497(e)
                                                          Reg. No. 33-65818
                                                          File No. 8117862

P R O S P E C T U S                                             November 1, 1996

                              Cash Resource Trust
             Cash Resource California Tax-Exempt Money Market Fund
 
     The Cash Resource California Tax-Exempt Money Market Fund is designed for
investors who seek current income exempt from federal income tax and California
personal income tax, consistent with preservation of capital and maintenance of
liquidity. The Fund is a diversified investment portfolio of Cash Resource Trust
(the "Trust".)
 
     AN INVESTMENT IN THE FUND IS NEITHER INSURED NOR GUARANTEED BY THE U.S.
GOVERNMENT. THERE CAN BE NO ASSURANCE THAT THE FUND WILL BE ABLE TO MAINTAIN A
STABLE NET ASSET VALUE OF $1.00 PER SHARE. FEDERAL LAW PERMITS THE FUND TO
INVEST MORE OF ITS ASSETS IN THE SECURITIES OF A SINGLE ISSUER THAN OTHER MONEY
MARKET FUNDS; AS A RESULT, AN INVESTMENT IN THE FUND 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
the Fund. Please read it carefully and keep it for future reference. YOU CAN
FIND MORE DETAILED INFORMATION ABOUT THE FUND IN THE NOVEMBER 1, 1996 STATEMENT
OF ADDITIONAL INFORMATION, AS AMENDED FROM TIME TO TIME. FOR A FREE COPY OF THE
STATEMENT, CALL 1-800-382-0016. The Statement has been filed with the Securities
and Exchange Commission and is incorporated into this Prospectus by reference.
 
   SHARES OF THE FUND 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 COMMIS-
         SION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
           ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.



                                EXPENSE SUMMARY
 
     Expenses are one of several factors to consider when investing in the Fund.
Expenses shown are based on estimates for the Fund's first full fiscal year. The
Example shows the cumulative expenses attributable to a hypothetical $1,000
investment in the Fund over specified periods.
 
                                                               
SHAREHOLDER TRANSACTION EXPENSES                                      None
 
ANNUAL FUND OPERATING EXPENSES
  (as a percentage of average net assets)
Management Fees                                                       .22%
12b-1 Fees                                                            .33%
Other Expenses                                                        .20%
Total Fund Operating Expenses                                         .75%


 
EXAMPLE
 
     Your investment of $1,000 in the Fund would incur the following expenses,
assuming a 5% annual return and redemption at the end of each period:
 


1 YEAR     3 YEARS
        
  $8         $24

 
     The table is provided to help you understand the expenses of investing in
the Fund and your share of the Fund's operating expenses. The Example does not
represent past or future expense levels. Actual returns and expenses may be
greater or less than those shown. Federal regulations require the Example to
assume a 5% annual return, but actual annual return will vary. Because of the
12b-1 fees payable by the Fund, long-term shareholders may pay more in aggregate
sales charges than the maximum initial sales charge permitted by the National
Association of Securities Dealers, Inc.
 
                                       2
 

                       INVESTMENT OBJECTIVE AND POLICIES
 
     The objective of the Fund is to seek as high a rate of current income
exempt from federal income tax and California personal income tax as Mentor
Investment Advisors, LLC ("Mentor Advisors"), the Fund's investment manager,
believes is consistent with preservation of capital and maintenance of
liquidity.
 
     The Fund will normally invest at least 80% of its assets in California
Tax-Exempt Securities, which are debt obligations issued by the State of
California, or any of its political subdivisions, or its agencies,
instrumentalities, or other governmental units, the interest from which is, in
the opinion of bond counsel, exempt from federal income tax and California
personal income tax. (This 80% requirement is a fundamental policy of the Fund.)
The Fund may invest the remainder of its assets in investments of any kind
described under "Selection of Investments" below.
 
     California Tax-Exempt Securities are issued to obtain funds for various
public purposes, such as the construction of public facilities, the payment of
general operating expenses, or the refunding of outstanding debts. They may also
be issued to finance various private activities, including the lending of funds
to public or private institutions for the construction of housing, educational,
or medical facilities and may also include certain types of private activity and
industrial development bonds issued by public authorities to finance privately
owned or operated facilities. Short-term California Tax-Exempt Securities are
generally issued as interim financing in anticipation of tax collections,
revenue receipts, or bond sales to finance various public purposes.
 
     The two principal classifications of California Tax-Exempt Securities are
general obligation and special obligation (or revenue) securities. GENERAL
OBLIGATION securities involve the credit of an issuer possessing taxing power
and are payable from the issuer's general unrestricted revenues. Their payment
may depend on an appropriation by the issuer's legislative body. The
characteristics and methods of enforcement of general obligation securities vary
according to the law applicable to the particular issuer. SPECIAL OBLIGATION
securities are payable only from the revenues derived from a particular facility
or class of facilities, or a specific revenue source, and generally are not
payable from the unrestricted revenues of the issuer. Industrial development and
private activity bonds are in most cases special obligation securities, the
credit quality of which is directly related to the private user of the
facilities.
 
     The Fund will invest in the following types of California Tax-Exempt
Securities: (i) municipal notes; (ii) municipal bonds; (iii) municipal
securities backed by the U.S. Government or any of its agencies or
instrumentalities; (iv) short-term discount notes (tax-exempt commercial paper);
(v) participation interests in any of the foregoing; and (vi) unrated securities
or new types of tax-exempt instruments which become available in the future if
Mentor Advisors determines they meet the quality standards discussed below. (In
the case of any such new types of tax-exempt instruments, this Prospectus would
be revised as may be appropriate to describe such instruments.) In connection
with the purchase of California Tax-Exempt Securities, the Fund may acquire
stand-by commitments, which give the Fund the right to resell the security to
the dealer at a specified price. Stand-by commitments may provide additional
liquidity for the Fund but are subject to the risk that the dealer may fail to
meet its obligations. The Fund does not generally expect to pay additional
consideration for stand-by commitments or to assign any value to them.
 
     The Fund will normally invest at least 80% of its assets in debt
obligations the interest from which is, in the opinion of bond counsel, exempt
from federal income tax and that will not give rise to interest income subject
to federal alternative minimum tax for individuals. To the extent the Fund
invests in these securities, individual shareholders of the Fund, depending on
their own tax status, may be subject to federal alternative minimum tax on the
part of the Fund's distributions derived from these securities. In addition, an
investment in the Fund may
 
                                       3
 

cause corporate shareholders to be subject to (or result in an increased
liability under) the alternative minimum tax because tax-exempt income is
generally included in the alternative minimum taxable income of corporations.
 
     Since the Fund invests primarily in California Tax-Exempt Securities, the
value of the Fund's shares may be especially affected by factors pertaining to
the economy of California and other factors specifically affecting the ability
of issuers of California Tax-Exempt Securities to meet their obligations.
 
     The ability of governmental issuers to meet their obligations will depend
primarily on the availability of tax and other revenues to those governments and
on their fiscal conditions generally. The amounts of tax and other revenues
available to governmental issuers may be affected from time to time by economic,
political, and demographic conditions affecting a particular state. In addition,
constitutional or statutory restrictions may limit a government's power to raise
revenues or increase taxes. The availability of federal, state, and local aid to
issuers of such securities may also affect their ability to meet their
obligations. Payments of principal and interest on special obligation securities
will depend on the economic condition of the facility or specific revenue source
from whose revenues the payments will be made, which in turn could be affected
by economic, political, and demographic conditions affecting the State of
California. Any reduction in the actual or perceived ability of an issuer of
California Tax-Exempt Securities to meet its obligations (including a reduction
in the rating of its outstanding securities) would likely adversely affect the
market value and marketability of its obligations and could adversely affect the
values of California Tax-Exempt Securities issued by others as well.
 
     The investment objective and policies of the Fund may, unless otherwise
specifically stated, be changed by the Trustees without a vote of the
shareholders. The Fund is not intended to be a complete investment program, and
there is no assurance the Fund will achieve its objective.
 
SELECTION OF INVESTMENTS
 
     The Fund will invest only in U.S. dollar-denominated high quality
securities and other U.S. dollar-denominated money market instruments meeting
credit criteria which the Trustees believe present minimal credit risk.
"High-quality securities" are (i) commercial paper or other short-term
obligations rated in one of the two highest short-term rating categories by at
least two nationally recognized rating services (or, if only one rating service
has rated the security, by that service), (ii) obligations rated at least AA by
Standard & Poor's or Aa by Moody's Investors Services, Inc. at the time of
investment, and (iii) unrated securities determined by Mentor Advisors to be of
comparable quality. The Fund will maintain a dollar-weighted average maturity of
90 days or less and will not invest in securities with remaining maturities of
more than 397 days. The Fund may invest in variable or floating-rate securities
which bear interest at rates subject to periodic adjustment or which provide for
periodic recovery of principal on demand. Under certain conditions, these
securities may be deemed to have remaining maturities equal to the time
remaining until the next interest adjustment date or the date on which principal
can be recovered on demand. The Fund follows investment and valuation policies
designed to maintain a stable net asset value of $1.00 per share, although there
is no assurance that these policies will be successful.
 
     Considerations of liquidity and preservation of capital mean that the Fund
may not necessarily invest in money market instruments paying the highest
available yield at a particular time. Consistent with its investment objective,
the Fund will attempt to maximize yields by portfolio trading and by buying and
selling portfolio investments in anticipation of or in response to changing
economic and money market conditions and trends. The Fund may also invest to
take advantage of what Mentor Advisors believes to be temporary disparities in
yields of different segments of the high-grade money market or among particular
instruments within the same segment of the market. These policies, as well as
the relatively short maturity of obligations purchased by the Fund, may
 
                                       4
 

result in frequent changes in the Fund's portfolio. The Fund will not usually
pay brokerage commissions in connection with the purchase or sale of portfolio
securities.
 
     The Fund may invest in high quality taxable money market instruments at any
time when Mentor Advisors believes that market conditions make pursuing the
Fund's basis 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.
 
     The portfolio of the Fund will be affected by general changes in interest
rates resulting in increases or decreases in the values of the obligations held
by the Fund. The value of the securities in the Fund's portfolio can be expected
to vary inversely to changes in prevailing interest rates. Although the Fund's
investment policies are designed to minimize these changes and to maintain a net
asset value of $1.00 per share, there is no assurance that these policies will
be successful. Withdrawals by shareholders could require the sale of portfolio
investments at a time when such a sale might not otherwise be desirable.
 
DIVERSIFICATION AND CONCENTRATION POLICIES
 
     The Fund is a "diversified" investment company under the Investment Company
Act of 1940. This means that the 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 California Tax-Exempt
Securities, the Fund is more likely to invest a higher percentage of its 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
the Fund if an issuer were unable to make interest or principal payments or if
the market value of these securities were to decline.
 
     The Fund will not invest more than 25% of its total assets in securities of
issuers in any one industry. Governmental issuers of California Tax-Exempt
Securities are not considered part of any "industry." However, California
Tax-Exempt Securities backed only by the assets and revenues of nongovernmental
users may for this purpose be deemed to be issued by such nongovernmental users,
and the 25% limitation would apply to such obligations.
 
     It is nonetheless possible that the Fund may invest more than 25% of its
assets in a broader segment of the California Tax-Exempt Securities market, such
as revenue obligations of hospitals and other health care facilities, housing
agency revenue obligations, or airport revenue obligations. This would be the
case only if Mentor Advisors determined that the yields available from
obligations in a particular segment of the market justified the additional risks
associated with such concentration. Although such obligations could be supported
by the credit of governmental users or by the credit of nongovernmental users
engaged in a number of industries, economic, business, political, and other
developments generally affecting the revenues of such users (for example,
proposed legislation or pending court decisions affecting the financing of such
projects and market factors affecting the demand for their services or products)
may have a general adverse effect on all California Tax-Exempt Securities in
such a market segment.
 
     The Fund reserves the right to invest more than 25% of its assets in
industrial development bonds and private activity bonds or notes.
 
                                       5
 

OTHER INVESTMENT PRACTICES
 
     THE 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, the 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. The Fund will enter into repurchase agreements
only with commercial banks and with registered broker-dealers who are members of
a national securities exchange or market makers in government securities, and
only if the debt instrument subject to the repurchase agreement is a U.S.
Government security. Although Mentor Advisors will monitor repurchase agreement
transactions to ensure that they will be fully collateralized at all times, the
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 the Fund may be treated as an
unsecured creditor and required to return the underlying collateral to the other
party's estate.
 
     SECURITIES LENDING. The 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 the Fund if
the other party should default on its obligation and the Fund is delayed or
prevented from recovering the collateral. Any investment of collateral by the
Fund would be made in accordance with the Fund's investment objective and
policies described above.
 
DIVIDENDS
 
     THE TRUST DETERMINES THE NET INCOME OF THE 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 the 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. The Fund's investments are valued at amortized cost
according to Securities and Exchange Commission Rule 2a-7. The Fund will not
normally have unrealized gains or losses so long as it values its investments by
the amortized cost method.
 
     DAILY DIVIDENDS. The 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 the 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 day
after the Fund accepts their order. The 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 the 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 the month will be paid all dividends declared through
the time of the withdrawal. Since the net income of the Fund is declared as a
dividend each time it is determined, the net asset value per share of the Fund
normally remains at $1 per share immediately after each determination and
dividend declaration.
 
     YOU CAN CHOOSE FROM TWO DISTRIBUTION OPTIONS: (1) automatically reinvest
all distributions from the Fund in additional shares of the 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
 
                                       6
 

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 the Fund
promptly following the month in which the reinvestment occurs.
 
TAX INFORMATION
 
     FEDERAL TAXES. The 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. The Fund will distribute
substantially all of its ordinary income (and net capital gains, if any) on a
current basis.
 
     Dividends paid that are derived from exempt-interest income (known as
"exempt-interest dividends") are not generally subject to federal income tax.
However, if you receive social security or railroad retirement benefits, you
should consult your tax adviser to determine what effect, if any, an investment
in the Fund may have on the taxation of your benefits. In addition, an
investment in the Fund may result in liability for federal alternative minimum
tax and for state and local taxes, both for individual and corporate
shareholders. (Shareholders should consult their own tax adviser with respect to
whether exempt-interest dividends would be excludable from gross income if the
shareholder were treated as a "substantial user" of facilities financed by an
obligation held by the Fund or a "related person" to such 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.
 
     If the 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.
 
     The Fund's distributions other than exempt-interest dividends will be
taxable to you as ordinary income, except that any distributions of net
long-term capital gains will be taxable as such, regardless of how long you have
held your shares. Distributions will be taxable as described above whether
received in cash or in shares through the reinvestment of distributions.
 
     Early in each year the Fund will notify you of the amount and tax status of
distributions paid to you for the preceding year.
 
     STATE TAXES. To the extent exempt-interest dividends are derived from
interest on California Tax-Exempt Securities, such distributions will be exempt
from California personal income tax (but not from California franchise and
corporate income tax). For California tax purposes, distributions derived from
investments in other than (i) California Tax-Exempt Securities and (ii)
obligations of the United States (or other obligations) which pay interest
exempt from California personal income taxation when held by an individual will
be taxable as ordinary income or as long-term capital gain, whether paid in cash
or reinvested in additional shares. Interest derived from California Tax-Exempt
Securities is not subject to the California alternative minimum tax on
individuals, and California personal income tax does not apply to any portion of
Social Security or railroad retirement benefits. Interest on indebtedness
incurred or continued to purchase or carry the Fund's shares generally will not
be deductible for California personal income tax purposes. An investment in the
Fund may result in liability for state and/or local taxes for shareholders
subject to tax by states other than California.
 
                                       7
 

     GENERAL. The foregoing is a summary of certain federal and California
income tax consequences of investing in the Fund. You should consult your tax
adviser to determine the precise effect of an investment in the Fund on your
particular tax situation.
 
BUYING AND SELLING SHARES OF THE FUND
 
     HOW TO BUY SHARES. The Trust offers shares of the Fund continuously at a
price of $1.00 per share. The Trust determines net asset value twice each day,
as of 12:00 noon and as of the close of regular trading on the Exchange. The
shares of the 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 the Fund.
 
     Because the 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 Fund, the Fund 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 Fund may delay payment for shares until the purchase price of
those shares has been collected which may be up to 15 calendar days after the
purchase date.
 
     For more information on how to purchase shares of the Fund, contact your
Financial Institution or Mentor Distributors, LLC ("Mentor Distributors"), 901
East Byrd Street, Richmond, Virginia 23219, the principal underwriter of the
Fund's shares. Mentor Distributors' telephone number is 1-800-382-0016.
 
     HOW TO SELL SHARES. You can redeem your Fund shares through your Financial
Institution any day the Exchange is open, or you may redeem your shares by check
or by mail. Redemption will be effected at the net asset value per share of the
Fund next determined after receipt of the redemption request in good order. The
Fund 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 Fund, and may charge you for its services (including, for
example, charges relating to the wiring of funds). Your Financial Institution
may accept your redemption instructions by telephone. Consult your Financial
Institution.
 
     SELLING SHARES BY CHECK. If you would like the ability to write checks
against your investment in the 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 the Fund. When the
Fund receives your properly completed documentation and card, you will receive
checks drawn on your Fund account and payable through the Trust'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.
 
                                       8
 

     Shareholders using Fund 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 the Fund by sending a
written withdrawal request to IFTC. You must sign the withdrawal request and
include a stock power with signature(s) guaranteed by a bank, broker/dealer, or
certain other financial institutions.
 
     IFTC may require additional documentation from shareholders which are
corporations, partnerships, agents, fiduciaries, or surviving joint owners.
Corporations, partnerships, agents, trusts, and fiduciary accounts must submit a
completed resolution in proper form before selling shares. Resolution forms are
available from IFTC and Mentor Distributors.
 
     THE FUND GENERALLY SENDS YOU PAYMENT FOR YOUR SHARES THE BUSINESS DAY AFTER
YOUR REQUEST IS RECEIVED IN GOOD ORDER. Under unusual circumstances, the Trust
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 the Fund for shares of any other fund in
the Trust at net asset value, except as described below. If you request an
exchange through your Financial Institution, your Financial Institution will be
responsible for forwarding the necessary documentation to IFTC. Exchange
Authorization Forms are available from your Financial Institution or Mentor
Distributors. For federal income tax purposes, an exchange is treated as a sale
of shares and generally results in a capital gain or loss. The Fund reserves the
right to change or suspend the exchange privilege at any time. Shareholders
would be notified of any change or suspension. Consult your Financial
Institution or Mentor Distributors before requesting an exchange.
 
FINANCIAL INSTITUTIONS
 
     Financial Institutions provide varying arrangements for their clients with
respect to the purchase and redemption of Fund shares and the confirmation
thereof and may arrange with their clients for other investment or
administrative services. When you effect transactions with the 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 the Fund promptly. Some Financial
Institutions may establish minimum investment requirements with respect to the
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 the 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
 
                                       9
 

whether, and to what extent, your Financial Institution is willing to take
advantage of them on your behalf. FINANCIAL INSTITUTIONS, INCLUDING WHEAT, FIRST
SECURITIES, INC., A SUBSIDIARY OF WHEAT FIRST BUTCHER SINGER, INC., AND EVEREN
SECURITIES, INC. ("EVEREN"), MAY CHARGE FEES TO OR IMPOSE RESTRICTIONS ON YOUR
SHAREHOLDER ACCOUNT. CONSULT YOUR FINANCIAL INSTITUTION FOR INFORMATION ABOUT
ANY FEES OR RESTRICTIONS OR FOR FURTHER INFORMATION CONCERNING ITS SERVICES.
 
MANAGEMENT
 
     The Trustees are responsible for generally overseeing the conduct of the
Fund's business. Subject to such policies as the Trustees may determine, MENTOR
INVESTMENT ADVISORS, LLC furnishes a continuing investment program for the Fund
and makes investment decisions on its behalf.
 
     Mentor Advisors is a wholly owned subsidiary of Mentor Investment Group,
LLC ("Mentor"), which is in turn a subsidiary of Wheat First Butcher Singer,
Inc., a diversified financial services holding company. Mentor Advisors and its
affiliates serve as investment adviser to twenty-one separate investment
portfolios in the Mentor Family of Funds, including the Fund and the other funds
making up Cash Resource Trust. For a copy of the prospectus relating to any of
these other funds, call Mentor Distributors at 1-800-382-0016. Mentor Advisors'
address is 901 East Byrd Street, Richmond, Virginia 23219.
 
     EVEREN Capital Corporation has a 20% ownership interest in Mentor and may
acquire additional ownership based principally on the amount of Mentor's
revenues derived from assets attributable to clients of EVEREN and its
affiliates.
 
     The Fund pays management fees to Mentor Advisors at the following annual
rates (based on the assets of the Fund): 0.22% of the first $500 million of the
Fund's average net assets; 0.20% of the next $500 million; 0.175% of the next $1
billion; 0.16% of the next $1 billion; and 0.15% of any amounts over $3 billion.
Mentor Advisors may from time to time voluntarily agree to reduce its
compensation (and, if necessary, to pay certain expenses) with respect to the
Fund to the extent that the Fund's expenses (other than Mentor Advisors'
compensation, brokerage, interest, taxes, deferred organizational expenses,
payments required under the Fund's Distribution Plan, and extraordinary
expenses) exceed an annual rate of the Fund's average net assets specified by
Mentor Advisors.
 
     The Trust pays all expenses not assumed by Mentor Advisors, including
Trustees' fees, auditing, legal, custodial, investor servicing, and shareholder
reporting expenses, and payments under its Distribution Plans. General expenses
of the Trust will be charged to the assets of the Fund on a basis that the
Trustees deem fair and equitable, which may be based on the relative assets of
the Fund or the nature of the services performed and relative applicability to
the Fund. Expenses directly charged or attributable to the Fund will be paid
from the assets of the Fund.
 
     Mentor Advisors places all orders for purchases and sales of the securities
of the 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 Fund (and, if permitted by law, of the other funds in the
Mentor family) as a factor in the selection of broker-dealers.
 
DISTRIBUTION SERVICES
 
     The Fund has adopted a Distribution Plan (the "Plan") pursuant to Rule
12b-1 under the Investment Company Act of 1940. The purpose of the Plan is to
permit the Fund to compensate Mentor Distributors for services
 
                                       10
 

provided and expenses incurred by it in promoting the sale of shares of the
Fund, reducing redemptions, or maintaining or improving services provided to
shareholders. The Plan provides for monthly payments by the Fund to Mentor
Distributors, subject to the authority of the Trustees to reduce the amount of
payments or to suspend the Plan for such periods as they may determine. Any
material increase in amounts payable under the Plan would require shareholder
approval.
 
     In order to compensate Financial Institutions for services provided in
connection with sales of Fund shares and the maintenance of shareholder accounts
(or, in the case of certain Financial Institutions which are banking
institutions, for certain administrative and shareholder services), Mentor
Distributors may make periodic payments (from any amounts received by it under
the Plan or from its other resources) to any qualifying Financial Institution
based on the average net asset value of shares for which the Financial
Institution is designated as the financial institution of record. Mentor
Distributors makes such payments at the annual rate of between 0.15% and 0.33%
with respect to the Fund. Mentor Distributors may suspend or modify these
payments at any time, and payments are subject to the continuation of the Plan
and of applicable agreements between Mentor Distributors and the applicable
Financial Institution. Financial Institutions receiving payments from Mentor
Distributors include Wheat, First Securities, Inc. and EVEREN.
 
HOW THE FUND'S PERFORMANCE IS CALCULATED
 
     YIELD AND EFFECTIVE YIELD DATA MAY FROM TIME TO TIME BE INCLUDED IN
ADVERTISEMENTS ABOUT THE FUND. "Yield" represents an annualization of the change
in value of a shareholder account (excluding any capital changes) for a specific
seven-day period. "Effective yield" compounds that yield for a year and is, for
that reason, greater than the Fund's yield. "Tax-equivalent" yield shows the
effect on performance of the tax-exempt status of distributions received from
the 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. The Fund's performance may be compared to various
indices. See the Statement of Additional Information.
 
     ALL DATA IS BASED ON THE 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 the Fund's
portfolio, and the Fund's operating expenses. Investment performance also often
reflects the risks associated with the Fund's investment objective and policies.
These factors should be considered when comparing the Fund's investment results
to those of other mutual funds and other investment vehicles.
 
GENERAL INFORMATION ABOUT THE TRUST
 
     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 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, each series representing a fund, one representing the Fund.
Under the Agreement and Declaration of Trust, the 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 the Fund are freely transferable, are entitled to
dividends
 
                                       11
 

as declared by the Trustees, and, if the Fund were liquidated, would receive the
net assets of the Fund. The Trust may suspend the sale of shares of the Fund at
any time and may refuse any order to purchase shares. Although neither the Trust
nor the Fund is required to hold annual meetings of its shareholders, the Fund's
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 may at times engage at its own expense certain Financial
Institutions, including Wheat, First Securities, Inc. and EVEREN, to perform
certain bookkeeping, data processing, and administrative services pertaining to
the maintenance of shareholder accounts.
 
     If you own fewer shares of the Fund than a minimum amount set by the
Trustees (presently 500 shares), the Trust may choose to redeem your shares and
pay you for them. You will receive at least 30 days written notice before the
Trust redeems your shares, and you may purchase additional shares at any time to
avoid a redemption. The Trust may also redeem shares if you own shares of the
Fund above any maximum amount set by the Trustees. There is presently no
maximum, but the Trustees may establish one at any time, which could apply to
both present and future shareholders.
 
     The Trust may send a single copy of shareholder reports and communications
to an address where there is more than one registered shareholder with the same
last name, unless a shareholder at that address requests, by calling or writing
his Financial Institution, that the Trust do otherwise.
 
                                       12


                              Cash Resource Trust
                              901 East Byrd Street
                               Richmond, VA 23219
 
                                 Cash Resource
                                     Trust
 
                             California Tax-Exempt
                               Money Market Fund
 
                                   PROSPECTUS
 
                                November 1, 1996