Filed Pursuant to Rule 497(e)
File Number 33-65818
P R O S P E C T U S September 30, 1997,
as revised March 26, 1998
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 Mentor Services Company, Inc. at 1-800-869-6042. 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>
- ---------------
*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>
Tax-Exempt
Money
Money Market U.S. Government Market
Fund Money Market Fund Fund
Year or Period ------------------------------------------- ------------------------------------------------- --------
Ended July 31, 1997 1996 1995 1994* 1997 1996 1995 1994* 1997
<S> <C>
- ----------------------------------------------------------------------------------------------------------------------------------
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 $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 0.029
Distributions
Net investment
income (0.047) (0.050) (0.050)(a) (0.020) (0.046)(a) (0.050) (0.050) (0.020) (0.029)
- ----------------------------------------------------------------------------------------------------------------------------------
Net asset value,
end of period $1.000 $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) 2.91%
- ----------------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
- ----------------------------------------------------------------------------------------------------------------------------------
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 $743,614
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) 0.71%
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) 0.71%
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) 2.88%
- ----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
California New York
Money Money
Market Market
Tax-Exempt Money Market Fund Fund Fund
Year or Period ------------------------------------------ ---------- ----------
Ended July 31, 1997 1996 1995 1994* 1997** 1997**
- ------------------------------------------------------------------------------------------
<S> <C>
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)
- ------------------------------------------------------------------------------------------
Net asset value,
end of period $1.000 $1.000 $1.000 $1.000 $1.000 $1.000
- ------------------------------------------------------------------------------------------
Total Return 2.91% 2.90% 3.05% 1.16%(c) 1.76%(c) 1.77%(c)
- ------------------------------------------------------------------------------------------
Ratios/Supplemental Data
- ------------------------------------------------------------------------------------------
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)
- ------------------------------------------------------------------------------------------
</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.
8
<PAGE>
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 Services Company, Inc. ("Mentor Services
Company"), 901 East Byrd Street, Richmond, Virginia 23219. Mentor Services
Company's telephone number is 1-800-869-6042.
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 your Financial Institution. 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.
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
Services Company. 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 Services Company 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 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, LLC, located at 901 East Byrd
Street, Richmond, Virginia 23219, serves as investment
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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 has over $12 billion in assets under management and is a
wholly owned subsidiary of Mentor Investment Group, LLC ("Mentor Investment
Group"), and its affiliates. Mentor Investment Group is a subsidiary of Wheat
First Butcher Singer, Inc., which is in turn a wholly owned subsidiary of First
Union Corp. ("First Union"). First Union is a leading financial services company
with approximately $157 billion in assets and $12 billion in total stockholders'
equity as of December 31, 1997. EVEREN Capital Corporation has a 20% ownership
in Mentor Investment Group and may acquire additional ownership based
principally on the amount of Mentor Investment Group's revenues derived from
assets attributable to clients of EVEREN Securities, Inc. and its affiliates.
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.
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
Mentor Distributors, LLC ("Mentor Distributors"), 3435 Stelzer Road,
Columbus, Ohio 43219, is the distributor of the Funds' shares. Mentor
Distributors is a wholly owned subsidiary of BISYS Fund Services, Inc. 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
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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.
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.
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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 Services Company, that the Trust do
otherwise.
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No person has been authorized to give any information or to make any
representations other than those 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
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 Securities
and Exchange Commission. Items which are thus omitted, including contracts and
other documents referred to or summarized herein, may be obtained 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
Richmond, VA 23219
(800) 869-6042
1998 Mentor Distributors, LLC
CPAA 040
[MENTOR INVESTMENT GROUP logo]
Cash Resource Trust
-----------------
PROSPECTUS
-----------------
September 30, 1997,
as revised March 26, 1998
[EVEREN SECURITIES logo]
<PAGE>
No person has been authorized to give any information or to make any
representations other than those 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
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 Securities
and Exchange Commission. Items which are thus omitted, including contracts and
other documents referred to or summarized herein, may be obtained 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
Richmond, VA 23219
(800) 869-6042
1998 Mentor Distributors, LLC
MK 1341
Cash Resource Trust
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PROSPECTUS
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September 30, 1997,
as revised March 26, 1998
[MENTOR INVESTMENT GROUP logo]
