subject to such taxes to the
extent that a corporation's net investment income is allocated to New York State
and/or New York City.
All or a portion of interest on indebtedness incurred or continued to
purchase or carry the Fund's shares generally will not be deductible for federal
or New York State and New York City personal income tax purposes.
For New York State and City personal income tax purposes, distributions of
net long-term gains will be taxable at the same rates as ordinary income.
General. The foregoing is a summary of certain federal, California, and New
York State and New York City 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.
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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 the net asset value of each Fund
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.
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
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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 may result 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 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
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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. Mentor Investment Advisors, L.L.C., located at 901 East Byrd
Street, Richmond, Virginia 23219, 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. Subject to such policies as the
Trustees may determine, Mentor Advisors furnishes a continuing investment
program for the Funds and makes investment decisions on their behalf.
Mentor Advisors is a wholly owned subsidiary of Mentor Investment Group,
LLC ("Mentor"), which is in turn a subsidiary of Wheat First Butcher Singer,
Inc., a diversified financial services holding company. Mentor Advisors and its
affiliates serve as investment adviser to twenty-one separate investment
portfolios in the Mentor Family of Funds, including the Funds. For a copy of the
prospectus relating to any of these other funds, call Mentor Distributors at
1-800-382-0016. Mentor Advisors' address is 901 East Byrd Street, Richmond,
Virginia 23219.
EVEREN Capital Corporation has a 20% ownership interest in Mentor and may
acquire additional ownership based principally on the amount of Mentor's
revenues derived from assets attributable to clients of EVEREN and its
affiliates.
Mentor has informed the Trust that Wheat First Butcher Singer, Inc. will be
acquired by First Union Corp. ("First Union"), in a transaction expected to
occur as early as December of this year. First Union is a global financial
services company with approximately $140 billion in assets and $10 billion in
total stockholders' equity. The proposed arrangement does not contemplate any
changes in the management or operations of Mentor or any of its investment
advisory subsidiaries, including Mentor Advisors. Consummation of the
acquisition, which is subject to a number of conditions, including regulatory
approvals, will result in the termination of the investment advisory agreements
between the Funds and Mentor Advisors. It is expected that the Trustees of the
Trust will meet to consider new investment advisory agreements between the Funds
and Mentor Advisors, to become effective upon consummation of the acquisition.
Implementation of the new agreements, which would be substantially identical to
the current investment advisory agreements, would be subject to approval of
shareholders at a meeting expected to be held prior to the consummation of the
acquisition.
Each Fund pays management fees to Mentor Advisors monthly at the following
annual rates (based on the average daily net 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.
The Funds pay all expenses not assumed by Mentor Advisors, including
Trustees' fees, auditing, legal, custodial, investor servicing, and shareholder
reporting expenses, and payments under their Distribution Plans. General
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.
Mentor Advisors places all orders for purchases and sales of the
investments of each Fund. In selecting broker-dealers, Mentor Advisors may
consider research and brokerage services furnished to it and its affiliates.
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Subject to seeking the most favorable price and execution available, Mentor
Advisors 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,
between 0.15% and 0.33% in the case of the Tax-Exempt Fund and the California
Tax-Exempt Fund, and between 0.15% and 0.38% in the case of the New York
Tax-Exempt 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 a Tax-Exempt 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 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.
17
<PAGE>
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 five series of shares. 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.
18
<PAGE>
No person has been authorized to
give any information or to make any
representations other than those [logo]
contained in this Prospectus and, if
given or made, such other information or
representations must not be relied upon
as having been authorized by the Trust.
This Prospectus does not constitute an Cash Resource Trust
offer in any State in which, or to any
person to whom, such offering may not
lawfully be made. This Prospectus omits
certain information contained in the
Registration Statement, to which -----------------
reference is made, filed with the PROSPECTUS
Securities and Exchange Commission. -----------------
Items which are thus omitted, including
contracts and other documents referred
to or summarized herein, may be obtained September 30, 1997
from the Commission upon payment of the
prescribed fees.
Additional information concerning
the securities offered hereby and the
Trust is to be found in the Registration
Statement, including various exhibits
thereto and financial statements
included or incorporated therein, which
may be inspected at the office of the
Commission.
Cash Resource Trust
901 East Byrd Street [logo]
Richmond, VA 23219
(800) 382-0016
1997 Mentor Distributors, LLC
CPA 040
<PAGE>
No person has been authorized to
give any information or to make any
representations other than those [logo]
contained in this Prospectus and, if
given or made, such other information or
representations must not be relied upon
as having been authorized by the Trust.
This Prospectus does not constitute an Cash Resource Trust
offer in any State in which, or to any
person to whom, such offering may not
lawfully be made. This Prospectus omits
certain information contained in the
Registration Statement, to which -----------------
reference is made, filed with the PROSPECTUS
Securities and Exchange Commission. -----------------
Items which are thus omitted, including
contracts and other documents referred
to or summarized herein, may be obtained September 30, 1997
from the Commission upon payment of the
prescribed fees.
Additional information concerning
the securities offered hereby and the
Trust is to be found in the Registration
Statement, including various exhibits
thereto and financial statements
included or incorporated therein, which
may be inspected at the office of the
Commission.
Cash Resource Trust
901 East Byrd Street [logo]
Richmond, VA 23219
(800) 382-0016
1997 Mentor Distributors, LLC
MK 1341
<PAGE>
CASH RESOURCE TRUST
FORM N-1A
PART B
STATEMENT OF ADDITIONAL INFORMATION
September 30, 1997
This Statement of Additional Information contains information which may
be of interest to investors but which is not included in the Prospectus dated
September 30, 1997 (the "Prospectus") of Cash Resource Money Market Fund, Cash
Resource U.S. Government Money Market Fund, Cash Resource Tax-Exempt Money
Market Fund, Cash Resource California Tax-Exempt Money Market Fund, and Cash
Resource New York Tax-Exempt Money Market Fund (each a "Fund" and collectively
the "Funds"), each of which is a series of shares of Cash Resource Trust (the
"Trust"). This Statement is not a prospectus and is only authorized for
distribution when accompanied or preceded by the Prospectus of the Funds dated
September 30, 1997. This Statement should be read together with the Prospectus,
as amended from time to time. Investors may obtain a free copy of the Prospectus
by calling Mentor Distributors, Inc. ("Mentor Distributors"), the Trust's
distributor, at (800) 382-0016.
Table of Contents
Part I Page
INVESTMENT OBJECTIVES AND POLICIES OF THE TRUST........................... 2
INVESTMENT RESTRICTIONS................................................... 6
MANAGEMENT OF THE TRUST................................................... 9
PRINCIPAL HOLDERS OF SECURITIES........................................... 13
INVESTMENT ADVISORY AND OTHER SERVICES.................................... 14
DETERMINATION OF NET ASSET VALUE.......................................... 18
TAXES ................................................................. 20
DISTRIBUTION.............................................................. 22
ORGANIZATION.............................................................. 24
PORTFOLIO TURNOVER........................................................ 25
CUSTODIAN................................................................. 25
INDEPENDENT AUDITORS...................................................... 25
PERFORMANCE INFORMATION................................................... 25
INVESTMENT PROFESSIONALS OF MENTOR INVESTMENT ADVISORS, LLC............... 34
SHAREHOLDER LIABILITY..................................................... 35
FINANCIAL STATEMENTS...................................................... 35
-1-
<PAGE>
INVESTMENT OBJECTIVES AND POLICIES OF THE TRUST
The investment objectives and policies of each of the Funds are
described in the Prospectus. This Statement contains additional information
concerning certain investment practices and investment restrictions of the
Funds.
Except as described below under "Investment Restrictions," the
investment objectives and policies described in the Prospectus and in this
Statement are not fundamental, and the Trustees may change the investment
objectives and policies of a Fund without a vote of shareholders.
Except as otherwise noted below, the following descriptions of certain
investment policies and techniques are applicable to all of the Funds. All
references to the Adviser refer to the investment adviser or sub-adviser, if
any, of the Funds.
Repurchase Agreements
Each Fund may enter into repurchase agreements. A repurchase agreement
is a contract under which a Fund acquires a security for a relatively short
period (usually not more than one week) subject to the obligation of the seller
to repurchase and the Fund to resell such security at a fixed time and price
(representing a Fund's cost plus interest). It is each Fund's present intention
to enter into repurchase agreements only with member banks of the Federal
Reserve System and securities dealers meeting certain criteria as to
creditworthiness and financial condition established by the Trustees of a Fund
and only with respect to obligations of the U.S. Government or its agencies or
instrumentalities or other high quality short term debt obligations. Repurchase
agreements may also be viewed as loans made by a Fund which are collateralized
by the securities subject to repurchase. The Adviser will monitor such
transactions to ensure that the value of the underlying securities will be at
least equal at all times to the total amount of the repurchase obligation,
including the interest factor. If the seller defaults, a Fund could realize a
loss on the sale of the underlying security to the extent that the proceeds of
the sale including accrued interest are less than the resale price provided in
the agreement including interest. In addition, if the seller should be involved
in bankruptcy or insolvency proceedings, a Fund may incur delay and costs in
selling the underlying security or may suffer a loss of principal and interest
if the Fund is treated as an unsecured creditor and required to return the
underlying collateral to the seller's estate.
Securities Loans
A Fund may lend its portfolio securities provided: (1) the loan is
secured continuously by collateral consisting of U.S. Government securities,
cash, or cash equivalents adjusted daily to have market value at least equal to
the current market value of the securities loaned; (2) the Fund may at any time
call the loan and regain the securities loaned; (3) the Fund will receive any
interest or dividends paid on the loaned securities; and (4) the aggregate
market value of the securities loaned will not at any time exceed one-third of
the total assets of such Fund. In
-2-
<PAGE>
addition, it is anticipated that a Fund may share with the borrower some of the
income received on the collateral for the loan or that it will be paid a premium
for the loan. Before a Fund enters into a loan, the Adviser considers all
relevant facts and circumstances including the creditworthiness of the borrower.
The risks in lending portfolio securities, as with other extensions of credit,
consist of possible delay in recovery of the securities or possible loss of
rights in the collateral should the borrower fail financially. Although voting
rights, or rights to consent, with respect to the loaned securities pass to the
borrower, a Fund retains the right to call the loans at any time on reasonable
notice, and it will do so in order that the securities may be voted by the Fund
if the holders of such securities are asked to vote upon or consent to matters
materially affecting the investment. A Fund will not lend portfolio securities
to borrowers affiliated with the Trust.
Foreign Securities
Cash Resource Money Market Fund may invest in U.S. dollar denominated
foreign securities which meet the criteria applicable to the Fund's domestic
investments, and in certificates of deposit issued by U.S. branches of foreign
banks and foreign branches of U.S. banks. Investment by the Fund in foreign
securities is subject to the limitations set forth in the Prospectus.
Investments in foreign securities may involve considerations different
from investments in domestic securities due to limited publicly available
information, non-uniform accounting standards, lower trading volume and possible
consequent illiquidity, greater volatility in price, the possible imposition of
withholding or confiscatory taxes, the possible adoption of foreign governmental
restrictions affecting the payment of principal and interest, expropriation of
assets, nationalization, or other adverse political or economic developments.
Foreign companies may not be subject to auditing and financial reporting
standards and requirements comparable to those which apply to U.S. companies.
Foreign brokerage commissions and other fees are generally higher than in the
United States. It may be more difficult to obtain and enforce a judgment against
a foreign issuer.
In determining whether to invest in securities of foreign issuers, the
Adviser will consider the likely impact of foreign taxes on the net yield
available to the Fund and its shareholders. Income received by the Fund from
sources within foreign countries may be reduced by withholding and other taxes
imposed by such countries. Tax conventions between certain countries and the
United States may reduce or eliminate such taxes. It is impossible to determine
the effective rate of foreign tax in advance since the amount of the Fund's
assets to be invested in various countries is not known, and tax laws and their
interpretations may change from time to time and may change without advance
notice. Any such taxes paid by the Fund will reduce its net income available for
distribution to shareholders.
-3-
<PAGE>
Tax-Exempt Securities
General description. As used in the prospectus and in this Statement
with reference to Cash Resource Tax-Exempt Money Market Fund, Cash Resource
California Tax-Exempt Money Market Fund, and Cash Resource New York Tax-Exempt
Money Market Fund, the term "Tax-Exempt Securities" includes debt obligations
issued by a state, its political subdivisions (for example, counties, cities,
towns, villages, districts and authorities) and their agencies,
instrumentalities or other governmental units, the interest from which is, in
the opinion of bond counsel, exempt from federal income tax. "California
Tax-Exempt Securities" are Tax-Exempt Securities issued by the State of
California, or any of its political subdivisions, or its agencies,
instrumentalities, or other governmental units, the interest from which is, in
the opinion of bond counsel, also exempt from California personal income tax.
"New York Tax-Exempt Securities" are Tax-Exempt Securities issued by the State
of New York, or any of its political subdivisions, or its agencies,
instrumentalities, or other governmental units (or of other governmental
issuers, such as U.S. territories), the interest from which is, in the opinion
of bond counsel, also exempt from New York State and City personal income taxes.
For purposes of the section, the term "Tax-Exempt Securities" include California
Tax-Exempt Securities and New York Tax-Exempt Securities. Such obligations are
issued to obtain funds for various public purposes, including the construction
of a wide range of public facilities, such as airports, bridges, highways,
housing, hospitals, mass transportation, schools, streets and water and sewer
works. Other public purposes for which Tax- Exempt Securities may be issued
include the refunding of outstanding obligations or the payment of general
operating expenses. Short-term Tax-Exempt Securities are generally issued by
state and local governments and public authorities as interim financing in
anticipation of tax collections, revenue receipts, or bond sales to finance such
public purposes. In addition, certain types of "private activity" bonds may be
issued by public authorities to finance such projects as privately operated
housing facilities and certain local facilities for water supply, gas,
electricity or sewage or solid waste disposal, student loans, or the obtaining
of funds to lend to public or private institutions for the construction of
facilities such as educational, hospital and housing facilities. Other types of
private activity bonds, the proceeds of which are used for the construction,
repair or improvement of, or to obtain equipment for, privately operated
industrial or commercial facilities, may constitute Tax-Exempt Securities,
although the current federal tax laws place substantial limitations on the size
of such issues. Tax-Exempt Securities also include tax-exempt commercial paper,
which are promissory notes issued by municipalities to enhance their cash flows.
Participation interests. A Fund may invest in Tax-Exempt Securities
either by purchasing them directly or by purchasing certificates of accrual or
similar instruments evidencing direct ownership of interest payments or
principal payments, or both, on Tax- Exempt Securities, provided that, in the
opinion of counsel to the initial seller of each such certificate or instrument,
any discount accruing on the certificate or instrument that is purchased at a
yield not greater than the coupon rate of interest on the related Tax-
-4-
<PAGE>
Exempt Securities will be exempt from federal income tax to the same extent as
interest on the Tax-Exempt Securities. A Fund may also invest in Tax-Exempt
Securities by purchasing from banks participation interests in all or part of
specific holdings of Tax- Exempt Securities. These participations may be backed
in whole or in part by an irrevocable letter of credit or guarantee of the
selling bank. The selling bank may receive a fee from a Fund in connection with
the arrangement. A Fund will not purchase such participation interests unless it
receives an opinion of counsel or a ruling of the Internal Revenue Service that
interest earned by it on Tax-Exempt Securities in which it holds such
participation interests is exempt from federal, California and New York personal
income taxes, as the case may be. No Fund expects to invest more than 5% of its
assets in participation interests.
Stand-by commitments. When a Fund purchases Tax-Exempt Securities, it
has the authority to acquire stand-by commitments from banks and broker-dealers
with respect to those Tax-Exempt Securities. A stand-by commitment may be
considered a security independent of the state tax-exempt security to which it
relates. The amount payable by a bank or dealer during the time a stand-by
commitment is exercisable, absent unusual circumstances, would be substantially
the same as the market value of the underlying Tax-Exempt Security to a third
party at any time. Each Fund expects that stand-by commitments generally will be
available without the payment of direct or indirect consideration. No Fund
expects to assign any value to stand-by commitments.
Yields. The yields on Tax-Exempt Securities depend on a variety of
factors, including general money market conditions, effective marginal tax
rates, the financial condition of the issuer, general conditions of the
tax-exempt security market, the size of a particular offering, the maturity of
the obligation and the rating of the issue. The ratings of Moody's Investors
Service, Inc. and Standard & Poor's represent their opinions as to the quality
of the Tax-Exempt Securities which they undertake to rate. It should be
emphasized, however, that ratings are general and are not absolute standards of
quality. Consequently, Tax-Exempt Securities with the same maturity and interest
rate but with different ratings may have the same yield. Yield disparities may
occur for reasons not directly related to the investment quality of particular
issues or the general movement of interest rates, due to such factors as changes
in the overall demand or supply of various types of Tax-Exempt Securities or
changes in the investment objectives of investors. Subsequent to purchase by a
Fund, an issue of Tax-Exempt Securities or other investments may cease to be
rated or its rating may be reduced below the minimum rating required for
purchase by the Fund. Neither event will require the elimination of an
investment from a Fund's portfolio, but Mentor Advisors will consider such an
event in its determination of whether a Fund should continue to hold an
investment in its portfolio.
"Moral obligation" bonds. The Funds do not currently intend to invest
in so-called "moral obligation" bonds, where repayment is backed by a moral
commitment of an entity other than the issuer, unless the credit of the issuer
itself, without regard to the "moral obligation," meets the investment criteria
established for investments by the Funds.
-5-
<PAGE>
Additional risks. Securities in which a Fund may invest, including
Tax-Exempt Securities, are subject to the provisions of bankruptcy, insolvency
and other laws affecting the rights and remedies of creditors, such as the
federal Bankruptcy Code (including special provisions related to municipalities
and other public entities), and laws, if any, which may be enacted by Congress
or state legislatures extending the time for payment of principal or interest,
or both, or imposing other constraints upon enforcement of such obligations.
There is also the possibility that as a result of litigation or other conditions
the power, ability or willingness of issuers to meet their obligations for the
payment of interest and principal on their Tax-Exempt Securities may be
materially affected. There is no assurance that any issuer of a Tax-Exempt
Security will make full or timely payments of principal or interest or remain
solvent.
From time to time, proposals have been introduced before Congress for
the purpose of restricting or eliminating the federal income tax-exemption for
interest on debt obligations issued by states and their political subdivisions.
Federal tax laws limit the types and amounts of tax-exempt bonds issuable for
certain purposes, especially industrial development bonds and private activity
bonds. Such limits may affect the future supply and yields of these types of
Tax-Exempt Securities. Further proposals limiting the issuance of tax-exempt
bonds may well be introduced in the future. If it appeared that the availability
of Tax-Exempt Securities for investment by a Fund and the value of the Fund's
portfolio could be materially affected by such changes in law, the Trustees of
the Trust would reevaluate a Fund's investment objectives and policies and
consider changes in the structure of the Fund or its dissolution.
INVESTMENT RESTRICTIONS
The Trust has adopted the following restrictions applicable to all of
the Funds (except where otherwise noted), which may not be changed without the
affirmative vote of a "majority of the outstanding voting securities" of a Fund,
which is defined in the Investment Company Act of 1940, as amended (the "1940
Act") to mean the affirmative vote of the lesser of (1) more than 50% of the
outstanding shares of the Fund and (2) 67% or more of the shares present at a
meeting if more than 50% of the outstanding shares are represented at the
meeting in person or by proxy.
A Fund may not:
1. Borrow money in excess of 10% of the value (taken at the lower of
cost or current value) of its total assets (not including the amount borrowed)
at the time the borrowing is made, and then only from banks as a temporary
measure (not for leverage) in situations which might otherwise require the
untimely disposition of portfolio investments or for extraordinary or emergency
purposes. Such borrowings will be repaid before any additional investments are
purchased.
-6-
<PAGE>
2. Underwrite securities issued by other persons except to the extent
that, in connection with the disposition of its portfolio investments, it may be
deemed to be an underwriter under the federal securities laws.
3. Purchase or sell real estate, although it may purchase securities
of issuers which deal in real estate, securities which are secured by interests
in real estate, and securities representing interests in real estate, and it may
acquire and dispose of real estate or interests in real estate acquired through
the exercise of its rights as a holder of debt obligations secured by real
estate or interests therein.
4. Purchase or sell commodities or commodity contracts.
5. Make loans, except by purchase of debt obligations in which a Fund
may invest consistent with its investment policies and by entering into
repurchase agreements and securities loans.
6. As to 75% of its assets, invest in securities of any issuer if,
immediately after such investment, more than 5% of the total assets of the Fund
(taken at current value) would be invested in the securities of such issuer;
provided that this limitation does not apply to securities issued or guaranteed
as to principal or interest by the U.S. Government or its agencies or
instrumentalities.
7. Acquire more than 10% of the voting securities of any issuer,
except that with respect to the Cash Resource California Tax-Exempt Money Market
Fund and Cash Resource New York Tax-Exempt Money Market Fund this restriction
only applies to 25% of such Fund's assets.
8. Invest more than 25% of its assets in any one industry, except that
Cash Resource Money Market Fund may invest without limit in obligations of
domestic branches of U.S. banks and U.S. branches of foreign banks (if it can be
demonstrated that they are subject to the same regulation as U.S. banks).
9. Issue any class of securities which is senior to a Fund's shares of
beneficial interest, except as consistent with or permitted by the 1940 Act or
as permitted by rule or order of the Securities and Exchange Commission.
Other than the Cash Resource California Tax-Exempt Money Market Fund
and Cash Resource New York Tax-Exempt Money Market Fund, a Fund may not:
1. Pledge, hypothecate, mortgage, or otherwise encumber its assets in
excess of 15% of its total assets (taken at the lower of cost and current value)
and then only in connection with borrowings permitted by restriction 1 above.
-7-
<PAGE>
2. Purchase securities on margin, expect such short-term credits as may
be necessary for the clearance of purchase and sales of securities.
3. Make short sales of securities or maintain a short position for the
account of a Fund unless at all times when a short position is open it owns an
equal amount of such securities or owns securities which, without payment of any
further consideration, are convertible into or exchangeable for securities of
the same issue as, and in equal amount to, the securities sold short.
4. Invest in securities of any issuer, if, to the knowledge of a Fund,
officers and Trustees of the Trust and officers and directors of the Adviser who
beneficially own more than 0.5% of the securities of that issuer together own
more than 5% of such securities.
5. Make investments for the purpose of gaining control of a company's
management.
In addition, it is contrary to the current policy of the Trust, which
may be changed without shareholder approval, to invest in the securities of
other registered open-end investment companies.
All percentage limitations on investments will apply at the time of
investment and shall not be considered violated unless an excess or deficiency
occurs or exists immediately after and as a result of such investment. Except
for the investment restrictions listed above as fundamental and those designated
in the Prospectus as fundamental, the investment policies described in the
Prospectus and this Statement are not fundamental and may be changed by approval
of the Trustees. As a matter of policy, the Trustees would not materially change
a Fund's investment objective without shareholder approval.
-8-
<PAGE>
MANAGEMENT OF THE TRUST
<TABLE>
<CAPTION>
Principal Occupation
Position Held With During Past
Name and Address A Fund Five Years
- ---------------- ------------------- --------------------
<S> <C>
Daniel J. Ludeman* Chairman and Chairman and Chief Executive
901 E. Byrd Street Trustee Officer since July 1991,
Richmond, VA 23219 Mentor Investment Group,
Inc.; Managing Director of
Wheat, First Securities, Inc.
since August 1989; Managing
Director of Wheat First
Butcher Singer, Inc. since
June 1991; Director, Wheat,
First Securities, Inc., Mentor
Income Fund, Inc. and
America's Utility Fund, Inc.;
Chairman and Trustee,
Mentor Funds and Mentor
Institutional Trust.
Arnold H. Dreyfuss Trustee Trustee, Mentor Funds and
P.O. Box 18156 Mentor Institutional Trust;
Richmond, Virginia 23226 formerly, Chairman and Chief
Executive Officer, Hamilton
Beach/Proctor-Silex, Inc.
Thomas F. Keller Trustee Retired; Formerly Dean,
Fuqua School of Business Fuqua School of
Duke University Business, Duke University;
Durham, NC 27706 Trustee, Mentor Funds and
Mentor Institutional Trust.
Louis W. Moelchert, Jr. Trustee Vice President of Business and
University of Richmond Finance, University of
Richmond, VA 23173 Richmond; Trustee, Mentor
Funds and Mentor Institutional
Trust; Director, America's
Utility Fund, Inc.
</TABLE>
-9-
<PAGE>
<TABLE>
<CAPTION>
Principal Occupation
Position Held With During Past
Name and Address A Fund Five Years
- ---------------- ------------------- --------------------
<S> <C>
Stanley F. Pauley Trustee Chairman and Chief
Carpenter Company, Executive Officer,
Incorporated Carpenter Company; Trustee,
5016 Monument Avenue Mentor Funds and Mentor
Richmond, Virginia 23261 Institutional Trust.
Troy A. Peery, Jr. Trustee President, Heilig-
Heilig-Meyers Company Meyers Company;
2235 Staples Mill Road Trustee, Mentor Funds and
Richmond, Virginia 23230 Mentor Institutional Trust.
Peter J. Quinn, Jr.* Trustee President, Mentor
901 E. Byrd Street Distributors, Inc.; Managing
Richmond, VA 23219 Director, Mentor Investment
Group, Inc. and Wheat First
Butcher Singer, Inc.;
formerly, Senior Vice
President/Director of Mutual
Funds, Wheat First Butcher
Singer, Inc.; Trustee, Mentor
Funds.
</TABLE>
-10-
<PAGE>
<TABLE>
<CAPTION>
Principal Occupation
Position Held With During Past
Name and Address A Fund Five Years
- ---------------- ------------------- --------------------
<S> <C>
Paul F. Costello President Managing Director, Wheat First
901 E. Byrd Street Butcher Singer, Inc. and
Richmond, VA 23219 Mentor Investment Group, Inc.;
President, Mentor Funds,
Mentor Income Fund, Inc., and
Mentor Institutional Trust;
Executive Vice President and
Chief Administrative Officer,
America's Utility Fund, Inc.;
Director, Mentor Perpetual
Advisors, Inc. and Mentor
Trust Company; formerly,
President, Mentor Series
Trust; Director, President and
Chief Executive Officer, First
Variable Life Insurance
Company; President and Chief
Financial Officer, Variable
Investors Series Trust;
President and Treasurer,
Atlantic Capital & Research,
Inc.; Vice President and
Treasurer, Variable Stock
Fund, Inc., Monarch Investment
Series Trust, and GEICO Tax
Advantage Series Trust; Vice
President, Monarch Life
Insurance Company, GEICO
Investment Services Company,
Inc., Monarch Investment
Services Company, Inc., and
Springfield Life Insurance
Company.
</TABLE>
-11-
<PAGE>
<TABLE>
<CAPTION>
Principal Occupation
Position Held With During Past
Name and Address A Fund Five Years
- ---------------- ------------------- --------------------
<S> <C>
Terry L. Perkins Treasurer Senior
901 E. Byrd Street Vice President,
Richmond, VA 23219 Mentor Investment
Group, Inc.; Treasurer,
Mentor Institutional Trust,
Mentor Funds, and America's
Utility Fund, Inc.; Trustee,
Mentor Income Fund, Inc.;
formerly, Treasurer and
Comptroller, Ryland Capital
Management, Inc.
Michael Wade Assistant Treasurer Vice President, Mentor
901 E. Byrd Street Investment Group, LLC since
Richmond, VA 23219 April 1994; Assistant
Treasurer, Mentor Income Fund,
Inc., Mentor Funds, Mentor
Institutional Trust, and
America's Utility Fund;
formerly, Senior Accountant,
Wheat First Butcher Singer,
Inc., April 1993 through March
1994; Audit Senior, BDO
Seidman, July 1989 through
March 1993.
John M. Ivan Secretary Managing Director and Director
10700 North Park Drive of Compliance since October
Glen Allen, VA 23060 1992, and Assistant General
Counsel, Wheat, First
Securities, Inc.; Managing
Director and Assistant
Secretary, Wheat First Butcher
Singer Inc. (formerly WFS
Financial Corporation); Clerk,
Mentor Institutional Trust;
Secretary, Mentor Income Fund,
Inc. and Mentor Funds
</TABLE>
- ------------------------
* This Trustee is deemed to be an "interested person" of a Fund as defined in
the 1940 Act.
-12-
<PAGE>
Except as stated above, the principal occupations of the officers and
Trustees for the last five years have been with the employers as shown above,
although in some cases they have held different positions with such employers.
The table below shows the fees paid to each Trustee by the Trust for
the current fiscal year and the fees paid to each Trustee by all funds in the
Mentor Family (including the Trust) during the 1996 calendar year.
Total compensation
Aggregate compensation from all
Trustees from the Trust complex funds
- -------- ---------------------- ------------------
Daniel J. Ludeman -- --
Arnold H. Dreyfuss 6,000 12,200
Thomas F. Keller 6,000 12,200
Louis W. Moelchert, Jr. 6,000 12,200
Stanley F. Pauley 6,000 12,200
Troy A. Peery, Jr. 5,500 11,175
Peter J. Quinn, Jr. -- --
The Trustees do not receive pension or retirement benefits from the
Trust.
The Agreement and Declaration of Trust of the Trust provides that the
Trust will indemnify its Trustees and officers against liabilities and expenses
incurred in connection with litigation in which they may be involved because of
their offices with the Trust, except if it is determined in the manner specified
in the Agreement and Declaration of Trust that they have not acted in good faith
in the reasonable belief that their actions were in the best interests of the
Trust or that such indemnification would relieve any officer or Trustee of any
liability to the Trust or its shareholders by reason of willful misfeasance, bad
faith, gross negligence, or reckless disregard of his duties. The Trust, at its
expense, may provide liability insurance for the benefit of its Trustees and
officers.
PRINCIPAL HOLDERS OF SECURITIES
As of September 1, 1997, the officers and Trustees of the Trust owned
as a group less than one percent of the outstanding shares of each Fund. To the
knowledge of the Trust, no person owned of record or beneficially more than 5%
of the outstanding shares of any Fund as of that date.
-13-
<PAGE>
INVESTMENT ADVISORY AND OTHER SERVICES
Under a Management Contract (the "Management Contract") between the
Trust and Mentor Investment Advisors, LLC ("Mentor Advisors"), Mentor Advisors,
at its expense, provides the Funds with investment advisory services and advises
and assists the officers of the Trust in taking such steps as are necessary or
appropriate to carry out the decisions of its Trustees regarding the conduct of
business of the Trust and each Fund. Mentor Advisors is a wholly owned
subsidiary of Mentor Investment Group, LLC, which in turn is a subsidiary of
Wheat First Butcher Singer Inc., a diversified financial services holding
company.
Until November 1, 1996, Commonwealth Advisors, Inc. served as
investment advisor to each of the Funds then in existence, and Commonwealth
Investment Counsel, Inc. served as sub-adviser to each of those Funds. On that
date, Commonwealth Investment Counsel, Inc. was reorganized as Mentor Investment
Advisors, LLC, which became investment advisor to the Funds in place of
Commonwealth Advisors, Inc.
The table below shows amounts paid to Mentor Advisors (or, for periods
prior to November 1, 1996, to Commonwealth Advisors) by each Fund for the
periods indicated:
<TABLE>
<CAPTION>
(In Thousands)
Fiscal year Fiscal Year Fiscal Year
ended ended ended
July 31, 1995 July 31, 1996 July 31, 1997
------------- ------------- -------------
<S> <C>
Cash Resource Money Market Fund $ 616 $ 1,173 $ 4,041
Cash Resource U.S. Government
Money Market Fund $ 2,098 $ 2,660 $ 4,470
Cash Resource Tax-Exempt Money
Market Fund $ 487 $ 632 $ 1,326
Cash Resource California
Tax-Exempt Money Market Fund $ -- $ -- $ 121
Cash Resource New York
Tax-Exempt Money Market Fund $ -- $ -- $ 11
</TABLE>
-14-
<PAGE>
The amounts shown above as having been paid under the Management
Contract to Commonwealth Advisors, Inc. or Mentor Advisors reflect expense
reductions as follows, which are due to an expense limitation:
<TABLE>
<CAPTION>
(In Thousands)
Fiscal year Fiscal year Fiscal year
ended ended ended
July 31, 1995 July 31, 1996 July 31, 1997
------------- ------------- -------------
<S> <C>
Cash Resource Money Market Fund $ 0 $ 0 $ 0
Cash Resource U.S. Government
Money Market Fund $ 0 $ 0 $ 0
Cash Resource Tax-Exempt
Money Market Fund $ 49 $ 0 $ 0
Cash Resource California Tax-Exempt
Money Market Fund $ -- $ -- $ 0
Cash Resource New York Tax-Exempt
Money Market Fund $ -- $ -- $ 11
</TABLE>
Mentor Advisors makes available to the Trust, without expense to the
Trust, the services of such of its directors, officers, and employees as may
duly be elected Trustees or officers of the Trust, subject to his individual
consent to serve and to any limitations imposed by law. Mentor Advisors pays
the compensation and expenses of officers and executive employees of the Trust.
Mentor Advisors also provides investment advisory research and statistical
facilities and all clerical services relating to such research, statistical, and
investment work. Mentor Advisors pays the Trust's office rent.
Under the Management Contract, the Trust is responsible for all of its
other expenses, including clerical salaries not related to investment
activities; fees and expenses incurred in connection with membership in
investment company organizations; brokers' commissions; payment for portfolio
pricing services to a pricing agent, if any; legal expenses; auditing expenses;
accounting expenses; taxes and governmental fees; fees and expenses of the
transfer agent and investor servicing agents of the Trust; the cost of preparing
share certificates or any other expenses, including clerical expenses, incurred
in connection with the issue, sale, underwriting, redemption, or repurchase of
shares; the expenses of and fees for registering or qualifying securities for
sale; the fees and expenses of the Trustees of the Trust who are not affiliated
with Mentor Advisors; the cost of preparing and distributing reports and
notices to shareholders; public and investor relations expenses; and fees and
disbursements of custodians of a Fund's assets. The Trust is also responsible
for its expenses incurred in connection with litigation, proceedings, and claims
and the legal obligation it may have to indemnify its officers and Trustees with
respect thereto.
-15-
<PAGE>
Mentor Advisors has agreed that, if in any year the aggregate expenses
of any Fund (including fees pursuant to the Management Contract but excluding
interest, taxes, brokerage and distribution fees and, with the prior written
consent of the necessary state securities commissions, extraordinary expenses)
exceed the expense limitation of any state having jurisdiction over the Trust,
Mentor Advisors will reimburse the Trust for such excess expense. This expense
reimbursement obligation is not limited to the amount of Mentor Advisors' fees.
Such expense reimbursement, if any, will be estimated, reconciled and paid on a
monthly basis.
The Management Contract provides that Mentor Advisors shall not be
subject to any liability to a Fund or to any shareholder for any act or omission
in the course of, or connected with, its rendering services under the relevant
contract in the absence of willful misfeasance, bad faith, gross negligence, or
reckless disregard of its duties.
The Management Contract may be terminated without penalty by vote of
the Trustees as to any Fund or by the shareholders of that Fund, or by Mentor
Advisors on 30 days written notice. The Management Contract also terminates
without payment of any penalty in the event of its assignment. In addition, the
Management Contract may be amended only by a vote of the shareholders of the
affected Fund(s), and provides that it will continue in effect from year to year
(in the case of the California and New York Tax- Exempt Funds, beginning in
1998) only so long as such continuance is approved at least annually with
respect to each Fund by vote of either the Trustees or the shareholders of a
Fund, and, in either case, by a majority of the Trustees who are not "interested
persons" of Mentor Advisors. In such a case, the vote of the shareholders is
the affirmative vote of a "majority of the outstanding voting securities" as
defined in the 1940 Act.
Mentor Advisors may place portfolio transactions with broker-dealers
which furnish, without cost, certain research, statistical, and quotation
services of value to it and its affiliates in advising the Funds and other
clients, provided that it will always seek best price and execution with
respect to transactions. Certain investments may be appropriate for a Fund and
for other clients advised by Mentor Advisors . Investment decisions for a Fund
and other clients are made with a view to achieving their respective investment
objectives and after consideration of such factors as their current holdings,
availability of cash for investment, and the size of their investments
generally. Frequently, a particular security may be bought or sold for only one
client or in different amounts and at different times for more than one but less
than all clients. Likewise, a particular security may be bought for one or more
clients when one or more other clients are selling the security. In addition,
purchases or sales of the same security may be made for two or more clients of
Mentor Advisors on the same day. In such event, such transactions will be
allocated among the clients in a manner believed by Mentor Advisors to be
equitable to each. In some cases, this procedure could have an adverse effect on
the price or amount of the securities purchased or sold by a Fund. Purchase and
sale orders for a Fund may be combined with those of other clients of Mentor
Advisors in the interest of achieving the most favorable net results for the
Fund.
-16-
<PAGE>
Brokerage and Research Services. Transactions on U.S. stock exchanges
and other agency transactions involve the payment by a Fund of negotiated
brokerage commissions. Such commissions vary among different brokers. Also, a
particular broker may charge different commissions according to such factors as
the difficulty and size of the transaction. Transactions in foreign securities
often involve the payment of fixed brokerage commissions, which are generally
higher than those in the United States. There is generally no stated commission
in the case of securities traded in the over-the-counter markets, but the price
paid by a Fund usually includes an undisclosed dealer commission or mark-up. In
underwritten offerings, the price paid by a Fund includes a disclosed, fixed
commission or discount retained by the underwriter or dealer.
Mentor Advisors places all orders for the purchase and sale of
portfolio securities for the Funds and buy and sell securities for the Funds
through a substantial number of brokers and dealers. In so doing, it uses its
best efforts to obtain for the Funds the best price and execution available. In
seeking the best price and execution, Mentor Advisors , having in mind the
Funds' best interests, considers all factors it deems relevant, including, by
way of illustration, price, the size of the transaction, the nature of the
market for the security, the amount of the commission, the timing of the
transaction taking into account market prices and trends, the reputation,
experience, and financial stability of the broker-dealer involved, and the
quality of service rendered by the broker-dealer in other transactions.
It has for many years been a common practice in the investment advisory
business for advisers of investment companies and other institutional investors
to receive research, statistical, and quotation services from broker-dealers
which execute portfolio transactions for the clients of such advisers.
Consistent with this practice, Mentor Advisors may receive research,
statistical, and quotation services from many broker-dealers with which it
places a Fund's portfolio transactions. These services, which in some cases may
also be purchased for cash, include such matters as general economic and
security market reviews, industry and company reviews, evaluations of
securities, and recommendations as to the purchase and sale of securities. Some
of these services are of value to Mentor Advisors and its affiliates in
advising various of their clients (including the Funds), although not all of
these services are necessarily useful and of value in managing the Funds. The
management fees paid by the Funds are not reduced because Mentor Advisors and
its affiliates receive such services.
As permitted by Section 28(e) of the Securities Exchange Act of 1934,
and by the Management Contract , Mentor Advisors may cause a Fund to pay a
broker-dealer which provides brokerage and research services to Mentor Advisors
an amount of disclosed commission for effecting a securities transaction for
that Fund in excess of the commission which another broker-dealer would have
charged for effecting that transaction. Mentor Advisors' authority to cause a
Fund to pay any such greater commissions in also subject to such policies as the
Trustees may adopt from time to time.
Brokerage Commissions. It is anticipated that most purchases and sales
of portfolio investments will be with the issuer or with major dealers in money
market instruments acting as principal. Accordingly, it is not anticipated that
-17-
<PAGE>
the Funds will pay significant brokerage commissions. In underwritten offerings,
the price paid by a Fund includes a disclosed, fixed commission or discount
retained by the underwriter. There is generally no stated commission in the case
of securities purchased from or sold to dealers, but the prices of such
securities usually include an undisclosed dealer's mark-up or mark-down. None of
the Funds incurred brokerage or underwriting commissions in the 1994 , 1995 or
1996 fiscal years.
DETERMINATION OF NET ASSET VALUE
The net asset value per share of each Fund is determined twice each day
as of 12:00 noon and as of the close of regular trading (generally 4:00 p.m. New
York time) on each day the New York Stock Exchange is open for trading. The New
York Stock Exchange is normally closed on the following national holidays: New
Year's Day, President's Day, Good Friday, Memorial Day, Independence Day, Labor
Day, Thanksgiving, and Christmas.
The valuation of each Fund's portfolio securities is based upon its
amortized cost, which does not take into account unrealized securities gains or
losses. This method involves initially valuing an instrument at its cost and
thereafter assuming a constant amortization to maturity of any discount or
premium, regardless of the impact of fluctuating interest rates on the market
value of the instrument. By using amortized cost valuation, each Fund seeks to
maintain a constant net asset value of $1.00 per share, despite minor shifts in
the market value of its portfolio securities. While this method provides
certainty in valuation, it may result in periods during which value, as
determined by amortized cost, is higher or lower than the price a Fund would
receive if it sold the instrument. During periods of declining interest rates,
the quoted yield on shares of a Fund may tend to be higher than a like
computation made by a fund with identical investments utilizing a method of
valuation based on market prices and estimates of market prices for all of its
portfolio instruments. Thus, if the use of amortized cost by a Fund resulted in
a lower aggregate portfolio value on a particular day, a prospective investor in
that Fund would be able to obtain a somewhat higher yield if he purchased shares
of the Fund on that day, than would result from investment in a fund utilizing
solely market values, and existing investors in a Fund would receive less
investment income. The converse would apply on a day when the use of amortized
cost by a Fund resulted in a higher aggregate portfolio value. However, as a
result of certain procedures adopted by the Trust, the Trust believes any
difference will normally be minimal.
The valuation of a Fund's portfolio instruments at amortized cost is
permitted by Securities and Exchange Commission Rule 2a-7 and certain procedures
adopted by the Trustees. Under these procedures, a Fund must maintain a
dollar-weighted average portfolio maturity of 90 days or less, purchase only
instruments having remaining maturities of 397 days or less, and invest in
securities determined by the Trustees to be of high quality with minimal credit
risks. The Trustees have also established procedures designed to stabilize, to
the extent reasonably possible, a Fund's price per share as computed for the
purpose of distribution, redemption and repurchase at $1.00. In the event Mentor
Advisors determines that a deviation in net asset value from $1.00 per share
may result in material dilution or is otherwise unfair to existing shareholders,
it will take such corrective action as it believes necessary and appropriate,
-18-
<PAGE>
including informing the President of the Trust; the sale of portfolio
instruments prior to maturity to realize capital gains or losses or to shorten
the average portfolio maturity; withholding dividends; redemption of shares in
kind; or establishing a net asset value per share by using readily available
market quotations.
Since the net income of a Fund is declared as a dividend each time it
is determined, the net asset value per share of a Fund remains at $1.00 per
share immediately after such determination and dividend declaration. Any
increase in the value of a shareholder's investment in a Fund representing the
reinvestment of dividend income is reflected by an increase in the number of
shares of a Fund in the shareholder's account on the last day of each month (or,
if that day is not a business day, on the next business day). It is expected
that a Fund's net income will be positive each time it is determined. However,
if because of realized losses on sales of portfolio investments, a sudden rise
in interest rates, or for any other reason the net income of a Fund determined
at any time is a negative amount, a Fund will offset such amount allocable to
each then shareholder's account from dividends accrued during the month with
respect to such account. If at the time of payment of a dividend by a Fund
(either at the regular monthly dividend payment date, or, in the case of a
shareholder who is withdrawing all or substantially all of the shares in an
account, at the time of withdrawal), such negative amount exceeds a
shareholder's accrued dividends, the Fund will reduce the number of outstanding
shares by treating the shareholder as having contributed to the capital of the
Fund that number of full and fractional shares which represent the amount of the
excess. Each shareholder is deemed to have agreed to such contribution in these
circumstances by his or her investment in a Fund.
Should a Fund incur or anticipate, with respect to its respective
portfolio, any unusual or unexpected significant expense or loss which would
affect disproportionately the Fund's income for a particular period, the
Trustees would at that time consider whether to adhere to the dividend policy
described above or to revise it in light of the then prevailing circumstances in
order to ameliorate to the extent possible the disproportionate effect of such
expense or loss on then existing shareholders. Such expenses or losses may
nevertheless result in a shareholder's receiving no dividends for the period
during which the shares are held and receiving upon redemption a price per share
lower than that which was paid.
The proceeds received by each Fund for each issue or sale of its
shares, and all income, earnings, profits, and proceeds thereof, subject only to
the rights of creditors, will be specifically allocated to such Fund, and
constitute the underlying assets of that Fund. The underlying assets of each
Fund will be segregated on the Trust's books of account, and will be charged
with the liabilities in respect of such Fund and with a share of the general
liabilities of the Trust. Expenses with respect to any two or more Funds may be
allocated in proportion to the net asset values of the respective Funds except
where allocations of direct expenses can
otherwise be fairly made.
TAXES
Each Fund of the Trust intends to qualify each year and elect to be
taxed as a regulated investment company under Subchapter M of the United States
Internal Revenue Code of 1986, as amended (the "Code").
-19-
<PAGE>
As a regulated investment company qualifying to have its tax liability
determined under Subchapter M, a Fund will not be subject to federal income tax
on any of its net investment income or net realized capital gains that are
distributed to its shareholders. As series of Massachusetts business trust, the
Funds under present law will not be subject to any excise or income taxes in
Massachusetts.
Other than dividends from Cash Resource Tax-Exempt Money Market Fund
that are excludable from income, distributions from a Fund will be taxable to a
shareholder whether received in cash or additional shares. Such distributions
that are designated as capital gains distributions will be taxable as such,
regardless of how long Fund shares are held, while other taxable distributions
will be taxed as ordinary income. Loss on the sale of Fund shares held for less
than six months will be treated as a long term capital loss to the extent of any
capital gain distribution received with respect to such shares (and will be
disallowed to the extent of exempt-interest dividends received with respect to
such shares). Also interest on indebtedness incurred to purchase shares of Cash
Resource Tax-Exempt Money Market Fund may be nondeductible.
In order to qualify as a "regulated investment company," a Fund must,
among other things, (a) derive at least 90% of its gross income from dividends,
interest, payments with respect to securities loans, gains from the sale or
other dispositions of stock, securities, or foreign currencies, and other income
(including gains from options, futures, or forward contracts) derived with
respect to its business of investing in such stock, securities, or currencies
and diversify its holdings so that, at the close of each quarter of its taxable
year, (i) at least 50% of the value of its total assets consists of cash, cash
items, U.S. Government Securities, and other securities limited generally with
respect to any one issuer to not more than 5% of the total assets of a Fund and
not more than 10% of the outstanding voting securities of such issuer, and (ii)
not more than 25% of the value of its total assets is invested in the securities
of any issuer (other than U.S. Government Securities). In addition, until the
start of a Fund's first tax year beginning after August 5, 1997, a Fund must
derive less than 30% of its gross income from the sale or other disposition of
certain assets (including stock or securities and certain options, futures
contracts, forward contracts and foreign currencies) held for less than three
months in order to qualify as a regulated investment company. In order to
receive the favorable tax treatment accorded regulated investment companies and
their shareholders, moreover, a Fund must in general distribute at least 90% of
the sum of its taxable net investment income,its net tax-exempt income, and the
excess, if any, of net short-term capital gains over net long-term capital
losses for such year. To satisfy these requirements, a Fund may engage in
investment techniques that affect the amount, timing and character of its income
and distributions.
An excise tax at the rate of 4% will be imposed on the excess, if any,
of each Fund's "required distribution" over its actual distributions in any
calendar year. Generally, the "required distribution" is 98% of the Fund's
ordinary income for the calendar year plus 98% of its capital gain net income
recognized during the one-year period ending on October 31 (or December 31, if
the Fund so elects) plus undistributed amounts from prior years. Each Fund
-20-
<PAGE>
intends to make distributions sufficient to avoid imposition of the excise tax.
Distributions declared by a Fund during October, November or December to
shareholders of record on a date in any such month and paid by the Fund during
the following January will be treated for federal tax purposes as paid by the
Fund and received by shareholders on December 31 of the year in which declared.
Each Fund is required to withhold 31% of all income dividends and
capital gain distributions, and 31% of the gross proceeds of all redemptions of
Fund shares, in the case of any shareholder who does not provide a correct
taxpayer identification number, about whom a Fund is notified that the
shareholder has underreported income in the past, or who fails to certify to a
Fund that the shareholder is not subject to such withholding. Tax-exempt
shareholders are not subject to these back-up withholding rules so long as they
furnish the Fund with a proper certification.
Exempt-interest dividends. A Fund will be qualified to pay
exempt-interest dividends to its shareholders only if, at the close of each
quarter of the Fund's taxable year, at least 50% of the total value of the
Fund's assets consists of obligations the interest on which is exempt from
federal income tax. Distributions that a Fund properly designates as
exempt-interest dividends are treated as interest excludable from shareholders'
gross income for federal income tax purposes but may be taxable for federal
alternative minimum tax purposes and for state and local purposes. If a Fund
intends to be qualified to pay exempt-interest dividends, the Fund may be
limited in its ability to enter into taxable transactions involving forward
commitments, repurchase agreements, financial futures and options contracts on
financial futures, tax-exempt bond indices and other assets.
Part or all of the interest on indebtedness, if any, incurred or
continued by a shareholder to purchase or carry shares of a Fund paying
exempt-interest dividends is not deductible. The portion of interest that is not
deductible is equal to the total interest paid or accrued on the indebtedness,
multiplied by the percentage of a Fund's total distributions (not including
distributions from net long-term capital gains) paid to the shareholder that are
exempt-interest dividends. Under rules used by the Internal Revenue Service for
determining when borrowed funds are considered used for the purpose of
purchasing or carrying particular assets, the purchase of shares may be
considered to have been made with borrowed funds even though such funds are not
directly traceable to the purchase of shares.
In general, exempt-interest dividends, if any, attributable to interest
received on certain private activity obligations and certain industrial
development bonds will not be tax-exempt to any shareholders who are
"substantial users" of the facilities financed by such obligations or bonds or
who are "related persons" of such substantial users.
A Fund which is qualified to pay exempt-interest dividends will inform
investors within 60 days of the Fund's fiscal year-end of the percentage of its
income distributions designated as tax-exempt. The percentage is applied
uniformly to all distributions made during the year. The percentage of income
designated as tax-exempt for any particular distribution may be substantially
different from the percentage of a Fund's income that was tax-exempt during the
period covered by the distribution.
-21-
<PAGE>
Securities issued or purchased at a discount. A Fund's investment in
securities issued at a discount and certain other obligations will (and
investments in securities purchased at a discount may) require the Fund to
accrue and distribute income not yet received. In order to generate sufficient
cash to make the requisite distributions, a Fund may be required to sell
securities in its portfolio that it otherwise would have continued to hold.
The foregoing is a general and abbreviated summary of the applicable
provisions of the Code and related regulations currently in effect. For the
complete provisions, reference should be made to the pertinent Code sections and
regulations. The Code and regulations are subject to change by legislative or
administrative actions. Dividends and distributions also may be subject to
state, local, foreign and other taxes. Shareholders are urged to consult their
tax advisers regarding specific questions as to federal, state , local or
foreign taxes. The foregoing discussion relates solely to U.S. federal income
tax law. Non-U.S. investors should consult their tax advisers concerning the tax
consequences of ownership of shares of the Fund, including the possibility that
distributions may be subject to a 30% United States withholding tax (or a
reduced rate of withholding provided by treaty).
DISTRIBUTION
Mentor Distributors, Inc. is the principal underwriter of the
continually offered shares of each of the Funds pursuant to a Distribution
Agreement between Mentor Distributors and the Trust. Mentor Distributors is not
obligated to sell any specific amount of shares of any Fund and will purchase
shares of a Fund for resale only against orders for shares.
The Trust, on behalf of each Fund, has adopted a Distribution Plan and
Agreement pursuant to Rule 12b-1 under the 1940 Act (each, a "Plan"). The
purpose of each Plan is to permit a Fund to compensate Mentor Distributors for
services provided and expenses incurred by it in promoting the sale of shares of
the Funds, reducing redemptions, or maintaining or improving services provided
to shareholders by Mentor Distributors or Financial Institutions. Each Plan
provides for payments by each Fund to Mentor Distributors at the annual rate of
up to 0.38% of the Fund's average net assets (0.33% in the case of Cash Resource
California Tax-Exempt Money Market Fund and the Cash Resource Tax- Exempt Money
Market Fund and 0.50% in the case of the Cash Resource New York Tax- Exempt
Money Market Fund ), subject to the authority of the Trustees to reduce the
amount of payments or to suspend the Plans as to any Fund for such periods as
they may determine. Subject to these limitations, the amount of such payments
and the specific purposes for which they are made shall be determined by the
Trustees.
-21-
<PAGE>
For the periods indicated, each Fund paid the following amounts to
Mentor Distributors under its respective Plan:
<TABLE>
<CAPTION>
(In thousands)
Fiscal year Fiscal year Fiscal year
ended ended ended
July 31, 1995 July 31, 1996 July 31, 1997
------------- ------------- -------------
<S> <C>
Cash Resource Money Market Fund $ 1,061 $ 2,043 $ 8,221
Cash Resource U.S. Government
Money Market Fund $ 3,764 $ 5,016 $ 9,126
Cash Resource Tax-Exempt Money
Market Fund $ 730 $ 948 $ 2,039
Cash Resource California Tax-Exempt
Money Market Fund $ -- $ -- $ 181
Cash Resource New York Tax-Exempt
Money Market Fund $ -- $ -- $ 19
</TABLE>
Mentor Distributors paid distribution expenses to Financial
Institutions (including affiliates of Mentor Distributors qualifying as
Financial Institutions) in respect of the Funds as follows:
<TABLE>
<CAPTION>
(In thousands)
Fiscal year Fiscal year Fiscal year
ended ended ended
July 31, 1995 July 31, 1996 July 31, 1997
------------- ------------- -------------
<S> <C>
Cash Resource Money Market Fund $ 1,061 $ 2,043 $ 8,221
Cash Resource U.S. Government
Money Market Fund $ 3,764 $ 5,016 $ 9,126
Cash Resource Tax-Exempt Money
Market Fund $ 730 $ 948 $ 2,039
Cash Resource California Tax-Exempt
Money Market Fund $ -- $ -- $ 181
Cash Resource New York Tax-Exempt
Money Market Fund $ -- $ -- $ 19
</TABLE>
Continuance of a Plan is subject to annual approval by a vote of the
Trustees, including a majority of the Trustees who are not interested persons of
the Trust, and have no direct or indirect financial interest in the operation of
the Plan and related agreements (the "Qualified Trustees"), cast in person at a
meeting called for that purpose. All material amendments to a Plan must be
likewise approved by the Trustees and the Qualified Trustees.
A Plan may not be amended in order to increase materially the costs
which a Fund may bear for distribution pursuant to the Plan without also being
approved by a majority of the outstanding voting securities of that Fund. Each
Plan terminates automatically in the event of its assignment and may be
terminated as to any Fund without penalty, at any time, by a vote of
-23-
<PAGE>
a majority of the outstanding voting securities of the Fund or by a vote of a
majority of the Qualified Trustees.
In order to compensate selected financial institutions, such as
investment dealers and banks through which shares of each Fund are sold
("Financial Institutions") for services provided in connection with sales of
shares of each Fund and/or for administrative services and the maintenance of
shareholder accounts, Mentor Distributors may make periodic payments to
qualifying Financial Institutions based on the average net asset value of shares
of a Fund which are attributable to shareholders for whom the Financial
Institutions are designated as the dealer of record. Mentor Distributors may
make such payments at an 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, between 0.15%
and 0.33% in the case of the Tax- Exempt Fund and in the California Tax-Exempt
Fund, and between 0.15% and 0.38% in the case of the New York Tax-Exempt Fund.
For this purpose, "average net assets" attributable to a shareholder account
means the product of (i) the average daily share balance of the Fund account
times (ii) the Fund's average daily net asset value per share. For
administrative reasons, Mentor Distributors may enter into agreements with
certain Financial Institutions providing for the calculation of "average net
assets" on the basis of assets of the accounts of the Financial Institutions'
customers on an established day in this period. Mentor Distributors may suspend
or modify these payments at any time, and payments are subject to the
continuation of the Fund's Distribution Plan described above and the terms of
related agreements between Financial Institutions and Mentor Distributors.
ORGANIZATION
The Trust is an open-end investment company established under the laws
of The Commonwealth of Massachusetts by Agreement and Declaration of Trust dated
June 14, 1993.
Shares entitle their holders to one vote per share, with fractional
shares voting proportionally; however, separate votes will be taken by each Fund
on matters affecting an individual Fund. Additionally, approval of the
Management Contract is a matter to be determined separately by each Fund. Shares
have noncumulative voting rights. Although a Fund is not required to hold annual
meetings of its shareholders, shareholders have the right to call a meeting to
elect or remove Trustees or to take other actions as provided in the Declaration
of Trust. Shares have no preemptive or subscription rights, and are
transferable. Shares are entitled to dividends as declared by the Trustees, and
if a Fund were liquidated, the shares of that Fund would receive the net assets
of that Fund. The Trust may suspend the sale of shares at any time and may
refuse any order to purchase shares.
Additional Funds may be created from time to time with different
investment objectives. Any additional Funds may be managed by investment
advisers other than Mentor Advisors . In addition, the Trustees have the
right, subject to any necessary regulatory approvals, to create more than one
class of shares in a Fund, with the classes being subject to different charges
and expenses and having such other different rights as the Trustees may
prescribe and to terminate any Fund of the Trust.
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<PAGE>
PORTFOLIO TURNOVER
The portfolio turnover rate of a Fund is defined by the Securities and
Exchange Commission as the ratio of the lesser of annual sales or purchases to
the monthly average value of the portfolio, excluding from both the numerator
and the denominator securities with maturities at the time of acquisition of one
year or less. Under that definition, the Funds will have no portfolio turnover.
Portfolio turnover generally involves some expense to a Fund, including
brokerage commissions or dealer mark-ups and other transaction costs on the sale
of securities and reinvestment in other securities.
CUSTODIAN
Investors Fiduciary Trust Company, 127 West 10th Street, Kansas City,
Missouri 64105, is the custodian of the Trust's assets. The custodian's
responsibilities include safeguarding and controlling the Trust's cash and
securities, handling the receipt and delivery of securities, and collecting
interest and dividends on the Trust's investments. The custodian does not
determine the investment policies of the Trust or decide which securities the
Trust will buy or sell.
INDEPENDENT AUDITORS
KPMG Peat Marwick LLP, located at 99 High Street, Boston, Massachusetts
02110, are the Trust's independent auditors, providing audit services, tax
return preparation, and other tax consulting services and assistance and
consultation in connection with the review of various Securities and Exchange
Commission filings.
PERFORMANCE INFORMATION
Based on the seven-day period ended July 31, 1997, Cash Resource Money
Market Fund's yield was 4.84% and its effective yield was 4.95%. Based on the
seven-day period ended July 31, 1997, Cash Resource U.S. Government Money
Market Fund's yield was 4.80% and its effective yield was 4.91%. See below for
information on how these Funds' yields and effective yields are calculated.
Based on the seven-day period ended July 31, 1997, Cash Resource
Tax-Exempt Money Market Fund's tax-exempt yield was 2.99%, and its tax-exempt
effective yield was 3.03%. A shareholder in a 31.00% federal tax bracket would
have to earn 4.33% from a taxable investment to produce an after-tax yield
equal to the Fund's tax-exempt yield of 2.99% and an effective yield of 4.39%
from a taxable investment to produce an after-tax yield equal to the Fund's
tax-exempt effective yield of 3.03%. See below for information on how the
Fund's tax-exempt yield and tax-exempt effective yield are calculated.
Based on the seven-day period ended July 31, 1997, Cash Resource
California Tax-Exempt Money Market Fund's tax-exempt yield was 2.77%, and its
tax-exempt effective yield was 2.81%. A shareholder in a 31.00% federal tax
bracket would have to earn
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<PAGE>
4.01% from a taxable investment to produce an after-tax yield equal to the
Fund's tax-exempt yield of 2.77% and an effective yield of 4.07% from a taxable
investment to produce an after-tax yield equal to the Fund's tax-exempt
effective yield of 2.81%. See below for information on how the Fund's tax-exempt
yield and tax-exempt effective yield are calculated.
Based on the seven-day period ended July 31, 1997, Cash Resource New
York Tax-Exempt Money Market Fund's tax-exempt yield was 2.86% and its
tax-exempt effective yield was 2.90% A shareholder in a 31.00% federal tax
bracket would have to earn 4.14% from a taxable investment to produce an
after-tax yield equal to the Fund's tax-exempt yield of 2.86% and an effective
yield of 4.20% from a taxable investment to produce an after-tax yield equal to
the Fund's tax-exempt effective yield of 2.90%. See below for information on how
the Fund's tax-exempt yield and tax-exempt effective yield are calculated.
The yield of each Fund is computed by determining the percentage net
change, excluding capital changes, in the value of an investment in one share of
such Fund over the base period, and multiplying the net change by 365/7 (or
approximately 52 weeks). A Fund's effective yield represents a compounding of
the yield by adding 1 to the number representing the percentage change in value
of the investment during the base period, raising that sum to a power equal to
365/7, and subtracting 1 from the result.
In the case of Cash Resource Tax-Exempt Money Market Fund, the Cash
Resource California Tax-Exempt Money Market Fund and the Cash Resource New York
Tax- Exempt Money Market Fund, the tax-equivalent yield of each Fund during the
base period may be presented for shareholders in one or more stated tax
brackets. Tax-equivalent yield is calculated by adjusting a Fund's tax-exempt
yield by a factor designed to show the approximate yield that a taxable
investment would have to earn to produce an after-tax yield equal, for that
shareholder, to a Fund's tax-exempt yield. A Fund's tax-equivalent yield will
differ for shareholders in other tax brackets.
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<PAGE>
-27-
<PAGE>
EQUIVALENT YIELDS: TAX-EXEMPT VERSUS TAXABLE SECURITIES FOR THE CASH RESOURCE
TAX-EXEMPT MONEY MARKET FUND
The table below shows the effect of the tax status of Tax-Exempt Securities on
the effective yield received by their individual holders under the federal
income tax laws in effect for 1997. It gives the approximate yield a taxable
security must earn at various income levels to produce after-tax yields
equivalent to those of Tax-Exempt Securities yielding from 2.0% to 10.0%.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
1997
Marginal
Taxable Income* federal Tax-exempt yield
______________ income -----------------------------------------------------------------------------
tax**
Single Joint Rate 2% 3% 4% 5% 6% 7% 8% 9% 10%
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Equivalent taxable yield
$0 - 24,650 $0 - 41,200 15.00% 2.35% 3.53% 4.71% 5.88% 7.06% 8.24% 9.41% 10.59% 11.76%
24,651 - 59,750 41,201 - 99,600 28.00% 2.78% 4.17% 5.56% 6.94% 8.33% 9.72% 11.11% 12.50% 13.89%
59,751 - 124,650 99,601 - 151,750 31.00% 2.90% 4.35% 5.80% 7.25% 8.70% 10.15% 11.59% 13.04% 14.49%
124,651 - 271,050 151,751 - 271,050 36.00% 3.13% 4.69% 6.25% 7.81% 9.38% 10.94% 12.50% 14.06% 15.63%
over 271,051 over 271,051 39.60% 3.31% 4.97% 6.62% 8.28% 9.93% 11.59% 13.25% 14.90% 16.56%
</TABLE>
- ------------------
* This amount represents taxable income as defined in the Internal
Revenue Code of 1986, as amended (the "Code"), after any deduction for
personal exemptions and the greater of the standard deduction or
itemized deductions.
** These rates are the marginal federal income tax rates on taxable income
in effect for 1997 under the Code.
Of course, there is no assurance that the Tax-Exempt Money Market Fund
will achieve any specific tax-exempt yield. While it is expected that the
Tax-Exempt Money Market Fund will invest principally in obligations which pay
interest exempt from federal income tax, other income received by the Tax-Exempt
Money Market Fund may be taxable. The table does not take into account any state
or local taxes payable on Tax-Exempt Money Market Fund distributions.
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<PAGE>
EQUIVALENT YIELDS: TAX-EXEMPT VERSUS TAXABLE SECURITIES
California Tax-Exempt Money Market Fund
The table below shows the effect of the tax status of California Tax-Exempt
Securities on the effective yield received by their individual holders under the
federal income tax and California personal income tax laws currently in effect
for 1997. It gives the approximate yield a taxable security must earn at various
income levels to produce after-tax yields equivalent to those of California
Tax-Exempt Securities yielding from 2.0% to 9.0%.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
1997
Combined
Taxable Income* California Tax-exempt yield
______________ and ----------------------------------------------------------------
Federal
Single*** Joint*** Rate** 2% 3% 4% 5% 6% 7% 8% 9%
- ------------------------------------------------------------------------------------------------------------------------
<S> <C>
Equivalent taxable yield
$0 - 5,016 $0 - 10,032 15.85% 2.38% 3.57% 4.75% 5.94% 7.13% 8.32% 9.51% 10.70%
5,017 - 11,888 10,033 - 23,776 16.70% 2.40% 3.60% 4.80% 6.00% 7.20% 8.40% 9.60% 10.80%
11,889 - 18,761 23,777 - 37,522 18.40% 2.45% 3.68% 4.90% 6.13% 7.35% 8.58% 9.80% 11.03%
18,762 - 24,650 37,523 - 41,200 20.10% 2.50% 3.75% 5.01% 6.26% 7.51% 8.76% 10.01% 11.26%
24,651 - 26,045 41,201 - 52,090 32.32% 2.96% 4.43% 5.91% 7.39% 8.87% 10.34% 11.82% 13.30%
26,046 - 32,916 52,091 - 65,832 33.76% 3.02% 4.53% 6.04% 7.55% 9.06% 10.57% 12.08% 13.59%
32,917 - 59,750 65,833 - 99,600 34.70% 3.06% 4.59% 6.13% 7.66% 9.19% 10.72% 12.25% 13.78%
59,751 - 124,650 99,601 - 151,750 37.42% 3.20% 4.79% 6.39% 7.99% 9.59% 11.19% 12.78% 14.38%
124,651 - 271,050 151,751 - 271,050 41.95% 3.45% 5.17% 6.89% 8.61% 10.34% 12.06% 13.78% 15.50%
over - 271,051 over - 271,051 45.22% 3.65% 5.48% 7.30% 9.13% 10.95% 12.78% 14.60% 16.43%
</TABLE>
- ------------------
* This amount represents taxable income as defined in the Internal
Revenue Code of 1986, as amended (the "Code"). It assumes that taxable
income as defined in the Code is the same as under the California
Revenue and Taxation Code; however, California taxable income may
differ due to differences in exemptions, itemized deductions, and other
items.
** For federal income tax and California personal income tax purposes,
these combined rates reflect the marginal rates on taxable income
currently in effect for 1997. The maximum marginal California personal
income tax rate for 1997 is currently 9.3%, and that is the maximum
marginal California personal income tax rate used in the above Table.
(These combined rates include the effect of deducting state income
taxes on your federal return).
*** The amount of taxable income in certain brackets may be affected by the
phase-out of personal exemptions and the limitation on itemized
deductions based upon adjusted gross income under the Code, and under
the California Revenue and Taxation Code.
Of course, there is no assurance that the Fund will achieve any specific
tax-exempt yield. While it is expected that the Fund will invest principally in
obligations which pay interest exempt from federal income tax and California
personal income tax, other income received by the Fund may be taxable. The table
does not take into account any state or local taxes payable on Fund
distributions except for California personal income tax.
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<PAGE>
New York Tax-Exempt Money Market Fund
The tables below show the effect of the tax status of New York Tax-Exempt
Securities on the effective yield received by their individual holders, in the
case of table 1, under the federal income tax and New York State personal income
tax laws currently in effect for 1997, and in the case of table 2, under the
federal, New York State and New York City personal income tax laws currently in
effect for 1997. The tables give the approximate yield a taxable security must
earn at various income levels to produce after-tax yields equivalent to those of
New York Tax-Exempt Securities yielding from 3.0% to 8.0%.
TABLE 1
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
1997 Combined
Taxable Income* New York State New York Tax-Exempt Security Yield of
__________________________ and Federal --------------------------------------------------
Single Joint Tax Rate** 3.0% 4.0% 5.0% 6.0% 7.0% 8.0%
- -----------------------------------------------------------------------------------------------------------------
<S> <C>
Equivalent taxable yield if double tax-exempt
$0 - 8,000 $0 - 16,000 18.40% 3.68% 4.90% 6.13% 7.35% 8.58% 9.80%
8,001 - 11,000 16,001 - 22,000 18.83% 3.70% 4.93% 6.18% 7.39% 8.62% 9.86%
11,001 - 13,000 22,001 - 26,000 19.46% 3.73% 4.97% 6.21% 7.45% 8.69% 9.93%
13,001 - 20,000 26,001 - 40,000 20.02% 3.75% 5.00% 6.25% 7.50% 8.75% 10.00%
20,001 - 24,650 40,001 - 41,200 20.82% 3.79% 5.05% 6.32% 7.58% 8.84% 10.10%
24,651 - 59,750 41,201 - 99,600 32.93% 4.47% 5.96% 7.46% 8.85% 10.44% 11.93%
59,751 - 124,650*** 99,601 - 151,750*** 35.73% 4.69% 6.22% 7.78% 9.34% 10.89% 12.45%
124,651 - 271,050*** 151,751 - 271,050*** 40.38% 5.03% 6.71% 8.39% 10.06% 11.74% 13.42%
over - 271,051*** over - 271,051*** 43.74% 5.33% 7.11% 8.89% 10.69% 12.44% 14.22%
</TABLE>
-30-
<PAGE>
TABLE 2
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
1997 Combined
New York State,
Taxable Income* New York City New York Tax-Exempt Security Yield of
________________________ and Federal ---------------------------------------------------
Single Joint Tax Rate** 3.0% 4.0% 5.0% 6.0% 7.0% 8.0%
- ------------------------------------------------------------------------------------------------------------------
<S> <C>
Equivalent taxable yield if double tax-exempt
$0 - 8,000 $0 - 16,000 21.02% 3.80% 5.07% 6.33% 7.60% 8.86% 10.13%
8,001 - 11,000 16,001 - 21,600 21.44% 3.82% 5.09% 6.37% 7.64% 8.91% 10.18%
11,001 - 12,000 22.08% 3.85% 5.13% 6.42% 7.70% 8.98% 10.27%
21,601 - 22,000 22.51% 3.87% 5.16% 6.45% 7.74% 9.03% 10.32%
12,001 - 13,000 22,001 - 26,000 23.15% 3.90% 5.21% 6.51% 7.81% 9.11% 10.41%
13,001 - 20,000 26,001 - 40,000 23.70% 3.93% 5.24% 6.55% 7.86% 9.17% 10.49%
20,001 - 24,650 40,001 - 41,200 24.51% 3.97% 5.30% 6.62% 7.95% 9.27% 10.60%
24,651 - 25,000 41,201 - 45,000 36.06% 4.69% 6.26% 7.82% 9.38% 10.95% 12.51%
25,001 - 50,000 45,001 - 90,000 36.13% 4.70% 6.26% 7.83% 9.39% 10.96% 12.53%
50,001 - 59,750 90,001 - 99,600 36.14% 4.70% 6.26% 7.83% 9.40% 10.96% 12.53%
59,751 - 124,650*** 99,601 - 151,750*** 38.80% 4.90% 6.54% 8.17% 9.80% 11.44% 13.07%
124,651 - 271,050*** 151,751 - 271,050*** 43.24% 5.29% 7.05% 8.81% 10.57% 12.33% 14.09%
over - 271,051*** over - 271,051*** 46.43% 5.60% 7.47% 9.33% 11.20% 13.07% 14.93%
</TABLE>
- ------------------
* This amount represents taxable income as defined in the Code. For
purposes of the foregoing tables, it is assumed that the definition of
taxable income in the Code is the same as under the New York State and
City Personal Income Tax law. However, New York State and City taxable
income may differ due to differences in exemptions, itemized
deductions, and other items.
** For federal tax purposes, these combined rates reflect the marginal
rates on taxable income currently in effect for 1997. These rates
include the effect of deducting state and, for the second table, state
and city taxes on your federal return. For New York purposes, these
combined rates reflect the expected New York State and New York City
income tax rates and the New York City surcharge rates for 1997.
*** The amount of taxable income in this bracket may be affected by the
phase-out of personal exemptions and the limitation on itemized
deductions, based upon adjusted gross income, under the Code. A
supplemental New York State tax is also phased in for New York adjusted
gross income between $100,000 and $150,000 and fully eliminates the
benefit of the lower marginal brackets for taxpayers with New York
adjusted gross income of $150,000 or more. This adjustment is not
reflected in the tables above.
Of course, there is no assurance that the Fund will achieve any specific
tax-exempt yield. While it is expected that the Fund will invest principally in
obligations which pay interest exempt from federal income tax and New York State
and City personal income taxes, other income received by the Fund may be
taxable. The tables do not take into account any state or local taxes payable on
Fund distributions except for the New York State and for table 2, New York City
personal income taxes.
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<PAGE>
From time to time, the Adviser may reduce its compensation or assume
expenses of a Fund in order to reduce a Fund's expenses, as described in the
Trust's current prospectus. Any such waiver or assumption would increase that
Fund's yield during the period of the waiver or assumption.
Independent statistical agencies measure a Fund's investment
performance and publish comparative information showing how the Fund, and other
investment companies, performed in specified time periods. Three agencies whose
reports are commonly used for such comparisons are set forth below. From time to
time, a Fund may distribute these comparisons to its shareholders or to
potential investors. The agencies listed below measure performance based on
their own criteria rather than on the standardized performance measures
described in the preceding section.
Lipper Analytical Services, Inc. distributes mutual fund rankings
monthly. The rankings are based on total return performance calculated by
Lipper, reflecting generally changes in net asset value adjusted for
reinvestment of capital gains and income dividends. They do not reflect
deduction of any sales charges. Lipper rankings cover a variety of performance
periods, for example year-to-date, 1-year, 5-year, and 10-year performance.
Lipper classifies mutual funds by investment objective and asset category.
Morningstar, Inc. distributes mutual fund ratings twice a month. the
ratings are divided into five groups: highest, above average, neutral, below
average and lowest. They represent a fund's historical risk/reward ratio
relative to other funds with similar objectives. The performance factor is a
weighted-average assessment of the Fund's 3-year, 5-year, and 10-year total
return performance (if available) reflecting deduction of expenses and sales
charges. Performance is adjusted using quantitative techniques to reflect the
risk profile of the fund. The ratings are derived from a purely quantitative
system that does not utilize the subjective criteria customarily employed by
rating agencies such as Standard & Poor's Corporation and Moody's Investor
Service, Inc.
Weisenberger's Management Results publishes mutual fund rankings and is
distributed monthly. The rankings are based entirely on total return calculated
by Weisenberger for periods such as year-to-date, 1-year, 3-year, 5-year and
10-year performance. Mutual funds are ranked in general categories (e.g.,
international bond, international equity, municipal bond, and maximum capital
gain). Weisenberger rankings do not reflect deduction of sales charges or fees.
Independent publications may also evaluate a Fund's performance.
Certain of those publications are listed below, at the request of Mentor
Distributors, which bears full responsibility for their use and the descriptions
appearing below. From time to time any or all of the Funds may distribute
evaluations by or excerpts from these publications to its shareholders or to
potential investors. The following illustrates the types of information provided
by these publications.
-32-
<PAGE>
Business Week publishes mutual fund rankings in its Investment Figures
of the Week column. The rankings are based on 4-week and 52-week total return
reflecting changes in net asset value and the reinvestment of all distributions.
They do not reflect deduction of any sales charges. Funds are not categorized;
they compete in a large universe of over 2,000 funds. The source for rankings is
data generated by Morningstar, Inc.
Investor's Business Daily publishes mutual fund rankings on a daily
basis. The rankings are depicted as the top 25 funds in a given category. The
categories are based loosely on the type of fund, e.g., growth funds, balanced
funds, U.S. government funds, GNMA funds, growth and income funds, corporate
bond funds, etc. Performance periods for sector equity funds can vary from 4
weeks to 39 weeks; performance periods for other fund groups vary from 1 year to
3 years. Total return performance reflects changes in net asset value and
reinvestment of dividends and capital gains. The rankings are based strictly on
total return. They do not reflect deduction of any sales charges Performance
grades are conferred from A+ to E. An A+ rating means that the fund has
performed within the top 5% of a general universe of over 2000 funds; an A
rating denotes the top 10%; an A- is given to the top 15%, etc.
Barron's periodically publishes mutual fund rankings. The rankings are
based on total return performance provided by Lipper Analytical Services. The
Lipper total return data reflects changes in net asset value and reinvestment of
distributions, but does not reflect deduction of any sales charges. The
performance periods vary from short-term intervals (current quarter or
year-to-date, for example) to long-term periods (five-year or ten-year
performance, for example). Barron's classifies the funds using the Lipper mutual
fund categories, such as Capital Appreciation Funds, Growth Funds, U.S.
Government Funds, Equity Income Funds, Global Funds, etc. Occasionally, Barron's
modifies the Lipper information by ranking the funds in asset classes. "Large
funds" may be those with assets in excess of $25 million; "small funds" may be
those with less than $25 million in assets.
The Wall Street Journal publishes its Mutual Fund Scorecard on a daily
basis. Each Scorecard is a ranking of the top-15 funds in a given Lipper
Analytical Services category. Lipper provides the rankings based on its total
return data reflecting changes in net asset value and reinvestment of
distributions and not reflecting any sales charges. The Scorecard portrays
4-week, year-to-date, one-year and 5-year performance; however, the ranking is
based on the one-year results. The rankings for any given category appear
approximately once per month.
Fortune magazine periodically publishes mutual fund rankings that have
been compiled for the magazine by Morningstar, Inc. Funds are placed in stock or
bond fund categories (for example, aggressive growth stock funds, growth stock
funds, small company stock funds, junk bond funds, Treasury bond funds etc.),
with the top-10 stock funds and the top-5 bond funds appearing in the rankings.
The rankings are based on 3-year annualized total return reflecting changes in
net asset value and reinvestment of distributions and not reflecting sales
charges. Performance is adjusted using quantitative techniques to reflect the
risk profile of the fund.
-33-
<PAGE>
Money magazine periodically publishes mutual fund rankings on a
database of funds tracked for performance by Lipper Analytical Services. The
funds are placed in 23 stock or bond fund categories and analyzed for five-year
risk adjusted return. Total return reflects changes in net asset value and
reinvestment of all dividends and capital gains distributions and does not
reflect deduction of any sales charges. Grades are conferred (from A to E): the
top 20% in each category receive an A, the next 20% a B, etc. To be ranked, a
fund must be at least one year old, accept a minimum investment of $25,000 or
less and have had assets of at least $25 million as of a given date.
Financial World publishes its monthly Independent Appraisals of Mutual
Funds, a survey of approximately 1000 mutual funds. Funds are categorized as to
type, e.g., balanced funds, corporate bond funds, global bond funds, growth and
income funds, U.S. government bond funds, etc. To compete, funds must be over
one year old, have over $1 million in assets, require a maximum of $10,000
initial investment, and should be available in at least 10 states in the United
States. The funds receive a composite past performance rating, which weighs the
intermediate - and long-term past performance of each fund versus its category,
as well as taking into account its risk, reward to risk, and fees. An A+ rated
fund is one of the best, while a D- rated fund is one of the worst. The source
for Financial World rating is Schabacker investment management in Rockville,
Maryland.
Forbes magazine periodically publishes mutual fund ratings based on
performance over at least two bull and bear market cycles. The funds are
categorized by type, including stock and balanced funds, taxable bond funds,
municipal bond funds, etc. Data sources include Lipper Analytical Services and
CDA Investment Technologies. The ratings are based strictly on performance at
net asset value over the given cycles. Funds performing in the top 5% receive an
A+ rating; the top 15% receive an A rating; and so on until the bottom 5%
receive an F rating. Each fund exhibits two ratings, one for performance in "up"
markets and another for performance in "down" markets.
Kiplinger's Personal Finance Magazine (formerly Changing Times),
periodically publishes rankings of mutual funds based on one-, three- and
five-year total return performance reflecting changes in net asset value and
reinvestment of dividends and capital gains and not reflecting deduction of any
sales charges. Funds are ranked by tenths: a rank of 1 means that a fund was
among the highest 10% in total return for the period; a rank of 10 denotes the
bottom 10%. Funds compete in categories of similar funds -- aggressive growth
funds, growth and income funds, sector funds, corporate bond funds, global
governmental bond funds, mortgage-backed securities funds, etc. Kiplinger's also
provides a risk-adjusted grade in both rising and falling markets. Funds are
graded against others with the same objective. The average weekly total return
over two years is calculated. Performance is adjusted using quantitative
techniques to reflect the risk profile of the fund.
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<PAGE>
U.S. News and World Report periodically publishes mutual fund rankings
based on an overall performance index (OPI) devised by Kanon Bloch Carre & Co.,
a Boston research firm. Over 2000 funds are tracked and divided into 10 equity,
taxable bond and tax-free bond categories. Funds compete within the 10 groups
and three broad categories. The OPI is a number from 0-100 that measures the
relative performance of funds at least three years old over the last 1, 3, 5 and
10 years and the last six bear markets. Total return reflects changes in net
asset value and the reinvestment of any dividends and capital gains
distributions and does not reflect deduction of any sales charges. Results for
the longer periods receive the most weight.
The 100 Best Mutual Funds You Can Buy (1992), authored by Gordon K.
Williamson. The author's list of funds is divided into 12 equity and bond fund
categories, and the 100 funds are determined by applying four criteria. First,
equity funds whose current management teams have been in place for less than
five years are eliminated. (The standard for bond funds is three years.) Second,
the author excludes any fund that ranks in the bottom 20 percent of its
category's risk level. Risk is determined by analyzing how many months over the
past three years the fund has underperformed a bank CD or a U.S. Treasury bill.
Third, a fund must have demonstrated strong results for current three-year and
five-year performance. Fourth, the fund must either possess, in Mr. Williamson's
judgment, "excellent" risk-adjusted return or "superior" return with low levels
of risk. Each of the 100 funds is ranked in five categories: total return,
risk/volatility, management, current income and expenses. The rankings follow a
five-point system: zero designates "poor"; one point means "fair"; two points
denote "good"; three points qualify as a "very good"; four points rank as
"superior"; and five points mean "excellent.
INVESTMENT PROFESSIONALS OF MENTOR INVESTMENT ADVISORS, LLC
R. Preston Nuttall, CFA
Mr. Nuttall has more than thirty years of investment management experience.
Prior to his involvement with the Mentor organization, he led short-term
fixed-income management for fifteen years at Capitoline Investment Services,
Inc. He has his undergraduate degree in economics from the University of
Richmond and his graduate degree in finance from the Wharton School at the
University of Pennsylvania.
Hubert R. White III
Mr. White has thirteen years of investment management experience. Prior to
joining the Mentor organization, he served for five years as portfolio manager
with Capitoline Investment Services. He has his undergraduate degree in business
from the University of Richmond.
Kathryn T. Allen
Ms. Allen has sixteen years of investment management experience and specializes
in tax- free trades. Prior to joining the Mentor organization, Ms. Allen was
portfolio group manager at PNC Institutional Management Corporation. She has her
undergraduate degree in commerce and business administration from the University
of Alabama.
-35-
<PAGE>
SHAREHOLDER LIABILITY
Under Massachusetts law, shareholders could, under certain
circumstances, be held personally liable for the obligations of the Trust.
However, the Agreement and Declaration of Trust disclaims shareholder liability
for acts or obligations of the Trust and requires that notice of such disclaimer
be given in each agreement, obligation, or instrument entered into or executed
by the Trust or the Trustee. The Agreement and Declaration of Trust provides for
indemnification out of a Fund's property for all loss and expense of any
shareholder held personally liable for the obligations of a Fund. Thus the risk
of a shareholder's incurring financial loss on account of shareholder liability
is limited to circumstances in which a Fund would be unable to meet its
obligations.
FINANCIAL STATEMENTS
The financial statements are incorporated herein by reference from the
Annual Report of the Trust to Shareholders on Form N-30D under the Investment
Company Act of 1940, as amended, on September 25, 1997 (File No. 811-07862).
-36-
<PAGE>
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements:
(1) Statements of Assets and Liabilities - July 31, 1997
- Incorporated by Reference in Part B. Statements of
Operations - Year Ended July 31, 1997 Incorporated
by Reference in Part B. Statements of Changes in Net
Assets -- Years or Period Ended July 31, 1997 and
1996 -Incorporated by Reference in Part B. Financial
Highlights - Included in Part A. Notes to Financial
Statements - Incorporated by Reference in Part B.
Independent Auditors Report - Incorporated by
Reference in Part B.
Included in Part C: None.
(b) Exhibits
(1) (A) Agreement and Declaration of Trust(1)
(B) Amendments to Agreement and Declaration of
Trust(2)(3)
(2) Bylaws(1)
(3) Inapplicable
(4) (A) Forms of certificate representing shares of
beneficial interest(1)
(B) Portions of Agreement and Declaration of Trust
Relating to
Shareholders' Rights(1)
(C) Portions of Bylaws Relating to Shareholders'
Rights(1)
(5) (A) Management Contract dated December 17, 1993(4)
(B) Form of Letter of Transfer dated November 1, 1996(7)
(6) Distribution Agreement dated December 17, 1993(4)
(7) Inapplicable
(8) Custody Agreement dated December 20, 1993(4)
(9) (A) Agency Agreement dated December 20, 1993(4)
(B) Draft Processing Agency Agreement dated December 20,
1993(4)
(10) Opinion and Consent of Ropes & Gray(2)
(11) Consent of Independent Auditors(7)
(12) Inapplicable
(13) Initial Capital Agreement dated December 17, 1993(4)
(14) Inapplicable
(15)(A) Distribution Plan and Agreement on behalf of Cash
Resource Money Market Fund dated December 17,
1993(4)
-1-
<PAGE>
(B) Distribution Plan and Agreement on behalf of Cash
Resource U.S. Government Money Market Fund dated
December 17, 1993(4)
(C) Distribution Plan and Agreement on behalf of Cash
Resource Tax- Exempt Money Market Fund dated
December 17, 1993(4)
(D) Form of Distribution Plan and Agreement on behalf of
Cash Resource New York Tax-Exempt Money Market Fund
(7)
(E) Form of Distribution Plan and Agreement on behalf of
Cash Resource California Tax-Exempt Money Market
Fund (7)
(16) Schedule of Computation of Performance(5)
(17) Financial Data Schedules(7)
(A) Cash Resource Money Market Fund
(B) Cash Resource U.S. Government Money Market Fund
(C) Cash Resource Tax-Exempt Money Market Fund
(D) Cash Resource California Tax-Exempt Money Market
Fund
(E) Cash Resource New York Tax-Exempt Money Market Fund
(1) Incorporated by reference from the Registrant's Registration Statement
on Form N-1A under the Securities Act of 1993, as amended, filed on
July 7, 1993.
(2) Incorporated by reference from Pre-Effective Amendment No. 1 to the
Registrant's Registration Statement on Form N-1A under the Securities
Act of 1993, as amended, filed on October 15, 1993 (File No. 33-65818).
(3) Incorporated by reference to Pre-Effective Amendment No. 2 to the
Registrant's Registration Statement on Form N-1A under the Securities
Act of 1933, as amended, filed on November 5, 1993 (File No. 33-
65818).
(4) Incorporated by reference to Post-Effective Amendment No. 1 to the
Registrant's Registration Statement on Form N-1A under the Securities
Act of 1933, as amended, filed on October 3, 1994 (File No. 33- 65818).
(5) Incorporated by reference to Post-Effective Amendment No. 2 to the
Registrant's Registration Statement on Form N-1A under the Securities
Act of 1933, as amended, filed on September 29, 1995 (File No. 33-
65818).
(6) Incorporated by reference to Post-Effective Amendment No. 3 to the
Registrant's Registration Statement on Form N-1A under the Securities
Act of 1933, as amended, filed on August 12, 1996 (File No. 33- 65818).
(7) Filed herewith.
Item 25. Persons Controlled by or Under Common Control with Registrant
None.
-2-
<PAGE>
Item 26. Number of Record Holders of Securities
The following table shows the number of holders of record of shares of
beneficial interest of the Funds as of September 1, 1997 .
Number of Record
Series Holders
------ ----------------
Cash Resource Money Market Fund 231,356
Cash Resource U.S. Government
Money Market Fund 300,731
Cash Resource Tax-Exempt Money
Market Fund 28,045
Cash Resource California Tax-Exempt
Money Market Fund 3,506
Cash Resource New York Tax-Exempt
Money Market Fund 262
Item 27. Indemnification
The information required by this item is incorporated herein by
reference from the Registrant's Registration Statement on Form N-1A under the
Securities Act of 1933, as amended (File No. 33-65818).
Item 28. Business and Other Connections of Investment Adviser
Mentor Investment Advisors, LLC ("Mentor Advisors"), located at 901
East Byrd Street, Richmond, Virginia 23219, serves as the Registrant's
investment adviser.
The business and other connections of each director, officer, or partner
of Mentor Advisors in which such director, officer, or partner is or has been,
at any time during the past two fiscal years, engaged for his own account or in
the capacity of director, officer, employee, partner, or trustee are set forth
in the following table.
-3-
<PAGE>
Other Substantial
Position with the Business, Profession,
Name Investment Adviser Vocation or Employment*
- ---- ------------------ -----------------------
John G. Davenport Managing Director Managing Director
Mentor
Investment Group, LLC
R. Preston Nuttall Managing Director Managing Director
Mentor
Investment Group, LLC
Paul F. Costello Managing Director Managing Director
Mentor Investment Group,
LLC and Mentor
Perpetual Advisors, LLC;
Senior Vice President
Mentor Distributors,
LLC, Executive Vice
President and Chief
Administrative Officer
America's Utility Fund,
Inc.; President Cash
Resource Trust, Mentor
Institutional Trust,
Mentor
Funds and Mentor
Income Fund.
Theodore W. Price Managing Director Managing Director
Mentor
Investment Group, LLC
P. Michael Jones Managing Director Managing Director
Mentor
Investment Group, LLC
Thomas Lee Souders Treasurer Managing Director and
Chief Financial Officer,
Wheat, First Securities,
Inc.; Treasurer, Mentor
Distributors, LLC
Robert P. Wilson Assistant Treasurer Managing Director and
Treasurer, Wheat, First
-4-
<PAGE>
Other Substantial
Position with the Business, Profession,
Name Investment Adviser Vocation or Employment*
- ---- ------------------ -----------------------
Securities, Inc.;
Assistant Treasurer,
Mentor Distributors, LLC
John M. Ivan Secretary Managing Director,
Assistant General Counsel,
and Director of
Compliance, Wheat, First
Securities, Inc.; Clerk,
Cash Resource Trust and
Mentor Institutional
Trust; Secretary, Mentor
Funds and Mentor
Distributors LLC
* The address of Mentor Investment Group, Inc., Wheat, First Securities, Inc.,
Wheat First Butcher Singer, Inc., Mentor Funds, and Mentor Income Fund, Inc.,
is 901 East Byrd Street, Richmond, VA 23219.
Item 29. Principal Underwriters
(a) Mentor Distributors, Inc. acts as the principal underwriter for the Trust.
(b)
Name and Principal Positions and Offices Positions and Offices
Business Address with Underwriter with Registrant
- ------------------ --------------------- ---------------------
Peter J. Quinn, Jr. President and Director Trustee
901 East Byrd Street
Richmond, VA 23219
Paul F. Costello Senior Vice President President
901 East Byrd Street
Richmond, VA 23219
David J. Kowach Vice President None
901 East Byrd Street
Richmond, VA 23219
John M. Ivan Secretary Clerk
901 East Byrd Street
Richmond, VA 23219
-5-
<PAGE>
Name and Principal Positions and Offices Positions and Offices
Business Address with Underwriter with Registrant
- ------------------ --------------------- ---------------------
Howard T. Macrae, Jr. Assistant Secretary None
901 East Byrd Street
Richmond, VA 23219
Thomas L. Souders Treasurer None
901 East Byrd Street
Richmond, VA 23219
Robert P. Wilson Assistant Treasurer None
901 East Byrd Street
Richmond, VA 23219
(c) Inapplicable
Item 30. Location of Accounts and Records
Persons maintaining physical possession of accounts, books and other
documents required to be maintained by Section 31(a) of the Investment Company
Act of 1940 and the Rules promulgated thereunder are Registrant's Clerk, John M.
Ivan; Registrant's investment adviser, Mentor Advisors', and Registrant's
transfer agent and custodian, Investors Fiduciary Trust Company. The address of
the Clerk and Mentor Advisors is 901 East Byrd Street, Richmond, Virginia 23219.
The address of the transfer agent and custodian is 127 West 10th Street, Kansas
City, Missouri 64105-1716.
Item 31. Management Services
None.
Item 32. Undertakings
(a) The Registrant undertakes, if requested to do so by the holders
of at least 10% of the Registrant's outstanding shares of
beneficial interest, to call a meeting of shareholders for the
purpose of voting upon the question of removal of a Trustee or
Trustees and to assist in communications with other
shareholders as required by Section 16(c) of the Investment
Company Act of 1940.
(b) The Registrant undertakes to furnish to each person to whom a
prospectus of the Registrant is delivered a copy of the
Registrant's latest annual report to shareholders, upon request
and without charge.
-6-
<PAGE>
NOTICE
A copy of the Agreement and Declaration of Trust of the Trust is on
file with the Secretary of State of The Commonwealth of Massachusetts, and
notice is hereby given that this instrument is executed on behalf of the
Registrant by an officer of the Registrant as an officer and not individually
and that the obligations of or arising out of this instrument are not binding
upon any of the Trustees, officers, or shareholders individually but are binding
only upon the assets and property of the Registrant.
-7-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all of
the requirements for effectiveness of this Amendment to its Registration
Statement pursuant to Rule 485(b) under the Securities Act of 1933 and has duly
caused this Amendment to be signed on behalf of the undersigned, thereunto duly
authorized, in the City of Richmond, and the Commonwealth of Virginia on this
30th day of September, 1997.
CASH RESOURCE TRUST
By:/s/ Paul F. Costello
---------------------
Name: Paul F. Costello
Title: President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities indicated on the 30th day of September, 1997.
Signature Title
--------- -----
* Chairman; Trustee
- -----------------
Daniel J. Ludeman
* Trustee
- ------------------
Arnold H. Dreyfuss
Trustee
- ----------------
Thomas F. Keller
* Trustee
- -----------------------
Louis W. Moelchert, Jr.
Trustee
- -----------------
Stanley F. Pauley
* Trustee
- ------------------
Troy A. Peery, Jr.
<PAGE>
Signature Title
--------- -----
Trustee
- --------------------
Peter J. Quinn, Jr.
/s/ Paul F. Costello President; Principal Executive
- -------------------- Officer
Paul F. Costello
/s/ Terry L. Perkins Treasurer; Principal Financial
- -------------------- Officer; Principal Accounting Officer
Terry L. Perkins
*By:/s/ Paul F. Costello
--------------------
Paul F. Costello
Attorney-in-Fact
<PAGE>
EXHIBIT INDEX
Exhibit No. Exhibit Page No.
- ----------- ------- --------
(5) (B) Form of Letter of Transfer
dated November 1, 1996
(11) Consent of Independent Auditors
(15)
(D) Form of Distribution Plan and
Agreement on behalf of Cash
Resource New York Tax-
Exempt Money Market Fund
(E) Form of Distribution Plan and
Agreement on behalf of Cash
Resource California Tax-
Exempt Money Market Fund.
(17) Financial Data Schedules
(A) Cash Resource Money Market
Fund
(B) Cash Resource U.S. Government
Money Market Fund
(C) Cash Resource Tax-Exempt
Money Market Fund
(D) Cash Resource New York Tax-
Exempt Money Market Fund
(E) Cash Resource California Tax-
Exempt Money Market Fund
EXHIBIT 5(B)
November 1, 1996
Mentor Investment Advisors, LLC
901 East Byrd Street
Richmond, Virginia 23219
Ladies and Gentlemen:
Effective today, we hereby transfer to you all of our rights and obligations
under the Management Contract dated December 17, 1993 in respect of the Cash
Resource Money Market Fund, Cash Resource U.S. Government Money Market Fund,
Cash Resource Tax Exempt Money Market Fund, Cash Resource California Tax-Exempt
Money Market Fund, and Cash Resource New York Tax-Exempt Money Market Fund, each
a series of Cash Resource Trust, and you hereby accept and assume any and all of
such rights and obligations. If this letter is consistent with your
understanding of the agreement between us, please acknowledge your acceptance by
signing in the space indicated below.
Very truly yours,
Commonwealth Advisors, Inc.
(formerly Cambridge Investment Advisors, Inc.)
By: /s/ Paul F. Costello
------------------------
Name: Paul F. Costello
Title: Managing Director
Acknowledged and accepted:
Mentor Investment Advisors, LLC
By: /s/ Paul F. Costello
------------------------
Name: Paul F. Costello
Title: Managing Director
EXHIBIT 11
CONSENT OF INDEPENDENT AUDITORS
The Trustees
Cash Resource Trust
We consent to the use of our report dated September 5, 1997
incorporated herein by reference and to the reference to our firm under the
captions "FINANCIAL HIGHLIGHTS" in the prospectus and "INDEPENDENT AUDITORS" in
the statement of additional information.
KPMG Peat Marwick LLP
Boston, Massachusetts
September 26, 1997
EXHIBIT 15(D)
DISTRIBUTION PLAN AND AGREEMENT
This Plan and Agreement (the "Plan") constitutes the Distribution Plan
of Cash Resource New York Tax-Exempt Money Market Fund (the "Fund"), a series of
shares of beneficial interest of Cash Resource Trust, a Massachusetts business
trust (the "Trust"), adopted pursuant to the provisions of Rule 12b-1 under the
Investment Company Act of 1940, as amended (the "Act"), and the related
agreement between the Trust and Mentor Distributors, Inc. ("Mentor
Distributors"), the principal underwriter of the Trust's shares. During the
effective term of this Plan, the Trust may make payments to Mentor Distributors
upon the terms and conditions hereinafter set forth:
Section 1. The Fund may make payments to Mentor Distributors, in the
form of fees or reimbursements, to compensate Mentor Distributors for services
provided and expenses incurred by it for purposes of promoting the sale of
shares of the Fund, reducing redemptions of shares, or maintaining or improving
services provided to shareholders by Mentor Distributors and financial
institutions, including without limitation investment dealers. The amount of
such payments and the purposes for which they are made shall be determined by
the Qualified Trustees. Payments under this Plan shall not exceed in any fiscal
year the annual rate of 0.50% of the average net asset value of the Fund, as
determined at the close of each business day during the year. A majority of the
Qualified Trustees (as defined below) may, at any time and from time to time,
reduce the amount of such payments, or may suspend the operation of the Plan for
such period or periods of time as they may determine.
Section 2. This Plan shall not take effect until:
(a) it has been approved by a vote of a majority of the
outstanding voting securities of the Fund; and
(b) it has been approved, together with any related
agreements, by votes, of the majority (or whatever greater percentage
may, from time to time, be required by Section 12(b) of the Act or the
rules and regulations thereunder) of both (i) the Trustee of the Trust,
and (ii) the Qualified Trustees of the Trust, cast in person at a
meeting called for the purpose of voting on this Plan or such
agreement.
Section 3. This Plan shall continue in effect for a period of more than
one year after it takes effect only so long as such continuance is specifically
approved at least annually in the manner provided for approval of this Plan in
Section 2(b).
Section 4. Mentor Distributors shall provide to the Trustees of the
Trust, and the Trustees shall review, at least quarterly, a written report of
the amounts so expended and the purposes for which such expenditures were made.
-1-
<PAGE>
Section 5. This Plan may be terminated at any time by vote of a
majority of the Qualified Trustees, or by vote of a majority of the Fund's
outstanding voting securities.
Section 6. All agreements with any person relating to implementation of
this Plan shall be in writing, and any agreement related to this Plan shall
provide:
(a) that such agreement may be terminated at any time, without
payment of any penalty, by vote of a majority of the Qualified Trustees
or by vote of a majority of the Fund's outstanding voting securities,
on not more than 60 days' written notice to any other party to the
agreement; and
(b) that such agreement shall terminate automatically in the
event of its assignment.
Section 7. This Plan may not be amended to increase materially the
amount of distribution expenses permitted pursuant to Section 1 hereof without
the approval of a majority of the outstanding voting securities of the Fund, and
all material amendments to this Plan shall be approved in the manner provided
for approval of this Plan in Section 2(b).
Section 8. As used in this Plan, (a) the term "Qualified Trustees"
shall mean those Trustees of the Trust who are not interested persons of the
Trust, and have no direct or indirect financial interest in the operation of
this Plan or any agreements related to it, and (b) the terms "assignment",
"interested person", and "vote of a majority of the outstanding voting
securities" shall have the respective meaning specified in the Act and the rules
and regulations thereunder, subject to such exemptions as may be granted by the
Securities and Exchange Commission.
Section 9. A copy of the Agreement and Declaration of Trust of the
Trust is on file with the Secretary of State of The Commonwealth of
Massachusetts, and notice is hereby given that this instrument is executed on
behalf of the Trustees of the Trust as Trustees and not individually, and that
the obligations of or arising out of this instrument are not binding upon any of
the Trustees, officers, or shareholders individually but are binding only upon
the assets and property of the Fund.
Executed as of September 29, 1996.
MENTOR DISTRIBUTORS, INC. CASH RESOURCE TRUST
on behalf of
Cash Resource New York
Tax-Exempt Money Market Fund
By: /s/ Paul F. Costello By: /s/ Paul F. Costello
-------------------- --------------------
-2-
EXHIBIT 15(E)
DISTRIBUTION PLAN AND AGREEMENT
This Plan and Agreement (the "Plan") constitutes the Distribution Plan
of Cash Resource California Tax-Exempt Money Market Fund (the "Fund"), a series
of shares of beneficial interest of Cash Resource Trust, a Massachusetts
business trust (the "Trust"), adopted pursuant to the provisions of Rule 12b-1
under the Investment Company Act of 1940, as amended (the "Act"), and the
related agreement between the Trust and Mentor Distributors, Inc. ("Mentor
Distributors"), the principal underwriter of the Trust's shares. During the
effective term of this Plan, the Trust may make payments to Mentor Distributors
upon the terms and conditions hereinafter set forth:
Section 1. The Fund may make payments to Mentor Distributors, in the
form of fees or reimbursements, to compensate Mentor Distributors for services
provided and expenses incurred by it for purposes of promoting the sale of
shares of the Fund, reducing redemptions of shares, or maintaining or improving
services provided to shareholders by Mentor Distributors and financial
institutions, including without limitation investment dealers. The amount of
such payments and the purposes for which they are made shall be determined by
the Qualified Trustees. Payments under this Plan shall not exceed in any fiscal
year the annual rate of 0.33% of the average net asset value of the Fund, as
determined at the close of each business day during the year. A majority of the
Qualified Trustees (as defined below) may, at any time and from time to time,
reduce the amount of such payments, or may suspend the operation of the Plan for
such period or periods of time as they may determine.
Section 2. This Plan shall not take effect until:
(a) it has been approved by a vote of a majority of the
outstanding voting securities of the Fund; and
(b) it has been approved, together with any related
agreements, by votes, of the majority (or whatever greater percentage
may, from time to time, be required by Section 12(b) of the Act or the
rules and regulations thereunder) of both (i) the Trustee of the Trust,
and (ii) the Qualified Trustees of the Trust, cast in person at a
meeting called for the purpose of voting on this Plan or such
agreement.
Section 3. This Plan shall continue in effect for a period of more than
one year after it takes effect only so long as such continuance is specifically
approved at least annually in the manner provided for approval of this Plan in
Section 2(b).
Section 4. Mentor Distributors shall provide to the Trustees of the
Trust, and the Trustees shall review, at least quarterly, a written report of
the amounts so expended and the purposes for which such expenditures were made.
-1-
<PAGE>
Section 5. This Plan may be terminated at any time by vote of a
majority of the Qualified Trustees, or by vote of a majority of the Fund's
outstanding voting securities.
Section 6. All agreements with any person relating to implementation of
this Plan shall be in writing, and any agreement related to this Plan shall
provide:
(a) that such agreement may be terminated at any time, without
payment of any penalty, by vote of a majority of the Qualified Trustees
or by vote of a majority of the Fund's outstanding voting securities,
on not more than 60 days' written notice to any other party to the
agreement; and
(b) that such agreement shall terminate automatically in the
event of its assignment.
Section 7. This Plan may not be amended to increase materially the
amount of distribution expenses permitted pursuant to Section 1 hereof without
the approval of a majority of the outstanding voting securities of the Fund, and
all material amendments to this Plan shall be approved in the manner provided
for approval of this Plan in Section 2(b).
Section 8. As used in this Plan, (a) the term "Qualified Trustees"
shall mean those Trustees of the Trust who are not interested persons of the
Trust, and have no direct or indirect financial interest in the operation of
this Plan or any agreements related to it, and (b) the terms "assignment",
"interested person", and "vote of a majority of the outstanding voting
securities" shall have the respective meaning specified in the Act and the rules
and regulations thereunder, subject to such exemptions as may be granted by the
Securities and Exchange Commission.
Section 9. A copy of the Agreement and Declaration of Trust of the
Trust is on file with the Secretary of State of The Commonwealth of
Massachusetts, and notice is hereby given that this instrument is executed on
behalf of the Trustees of the Trust as Trustees and not individually, and that
the obligations of or arising out of this instrument are not binding upon any of
the Trustees, officers, or shareholders individually but are binding only upon
the assets and property of the Fund.
Executed as of September 29, 1996.
MENTOR DISTRIBUTORS, INC. CASH RESOURCE TRUST
on behalf of
Cash Resource California
Tax-Exempt Money Market Fund
By: /s/ Paul F. Costello By: /s/ Paul F. Costello
-------------------- --------------------
-2-
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 01
<NAME> CASH RESOURCE MONEY MARKET FUND
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUL-31-1997
<PERIOD-END> JUL-31-1997
<INVESTMENTS-AT-COST> 2,931,813
<INVESTMENTS-AT-VALUE> 2,931,813
<RECEIVABLES> 18,246
<ASSETS-OTHER> 106
<OTHER-ITEMS-ASSETS> 38
<TOTAL-ASSETS> 2,950,203
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 8,598
<TOTAL-LIABILITIES> 8,598
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 2,941,605
<SHARES-COMMON-STOCK> 2,941,635
<SHARES-COMMON-PRIOR> 646,500
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 2,941,605
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 120,023
<OTHER-INCOME> 0
<EXPENSES-NET> 18,725
<NET-INVESTMENT-INCOME> 101,298
<REALIZED-GAINS-CURRENT> (30)
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 101,268
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 101,298
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 11,609,162
<NUMBER-OF-SHARES-REDEEMED> 9,410,466
<SHARES-REINVESTED> 96,439
<NET-CHANGE-IN-ASSETS> 2,295,105
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 4,041
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 18,725
<AVERAGE-NET-ASSETS> 2,170,424
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> 0.05
<PER-SHARE-GAIN-APPREC> 0.00
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 0.05
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> 0.86
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 02
<NAME> CASH RESOURCE U.S. GOVERNMENT MONEY MARKET FUND
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUL-31-1997
<PERIOD-END> JUL-31-1997
<INVESTMENTS-AT-COST> 2,922,062
<INVESTMENTS-AT-VALUE> 2,922,062
<RECEIVABLES> 6,429
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 174
<TOTAL-ASSETS> 2,928,665
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 9,954
<TOTAL-LIABILITIES> 9,954
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 2,918,711
<SHARES-COMMON-STOCK> 2,918,704
<SHARES-COMMON-PRIOR> 1,402,450
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 2,918,711
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 131,004
<OTHER-INCOME> 0
<EXPENSES-NET> 19,424
<NET-INVESTMENT-INCOME> 111,580
<REALIZED-GAINS-CURRENT> 60
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 111,640
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 111,580
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 11,304,514
<NUMBER-OF-SHARES-REDEEMED> 9,896,481
<SHARES-REINVESTED> 108,221
<NET-CHANGE-IN-ASSETS> 1,516,314
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 4,470
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 19,424
<AVERAGE-NET-ASSETS> 2,407,660
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> 0.05
<PER-SHARE-GAIN-APPREC> 0.00
<PER-SHARE-DIVIDEND> 0.05
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> 0.81
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 03
<NAME> CASH RESOURCE TAX-EXEMPT MONEY MARKET FUND
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUL-31-1997
<PERIOD-END> JUL-31-1997
<INVESTMENTS-AT-COST> 740,201
<INVESTMENTS-AT-VALUE> 740,201
<RECEIVABLES> 5,442
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 35
<TOTAL-ASSETS> 745,678
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2,064
<TOTAL-LIABILITIES> 2,064
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 743,614
<SHARES-COMMON-STOCK> 743,617
<SHARES-COMMON-PRIOR> 290,894
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 743,614
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 22,237
<OTHER-INCOME> 0
<EXPENSES-NET> 4,386
<NET-INVESTMENT-INCOME> 17,851
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<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 17,851
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 17,851
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2,957,235
<NUMBER-OF-SHARES-REDEEMED> 2,521,741
<SHARES-REINVESTED> 17,229
<NET-CHANGE-IN-ASSETS> 452,723
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
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<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 4,386
<AVERAGE-NET-ASSETS> 619,590
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> 0.03
<PER-SHARE-GAIN-APPREC> 0.00
<PER-SHARE-DIVIDEND> 0.03
<PER-SHARE-DISTRIBUTIONS> 0.00
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<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> 0.71
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 04
<NAME> CASH RESOURCE CALIFORNIA TAX-EXEMPT MONEY MARKET FUND
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUL-31-1997
<PERIOD-END> JUL-31-1997
<INVESTMENTS-AT-COST> 86,617
<INVESTMENTS-AT-VALUE> 86,617
<RECEIVABLES> 3,116
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 8
<TOTAL-ASSETS> 89,741
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 309
<TOTAL-LIABILITIES> 309
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 89,432
<SHARES-COMMON-STOCK> 89,432
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 89,432
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 1,891
<OTHER-INCOME> 0
<EXPENSES-NET> 411
<NET-INVESTMENT-INCOME> 1,480
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 1,480
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 1,480
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 336,910
<NUMBER-OF-SHARES-REDEEMED> 248,850
<SHARES-REINVESTED> 1,372
<NET-CHANGE-IN-ASSETS> 89,432
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 121
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 411
<AVERAGE-NET-ASSETS> 85,256
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> 0.02
<PER-SHARE-GAIN-APPREC> 0.00
<PER-SHARE-DIVIDEND> 0.02
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> 0.75
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 05
<NAME> CASH RESOURCE NEW YORK TAX-EXEMPT MONEY MARKET FUND
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUL-31-1997
<PERIOD-END> JUL-31-1997
<INVESTMENTS-AT-COST> 12,074
<INVESTMENTS-AT-VALUE> 12,074
<RECEIVABLES> 51
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 2
<TOTAL-ASSETS> 12,127
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 56
<TOTAL-LIABILITIES> 56
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 12,071
<SHARES-COMMON-STOCK> 12,071
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 12,071
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 177
<OTHER-INCOME> 0
<EXPENSES-NET> 39
<NET-INVESTMENT-INCOME> 138
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 138
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 138
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 40,518
<NUMBER-OF-SHARES-REDEEMED> 28,570
<SHARES-REINVESTED> 123
<NET-CHANGE-IN-ASSETS> 12,071
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 11
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 51
<AVERAGE-NET-ASSETS> 7,836
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> 0.02
<PER-SHARE-GAIN-APPREC> 0.00
<PER-SHARE-DIVIDEND> 0.02
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> 0.80
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
