CASH RESOURCE TRUST /MA/, 485APOS, 1999-01-29

CASH RESOURCE TRUST /MA/
485APOS, 1999-01-29

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As filed with the Securities and Exchange Commission on January 29, 1999

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. 9 /X/
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REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY /X/
ACT OF 1940 ---

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Amendment No. 11 /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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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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X 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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-1-

<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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PARTS A AND B OF THIS POST-EFFECTIVE AMENDMENT RELATE SOLELY TO THE NORTH
CAROLINA TAX-EXEMPT MONEY MARKET FUND, PENNSYLVANIA TAX-EXEMPT MONEY MARKET
FUND, AND VIRGINIA TAX-EXEMPT MONEY MARKET FUND SERIES OF THE REGISTRANT. ONLY
PART C INFORMATION RELATING TO ANY OTHER SERIES OF THE REGISTRANT IS AMENDED OR
SUPERSEDED HEREBY.

-2-

<PAGE>

P R O S P E C T U S April , 1999
Class A Shares

CASH RESOURCE TRUST
CASH RESOURCE NORTH CAROLINA TAX-EXEMPT MONEY MARKET FUND
CASH RESOURCE PENNSYLVANIA TAX-EXEMPT MONEY MARKET FUND
CASH RESOURCE VIRGINIA TAX-EXEMPT MONEY MARKET FUND

The Cash Resource North Carolina, Pennsylvania, and Virginia Tax-Exempt
Money Market Funds seek a high rate of current income exempt from federal income
tax and from specified state personal income taxes. 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 each of the Funds
to invest more of its assets in the securities of a single issuer than other
money market funds; as a result, an investment in these 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 April __, 1999 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.

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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 Class A Shares of each of the Funds and expenses each Fund expects to incur
during its first full fiscal year. The Examples show the cumulative expenses
attributable to a hypothetical $1,000 investment in Class A Shares of 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 RESOURCE CASH RESOURCE CASH RESOURCE
NORTH CAROLINA PENNSYLVANIA VIRGINIA
TAX-EXEMPT TAX-EXEMPT TAX-EXEMPT
MONEY MARKET MONEY MARKET MONEY MARKET
FUND FUND FUND
-------------- -------------- -------------
<S> <C> <C> <C>
SHAREHOLDER TRANSACTION
EXPENSES None None None
Annual Fund Operating
Expenses (as a percentage
of average net assets)
Management Fees ........... .22% .22% .22%
12b-1 Fees ................ .33% .33% .33%
Other Expenses ............ .20% .20% .20%
---- ---- -----
Total Fund Operating
Expenses ................ .75% .75% .75%
---- ---- -----
</TABLE>

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> <C> <C> <C>
Cash Resource North Carolina Tax-Exempt
Money Market Fund ................................. $8 $24 $42 $ 93
Cash Resource Pennsylvania Tax-Exempt Money
Market Fund ....................................... $8 $24 $42 $ 93
Cash Resource Virginia Tax-Exempt Money
Market Fund ....................................... $8 $24 $42 $ 93
</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 expects to incur. 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.

<PAGE>

INVESTMENT OBJECTIVES AND POLICIES

The investment objective of each of the Funds is to seek as high a rate of
current income exempt from federal income tax (and, in the case of the North
Carolina Tax-Exempt Money Market Fund, North Carolina personal income tax, or in
the case of the Pennsylvania Tax-Exempt Money Market Fund, Pennsylvania personal
income tax, or, in the case of the Virginia Tax-Exempt Money Market Fund,
Virginia personal income tax) as Mentor Investment Advisors, LLC the Funds'
investment advisor ("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. None of the Funds is intended to be a complete investment program,
and there is no assurance the Funds will achieve their objectives.

3
<PAGE>

In this prospectus, references to a "State" are, in the case of the North
Carolina Tax-Exempt Money Market Fund, to the State of North Carolina, in the
case of the Pennsylvania Tax-Exempt Money Market Fund, to the State of
Pennsylvania, and in the case of the Virginia Tax-Exempt Money Market Fund, to
the State of Virginia.

Each of the Funds will normally invest at least 80% of its assets in State
Tax-Exempt Securities. State Tax-Exempt Securities are debt obligations issued
by the State, 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 State personal
income tax. (This 80% requirement is a fundamental policy of the Fund.) A Fund
may invest the remainder of its assets in investments of any kind described
under "Selection of Investments" below.

State 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 State 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 State 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.

<PAGE>

A Fund will invest in the following types of State 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 State Tax-Exempt Securities, a
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 a Fund but are subject to the risk that the
dealer may fail to meet its obligations. The Funds do not generally expect to
pay additional consideration for stand-by commitments or to assign any value to
them.

Each 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 a 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 a 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 each Fund invests primarily in State Tax-Exempt Securities, the value
of a Fund's shares may be especially affected by factors pertaining to the
economy of relevant State and other factors specifically affecting the ability
of issuers of State Tax-Exempt Securities to meet their obligations; an
investment in a 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 State.
Any reduction in the actual or perceived ability of an issuer of the relevant
State Tax-Exempt Securities to meet its obligations (including a reduction in
the rating of its outstanding securities) would likely

5
<PAGE>

adversely affect the market value and marketability of its obligations and could
adversely affect the values of State Tax-Exempt Securities issued by others as
well.

A 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.

6
<PAGE>

DIVERSIFICATION AND CONCENTRATION POLICIES

Each Fund is a "diversified" investment company under the Investment
Company Act of 1940. This means that each Fund may invest up to 25% of its
total assets in the securities of one or more issuers, and is limited with
respect to the remaining portion of its assets to investing 5% or less of its
total assets in the securities of any one issuer (other than the U.S.
government).

Because of the relatively small number of issuers of State Tax-Exempt
Securities, each Fund is 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.

None of the Funds will invest more than 25% of its total assets in any one
industry. Governmental issuers of State 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 Fund may invest more than 25% of its
assets in a broader segment of the State Tax-Exempt Securities market, 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,

<PAGE>

and other developments generally affecting the revenues of such users (for
example, proposed legislation or pending court decisions affecting the
financing of such projects and market factors affecting the demand for their
services or products) may have a general adverse effect on all Tax-Exempt
Securities in such a market segment. Each of the Funds reserves the right to
invest more than 25% of its assets in industrial development bonds and private
activity bonds or notes.

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.

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

<PAGE>

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.

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 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.

<PAGE>

You can choose from two distribution options: (1) automatically reinvest
all distributions from a Fund in additional Class A 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 net ordinary income (and net capital gains, if any) on
a current basis.

Dividends paid by a 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.

If a 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 (NORTH CAROLINA TAX-EXEMPT MONEY MARKET FUND). To the extent
exempt-interest dividends are derived from interest on North Carolina Tax-Exempt
Securities, such

<PAGE>

distributions will be exempt from North Carolina personal income tax (but not
from North Carolina franchise and corporate income tax). For North Carolina tax
purposes, distributions derived from investments in other than (i) North
Carolina Tax-Exempt Securities and (ii) obligations of the United States (or
other obligations) which pay interest exempt from North Carolina 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 North Carolina Tax-Exempt Securities is not subject to the
North Carolina alternative minimum tax on individuals, and North Carolina
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 North Carolina
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 North Carolina.

STATE TAXES (PENNSYLVANIA TAX-EXEMPT MONEY MARKET FUND). Distributions paid
by the Pennsylvania Fund will not be subject to the Pennsylvania personal income
tax or to the Philadelphia School District investment net income tax to the
extent that the distributions are attributable to interest received by the
Pennsylvania fund from its investments in Pennsylvania Tax-Exempt Securities and
obligations of the United States, its territories and certain of its agencies
and instrumentalities. Distributions by the Pennsylvania Fund to a Pennsylvania
resident that attributable to other sources may be subject to the Pennsylvania
personal income tax and (for residents of Philadelphia) to the Philadelphia
School District investment net income tax whether paid in cash or reinvested in
additional shares. Distributions paid by the Pennsylvania fund which are
excludable as exempt income for federal tax purposes are not subject to the
Pennsylvania corporate net income tax.

Individual shareholders of the Pennsylvania fund who are subject to the
personal property taxes levied by certain Pennsylvania counties, cities and
school districts will be exempt from such tax on their shares of the
Pennsylvania fund to the extent that the Pennsylvania fund's portfolio consists
of tax-exempt securities and obligations of the United States, its territories
and certain of its agencies and instrumentalities. Corporations are not subject
to Pennsylvania personal property taxes.

STATE TAXES (VIRGINIA TAX-EXEMPT MONEY MARKET FUND). To the extent
exempt-interest dividends are derived from interest on Virginia Tax-Exempt
Securities, such distributions will be exempt from Virginia personal income tax
(but not from Virginia franchise and corporate income tax). For Virginia tax
purposes, distributions derived from investments in other than (i) Virginia
Tax-Exempt Securities and (ii) obligations of the United States (or other
obligations) which pay interest exempt from Virginia 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 Virginia Tax-Exempt Securities is not subject to the Virginia
alternative minimum tax on individuals, and Virginia 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 Virginia 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 Virginia.

GENERAL. The foregoing is a summary of certain federal, North Carolina,
Pennsylvania, and Virginia 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.

<PAGE>

BUYING AND SELLING SHARES OF THE FUNDS

HOW TO BUY SHARES. The Trust offers Class A 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. Class A 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.

The Funds may refuse any order to buy shares.

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.

<PAGE>

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 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

<PAGE>

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., First Union Brokerage Service ("FUBS"), 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 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 $14 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 $234 billion in

<PAGE>

assets and $17 billion in total stockholders' equity as of December 31, 1998.
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.

The Funds receive services from a number of providers which rely on the
smooth functioning of their respective systems and the systems of others to
perform those services. It is generally recognized that certain systems in use
today may not perform their intended functions adequately after the Year 1999
because of the inability of the software to distinguish the Year 2000 from the
Year 1900. Mentor Advisors is taking steps that it believes are reasonably
designed to address this potential "Year 2000" problem and to obtain
satisfactory assurances that comparable steps are being taken by the Funds'
other major service providers. There can be no assurance, however, that these
steps will be sufficient to avoid any adverse impact on the Funds from this
problem.

ADMINISTRATIVE SERVICES. Mentor Investment Group, LLC, located at 901 East
Byrd Street, Richmond, Virginia 23219, provides each Fund with certain
administrative personnel and services necessary to operate each Fund, such as
bookkeeping and accounting services. Mentor Investment Group provides these
services to each of the Funds at an annual rate of 0.02% of the Fund's average
daily net assets.

<PAGE>

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 with respect to its Class A Shares.
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 Class A 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 out of the Funds' assets
attributable to their Class A Shares, 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 Class A 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, Mentor Advisors, or their affiliates may make periodic payments
(from any amounts received under the Plans or from their other resources) to any
qualifying Financial Institution based on the average net asset value of Class A
Shares for which the Financial Institution is designated as the financial
institution of record. Such payments may be made at an annual rate of 0.15% and
0.33% with respect to each of the Funds. These payments may be suspended or
modified 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 such payments
include Wheat, First Securities, Inc., First Union Brokerage Services, 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 Class A Shares of the Funds. "Yield" is calculated by
dividing a Fund's annualized net investment income per Class A 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.

<PAGE>

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.

There is presently no maximum or minimum share ownership requirement, but
the Trustees may establish either 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.

<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

1999 MENTOR DISTRIBUTORS, LLC

CPAA 040

[MENTOR INVESTMENT GROUP LOGO]

CASH RESOURCE TRUST

NORTH CAROLINA TAX-EXEMPT MONEY MARKET PORTFOLIO
PENNSYLVANIA TAX-EXEMPT MONEY MARKET PORTFOLIO
VIRGINIA TAX-EXEMPT MONEY MARKET PORTFOLIO

-------------------------------
PROSPECTUS
CLASS A SHARES
-------------------------------

April , 1999

[EVEREN SECURITIES LOGO]

<PAGE>

CASH RESOURCE TRUST
901 East Byrd Street
Richmond, VA 23219
(800) 869-6042

1999 MENTOR DISTRIBUTORS, LLC

SECURITIES: NOT FDIC-INSURED/NOT BANK-GUARANTEED MAY LOSE VALUE

CASH RESOURCE TRUST

NORTH CAROLINA TAX-EXEMPT MONEY MARKET PORTFOLIO
PENNSYLVANIA TAX-EXEMPT MONEY MARKET PORTFOLIO
VIRGINIA TAX-EXEMPT MONEY MARKET PORTFOLIO

-------------------------------
PROSPECTUS

CLASS A SHARES
-------------------------------

April , 1999

[MENTOR INVESTMENT GROUP LOGO]

<PAGE>

CASH RESOURCE TRUST
901 East Byrd Street
Richmond, VA 23219
(800) 869-6042

1999 MENTOR DISTRIBUTORS, LLC

MK 1341

[MENTOR INVESTMENT GROUP LOGO]

CASH RESOURCE TRUST

NORTH CAROLINA TAX-EXEMPT MONEY MARKET PORTFOLIO
PENNSYLVANIA TAX-EXEMPT MONEY MARKET PORTFOLIO
VIRGINIA TAX-EXEMPT MONEY MARKET PORTFOLIO

-------------------------------
PROSPECTUS
CLASS A SHARES
-------------------------------

April , 1999

[WHEAT FIRST UNION LOGO]

SECURITIES: NOT FDIC-INSURED/NOT BANK-GUARANTEED MAY LOSE VALUE

Wheat First Union is a division of Wheat First Securities, Inc., a registered
broker/dealer, Member New York Stock Exchange and SIPC, and a separate non-bank
affiliate of First Union Corporation

<PAGE>

CASH RESOURCE TRUST

FORM N-1A

PART B

STATEMENT OF ADDITIONAL INFORMATION

April , 1999

This Statement of Additional Information contains information which may be
of interest to investors but which is not included in the Prospectus dated
April , 1999 (the "Prospectus") of Cash Resource North Carolina Tax-Exempt Money
Market Fund, Cash Resource Pennsylvania Tax-Exempt Money Market Fund, and Cash
Resource Virginia 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
April , 1999. 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 Services Company, Inc. at (800) 382-0016.

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Investment Objectives and Policies of the Trust ...................... 2
Investment Restrictions .............................................. 6
Management of the Trust .............................................. 8
Principal Holders of Securities ...................................... 10
Investment Advisory and Other Services ............................... 11
Determination of Net Asset Value ..................................... 15
Taxes ................................................................ 17
Distribution ......................................................... 20
Organization ......................................................... 22
Portfolio Turnover ................................................... 23
Custodian ............................................................ 23
Independent Auditors ................................................. 23
Performance Information .............................................. 23
Investment Professionals of Mentor Investment Advisors, LLC .......... 36
Shareholder Liability ................................................ 37
Financial Statements ................................................. 37
</TABLE>

<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.

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. Mentor Investment Advisors, LLC (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 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

<PAGE>

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.

TAX-EXEMPT SECURITIES

GENERAL DESCRIPTION. As used in the prospectus and in this Statement with
reference to Cash Resource North Carolina Tax-Exempt Money Market Fund, Cash
Resource Pennsylvania Tax-Exempt Money Market Fund, and Cash Resource Virginia
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

<PAGE>

which is, in the opinion of bond counsel, exempt from federal income tax.
"North Carolina Tax-Exempt Securities" are Tax-Exempt Securities issued by the
State of North Carolina, 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 North Carolina personal income
tax. "Pennsylvania Tax-Exempt Securities" are Tax-Exempt Securities issued by
the State of Pennsylvania, 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 Pennsylvania personal
income tax. "Virginia Tax-Exempt Securities" are Tax-Exempt Securities issued by
the State of Virginia, 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 Virginia personal income tax. For
purposes of the section, the term "Tax-Exempt Securities" include North
Carolina, Pennsylvania, and Virginia 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- 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.

<PAGE>

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.

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

<PAGE>

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.

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.

<PAGE>

7. With respect to 75% of a Fund's asset's, acquire more than 10% of the
voting securities of any issuer.

8. Invest more than 25% of its assets in any one industry.

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.

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.

<PAGE>

MANAGEMENT OF THE TRUST

<TABLE>
<CAPTION>
POSITION HELD
NAME AND ADDRESS WITH A FUND PRINCIPAL OCCUPATION DURING PAST FIVE YEARS
- -------------------------- ---------------------- ------------------------------------------------------
<S> <C> <C>
Daniel J. Ludeman (41)* Chairman and Trustee Chairman and Chief Executive Officer Mentor
901 E. Byrd Street Investment Group, Inc.; Chairman and Director
Richmond, VA 23219 Mentor Income Fund, Inc., and America's Utility Fund, Inc.;
Chairman and Trustee, Mentor Funds, Mentor Variable
Investment Portfolios and Mentor Institutional Trust.

Arnold H. Dreyfuss (70) Trustee Chairman, Eskimo Pie Corporation; Trustee, Mentor
P.O. Box 18156 Funds, Mentor Variable Investment Portfolios and
Richmond, Virginia 23226 Mentor Institutional Trust; Director, Mentor Income
Fund, Inc. and America's Utility Fund, Inc.;
formerly, Chairman and Chief Executive Officer,
Hamilton Beach/Proctor-Silex, Inc.

Thomas F. Keller (67) Trustee R.J. Reynolds Industries Professor of Business
Fuqua School of Business Administration and Former Dean of Fuqua School
Duke University of Business, Duke University; Director of LADD
Durham, NC 27706 Furniture, Inc., Wendy's International, Inc.,
American Business Products, Inc., Dimon, Inc., and
Biogen, Inc.; Director of Nations Balanced Target
Maturity Fund, Inc., Nations Government Income
Term Trust 2003, Inc., Nations Government Income
Term Trust 2004, Inc., Hatteras Income Securities,
Inc., Nations Institutional Reserves, Nations Fund
Trust, Nations Fund, Inc., Nations Fund Portfolios,
Inc., and Nations LifeGoal Funds, Inc. Trustee,
Mentor Funds, Mentor Variable Investment
Portfolios and Mentor Institutional Trust; Director,
Mentor Income Fund, Inc. and America's Utility
Fund, Inc.

Louis W. Moelchert, Jr. (57) Trustee Vice President for Investments, University of
University of Richmond Richmond; Trustee, Mentor Funds, Mentor Variable
Richmond, VA 23173 Investment Portfolios and Mentor Institutional Trust;
Director, Mentor Income Fund, Inc. and America's
Utility Fund, Inc.

Troy A. Peery, Jr. (38) Trustee Trustee, Mentor Funds, Mentor Variable Investment
c/o Cash Resource Trust Portfolios and Mentor Institutional Trust; Director,
901 E. Byrd Street Mentor Income Fund, Inc. and America's Utility Fund,
Richmond, Virginia 23219 Inc.; Formerly, President of Heilig-Meyers Company.

Peter J. Quinn, Jr. (38)* Trustee Managing Director, Mentor Investment Group, LLC,
901 E. Byrd Street and Mentor Services Company, Inc.; Trustee, Mentor
Richmond, VA 23219 Funds, Mentor Variable Investment Portfolios and
Mentor Institutional Trust; Director, Mentor Income
Fund, Inc. and America's Utility Fund, Inc.

</TABLE>

<PAGE>

<TABLE>
<CAPTION>
POSITION HELD
NAME AND ADDRESS WITH A FUND PRINCIPAL OCCUPATION DURING PAST FIVE YEARS
- ------------------------- --------------------- -----------------------------------------------------
<S> <C> <C>
Arch T. Allen, III (58) Trustee Attorney at law, Raleigh, North Carolina; Trustee,
c/o Cash Resource Trust Mentor Funds, Mentor Variable Investment
901 E. Byrd Street Portfolios and Mentor Institutional Trust; Director,
Richmond, VA 23219 Mentor Income Fund, Inc. and America's Utility
Fund, Inc.; formerly, Vice Chancellor for
Development and University Relations, University
of North Carolina at Chapel Hill.

Weston E. Edwards (64) Trustee President, Weston Edwards & Associates; Trustee
c/o Cash Resource Trust Mentor Funds, Mentor Variable Investment
901 E. Byrd Street Portfolios and Mentor Institutional Trust; Director,
Richmond, VA 23219 Mentor Income Fund, Inc. and America's Utility
Fund, Inc.; Founder and Chairman, The Housing
Roundtable; formerly, President, Smart Mortgage
Access, Inc.

Jerry R. Barrentine (64) Trustee President, J.R. Barretine & Associates; Trustee,
c/o Cash Resource Trust Mentor Funds, Mentor Variable Investment
901 E. Byrd Street Portfolios and Mentor Institutional Trust; Director,
Richmond, VA 23219 Mentor Income Fund, Inc. and America's Utility
Fund, Inc.; formerly, Executive Vice President and
Chief Financial Officer, Barclays/American
Mortgage Director Corporation; Managing Partner,
Barrentine Lott & Associates.

J. Garnett Nelson (59) Trustee Consultant, Mid-Atlantic Holdings, LLC; Trustee,
c/o Cash Resource Trust Mentor Funds, Mentor Variable Investment
901 E. Byrd Street Portfolios and Mentor Institutional Trust; Director,
Richmond, VA 23219 Mentor Income Fund, Inc., America's Utility Fund,
Inc., GE Investment Funds, Inc., and Lawyers Title
Corporation; Member, Investment Advisory
Committee, Virginia Retirement System; formerly,
Senior Vice President, The Life Insurance Company
of Virginia.

Paul F. Costello (38) President Managing Director, Mentor Investment Group, LLC; President,
901 E. Byrd Street Mentor Funds, Mentor Income Fund, Inc., Mentor
Richmond, VA 23219 Institutional Trust, Mentor Variable Investment
Portfolios and America's Utility Fund, Inc.

Terry L. Perkins (51) Treasurer, Senior Vice President and Treasurer, Mentor Investment Group,
901 E. Byrd Street Secretary LLC; Treasurer, Mentor Institutional Trust, Mentor
Richmond, VA 23219 Funds, Mentor Variable Investment Portfolios and
Mentor Income Fund, Inc.; Treasurer and Senior
Vice President, America's Utility Fund, Inc.

Michael Wade (32) Assistant Treasurer Vice President and Controller, Mentor Investment Group, LLC
901 E. Byrd Street Assistant Treasurer, Mentor Income Fund, Inc.,
Richmond, VA 23219 Mentor Funds, Mentor Institutional Trust, Mentor
Variable Investment Portfolios and America's Utility
Fund
</TABLE>

<PAGE>

- -------------
* This Trustee is deemed to be an "interested person" of a Fund as defined in
the 1940 Act.

Except as stated above, the principal occupations of the officers and
Trustees for the last five years have been with the employers as shown above,
although in some cases they have held different positions with such employers.

The table below shows the fees paid to each Trustee by the Trust for the
1998 fiscal year and the fees paid to each Trustee by all funds in the Mentor
Family (including the Trust) during the 1998 calendar year.

<TABLE>
<CAPTION>
AGGREGATE COMPENSATION TOTAL COMPENSATION
TRUSTEES FROM THE TRUST FROM ALL COMPLEX FUNDS (9 FUNDS)
- --------------------------------- ------------------------ ----------------------------------
<S> <C> <C>
Daniel J. Ludeman ............... $ 0 $ --
Arnold H. Dreyfuss .............. $ 17,911 $ 32,000
Thomas F. Keller ................ $ 15,793 $ 32,000
Louis W. Moelchert, Jr. ......... $ 17,911 $ 32,000
Troy A. Peery, Jr. .............. $ 17,911 $ 32,000
Peter J. Quinn, Jr. ............. $ 0 $ 0
Arch T. Allen, III+ ............. $ 13,967 $ 35,000
Weston E. Edwards + ............. $ 13,967 $ 42,000
Jerry R. Barrentine+ ............ $ 13,967 $ 40,000
J. Garnett Nelson+ .............. $ 13,967 $ 40,000
</TABLE>

- -------------
+ Elected Trustee December 22, 1997.

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, provides liability insurance for the benefit
of its Trustees and officers.

PRINCIPAL HOLDERS OF SECURITIES

As of April , 1999, no shares of any of the Funds were outstanding.

<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.

<PAGE>

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

<PAGE>

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.

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, beginning in February of 2000, 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.

<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 buys and sells 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.

<PAGE>

It is anticipated that most purchases and sales of portfolio investments
will be with the issuer or with major dealers in money market instruments
acting as principal. Accordingly, it is not anticipated that the Funds will pay
significant brokerage commissions. In underwritten offerings, the price paid by
a Fund includes a disclosed, fixed commission or discount retained by the
underwriter. There is generally no stated commission in the case of securities
purchased from or sold to dealers, but the prices of such securities usually
include an undisclosed dealer's mark-up or mark-down. None of the Funds
incurred brokerage or underwriting commissions in the 1996, 1997, or 1998
fiscal years.

DETERMINATION OF NET ASSET VALUE

The net asset value per share of each class of a 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, Dr. Martin Luther King, Jr. 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

<PAGE>

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, 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 class of shares of each Fund is declared as a
dividend each time it is determined, the net asset value per share 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

<PAGE>

Fund. The underlying assets of each Fund will be segregated on the Trust's
books of account, and will be charged with the liabilities in respect of such
Fund and with a share of the general liabilities of the Trust. Expenses with
respect to any two or more Funds may be allocated in proportion to the net
asset values of the respective Funds except where allocations of direct
expenses can otherwise be fairly made.

TAXES

Each Fund of the Trust intends to qualify each year and elect to be taxed
as a regulated investment company under Subchapter M of the United States
Internal Revenue Code of 1986, as amended (the "Code").

As a regulated investment company qualifying to have its tax liability
determined under Subchapter M, a Fund will not be subject to federal income tax
on any of its net investment income or net realized capital gains that are
distributed to its shareholders. As series of Massachusetts business trust, the
Funds under present law will not be subject to any excise or income taxes in
Massachusetts.

Other than exempt-interest dividends from Cash Resource North Carolina,
Pennsylvania, and Virginia Tax-Exempt Money Market Funds 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 dividends will be taxable as such, regardless of how long Fund
shares are held, while other taxable distributions will be taxed as ordinary
income. Also interest on indebtedness incurred to purchase shares of Cash
Resource North Carolina, Pennsylvania, and Virginia Tax-Exempt Money Market
Funds 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 disposition of stock, securities, or foreign currencies, and other income
(including but not limited to gains from options, futures, or forward
contracts) derived with respect to its business of investing in such stock,
securities, or currencies and (b) 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, securities of
other regulated investment companies, 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 (other than those of U.S. Government Securities or other regulated
investment companies) of any issuer or of two or more issuers which the Fund
controls and which are engaged in the same, similar, or related trades or
businesses. 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

<PAGE>

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.

If a Fund failed to qualify as a regulated investment company accorded
special tax treatment in any taxable year, the Fund would be subject to tax on
its taxable income at corporate rates, and all distributions from earnings and
profits, including any distributions of net tax-exempt income and net long-term
capital gains, would be taxable to shareholders as ordinary income. In
addition, a Fund could be required to recognize unrealized gains, pay
substantial taxes and interest and make substantial distributions before
requalifying as a regulated investment company that is accorded special tax
treatment.

An excise tax at the rate of 4% will be imposed on the excess, if any, of
each Fund's "required distribution" over its 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 realized
during the one-year period ending on October 31 (or December 31, if the Fund so
elects) plus undistributed amounts from prior years. Each Fund intends to make
distributions sufficient to avoid imposition of the excise tax. Distributions
declared by a Fund during October, November or December to shareholders of
record on a date in any such month and paid by the Fund during the following
January will be treated for federal tax purposes as paid by the Fund and
received by shareholders on December 31 of the year in which declared.

Distributions from a Fund (other than exempt-interest dividends, as
discussed below) will be taxable to shareholders as ordinary income to the
extent derived from the Fund's investment income and net short-term gains. Net
capital gain (that is, the excess of net gains from capital assets held for
more than one year over net losses from capital assets held for not more than
one year) of a Fund that is distributed and designated as a capital gain
dividend will be taxable to shareholders as long-term capital gain, generally
taxable to individuals at a 20% rate, regardless of how long a shareholder has
held the shares in the Fund.

Each Fund is required to withhold 31% of all ordinary 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. Shareholders who
fail to furnish their current tax identification numbers are subject to a
penalty of $50 for each such failure unless the failure is due to reasonable
cause and not willfull neglect. An individual's taxpayer identification number
is his or her Social Security number. Tax-exempt shareholders are not subject
to these back-up withholding rules so long as they furnish the Fund with a
proper certification.

<PAGE>

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 capital gain
dividend) 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.

Each Fund seeks to maintain a stable net asset value of $1.00 per share;
however, there can be no assurance that a Fund will be able to do so. A
shareholder may therefore recognize gain or loss on the sale or redemption of
shares of a Fund in an amount equal to the difference between the proceeds of
the sale or redemption and the shareholder's adjusted tax basis in the shares.
All or a portion of any loss so recognized may be disallowed if the shareholder
purchases other shares of that Fund within 30 days before or after the sale or
redemption. In general, any gain or loss arising from (or treated as arising
from) the sale or redemption of shares of a Fund will be considered capital
gain or loss and will be long-term capital gian or loss if the shares were held
for longer than one year. Long-term capital gain is generally taxable to
individuals at a 20% rate. However, any capital loss arising from the sale or
redemption of shares held for six months or less will be disallowed to the
extent of the amount of exempt-interest dividends received on

<PAGE>

such shares and (to the extent not disallowed) will be treated as a long-term
capital loss to the extent of the amount of capital gain dividends received on
such shares.

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, LLC 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 (the "Plan"). The purpose of
the Plan is to permit the Funds 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. The 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, 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.

<PAGE>

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

<PAGE>

direct or indirect financial interest in the operation of the Plan and related
agreements (the "Qualified Trustees"), cast in person at a meeting called for
that purpose. All material amendments to a Plan must be likewise approved by
the Trustees and the Qualified Trustees.

A Plan may not be amended in order to increase materially the costs which
a Fund may bear for distribution pursuant to the Plan without also being
approved by a majority of the outstanding voting securities of that Fund. Each
Plan terminates automatically in the event of its assignment and may be
terminated as to any Fund without penalty, at any time, by a vote of a majority
of the outstanding voting securities of the Fund or by a vote of a majority of
the Qualified Trustees.

In order to compensate Financial Institutions for services provided in
connection with sales of Class A 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, Mentor Advisors, or their affiliates may make periodic payments
(from any amounts received under the Plans or from their other resources) to any
qualifying Financial Institution based on the average net asset value of Class A
Shares for which the Financial Institution is designated as the financial
institution of record. Such payments may be made at an annual rate of 0.15% and
0.33%. These payments may be suspended or modified 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 such payments include Wheat, First Securities, Inc.,
First Union Brokerage Service and EVEREN. 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.

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

<PAGE>

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.

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

[ ] 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.

EQUIVALENT YIELDS: TAX-EXEMPT VERSUS TAXABLE SECURITIES
[to be provided]

<PAGE>

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.

EXPENSE LIMITATIONS. 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.

COMPARATIVE INFORMATION. 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

<PAGE>

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.

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.

<PAGE>

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.

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,

<PAGE>

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.

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.

<PAGE>

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.

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.

<PAGE>
PART C

OTHER INFORMATION

Item 24. Financial Statements and Exhibits

(a) Financial Statements:

(1) Statements of Assets and Liabilities - July 31, 1998
- Incorporated by Reference in Part B.

Statements of Operations - Year Ended July 31, 1998
Incorporated by Reference in Part B.

Statements of Changes in Net Assets -- Years or
Periods Ended July 31, 1998 and 1997 -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) Form of Management Contract dated February 1,
1998(10)
(B) Form of Management Contract - North Carolina
Tax-Exempt Money Market Fund, Pennsylvania
Tax-Exempt Money Market Fund, and
Virginia Tax-Exempt Money Market Fund(10)

(6) Form of Distribution Agreement dated February 1,
1998(10)

(7) Inapplicable
(8) (A) Custody Agreement dated December 20, 1993(4)

(B) Form of Administration Agreement (10)

(9) (A) Agency Agreement dated December 20, 1993(4)
(B) Draft Processing Agency Agreement dated December 20,
1993(4)

(11) Consent of Independent Auditors (9)

(12) Inapplicable
(13) Initial Capital Agreement dated December 17, 1993(4)
(14) Inapplicable

(15) Plan of Distribution (10)
(24) Power of Attorney

-1-

<PAGE>

(16) Schedule of Computation of Performance(5)
(27) Financial Data Schedules(9)
(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) Incorporated by reference to Post-Effective Amendment No. 6 to the
Registrant's Registration Statement on Form N-1A under the Securities
Act of 1933, as amended filed on September 30, 1997 (File No.
33-65818).

(8) Incorporated by reference to Post-Effective Amendment No. 7 to the
Registrant's Registration Statement on Form N-1A under the Securities
Act of 1933, as amended filed on January 30, 1998 (File No.
33-65818).

(9) Incorporated by reference to Post-Effective Amendment No. 8 to the
Registrant's Registration Statement on Form N-1A under the Securities
Act of 1933, as amended filed on October 13, 1998 (File No.
33-65818).

(10) 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 December 31, 1998. There were no Class B
Shares of any Fund outstanding as of that date.

Number of Record
Series Holders
------ ----------------
Cash Resource Money Market Fund 459,914
Cash Resource U.S. Government
Money Market Fund 332,538
Cash Resource Tax-Exempt Money
Market Fund 28,076
Cash Resource California Tax-Exempt
Money Market Fund 3,604
Cash Resource New York Tax-Exempt
Money Market Fund 531
Cash Resource North Carolina Tax-Exempt
Money Market Fund --
Cash Resource Pennsylvania Tax-Exempt
Money Market Fund --
Cash Resource Virginia Tax-Exempt
Money Market Fund --

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>

(a) The following is additional information with respect to the
directors and officers of Mentor Investment Advisors, LLC:

Business, Profession,
Vocation or Employment
Position with during the past
Name Investment Adviser two fiscal years

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; President, Mentor
Funds, Mentor
Institutional Trust,
Mentor Variable Investment
Portfolios, Cash
Resource Trust, Mentor
Income Fund, Inc.; and
America's Utility Fund,
Inc.; Managing Director,
Mentor Perpetual Advisors,
LLC.

P. Michael Jones Managing Director Managing Director,
Mentor Investment
Group, LLC.

Peter J. Quinn, Jr. Managing Director Managing Director,
Mentor Investment
Group, LLC.

-4-

<PAGE>

Daniel J. Ludeman Chairman Chairman and Chief
Executive Officer,
Mentor Investment
Group, LLC.

Karen H. Wimbish Managing Director Managing Director,
Mentor Investment
Group, LLC.

Terry L. Perkins Treasurer; Senior Vice President,
Secretary Mentor Investment Group,
LLC

Michael A. Wade Controller Vice President, Mentor
Investment Group, LLC.

* The address of Mentor Investment Group, Inc., Wheat, First Securities, Inc.,
and Wheat First Butcher Singer, Inc., is 901 East Byrd Street, Richmond, VA
23219.

Item 29. Principal Underwriters:

(a) Mentor Distributors, LLC, the Fund's principal underwriter, acts as
principal underwriter for the following investment companies:

The Mentor Funds
o Mentor Growth Portfolio
o Mentor Strategy Portolio
o Mentor Short-Duration Income Portfolio
o Mentor Balanced Portfolio
o Mentor Capital Growth Portfolio
o Mentor Perpetual Global Portfolio
o Mentor High Income Portfolio
o Mentor Income and Growth Portfolio
o Mentor Quality Income Portfolio
o Mentor Municipal Income Portfolio
o Mentor Institutional U.S. Government Money Market Portfolio
o Mentor Institutional Money Market Portfolio
o Global Emerging Companies Portfolio
o High Yield Portfolio

Cash Resource Trust
o Cash Resource Money Market Fund
o Cash Resource U.S. Government Money Market Fund
o Cash Resource Tax-Exempt Money Market Fund
o Cash Resource California Tax-Exempt Money Market Fund
o Cash Resource New York Tax-Exempt Money Market Fund
o Cash Resource North Carolina Tax-Exempt Money Market Fund
o Cash Resource Pennsylvania Tax-Exempt Money Market Fund
o Cash Resource Virginia Tax-Exempt Money Market Fund

Mentor Institutional Trust
o Mentor U.S. Government Cash Management Portfolio
o Mentor Fixed-Income Portfolio
o Mentor Perpetual International Portfolio

Mentor Investment Group
o Mentor Income Fund
o America's Utility Fund

Mentor Variable Investment Portfolios
o Mentor VIP Growth Portfolio
o Mentor VIP Strategy Portfolio
o Mentor VIP Balanced Portfolio
o Mentor VIP Capital Growth Portfolio
o Mentor VIP Perpetual International Portfolio
o Mentor VIP High Income Portfolio

(b) Information concerning officers of Mentor Distributors, LLC:

-5-

Name And Principal Positions And Offices Positions And Offices
Business Address* With Underwriter With Registrant
- ----------------- -------------------- ---------------------
Lynn Mangum Chairman Inapplicable
D'Ray Moore President Inapplicable
Dennis Sheehan Executive Vice President Inapplicable
William J. Tomko Senior Vice President Inapplicable
Mark J. Rybarczyk Senior Vice President Inapplicable
Kevin J. Dell Vice President and Inapplicable
Secretary
Michael D. Burns Vice President Inapplicable
David Blackmore Vice President Inapplicable
Robert L. Tuch Assistant Secretary Inapplicable
Steven Ludwig Compliance Officer Inapplicable

*Principal Address for all Officers:
BISYS Fund Services, Inc.
3435 Stelzer Road
Columbus, Ohio 43219-8000

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 has duly caused this Amendment to
be signed on its behalf by the undersigned, thereto duly authorized, in the City
of Richmond, and the Commonwealth of Virginia on this th day of January, 1999.

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 th day of January, 1999.

Signature Title
--------- -----

* Chairman; Trustee
- -----------------
Daniel J. Ludeman

* Trustee
- ------------------
Arnold H. Dreyfuss

* Trustee
- ----------------
Thomas F. Keller

* Trustee
- -----------------------
Louis W. Moelchert, Jr.

* Trustee
- ------------------
Troy A. Peery, Jr.

<PAGE>

Signature Title
--------- -----

Trustee
- --------------------
Peter J. Quinn, Jr.

Trustee
- --------------------
Arch T. Allen, III

Trustee
- --------------------
Weston E. Edwards

Trustee
- --------------------
Jerry R. Barrentine

Trustee
- --------------------
J. Garnett Nelson

/s/ Paul F. Costello President; Principal Executive
- -------------------- Officer
Paul F. Costello

/s/ Terry L. Perkins Treasurer; Secretary; Principal
- -------------------- Financial Officer; Principal
Terry L. Perkins Accounting Officer

*By:/s/ Paul F. Costello
--------------------
Paul F. Costello
Attorney-in-Fact

<PAGE>

EXHIBIT INDEX

Exhibit No. Exhibit
- ----------- -------
(5) (A) Form of Management Contract

(B) Form of Management Contract - North Carolina, Pennsylvania,
and Virginia Tax-Exempt Money Market Funds

(8) (B) Form of Administration Agreement

(9) (C) Form of Shareholder Servicing Plan

(15) Plan of Distribution

(24) Power of Attorney

Exhibit 5(a)

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

CASH RESOURCE TRUST

MANAGEMENT CONTRACT

This Management Contract dated as of February 1, 1998 and amended
November 10, 1998 between CASH RESOURCE TRUST, a Massachusetts business trust
(the "Trust"), and MENTOR INVESTMENT ADVISORS, LLC, a Virginia limited liability
company (the "Manager")

WITNESSETH:

That in consideration of the mutual covenants herein contained, it is
agreed as follows:

1. SERVICES TO BE RENDERED BY THE MANAGER TO TRUST.

(a) The Manager, at its expense, will furnish continuously an
investment program for each of the series of shares of beneficial interest of
the Trust (each, a "Fund"), will determine what investments shall be purchased,
held, sold, or exchanged by each of the Funds and what portion, if any, of the
assets of a Fund shall be held uninvested and shall, on behalf of each Fund,
make changes in the Fund's investments. In the performance of its duties, the
Manager will comply with the provisions of the Agreement and Declaration of
Trust and Bylaws of the Trust and each Fund's stated investment objectives,
policies, and restrictions, and will use its best efforts to safeguard and
promote the welfare of the Trust and to comply with other policies which the
Trustees may from time to time determine and shall exercise the same care and
diligence expected of the Trustees.

(b) The Manager, at its expense, except as such expense is paid by the
Trust as provided in Section 1(d), will furnish all necessary investment and
related management facilities, including, salaries of personnel, required for it
to execute its duties faithfully. The Manager will pay the compensation, if any,
of certain officers of the Trust carrying out the investment management and
related duties provided for by this Contract.

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(c) The Manager, at its expense, shall place all orders for the
purchase and sale of portfolio investments for each Fund's account with brokers
or dealers selected by the Manager. In the selection of such brokers or dealers
and the placing of such orders, the Manager shall use its best efforts to obtain
for each Fund the most favorable price and execution available, except to the
extent it may be permitted to pay higher brokerage commissions for brokerage and
research services as described below. In using its best efforts to obtain for a
Fund the most favorable price and execution available, the Manager, bearing in
mind the Trust's best interests at all times, shall consider 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 or
dealer involved, and the quality of service rendered by the broker or dealer in
other transactions. Subject to such policies as the Trustees of the Trust may
determine, the Manager shall not be deemed to have acted unlawfully or to have
breached any duty created by this Contract or otherwise solely by reason of its
having caused a Fund to pay a broker or dealer that provides brokerage and
research services to the Manager an amount of commission for effecting a
portfolio investment transaction in excess of the amount of commission that
another broker or dealer would have charged for effecting that transaction, if
the Manager determines in good faith that such amount of commission was
reasonable in relation to the value of the brokerage and research services
provided by such broker or dealer, viewed in terms of either that particular
transaction or the Manager's overall responsibilities with respect to the Fund
and to other clients of the Manager as to which the Manager exercises investment
discretion. The Manager agrees that in connection with purchases or sales of
portfolio investments for the Trust's account, neither the Manager nor any
officer, director, employee, or agent of the Manager shall act as a principal or
receive any commission other than as provided in Section 3.

(d) The Manager shall not be obligated to pay any expenses of or for
the Trust not expressly assumed by the Manager pursuant to this Section 1 other
than as provided in Section 3.

2. OTHER AGREEMENTS, ETC.

It is understood that any of the shareholders, Trustees, officers, and
employees of the Trust may be a shareholder, director, officer, or employee of,
or be otherwise interested in, the Manager, and in any person controlled by or
under common control with the Manager, and that the Manager and any person
controlled by or under common control with the Manager may have an interest in
the Trust. It is also understood that the Manager and any person controlled by
or under common control with the Manager have and may have advisory, management,
service, or other contracts with other organizations and persons, and may have
other interests and business.

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3. COMPENSATION TO BE PAID BY THE TRUST TO THE MANAGER.

The Trust will pay to the Manager as compensation for the Manager's
services rendered, for the facilities furnished and for the expenses borne by
the Manager pursuant to Section 1, a fee in respect of each of the Funds,
computed and paid monthly at the following annual rates (based on the assets of
each Fund taken separately): 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;
provided, however, that for purposes of determining the annual rate at which
such fee will be computed and paid, a Fund's assets will be deemed to include
the assets of, in the case of Cash Resource Money Market Fund, Mentor Money
Market Portfolio; in the case of Cash Resource U.S. Government Money Market
Fund, Mentor U.S. Government Money Market Portfolio; and in the case of Cash
Resource Tax-Exempt Money Market Portfolio, Mentor Tax- Exempt Money Market
Portfolio, each of which Portfolios is a series of shares of Mentor Funds.

Such average net asset value shall be determined by taking an average
of all of the determinations of such net asset value during such month at the
close of business on each business day during such month which this Contract is
in effect. Such fees shall be payable for each month within 7 days after the
close of such month and shall commence accruing as of the date of the initial
issuance of shares of the Trust to the public.

The fees payable by the Trust to the Manager pursuant to this Section 3
shall be reduced by any commissions, fees, brokerage, or similar payments
received by the Manager or any affiliated person of the Manager in connection
with the purchase and sale of portfolio investments of the Trust, less any
direct expenses approved by the Trustees incurred by the Manager or any
affiliate of the Manager in connection with obtaining such payments.

In the event that expenses of any Fund for any fiscal year should
exceed the expense limitation on investment company expenses imposed by any
statute or regulatory authority of any jurisdiction in which shares of that Fund
are qualified for offer or sale, the compensation due the Manager for such
fiscal year shall be reduced by the amount of such excess by a reduction or
refund thereof. In the event that the expenses of any Fund exceed any expense
limitation which the Manager may, by written notice to the Trust, voluntarily
declare to be effective subject to such terms and conditions as the Manager may
prescribe in such notice, the compensation due the Manager shall be reduced,
and, if necessary, the Manager shall assume expenses of that Fund, to the extent
required by such expense limitation.

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If the Manager shall serve for less than the whole of a month, the
foregoing compensation shall be prorated.

4. ASSIGNMENT TERMINATES THIS CONTRACT; AMENDMENTS OF THIS CONTRACT.

This Contract shall automatically terminate, without the payment of any
penalty, in the event of its assignment; and this Contract shall not be amended
unless such amendment be approved at a meeting by the affirmative vote of a
majority of the outstanding shares of the affected Fund, and by the vote, cast
in person at a meeting called for the purpose of voting on such approval, of a
majority of the Trustees of the Trust who are not interested persons of the
Trust or of Cambridge or the Manager.

5. EFFECTIVE PERIOD AND TERMINATION OF THIS CONTRACT.

This Contract shall become effective upon its execution and shall
remain in full force and effect continuously thereafter (unless terminated
automatically as set forth in Section 4) until terminated as follows:

(a) Either party hereto may at any time terminate this Contract as to
one or more Funds or as to the Trust as a whole by not more than sixty days nor
less than thirty days written notice delivered or mailed by registered mail,
postage prepaid, to the other party, or

(b) If (i) the Trustees of the Trust or the shareholders by the
affirmative vote of a majority of the outstanding shares of any Fund, and (ii) a
majority of the Trustees of the Trust who are not interested persons of the
Trust or of the Manager, by vote cast in person at a meeting called for the
purpose of voting on such approval, do not specifically approve at least
annually the continuance of this Contract, then this Contract shall
automatically terminate (as to the Trust as a whole or as to the affected Fund,
as the case may be) at the close of business on January 31, 2000 or the
expiration of one year from the effective date of the last such continuance,
whichever is later.

Action by the Trust under (a) above may be taken either (i) by vote of
a majority of its Trustees, or (ii) by the affirmative vote of a majority of the
outstanding shares of the affected Fund.

Termination of this Contract pursuant to this Section 5 will be without
the payment of any penalty.

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6. CERTAIN DEFINITIONS.

For the purposes of this Contract, the "affirmative vote of a majority
of the outstanding shares" of a Fund means the affirmative vote, at a duly
called and held meeting of such shareholders, (a) of the holders of 67% or more
of the shares of the Fund present (in person or by proxy) and entitled to vote
at such meeting, if the holders of more than 50% of the outstanding shares of
the Fund entitled to vote at such meeting are present in person or by proxy, or
(b) of the holders of more than 50% of the outstanding shares of the Fund
entitled to vote at such meeting, whichever is less.

For the purposes of this Contract, the terms "affiliated person",
"control", "interested person," and "assignment" shall have their respective
meanings defined in the Investment Company Act of 1940, as amended, and the
Rules and Regulations thereunder, subject, however, to such exemptions as may be
granted by the Securities and Exchange Commission under said Act; the term
"specifically approve at least annually" shall be construed in a manner
consistent with the Investment Company Act of 1940, as amended, and the Rules
and Regulations thereunder; and the term "brokerage and research services" shall
have the meaning given in the Securities Exchange Act of 1934, as amended, and
the Rules and Regulations thereunder.

7. NON-LIABILITY OF MANAGER.

In the absence of willful misfeasance, bad faith, or gross negligence
on the part of the Manager, or reckless disregard of its obligations and duties
hereunder, the Manager shall not be subject to any liability to the Trust or to
any shareholder of the Trust for any act or omission in the course of, or
connected with, rendering services hereunder.

8. LIMITATION OF LIABILITY OF THE TRUSTEES AND SHAREHOLDERS.

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 this instrument are not binding upon any of the Trustees, officers, or
shareholders of the Trust but are binding only upon the assets and property of
the Trust.

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IN WITNESS WHEREOF, CASH RESOURCE TRUST and MENTOR INVESTMENT ADVISORS,
LLC have each caused this instrument to be signed in duplicate in its behalf by
its President or Vice President thereunto duly authorized, all as of the day and
year first above written.

CASH RESOURCE TRUST

By:____________________________

MENTOR INVESTMENT ADVISORS, LLC

By:____________________________

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Exhibit 5 (b)

Cash Resource North Carolina Tax-Exempt Money Market Fund
Cash Resource Pennsylvania Tax-Exempt Money Market Fund
Cash Resource Virginia Tax-Exempt Money Market Fund

CASH RESOURCE TRUST

MANAGEMENT CONTRACT

This Management Contract dated as of February 10, 1999 and amended
November 10, 1998 between CASH RESOURCE TRUST, a Massachusetts business trust
(the "Trust"), and MENTOR INVESTMENT ADVISORS, LLC, a Virginia limited liability
company (the "Manager")

WITNESSETH:

That in consideration of the mutual covenants herein contained, it is
agreed as follows:

1. SERVICES TO BE RENDERED BY THE MANAGER TO TRUST.

(c) The Manager, at its expense, shall place all orders for the
purchase and sale of portfolio investments for each Fund's account with brokers
or dealers selected by the

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<PAGE>

Manager. In the selection of such brokers or dealers and the placing of such
orders, the Manager shall use its best efforts to obtain for each Fund the most
favorable price and execution available, except to the extent it may be
permitted to pay higher brokerage commissions for brokerage and research
services as described below. In using its best efforts to obtain for a Fund the
most favorable price and execution available, the Manager, bearing in mind the
Trust's best interests at all times, shall consider 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 or dealer
involved, and the quality of service rendered by the broker or dealer in other
transactions. Subject to such policies as the Trustees of the Trust may
determine, the Manager shall not be deemed to have acted unlawfully or to have
breached any duty created by this Contract or otherwise solely by reason of its
having caused a Fund to pay a broker or dealer that provides brokerage and
research services to the Manager an amount of commission for effecting a
portfolio investment transaction in excess of the amount of commission that
another broker or dealer would have charged for effecting that transaction, if
the Manager determines in good faith that such amount of commission was
reasonable in relation to the value of the brokerage and research services
provided by such broker or dealer, viewed in terms of either that particular
transaction or the Manager's overall responsibilities with respect to the Fund
and to other clients of the Manager as to which the Manager exercises investment
discretion. The Manager agrees that in connection with purchases or sales of
portfolio investments for the Trust's account, neither the Manager nor any
officer, director, employee, or agent of the Manager shall act as a principal or
receive any commission other than as provided in Section 3.

(d) The Manager shall not be obligated to pay any expenses of or for
the Trust not expressly assumed by the Manager pursuant to this Section 1 other
than as provided in Section 3.

2. OTHER AGREEMENTS, ETC.

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3. COMPENSATION TO BE PAID BY THE TRUST TO THE MANAGER.

If the Manager shall serve for less than the whole of a month, the
foregoing compensation shall be prorated.

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4. ASSIGNMENT TERMINATES THIS CONTRACT; AMENDMENTS OF THIS CONTRACT.

5. EFFECTIVE PERIOD AND TERMINATION OF THIS CONTRACT.

(b) If (i) the Trustees of the Trust or the shareholders by the
affirmative vote of a majority of the outstanding shares of any Fund, and (ii) a
majority of the Trustees of the Trust who are not interested persons of the
Trust or of the Manager, by vote cast in person at a meeting called for the
purpose of voting on such approval, do not specifically approve at least
annually the continuance of this Contract, then this Contract shall
automatically terminate (as to the Trust as a whole or as to the affected Fund,
as the case may be) at the close of business on February 9, 2001 or the
expiration of one year from the effective date of the last such continuance,
whichever is later.

Action by the Trust under (a) above may be taken either (i) by vote of
a majority of its Trustees, or (ii) by the affirmative vote of a majority of the
outstanding shares of the affected Fund.

Termination of this Contract pursuant to this Section 5 will be without
the payment of any penalty.

6. CERTAIN DEFINITIONS.

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<PAGE>

of more than 50% of the outstanding shares of the Fund entitled to vote at such
meeting are present in person or by proxy, or (b) of the holders of more than
50% of the outstanding shares of the Fund entitled to vote at such meeting,
whichever is less.

7. NON-LIABILITY OF MANAGER.

8. LIMITATION OF LIABILITY OF THE TRUSTEES AND SHAREHOLDERS.

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 this instrument are not binding upon any of the Trustees, officers, or
shareholders of the Trust but are binding only upon the assets and property of
the Trust.

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CASH RESOURCE TRUST

By:____________________________

MENTOR INVESTMENT ADVISORS, LLC

By:____________________________

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Exhibit 8 (b)

CASH RESOURCE TRUST
901 East Byrd Street
Richmond, Virginia 23219

March 31, 1998, as amended
February 10, 1999

Mentor Investment Group, LLC
901 East Byrd Street
Richmond, Virginia 23219

Re: Administration Agreement

Dear Gentlemen:

Cash Resource Trust, a Massachusetts business trust (the "Trust"), is
engaged in the business of an investment company. The Trust desires that you act
as administrator of one or more series specified by the Trustees from time to
time on Exhibit A hereto (each, a "Specified Series") of the Trust, and you are
willing to act as such administrator and to perform such services under the
terms and conditions hereinafter set forth. Accordingly, the Trust agrees with
you as follows:

1. Delivery of Trust Documents. The Trust has furnished you with
copies properly certified or authenticated of each of the following:

(a) Agreement and Declaration of Trust of the Trust.

(b) By-laws of the Trust as in effect on the date hereof.

The Trust will furnish you from time to time with copies, properly
certified or authenticated, of all amendments of or supplements to the
foregoing, if any.

2. Administrative Services. You will continuously provide business
management services to each of the Specified Series and will generally, subject
to the general oversight of the Trustees and except as provided in the next
following paragraph, manage all of the business and affairs of each of the
Specified Series, subject always to the provisions of the

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<PAGE>

Trust's Declaration of Trust and By-laws and of the Investment Company Act of
1940, as amended (the "1940 Act"), and subject, further, to such policies and
instructions as the Trustees may from time to time establish. You shall, except
as provided in the next following paragraph, advise and assist the officers of
the Trust in taking such steps as are necessary or appropriate to carry out the
decisions of the Trustees and the appropriate committees of the Trustees
regarding the conduct of the business of each of the Specified Series.

Notwithstanding any provision of this Agreement, you will not at any
time provide, or be required to provide, to the Trust or to any person with
respect to the Trust investment research, advice, or supervision, or in any way
advise the Trust or any person acting on behalf of the Trust as to the value of
securities or other investments or as to the advisability of investing in,
purchasing, or selling securities or other investments.

3. Allocation of Charges and Expenses. You will pay the compensation
and expenses of all officers and executive employees of the Trust (other than
such persons who serve as such and who are employees of or serve at the request
of any investment adviser to the Trust) and will make available, without expense
to the Trust, the services of such of your directors, officers, and employees as
may duly be elected Trustees or officers of the Trust, subject to their
individual consent to serve and to any limitations imposed by law. You will
provide all clerical services relating to the business of each of the Specified
Series. You will not be required to pay any expenses of the Trust other than
those specifically allocated to you in this paragraph 3. In particular, but
without limiting the generality of the foregoing, you will not be required to
pay: clerical salaries not relating to the services described in paragraph 2
above; fees and expenses incurred by the Trust in connection with membership in
investment company organizations; brokers' commissions; payment for portfolio
pricing services to a pricing agent, if any; legal, auditing, or accounting
expenses; taxes or governmental fees; the fees and expenses of the transfer
agent 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 of the Trust; the
expenses of and fees for registering or qualifying securities for sale; the fees
and expenses of Trustees of the Trust who are not affiliated with you; the cost
of preparing and distributing reports and notices to shareholders; public and
investor relations expenses; or the fees or disbursements of custodians of the
Trust's assets, including expenses incurred in the performance of any
obligations enumerated by the Agreement and Declaration of Trust or By-Laws of
the Trust insofar as they govern agreements with any such custodian.

4. Compensation. As compensation for the services performed and the
facilities furnished and expenses assumed by you, including the services of any
consultants retained by you, each Specified Series shall pay you, as promptly as
possible after the last day of each month, a fee, calculated daily, at the
annual rate of .02 of 1% of the Specified Series' average daily net assets.

The first payment of the fee shall be made as promptly as possible at
the end of the month next succeeding the effective date of this Agreement in
respect of such Specified

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Series, and shall constitute a full payment of the fee due you for all services
prior to that date. If this Agreement is terminated as of any date not the last
day of a month, such fee shall be paid as promptly as possible after such date
of termination, shall be based on the average daily net assets of the Specified
Series in that period from the beginning of such month to such date of
termination, and shall be that proportion of such average daily net assets as
the number of business days in such period bears to the number of business days
in such month. The average daily net assets of a Specified Series shall in all
cases be based only on business days and be computed as of the time of the
regular close of business of the New York Stock Exchange, or such other time as
may be determined by the Trustees. Each such payment shall be accompanied by a
report of the Trust prepared either by the Trust or by a reputable firm of
independent accountants which shall show the amount properly payable to you
under this Agreement and the detailed computation thereof.

5. Limitation of Liability. You shall not be liable for any error of
judgement or mistake of law or for any loss suffered by the Trust in connection
with the matters to which this Agreement relates except a loss resulting from
willful misfeasance, bad faith, or gross negligence on your part in the
performance of your duties, or from reckless disregard by you of your
obligations and duties under this Agreement. Any person, even though also
employed by you, who may be or become an employee of and paid by the Trust shall
be deemed, when acting within the scope of his or her employment by the Trust,
to be acting in such employment solely for the Trust and not as your employee or
agent.

6. Duration and Termination of this Agreement. This Agreement shall
remain in force for two years from the date first above written and continue
from year to year thereafter, but only so long as such continuance is
specifically approved at least annually with respect to each Specified Series by
the vote of a majority of the Trustees who are not interested persons of you or
of the Trust, cast in person at a meeting called for the purpose of voting on
such approval and by a vote of the Trustees. This Agreement may, on 30 days
notice, be terminated at any time without the payment of any penalty by you,
and, immediately upon notice, by the Trustees or, as to a Specified Series, by
vote of a majority of the outstanding voting securities of that Specified
Series. This Agreement shall automatically terminate in the event of its
assignment. In interpreting the provisions of this Agreement, the definitions
contained in Section 2(a) of the 1940 Act, as modified by rule 18f-2 under the
Act (particularly the definitions of "interested person", "assignment", and
"majority of the outstanding voting securities"), as from time to time amended,
shall be applied, subject, however, to such exemptions as may be granted by the
Securities and Exchange Commission by any rule, regulation, or order.

7. Amendment of this Agreement. No provisions of this Agreement may be
changed, waived, discharged, or terminated orally, but only by an instrument in
writing signed by the party against which enforcement of the change, waiver,
discharge, or termination is sought, and no amendment of this Agreement shall be
effective as to a Specified Series until approved by the Trustees, including a
majority of the Trustees who are

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not interested persons of you or of the Trust, cast in person at a meeting
called for the purpose of voting on such approval.

8. Miscellaneous. The captions in this Agreement are included for
convenience or reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction of effect. This
Agreement may be executed simultaneously in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.

9. Limitation of Liability of the Trustees and Shareholders. A copy of
the Agreement and Declaration of Trust of the Trust is on file with the
Secretary 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 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 appropriate Series.

If you are in agreement with the foregoing, please sign the form of
acceptance on the accompanying counterpart of this letter and return such
counterpart to the Trust, whereupon this letter shall become a binding contract.

Yours very truly,

CASH RESOURCE TRUST

By: ___________________________
Title:

The foregoing Agreement is hereby
accepted as of the date thereof.

MENTOR INVESTMENT GROUP, LLC

By: _____________________________
Title:

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EXHIBIT A

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
Cash Resource North Carolina Tax-Exempt Money Market Fund
Cash Resource Pennsylvania Tax-Exempt Money Market Fund
Cash Resource Virginia Tax-Exempt Money Market Fund

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Exhibit 9 (c)

CASH RESOURCE TRUST
SHAREHOLDER SERVICING PLAN

This Shareholder Servicing Plan ("Plan"), adopted the 1st day of
February, 1998, is amended this 10th day of February, 1999 by the Board of
Trustees of Cash Resource Trust, a Massachusetts business trust (the "Trust"),
with respect to certain classes of shares ("Classes") of the Funds set forth in
exhibits hereto.

1. This Plan is adopted to allow the Trust to make payments as
contemplated herein to obtain certain administrative services for shareholders
of Classes of the Funds ("Shares").

2. This Plan is designed to compensate broker/dealers and other
participating financial institutions and other persons ("Administrators") for
providing administrative support services to the Funds and their shareholders.
These administrative support services may include, but are not limited to, the
following: providing office space, equipment, telephone facilities, and various
personnel including clerical, supervisory and computer personnel as necessary or
beneficial to establish and maintain shareholder accounts and records;
processing purchase and redemption transactions and automatic investments of
client account cash balances; answering routine client inquiries regarding the
Funds; assisting clients in changing dividend options, account designations and
addresses; and providing such other services as the Funds reasonably request.
The Plan will be administered by such entity as may be designated by the Board
of Trustees to do so (the "Plan Administrator").

3. Any payment to the Plan Administrator shall be limited to the
reimbursement of payments made by the Plan Administrator to the Administrators
or for such other purposes as the Board of Trustees may approve from time to
time. The fees paid under this Plan are intended to qualify as a "service fees"
as defined in Rule 2830 of the Conduct Rules of the National Association of
Securities Dealers, Inc. (or any successor provision) as in effect from time to
time.

4. The Plan Administrator has the right (i) to select, in its sole
discretion, the Administrators to participate in the Plan and (ii) to terminate
without cause and in its sole discretion any agreement with any Administrator.

5. Quarterly in each year that this Plan remains in effect, the Plan
Administrator shall prepare and furnish to the Board of Trustees of the Trust,
and the Board of Trustees shall review, a written report of the amounts expended
under the Plan and the purpose for which such expenditures were made.

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6. This Plan shall become effective with respect to any Class (i) after
approval by a majority votes of: (a) the Trust's Board of Trustees; and (b)
those Trustees who are not "interested persons" of the Trust (as defined in
Investment Company Act of 1940) and have no direct or indirect financial
interest in the operation of this Plan or any agreements related to it
("Disinterested Trustees"); and (ii) upon adoption in the same manner of an
exhibit this Plan with respect to such Class.

7. This Plan shall remain in effect with respect to each Class set
forth on an exhibit and any subsequent Classes added pursuant to an exhibit.

8. All material amendments to this Plan must be approved by a majority
vote of the Board of Trustees of the Trust and of the Disinterested Trustees.

9. This Plan may be terminated with respect to a particular Class at
any time by: (a) a majority vote of the Disinterested Trustees; or (b) a vote of
a majority of the outstanding voting securities of the particular Class as
defined in Section 2(a)(42) of the Act; or (c) by the Plan Administrator on 60
days notice to the Trust.

10. While this Plan shall be in effect, the selection and nomination of
Disinterested Trustees of the Trust shall be committed to the discretion of the
Disinterested Trustees then in office.

11. All agreements with any person relating to the implementation of
this Plan shall be in writing and any agreement related to this Plan shall be
subject to termination, without penalty, pursuant to the provisions of Paragraph
9 herein.

12. This Plan shall be construed in accordance with and governed by the
laws of the Commonwealth of Virginia.

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EXHIBIT A
to the
Shareholder Servicing Plan

CASH RESOURCE TRUST

Cash Resource Money Market Fund -- Class B shares
Cash Resource U.S. Government Money Market Fund -- Class B shares
Cash Resource Tax-Exempt Money Market Fund -- Class B shares
Cash Resource California Tax-Exempt Money Market Fund -- Class B shares
Cash Resource New York Tax-Exempt Money Market Fund -- Class B shares
Cash Resource North Carolina Tax-Exempt Money Market Fund -- Class B shares
Cash Resource Pennsylvania Tax-Exempt Money Market Fund -- Class B shares
Cash Resource Virginia Tax-Exempt Money Market Fund -- Class B shares

This Plan is adopted by Cash Resource Trust with respect to the Classes
of Shares of the Funds set forth above.

In compensation for the services provided pursuant to this Plan, the
Plan Administrator will be paid a monthly fee by each Fund computed at an annual
rate not to exceed 0.25 of 1% of the average daily net asset value of the shares
of such classes.

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Exhibit 15

PLAN OF DISTRIBUTION PURSUANT TO RULE 12b-1

CASH RESOURCE TRUST

This constitutes the PLAN OF DISTRIBUTION of CASH RESOURCE TRUST (the
"Trust") on behalf of the series of shares of beneficial interest of the Trust
identified on Exhibit A attached hereto and made a part hereof (each, a
"Portfolio").
1. Each Portfolio shall pay to the principal underwriter of the
Portfolio's shares (the "Distributor") a fee for services performed and expenses
incurred in respect of the distribution of shares of the Portfolio, or, where
applicable, of a class of shares of the Portfolio specified in Exhibit A, at the
annual rate set forth opposite the Portfolio's name on Exhibit A of such
Portfolio's average daily net assets attributable to its shares, or to such
class of shares, such fee to be calculated and accrued daily and paid monthly.
2. The amount set forth in paragraph 1 of this Plan shall be paid for
the Distributor's services as distributor of the shares of each Portfolio (or of
the applicable class of shares of any such Portfolio, as the case may be) in
accordance with the Distribution Agreement between the Distributor and the Trust
and may be spent by the Distributor or its agents on any activities or expenses
related to the sale and repurchase of the shares of the Portfolio (or any such
class of shares, as the case may be), including, but not limited to, commissions
and other compensation to persons who engage in or support distribution and
repurchase of shares; printing of prospectuses and reports for other than
existing shareholders; advertising; preparation and distribution of sales
literature; and overhead, travel, and telephone expenses.

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<PAGE>

3. This Plan shall not take effect until it has been approved, together
with any related agreements, by votes of a majority of both (a) the Trustees and
(b) those Trustees who are not "interested persons" of the Trust (as defined in
the Investment Company Act of 1940, as amended) and have no direct or indirect
financial interest in the operation of this Plan or any agreements related to it
(the "Rule 12b-1 Trustees"), cast in person at a meeting or meetings called for
the purpose of voting on this Plan and such related agreements.
5. This Plan shall continue in effect for successive periods of one
year from its execution for so long as such continuance is specifically approved
at least annually in the manner provided for approval of this Plan in paragraph
4.
6. Any person authorized to direct the disposition of monies paid or
payable by a Portfolio pursuant to this Plan or any related agreement shall
provide to the Trustees 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.
7. This Plan may be terminated at any time in respect of any or all of
the Portfolios by vote of a majority of the Rule 12b-1 Trustees or, in respect
of a Portfolio, by vote of that Portfolio's shares constituting a majority of
the outstanding voting securities of such Portfolio (or the class of shares in
question, as the case may be).
8. This Plan may not be amended to increase materially the amount of
distribution expenses provided for in paragraph 1 hereof unless such amendment
is approved in the manner provided for initial approval in paragraph 3 hereof,
and no material amendment to the Plan

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<PAGE>

shall be made unless such amendment is approved in the manner provided for
initial approval in paragraph 4 hereof.
9. While this Plan is in effect, the selection and nomination of
Trustees who are not interested persons (as defined in the Investment Company
Act of 1940, as amended) of the Trust shall be committed to the discretion of
the Trustees who are themselves not interested persons.
10. The Trust shall preserve copies of this Plan and any related
agreements and all reports made pursuant to paragraph 6 hereof for a period of
not less than six years from the date of execution this Plan, or of the
agreements or of such reports, as the case may be, the first two years in an
easily accessible place.
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 this instrument are not binding upon any of the Trustees or officers of the
Trust or shareholders of any Portfolio of the Trust but are binding only upon
the assets and property of the relevant Portfolio of the Trust.

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<PAGE>

EXHIBIT A

12b-1 Fee
Cash Resource Money Market Fund 0.38%
Cash Resource U.S. Government Money Market Fund 0.38%
Cash Resource Tax-Exempt Money Market Fund 0.33%
Cash Resource California Tax-Exempt Money Market Fund 0.33%
Cash Resource New York Tax-Exempt Money Market Fund 0.50%
Cash Resource North Carolina Tax-Exempt Money Market Fund 0.33%
Cash Resource Pennsylvania Tax-Exempt Money Market Fund 0.33%
Cash Resource Virginia Tax-Exempt Money Market Fund 0.33%

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POWER OF ATTORNEY

We, the undersigned Officers and Trustees of Cash Resource Trust (the
"Trust"), hereby severally constitute and appoint Daniel J. Ludeman, Paul F.
Costello and Terry L. Perkins, and each of them singly, our true and lawful
attorneys, with full power to them and each of them, to sign for us, and in our
names and in the capacities indicated below, the Registration Statement on Form
N-1A of the Trust and any and all amendments (including post-effective
amendments) to said Registration Statement and to file the same with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto our said attorneys, and each
of them acting alone, full power and authority to do and perform each and every
act and thing requisite or necessary to be done in the premises, as fully to all
intents and purposes as he might or could do in person, and hereby ratify and
confirm all that said attorneys or any of them may lawfully do or cause to be
done by virtue thereof.

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

Signature Title Date
- --------- ----- -----

/s/ Arch T. Allen, III
- ------------------------ Trustee November 10, 1998
Arch T. Allen, III

/s/ Jerry R. Barrentine
- ------------------------ Trustee November 10, 1998
Jerry R. Barrentine

/s/ Arnold H. Dreyfuss
- ------------------------ Trustee November 10, 1998
Arnold H. Dreyfuss

/s/ Weston E. Edwards
- ------------------------ Trustee November 10, 1998
Weston E. Edwards

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<PAGE>

/s/ Thomas F. Keller
- -------------------------- Trustee November 10, 1998
Thomas F. Keller

/s/ Daniel J. Ludeman
- -------------------------- Chairman;Trustee November 10, 1998
Daniel J. Ludeman

/s/ Louis W. Moelchert, Jr.
- --------------------------- Trustee November 10, 1998
Louis W. Moelchert, Jr.

/s/ J. Garnett Nelson
- --------------------------- Trustee November 10, 1998
J. Garnett Nelson

/s/ Troy A. Peery, Jr.
- --------------------------- Trustee November 10, 1998
Troy A. Peery, Jr.

/s/ Peter J. Quinn, Jr.
- ---------------------------- Trustee November 10, 1998
Peter J. Quinn, Jr.

/s/ Paul F. Costello
- ---------------------------- President November 10, 1998
Paul F. Costello (Principal Executive
Officer)

/s/ Terry L. Perkins
- ---------------------------- Treasurer November 10, 1998
Terry L. Perkins (Principal Financial
and Accounting Officer)

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